Legal Document

535 U.S. 789 GISBRECHT ET AL.v.BARNHART, COMMISSIONER OF SOCIAL SECURITY No. 01-131. Supreme Court of the United States. Argued March 20, 2002. Decided May 28, CERTIORARI TO THE UNITED STATES COURT APPEALS FOR NINTH CIRCUIT An attorney who successfully represents a Social Security benefits claimant in court may be awarded as part judgment "a reasonable fee ... not excess 25 percent past-due benefits" to claimant. 42 U. S. C. § 406(b)(1)(A). The is payable "out of, and addition to, amount [the] benefits." Ibid. In many cases, instant case, Equal Access Justice Act (EAJA) effectively increases portion successful pocket. Under EAJA, party prevailing against States fees by if Government's position litigation was "substantially justified." 28 2412(d)(1)(A). Congress harmonized Government under EAJA with 406(b) out claimant's benefits: Fee awards made both prescriptions, but must refund smaller fee, up point receives 100 benefits. Petitioners Gisbrecht, Miller, Sandine brought separate actions District seeking disability Title II Act. All three were represented same attorneys prevailed on merits their claims. Each petitioner then sought attorneys' EAJA. Pursuant contingent-fee agreements standard for representation, each had agreed pay counsel all recovered. Their accordingly requested $7,091.50 from Gisbrecht's recovery, $7,514 Miller's, $13,988 Sandine's. Given offsets, amounts fact client's recovery would have been $3,752.39 $2,349.25 $7,151.90 Following Ninth Circuit precedent, case declined give effect attorney-client agreement, instead employing "lodestar" method, which number hours reasonably devoted multiplied hourly fee. This method yielded $3,135 $5,461.50 $6,550 Offsetting lodestar determinations, determined that no or Sandine's counsel, only $296.75 Miller's her counsel. consolidated cases affirmed. Held: Section does displace within statutory ceiling; instead, instructs courts review reasonableness those agreements. Pp. 799-809. (a) 406(b)'s words, read isolation, could construed allow either Circuit's approach petitioners' agreement should control, "in Because statute's text inconclusive, this takes into account, interpretive guides, origin application proffered approaches. 799-800. (b) though rooted accounting practices adopted 1940's, did gain firm foothold federal until mid-1970's. today holds sway federalcourt adjudication disputes over properly shifted loser litigation. Fees losing party, however, are at issue here. 800-802. (c) authorizes party's recovery. Characteristically clients enter specifying attorney's will any becomes entitled. Contingent-fee arrangements, problematic, particularly when exposed review, common settings, representation operates largely basis. Before 1965, imposed limits drawn signed claimants. Arrangements yielding exorbitant reserved lawyers one-third one-half accrued benefits; longer persisted, greater buildup and, correspondingly, legal awardable prevailed. Attending these realities, provided benefits, court's judgment, specified other payable. Violation limitations criminal offense. protecting claimants inordinately large fees, ensure representing risk nonpayment clients. therefore authorized agency payment directly funds withheld But nothing history reveals design prohibit discourage entering prevalence such between claimants, it unlikely Congress, simply prescribing "reasonable fees," meant outlaw, rather than contain, 802-805. (d) conclusion bolstered Congress' 1990 authorization 406(a), governs agency-level representation. It anomalous contract-based expressly 406(a)(2) administrative level disallowed 406(b). also legislating intended install develop employ years later. Furthermore, designed govern imposition party. prevents gaining additional pursuant contract, his own client. total receive Nothing more demanded received 805-807. (e) Most plausibly read, primary means set court. Rather, calls arrangements assure they yield results particular cases. Within boundary provided, show services rendered. Courts reduced based character representative achieved. If responsible delay, example, reduction order so profit accumulation during pendency And comparison time spent downward adjustment similarly order. 807-808. 238 F. 3d 1196, reversed remanded. GINSBURG, J., delivered opinion Court, REHNQUIST, STEVENS, O'CONNOR, KENNEDY, SOUTER, THOMAS, BREYER, JJ., joined. SCALIA, filed dissenting opinion, post, p. 809. Eric Schnaufer argued cause petitioners. With him briefs Schnapper Tim Wilborn. David B. Salmons pro hac vice respondent. brief Solicitor General Olson, Assistant Attorney McCallum, Deputy Clement, William Kanter, Frank A. Rosenfeld.* JUSTICE GINSBURG Court. 1 concerns represent (1994 ed. Supp. V),1 recovered; amount, exceed At question has sharply divided Federal Appeals: What appropriate starting judicial determinations [representation before court]"? See ibid. Is presumptively reasonable? Or begin calculation (hours times rate) kind we approved statutes shift obligation litigation? Hensley v. Eckerhart, 461 424, 426 (1983) (interpreting Civil Rights Attorney's Awards 1976, 1988, allows "prevailing party" recover adversary costs" (internal quotation marks omitted)). 2 conclude, displace, decision us rests calculations rejects primacy lawful agreements, reverse below remand recalculation claimants' 3 * A 4 individuals claiming old-age, survivor, court, governed prescriptions originated 1965. Amendments 79 Stat. 403, amended, 406.2 statute deals stages discretely: 406(a) proceedings; controls 20 CFR 404.1728(a) (2001). 5 For level, an file petition agreement. 406(a). response petition, "for performed connection claim before" it; determination favorable made, Commissioner "shall fix fee" services. 406(a)(1) ed.) (emphasis added). setting award, several factors. 404.1725(b) (2001).3 authorized, even unsuccessful. 404.1725(b)(2). 6 As alternative petitions, Act, amended 1990, accommodates advance ruling Omnibus Budget Reconciliation 104 1388-266 1388-267, §§ 406(a)(2)-(4) V). claimant, generally approve subject limitation: lesser $4,000 (increased $5,300 effective February 2002). 406(a)(2)(A)(ii), (iii) ed.); 67 Fed. Reg. 2477 (2002); see Administration, Office Hearings Appeals, Litigation Law Manual (HALLEX) I-5-109 III.A (Feb. 5, 1999). 7 proceedings rendition claimant." 406(b)(1)(A) ed., interpreted "prohibi[t] lawyer charging there award back Tr. Oral Arg. 37-38; Brief Opposition 12, n. 12 (reading [fee] non-contingent fees"). 8 its figuring limited past due, continuing entitlement 9 establish exclusive regime obtaining Collecting demanding client anything allocation 406(a)(5), (b)(2) 404.1740-1799 10 (EAJA), enacted 1980, 94 2329, 2412. including recovered, "time expended" "[hourly] rate," 2412(d)(1)(B), capped mine run $125 per hour, 2412(d)(2)(A).4 Cf. §504 (authorizing prevails adjudication). 11 manner: "refun[d] fee." Aug. 1985, Pub. L. 99-80, 3, 99 186. "Thus, offsets 406(b), [amount actually receives] increased 3. B Gary Barbara Nancy Oregon 405(g) ed.),5 petitioners attorneys, Gisbrecht $28,366 $30,056; Sandine, $55,952. EAJA: $3,339.11, $5,164.75, $6,836.10. 13 Samuels, Disability Claims 21:10 (2d 1994), App. Pet. Cert. 72-86. 14 Allen Shalala, 48 456, 458-459 (CA9 1995), Apfel, CV-98-0437-RE (Ore., Apr. 14, 1999); Miller CV-96-6164-AS Mar. 30, CV-97-6197-ST June 18, Instead, employed awards, appealed.6 15 Adhering precedent applying calculate Appeals cases7 affirmed Court's dispositions. 1196 (2000). noted adjusted further factors, one them, "whether fixed contingent." Id., 1198 (quoting Kerr Screen Extras Guild, Inc., 526 2d 67, 70 1975)).8 While district consider plaintiff's request increase [based agreement]," stated, `is required articulate reasons' accepting rejecting request." 3d, 1199 Widrig 140 1207, 1211 1998)) original). 16 We granted certiorari, 534 1039 (2001), view division among Circuits calculating Compare Coup Heckler, 834 313 (CA3 1987); Craig Secretary, Dept. Health Human Servs., 864 324 (CA4 1989); Brown Sullivan, 917 189 (CA5 1990); Cotter Bowen, 879 359 (CA8 Hubbard 946 (CA10 1993); Kay 176 1322 (CA11 1999) (all following, accord Circuit, method), Wells 907 367 (CA2 Rodriguez 865 739 (CA6 1989) (en banc); McGuire 873 974 (CA7 giving resulting reasonable).9 now judgment. 17 Beginning text, benefits," ordinarily percent." provision fee," measured calculation. language exclude contracts produce higher ceiling. Such most arrangement Department Services, Report Congress: 15, 66, (July 1988) (hereinafter SSA Report); National Organization Claimants' Representatives Amicus Curiae 1-2. Looking outside inconclusive next take 18 roots 1940's firms determine whether charged sufficient cover overhead generate suitable profits. W. Ross, Honest Hour: Ethics Time-Based Billing Attorneys (1996) Hour). American Bar Association (ABA) report, published 1958, observed earnings failed keep pace rate inflation; report urged record ultimately afforded compensation counsels' efforts. Special Committee Economics Practice, 1958 Lawyer His 1938 Dollar 9-10 (reprint 1959). 19 Hourly records initially internal check. Hour 19. might methods: annual retainer; fee-for-service method; "eyeball" estimated regular clients; recognized Stanton Embrey, 93 548, 556 (1877), formally ABA 1908. 13-19. became practice matter, increasingly realized billing administratively convenient; moreover, objective measure lawyer's labor, readily impartable 18. By early 1970's, become widespread. id., 19, 21. swiftly settle rates overriding criterion awards. 1974, Fifth issued influential holding that, VII 1964, 2000e-5(k) (1970 ed.), Johnson Georgia Highway Express, 488 714, 717-719 (1974).10 mid-1970's, Lindy Bros. Builders, Inc. Philadelphia Radiator & Standard Sanitary Corp., 487 161 1973), appeal after remand, 540 102 (1976), achieved dominance decisions 424 (1983), Blum Stenson, 465 886 (1984), Pennsylvania Delaware Valley Citizens' Council Clean Air, 478 546 (1986). 21 Since time, "[t]he `lodestar' figure has, name suggests, guiding light our fee-shifting jurisprudence." Burlington Dague, 505 557, 562 (1992) (relying Hensley, Blum, apply Solid Waste Disposal 7002(e), 6972(e) (1988 Water 505(d), 33 1365(d) noting prior 1988 III); Air 7604(d) ed.)). "[i]deally, litigants S., 437.11 where settlement parties possible, useful [court of] [payable loser] expended rate." 433. Thus, federal-court 440 (Burger, concurring) (decision addresses seeks party"). 22 Unlike V) authorize another genre: Several governing suits provide paid See, e. g., Tort (FTCA), 2678 ("No shall charge, demand, receive, collect rendered, centum [court] rendered [in FTCA suit], compromise, [by claim]."); Veterans' Benefits 38 5904(d)(1) ("When [for veterans' benefits] entered [contingent-]fee [under withholding award], basis claim.").12 confront, "specifying entitled." 2; Washington Legal Foundation et al. Amici 9, ("There serious dispute virtually every includes his/her retainer calling equal 25% courts."). 23 Contingent settings. perhaps visible tort litigation, used in, patent real estate tax appeals, mergers acquisitions, public offerings. Formal Opinion 94-389, ABA/BNA Lawyers' On Professional Conduct 1001:248, 1001:250 (1994). observation contingent needed "reduce financial incentives encourage unnecessary, unwarranted[,] unmeritorious suits" Traditionally today, "the marketplace contingency basis." 3; 70; 56, 60, 88, 89, 91 (affidavits practitioners). 24 formulating 1965 amendments included "attorneys upon occasion court]." Rep. 404, 89th Cong., 1st Sess., pt. 1, 122 (1965). Senate observed, mindful, too, Ibid.13 "no payable." "25 limitation penalties applicable larger — fine $500, year's imprisonment, both. "[T]o allowed court," "to certify Ibid.; supra, 804, 13. 26 thus protect "inordinately fees" "nonpayment [appropriate] fees." 66 omitted). "desig[n] agreements." agreements.14 27 enacting express authorization, instructed Administration prepare 100-203, 9021(b), 101 1330-295. presented reviewed methods determining method. 10-11. led inform although hardly flawless, "identify ensuring access representation." 25. subsequently altered validate disposition 795. observe, 24, 29 providing tied boundary, some 801-802. again emphasize, 562. Venegas Mitchell, 495 82, 89-90 (1990) ("[None] indicated [42 C.] protects plaintiffs having what contracted pay, contractual liability opponents. Indeed, depriving option promising necessary secure choice 1988's general purpose enabling competent counsel."). contrast, representation; endeavor charge noncontingent 406(b)(2); 404.1740(c)(2) 30 independent check, cases.15 line: Agreements unenforceable extent exceeding V).16 acknowledge, 40.17 31 looking first testing reasonableness, appropriately McGuire, 2d, 983 ("Although given significant weight fixing judge independently assess terms."); Lewis Secretary 707 246, 249-250 1983) (instructing substandard). Rodriquez, 746-747. 747 (reviewing disallow "windfalls lawyers"); Wells, 372 (same). regard, require submit, satellite aid assessment statement normal noncontingent-fee 741. Judges accustomed making wide variety contexts, assessments matters, event appeal, qualify highly respectful review. 32 erroneously override customary hold Accordingly, consistent opinion. 34 ordered. Notes: Jeffrey Robert White Trial Lawyers America amicus curiae urging reversal. Daniel J. Popeo Richard Samp amici affirmance. G. Shor, Kirk Roose, Joel Friedman, E. Rains, Buchanan curiae. 49 624, explicitly in-court least two concluded implicitly fees. SeeBowen Galbreath, 485 74, 75-76 (1988) (citing Celebrezze Sparks, 342 286 1965)) ("Under 405(g), reviewing [a decision] power `a affirming, modifying, reversing ....' Sparks reasoned gives jurisdiction, presumed, absent indication contrary, exercise powers 288-289 [citing Folsom McDonald, 237 380, 382-383 1956)]."). proceedings, originally 620 (1935). Four later, permit Board prescribe maximum agency. 1939, 53 1360. expected need slim. H. R. 728, 76th 44-45 (1939); 734, (1939). established $10, permitting 403.713(d) (1949). later prescribed initial appellate levels process. 404.976 (1961). provides: "Evaluating approval "(1) When evaluate representative's social security program, economic beneficiaries together "(i) type performed; "(ii) complexity case; "(iii) skill competence services; "(iv) "(v) achieved; "(vi) taken your representative; "(vii) requests services, before, expenses he she incurred. "(2) Although any, payable, do base benefit alone, consideration factors listed section. specific provisions law unrelated efforts representative. determines cost living special factor, availability qualified proceeding involved, justifies 2412(d)(2)(A)(ii) denials applications named appellants below, here, interest seek obtain convenience, nonetheless refer SeeHopkins Cohen, 390 530, 531, (1968). note direct stake answer question; plays resembling trustee 248 1983). fourth case,Anderson CV-96-6311-HO Sept. 29, 1999), cases; denied certiorari Anderson granting question. directed labor required, (2) novelty difficulty questions (3) requisite perform service properly, (4) preclusion employment due acceptance (5) (6) contingent, (7) circumstances, (8) involved obtained, (9) experience, reputation, ability (10) `undesirability' (11) nature length professional relationship client, (12) similar cases." 69-70 1974)). CfRamos Colon 850 (CA1 (per curiam) ("a blind deference phase proceedings" Seesupra, 798-799, 8. also,e. 3554(c)(4) ("[T]he interested attempt reach costs [including fees] paid."). Servicemembers' Group Life Insurance 1984(g) apportion proper, said recovered payments decree."); International Settlement 1949 (ICSA), 1623(f) remuneration account behalf Commission [the ICSA] certified [ICSA] claim. Any contrary unlawful void."); Trading Enemy 50 property proceeds returned unless satisfactory evidence furnished aggregate agents, ..., representatives, return value payment."); War 2017m [Act] (or respect class claims) title claim.") proposal recommended clients' awards; testified Finance "[a]ttorneys complained sometimes without knowledge notified receipt money, nor 6675 Finance, pp. 512-513 (1965) Cf.,e. 1891, 851-854 (regulating claims Native Americans providing: "all heretofore allowances hereby declared void regulated court"); Alaska 1971, 43 1621(a) ("None revenues Act] contract percentage [Act]."). dissent observes "fee Social-Security negotiated; akin adherence contracts."Post, 812. Exposure plus limitation, checks arbitration upheld objections "freely negotiated," Vimar Seguros y Reaseguros, M/V Sky Reefer, 515 528, (1995) (STEVENS, dissenting), product "disparate bargaining power" contracting parties, Carnival Cruise Lines, Shute, 499 585, 598 (1991) dissenting). City Stores, Adams, 532 105, 138-139, (2001) (Souter, dissenting) (observing employees "lack resist clause prospective employers insist one"). Statement terms tellingly contrasts shifting places dollar limit can 2412(d)(2)(A); seesupra, 796, 4. Specifically, maintain "[a]lthough section permits create presumption favor amount. To because requires affirmative finding `reasonable,' bears burden persuasion requirement satisfied." 40 35 Scalia, dissenting. 36 I know judges appeals make today's idea trial finds produced ("presumptively reasonable," ante, 792) above amount; 40%; 65%. judge's 300% 200%; itself. gets "in" box, whatever approximating uniform rule law. That is, think, inevitable consequence trying combine incompatible. tells commence analysis adjust produces (most notably, actual rate, 808) are, sense, precise antithesis since very eliminate them my view, possible way meaning understand referring fair work performed, held best reflected lodestar.1 433 (1983). 37 think obvious contingentfee viewing matter ex outcome lawsuit definitively known. gamble assigning unsuccessful attorney, exchange (because loss borne) higher, much case. why, days justice thought less sporting enterprise, unlawful. Butler Legro, 62 N. 350, 352 (1882) ("Agreements duty, tend extortion fraud, champertous void"). thing say unreasonable high self-respecting system tolerate itself Social-Security-benefit 25%. chances success high, anticipated negligible, assured exorbitant; neither thinks anticipates case-by-case post ante predictions thousands (mostly small recovery) something quite different, however irrational look consequences contingencies resolved, proclaim too money little work. like declaring purchase winning lottery ticket gross disparity $2 price million-dollar payout.2 39 concluded, committed known; cannot two. (already conceivably contemplated, conclude agreed-upon recompense done. calculated lodestar, focuses quality "provides estimate services." departure suggests enforcing privately negotiated contracts. uncontested specialized bar charges (the 25%), presumably typically unsophisticated take-it-or-leave-it Nor explicit contingency-fee stage, V), imply judicial-review stage regarded reasonable. merely maximum. latter impose requirement. Once imposed, compensation. 41 middle course between, hand, fee; reference connote latter; hybrid establishes clear criteria hence needless litigation; respectfully dissent. "unlikely,"ante, 806, contemplated yet developed. Of not. contemplate post-1965 using lodestar. hesitated 561-562 (explaining "our construing `reasonable' applies uniformly" use language, including, inter alia, (Civil 1964)). There oneex element prominent assuredly reduce otherwise (that say, reasonable) award: duration dragging feet. rewarded dilatoriness. overall assessment, do, 808. unreasonable; breach contract. Surely contains implicit term bring quickly practicable intentionally delay conclusion. condition award.

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