Opinion
16 Civ. 1978 (KMK) (JCM)
06-27-2024
ANTHONY BONANNO, Plaintiff, v. MARTIN J. O'MALLEY,[1]Commissioner of Social Security, Defendant.
Honorable Kenneth M. Karas, United States District Judge
REPORT AND RECOMMENDATION
JUDITH C. MCCARTHY, UNITED STATES MAGISTRATE JUDGE
Plaintiff Anthony Bonanno (“Plaintiff”) commenced this action pursuant to 42 U.S.C. § 405(g) seeking judicial review of a decision by the Commissioner of Social Security (the “Commissioner”), who denied Plaintiff's application for disability benefits. (Docket No. 1). Pursuant to a stipulation between the parties, the matter was remanded to the Commissioner for further administrative proceedings. (Docket No. 9). An Administrative Law Judge (“ALJ”) later issued a favorable decision finding Plaintiff disabled and entitled to benefits. (Bowes Decl. ¶¶ 17-20). Before the Court is Plaintiff's motion for attorney's fees pursuant to 42 U.S.C. § 406(b). (Docket No. 14). The Commissioner does not oppose the reasonableness of the fee award, but contests Plaintiff's request that the Court award Plaintiff's counsel a “net” fee award. (Docket No. 20). For the reasons set forth below, the Court respectfully recommends granting in part and denying in part Plaintiff's motion.
Refers to the Declaration of Christopher James Bowes, dated February 8, 2024. (Docket No. 15).
I. BACKGROUND
Plaintiff filed an application for Social Security Disability benefits on July 9, 2013. (Bowes Decl. ¶ 4). The Social Security Administration (“SSA”) denied Plaintiff's claim, and the ALJ found Plaintiff not disabled within the meaning of the Social Security Act after a hearing. (Id. ¶¶ 5-7). After the Appeals Council denied Plaintiff's request for review, Plaintiff retained Christopher James Bowes (“Mr. Bowes”) to represent him in federal court. (Id. ¶¶ 8-9, Ex. A).
Plaintiff commenced this action on March 16, 2016, by filing a complaint. (Docket No. 1). On June 16, 2016, the parties agreed to remand the claim for further administrative proceedings, which was so ordered by Your Honor on the same day. (Docket No. 9). On October 13, 2016, Your Honor signed a stipulation between the parties for attorney's fees under the Equal Access to Justice Act (“EAJA”), 28 U.S.C. § 2412, for $1,400.00. (Docket No. 13). On remand, the ALJ found that Plaintiff was disabled and entitled to disability benefits as of April 2011. (Bowes Decl. ¶ 17). The SSA issued a Notice of Award (“NOA”) to Plaintiff on January 24, 2024. (Id. Ex. C).
On February 8, 2024, Plaintiff's counsel, Mr. Bowes, filed the instant motion seeking an award of attorney's fees in the amount of $15,150.00 pursuant to 42 U.S.C. § 406(b). (Docket No. 14). This amount is less than the agreed upon contingent attorney fee of 25 percent of the past-due benefits awarded to Plaintiff.(Bowes Decl. ¶ 31). In addition, under the EAJA, counsel previously received an award of $1,400.00, which Plaintiff would be entitled to if Mr. Bowes receives a greater award under § 406(b). (Docket No. 13). Thus, Counsel seeks a net award of $13,750.00 ($15,150.00 less the $1,400.00 already awarded under the EAJA). (Bowes Decl. ¶ 41). By letter dated March 25, 2024, the Commissioner informed the Court that he does not object to the amount sought by Plaintiff's counsel for payment of attorney's fees. (Docket No. 20).
The SSA is withholding 25 percent of the past-due benefits awarded in the amount of $47,555.25. (Bowes Decl. ¶ 20, and Ex. C).
II. DISCUSSION
Section 406(b) of the SSA provides that when a claimant receives a favorable judgment in federal court, the court may determine and allow “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.” 42 U.S.C. § 406(b)(1)(A). “When considering a motion for attorney's fees pursuant to § 406(b), the court first determines whether it was timely made, and then reviews the request for reasonableness.” Johnson v. Kijakazi, No. 20-CV-2630 (BCM), 2022 WL 17718336, at *4 (S.D.N.Y. Dec. 15, 2022). The Commissioner may “certify the amount of such fee for payment to such attorney out of, and not in addition to, the amount of such past-due benefits.” Id. As such, a fee award under 42 U.S.C. § 406(b) is not the result of any fee shifting between the parties, but it is instead an amount paid by the Social Security claimant to his or her own attorney. Wells v. Sullivan, 907 F.2d 367, 371 (2d Cir. 1990).
A. Timeliness of Motion for Attorney's Fees
Federal Rule of Civil Procedure 54(d) governs the timeliness of fee applications under § 406(b). See Sinkler v. Berryhill, 932 F.3d 83, 86 (2d Cir. 2019). Rule 54(d) requires that fee applications be filed within fourteen-days following “the entry of judgment.” See Fed.R.Civ.P. 54(d)(2)(B)(i). In Sinkler, however, the Second Circuit held that equitable tolling extends this period to fourteen days after “a party receives notice of a benefits calculation” for social security cases involving a judgment that reverses the denial of benefits and remands to the SSA. See Sinkler, 932 F.3d at 89. The Circuit reasoned that rigid application of Rule 54(d) in such cases would otherwise create an impossible deadline because the Commissioner “typically” takes months to calculate the amount of past-due benefits, and § 406(b) cuts off attorney's fees at 25% of any benefits awarded. Id. at 87. Thus, “parties who must await the Commissioner's award of benefits on remand cannot be expected to file an application for attorney's fees that are statutorily capped by the amount of an as-yet-unknown benefits award.” Id. at 88.
The Sinkler court also noted that “[n]othing in this opinion departs from the law's presumption that a party receives communications three days after mailing.” See 932 F.3d at 89 n.5.
Here, the SSA issued the NOA on January 24, 2024, (Bowes Decl. ¶ 18, Ex. C at 1), and Plaintiff's counsel received notice of the NOA on January 26, 2024, (Bowes Decl. ¶ 19). Plaintiff's counsel filed the instant motion for attorney's fees on February 8, 2024. (Docket No. 14). Counsel filed the motion within fourteen days plus the three-day mailing period of receipt of the NOA. Thus, his motion is timely. See 932 F.3d at 89 n.5. Moreover, the Commissioner does not challenge the timeliness of Plaintiff's motion. (See Docket No. 20). Accordingly, the Court concludes and respectfully recommends finding that the motion is timely.
B. Reasonableness of Award Requested
The SSA provides that a court may award a “reasonable fee . . . not in excess of 25 percent of the total of the past-due benefits to which the claimant is entitled.” 42 U.S.C. § 406(b)(1)(A). “[W]here there is a contingency fee agreement in a successful social security case, the district court's determination of a reasonable fee under § 406(b) must begin with the agreement, and the district court may reduce the amount called for by the contingency agreement only when it finds the amount to be unreasonable.” Wells, 907 F.2d at 371. Thus, “§ 406(b) does not displace contingent-fee agreements,” but “[r]ather . . . calls for court review of such arrangements as an independent check, to assure that they yield reasonable results in particular cases.” Gisbrecht v. Barnhart, 535 U.S. 789, 807 (2002).
To determine whether a fee is “unreasonable,” courts should consider (1) “whether the contingency percentage is within the 25% cap;” (2) “whether there has been fraud or overreaching in making the agreement;” and (3) “whether the requested amount is so large as to be a windfall to the attorney.” Wells, 907 F.2d at 372; see also Fields v. Kijakazi, 24 F.4th 845, 853 (2d Cir. 2022). In Gisbrecht, the Supreme Court also held that reduction of the fee may be “appropriate[]” “based on the character of the representation and the results the representative achieved,” or the attorney's role in any delay. See 535 U.S. at 808. Here, the percentage is within the 25% statutory cap, and there is no evidence of fraud or overreaching. (See Docket No. 20). Thus, the Court focuses its analysis on whether the requested amount constitutes a windfall or otherwise must be reduced under Gisbrecht. See 535 U.S. at 808.
In Fields, the Second Circuit explained that the windfall factor considers whether “the benefits are large in comparison to the amount of time counsel spent on the case.” 24 F.4th at 853 (quoting Gisbrecht, 535 U.S. at 808) (internal quotations omitted). At the same time, however, “courts must consider more than the de facto hourly rate” because “even a relatively high hourly rate may be perfectly reasonable, and not a windfall, in the context of any given case.” Id. at 854. Indeed, the “windfall factor does not constitute a way of reintroducing the lodestar method.” Id. (emphasis in original). Consequently, the Circuit set forth four additional factors to be considered when determining whether a particular award constitutes a windfall: (1) “the ability and expertise of the lawyers and whether they were particularly efficient, accomplishing in a relatively short amount of time what less specialized or less well-trained lawyers might take far longer to do;” (2) “the nature and length of the professional relationship with the claimant-including any representation at the agency level;” (3) “the satisfaction of the disabled claimant;” and (4) “how uncertain it was that the case would result in an award of benefits and the effort it took to achieve that result.” Id. at 854-56.
Applying these standards, the Court recommends finding that the fee sought by Plaintiff's counsel is reasonable within the meaning of 42 U.S.C. § 406(b). The $15,150.00 fee award sought by Plaintiff's counsel is much less than 25 percent of the past due benefits, and there is no evidence of fraud or overreaching in the creation of the contingency fee agreement. (See generally Bowes Decl. Exs. A, C).
Moreover, the fee sought will not result in a windfall to Plaintiff's counsel for several reasons. First, Plaintiff's attorneys represented Plaintiff on a contingency fee basis, (see Bowes Decl. Ex. A), and the fee sought appropriately accounts for the risk of taking on a contingency case, see Wells, 907 F.2d at 371 (“In the absence of a fixed-fee agreement, payment for an attorney in a social security case is inevitably uncertain, and any reasonable fee award must take account of that risk.”). Second, Plaintiff's counsel's time sheets, (Bowes Decl. Ex. B), reflect that counsel spent 10.1 hours on Plaintiff's case. These hours are eminently reasonable, as “District courts within this Circuit endorse a twenty to forty-hour range as reasonable for a typical Social Security disability appeal in federal court.” Bass v. Kijakazi, No. 16 Civ. 6721 (JCM), 2022 WL 1567700, at *4 (S.D.N.Y. May 18, 2022) (internal quotations and citation omitted). Furthermore, “plaintiff's counsel should not be penalized for working efficiently on the case as compared to other attorneys who might have taken longer to perform the same work and whose corresponding hourly rate would be lower due to their lack of experience and productivity.” Blizzard v. Astrue, 496 F.Supp.2d 320, 323 (S.D.N.Y. 2007) (quoting Maier v. Apfel, No. 95 Civ. 9264 (JGK), 1998 WL 401536, at *2 (S.D.N.Y. July 17, 1998)). Third, the de facto hourly rate of $1,500.00 is within the range of awards approved by courts in this Circuit. See, e.g., Laden v. Comm'r of Soc. Sec., No. 17 Civ. 10050 (NSR) (AEK), 2022 WL 17828488, at *5 (S.D.N.Y. Nov. 3, 2022) (collecting cases), report and recommendation adopted, 2022 WL 17414356 (S.D.N.Y. Dec. 5, 2022); see also Fields 24 F.4th at 854-57 (upholding a $1,556.98 de facto hourly rate as “[i]t would be foolish to punish a firm for its efficiency and thereby encourage inefficiency”). Fourth, after the ALJ denied his claim, Plaintiff retained counsel to represent him in federal court, (Bowes Decl. ¶ 9), and Plaintiff ultimately received past-due benefits totaling $190,221.00, (id. ¶ 20). Thus, there is no reason to believe that Plaintiff was not satisfied with his counsel. See Laden, 2022 WL 17828488, at *5 (finding that “this Court has no reason to believe that Plaintiff is in any way unsatisfied with the results of counsel's representation” where Plaintiff “was awarded $162,384.22 in past-due benefits and was found to be eligible for $2,488 per month going forward”). Finally, the Court notes that the Commissioner has no objection to Plaintiff's requested award. (See Docket No. 20).
Accordingly, the Court respectfully recommends finding that an attorney fee award of $15,150.00 is reasonable.
C. Previous EAJA Award
“Under [the] EAJA, a party prevailing against the United States in court, including a successful Social Security benefits claimant, may be awarded fees payable by the United States if the Government's position in the litigation was not ‘substantially justified.'” Gisbrecht, 535 U.S. at 796 (quoting 28 U.S.C. § 2412(d)(1)(A)). This provision “effectively increases the portion of past-due benefits the successful Social Security claimant may pocket,” and calculates fees “not by a percent of the amount recovered, but by the ‘time expended' and the attorney's ‘[hourly] rate,' . . . capped in the mine run of cases at $125 per hour.” See id. (quoting 28 U.S.C. § 2412(d)(1)(B), (2)(A)) (alteration in original). Although awards under both the EAJA and § 406(b) are permissible, “the claimant's attorney must ‘refun[d] to the claimant the amount of the smaller fee.'” See id. (quoting Act of Aug. 5, 1985, Pub. L. No. 99-80, § 3, 99 Stat. 186) (alteration in original); see also Wells v. Bowen, 855 F.2d 37, 42 (2d Cir. 1988).
On October 13, 2016, Plaintiff's counsel received $1,400.00 of attorney's fees pursuant to the EAJA, (Docket No. 13), which counsel “must refund to the claimant” if he subsequently receives a greater award “under § 406(b),” Gisbrecht, 535 U.S. at 789. However, Plaintiff's counsel requests that the “Court direct the Commissioner to disburse a net fee of $13,750.” (Docket No. 16 at 8). The Commissioner opposes this request, asking the Court to simply “indicate the amount of any section 406(b) award,” and order Plaintiff's counsel to “refund” the EAJA award. (Docket No. 20 at 2-3).
Courts in this District characterize the “netting approach as disfavored.” Johnson, 2022 WL 17718336, at *6. “Fee awards may be made under both the EAJA and § 406(b), but the claimant's attorney must ‘refun[d] to the claimant the amount of the smaller fee.'” Guzman v. Comm'r of Soc. Sec., No. 15CV3920 (VB)(LMS), 2019 WL 4935041, at *3 (S.D.N.Y. Aug. 1, 2019) (alteration in original) (quoting Gisbrecht, 535 U.S. at 796), report and recommendation adopted, 2019 WL 4933596 (S.D.N.Y. Oct. 7, 2019). “Courts . . . routinely and explicitly mandate attorneys who obtain fee awards under both statutes to ‘return the amount of such EAJA award to plaintiff out of the payment received under Section 406(b).'” Id. (quoting Jackson v. Astrue, No. 09-CV-1290 (FB), 2011 WL 1868718, at *2 (E.D.N.Y. May 16, 2011)).
While the netting approach would “relieve counsel of the administrative inconvenience of refunding the amount previously awarded under EAJA to his client,” it “is not consistent with the governing statutes or relevant precedent.” Johnson, 2022 WL 17718336, at *6. Accordingly, following “well-established precedent,” id., the Court respectfully recommends finding that Plaintiff's counsel must refund the $1,400.00 EAJA award to Plaintiff, upon receipt of his fees under Section 406(b).
III. CONCLUSION
For the foregoing reasons, the Court respectfully recommends granting in part Plaintiff's motion, and finding that Plaintiff's counsel is entitled to $15,150.00 in attorney's fees under 42 U.S.C. §406(b). I respectfully recommend that Mr. Bowes be directed to promptly refund to Plaintiff $1,400.00, which represents the EAJA fees that counsel previously received, upon receipt of his fees under Section 406(b).
IV. NOTICE
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b)(2) of the Federal Rules of Civil Procedure, the parties shall have fourteen (14) days from receipt of this Report and Recommendation to serve and file written objections. See Fed.R.Civ.P. 6(a) and (d) (rules for computing time). A party may respond to another party's objections within fourteen (14) days after being served with a copy. See Fed.R.Civ.P. 72(b)(2). Objections and responses to objections, if any, shall be filed with the Clerk of the Court, with extra copies delivered to the chambers of the Honorable Kenneth M. Karas at the United States District Court, Southern District of New York, 300 Quarropas Street, White Plains, New York, 10601, and to the chambers of the undersigned at said Courthouse.
Requests for extensions of time to file objections must be made directly to the Honorable Kenneth M. Karas and not to the undersigned. Failure to file timely objections to this Report and Recommendation will result in a waiver of objections and will preclude later appellate review of any order of judgment that will be rendered. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(b), 6(d), 72(b); Caidor v. Onondaga Cnty., 517 F.3d 601, 604 (2d Cir. 2008).