Healy v. Fortis Benefits Insurance Company et al

Filing 66

ORDER RE MOTION FOR ATTORNEY FEES AND PREJUDGMENT INTEREST. Signed by Judge Richard Seeborg on 5/2/16. (cl, COURT STAFF) (Filed on 5/2/2016)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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LIZABETH HEALY,

Case No. 14-cv-00832-RS

United States District Court
Northern District of California

Plaintiff,
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v.

ORDER RE MOTION FOR ATTORNEY
FEES AND PREJUDGMENT INTEREST

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FORTIS BENEFITS INSURANCE
COMPANY, et al.,
Defendants.

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Plaintiff Lizabeth Healy brought this action to challenge a determination that terminated

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her benefits under a long-term disability insurance policy provided by her former employer.

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Healy obtained summary judgment in her favor, and now seeks an award of attorney fees. She

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also requests prejudgment interest at a rate in excess of that ordinarily allowed. Healey’s motion

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has been submitted pursuant to Civil Local Rule 7-1(b) and will be granted in part, and denied in

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part.

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“Lawyers must eat, so they generally won’t take cases without a reasonable prospect of

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getting paid.” Moreno v. City of Sacramento, 534 F.3d 1106, 1111 (9th Cir. 2008).

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Acknowledging that fact, Congress has authorized courts to award reasonable attorney fees and

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costs to parties who have obtained “some degree of success on the merits” when asserting claims

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under the Employee Retirement Income and Security Act (“ERISA”). 29 U.S.C. § 1132(g); Hardt

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v. Reliance Standard Life Ins. Co., 560 U.S. 242, 255 (2010). Here, the parties have appropriately

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agreed that an award of fees is warranted under the applicable standards.1 The only issue to be

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adjudicated is the amount of the award. Healy seeks a fee award of $156,862.50, plus expenses of

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$6660.34,2 for a total of $163,522.84. Defendants contend a reasonable fees and costs award

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would total $101,785.67. Accordingly, the amount in controversy is slightly less than $62,000.
“The most useful starting point for determining the amount of a reasonable fee is the

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number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate.”

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Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). Defendants first question whether Healy has

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met her burden to establish the reasonableness of the hourly rates claimed by counsel. Defendants

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acknowledge that plaintiff’s lead counsel is “among the preeminent ERISA plaintiff’s attorneys in
Northern California.” Defendants argue, however, that because counsel represented Healy on a

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United States District Court
Northern District of California

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contingency basis, there is a lack of evidence that any clients have paid the claimed hourly rate.

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Defendants argue that fee applications in ERISA actions like this are based on an “entire

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structure” that is “a fiction.” Counsel submit declarations from other attorneys opining about fees

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rates that are never actually charged, and courts award fees without, in defendants’ view, adequate

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evidence of what prevailing rates actually are for clients who pay on an hourly basis. While

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defendants’ concern about “phantom rates” is not frivolous, they have not shown that the claimed

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rates are unreasonable in the context of a practice area that generally involves contingent rather

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than hourly fees. Healy has made a sufficient showing that the hourly rates claimed by her

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attorneys are reasonable.
Review of the billing records submitted in support of the motion establishes that the hours

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To assess whether an attorney’s fee award is appropriate in disputed cases, courts consider five
factors with an eye toward “protecting participants in employee benefit plans”: “(1) the degree of
the opposing parties’ culpability or bad faith”; (2) the opposing party’s ability to pay the award;
“(3) whether an award of fees would deter others from acting under similar circumstances; (4)
whether the parties requesting fees sought to benefit all plan participants or resolve a significant
legal question; and (5) the relative merits of the parties’ positions.” McElwaine v. US W., Inc.,
176 F.3d 1167, 1172 (9th Cir. 1999) (quoting Hummell v. Rykoff & Co., 634 F.2d 446, 453 (9th
Cir.1980)).
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Healy’s reply brief concedes that $46.60 in non-recoverable meal expenses should be deducted
from the original claim for costs.

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CASE NO.

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14-cv-00832-RS

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claimed generally are reasonable, and that defendants’ arguments to the contrary are not

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compelling. First, while there is no dispute that attorney fees incurred during the administrative

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review phase of an ERISA matter are not recoverable, see Cann v. Carpenters’ Pension Trust

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Fund for N. Cal., 989 F.2d 313, 316 (9th Cir. 1993), Healy has made an adequate showing that her

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fee claim is limited to time incurred in preparation of this action, even though the administrative

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proceeding may have been ongoing.

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Next, while this action ultimately was adjudicated on the administrative record, there is no

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categorical basis to preclude Healy from recovering fees expended in pursuit of discovery. See

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Cabrales v. County of Los Angeles, 935 F.2d 1050, 1053 (9th Cir. 1991) (“Rare, indeed, is the

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United States District Court
Northern District of California

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litigant who doesn’t lose some skirmishes on the way to winning the war.”)
Finally, because the billing records reflect that counsel has exercised billing judgment,

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defendants’ complaints that more than one attorney was present at certain events, that some billing

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entries arguably lack detail, and that plaintiffs are seeking “fees on fees” all fail to present grounds

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for excising specific entries from the fee claim. Similarly, with the exception of the meal costs

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that Healy acknowledges are not recoverable, the costs claimed are appropriate. Accordingly the

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motion for fees will be granted be the amount of $156,862.50, together with expenses of

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$6,660.34.

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Healy also requests prejudgment interest at a rate of 10%. A district court may award

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prejudgment interest on an award of ERISA benefits at its discretion.” Blankenship v. Liberty Life

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Assur. Co., 486 F.3d 620, 627-628 (9th Cir. 2007) (citations omitted). While the formula

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prescribed for post-judgment interest under 28 U.S.C. § 1961 may be used to calculate the rate of

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prejudgment interest, the Court may award a higher rate of interest if “the trial judge finds, on

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substantial evidence, that the equities of that particular case require a different rate.” Grosz-

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Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154, 1164 (9th Cir. 2001). Here Healy argues

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that historically low interest rates render the usual rate insufficient to compensate her for her

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losses. She has not, however, presented any evidence or argument of specific injuries that would

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compel a departure from that rate. Accordingly, Healy may recover prejudgment and post-

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CASE NO.

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14-cv-00832-RS

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judgment interest at the ordinary rate, but her motion regarding interest is otherwise denied.

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IT IS SO ORDERED.

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Dated: May 2, 2015
______________________________________
RICHARD SEEBORG
United States District Judge

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United States District Court
Northern District of California

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CASE NO.

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14-cv-00832-RS