Case: 12-10255 Document: 00512124472 Page: 1 Date Filed: 01/25/2013
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
January 25, 2013
No. 12-10255 Lyle W. Cayce
Clerk
SAMUEL D. JACKSON,
Plaintiff - Appellant
v.
MICHAEL J. ASTRUE, Commissioner of Social Security,
Defendant - Appellee
Appeal from the United States District Court
for the Northern District of Texas
Before HIGGINBOTHAM, CLEMENT, and HAYNES, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
This case concerns the type of judgment for which a district court can
grant attorneys’ fees to the attorney of a prevailing social-security claimant
under the Social Security Act, 42 U.S.C. § 406(b). The district court determined
that § 406(b) does not authorize attorneys’ fees when a district court remands a
case to the Social Security Administration (“SSA”), even when the SSA grants
benefits on remand. On appeal, both parties agree that the district court’s
construction of § 406(b) is erroneous.1 We reverse.
1
Although Jackson is the named plaintiff-appellant in this case, the real party in
interest is Jackson’s attorney, whose motion for § 406(b) fees gives rise to this appeal.
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No. 12-10255
I.
In 2004, Samuel Jackson filed a claim for disability-insurance benefits and
supplemental-security-income benefits under Titles II and XVI of the Social
Security Act. The SSA denied Jackson’s claim and Jackson appealed to the
Northern District of Texas. On February 15, 2011, a magistrate judge
recommended reversing the SSA’s denial of benefits and remanding Jackson’s
claim to the SSA for further proceedings. On March 8, 2011, the district court
entered an order adopting the magistrate judge’s recommendation. In light of
this favorable judgment, Jackson’s counsel sought an award of attorneys’ fees
under the Equal Access to Justice Act, 28 U.S.C. § 2412 (“EAJA”). The district
court granted counsel’s request and awarded him $4,685.53 in fees.
On remand, the SSA determined that Jackson was disabled and awarded
him past-due benefits. Thereafter, Jackson’s counsel filed a motion asking the
district court for attorneys’ fees under 42 U.S.C. § 406(b) in the amount of
$17,921.25, representing 25 percent of Jackson’s benefits award.2 The district
court denied the motion, concluding that under a literal interpretation of
§ 406(b), it was not authorized to award the requested fees. The sole issue
presented by this appeal is whether the district court erred by concluding that
it lacked the legal authority to award § 406(b) fees.
II.
Section 406(b) provides that “[w]henever a court renders a judgment
favorable to a [social-security-benefits] claimant . . . who was represented before
2
Attorneys who successfully represent social-security-benefits claimants in court may
receive fees under both the EAJA and § 406(b), “but . . . must refun[d] to the claimant the
amount of the smaller fee.” Gisbrecht v. Barnhart, 535 U.S. 789, 796 (2002) (alterations in
original) (citations omitted) (internal quotation marks omitted). In this case, Jackson’s
counsel stipulated that he would refund the $4,685.53 EAJA award to Jackson upon receipt
of the larger § 406(b) award.
2
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No. 12-10255
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.”3 In this case, the district court reasoned, Jackson did not
receive benefits “by reason of” the district court’s remand order, but by virtue of
the SSA’s subsequent determination that Jackson qualified as disabled.
Consequently, the district court concluded, it lacked the statutory authority to
award § 406(b) fees to Jackson’s counsel.
We disagree. The district court’s interpretation of § 406(b) is too narrow.
As the Tenth Circuit has observed, “in a broader sense, it easily can be said that
an award of benefits made after a court-ordered remand is an award made ‘by
reason of’ the court’s judgment; after all, if it were not for the order of remand
continuing the proceedings, there would be no benefits award.”4 In Jeter v.
Astrue, we implicitly adopted the Tenth Circuit’s reasoning, observing that “[f]or
purposes of § 406(b), a successful decision on remand is considered a favorable
decision before the district court.”5 The district court dismissed our statement
in Jeter as dicta, observing that “the parties in [Jeter] did not challenge or brief
the applicability of § 406(b)(1)[] and the Fifth Circuit’s statement is not
accompanied by any analysis.” We hereby reaffirm Jeter’s understanding of §
406(b) and take this opportunity to explain our reasoning.
As we observed in Dawson v. Finch, Congress intended § 406(b) “to
encourage effective legal representation of claimants by insuring lawyers that
3
42 U.S.C. § 406(b). The SSA then “certif[ies] the amount of such fee for payment to
such attorney out of, and not in addition to, the amount of such past-due benefits.” Id.
4
McGraw v. Barnhart, 450 F.3d 493, 499 (10th Cir. 2006).
5
622 F.3d 371, 375 n.3 (5th Cir. 2010).
3
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they will receive reasonable fees directly through certification by the Secretary.”6
The district court’s narrow reading of § 406(b) risks undermining this
congressional policy. Under the district court’s approach:
an attorney . . . who renders substantial service before the court and
is successful in obtaining a remand which ultimately leads to an
award of benefits would be compensated only for work done at the
administrative level; his labors in court, no matter how effective and
productive . . . would go unrewarded. This might tend to discourage
attorneys from undertaking to represent claimants in such cases.7
In this regard, it bears mentioning that between 1995 and 2005, roughly half of
disability appeals adjudicated on the merits resulted in remand orders.8
The district court expressed confidence that its understanding of § 406(b)
did not conflict with Congress’s desire to “encourage attorneys to take social-
security cases,” observing that attorneys who succeed on remand can still recoup
fees under § 406(a) and the EAJA. We are not persuaded by the district court’s
reasoning. First, § 406(a) fees are only available to compensate attorneys for
representation before the SSA, not for work performed to obtain a remand order
6
Dawson v. Finch, 425 F.2d 1192, 1195 (5th Cir. 1970). Congress also intended
§ 406(b) to ensure that benefits for the disabled are not diluted by excessive contingency fees.
Id. Section 406(b) accomplishes this purpose by limiting attorneys’ fees to 25 percent of the
benefits recovered. In this case, counsel’s request for attorneys’ fees falls within the statutory
cap.
7
McGraw, 450 F.3d at 502 (quoting Conner v. Gardner, 381 F.2d 497, 500 (4th Cir.
1967); see also Bergen v. Comm’r, 454 F.3d 1273, 1277 (11th Cir. 2006) (“Reading § 406(b)(1)(A)
literally, as did the district court, would frustrate the underlying congressional policy of
encouraging effective legal representation of claimants by insuring lawyers that they will
receive reasonable fees directly through certification by the Secretary.” (internal quotation
marks and alterations omitted)).
8
U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-07-331, SSA HAS TAKEN STEPS TO ADDRESS
CONFLICTING COURT DECISIONS, BUT NEEDS TO MANAGE DATA BETTER ON THE INCREASING
NUMBER OF COURT REMANDS 13 (2007), available at http://www.gao.gov/products/GAO-07-331.
Of the cases remanded to the SSA during this period, the agency “awarded benefits to the
majority of claimants — about 66 percent — upon re-adjudication.” Id. at 16.
4
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from a district court.9 Second, though EAJA awards may be available to
compensate attorneys for appellate representation, they are subject to a number
of limitations that have no analogues in § 406(b).10 For example, whereas
§ 406(b) fee awards are permissive, EAJA fees are limited to circumstances
where the government’s litigation position was not “substantially justified.”
Moreover, whereas § 406(b) permits attorneys to calculate their fees as a
percentage of benefits obtained, the EAJA awards fees on a per-hour basis.
Finally, whereas § 406(b) fees are paid directly to the successful claimant’s
attorney, EAJA fees are paid to the claimant, who may or may not tender the
award to counsel.11 In short, the district court’s construction of § 406(b)
unavoidably reduces the likelihood that an attorney who undertakes a disability
benefits representation will receive reasonable compensation for his work.
For substantially the reasons set forth above, all five circuits to consider
the question have determined that § 406(b) fees are authorized in cases where
an attorney obtains a favorable decision on remand.12 The SSA has not opposed
such fees for over 25 years and now urges this Court to reaffirm our position in
Jeter. We take the agency’s invitation.
9
Gisbrecht v. Barnhart, 535 U.S. 789, 794 (2002) (“[28 U.S.C. § 406] deals with the
administrative and judicial review stages discretely: § 406(a) governs fees for representation
in administrative proceedings; § 406(b) controls fees for representation in court.”).
10
Compare 42 U.S.C. § 406(b)(1)(A), with 28 U.S.C. § 2412(d)(1)(A).
11
McGraw, 450 F.3d at 503. Because the government pays EAJA fees directly to the
litigant, the fees are also subject to an offset to satisfy any pre-existing debt that the litigant
owes to the federal government. Astrue v. Ratliff, 130 S. Ct. 2521, 2524 (2010).
12
See Bergen, 454 F.3d at 1277; McGraw, 450 F.3d at 502; Fenix v. Finch, 436 F.2d 831,
835 (8th Cir. 1971); Philpott v. Gardner, 403 F.2d 774, 775 (6th Cir. 1968); Conner, 381 F.2d
at 500.
5
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III.
We REVERSE the district court’s denial of attorneys’ fees and REMAND
this case for further proceedings consistent with our opinion.
6