Zhang v. Berryhill
Filing
26
DECISION AND ORDER granting 21 Motion for Attorney Fees consistent with this Decision and Order. Signed by Hon. Michael A. Telesca on 5/29/19. (JMC)-CLERK TO FOLLOW UP-
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
SUWEN ZHANG,
Plaintiff,
-vs-
No. 6:17-cv-06492-MAT
DECISION AND ORDER
NANCY A. BERRYHILL, Acting
Commissioner of Social Security,
Defendant.
I.
Introduction
Represented by counsel, Suwen Zhang (“Plaintiff”), commenced
this action pursuant to Title II of the Social Security Act (“the
Act”),
seeking
Commissioner
review
of
of
Social
the
final
Security
decision
(“the
of
the
Acting
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 September 27, 2013, Plaintiff filed a Title II application
for a period of disability and disability insurance benefits,
alleging disability beginning April 1, 2013. The claim was denied
initially and, after an administrative hearing, an administrative
law judge (“ALJ”) issued an unfavorable decision on April 6, 2016.
The Appeals Council decline review of the ALJ’s decision and
Plaintiff filed an action in this Court. On June 22, 2018, the
undersigned issued a Decision and Order (Docket No. 16) reversing
the decision denying benefits and remanding Plaintiff’s claim to
the Commissioner for calculation and payment of benefits.
In an award notice dated July 25, 2018, the Social Security
Administration (“SSA”) advised Plaintiff that it was awarding her
past due disability benefits beginning September 2012, and that it
was
sending
her
a
check
in
the
amount
of
$26,243.50,
which
represents “the money [she] [is] due through June 2018.” Notice of
Award, Docket No. 23-1, pp. 7 of 10. The SSA also stated that it
“withheld $8,773.50 from [her] past due benefits in case [it]
need[s] to pay [her] representative.” Id., p. 8 of 10. Thus, the
amount of the past due benefits award apparently was $35,017.00
($26,243.50 + $8,773.50).
By Stipulation and Order (Docket No. 20) dated September 10,
2018, this Court awarded Counsel $5,295.80 in fees and $400 in
costs under the Equal Access to Justice Act (“EAJA”), 28 U.S.C.
§ 2412.
On February 27, 2019, Counsel filed a motion (Docket No. 21)
pursuant to 42 U.S.C. § 406(b) (“Section 406(b)”) for attorney’s
fees,
along
with
a
Memorandum
of
Law
(Docket
No.
22)
and
Affirmation in Support (Docket No. 23). Counsel seeks fees in the
amount of $8,773.50.
On March 15, 2019, the Commissioner filed a response (Docket
No. 24) indicating that she has no objections to Plaintiff’s
request for attorney’s fees pursuant to Section 406(b) but requests
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that the Court conduct an independent reasonableness review, as
required by law. The 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. However, the amount awarded must be reduced to
$8,754.25, which represents 25 percent of the total past due
benefits paid to Plaintiff.
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
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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
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 the SSA’s Notice of
Award states that Plaintiff’s next check would be in the amount
$26.243.50, representing benefits through June 2018. The SSA also
stated that it “usually withheld 25%” to pay any representative’s
fee,
and
that
representative.
it
withheld
$8,773.50
to
pay
Plaintiff’s
Thus, it appears that her total past due benefits
amount was $35,017.00. Contrary to Plaintiff’s and Defendant’s
assertions, twenty-five percent of that amount is $8,754.25, not
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$8,773.50. The amount withheld by the SSA, $8,773.50, represents
25 percent of $35,094.00, which amount is nowhere reflected on the
SSA’s Notice of Award. In short, the requested amount ($8,773.50)
exceeds the statutory cap by $77.00. Accordingly, it must be
reduced to $8,754.25 to make it 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—as modified above—is in line with the
“character of the representation and the results the representation
achieved.” Here, Counsel’s effective briefing secured 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
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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 as modified ($8,754.25) by the total
hours expended by Counsel (26.2 hours) yields an effective hourly
rate of $334.13. The Commissioner submits that this request does
not represent a windfall. A survey of the case law from this
Circuit confirms that such an hourly rate is clearly reasonable.
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.
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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 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 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.
-7-
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, newly
enacted Western District of New York Local Rule 5.5(g)(1) rejects
the 14-day standard and sets a window of 65 days for filing Section
406(b) applications.
Counsel represents that his fee petition is timely because,
although the Notice of Award is dated July 25, 2018, his office did
not receive it until February 15, 2019. The copy of the Notice of
Award he submitted bears a stamp with the February 15, 2019 date.
The Notice of Award was addressed directly to Plaintiff, and
Counsel was not copied on the letter, even though he was counsel of
record with the SSA. The Court accepts Counsel’s representation
that he did not receive the Notice of Award until February 15,
2019. In such case, his Section 406(b) Motion, filed February 27,
2019, is timely under new Local Rule 5.5, which may be applied,
insofar as just and practicable, to all actions pending as of
January 1, 2019.
V. Conclusion
For the reasons set forth above, the Court grants the Section
406(b)(1) Motion but reduces the amount awarded to $8,754.25 to
bring the fee award in line with the 25 percent statutory cap and
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the parties’ retainer agreement. The Court directs the Commissioner
to release the funds withheld from the past due benefits award.
Upon receipt of the Section 406(b) fee, Counsel is directed to
remit payment of the EAJA fee he previously received to Plaintiff.
SO ORDERED.
S/Michael A. Telesca
HONORABLE MICHAEL A. TELESCA
United States District Judge
DATED:
May 29, 2019
Rochester, New York
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