Case No.: 3:19-cv-00846-AHG
ORDER GRANTING PETITION FOR ATTORNEY FEES PURSUANT TO 42 U.S.C. SECTION 406(b)
[ECF No. 15]
Before the Court is a motion by Plaintiff Ricardo A.'s counsel for attorney fees pursuant to 42 U.S.C. § 406(b). ECF No. 15. For the reasons set forth below, the Court GRANTS the motion.
I. PROCEDURAL BACKGROUND
On May 6, 2019, Plaintiff timely commenced the instant appeal seeking judicial review of the Commissioner of Social Security's ("Commissioner") denial of his application for disability insurance benefits. ECF No. 1. The parties consented to proceed before a Magistrate Judge on May 21, 2019. ECF No. 7. Pursuant to the Court's Order, the parties filed a Joint Motion for Judicial Review on November 26, 2019, stating their positions on the disputed issues in the case. ECF No. 13.
On July 22, 2020, the Court reversed the Commissioner's denial of disability insurance benefits and remanded the matter for the calculation and award of benefits. ECF No. 14. On remand, the Commissioner confirmed past-due benefits in the amount of $69,828, but withheld $17,457 of that for attorney fees. ECF No. 15 at 2. The Social Security Administration ("SSA") then paid counsel $6,000, which counsel represents is the maximum amount a Plaintiff's attorney can charge for representation at the administrative level. Id. The remaining $11,457 are still being withheld to cover legal work done in federal court. Id.
This amount was reduced by $97 to cover an administrative fee.
In the instant motion, Plaintiff's counsel, Matty M. Sandoval, Esq., seeks an order awarding attorney fees in the amount of $10,000 for representing Plaintiff in this action. Id. at 2-4. Plaintiff has provided a Declaration in support of the motion, stating that he understands the amount requested, reviewed the fee agreement that specifies an attorney fee of 25% of his past due benefits (more than what Mr. Sandoval now requests), and that he feels the request for $10,000 is "more than reasonable, and ask[s] this Court to approve it." ECF No. 15-5.
The Court set a deadline of February 5, 2021 for the Commissioner to file an opposition, if any, to the attorney fee motion. ECF No. 16. The Commissioner has filed no response; accordingly, the Court treats the motion as unopposed.
II. LEGAL STANDARD
"Under 42 U.S.C. § 406(b), a court entering judgment in favor of [a social security] claimant who was represented by an attorney '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.'" Crawford v. Astrue, 586 F.3d 1142, 1147 (9th Cir. 2009) (en banc) (quoting 42 U.S.C. § 406(b)(1)(A)). "Within the 25 percent boundary, . . . the attorney for the successful claimant must show that the fee sought is reasonable for the services rendered." Gisbrecht v. Barnhart, 535 U.S. 789, 807 (2002).
The Court notes that the lodestar calculation does not apply to the instant motion. See Gisbrecht, 535 U.S. at 802 (explaining that the lodestar method is applicable to "disputes over the amount of fees properly shifted to the loser in the litigation" whereas "Section 406(b) is of another genre: [i]t authorizes fees payable from the successful party's recovery"); see also Crawford, 586 F.3d at 1148 ("SSDI attorney fees, in contrast, are not shifted. They are paid from the award of past-due benefits and the amount of the fee, up to 25% of past-due benefits, is based on the agreement between the attorney and the client."); see, e.g., Shultz v. Comm'r of Soc. Sec., No. 17cv1823-CAB-MDD, 2020 U.S. Dist. LEXIS 147006, at *3-*4 (S.D. Cal. Aug. 14, 2020) (not applying the lodestar calculation, when the motion was not opposed by the Commissioner or plaintiff); Berry v. Saul, No. 16cv1700-MMA-AGS, 2019 WL 6467807 at *2 n.2 (S.D. Cal. Dec. 2, 2019) (same).
"[A] district court charged with determining a reasonable fee award under § 406(b)(1)(A) must respect 'the primacy of lawful attorney-client fee agreements,' . . . 'looking first to the contingent-fee agreement, then testing it for reasonableness[.]'" Crawford, 586 F.3d at 1148 (quoting Gisbrecht, 535 U.S. at 793, 808). When determining reasonableness of the fee award, courts must consider "whether the amount need be reduced, not whether the [lode]star amount should be enhanced." Crawford, 586 F.3d at 1149. While there is not a definitive list of factors, courts should consider "the character of the representation and the results the representative achieved." Gisbrecht, 535 U.S. at 808. "The court 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 the examples given in Gisbrecht, 535 U.S. at 808).
Here, the fee agreement between Plaintiff and his counsel, Mr. Sandoval, provides that Plaintiff will pay Mr. Sandoval "a fee equal to 25 percent of any past-due benefits from my claim or, if less, $6,000.00 the maximum dollar amount allowed pursuant to section 206(a)(2)(A) of the Social Security Act [42 U.S.C. § 406(a)(2)(A)] based on the date SSA approves my fee agreement." ECF No. 15-4. As discussed, the SSA already paid out the $6,000 statutory maximum (less $97 in administrative fees) for work done at the administrative level, and is withholding the remaining $11,457 for work done before this Court. ECF No. 15 at 2; see also ECF Nos. 15-1 at 3; 15-2. Counsel asks that the Court approve an additional payment of $10,000 pursuant to Section 406(b), for a total of $16,000, which amounts to 22.91% of the $69,828 in past-due benefits that the Court ordered to be paid to Plaintiff. ECF No. 15 at 3.
Having reviewed the documents submitted by Plaintiff's counsel, and the applicable law, the Court finds that counsel's fee request is reasonable. In support of the fee petition, Plaintiff's counsel submitted a billing statement detailing the hours he spent working on this case before the Court, reflecting a total of 40.5 hours. ECF No. 15-3. Therefore, the $10,000 fee request amounts to a de facto hourly rate of approximately $246.91, which is on the very low end of de facto hourly rates approved by courts in this district. See, e.g., Berry v. Saul, No. 16-CV-1700-MMA-AGS, 2019 WL 6467807, at *2 (S.D. Cal. Dec. 2, 2019) (approving a de facto hourly rate of $402.76, and noting that this rate "falls on the low end of the range that has been approved by courts in similar cases, including this Court"); Richardson v. Colvin, No. 15-CV-1456-MMA-BLM, 2017 WL 1683062, at *2 (S.D. Cal. May 2, 2017) (approving rate of $770 and collecting other cases from this district approving de facto hourly rates of $519, $656, $666.68, $800, $875, and $902) (citations omitted); Ayersman v. Berryhill, No. 17-CV-1121-WQH-JMA, 2021 WL 37717, at *2 (S.D. Cal. Jan. 5, 2021) (approving de facto rate of $787.40).
Further, regardless of the de facto rate, as the Ayersman court noted, "[t]he courts recognize 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." Id. (quoting Sproul v. Astrue, No. 11-CV-1000-IEG DHB, 2013 WL 394056, at *2 (S.D. Cal. Jan. 30, 2013)) (other citations omitted). See also Moreno v. Berryhill, No. 13-cv-8492-PLA, 2018 WL 3490777, at *3 (C.D. Cal. July 19, 2018) ("Counsel assumed the risk of nonpayment inherent in a contingency agreement, [and] the fee does not exceed . . . the 25 percent statutory cap[.]"). Here, counsel also assumed the risk of non-payment by agreeing to be paid on a contingency basis, and counsel's work before this Court ultimately resulted in a highly favorable result for his client. See ECF Nos. 14, 15-4. Thus, not only is the de facto hourly rate relatively quite low compared to other de facto rates approved in this district, but the Court also finds it reasonable to approve the amount requested given the contingent nature of the fee agreement. And upon review of the record, the Court finds none of the factors outlined in Gisbrecht—substandard performance, delay, or benefits that are not in proportion to the time counsel spent on the case—to be applicable here, as might justify a reduction of the requested fee. See 535 U.S. at 808; Crawford, 586 F.3d at 1151. Finally, the $10,000 fee, coupled with the $6,000 already paid by SSA, together do not exceed 25% of the past-due benefits that counsel secured for his client. Therefore, the Court concludes that Mr. Sandoval's attorney fee request of $10,000 is reasonable and should be granted.
Notably, the 25% cap set forth in Section 406(b)(1)(A) applies solely to attorney fees for representation in federal court. For that reason, the Supreme Court has held that the amount paid out by the agency for work done at the administrative level pursuant to § 406(a)(2)(A) does not serve to further delimit the amount that the Court can approve pursuant to § 406(b)(1)(A). Culbertson v. Berryhill, 139 S. Ct. 517, 521-23 (2019). In other words, the Court need not actually take into account the $6,000 already paid by the agency in applying the 25% statutory cap to the fee requested for work done at the federal court level. Counsel's requested fee of $10,000 for work performed before this Court is only 14.32% of Plaintiff's past-due benefits award, and thus falls significantly below the 25% cap. However, keeping in mind that the Court must respect "the primacy of lawful attorney-client fee agreements," Crawford, 586 F.3d at 1148, the Court applies the 25% limit set forth in the agreement between Plaintiff and Mr. Sandoval. ECF No. 15-4. Including the additional $6,000 in its calculations, the total fee of $16,000 is still only 22.91% of the benefit award. --------
For the reasons set forth above, the Court GRANTS Plaintiff's counsel's Petition for Attorney Fees Pursuant to 42 U.S.C. Section 406(b) (ECF No. 15). The Court AWARDS Matty Michael Sandoval attorney fees in the amount of $10,000.00, and accordingly DIRECTS the Commissioner to certify the fee of $10,000.00 payable to Matty M Sandoval.
IT IS SO ORDERED. Dated: February 24, 2021
Honorable Allison H. Goddard
United States Magistrate Judge