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Pearson v. Astrue

January 26, 2009

CONNIE PEARSON, PLAINTIFF,
v.
MICHAEL J. ASTRUE, COMMISSIONER OF SOCIAL SECURITY, DEFENDANT.



The opinion of the court was delivered by: Jennifer T. Lum United States Magistrate Judge

ORDER AWARDING ATTORNEY FEES PURSUANT TO 42 U.S.C. SECTION 406(b)

BACKGROUND

On July 12, 2005, Connie J. Pearson ("plaintiff") filed a Complaint seeking review of the Commissioner's denial of plaintiff's application for Disability Insurance Benefits. On July 19, 2005, Michael J. Astrue, Commissioner of Social Security ("defendant") filed a Consent to Proceed Before United States Magistrate Judge Jennifer T. Lum. On August 18, 2005, plaintiff filed a Consent to Proceed Before United States Magistrate Judge Jennifer T. Lum. Thereafter, on January 3, 2006, defendant filed an Answer to the Complaint. On April 18, 2006, the parties filed their Joint Stipulation.

On June 30, 2006, the district court remanded the case to allow the Administrative Law Judge ("ALJ") to fully evaluate the opinion of Mark Janis, M.D., plaintiff's treating physician, and the opinion of Margaret A. Donohue, Ph.D., regarding plaintiff's mental functional limitations, and to remedy the errors outlined in the Court's Memorandum Opinion and Order.

On September 14, 2006, the Court entered an Order granting plaintiff's counsel the sum of $5,000.00 in attorney fees pursuant to the Equal Access to Justice Act ("EAJA").

After further administrative proceedings, the ALJ determined that plaintiff was entitled to benefits. (See Motion at 2). Thereafter, on November 2, 2008, the Commissioner sent plaintiff a Notice of Award indicating an award of retroactive benefits in the sum of $84,590.40. (Motion at 2; Exh. 2).

On November 11, 2008, plaintiff filed a "Petition for Approval of Attorney Fees Under 42 U.S.C. § 406(b) ("Motion") with a Memorandum in Support thereof. On January 7, 2009, defendant filed an Response to Plaintiff's Counsel's Motion for Attorney Fees Pursuant to 42 U.S.C. § 406(b) ("Response"). Thereafter, on January 9, 2009, plaintiff filed a "Reply in Support of Petition for Approval of Attorney Fees Under 40 U.S.C. § 406(b)" ("Reply").

DISCUSSION

Congress authorized payment of a reasonable fee for representation of a successful social security claimant in court. 42 U.S.C. § 406(b). A "reasonable fee" cannot be in excess of 25 percent of the past-due benefits to which the claimant is entitled by his or her judgment.

42 U.S.C. § 406(b)(1)(A). This fee provision is not intended to displace contingent fee agreements as a means to set fees for representation of social security benefit claimants. Gisbrecht v. Barnhart, 535 U.S. 789, 807 (2002). Nor does it imply that all contingent fee agreements that provide for fees up to 25 percent of the past-due benefits awarded are reasonable per se. Id. Instead, in order to recover fees under Section 406(b), an attorney for a successful claimant must show that the fee sought is within the 25 percent boundary and that the fee sought is reasonable for the services rendered in the course of his or her representation before the district court. Id. at 807-08; Crawford v. Astrue, 545 F.3d 854, 858-59 (9th Cir. 2008).

Accordingly, even when a contingent fee falls within the 25 percent boundary, the court may reduce the fee if the court finds it unreasonable. Gisbrecht, 535 U.S. at 807. "The methodology by which a district [court] makes such reasonableness determinations is for that court to select in the exercise of its sound discretion." Crawford, 545 F.3d at 862. In order to determine whether a fee is reasonable, courts have considered the attorney's recovery based on the character of the representation and the results the representation achieved. Gisbrecht, 535 U.S. at 808. For example, if the attorney is responsible for delay, "a reduction is in order so that the attorney will not profit from the accumulation of benefits during the pendency of the case in court." Id. Similarly, if the benefits are large in comparison to the amount of time counsel spent on the case, a downward adjustment is in order to avoid a windfall for the attorney. Id.; see also Ellick v. Barnhart, 445 F. Supp. 2d 1166, 1173 (C.D. Cal. 2006) ("Counsel spent very little time on the case in comparison to the amount of benefits now owing, and the issues briefed in the summary judgment motion were neither novel nor complex."). If the contingent fee is found to be unreasonable, the court must adjust the attorney's recovery accordingly. Gisbrecht, 535 U.S. at 808.

Here, plaintiff is a successful social security claimant and plaintiff's attorney may be awarded a reasonable fee under Section 406(b). See 42 U.S.C. § 406(b)(1)(A) ("Whenever a court renders a judgment favorable to a claimant under [Title II] 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 . . . ").

On July 11, 2005, plaintiff entered into a contingent fee agreement with her attorney. (See Motion at 1-2, Exh. 1). Under the terms of the contingent fee agreement, plaintiff agreed that if her claim was appealed to the federal court level and, thereafter, benefits became payable, her counsel could petition the court for approval of a fee equal to 25 percent of the total past-due benefits. (Motion at 2; Exh. 1 ¶ 4). Thus, the contingent fee agreement provides for a fee that falls within the acceptable range provided by Section 406(b). In addition, there is no basis to find, and none is alleged, that the contingent fee agreement itself is invalid based on fraud or other grounds.

Upon finding a valid contingent fee agreement between a successful social security claimant and his or her attorney, the Court must determine whether the contingent fee is reasonable for the services rendered. Gisbrecht, 535 U.S. at 807. Here, plaintiff's counsel proposes to collect a fee of $21,147.60 for 34.2 hours of attorney time associated with representation before the district court. (Motion at 2-3, Exhs. 3, 4 at 2-3). Such a fee results in an effective hourly rate of $618.35 ($21,147.60 divided by 34.2 hours). The Court finds this hourly rate to be within the acceptable range of reasonable rates. See Hearn v. Barnhart, 262 F. Supp. 2d 1033, 1037 (N.D. Cal. 2003) (canvassing Section 406(b) cases and ...


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