Claiborne, ex. rel. L.D., minor v. Astrue

Filing 51

MEMORANDUM Opinion and Order Signed by the Honorable Sheila Finnegan on 7/6/2012: Mailed notice. (is, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
ALISHA CLAIBORNE ex rel., L.D., a
minor,
Plaintiff,
v.
MICHAEL J. ASTRUE,
Commissioner of Social Security,
Defendant.

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No. 10 C 7728
Magistrate Judge Finnegan

MEMORANDUM OPINION AND ORDER
Plaintiff Alisha Claiborne filed an action seeking review of the final decision of the
Commissioner of Social Security (“Commissioner”) denying her application to recover
Supplemental Security Income (“SSI”) on behalf of her minor daughter, L.D., under Title IX
of the Social Security Act. 42 U.S.C. § 1382c(a)(3)(C). On January 24, 2012, the Court
remanded the case to the Administrative Law Judge (“ALJ”) for further evaluation.
Claiborne ex rel., L.D. v. Astrue, No. 10 C 7728, 2012 WL 205907, at *17 (N.D. Ill. Jan. 24,
2012). Plaintiff now seeks to recover her attorneys’ fees and costs pursuant to the Equal
Access to Justice Act (“EAJA”), 28 U.S.C. § 2412(d), arguing that the Commissioner’s
position in defending the ALJ’s decision was not “substantially justified.” For the reasons
set forth here, Plaintiff’s application for $13,372 in fees and $38.73 in costs is granted.
DISCUSSION
I.

Attorneys’ Fees
Under the EAJA, a plaintiff is eligible to recover attorneys’ fees if (1) she makes a

timely application for fees; (2) she is a “prevailing party”; (3) the government’s position was

not “substantially justified”; and (4) no special circumstances makes an award unjust. 28
U.S.C. § 2412(d)(1)(A)-(B); Seabron v. Astrue, No. 11 C 1078, 2012 WL 1985681, at *1
(N.D. Ill. June 4, 2012). The Commissioner does not dispute that Plaintiff has satisfied
these requirements and is entitled to an award of fees and costs in this case.
Plaintiff has submitted invoices showing that her attorneys worked a total of 73.1
hours, including time spent preparing the fee petition and reply brief. Specifically, Barry
Schultz worked 24.6 hours; Lauren Rafferty worked 35.9 hours; and Julie Coen worked
12.6 hours. Two legal assistants worked an additional 1.3 hours. (Doc. 45-3; Doc. 49, at
15 n.10). Plaintiff seeks an attorneys’ rate of $181.25 per hour based on the “All items”
figure provided by the Chicago-Gary-Kenosha Consumer Price Index (“CPI”) for May 2011,
when her lawyers performed most of the work for this case. (Doc. 45 ¶ 12; Doc. 45-1).
She also seeks $95 per hour for the legal assistant work. (Id. ¶ 15).
The Commissioner does not challenge the reasonableness of the number of hours,
or the $95 hourly rate requested for the legal assistant work. The Commissioner does
object, however, that the $181.25 hourly rate for Plaintiff’s counsel is unjustifiably high.
(Doc. 48, at 2-6). The Commissioner also insists that any award of fees must be made
payable directly to Plaintiff, though it may be mailed to her “at the address of her attorney.”
(Id. at 1). The Court considers each argument in turn.
A.

Hourly Rate

The EAJA provides that the amount of attorneys’ fees awarded “shall be based
upon prevailing market rates for the kind and quality of the services furnished, except that
. . . attorney fees shall not be awarded in excess of $125 per hour unless the court
determines that an increase in the cost of living [since 1996, when the current version of
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the Act was passed] or a special factor, such as the limited availability of qualified attorneys
for the proceedings involved, justifies a higher fee.” Mathews-Sheets v. Astrue, 653 F.3d
560, 562 (7th Cir. 2011) (quoting 28 U.S.C. § 2412(d)(2)(A)(ii)). This “rather chintzy” feeshifting statute sets the $125 rate as “a presumptive ceiling; to justify a higher rate the
plaintiff must point to inflation,” or show that the case “requires for competent counsel
someone from among a small class of specialists who are available only for [more than
$125] per hour.” Id. at 562, 563, 565.
Though the two methods of justifying a fee increase are set forth in the disjunctive
under the EAJA, the Commissioner construes certain language in Mathews-Sheets to
mean that lawyers must prove both propositions: (1) “inflation has increased the cost of
providing adequate legal service,” 653 F.3d at 563; and (2) no competent attorney in the
area would handle the case for less than the amount requested in the fee petition. Id. at
565. In the Commissioner’s view, Plaintiff is not entitled to a cost of living increase in this
case because her lawyer has not established either criterion. (Doc. 48, at 3).
Plaintiff responds that Mathews-Sheets involved “an unusual and convoluted set of
facts” not applicable here, and insists that the Commissioner’s position with respect to rate
increases is unworkable. (Doc. 49, at 5-7). She also notes that prior to this decision, the
Commissioner “did not contest the appropriateness of a cost of living adjustment to EAJA
fees[,]” and the Seventh Circuit “also assumed the appropriateness of a COLA.” (Doc. 49,
at 5) (citing Tchemkou v. Mukasey, 517 F.3d 506, 512 (7th Cir. 2008) (“We believe that,
given the passage of time since the establishment of the hourly rate, a cost-of-living
adjustment is warranted.

The Government does not object [ ] to the increase in

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general....”). Given the parties’ disagreement concerning the meaning and applicability of
Mathews-Sheets, this Court begins with a detailed discussion of that decision.
1.

Mathews-Sheets

The plaintiff’s attorney in Mathews-Sheets sought a fee of $225 per hour based on
his conclusory assertion that this amount constituted “the prevailing market rate.” Id. at
563. Aside from citing to the CPI (which supported a rate of only $170 per hour), the
lawyer provided no basis whatsoever for the requested fee increase, though he did raise
the issue of inflation in a reply brief. Id. at 562-63. Even then, the lawyer failed to
reference his particular circumstances that purportedly justified the “inflation adjustment.”1
Id. at 563-64. The district court declined to award the attorney more than $125 per hour,
not because his arguments were weak, but because “the information in the reply brief about
cost of living had been submitted ‘too late.’” Id. at 563. The Seventh Circuit rejected the
district court’s rationale and remanded the case, explaining that “it was not improper for the
lawyer to request the cost of living increase for the first time in his reply brief.”2 Id. at 564.
After stating that the “entire scope of the remand” would be the issue of inflation
since that was the only factor mentioned by the lawyer, the court went on to discuss the
other special factor that may justify an upward adjustment, namely, the limited availability
of qualified attorneys. The court observed:

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The court explained: “Suppose inflation had not affected the wages he pays his
clerical employees, or had been offset by advances in law-office technology or changes in the
standards and procedures of the Social Security Administration that made it cheaper to litigate
claims for disability benefits.” Id. at 564.
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The court also remarked that a fee of $125 “seems awfully low,” noting that even
if the lawyer had received $170 per hour, the “total fee award would be only $9,010.” Id. at 564.

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It might seem that because the cost of living special factor is not automatic,
the two enumerated special factors merge; the lawyer arguing for a cost of
living increase must show limited availability of lawyers able to handle such
a case. But that is not correct. Inflation might have an impact across a range
of fields of practice that would make it difficult to hire a competent lawyer
even in a rather routine case in a field of law by no means esoteric; in such
a situation a fee above the statutory fee might well be justified. When
inflation is not a factor, the lawyer does have to show that there is something
special about the particular type of case that justifies the higher fee. That
special factor has not been invoked in this case.
And so on remand the plaintiff’s lawyer will have to show that without a cost
of living increase that would bring the fee award up to $170 per hour, a
lawyer capable of competently handling the challenge that his client mounted
to the denial of social security disability benefits could not be found in the
relevant geographical area to handle such a case.
Id. at 565 (emphasis in original).
2.

Analysis

The Commissioner seizes on the last quoted sentence in Mathews-Sheets as
evidence that even where lawyers show that inflation has increased the cost of providing
adequate legal service, they must still demonstrate that, absent a fee award above the
statutory $125 per hour, no competent attorney would be willing to handle the case.
Several courts have imposed such a requirement based on the language in MathewsSheets. See, e.g., Seabron, 2012 WL 1985681, at *3 (indicating that lawyer must prove
that higher fee is justified by both inflation and lack of competent counsel willing to take the
case for the statutory amount); Oatis v. Astrue, No. 10 C 6043, 2012 WL 965104, at *1
(N.D. Ill. Mar. 20, 2012) (same); Scott v. Astrue, No. 08 C 5882, 2012 WL 527523, at *5
(N.D. Ill. Feb. 16, 2012) (same); Heichelbech v. Astrue, No. 3:10-CV-65-WGH-RLY, 2011
WL 4452860, at *2 (S.D. Ind. Sept. 26, 2011) (allowing plaintiff extra time to submit

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evidence that “attorneys could not be found in the Evansville community and surrounding
geographical area to handle a social security case for $125 an hour.”).
Other courts, however, have declined to construe Mathews-Sheets as imposing this
dual requirement in view of the language in the EAJA. In Shipley v. Astrue, No. 1:10-CV1311-DML, 2012 WL 1898867 (S.D. Ind. May 23, 2012), for example, the court
acknowledged that “a sentence in the Mathews-Sheets opinion, without context, could
support th[e] position” that an attorney “must present proof that without a cost of living
increase, no lawyer can be found in the relevant geographical area to competently handle
the client’s judicial challenge to the denial of disability benefits.” Id. at *3. The court
concluded, however, that such an argument “ignores the two bases under the EAJA that
justify a rate higher than the $125 cap”; namely, “an increase in the cost of living or a
special factor, such as the limited availability of qualified attorneys.” Id. (emphasis in
original). See also Gonzalez v. Astrue, No. 1:10-CV-00899-DML-TWP, 2012 WL 1633937,
at *2 (S.D. Ind. May 9, 2012) (stating that the Commissioner had “plucked out” a particular
sentence from the Mathews-Sheets decision and “conflated the two separate bases under
the EAJA that justify a rate higher than the $125 cap.”).
It is not clear to this Court whether the Mathews-Sheets court intended to require
that lawyers seeking a fee increase prove both that (1) inflation has increased the cost of
providing adequate legal service, and (2) no competent lawyer in the geographical area
would take the case for less than the amount requested in the fee petition. Such a
requirement would seem at odds with the disjunctive language in the EAJA. Moreover, the
language that the Commissioner relies upon to support its position appears to be dicta; the
Seventh Circuit remanded because the lower court never considered the lawyer’s request
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for a higher fee based on the cost of living, and instead erroneously found that the lawyer
had forfeited this argument by not raising it until his reply brief. 653 F.3d at 563-64.
Regardless, the Court need not resolve whether Matthews-Sheets imposes the dual
requirement suggested by the Commissioner since this Court is satisfied that Plaintiff has
presented sufficient evidence to justify an hourly rate of $181.25 even if both requirements
apply. In that regard, Plaintiff’s counsel submitted virtually identical evidence in two other
cases in which the dual requirement was imposed, and the court determined that counsel
was entitled to the higher fee. Seabron, 2012 WL 1985681, at *4 (awarding a rate of
$176.25 per hour); Scott, 2012 WL 527523, at *6 (awarding rates of $171.25 and $175 per
hour (adjusted for the relevant time period)). Moreover, in considering what is sufficient
evidence, this Court is mindful that, given the low range of typical fee awards in these
cases, “the court should not demand proof that could be more expensive to gather than the
fees requested. And because the government could be ordered to pay those ‘fees on fees,’
that result would not serve its interests either.” Gonzalez, 2012 WL 1633937, at *2 n.1.
In support of the higher rate, Plaintiff’s counsel provided evidence in the form of
specific representations that many of his expenses have increased since 1996, including
rent (a 3% per annum increase), salaries (a 5% per annum increase for legal staff and a
3% to 4% per annum increase for administrative staff) and health insurance (a 100%
increase). He also described “significant” increases in the costs of legal research tools
such as Westlaw, relevant continuing legal education conferences, and even paper. (Doc.
45 ¶ 17(b)). The Commissioner objects that Plaintiff has not shown that her lawyer’s cost
increases are “due to inflation rather than simply due to choices that the law firm made.”
(Doc. 48, at 5) (quoting Mathews-Sheets v. Astrue, No. 1:08-CV-1426-WTL-DML, 2012 WL
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566108, at *2 (S.D. Ind. Feb. 21, 2012)) (emphasis in original). In response to this
challenge, Plaintiff’s attorney has affirmed, “as an officer of the Court, that the increase in
expenses . . . w[as] due to inflationary pressures and not due to counsel merely choosing
to pay more” for the stated items. (Doc. 49, at 12). The Court accepts this representation
and finds the evidence adequate to prove inflation. See Gonzalez, 2012 WL 1633937, at
*2 (noting that the Mathews-Sheets court did not “prescribe any particular manner in which
a lawyer might demonstrate” that inflation has increased the cost of providing adequate
legal service).
Plaintiff also showed that since the 1996 amendment to the Act, her lead attorney’s
non-contingency hourly rate has increased 52% from $180 to $275. By comparison, the
attorney has sought to increase his EAJA hourly rate by only 40%. (Doc. 45 ¶ 17(b)). In
addition, Plaintiff submitted affidavits from two attorneys practicing Social Security disability
law (Jan L. Kodner and Eric Schnaufer) who confirm that they have been awarded hourly
rates of between $165 and $350 for these cases, well above the statutory amount.
Specifically, the Social Security Administration has awarded Mr. Kodner fees amounting
to between $165 and $300 per hour, and Mr. Schnaufer charges between $175 and $350
per hour for non-contingency EAJA work he performs for other attorneys. (Doc. 45-4; 455). Plaintiff’s counsel further states that “[t]he $125.00 per hour rate set by Congress in
1996 for EAJA claims is not sufficient to attract competent counsel in the Chicago area in
2011.” (Doc. 45, at 9).3

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Plaintiff aptly notes that she “could produce affidavits from 99% of the attorneys in
the Chicago area stating they would not handle an EAJA case for $125.00 per hour, and yet, still
Plaintiff would not have proven that ‘no competent lawyer’ would handle the case at that EAJA rate.”
(Doc. 49, at 7).

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The Commissioner argues that the affidavits from Mr. Kodner and Mr. Schnaufer are
insufficient to justify an hourly rate enhancement, claiming that the Oatis court rejected the
same affidavits in declining to increase the $125 hourly fee. (Doc. 48, at 4-5). The cited
opinion, however, does not mention those affidavits or explain why they would not support
a cost of living increase. The court noted only that the plaintiff “continues merely to list
awards received by her counsel in other cases and argues that based on the holding in
Mathews-Sheets alone, $170 per hour is reasonable.” 2012 WL 965104, at *1. As noted,
Plaintiff has provided much more evidence to support a rate increase in this case. Indeed,
in her reply brief, Plaintiff submitted additional affidavits from attorneys Frederick J. Daley,
Jr. and David F. Traver, who also practice in the Social Security arena. Both attorneys
attest that they do not represent claimants without an appropriate cost of living increase.4
(Doc. 49-2 ¶ 8; Doc. 49-3 ¶ 6).
The Court finds that Plaintiff is entitled to an upward adjustment in the hourly rate
to $181.25, and awards her $13,372.84 in attorneys’ fees.

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Plaintiff also argues that her attorneys are entitled to higher fees because claimants
win their cases in court only 54% of the time, making the “effective hourly rate” a mere $67.50 (54%
of the $125 statutory cap). (Doc. 45, at 9-10). As the Seabron court explained, Plaintiff “does not
provide any evidence that Congress took this into account when it determined the $125 per hour
rate[, so] the cost of living adjustment to the EAJA is not reasonably warranted on those facts
alone.” 2012 WL 1985681, at *3 n.2. This argument also ignores the fact that counsel in such
cases are not limited to EAJA fees. They also have contingent fee arrangements so potentially may
recover up to 25% of all past due benefits that are awarded. (Doc. 45-2). (See Affidavit of
Frederick Daley, Doc. 49-2 ¶ 10) (“Indeed, I do not generally represent any clients for just an EAJA
fee at $170 an hour, let alone $125. We evaluate cases based on risk/reward and opt for the
meritorious ones that have past-due benefit potential to pay a fee under 42 U.S.C. § 406(b) well
above any EAJA fee.”).

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B.

Payment to Attorneys
The introductory paragraph to the Commissioner’s response brief asserts that “[a]ny

fees awarded belong to Plaintiff and must be made payable to Plaintiff, but may be mailed
to Plaintiff at the address of her attorney.” (Doc. 48, at 1). Plaintiff claims that she will
address this issue in her reply brief, but never does. (Doc. 49, at 1). For reasons set forth
in this Court’s opinion in Tadros v. Astrue, No. 10 C 7074, 2012 WL 965090 (N.D. Ill. Mar.
21, 2012), the fees are awarded to Plaintiff and she is to be identified as the payee for
purposes of facilitating the Treasury Department’s search for possible offsets. Id. at *4 n.2.
Since Plaintiff has assigned any fee award to her attorney, however, the Commissioner is
to evaluate the propriety of directing payment to Plaintiff’s attorney pursuant to that
assignment after this Court has issued an order awarding attorneys’ fees under the EAJA
and the search for offsets has been completed.
II.

Costs
Plaintiff requests $38.73 in costs consisting of $17.13 for “Federal Express filing of

Complaint” and $21.60 for 216 pages of copies at $.10 per page. The Commissioner does
not dispute that these costs are allowable under the EAJA and 28 U.S.C. § 1920, and
Plaintiff is thus awarded the full amount.

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CONCLUSION
For the reasons stated above, Plaintiff’s Motion for Attorney’s Fees is granted in the
amount of $13,411.57 ($13,372.84 in fees plus $38.73 in costs).
ENTER:

Dated: July 6, 2012

_________________________________
SHEILA FINNEGAN
United States Magistrate Judge

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