Opinion
20-CV-09592 (AT) (VF)
08-01-2024
GISELLE SUSCA, Plaintiff, v. MARTIN O'MALLEY, Commissioner of the Social Security Administration[1], Defendant.
TO: THE HONORABLE ANALISA TORRES, United States District Judge.
REPORT & RECOMMENDATION
VALERIE FIGUEREDO, UNITED STATES MAGISTRATE JUDGE.
Plaintiff Giselle Susca brings this motion for approval of attorneys' fees pursuant to 42 .S.C. § 406(b). For the reasons explained below, I recommend that Susca's motion be GRANTED but that the fee award be reduced to $10,800.
BACKGROUND
On May 6, 2016, Plaintiff filed an application for disability insurance benefits under Title II of the Social Security Act. See ECF No. 1 at ¶ 5. On July 30, 2018, Plaintiff's application was denied following a hearing before an Administrative Law Judge (“ALJ”). Id. Plaintiff requested review by the Appeals Council, which denied review and affirmed the ALJ's decision on May 14, 2020. Id.
On November 15, 2020, Plaintiff entered into a contingent-fee agreement with her counsel, Daniel Fishman of Chermol & Fishman, LLC. The agreement required Plaintiff to pay the firm 25% of any past-due benefits in exchange for the firm's legal services if Plaintiff received a favorable award. See ECF No. 25 at ¶ 4; ECF No. 25-2 at 1-2. On November 15, 2020, Plaintiff filed a complaint in this Court seeking review of the decision of the Commissioner of the Social Security Administration (“SSA”). See ECF No. 1.
Pursuant to a stipulation between the parties, on June 10, 2021, the matter was remanded to the Commissioner for further proceedings pursuant to sentence four of 42 U.S.C. § 405(g). ECF Nos. 19-20. The parties also reached agreement as to the amount of attorneys' fees ($2,235.60) and costs ($400) owed to Plaintiff's counsel under the Equal Access to Justice Act (“EAJA”). ECF No. 24. On remand, Plaintiff was found to be entitled to past-due disability benefits dating back to October 2016, in a total amount of $228,878.92. See ECF No. 25-1 (SSA Notice of Award) at 1; ECF No. 25 at ¶ 10. In a Notice of Award dated August 26, 2023, the Commissioner advised that the SSA had withheld 25% of those past-due benefits (in the amount of $57,219.73) to pay a possible request for attorneys' fees. ECF No. 25 at ¶ 3; ECF No. 25-1 at 4. Plaintiff subsequently received a payment of 75% of her past-due benefits. ECF No. 25 at ¶ 3.
On September 5, 2023, Plaintiff filed the instant motion for attorneys' fees pursuant to 42 U.S.C. § 406(b). See ECF No. 25. Plaintiff's counsel seeks approval of attorneys' fees in the amount of $57,219.73. See id. at ¶ 11. Daniel Fishman, an attorney at Chermol & Fishman, states that his firm expended 10.8 hours on this case in federal court. See ECF No. 25-3 at ¶ 4.
The Commissioner “neither supports nor opposes” counsel's request for attorneys' fees in the amount of $57,219.73 under 42 U.S.C. § 406(b). ECF No. 28 at 1. But the Commissioner asks that if the Court authorizes the fee, that it “decline to include language directing that the Commissioner ‘pay' the award.” Id. at 2. Rather, the Commissioner asks that the Court “specifically indicate that any amount it authorizes in § 406(b) fees is to be paid out of Plaintiff's past-due benefits in accordance with agency policy.” Id. at 3-4.
STANDARD OF REVIEW
Section 406(b) of the Social Security Act states that when a disability claimant succeeds in federal court, “the court may determine and allow as part of its judgment a reasonable fee for such representation, not in excess of 25% 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). “[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.” Fields v. Kijakazi, 24 F.4th 845, 852-53 (2d Cir. 2022) (quoting Wells v. Sullivan, 907 F.2d 367, 371 (2d Cir. 1990)) (quotation marks omitted); see also Gisbrecht v. Barnhart, 535 U.S. 789, 807-08 (2002) (explaining that “§ 406(b) calls for court review of such arrangements as an independent check, to assure that they yield reasonable results”). “When conducting its analysis, the court's primary inquiry should be on the reasonableness of the contingency agreement in the context of the particular case and not merely to rubber stamp the contingent fee agreement.” Caraballo v. Comm'r of Soc. Sec., No. 17-CV-7205 (NSR) (LMS), 2021 WL 4949217, at *2 (S.D.N.Y. Oct. 22, 2021) (citing Wells, 907 F.2d at 371).
To assess the reasonableness of a contingency fee, a court must first “‘determine whether the contingency percentage is within the 25% cap' and . . . ‘whether there has been fraud or overreaching in making the agreement.'” Fields, 24 F.4th at 853 (quoting Wells, 907 F.2d 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 representative achieved,” (2) whether “the attorney is responsible for delay, lest the attorney profit from the accumulation of benefits during a delay that the attorney caused,” and (3) “if the benefits are large in comparison to the amount of time counsel spent on the case, the so-called windfall factor.” Id. (citing Gisbrecht, 535 U.S. at 808) (internal quotation marks omitted); Valle v. Colvin, No. 13-CV-2876 (JPO), 2019 WL 2118841, at *2 (S.D.N.Y. May 15, 2019) (citing Blizzard v. Astrue, 496 F.Supp.2d 320, 322 (S.D.N.Y. 2007)).
DISCUSSION
Plaintiff seeks an award of attorneys' fees for her counsel in the amount of 25% of her past-due benefits-specifically, $57,219.73. That amount, when divided by the time expended by counsel on this case (10.8 hours), yields an hourly rate of $5,298.12. ECF No. 25-3 at ¶ 4. For the reasons explained below, I recommend a reduction in the fee award because the requested amount would result in a windfall to Plaintiff's counsel.
First, the requested fee amount is not greater than 25% of Plaintiff's past-due benefits. ECF No. 25-1 at 4. Additionally, there is no indication of fraud or overreaching in the making of the contingency fee agreement. Nor is there any indication in the record of any purposeful delay imposed by Plaintiff's counsel, for purposes of increasing the total benefits award. To the contrary, counsel obtained a stipulated remand of Plaintiff's case before any motion practice, avoiding any delay in the federal court case. ECF No. 25 at ¶ 1.
Next, the award is in “line with the character of the representation and the results the representation achieved.” Rodriguez v. Colvin, 318 F.Supp. 653, 658 (S.D.N.Y. 2018) (quoting Gisbrecht, 535 U.S. at 808). Mr. Fishman succeeded in obtaining a desirable result for his client. He obtained the Commissioner's agreement to remand the case back to the agency for further proceedings, ECF No. 25 at ¶ 1, and before the SSA, the ALJ found Plaintiff disabled and entitled to an award of past-due benefits, ECF No. 25-1 at 3. See Brickel v. Kijakazi, No. 20-CV-11033 (KMK) (AEK), 2023 WL 4060098, at *3 (S.D.N.Y. Apr. 12, 2023) report and recommendation adopted by, 2023 WL 6533495 (S.D.N.Y. Oct. 6, 2023) (concluding that result was favorable where plaintiff's counsel obtained a remand and plaintiff received past-due benefits).
The only remaining question is whether a $57,219.73 award would be a windfall to Plaintiff's counsel. Stated differently, are the benefits to be awarded to Plaintiff “large in comparison to the amount of time [counsel] spent on the case.” Gokey v. Berryhill, No. 18-CV-658 (RA), 2021 WL 5014576, at *2 (S.D.N.Y. Oct. 27, 2021) (citation and internal quotation marks omitted). In assessing whether there is a windfall, the Second Circuit has instructed that “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.” Fields, 24 F.4th at 854. Among the factors a court should consider are (1) “the ability and expertise of the lawyers and whether they were particularly efficient”; (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.
An assessment of the relevant factors establishes that an award of $57,219.73 would amount to a windfall for Plaintiff's counsel. Counsel performed only 10.8 hours of work, resulting in a de facto hourly rate of $5,298.12. That hourly rate far exceeds the range of de facto hourly rates approved by courts within this Circuit. See Baron v. Astrue, 311 F.Supp.3d 633, 637-38 (S.D.N.Y. 2018) (citing cases finding reasonable hourly rates between $1,072.17 and $2,100); Mitchell v. Astrue, No. 9-CV-83 (NGG) (SMG), 2019 WL 1895060, at *5-6 (E.D.N.Y. Apr. 29, 2019) (rejecting a fee award at an hourly rate of $7,142.86); see also Foster v. Comm'r of Soc. Sec., No. 19-CV-1743 (PKC), 2023 WL 7924172, at *3 n.5 (E.D.N.Y. Nov. 16, 2023) (crediting Plaintiff's counsel for seeking less than a quarter of their 25% contingency fee to which they were entitled under their retainer agreement where the agreement would grant them an effective hourly rate of over $7,100). Courts routinely reduce fee awards where the de facto hourly rate was far less than the de facto rate here. See, e.g., Marsh v. Comm'r of Soc. Sec., No. 19-CV-6349 (ALC), 2024 WL 1115669, at *2-3 (S.D.N.Y. Mar. 12, 2024) (reducing an award based on a “high” de facto hourly rate of approximately $1,600 an hour); Cutajar v. Comm'r of Soc. Sec., No. 19-CV-5569 (SDA), 2021 WL 1541386, at *3 (S.D.N.Y. Apr. 10, 2021) (finding a de facto hourly rate of $1,092.31 would constitute a windfall); see also King v. Kijakazi, No. 20-CV-1139 (SM), 2023 WL 1782032, at *5 (D.N.H. Feb. 6, 2023) (reducing contingency fee from 25% to 12.5% where the original de facto hourly rate would amount to $5,600 for only 4.1 hours of counsel's time).
In addition to being an exceedingly high hourly rate, the de facto hourly rate here is high in comparison to the hourly rate typically charged by Plaintiff's counsel. As Mr. Fishman explains, his non-contingent hourly rate is $325. See ECF No. 25 at ¶ 13. The de facto hourly rate of $5,298.12 is more than 15 times Mr. Fishman's hourly rate in representations where he is not paid on a contingent basis. Id.
Moreover, the de facto hourly rate is unreasonable when assessed under the circumstances of this case. Plaintiff was represented by Chermol & Fishman in the federal court action only. Plaintiff was represented by another lawyer in the administrative proceedings leading up to the filing of this case. See ECF No. 25 at ¶ 9. This case therefore differs from those where counsel's “‘significant investment of time and effort in [Plaintiff's] case at the agency level further enabled [the firm] to operate with efficiency in the federal courts.'” Rebecca S. v. Comm'r of Soc. Sec., No. 20-CV-1480 (FPG), 2022 WL 2662970, at *2 (W.D.N.Y. July 11, 2022) (quoting Newlin v. Kijakazi, No. 19-CV-6248 (SLC), 2022 WL 950981, at *5 (S.D.N.Y. Mar. 30, 2022)). Additionally, Chermol & Fishman began its representation of Plaintiff several years after her past-due benefits started to accrue, which is another reason why the de facto hourly rate is unreasonable. Nashir v. Berryhill, No. 18-CV-767 (HKS), 2023 WL 2815003, at *2 (W.D.N.Y. Apr. 5, 2023) (reducing counsel's award where counsel represented plaintiff for approximately half the time that past-due benefits were accruing).
Furthermore, the “low total number of hours” expended by counsel here-10.8-is “noteworthy.” Rebecca S., 2022 WL 2662970, at *2. “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-CV-6721 (JCM), 2022 WL 1567700, at *4 (S.D.N.Y. May 18, 2022) (citation & internal quotation marks omitted). Counsel's 10.8 hours of work does not even approach the low-end of this range, further suggesting that Plaintiff's case did not require the kind of vigorous representation which could justify the high de facto hourly rate sought here. See Rebecca S., 2022 WL 2662970, at *2. As the Second Circuit has explained, a “windfall is more likely to be present in a case . . . where the lawyer takes on a contingency-fee representation that succeeds immediately and with minimal effort, suggesting very little risk of nonrecovery.” Fields, 24 F.4th at 856. That appears to be what happened here.
“[E]ven for the most highly regarded attorney,” Mitchell v. Astrue, 2019 WL 1895060, at *5, the de facto hourly rate of $5,298.12 is excessively high. Courts in this Circuit generally conclude that hourly rates between $1,000 and $2,000 are “relatively” high and those rates are still several thousands of dollars less than the de facto rate here. See, e.g., Fields, 24 F.4th at 854 (describing an award based on a $1,500 hourly rate to be “relatively high”); Hennelly v. Kijakazi, No. 20-CV-4786 (JGK), 2023 WL 3816961, at *2 (S.D.N.Y. June 5, 2023) (describing a noncontingency rate of $1,705.16 as “high, [but] not unprecedented”); Mannouris v. Comm'r of Soc. Sec., No. 20-CV-9790 (AT) (BCM), 2023 WL 9118792, at *3 (S.D.N.Y. Dec. 22, 2023), report and recommendation adopted by 2024 WL 81851 (S.D.N.Y. Jan. 8, 2024) (describing a de facto hourly rate of $1,918 as “relatively high”); Fabiani v. Kijakazi, No. 21-CV-5453 (LJL) (JLC), 2023 WL 8582274, at *3 (S.D.N.Y. Nov. 21, 2023) report and recommendation adopted by 2023 WL 8566545 (S.D.N.Y. Dec. 11, 2023) (describing a de facto hourly rate of $1,452 as “on the high side”); Galan v. Comm'r of Soc. Sec., No. 20-CV-9096 (ER) (JLC), 2023 WL 4420289, at *3 (S.D.N.Y. July 10, 2023) (describing “hourly rates of over a thousand dollars” as “a high de facto hourly rate”); Hutchinson v. Comm'r of Soc. Sec., No. 18-CV-12152 (ER) (KNF), 2023 WL 4398996, at *3 (S.D.N.Y. July 7, 2023) (same); Laden v. Comm'r of Soc. Sec., No. 17-CV-10050 (NSR) (AEK), 2022 WL 17828488, at *5 (S.D.N.Y. Nov. 3, 2022) (describing an hourly rate of $1,128 as “on the higher end of the spectrum of de facto hourly rates approved by courts within this Circuit”) report and recommendation adopted by 2022 WL 17414356 (S.D.N.Y. Dec. 5, 2022); Valich v. Comm'r of Soc. Sec., No. 21-CV-10123 (GRJ), 2023 WL 7162756, at *2 (S.D.N.Y. Oct. 31, 2023) (describing a de facto hourly rate above $1,100 per hour as “above the market rate for non-contingency Social Security cases”); Mitchell, 2019 WL 1895060, at *5 (“the resulting complexity of the [SSA] case does not, however, render reasonable an award equivalent to over $7,000 per hour.”). In short, the de facto hourly rate of $5,298.12 is an “outlier,” and “starkly out of line with de facto hourly rates” approved in other Social Security cases in this Circuit, thereby “suggest[ing]a windfall” Fields, 24 F.4th at 856.
To be sure, Mr. Fishman is an experienced attorney with specific expertise in social security cases. ECF No. 25-3 at ¶ 2. And Plaintiff also received a favorable result in the form of an outright benefit award. See Ward v. Kijakazi, No. 20-CV-5412 (PGG) (JLC), 2023 WL 329210, at *3 (S.D.N.Y. Jan. 20, 2023), adopted by 2023 WL 5321032 (S.D.N.Y. Aug. 18, 2023) (attorney's efforts were “particularly successful” when claimant received fully favorable decision from SSA and a substantial award of past-due benefits). Yet these factors are not enough to justify the excessively high de facto hourly rate. I thus recommend that Plaintiff's request for an award of $57,219.73 be denied.
Instead, I recommend an award of $10,800, which would adequately compensate counsel for the time spent on this case, the risks accepted in undertaking Plaintiff's representation on a contingency basis, and the successful result obtained for Plaintiff. Rebecca S., 2022 WL 2662970, at *3 (awarding a de facto hourly rate of $1,000); Nashir, 2023 WL 2815003, at *2 (reducing counsel's award to a de facto hourly rate of approximately $1001). “Courts may use ‘a record of the hours spent representing the claimant,' as well as ‘the lawyer's normal hourly billing charge' to assess the reasonableness of the fee award, and to decrease it where appropriate.” Mitchell, 2019 WL 1895060, at *5 (quoting Gisbrecht, 535 U.S. at 808). An award of $10,800 would result in a de facto hourly rate of $1,000, which represents more than triple Mr. Fishman's hourly rate of $325. ECF No. 25 at ¶ 13.
Finally, a fee award “may be made under both the EAJA and § 406(b), but the claimant's attorney must refund to the claimant the amount of the smaller fee.” Guzman v. Comm'r of Soc. Sec., No. 15-CV-3920 (VB) (LMS), 2019 WL 4935041, at *3 (S.D.N.Y. Aug. 1, 2019), report and recommendation adopted by 2019 WL 4933596 (S.D.N.Y. Oct. 7, 2019) (quoting Gisbrecht, 535 U.S. at 796 (cleaned up)). Courts in this District have thus mandated that attorneys who obtain fees under both statutes “return the amount of such EAJA award to plaintiff out of the payment received under Section 406(b).” Guzman, 2019 WL 4935041, at *3 (quoting Jackson v. Astrue, No. 09-CV-1290 (FB), 2011 WL 1868718, at *2 (E.D.N.Y. May 16, 2011)). I thus recommend that Chermol & Fishman be required to refund Plaintiff the attorney's fees in the amount of $2,235.60 previously awarded under the EAJA.
CONCLUSION
For the foregoing reasons, I recommend that Plaintiff's motion for attorneys' fees be GRANTED in part and DENIED in part. I also recommend that Plaintiff's counsel be awarded the sum of $10,800 in fees. I further recommend that any such award should be paid out of Plaintiff's past-due benefits, and upon receipt of this sum, Chermol & Fishman should refund the previously awarded EAJA fees of $2,235.00 to Plaintiff.
SO ORDERED.
PROCEDURE FOR FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties have fourteen (14) days (including weekends and holidays) from service of this Report and Recommendation to file any objections. See also Fed. R. Civ. P. 6(a), 6(b), 6(d). A party may respond to any objections within 14 days after being served. Any objections and responses shall be filed with the Clerk of the Court. Any request for an extension of time to file objections or responses must be directed to the Honorable Analisa Torres. If a party fails to file timely objections, that party will not be permitted to raise any objections to this Report and Recommendation on appeal. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72; Fed.R.Civ.P. 6(a), 6(b), 6(d); 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).