UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
July 2, 2009
BRENDA E. DANIEL, PLAINTIFF,
MICHAEL J. ASTRUE,*FN1 COMMISSIONER OF THE SOCIAL SECURITY ADMINISTRATION, DEFENDANT.
The opinion of the court was delivered by: Margaret A. Nagle United States Magistrate Judge
ORDER RE: MOTION FOR ATTORNEY FEES PURSUANT TO 42 U.S.C. § 406(b)
On January 16, 2008, counsel for plaintiff filed a Notice of Motion and Motion for Attorney Fees Pursuant to 42 U.S.C. § 406(b), with a supporting memorandum of points and authorities and declaration by plaintiff's counsel, William M. Kuntz, Attorney at Law (collectively, the "Motion"). The Motion requests payment of attorney's fees in the total amount of $18,143.50. On January 28, 2008, defendant filed a Response to Plaintiff's Counsel's Motion for Attorney Fees Pursuant to 42 U.S.C. § 406(b). For the reasons stated below, the Motion is GRANTED.
Plaintiff's counsel represented plaintiff before the United States District Court pursuant to a contingency fee agreement ("Agreement"), which provides in Paragraph 3 for attorney's fees "equal to 25% of all past due benefits resulting from a the favorable decision on this Social Security and/or SSI Disability claim." (Motion at 3, Exhibit 1.) On March 31, 2006, the Court reversed the Commissioner's decision and remanded this case for further administrative proceedings. (Motion at 3.) On November 14, 2006, the Commissioner issued a decision granting plaintiff's application for benefits. (Motion at 3, Exhibit 2.) On March 5, 2007, plaintiff was awarded $100,574.00 in retroactive benefits. (Motion at 3, Exhibit 3.) Pursuant to a stipulation of the parties and related Court Order, plaintiff's counsel was awarded the sum of $1,942.00 in attorney's fees pursuant to the Equal Access to Justice Act ("EAJA"). (Motion at 3.)
Section 406(b) of Title 42 provides:
Whenever 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, not in excess of 25 percent of the total of the past-due benefits to which the claimant is entitled . . . . In case of any such judgment, no other fee may be payable . . . for such representation except as provided in this paragraph.
42 U.S.C. § 406(b)(1)(A).*fn2
In Gisbrecht v. Barnhart, 535 U.S. 789 (2002), the Supreme Court held that 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. Rather, § 406(b) calls for court review of such arrangements as an independent check, to assure that they yield reasonable results in particular cases. Congress has provided one boundary line: Agreements are unenforceable to the extent that they provide for fees exceeding 25 percent of the past-due benefits. Within this 25 percent boundary . . . the attorney for the successful claimant must show that the fee sought is reasonable for the services rendered.
Id. at 807 (citations omitted).
The hours spent by counsel representing the claimant and counsel's "normal hourly billing charge for non-contingent-fee cases" may aid "the court's assessment of the reasonableness of the fee yielded by the fee agreement." Gisbrecht, 535 U.S. at 808. The Court appropriately may reduce counsel's recovery based on the character of the representation and the results the representative achieved. If the attorney is responsible for delay, for example, 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. If the benefits are large in comparison to the amount of time counsel spent on the case, a downward adjustment is similarly in order.
Id. (citations omitted).
Significantly, since Gisbrecht, district courts have been deferential to the terms of contingency contracts in Section 406(b) cases, recognizing that the resulting de facto hourly rates typically exceed those for non-contingency fee arrangements. See Ellick v. Barnhart, 445 F. Supp. 2d, 1166, 1169-71 (C.D. Cal. 2006)(surveying post-Gisbrecht cases and finding decisions approving fee awards involving range of net hourly rates of up to $982 per hour); Hearn v. Barnhart, 262 F. Supp. 2d 1033, 1037 (N.D. Cal. 2003)(awarding $25,132.50 in Section 406(b) fees, equivalent to $450 per hour, and citing, inter alia, Martin v. Barnhart, 225 F. Supp. 2d 704 (W.D. Va. 2002)(awarding $10,189.50, equivalent to $605 per hour), and Coppett v. Barnhart, 242 F. Supp. 2d 1380 (S.D. Ga. 2002)(awarding $6,554.12, equivalent to $350.49 per hour)); see also Mudd v. Barnhart, 418 F.3d 424, 427 (4th Cir. 2005)(affirming denial of motion challenging $12,231.50 fee award equivalent to 25% of past benefits and hourly rate of $736.84); Blizzard v. Astrue, 496 F. Supp. 2d 320, 324 (S.D.N.Y. 2007)(approving $26,798.25 fee award equaling 25% of past benefits and amounting to an hourly rate of $705); Koester v. Astrue, 482 F. Supp. 2d 1078, 1083 (E.D. Wis. 2007)(finding $16,890 fee award amounting to 25% of past benefits and hourly rate of $580.67 to be reasonable and rejecting characterization of award as "windfall").
The Court finds that the Motion demonstrates that "the fee sought is reasonable for the services rendered" and is less than the agreed-upon 25% of past-due benefits.*fn3 Neither "the character of the representation" nor "the results the representative achieved" suggest the unreasonableness of the fee sought. Indeed, the character of the representation was clearly excellent in view of counsel's ability to secure a remand Order and Judgment from this Court that ultimately resulted in a substantial award of past-due disability benefits to his client.
Further, plaintiff's counsel was not responsible for any significant delay in securing plaintiff's benefits. Nothing in the record before the Court suggests that there was any overreaching in the making of the fee agreement or any impropriety on the part of counsel in his representation of plaintiff before this Court. Counsel assumed a significant risk of nonpayment inherent in a contingency agreement, the agreed-upon contingent fee is less than the 25% statutory cap, and the Motion seeks less than the agreed-upon fee. Although the de facto hourly rate of plaintiff's counsel's services amounts to $1,491.25,*fn4 counsel seeks only approximately 18% of plaintiff's past-due benefits, rather than the 25% to which counsel is entitled under the Agreement. In effect, the downward adjustment already imposed by counsel results in a decreased fee award of approximately 75% of the total amount he would be entitled to recover pursuant to the terms of the Agreement. It is the Court's view that, despite the relatively high de facto hourly rate, no further downward adjustment is warranted as counsel, who has been practicing exclusively in the field of Social Security law since 1991, should not receive less compensation for efficiently performing in 12 hours and 10 minutes what it takes the average lawyer to perform in 33 hours. (Motion at 8, 10; Exhibit 7); see Patterson v. Apfel, 99 F. Supp. 2d 1212, 1214 & n.2 (C.D. Cal. 2000)(33.75 hours of attorney time spent on a social security case is average and reasonable). Therefore, under the totality of the circumstances, the Court finds that counsel's requested fee of $18,143.50 is reasonable under the inquiry called for by Gisbrecht.
For the reasons set forth above, the Motion is GRANTED. Section 406(b) fees are allowed in the total amount of $18,143.50 to be paid out of the amount withheld by the Commissioner from plaintiff's past-due benefits. In view of the previous payment of EAJA fees in the amount of $1,942.00 to counsel, the Commissioner shall certify payment to counsel of a net fee of $16,201.50. The balance of the withheld funds shall be paid to plaintiff.
IT IS SO ORDERED.