Webb v. Richardson

• Citation: 472 F.2d 529
• Decision Date: 20 December 1972
• Docket Number: No. 71-2010.,71-2010.
• Parties: Glendal B. WEBB, Plaintiff-Appellee, v. Elliot L. RICHARDSON, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

472 F.2d 529 (1972)

Glendal B. WEBB, Plaintiff-Appellee, v. Elliot L. RICHARDSON, Defendant-Appellant.

No. 71-2010.

United States Court of Appeals, Sixth Circuit.

December 20, 1972.

James L. Kelley, Office of Legal Counsel, Dept. of Justice, Washington, D. C., for appellant; L. Patrick Gray, Asst. Atty. Gen., Eugene E. Siler, U. S. Atty., Kathryn H. Baldwin, Atty., Department of Justice, Washington, D. C., on brief.

Henry R. Wilhoit, Jr., Grayson, Ky., for appellee.

Before EDWARDS, McCREE, and KENT, Circuit Judges.

McCREE, Circuit Judge.

The Secretary appeals from the allowance of attorney fees to a claimant's attorney in the amount of 25% of accrued benefits awarded at the direction of the District Court. We agree with the Secretary that the fee fixed by the court was not reasonable in the circumstances of this case, and we remand for reconsideration.

Claimant first applied for disability benefits in 1961. This application was denied by the Social Security Administration and judicial review was not sought. In February 1965, claimant filed a second application, which was denied through the first two levels of the administrative process. Claimant then retained attorney William C. Kibbey to represent him. Mr. Kibbey represented claimant at a hearing in September 1965 and in a subsequent appeal to the Appeals Council, which affirmed the hearing examiner's denial of benefits.

Mr. Kibbey then filed a complaint in federal court in July 1966, pursuant to 42 U.S.C. § 405(g), seeking review of the administrative action. The Secretary filed an answer and a motion for summary judgment. Kibbey filed a brief in opposition to the motion, and the Secretary then filed a reply brief in March 1967. In April 1967, the District Court, sua sponte, entered an order continuing indefinitely this case and twenty-one other Social Security cases, and the court renewed this order approximately every six months for the next three and one-half years. In January 1971, the court denied the Secretary's motion for summary judgment and remanded the case to the Secretary with directions to enter an award of benefits retroactive to February 1964. The Secretary did not appeal that decision.

In March 1971, Mr. Kibbey moved the District Court to allow him a fee of 25% of the total award. Attached to the motion was a contingent-fee agreement under which the claimant agreed to pay Kibbey 25% of all benefits awarded, a statement signed by the claimant that the fee sought was fair and reasonable, and a statement of Mr. Kibbey in which he supported his request on the ground, inter alia, that he was counsel in numerous other recent Social Security cases in which the Secretary's denial of benefits had been affirmed, with the consequence that he recovered nothing for his efforts. Mr. Kibbey's statement also included a general description of what he had done on behalf of the claimant, and averred that his representation of the claimant at the higher administrative levels and in court "required extensive study of the medical evidence and review of the applicable law." No itemization of time was provided.

The court postponed decision on the motion until the Secretary should have calculated the amount of the benefits due claimant. Following the determination that the award amounted to $19,273.60, Kibbey moved to be allowed a fee in the amount of $4,818.37, one-fourth of the total award. Filed with Kibbey's motion was the affidavit of a former member of the local county bar association minimum fee committee who opined that the fee sought was fair and reasonable. The Secretary filed a response to the motion in which he opposed allowing 25% of the total award because approximately 40% of the award had accumulated during the four-year delay between the time of the filing of the last brief and the rendering of judgment, because Kibbey had not itemized the time spent on research and preparation of the pleadings and brief, and because there were no complex factual or legal issues involved in the case.

On June 29, 1971, the District Court entered an order granting Kibbey's motion for a fee of 25% of the total award. The court gave no reasons for its action and did not find specifically that the amount claimed was "reasonable." The Secretary has appealed this order.

The authority for the fixing of the attorney fee by the District Court is provided in section 206(b) of the Social Security Act, 42 U.S.C. § 406(b) which reads, in pertinent part:

(b)(1) Whenever a court renders a judgment favorable to a claimant under this subchapter who was represented before the court by an attorney, the court may determine and allow as part of its judgment a reasonable fee for such representation, not in excess of 25 percent of the total of the past-due benefits to which the claimant is entitled by reason of such judgment. . . . In case of any such judgment, no other fee may be payable or certified for payment for such representation except as provided in this paragraph.

The Secretary claims that the fee awarded in this case was not "reasonable" within the meaning of section 206 (b). We agree, but not entirely for the reasons urged by the Secretary.

Appellant's primary contention is that the court erred in considering the work performed by Kibbey before the administrative agency. That the court did consider this work is obvious, the Secretary contends, both from the size of the award and from the fact that Kibbey's motion referred to this work in attempting to justify the maximum allowable fee. The Secretary contends that it is well-settled that the court can award a fee only for the services performed before it, and that an attorney must apply to the Secretary for allowance of a fee for work performed before the agency.

Appellee's response is, first, that the Secretary did not present this contention to the District Court and therefore cannot now raise it on appeal, and, second, that the Social Security Act permits a court to award a fee based on all the work performed by an attorney in a case, including work performed before the Secretary.

We agree with the Secretary that we should consider this issue. We do so primarily because a determination whether the fee was reasonable necessarily involves an analysis of the factors upon which the court relied in making its discretionary decision. "Where an exercise of discretion properly goes into a trial court determination of whether to grant or deny particular relief, the grounds upon which the order is based are those upon which it must be judged." Oser v. Wilcox, 338 F.2d 886, 893 (9th Cir. 1964). Cf. Bentley v. Palmer House Company, 332 F.2d 107, 109 (7th Cir. 1964). Moreover, the question whether the District Court properly considered work performed before the Secretary by the attorney presents "a simple legal issue," Buckeye Cablevision, Inc. v. United States, 438 F.2d 948, 952 (6th Cir. 1971) to be resolved on the basis of admitted facts, and certainly it can be said that this disability case is one of those "exceptional cases" in which the interests of justice require us to decide this legal issue. See Hormel v. Helvering, 312 U.S. 552, 557, 61 S.Ct. 719, 85 L.Ed. 1037 (1941). Finally, since we are remanding the case for reconsideration of the fee, we believe it appropriate to make clear what legal services may be considered in fixing reasonable compensation for the attorney.

Before 1965, there was no provision in the Social Security Act authorizing a court to award attorney fees for the prosecution of a successful review of the Secretary's action. Section 206 did, however, authorize the Secretary to regulate attorney fees charged for performing services before him:

The Secretary may, by rule and regulation, prescribe the maximum fees which may be charged for services performed in connection with any claim before the Secretary under this subchapter, and any agreement in violation of such rules and regulations shall be void.

42 U.S.C. § 406 (1964). Pursuant to this section, the Secretary promulgated regulations establishing a schedule of fees for representation at certain levels of the administrative process, with a provision for higher fees upon approval by the Secretary for good cause shown. See Swotes v. Gardner, 392 F.2d 428, 431 (3d Cir. 1968); Chernock v. Gardner, 360 F.2d 257, 258-259 (3d Cir. 1967); Sheppard v. Flemming, 189 F.Supp. 571, 572 (S.D.W.Va.1960). Court decisions unanimously held that this statutory provision did not give the Secretary power to establish attorney fees for representation of a claimant before a court. See, e. g., Gonzalez v. Hobby, 213 F.2d 68, 69 (1st Cir. 1954); Carroll v. Celebrezze, 228 F.Supp. 24 (N.D.Iowa 1964); Sheppard v. Flemming, supra, 189 F.Supp. at 572. It was also settled that the Secretary's determination of the size of the fee was not reviewable by the courts, Chernock v. Gardner, supra; Sheppard v. Flemming, supra; Goodell v. Flemming, 179 F.Supp. 806 (W.D.N.Y.1959), and that the Secretary could not authorize direct payment of the fee awarded from the benefits payable to the claimant. Swotes v. Gardner, 392 F.2d 428 (3d Cir. 1968).

There was a conflict, however, in the decisions concerning the power of a court to award attorney fees for representation beyond proceedings before the Secretary. One view was that courts had no jurisdiction to set a fee for in-court representation and that attorney and client were free to contract as in the case of other litigation. E. g., Carroll v. Celebrezze, supra. This view sanctioned the contingent-fee arrangements that were (and are) the dominant mode of contract between attorneys and Social Security claimants, and that often provided for fees as high as 50% of accumulated benefits. See, e. g., Gardner v. Mitchell, 391 F.2d 582 (5th Cir. 1968); Robinson v. Gardner, 374 F.2d 949 (4th Cir. 1967). Another view was that courts had inherent authority to award attorney fees for work performed before them and that section 205(g) of ...