Opinion
17 Civ. 10050 (NSR) (AEK)
11-03-2022
SHANE LADEN, Plaintiff, v. COMMISSIONER OF SOCIAL SECURITY, Defendant.
REPORT AND RECOMMENDATION
ANDREW E. KRAUSE United States Magistrate Judge
TO: THE HONORABLE NELSON S. ROMAN, U.S.D.J.
This case was originally referred to Magistrate Judge Lisa Margaret Smith on January 9, 2018. ECF No. 11. The order of reference was reassigned to the undersigned on October 15, 2020.
Before the Court is Plaintiff Shane Laden's motion for attorney's fees pursuant to 42 U.S.C. § 406(b). ECF Nos. 54-56. For the reasons set forth below, I respectfully recommend that the motion be GRANTED.
BACKGROUND
Plaintiff filed an application for disability insurance benefits on October 28, 2014. Administrative Record (“AR”) at 69. On May 9, 2017, an administrative law judge (“ALJ”) determined that Plaintiff was not entitled to benefits. AR at 16-33. The Social Security Administration's (“SSA”) Appeals Council denied Plaintiff's request for review of the ALJ decision on October 27, 2017. AR at 1-4. Thereafter, in December 2017, Plaintiff retained Daniel A. Osborn of Osborn Law, P.C. to litigate his claim in federal court. ECF No. 56 (“Osborn Decl.”) ¶ 2 & Ex. 1. Pursuant to a fee agreement executed by Plaintiff and counsel, Plaintiff agreed to pay Mr. Osborn, for his work in federal court, the greater of 25 percent of any past-due benefits resulting from his claim or such amount as Mr. Osborn was able to obtain pursuant to the Equal Access to Justice Act (“EAJA”), 28 U.S.C. § 2412. Osborn Decl. Ex. 1. The fee agreement provided that if Mr. Osborn was ultimately granted fees pursuant to 42 U.S.C. § 406(b), he would refund the smaller of the either the 406(b) fees or the EAJA fees to Plaintiff or his family. Id.
Citations to “AR” refer to the certified copy of the administrative record filed by the Commissioner. ECF No. 19.
Plaintiff filed his complaint on December 22, 2017. ECF No. 1. On June 10, 2019, Plaintiff submitted his motion for judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure. ECF Nos. 29, 30. On November 7, 2019, the Commissioner filed a cross-motion for judgment on the pleadings, ECF Nos. 39-40, and on December 30, 2019, Plaintiff filed his reply, ECF No. 44.
On May 10, 2021, while the cross-motions were pending, this Court issued an order requiring the parties to meet and confer regarding whether the case should be remanded to the Commissioner for a new hearing before a constitutionally appointed ALJ in accordance with the Supreme Court's decision in Carr v. Saul, 141 S.Ct. 1352 (2021). ECF No. 45. On June 8, 2021, the parties submitted a proposed stipulation and order of remand, ECF No. 49, which was so ordered by Your Honor the following day, ECF No. 50. On July 29, 2021, Your Honor signed a stipulation and order approving the award of EAJA fees and expenses in the amount of $8,750. ECF No. 53.
In Carr, the Supreme Court held that applicants for Social Security disability benefits who had hearings conducted, and/or decisions issued, by an ALJ whose appointment was not in accordance with the Appointments Clause of the U.S. Constitution were not required to administratively exhaust their Appointments Clause challenges during proceedings before the SSA before raising such challenges for the first time in federal court. 141 S.Ct. at 1362.
Upon remand to the SSA, a second hearing was held before an ALJ who ultimately issued a decision finding Plaintiff to be disabled and entitled to benefits. Osborn Decl. ¶ 12. The SSA issued a notice of award (“NOA”) to Plaintiff on May 29, 2022, setting forth the benefits he would be receiving. Id. ¶ 13 & Ex. 4. The NOA indicated that the SSA withheld 25 percent of the past-due benefits-a total of $54,184.78-to pay fees to an authorized representative. Osborn Decl. ¶ 14 & Ex. 4 at 3. The SSA sent the NOA to the law firm that represented Plaintiff in the administrative proceedings. Osborn Decl. ¶ 15. Mr. Osborn did not receive a copy of the NOA until his firm requested and received a copy from that law firm on July 13, 2022. Id. ¶ 16 & Ex. 5.
Mr. Osborn filed the instant motion, which seeks $54,184.78 in attorney's fees, six days after his firm received the NOA. See Osborn Decl. ¶ 16; ECF No. 55 (showing filing date of July 19, 2022). On August 8, 2022, the Commissioner filed a response in her limited role “resembling that of a trustee for the claimant[ ].” ECF No. 58 at 1 (citing Gisbrecht, 535 U.S. at 798 n.6). The Commissioner did not take a specific position with respect to the fee request, and noted that the SSA “defers to the Court to determine the reasonableness of the requested fee.” Id. at 3-4.
Mr. Osborn acknowledges that while counsel may receive fee awards under both the EAJA and 42 U.S.C. § 406(b), counsel must refund to Plaintiff the amount of the smaller fee. See ECF No. 55 at 5 n.2; Gisbrecht v. Barnhart, 535 U.S. 789, 796 (2002).
DISCUSSION
A. Legal Standard
“Three statutes authorize attorney's fees in social security actions. 42 U.S.C. § 406(a) compensates attorneys for their representation at the administrative level; 42 U.S.C. § 406(b) compensates attorneys for representation before federal courts; and the EAJA provides additional fees if the Commissioner's position was not ‘substantially justified.'” LaFrance v. Saul, No. 17-cv-4709 (CM) (SN), 2019 WL 4677041, at *1 (S.D.N.Y. Aug. 26, 2019) (citing Gisbrecht, 535 U.S. at 794-96), adopted by 2019 WL 4565074 (S.D.N.Y. Sept. 20, 2019). Pursuant to Section 406(b), which is invoked here, “[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,” as long as the fee does not exceed “25 percent of the total of the past-due benefits to which the claimant is entitled.” 42 U.S.C. § 406(b)(1)(A).
B. Analysis
1. Timeliness
The Court will first address whether Mr. Osborn timely filed his application for attorney's fees. In Sinkler v. Berryhill, the Second Circuit concluded that the 14-day filing period set forth in Rule 54(d)(2)(B) of the Federal Rules of Civil Procedure applies to attorney's fees applications under 42 U.S.C. § 406(b), but that the 14-day filing period is subject to equitable tolling. 932 F.3d 83, 85 (2d Cir. 2019). Thus, “[w]here, as here, a Social Security claimant secures a judgment reversing a denial of benefits and remanding for further proceedings, the fourteen-day filing period is tolled until the claimant receives notice of the amount of any benefits award . . . because the benefits award amount is necessary to identify the maximum attorney's fee that may be awarded under § 406(b).” Id. “[I]t is unclear whether the court in Sinkler intended for the 14-day tolling period to commence when the party to the action receives notice of the damage award or when the party 's counsel receives notice.” Almodovar v. Saul, No. 16-cv-7419 (GBD) (SN), 2019 WL 6207784, at * 2 (S.D.N.Y. Nov. 21, 2019) (emphasis in original); compare Sinkler, 932 F.3d at 85 (“[T]he fourteen-day filing period is tolled until the claimant receives notice of the amount of any benefits award.”) with id. at 88 (“Once counsel receives notice of the benefits award . . . there is no sound reason not to apply Rule 54(d)(2)(B)'s fourteen-day limitations period . . . .”).
Rule 54(d)(2)(B) states that “[u]nless a statute or a court order provides otherwise,” a motion for attorney's fees must “be filed no later than 14 days after the entry of judgment.” Fed.R.Civ.P. 54(d)(2)(B)(i).
Here, the NOA is dated May 29, 2022, and is presumed to have been received on June 1, 2022. Osborn Decl. Ex. 4; see Sinkler, 932 F.3d at 89 n.5 (“Nothing in this opinion departs from the law's presumption that a party receives communications three days after mailing.”). The motion for attorney's fees was filed 48 days later. See ECF No. 55. But as Mr. Osborn has explained, he did not receive the NOA until July 13, 2022, when it was relayed to him by the firm that represented Plaintiff before the SSA, and the motion for attorney's fees was filed six days after Mr. Osborn received the NOA. Osborn Decl. ¶ 16; ECF No. 55. The Commissioner's letter notes a question about the timeliness of the application, but states that “it is up to this Court to determine whether that reason is sufficient to determine” that the motion was timely. See ECF No. 58 at 2.
The Court need not-and does not-decide the correct interpretation of Sinkler to resolve this matter. In holding that Rule 54(d)(2)(B) applies in the context of § 406(b) motions, the Second Circuit noted that the 14-day limitations period “is not absolute,” and that such a period applies “[u]nless a statute or a court order provides otherwise.” Sinkler, 932 F.3d at 89 (quoting Fed.R.Civ.P. 54(d)(2)(B)). “Thus, district courts are empowered to enlarge that filing period where circumstances warrant.” Id.
The Court finds that the circumstances here warrant doing so. Mr. Osborn was not Plaintiff's counsel before the SSA on remand and was not notified by the SSA of Plaintiff's ultimate benefit award. See Osborn Decl. ¶¶ 13, 15, 16 & Ex. 4. “Without the [NOA], [Mr. Osborn] could not file a motion for attorney's fees because he did not know the amount of past-due benefits.” LaFrance, 2019 WL 4677041, at *3. Once Mr. Osborn received the NOA on July 13, 2022, see Osborn Decl. ¶ 16 & Ex. 5, he filed the instant motion six days later, see ECF No. 55. Accordingly, even if the filing period began to run when Plaintiff presumably received the NOA on June 1, 2022, enlargement of the filing period is warranted under the circumstances, and the motion is deemed to be timely. See Sinkler, 932 F.3d at 89-90; Phillip v. Comm'r of Soc. Sec., No. 18-cv-5005 (SN), 2021 WL 681289, at *2 (S.D.N.Y. Feb. 22, 2021) (enlarging the filing period and deeming a § 406(b) motion timely filed in nearly identical circumstances); Diberardino v. Comm'r of Soc. Sec., No. 17-cv-2868 (PKC), 2020 WL 6746828, at *2-3 (E.D.N.Y. Nov. 17, 2020) (same).
2. Reasonableness of the Fee Award
To ensure that contingency fees are employed fairly in Social Security cases, “Congress capped contingency fees at twenty-five percent of the claimant's past-due benefits and charged courts with ensuring that resulting fees are ‘reasonable.'” Fields v. Kijakazi, 24 F.4th 845, 849 (2d Cir. 2022). “[W]here there is a contingency fee agreement in a successful social security case, the district court's determination of a reasonable fee under § 406(b) must begin with the agreement, and the district court may reduce the amount called for by the contingency agreement only when it finds the amount to be unreasonable.” Id. at 852-53 (quoting 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 (NSR) (LMS), 2021 WL 4949217, at *2 (S.D.N.Y. Oct. 22, 2021) (citing Wells, 907 F.2d at 371).
To assess the reasonableness of a contingency fee, a court must first “‘determine whether the contingency percentage is within the 25% cap' and . . . ‘whether there has been fraud or overreaching in making the agreement.'” Fields, 24 F.4th at 853 (quoting Wells, 907 F.2d at 372). A court must then consider the following factors to determine the reasonableness of a requested award: (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 is responsible for delay,' lest the attorney ‘profit from the accumulation of benefits' during a delay that the attorney caused,” and (3) “‘[i]f the benefits are large in comparison to the amount of time counsel spent on the case,' the so-called ‘windfall' factor.” Id. (quoting Gisbrecht, 535 U.S. at 808).
Here, as the Commissioner notes, counsel's requested fee “is not greater than 25% of Plaintiff's past due benefits,” ECF No. 58 at 3, and further, there is no evidence or suggestion of fraud or overreaching in the negotiation of the fee agreement.
The Court turns next to the reasonableness factors. First, the fee, comprising 25 percent of Plaintiff's past-due benefits award, Osborn Decl. Ex. 4 at 3, is in accordance with the character of the representation and the results achieved. After bringing this action to challenge the denial of benefits, Mr. Osborn was able to achieve a successful result for his client, as the Commissioner agreed to remand the case to the agency for further proceedings before a constitutionally appointed ALJ. ECF No. 50; Osborn Decl. ¶ 8. Back before the SSA, Plaintiff was granted a second hearing before an ALJ, who found Plaintiff to be disabled and entitled to receive benefits. Osborn Decl. ¶ 12; see, e.g., Shrack v. Saul, No. 16-cv-2064 (RMS), 2020 WL 373074, at *2 (D. Conn. Jan. 23, 2020) (finding that where “plaintiff sought and obtained a Sentence Four remand, and the plaintiff received a fully favorable result upon remand,” fee was in line with character of representation and results achieved).
Second, although Plaintiff's counsel requested-and was granted-multiple extensions to file Plaintiff's papers, these extensions do not amount to an unreasonable delay. Counsel filed four extension requests for the opening brief and one extension request for the reply brief. ECF Nos. 17, 22, 25, 27, 42. Such extensions of time are commonplace in Social Security cases; and while there was a longer-than-usual delay in submitting Plaintiff's motion for judgment on the pleadings, counsel provided acceptable reasons for seeking the extensions. See McDonald v. Comm'r of Soc. Sec., No. 16-cv-926 (FPG), 2019 WL 1375084, at *2 (W.D.N.Y. Mar. 27, 2019) (finding attorney did not unreasonably delay proceedings where he requested multiple extensions of time to file dispositive motion and reply, but “provided acceptable reasons for doing so”); cf. Shrack, 2020 WL 373074, at *2 (finding counsel's multiple extension requests did not cause unreasonable delay because “such requests were reasonable given the current work load for this plaintiff's counsel who practices exclusively in the field of Social Security”).
Counsel attributes part of the lengthy delay to the 2018-2019 shutdown of the federal government, during which time all civil cases in this District in which the United States, its employees, or its agencies were parties were stayed. See ECF No. 25; Standing Order, In re: Stay of Certain Civil Cases Pending the Restoration of Department of Justice Funding, No. 18-mc-00605-CM (S.D.N.Y. Dec. 27, 2018), ECF No. 2. At one point, Plaintiff's motion was due while the government shutdown was ongoing, see ECF No. 23, but Plaintiff did not file the motion for judgment on the pleadings based on the understanding that the matter was stayed, ECF No. 25. After the filing deadline had passed and government operations resumed in full, Plaintiff wrote to the Court to convey a further proposed revised schedule that the parties had negotiated. Id. Plaintiff also requested extensions to file his opening brief for the following reasons unrelated to the government shutdown: (1) counsel was scheduled to take maternity leave, (2) counsel required additional time to review the extensive record upon returning from maternity leave, and (3) counsel was in the process of transferring the file to another attorney. ECF Nos. 17, 22, 27. Plaintiff also requested one extension of time to file his reply brief due to various scheduling conflicts. See ECF No. 42. Notably, the Commissioner has not suggested that these extensions amount to an “unreasonable delay.” See ECF No. 58 at 3-4. Moreover, because every other reasonableness factor weighs in favor of granting counsel's application for attorney's fees, the delays in the proceedings here-which arose for acceptable reasons, and were allowed by the Court-should not result in the denial or reduction of the requested fee award. See Toth v. Saul, No. 17-cv-516 (SLC), 2020 WL 6441313, at *2-3 (N.D. Ind. Nov. 3, 2020) (finding fee request to be reasonable where all factors-other than counsel's delay-weighed in favor of granting counsel's request).
Third, with respect to the so-called “windfall” factor, counsel's requested fee of $54,184.78 is not inappropriately large in light of the 48 hours that counsel devoted to the case and the successful result that was achieved. See Osborn Decl. ¶ 9 & Ex. 2. For purposes of evaluating the “windfall” factor, the Second Circuit has instructed court to look beyond the de facto hourly rate and to 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 taken to achieve that result.” Fields, 24 F.4th at 854-55.
Here, counsel represented Plaintiff only for his federal court proceedings; work on this matter included the review of an over 1,000-page administrative record and drafting memoranda of law, which eventually resulted in a stipulated remand by the Commissioner. See Osborn Decl. ¶¶ 5-7, 8, 15 & Ex. 2; ECF No. 19. Although the 48 hours expended by counsel is more than the 20-40 hours courts within this Circuit generally and routinely endorse, see Bass v. Kijakazi, No. 16-cv-6721 (JCM), 2022 WL 1567700, at *4 (S.D.N.Y. May 18, 2022), in this case, 48 hours is reasonable given the voluminous record, and the fact that counsel did not represent Plaintiff before the SSA and thus had to learn the record for the first time at the district court level, see, e.g., Santiago v. Comm'r of Soc. Sec., No. 19-cv-4001 (KPF) (KNF), 2020 WL 7335310, at *4 (S.D.N.Y. Dec. 14, 2020) (finding 50 hours reasonable in case where “the legal issues . . . were not unusually complex” but the 1,113-page record was “larger than average” and took significant time to review); Borus v. Astrue, No. 09-cv-4723 (PAC) (RLE), 2012 WL 4479006, at *3 (S.D.N.Y. Sept. 28, 2012) (finding 54 hours reasonable in case where counsel did not represent plaintiff at administrative proceedings and therefore had to learn the record for the first time at the federal court level); cf. Daily v. Comm'r of Soc. Sec., No. 18 Civ. 1080 (AT) (KNF), 2020 WL 1322528, at *3 (S.D.N.Y. Mar. 19, 2020) (awarding EAJA fees to compensate counsel for 68.3 hours in case where counsel did not represent the plaintiff at the administrative level and Commissioner conceded the 903-page record was “unusually voluminous”). Moreover, this Court has no reason to believe that Plaintiff is in any way unsatisfied with the results of counsel's representation. Indeed, Plaintiff was awarded $162,384.22 in past-due benefits and was found to be eligible for $2,488 per month going forward. Osborn Decl. Ex. 4 at 2; see Bass, 2022 WL 1567700, at *5 (finding that counsel's success in advocating on behalf of the plaintiff “militate[s] in favor of approving” fee request). Further, given that Plaintiff did not secure a remand until the issues were fully briefed before this Court, it is apparent that a favorable outcome was uncertain. See Fields, 24 F.4th at 856 (“A windfall is more likely to be present in a case . . . where the lawyer takes on a contingency-fee representation that succeeds immediately and with minimal effort, suggesting very little risk of nonrecovery. That kind of unearned advantage is what the windfall concern really is about.”). In these types of circumstances, contingency agreements, like the one at issue here, present risks of non-payment-“payment . . . is inevitably uncertain, and any reasonable fee award must take account of that risk.” Id. at 85556 (quotation marks omitted). The award amount sought here appropriately reflects that risk.
Turning to the de facto rate-which is not dispositive, see id. at 854-counsel would effectively be compensated here at $1,128.85 per hour ($54,184.78 for 48 hours worked). Osborn Decl. ¶¶ 9, 14 & Ex. 2; see also ECF No. 55 at 6. While this rate is on the higher end of the spectrum of de facto hourly rates approved by courts within this Circuit, it is substantially less than the $1,556.98 de facto hourly rate approved by the Second Circuit in Fields. See 24 F.4th at 854-57. Further, other courts within this Circuit have approved similar and even higher rates, including in cases litigated by Mr. Osborn's firm. See, e.g., Ricciardi v. Comm'r of Soc. Sec., No. 19-cv-3304 (MKB), 2022 WL 1597401, at *4-5 (E.D.N.Y. May 19, 2022) (approving Mr. Osborn's $1,528.56 hourly rate); Kirk W. v. Kijakazi, No. 18-cv-1049L, 2022 WL 883774, at *1-3 (W.D.N.Y. Mar. 25, 2022) (approving $1,574.78 hourly rate); Muniz v. Comm'r of Soc. Sec., No. 18-cv-8295 (KMK) (PED), 2020 WL 8340078, at *3-4 (S.D.N.Y. Dec. 15, 2020) (approving $1,257.15 hourly rate), adopted by 2021 WL 293381 (S.D.N.Y. Jan. 28, 2021); Valle v. Colvin, No. 13-cv-2876 (JPO), 2019 WL 2118841, at *3-4 (S.D.N.Y. May 15, 2019) (approving $1,079.72 hourly rate). Accordingly, I respectfully recommend the Court find that Mr. Osborn's requested fee award of $54,184.78 is reasonable.
CONCLUSION
For the reasons set forth above, I respectfully recommend that Plaintiff's motion for attorney's fees, ECF No. 54, be GRANTED, and that Mr. Osborn be awarded $54,184.78. I further respectfully recommend that Mr. Osborn be directed to promptly refund to Plaintiff $8,750, which represents the EAJA fees that counsel previously received, upon receipt of the award addressed in this Report and Recommendation.
NOTICE
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties shall have fourteen (14) days from service of this Report and Recommendation to file written objections. See also 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 Nelson S. Roman, United States District Court, Southern District of New York, 300 Quarropas Street, White Plains, New York, 10601, and to the chambers of the Honorable Andrew E. Krause at the same address.
Any request for an extension of time for filing objections or responses to objections must be directed to Judge Roman, and not to the undersigned.
Failure to file timely objections to this Report and Recommendation will result in a waiver of objections and will preclude appellate review. See Thomas v. Arn, 474 U.S. 140 (1985); Smith v. Campbell, 782 F.3d 93, 102 (2d Cir. 2015).