Opinion
18-CV-1097 (VSB) (JLC)
10-16-2020
PETER PALAZZOLO, Plaintiff, v. ANDREW M. SAUL, Commissioner, Social Security Administration, Defendant.
REPORT & RECOMMENDATION
JAMES L. COTT, UNITED STATES MAGISTRATE JUDGE.
To the Honorable Vernon S. Broderick, United States District Judge:
Before the Court is plaintiff Peter Palazzolo's motion for attorney's fees pursuant to 42 U.S.C. § 406(b). For the following reasons, I recommend that the motion be granted.
I. BACKGROUND
Palazzolo filed an application for Disability Insurance Benefits on August 1, 2014. Administrative Record dated April 14, 2018, Dkt. No. 8, at 137. The application was denied initially and following a hearing before an Administrative Law Judge. Id. at 15-28, 70-81. On February 7, 2018, Palazzolo timely commenced an action in this Court to review the ALJ's decision. Complaint, Dkt. No. 1. Palazzolo was represented by Jacob Neff and Nathalie Bernadette Martelly (“Martelly”) of Disability Justice and signed a retainer agreement with the firm. Memorandum in Support of Motion of Plaintiff's Attorney for an Award of Attorney Fees (“Pl. Mem.”), Dkt. No. 22, Ex. A. The retainer agreement provided that if Palazzolo's case was remanded and he was awarded past due benefits, he would pay Disability Justice up to 25 percent of the award pursuant to 42 U.S.C. § 406. Id.
On August 27, 2017, Palazzolo moved for judgment on the pleadings. Dkt. No. 13. The parties subsequently agreed to remand the case for further proceedings by stipulation, and judgment was entered on December 3, 2018. Dkt. Nos. 19-21. On remand, the ALJ found that Palazzolo has been disabled since his onset date of January 31, 2012. Pl. Mem., Ex. C. Although Palazzolo's Notice of Award (“NOA”) is dated March 23, 2020, id., Ex. F, Disability Justice did not receive the decision until it was faxed to its office on June 24, 2020 because the Social Security Administration (“SSA”) mailed the notice to Disability Justice's old address. Pl. Mem. at 9. The Notice of Award indicated that $46,596.00 (representing 25 percent of Palazzolo's past due award) was being withheld for payment of attorney's fees. Pl. Mem., Ex. F at 2.
On June 18, 2020, Martelly filed the instant motion requesting approval of $13,436.83 in attorney's fees in accordance with 42 U.S.C. § 406(b) and a memorandum of law in support of the motion with exhibits (Dkt. Nos. 22, 22-1).On July 10, 2020, the Commissioner filed a response in his limited role “resembling that of a trustee for the claimant[].” Dkt. No. 26 at 1 (citing Gisbrecht v. Barnhart, 535 U.S. 789, 798 n.6 (2002)). The Commissioner “d[id] not object to the requested amount of $13,436.83 that counsel is seeking.” Id. at 3. Although the Commissioner argued that Plaintiff's counsel filed her motion five months late, he noted that “it is up to the Court to determine whether counsel's petition as presented should be deemed timely filed.” Id. at 2.
Had Martelly filed a motion for Equal Access to Justice Act (“EAJA”) fees, she would have requested $18,080.00. Pl. Mem. at 3. Because Martelly did not request EAJA fees, she subtracted $4,643.17 (the amount she would have been eligible for if she had filed an EAJA motion) to reach the total amount requested. Id.; see also Dkt. No. 26 n.3 (calculating EAJA fees).
II. DISCUSSION
A. Legal Standards
Pursuant to Section 406(b) of the Social Security Act, “[w]henever a court renders a judgment favorable to a 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,” as long as the fee does not exceed “25 percent of the total of the past-due benefits to which the claimant is entitled.” 42 U.S.C. § 406(b). However, even if the claimant agreed to a contingency fee arrangement, Section 406(b) “calls for court review of such arrangements as an independent check.” Gisbrecht, 535 U.S. at 807. To do so, courts must first determine whether “the contingency percentage is within the 25% cap . . . [and] whether there has been fraud or overreaching in making the agreement.” Wells v. Sullivan, 907 F.2d 367, 372 (2d Cir. 1990). Here, the requested fee is less than the 25 percent negotiated in the contingency fee agreement. Furthermore, there is no evidence of “fraud or overreaching” in reaching the agreement. Id. at 372.
A court must then consider the following factors to determine the reasonableness of a requested award:
1) whether the requested fee is out of line with the “character of the representation and the results the representation achieved;” 2)
whether the attorney unreasonably delayed the proceedings in an attempt to increase the accumulation of benefits and thereby increase his own fee; and 3) whether “the benefits awarded are large in comparison to the amount of time counsel spent on the case,” the so-called “windfall” factor.Nieves v. Colvin, No. 13-CV-1439 (WHP) (GWG), 2017 WL 6596613, at *1 (S.D.N.Y. Dec. 26, 2017) (quoting Gisbrecht, 535 U.S. at 808), adopted by, 2018 WL 565720 (Jan. 24, 2018); see also Wells, 907 F.2d at 371 (“best indicator of the ‘reasonableness' of a contingency fee in a social security case is the contingency percentage actually negotiated between the attorney and client”).
B. Analysis
1. Timeliness
The Court will first address whether Martelly timely filed her application for attorney's fees. The Second Circuit recently held in Sinkler v. Berryhill that motions for attorney's fees under § 406(b) are “subject to the fourteen-day filing limitation of Rule 54(d)(2)(B) [of the Federal Rules of Civil Procedure] once a party receives notice of a benefits calculation following a sentence four remand judgment.” 932 F.3d 83, 89 (2d Cir. 2019). “[I]t is unclear whether the court in Sinkler intended for the 14-day tolling period to commence when the party to the action receives notice of the damage award or when the party's counsel receives notice.” Almodovar v. Saul, No. 16-CV-7419 (GBD) (SN), 2019 WL 6207784, at *2 (S.D.N.Y. Nov. 21, 2019). The Sinkler decision seems to imply both. Compare Sinkler, 932 F.3d at 85 (“[T]he fourteen-day filing period is tolled until the claimant receives notice of the amount of any benefits award.” (emphasis added)) with id. at 88 (“Once counsel receives notice of the benefits award . . . there is no sound reason not to apply Rule 54(2)(B)'s fourteen-day limitations period ....” (emphasis added)). The Commissioner contends that the “14-day deadline[] runs from receipt of the notice by claimant.” Dkt. No. 26 at 2.
Although Sinkler is the controlling precedent, plaintiff's counsel only cites the Sinkler decision from the Western District of New York, and not the Second Circuit decision, and instead cites to Walker v. Astrue, 539 F.3d 274 (3d Cir. 2010), which, while cited favorably in Sinkler, is not binding authority.
“[T]he Court does not need to decide the proper interpretation of Sinkler at this time. Even assuming the filing period began to run when Plaintiff received the NOA, [Martelly's] application should still be deemed timely submitted.” LaFrance v. Saul, No. 17-CV-04709 (CM) (SN), 2019 WL 4677041, at *2 (S.D.N.Y. Aug. 26, 2019), adopted by, 2019 WL 4565074 (Sept. 20, 2019). The Second Circuit made clear that “district courts are empowered to enlarge that filing period where circumstances warrant,” noting that Rule 54's “fourteen-day limitations period is not absolute.” Sinkler, 932 F.3d at 89.
The Notice of Award is dated March 23, 2020. Pl. Mem., Ex. F at 1. There is a presumption that a party receives a notice three days after mailing. See Sinkler, 932 F.3d at 89 n.5 (“Nothing in this opinion departs from the law's presumption that a party receives communications three days after mailing.” (citing Tiberio v. Allergy Asthma Immunology of Rochester, 664 F.3d 35, 37 (2d Cir. 2011)). However, Martelly represents that she did not receive the NOA until it was faxed to her because the SSA previously mailed the NOA to her law firm's old address. Pl. Mem. at 9. In support, she has provided a copy of the fax cover page dated July 24, 2020. Pl. Mem., Ex. F at 1. A court in this District recently used its discretion to enlarge the 14-day filing period on similar facts. See Randolph v. Saul, No. 17-CV-6711 (BCM), 2020 WL 1819933, at *2 (S.D.N.Y. Apr. 10, 2020) (exercising discretion to enlarge 14-day period where counsel received NOA via fax weeks after it was originally mailed). Moreover, “[w]ithout the Notice of Award, [Martelly] could not file a motion for attorney's fees because [s]he did not know the amount of past-due benefits.” LaFrance, 2019 WL 4677041, at *2.
Plaintiff's counsel should have submitted a sworn statement to set forth the relevant facts, rather than simply include them in a memorandum of law with attached exhibits, as it is well-settled that “[a]n attorney's unsworn statements in a brief are not evidence.” Kulhawik v. Holder, 571 F.3d 296, 298 (2d Cir. 2009). In future applications of this kind, counsel should submit a sworn statement in support of any motion for fees, as well as a memorandum of law. However, because the Commissioner does not oppose the application, and the Court has discretion on the timeliness issue, I recommend that a resubmission of the motion with a sworn statement not be required in these circumstances.
Because Martelly filed the instant motion within 14 days of receiving the NOA, her delay-assuming there is a delay-was reasonable under the circumstances.
2. Reasonableness
With respect to the merits of the application, in this case each of the reasonableness factors weighs in favor of approving the fee request. Martelly, after reviewing a 639-page record (see Dkt. No. 8), submitted “a detailed, non-boilerplate brief in support of” Palazzolo's case (see Dkt. No. 13), which resulted in a successful remand and the award of past due benefits. Nieves, 2017 WL 6596613, at *2.
Additionally, there is nothing in the record to suggest that counsel unreasonably delayed the proceedings.
Moreover, Martelly's de facto rate of $594.55 per hour (see Pl. Mem. at 7) does not give rise to the concern that awarding the requested fee may amount to a “windfall.” Gisbrecht, 535 U.S. at 808. In assessing whether a requested fee would be a “windfall” for purposes of Section 406(b), courts consider several factors, including: “1) whether the attorney's efforts were particularly successful for the plaintiff, 2) whether there is evidence of the effort expended by the attorney demonstrated through pleadings which were not boilerplate and through arguments which involved both real issues of material fact and required legal research, and finally 3) whether the case was handled efficiently due to the attorney's experience in handling social security cases.” Joslyn v. Barnhart, 389 F.Supp.2d 454, 456-57 (W.D.N.Y. 2005).
Martelly contends that she worked a total of 22.60 hours on Palazzolo's case before the Court. Pl. Mem. at 6. As Martelly is seeking $13,436.83 in fees, the de facto hourly rate is thus $594.55 per hour.
The Supreme Court held in Gisbrecht that the lodestar method is not the touchstone for calculating attorney's fees under Section 406(b). 535 U.S. at 806. However, some courts in the Second Circuit have observed that “[a]lthough the reviewing court may not use the lodestar method to calculate the fee due, a record of the number of hours spent on the case in federal court may assist a court in determining whether a given fee is reasonable.” Sweda v. Berryhill, No. 16-CV-6236 (PKC), 2019 WL 2289221, at *2 (E.D.N.Y. May 28, 2019) (quoting Benton v. Comm'r of Soc. Sec., No. 03-CV-3154 (ARR), 2007 WL 2027320, at *2 (E.D.N.Y. May 17, 2007)).
Applying these factors, the Court concludes that the requested fee would not be an impermissible windfall in the context of this case. As discussed above, there is no question that counsel's efforts were “particularly successful.” Palazzolo received (before fees) more than $140,000 in past due benefits. Pl. Mem., Exhibit F at 1. The pleadings were not boilerplate and involved nuanced arguments that required legal research. The requested fee amount is not only “the product of competent and efficient advocacy,” but also within “the range of effective hourly rates that have previously been deemed reasonable by courts in this Circuit.” Valle v. Colvin, No. 13-CV-2876 (JPO), 2019 WL 2118841, at *3 (S.D.N.Y. May 15, 2019) (awarding de facto rate of $1079.72); see also Bate v. Berryhill, No. 18-CV-1229 (ER), 2020 WL 728784, at *3 (S.D.N.Y. Feb. 13, 2020) (awarding de facto rate of $1,506.32); Ogirri v. Saul, No. 16-CV-9143 (JLC), 2019 WL 3023804, at *2-3 (S.D.N.Y. July 11, 2019) (awarding de facto rate of $855.86 per hour). Furthermore, contingency agreements, like the one at issue here, present risks of non-payment; “payment . . . is inevitably uncertain, and any reasonable fee award must take account of that risk.” Nieves, 2017 WL 6596613, at *2 (citing Wells, 907 F.2d at 371). The award amount sought by plaintiff appropriately reflects that risk. Accordingly, Martelly's requested fee award of $13,436.83 is reasonable.
Without taking into account the EAJA fees, Martelly would have requested $18,080.00, or a de facto rate of $800. Dkt. No. 26 at 3. That de facto rate is also reasonable and falls within the range of effective hourly rates by courts in this Circuit.
III. CONCLUSION
For these reasons, the Court recommends that the motion be granted and that plaintiff's counsel be awarded $13,436.83 in attorney's fees.
PROCEDURE FOR FILING OBJECTIONS
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties shall have fourteen (14) days from service of this Report to file written objections. See also Fed.R.Civ.P. 6. Such objections, and any responses to such objections, shall be filed with the Clerk of Court, with courtesy copies delivered to the chambers of the Honorable Vernon S. Broderick and the undersigned, United States Courthouse, 500 Pearl Street, New York, New York, 10007. Any requests for an extension of time for filing objections must be directed to Judge Broderick.
FAILURE TO FILE OBJECTIONS WITHIN FOURTEEN (14) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72. See Thomas v. Arn, 474 U.S. 140 (1985); Wagner & Wagner, LLP v. Atkinson, Haskins, Nellis, Brittingham, Gladd & Carwile, P.C., 596 F.3d 84, 92 (2d Cir. 2010).