Unreported / Non-Citable
Background
Saul James Morales appealed the Commissioner of Social Security's denial of her benefits application in the U.S. District Court for the Eastern District of California. Morales had entered into a contingent fee agreement with counsel Jonathan O. Peña providing for attorney fees of up to 25 percent of past-due benefits awarded, and the agreement also contemplated that counsel would seek fees under the Equal Access to Justice Act, which would be refunded if the 25 percent contingency fee were paid. After Morales filed a motion for summary judgment, the parties stipulated to remand under 42 U.S.C. § 405(g) Sentence Four, and judgment was entered for the plaintiff. Counsel was awarded $5,500 under the EAJA at that stage.
On remand, the agency determined that Morales was disabled and entitled to past-due benefits. Three separate notices of award were issued: one for the claimant's disability benefits and two for child's benefits for two different children. The notices specified the amounts withheld for payment to counsel, totaling $22,345.50, $4,259.50, and $4,259.50. Counsel then moved for an award of $30,864.50 in attorney fees under 42 U.S.C. § 406(b). The Commissioner filed a response summarizing the applicable law but took no position on the merits of the motion.
The Court’s Holding
The magistrate judge explained that under 42 U.S.C. § 406(b)(1)(A), when a court renders a judgment favorable to a Social Security claimant represented by an attorney, the court may allow a reasonable fee not exceeding 25 percent of the total past-due benefits. Citing Gisbrecht v. Barnhart, the court noted that contingency fee agreements are unenforceable to the extent they exceed that statutory cap, and that courts must review contingent-fee arrangements as an independent check to assure reasonable results, considering the character of the representation and the results achieved, as well as any substandard performance, dilatory conduct, or fees excessively large in relation to the benefits received.
Applying that framework, the magistrate judge found that Morales was represented by experienced counsel who achieved a favorable result, including an order of remand, entry of judgment, and ultimately a substantial award of past-due benefits, with no indication of dilatory conduct, excessive delay, or substandard performance. Counsel's itemized bill reflected 24.4 hours of attorney time, yielding an effective hourly rate of $1,264.93, which the court found within the upper limits of reasonableness based on comparable Eastern District of California cases. The court also concluded the award would not amount to a windfall, because a comparatively high effective hourly rate is generally warranted to compensate counsel for the risk assumed in representing Social Security claimants, and the total was consistent with fee awards granted in similar cases.
The magistrate judge recommended that the motion for attorney fees be granted, that the Commissioner be directed to certify payment of a gross award of $30,864.50 to Jonathan O. Peña, and that Peña be directed to refund the previously awarded $5,500 EAJA fee directly to Morales. The findings and recommendations were submitted to the assigned district judge under 28 U.S.C. § 636(b)(1), with any party permitted to file written objections within fourteen days of service, and the parties were advised that failure to object may waive appellate rights.
Key Takeaways
- The magistrate judge recommended granting counsel's motion for $30,864.50 in attorney fees under 42 U.S.C. § 406(b), finding the amount within the statutory 25 percent cap on past-due benefits.
- The court applied the Gisbrecht and Crawford reasonableness framework, examining the character of the representation, the results achieved, and the absence of dilatory or substandard conduct.
- An effective hourly rate of $1,264.93, derived from 24.4 hours of billed attorney time, was deemed within the upper limits of reasonableness based on comparable district cases.
- The court concluded the fee would not constitute a windfall because higher effective hourly rates are generally warranted to compensate for the contingency risk in Social Security representation.
- Counsel was directed to refund the $5,500 EAJA fee previously awarded directly to the plaintiff, and the recommendations are subject to a fourteen-day objection period before the assigned district judge.
Why It Matters
This recommendation illustrates how district courts in the Ninth Circuit apply the Gisbrecht and Crawford framework to review contingent fee petitions under 42 U.S.C. § 406(b), confirming that effective hourly rates well above typical market rates can be approved when counsel achieves favorable results on a contingency basis. It also underscores the routine but important requirement that EAJA fees be refunded to the claimant when a larger § 406(b) fee is awarded from past-due benefits.