Hardy v. Berryhill

Filing 27

OPINION & ORDER Granting In Part Petition for Attorney Fees (Dkt. 22 ) Signed by District Judge Mark A. Goldsmith. (Sandusky, K)

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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
CHRISTOPHER B. HARDY,
Plaintiff,

Case No. 18-10743

vs.

HON. MARK A. GOLDSMITH

ACTING COMMISSIONER
NANCY A. BERRYHILL,
Defendant.
___________________________/
OPINION & ORDER
GRANTING IN PART PETITION FOR ATTORNEY FEES (Dkt. 22)
This matter is before the Court on attorney Meredith E. Marcus’s petition for an award of
attorney fees under 42 U.S.C. § 406(b) (Dkt. 24). Attorney Marcus is the lead attorney for
Plaintiff in this matter. On October 25, 2018, the underlying case was remanded under sentence
four by stipulation of the parties (Dkt. 19). A judgment was entered on that same day (Dkt. 20).
On remand, Plaintiff received a favorable decision awarding $147,911.48 in total past-due
benefits. Marcus filed the present petition seeking $36,977.87 in attorney fees under 42 U.S.C.
§ 406(b). Defendant filed a response arguing that such an award would constitute a windfall for
Marcus. Resp. at 2 (Dkt. 23). In the reply brief, Marcus revised the requested fee award to
$26,977.87. For the reasons discussed below, the motion is granted in part.
I.

APPLICABLE LAW

There are two statutes under which a plaintiff may recover attorney fees in a Social
Security disability case. First, under the Equal Access to Justice Act (“EAJA”), a plaintiff may
recover attorney fees paid by the Government. See 28 U.S.C. § 2412. Second, as part of the

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judgment in plaintiff’s favor, a court may award a reasonable fee for an attorney’s representation
paid out of a plaintiff’s past-due benefits. See 42 U.S.C. § 406(b). The fee awarded under
§ 406(b) may not exceed 25% of the total past-due benefits. 42 U.S.C. § 406(b)(1)(A); Lasley v.
Comm’r of Soc. Sec., 771 F.3d 308, 309 (6th Cir. 2014). If fees are awarded under both the
EAJA and § 406(b), counsel must refund the smaller amount to the plaintiff. Gisbrecht v.
Barnhart, 535 U.S. 789, 796 (2002).
II.

DISCUSSION

Fees under 42 U.S.C. § 406(b), unlike those under the EAJA, are paid from the
claimant’s past due benefits. Section 406(b) attorney fees are awarded to a claimant who
succeeds on their Social Security appeal, not to exceed 25% of the total past-due benefits to
which the claimant is entitled:
(b) Fees for representation before court
(1) (A) Whenever a court renders a judgment favorable to a claimant under [42
U.S.C. § 401 et seq.] who was represented before the court by an attorney, the
court may determine and allow as part of its judgment a reasonable fee for such
representation, not in excess of 25 percent of the total of the past-due benefits to
which the claimant is entitled by reason of such judgment, and the Commissioner
of Social Security may, notwithstanding the provisions of section 405(i) of this
title, but subject to subsection (d) of this section, certify the amount of such fee
for payment to such attorney out of, and not in addition to, the amount of such
past-due benefits. In case of any such judgment, no other fee may be payable or
certified for payment for such representation except as provided in this paragraph.
42 U.S.C. § 406(b)(1)(A). The Supreme Court has explained that contingent-fee agreements are
the most common fee arrangement in Social Security cases, and that Ҥ 406(b) does not displace
contingent-fee agreements as the primary means by which fees are set for successfully
representing Social Security benefits claimants in court. Rather, § 406(b) calls for court review
of such arrangements as an independent check, to assure that they yield reasonable results in
particular cases.” Gisbrecht, 535 U.S. at 807 (footnote omitted).
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The Sixth Circuit has explained that a court should use the 25% cap as a benchmark for
evaluating the reasonableness of attorney fees, although a 25% attorney fee award is not per se
reasonable. Rodriquez v. Bowen, 865 F.2d 739, 746 (6th Cir. 1989) (en banc). Courts must look
to the executed fee agreement and give deference to the expression of the parties’ intentions. Id.
There is a “rebuttable presumption that an attorney would receive the full 25% contingency fee
under contract unless 1) the attorney engaged in improper conduct or was ineffective, or 2) the
attorney would enjoy an undeserved windfall due to the client’s large back pay award or the
attorney’s relatively minimal effort.” Hayes v. Sec’y of Health & Hum. Servs., 923 F.2d 418,
419 (6th Cir. 1990) (citing Rodriquez, 865 F.2d at 746); see also Gisbrecht, 535 U.S. at 792
(noting contingent-fee agreements are presumptively reasonable).
There are no indications of improper conduct or substandard performance by Marcus.
Indeed, Defendant acknowledges that Marcus achieved an excellent result, especially in light of
the lifetime benefits Plaintiff is likely to receive. Resp. at 7. Defendant’s concern centers on the
potential for an undeserved windfall to Marcus due to the size of Plaintiff’s award of past-due
benefits. Defendant notes that if Marcus receives the full 25% of the withheld funds, the
effective hourly rate would be $1,196.69, which Defendant argues is excessive. Resp. at 3.
Defendant argues that a reasonable fee award in this matter would be no more than $20,987.28,
which would be an effective hourly rate of $679.20. Resp. at 3-8. Defendant arrived at this
figure by doubling the reasonable hourly rate in the relevant market and adding 20% for the
excellent results achieved and the level of representation in this appeal. Id. at 5-7 (citing Staple
v. Comm’r of Soc. Sec., No. 16-CV-12648, 2019 WL 4891476, at *3-5 (E.D. Mich. Sept. 9,
2019)). In the reply brief, Marcus revised the attorney fee request to $26,977.87, Reply at 1,
which would yield an effective hourly rate of $873.

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There is no set formula to evaluate whether an attorney would enjoy an undeserved
windfall. The Sixth Circuit has suggested some considerations to guide the analysis of whether a
fee is reasonable:
[A]rguments may include, without limitation, a consideration of what proportion
of the hours worked constituted attorney time as opposed to clerical or paralegal
time and the degree of difficulty of the case. Factors such as these should inform
the district court’s determination of whether the attorney would enjoy a windfall
because of minimal effort expended.
Hayes, 923 F.2d at 422 (quotations and citations omitted). Although the Sixth Circuit has not set
forth a strict formula of what constitutes a windfall, it has provided a rule for what is not a
windfall:
[A] windfall can never occur when, in a case where a contingent fee contract
exists, the hypothetical hourly rate determined by dividing the number of hours
worked for the claimant into the amount of the fee permitted under the contract is
less than twice the standard rate for such work in the relevant market. We believe
that a multiplier of 2 is appropriate as a floor in light of indications that social
security attorneys are successful in approximately 50% of the cases they file in
the courts. Without a multiplier, a strict hourly rate limitation would insure that
social security attorneys would not, averaged over many cases, be compensated
adequately.
Id.
On remand, the ALJ awarded Plaintiff $147,911.48 in past-due Social Security benefits,
of which $36,977.87 (25% of the total award) was withheld pending Marcus’s request for
attorney fees. See Notice of Award, Ex. A to Pet. (Dkt. 22-1). Marcus and her colleagues spent
30.9 hours of work on this matter. Pet. at 14-15. Marcus’s efforts constituted the majority of
those hours at 22.65. The remaining hours were split between legal support staff and other
attorneys. The legal issues in this appeal were not particularly complex. Nonetheless, Marcus’s
motion for summary judgement is a cut above the standard motion filed in this Court. It is both
well written and well supported by appropriate legal authority. Indeed, her brief persuaded

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Defendant to stipulate to remand this matter, thereby saving Defendant from filing a response
brief and this Court from ruling on the matter.
The fee award should be greater than Defendant recommends, due to the excellent
representation and results in this matter, but it should be less than Marcus seeks, because the
issues were not particularly complex. The Court finds that an award of $23,175 is reasonable,
which equates to an effective hourly rate of $750.1 This fee will not result in an undeserved
windfall, nor will the fee “unduly erode” Plaintiff’s past-due benefit award. Royzer v. Sec’y of
Health & Hum. Servs., 900 F.2d 981, 982 (6th Cir. 1990).
III.

CONCLUSION

Marcus’s petition for attorney fees (Dkt. 22) is granted in part. The Commissioner of
Social Security is directed to pay Plaintiff’s attorney $23,175 out of the $36,468.50 withheld and
release the remaining funds to Plaintiff. Plaintiff’s attorney must refund the $5,282.77 EAJA
award to Plaintiff.
SO ORDERED.
Dated: July 22, 2020
Detroit, Michigan

s/Mark A. Goldsmith
MARK A. GOLDSMITH
United States District Judge

1

The Court notes that this rate is not more than twice the standard rate in the Michigan market
for any attorney with Marcus’s experience. See Hayes, 923 F.2d at 422 (“[A] windfall can never
occur when . . . the hypothetical hourly rate . . . is less than twice the standard rate for such work
in the relevant market.”). The State Bar of Michigan’s 2017 Desktop Reference on the
Economics of Law Practice in Michigan reports that private practitioners with six to ten years of
experience, such as Marcus, have hourly billing rates ranging from $225 (median) to $380 (95th
Percentile). See https://www.michbar.org/opinions/content (last visited on July 21, 2020).
Additionally, the Michigan Desktop Reference reports that public benefits attorneys receive
effective hourly billing rates ranging from $308 (median) to $880 (95th Percentile). Given
Marcus’s experience and the quality and effectiveness of her representation, the effective hourly
rate in this case of $750 is reasonably set at the upper end of these ranges.
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