Brown v. Kijakazi

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF NEW YORK

_____________________________________________

CHAD B.,

Plaintiff,

v. 3:22-CV-729

(TWD)

COMMISSIONER OF THE SOCIAL

SECURITY ADMINISTRATION,

Defendant.

_____________________________________________

APPEARANCES: OF COUNSEL:

LACHMAN & GORTON PETER A. GORTON, ESQ.

Attorney for Plaintiff

PO Box 89

Endicott, New York 13761

U.S. SOCIAL SECURITY ADMIN. GEOFFREY M. PETERS, ESQ.

OFFICE OF GEN. COUNSEL

REGION II

Attorney for Defendant

6401 Security Blvd.

Baltimore, MD 21235

THÉRÈSE WILEY DANCKS, United States Magistrate Judge

DECISION AND ORDER

Currently before the Court is Plaintiff’s counsel’s (“Mr. Gorton”) motion and amended

motion for attorney’s fees pursuant to 42 U.S.C. § 406(b)(1). (Dkt. Nos. 19, 28.) Defendant filed

a response (Dkt. No. 20) to the original motion (Dkt No. 19), but Defendant did not respond to

the amended motion. (Dkt. No. 28.)

I. BACKGROUND

Mr. Gorton represented Plaintiff in a civil action before this Court, seeking judicial

review of Defendant’s denial of Plaintiff’s application for disability benefits under the Social

Security Act. On November 29, 2022, Mr. Gorton filed a brief in support of remand arguing the

Administrative Law Judge (“ALJ”) erred in addressing the medical opinions in the record. (Dkt.

No. 11.) In lieu of responding, the parties stipulated to remand this matter to Defendant for

further administrative action pursuant to sentence four of 42 U.S.C. § 405(g). (Dkt. Nos. 13, 14,

15.) Mr. Gorton continued to represent Plaintiff post-remand. Upon remand, the ALJ issued

fully favorable decisions under Title 16 and Title 2 granting Plaintiff disability insurance benefits

and supplemental security income. (Dkt. Nos. 19-3 and 28-2.)

Thereafter, Defendant issued a Notice of Change in Benefits indicating Plaintiff was

entitled to $96,418.90 in past-due benefits for his claim. (Dkt. No. 28-2 at 3.). Defendant

withheld 25% of the past-due benefits, or $24,104.73. Id. Also, in a Stipulation and Order dated

February 10, 2023, Plaintiff was awarded $7,364.75 in attorney’s fees under the Equal Access to

Justice Act (“EAJA”), 28 U.S.C. § 2412. (Dkt. No. 18.) However, Mr. Gorton only received

$6,074.04 from the Department of the Treasury. (Dkt. No. 19-2 at 2.)

Mr. Gorton now seeks the withheld attorney’s fees of $24,104.73, to be paid to him

pursuant to a contingency fee agreement he had with Plaintiff (Dkt. No. 19-4), and he requests

that he be ordered to return the EAJA amount paid to him of $6,074.04 to the Plaintiff. (Dkt. No.

28-1.) As noted, Defendant did not respond to the amended motion for attorney’s fees pursuant

to 42 U.S.C. § 406(b)(1). See generally Docket.

II. DISCUSSION

Under 42 U.S.C. § 406, a prevailing claimant’s fees are payable out of the benefits the

claimant recovers, and such fees may not exceed 25 percent of past-due benefits. See Gisbrecht

v. Barnhart, 535 U.S. 789, 792 (2002). “[Section] 406(a) governs fees for representation in

administrative proceedings; § 406(b) controls fees for representation in court.” Id. at 794 (citing

20 CFR § 404.1728(a)). For representation of a claimant at the administrative level, an attorney

may file a fee petition. See Gisbrecht, 535 U.S. at 794 (citing 42 U.S.C. § 406(a)). In response

to such a petition, “the agency may allow fees ‘for services performed in connection with any

claim before’ it; [however,] if a determination favorable to the benefits claimant has been made, .

. . the Commissioner of Social Security ‘shall . . . fix . . . a reasonable fee’ for an attorney’s

services.” See Gisbrecht, 535 U.S. at 794 (quoting 42 U.S.C. § 406(a)(1)).

With respect to proceedings before a court, the statute provides “for fees on rendition of

‘a judgment favorable to a claimant.’” See Gisbrecht, 535 U.S. at 794 (quoting 42 U.S.C. §

406(b)(1)(A)). As part of its judgment, a court may allow “a reasonable fee . . . not in excess of

25 percent of the total of the past-due benefits” awarded to the claimant. 42 U.S.C. §

406(b)(1)(A). This fee is payable “out of, and not in addition to, the amount of [the] past-due

benefits.” Id.

In addition, the EAJA “effectively increases the portion of past-due benefits the

successful Social Security claimant may pocket.” Gisbrecht, 535 U.S. at 796 (citation omitted).

Pursuant to the EAJA, a court may award a claimant “fees payable by the United States if [its]

position in the litigation was not ‘substantially justified.’” Id. (citation omitted). “EAJA fees are

determined not by a percent of the amount recovered, but by the ‘time expended’ and the

attorney’s ‘[hourly] rate,’ § 2412(d)(1)(B), capped in the mine run of cases at $125 per hour, §

2412(d)(2)(A).” Id. (citation and footnote omitted).

A court may award fees under both the EAJA and Section 406(b), but the claimant’s

counsel must “‘refun[d] to the claimant the amount of the smaller fee.’” Id. (citation omitted).

“‘Thus, an EAJA award offsets an award under Section 406(b), so that the [amount of the total

past-due benefits the claimant actually receives] will be increased by the . . . EAJA award up to

the point the claimant receives 100 percent of the past-due benefits.’” Id. (quotation omitted).

In Gisbrecht, the Supreme Court held Ҥ 406(b) does not displace continent-fee

agreements as the primary means by which fees are set for successfully representing Social

Security benefits claimants in court.” Gisbrecht, 535 U.S. at 807. “Rather, § 406(b) calls for

court review of such arrangements as an independent check, to assure that they yield reasonable

results in particular cases.” Id. (footnote omitted).

The Gisbrecht Court noted “[c]ourts that approach fee determinations by looking first to

the contingent-fee agreement, then testing it for reasonableness, have appropriately reduced the

attorney’s recovery based on the character of the representation and the results the representation

achieved.” Id. at 808 (citations omitted). “If the benefits are large in comparison to the amount

of time counsel spent on the case, a downward adjustment is . . . in order.” Id. (citing Rodriquez

v. Bowen, 865 F.2d 739, 747 (6th Cir. 1989) (reviewing court should disallow “windfalls for

lawyers”)). “In this regard, the court may require the claimant’s attorney to submit . . . as an aid

to the court’s assessment of the reasonableness of the fee yielded by the fee agreement, a record

of the hours spent representing the claimant and a statement of the lawyer’s normal hourly

billing charge for noncontingent-fee cases.” Gisbrecht, 535 U.S. at 808 (citing Rodriquez, 865

F.2d at 741).

Likewise, in Wells v. Sullivan, 907 F.2d 367 (2d Cir. 1990), the Second Circuit held

Ҥ 406(b) does not invalidate all contingent fee arrangements it merely sets their upper limit and

because such arrangements effectuate congress’s objective of securing adequate representation

for social security claimants, a requested fee based on a contingent fee arrangement should be

enforced unless the court finds it to be unreasonable.” Id. at 370. The court noted that, “because

§ 406(b) requires the district court to review the reasonableness of any requested fee, contingent

fee agreements cannot simply be adopted as per se reasonable in all social security cases.” Id.

(citations omitted). However, the court recognized “that a contingency agreement is the freely

negotiated expression both of a claimant’s willingness to pay more than a particular hourly rate

to secure effective representation, and of an attorney’s willingness to take the case despite the

risk of nonpayment.” Id. (citing Rodriguez, 865 F.2d at 746 (other citations omitted).

Furthermore, the court stated it “ought normally to give the same deference to these agreements

as [it] would to any contract embodying the intent of the parties.” Wells, 907 F.2d. at 370

(citations omitted).

Thus, in determining the reasonableness of a contingent fee agreement, courts should

consider “whether the contingency percentage is within the 25% cap; . . . whether there has been

fraud or overreaching in making the agreement, and whether the requested amount is so large as

to be a windfall to the attorney.” Id. (citations omitted). “Should the district court find that the

agreement provides an unreasonable fee under the circumstances, the court may reduce the fee

provided it states the reasons for and the amounts of the deductions.” Id. (citation omitted).

Finally, “[a]lthough the reviewing court may not use the lodestar method to calculate the

fee due, a record of the number of hours spent on the case in federal court may assist a court in

determining whether a given fee is reasonable.” Benton v. Comm’r of Soc. Sec., No. 03 CV

3154, 2007 WL 2027320, *2 (E.D.N.Y. May 17, 2007) (citation omitted).

In this case, to determine whether the fee award Mr. Gorton seeks under § 406(b) is

reasonable, the Court begins by looking at the contingency fee agreement between Plaintiff and

his counsel. This agreement provides, in pertinent part, that “[t]he attorney fee charged to me

will be 25% of the past due benefits….” (Dkt. No. 19-4.) There is no evidence this agreement

was the result of fraud or overreaching. Moreover, the agreement seeks no more than the

maximum allowed under the relevant statute of 25% of the retroactive benefits. Thus, the only

issue the Court need address is whether the amount of fees Mr. Gorton seeks would result in a

windfall to him.

As noted above, Mr. Gorton’s record of the time he expended in federal court and the

tasks he performed related to the federal court litigation is one factor the Court may consider in

determining reasonableness. Mr. Gorton’s records indicate he spent a total of 33.1 hours of work

related to this case. (Dkt. No. 19-2 at 1.) Here, Mr. Gorton seeks an award of $24,104.73 in

fees, which is based on 25% of Plaintiff’s past-due benefits the Social Security Administration

has withheld. If the Court divides the total fee sought by the hours he expended for work before

this Court, the effective hourly rate would be $728.24.

To determine whether fees in this amount would result in a windfall to Mr. Gorton, the

Court must consider the following factors:

“(1) whether the attorney’s efforts were particularly successful for

the plaintiff, (2) whether there is evidence of the effort expended

by the attorney demonstrated through pleadings which were not

boilerplate and through arguments which involved both real issues

of material fact and required legal research, and finally, ... (3)

whether the case was handled efficiently due to the attorney’s

experience in handling social security cases.”

Fura v. Astrue, No. 08–CV–0689, 2011 WL 1541307, *3 (N.D.N.Y. Apr. 21, 2011) (quoting

Porter v. Comm’r of Soc. Sec., 2009 WL 2045688 (N.D.N.Y. July 10, 2009)) (other citation

omitted).

A review of the record demonstrates Mr. Gorton’s efforts were particularly successful for

Plaintiff and it appears he was able to handle this case efficiently, at least in part, because of his

experience with Social Security cases. Thus, the Court concludes that, in light of the total

amount of time Mr. Gorton expended on this case at both the administrative and district court

level, his expertise in handling Social Security cases, the complexity of the issues in this case,

the success he achieved in this case, and the inherent uncertainty of non-payment that is always

involved when entering into a contingency fee agreement, as well as the lack of any evidence of

fraud or overreaching in this case, an award of fees in the amount of $24,104.73 pursuant to §

406(b) would be reasonable for the type and amount of work he expended before this Court.

Additionally, since Mr. Gorton readily acknowledges that the EAJA fee of $6,074.04

previously paid to him should be ordered returned to Plaintiff, he will not earn in excess of the

agreed upon fee. (Dkt. No. 28-1.) As noted above, Plaintiff’s fee agreement seeks no more than

25% of the retroactive benefits, therefore, the Court will order that Mr. Gorton return the EAJA

fee of $6,074.04 to Plaintiff.

III. CONCLUSION

After reviewing the entire record in this matter, the parties’ submissions and the

applicable law, and for the above-stated reasons, the Court hereby

ORDERS that Mr. Gorton’s motion (Dkt. No. 19) be DENIED as moot, his amended

motion (Dkt. No. 28) for an award of attorney’s fees pursuant to 42 U.S.C. § 406(b) is

GRANTED in the amount of $24,104.73; and the Court further

ORDERS that the amount of $24,104.73 in attorney’s fees pursuant to 42 U.S.C. §

406(b) shall be paid to Mr. Gorton out of the sums that Defendant has withheld from Plaintiff's

past-due benefits; and the Court further

ORDERS that, upon his receipt of attorney’s fees in the amount of $24,104.73, pursuant

to 42 U.S.C. § 406(b), Mr. Gorton shall immediately refund to Plaintiff the previously awarded

EAJA sum of $6,074.04.

This case remains closed.

Dated: May 17, 2024

Syracuse, New York

a Wiley Dancks :

United States Magistrate Judge