Sara Vargas v. Jo Anne B Barnhart

Case 2:03-cv-01680-E Document 26 Filed 12/21/06 Page 1 of 11 Page ID #:107 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALI...

0 Downloads 3 Views
Case 2:03-cv-01680-E Document 26 Filed 12/21/06 Page 1 of 11 Page ID #:107

1 2 3 4 5 6 7 8

UNITED STATES DISTRICT COURT

9

CENTRAL DISTRICT OF CALIFORNIA

10 11 12 13 14 15 16

SARA VARGAS,

) ) Plaintiff, ) ) v. ) ) JO ANNE B. BARNHART, COMMISSIONER ) OF SOCIAL SECURITY ADMINISTRATION, ) ) ) Defendant. ) ___________________________________)

NO. CV 03-1680-E

OPINION AND ORDER GRANTING IN PART COUNSEL’S MOTION FOR ATTORNEY FEES PURSUANT TO 42 U.S.C. SECTION 406(b)

17 18 19

PROCEEDINGS

20 21

On August 3, 2006, counsel for Plaintiff filed “Counsel’s

22

Notice of Motion and Motion for Attorney Fees Pursuant to 42 USC §

23

406(b), etc.” (“the Motion”), seeking $9,500.

24

Defendant filed a response that purportedly takes no position as to

25

whether the requested fee is reasonable, but notes certain factors

26

for the Court’s consideration.

27

///

28

///

On October 23, 2006,

The Court has taken the Motion under

Case 2:03-cv-01680-E Document 26 Filed 12/21/06 Page 2 of 11 Page ID #:108

1

submission without oral argument.

2

2006 Minute Order.1

See Local Rule 7-15; August 4,

3 4

BACKGROUND

5 6

Plaintiff filed a complaint on March 12, 2003, seeking review

7

of the Commissioner’s denial of disability benefits.2

8

Defendant’s answer, Plaintiff filed a motion for summary judgment.

9

The motion for summary judgment asserted that the Commissioner’s

Following

10

denial should be reversed, and benefits should be awarded, because:

11

(1) the Administrative Law Judge (“ALJ”) allegedly failed adequately

12

to develop the record by requesting further information from

13

Plaintiff’s treating psychiatrist regarding Plaintiff’s alleged

14

mental impairment;

15

Appeals Council’s order of remand requiring that the ALJ seek further

16

information from treating and consultative examiners, obtain medical

17

source statements in light of new medical evidence suggesting greater

18

physical limitations, and then explain the weight given to the

19

various medical opinions; and (3) the ALJ allegedly failed to offer

(2) the ALJ allegedly failed to follow the

20 21 1

22 23 24 25 26 27 28

On May 22, 2003, the parties filed a consent to proceed before a United States Magistrate Judge for all purposes. Thus, the Motion properly is before the Magistrate Judge. See 28 U.S.C. § 636(c). 2

Plaintiff filed at least two applications for benefits with the Social Security Administration that were denied initially and on reconsideration. See Administrative Record, filed July 17, 2003 (“A.R.”) pp. 90-96. Administrative Law Judges then conducted hearings and eventually issued unfavorable decisions. A.R. 15-19. Plaintiff’s current counsel did not represent Plaintiff until 2002, when Plaintiff requested that the Appeals Council review the unfavorable decisions. A.R. 8-11. 2

Case 2:03-cv-01680-E Document 26 Filed 12/21/06 Page 3 of 11 Page ID #:109

1

clear and convincing reasons to reject Plaintiff’s subjective

2

complaints of pain.

3

Judgment, etc.,” filed August 20, 2003.

See “Notice of Motion and Motion for Summary

4 5

On October 20, 2003, the parties stipulated to remand the

6

matter to the Social Security Administration for further proceedings

7

pursuant to sentence four of 42 U.S.C. section 405(g).

8

entered an order and a judgment accordingly.

9

Remand; Order of Remand” filed October 20, 2003.

The Court

See “Stipulation for

10 11

Following remand, the Administration conducted proceedings

12

that resulted in a favorable decision for Plaintiff and an award of

13

past-due benefits from April 2001, totaling approximately $38,302.46.

14

See Exhibits 2 and 3 filed with the Motion.

15

Commission withheld $9,575.61 (i.e., 25 percent) for attorney fees.

16

See Motion, p. 3.

Of this award, the

17 18

Counsel for Plaintiff now moves for $9,500 in fees, which

19

is $75.61 less than 25 percent of the approximated award. Counsel

20

acknowledges that any award made under section 406(b) must be offset

21

by the $2,400 in attorney fees counsel previously recovered under the

22

Equal Access to Justice Act (“EAJA”).

23

for the Award and Payment of Attorney Fees Under the EAJA, etc.,”

24

filed February 9, 2004; 28 U.S.C. § 2412.

25

counsel for Plaintiff submitted a copy of the fee agreement between

26

Plaintiff and counsel, which provides for a contingent fee of 25

27

percent of any past-due benefits awarded on the reversal of any

28

unfavorable ALJ decision.

See Motion, p. 3; “Stipulation

In support of the Motion,

See Motion, Exhibit 1 at ¶¶ 3-4. 3

Case 2:03-cv-01680-E Document 26 Filed 12/21/06 Page 4 of 11 Page ID #:110

APPLICABLE LAW

1 2

Under 42 U.S.C. section 406(b), the Court may allow attorney

3 4

fees in a “reasonable” amount, not to exceed 25 percent of the total

5

past-due benefits awarded to the claimant.

6

independent duty to ensure that a section 406(b) contingency fee is

7

reasonable.

8

(“Gisbrecht”).3

The Court has an

See id.; Gisbrecht v. Barnhart, 535 U.S. 789 (2002)

9 10 11

The United States Supreme Court has explained that section 406(b):

12 13

. . . does not displace contingent-fee agreements as

14

the primary means by which fees are set for

15

successfully representing Social Security benefits

16

claimants in court.

17

review of such arrangements as an independent check, to

18

assure that they yield reasonable results in particular

Rather, § 406(b) calls for court

19 3

20 21 22 23 24 25

Section 406(b)(1) 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.

26 27 28

See 42 U.S.C. § 406(b)(1)(A). Section 406(b) supplements section 406(a), which provides that the Commissioner may award attorney fees to a successful claimant’s counsel for work performed before the Social Security Administration. See 42 U.S.C. § 406(a). 4

Case 2:03-cv-01680-E Document 26 Filed 12/21/06 Page 5 of 11 Page ID #:111

1

cases.

Congress has provided one boundary line:

2

Agreements are unenforceable to the extent that they

3

provide for fees exceeding 25 percent of the past-due

4

benefits.

5

attorney for the successful claimant must show that the

6

fee sought is reasonable for the services rendered.

Within this 25 percent boundary . . . the

7 8

Gisbrecht at 807 (citations omitted).

9 10

When a contingency fee falls within the 25 percent boundary,

11

as here, Gisbrecht instructs that the Court appropriately may reduce

12

counsel’s recovery:

13 14

. . . based on the character of the representation and

15

the results the representative achieved.

16

attorney is responsible for delay, for example, a

17

reduction is in order so that the attorney will not

18

profit from the accumulation of benefits during the

19

pendency of the case in court.

20

large in comparison to the amount of time counsel spent

21

on the case [thereby resulting in a windfall], a

22

downward adjustment is similarly in order.

If the

If the benefits are

23 24

Id. at 808 (citations omitted) (emphasis added); see also Straw v.

25

Bowen, 866 F.2d 1167, 1169-70 (9th Cir. 1989) (in traditional, non-

26

contingency fee analysis, the court multiplies reasonable hours

27

expended by the prevailing market rate to arrive at a “lodestar

28

figure”; the court may adjust the lodestar figure by considering the 5

Case 2:03-cv-01680-E Document 26 Filed 12/21/06 Page 6 of 11 Page ID #:112

1

factors identified in Kerr v. Screen Extras Guild, Inc., 526 F.2d 67,

2

70 (9th Cir. 1975), cert. denied, 425 U.S. 951 (1976), to the extent

3

the lodestar figure does not already subsume such factors).

4

Gisbrecht does not instruct precisely how a district court should

5

quantify the “downward adjustment” when the court concludes such an

6

adjustment is “in order.”

7 8 9

Justice Scalia dissented in Gisbrecht, expressing concern that the majority opinion “does nothing whatever to subject [section

10

406(b)] fees to anything approximating a uniform rule of law.”

11

Gisbrecht, 535 U.S. at 809.

12

well-founded.

13

Barnhart, 445 F.Supp.2d 1166 (C.D. Cal. 2006), a survey of the cases

14

applying Gisbrecht to section 406(b) fee requests reveals

15

considerable divergence and scant evidence of any “uniform rule of

16

law.” See Ellick, 445 F.Supp.2d at 1168-72, for a summary of the

17

reported decisions.4

Justice Scalia’s concern may have been

As this Court recently discussed in Ellick v.

18 19

DISCUSSION

20 21

Having reviewed the papers on file in this case in light of

22 23 24 25 26 27 28

4

At the time of the Ellick decision, there were 43 reported decisions applying Gisbrecht to section 406(b) fee requests. There has been only one reported decision so applying Gisbrecht since Ellick. See Briem v. Barnhart, 2006 WL 3374955 (W.D.N.Y. Nov. 17, 2006). The Briem court awarded fees equating to 25 percent of past-due benefits as provided by the fee agreement. The court noted the time and effort counsel expended at the administrative level and counsel’s level of experience in finding the fee request was reasonable. Briem does not mention the de facto hourly rate of $612.50 for time spent before the court. Id. at *1. 6

Case 2:03-cv-01680-E Document 26 Filed 12/21/06 Page 7 of 11 Page ID #:113

1

Gisbrecht and its progeny, the Court concludes that counsel has not

2

met counsel’s burden of showing the reasonableness of the fees

3

requested.

4

Counsel’s office achieved a favorable result for Plaintiff and should

5

be compensated above the office’s normal hourly fees to recognize the

6

risks of contingent litigation.

7

Supp. 2d 1033, 1037 (N.D. Cal. 2003) (quoting Dodson v. Commissioner

8

of Social Security, 2002 WL 31927589 (W.D. Va. Oct. 22, 2002):

9

“Congress has indicated the permissibility, within limits, of

See 42 U.S.C. § 406(b); Gisbrecht, 535 U.S. at 807.

See, e.g., Hearn v. Barnhart, 262 F.

10

rewarding attorneys for assuming the risk of going uncompensated for

11

representing Social Security claimants.”).

12

in past-due benefits Plaintiff recovered is large in comparison to

13

the amount of time spent on the case by counsel’s office.

However, the $38,302.46

14 15

Counsel’s fee statement submitted with the Motion, which

16

concerns time expended in 2003, notes

billing rates of $147.63 for

17

Mr. Kalagian and $94.78 for Ms. Aparicio.

18

Motion at p. 1.5

19

3.7 hours.

20

counsel would receive:

21

///

22

///

See Exhibit 4 attached to

Counsel spent 14.95 hours and the paralegal spent

See id.

If compensated according to these hourly rates,

23 5

24 25 26 27 28

The Court notes that counsel’s petition for attorney fees under the EAJA, which was filed around the time services were rendered in this case, states that the attorneys in counsel’s firm bill their time out at $200 to $250 per hour. See “Petition for Attorney Fees and Expenses Under the Equal Access to Justice Act,” filed November 19, 2003, at ¶ 8. In the Motion, however, counsel asserts “[t]he firm has been paid $350 per hour for [counsel’s] time on an hourly basis in limited hourly cases. “ See Motion, p. 10. 7

Case 2:03-cv-01680-E Document 26 Filed 12/21/06 Page 8 of 11 Page ID #:114

1

$147.63 x 14.95 hours =

2

$ 94.78 x 3.7 hours

3

=

Total Fees

$2,207.07 350.69 $2,557.76

4 5

If counsel receives the full 25 percent under the fee agreement,

6

however, counsel will receive a fee equivalent to roughly 3.71 times

7

these rates (i.e., $547.71 per hour for counsel’s time and $351.63

8

per hour for her paralegal’s time).6

9

hourly rate in 2003 was $200 or $250 per hour (as reported in the

Assuming that counsel’s normal

10

EAJA petition (see fn. 5)), counsel would receive a fee equivalent to

11

roughly 2.84 or 2.32 times his normal hourly rates, respectively.

12 13

Additionally, at least one court adjudicating section 406(b)

14

fee requests has denied recovery for non-attorney time that can be

15

compensated under the EAJA.

16

1020, 1021 (W.D. Mo. 2002); but see Hussar-Nelson v. Barnhart, 2002

17

WL 31664488 (S.D. Iowa 2002) (not differentiating between 48.8 hours

18

spent by attorney and 5.1 hours spent by law clerk in considering

19

reasonableness of fee for work before the court).

See Roark v. Barnhart, 221 F. Supp. 2d

20 21 22 23 24 25 26 27 28

6

Counsel argues the fee sought is reasonable based on comparable hourly rates derived from the 2000 Small Law Firm Economic Survey and the 2001 Small Law Firm Economic Survey. See Motion, pp. 7-11; Exhibits 5-9 to Motion. Contrary to counsel’s argument, rates other than the normal hourly rates of counsel’s office do not materially aid the Court’s assessment of reasonableness. See Gisbrecht, 535 U.S. at 808 (The hours spent by counsel representing the claimant and counsel’s “normal hourly billing charge for noncontingent-fee cases” may aid “the court’s assessment of the reasonableness of the fee yielded by the fee agreement.”); see also Grunseich v. Barnhart, 439 F.Supp.2d 1032, 1034 n.3 (C.D. Cal. 2006) (rejecting reliance on these surveys). 8

Case 2:03-cv-01680-E Document 26 Filed 12/21/06 Page 9 of 11 Page ID #:115

1

While the contingent risk in the present case should be

2

compensated reasonably, it should not be compensated as richly as

3

counsel suggests.

4

counsel suggests would not be faithful to Gisbrecht.

5

at 808 (“If the benefits are large in comparison to the amount of

6

time counsel spent on the case, a downward adjustment is . . . in

7

order”).

8

the amount of benefits now owing, and the issues briefed in the

9

summary judgment motion were neither novel nor complex.7

Under the circumstances of this case, to do as See Gisbrecht

Counsel spent very little time on the case in comparison to

10 11

The Court finds that a downward adjustment from a full

12

contingency fee award is required in this case to arrive at a fee

13

that is “reasonable for the services rendered.”

14

case law, and after considering the nature of the contingent risk,

15

the Court finds that a fee of $8,351.72, representing 2.5 times the

16

normal hourly rates of counsel and the paralegal, using a normal

17

hourly rate of $200 (or a de facto rate of $500 for counsel and

18

$236.95 for the paralegal) is a reasonable fee for the representation

19

of Plaintiff before this Court.

20

1737443 (E.D. Tex. Jul. 22, 2004) (awarding fee that was roughly 1.01

21

times counsel’s normal hourly rate); Wallace v. Barnhart, 2004 WL

22

883447 (N.D. Iowa Apr. 22, 2004) (awarding fee that was 1.25

23

counsel’s normal hourly rate); Hearn v. Barnhart, 262 F. Supp. 2d at

24

1035 (awarding fee that was roughly 1.5 times counsel’s normal hourly

25

rate); Mitchell v. Barnhart, 376 F. Supp. 2d 912, 923 (S.D. Iowa

After surveying the

See Brannen v. Barnhart, 2004 WL

26 7

27 28

Counsel does not argue that any of the issues raised in Plaintiff’s complaint or motion for summary judgment were particularly novel or complex, nor could counsel persuasively so argue. 9

Case 2:03-cv-01680-E Document 26 Filed 12/21/06 Page 10 of 11 Page ID #:116

1

2005) (awarding fee that was 1.64 times counsel’s normal hourly

2

rate); Coppett v. Barnhart, 242 F. Supp. 2d 1380, 1381 (S.D. Ga.

3

2002) (awarding fee that was roughly twice counsel’s normal hourly

4

rate); Roark v. Barnhart, 221 F. Supp. 2d at 1021 (same); Ogle v.

5

Barnhart, 2003 WL 22956419 (D. Me. Dec. 12, 2003) (awarding fee that

6

was 2.5 times counsel’s normal hourly rate); Van Nostrand v.

7

Barnhart, 2005 WL 1168428 (W.D. Tex. May 12, 2005) (same); cf.

8

Yarnevic v. Apfel, 359 F. Supp. 2d 1363, 1365-66 (N.D. Ga. Feb. 18,

9

2005) (awarding fee that was roughly 2.85 times counsel’s standard

10

hourly rate); Droke v. Barnhart, 2005 WL 2174397 (W.D. Tenn. Sep. 6,

11

2005) (awarding fee that was roughly 5.54 times counsel’s normal

12

hourly rate where counsel achieved “exceptional” results); Claypool

13

v. Barnhart, 294 F. Supp. 2d 829, 830 (S.D. W. Va. 2003) (awarding

14

fee that was roughly 5.73 times counsel’s normal hourly rate where

15

past-due benefits totaled almost $200,000); and Whitehead v.

16

Barnhart, 2006 WL 681168 (W.D. Mo. Apr. 7, 2006) (awarding fee that

17

was roughly 6.55 times counsel’s normal hourly rate where counsel

18

argued novel, case-specific and risky position).

19 20

As in Ellick, the Court acknowledges the regrettable

21

imprecision of its analysis.

After Gisbrecht, counsel and their

22

clients cannot predict with any degree of certainty what courts will

23

award as “reasonable” fees under section 406(b), particularly where

24

the benefits are large in comparison to the amount of time spent by

25

counsel.

26

appellate courts, district courts cannot have any degree of

27

///

And, absent further guidance from Congress or from the

28 10

Case 2:03-cv-01680-E Document 26 Filed 12/21/06 Page 11 of 11 Page ID #:117

1

confidence that their section 406(b) awards will be consistent with

2

what the law intends.

3 4

CONCLUSION

5 6

The Motion is granted in part.

Section 406(b) fees are

7

allowed in the gross amount of $8,351.72, to be paid out of the sums

8

withheld by the Commissioner from Plaintiff’s benefits.

9

shall reimburse Plaintiff in the amount of $2,400, previously paid by

10

Counsel

the Government under the EAJA.

11 12

IT IS SO ORDERED.

13 14

DATED:

December 21, 2006.

15 16 17

/s/ CHARLES F. EICK UNITED STATES MAGISTRATE JUDGE

18 19 20 21 22 23 24 25 26 27 28 11