Laura Gossett v. Social Security Administration, Commissioner

• Court: Court of Appeals for the Eleventh Circuit
• Decided: April 28, 2020
• Docket: 19-13922
• Status: Unpublished

Opinion

Case: 19-13922 Date Filed: 04/28/2020 Page: 1 of 8

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT ________________________

No. 19-13922 Non-Argument Calendar ________________________

D.C. Docket No. 4:14-cv-01696-CLS

LAURA GOSSETT,

Plaintiff-Appellant,

versus

SOCIAL SECURITY ADMINISTRATION, COMMISSIONER,

Defendant-Appellee.

________________________

Appeal from the United States District Court for the Northern District of Alabama ________________________

(April 28, 2020) Before WILSON, MARTIN, and ROSENBAUM, Circuit Judges.

PER CURIAM:

Laura Gossett filed a claim for disability and disability insurance benefits

with the Social Security Administration (“SSA”). The SSA initially denied her Case: 19-13922 Date Filed: 04/28/2020 Page: 2 of 8

claim, but Gossett successfully challenged the denial of her claim in federal district

court. Her attorney, Myron Allenstein, moved the district court for attorney’s fees

pursuant to 42 U.S.C. § 406(b) and the Equal Access to Justice Act (“EAJA”), 28

U.S.C. § 2412. Although Allenstein asked for $78,280.63 as a fee award, the

district court awarded him $5,701.80. Allenstein appeals this fee award. After

careful consideration, we vacate the fees awarded and remand to the district court

to recalculate the award.

I.

Beginning in 2013, Allenstein represented Gossett in her application for

Social Security disability benefits. Gossett signed a contingency-fee agreement for

Allenstein’s services. The agreement provided:

if it becomes necessary for [Allenstein] to file a civil action in the United States District Court, then [Allenstein] may petition the court for approval of a fee of 25 percent of past due benefits resulting from my claim(s). . . . If the claim is won in Federal Court . . . the fee cap is not applicable and counsel will be entitled to a fee based on time devoted to the claim but limited to 25% of back benefits.

The agreement also said that if the district court awarded attorney’s fees under the

EAJA as well as attorney’s fees from Gossett’s back benefits, Gossett would keep

“the lower of the two fees.”

Allenstein spent 15 hours working on Gossett’s appeal of the SSA’s denial

of her application for benefits. The district court found for Gossett, vacated the

denial of benefits, and remanded to the SSA. On remand, the SSA deemed Gossett

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disabled since April 2009 and awarded her a total of $216,376.50 in back benefits,

as well as a total of $108,146 in back benefits for her three dependents. The SSA

withheld one-fourth of this award—$81,130.63—as the maximum amount of

attorney’s fees that the court would approve out of the past-due benefit.

After the favorable decision from the SSA but before learning the precise

amount of back benefits, Allenstein moved the district court for $2,850.90 in

attorney’s fees under the EAJA, based on 15 hours of work at a “reasonable”

hourly rate of $190.06. The Acting Social Security Commissioner

(“Commissioner”) did not oppose this fee request, and the district court awarded

EAJA fees in the requested amount.

Allenstein then moved for attorney’s fees under 42 U.S.C. § 406(b), which

allows for a reasonable attorney’s fee at 25% or less of total past-due benefits.

Allenstein amended his request for fees after the SSA gave notice of back benefits.

Citing the terms of the contingency-fee agreement, Allenstein asked for $78,280.63

in attorney’s fees. This amount represented 25% of the total past-due benefits,

$81,130.63, reduced by $2,850 in EAJA attorney’s fees as promised in the

contingency-fee agreement.

The Commissioner opposed Allenstein’s motion. It argued that $78,280.63

as an attorney’s fee for 15 hours of work would result in a “windfall” to Allenstein.

It asked the district court to award a lower attorney’s fee.

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The district court granted Allenstein’s motion in part, awarding him

$5,701.80 in fees under 42 U.S.C. § 406(b). The court reasoned that awarding

Allenstein the full 25% contingency fee for 15 hours of work would “result[] in an

effective hourly rate of $5,218.71.” The court noted that Allenstein had

“represented that $190.06 was a reasonable [hourly] rate” in his motion for EAJA

fees. Thus, to arrive at what it viewed as a more reasonable fee, the court

calculated “a fee equivalent to double the prevailing hourly rate (i.e., $380.12)” for

each of Allenstein’s 15 hours of work. This calculation resulted in an award of

$5,701.80.

Allenstein moved for reconsideration of this fee award, and the district court

declined to change the award. This is Allenstein’s appeal.

II.

This Court reviews a district court’s award of attorney’s fees for abuse of

discretion. ACLU of Ga. v. Barnes, 168 F.3d 423, 427 (11th Cir. 1999). By

definition, a district court abuses its discretion when it makes an error of law. In re

Managed Care Litig., 605 F.3d 1146, 1150 (11th Cir. 2010) (per curiam).

III.

Allenstein argues that the district court improperly relied on an out-of-circuit

case, Hayes v. Secretary of Health & Human Services, 923 F.2d 418 (6th Cir.

1990), in assessing the reasonableness of the attorney’s fee award allowed by the

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contingency agreement. He asks our Court to respect the contingency-fee

agreement and award him the full 25% of Gossett’s back benefits. We agree that

the district court made an error of law in relying on Hayes, and we vacate and

remand for reassessment of a reasonable attorney’s fee in Gossett’s case.

42 U.S.C. § 406(b)(1)(A) provides:

Whenever a court renders a judgment favorable to a [Social Security] 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 by reason of such judgment . . . .

In Gisbrecht v. Barnhart, 535 U.S. 789, 122 S. Ct. 1817 (2002), the Supreme Court

resolved a circuit split about the method for determining “reasonable” attorney’s

fees under § 406(b). Id. at 799, 122 S. Ct. at 1823–24. The Court first considered

the “lodestar calculation” method, which involves awarding fees based on “hours

reasonably spent on the case times reasonable hourly rate.” Id. at 792, 122 S. Ct. at

1820. The Court explicitly rejected this method. Id. at 793, 122 S. Ct. at 1820. It

reasoned that applying the lodestar method to SSA fee awards was incompatible

with the standard practice of contingency-fee agreements in SSA cases; Congress’s

legislation of § 406(b), which predated the lodestar method; and the lodestar

method’s purpose to “govern imposition of fees on the losing party,” rather than

fees paid from the client’s award of benefits. Id. at 797, 805–06, 122 S. Ct. at

1822, 1827–28.

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Gisbrecht held that Ҥ 406(b) does not displace contingent-fee agreements as

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

Security benefits claimants in court.” Id. at 807, 122 S. Ct. at 1828. The Court

explained that contingent-fee agreements are “presumptively reasonable,” but that

Ҥ 406(b) calls for court review of such arrangements as an independent check, to

assure that they yield reasonable results in particular cases.” Id. at 792, 807, 122 S.

Ct. at 1820, 1828. The Court said that courts could “appropriately reduce[] the

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

representative achieved.” Id. at 808, 122 S. Ct. at 1828. Relevant here, a court

could reduce a windfall fee award if “the benefits are large in comparison to the

amount of time counsel spent on the case.” Id.

The district court in this case determined that the 25% contingency fee

provided for in Allenstein and Gossett’s agreement would be a “windfall” to

Allenstein. The court invoked the Sixth Circuit’s opinion in Hayes for “guidance

about how to determine when a high hourly rate will constitute a windfall to

claimant’s counsel.” Hayes held that “a windfall can never occur when, in a case

where a contingent fee contract exists, the hypothetical hourly rate determined by

dividing the number of hours worked for the claimant into the amount of the fee

permitted under the contract is less than twice the standard rate for such work.”

923 F.2d at 422 (footnote omitted). Based on Hayes, the district court decided that

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the “floor” of reasonableness was 15 hours multiplied by a $380.12 hourly rate, for

a total fee of $5,701.80.

The district court’s decision was contrary to Gisbrecht because it looked to

Hayes to assess the reasonableness of Allenstein’s contingent-fee agreement.

Hayes pre-dated Gisbrecht and employed the lodestar method, which the district

court itself acknowledged. Gisbrecht expressly rejected exclusive use of the

lodestar method to assess the reasonableness of attorney’s fees. See 535 U.S. at

793, 122 S. Ct. at 1820. Thus, the district court’s reliance on only the lodestar

method was an abuse of discretion. See Jeter v. Astrue, 622 F.3d 371, 379 (5th

Cir. 2010) (observing that Gisbrecht “proscribes exclusive, primary reliance on the

lodestar method to determine the reasonableness of a § 406(b) fee award”).

Important to this decision is that the district court did not consider or explain

any factors beyond Allenstein’s effective hourly rate in its assessment of a

reasonable fee. See, e.g., Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S. Ct.

1933, 1941 (1983) (holding that district courts must “provide a concise but clear

explanation of its reasons for the fee award”); Crawford v. Astrue, 586 F.3d 1142,

1152 (9th Cir. 2009) (vacating § 406(b) fee award because the “court failed to

relate its . . . lodestar [calculation] to the circumstances of the individual case”).

Courts have recognized that Gisbrecht’s “reference to windfall leaves room for

consideration of an effective hourly fee rate,” but only alongside other factors,

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including “whether an attorney’s success is attributable to his own work or instead

to some unearned advantage,” the attorney’s “degree of expertise” and adequacy of

representation, the percentage of back benefits sought, and the attorney’s “risk of

loss.” Jeter, 622 F.3d at 376, 380; see also Mudd v. Barnhart, 418 F.3d 424, 428–

29 (4th Cir. 2005) (affirming an award of § 406(b) fees where the court considered

“time spent and work performed by counsel” along with “overall complexity of the

case, the lawyering skills necessary to handle it effectively, the risks involved, and

the significance of the result achieved”). Because “courts must look to the

agreement made by the parties and independently review whether the resulting fee

is reasonable under the circumstances,” the district court erred by relying solely on

the lodestar calculation. See Keller v. Comm’r of Soc. Sec., 759 F.3d 1282, 1284

(11th Cir. 2014) (emphasis added).

Gisbrecht calls upon the district court to evaluate factors or circumstances

beyond the lodestar calculation, based on the circumstances of Gossett’s case. We

express no view on what will constitute a reasonable fee in this case. Nevertheless,

we vacate the fee award and remand to the district court for further proceedings

consistent with this opinion.

VACATED AND REMANDED.