CALIFORNIA ATTORNEY'S FEES

Cases Under Review, Social Security: SCOTUS Decides That Social Security Benefits Cap Of 25% Only Applies To Court Representation, Not Agency Work

SCOTUS Disagreed With Eleventh Circuit, Following The Contrary Conclusion By Three Other Circuit Courts.

United States Supreme Court

            On January 8, 2019, the United States Supreme Court issued its opinion in Culbertson v. Berryhill, No. 17-773 (U.S. Supreme Court Jan. 8, 2019), which confronted this issue in the social security benefits area: “Whether fees subject to 42 U.S.C. § 406(b)’s 25-percent cap related to the representation of individuals claiming Social Security benefits include, as the U.S. Courts of Appeals for the 6th, 9th, and 10th Circuits hold, only fees for representation in court or, as the U.S. Courts of Appeals for the 4th, 5th, and 11th Circuits hold, also fees for representation before the agency.”

            In a unanimous opinion written by Justice Clarence Thomas, SCOTUS decided that the 42 U.S.C. § 406(b)(1)(A) cap of 25% applies only to fees for court representation rather than aggregate fees awarded under § 406(a) and (b), which can include more inclusive “reasonable” agency fees unless a fee agreement dictates otherwise. It disagreed with the Eleventh Circuit, endorsing the conclusion reached by three other federal courts of appeal.

Social Security: Social Security Disability Claimant Winning Remand Erroneously Denied Attorney’s Fees Under EAJA By District Court

 

Government’s Position on Remand Issue Was Not Justified, Such That Later Litigation Position Rulings Were Irrelevant.

     In Tobeler v. Colvin, Case No. 12-16392 (9^th Cir. Apr. 18, 2014) (published), Social Security disability claimant had obtained a remand because a Social Security administrative law judge (ALJ) had disregarded competent lay witness on claimant’s symptoms without comment, a “no no” in this area of the law. Ultimately, however, the district court concluded that the ALJ’s error was harmless. Claimant then sought attorney’s fees for obtaining a remand, but the district court denied the request after finding that the government’s position was substantially justified because it prevailed on the remainder of the ALJ’s conclusions except for the lay witness testimony issue.

    Machine signs 7,000 social security checks per hour with no writer’s cramp.  December 14, 1939.  Library of Congress.

     The denial of fees was reversed because the district court abused its discretion in concluding the government’s position was substantially justified. The problem was that the government’s underlying position on the witness issue producing a remand was unjustified. Because fees had to be awardable on this point, it did not matter that government’s litigation position was ultimately sustained at later points in the case. Remanded to fix reasonable amount of fees.

Social Security: Attorney’s Fees Request Denied Under EAJA Because Reversal Of Denial Of Social Security Disability Benefits Was Unusual Case Where Government’s Position Was Substantially Justified

 

Majority and Dissent Differed Over Application of Meier v. Covin.

     In an earlier opinion, the Ninth Circuit had reversed the denial of social security disability benefits. However, the federal appeals court then denied the winner’s request for attorneys’ fees under the Equal Access to Justice Act (EAJA), which generally supports fee requests unless the government’s position was substantially justified.

     That denial occurred in Campbell v. Astrue, Case No. 11-55486 (9th Cir. Nov. 26, 2013) (published), except that it happened in a 2-1 decision over a dissent by Circuit Judge Wardlaw.

     The majority found that this was an “unusual case” requiring a denial of EAJA fees because the government’s position was substantially justified. Although finding the case to be similar to an opposite result reached in Meier v. Covin, 727 F.3d 867 (9th Cir. 2013) [discussed in our July 23, 2013 post], the majority distinguished Meier as involving a present disability determination versus an ALJ in Campbell having to extrapolate a past disability based upon a review of medical records such that the government’s opposition was justified under the circumstances.

     Circuit Judge Wardlaw disagreed with the fee denial, finding Meier dispositive and believing the case was not “unusual” for fee determination purposes--in derogation of different outcomes usually warranted under the EAJA fee-shifting statute.

Social Security: Attorney’s Fees Award Under EAJA Erroneously Decided Because ALJ’s Decision Is “Position of the United States” For Determining If Government Was Substantially Justified In Its Position

 

Remand Was Ordered to Consider $15,000-Plus Fee Request.

     In Meier v. Colvin, Case No. 11-35736 (9th Cir. July 23, 2013) (for publication), a social security disability benefits claimant suffered defeats at the administrative law level and the district court level, until the the Ninth Circuit in an earlier unpublished memorandum opinion reversed and remanded for a benefits award after determining the ALJ failed to provide reasons for rejecting certain proof submitted by claimant. Claimant then moved to recover over $15,000 in fees and costs under the Equal Access to Justice Act (EAJA), which has a fee-shifting provision mandating fees to a prevailing party other than the U.S. in any civil action unless the court finds that the position of the U.S. was “substantially justified.” The district court denied the requests, determining that the losses at the ALJ level showed there was sufficient governmental justification.

     The Ninth Circuit reversed the fee denial, reasoning that the ALJ’s decision as adjudicator was a “position of the United States” just as the government’s litigation position in the action. It observed that the pertinent EAJA provisions (28 U.S.C. § 2412(d)(1)(A), (d)(2)(D)) make no distinction between an agency’s adjudicative and adversarial acts. Based on the earlier decision finding the ALJ’s decision was not supported by substantial evidence, this also established that the U.S. position was not “substantially justified.” Reversed and remanded to fix an award of fees and costs.

Social Security: Claimant’s Attorney Subject To Offset For EAJA Fee Award From Fee Recovery Allowed Under The SSA

 

Offset Applicable for Entire Work of Attorney During Litigation, Not Just Discrete Work.

     Parrish v. Comm’r of Social Security Administration, Case No. 11-35332 (9th Cir. Nov. 5, 2012) (published) is an interesting case involving the interaction of Social Security Act (SSA) and Equal Access to Justice Act (EAJA) provisions allowing attorneys to receive fees for successfully representing Social Security benefit claimants.

Above:  New Social Security board member primps.  August 23, 2937.  Library of Congress.

     SSA, 42 U.S.C. § 402(b)(1), limits fee recovery for attorneys representing successful claimants in federal court to 25% of the total past-due benefits conferred by the judgment, because the recovery comes out of the claimant’s benefits. In contrast, EAJA, 28 U.S.C. § 2412(d)(1)-(2), allows fee recovery to the successful attorney determined by the time expended and the attorney’s hourly rate, subject to a specified cap, with the fees being paid by the government. However, because attorneys accepting an award above the section 402(b)(1) cap were subject to possible criminal sanctions under section 402(b)(2), Congress amended the EAJA in 1985 to add a savings provisions allowing attorneys to receive fees under both SSA section 402(b) and EAJA section 2412. (Pub. L. No. 99-80, § 3, 99 Stat. 183 (1985) (uncodified.) But there is an important rub to this savings provision: a lawyer must offset any fees received under EAJA with any award that the attorney receives under SSA if the two were for the “same work”--adopted in order to avoid giving double compensation to attorneys.

     In Parrish, controversy centered on this “same work” construct. The district court clearly awarded attorney a total fee award of $11,575 under EAJA (the aggregate of two awards), with the winning attorney filing a motion to seek $9,059.89 in fees under SSA (the statutory 25% maximum). Attorney requested a deduction of the first EAJA fee award of $6,575, but not the second EAJA fee award of $5,000. However, the district court found that both EAJA awards should be deducted, which exceeded the $9,059.89 SSA fee award such that no additional fees were warranted.

     Attorney appealed, primarily arguing that only his work on the second appeal (not a successful first one) should be considered for offset purposes. The Ninth Circuit disagreed, determining that an attorney’s work throughout the case in representing a client should be considered under the “same work” construct. It found that the district court had correctly made the right deductions. Affirmed.

Reasonableness Of Fees/Social Security: Magistrate Judge’s Use Of An Informal, De Facto Cap For Awarding Fees In “Routine” Social Security Benefits Case Reversed

 

Routine Is in the Eye of the Beholder--The Third Reduction Was Not Viewed Kindly By Ninth Circuit; “Judicial Intuit Gestalt” Reigned Supreme.

     Costa v. Commissioner of Social Security Administration, Case No. 11-35245 (9th Cir. Aug. 24, 2012) (published) (per curiam) reinforces a theme we see at both the federal and state court levels on fees--lower courts and litigants should be reticent to use formulaic approaches to the amount of fee recovery, especially given that most of these types of recovery are fairly case specific in nature (defying generalities).

     There, a magistrate judge reversed an administrative law judge’s decision finding that a social security disability claimant was not disabled. Claimant then sought reasonable attorney’s fees under the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412(d), requesting fees in the amount of $10,544.72. However, the magistrate judge reduced the number of hours by one-third, to $7,191.35, placing special emphasis on a de facto cap that some local judicial orders had set in “routine” social security disability matters--namely, 20 to 40 hours. (In fairness to the magistrate judge, he did include some specific line item reductions in requested fees, but the problem for the Ninth Circuit was that they were vaguely consonant with coming to the de facto hourly conclusion -- I guess we could argue this is “judicial intuit gestalt,” maybe a new phrase we just coined. Otherwise known as “I know it when I see it.”)

     The Ninth Circuit reversed and actually ordered compensation in the requested amount of $10,544.72, likely because the amounts involved did require a new remand determination.

     The de facto policy, in our blogging view, is what drove the result in this decision. Although surveying hourly rates in different cases is probative, the Ninth Circuit seemed skeptical that the the amount of time spent in other cases could really be determinative in different cases where case-specific factors might drive up the time spent in the case. (Actually, this seems to be a very pragmatic determination.) Also, relying on its earlier decision in Moreno v. City of Sacramento, 534 F.3d 1106, 1113 (9th Cir. 2008) [discussed in our August 2, 2008 post], the federal appellate court determined that the magistrate judge’s fee reductions were not specific enough to really justify a haircut of a third. Requested attorney’s fees granted, in the case of the federal appeals court not liking de facto fee caps.

Social Security: U.S. Supreme Court Decides That Fee Awards Under Social Security Benefit Cases Belong To Client, Not Attorney

 

This Allows Offsetting for Client’s Debts to Government.

     In our past posts of October 1, 2009 and February 25, 2010, we explored the United States Supreme Court’s grant of certiorari in and oral argument with respect to Astrue v. Ratliff, Case No. 08-1322 (U.S. June 14, 2010), which concerned who owned payments in a Social Security benefit attorney’s fees award.

     Ratliff held that an attorney’s fees award to a successful Social Security claimant under 28 U.S.C. § 2412(d)(1)(A) is payable to the litigant, not the litigant’s attorney. So, that means the award is subject to an offset for any pre-existing debts which litigant owes to the Government. The high court also found its result was buttressed by cases interpreting the federal civil rights fee-shifting statute, 42 U.S.C. § 1988, which contains virtually identical language to that employed in § 2412(d)(1)(A).

Social Security: U.S. Supreme Court Appears To Be Leaning To The View That Fee Awards Are Clients’ Property Subject to Governmental Offsetting

High Court Recently Hears Arguments in Astrue v. Ratliff.

    In our October 1, 2009 post, we reported that the U.S. Supreme Court had accepted review of Astrue v. Ratliff, an Eighth Circuit decision. The issue for consideration was whether Social Security disability fee awards belong to clients, rather than their attorneys, so as to be subject to offsets for payment of debts owed to the government by clients.

     Marcia Coyle, in her February 23, 2010 article “High Justices May Favor Clients Over Lawyers in Fee Shift Dispute” posted on The National Law Journal website, suggests that the majority of justices seemed to lean in favor of the position that the fee awards belong to the client in recent oral arguments in Astrue v. Ratliff. For example, Justice Ruth Bader Ginsburg appeared skeptical that attorneys could reap the benefit of the fee awards because, unlike other federal statutes, the Equal Access to Justice Act does not exempt fee payments from being subject to offsets. Stay tuned, it is likely that a decision will be rendered before the end of this year.

Marc And Mike’s Top Twenty Decisions For 2009

Part 1 of 2: First Ten Grouping—Nos. 11-20.

     As noted in an earlier post, we have accumulated our “top 20” attorney’s fees decisions, recognizing that we limit the list to published decisions and that the order reflects nothing about the importance of the decision. Rather, we try to survey decisions of interest in different areas of the substantive law based on all the decisions we have examined during 2009. Without further ado, here we go.

     YEARLY ROUNDUP

20. Crawford v. Astrue, 2009 WL 3617989 (9^th Cir. Nov. 4, 2009) (en banc)

Majority Author: Circuit Judge Fletcher; Concurring/Dissenting Author:

Circuit Judge Clifton; Dissenting Author: Circuit Judge Ben

     Attorneys representing Social Security disability insurance claimants are presumptively entitled to fee awards under their contingency arrangements; majority reversed magistrate reductions of awards to only 6.68-11.61% of past-due benefits award.

(See our November 5, 2009 post on this decision.)

19. Krug v. Maschmeier, 172 Cal.App.4^th 796 (lst Dist., Div. 4 Mar. 25, 2009)

Author: Presiding Justice Ruvolo

     Prevailing defendants in civil harassment actions can recover discretionary attorney’s fees even if the underlying action was not frivolous or was not brought in bad faith.

(See our March 25, 2009 post on this decision.)

18. Garcia v. Santana, 174 Cal.App.4^th 464 (2d Dist., Div. 7 May 28, 2009)

Majority Author: Justice Zelon; Concurring Author: Justice Woods;

Dissenting Author: Justice Jackson

     Financial condition of indigent litigant is a factor to consider in assessing fees to a prevailing party in a Davis-Stirling Act action.

(See our May 28, 2009 post on this decision.)

17. In re SNTL Corp., 571 F.3d 826 (9^th Cir. June 23, 2009)

Per Curiam Opinion

     Unsecured creditor’s request for postpetition-incurred contractual/statutory fees, arising from prepetition claim, is allowable.

(See our June 23, 2009 post on this decision.)

16. Biltmore Associates, LLC v. Twin City Fire Ins. Co., 572 F.3d 663 (9^th Cir.

July 10, 2009)

Author: Justice Kleinfield

     Attorney’s fees, if other than sanctions or if not awarded for trustee wrongdoing, can only be awarded against trustee in a representative capacity.

(See our July 10, 2009 post on this decision.)

15. Center For Biological Diversity v. Marina Point Development Co., 566 F.3d

794 (9^th Cir. May 14, 2009) (second amendment)

Majority Author: Circuit Judge Fernandez; Concurring Author: Circuit

Judge Rymer; Dissenting Author: Justice Kleinfield

     Attorney’s fees were properly awarded under the Endangered Species Act even though underlying controversy was moot; court will not review the merits determination, if moot, for purposes of testing the fees award; concurring opinion suggests that the U.S. Supreme Court may want to review the issue.

(See our March 28, 2009 post on this decision.)

14. Alan T.S., Jr. v. Superior Court, 172 Cal.App.4^th 238 (4^th Dist., Div. 3 Mar.

18, 2009)

Author: Presiding Justice Sills

     Interesting discussion of problems that plague the family law court system, made in the course of reversing awards for failure to consider the relevant “need” factors under Family Code sections 2030 and 2032.

(See our March 21, 2009 post on this decision.)

13. Ramon v. County of Santa Clara, 173 Cal.App.4^th 915 (6^th Dist. May 4, 2009)

Author: Acting Presiding Justice Mihara

     Plaintiff’s amicus curiae work in related action was proper basis for additional fee award under California Code of Civil Procedure section 1021.5 (the private attorney general statute).

(See our May 4, 2009 post on this decision.)

12. Law Offices of Andrew L. Ellis v. Yang, 178 Cal.App.4^th 869 (2d Dist., Div. 3

Oct. 27, 2009)

Author: Justice Aldrich

     Trial courts have discretion to award or deny anti-SLAPP attorney’s fees to defendants in cases where plaintiffs dismiss their actions without prejudice.

(See our October 28, 2009 post on this decision.)

11. Galleria Plus, Inc. v. Hanmi Bank, 2009 WL 3859491 (2d Dist., Div. 4

Nov. 19, 2009)

Author: Presiding Justice Epstein

     Code of Civil Procedure section 128.7 sanctions cannot be granted unless a prior, unfiled “safe harbor” motion has set a definitive hearing date in the motion sent to the opponent.

(See our November 20, 2009 post on this decision.)

Our next top 10 will follow shortly before the New Year. Happy Holidays to everyone.

Social Security: SSDI Claimant’s Attorneys Should Be Entitled To Contingency Arrangement Award Absent Unusual Circumstances

Ninth Circuit En Banc Panel Reverses Magistrates’ Reductions Below Requested Fees That Were Pegged To Contingency Arrangements (Albeit Lower).

     We have told you faithful readers that we are purveyors to all substantive areas of the law. Here is an important one for litigants and practitioners in the area of attorney’s fees awarded to lawyers who successfully represent Social Security disability insurance (SSDI) claimants.

     The case is Crawford v. Astrue (and another two consolidated appeals), Case Nos. 06-55822, 06-55954, & 06-56284 (9^th Cir. Nov. 4, 2009) (for publication), heard by an 11- member en banc panel of the Ninth Circuit.

     Under 42 U.S.C. section 406(b), a court entering judgment in favor of an SSDI claimant represented by an attorney must determine a reasonable attorney’s fees, not in excess of 25% of the total of the past-due benefits, which is paid by the SSDI claimant out of the past-due benefits awarded. In 2002, the U.S. Supreme Court in Gisbrecht v. Barnhart, 535 U.S. 789, 808 (2002) rejected using a lodestar test in this area and instead held that primacy should be given to the contingency arrangement between attorney and client (no more than 25% of the awarded past-due benefits), reduced by such factors as substandard representation, dilatory conduct to increase the amount of the past-due benefits, or situations where there is a small amount of attorney time when comparatively analyzed against the benefits achieved. Well, this statutory section was at the center of the battle in Crawford.

     Here is what happened in Crawford and related cases where benefits were awarded:

Social Security Claimants: Ninth Circuit Clarifies Post-Gisbrecht Methodology For Determining Attorney’s Fees Awards

Federal Court of Appeals Splits 2-1 on Factor Weighing Discretion Given to District Judges.

            In Gisbrecht v.Barnhart, 535 U.S. 789, 807-809 (2002), the United States Supreme Court set forth a new methodology for determining attorney’s fees in social security cases.  Under 42 U.S.C. section 406(b)(1)(A), a court rendering a judgment favorable to an attorney-represented social security claimant may allow a reasonable fee not exceeding 25% of the total past-due benefits to which the claimant is entitled, which will be paid out of the past-due benefit judgment.  Gisbrecht reversed a Ninth Circuit opinion adopting a lodestar calculation for attorney’s fees, expressing the belief that section 406(b) did not displace the normal 25% contingency fee arrangement as the standard bearer for fee recovery.  Carefully, however, Gisbrecht did indicate that district courts have considerable discretion to award fees under contingency arrangements, testing reasonableness of fees based on (1) the character of the representation; (2) the results achieved; (3) attorney fault for delay; (4) amount of benefit award compared to the amount of time spent on the case; and (5) hours spent on the representation and the lawyer’s normal hourly billing charge.  (535 U.S. at 808.)  Because the Supreme Court left a substantial leeway to the discretion of the district judge, the next Ninth Circuit case is one of the first published decisions to discuss fee awards in the wake of Gisbrecht.

            Crawford/Washington/Trejo v. Astrue, Case Nos. 06-55822, 06-55954, & 06-56284 (9^th Cir. Sept. 25, 2008) is must reading for social security claimant attorneys as far as seeking fee recovery after Gisbrecht.  The opinion was a 2-1 decision, with a poignant dissent by Circuit Judge Fletcher.

            In this Ninth Circuit opinion, the majority found that the district judges did give primacy to the contingent fee arrangements, but decided that adjustments needed to be made so that the fee was reasonable.  Adjustments were based on such factors as a readily admitted benefit award, failure to provide evidence on the riskiness of the representation, the relative non-complexity of the matter, and the excessiveness of the requested enhancements (e.g., 82%, 256%, or 279%).  The district courts, instead, awarded enhancements of 40%, 40%, and 100%, respectively to the parenthetical requested percentages.  The majority did not believe Gisbrecht prohibited lodestar calculations and adjustments, but did preclude district judges from exclusively relying on lodestar calculations and refusing to consider contingency-fee arrangements with social security claimants.  (Slip Opn., at p. 13702.)  The majority did not believe that Gisbrecht mandated a mechanistic procedure based on using the contingency fee arrangement as the baseline for any future reductions.  (Id., at pp. 13702-13703.)  The majority wanted to leave a wide ambit of discretion available to the district judges in this substantive area of the law.

            Circuit Judge Fletcher, in dissent, believed the district judges and majority circuit judges did not respect the primacy of the contingency fee arrangements as far as awarding fees under Gisbrecht.  She calculated that the attorneys received 53.5% to 73.3% less than the contingency contracts provided when compared to the actual fee awards.  Circuit Judge Fletcher opined that the majority was resurrecting a lodestar calculation test that was previously adopted by the Ninth Circuit in Gisbrecht—but reversed subsequently by the Supreme Court.