Salazar v. Commissioner of Social Security
Filing
22
OPINION AND ORDER granting in part 18 Motion for Attorney Fees; granting 21 Motion for Leave to File Reply/Supplemental Brief. Signed by District Judge Judith E. Levy. (WBar)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
Robert Salazar,
Plaintiff,
v.
Commissioner of Social Security,
Case No. 18-10628
Judith E. Levy
United States District Judge
Defendant.
________________________________/
OPINION AND ORDER GRANTING PLAINTIFF’S COUNSEL’S
MOTION TO FILE A REPLY/SUPPLEMENTAL BRIEF [21] AND
GRANTING IN PART PLAINTIFF’S COUNSEL’S
MOTION FOR ATTORNEY FEES [18]
Before the Court is Plaintiff’s counsel’s motion for attorney fees
pursuant to 42 U.S.C. § 406(b) (ECF No. 18) and motion to file a
reply/supplemental brief. (ECF No. 21.) For the reasons set forth below,
the motion to file a reply brief is granted and the motion for attorney fees
is granted in part.1
The Court apologizes to Plaintiff and Plaintiff’s counsel for the delay in
resolving these motions.
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I.
Background
On March 11, 2015, Plaintiff Robert Salazar filed an application for
Social Security disability insurance benefits, alleging a disability
beginning on March 9, 2015. (See ECF No. 6-2, PageID.45.) Plaintiff’s
claim was initially denied on August 10, 2015. (Id.) On or about
September 21, 2015, Plaintiff retained MacDonald & MacDonald, PLLC
to represent him with respect to his disability claim. (ECF No. 18-5,
PageID.848.) On October 6, 2015, Plaintiff filed a written request for a
hearing. (ECF No. 6-2, PageID.45.) On May 23, 2017, a hearing was held
before an administrative law judge (“ALJ”). (Id.) On August 31, 2017, the
ALJ denied Plaintiff’s claim for disability benefits. (See id. at PageID.42–
54.) Plaintiff filed a request for review of the ALJ’s decision with the
Appeals Council. (ECF No. 6-4, PageID.192, 194). The Appeals Council
denied review on February 12, 2018. (ECF No. 6-2, PageID.24–28.)
On February 22, 2018, Plaintiff filed this Social Security appeal.
(ECF No. 1.) On July 26, 2018, Plaintiff moved for summary judgment,
asserting that the ALJ made several legal errors in denying Plaintiff’s
claim. (ECF No. 12.) On October 7, 2018, the Court entered a stipulated
order remanding the case to the Commissioner for further proceedings
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under sentence four of 42 U.S.C. § 405(g). (ECF No. 16, PageID.833.)
Plaintiff did not file a motion for attorney fees under the Equal Access to
Justice Act (“EAJA”), 28 U.S.C. § 2412, “within 30 days of final judgment
in the action.” See E.D. Mich. LR 54.2(a).
On remand, the Social Security Administration found that Plaintiff
was disabled as of December 7, 2017. (ECF No. 18-8, PageID.857–858.)
In a notice of award dated March 1, 2020, the Social Security
Administration informed Plaintiff that it was withholding 25% of his
past-due benefits for representative fees in the amount of $8,163.50. (Id.)
On March 12, 2020, Plaintiff’s counsel, Robert J. MacDonald of
MacDonald & MacDonald, PLLC, filed the present motion for an award
of attorney fees pursuant to § 406(b). (ECF No. 18.) The Commissioner
filed a response opposing an award under § 406(b). (ECF No. 20.) On
September 21, 2020, the ALJ authorized MacDonald to collect a fee in the
amount of $6,000.00 for proceedings before the Social Security
Administration. (ECF No. 21-2.) On October 28, 2020, MacDonald filed a
motion for leave to file a reply/supplemental brief (ECF No. 21) and
enclosed his proposed reply/supplemental brief. (ECF No. 21-1.)
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II.
Legal Standard
“Whenever a court renders a judgment favorable to a claimant . . .
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.” 42 U.S.C. § 406(b)(1)(A). The district court may
“determine . . . a reasonable fee for such representation,” however an
award may not be “in excess of 25 percent of the total of the past-due
benefits to which the claimant is entitled.” Id. While contingency fee
agreements are permissible under the statute, the court must conduct a
“review of such arrangements as an independent check, to assure that
they yield reasonable results in particular cases.” Lasley v. Comm’r of
Soc. Sec., 771 F.3d 308, 309 (6th Cir. 2014) (quoting Gisbrecht v.
Barnhart, 535 U.S. 789, 807 (2002)). “‘Within the 25 percent boundary,’
prevailing counsel bears the burden of ‘show[ing] that the fee sought is
reasonable for the services rendered.’” Id. (alteration in original).
III. Analysis
MacDonald’s substantive motion seeks $2,163.50 in attorney fees
under § 406(b) in addition to the $6,000.00 he was awarded for
proceedings before the Social Security Administration. (ECF No. 18,
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PageID.836; see ECF No. 21-2, PageID.879–880.) The Commissioner
opposes this request on two grounds: “first, there is no valid contingency
fee agreement between plaintiff and counsel for payment of § 406(b) fees,
and second, counsel did not seek EAJA fees in this case, which could
reduce any possible fees due to him under § 406(b).” (ECF No. 20,
PageID.864 (emphasis omitted).) As set forth below, the Court concludes
there is a valid contingency fee agreement but will reduce MacDonald’s
§ 406(b) fee award based on his failure to request attorney fees under
EAJA.
A.
The Contingency Fee Agreement
The Commissioner first asserts that MacDonald does not have a
valid contingency agreement with Plaintiff regarding fees under § 406(b).
(ECF No. 20, PageID.264.) The Court does not agree.
The fee agreement between MacDonald’s firm and Plaintiff states,
in relevant part:
I hereby retain MACDONALD & MACDONALD, PLLC,
as my attorneys to represent me and my dependents in my
claim for Social Security Disability Insurance Benefits. I give
my attorneys full authority to act on my behalf in all matters
concerning my claim for Social Security Disability Insurance
Benefits, including the right to gather medical and other
evidence, enter into agreements, appear on my behalf at the
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Administrative Hearing, and do any other act which in their
discretion they consider appropriate.
In consideration for their representation, I agree to pay
my attorneys 25% of any past due benefits owed to me and my
dependents by the Social Security Administration. I further
understand that such a fee shall not exceed $6,000.00 or the
applicable maximum amount set by the Commissioner
pursuant to 42 U.S.C. 406(a) if the Social Security
Administration renders a favorable decision at or before the
first administrative hearing. I understand that this fee is
contingent upon an award of benefits by the Social Security
Administration and that if no benefits are awarded me and
my dependents, no fee will be due to my attorneys.
I understand that the Social Security Administration
will withhold the sum of 25% of any past due benefits owed to
me and my dependents for payment of my attorney’s fee and
will pay this sum directly to my attorneys. If for any reason,
the amount of my attorney’s fee is not withheld by the Social
Security Administration, I understand that it is my obligation
to pay such a fee directly to my attorneys. I also understand
that the Social Security Administration has the authority to
review any request for an attorney’s fee submitted by my
attorneys and has the ultimate authority to specify the
amount of fee allowable.
(ECF No. 18-5, PageID.848.)
The Commissioner is correct that the agreement cites only to
§ 406(a) and does not cite to § 406(b). (See id.; ECF No. 20, PageID.865.)
Additionally, the agreement provides that “the Social Security
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Administration has the authority to review any request for an attorney’s
fee submitted by my attorneys and has the ultimate authority to specify
the amount of fee allowable,” suggesting that the agreement does not
contemplate an award by a district court under § 406(b). (ECF No. 18-5,
PageID.848 (emphasis added).) Nevertheless, the agreement also states:
“I give my attorneys full authority to act on my behalf in all matters
concerning my claim for Social Security Disability Insurance Benefits,
including the right to . . . do any other act which in their discretion they
consider appropriate.” (Id. (emphasis added).) Moreover, MacDonald is
correct that the agreement contemplates a fee equal to “25% of any past
due benefits” and that the $6,000.00 maximum applies only “if the Social
Security Administration renders a favorable decision at or before the first
administrative hearing.” (Id. (emphasis added); see ECF No. 21-1,
PageID.874.)
The Court concludes that MacDonald’s firm and Plaintiff entered
into a valid contingency fee agreement and that the agreement is
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sufficiently broad to allow a fee award under § 406(b) if the total attorney
fees awarded do not exceed 25% of Plaintiff’s past due benefits.2
B.
Counsel’s Failure to Seek EAJA Fees
The Commissioner also asserts that the Court should reduce any
award under § 406(b) because MacDonald failed to seek EAJA fees. (ECF
No. 20, PageID.866.) The Court agrees.
Under EAJA, “a court shall award to a prevailing party other than
the United States fees and other expenses . . . incurred by that party in
any civil action . . . brought by or against the United States . . . unless the
court finds that the position of the United States was substantially
justified.” 28 U.S.C. § 2412(d)(1)(A). “[W]hile fees awarded under 42
In a footnote, the Commissioner also argues that Plaintiff’s affidavit cannot
create an enforceable contingency fee agreement, citing Thomas v. Astrue, 359 F.
App’x 968, 973 (11th Cir. 2010). (See ECF No. 20, PageID.865 n.1.) In Thomas, the
Eleventh Circuit found that the plaintiff’s contingency fee agreement was
unenforceable under Georgia law because when the plaintiff “signed the agreement
[her attorney] had already completed his representation of her in district court, and
her case had been remanded to the Commissioner” and the agreement therefore
lacked consideration. 359 F. App’x at 973. Additionally, the court found that “[t]here
was no contingency because the outcome already was known.” Id. (citation omitted).
Thomas is readily distinguishable from the present case. Here, Plaintiff signed the
fee agreement more than two years prior to MacDonald initiating Plaintiff’s appeal
in this Court. (See ECF Nos. 1, 18-5.) Moreover, Plaintiff’s subsequent affidavit
merely confirms that he “agreed to pay [MacDonald’s firm] 25% of [his] past due
benefits” (ECF No. 18-4) and does not undermine the validity of his fee agreement
with MacDonald’s firm.
2
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U.S.C. § 406(b) are deducted from a claimant’s award of past-due Social
Security benefits, the United States must pay fees awarded under the
EAJA out of government funds.” Minor v. Comm’r of Soc. Sec., 826 F.3d
878, 881 (6th Cir. 2016) (citing Gisbrecht, 535 U.S. at 795–96). “In other
words, Social Security claimants pay section 406(b) fees out of their
benefits—benefit payments that would otherwise go into their own
pockets—whereas the government must pay EAJA fees independent of
the benefits award.” Id. Additionally, an award under EAJA offsets any
award under § 406(b), permitting the claimant to recover an additional
portion of their past-due benefits. Id. (citing Gisbrecht, 535 U.S. at 796).
Courts in this District have repeatedly held that requests for the
full amount of attorney fees under § 406(b) are unreasonable where
counsel did not timely apply for EAJA fees. See, e.g., Pasiak v. Comm’r of
Soc. Sec., No. 17-11401, 2021 WL 3087984, at *6–7 (E.D. Mich. July 22,
2021) (Lawson, J.); Miller v. Comm’r of Soc. Sec., No. 17-12699, 2019 WL
13215555, at *2–3 (E.D. Mich. Dec. 9, 2019) (Drain, J.); Austin v. Comm’r
of Soc. Sec., No. 16-CV-14027, 2018 WL 4787656, at *2–3 (E.D. Mich. Oct.
4, 2018) (Friedman, J.). In calculating a reasonable award, these courts
have reduced the requested award by the amount counsel could have
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obtained under EAJA. See, e.g., Pasiak, 2021 WL 3087984, at *7
(reducing fee award by $8,965.25); Miller, 2019 WL 13215555, at *3
(subtracting $3,875.00 in “fees counsel would have received under the
EAJA”); Austin, 2018 WL 4787656, at *3 (deducting $7,156.25 for
unrequested EAJA fees); Estep v. Comm’r of Soc. Sec., No. 15-10381, 2018
WL 3119076, at *2 (E.D. Mich. Mar. 22, 2018) (Patti, Mag. J.)
(recommending a reduction of $3,550.00), report and recommendation
adopted, 2018 WL 3109585 (E.D. Mich. June 25, 2018) (Berg, J.).
Here, MacDonald did not make a request for EAJA fees. As the
Commissioner correctly notes (see ECF No. 20, PageID.867 n.2),
MacDonald’s 14.5 claimed hours for his representation of Plaintiff in
federal court would have resulted in an EAJA award of $1,812.50 at the
statutory rate of $125.00 per hour. See 28 U.S.C. § 2412(d)(2)(A). (See also
ECF No. 18-3, PageID.845.) The Court also finds that attorney fees under
EAJA would have been warranted in this case given the government’s
stipulation to remand following Plaintiff’s motion for summary judgment.
(See ECF No. 16.) See also 28 U.S.C. § 2412(d)(1)(A). As such the Court
concludes that a full award under § 406(b) would be unreasonable and
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reduces the award by the amount of EAJA fees counsel could have
requested.
MacDonald’s arguments opposing a reduction are unsuccessful. He
asserts that requiring attorneys to file a motion under EAJA to obtain
their full fee under § 406(b) imposes “additional laborious steps” that
would “further reduce access to representation” in federal court. (See ECF
No. 21-1, PageID.876–877.) However, MacDonald fails to explain why a
routine motion for attorney fees under EAJA is burdensome or time
consuming. Further, “it is routine practice in this district” for the
government to stipulate to EAJA fees where the court remands the case
for further proceedings. See Austin, 2018 WL 4787656, at *2; cf. Stoica v.
Saul, No. 19-13218, 2023 WL 2301999, at *1 (E.D. Mich. Mar. 1, 2023)
(Levy, J.) (noting that, following a stipulated remand, the court entered
“a stipulated order for an award of attorney fees under” EAJA “in the
amount of $4,375.00”).
MacDonald further contends that nothing in Eastern District of
Michigan’s Local Rule 54.2(a)3 “mandates or even suggests that motions
Local Rule 54.2(a) provides deadlines for filing Social Security fee motions
under § 406(b) and EAJA. See E.D. Mich. LR 54.2(a).
3
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for attorney fees under EAJA must be filed as a prerequisite before
seeking fees under 42 USC [§] 406(b).” (ECF No. 21-1, PageID.877.)
While that may be true, it does not alter the Court’s conclusion that
MacDonald’s requested § 406(b) award is unreasonable under the
circumstances here. Plaintiff should not be penalized $1,812.50 because
MacDonald judged it was not worth his time to pursue EAJA fees in this
case. Austin, 2018 WL 4787656, at *3 (“Plaintiff’s counsel did his client a
great disservice by not requesting fees under the EAJA.”).
Accordingly, the Court grants MacDonald’s motion for attorney fees
in part. The requested award of $2,163.50 is reduced by $1,812.50, which
results in an award of $351.00.
IV.
Conclusion
For the reasons set forth above, Plaintiff’s counsel’s motion to file a
reply/supplemental brief (ECF No. 21) is GRANTED, and Plaintiff’s
counsel’s motion for attorney fees pursuant to 42 U.S.C. § 406(b) (ECF
No. 18) is GRANTED IN PART in the amount of $351.00.
The Commissioner of Social Security is DIRECTED to disburse
$351.00 from the representative fees withheld from Plaintiff Robert
Salazar’s past-due benefits to Plaintiff’s counsel, Robert J. MacDonald of
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MacDonald & MacDonald, PLLC, upon presentation of this Opinion and
Order.
The Commissioner of Social Security is further DIRECTED to
disburse any remaining retained funds to Plaintiff Robert Salazar.
IT IS SO ORDERED.
Dated: December 15, 2023
Ann Arbor, Michigan
s/Judith E. Levy
JUDITH E. LEVY
United States District Judge
CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was served
upon counsel of record and any unrepresented parties via the Court’s
ECF System to their respective email or first-class U.S. mail addresses
disclosed on the Notice of Electronic Filing on December 15, 2023.
s/William Barkholz
WILLIAM BARKHOLZ
Case Manager
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