Court Opinion

ID: 9558569
Source: CourtListenerOpinion
Date Created: 2023-08-21 17:12:48.208862+00
Date Added: 2024-06-11T09:09:24.824640
License: Public Domain

B. FLETCHER, Circuit Judge,
dissenting:
I respectfully dissent. In the majority opinion, the panel has decided three discrete appeals because one overarching issue controls all of them: Has the district court followed the mandate of Gisbrecht v. Barnhart, 535 U.S. 789, 122 S.Ct. 1817, 152 L.Ed.2d 996 (2002)? In that case, the Supreme Court reversed the Ninth Circuit’s opinion in Gisbrecht v. Apfel, 238 F.3d 1196 (9th Cir.2000), disapproving fifteen years of Ninth Circuit practice regarding how to determine attorney fees under 42 U.S.C. § 406(b)(1)(A). By affirming the fee awards in these cases, the majority opinion effectively reinstates the Ninth Circuit’s same old methodology by permitting the district court to make adjustments from the lodestar calculation rather than from the percent of recovery specified in the contingent fee agreement. Further, the majority ignores the basic principle that this court cannot review for abuse of discretion but rather should remand for explanation if the district court fails to explain its decision.
I
We first used the lodestar method to determine a reasonable fee under § 406 in Starr v. Bowen, 831 F.2d 872 (9th Cir. 1987). See Allen v. Shalala, 48 F.3d 456, 458 (9th Cir.1995). Under that method, the district court determined the reasonable fee by multiplying the reasonable hourly rate by the number of hours reasonably expended on the case. Gisbrecht, 238 F.3d at 1197-98. The district court could then adjust the amount of the fee award by applying the twelve factors set out in Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir.1975), including “whether the fee is fixed or contingent.” Gisbrecht, 238 F.3d at 1198 (quoting Kerr, 526 F.2d at 70).
Although the district court could consider the contingent nature of the fee agreement, we repeatedly held that failure to do so was not an abuse of discretion. See id. at 1199 (citing Straw v. Bowen, 866 F.2d 1167, 1170 (9th Cir.1989) and other cases). In fact, although the district court was supposed to consider a request to increase the award because of the contingent nature of the fee agreement, it was “not required to articulate its reasons for accepting or rejecting such a request.” Id. (internal quotations and citations omitted).
This approach was flatly rejected by the Supreme Court. It held a district court charged with making a fee award under § 406(b)(1)(A) must respect “the primacy of lawful attorney-client fee agreements,” Gisbrecht, 535 U.S. at 793, 122 S.Ct. 1817, “looking first to the contingent-fee agreement, then testing it for reasonableness,” id. at 808, 122 S.Ct. 1817. The resulting award is unreasonable, and thus subject to reduction by the court, if the attorney provided substandard representation or engaged in dilatory conduct, or if the “benefits are large in comparison to the amount of time spent on the case.” Id. The attorney bears the burden of establishing that the fee sought is reasonable. Id. at 807, 122 S.Ct. 1817. “[A]s an aid to the court’s assessment of the reasonableness of the fee yielded by the fee agreement,” the attorney may provide the court with a record of the hours worked and its regular fee. Id. at 808,122 S.Ct. 1817.
An examination of the fee awards in these cases makes it starkly evident that the district courts did not respect the primacy of the attorney-client fee agreements. In each case, the client signed a contract providing that the attorney would *865receive 25% of the back pay awarded if benefits were awarded following appeal to the district court. Had the district court awarded the full contractual fee, the attorneys in these cases would have received fees ranging from $19,010 to $43,000. Instead, they received amounts ranging from $8,825.53 to $12,650.40. These fee awards represented 6.68% to 11.6% of the benefit awards. Put another way, the attorneys received 53.57% to 73.3% less than the contingency contracts provided.1
The language in each of the district court orders also makes clear that the district court failed to apply the reasonableness test mandated by Gisbrecht Although the Gisbrecht court did not provide a definitive list of what factors should be considered in determining whether a fee is reasonable or how those factors should be weighed, the majority is wrong to conclude that the Court “did not indicate how or on what basis the district courts were to determine that a fee was reasonable.” Maj. Op. at 859. Rather, the Supreme Court directed courts to consider “the character of the representation and the results the representative achieved” and to rely on the district court’s expertise in making reasonableness determinations.2 Gisbrecht, 535 U.S. at 808, 122 S.Ct. 1817. See also Mudd v. Barnhart, 418 F.3d 424, 428 (4th Cir.2005) (“The [Supreme] Court did not provide a definitive list of factors to be considered because it recognized that the judges of our district courts are accustomed to making reasonableness determinations in a wide variety of contexts.” (quotation and alterations omitted)). The Supreme Court also indicated that the district court could consider the lodestar calculation, but only as an aid in assessing the reasonableness of the fee. See Gibrecht, 535 U.S. at 808, 122 S.Ct. 1817. The lodestar cannot serve as the baseline for determining the fee.
The majority correctly observes that the district court orders quote extensively from Gisbrecht. The orders even cursorily discuss the character of the representation-noting that it was skillful and not dilatory-before concluding that the requested fee would represent a windfall to the attorneys. But this sort of parroting of language from Gisbrecht does not mean that the district courts actually applied its teachings. As the orders make clear, the *866district courts in these cases started with the lodestar calculation, and then adjusted slightly to account for the contingent nature of the representation. This is contrary to the Supreme Court’s clear directive that the district court must first look to the fee agreement and then adjust downward to account for the particular lack of difficulty in the representation. See id. See also Rodriquez v. Bowen, 865 F.2d 739, 746 (6th Cir.1989) (en banc) (“In the event the court chooses not to give effect to the terms of the agreement, it should state for the record the deductions being made and the reasons therefore.”). That the courts determined that the fee agreements “met the § 406(b)(1) guidelines” does not demonstrate that the district courts “recognized the primacy of contingent-fee agreements”. Maj. Op. at 861. Rather, it merely shows that the courts acknowledged their existence. Because the district courts did not give proper consideration to the fee agreements and inverted the reasonableness analysis prescribed by Gisbrecht, the fee orders in these cases should be vacated, and the cases remanded for further consideration.
II
In addition to inverting the Gisbrecht analysis, each district court failed to explain why it chose to enhance the lodestar calculation by the factor that it did. The Supreme Court has held that, although the district court has discretion to determine a reasonable fee, it must provide “a concise but clear explanation of its reasons for the fee award.” Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983). If the district court fails to do so, this court is unable to review the award for abuse of discretion, and we must vacate and remand. See, e.g., Ferland v. Conrad Credit Corp., 244 F.3d 1145, 1151 (9th Cir.2001); Gates v. Deukmejian, 987 F.2d 1392, 1400 (9th Cir.1992).
Each district court explained on a general level the reason for the reduction, concluding that the requested fee would result in a windfall to the attorney because it was significantly larger than the lodestar amount. Not only did each court start from the wrong premise, each failed to give any explanation for the particular fee awarded. Instead, each court increased the lodestar by a percentage but failed to relate that percentage to the circumstances of the individual case. Under these circumstances, our precedent requires that we remand for reassessment of the fee request. Cf. Ferland, 244 F.3d at 1151 (“[T]he district court did not explain except at the most general level why it reduced by more than half the number of attorney hours for which Ferland could be compensated, and did not explain at all the particular level of reduction-from 261.2 to 120 hours-chosen. Because we cannot determine the basis for the district court’s decision to so substantially reduce the hours for which it permitted fees, we vacate the fee award and remand for reassessment in accord with the principles discussed above.” (footnote omitted)).3
*867III
Finally, to the extent that the district court orders in Trejo and Crawford give some explanation of why the court did not award the specific fee requested, that explanation was based on a further misreading of Gisbrecht. Specifically, the orders misconstrue the nature of the risk assessment by focusing on the firm’s overall success rate instead of the specific facts that make a given case more or less risky for the firm.4 See, e.g., McGuire, 873 F.2d at 985. For example, in Crawford, the district court faulted the firm for failing to “provide! ] any data regarding [the] firm’s success rate that would enable the Court to assess the risk assumed by [the] firm in representing social security benefits claimants in the Central District of California.” This misstates the attorney’s burden, which is to show that the fee is reasonable based on the facts of the particular case. A district court cannot reduce the amount of a fee simply because a firm is generally successful. Rather, the district court should look at the complexity and risk involved in the specific case at issue to determine how much risk the firm assumed in taking the case. The firm should not be penalized for providing high-quality representation that frequently results in success for its clients.
IV
The majority opinion ignores the clear instructions of the Supreme Court by affirming the district court’s reliance on lodestar calculations in determining fee awards under § 406(b). It also undermines our precedent requiring that a district court explain the reason for its fee award. Because the Supreme Court has spoken in no uncertain terms to both of these issues and instructed us not to affirm where the district court bases its reasonable fee determination on a lodestar calculation or fails to adequately explain the reason for the amount of the fee award, I would vacate the district court orders and remand each of these cases for further proceedings.

. The attorneys in these cases recognized that a full 25% fee would be unreasonable. They therefore sought fees ranging from $11,500 to $24,000, which represented 13.95% to 16.95% of the benefits awarded, a substantial reduction from the amount contracted for. Although I do not hold the view that where, as here, an attorney seeks less than 25% of the back-benefits awarded, the fee request is presumptively reasonable, I believe that the attorney’s request should be entitled to some deference in such cases. I find it particularly problematic that the district court in Crawford reduced the-fee sought by 60%. The attorney in that case requested less than 17% of the back-benefits awarded-a substantial reduction from what the contract provided for-and ultimately received less than 7% of the claimant's award. Although that figure represented a premium over the lodestar, the fact that it was so much lower than the contracted-for amount strongly suggests that the district court gave insufficient deference to the fee agreement.

. The majority improperly characterizes Gis-brecht as providing five distinct examples of ways to test for reasonableness. Maj. Op. at 858-59. Rather, Gisbrecht makes clear that the district court may reduce the fee based on "the character of the representation and the results the representative achieved.” 535 U.S. at 808, 122 S.Ct. 1817. Pursuant to this evaluation the court may properly reduce the fee for substandard performance, delay, or benefits that are not in proportion to the time spent on the case. Id. As evidence of the reasonableness of the resulting fee, the court may require the attorney to submit a record of hours spent and a statement of normal hourly billing charges. Id.

. Although both Ferland and Gates involved fee awards under fee-shifting statutes, the basic principle that the district court must explain the basis for its award applies with equal force in § 406(b) cases. The Supreme Court made clear in Gisbrecht that reasonableness review in § 406(b) cases is essentially the same as reasonableness review in other contexts. See Gisbrecht, 535 U.S. at 808, 122 S.Ct. 1817. Additionally, several of our sister circuits have held that the basic principle that the district court must explain its decision applies in these cases. McGuire v. Sullivan, 873 F.2d 974, 985 (7th Cir.1989) (affirming where the district court “made specific findings regarding the difficulty, riskiness and other relevant factors which demonstrate that a twenty-five percent contingency contract is reasonable”); Rodriquez, 865 F.2d at 746.

. This is not the case in Washington where the magistrate noted that the ALJ's error was so clear that counsel did not have to work particularly hard to get the government to stipulate to a remand.