Opinion
20-cv-7729 (KMK) (VR)
12-15-2023
Gregory Balz, Plaintiff, v. Kilolo Kijakazi, Acting Commissioner of Social Security,[1] Defendant.
REPORT & RECOMMENDATION
TO THE HONORABLE KENNETH M. KARAS, UNITED STATES DISTRICT JUDGE
Currently before the Court is a motion for attorney's fees submitted by Mr. Seelig, counsel for Plaintiff Gregory Balz, pursuant to 42 U.S.C. § 406(b). (ECF No. 36). This motion is before me by an Order of Reference, dated November 15, 2023. (ECF No. 39). For the reasons below, I respectfully recommend that Mr. Seelig's motion be GRANTED.
I. BACKGROUND
On December 28, 2018, Plaintiff applied for Social Security disability benefits, alleging an onset of disability of March 31, 2014. (See ECF No. 18 at 183-84). Plaintiff requested a hearing before an Administrative Law Judge (ALJ). (Id. at 107). On February 12, 2020, ALJ Vincent M. Cascio issued a written decision, in which he concluded that Plaintiff was not disabled within the meaning of the Social Security Act. (Id. at 10-26). Plaintiff sought review from the Appeals Council (id. at 169-71), who denied his request on July 21, 2020 (id. at 5-7).
All page numbers to documents filed on ECF refer to ECF pagination, not the sequential numbering of the SSA Record provided on the bottom right corner of the page.
On September 18, 2022, Plaintiff began this action by filing a complaint in the Southern District of New York. (ECF No. 1). On May 13, 2021, the Commissioner filed the Social Security Administration administrative record (ECF Nos. 18, 18-1, 18-2, 18-3, 18-4), and the parties then cross-moved for judgment on the pleadings. (ECF Nos. 19, 20, 24, 25, 26). On January 25, 2022, the Hon. Paul E. Davison issued a Report and Recommendation, recommending that judgment on the pleadings be granted in favor of Plaintiff and that the case be remanded for further administrative proceedings. (ECF No. 27); Balz v. Kijakazi, No. 20-cv-7729, 2022 WL 1446504 (S.D.N.Y. Jan. 25, 2022). The Commissioner objected to Judge Davison's Report and Recommendation and Plaintiff responded. (ECF Nos. 29, 30). On March 30, 2022, Your Honor adopted Judge Davison's Report and Recommendation, reversed the ALJ's decision, and remanded the action for further administrative proceedings. (ECF No. 31); Balz v. Kijakazi, No. 20-cv-7729, 2022 WL 1058497 (S.D.N.Y. Mar. 30, 2022). Then, on May 17, 2022, Your Honor awarded $11,200 in attorney's fees under the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412. (ECF No. 34).
Under EAJA, a party prevailing against the Government may receive fees if the Government's position was not “substantially justified.” Gisbrecht v. Barnhart, 535 U.S. 789, 796 (2002). However, if fees are also awarded pursuant to 42 U.S.C. § 406(b), then the plaintiff's attorney must refund to plaintiff the smaller of the two fees. Id.
On remand, the Commissioner held a second hearing and Plaintiff was approved for Social Security disability benefits. (See ECF No. 38-2). In a Notice of Award, dated October 24, 2023, the Commissioner informed Plaintiff that his past-due disability benefits totaled $134,431.00, and his past-due child benefits totaled $17,683.00. (Id. at 4, 9). The Commissioner noted that 25% of these totals - $33,607.75 and $4,420.75, respectively, totaling $38,028.50 - were being withheld from Plaintiff for attorney's fees. (Id.).
On November 2, 2023, Plaintiff's counsel, Richard Blake Seelig, filed a motion for attorney's fees, requesting $38,028.50, which amounts to 25% of Plaintiff's past due benefits. (ECF Nos. 36, 37, 38). In support, Mr. Seelig attaches copies of the retainer agreement, the Commissioner's notice of award, and an itemized list of the time Mr. Seelig spent on Plaintiff's case. (See ECF Nos. 38-1, 38-2, 38-3). The retainer agreement, signed by Plaintiff, provided that if the action were to be remanded by the United States District Court and Plaintiff were to be awarded past due benefits, then Plaintiff would pay Mr. Seelig 25% of all retroactive or past due benefits. (ECF No. 38-1 at 2). Mr. Seelig acknowledges that if he is awarded $38,028.50 in fees under 42 U.S.C. § 406(b), then Plaintiff is entitled to a $11,200 refund for the EAJA fees that were previously awarded. (ECF No. 37 at 8).
In response, the Commissioner “neither supports nor opposes counsel's request for attorney's fees in the amount of $38,028.50, under 42 U.S.C. § 406(b).” (ECF No. 40 at 1). But the Commissioner asks that if the Court authorizes the fee, that it “decline to include language directing that the Commissioner ‘pay' the award.” (Id. at 2). Rather, “the Court [should] specifically indicate that any amount it authorizes in § 406(b) fees is to be paid out of [Plaintiff's] past-due benefits in accordance with agency policy.” (Id.).
Mr. Seelig timely filed his fee application. Under Rule 54(d)(2)(B) of the Federal Rules of Civil Procedure, an attorney's fee application under 42 U.S.C. § 406(b) must be filed within fourteen days after entry of judgment. Sinkler v. Berryhill, 932 F.3d 83, 85 (2d Cir. 2019) (holding that Rule 54(d)(2)(B)'s fourteen-day filing period applies to 42 U.S.C. § 406(b) fee applications). Here, Mr. Seelig's November 2, 2023, fee application was timely because he filed it within fourteen days after the Commissioner issued the October 24, 2023, Notice of Award. (See ECF Nos. 36, 38-2).
A. Legal Standard
Three statutes authorize attorney's fees in social security actions: (1) 42 U.S.C. § 406(a) governs fees for representation in administrative proceedings; (2) 42 U.S.C. § 406(b) controls fees for representation in federal court; and (3) the EAJA provides additional fees if the Commissioner's position was not “substantially justified.” See Gisbrecht v. Barnhart, 535 U.S. 789, 794-96 (2002). Under § 406(b), which is invoked here, “[w]henever 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.” 42 U.S.C. § 406(b)(1)(A). “The effect of th[is] provision . . . is threefold: it fixes a maximum percentage for contingent fees of twenty-five percent; it permits recovery of such fees only out of past due benefits; and it requires court approval for whatever amount of such fees should be paid.” Fields v. Kijakazi, 24 F.4th 845, 852 (2d Cir. 2022) (alterations and internal quotation marks omitted). For cases with contingency fee agreements, the district court's determination of a reasonable fee under § 406(b) must begin with the agreement, which should be enforced so long as it is reasonable. Id. at 852-53 (citing Wells v. Sullivan, 907 F.2d 367, 371 (2d Cir. 1990)). “When conducting its analysis, the court's primary inquiry should be on the reasonableness of the contingency agreement in the context of the particular case and not merely to rubber stamp the contingent fee agreement.” Caraballo v. Comm'r of Soc. Sec., No. 17-cv-7205, 2021 WL 4949217, at *2 (S.D.N.Y. Oct. 22, 2021) (citing Wells, 907 F.2d at 371).
B. Reasonableness of Fee Award
As noted above, counsel for Plaintiff seeks attorney's fees of $38,028.50 (25% of Plaintiff's past due benefits), based on the contingency fee agreement signed by Plaintiff. To assess the reasonableness of a contingency fee award, the Second Circuit has instructed courts to determine: (1) whether the contingency percentage is within the 25% cap; (2) whether there has been fraud or overreaching in making the agreement; and (3) whether the fee amount is so large that it constitutes a windfall to the attorney. Wells, 907 F.2d at 372; see also Fields, 24 F.4th at 853. In Gisbrecht v. Barnhart, the Supreme Court provided additional “reasonableness” factors for courts to consider, including (1) whether the requested fee is out of line with the “character of the representation and the results the representative achieved,” (2) whether “the attorney is responsible for delay,” lest the attorney profit from the accumulation of benefits during a delay that the attorney caused, and (3) “if the benefits are large in comparison to the amount of time counsel spent on the case,” the so-called windfall factor also cited in Wells. Gisbrecht v. Barnhart, 535 U.S. 789, 808 (2002); see also Fields, 24 F.4th at 853.
Here, the Wells factors favor approving the requested attorney's fees as reasonable. First, the requested fee represents 25% of Plaintiff's past-due benefits. (Compare ECF No. 38-2 (Notice of Award) at 4, 9 (providing past-due benefits totaling $152,114.00) with ECF No. 36 (Motion for Attorney's Fees) (requesting attorney's fees of $38,028.50)). Thus, the requested fee “is within the 25% cap,” Fields, 24 F.4th at 853, and the amount negotiated in the contingency fee agreement (ECF No. 38-1 at 2). Second, there is no evidence or allegation of “fraud or overreaching” by Mr. Seelig. Fields, 24 F.4th at 85. And third, the requested fee is not so large that it constitutes a windfall. Mr. Seelig seeks an award of $38,028.50 in attorney's fees for 52.6 hours of work (ECF No. 37 at 8), which amounts to an hourly rate of $722.98. Yet in determining whether there is a windfall that renders a fee unreasonable, the Court “must consider more than the de facto hourly rate.” Fields, 24 F.4th at 854. In some cases, “even a relatively high hourly rate may be perfectly reasonable, and not a windfall.” Id. To make this determination, courts must assess: (1) the “ability and expertise” of the attorneys, (2) the “nature and length of the professional relationship with the claimant,” (3) the “satisfaction of the disabled claimant,” and (4) “how uncertain it was that the case would result in an award of benefits and the effort it took to achieve that result.” Id. at 854-55.
Here, each of the above factors warrants a finding that the requested fee is not a windfall. First, as to counsel's “ability and expertise,” Mr. Seelig spent 52.6 hours working on Plaintiff's case at the federal level, and in that time, he managed to: (1) review the 970-page administrative record (ECF Nos. 18, 18-1, 18-2, 18-3, 18-4); (2) draft a highly detailed, 25-page memorandum of law, and a 9-page reply, in support of his motion for judgment on the pleadings (ECF No. 20); and (3) draft a response to the Commissioner's five-point objection to Judge Davison's Report and Recommendation (ECF Nos. 29, 30). Cf. Fields, 24 F.4th at 854 (“Daniel S. Jones of Binder & Binder spent 22.70 hours working on Mr. Fields's case at the federal level, and in that time managed to review the 863-page administrative record in its entirety, draft a highly detailed 19-page memorandum of law, and successfully negotiate a stipulated remand with the government lawyers.”). Mr. Seelig has honed his practice to Social Security disability law, having handled more than one thousand Social Security matters over the last ten years. (ECF No. 37 at 7).
Thus, Mr. Seelig's ability and expertise allowed him to accomplish in 52.6 hours what other lawyers might reasonably have taken significantly more time to do. Cf. Fields, 24 F.4th at 854 (“Binder & Binder's ability and expertise allowed it to accomplish in just 25.8 hours what other lawyers might reasonably have taken twice as much time to do.”). The $722.98 de facto hourly rate “must be viewed in this context,” as “[i]t would be foolish to punish a firm for its efficiency and thereby encourage inefficiency.” Id.
Second, the nature and length of the professional relationship between Mr. Seelig and Plaintiff is long, given that Mr. Seelig represented Plaintiff beginning in August 2020. (ECF Nos. 37 at 1; 38-1 at 2). Third, over this long-running relationship, there is no evidence that Plaintiff has been dissatisfied with Mr. Seelig's representation. And finally, the positive outcome of Plaintiff's case was far from certain, as shown by the ALJ's initial finding that Plaintiff was not disabled, and the Appeals Council's subsequent denial of Plaintiff's request for review. (ECF No. 18 at 5-7, 10-26). Also, the Commissioner vigorously defended the ALJ's determination by filing her own motion for judgment on the pleadings, then filing a five-point objection to the Report and Recommendation. (ECF Nos. 24, 25, 29). Thus, the four “windfall” factors discussed above warrant finding that the $722 de facto hourly rate is not a windfall. Fields, 24 F.4th at 854-55.
The other reasonableness factors in Gisbrecht also support approving the requested attorney's fees. Gisbrecht, 535 U.S. at 808. The requested fee is not out of line with “the character of the representation and the results the representative achieved.” Fields, 24 F.4th at 853 (quoting Gisbrecht, 535 U.S. at 808). Mr. Seelig resolutely pursued this action and obtained positive results for Plaintiff, securing a remand after filing a motion for judgment on the pleadings and responding to the Commissioner's objections to the Report and Recommendation. (ECF Nos. 19, 20, 26, 30). Upon remand, the Commissioner held a second hearing and approved Plaintiff for Social Security disability benefits, finding that Plaintiff had been disabled since November 7, 2018, which entitled him to $152,114.00 in past due benefits from May 2019 onward. (ECF No. 38-2 at 2-3, 8-9). Thus, Mr. Seelig's requested fee of $38,028.50 matches the character of the representation and the positive results he achieved. His requested fee of 25% of past due benefits (amounting to an hourly rate of $722) also falls squarely within the range of fees typically awarded. See Fields, 24 F.4th at 856 (awarding attorney's fees of $40,170 for 25.8 attorney hours, at an hourly rate of approximately $1,556.98). Finally, there is no suggestion that Mr. Seelig caused any unreasonable delay in pursuing this case on behalf of his client. Id. at 853.
III. CONCLUSION
For the reasons stated above, the Court respectfully recommends that Mr. Seelig's motion for attorney's fees (ECF No. 36) be GRANTED, and that Mr. Seelig be awarded $38,028.50.
The Court further respectfully recommends that, upon receipt of the $38,028.50 award recommended by this Report and Recommendation, Mr. Seelig be directed to promptly refund $11,200 to Plaintiff, which represents the EAJA fees that Mr. Seelig received. (ECF No. 34).
NOTICE
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties have fourteen (14) days from service of this Report and Recommendation to file written objections. Fed.R.Civ.P. 6(a). A party may respond to another party's objections within fourteen (14) days after being served with a copy. Fed.R.Civ.P. 72(b)(2). Such objections, and any responses to such objections, shall be filed with the Clerk of the Court, with courtesy copies delivered to the chambers of the Honorable Kenneth M. Karas, United States District Court, Southern District of New York, 300 Quarropas Street, White Plains, New York, 10601, and to the chambers of the undersigned at the same address.
Any request for an extension of time for filing objections or responses to objections must be directed to Judge Karas, and not to the undersigned.