Crawford v. Astrue

CONCLUSION IV. CRAWFORD, Plaintiff, Clara the district court abused We hold that v. applying

its discretion in erroneous le- review, gal failing properly ASTRUE, standard of Michael J. Commissioner and the hardships Security Administration, consider the balance the Social interest, public entering an overbroad Defendant-Appellee, remand, injunction. On district v. apply the rational basis level scru- Shapiro, Real-party- Brian C. tiny Appellees to determine whether have in-interest-Appellant. demonstrated likelihood of success on The district court must also merits. Ruby Plaintiff, Washington, Appellees determine demon- whether have v. likely irrep- strated that are to suffer preliminary arable harm in the absence of Astrue, J. Michael Commissioner of the relief, equities tips whether the balance of Security Administration, Social in the favor the three Appellees, Defendant-Appellee, whether public supports interest v. entry injunction. of an If the finds Young Cho, Real-party-in- Appellees, narrowly favor of it must interest-Appellant. any injunctive specific tailor relief to the by Appellees. threatened harms raised Daphne Trejo, Plaintiff, M. injunc- granting prеliminary The order v. REVERSED; preliminary tion is in- VACATED; junction is case is Astrue, Michael J. Commissioner of the REMANDED to the district court for fur- Security Administration, Social proceedings opin- ther consistent with this Defendant-Appellee, against Appellants ion. The claims HRC ripe. are as not DISMISSED The motion Bourgeois Haley, Real-party- Denise portion to strike that of Appellees’ brief in-interest-Appellant. that addresses the Title claim VII GRANTED.18 06-55822, 06-55954, Nos. 06-56284. Appeals, States

United Ninth Circuit. Argued and Submitted June 2009. Filed Nov. and, ion, grant except dresses the Title VII claim. We to the extent that the court, motion to strike. upon light reconsideration of this disposition, preliminary injunction issues a as rules, Washington plaintiffs

18. The named employers, new and their Administrative 246-869-010, may Code sections 246-863-095 and be enforced in accordance the law filing opin- effective as of the this Washington. date of of the state of Rohlfing, D. Santa Fe Lawrence CA, parties for in inter- Springs, the real est-appellants. Robinson, Department E.

Michael DC, Justice, defen- Washington, dant-appellee.

I. In each of presented the three cases review, Security the Social Administration (“SSA”) denied a claim for benefits. Each attorney claimant retained an to challenge the administrative action federal court. of the represent- Each three claimants was KOZINSKI, ALEX Before: Chief a different by attorney: ed Brian Shapi- C. SCHROEDER, MARY M. B. Judge, Crawford; represented ro Young Clara FLETCHER, PREGERSON, HARRY represented Ruby Washington; Cho and REINHARDT, STEPHEN J. ANDREW Bourgeois Haley represented Denise KLEINFELD, BERZON, MARSHA S. Daphne Trejo. M. three attorneys All RAWLINSON, B. JOHNNIE RICHARD were affiliated with the Lawrence D. CLIFTON, BEA, R. CARLOS T. and N. firm, Rohlfing (“Rohlfing”) which spe- law SMITH, Judges. RANDY Circuit Security cializes Social matters. case, signed each the claimant a written Opinion by Judge BETTY B. contingent-fee agreement under which the FLETCHER; Partial and Concurrence paid any would be 25% of past- by CLIFTON; Judge Partial Dissent due benefits awarded to the claimant. The by Judge Dissent BEA. court district each remanded case back to FLETCHER, BETTY B. Judge: Circuit SSA, eventually awarded sub- three appeals past-due We review consolidated stantial to each benefits claimant. that one present overarching issue: Did The subsequently filed motions the district court follow the mandate of district pursuant court to U.S.C. Barnhart, Gisbrecht v. of requesting fees less than the (2002), past-due 152 L.Ed.2d 996 in de- 25% of benefits which their termining amount attorney-client fees fee agreements provided. lawyers successfully case, awarded to rep- who In each the Commissioner of Social (“Commissioner”) Security disability resented Security Social insur- declined to as- (“SSDI”) ance claimants in position federal court sert a on the reasonableness of under contingent-fee contracts? We hold the fees attorneys.2 in each case that did not. objected We vacate the of the None claimants to the re- grant Nevertheless, courts’ orders and the attor- quested fees. the district neys contingency-based re- court each case awarded significantly quested. than attorneys sought.3 lower fees 1. appealed The three orders the Cen- from In each properly district court 3. them, tral District California. Two reduced the fee award the amount of attor- Barnhart, 00-cv-11884, v. No. and neys’ already paid government Crawford Barnhart, 03-cv-06884, Washington v. No. Equal Access to Justice Act by Magistrate were Judge decided Nakazato. ("EAJA”). See 28 U.S.C. 2412. A district third, Barnhart, 98-cv-05662, Trejo No. may award fees under both the EAJA by Magistrate Judge was decided Block. 406(b), 42 U.S.C. and “but the claimant’s must refund claimant “plаys part The Commissioner in the fee amount smaller fee.” resembling determination trustee of a (quotation U.S. 122 S.Ct. 1817 the claimants.’’ at 798 n. U.S. ‍​‌​​‌​‌​​‌​​​‌​​​‌​​​​‌‌‌‌​​​‌‌‌​​​​​‌‌‌‌​​‌‌‌​‌‍omitted). alteration 6, 122 S.Ct. 1817. rates, inflation rates (Real-party-in-interest parative A. Crawford presented Shapiro) Shapiro were reasonable would result a lodestar fee of remand, the SSA awarded Crawford On however, $5,907.14. concluded, The court Twenty- $123,891.20in past-due benefits. had not burden of Shapiro met his $30,972.80. percent five $21,000, convincing the court that a fee of (16.95% $21,000 fee of Shapiro court found a 256% represented which the awarded). sup- To lodestar, over was rea- “enhancement” motion, evi- Shapiro presented port his did Shapiro noted that sonable. his own he 19.5 hours of dence that regarding “data his firm’s suc- present time on paralegal and 4.5 hours of would cess rate that enable the Court Rohlfing case. Because the Crawford’s in the risk his firm assess assumed ba- only contingent-fee on a operates firm claim- representing security social benefits (1) that sis, presented evidence Shapiro ants the Central District of California” rates, charged hourly average small firms that expertise and determined counsel’s inflation, accounting for of after $272.72 already had been taken into account in the associates, and for partners, for $186.54 hourly comparative The court there- rate. (2) upper- paralegals; for that the $93.82 fore found that the constituted a “wind- posi- hourly charged rates for each decile fall” and that “substantial reduction $272.72, $366.54, in small firms were tion concluded, warranted.” court (3) The $130.91, [was] respectively; and its explaining reasoning, without that plaintiffs’ income average gross of small the lode- high- percent 40% enhancement over firms was 30-40% contingency about court of all star fee would be reasonable. The average gross income er than $8,270.00, pre- also fee of of the law firms combined. He awarded a or 6.68% small a lawyer representing evidence that benefits. sented could an- claimants federal court SSDI Washington (.Real-party-in-interest B. of payment only about 35% ticipate Cho) (1) granted courts cases because district of only in SSDI about 6% benefits cases remand, Washing- On SSA awarded time, the 48% of cases $76,041.00 past-due Twen- ton benefits. an SSDI the distriсt court remanded which of ty-five percent that bene- agency, case to the SSA awarded $19,010.25. $11,500.00 sought a fee of Cho aid the fits 60% of the time. To about (15.12% awarded). of the Cho request, court’s evaluation of his 17.45 presented evidence that he requested that he Shapiro noted the fee parale- of his time and 4.7 hours of hours equivalent to 3.55 times the lodestar on the case. introduced the gal time Cho for reasonably calculation and accounted hourly that comparative same rate data his representing the risk he assumed in as that Shapiro presented, well as evidence contingent-fee on a basis. client faster legal the costs of services had risen justifying the cost of living, than was no court found that there for in the ninth decile of rates $429.95 overreaching” negotiation in the “fraud or associates, for partners, $319.90 that contingent-fee agreement, of the 25% paralegals. Finally, pre- for Cho the 25% $153.55 fee was within same data 406(b), sented the success-rate boundary Shapiro and that set as did Cho noted resulting Shapiro. in SSDI cases unnecessary delay no caused determining fees in class-action accumulation back benefits. that courts an undue hours, multipliers com- cases had also found that the securities found The court acknowledged contingent- 3 to 4.5 the lodestar were reason- The court over able. agreement providing 25% past-due benefits awarded and found judge magistrate

The same who decided there was no evidence of fraud or over- Washington. also decided inAs Crawford reaching by agree- counsel in making the Crawford, the court found that there was “high ment. The court noted the quality overreaching” in making no “fraud or representation provided ... which ulti- agreement, contingent-fee mately fully resulted deci- favorable sought fee Cho fell within 25% statuto- sion awarding years over twelve back boundary less than ry and was the fee pay, Washington agreed to and that benefits” and found there was no ex- there delay” was no “excessive attributable to cessive Haley. attributable to counsel. The court also found that court Haley’s also found that economic presented economic Cho were reason- data Nevertheless, data were reasonable. Nevertheless, able. found that Haley found that the fee sought was found repre- First, unreasonable. finding that 1.5 sented 82% “enhancement” over the hours of paralegal claimed time and 1.4 $6,303.95 was lodestar unreasonable. hours of attorney claimed time im- were Crawford, inAs the court noted that Cho properly attributed to the federal court provided no regarding had data his law action, the court reduced the hours worked firm’s success rate and Cho’s skills attorney to 25.5 hours of time and 1.1 already for in were accounted determining Second, hours of time. paralegal as in hourly the reasonable rate. The court also Washington, and the court noted Crawford (1) that: did found “counsel not have to do Haley provided had no data regarding persuade much work to the Commissioner her law firm’s success rate that Ha- remand,” stipulate to to a a fee ley’s already skills were accounted for in representing multiplier a 3 to 4.5 over the determining the reasonable rate. lodestar would be unreasonable because Third, the found that there no was Security Social are not as complex cаses or firm precluded evidence that the from expensive as class-action litiga- securities employment by other accepting Trejo’s Concluding tion. the requested fee case and that case any did not involve “windfall,” represent would a the court unduly short time limits. The court con- applied a 40% enhancement to the lodestar cluded that “plaintiffs counsel has done fee, without why explaining percent- wholly job inadequate convincing the age increase would result a reasonable sought that the 279% enhancement $8,825.53, fee. a fee awarded ... is reasonable under the circumstances 11.61%of past-due or benefits. presented,” and that a reasonable enhance- Haley) $6,325.20 Trejo (Real-party-in-interest ment over the C. lodestar be would not, however, 100%. explain The court did remand, On Trejo SSA awarded why a 100% enhancement would be rea- $172,223.00 in past-due Twenty- benefits. sonable. The court determined that a rea- percent $43,055.75. five of that amount is $12,650.40, sonable fee would be about or (13.94% Haley $24,000 sought a fee of 7.35% of the past-due benefits. awarded.) pre- benefits She sented evidence that 26.9 she hours II. of her time and of paralegal 2.6 hours presented timely appealed on the case. three She also the same comparative hourly rate data district courts’ fee orders. We and success consolidat- rate data as Shapiro argument. did and Cho. ed the cases for We review

1147 paym is not losing party responsible fees court’s award of Gisbrecht, 802, § ent.5 535 at 122 42 abuse U.S. pursuant U.S.C. Astrue, 529 Ct. 1817. Also in to fees award Clark v. F.3d S. contrast of discretion. Cir.2008) (9th statutes, (citing fee-shifting ed under under which 1211, Allen v. 1213 (9th Cir.1995), Shalala, 456, “nothing prevents attorney pre F.3d Gisbrecht, fees, vailing party from gaining other additional grounds abrogated 1817). contract, client,” 799, from pursuant “The his own at 535 U.S. at if id. 122 S.Ct. the court-award abuses its discretion it does district court only way fee is ed successful SSDI legal standard or apply the correct attorney per may recover fees for work clearly its decision on a erroneous rests fact, formed before district court. fact.” at 1214. We review finding of Id. attorney it is a criminal offense for an interpretation de novo the district court’s collect in excess of allowed Id.; those Mudd v. Barn of a statute. see also 406(b)(2); (re the court. 42 U.S.C. see also (4th Cir.2005) hart, 418 F.3d 806-07, 122 S.Ct. court’s inter viewing de novo the district 1817.6 406(b)). pretation of U.S.C. attorneys routinely SSDI enter into con-

A. tingent-fee agreements specifying that 406(b), a court 42 U.S.C. enter Under any past-due fee will 25% of be judgment in favor of an SSDI claimant ing recovered, providing thus “may represented who was statutory represen- maximum of if the part judg as of its determine allow tation is successful. See representa a reasonable for such ment Contingent- U.S. 122 S.Ct. 1817. tion, percent not in excess of 25 the total agreements were at already prevalent 406(b) to which the claim past-due enacted, § benefits was at see id. by judg 805, 1817, of such ant is entitled reason 122 pro- S.Ct. and agreements 4 In un viding ment.” contrast to fees awarded for 25% of past-due fees of benefits fee-shifting provisions such 42 der as have since become the common fee “most 1988, paid by arrangement § U.S.C. fee is claim between and Social awarded; 800, Security Id. past-due ant out of the benefits claimants.” at S.Ct. 406(b)(1)(A) pay attorney provides, 4. far less of the total Section than 25% benefits recovered. judgment fa- Whenever court renders subchapter this vorable to claimant under may petition attorney 6. An also fees for for represented by who was before representing at a claimant the administrative attorney, may the court determine and al- 406(a). 406(a) § level. 42 U.S.C. Section part judgment low as of its a reasonable fee past- may exceed the not lesser of 25% representation, for such not in excess of 25 $5,300. due benefits or U.S.C. percent past-due of the total of the benefits Gisbrecht, 406(a)(2)(A)(ii), (iii); § U.S. at to which the claimant is entitled reason 795, statutory (noting 122 S.Ct. 1817 judgment, of such and the Commissioner of $4,000 $5,300 by regu- limit increased to Security certify may ... Social 2002); lation in 67 Fed. Red. 2477. The 25% payment attorney of such fee for to such out 406(b) cap attorneys' only § fees in limits to, of, not in the amount of addition for amount of fees awarded past-due benefits. such representation before the court. It 406(b) only does 5. are based on the not limit combined fees awarded Section recovered, 406(a) representation past-due § under before the amount of even for benefits continuing representation entitled to SSA and under for where claimant is Clark, 795, аt before the district court. 529 F.3d benefits. See Thus, may actually 1218. the claimant S.Ct. does specify 1817. The statute not how with determining a reasonable fee award 406(b)(1)(A) respect courts should determine whether a re- “the primacy attorney-client lawful quested fee is reasonable. See id. (noting agreements,” id. at text”). Rather, “the inconclusive statute’s “looking first contingent-fee to the agree only provides the statute that the fee must ment, reasonableness,” then testing exceed 25% id. at 122 S.Ct. 1817. The Court awarded. noted that courts had followed this split Before the circuits were model had “appropriately reduced the at regarding to address ambiguity how this torney’s recovery based on the character belonged the statute. We of the representation and the results the of circuits which ‍​‌​​‌​‌​​‌​​​‌​​​‌​​​​‌‌‌‌​​​‌‌‌​​​​​‌‌‌‌​​‌‌‌​‌‍used the lodestar method representative achieved.” Id. A fee result to determine a reasonable fee under ing from a contingent-fee agreement 406(b). v. Apfel, See Gisbrecht 238 F.3d unreasonable, subject and thus to reduc (9th Cir.2000); 1197-98 see also Al- court, tion if provided len, 48 F.3d at 458. Under the lodestar substandard representation or engaged method, the district court determines a dilatory conduct in order to increase the by multiplying reasonable fee the reason- past-due benefits, accrued amount of or if able rate the number of hours large “benefits are in comparison to reasonably expended on the case. Gis- the amount of time counsel on the brecht, Although 238 F.3d 1197-98. case.” Id. an aid “[A]s to the court’s as district court could sessment of contingent consider the the reasonableness of the fee yielded by agreement,” the fee agreement nature of the fee but “not in determin- as a basis for satellite litigation,” the court ing a reasonable we held failure may require provide counsel to a record of to do so was not an abuse of discretion. the hours worked and counsel’s regular See id. at 1199. Three other circuits re- hourly billing charge noncontingent jected method, the lodestar giving instead cases. Id. bears the burden attorney-client effect to the contingent-fee establishing that the fee sought is rea agreement resulting unless the fee was 807, 122 sonable. Id. at Sullivan, unreasonable. See Wells v. 907 Supreme The Court made clear (2d Gis- 367, Cir.1990); F.2d Rodriquez v. why brecht courts must start with the con- Bowen, (6th Cir.1989) 739, 865 F.2d tingent-fee agreement in SSDI cases. (en banc); Sullivan, McGuire v. 873 F.2d The Court explained that the lodestar 974, (7th Cir.1989); 980-81 see also Gis- method was developed to implement fee- brecht, 535 U.S. at 122 S.Ct. 1817 statutes, shifting which against assess fees cases). (listing losing party the and which prevent do not Gisbrecht, the Supreme flatly Court attorney the from seeking additional fees rejected our lodestar approach. The Gisbrecht, from the client. See 535 U.S. explained Court that we had “erroneously 802, 806, at 122 S.Ct. 1817. SSDI attor- 406(b) § read customary to override attor- fees, neys’ contrast, are not shifted. ney-client contingent-fee agreements” They are paid from the past-due award of when we approved the use of the lodestar and the amount of up the to fee, .Gisbrecht, to determine a reasonable past-due benefits, 25% of is based on the 808-09, 535 U.S. at 122 S.Ct. 1817. The agreement between the and the Court held that a district charged 803-04, client. See id. at 122 S.Ct. 1817.7 explained, As the pre- Second Circuit ain mon-like arbiters of 'reasonableness' between Gisbrecht shifting "since there is no opposing prevailing plaintiffs interests of 406(b), § fees under courts need not be Solo- (1992), L.Ed.2d 449 and the rule of con- forbid- to embrace use Congress chose compensate lawyers who to tingent ding contingency to enhancements com- claimants. When Con- represent non-payment pensate SSDI the risk of to Social Securi- gress 566-67, added shifting cases. See id. at S.Ct. from contingent paid ty Act in apply 2638. These rules should not where already norm. were past-due benefits paid the fee is the client under (discussing 122 S.Ct. See id. parties. agreement negotiated between history). legislative amendments’ under-compensates lodestar method contingent-fee displace agree- Rather than rep- for the risk assume ments, to ad- amendment meant resenting claimants and ordinarily SSDI problem imple- their particular dress a produces remarkably smaller fees than Attorneys entering were into mentation. produced by starting be would reserving Congress what re- agreements A contingent-fee agreement. district to garded fees” one-third as “exorbitant use court’s of the lodestar determine a benefits, often for one-half of ultimately thus works reаsonable fee easy in which the would cases claimants disadvantage of SSDI who delay in in- purposefully cause order to any past-due counsel need to recover bene- accrued benefits the result- crease the at all. fits time, At the same Con- ing See id. fees. that fee should gress was mindful awards B. adequate encourage repre- be sufficient to Supreme Court Gisbrecht has 806, 122 See id. at sentation of claimants. given the district courts direction how to Wells, 1817; also 907 F.2d at 370 see contingent for a request evaluate (contingent-fee agreements “effectuate 406(b). “ap- Courts objective of securing ade- [CJongress’s 406(b)] fee determinations proach^ security quate for social representation claimants”). agree- looking contingent-fee first to the backdrop, this Against Con- ment, 406(b), then says testing noth- it for reasonableness.” gress enacted 1817; contingent-fee agree- 122 S.Ct. ing discourage Mudd, ments, opting cap (recogniz- 25% instead see also 418 F.3d at 428 805, 122 fees. 535 U.S. at methodology). See Because ing this same no in how SSA has direct interest much of how goes the award to counsel and much demonstrates, history Congress As this person, to the disabled have considered duty to assure has affirmative implications allowing negative policy fee is reasonableness of the established. methodology to the lodestar drive SSDI duty begin, un- Performance of that lode- prevalence fee Given the of awards. Gisbrecht, agreement, der the fee and with context, fee-shifting star in the calculations the amount question is whether need courts are familiar the normal reduced, be not whether loadstar “strong These include the lodestar rules. be enhanced. An examina- should lodestar rea- that the is the presumption” in these cases tion of the awards makes City Burlington v. Da- fee see sonable 2638, starkly that the district courts gue, evident Rather, contingency agreement the context of losing because a defendants. Wells, (in- security claimant evaluates F.2d at 371 ‍​‌​​‌​‌​​‌​​​‌​​​‌​​​​‌‌‌‌​​​‌‌‌​​​​​‌‌‌‌​​‌‌‌​‌‍particular successful social case.” attorney, primary pays omitted). court's his own ternal citation on the reasonableness of the focus should be Instead, in path. respect “primacy did not follow this direct attorney- of lawful mandate, agreements.” client fee contrast to Gisbreeht’s the dis U.S. at S.Ct. 1817. Lawful attor “rest[ed] trict courts’ decisions lodestar ney-client contingent agreements fee rejected] primacy do calculations and not result in modify “enhancements” that attorney-client agreements.” lawful fee might lodestar otherwise be too 793, 122 535 U.S. at Rather, they low. “primary are the Here, in each the client by means” which fees are determined. Id. signed providing a contract that the attor 122 S.Ct. 1817. The district courts’ ney any past-due would receive 25% of methodology these cases under-empha following appeal benefits awarded to the contingent-fee sizes the agreements, con district court. In determining a reason travening Court’s instruction fee, the district proceeded able courts con agreements be primary means trary requirements Gisbreeht for determining the fee. beginning with a lodestar calculation. These vividly cases demonstrate the del- compared Each court the lodestar fee to eterious effect of a district court’s failure award, and referred to to recognize the distinction between fee- the difference between two as “an shifting cases and involving payment eases order, enhancement.” In each the district by the claimant from his benefit award. expressed the “enhancement” aas All of the normal language lodestar percentage of the example, lodestar for methodology are accounted for in the dis- court noted that the requested Crawford trict fees, court’s orders: reasonable rea- fee would have represented a 256% en hours, sonable and an “enhancement.” hancement over the lodestar —and found generally Lodestar fees will be much less that each enhancement would be a “wind than contingent fees because the lodestar lawyers. fall” to the Each court then add method tends to under-compensate attor- percentage ed a of the lodestar to enhance neys for the risk undertook in repre- fees, the lodestar choosing 40% for the senting their clients and does not account and Washington cases and 100% Crawford for the fact that the statute limits attor- Trejo case. Had the district court neys’ percentage fees to a of past-due ben- awarded the full fees contracted recovery efits and allows no from future parties, in these cases would benefits, may far past- exceed the $19,010.25 ranging have received fees from due Crawford, benefits awarded. $43,055.75. Instead, they received example, the district court awarded 6.68% $8,270.00 ranging amounts from of the past-due benefits. From the lode- $12,650.40. The fees awarded ranged view, star point of premium this was a from past-due 6.68% 11.61% of the ben 40% over the lodestar. It seems reason- efits awarded. Put way, another the dis able. But from contingent-fee point trict courts reduced the contractual view, 6.68% of benefits was over between 53.57% and 73.30%.8 73% less than the contracted fee and over By beginning with the lodestar calcula- 60% than less the discounted fee the attor- tion, the district plainly courts ney failed to requested.9 Had the district court attorneys 8. The sug- in these cases themselves substantial reduction from the amounts for gested provided provided. that the full which the contracts 25% agreements their fee would be unreasonable. attorneys Trejo Washington in were They sought ranging therefore fees from rеduction, respective- dealt a and a 23% 47% awarded, to 13.94% of the 16.95% ly, requested. from the fees list of factors to be considered agreement, definitive contingent-fee the with started be a strik- recognized judges a 6.68% fee would it the ending with because agree- parties’ from the ing reduction are accustomed to mak- our district courts underscores ment. This difference in a ing reasonableness determinations starting with the importance practical variety (quotation and wide of contexts.” just and not agreement contingent-fee omitted)). may alterations an enhancement. viewing as properly reduce the fee for substandard exten- quote orders performance, delay, The district court or benefits that are They even cursori- sively from Gisbrecht. spent to the time on the proportion not representa- of the the character ly discuss at case. S.Ct. and not noting that it was skillful 1817. As evidence of the reasonableness tion— concluding the re- dilatory may —before resulting require the court a windfall to represent fee would quested counsel to a record of hours submit of lan- parroting But this attоrneys. hourly billing and a statement of normal not mean that guage from does Gisbrecht charges. Supreme Id. The Court did ac- actually applied its district courts knowledge that court could the district clear, make teachings. As the orders calculation, only consider the lodestar but courts in these cases started assessing as an aid in the reasonableness adjusted calculation and then the lodestar of the fee. See id. na- contingent account for the upward to con- representation. This is ture of the reasonable Applying Gisbrecht’s di- trary Court’s clear test, attorneys we hold that ness court must first rective that the district these cases met their burden to demon adjust agreement the fee and then look to they requested fees were strate attorney provided sub- if the downward First, reasonable. no reduction delayed or representation standard was war performance due substandard case, result requested if the fee would or Nothing ranted. in the district courts’ 122 S.Ct. in a windfall. See id. perform opinions suggests counsels’ 1817; at 746 Rodriquez, also 865 F.2d see anything ance other than excellent. (“In the court chоoses not to the event case, In each demonstrated agreement, to the terms of the give effect found) (and courts that there the district for the record the deduc- it should state overreaching was no evidence of fraud or made and the reasons there- being tions making contingent-fee 25% fore.”). high- agreements they provided and that quality representation which resulted C. receiving past-due clients substantial their here are reasonable The fees Second, benefits. no reduction mandated Gisbrecht. test warranted, dilatory conduct was as the a de- Although provide did not Gisbrecht attorneys in caused no exces these cases con- list of factors that should be finitive accu sive which resulted in an undue a fee is determining whether sidered Finally, benefits. mulation of factors should be reasonable or how those fees, significantly which were directed the lower weighed, bargained for in the lower than the fees “the character of the courts to consider agreements, were not ex contingent-fee repre- representation and the results cessively large in relation to the bеnefits Gisbrecht, 535 U.S. sentative achieved.” Mudd, achieved. In each counsel voluntari 1817; see also (“The comparison the fees in provide ly evaluated F.3d at 428 Court did 1152 on the case. In each D.

amount of time voluntarily reduced those counsel A separate adequate ground substantially from the allowable 25%. vacating for the orders these cases is attorneys percentage will receive no why the district courts’ failure explain paid to the the substantial future benefits percentages by they enhanced following repre- claimants their successful produced their lodestar calculations a rea signifi- sentation. The assumed fee in Although sonable each case. cases, accepting cant risk in these includ- district court has discretion to determine a ing the risk that no benefits would be fee, it provide reasonable “a concise a long awarded or that there would be explanation but clear of its reasons for the resolving court or administrative Eckerhart, Hensley fee award.” 461 the cases.10 424, 437, 1933, U.S. 103 S.Ct. 76 L.Ed.2d a long, long Counsel have waited (1983). Here, although 40 each district payment, and have borne the costs of explained very general on a level appeal they this out of the fees to which requested that the fee would result petitioners’ are entitled. force To counsel attorney, windfall to the each court failed multiply by diminution of those fees to relate its “enhancement” of the lodestar going through separate three and unneces to the circumstances of the individual case. sary court proceedings would be See, Sacramento, e.g., City Moreno v. completely unjustified. question be (9th Cir.2008) 534 1112 (noting F.3d fore the district courts whether that where the district court awards a fees sought petitioners are reasonable. substantially reduced it must “articu See reasoning its specificity”); ] more late! (holding that 42 U.S.C. “in Deukmejian, Gates v. 987 F.2d structs courts to review for reasonableness (9th Cir.1992) (as (“the amended) use of yielded by [attorney-client contingent- percentages” does “discharge!] Wells, agreements.”); fee] see also district court responsibility from its to set (“[B]ecause F.2d at 371 a successful social forth a but explanation ‘concise clear’ of its security pays claimant evaluates and his for choosing given reasons percentage attorney, own primary court’s focus reduction”). should be on the reasonableness of the addition, the district courts’ orders contingency agreement in the context of a Trejo and misconstrue na- case.”). particular Crawford Because we have held ture of the risk assessment focusing on reasonable, nothing fees are re the firm’s overall success rate instead of mains the district courts to indo these specific facts that a given make case cases, except to award those fees. The more or risky less for the firm. For exam- Supreme Court in Gisbreckt held that “sat ple, Crawford, the district court faulted ellite litigation” over fees should failing the firm for “provide[ any data ] encouraged. not be See regarding firm’s success [the] rate Accordingly, U.S. would enable the Court to petitioners we hold that assess the risk entitled to the fees which assumed firm in representing [the] and remand so- security with instructions to cial award benefits claimants the Cen- fees. tral District of California.” This misstates example, years 10. For it took over six agency. court remanded it to the Trejo's SSA to resolve case after the district courts, us, not to and burden, to show to the district which is attorney’s the on the courts that the expertise based the of the district fee is reasonable A district case. in particular referenced Gisbrecht v. facts of amount of a fee reduce the Barnhart, 789, 808, cannot court generally success- a firm is simply (2002)- because (“Judges 152 L.Ed.2d Rather, court should look the district ful. to mak district courts are accustomed our in the and risk involved complexity at the in determinations ing reasonableness how to determine case issue specific contexts, variety wide and their assess taking in firm assumed much risk the matters, in in the event of an ments such case. ordinarily highly re qualify appeal, review.”) spectful III. majority opinion poor courts inverted the sets a exam- the district

Because analysis prescribed Gis- It reasonableness for district courts to follow. orders ple brecht, attorneys proved rates, and because into payments that translate and none of their fees the reasonableness attorneys parale- both in court orders grounds the district in Washington, in Craw- gаls, $875 $519 unreasonableness, we direct the establish But, Trejo. in as described ford, and $902 attorneys their grant district court in Judge dissenting in more detail Bea’s the district We VACATE requested fees. majority opinion provides no opinion, and REMAND with instruc- orders courts’ why awards explanation of these serious pay the attor- to order the SSA tions why they repre- or do not are reasonable fees they requested, less neys the fees It instructs district sent “windfalls.” EAJA, and to re- already under the paid complexity to “look at the and risk courts of the withheld lease the balance specific in the case at issue to involved to the claimants. much risk the firm as- determine how REMANDED WITH VACATED case,” supra at taking sumed INSTRUCTIONS. require- comply but it does not with itself, Washington not even ment CLIFTON, Judge, with whom Circuit court found that where the district joins, concurring Judge KOZINSKI Chief “very little risk.” counsel faced claimant’s dissenting part: part finding acknowledges, supra It that the dis- agree I Trejo case that by the district proper stan- apply did not trict courts attorney time and 1.5 reported 1.4 hours of the amounts of fees determining dard properly paralegal time did hours represented who awarded аction, but it relate to the federal I thus con- claimants in these cases. attorney the full awards the claimant’s still III-A, I, II, and III-B of cur in sections reduc- requested, with no amount of majority opinion. inappropriate time entries. tion for the majority’s with the order agree I do not is no It to me that there is not obvious attorneys be awarded the that claimants’ made any requests of the fee “windfall” however, and they requested, amounts It not nec- attorneys. would claimants’ respectfully I dissent. that order from of discretion essarily constitute abuse instead be remanded so The cases should court to decline to award district courts can de- respective the at- requested. Awarding full amounts by applying termine reasonable brings an end to torneys ask for assigned what That is task proper standard. remand, a than requiring this matter without the district courts decided was rea satisfy obligation not our majority but does sonable. The reaches this deci the interests of the protect the statute to regardless sion of the fact that the district themselves, past from whose claimants courts were more familiar than we are money tаken. In future benefits difficulty, any, with if of these cases cases, district courts should do as we attorneys much work how did on say, not as we do. Essentially, disagree each case. we majority how the reads Gisbrecht v. Barn BEA, with whom Judge, Circuit hart, 789, 535 U.S. 122 S.Ct. SMITH, and N.R. Circuit RAWLINSON (2002), L.Ed.2d 996 the most recent deci join, dissenting: Judges, Supreme topic sion from the Court on the how much an This is a case about attor- attorneys fees in think SSDI cases. We ney get paid successfully repre- for should majority faults the district courts for claims senting govern- someone who doing something namely considering the — incorrectly security ment withheld social attorneys amount of time the worked on (“SSDI”). disability In benefits each of each Supreme case—that Court re appeal, plaintiffs these cases here on Gisbrecht, quired them to do. Under we government a claim with filed think the district courts did not abuse their they eligible were disabled and therefore by finding discretion fee security The agency SSDI. social disa- unreasonable, amounts were or in award greed with each of them. After gov- ing attorneys a lower amount claims, ernment denied the each claimant based on attorneys the amount of time the an appeal govern- hired Therefore, spent on each case. we would ment’s decision. The contract between the affirm the decisions below. attorneys claimants and their stated the magistrate judges The below did not pay attorneys claimants would per- by awarding abuse their discretion attor- they cent of the benefits receive if their neys’ fees of less than the amounts re- cases, appeal succeeded. In SSDI suc- Astrue, quested. See Clark v. 529 F.3d plaintiffs cessful are entitled to an award (9th Cir.2008). 1211, 1213 A lower court in an equal to the sum of the (1) applies abuses its discretion if it monthly payments they would have re- (2) legal incorrect standard or makes fac- government approved ceived had the their tual findings illogical, implausible, disability claim plaintiffs initially when or however, support filed them. bereft of the record. Congress, decided Id. magistrate judges contracts between SSDI The here claimants careful- attorneys ly and their must applied be reviewed a the method outlined in Gisbrecht judge, attorneys Barnhart, and that the prove 122 S.Ct. judge the amount of fees (2002), opinion L.Ed.2d 996 and each request are “reasonable.” each of these fully supported by the record. The cases, the district courts decided the re- majority chastises magistrate judges quested fees were unreasonable following for not but then fails attorneys awarded the a smaller share of Therefore, to follow it themselves. we the disabled claimants’ recovered benefits majority think the has itself abused its than attorneys sought. what the in ignoring own discretion the standard of review, evidence, re-weighing the and en- decides the gaging in Therefore, appellate finding. fact As the requests were reasonable. Supreme emphasized, pay disabled clients must their Court district court larger disability judges magistrates, appellate share of their making achieved.” judges, are “accustomed U.S. in a wide gave determinations reasonableness two contexts, variety of and their assessments examples of when should matters, appeal, in the event of an in such attorney’s recovery reduce an under such re ordinarily qualify highly respectful contingent arrangement: when 808, 122 view.” Id. at attorney responsible for an unrea- recovering sonable in benefits for governing this case The statute states (because attorney the claimant “a fee should may that the court allow reasonable not in excess of not from the accumulation representation, profit unpaid for such of the total bene- percent during delay); benefits “when 406(b). Gisbrecht fits....” U.S.C. are in large comparison benefits judge the trial an requires perform amount of time counsel on the case.” spent contingent fee ar- independent “check” Id. they yield rea- rangements “to assure any no claim There is here that particular in cases.” Gis- sonable results attorneys in three pur- cases before us Barnhart, brecht posely delayed proceedings pile up so as to (2002). 1817, 152 L.Ed.2d 996 The unpaid larger pot benefits into a to divide issue of this case is whether the trial sole Instead, with the client. at issue here is an

judges’ rulings constitute abuse of dis- whether the benefits to large counsel are in of 42 application cretion their U.S.C. comparison to the amount of time coun- 406(b) by interpreted as the Court sel spent on the case. To make that deter- Gisbrecht. mination, permits Gisbrecht the trial court Supreme Court held to require “the claimant’s ... solely courts must not consider the ... as an submit aid to the court’s assess- (reasonable spent lodestar method hours ment the reasonableness of the fee rate) hourly a reasonable for multiplied yielded by agreement, the fee a record of calculating reasonable spent representing hours the claimant cases. The lodestar method was SSDI lawyer’s and a statement of the normal designed oppos- to balance interests of hourly billing charge noncontingent-fee ing parties fee-shifting statutes. ‍​‌​​‌​‌​​‌​​​‌​​​‌​​​​‌‌‌‌​​​‌‌‌​​​​​‌‌‌‌​​‌‌‌​‌‍specifical- cases.” Id. The Attorneys representing claimants SSDI ly left it to a district court’s discretion to paid recovery fees from the a amount of decide what reasonable client, opposing par- disabled not from the spent to be on a case entailed. ty. claimants cannot afford typically SSDI magistrate judges The here each fol- Thus, attorney’s hourly virtually fee. process all a in lowed the outlined Gisbrecht. attorneys charge contingency fee Again, they contingency these cases. U.S.C. First examined the may percentage sets the maximum be agreements. compared Then each charged for a claimant in representing dis- amount of the fee award to the trict court at percent past attorneys amount of time the spent. To recovered. magistrate judges making aid the such a comparison, attorneys submitted rec- attorney’s

To determine the amount of and, ord of their hours statistics on the fees to be awarded when the claimant is average hourly comparable rate for attor- successful, any a court first looks at contin- neys their billing lieu of own gent-fee agreement reasonableness only because take cases on a charge on the character of representa- “based representative contingency tion and the results the basis. information, the the reasonableness of the time the considering this assess

After The grant attorney spent found that to on a case. actual magistrate judges request- amount of their provides the full amount of time case result in wind- judge fees would the trial with a reference amount to contingency ed аttorneys. magistrate determining falls for the whether the use consequently granted smaller attor- judges receive a A windfall can would windfall. neys’ computations based on only by comparing fee awards be identified the re- spent plus the amount of hours substan- quested amount with a reference amount. Here, percentage. judges given tial bonus the trial were three parties: contingent amounts reasoning why as to majority’s amount, the amount at- here is in- magistrate judges wrong were torney, and the reference —or “lodestar”— First, majority the states the adequate. judges amount. The trial found the re- they magistrate judges erred because quested amounts to be a “windfall”—an- give “primacy” contingent- failed to way saying requested other of amounts agreements. Op. fee See 1150. We do were not reasonable —and considered an majority might mean not know what adjustment upward from the reference But it mean- by this term. cannot be the Therefore, judges amount. spent here ing “primacy” as used in Gisbrecht.1 explaining why time the court needed to Supreme re In increase the reference amount. “rejected primа versed us because we majority, recognizing The perhaps attorney-client cy agree of lawful fee “primacy” is thin reed from which to ments.” Id. at 1817. This hang opinion, magistrate its dismisses the easily statement is understood in context. judges’ contingency discussion of fee 406(b), Prior to the enactment of contin to, agreements as mere or lip-service par- gent-fee agreements preva were the most of, roting quite Gisbrecht. This is a cavali- paid lent method which SSDI claimants sincerity er on the our magis- assault 803, 122 attorneys. their Id. at S.Ct. 1817. judges, hardly “highly respectful trate rejected Our error was that we had this Supreme review” the Court instructed us frequently most used method apply to to those most “accustomed to negotiate and SSDI claimants used fees. to making reasonableness determinations.” unlikely The Court held it was 808, 535 U.S. at S.Ct. 1817. Congress intended contin ban gency agreements altogether fee and re majority says skeptical it is whether place solely application them with courts’ magistrate judges adequately consid- method, particularly of the lodestar be contingency agreement ered the be- cause thе lodestar method developed cause each used the term “enhance- 406(b). years Congress after enacted they compared ment” when 806, 122 Id. at amount of fees to the amount of and the reasonable rate. majority attempts clarify

When the But, the choice of the term “enhancement” meaning “primacy,” up ends re- placing “primacy” “exclusivity.” supported That is Gisbrecht itself. de- scribing method of determin- interpretation simply contrary approved to Gis- brecht, reasonableness, encourages ing district courts Gisbrecht relied date, Primacy being is defined as "the no other circuits have addressed the state To (as order, rank).” importance, first or meaning "primacy” in Gisbrecht. (2009). Dictionary Merriam-Webster's Online opinions, including significant in accepting representa- several other McGuire risk (7th Sullivan, 974, 979, 981 tion, 873 F.2d awarding significant then fee based Cir.1989), which refer to “enhancements” litigation on the risk of would indeed be a and “risk enhancements” over a lodestar “windfall.” discussing

figure when whether contin- majority devotes all of three sen- Thus, agreement gent-fee is reasonable. discussing tences to what would bе reason- this one word does not reflect an use of (1) why. able fees and It asserts the fees analysis. improper requested were reasonable at- because the majority may The second reason the torneys requested less than the full 25% magistrate judges’ doubt the decisions is contingency allowed under the agree- significantly that the fees award were each (2) ment; the attorneys will not receive a lower than the amount. In oth- percentage of the SSDI claimants future words, er does not like the benefits; “attorneys assumed major- final That judges result. significant risk in accepting cases, these fees, ity higher have awarded how- would including the risk no benefits would ever, magistrate does not mean the judges be awarded or that there would be a long in apply- abused their discretion and erred court or administrative in resolving ing Gisbrecht. the Op. case.” at 1152. The attorneys’ magistrate judges awarding found choices to requested reduce their fees tell requested the fees would result in a wind- only they us too were loath somewhat attorneys.2 fall for the majority does to seek the full amount of fees as written magistrate judges not discuss how the in the An attorney contracts. must still findings erred in their requested the requested reasonable, show the amount is attorneys; fees would be a windfall for the merely requested amount is nor does the even discuss what admittedly less than an higher, unreason- discretionary defines the in properly range able amount.3 magistrates which the could find a wind- The second reason is a red herring; however, It magistrate judges, fall. is the future benefits are never available under court, and not this who the best know 406(b) and cannot contribute to assess- cases, pleadings, the the effort by invested ing whether a particular request fee attorney, each and all other relevant fac- is reasonable. assessing requested tors in whether the directly The third contrary fee awards were reasonable. famil- reason is to This iarity magistrate specific findings is decisive. If the judges magistrate the the There, judge found that the did not assume a in Washington. magis- the good apply analyses, 2. "Windfall” seems like a term to factors found in lodestar such as the large See, to a fee award if “the benefits are in e.g., the case. comparison to the amount of time the attor- McClellan, Cal.App.4th Padilla v. ney spent on the case." Id. at 122 S.Ct. (2001) Cal.Rptr.2d (assessing matter, "type difficulty the and of the coun- required sel's skill vis-a-vis the skill to handle only 3. SSDI is not the field of the law where case, age experience, counsel’s and attorney contingency subject contracts gave time and attention counsel supervision to court based on reasonableness. outcome"). and the See also Revised Code of injury contingency Personal fee contracts for Washington (providing judicial 4.24.005 representation pro- of minors and all sorts of review of fees based on factors bate court matters come to mind. In these cases, required,” and contingency agree- such as "time labor in all tort courts review actions). many ments for and reasonableness use of the numbers, say, specific opposed the facts of the case those as to judge trate found 103%, fiat; by judicial they heavily in favor of the 45% or do not weighed SSDI claimant, explain percent- demonstrated the how reached these which Instead, “very losing Washing- risk” of the case. ages. took оn little and Crawford Yet, ton, about majority says not word magistrate judges explained his dis- why magistrate judge abused they increased 40% (a) lodestar, making finding. this factual So cretion because there was above (b) of our application much for standard plaintiffs no excessive coun- Trejo, mag- In persuade review. to sel was able Commissioner Crawford explicit remand, find- judges ultimately did not make stipulate leading istrate to to a case, but ings losing However, about the risk of to the favorable decision. difficulty case in considered the of the judges refused to increase the fee 256% (that (that assessing quality representation. Crawford) requested or 82% (1) every ease in- importantly, Most SSDI Washington) because of loss. If that factor is suffi- volves risk counsel did not meet his bur- Crawford requested attorneys cient to show fees are to the risk of accepting den show reasonable, reduced district courts will be justified representation his (2) stamping contingency to rubber fee re- amount4; counsel did not have to do quests. persuade much work to the Commissioner stipulate Washington', remand Similarly, support there is no counsel incurrеd little risk majority’s position reversing mag- Washington, because it was so clear that judges’ necessary istrate orders is to as- Trejo, had erred. magis- ALJ sure SSDI claimants have a of attor- corps judge trate increased the fees 100% choose, neys from to be sure to (1) attorney provided high because adequate representation. receive This (2) quality representation although musing by any support lacks reaching there was excessive Further, in this record. if a redistribution decision, plain- ultimate it was not due to money, palliate awarded to the claim- of However, judge tiffs counsel. refused disability, ant’s between the disabled (1) 279%, to increase the fee because attorney and his needed to claimant is provide counsel did not data on her firm’s counsel, adequate plaintiffs’ make available (2) rate; success there was no evidence the a policy consideration to be ad- attorney precluded from other em- by Congress, dressed not the courts. case; ployment acceptance due to of the Perhaps strongest in sup- contention require the case did not short timе port reversing the decisions below is limitations. magistrate judges precise- did not Sacramento, City Moreno 534 ly explain computations led to (9th Cir.2008), their fee F.3d we held magistrate judges awards. The provide specific district ex- applied either a 40% or 100% risk-factor courts planation for reductions of upward enhancement to the lodestar fee Moreno, computed in than greater each case. Admitted- awards 10%. how- ly, magistrate ever, judges appear reducing to reach involved a district court an found, part, attorneys representations 4. The district court take on counsel who similar purpose determining failed to meet his burden because he failed to that matters for the Otherwise, provide contingent data on the success rate of his firm. the courts would risk. attorneys plaintiff’s specific punish The success rate of firm is successful and reward in- relevant; competent attorneys. it is the success rate of all agreements, request based on the district the district court determines attorney did re- the fees were reasonable. court’s determination should not have been dundant work and (like court, If we overrule the district we specific hours the attor- remunerated Gisbrecht) Supreme Court did spent on the case. ney claimed to have should remand these cases to those courts id. at 1112-14. When See to make the reasonableness determination disregards and eliminates some of at- in these cases. Gisbrecht did not hold that hours, easily the court can torneys’ billable contingent agreements, if not in excess arithmetically. explain its reductions benefits, percent of 25 a contin- a district court determines When Gisbrecht, presumptively reasonable. factor, however, gent risk arithmetic is U.S. S.Ct. 1817. Gisbrecht insufficient. gives instead plaintiff Trejo re- example, For showing sought burden “the fee $24,000, which quested was 14% is reasonable for the services rendered.” $172,223 unpaid benefits to the award Id. at 122 S.Ct. 1817. For these magistrate alone, claimant. The awarded SSDI if magistrate reasons even benefits, $12,650.40, unpaid or 7.3% of the applied courts these decisions Gisbrecht by taking multiplied the number of hours incorrectly, only giv- we can remand after average hourly comparable rate of ing clarifying them instructions. The Su- ($6,325.20) doubling аnd then preme Court has shown remand is the attorney’s that fee to take the risk of not procedure correct when district courts into account. the ma- getting paid Would misapply the in determining attorneys law jority require magistrate judge to ex- cases, judges SSDI because district plain exactly how he arrived at 100%? magistrate judges, not appellate court Supreme Court made clear we judges, making are “accustomed to reason- rely expertise should on the lower courts’ ableness in a variety determinations wide to make reasonableness determinations. of contexts.” U.S. Lastly, though even

overruled this Circuit it re- reasons, respectfully For these ‍​‌​​‌​‌​​‌​​​‌​​​‌​​​​‌‌‌‌​​​‌‌‌​​​​​‌‌‌‌​​‌‌‌​‌‍we dis- manded “for recalculation of counsel fees sent.

payable from the claimant’s bene-

fits.” Id. 793. The here criti- magistrate judges

cizes and overrules the Then, failing to follow Gisbrecht. fiat,

judicial it refuses to follow Gisbrecht’& merely, It

direction. states we “[b]ecause reasonable,

have held fees are nothing remains for the district courts to BENDER, Debtor, P. re William cases, except do in these to award those fees” and then awards the fees Congrejo LLC, Investments, in each of these cases. Washington liability limited court, Op. appellate See at 1152 . The company, Appellant, most, can what trial determine error, did was but should remand to the whether, Mann, Chapter court to Diane M. upon determine Trustee, according “primacy” Appellee. contingency

Case Details

Case Name: Crawford v. Astrue

Court Name: Court of Appeals for the Ninth Circuit

Date Published: Nov 4, 2009

Citation: 586 F.3d 1142

Docket Number: 06-55822, 06-55954, 06-56284

Court Abbreviation: 9th Cir.