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Lee v. Commissioner, Social Security Administration

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

June 15, 2018

JAMES DAVID LEE, Plaintiff,
v.
COMMISSIONER, SOCIAL SECURITY ADMINISTRATION, Defendant.

         DECISION AND ENTRY ADOPTING UNITED STATES MAGISTRATE JUDGE'S REPORT AND RECOMMENDATIONS (DOC. #22); OVERRULING DEFENDANT'S OBJECTIONS THERETO (DOC. #23); SUSTAINING PLAINTIFF'S MOTION FOR ALLOWANCE OF ATTORNEY FEES (DOC. #19); AWARDING ATTORNEY FEES IN THE AMOUNT OF $17, 550.00; ORDERING PLAINTIFF'S COUNSEL TO REFUND TO PLAINTIFF THE $4, 300.00 PREVIOUSLY PAID UNDER THE EQUAL ACCESS TO JUSTICE ACT; CASE TO REMAIN TERMINATED

          WALTER H. RICE, UNITED STATES DISTRICT JUDGE

         On October 24, 2017, United States Magistrate Judge Sharon L. Ovington issued a Report and Recommendations, Doc. #22, in which she recommended that the Court sustain Plaintiff's Motion for Allowance of Attorney Fees, Doc. #19, and order Defendant to pay $17, 550.00 in attorney fees pursuant to 42 U.S.C. § 406(b). She also recommended that the Court order Plaintiff's counsel to refund directly to Plaintiff the $4, 300.00 in attorney fees previously paid under the Equal Access to Justice Act ("EAJA").

         This matter is currently before the Court on Defendant's Objections to the Report and Recommendations, Doc. #23. Defendant argues that the $17, 550.00 contingency fee award for 26 hours of work, equating to a hypothetical hourly rate of $675.00, constitutes a windfall to Plaintiff's counsel, and that Magistrate Judge Ovington's justification for such a large award is erroneous.

         A.

         The relevant statute permits the court to award a "reasonable fee . . . not in excess of 25 percent of the total of the past due benefits to which the claimant is entitled." 42 U.S.C. § 406(b)(1)(A). The Sixth Circuit has held that "a hypothetical hourly rate that is less than twice the standard rate is per se reasonable, and a hypothetical hourly rate that is equal to or greater than twice the standard rate may well be reasonable." Hayes v. Sec'y of Health & Human Servs., 923 F.2d 418, 422 (6th Cir. 1991). If the hypothetical hourly rate is equal to or greater than twice the standard rate, the court may consider reducing it if "1) the attorney engaged in improper conduct or was ineffective, or 2) the attorney would enjoy an undeserved windfall due to the client's large back pay award or the attorney's relatively minimal effort." Id. at 419.

         Courts serve as an "independent check" of the reasonableness of a fee request that is the product of a contingent-fee agreement. Plaintiff's counsel bears the burden of showing "that the fee sought is reasonable for the services rendered." Gisbrecht v. Barnhart, 535 U.S. 789, 807 (2002).

         Here, Magistrate Judge Ovington noted that Plaintiff and his attorney had agreed that attorney fees would be equal to 25% of any lump sum award that the Plaintiff received. Here, the $17, 550.00 in requested attorney fees was considerably less than 25% of the $94, 243.00 that Plaintiff was awarded in past-due benefits. Given that counsel spent 26 hours working on the case, this resulted in a hypothetical hourly rate of $675.00. Magistrate Judge Ovington found this to be a reasonable rate. She explained that, under Hayes, if this amount is viewed as the product of the applicable multiplier of 2, this translates to a "standard rate" of $337.50 per hour. She cited to numerous opinions from this District in which judges have approved hypothetical hourly rates above $700.00. Doc. #22, PageID##806-07 (collecting cases).

         Magistrate Judge Ovington also found that the hypothetical hourly rate of $675.00 was reasonable based on "the excellent results Plaintiff's counsel obtained in this case, " and on the risk inherent in contingency fee contracts. Id. at PageID##807-08.

         Relying heavily on Lasley v. Commissioner of Social Security, 771 F.3d 308 (6th Cir. 2014), Defendant objects to Magistrate Judge Ovington's findings. In Lasley, the district court held that plaintiff's counsel's request for a $26, 049.73 contingency fee constituted a windfall. Counsel had worked 35.5 hours on the case, resulting in an hourly rate of $733.80. The district court had reduced the fee to $12, 780.00, or $360.00 per hour. Other factors considered by the district court included "the delay in filing the § 406(b) motion, the Commissioner's opposition to the fee, and the 'brevity' and 'relative simplicity' of the representation." Id. at 310.

         The Sixth Circuit found no abuse of discretion. It noted that the hourly rate of $733.80 "grossly exceeded -indeed, more than quadrupled-the standard rates applied to social security fee requests in the Southern District of Ohio." Id. In support of this statement, the court cited to one district court case in which the court applied a "'conservative' hourly rate of $180, " and another in which the district court had applied an hourly rate of $165.00, equivalent to the rate approved in counsel's request for fees under the EAJA. Id.

         Defendant maintains that this case is analogous to Lasley. The hypothetical hourly rate of $675.00 is more than four times the EAJA hourly rate of $163.81 to which the parties stipulated. Docs. ##17, 18. Defendant cites to several recent cases in which judges in this District have approved hypothetical hourly rates in the range of $360.00-$400.00. This is approximately twice the standard EAJA hourly rate. Doc. #23, PageID##812-14 (collecting cases). Defendant asks the Court to reduce the hypothetical hourly rate from $675.00 to $400.00 and award a total of not more than $10, 500.00 in attorney fees.

         Defendant also argues that, as in Lasley, the issues involved in this case were not complex and, the large size of the award was attributable not so much to counsel's legal abilities, but to the fact that six years elapsed between the filing of the application and the award of benefits. ...


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