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Lee v. Berrryhill

United States District Court, S.D. Ohio, Western Division, Dayton

October 24, 2017

JAMES LEE, Plaintiff,
v.
NANCY A. BERRRYHILL, Commissioner Of The Social Security Administration, Defendant.

          WALTER H. RICE DISTRICT JUDGE.

          REPORT AND RECOMMENDATIONS [1]

          SHARON L. OVINGTON UNITED STATES MAGISTRATE JUDGE.

         This case is before the Court upon a Motion For Allowance Of Attorney Fees filed by Plaintiff's counsel (Doc. #19), the Commissioner's Response (Doc. #20), Plaintiff's Counsel's Reply (Doc. #21), and the record as a whole.

         Before this case began, Plaintiff and his counsel entered into a written contingency-fee agreement. The agreement documented Plaintiff's agreement to pay attorney fees in the amount of 25% of any lump sum award for past-due Social Security benefits payable to him. The agreement also documented counsel's willingness to work on a contingency-fee basis. This resulted in counsel's acceptance of the risk he would recover zero attorney fees in the event Plaintiff received no past-due benefits. See Doc. #19, PageID #779.

         As this case proceeded, Plaintiff established that a remand for payment of benefits was warranted, and Judgment was entered accordingly. The Social Security Administration awarded Plaintiff past-due benefits in a lump sum of $94, 243.00. Id. at 780. The Social Security Administration has withheld $30, 129.00 from Plaintiff's past-due benefits for payment of attorney fees. Id. at 781.

         Relying on 42 U.S.C. § 406(b), Plaintiff's counsel presently seeks approval of a $17, 550.00 award of attorney fees from the funds withheld from Plaintiff's past-due benefits. The attorney-fee award Plaintiff's counsel seeks, if granted, would result in an award based on a hypothetical hourly rate of $675.00 ($17, 550.00 ÷ 26 hours = $675.00).

         The Commissioner seeks a reduction of this hourly rate to $400.00 per hour.

         Section 406(b) authorizes this Court to award attorney's fees when a plaintiff brings a successful challenge to the Social Security Administration's denial of his or her application for benefits. See Damron v. Comm'r of Soc. Sec., 104 F.3d 853, 856 (6th Cir. 1997). The award may not exceed 25% of the past-due benefits that the plaintiff received as a result of the successful challenge. See id.; see also 42 U.S.C. § 406(b)(1).

         To succeed under § 406(b), the plaintiff's counsel must show, and the court must affirmatively find, that the contingency fee sought-even one within the 25% cap-is reasonable for the services rendered. Gisbrecht v. Barnhart, 535 U.S. 789, 807 (2002); see Lasley v. Comm'r of Soc. Sec., 771 F.3d 308, 309 (6th Cir. 2014). Section 406(b) “does not displace contingent-fee agreements” but instead “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.

         To determine whether an award under § 406(b) is reasonable, a floor/ceiling approach guides the way. The ceiling is § 406(b)'s 25% cap, which “accords a rebuttable presumption of reasonableness to contingency agreements that comply with § 406(b)'s 25%-cap.” Lasley, 771 F.3d at 309. The floor is “[the] hypothetical rate that is twice the standard rate for such work in the relevant market.” Hayes v. Sec'y of Health & Human Servs., 923 F.2d 418, 422 (6th Cir. 1991). “‘[A] hypothetical hourly rate that is less than twice the standard rate is per se reasonable ...'” Lasley, 771 F.3d at 309 (quoting Hayes, 923 F.2d at 421).

         Within the range set by this floor and this ceiling, “a hypothetical hourly rate that is equal to or greater than twice the standard rate may well be reasonable.'” Lasley, 771 F.2d at 309 (quoting Hayes, 923 F.2d at 421). Courts may consider arguments attacking the rebuttable presumption of reasonableness that attaches to awards above the double-the-standard-rate floor and below the 25% statutory ceiling. Id. at 309.

         “Reasonableness” remains the heart of the matter. And, care must be taken to consider the presumption a rebuttable-not a strict-presumption of reasonableness. Lasley, 771 F.2d at 309 (noting, “Gisbrecht ... elides strict presumptions altogether.”). Reducing a sought-after award is warranted to avoid windfalls especially “‘[i]f the benefits are large in comparison to the amount of time counsel spent on the case ....'” Id. at 310 (quoting Gisbrecht, 535 U.S. at 808).

         The award Plaintiff's counsel requests, $17, 550.00, is reasonable and not a windfall. The amount of attorney fees he seeks is far less than 25% of Plaintiff's past-due benefits, or $23, 560.75 ($94, 243.00 x .25 = $23, 560.75), awarded by the Social Security Administration.

         The parties correctly calculate that Plaintiff's counsel proposes a hypothetical hourly rate of $675.00 ($17, 550.00 /26 hours = $675.00). Viewing this as the product of the applicable multiplier of 2, see Hayes, 923 F.2d at 422, translates to an hourly rate of $337.50. This is below the hourly rates and the hypothetical hourly rates permitted in a number of well-reasoned decisions in this District. See, e.g., Jodrey v. Comm'r of Soc. Sec., No. 1:12-cv-725, 2015 WL 799770, at *3-4 (S.D. Ohio Feb. 25, 2015) Report and Recommendation (Litkovitz, M.J.), adopted, 2015 WL 1285890 (S.D. Ohio Mar. 19, 2015) (Barrett, J.) (approving hypothetical hourly rate of $700.00); Havens v. Comm'r of Soc. Sec., No. 2:12-cv-637, 2014 WL 5308595, at *2 (S.D. Ohio Oct. 16, 2014) Report and Recommendation (Kemp, M.J.), adopted, 2014 WL 6606342 (S.D. Ohio Nov. 20, 2014) (Smith, J.) (approving hypothetical hourly rate of $750.00); Metz v. Comm'r, Soc. Sec. Admin., ...


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