Cubero v. Commissioner of Social Security
Filing
25
OPINION AND ORDER: 24 AMENDED MOTION for Attorney Fees under 42 USC sec 406(b) is GRANTED in part, and 20 MOTION for Attorney Fees under 42 U.S.C. § 406(b) is DENIED as MOOT. Signed by Judge John M. Conroy on 7/9/2019. (hbc)
UNITED STATES DISTRICT COURT
FOR THE
DISTRICT OF VERMONT
Jose C.,
Plaintiff,
v.
Civil Action No. 2:13-cv-220-jmc
Commissioner of Social Security,
Defendant.
OPINION AND ORDER
(Docs. 20, 24)
On March 31, 2019, the Social Security Administration (SSA) issued a notice of
award to Plaintiff Jose C. advising him that he was entitled to disability benefits.
(Doc. 20-2.) On April 3, 2019, Plaintiff’s counsel, Craig Jarvis, properly filed a Motion
for Attorney’s Fees with this Court seeking attorney’s fees due under a contingent fee
agreement. (Doc. 20.) Subsequently, on May 16, 2019, Attorney Jarvis filed an
Amended Motion for Attorney’s Fees modifying the amount requested. (Doc. 24.) For
the reasons set forth below, the Amended Motion for Attorney’s Fees (Doc. 24) is
GRANTED, in part, and the Motion for Attorney’s Fees (Doc. 20) is DENIED as
MOOT.
Legal and Factual Background
To contextualize the factual background, the Court briefly summarizes the
statutory structure governing the fees an attorney may earn for representing a
plaintiff claiming Social Security benefits. Section 406 of “the Social Security Act
‘discretely’ addresses attorney’s fees for the administrative and judicial-review stages:
‘§ 406(a) governs fees for representation in administrative proceedings; § 406(b)
controls fees for representation in court.’” Culbertson v. Berryhill, 139 S. Ct. 517, 520
(2019) (quoting Gisbrecht v. Barnhart, 535 U.S. 789, 794 (2002)); see generally
42 U.S.C. § 406. In administrative proceedings, if the claimant has a fee agreement
with his or her attorney, § 406(a)(2) caps the attorney’s fees at the lesser of twentyfive percent of past-due benefits or a dollar amount currently set at $6,000. See
Maximum Dollar Limit in the Fee Agreement Process, 74 Fed. Reg. 6080 (2009). At
the judicial-review stage in federal court, § 406(b)(1)(A) limits attorney’s fees to no
more than twenty-five percent of past-due benefits and allows the SSA to withhold
past-due benefits to pay those fees.
In addition to § 406 attorney’s fees, under the Equal Access to Justice Act
(EAJA), “a party prevailing against the United States in court, including a successful
Social Security benefits claimant, may be awarded fees payable by the United States
if the Government’s position in the litigation was not ‘substantially justified.’”
Gisbrecht, 535 U.S. at 796 (quoting 28 U.S.C. § 2412(d)(1)(A)). A fee award may be
made under both 42 U.S.C. § 406(b) and the EAJA, but “the claimant’s attorney must
“refun[d] to the claimant the amount of the smaller fee.” Id. (quoting Act of Aug. 5,
1985, Pub. L. 99–80, § 3, 99 Stat. 186). In other words, an EAJA award offsets an
award under § 406, so that a Social Security claimant may receive one-hundred
percent of the past-due benefits. Id.
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With that legal structure in mind, the Court turns to facts of this case. On
August 16, 2013, after the Commissioner denied Plaintiff’s application for Disability
Insurance Benefits (DIB) at all levels of administrative review, Attorney Jarvis
timely filed a Complaint in this Court on behalf of Plaintiff. (See generally Doc. 1.)
To compensate counsel for representing Plaintiff in federal court,1 Plaintiff and
Jarvis entered into a contingent fee agreement (the Federal Court Agreement). (See
Doc. 20-4.) The Federal Court Agreement stated that Jarvis would “receive . . . an
amount equal to twenty-five percent (25%) of all past-due benefits awarded to
[Plaintiff].” (Id. ¶ 1.) In addition to past-due benefits, under the Federal Court
Agreement, Plaintiff assigned Jarvis any attorney’s fees awarded under the EAJA.
(Id. ¶ 2.) The Federal Court Agreement specified, however, that “in no case shall the
cumulative award of attorney fees exceed 25% of past-awarded benefits, unless EAJA
fees alone would exceed that amount.” (Id. ¶ 3.) Finally, Plaintiff agreed to
reimburse any costs and expenses that Jarvis paid on Plaintiff’s behalf “from
[Plaintiff’s] share of the recovery.” (Id. ¶ 4.)
On April 18, 2014, this Court reversed the Commissioner’s position pursuant to
sentence four of 42 U.S.C. § 405(g) and remanded the matter to the SSA for further
administrative proceedings. (Doc. 13; see also Doc. 12.) Ten days later, in an April 28
Order, this Court awarded Plaintiff $5,864.50 in attorney’s fees under the EAJA.
(Doc. 19.)
Apparently, Plaintiff and Jarvis had previously entered into a different fee agreement for
representation before the SSA, although that agreement is not in the record. (See Doc. 20-4 ¶ 3
(stating that agreement for representation before the SSA remained in effect)).
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On remand from this Court, the Commissioner again denied Plaintiff’s DIB
application, and he appealed to the U.S. District Court for the Southern District of
Florida, where he then resided. (Doc. 20-9 at 1–4.) On August 23, 2017, the Florida
district court remanded Plaintiff’s case to the Commissioner for further proceedings.
(Id. at 24.) Approximately two months later, on October 10, the Florida district court
also awarded Plaintiff $5,550 in attorney’s fees under the EAJA. (Doc. 20-3 at 1.)
Following the second remand to the Commissioner, on March 31, 2019, the
SSA issued a notice of award to Plaintiff advising him that he was entitled to
disability benefits. (Doc. 20-2.) The notice also informed him that the SSA had
approved the fee agreement between Plaintiff and Attorney Jarvis governing Jarvis’s
representation before the SSA. (Id. at 3.) Pursuant to this agreement and in
accordance with 42 U.S.C. § 406(a)(2), Jarvis could recover no more than $6,000 in
attorney’s fees for the work that Jarvis had performed in the administrative
proceedings before the SSA. (Id.); see also Maximum Dollar Limit in the Fee
Agreement Process, 74 Fed. Reg. 6080 (2009).
Further, the notice advised Plaintiff that he was entitled to past-due benefits
of $78,503.00 and that, pursuant to SSA policy, the SSA had withheld twenty-five
percent of his past-due benefits to pay any fees due to Attorney Jarvis under the
Federal Court Agreement. (Id. at 4.) Twenty-five percent of $78,503.00 is
$19,625.75.
Finally, as described above, in the course of these proceedings, Jarvis has been
assigned a total of $11,414.50 in EAJA fees pursuant to the terms of the Federal
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Court Agreement. (Doc. 20 at 2; Doc. 20-4 ¶ 2.) That total includes $5,864.50 that
this Court awarded on April 28, 2014 (Doc. 19) and $5,550 that the Florida district
court awarded on October 10, 2017. (Doc. 20-3 at 1.)
In his original Motion for Attorney’s Fees (Doc. 20), Jarvis asked this Court to
enforce the Federal Court Agreement and to award 25% of the past-due benefits due
to Plaintiff, or $19,625.75 in attorney’s fees, which is the maximum amount allowed
under 42 U.S.C. § 406(b). (Doc. 20 at 3.) Jarvis also acknowledged in his Motion
that he was required by law to reimburse the EAJA fees to Plaintiff (id.); however,
Jarvis sought to deduct his unpaid legal expenses from the EAJA fees, as well as the
$6,000 in attorney’s fees previously approved by the SSA under § 406(a). (Id.)
The Acting Commissioner of Social Security filed a response advising this
Court that the SSA did not object to Jarvis’s request for $19,625.75 in attorney’s fees
under § 406(b) because the amount requested did not exceed the statutory cap or
constitute a windfall and there was no evidence of fraud or overreaching. (Doc. 22
at 1.) But the Acting Commissioner opposed Jarvis’s request to deduct expenses from
the EAJA fees, arguing instead that expenses are not contemplated under § 406(b)
and, as a result, “the Court should order counsel to refund all EAJA fees directly to
[Plaintiff], without reduction.” (Id.)
Subsequently, Jarvis filed an Amended Motion for Attorney’s Fees. (Doc. 24.)
In his Amended Motion, Jarvis again asks this Court to enforce the Federal Court
Agreement and to award $19,625.75 in attorney’s fees to Jarvis. (Id. at 1.) With
regard to EAJA fees, however, Jarvis acknowledges that the Federal Court
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Agreement states that “in no case shall the cumulative award of attorney fees exceed
25% of past-awarded benefits, unless EAJA fees alone would exceed that amount.”
(Doc. 20-4 ¶ 3.) Based on this contractual language capping attorney’s fees, Jarvis no
longer seeks to deduct $6,000 in § 406(a) fees from the EAJA fees. (Doc. 24 at 1.)
However, Jarvis still asks this Court for an order allowing him to deduct his unpaid
legal expenses ($1,629.04) from the EAJA fees prior to reimbursing Cubero. (Id.)
The Acting Commissioner has not yet responded to Jarvis’s Amended Motion.
Analysis
As an initial matter, Attorney Jarvis’s Amended Motion for Attorney’s Fees
(Doc. 24) supersedes his Motion for Attorney’s Fees (Doc. 20) and renders that
original motion moot.
Next, because the attorney’s fees requested by Jarvis are not unreasonable
under 42 U.S.C. § 406(b), the Court awards Jarvis $19,625.75 in attorney’s fees from
the past-due benefits. As described above, § 406(b) governs attorney’s fees for
representation in judicial proceedings. The relevant subsection provides:
Whenever a court renders a judgment favorable to a claimant under this
subchapter 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). In determining whether the fee requested is reasonable,
courts first look to the contingent-fee agreement. Wells v. Sullivan, 907 F.2d 367, 371
(2d Cir. 1990) (“[T]he best indicator of the ‘reasonableness’ of a contingency fee in a
social security case is the contingency percentage actually negotiated between the
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attorney and client.”). While a court should give deference to the parties’ intent in
the fee agreement, if the court concludes that the fee is unreasonable, the court may
reduce the fee. Id. The following factors may provide a basis for refusing to approve
the full amount requested under a contingency fee arrangement: (1) whether the
amount requested exceeds the statutory twenty-five percent cap; (2) whether there
was fraud or overreaching in the making of the agreement; and (3) whether the
requested amount is so large as to be a windfall to the attorney. Id. at 372; see also
Gisbrecht, 535 U.S. at 807 (discussing first and third factors).
Here, as described above, the Federal Court Agreement limited Jarvis’s fees to
twenty-five percent of all awarded past-due benefits (Doc. 20-4 ¶ 3), which does not
exceed the statutory cap under 42 U.S.C. § 406(b)(1)(A). Second, there is no evidence
of fraud or overreaching in the making of the Federal Court Agreement. Finally, the
requested amount is not so large as to constitute a windfall. Jarvis indicates that he
spent 76.7 hours representing Plaintiff before this Court and the Florida district
court (see Docs. 20-5; 20-6); dividing $19,625.75 by 76.7 hours results in a reasonable
hourly rate of $255.86. See Ayers v. Comm’r of Soc. Sec., No. 1:07-cv-155-jgm, 2013
WL 5603008, at *1 (D. Vt. Oct. 11, 2013); Heffernan v. Astrue, 87 F. Supp. 3d 351,
356–57 (E.D.N.Y. Feb. 10, 2015) (discussing § 406(b) fee cases in Second Circuit and
reducing fee award to a sum reflecting hourly rate of $350, down from $1,000);
Devenish v. Astrue, 85 F. Supp. 3d 634, 638–39 (E.D.N.Y. Jan. 24, 2015) (reducing
from $1,000 to $350). Moreover, Jarvis’s representation involved separate appeals to
this Court and the Florida district court over multiple years, which ultimately
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resulted in a successful outcome for Plaintiff. See Ayers, 2013 WL 5603008, at *1
(stating other factors to consider are the attorney’s degree of success and the amount
of effort required). Accordingly, after considering the relevant factors, the Court
concludes that an award of $19,625.75 in § 406(b) attorney’s fees is reasonable.
But the Court also concludes that Attorney Jarvis may not deduct his expenses
from the EAJA award that he is required to remit to Plaintiff. As noted above,
although a fee award may be made under both 42 U.S.C. § 406(b) and the EAJA, by
law, “the claimant’s attorney must ‘refun[d] to the claimant the amount of the
smaller fee.’” Gisbrecht, 535 U.S. at 796 (alteration in original) (quoting Act of Aug.
5, 1985, Pub. L. 99–80, § 3, 99 Stat. 186). In this case, as Jarvis acknowledges, he
must remit the EAJA fees because those fees are smaller than the § 406(b) fees.
However, nothing in the law authorizes Jarvis to deduct expenses prior to refunding
the smaller fee. Instead, a claimant’s obligation to pay his attorney “is controlled not
by the EAJA but by contract and the law governing that contract.” Astrue v. Ratliff,
560 U.S. 586, 599 (2010). (See Doc. 20-4.) Here, Plaintiff agreed to reimburse any
costs and expenses that Jarvis paid on his behalf “from [Plaintiff’s] share of the
recovery.” (Doc. 20-4 ¶ 4.) In making his argument to deduct expenses, Jarvis points
to this contractual language and asserts that it would expedite matters for him to
deduct expenses prior to remitting the EAJA fees to Plaintiff. (Doc. 23 at 3–4.) That
may be true as a practical matter, but the Federal Court Agreement does not allow
Jarvis to unilaterally deduct expenses from EAJA fees; instead, the Federal Court
Agreement requires Plaintiff to pay expenses from the “recovery.” (Doc. 20-4 ¶ 4.)
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In sum, by law, Jarvis is required to reimburse the EAJA award to Plaintiff; nothing
in either the law or the Federal Court Agreement permits Jarvis to deduct expenses
from the EAJA fees. Plaintiff’s obligation to reimburse counsel for the valid expenses
that have been incurred is governed by the contract between Plaintiff and counsel.
Conclusion
Jarvis’s Amended Motion for Attorney’s Fees (Doc. 24) is GRANTED in part. It
is hereby ORDERED, pursuant to 42 U.S.C. § 406(b), that attorney’s fees in the
amount of $19,625.75, be made payable to Craig Jarvis, Esq. It is further ORDERED
that Jarvis remit to Plaintiff the amount of $11,414.50, representing the full amount
of attorney’s fees previously awarded to him under the Equal Access to Justice Act,
28 U.S.C. § 2412(d). Finally, Jarvis’s original Motion for Attorney’s Fees (Doc. 20) is
DENIED as MOOT.
Dated at Burlington, in the District of Vermont, this 9th day of July 2019.
/s/ John M. Conroy
.
John M. Conroy
United States Magistrate Judge
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