Opinion
20-CV-10809 (AT) (OTW)
06-07-2024
YOLANDA VAZQUEZ, Plaintiff, v. COMMISSIONER OF SOCIAL SECURITY, Defendant.
REPORT & RECOMMENDATION TO THE HON. ANALISA TORRES
ONA T. WANG, United States Magistrate Judge:
I. INTRODUCTION
Before the Court is Plaintiff Yolanda Vasquez's (“Plaintiff”) motion for an order awarding attorneys' fees pursuant to 42 U.S.C. § 406(b) in the amount of $4,185.00. (See ECF Nos. 22, 23, 24, and 25). For the following reasons, the Court respectfully recommends that Plaintiff's motion be GRANTED.
II. BACKGROUND
Plaintiff brought this case seeking review of Defendant Commissioner of Social Security's (“Commissioner”) denial of her disability insurance benefits under the Social Securities Act. (ECF 1). On October 15, 2021, the parties stipulated and agreed to remand the case to the Commissioner for further administrative proceedings, and the Clerk of Court remanded the case the same day. (See ECF Nos. 18 and 19). On January 25, 2022, Judge Torres “so ordered” the parties' joint stipulation, pursuant to which the Commissioner paid Plaintiff $835.00 in attorneys' fees under the Equal Access to Justice Act (“EAJA”), 28 U.S.C. §2412, in full satisfaction of claims under the EAJA in connection with this action. (ECF Nos. 20 and 21).
Upon remand to the Social Security Administration (“SSA”), a second hearing was held before an Administrative Law Judge (“ALJ”). (ECF 24 at 2). The ALJ found Plaintiff disabled and entitled to benefits. Id. The Notice of Award, dated August 30, 2022, informed Plaintiff that the SSA had withheld $18,373.03 for the payment of attorneys' fees, representing 25% of Plaintiff's past-due benefits. (Id.; ECF 24-4 at 4). Plaintiff's counsel, Osborn Law P.C. (“Osborn”), received the Notice of Award on September 26, 2022, and timely filed a motion for attorneys' fees in the amount of $4,185.00 on September 28, 2022. (See ECF Nos. 22 and 23). On November 8, 2022, defense counsel filed a response.(ECF 25). On December 7, 2023, Judge Torres issued an amended order referring this fees motion to me for Report and Recommendation. (ECF 26). For the following reasons, I respectfully recommend that Plaintiff's motion be GRANTED.
The Court notes that in its August 30, 2022, Notice of Award letter, the SSA calculated 25% of past-due benefits as $18,373.03 (see ECF 24-4 at 4: “We withheld $18,373.03 from your past due benefits in case we need to pay your representative.”), whereas Defendant's response to Plaintiff's fee motion (ECF 25) indicates that SSA withheld $20,152.63 for attorneys' fees, citing to “ECF 28” (the highest docket entry in this case is ECF 26). Defense counsel appears to have failed to properly draft the “Background” section of their response letter, which references a different Notice of Award letter date, ECF numbers that are not present in this case, and incorrect dates for the filing of this lawsuit, remand to the SSA for further proceedings, and of this fees motion. (ECF 25 at 1). The rest of the response letter appears to accurately assess this case.
The Second Circuit has held that pursuant to Rule 54 of the Federal Rules of Civil Procedure, a fee application under §406(b) must be filed within 14 days after the entry of judgment. See Sinkler v. Berryhill, 932 F.3d 83, 85 (2d Cir. 2019). While the SSA's Notice of Award is dated August 30, 2022, Plaintiff's counsel did not receive the Notice of award until September 26, 2022, and thereafter promptly filed their motion on September 28, 2022. (See ECF Nos. 23 and 24). Accordingly, the Court finds the motion timely. See, e.g., Sinkler, 932 F.3d at 88 (“Once counsel receives notice of the benefits award . . . there is no sound reason not to apply [Rule 54's] fourteen-day limitations period to a §406(b) filing, just as it would apply to any other final or appealable judgment.”) (emphasis added).
“The Commissioner respectfully defers to the Court to determine whether the requested fee is reasonable in light of the factors set forth above.” (ECF 25).
III. DISCUSSION
1. Legal Standard
Section 406(b) of the Social Security Act states:
Whenever a court renders a judgment favorable to a claimant under this subchapter 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, and the Commissioner of Social Security may, notwithstanding the provisions of section 405(i) of this title, but subject to subsection (d) of this section, 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. In case of any such judgment, no other fee may be payable or certified for payment for such representation except as provided in this paragraph.42 U.S.C. § 406(b)(1)(A). Section 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.” Gisbrecht v. Barnhart, 535 U.S. 789, 807 (2002); accord Wells v. Sullivan, 907 F.2d 367, 370 (2d Cir. 1990). Instead, it “calls for court review of such arrangements as an independent check, to assure that they yield reasonable results in particular cases.” Gisbrecht, 535 U.S. at 807. The Court's reasonableness analysis looks at three factors: (1) whether the requested fees exceed the 25 percent limit, (2) whether the contingent fee agreement was reached through “fraud or overreaching,” and (3) whether the requested fees would represent a windfall to counsel. Wells, 907 F.2d at 373; see, e.g., Federico v. Acting Comm'r of Soc. Sec., No. 20-CV-2220 (AT) (OTW), 2023 WL 4471605, at *1 (S.D.N.Y. June 21, 2023).
To assess whether the requested fees would be a windfall, the Court considers: (1) the ability, expertise, and efficiency of counsel, (2) the nature and length of the relationship with the claimant, (3) the satisfaction of the disabled claimant with counsel's services, and (4) the uncertainty of an award of benefits. Wells, 907 F.2d at 372.
2. Reasonableness of the Requested Fee
Osborn's fee award of $4,185.00 is reasonable. In support of their motion for attorneys' fees, Osborn provided the Court with the following: (1) an attorney fee agreement, signed by Plaintiff on December 16, 2020, where Plaintiff agreed to pay the greater of 25% of past-due benefits resulting from her claim, or the EAJA fee (see ECF 24-1 at 2, Exhibit 1 - Attorney Fee Agreement); (2) Osborn's letter to defense counsel requesting an EAJA fee award (see ECF 24-2, Exhibit 2 - Letter Re EAJA Fees); (3) Judge Torres's Stipulation and Order approving the payment of $835.00 in EAJA fees (ECF 24-3, Exhibit 3 - Stipulation and Order); (4) a letter from the SSA approving the disability benefits payable to Plaintiff (ECF 24-4, Exhibit 4 - Notice of Award); and (5) a copy of the email by which Plaintiff's counsel was notified of the Notice of Award (ECF 24-5, Exhibit 5 - September 26, 2022 Email). Plaintiff's counsel expended 2.5 hours of attorney work and 3.1 hours of paralegal work on this matter. (See ECF at 2, Exhibit 2 - Letter Re EAJA Fees). Counsel provided detailed supporting time records for this time, and seeks an award of $4,185.00, an amount far less than the presumptive 25% of past-due benefits. Though Defendant does not oppose the motion, the Commissioner's response notes that “[c]onsidering the attorney time alone, this amounts to a de facto hourly rate of $1,674.00 ($4,185.00 divided by 2.5 hours).” (ECF 25 at 3).
Plaintiff negotiated a fee of $4,185.00 with counsel, which results in an hourly rate of $1,674.00 for 2.5 hours of attorney work. Id. The award requested does not exceed the statutory 25% cap and there is no evidence of fraud or overreaching in the making of the agreement.
The Government calculates the de facto $1674 hourly rate by dividing the total fee sought by Plaintiff and the number of attorney hours ($4,185.00 divided by 2.5 hours). Plaintiff's counsel asserts that the de facto hourly rate is $1,550.00 for attorney time (ECF 23 at 6), but does not explain how this number was calculated.
This award would not represent an impermissible windfall to Osborn. While Osborn's de facto hourly rate of $1,674.00 is high, a windfall “must consider more than the de facto hourly rate.” Fields v. Kijakazi, 24 F.4th 845, 854 (2d Cir. 2022). In Social Security cases, courts often permit higher than normal hourly rates “due to the uncertain nature of contingency cases and to encourage representation of Social Security litigants, who may lack the resources to independently retain counsel.” Morrison v. Saul, No. 16-CV-4168 (OTW), 2019 WL 6915954, at *3 (S.D.N.Y. Dec. 19, 2019) (citing Baron v. Astrue, 311 F.Supp.3d 633, 637 (S.D.N.Y. 2018)). A substantial number of cases in the Second Circuit have awarded attorneys' fees with de facto hourly rates exceeding $1000. See Bate v. Berryhill, No. 18-CV-1229 (ER), 2020 WL 728784, at *3 (S.D.N.Y. Feb. 13, 2020) (citing Baron, 311 F.Supp.3d at 637-38 (referencing cases with de facto hourly rates ranging from $1,072.12 to $2,100 that were found reasonable in light of counsel's competence and efficiency)). Counsel's efficiency in producing an effective case for their client should not be penalized due to an imputed hourly rate. See Kazanjian v. Astrue, No. 09 CIV. 3678 BMC, 2011 WL 2847439, at *2 (E.D.N.Y. July 15, 2011) (awarding Plaintiff's counsel fees of a $2,100 hourly rate). Here, the requested fee was contingent on Plaintiff's counsel obtaining a favorable result for their client, which was substantially uncertain. Through their diligent efforts, counsel was able to secure remand and an award entitling Plaintiff to hundreds of thousands of dollars in benefits. There is no reason to believe that the disabled Plaintiff is unsatisfied with counsel's services. Osborn's de facto hourly rate of $1674.00 in this case is the product of a freely negotiated contingency fee agreement and counsel's competence in advocating for their client. Accordingly, the requested attorneys' fees are reasonable and do not require reduction to avoid a windfall.
3. Previous EAJA Award
In a situation where a plaintiff's counsel was rewarded attorneys' fees for the same work under both the EAJA and 42 U.S.C. § 406(b), counsel must refund to the plaintiff the amount of the smaller fee. See Gisbrecht, 535 U.S. at 796 (“Congress harmonized fees payable by the Government under EAJA with fees payable under § 406(b) out of the claimant's past-due Social benefits in this manner: Fee awards may be made under both prescriptions, but the claimant's attorney must refund to the claimant the amount of the smaller fee.”) (internal quotations and citations omitted). In this case, Plaintiff's counsel received an EAJA fee of $837.00. Accordingly, upon receipt of attorney's fees under 42 U.S.C. § 406(b), Osborn is directed to refund the previously awarded EAJA fee to Plaintiff.
IV. CONCLUSION
For the foregoing reasons, I recommend that Plaintiff's motion for attorney's fees under 42 U.S.C. § 406(b) be GRANTED and that the SSA approve a payment of $4,185.00 to Daniel A. Osborn of Osborn Law, P.C. Upon receipt of that payment, Plaintiff's counsel should refund the previously awarded EAJA fee in the amount of $837.00 directly to Plaintiff.
V. OBJECTIONS
In accordance with 28 U.S.C. §636(b)(1) and Fed.R.Civ.P. 72(b), the parties shall have fourteen (14) days (including weekends and holidays) from receipt of this Report to file written objections. See also FED. R. CIV. P. 6 (allowing three (3) additional days for service by mail). A party may respond to any objections within fourteen (14) days after being served. Such objections, and any responses to objections, shall be addressed to the Honorable Analisa Torres, United States District Judge. Any requests for an extension of time for filing objections must be directed to Judge Torres.
FAILURE TO FILE OBJECTIONS WITHIN FOURTEEN (14) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See Thomas v. Arn, 474 U.S. 140, 155 (1985); IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1054 (2d Cir. 1993); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir. 1992); Wesolek v. Canadair Ltd., 838 F.2d 55, 58 (2d Cir. 1988); McCarthy v. Manson, 714 F.2d 234, 237-38 (2d Cir. 1983).