Thursday, July 28, 2011

2d Circuit vacates low attorneys' fees award

If you represent plaintiffs in civil rights cases, you know that once the district court rules on your attorneys' fees motion, the "abuse of discretion" standard of appellate review makes it nearly impossible to overcome the initial fee award on appeal. The district court is where the action is on these motion, not the Court of Appeals. But that's not always the case.

The case is Vincent v. Commissioner of Social Security, decided on July 8. Thanks to her lawyer, Schneider, Vincent got her social security disability benefits. Vincent lost at the administrative level. Through his successful appeal to the federal court, Schneider persuaded the Northern District of New York to rule in Vincent's favor. Under the Equal Access to Justice Act, counsel sought about $8,200 in legal fees. The district court instead awarded him about $2,700, for several reasons. As the Court of Appeals (Walker, Calabresi and Wesley) puts it, "The district court held that Schneider’s failure to develop the record constituted 'special circumstances' that, under the Equal Access to Justice Act, would render a full award 'unjust.' In addition, the district court viewed the length of time Schneider billed for preparing the fee application as “clearly excessive and unreasonable.' The district court also expressed concern that Schneider’s billing records provided only 'conclusory explanations' for 'several lengthy increments of time' and improperly intermingled legal and clerical tasks."

That's a mouthful of reasons to sharply reduce Schneider's attorneys' fees. Since the Court of Appeals does like to wade into the muck in second-guessing the district court's nuanced analysis on attorneys' fees, the eye-opener here is that the Second Circuit overruled the district court's objections and then remanded the case to a different magistrate judge.

While the EAJA allows the courts to reduce attorneys' fees under "special circumstances," this case does not rise to that level. Under Circuit precedent, "A prevailing party can therefore be denied attorney’s fees under the EAJA for 'special circumstances' when his own misconduct created the circumstances that led to the litigation, and when that party’s contributions to the litigation’s success were 'marginal, duplicative and unnecessary.'” Does counsel's inadequate representation qualify as a special circumstance? The Court of Appeals decides this question for the first time.

The administrative law judge attacked Schneider's competence because, the ALJ said, his client had credibility problems, which is why the ALJ ruled against her. Judge Walker writes,

In the circumstances of this case, in which the ALJ gave Vincent no notice of his credibility concerns, it was the ALJ’s responsibility to develop the facts related to this collateral issue. ... The district court erred in concluding that Schneider shared responsibility with the ALJ for these omissions. In the district court’s view, Schneider should have identified the discrepancy in Vincent’s work history and preemptively addressed it, and also should have developed the record to explain Vincent’s noncompliance with treatment recommendations. The district court demanded too much of counsel. If we endorsed the district court’s position, counsel would have to anticipate and refute all conceivable credibility issues to be assured recovery of attorney’s fees after prevailing on appeal. This is not, nor should it be, the bar against which representation in Social Security matters is assessed for purposes of awarding EAJA fees.

The Court of Appeals says that the ALJ did not give Schneider notice about his credibility concerns, and it was not Schneider's fault that the ALJ deemed her incredible. That ruling may be of interest only to lawyers who represent clients in social security cases. But the Court of Appeals also vacates the low attorneys' fees award on grounds that affect the civil rights bar. The district court reduced the fee entitlement because it thought that Schneider spent too much time on the fee application. But the fee petition raised a novel legal issue of whether the "special circumstances" exception applied here. This justified the nearly 23 hours that counsel spent on the fee petition. It was an abuse of discretion for the district court to find that Schneider wasted time in pursuing his fees. As Judge Walker writes:

It is therefore unsurprising that the EAJA briefing here would demand more attention and time than a standard fee application. Furthermore, by rebuking Schneider in the remand order, which preceded Vincent’s fee motion, the district court alerted Schneider that it viewed his entitlement to fees with skepticism. That alone made this an atypical EAJA application, one that required Schneider to concentrate more effort than usual in convincing the district court that he had earned the fees requested. The district court therefore appears to have underappreciated the degree of effort warranted by the EAJA motion.
Finally, the district court abused its discretion in reducing the attorneys' fees on the basis of its concerns about the adequacy of Schneider's billing records, which were allegedly too vague or sought compensation for clerical tasks. The district court got it wrong in ruling this way without giving counsel an opportunity to respond to the court's concerns about these records. The case is remanded to the district court to reconsider the fee application.

However, a different judge will review the fee petition on remand. The Court of Appeals notes that this same Magistrate Judge improperly ruled against Schneider's fee petition in a different case a few years ago. The Second Circuit decides that a different judge should get this case this time around.

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