The opinion of the court was delivered by: Magistrate Judge Arlander Keys
MEMORANDUM OPINION AND ORDER
On August 6, 2012, the Court issued a Memorandum Opinion and Order that granted Plaintiff Sheri A. Carnaghi's motion for summary judgment. The Court remanded her claim for Social Security disability benefits for further proceedings, finding that the ALJ failed to adequately address certain issues related to the testimony of the vocational expert. See Carnaghi v. Astrue, No. 11 C 2718, 2012 WL 3292834 (N.D. Ill. Aug. 6, 2012). On September 18th, 2012, Plaintiff filed a motion for attorney's fees under the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412. Plaintiff requests an award of $11,826.53 (Pl.'s Reply at 12), based on an hourly rate of $182.13 for her lawyer. Pursuant to a retainer and fee agreement between Plaintiff and her lawyer, (Pl.'s Mot. Ex. 2), Plaintiff asks that the award be made payable to her lawyer. The Commissioner argues that Plaintiff has not made a sufficient showing to justify a rate above the statutory maximum of $125. See 28 U.S.C. § 2412(d)(2)(A)(ii).
Additionally, the Commissioner challenges whether the award should be made payable to Plaintiff or her lawyer. For the reasons explained below, Plaintiff's motion is granted at a rate of $175 per hour, to be made payable directly to her lawyer, Barry A. Schultz.
A. Award of Fees Under the EAJA
The EAJA provides that the court shall award fees and other expenses to a prevailing party, other than the United States, "in any civil action.including proceedings for judicial review of agency action, brought by or against the United States.unless the court finds that the position of the United States was substantially justified.." 28 U.S.C. § 2412(d)(1)(A). A position is substantially justified if it was "grounded in '(1) a reasonable basis in truth for the facts alleged; (2) a reasonable basis in law for the theory propounded; and (3) a reasonable connection between the facts alleged and the legal theory advanced.'" United States v. Hallmark Construction Co., 200 F.3d 1076, 1080 (7th Cir. 2000) (quoting Phil Smidt & Son, Inc. v. NLRB, 810 F.2d 638, 642 (7th Cir. 1987). The Court's remand made Plaintiff the "prevailing party." Shalala v. Schaefer, 509 U.S. 292, 300-301 (1993).
It was originally unclear whether the Commissioner intended to argue that the government's position was substantially justified. Although the Commissioner's response to Plaintiff's motion contained a recitation of the legal standard, there was no argument. (Def.'s Resp. at 1-2.) The Commissioner failed to meet his burden of proof by making no argument, but the Court is also satisfied that the Commissioner did not intend to challenge Plaintiff's right to some amount of EAJA fees. Plaintiff explained that her counsel contacted Anne Kenny Kleinman, of the Office of General Counsel, who confirmed that the Commissioner did not intend to make a substantial justification argument in this case. (Pl.'s Reply at 1.) As a result, the parties agree, and the court finds, that the Plaintiff is entitled to some amount of fees under the EAJA.
B. Hourly Rate for Attorney's Fees
The parties' primary dispute is whether a cost of living adjustment should be made to the statutory maximum of $125 per hour for attorney's fees under the EAJA. See 28 U.S.C. § 2412(d)(2)(A)(ii). The Commissioner argues that Plaintiff must show she could not have found a competent attorney for $125 per hour. (Def.'s Resp. at 4.) For this proposition, the Commissioner relies on the recent Seventh Circuit opinion Mathews-Sheets v. Astrue, 653 F.3d 560 (7th Cir. 2011). Plaintiff, however, argues that the Commissioner misreads Mathews-Sheets by "seizing" on part of a single sentence in that opinion. (Pl.'s Reply at 2-3.) In Plaintiff's view, neither Mathews-Sheets nor the EAJA itself require such a showing. Plaintiff contends that the inability to find a competent attorney is a separate special factor which could justify a fee in excess of $125 per hour, but that it is not the only method of justifying an increase. Rather, Plaintiff contends, it is enough for a prevailing party to show that inflation has directly affected her lawyer's costs of providing legal services and the fees her lawyer charges. (Pl.'s Reply at 5.) Based on the language of the EAJA and the Mathews-Sheets opinion considered as a whole, the Court finds Plaintiff's arguments convincing.
The EAJA limits attorney's fees to $125 per hour, but allows a court to award a higher rate under certain circumstances. Specifically, the statute states: "attorney fees shall not be awarded in excess of $125 per hour unless the court determines that an increase in the cost of living or a special factor, such as the limited availability of qualified attorneys for the proceedings involved, justifies a higher fee." 28 U.S.C. §2412
(d)(2)(A)(ii) (emphasis added). The plain language of the statute-the use of "or" rather than "and"-indicates that Congress did not intend to require that an attorney show both an increase in the cost of living and that no qualified attorney could be found for a rate of $125 to justify a higher rate. Either showing is sufficient under the statute. See, e.g., Mireles v. Astrue, No. 10 C 6947, 2012 WL 4853065, at *2 (N.D. Ill. Oct. 11, 2012); Claiborne v. Astrue, No. 10 C 7728, 2012 WL 2680777, at *3) (N.D. Ill. July 6, 2012). F When the Mathews-Sheets opinion is considered as a whole, rather than focusing on a single excised sentence, it becomes clear that the opinion can be read consistently with this expressed intent of Congress. The Commissioner focuses on part of a sentence in the case that could suggest a plaintiff must show, in all instances, that "a lawyer capable of competently handling the challenge that his client mounted to the denial of social security disability benefits could not be found in the relevant geographical area to handle such a case [for $125 per hour]." Mathews-Sheets, 653 F.3d at 565. If the Commissioner's interpretation were correct, however, it would be difficult to reconcile the statement with the paragraph immediately prior to it which explains, "[i]t might seem that because the cost of living special factor is not automatic, the two enumerated special factors merge; the lawyer arguing for a cost of living increase must show limited availability of lawyers able to handle such a case. But that is not correct." Id. The Commissioner's interpretation, therefore, cannot stand without creating an internal contradiction.
It is not necessary to read such a contradiction into Mathews-Sheets. Earlier in the opinion, the court explained that a "lawyer seeking [a cost of living] adjustment must show that inflation has increased the cost of providing adequate legal service to a person seeking relief against the government.No such showing was made." Id. at 563 (citations omitted). Counsel in Mathews-Sheets instead argued that a cost of living adjustment did not need to be requested because it was automatic. The court clarified that such an increase is not automatic. Id. In addition, after initially requesting $225 per hour as the prevailing market rate, the lawyer in his reply brief reduced his request to $170 per hour, citing the Consumer Price Index. However, the lawyer apparently did not make any showing that such inflation had actually affected his costs and fees. The court reiterated that "[a]n inflation adjustment must.be justified by reference to the particular circumstances of the lawyer seeking the increase." Id. at 564. In sum, the lawyer in Mathews-Sheets failed to make a cost of living argument.
Since counsel in Mathews-Sheets had not made a cost of living argument, he would need to argue a special factor to justify a rate above $125. He had not invoked any other special factor, so his final option would be to argue the special factor mentioned in the EAJA. That is, ".the limited availability of qualified attorneys for the proceedings involved." 28 U.S.C. § 2412(d)(2)(A)(ii). This is the context within which the Commissioner's chosen sentence must be read. The entire paragraph containing the Commissioner's quote reads:
And so on remand the plaintiff's lawyer will have to show that without a cost of living increase that would bring the fee award up to $170 per hour, a lawyer capable of competently handling the challenge that his client mounted to the denial of social security disability benefits could not be found in the relevant geographical area to handle such a case. Id. at 565.
In other words, the Court seems to be saying above that since the lawyer's cost of living has not increased to justify an award above $125 per hour, the lawyer must show that no competent lawyer could be found for $125 per hour, if the lawyer wants a rate above $125. He must prove one or the other; since he has not proven the former, he is left to prove the latter. Such a reading is consistent with the ...