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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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 11 LIZABETH HEALY, Case No. 14-cv-00832-RS United States District Court Northern District of California Plaintiff, 12 v. ORDER RE MOTION FOR ATTORNEY FEES AND PREJUDGMENT INTEREST 13 14 FORTIS BENEFITS INSURANCE COMPANY, et al., Defendants. 15 16 Plaintiff Lizabeth Healy brought this action to challenge a determination that terminated 17 18 her benefits under a long-term disability insurance policy provided by her former employer. 19 Healy obtained summary judgment in her favor, and now seeks an award of attorney fees. She 20 also requests prejudgment interest at a rate in excess of that ordinarily allowed. Healey’s motion 21 has been submitted pursuant to Civil Local Rule 7-1(b) and will be granted in part, and denied in 22 part. 23 “Lawyers must eat, so they generally won’t take cases without a reasonable prospect of 24 getting paid.” Moreno v. City of Sacramento, 534 F.3d 1106, 1111 (9th Cir. 2008). 25 Acknowledging that fact, Congress has authorized courts to award reasonable attorney fees and 26 costs to parties who have obtained “some degree of success on the merits” when asserting claims 27 under the Employee Retirement Income and Security Act (“ERISA”). 29 U.S.C. § 1132(g); Hardt 28 v. Reliance Standard Life Ins. Co., 560 U.S. 242, 255 (2010). Here, the parties have appropriately 1 agreed that an award of fees is warranted under the applicable standards.1 The only issue to be 2 adjudicated is the amount of the award. Healy seeks a fee award of $156,862.50, plus expenses of 3 $6660.34,2 for a total of $163,522.84. Defendants contend a reasonable fees and costs award 4 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 5 6 number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate.” 7 Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). Defendants first question whether Healy has 8 met her burden to establish the reasonableness of the hourly rates claimed by counsel. Defendants 9 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 11 United States District Court Northern District of California 10 contingency basis, there is a lack of evidence that any clients have paid the claimed hourly rate. 12 Defendants argue that fee applications in ERISA actions like this are based on an “entire 13 structure” that is “a fiction.” Counsel submit declarations from other attorneys opining about fees 14 rates that are never actually charged, and courts award fees without, in defendants’ view, adequate 15 evidence of what prevailing rates actually are for clients who pay on an hourly basis. While 16 defendants’ concern about “phantom rates” is not frivolous, they have not shown that the claimed 17 rates are unreasonable in the context of a practice area that generally involves contingent rather 18 than hourly fees. Healy has made a sufficient showing that the hourly rates claimed by her 19 attorneys are reasonable. Review of the billing records submitted in support of the motion establishes that the hours 20 21 22 23 24 25 26 27 1 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)). 2 Healy’s reply brief concedes that $46.60 in non-recoverable meal expenses should be deducted from the original claim for costs. 28 CASE NO. 2 14-cv-00832-RS 1 claimed generally are reasonable, and that defendants’ arguments to the contrary are not 2 compelling. First, while there is no dispute that attorney fees incurred during the administrative 3 review phase of an ERISA matter are not recoverable, see Cann v. Carpenters’ Pension Trust 4 Fund for N. Cal., 989 F.2d 313, 316 (9th Cir. 1993), Healy has made an adequate showing that her 5 fee claim is limited to time incurred in preparation of this action, even though the administrative 6 proceeding may have been ongoing. 7 Next, while this action ultimately was adjudicated on the administrative record, there is no 8 categorical basis to preclude Healy from recovering fees expended in pursuit of discovery. See 9 Cabrales v. County of Los Angeles, 935 F.2d 1050, 1053 (9th Cir. 1991) (“Rare, indeed, is the 10 United States District Court Northern District of California 11 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, 12 defendants’ complaints that more than one attorney was present at certain events, that some billing 13 entries arguably lack detail, and that plaintiffs are seeking “fees on fees” all fail to present grounds 14 for excising specific entries from the fee claim. Similarly, with the exception of the meal costs 15 that Healy acknowledges are not recoverable, the costs claimed are appropriate. Accordingly the 16 motion for fees will be granted be the amount of $156,862.50, together with expenses of 17 $6,660.34. 18 Healy also requests prejudgment interest at a rate of 10%. A district court may award 19 prejudgment interest on an award of ERISA benefits at its discretion.” Blankenship v. Liberty Life 20 Assur. Co., 486 F.3d 620, 627-628 (9th Cir. 2007) (citations omitted). While the formula 21 prescribed for post-judgment interest under 28 U.S.C. § 1961 may be used to calculate the rate of 22 prejudgment interest, the Court may award a higher rate of interest if “the trial judge finds, on 23 substantial evidence, that the equities of that particular case require a different rate.” Grosz- 24 Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154, 1164 (9th Cir. 2001). Here Healy argues 25 that historically low interest rates render the usual rate insufficient to compensate her for her 26 losses. She has not, however, presented any evidence or argument of specific injuries that would 27 compel a departure from that rate. Accordingly, Healy may recover prejudgment and post- 28 CASE NO. 3 14-cv-00832-RS 1 judgment interest at the ordinary rate, but her motion regarding interest is otherwise denied. 2 3 IT IS SO ORDERED. 4 5 6 7 Dated: May 2, 2015 ______________________________________ RICHARD SEEBORG United States District Judge 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO. 4 14-cv-00832-RS

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