Callahan v. Berryhill
Filing
20
DECISION AND ORDER granting 16 Motion for Attorney Fees in its entirety consistent with this Decision and Order. Signed by Hon. Michael A. Telesca on 5/21/19. (JMC)-CLERK TO FOLLOW UP-
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
CRYSTAL CALLAHAN,
Plaintiff,
-vs-
No. 6:17-cv-06245-MAT
DECISION AND ORDER
NANCY A. BERRYHILL, Acting
Commissioner of Social Security,
Defendant.
I.
Introduction
Represented
by
counsel,
Crystal
Callahan
(“Plaintiff”),
commenced this action pursuant to Title II of the Social Security
Act (“the Act”), seeking review of the final decision of the Acting
Commissioner
of
Social
Security
(“the
Commissioner”
or
“Defendant”), denying her application for disability insurance
benefits (“DIB”). Before the Court is Plaintiff’s Motion for
Attorney’s Fees pursuant to 42 U.S.C. § 406(b) (“Section 406(b)”).
II.
Procedural History
On April 11, 2012, Plaintiff filed a Title II application for
a period of disability and disability insurance benefits, alleging
disability
beginning
October
25,
2010.
The
claim
was
denied
initially on August 23, 2012. After an administrative hearing, an
administrative law judge (“ALJ”) issued an unfavorable decision on
August
23,
2013.
After
the
Appeals
Council
declined
review,
Plaintiff filed an action in this Court. On September 29, 2015, the
undersigned remanded the claim to the Commissioner for further
proceedings pursuant to the fourth sentence of section 205(g) of
the Act.
A second administrative hearing was held on June 15, 2016. On
February 16, 2017, a new ALJ issued a second unfavorable decision.
Following the Appeals Council’s denial of review, Plaintiff timely
commenced this action.
On April 4, 2018, the undersigned issued
a Decision and Order finding that the Commissioner’s decision
contained
errors
evidence.
Because
of
law
the
and
record
was
unsupported
conclusively
by
substantial
demonstrated
that
Plaintiff’s mental impairments, standing alone, are disabling, the
undersigned
reversed
the
Commissioner’s
decision
and
remanded
solely for the calculation and payment of benefits. See Docket
No. 12.
Plaintiff filed an application for attorney’s fees under the
Equal Access to Justice Act, 28 U.S.C. § 2412(d) (“EAJA”). By
stipulation and order dated May 18, 2018, this Court awarded
Plaintiff’s attorney $4,500.00 in fees and $400 in costs under the
EAJA. See Docket No. 14.
In the subsequent months, the Social Security Administration
(“SSA”) sent Plaintiff three Notices of Awards (“NOAs”) regarding
the benefit amounts that would be paid to her and her auxiliaries
(her two children). See Plaintiff’s Motion for Attorney’s Fees
(“Pl.’s Mot.”) (Docket No. 16), Exhibits (“Exhs.”) C, D, and E
(Docket No. 16-2).
While those NOAs should have informed her of
the amount of past due benefits and the amounts that were withheld
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from
past
due
benefits
to
pay
her
attorney,
they
contained
incomplete information, as the Commissioner concedes. See Pl.’s
Mot., Exhs. C, D, and E; Letter dated 02/05/2019 from Commissioner
to the Court (Docket No. 18) at 2.
First, the NOA dated July 23, 2018, informed Plaintiff that
$21,486.00,
which
reflected
25
percent
of
her
own
past
due
benefits, was withheld for payment of attorney fees. However, the
NOA did not state that the past due benefits were $85,944.00. See
Pl.’s Mot., Exh. C. Second, an NOA dated October 15, 2018, informed
Plaintiff that $3,000.00 was withheld from past due benefits
totaling $20,084.00 owed to Plaintiff’s daughter, C.L.C. This NOA
did not, however, explain why less than 25 percent of the past due
benefits was withheld and, in any event, included an incorrect past
due benefits amount. See Pl.’s Mot., Exh. D. Third, another October
15, 2018 NOA indicated that $3,000.00 also was withheld from the
past due benefits owed to Plaintiff’s son, P.C., although the
amount of past due benefits was listed as $0.00. See Pl.’s Mot.,
Exh. E.
Because the NOAs were insufficient to convey accurately the
amount
of
past
due
benefits
owed
to
Plaintiff
and
her
and
auxiliaries, the parties obtained updated information from the
SSA’s
Center
attorney
and
for
Disability
counsel
for
and
the
Program
Support.
Commissioner
stipulated (Docket No. 18-1) to those amounts:
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have
Plaintiff’s
separately
Name
Type
Past Due
Benefits
Amount
Withheld
Crystal
Callahan
Claimant
$85,944.00
$21,486.00
$21,486.00
C.L.C.
Auxiliary
$18,692.00
$3,000.00
$4,673.00
P.C.
Auxiliary
$18,692.00
$4,673.00
$4,673.00
$123,328.00
$29,159.00
$30,8932.00
TOTAL
25% Cap
On January 4, 2019, Plaintiff’s attorney (“Counsel”) filed a
motion (Docket No. 16) pursuant to 42 U.S.C. § 406(b) (“Section
406(b)”) for attorney’s fees. On January 30, 2019, Counsel filed a
Supplemental
Affidavit
(“Pl.’s
Suppl.
Aff.”)
(Docket
No.
17)
seeking fees in the amount of $24,832.00. Counsel explains that
this sum represents 25 percent of the past due benefit amount owed
to Plaintiff ($123,328.00), or $30,932.00 minus the $6,000.00 he
has received in fees for work performed at the administrative level
under 42 U.S.C. § 406(a). Counsel requests this amount for the
58.45 hours of work performed before this Court in the two cases
stemming from the same Title II application, Callahan v. Colvin,
No. 6:14-cv-6553-MAT, which resulted in a remand for further
proceedings, and Callahan v. Berryhill, No. 6:17-cv-6245-MAT, which
resulted in a remand for calculation and payment of benefits.
The Commissioner filed a response (Docket No. 18) indicating
that she has no objections to Plaintiff’s request for attorney’s
fees pursuant to Section 406(b) but requests that the Court conduct
an independent reasonableness review, as required by law. The
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Commissioner also does not object to the Section 406(b) Motion as
being untimely.
For
the
reasons
discussed
below,
the
Court
finds
that
Plaintiff’s Section 406(b) Motion was timely filed and that it
should be granted.
III. Applicable Legal Principles
Section 406(b) provides in relevant part that “[w]henever 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, 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.” 42 U.S.C. § 406(b)(1)(A).
“Within the 25 percent boundary” set by Section 406(b), “the
attorney for the successful claimant must show that the fee sought
is reasonable for the services rendered.” Gisbrecht v. Barnhart,
535 U.S. 789, 807 (2002) (citation omitted). Section 406(b) also
“calls for court review of [contingent fee] arrangements as an
independent check, to assure that they yield reasonable results in
particular
cases.”
Id.
(footnotes
omitted).
Thus,
it
is
the
district court’s responsibility to determine whether the requested
fees are unreasonable, as required by Social Security Act and
Gisbrecht, supra.
After ascertaining that a given contingent fee agreement is
within the 25 percent statutory boundary, courts have considered
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the following factors in determining whether the resulting fee is
reasonable: 1) whether the requested fee is out of line with the
“character of the representation and the results the representation
achieved;”
2)
whether
the
attorney
unreasonably
delayed
the
proceedings in an attempt to increase the accumulation of benefits
and thereby increase his own fee; and 3) whether “the benefits
awarded are large in comparison to the amount of time counsel spent
on the case,” the so-called “windfall” factor. Joslyn v. Barnhart,
389 F. Supp.2d 454, 456 (W.D.N.Y. 2005) (quoting Gisbrecht, 535
U.S. at 808).
IV.
Discussion
A.
Reasonableness of the Fee Requested
As an initial matter, the Court notes that Counsel’s request
of $24,832.00 represents 25 percent of the past due benefit amount
owed to Plaintiff ($123,328.00), or $30,932.00 minus the $6,000.00
Counsel
has
received
in
fees
for
work
performed
at
the
administrative level under 42 U.S.C. § 406(a). The requested amount
therefore does not exceed the statutory cap. It furthermore is
permissible under the fee agreement between Plaintiff and Counsel,
which,
consistent
with
the
statutory
cap,
allows
for
up
to
25 percent of any past due benefits awarded.
With regard to the first Gisbrecht factor, the Court finds
that the requested fee is in line with the “character of the
representation and the results the representation achieved.” Here,
Counsel’s
effective
briefing
secured
-6-
a
remand
for
further
administrative proceedings and, ultimately, a reversal and remand
for calculation and payment of benefits. This factor accordingly
weighs in favor of finding reasonableness.
Turning to the second factor, Counsel did not engage in
dilatory
litigation
tactics
or
otherwise
cause
delay
in
the
proceedings that might have inflated past due benefits and thus the
potential fee award. The second factor also weighs in favor of
finding reasonableness.
With regard to whether the fee award constitutes a “windfall,”
the Supreme Court has not provided clear guidance on assessing this
factor but has suggested that conducting what is essentially a
lodestar analysis may be helpful. See Gisbrecht, 535 U.S. at 808
(suggesting that the hours spent by counsel representing the
claimant
and
counsel’s
“normal
hourly
billing
charge
for
noncontingent-fee cases” may aid “the court’s assessment of the
reasonableness of the fee yielded by the fee agreement”). Dividing
the Section 406(b)(1) fee requested ($24,832.00) by the total hours
expended by Counsel (58.45 hours) yields an effective hourly rate
of $424.84. The Commissioner submits that this request does not
represent a windfall. See Docket No. 18 at 2 (citing Gisbrecht, 535
U.S. at 808; other citation omitted).
A survey of the case law
from this Circuit confirms that such an hourly rate is clearly
reasonable. See, e.g., Heffernan v. Astrue, 87 F. Supp.3d 351,
356-57 (E.D.N.Y. 2015) (discussing cases in Second Circuit and
reducing, as unreasonable, a requested Section 406(b) fee of
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$15,100.00 for 15.1 hours ($1,000.00 per hour) to $5,285 ($350.00
per hour)).
The Court further observes that a contingent fee outside of
the Social Security context typically represents the past and
future value of the case. Here, however, the statute provides that
attorney’s
fees
are
based
solely
on
past
due
benefits.
See
42 U.S.C. § 406(b)(1). The value of this case to Plaintiff and her
auxiliaries
is
greater
than
the
amount
of past
due
benefits
received. In addition, the value of health care benefits attendant
to Title II benefits is not included in the computation of the fee
under Section 406(b)(1). Counsel, on the other hand, assumed a
substantial
risk
of
loss
in
taking
this
case,
given
that
Plaintiff’s claim had been denied at multiple levels of agency
review before the initiation of this civil action. In this regard,
the Court considers the deference owed to lawful attorney-client
fee agreements, Gisbrecht, 535 U.S. at 793, and the interest in
assuring that attorneys continue to represent clients such as
Plaintiff, id. at 805.
Consideration of all of the Gisbrecht factors warrant a
finding that the requested fee is reasonable, and the Commissioner
does not disagree. In addition, Counsel has stated that he will
refund the amount of the EAJA fees awarded to Plaintiff in her two
cases before this Court (i.e., $10,500.00) should the Section
406(b) application be approved. See Gisbrecht, 535 U.S. at 796
(“Fee awards may be made under both prescriptions [in the EAJA and
-8-
Section 406(b)], but the claimant’s attorney must ‘refun[d] to the
claimant the amount of the smaller fee.’”) (quoting Act of Aug. 5,
1985, Pub. L. 99–80, § 3, 99 Stat. 186; second alteration in
original).
B.
Timeliness of the Section 406(b) Motion
The law within the Second Circuit is unsettled regarding the
deadline to file a Section 406(b) motion. The Act does not require
a fee application to be filed within any specific time limit,
“making
the
timeliness
question
somewhat
more
complicated.”
Geertgens v. Colvin, No. 13 CIV. 5133(JCF), 2016 WL 1070845, at *2
(S.D.N.Y. Mar. 15, 2016). The Second Circuit has not squarely
addressed the question of what standard should govern the question
of whether a Section 406(b) application is timely filed. Courts in
this District, up until recently, had consistently applied a
reasonableness standard. See, e.g., Jenis v. Colvin, 12-CV-0600A,
2016 WL 624623, at *1 n. 1 (W.D.N.Y. Oct. 26, 2016) (Section 406(b)
application filed four months after notice of award was filed
within a reasonable time and was timely); see also Buckingham v.
Astrue, 07-cv-159-JTC, 2010 WL 4174773, at *1 (W.D.N.Y. Oct. 25,
2010) (granting Section 406(b) application filed 98 days after
notice of award received, without consideration of timeliness); but
see Sinkler v. Berryhill, 305 F. Supp.3d 448, 452 (W.D.N.Y. 2018),
appeal docketed, 18-2044 (2d Cir. July 11, 2018). However, the
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Western District of New York Proposed Local Rule 5.5(g)(1)1 rejects
the 14-day standard and suggests a window of 65 days for filing
Section 406(b) applications.
Here, Counsel has explained that he had waited to file because
the originally issued NOAs provided inaccurate and incomplete
information and thus were an inadequate basis for a fee request.
The Commissioner states that she finds the explanation reasonable,
particularly
given
her
need
to
contact
the SSA’s
Center
for
Disability and Program Support in order to obtain the complete and
correct
benefit
and
withholding
amounts.
Therefore,
the
Commissioner recommends that this Court deem the motion to be
timely filed.
The
Court
agrees
with the
Commissioner’s
recommendation.
Counsel filed his initial Section 406(b) motion on January 4, 2019,
less than 3 months after the last NOA was issued on October 15,
2018. He then filed his Supplemental Affidavit clarifying the
amounts requested on January 30, 2019, 5 days after the parties
signed the stipulation (Docket No. 18-1) agreeing to the correct
amounts of past due benefits. Given the uncertain status of the law
and the extenuating circumstances detailed above, the Court finds
that Counsel filed his Section 406(b) motion within a reasonable
period of time.
1
Available at
http://www.nywd.uscourts.gov/news/notice-proposed-federal-court-local-rules-am
endments (last accessed May 21, 2019).
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V. Conclusion
For the reasons set forth above, the Court grants the Section
406(b)(1)
Motion (Docket
No.
16)
in its
entirety
and
awards
Plaintiff attorney’s fees in the amount of $24,832.00. The Court
directs the Commissioner to release the funds withheld from the
benefits awards. Upon receipt of the Section 406(b) fee, Counsel is
directed to remit payment of $10,500.00, representing the EAJA fees
received in Plaintiff’s two cases before this Court, to Plaintiff.
SO ORDERED.
S/Michael A. Telesca
HONORABLE MICHAEL A. TELESCA
United States District Judge
DATED:
May 21, 2019
Rochester, New York
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