Buster v. Mechanics Bank Supplemental Executive Retirement Plan et al

Filing 166

ORDER GRANTING #150 MOTION FOR ATTORNEY'S FEES, COSTS, AND PREJUDGMENT INTEREST by Judge William Alsup. (whalc2, COURT STAFF) (Filed on 10/2/2017)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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STEVEN K. BUSTER,

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For the Northern District of California

United States District Court

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Plaintiff,

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No. C 16-01146 WHA

v.
COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS OF MECHANICS
BANK; MECHANICS BANK
SUPPLEMENTAL EXECUTIVE
RETIREMENT PLAN; and MECHANICS
BANK, a California Corporation,

ORDER GRANTING MOTION
FOR ATTORNEY’S FEES,
COSTS, AND PREJUDGMENT
INTEREST

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Defendants.
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/

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INTRODUCTION
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Plaintiff in this ERISA action moves for attorney’s fees, costs, and prejudgment interest
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following judgment in his favor. The motion is GRANTED.
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STATEMENT
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The factual and procedural background of this action has been set forth in detail in prior
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orders (Dkt. Nos. 67, 93, 144) and need not be repeated here. In brief, plaintiff Steven Buster
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brought this action against defendants Mechanics Bank, its Supplemental Executive Retirement
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Plan (SERP), and the compensation committee of its board of directors to recover SERP
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benefits under the Employee Retirement Income Security Act of 1974. After a prior order
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denied both sides’ cross-motions for summary judgment, this action proceeded to a bench trial
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on the administrative record (Dkt. No. 93).

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An order after the bench trial found that the bank owed Buster all benefits sought herein

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(Dkt. No. 144). Judgment was entered accordingly (Dkt. No. 147). The bank has appealed

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(Dkt. No. 148). Buster now moves for attorney’s fees, costs, and prejudgment interest (Dkt.

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No. 150). This order follows full briefing and oral argument.

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ANALYSIS

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1.

ATTORNEY’S FEES.

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Section 1132(g)(1) of Title 29 of the United States Code provides, “the court in its

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discretion may allow a reasonable attorney’s fee and costs of action to either party.” The

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Supreme Court has held that “a fee claimant need not be a ‘prevailing party’” but “must show
‘some degree of success on the merits’ before a court may award attorney’s fees under [Section]

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For the Northern District of California

United States District Court

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1132(g)(1).” Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 252, 255 (2010). Our

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court of appeals has further explained that, “absent special circumstances, a prevailing ERISA

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employee plaintiff should ordinarily receive attorney’s fees from the defendant.” Smith v.

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CMTA-IAM Pension Trust, 746 F.2d 587, 590 (9th Cir. 1984).

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In our circuit, a court exercising its discretion under Section 1132(g)(1) should consider,

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among other things, “(1) the degree of the opposing parties’ culpability or bad faith; (2) the

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ability of the opposing parties to satisfy an award of fees; (3) whether an award of fees against

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the opposing parties would deter others from acting under similar circumstances; (4) whether

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the parties requesting fees sought to benefit all participants and beneficiaries of an ERISA plan

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or to resolve a significant legal question regarding ERISA; and (5) the relative merits of the

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parties’ positions.” Hummell v. S. E. Rykoff & Co., 634 F.2d 446, 453 (9th Cir. 1980).

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Here, Buster undoubtedly achieved “some degree of success on the merits.” This order
therefore turns to the Hummell factors.
A.

Culpability or Bad Faith.

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The July 14 order setting forth findings of fact and conclusions of law after the bench

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trial described in detail the evidentiary record revealing the bank’s culpability in this dispute,

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including the unreasonableness of its litigation positions (see Dkt. No. 144). The bank points

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out that it disagrees with that order (Dkt. No. 155 at 5). That disagreement will be considered
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by our court of appeals in due course (see Dkt. No. 148). For now, however, the findings and

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conclusions set forth in that order more than adequately demonstrate that this factor weighs in

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favor of granting attorney’s fees.

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B.

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Ability to Pay.

The bank concedes it “has sufficient financial resources to satisfy an attorney’s fees

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award in the amount requested” (Dkt. No. 155 at 6). This factor also weighs in favor of

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granting attorney’s fees.

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C.

Deterrence.

The bank’s opposition to the instant motion does not address the deterrence factor headon but merely rehashes the argument that the bank reasonably handled Buster’s claim for

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United States District Court

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benefits and reasonably defended this litigation (ibid.). As explained in the July 14 order, this

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argument is unpersuasive. An award of attorney’s fees here, particularly one that acknowledges

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the bank’s misconduct and unreasonable arguments, would likely deter other employers

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tempted to shortchange their employees’ retirement benefits under similar circumstances. This

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factor also weighs in favor of granting attorney’s fees.

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D.

Benefitting Others.

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Although Buster essentially argues that his victory here will coincidentally benefit other

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individuals insofar as it will encourage the bank to behave more scrupulously (see Dkt. No. 150

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at 10–11), the bottom line remains that he brought this action solely for his own benefit. In

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doing so, however, he raised novel and significant questions of ERISA law — including, for

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example, whether “the administrator of a top-hat plan could escape the reach of equitable

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remedies under Section 502(a)(3) simply because it was exempt from the higher fiduciary

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standard of care” (see Dkt. No. 67 at 8).

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The bank counters that “the Court’s final determination and Order did not reach any

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conclusions with regard to those [equitable] claims” (Dkt. No. 155 at 7). This argument misses

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the point. First, this Hummell factor considers whether Buster “sought to . . . resolve a

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significant legal question regarding ERISA,” not whether the “significant legal question”

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persisted through the end of the case. Hummell, 634 F.2d at 453. Second, the specific
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aforementioned legal question about the applicability of equitable remedies to top-hat plan

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administrators was resolved on a motion to dismiss (see Dkt. No. 67). That resolution is no less

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meaningful for having occurred before a final decision on the merits. In short, this factor

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weighs slightly in favor of granting attorney’s fees.

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E.

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Relative Merits.

As explained in the July 14 order, the relative merits of this case weigh in Buster’s

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favor. The bank simply reiterates that it “disagree[s] with a number of the findings and

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conclusions reached in the Court’s Order, and intend[s] to challenge those findings and

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conclusions on appeal” (Dkt. No. 155 at 7). Again, our court of appeals will consider that
disagreement in due course. For now, however, this factor weighs in favor of granting

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United States District Court

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attorney’s fees.

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In summary, the Hummell factors, taken as a whole, weigh in favor of granting

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attorney’s fees. This order decides only the question of entitlement to fees. A companion order

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will set forth the procedure to determine the appropriate amount of the fee award.*

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2.

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“A district court may award prejudgment interest on an award of ERISA benefits at its

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discretion.” Blankenship v. Liberty Life Assur. Co. of Boston, 486 F.3d 620, 627–28 (9th Cir.

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2007) (citations omitted). “Prejudgment interest is an element of compensation, not a penalty.”

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Dishman v. UNUM Life Ins. Co. of Am., 269 F.3d 974, 988 (9th Cir. 2001). “Whether interest

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will be awarded is a question of fairness . . . to be answered by balancing the equities.” Shaw v.

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Int’l Ass’n of Machinists & Aerospace Workers Pension Plan, 750 F.2d 1456, 1465 (9th Cir.

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1985) (quotation and citation omitted). Generally, the interest rate prescribed for postjudgment

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interest under Section 1961 of Title 28 of the United States Code is appropriate for fixing the

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rate of prejudgment interest unless the district court finds, on substantial evidence, that the

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equities of a particular case require a different rate. Blankenship, 486 F.3d at 628.

PREJUDGMENT INTEREST.

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*

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Buster also requests $16,267.35 in litigation costs (Dkt. No. 150 at 23). The bank does not challenge
this request. The Clerk’s Office taxed costs in the amount of $14,386.66 (Dkt. No. 165). This order does not
disturb that decision.

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Buster seeks prejudgment interest based on the rates prescribed under Section 1961,

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compounded monthly (Dkt. No. 150 at 25). Under those conditions, Buster’s counsel calculates

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the total amount of prejudgment interest owed to be $1,387.90 (see Dk. No. 150-2). The bank

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challenges neither Buster’s request for prejudgment interest nor his counsel’s calculation of the

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amount. This order concludes that the balance of equities supports an award of prejudgment

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interest in the amount requested.

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CONCLUSION
To the extent stated above, plaintiff’s motion for attorney’s fees, costs, and prejudgment

respect to attorney’s fees, as stated, this order decides only the question of entitlement. A

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For the Northern District of California

interest is GRANTED. Plaintiff is hereby awarded $1,387.90 in prejudgment interest. With

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United States District Court

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companion order will set forth the procedure to determine the appropriate amount of the award.

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IT IS SO ORDERED.

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Dated: October 2, 2017.

WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE

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