Opinion
18-CV-3173 (VEC) (BCM)
07-22-2022
NIKI CATRINA GONDOLA, Plaintiff, v. KILOLO KIJAKAZI, Defendant.
REPORT AND RECOMMENDATION TO THE HON. VALERIE E. CAPRONI
BARBARA MOSES, MAGISTRATE JUDGE
By motion dated November 29, 2021 (Supp. Att'y Fee Mot.) (Dkt. 68), plaintiff Niki Catrina Gondola seeks an order, pursuant to 42 U.S.C. § 406(b), approving a supplemental award of $10,143.35 in attorney's fees, representing 25% of the past-due benefits awarded to her child by the Social Security Administration (SSA) after remand in this action. For the reasons that follow, I respectfully recommend that the motion be granted.
Kilolo Kijakazi is now the Commissioner of Social Security. Pursuant to Fed.R.Civ.P. 25(d), she is substituted for former Acting Commissioner Andrew Saul as the defendant in this action.
I. BACKGROUND
Plaintiff applied to the SSA for disability benefits, but her application was denied. See Complaint (Dkt. 1) ¶¶ 7-8. On April 11, 2018, she sought judicial review of the agency's decision in this Court. Id. ¶¶ 12-16. In connection with that review, she executed a written Client Acknowledgment stating, in pertinent part:
If my attorney is successful in the United States District Court, or the United States Court of Appeals, I agree to pay Twenty five percent (25%) of all past due benefits awarded to me and my family in my Social Security Disability case, my Supplemental Security Income disability case, or both....I understand that my fee shall not be greater than 25% of all past due benefits awarded to me and my family for both the Admi[n]istrative fees and Federal Court fees combined.
Affirmation of Irwin M. Portnoy dated May 7, 2021 (Portnoy 5/7/21 Aff.) (Dkt. 43), Ex. 1.
Thereafter, attorney Portnoy, together with attorney Timothy McAdam, "performed certain legal services for and on behalf of Ms. Gondola resulting in a favorable judgment." Portnoy 5/7/21 Aff. ¶ 3. On October 10, 2018, they submitted a motion for judgment on the pleadings on plaintiff's behalf, supported by a memorandum of law (Dkts. 18, 19), and on October 18, 2020, they submitted a corrected set of motion papers. (Dkts. 21, 22, 23.)
The briefs were signed by Mr. McAdams, with Mr. Portnoy listed as "of counsel."
On March 26, 2019, based on a stipulation by the parties, this action was remanded to the SSA for further proceedings. (Dkt. 30.)
A. Initial Fee Application
Beginning shortly after the remand, Mr. Portnoy filed a series of motions - many of them later amended, corrected, or withdrawn - seeking fee awards for the legal work that he and Mr. McAdams performed in this Court. In his initial motion, filed on April 5, 2019, counsel requested "an attorney fee for services rendered to Plaintiff herein, pursuant to 42 U.S.C. § 406(b), in the amount of no more than 25% of claimant's and/or claimant's auxiliary, retroactive, or past due benefits." Notice of Motion (4/5/19 Mot.) (Dkt. 32) at 1.
As relevant here, § 406(b) 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, and the Commissioner of Social Security may . . . certify the amount of such fee for payment to such attorney out of, and not in addition to, the amount of such past-due benefits. In case of any such judgment, no other fee may be payable or certified for payment for such representation except as provided in this paragraph.42 U.S.C. § 406(b)(1)(A).
On April 5, 2019, when the motion was filed, no past-due benefits had been awarded. Consequently, counsel asked the Court to "stay the within motion until a reasonable time after Defendant has issued a Notice of Award of Retroactive Benefits to Plaintiff and her dependents, if applicable[.]" 4/5/19 Mot. at 1-2. The motion was supported by affirmations from both attorneys attesting to the services they performed. Mr. McAdams attached time records showing that he spent 9.8 hours drafting the complaint herein and editing the brief in support of plaintiff's motion for judgment on the pleadings. Affirmation of Timothy S. McAdam dated April 5, 2019 (McAdam 4/5/19 Aff.) (Dkt. 34), ¶ 3 & App. 2 (Dkt. 34-1). Mr. Portnoy, however, neglected to attach his time records to the affirmation he filed that day. (Dkt. 33.)
B. Application for and Award of EAJA Fees
On April 18, 2022, counsel filed a new motion for fees, this time requesting $12,107.93 pursuant to the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412. Notice of Motion (4/18/19 Mot.) (Dkt. 36) at 1. The motion was supported by fresh affirmations from both attorneys. This time, Mr. Portnoy attached his time records, showing that he spent 72.7 hours on this case, most of it devoted to drafting the brief in support of plaintiff's motion for judgment on the pleadings. Affirmation of Irwin M. Portnoy dated April 5, 2019 (Portnoy 4/18/19 Aff.) (Dkt. 38), ¶ 6 & App. 3 (Dkt. 38-2).
The Portnoy timesheet reports counsel's time in increments of 1/100 of an hour (36 seconds). In this Report and Recommendation, I round to the nearest 1/10 of an hour (6 minutes). Of the 72.7 hours listed on the Portnoy timesheet, 8.7 hours, for work performed from March 25 to March 28, 2019, do not appear to relate to this action. Portnoy 4/18/19 Aff. App. 3, at 3.
As relevant here, EAJA provides:
[A] court may award reasonable fees and expenses of attorneys, in addition to the costs . . . to the prevailing party in any civil action brought by or against the United States or any agency or any official of the United States acting in his or her official capacity in any court having jurisdiction of such action.28 U.S.C. § 2412(b). EAJA fees are "payable by the United States if the Government's position in the litigation was not 'substantially justified,'" Gisbrecht v. Barnhart, 535 U.S. 789, 796 (2002) (quoting 28 U.S.C. § 2412(d)(1)(A)), are calculated based on the hours that the attorney reasonably spent on the case, and are capped, by statute, at $125 per hour (which may be adjusted for inflation). 28 U.S.C. § 24123(d)(2)(A).
On May 24, 2019, based on a stipulation by the parties, the Hon. Valerie E. Caproni, United States District Judge, awarded plaintiff the sum of $7,000.00 in attorneys' fees pursuant to EAJA and closed both the 4/5/19 Motion and the 4/18/19 Motion. (Dkt. 41.)
C. Application for and Award of § 406(b) Fees
On April 28, 2021, the SSA awarded benefits to plaintiff dating back to December 2014, from which it withheld $21,190.38 (25% of the past-due award) "in case we need to pay your representative." Portnoy 5/7/21 Aff. ¶ 5 & Ex. 2 (4/28/21 Notice of Award), at 3. Thereafter, Mr. Portnoy made three motions for an award of fees in that amount. (Dkts. 42, 45, 46.) In connection with those motions, he submitted a copy of the Acknowledgment, in which plaintiff agreed to pay her lawyers 25% of any past due benefits awarded to her or her family, Portnoy 5/7/21 Aff. Ex. 1, and noted, "We intend to file an additional and supplemental application when as [sic] and if Ms. [G]ondola's dependent is awarded benefits." Id. ¶ 8.
By order dated July 2, 2021 (7/2/21 Order) (Dkt. 49), Judge Caproni found the sum of $21,190.38 to be a "reasonable" fee and ordered that plaintiff's attorneys (i) be paid $21,190.38 pursuant to 42 U.S.C. § 406(b); and (ii) refund to plaintiff the monies previously awarded pursuant to EAJA. 7/2/22 Order at 1-2. The 7/2/21 Order closed the motions at Dkts. 42, 45, and 46.
As the Court explained in Gisbrecht, "Fee awards may be made under both [EAJA and § 406(b)], but the claimant's attorney must 'refun[d] to the claimant the amount of the smaller fee.'" 535 U.S. at 796 (citation omitted). This ensures that the total fee award for counsel's work in court does not exceed the 25% limit imposed by § 406(b)(1)(A).
D. Award of Administrative Fees
On September 24, 2021, Mr. Portnoy asked the Court to "correct" the 7/2/21 Order by adding another $4095.00 to the § 406(b) fee award, based on a September 20, 2021 notice from the SSA (9/20/21 Notice) advising plaintiff that it had "approved a fee of $4,095.00 to pay your representative for work on your Social Security Claim." Notice of Motion (9/24/21 Mot.) (Dkt. 50) at 1; Affirmation of Irwin M. Portnoy dated September 24, 2021 (Dkt. 54), Ex. 1. However, on October 4 and October 7, 2021, counsel asked to withdraw the motion, explaining (not very clearly) that the $4,095.00 referenced in the 9/20/21 Notice was for Mr. McAdam's services at the "administrative level" and did not reflect any supplemental or auxiliary award of past-due benefits to plaintiff or her family that might entitle counsel to an additional fee award under § 406(b). Letter from Irwin M. Portnoy dated Oct. 4, 2021 (Portnoy 10/4/21 Letter) (Dkt. 56), at 1-2; Letter from Irwin M. Portnoy dated Oct. 7, 2021 (Dkt. 58), at 1-2.
The Social Security Act "deals with the administrative and judicial review stages discretely." Gisbrecht, 535 U.S. at 793-94. Fees for legal work performed before the agency are governed by 42 U.S.C. § 406(a), which requires the SSA, upon the award of past-due benefits, to "fix . . . a reasonable fee" for the successful claimant's representative and pay that fee "out of, and not in addition to, the amount of such past-due benefits." 42 U.S.C. § 406(a)(1).
In this case, the SSA fixed that fee at $4,095.00 with respect to the 4/28/21 Notice of Award, and explained that it would be paid directly to counsel (less a small "user fee") from the $21,109.38 it had withheld from the award. See 9/20/21 Notice at 1 ("[W]e are sending your representative this money."). Thereafter, by notice dated September 25, 2021, the SSA advised plaintiff that in light of this Court's order granting fees under § 406(b), it would send counsel the remaining $17,096.38 that it had withheld from the award. Portnoy 10/4/21 Letter Ex. 1 (Dkt. 56-1). Thus, between the agency's award under § 406(a) and this Court's award under § 406(b), counsel received a total of $21,190.38 - the full 25% withheld by the agency - with respect to the 4/28/21 Notice of Award.
In Culbertson v. Berryhill, 139 S.Ct. 517, 521 (2019), a unanimous Supreme Court held that, as a matter of statutory construction, the 25% cap on fees under § 406(b) does not limit "the aggregate fees awarded for representation before both the agency under § 406(a) and the court under § 406(b)." In other words, a lawyer may be paid more than 25% of the past-due benefits awarded to her client if the awards under § 406(a) and § 406(b) add up to more than that. In this case, however, plaintiff's fee agreement expressly includes an aggregate cap: "I understand that my fee shall not be greater than 25% of all past due benefits awarded to me and my family for both the Admi[n]istrative fees and Federal Court fees combined." Portnoy 5/7/21 Aff. Ex. 1, at 1 (emphasis added). Consequently, even though the SSA awarded $4,095.00 under § 406(a), and this Court awarded $21,190.38 under § 406(b), plaintiff's counsel were not entitled, at that time, to more $21,190.38 (25% of the past-due award) in the aggregate.
E. Application for Additional § 406(b) Fees
On October 10, 2021, the SSA awarded auxiliary benefits to plaintiff's child Shayla, dating back to December 2014. Affirmation of Irwin M. Portnoy dated October 18, 2021 (Portnoy 10/18/21 Aff.) (Dkt. 62), Ex. 1 (10/10/21 Notice of Award). The amount of the past-due award was $43,951.00, from which the SSA withheld $10,143.25 (25%) "in order to pay the approved representative's fee." Id. at 2.
On October 18, 2021, Mr. Portnoy moved to "amend" the 9/24/21 Motion "by awarding an additional $10,143.25 to that ordered by the Court's [sic] on July 2, 2021[.]" Amended and Supplemental Notice of Motion (10/18/21 Mot.) (Dkt. 61) at 1. In his accompanying affirmation, he assured the Court that "[c]ounsel for Plaintiff have refunded the funds awarded to Plaintiff under 28 U.S.C. § 2412 (the EAJA) pursuant to the Court's order of July 2, 2021." Portnoy 10/18/21 Aff. ¶ 4. He also confirmed that on September 22, 2021, the SSA paid Mr. McAdam the fee it awarded him pursuant § 406(a) for administrative work before the agency. Id. ¶ 3.
Mr. Portnoy attached copies of two checks, both made out to Mr. McAdam as "Atty for Niki C Gondola," in the amounts of $3,997.00 and $79.06, respectively. Portnoy 10/18/21 Aff. App. 2. I presume that the $3,997.00 check constitutes the $4,095 fee award less the then-current "user fee" of $98. See Social Security Administration, Program Operations Manual System, TN 33 (05-22), available at https://secure.ssa.gov/poms.nsf/lnx/0203920019 (last visited July 22, 2022). I venture no presumption as to the purpose of the $79.06 check.
The following day, Judge Caproni issued an order (Dkt. 64) recognizing that the 10/18/21 Motion was "for a supplemental award to Plaintiff's child," terminating that motion, and directing the parties to "include any award of fees with respect to Plaintiff's child" in a joint stipulation and order "which must address all attorneys' fees related to this case." (Emphasis in the original.)
On November 29, 2021, in lieu of a joint stipulation and order, defendant filed a status letter informing the Court that the Commissioner of Social Security "is not in a position to enter into a stipulation as envisioned by the Court's Order of October 19, 2021," because her "role in applications for attorney's fees under § 406(b) is quite limited." Letter from Susan C. Branagan dated Nov. 29, 2021 (Dkt. 67), at 1-2. Defendant explained that "the real parties in interest" in a fee award application under § 406(b) are claimant's attorneys, and that, since the fees come out of the past due benefits awarded to the claimant, "the Commissioner of Social Security . . . has no direct financial stake in the answer to the § 406(b) question[.]" Id. at 1 (quoting Gisbrecht, 535 U.S. at 798 n.6) (emphasis supplied by defendant).
That same day, Mr. Portnoy filed another Amended and Supplemental Notice of Motion, this time phrasing his request slightly differently to seek "a supplemental and additional award of $10,143.25 in attorneys fees" pursuant to § 406(b). Supp. Att'y Fee Mot. at 1. In the accompanying Supplemental Affirmation of Irwin M. Portnoy (Portnoy 11/29/21 Aff.) (Dkt. 69), Mr. Portnoy again notes that "[c]ounsel for Plaintiff have refunded the funds awarded to Plaintiff under 28 U.S.C. § 2412 (the EAJA)," and that Mr. McAdam received his § 406(a) award. Portnoy 11/29/21 Aff. ¶¶ 3-4.
The motion was referred to me for report and recommendation on November 30, 2021. (Dkt. 71). Defendant did not file any opposition.
II. ANALYSIS
When considering a motion for attorneys' fees pursuant to § 406(b), the court first determines whether it was timely made, see Sinkler v. Berryhill, 932 F.3d 83, 87-88 (2d Cir. 2019), and then reviews the request for reasonableness. Section 406(b) "does not displace contingent-fee agreements as the primary means by which fees are set for successfully representing Social Security benefits claimants in court." Gisbrecht, 535 U.S. at 807. Rather, it "calls for court review of such arrangements as an independent check, to assure that they yield reasonable results in particular cases." Id. Factors to be considered include: (a) "whether the contingency percentage is within the 25% cap"; (b) "whether there has been fraud or overreaching in making the agreement"; and (c) "whether the requested amount is so large as to be a windfall to the attorney." Wells v. Sullivan, 907 F.2d 367, 372 (2d Cir. 1990); Dupree v. Saul, 2021 WL 308516, at *1 (S.D.N.Y. Jan. 29, 2021). More recently, in Gisbrecht, the Court noted that a fee award may appropriately be reduced based on "the character of the representation and the results the representation achieved," or if the attorney "is responsible for delay." 535 U.S. at 808.
A. Timeliness
Fed. R. Civ. P. 54(d)(2)(B), which requires that fee applications be filed within 14 days after entry of judgment, "provides the applicable limitations period for filing § 406(b) motions." Sinkler, 932 F.3d at 87-88. However, the running of the 14-day period is tolled until "counsel receives notice of the benefits award." Id. at 88. When more than one award of past-due benefits is made (for example, an initial award of benefits to the claimant followed by an award of auxiliary benefits to the claimant's dependent), the timeliness of each application is measured from the receipt of notice of the award to which it relates. See generally Newlin v. Kijakazi, 2022 WL 950981, at *1 (S.D.N.Y. Mar. 30, 2022) (granting plaintiff's first motion for fees, made with respect to an award of past-due benefits to plaintiff on May 5, 2021, and his second motion for fees, made with respect to auxiliary awards of past-due benefits to plaintiff's dependents on June 27, 2021, but not sent to plaintiff until November 2, 2021). District courts may further enlarge the filing period "where circumstances warrant." Sinkler, 932 F.3d at 89 (citing Walker v. Astrue, 593 F.3d 274, 280 (3d Cir. 2010)).
Here, the SSA awarded past-due benefits to plaintiff's child Shayla on October 10, 2021. Portnoy 10/18/22 Aff. Ex. 1. Eight days later, on October 18, 2021, plaintiff filed the 10/18/21 Motion, requesting that the Court "amend" the 9/24/21 Motion by "awarding an additional $10,143.25 to that ordered by the Court's [sic] on July 2, 2021[.]" While the phrasing was inartful, the intent was unmistakable. Moreover, the present motion, filed on November 29, 2021, is essentially a reprise of the 10/18/22 Motion, made necessary by defendant's unwillingness to stipulate to an award under § 406(b). Consequently, the motion should be deemed timely.
B. Reasonableness
The proposed attorney's fee appears to be within the statutory 25% limit, and there is no evidence in the record suggesting that there was fraud or overreaching in connection with the 25% fee agreement that plaintiff signed. The character of the representation was adequate, and the results were good: a quick remand, after plaintiff filed her motion for judgment on the pleadings, followed by substantial past-due benefits awards to plaintiff and her child.
There is no evidence in the record suggesting that the SSA awarded any additional fees under § 406(a) with respect to the 10/10/21 Notice of Award.
That leaves the "windfall" factor. The $10,143.25 now requested, combined with the $21,190.38 previously awarded and paid, would provide counsel with an aggregate of $31,333.63 as payment for a total of 73.8 hours of work on this case. See McAdam 4/5/19 Aff. App. 2; Portnoy 4/18/19 Aff. App. 3. Mathematically, these figures imply a de facto hourly rate of $424.57. Although such a rate would be "difficult to justify" in a social security case "as part of a traditional 'lodestar' analysis, a 'lodestar' analysis does not apply." Baron v. Astrue, 311 F.Supp.3d 633, 637 (S.D.N.Y. 2018). "[E]ven a relatively high hourly rate may be perfectly reasonable, and not a windfall, in the context of any given case." Fields v. Kijakazi, 24 F.4th 845, 854 (2d Cir. 2022). Thus, before reducing a fee award on "windfall" grounds, our Circuit requires that the court consider:
For purposes of the reasonableness analysis, I have excised the hours that appear on the Portnoy timesheet but do not appear to represent work on this case.
(i) the "ability and expertise of the lawyers and whether they were particularly efficient, accomplishing in a relatively short amount of time what less specialized or less well-trained lawyers might take far longer to do";
(ii) "the nature and length of the professional relationship with the claimant -including any representation at the agency level";
(iii) "the satisfaction of the disabled claimant"; and
(iv) "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 854-56.
Here, one of plaintiff's lawyers, Mr. Portnoy, is a former Administrative Law Judge for the SSA, and in that capacity brought both experience and expertise to his representation of the plaintiff. See Portnoy 4/18/2019 Aff. App. 1. Mr. McAdams similarly has decades of experience in representing social security claimants. McAdam 4/18/19 Aff. (Dkt. 37) App. 1. Between the two of them, they digested a dense 634-page administrative record and prepared a set of motion papers that convinced the defendant to stipulate to a remand without further litigation. Consequently, the "ability and expertise of the lawyers" furnishes no basis for reducing their fee.
Attorneys Portnoy and McAdam did not represent plaintiff administratively before she sought review in this Court, but they conscientiously pressed her case once retained, and remained engaged after remand. Again, these facts furnish no basis for reducing the requested fee. See Ricciardi v. Comm'r of Soc. Sec., 2022 WL 1597401, at *4 (E.D.N.Y. May 19, 2022) (granting motion for attorney's fees where attorney did not represent the plaintiff at the administrative level but filed the briefs in district court); Stovall v. Berryhill, 2022 WL 798160, at *3 (E.D.N.Y. Mar. 16, 2022) (similar).
While the Court has not received (and does not expect) a testimonial from plaintiff Gondola, she obtained a good result - including past-due awards aggregating over $125,000 and ongoing benefits for herself and her child - in a relatively short period of time, which permits the Court to infer that she is satisfied with the outcome of the case. See Fields, 24 F.4th at 855 (plaintiff "stands to receive a six-figure award of past-due benefits as well as ongoing monthly benefits," and as a result, "there is no reason to think [plaintiff] is dissatisfied"). I note that plaintiff's case was remanded approximately six months after the administrative record was filed, and the initial award of benefits was made approximately two years after that, notwithstanding the COVID-19 pandemic, which significantly slowed the SSA's operations.
See Lisa Rein, "Social Security offices have been closed for most of the pandemic," Washington Post, Dec. 24, 2021, available at https://www.washingtonpost.com/politics/social-security-corona virus/2021/12/18/0e3b9508-4bc1-11ec-b73b-a00d6e559a6estory.html (last visited July 22, 2022).
Finally, with regard to the "uncertainty" factor, there is never any guarantee that a contingency case will be successful. "Lawyers who operate on contingency - even the very best ones - lose a significant number of their cases and receive no compensation when they do." Fields, 24 F.4th at 855; see also Wells, 907 F.2d at 371 ("[P]ayment for an attorney in a social security case is inevitably uncertain, and any reasonable fee award must take account of that risk."); Nieves v. Colon, 2017 WL 6596613, at *2 (S.D.N.Y. Dec. 26, 2017) (payment is "inevitably uncertain, and any reasonable fee award must take account of that risk"). Here, although counsel succeeded relatively quickly, that does not signify that this case was inherently less risky than others like it when counsel were engaged. Nor, of course, should this Court penalize counsel at the fee application stage for achieving a good result in a short period of time. Consequently, I conclude that the $10,143.25 now requested would not constitute an unfair windfall to plaintiff's counsel.
III. CONCLUSION
For the reasons set forth above, I recommend, respectfully, that plaintiff's motion be GRANTED and that plaintiff's counsel be awarded the additional sum of $10,143.35 as attorneys' fees, to be paid from the monies retained by defendant for that purpose. I further recommend that the withdrawn motion at Dkt. 50, as well as the pending motion at Dkt. 68, be closed.
NOTICE OF PROCEDURE FOR FILING OF OBJECTIONS TO THIS REPORT AND RECOMMENDATION
The parties shall have fourteen days from this date to file written objections to this Report and Recommendation pursuant to 28 U.S.C. § 636(b)(1) and Fed.R.Civ.P. 72(b). See also Fed.R.Civ.P. 6(a) and (d). Any such objections shall be filed with the Clerk of the Court, with courtesy copies delivered to the Hon. Valerie E. Caproni at 40 Foley Square, New York, New York 10007. Any request for an extension of time to file objections must be directed to Judge Caproni. Failure to file timely objections will result in a waiver of such objections and will preclude appellate review. See Thomas v. Arn, 474 U.S. 140 (1985); Frydman v. Experian Info. Sols., Inc., 743 Fed.Appx. 486, 487 (2d Cir. 2018) (summary order); Wagner & Wagner, LLP v. Atkinson, Haskins, Nellis, Brittingham, Gladd & Carwile, P.C., 596 F.3d 84, 92 (2d Cir. 2010).