M.F. v. Kijakazi

Opinion

1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5

7 M. F., No. 20-cv-08742-WHA 8 Plaintiff, ORDER REGARDING MOTION FOR 9 v. FURTHER FEES PURSUANT TO 42 U.S.C. § 406(B) AND RELATED 10 KILOLO KIJAKAZI, MOTIONS 11 Defendant.

13 INTRODUCTION 14 Attorney represented claimant in this social security appeal and was awarded 15 EAJA fees after a reversal and remand and now seeks yet more in fees from 16 claimant herself. The motion is DENIED because the fee agreement did not make 17 clear that the attorney could seek supplemental fees from her. 18 STATEMENT 19 Claimant M.F. filed an application for disability benefits under the Social 20 21 Security Act in August 2015 while represented by Attorney Frederick Crow. After 22 she was denied, she filed for reconsideration. The ALJ found that she was not 23 disabled in February 2020. The Appeals Council denied her request for 24 administrative review. In April 2020, Attorney Crow withdrew as claimant’s 25 representative and waived attorney’s fees (Dkt. No. 44-6). In November 2020, 26 Attorney Steven Bruce, practicing under the name People with Disabilities 27 Foundation (PWDF), agreed to represent M.F. for judicial review. M.F. signed a 1 2 retainer agreement (“2020 Agreement”) which read as follows: 3 I, [MF] hereby employ Steven Bruce to represent me in federal court as a plaintiff in a Social Security/SSI disability case. 4 I agree to pay my attorney reasonable expenses that are incurred in 5 representing me. Such expenses may include federal court filings fees, computerized legal research services, long distance telephone 6 calls, medical reports, photocopying, postage, travel, and other attorney’s fees on an hourly basis. I will get an itemized bill for 7 these expenses. I understand that I will not have to pay these expenses unless we win the case. People With Disabilities 8 Foundation (PWDF) can never guarantee results.

9 I understand that PWDF is accepting this case for public interest reasons. I agree to cooperate in any way that I can so my attorney’s 10 full fee is authorized. I hereby assign any court-awarded Equal Access to Justice Act (EAJA) attorney’s fees to my attorneys. 11 This agreement is in addition to any other fee agreement I have 12 signed with my attorney for representation before the Social Security Administration. This agreement supersedes any and all 13 previous agreement(s) with PWDF for representation on Social Security /SSI disability case. 14 (Dkt. Nos. 27-3 at 2; 53-1) (emphasis in original). 15 In 2021, claimant and defendant filed cross motions for summary judgment 16 in which claimant’s motion was granted and judgment and remand were entered in 17 18 her favor (Dkt. Nos. 25, 26). An order then awarded Attorney Bruce $17,466.72 in 19 EAJA fees and $400 in costs, which was paid to Attorney Bruce by the Social 20 Security Administration (Dkt. No. 35 at 7). 21 Subsequently, in contemplation of further proceedings before the agency, 22 M.F. and Attorney Bruce signed a further agreement (“2022 Agreement”) for 23 representation through Appeals Council appeal and for attorney’s fees pursuant to 24 25 42 U.S.C. § 406(a)(2)(A). The 2022 Agreement stated in relevant part: 26 I employ People With Disabilities Foundation (PWDF) to represent me before the Social Security Administration (SSA) in 27 my Disability Insurance Benefits (DIB) and/or Supplemental Security Income (SSI) case. If I win at any administrative level of this agreement, I agree that the attorney’s fee will be the lesser 1 of SSA’s current cap of $6,000 or twenty-five percent (25%) of all past due benefits awarded to me and my family pursuant to 42 2 U.S.C. § 406(a)(2)(A). The attorney’s fee is for legal services rendered within the scope of representation herein. 3 I understand that SSA normally withholds the attorney’s fee and 4 pays PWDF directly; however if I or my family receive any past due SSDI/SSI benefits, I agree to bring to PWDF the lesser of 5 $6,000 or twenty-five percent (25%) of all past due benefits awarded me and my family. Upon receipt of any payment(s) for 6 attorney’s fees brought by me, PWDF will deposit it into a trust account until the fee is approved by SSA. 7 (Dkt. No. 49-1) (emphasis in original). At the bottom of the agreement, after the signature 8 point, the agreement further stated: “PWDF reserves the right to petition for fees in excess of 9 $6,000 but less than twenty-five percent (25%) of all past due benefits. PWDF reserves the 10 right to keep any attorney’s fees received from any third party, in compliance with applicable 11 law” (ibid.). Significantly, this agreement failed to say that the further fees would be sought 12 from the claimant (as opposed to the government as EAJA fees). 13 Claimant prevailed on appeal and the Council granted $183,414 in past-due benefits. At 14 his request, claimant paid Attorney Bruce in the amount of $12,987 for fees in November 15 2023. 16 In January 2024, Attorney Bruce filed the instant motion for attorney’s fees 17 in the district court pursuant to 42 U.S.C. § 406(b) stating that the Social Security 18 Administration had not sent the notice of award from September 2022 until the end 19 of 2023, so he had not made been aware of claimant’s award of the past-due 20 benefits until January 2024 (Dkt. No. 44-1 ¶ 3). The motion failed to attach any of 21 22 the fee agreements. Counsel also failed to serve it on the claimant, M.F. From 23 outward appearances, it seemed superficially to be a request for yet more EAJA 24 fees to be paid by the government. Upon closer review, however, it became clear 25 to the judge that the attorney was seeking money from the client. The judge then 26 asked for copies of all fee agreements and requested the attorney to serve his client 27 Attorney Bruce filed a motion to withdraw (Dkt. No. 63) and a motion to 1 2 strike a declaration filed by claimant (Dkt. No. 66). 3 ANALYSIS 4 1. MOTION FOR ATTORNEY’S FEES UNDER 42 U.S.C. § 406(B) 5 Social security benefit cases have a unique statutory scheme in which an 6 attorney successfully representing his or her client may file for three types of 7 attorney’s fees: Section 406(a) fees, Equal Access to Justice Act (EAJA) fees, and 8 Section 406(b) fees. Here, Attorney Bruce was already awarded EAJA fees and is 9 10 now seeking the third type of attorney’s fees. 11 First, Section 406(a) governs attorney’s fees for representation in 12 administrative proceedings (here, representation before the Commissioner of 13 Social Security Administration). There are two ways to govern fees under Section 14 406(a) depending on whether a prior fee agreement exists. If the claimant has a fee 15 agreement, Section 406(a)(2) caps fees at the lesser of 25% of past-due benefits or 16 $4,000. If there is no fee agreement, Section 406(a)(1) gives the agency authority 17 18 to prescribe the maximum fees which may be charged for services performed in the 19 connection with any claim” before the agency. If the claimant obtains a favorable 20 agency determination, the agency may provide “a reasonable fee to compensate 21 such attorney for services performed by him.” Culbertson v. Berryhill, 586 U.S. 22 53, 56 (2019). 23 Second, an attorney may file for EAJA fees after prevailing in a civil action 24 25 including judicial review of agency action, brought by or against the government in 26 any court having jurisdiction in that action, unless the court finds that the position 27 of the government was substantially justified. 28 U.S.C.§ 2412(d)(1)(A). These attorney’s hourly rate. Gisbrecht v. Banhart, 535 U.S. 789, 796 (2002). The court, 1 2 in its discretion, may reduce the amount to be awarded pursuant to this subsection, 3 or deny an award, to the extent that the prevailing party during the proceedings 4 engaged in conduct which unduly and unreasonably protracted the final resolution 5 of the matter in controversy. 28 USC § 2412(d)(1)(C). 6 Third, Section 406(b) governs attorney’s fees for successful representation in 7 judicial proceedings, unlike Section 406(a) fees for successful representation in 8 administrative proceedings. The court may determine and allow as part of its 9 10 judgment “a reasonable fee for such representation, not in excess of 25 percent of 11 the total of past-due benefits to which the claimant is entitled by reason of such 12 judgment.” Section 406(b)(1)(A). Unlike EAJA fees, which are paid by the 13 government, Section 406(b) fees are paid by the claimant out of the past-due 14 benefits awarded. Crawford v. Astrue, 586 F.3d 1142, 1147 (9th Cir. 2009). This 15 statute “does not displace contingent-fee agreements as the primary means by 16 which fees are set for successfully representing Social Security benefits claimants 17 18 in court. Rather, Section 406(b) calls for court review of such arrangements as an 19 independent check, to assure that they yield reasonable results in particular cases.” 20 Gisbrecht, 535 U.S. at 807. Further, the Supreme Court has rejected the lodestar 21 method in calculating fees under Section 406(b). Id., at 808-809. 22 A district court may award fees under both the EAJA and Section 406(b), 23 “but the claimant's attorney must refund to the claimant the amount of the smaller 24 25 fee.” Gisbrecht, 535 U.S. at 796; Crawford, 586 F.3d at 1145 n.3. Therefore, if an 26 attorney has already been awarded EAJA fees, the district court must reduce the 27 fee award by the amount of attorney’s fees already paid by the government under 406(b) even after it has entered judgment for a claimant and remanded the case 1 2 back to the agency for further proceedings. Culbertson, 586 U.S. at 58. 3 The main issue in deciding this motion concerns the fee agreements. This 4 order presumes that a motion for fees under Section 406(b) can be made in the 5 district court both before and after a successful remand to the agency. 6 Nonetheless, the specific facts involved here merit denial of the fees sought by 7 counsel. 8 In his motion, Attorney Bruce states that he and claimant entered into a 9 10 retainer agreement in November 2020 to represent her in federal court (Dkt. No. 44 11 at 5). However, as pointed out by defendant, no such contingent fee agreement 12 pursuant to Section 406(b) was attached with the motion. Attorney Bruce was then 13 asked to produce the contingency fee agreement pursuant to Section 406(b) (Dkt. 14 No. 48). Attorney Bruce filed a copy of the 2022 Agreement for representation 15 through Appeals Council appeal pursuant to Section 406(a)(2)(A) (Dkt. No. 49). 16 Because the 2022 Agreement did not refer to representation in federal court, the 17 18 judge asked Attorney Bruce to produce the fee agreement referenced (indeed, 19 relied upon) in his motion (Dkt. No. 52). In response, he filed a copy of the 2020 20 Agreement (Dkt. No. 53-1). 21 With respect to the 2022 Agreement, Attorney Bruce was ordered to address 22 several points: how much in fees he had already received under the 2022 23 Agreement; why he should not be bound by his 2022 Agreement with claimant and 24 25 limit his fee to $6,000 when the agreement failed to point out that any further 26 award would have to be paid by claimant (Dkt. No. 55). To this, Attorney Bruce 27 responded that he had received $12,987 under the 2020 Agreement which he said No. 56 at 2). Attorney Bruce conceded that the 2022 Agreement cannot provide 1 2 for fees under Section 406(b). 3 The 2020 Agreement stated that Attorney Bruce and his foundation were 4 taking the case for “public interest” reasons. It explicitly “assign[ed] any court- 5 awarded Equal Access to Justice Act (EAJA) attorney’s fees to my attorneys,” and 6 provided that claimant was responsible for reasonable expenses incurred in 7 representing her which includes “other attorney’s fees on an hourly basis” (Dkt. 8 No. 53-1). Significantly, however, this agreement did not say that further fees, 9 10 pursuant to Section 406(b) or otherwise, would be paid to Attorney Bruce by her. 11 Yes, the 2020 Agreement further stated that “This agreement is in addition to any 12 other fee agreement I have signed with my attorney for representation before the 13 Social Security Administration.” But there was no such “other agreement” when 14 the 2020 Agreement was made, for the 2020 Agreement was her first agreement 15 with Attorney Bruce. This order finds that the 2020 Agreement does not support 16 the relief sought against the client herein. 17 18 This is sufficient and dispositive but more should be said. After the EAJA 19 fee award and the case returned to the agency, Attorney Bruce and M.F. entered 20 into the 2022 Agreement. This agreement reasonably could have been understood 21 by any client to mean that, going forward, her maximum personal exposure for fees 22 was $6,000. The post-note after the signatures could easily have been understood, 23 in light of the prior EAJA agreement to refer to the fees sought from the 24 25 government, not to be sought from her personally. Nowhere did the post-note say 26 that the additional fees would be sought from her personally. Furthermore, on the 27 record, it is clear and this order so finds that claimant did most of the work on remand, not the attorney, and the $12,987 he had been paid by her in reasonable 1 2 compensation for the work that he did on remand. 3 Although Attorney Bruce has achieved a favorable result for claimant, there 4 have been concerns raised by claimant and observed by the Court throughout the 5 resolution of these motions which ought to give pause. Four instances are of note. 6 First, claimant describes an “evasiveness” in Attorney Bruce’s representation as he 7 “had delayed contacting the Regional Commissioner for six months” when 8 claimant had not received her notice of award (Dkt. 57 at 4-5). When claimant 9 10 expressed her frustration to Attorney Bruce via email, he told her to reach out to 11 the Commissioner on her own and at one point stated, “I will stop all work [and 12 withdraw]” (Dkt. 57 at 12). Second, this order is concerned by specific exhibits 13 attached to Attorney Bruce’s filings in which one exhibit appears to be a notice 14 from the SSA and the other appears (or rather, attempts) to replicate the same 15 notice but is riddled with typographical errors, a visibly different font, and 16 formatting discrepancies (Dkt Nos. 56-1, 56-2). Third, this order is frustrated by 17 18 the lack of forthrightness on Attorney Bruce’s part in aiding this Court to 19 understand and resolve this matter. More specifically, Attorney Bruce’s failure to 20 provide a copy of the agreement he was relying upon in his motion required the 21 Court to undertake a wild goose chase to identify the relevant documents to resolve 22 this matter. Fourth, the judge was surprised when Attorney Bruce initially filed 23 this motion that he was seeking money from her without even providing notice to 24 25 claimant. In effect, he tried to extract a significant amount of money from her 26 without giving her any notice at all. It was only after Attorney Bruce was ordered 27 to provide claimant notice that claimant was apprised of these matters. 1 Based on this record and the statements of M.F., Attorney Bruce’s motion for 2 attorney’s fees is DENIED. This order finds that Attorney Bruce has already been 3 sufficiently compensated for his representation through the EAJA fees already 4 granted. 5 6 2. MOTION TO WITHDRAW AS COUNSEL, MOTION TO STRIKE, AND MOTION FOR LEAVE TO FILE SUR REPLY 7 As a final matter, this order now turns to three additional motions. First, due 8 to the obvious conflict of interest in Attorney Bruce seeking additional fees, his 9 10 motion to withdraw as counsel is GRANTED. Second, Attorney Bruce moves to

ul strike an amended complaint declaration written by M.F. However, because he is

12 seeking fees from M.F., this order finds that she should have her day in court and

13 be heard. As such, the motion to strike is DENIED. Third, Attorney Bruce’s

14 motion for leave to file sur reply is DENIED on the basis that he fails to attach the 15 sur reply in question to his motion. Q 16 CONCLUSION 17 5 18 To the extent stated herein, Attorney Bruce’s motion to withdraw as attorney 19 is GRANTED, the motion to strike is DENIED, and the motion for attorney’s fees 20 pursuant to Section 406(b) is DENIED. Attorney Bruce is hereby ordered to 21 provide a copy of this order to each member of PWDF’s Board of Directors. 22 IT IS SO ORDERED. 23 . Dated: April 11, 2024. 24 25 26 MA? Prone WILLIAM ALSUP 27 UNITED STATES DISTRICT JUDGE 28