Plas M. Allen v. Donna E. Shalala, Secretary of Health and Human Services
48 F.3d 456
9th Cir.
1995
Check Treatment

*1 The denial

AFFIRMED. Plaintiff-Appellant, ALLEN, M.

Plas SHALALA, Secretary of E.

Donna Services,*

Health and Human

Defendant-Appellee.

No. 93-35124. Appeals, States Court

Ninth Circuit. Sept. **.

Submitted

Decided Feb. * 34-4(c), 34(a); grants predeces- R.App.P. Cir.R. her 9th Shalala is substituted for Donna E. sor, Bowen, M.D., Secretary of Health unopposed Otis R. case appellee's motion to submit this 43(c)(1). F.R.App.P. Services. Human on the briefs. ** unanimously panel finds this case suitable argument. disposition without oral Fed.

457

BACKGROUND applied Security Allen for disability Social initial application benefits 1985. His was and, subsequently denied. He refiled follow- hearings reviews, ing numerous includ- appeal an Ap- the district peals Council found Allen to be disabled. Appellant then moved in the district court fee pursuant for a to 42 U.S.C. 406(b)(1), provides: which judgment Whenever a court renders a subchap- favorable a claimant under this represented ter was who before by attorney, the court determine allow part judgment of its a reason- representation, fee for able such percent of 25 excess of total past-due benefits to which claimant by entitled of judgment. reason such 42 U.S.C. The district court Wilborn, OR, Ralph Eugene, plaintiff- for hourly fees at an awarded lodestar rate of appellant. $150, giving weight no to the Ishem, Regional Ernest J. Assistant attorney.1 Coun- between Allen and his sel, WA, Seattle, defendant-appellee. for appeal This followed.

STANDARD OF REVIEW We review the amount of by fees awarded the district court for an LEAVY, Before: THOMPSON and Circuit abuse discretion. Drucker v. O’Brien’s TASHIMA, Judges, A. and WALLACE 1171, Moving Storage, 963 F.2d 1173 Judge.*** District (9th Cir.1992). An abuse discretion occurs TASHIMA; Opinion Judge Dissent if district apply the cor Judge LEAVY. clearly rect or law rests its decision on finding fact. erroneous United States v. TASHIMA, Judge: A. WALLACE District Plainbull, 724, Cir.1992), 957 F.2d 725 appeal This is an from the district court’s Co., citing Broadcasting Hunt v. National awarding decision appel- to the 289, (9th Cir.1989). Interpreta 872 F.2d 292 (Allen appellant) lant Allen Pías M. or attor- question subject tion of statute is a of law ney’s provided fees far lower than the fees to de novo review. United States v. McCon percent contingent agree- under the 25 (en Cir.) banc), ney, appellant attorney. ment his denied, cert. U.S. S.Ct. argues Appellant court erred L.Ed.2d 46 by computing the fee under the lodestar method, weight given with no to the contin- DISCUSSION gent agreement. jurisdiction We have pursuant review the district decision Appellant challenges court’s the district court’s First, to 28 U.S.C. decision two bases. he contends *** Tashima, $4,117.50 (for Hon. A. Wallace Dis- States awarded fees 27.45 California, services). Judge, sitting percent trict Central District of the benefits hours $8,632.45. by designation. appellant would be forth in Kerr v. the twelve factors set Screen

that our decision Guild, Inc., (9th Cir.1987), Cir. upon which the district Extras denied, light 1975), relied, longer binding in cert. no (1976),3 intervening decision 48 L.Ed.2d 195 one which Court’s *3 82, attorney Mitchell, accepted employ 110 495 the fact that the Venegas v. (1992). Second, he a 1679, 74 ment on basis. L.Ed.2d 109 binding still argues even if Starr is that in a applied the lodestar method We first refusing court erred precedent, the district 406(b)(1) case, § In that we case Starr. figure, in multiplier to the lodestar apply a fee award where the district vacated fee contract between light contingent the gave contingent “great weight” to 25% these attorney. We examine him and his plaintiff the and his at- issues seriatim. arguments torney. rejected that the dis- We contingent treat a fee ar- trict court should Method A. the Lodestar Use of and presumptively as fair reason- rangement proper on split the meth The circuits have able, noting district court does not “[t]he that attorney’s calculating under od of routinely approve sit fee con- Second, 406(b)(1). Sixth, and Seventh § security claimants and tract between social “contingency” adopted the Circuits Instead, F.2d their counsel.” 831 at 874. method, under the court uses the con which begin in- the court to instructed tingent for the fee contract the basis Supreme quiry “with the Court’s directive effect, it, award, treating presumptively point starting most for de- ‘[t]he that useful Sullivan, v. 907 F.2d 367 Wells reasonable. termining the is amount a reasonable fee (2d Bowen, Cir.1990); Rodriguez v. 865 F.2d reasonably expended the number of hours Cir.1989) (en (6th banc); v. McGuire 739 litigation multiplied by a the reasonable ” (7th Cir.1989). Sullivan, 974, 873 F.2d 980-83 874, citing hourly rate.’ F.2d at Hens- 831 433, Eckerhart, 424, ley v. 461 U.S. 103 S.Ct. Circuit, Fourth, along with the This 1939, 40 76 L.Ed.2d This lode- Circuits, rejected Fifth, Eighth the and has adjusted by star amount then be consid- in favor the “lodestar” contingency method ering the Kerr factors. calculating Craig Depart fees. v. method of Serv., approach the Starr two Health and Human 864 F.2d We reaffirmed ment of Sullivan, Bowen, (4th years 1167 Cir.1989); later v. 866 F.2d 324 Brown v. 917 Straw (9th Cir.1989). (5th Cir.1990); analysis in v. Central to our F.2d Cotter Cir.1989).2 recognition both and was a F.2d Under the lodestar Straw Security peculiar in the context of Social approach, the court first determines a rea claims, compensation hourly multiplies Then it “while the rate. sonable encourage reasonably ex must be sufficient to members by rate the number of hours representation pre the undertake of dis- pended litigation on the arrive bar to. claimants, disability from ability This the sumptively lodestar reasonable normally adjusted by paid, considering which the amount then be 1) only and are: the time labor re- not the ones in Those factors Section 2) applies quired; novelty difficulty ques- the method of which this Circuit the of the example, calculating involved; 3) fees. For requisite perform the skill tions n follow awarding approach attor- the lodestar 4) preclusion legal properly; service ney's See, fee-shifting fees under federal statutes. accep- employment due to other Deukmejian, e.g., F.2d Gates v. case; 5) fee; 6) customary of the tance Cir.1992) (fees 42 U.S.C. under 7) contingent; time the fee fixed or whether 1988). permissible § It is also one meth- imposed the client or circum- limitations attorneys' determining fees in ods of stances; 8) results the amount involved Compare Washington fund In re common cases. obtained; 9) experience, reputation, and abil- Sys. Litig., Supply Sec. 19 F.3d Public Power 10) attorneys; undesirability ity of the (9th Cir.1994) (approving use of lodestar meth- case; 11) profession- length of the the nature and Paul, Johnson, od) (WPPSS), Alston & Hunt with client; 12) relationship awards al (9th Cir.1989) Graulty, (approv- v. Kerr, 526 at 70. similar cases. F.2d method). percentage use of of fund Second, already-inadequate stipend sup- Venegas deals with a statute, § port maintenance the claimant and his which lan- differs both in Starr, guage purpose quoting 831 F.2d at and in As a dependents.” statute, Weinberger, attempt MacDonald Straw, Cir.1975); regulate prevailing parties pay at 1169.4 what must attorneys.

their As the Court noted in Vene- Nevertheless, appellant gas, “§ argues that in losing 1988 controls what the defen- light in dant pay, prevailing plain- Court’s decision must what the Venegas we tiff pay lawyer.” must now abandon the lodestar must his Id. Section 406(b)(1), hand, approach adopt ap speaks directly other disagree. proach plaintiff eases. We what a pay must his or her own *4 lawyer. Venegas, civil plaintiff rights In the in a judgment spite inapplicability

action a favorable at trial. In the Venegas obtained to method, 406(b)(1) § using the appellant argues The trial lodestar that attorney’s fees Venegas calculated reasonable and because the Second Circuit relied on pursuant method, in plaintiff, rejecting that sum to the the lodestar we should Wells, § a to 42 statute. do the In U.S.C. same. the Second Circuit attorney plaintiffs attempted then to considered for the time proper first the statutory award, calculating collect in method attorney’s fees excess reasonable pursuant contingency Relying § to a contract with the fees opinions under § plaintiff. Circuits, The trial court ruled that 1988 from the and Sixth Seventh Wells attorney prohibit collecting adopted contingency did not the the rather than the statutory fees in excess of the and the lodestar at method. 907 F.2d 370-71. In addition, upheld Venegas authority Court that decision. cited Wells for rejection of the lodestar method. Id. at why Venegas are several There reasons 369-70. Because we not do write on a clean adoption does not affect our of the lodestar slate, agree analysis whether we with the in method Starr and Straw. Venegas point. in contained is a moot Wells First, Venegas explicitly did not deal with hold, Venegas suggest, or even proper calculating method of reasonable that a look to a should first fees, disapproved it nowhere lode- contingent determining a when contract star method used district court in Rather, attorney’s Court reasonable arriving attorney’s at a reasonable fee award. implicitly principle reaffirmed the that What the Court held was that once reason- use must the lodestar when method attorney’s able fees have been calculated— computing reasonable fee awards using approach the lodestar successful —a § under at at 1988. plaintiff may obligated pay nevertheless be to sum,, nothing Venegas sug- 1682-83. In in his or more her under terms of 406(b)(1) gests interpretation §of in that our separately negotiated contingent fee con- Straw and was incorrect. Starr tract. U.S. at 110 S.Ct. Venegas suggest Consequently, reject does not that the lodestar we are not free to inappropriate method was means deter- lodestar method and Wells. follow mining any binding precedent. under or fees Straw continue be statute; Thus, provides depart- other it no for err basis we hold the trial did not approach calculating from the lodestar in in established this Circuit. based on the lodestar method. concerns, desperation. attorneys working In addition to and that for a these other courts adopting approach expressed the lodestar have past-due might percentage benefits have security concern some social claimants have perverse prolong process. incentive to the claims impairments mental ity intelligently that interfere with their abil- See, Sullivan, e.g., Krig v. 143 F.R.D. negotiate contingent fee con- Sullivan, (N.D.Fla.1992); F.Supp. Frazier attorneys, tracts with their that claimants (M.D.Ala.1991). 1511, 1516-17 unwisely enter into contracts out of or Agreement apply multiplier to the lodestar fee Contingent

B. Consideration of initially calculating the lodestar. if the argues that even dis Appellant Davis, 976 F.2d at 1549. applying the lode correct trict court were method, However, increased the inapplica- it should have are Dague star Davis Davis, account of con Dague amount to take ble to the instant case. Appellant bases his tingent contract. Venegas, with statutes. like dealt multiplier noted, his claim that request a risk As is not a fee- Security attorneys be- shifting Social statute. It strikes a balance successful lawyers third of the fíléd encouraging represent less than one tween claimants, already ability protecting federal court. inadequate stipend most claimants receive. Starr, that while a we held nothing inconsistent There starting point, con- be contract is allowing scheme tingency factor that be considered is one of a existence determining a Neverthe- reasonable fee. agreement, long as it factor balances that less, courts have cautioned that cannot Nothing we have with the others identified. contingency factor use to subsidize Dague or Davis alters the scheme we losing appellant plaintiffs, as here claims of *5 adopted Starr and Straw. noted, quot- requests. As the district court Straw, “this subsidization funda- respect to the consideration contin- With depend who mentally factor, unfair to the claimants gency potential this as enhancement recoveries, upon WPPSS, is] con- [and back benefit Dague more than case is like trary protect congressional WPPSS, intent to claim- rejected specifically In we Davis. limiting at ants fee awards.” 866 F.2d application Dague’s to common fund cases. contingency, 1171. court consider The agree Dague’s ... rationale We many only competing one of factors but as barring multipliers statutory risk fee arriving at a reasonable fee. operate multipli- risk cases not to bar fund common eases. ers

Up point, agree to this we district must, omitted). However, (footnote reasoning. WPPSS, we none- court’s 19 F.3d at 1299 theless, this case because the district analogy remand common fund The cases on apparently based decision a be- neither clear: involves any to afford impermissible fee-shifting payment lief that it is of a and both concern class) (or contingency. consideration all The reasonable fee client client court, City Burlington his, relying attorney. trict v. her or its own — -, Dague, S.Ct. remand, Thus, on district should (1992), City and Davis v. L.Ed.2d appellant’s contingency arguments (9th Francisco, County San chooses, if it may, contingency so factor 406(b) Cir.1992), that, held “While section of a into its determination statute, here is not a reason- this will Whether to what extent factor ing regarding contingency enhancement un- ultimately fee is matter affect the analysis applies.” der the lodestar within the court’s discretion. Dague, In held that a Court CONCLUSION determining an award of reasonable we, like Were the Second Circuit fees under various Wells, slate, writing on a clean we award above statutes cannot enhance However, as a reached different result. that the attor- lodestar amount reflect three-judge panel of this ney was retained on a fee basis. controlling precedent. depart from free to Davis, Dague applied and held: McCormick, v. 510 n. 5 Nichols Dague rejection represents outright denied, Cir.1991), cert. 502 U.S. contingency a factor relevant 1226, 117 L.Ed.2d fee; it would establishment of part, part REVERSED in seem AFFIRMED to be immaterial whether consid- contingency deciding and REMANDED. eration occurs LEAVY, Judge, dissenting. Circuit America, UNITED STATES Hogan Judge followed the method of calcu- Plaintiff-Appellee, by starting

lating with the Bowen, required by v. v. Cir.1987), F.2d 872 and Straw v. (9th Cir.1989). con- He then DAMME, John Louis VAN sidered the factors set forth in Kerr Defendant-Appellant. Inc., Guild, Screen Extras F.2d 67 Cir.1975), which include con- 93-30325, Nos. 93-30338. Judge In light tracts as a consideration. Appeals, States Court of Hogan’s I concur in ma- cannot Ninth Circuit. jority’s decision to remand for a recalcula- tion. Argued and Submitted June remands, majority because departed incorrectly district court from our Decided Feb. precedent by considering reasonable, presumptively contract but

the basis that the district court failed Specifically,

consider the at all. majority finds that “district

apparently based its on a decision belief impermissible

it any to afford consider- contingency.” Op.

ation at toall at 460. The

majority bases its conclusion on the fact that eases, cited to

although § a fee-shifting is not stat-

ute. Id. at The district court’s

however, clearly distinguished fee-

shifting Having eases. made distinction, the district court dis- then plaintiffs argument par-

cussed the that his practice

ticular war- talents exclusive

ranted an enhancement. record does permit conclusion the district rejected any consideration of inher-

ent type litigation, this nor Thus, fee contract at issue. permit record does inference

the district court abused discretion $4,117.50

finding To be a reasonable fee. contrary, the record shows that carefully

trict court plaintiffs considered the

arguments as well as Cir- the settled Ninth precedent.

cuit view, my being the district court is told already what it has I considered.

would affirm.