Unreported / Non-Citable
Background
Gustavo Betancourt sued in the Eastern District of California to challenge the Commissioner of Social Security's denial of disability benefits. After Betancourt moved for summary judgment and the Commissioner did not respond, the parties stipulated to a remand under sentence four of 42 U.S.C. section 405(g), and judgment was entered for Betancourt. Counsel, Jonathan O. Peña, was awarded $4,424.88 under the Equal Access to Justice Act (EAJA). On remand, the agency found Betancourt disabled and entitled to past-due benefits.
Counsel then moved under 42 U.S.C. section 406(b) for $20,069.53, relying on a contingent fee agreement allowing fees of up to 25 percent of past-due benefits and providing that any EAJA fee would be refunded if the full contingency fee was paid. Counsel's figures put the past-due award at $80,278.12, which makes the request exactly 25 percent. The magistrate judge noted it was unclear where the 35-page award notice states those totals and presumed counsel calculated them from the monthly benefit amounts, but observed that no one disputed the numbers. The Commissioner filed a response that summarized the governing law but took no position on the merits.
The Court’s Holding
This is a findings and recommendations document, not a final order. Magistrate Judge Gary S. Austin recommends that the district judge grant the motion. Applying Gisbrecht v. Barnhart's requirement that courts independently check contingent fee agreements for reasonableness, along with the factors in Crawford v. Astrue, the magistrate judge found that counsel was experienced, obtained a favorable result in the form of a remand, judgment and substantial past-due benefits, and showed no sign of dilatory conduct, excessive delay or substandard performance. Counsel's itemized bill showed 21 hours spent reviewing the administrative record and drafting the summary judgment motion, which the court found a reasonable time expenditure.
The resulting effective rate of $955.69 per hour was found to be within the upper limits of reasonableness. The court compared it with Eastern District decisions involving rates from about $1,326 to $1,553 per hour, and with one decision that reduced a $3,532.87 rate to $1,500. It concluded the award would not be a windfall, because the lodestar is only a guidepost and comparatively high effective rates compensate counsel for the risk of taking Social Security cases on contingency. It also noted that the total is consistent with other section 406(b) awards cited from the district, which ranged from $20,577.57 to $44,603.50.
The recommended relief has three parts: grant the motion, direct the Commissioner to certify payment of a gross award of $20,069.53 to counsel, and direct counsel to refund the $4,424.88 EAJA fee directly to Betancourt. The parties have 14 days after service to file objections, and failure to object may waive rights on appeal. Nothing has yet been ordered, and the district judge must still act.
Key Takeaways
- A section 406(b) fee request is capped at 25 percent of past-due benefits, but the court must still independently review the contingent fee agreement for reasonableness, even when the Commissioner takes no position.
- Here, an effective rate of $955.69 per hour on 21 hours was treated as within the upper limits of reasonableness, and the court stressed that the lodestar is only a guidepost in contingency cases.
- When counsel receives both an EAJA award and a section 406(b) fee, the EAJA amount goes back to the client, and the recommendation directs counsel to refund $4,424.88 directly to Betancourt.
- The recommendation is not yet an order. It goes to the assigned district judge, and objections are due within 14 days of service.
- The document is an unreported magistrate judge recommendation, so it is persuasive at most and carries no precedential weight.
Why It Matters
The recommendation shows how Eastern District of California judges routinely handle section 406(b) motions: confirm the fee is within the 25 percent statutory cap, apply the Gisbrecht and Crawford factors, and compare the effective hourly rate and total fee against recent local awards. It reflects that a rate near $1,000 per hour was not viewed as excessive in this setting, though the court's own cited cases show that rates well above that level have drawn scrutiny and, in one instance, a reduction.
Its weight is limited. It is an unpublished recommendation that has not yet been adopted, it rests on an unchallenged calculation of past-due benefits that the court could not trace to a specific page of the award notice, and it resolves only this fee request. Counsel and claimants should treat it as an example of reasoning, not as a rule that any particular hourly rate is presumptively reasonable.