McGuire v. Sullivan
| Decision Date | 18 May 1989 |
| Docket Number | Nos. 88-1097,88-1143 and 88-1257,88-1109,s. 88-1097 |
| Citation | 873 F.2d 974 |
| Parties | , 25 Soc.Sec.Rep.Ser. 423, Unempl.Ins.Rep. CCH 14625A Ralph McGUIRE, Jr., Donna M. Gruber, Lura Green on Behalf of her son Adrian Green, and Lyle V. Marshall, Plaintiffs-Appellees, v. Louis W. SULLIVAN, M.D., * Secretary of Health and Human Services, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Donna J. Fuchsluger, Office of General Counsel, Baltimore, Md., for defendant-appellant.
Craig Allen Fobes, W. St. Paul, Minn., for appellee.
Before CUDAHY and MANION, Circuit Judges, and WILL, Senior District Judge. **
This is an appeal from the district courts' awards of attorney's fees in four social security cases. The claimants were granted awards after remand from the district courts to the Secretary of Health and Human Services (the "Secretary"). In each case, counsel had entered into a contingency agreement with the social security claimant. The Secretary opposed the fees as excessive, but the district courts awarded close to the full amounts requested pursuant to the contingency agreements. This appeal followed. We affirm two of the cases and remand two of them for additional findings.
In each of the four cases, the claimant's application for social security benefits was first denied by the Secretary and a complaint challenging that decision was filed in district court. The claimants, upon remand to the Secretary, were all ultimately successful in obtaining benefits. In the Gruber, Green and Marshall cases, the remands by the district courts were based in part on the revised criteria for mental impairments which were promulgated in the Social Security Disability Benefits Reform Act of 1984, 98 Stat. 1794, 1801-1802, Pub.L. No. 98-460 ("1984 Disability Amendments").
The attorney in all four cases was Craig A. Fobes whose Wisconsin practice from 1981 to 1986 consisted mostly of social security cases. He has handled such cases since August of 1974. He has regularly received difficult social security cases by referral from other attorneys in Madison and Eau Claire. The McGuire case is one such case received upon referral.
The trial court granted final judgment in June 1987 awarding Mr. McGuire Title II benefits. In July of 1987, Mr. Fobes request for attorney's fees for his work on the case under the Equal Access to Justice Act ("EAJA"), 28 U.S.C. Sec. 2412 was denied, because the position of the Secretary in contesting the benefits was found by the court to be substantially justified. As a result, in September 1987 Mr. Fobes requested that the court award him the lesser of $14,458.72 or 25% of Mr. McGuire's past-due benefits. In support of this request, Mr. Fobes referred to the contingency agreement made with Mr. McGuire and showed the court a record of 42.74 hours of legal service before the court. The Secretary opposed the fees as excessive, but on September 25, 1987, the court awarded $13,533.12.
The Secretary filed a motion to alter or amend the judgment which the court denied on November 16, 1987. In denying that motion and upholding the fee award, the court noted the factors laid out in Blankenship v. Schweiker, 676 F.2d 116 (4th Cir.1982) and also relied on the decision in Andrews v. Bowen, 640 F.Supp. 1001 (W.D.N.C.1986), vacated, 818 F.2d 28 (4th Cir.1987).
The district court distinguished from social security fee request cases the Supreme Court case of Pennsylvania v. Delaware Valley Citizens' Council, 483 U.S. 711, 107 S.Ct. 3078, 97 L.Ed.2d 585 (1987) in which the plurality limited the degree to which, in certain cases, a fee may be multiplied above a reasonable hourly rate. The district court pointed out that the Delaware Valley principles were applied to a fee-shifting statute, which requires that the fees be paid by the losing party. In contrast, fees under Sec. 206(b) of the Social Security Act are "awarded by the willing client who has entered into a contingency fee arrangement and thereafter has approved the arrangement." McGuire v. Bowen, No. 85-C-268-S, slip op. at 5 (W.D.Wis. Sept. 24, 1987).
The district court listed as factors in support of the fee request, the "tremendous success achieved," ibid., the skill of Mr. Fobes, the role of the contingency contract in securing legal representation for Mr. McGuire and the fact that the benefits would continue throughout Mr. McGuire's lifetime.
Mr. Fobes took Ms. Gruber's case after another attorney, experienced in the Social Security area, had declined to take it because of its difficulty. Ms. Gruber's case was remanded on November 15, 1984 for reconsideration of her mental impairments in light of the 1984 Disability Amendments. Mr. Fobes filed objections to the remand arguing in part that the question of whether an earlier application filed by Ms. Gruber had been reopened had to be resolved apart from whether she was disabled under the new amendments. Record at 14, pp. 2-3. Afterwards, Fobes and counsel for the Secretary stipulated to the reopening which made it possible for Ms. Gruber to receive three extra years of benefits. Mr. Fobes' argument that the Secretary had violated Ms. Gruber's rights pursuant to a court order in the class action, Mental Health Ass'n v. Schweiker, 554 F.Supp. 157 (D.Minn.1982), aff'd in part and modified in part sub nom., Mental Health Ass'n v. Heckler, 720 F.2d 965 (8th Cir.1983), was adopted by Magistrate Groh as a separate basis for the remand. Order of March 25, 1988, Record at 25.
In October 1986, Ms. Gruber was found disabled and in June the district court entered judgment awarding her Title II benefits. Mr. Fobes filed a request for attorney's fees for 42.37 hours of court-related legal services on the case, in the amount of $9,486.77 or 25% of Title II and Title XVI benefits. The court allowed the fees over the objection of the Secretary on November 18, 1988, in a decision which is published at 673 F.Supp. 970 (W.D.Wis.1987). In that opinion, the court referred to Judge Shabaz' earlier fee decision in the McGuire case. In addition, the court applied the Blankenship factors to the case at hand. The district court found the case to be a difficult one due to "roadblocks" raised by the Secretary and the unusual disability of Ms. Gruber and noted the skill of her attorney, the successful result achieved and the reputation and ability of the attorney. The district judge pointed out that the case had been taken by Mr. Fobes only after it had been declined by another attorney, that the fee was based on a contingency agreement and it was similar to other awards by district courts. In addition to the $9,486.77, the district court awarded $3,177.75 in attorney's fees to Ms. Gruber pursuant to the EAJA. The EAJA award reduces to $6,309.02 the amount to be paid to Mr. Fobes out of Ms. Gruber's past-due benefits. 1
Adrian Green's mother applied for Title XVI disability benefits on his behalf, but the application was denied at every step of the appeal process by the Secretary. Again, Mr. Fobes accepted the case after another attorney had refused it, Suppl.App., p. 23C, and filed a claim in forma pauperis in federal district court on May 30, 1985. Mr. Fobes persuaded counsel for the Secretary to stipulate to a remand pursuant to the 1984 Disability Amendments. The Secretary found Green disabled and the district court entered judgment in July 1987. In October 1987, Mr. Fobes requested $3,489.79 for attorney's fees for 3.24 hours of work on the Green case. The court allowed the fee, following the principles announced in Gruber and stating that the time spent representing the claimant in federal court alone was not an adequate measure for fees in a social security case.
After the Secretary denied Lyle Marshall's application for Title XVI benefits, Mr. Fobes filed on his behalf a complaint in forma pauperis on September 18, 1984. The district court, sua sponte, remanded the case to the Secretary for reconsideration pursuant to the 1984 Disability Amendments. Mr. Marshall was found disabled and the district court entered judgment on March 26, 1987. Mr. Fobes requested in November 1987 that the court allow him $5,600 or 25% of the claimant's past benefits for 5.6 hours of court-related services. The court approved the fee request and again announced that it was following the principles set out in Gruber.
In reviewing a fee award, we defer to "the district court's superior understanding of the litigation and the desirability of avoiding appellate review of what are essentially factual matters." Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S.Ct. 1933, 1941, 76 L.Ed.2d 40 (1983). Factual matters are, of course, reviewed under a clearly erroneous standard. Fed.R.Civ.P. 52(a). We reverse a fee award decision, only upon finding an abuse of discretion. Hagge v. Bauer, 827 F.2d 101, 111-12 (7th Cir.1987). Therefore, "[i]f reasonable persons could differ over the trial court's view, then the appellate court will not be able to find an abuse of discretion." Munson v. Friske, 754 F.2d 683, 696 (7th Cir.1985).
Section 206(b) of the Social Security Act ("the Act"), codified at 42 U.S.C. Sec. 406(b), governs the award of attorney's fees under Title II of the Act and limits them to twenty-five percent of past-due benefits. The relevant part of the section provides:
(1) Whenever a court renders a judgment favorable to a claimant under this title who was represented before the court by an attorney, the court may determine and allow ... a reasonable fee for such representation, not in excess of 25 percent of the total of the past-due benefits ... and the Secretary may, notwithstanding the provisions of ...
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