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Carter v. Saul

United States District Court, W.D. Kentucky, Owensboro Division

September 4, 2019

MURRAY L. CARTER PLAINTIFF
v.
ANDREW SAUL, COMMISSIONER SOCIAL SECURITY ADMINISTRATION[1] DEFENDANT

          MEMORANDUM OPINION AND ORDER

          H. Brent Brennenstuhl, United States Magistrate Judge.

         BACKGROUND

         Plaintiffs counsel moves the Court, pursuant to 42 U.S.C. § 406(b), for authorization of attorney fees in the total amount of $4, 628.00 for representation of Plaintiff before the Court (DN 23, DN 29-4 PageID # 2106). Defendant, Andrew Saul, Commissioner of Social Security ("Commissioner"), suggests that a reduction in the requested fee is warranted to avoid counsel receiving an unreasonable windfall (DN 24). At the Court's direction (DN 25)[2], the parties have submitted supplemental memoranda addressing whether the amount sought constitutes an inappropriate windfall (DN 26, 29, 30). For the reasons that follow, the motion will be granted in part and denied in part.

         FINDINGS OF FACT

         On April 24, 2015, Plaintiff filed a complaint seeking judicial review of the final decision of the Commissioner pursuant to 42 U.S.C. § 405(g) (DN 1). The Commissioner filed an answer and a copy of the administrative record (DN 10, 11). Plaintiff filed a Fact and Law Summary setting forth his challenges to the final decision of the Commissioner (DN 14). Thereafter, the Commissioner filed a Fact and Law Summary (DN 19). The Court issued a memorandum opinion and order reversing the final decision of the Commissioner and remanding the case to the Commissioner pursuant to sentence four of 42 U.S.C. § 405(g) (DN 20). The judgment was entered on April 15, 2016 (DN 21).

         In a Plaintiff-favorable decision dated June 15, 2018, an Administrative Law Judge awarded Social Security Disability benefits (Affidavit of Counsel DN 29-4 PageID # 2104). The Notice of Award dated October 9, 2018, announced that past-due benefits had been awarded to Plaintiff for December 2012 through August 2018 (DN 23-1 PageID # 2049, 2050).

         Of the past-due benefits awarded, the Social Security Administration (SSA) withheld $13, 178.00 (25%) for direct payment of attorney fees pursuant to the terms of the contingency fee agreement between Plaintiff and the law firm Rhoads & Rhoads, PSC (DN 23-1 PageID # 2044, 2053, 2057; DN 29-4 PageID # 2105). The SSA has already authorized and separately paid three attorneys in the Rhoads law firm[3] a total of $8, 550.00 for their representation of Plaintiff before the Commissioner (DN 29-4 PageID # 2105). Thus, $4, 628.00 remains of the past-due benefits withheld for direct payment of attorney fees (Id.).

         Originally, attorney Bradley P. Rhoads filed the motion for authorization of attorney fees, a supporting affidavit, and an itemization of 35.25 hours of time that he and staff in the law office expended on Plaintiffs case before the Commissioner and the Court (DN 23). However, in a letter dated July 10, 2019, Defendant expressed concerns about the identity of the attorney who actually performed the work before the Court and the accuracy of time sheet submitted to the Court (DN 29-1). Specifically, the letter pointed out that time sheets submitted to the Social Security Administration indicated Ms. Martin-Diaz, not Mr. Rhoads, had worked on the case before the Court and she reported four hours, not six, were expended for the preparation and filing of the memorandum of law with the Court (DN 29-1 PageID # 2099).

         The letter prompted attorney Sara Martin-Diaz to file an addendum that includes a supplemental memorandum, an amended time sheet, and an affidavit from her (DN 29). Ms. Martin-Diaz confirmed that she, not Mr. Rhoads, performed all work before the Court (DN 29 PageID # 2094-95; DN 29-4 PageID # 2106). Further, she confirmed that she expended four, not six, hours preparing and filing the memorandum of law, thereby reducing from 7.25 to 5.25 the total hours she expended before the Court (DN 29-3 PageID # 2103, DN 29-4 PageID # 2106). Ms. Martin-Diaz's affidavit indicates she performed an additional four hours of work preparing and filing the motion for attorney fees and all related materials (DN 29-4 PageID # 2106). Ms. Martin-Diaz seeks an award of $4, 628.00 for representing Plaintiff before the Court (Id.).

         CONCLUSIONS OF LAW

         Ms. Martin Diaz argues the Court should approve her request for $4, 628.00. This amount constitutes what remains of the 25% of past-due benefits withheld by the SSA for direct payment of attorney fees under the terms of the contingency fee agreement. The Commissioner, representing the interests of Plaintiff whose back benefits pay for the fees, opposes this sum because counsel will receive a "windfall" considering her level of experience and the limited number of hours she expended before the Court. See Gisbrecht v. Barnhart, 535 U.S. 789, 798 n. 6 (2002) (recognizing the Commissioner acts much like a trustee for the claimant in the fee determination).

         When a district court renders a judgment favorable to a claimant seeking Social Security Disability Insurance Benefits, 42 U.S.C. § 406(b) permits it to award "a reasonable [attorney's] 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," payable out of the claimant's past-due benefits.[4] 42 U.S.C. § 406(b)(1)(A); Laslev v. Comm'r of Soc. Sec. 771 F.3d 308, 309 (6th Cir. 2014); Allan v. Commissioner. No. 10-11651, 2014 WL 1818110, at *1 (E.D. Mich. May 7, 2014). A judgment issued by a federal court either awarding benefits or remanding the matter to the Commissioner may be considered "favorable" within the meaning of the statute, so long as the claimant is awarded benefits "by reason of the judgment. Nolan v. Comm'r of Soc. Sec, No. 4:11-CV-5, 2013 WL 5937908, at *1 (E.D. Tenn. Nov. 5, 2013) (citing Bergen v. Comm'r of Soc. Sec, 454 F.3d 1273, 1277 (11th Cir. 2006)).

         Here, the Court rendered a judgment favorable to Plaintiff because: (1) it remanded his case to the Commissioner (DN 20, 21); and (2) he was awarded Social Security Disability Benefits by reason of the judgment. Having determined the prerequisite satisfied, the Court will address counsel's request for a fee payable out of Plaintiff s past-due benefits.

         Notably, 42 U.S.C. § 406(b)(1)(A) imposes a 25% cap on past due benefits and a requirement that courts determine the "reasonableness" of the fee up to that ceiling. Lasley, 771 F.3d at 309; Rodriguez v. Bowen, 865 F.2d 739, 746 (6th Cir. 1989). While the 25% cap serves as a starting point for the Court's evaluation, it should not be considered per se reasonable. See Lasley, 771 F.3d at 309; Rodriguez, 865 F.2d at 746.

         As mentioned above, Plaintiff and the Rhoads law firm executed a fee agreement (DN 23-1 PageID # 2057). Due deference should be given to their expressed intentions in the agreement. See Rodriguez, 865 F.2d at 746. But the Court is not bound by the fee agreement, see Rodriguez, 865 F.2d at 746 (citations omitted), because it is tasked with assuring the fee authorized is reasonable for the services rendered. See Gisbrecht, 535 U.S. at 807[5].

         If a court decides not give effect to the terms of the fee agreement, it should identify the deductions being made and articulate the reasons for doing so. See Lasley, 771 F.3d at 309-10 (citing Gisbrecht, 535 U.S. at 808); Rodriguez, 865 F.2d at 746. Generally, deductions for large fees fall into two categories: (1) those caused by counsel's improper conduct or ineffectiveness; and (2) "situations in which counsel would otherwise enjoy a windfall because of either an inordinately large benefit award or from minimal effort expended." Rodr ...


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