Opinion
No. 16-cv-4099
2020-09-16
LINDA G., Plaintiff, v. Andrew M. SAUL, Commissioner of the Social Security Administration, Defendant.
Marshall W. Conick, Marshall W. Conick, Attorney at Law, New Lenox, IL, Ashley S. Rose, Law Office of Ashley S. Rose, Glen Ellyn, IL, for Plaintiff. SSA, AUSA, Erin Elaine Kelly, United States Attorney's Office, Megan Elizabeth Donohue, Assistant United States Attorney, Chicago, IL, for Defendant.
Marshall W. Conick, Marshall W. Conick, Attorney at Law, New Lenox, IL, Ashley S. Rose, Law Office of Ashley S. Rose, Glen Ellyn, IL, for Plaintiff.
SSA, AUSA, Erin Elaine Kelly, United States Attorney's Office, Megan Elizabeth Donohue, Assistant United States Attorney, Chicago, IL, for Defendant.
ORDER
Susan E. Cox, U.S. Magistrate Judge Plaintiff Linda G. now comes before the Court seeking an award of attorney's fees pursuant to 42 U.S.C. § 406(b). [Dkt. 27.] Defendant Commissioner of the Social Security Administration ("Commissioner"), in a role "resembling that of a trustee" for Plaintiff (see Gisbrecht v. Barnhart , 535 U.S. 789, 798, 122 S.Ct. 1817, 152 L.Ed.2d 996 (2002) ) asks the Court to review the reasonableness of those fees, which the Court now does. For the reasons detailed herein, Plaintiff's motion is granted in part. Plaintiff's counsel is awarded $37,870.00 in § 406(b) attorney's fees.
In accordance with Northern District of Illinois Internal Operating Procedure 22, the Court refers to Plaintiff only by her first name and the first initial of her last name.
I. Procedural History
Plaintiff filed an application for disability benefits on December 26, 2012, alleging an onset date of November 15, 2008. Plaintiff's claims were denied initially and upon reconsideration. After an administrative hearing, Administrative Law Judge ("ALJ") Victoria A. Ferrer issued a November 20, 2015 opinion finding Plaintiff not disabled. This Court reversed and remanded the ALJ's decision. [Dkt. 18.] A second administrative hearing resulted in a fully favorable decision and an award of benefits for Plaintiff. [see Dkts. 48-1 and 48-2.] Plaintiff's counsel now seeks attorney's fees pursuant to 42 U.S.C. § 406(b). [Dkts. 27 and 48.]
The motion of Plaintiff's counsel, Mr. Ashley Rose, initially requests fees in the amount of $60,281.25. [Dkt. 27, ¶ 2.] However, this $60,281.25 figure includes $6,000.00 already awarded under 42 U.S.C. § 406(a) for work before the Social Security Administration by a colleague of Mr. Rose on this case. [Id. at ¶15.] Therefore, counsel actually seeks to retain $54,281.25 under 42 U.S.C. § 406(b). [Id. at ¶18.] At issue here is whether that fee award sought is reasonable.
Counsel seeks to be paid $44,407.50 out of Plaintiff's past-due benefits, and desires to keep the amount awarded under the EAJA of $9,873.75. [See dkt. 27, ¶ 16.] The Court discusses why this "offset" Plaintiff's counsel seeks is inappropriate in Section III(b), infra.
Additionally, the Court notes Plaintiff's counsel has already received $9,873.75 for work before this court under the Equal Access to Justice Act (EAJA). [Dkt. 26.]
II. Legal Standard
42 U.S.C. § 406(b)(1) of the Social Security Act provides in pertinent part:
[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 by reason of such judgment...
While the language of 42 U.S.C. § 406(b)(1) only refers to benefits to which a claimant himself is entitled, the Supreme Court has clarified that counsel is entitled to include 25 percent of a dependent's past-due benefits in his requested fee. Hopkins v. Cohen , 390 U.S. 530, 88 S.Ct. 1146, 20 L.Ed.2d 87 (1968). Nonetheless, the attorney still bears the burden of proving "that the fee sought is reasonable for the services rendered." Gisbrecht , 535 U.S. at 807 n. 17, 122 S.Ct. 1817 (2002).
A reduction in attorney fees may be warranted where the amount requested would represent a windfall to the attorney in light of the time and effort expended by the lawyer. Id. at 808, 122 S.Ct. 1817. The Supreme Court has explained that the 25% compensation scheme of " § 406(b) does not displace contingent-fee agreements as the primary means" of compensating attorneys, but rather "calls for court review of such arrangements as an independent check, to assure that they yield reasonable results in particular cases." Id. at 807, 122 S.Ct. 1817. With this in mind, the Seventh Circuit stated that "the court should consider the reasonableness of the contingency percentage to make sure the attorney does not receive fees which are out of proportion to the services performed, the risk of loss and the other relevant considerations." McGuire v. Sullivan , 873 F.2d 974, 981 (7th Cir. 1989). Part of that reasonableness check calls for the Court to consider whether "the benefits are large in comparison to the amount of time counsel spent on the case" and, if so, "a downward adjustment is... in order." Gisbrecht , 535 U.S. at 791, 122 S.Ct. 1817.
Additionally, the Court finds the Fourth Circuit's 1966 decision in Redden v. Celebrezze , 370 F.2d 373, remains relevant and quite enlightening to this matter:
disability cases are frequently drawn out over a considerable period of time and the accrued benefits which are ultimately determined to be payable may be very substantial. When they are, judges should constantly remind themselves that, while the lawyer is entitled to a reasonable compensation for the services rendered by him in the judicial proceeding, these benefits are provided for the support and maintenance of the claimant and his dependents and not for the enrichment of members of the bar. Routine approval of the statutory maximum allowable fee should be avoided in all cases. In a great majority of the cases, perhaps, a reasonable fee will be much less than the statutory maximum. The statute directs a determination and allowance of a reasonable fee and the courts are responsible under the Act for seeing that unreasonably large fees in these Social Security cases are not charged or collected by lawyers.
Redden , 370 F.2d at 376 (4th Cir. 1966) (emphasis added).
III. The Reasonableness of Plaintiff's Proposed Fee Award
a. Claimant's Benefits
One method of calculating attorney's fees is the "lodestar" approach. Under the lodestar method of calculating an attorney's fees, the number of hours reasonably devoted to a particular case is multiplied by a reasonable hourly fee. Gisbrecht , 535 U.S. at 789, 122 S.Ct. 1817. However, this is not strictly the method the Court employs here:
While the Supreme Court in Gisbrecht rejected the lodestar approach as a starting point to determine the reasonableness of a fee request under § 406(b), see Gisbrecht , 535 U.S. at 802, 808, 122 S.Ct. 1817, certain aspects of a lodestar approach remain in the calculus; as a result, "[d]istrict courts are left to determine how much of the lodestar approach is still viable." Brannen v. Barnhart , 2004 WL 1737443, at *5 (E.D. Tex. July 22, 2004) ; see Jeter v. Astrue , 622 F.3d 371, 381 (5th Cir. 2010) ("[D]istrict courts may consider the lodestar method in determining the reasonableness of a § 406(b) fee, but the lodestar calculation alone cannot constitute the basis for an ‘unreasonable’ finding.").
Smith v. Saul , 2020 WL 104138, at *2 (N.D. Ind. Jan. 9, 2020). As the independent check on the reasonableness of counsel's fee award, the Court can assess such factors as whether (1) the fee is out of line with "the character of the representation and the results... achieved"; (2) counsel's delay caused past-due benefits to accumulate; or (3) past due benefits "are large in comparison to the amount of time counsel spent on the case." Gisbrecht , 535 U.S. at 808, 122 S.Ct. 1817.
The Commissioner does not contend there was substandard performance by counsel here, nor that any delay of counsel was the cause of the accumulation of past-due benefits to the claimant. The Commissioner focuses on the third factor, that the fee counsel requests is excessive in comparison to the amount of time counsel spent on the case, resulting in a windfall to counsel. Therefore, the Court has perused the "Activity" sheet detailing the hours Mr. Rose expended in this case. [Dkt. 48-3.] Mr. Rose claims to have expended 54.1 hours of attorney time in litigation of this matter. Id.
Twenty-five percent of Plaintiff's past due benefits, which have been withheld by the Agency to pay any authorized fees, amounts to $60,281.25 [dkt. 28-2 at p. 5]. Again, Mr. Rose seeks $54,281.25 in attorney's fees from this amount. This amount divided by the hours Mr. Rose expended on this case results in an hourly rate of $1,003.35. The Court finds $54,281.25 to be a high recovery for counsel when viewed in terms of an hourly rate, particularly in light of the time expended on counsel's reply brief.
As suggested by Supreme Court in Gisbrecht , this Court looks for guidance in the form of counsel's normal hourly rate in a non-contingent matter. Gisbrecht , 535 U.S. at 807-08, 122 S.Ct. 1817. Counsel has represented that his hourly rate for a non-contingent matter would be $350 per hour. [Dkt. 48-4.] Thus, the amount counsel would receive from Plaintiff's benefits here, if he were granted 25% of those benefits, amounts to approximately triple his hourly rate. The Sixth Circuit has offered some helpful guidance on this point, suggesting that a multiplier of two is an appropriate floor (i.e. , doubling of an attorney's hourly rate would be per se reasonable), and a multiplier above that amount is when a "court may consider arguments designed to rebut the presumed reasonableness of the attorney's fee." Hayes v. Sec'y of Health & Human Servs. , 923 F.2d 418, 422 (6th Cir. 1990) (citing Kirchoff v. Flynn , 786 F.2d 320, 326 (7th Cir. 1986) ("[w]ithout a floor the introduction of a cap would depress average fees below their expected level in the private market")).
In rebuttal of the presumed reasonableness of Mr. Rose's fee petition, the Commissioner points out that Mr. Rose billed eleven hours on a reply brief that contained about two pages of argument. [Dkt. 40, p. 4; Dkt. 48-3 at p. 2.] (The Courts further notes that this is in addition to the 5.5 hours earlier spent "study(ing) unfavorable" case law that presumably would have aided him in speedily drafting his reply memorandum. [See dkt. 48-3 at p.1.]) Thus, the hourly rate implied by counsel's motion for fees suggests he should be compensated at about $5,500 per page for this work, which the Court does not find reasonable. See McGuire v. Sullivan , 873 F.2d 974, 981 (7th Cir. 1989) (court should consider the reasonableness of the contingency percentage to make sure the attorney does not receive fees which are out of proportion to the services performed...").
Additionally, the Commissioner notes that Plaintiff's monthly benefit amount of $2,737 is a major driver of the amount of past-due benefits in this case. [Dkt. 40, p. 4.] Although this amount is roughly twice the average benefit amount for a disabled worker in 2019, Plaintiff's monthly benefit amount was largely determined by her strong earnings history. See SSA, Disabled Worker Average Benefits, https://www.ssa.gov/oact/STATS/dib-g3.html (last visited Sept. 4, 2020); see also , SSA, PIA Definition, https://www.ssa.gov/OACT/COLA/piaformula.html (explaining how monthly benefit amounts are computed) (last visited Sept. 4, 2020). Thus, pursuant to statute, the Court will not give undue weight to the amount of past-due benefits awarded to Plaintiff in this matter. 20 C.F.R. § 404.1725(b) ("The benefits payable in any claim are determined by specific provisions of law and are unrelated to the efforts of the representative.").
While the Court is mindful of balancing both the risks involved to counsel when taking on these types of contingent cases, and the fact that Social Security benefits are provided for the support and maintenance of the claimant and her dependents and not for the enrichment of members of the bar, in light of all the foregoing considerations, the Court cannot approve counsel's request for a fee that is approximately triple his normal rate; because the fees sought here do not meet the Court's reasonableness check, "a downward adjustment in order." Gisbrecht , 535 U.S. at 791, 122 S.Ct. 1817.
The Court appreciates the risk involved here (and in any contingent case), but at the same time, the risk-of-no-recovery in Social Security cases argument "is not a terribly strong one [and t]here isn't really as much risk involved as [counsel] contends." Dettloff v. Colvin , 2015 WL 3398366, at *2 (N.D. Ill. May 27, 2015) ; see also , dkt. 27, ¶ 10.
While the Commissioner does not suggest a particular hourly fee he would find appropriate to award Mr. Rose, the Court finds the issues in this case to be commonly-litigated issues and Mr. Rose's hours expended to be high in light of that factor. Because of this, and the fact it seems to have taken Mr. Rose an unusually long time to draft the two pages of argument in his reply brief, the Court considers a multiplier of two times counsel's hourly rate to be reasonable. Hayes , 923 F.2d at 422. Thus, the Court grants Mr. Rose $700 per hour for the 54.1 hours for which he worked on Plaintiff's case. This amounts to a recovery of $37,870.00 in § 406(b) fees.
The Court is disinclined to reduce Mr. Rose's hours in this case, because
courts should avoid engaging in an arbitrary determination of how long a ‘reasonable’ attorney would spend on a certain matter. As the Seventh Circuit has observed, ‘lawyers do not come from cookie cutters. Some are fast studies and others require extra preparation.’ On the other hand, we have a right to expect efficiency from plaintiff's attorneys who, as here, are highly experienced specialists in litigating social security appeals.
Scott v. Astrue , 2012 WL 527523, at *6 (N.D. Ill. Feb. 16, 2012) (citing Gusman v. Unisys Corp. , 986 F.2d 1146, 1150 (7th Cir. 1993) ) (other signals and citations omitted). Mr. Rose has practiced exclusively in the field of Social Security disability law since 1988. [Dkt 27, ¶ 9.] He has represented clients at all stages of the disability-seeking process, including having written over 450 briefs at the District Court level. Id. Therefore, while not reducing Mr. Rose's hours, the Court merely notes as unusual the high amount of time Mr. Rose devoted to this case fairly classified as one containing commonly-litigated issues.
b. Apportionment of Fees
Next, the Court must address the fact Mr. Rose asks the Court to "offset" any § 406(b) recovery from the EAJA fees he has already received in this matter. [Dkt. 27, ¶ 16.] As a general rule, counsel is not entitled to retain both his EAJA fees and the award for past due benefits under § 406(b). See Gisbrecht , 535 U.S. at 796, 122 S.Ct. 1817 ; 42 U.S.C. § 406(b)(1)(A). If a claimant's attorney receives fees under both EAJA and § 406(b), he "must refund to the claimant the amount of the smaller fee." Gisbrecht , 535 U.S. at 796, 122 S.Ct. 1817 (quotation and alteration omitted); Kopulos v. Barnhart , 318 F. Supp. 2d 657, 668 (N.D. Ill. 2004) (explaining that the attorney's refund to the claimant avoids the ramifications of § 406(b)(2) ). Thus, "the scheme [proposed by counsel] is not expressly authorized by the applicable statutes or regulations." Schneider v. Colvin , No. 12 cv 9084, Order on § 406(b) fees, dkt. 47 (March 10, 2016) (reconsideration denied November 7, 2016).
Additionally, "a federal court is without jurisdiction to render a fee award touching on an attorney's efforts in administrative proceedings." Id. (citing Picha v. Chater , 1996 WL 501566, at *1 (N.D. Ill. Aug. 28, 1996) ; Buchanan v. Apfel , 249 F.3d 485, 492 (6th Cir. 2001) ; Mathus v. Heckler , 661 F. Supp. 241, 243 (N.D. Ill. 1987) ; Ruzicka v. Heckler , 562 F. Supp. 499, 500 (N.D. Ill. 1983) ; 20 C.F.R. § 404.1728(b) (explaining that other than the § 406(b) fee award, "[w]e will not certify for direct payment any other fee your representative may request")). Thus, the Court does not believe it has authority to order the "offset" counsel seeks, and it will not do so here. Mr. Rose "must refund to the claimant the amount of the smaller fee" of the EAJA and § 406(b) fees he is awarded in this case, (i.e. , $9,873.75 in EAJA fees). Gisbrecht , 535 U.S. at 796, 122 S.Ct. 1817.
c. Dependent Benefits
Lastly, Plaintiff's counsel notes that he may file a future motion for attorney's fees pursuant to 42 U.S.C. § 406(b) based on any awarded dependent benefits. [Dkts. 27, ¶ 17.] While counsel is indeed entitled to request the Court to award 25 percent of a dependent's past-due benefits to counsel, the Court must still be the "independent check" on the reasonableness of counsel's fee award. Hopkins , 390 U.S. 530, 88 S.Ct. 1146. As such, the Court will consider, as part of its windfall analysis, whether counsel performed any additional work before the Court with regard to Plaintiff's dependents. Counsel should carefully review this Court's 42 U.S.C. § 406(b) decision in Jose R. v. Saul , 2020 WL 635911, at *2 (N.D. Ill. Feb. 11, 2020), with regard to the issue of dependent benefits before filing any additional motion for 42 U.S.C. § 406(b) fees in this case.
IV. Conclusion
For the foregoing reasons, Plaintiff's Motion for Attorney's Fees [dkt. 27] pursuant to 42 U.S.C. § 406(b) is granted in part. Plaintiff's attorney, Ashley S. Rose, is awarded $37,870.00 in 42 U.S.C. § 406(b) fees, payable by the Social Security Administration from Plaintiff's past-due Social Security disability benefits. From this amount, counsel will refund to Plaintiff the amount of $9,873.75, equal to the EAJA attorney fees recovered by attorney Rose for representation of Plaintiff in Court.