1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 ANGELINA GURZENDA, 7 Case No. 18-cv-0488-JCS Plaintiff, 8 v. ORDER REGARDING MOTIONS FOR 9 ATTORNEY’S FEES ANDREW SAUL, 10 Re: Dkt. Nos. 39 Defendant. 11
12 13 I. INTRODUCTION 14 Plaintiff Angelina Gurzenda brought this action seeking review of the final decision of 15 Defendant Andrew M. Saul, Commissioner of the Social Security Administration (the 16 “Commissioner”) denying her application for supplemental security income under Title XVI of the 17 Social Security Act. In a September 25, 2019 order, the Court reversed the decision of the 18 Commissioner and remanded for further proceedings. The Social Security Administration later 19 awarded Gurzenda past due benefits. Gurzenda’s counsel, Josephine Gerrard, now moves for an 20 award of attorney’s fees under 42 U.S.C. § 406(b) and the fee agreement between her and 21 Gurzenda. For the reasons stated below, the Court GRANTS the motion.1 22 II. BACKGROUND 23 On January 16, 2018, Gurzenda entered into a contingency-based fee agreement (the “Fee 24 Agreement”) with Gerrard, appointing Gerrard as her counsel for her appeal from the prior 25 administrative denial of her claims. Fees Mot. (dkt. 39) Ex. B. The Fee Agreement grants Gerrard 26 “the right . . . to ask the court to award as much as 25% of [Gurzenda’s] past-due benefits,” and 27 1 provides that “[i]f the court awards an attorney fee out of any past-due benefits and also awards an 2 [Equal Access to Justice Act (‘EAJA’)] fee for that same work, [Gurzenda] will be refunded or 3 credit with the amount of the smaller fee.” Id. On September 25, 2019, the Court granted 4 Gurzenda’s motion for summary judgment, reversing the administrative law judge’s prior denial 5 of benefits and remanding the matter for further administrative proceedings. See S.J. Order (dkt. 6 34).2 The Court awarded Gurzenda $6,750 in attorney’s fees under the EAJA, 28 U.S.C. 7 § 2412(d), based on the stipulation of the parties. Dkts. 36, 38. On February 4, 2020, the Social 8 Security Administration issued an award letter granting Gurzenda $39,365 in past due benefits. 9 Fees Mot. Ex. A. 10 Gerrard now requests that the Court award attorney’s fees of $3,091 pursuant to 42 U.S.C. 11 § 406(b)(1). Fees Mot. at 1, 4. Gerrard contends that this fee is reasonable because it equals the 12 difference between the maximum § 406(b)(1) fee of $9,841 (twenty-five percent of Gurzenda’s 13 back-benefits award, apparently rounding off the additional twenty-five cents that result from a 14 precise calculation) and the EAJA award of $6,750. Id. at 4. Under Gerrard’s proposed award, 15 Gurzenda’s remaining past due benefits would equal $36,274, which is the difference between the 16 $39,365 full award and $3,091 in requested attorney’s fees. 17 In a response to the motion—offered in the Commissioner’s role “‘resembling that of a 18 trustee,’” without taking a position on the reasonableness of Gerrard’s request—the Commissioner 19 argues that Gerrard’s request is “terribly confusing,” as compared to the more typical practice in 20 which an attorney seeks the full amount authorized under the applicable fee agreement and 21 § 406(b)(1) and the Court orders the return of any EAJA fees to the plaintiff. Comm’r’s Response 22 (dkt. 40) at 3–4 (quoting Gisbrecht v. Barnhart, 535 U.S. 789, 808–09 (2002)). Specifically, the 23 Commissioner argues that under Gerrard’s proposed award, Gurzenda would not receive the 24 $6,750 EAJA award. Id. at 4. As such, the Commissioner asserts that the Court should award 25 Gerrard a gross fee of $9,841.25, comprising 25% of Gurzenda’s award of past-due benefits, and 26 order Gerard to return the $6,750 EAJA award to Gurzenda. Id. at 4–5. After refunding Gurzenda 27 the $6,750 EAJA award, the net fee payable to Gerrard would be $3,091.25, with Gurzenda 1 retaining $36,273.75. Id. 2 III. ANALYSIS 3 A. Legal Standard for Social Security Attorney’s Fees 4 “Whenever a court renders a judgment favorable to a claimant under this subchapter who 5 was represented before the court by an attorney, the court may determine and allow as part of its 6 judgment a reasonable fee for such representation, not in excess of 25 percent of the total of the 7 past-due benefits to which the claimant is entitled by reason of such judgment, and the 8 Commissioner of Social Security may . . . certify the amount of such fee for payment to such 9 attorney out of, and not in addition to, the amount of such past-due benefits.” 42 U.S.C. § 406(b). 10 Courts must “review for reasonableness” fees sought under this statute, and may reduce an award 11 of fees below the statutory ceiling based on factors including “the character of the representation,” 12 “the results the representative achieved,” an attorney’s responsibility for delay (which must be 13 addressed “so that the attorney will not profit from the accumulation of benefits during the 14 pendency of the case in court”), and whether the “benefits are large in comparison to the amount 15 of time counsel spent on the case” (which “may require the claimant’s attorney to submit . . . a 16 record of the hours spent representing the claimant and a statement of the lawyer’s normal hourly 17 billing charge for noncontingent-fee cases”). Gisbrecht, 535 U.S. at 808–09; see also Crawford v. 18 Astrue, 586 F.3d 1142, 1151 (9th Cir. 2009) (“The court may properly reduce the fee for 19 substandard performance, delay, or benefits that are not in proportion to the time spent on the 20 case.”). In conducting that inquiry, courts must “respect the ‘primacy of lawful attorney-client fee 21 agreements.’” Crawford, 586 F.3d at 1150 (quoting Gisbrecht, 535 U.S. at 1150). 22 In addition to the fees permitted under § 406(b), the EAJA, enacted in 1980, allows a party 23 who prevails against the United States in court, including a successful Social Security benefits 24 claimant, to receive an award of fees payable by the United States if the government’s position in 25 the litigation was not “substantially justified.” Gisbrecht, 535 U.S. at 796 (citing 28 U.S.C. 26 § 2412(d)(1)(A)). The burden of proving the substantial justification exception to the mandatory 27 award of fees under the EAJA lies with the government. Love v. Reilly, 924 F.2d 1492, 1495 (9th 1 expended” and the attorney’s billing rate. 28 U.S.C. § 2412(d)(1)(B). The EAJA authorizes an 2 award of only “reasonable” attorneys’ fees, and caps the rate at which fees can be awarded at $125 3 per hour, except that a court may authorize a higher rate based on special circumstances or an 4 increase in the cost of living. 28 U.S.C. § 2412(d)(2)(A). The Ninth Circuit has authorized a cost 5 of living adjustment based on the “CPI-U” consumer price index. Thangaraja v. Gonzales, 428 6 F.3d 870, 876 (9th Cir. 2005).
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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 ANGELINA GURZENDA, 7 Case No. 18-cv-0488-JCS Plaintiff, 8 v. ORDER REGARDING MOTIONS FOR 9 ATTORNEY’S FEES ANDREW SAUL, 10 Re: Dkt. Nos. 39 Defendant. 11
12 13 I. INTRODUCTION 14 Plaintiff Angelina Gurzenda brought this action seeking review of the final decision of 15 Defendant Andrew M. Saul, Commissioner of the Social Security Administration (the 16 “Commissioner”) denying her application for supplemental security income under Title XVI of the 17 Social Security Act. In a September 25, 2019 order, the Court reversed the decision of the 18 Commissioner and remanded for further proceedings. The Social Security Administration later 19 awarded Gurzenda past due benefits. Gurzenda’s counsel, Josephine Gerrard, now moves for an 20 award of attorney’s fees under 42 U.S.C. § 406(b) and the fee agreement between her and 21 Gurzenda. For the reasons stated below, the Court GRANTS the motion.1 22 II. BACKGROUND 23 On January 16, 2018, Gurzenda entered into a contingency-based fee agreement (the “Fee 24 Agreement”) with Gerrard, appointing Gerrard as her counsel for her appeal from the prior 25 administrative denial of her claims. Fees Mot. (dkt. 39) Ex. B. The Fee Agreement grants Gerrard 26 “the right . . . to ask the court to award as much as 25% of [Gurzenda’s] past-due benefits,” and 27 1 provides that “[i]f the court awards an attorney fee out of any past-due benefits and also awards an 2 [Equal Access to Justice Act (‘EAJA’)] fee for that same work, [Gurzenda] will be refunded or 3 credit with the amount of the smaller fee.” Id. On September 25, 2019, the Court granted 4 Gurzenda’s motion for summary judgment, reversing the administrative law judge’s prior denial 5 of benefits and remanding the matter for further administrative proceedings. See S.J. Order (dkt. 6 34).2 The Court awarded Gurzenda $6,750 in attorney’s fees under the EAJA, 28 U.S.C. 7 § 2412(d), based on the stipulation of the parties. Dkts. 36, 38. On February 4, 2020, the Social 8 Security Administration issued an award letter granting Gurzenda $39,365 in past due benefits. 9 Fees Mot. Ex. A. 10 Gerrard now requests that the Court award attorney’s fees of $3,091 pursuant to 42 U.S.C. 11 § 406(b)(1). Fees Mot. at 1, 4. Gerrard contends that this fee is reasonable because it equals the 12 difference between the maximum § 406(b)(1) fee of $9,841 (twenty-five percent of Gurzenda’s 13 back-benefits award, apparently rounding off the additional twenty-five cents that result from a 14 precise calculation) and the EAJA award of $6,750. Id. at 4. Under Gerrard’s proposed award, 15 Gurzenda’s remaining past due benefits would equal $36,274, which is the difference between the 16 $39,365 full award and $3,091 in requested attorney’s fees. 17 In a response to the motion—offered in the Commissioner’s role “‘resembling that of a 18 trustee,’” without taking a position on the reasonableness of Gerrard’s request—the Commissioner 19 argues that Gerrard’s request is “terribly confusing,” as compared to the more typical practice in 20 which an attorney seeks the full amount authorized under the applicable fee agreement and 21 § 406(b)(1) and the Court orders the return of any EAJA fees to the plaintiff. Comm’r’s Response 22 (dkt. 40) at 3–4 (quoting Gisbrecht v. Barnhart, 535 U.S. 789, 808–09 (2002)). Specifically, the 23 Commissioner argues that under Gerrard’s proposed award, Gurzenda would not receive the 24 $6,750 EAJA award. Id. at 4. As such, the Commissioner asserts that the Court should award 25 Gerrard a gross fee of $9,841.25, comprising 25% of Gurzenda’s award of past-due benefits, and 26 order Gerard to return the $6,750 EAJA award to Gurzenda. Id. at 4–5. After refunding Gurzenda 27 the $6,750 EAJA award, the net fee payable to Gerrard would be $3,091.25, with Gurzenda 1 retaining $36,273.75. Id. 2 III. ANALYSIS 3 A. Legal Standard for Social Security Attorney’s Fees 4 “Whenever a court renders a judgment favorable to a claimant under this subchapter who 5 was represented before the court by an attorney, the court may determine and allow as part of its 6 judgment a reasonable fee for such representation, not in excess of 25 percent of the total of the 7 past-due benefits to which the claimant is entitled by reason of such judgment, and the 8 Commissioner of Social Security may . . . certify the amount of such fee for payment to such 9 attorney out of, and not in addition to, the amount of such past-due benefits.” 42 U.S.C. § 406(b). 10 Courts must “review for reasonableness” fees sought under this statute, and may reduce an award 11 of fees below the statutory ceiling based on factors including “the character of the representation,” 12 “the results the representative achieved,” an attorney’s responsibility for delay (which must be 13 addressed “so that the attorney will not profit from the accumulation of benefits during the 14 pendency of the case in court”), and whether the “benefits are large in comparison to the amount 15 of time counsel spent on the case” (which “may require the claimant’s attorney to submit . . . a 16 record of the hours spent representing the claimant and a statement of the lawyer’s normal hourly 17 billing charge for noncontingent-fee cases”). Gisbrecht, 535 U.S. at 808–09; see also Crawford v. 18 Astrue, 586 F.3d 1142, 1151 (9th Cir. 2009) (“The court may properly reduce the fee for 19 substandard performance, delay, or benefits that are not in proportion to the time spent on the 20 case.”). In conducting that inquiry, courts must “respect the ‘primacy of lawful attorney-client fee 21 agreements.’” Crawford, 586 F.3d at 1150 (quoting Gisbrecht, 535 U.S. at 1150). 22 In addition to the fees permitted under § 406(b), the EAJA, enacted in 1980, allows a party 23 who prevails against the United States in court, including a successful Social Security benefits 24 claimant, to receive an award of fees payable by the United States if the government’s position in 25 the litigation was not “substantially justified.” Gisbrecht, 535 U.S. at 796 (citing 28 U.S.C. 26 § 2412(d)(1)(A)). The burden of proving the substantial justification exception to the mandatory 27 award of fees under the EAJA lies with the government. Love v. Reilly, 924 F.2d 1492, 1495 (9th 1 expended” and the attorney’s billing rate. 28 U.S.C. § 2412(d)(1)(B). The EAJA authorizes an 2 award of only “reasonable” attorneys’ fees, and caps the rate at which fees can be awarded at $125 3 per hour, except that a court may authorize a higher rate based on special circumstances or an 4 increase in the cost of living. 28 U.S.C. § 2412(d)(2)(A). The Ninth Circuit has authorized a cost 5 of living adjustment based on the “CPI-U” consumer price index. Thangaraja v. Gonzales, 428 6 F.3d 870, 876 (9th Cir. 2005). 7 “Congress harmonized fees payable by the Government under EAJA with fees payable 8 under § 406(b) out of the claimant’s past-due Social Security benefits in this manner: Fee awards 9 may be made under both prescriptions, but the claimant’s attorney must ‘refun[d] to the claimant 10 the amount of the smaller fee.’” Gisbrecht, 535 U.S. at 796 (quoting Act of Aug. 5, 1985, Pub. L. 11 No. 99-80, § 3, 99 Stat. 186 (1985)) (alteration in original). Accordingly, “an EAJA award offsets 12 an award under Section 406(b),” increasing “the amount of the total past-due benefits the claimant 13 actually receives . . . up to the point the claimant receives 100 percent of the past-due benefits.” 14 Id. (citation, brackets, and internal quotation marks omitted). 15 B. Authorized Attorney’s Fees Under 42 U.S.C. § 406(b) 16 Here, Gerrard seeks an award of $3,091.25 in attorney’s fees, which amounts to twenty- 17 five percent of Gurzenda’s total award of past due benefits less the EAJA award of $6,750. See 18 Fees Mot. at 4. In response, the Commissioner asserts that it is “unclear whether [Gerrard] was 19 aware” that she owed Gurzenda the EAJA award and that her calculation was “confusing.” 20 Comm’r’s Response at 3, 5. Based on Gerrard’s proposed calculation, however, it is clear that 21 she was aware of the requirement, as her calculation directly took the required refund into 22 account. 23 The competing proposals offered by Gerrard and the Commissioner result in the same 24 outcome.3 The Commissioner proposes that Gerrard should have requested the full §406(b) fee of 25 $9,841, leaving Gurzenda with $29,524. Next, the Commissioner’s calculation necessitates that 26 Gerrard returns to Gurzenda the $6,750 EAJA award that Gerrard previously recovered from the 27 1 Commissioner. The final result of the Commissioner’s proposed calculation leaves Gurzenda with 2 a net benefits payment of $36,274 and Gerrard with a total fee of $9,841. Gerrard’s calculation 3 combines the Commissioner’s first and second steps, resulting in a single transaction and no need 4 for a refund from Gerrard to Gurzenda. Under either calculation, Gurzenda receives $36,274 in 5 past due benefits and Gerrard receives $9,841 in attorney’s fees. 6 Gerrard’s fee can be viewed alternatively as either: (1) the $6,750 EAJA award she 7 previously received from the Commissioner plus $3,091 awarded under § 406(b) out of 8 Gurzenda’s benefits; or (2) a $9,841 award under § 406(b) out of Gurzenda’s benefits, with the 9 EAJA award from the Commissioner going instead to Gurzenda. Under either framework, 10 though, each party receives the same amount. While Gerrard’s plan adds some complication in 11 that it differs from the usual practice described in Gisbrecht and has prompted the Commissioner’s 12 quasi-objection in response, it also simplifies the process by directing all funds to the appropriate 13 recipient in the first instance, without need to order a refund from Gerrard to Gurzenda. 14 The question remains whether Gerrard’s approach is permissible under the parties’ fee 15 agreement and applicable statutes. The fee agreement provides that if the Court awards fees both 16 under the EAJA and out of Gurzenda’s benefits under § 406(b), Gurzenda “will be refunded or 17 credited with the amount of the smaller fee.” Fees Mot. Ex. B at 2. Gerrard’s proposal satisfies 18 that provision in that Gurzenda would be “credited” with the amount of the EAJA fee as a result of 19 Gerrard receiving only $3,091—and not the full twenty-five percent, or $9,841—from Gurzenda’s 20 past-due benefits. 21 As for the statutory scheme, § 406(b)(1)(A) provides that when any fees are awarded 22 thereunder, “no other fee may be payable or certified for payment for such representation except 23 as provided in this paragraph.” 42 U.S.C. § 406(b)(1)(A). To prevent that clause prohibiting an 24 award of fees under the EAJA, or allowing such an award to serve as a windfall to counsel rather 25 than offsetting the fees that a claimant must pay under § 406(b), Congress has provided that 26 section 406(b)(1)’s prohibition on other fees “shall not apply with respect to any [EAJA] award 27 but only if, where the claimant’s attorney receives fees for the same work under both [§ 406(b)] 1 Pub. L. No. 96-491, § 206 (Oct. 21, 1980), as modified by Pub. L. No. 99–80, § 3 (Aug. 5, 1985). 2 As the Supreme Court noted in Gisbrecht, when fees are available under both statutes, the 3 claimant’s attorney typically receives both awards, and refunds the smaller award to the claimant. 4 535 U.S. at 796. Neither party has cited any case considering whether Gerrard’s approach is also 5 permissible. As Gerrard notes in her reply, however, by explicitly subtracting the prior EAJA 6 award from the twenty-five percent fee allowed under her fee agreement and § 406(b), the 7 remaining $3,091 does not account for the “same work” as the EAJA award. In the alternative, the 8 deduction could also be construed as a “refund,” as contemplated by Congress in harmonizing the 9 two fee statutes. The Court therefore concludes that Gerrard’s approach of deducting the earlier 10 EAJA award from the amount she would otherwise be entitled to receive under § 406(b) is 11 permissible, albeit unorthodox.4 12 The Court also concludes that Gerrard’s total fees of $9,841—combining the EAJA award 13 with the amount she seeks under § 406(b)—are reasonable. A court’s review of reasonableness 14 under § 406(b) must “respect the ‘primacy of lawful attorney-client fee agreements.’” Crawford, 15 586 F.3d at 1150 (quoting Gisbrecht, 535 U.S. at 1150). Gerrard spent 67.1 hours working on the 16 case, Fees Mot. Ex. E, resulting in an effective rate of $146.66 per hour, which is modest even 17 before taking into account the contingent nature of the representation. Although Gerrard required 18 a number of deadline extensions, much of the delay was due to the complex history of Gurzenda’s 19 multiple applications for disability benefits, and Gerrard ultimately obtained a favorable result for 20 her client. The Court finds no basis to deviate from the terms of the fee agreement. 21 IV. CONCLUSION 22 For the reasons stated above, the motion is GRANTED. Gurzenda’s counsel Josephine M. 23 Gerrard may recover fees of $3,091 from Gurzenda’s past-due benefits, in additional to the $6,750 24 that Gerrard already received under the EAJA. The Commissioner is ORDERED to disburse 25 / / / 26 / / / 27 ] Gurzenda’s past-due benefits in a manner consistent with this order. 2 IT ISSO ORDERED. 3 Dated: September 9, 2020 4 ¢ Zo J PH C. SPERO 5 ief Magistrate Judge 6 7 8 9 10 1]
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