United States District Court, N.D. California
ORDER GRANTING PLAINTIFF'S COUNSEL'S MOTION
FOR ATTORNEYS' FEES Re: Dkt. No. 26
C. SPERO United States Magistrate Judge
Rayford initiated this action to seek review of the final
decision by the Commissioner of the Social Security
Administration (''the Commissioner'') denying
his Application for disability insurance and Supplemental
Security Income (''SSI'') benefits under the
Social Security Act (''SSA''). On November 1,
2015, the Court reversed the Commissioner's decision and
remanded for additional administrative proceedings.
See Dkt. 21. On remand, the Commissioner granted
Plaintiff‘s application for benefits, entitling him to
receive $72, 566.00 in retroactive benefits under Title
See Ex. A. Plaintiff‘s counsel, Tony Arjo, who
represented Plaintiff in this matter under a contingency fee
agreement, now brings a Motion for Attorney Fees Pursuant to
42 U.S.C. § 406(b) (the ''Motion''),
seeking an award of $17, 500.00 in attorneys‘ fees for
work before this Court. The parties have consented to the
jurisdiction of a United States Magistrate Judge pursuant to
28 U.S.C. § 636(c). For the reasons stated below, the
Motion is GRANTED.
December 12, 2013, Plaintiff entered into a contingency-based
fee agreement with Tony Arjo (''Fee
Agreement''), appointing Mr. Arjo as his attorney in
connection with his claim for social security disability
benefits. Ex. B. The Fee Agreement provides Plaintiff‘s
Attorney with 25% of any past due benefits awarded to
Plaintiff, as well as assigning to Mr. Arjo any fees awarded
under the Equal Access to Justice Act
(''EAJA''), noting that the EAJA does not
come out of past due benefits and can be paid directly to Mr.
Arjo. Id. ¶ 2. On June 10, 2015, this Court put
into effect a stipulation ordering the Defendant to pay
$4300.00 in attorneys‘ fees under the EAJA. Dkt. 25.
However, prior to the Commissioner‘s distribution of
this EAJA award, the U.S. Department of the Treasury reduced
the EAJA award by its full amount to apply the funds to
offset Plaintiff‘s child support debts. Ex. D; Mot. at
4. Following this Court‘s reversal and remand of the
Commissioner‘s previous decision to deny benefits to
Plaintiff, ''an Administrative Law Judge issued a
favorable decision on Mr. Rayford‘s claim on November
7, 2016.'' Mot. at 2. The Social Security
Administration subsequently notified Plaintiff it was
withholding $18, 141.50, which is 25% of the total past due
benefits to Plaintiff, pending the determination of
attorneys‘ fees. Ex. A.
present Motion, Plaintiff‘s counsel asks the Court to
direct the Social Security Commissioner to certify the fee of
$17, 500 for legal fees incurred in this Court.
Plaintiff‘s counsel contends this fee is reasonable
because it amounts to less than both the statutory limit and
agreed upon amount of 25% of past-due benefits. Mot. at 3-4;
42 U.S.C. § 406(b). Plaintiff‘s counsel also
claims that his time spent on the case; the award of past-due
benefits, ongoing SSI and Title II benefits, and Medicare
medical insurance; and the risk posed by previous
administrative denials in conjunction with the
contingency-based Fee Arrangement demonstrate the
reasonableness of this fee amount. According to
Plaintiff‘s counsel, he expended 23.6 hours before the
District Court. Ex. C (time log).
response to the Motion, the Commissioner filed a Statement
wherein it analyzed the current Motion as a non-party 42
U.S.C. § 406(b) (''Commissioner‘s
Statement''). Dkt. 27. While the Commissioner
''takes no position on the reasonableness of
[Plaintiff s Counsel‘s] request, '' the
Commissioner notes that ''[t]he effective hourly rate
sought by Counsel is $741.53, '' and ''[i]t
is for the Court to determine whether the hourly rate
requested by Counsel is reasonable.''
Commissioner‘s Statement at 4 n.2. In determining the
reasonableness of this rate, ''the Court may consider
the effective hourly rates resulting from awards in other
cases.'' Id. (citing Hearn v.
Barnhart, 262 F.Supp.2d 1033, 1036-37 (N.D. Cal. 2003)).
However, the Commissioner emphasizes that ''a
district court should not merely make a lodestar calculation
but rather should credit and consider the contingent-fee
agreement and perform a reasonableness test mandated by
Gisbrecht'' Id. (citing Crawford v.
Astrue, 586 F.3d 1142, 1149-50 (9th Cir. 2009) (en
banc)) (referencing Gisbrecht v. Barnhart, 535 U.S.
789 (2002)). In its analysis, ''district courts
‗may properly reduce the fee for substandard
performance, delay, or benefits that are not in proportion to
the time spent on the case.'' Commissioner‘s
Statement at 3 (quoting Crawford, 586 F.3d at 1151).
The Commissioner additionally contends that the prior EAJA
award of $4300 should have no bearing on the attorneys‘
fees awarded in response to this Motion, because ''it
appears that the previously awarded EAJA fees were entirely
offset by Plaintiff s prior debts, '' indicating that
there are ''no EAJA fees to refund should this Court
award 406(b) fees.'' Id. at 4.
served the Motion on Plaintiff by mailing it to him on
February 24, 2017. Mot. at 6. Plaintiff has not appeared or
filed any objection to the Motion.
scheme established by Congress for attorney fee awards in
cases involving social security claims is described by the
Supreme Court as follows:
Fees for representation of individuals claiming Social
Security old-age, survivor, or disability benefits, both at
the administrative level and in court, are governed by
prescriptions Congress originated in 1965. Social Security
Amendments of 1965, 79 Stat. 403, as amended, 42 U.S.C.
§ 406. . . . The statute deals with the administrative
and judicial review stages discretely: § 406(a) governs
fees for representation in administrative proceedings; §
406(b) controls fees for representation in court. See
also 20 CFR § 404.1728(a) (2001).
Gisbrecht, 535 U.S. at 793-94. Subsection 406(b)
provides, in relevant part, that ''[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,
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.'' 42 U.S.C. § 406(b).
Gisbrecht, courts should ''approach fee
determinations [under § 406(b)] by looking first to the
contingent-fee agreement, then testing it for reasonableness,
'' and may reduce the recovery ''based on the
character of the representation and the results the
representative achieved.'' Gisbrecht, 535
U.S. at 808. The Ninth Circuit has applied Gisbrecht
to mean that ''court[s] may properly reduce the fee
for substandard performance, delay, or benefits that are not
in proportion to the time spent on the case.''
Crawford, 586 F.3d at 1151 (citing
Gisbrecht 535 U.S. at 808). In this analysis, courts
''generally have been deferential to the terms of the
contingency fee contracts in § 406(b) cases, accepting
that the resulting de facto hourly rates may exceed
those for non contingency-fee arrangements, '' noting
that ''basing a reasonableness determination on a
simple hourly rate basis is inappropriate when an attorney is
working pursuant to a reasonable contingency contract for
which there runs a substantial risk of loss.''
Hearn, 262 F.Supp.2d at 1037. Further, the Ninth
Circuit has held that the 25% cap applies only to fees
awarded under 42 U.S.C. § (b) and does not apply to the
total fees awarded under subsections (a) and (b)
combined, which may exceed 25% of the award of benefits.
Clark v. Astrue, 529 F.3d 1211, 1218 (9th Cir.
addition to the fees permitted under § 406(a) and (b),
the Equal Access to Justice Act (''EAJA''),
enacted in 1980, allows a party who prevails against the
United States in court, including a successful Social
Security benefits claimant, to receive an award of fees
payable by the United States if the Government‘s
position in the litigation was not ''substantially
justified.'' Gisbrecht, 535 U.S. at 796
(citing 28 U.S.C. § 2412(d)(1)(A)). In contrast to fees
awarded under § 406(b), EAJA fees are based on the
''time expended'' and the attorney‘s
''[hourly] rate.'' 28 U.S.C. §
2412(d)(1)(B). In Gisbrecht, the Supreme Court
explained that ''Congress harmonized fees payable by
the Government under EAJA with fees payable under §
406(b) out of the claimant‘s past-due Social Security
benefits in this manner: Fee awards may be made under both
prescriptions, but the claimant's attorney must refun[d]
to the claimant the amount of the smaller
fee.‘'' 535 U.S. at 796 (citing Act of Aug. 5,