Bauman v. Publix Super Markets, Inc. Employee Stock Ownership Plan et al

Filing 84

OPINION AND ORDER denying Defendants' Motion for Attorney's Fees 66 and denying as moot Plaintiff's Motion for Oral Argument 77 . Signed by Judge William S. Duffey, Jr on 1/23/18. (ddm)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
NEWNAN DIVISION
MICHAEL E. BAUMAN, by and
through Michael E. Sumner,
Conservator,
Plaintiff,
v.

3:15-cv-75-WSD

PUBLIX SUPER MARKETS, INC.
EMPLOYEE STOCK
OWNERSHIP PLAN, and PUBLIX
SUPER MARKETS, INC., as Plan
Administrator,
Defendants.

OPINION AND ORDER
This matter is before the Court on Defendants Publix Super Markets, Inc.
Employee Stock Ownership Plan (the “ESOP” or “Plan”) and Publix Super
Markets, Inc.’s (“Publix”) (collectively, “Defendants”) Motion for Attorney’s Fees
[66], and Plaintiff Michael E. Bauman’s (“Plaintiff”) Motion for Oral
Argument [77].
I.

BACKGROUND
This is an action, under the Employee Retirement Income Security Act

of 1974 (“ERISA”), “to recover benefits due” under an employee stock ownership

plan. 29 U.S.C. § 1132(a)(1)(B). Plaintiff, now a legally incompetent adult,
worked at Publix for almost seventeen years. When he left his job at Publix,
Publix sent him money to which he was entitled under the employee stock
ownership plan. Plaintiff lost all of the money in an internet scam. Plaintiff
claimed that, under the terms of the plan, Publix was required to send the money to
his conservator—not to Plaintiff directly—because Publix knew Plaintiff, at the
time, was legally incompetent. Publix denied Plaintiff’s claim for reinstatement of
the plan benefits he lost in the internet scam, and Plaintiff challenged Publix’s
denial under ERISA.
On March 17, 2017, the Court granted Defendants’ Motion for Summary
Judgment and denied Plaintiff’s Motion for Summary Judgment as untimely.
([63]). In granting Defendants’ motion, the Court found that delivering a letter to
the Publix location at which Plaintiff worked was insufficient to provide
Defendants with actual notice that Plaintiff was legally incompetent, and therefore
Defendants did not violate the provision of the ESOP prohibiting distributions
directly to legally incompetent individuals. This holding was affirmed by the
United States Court of Appeals for the Eleventh Circuit. Bauman by & through
Sumner v. Publix Super Markets, Inc. Emp. Stock Ownership Plan, No. 17-11709,
2017 WL 4510322 (11th Cir. Oct. 10, 2017).
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On March 31, 2017, Defendants filed their Motion for Attorney’s Fees
against Michael E. Sumner, “in his capacity as conservator under ERISA” and “in
his capacity as counsel of record under 28 U.S.C. § 1927 for unreasonably and
vexatiously multiplying these proceedings.” ([66]).
II.

DISCUSSION
A.

Attorney’s Fees Under ERISA

Pursuant to ERISA’s fee-shifting provision, a district court, “in its discretion
may allow a reasonable attorney’s fee and costs of action to either party,”
29 U.S.C. § 1132(g)(1), if that party achieved “some degree of success on the
merits.” Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 255 (2010). This
standard requires more than “trivial success on the merits” or a “purely procedural
victory.” Id. Once it is established that a party had “some degree” of success, the
Eleventh Circuit requires district courts to consider five factors when deciding
whether to award fees to a prevailing party:
(1) the degree of the opposing parties’ culpability or bad faith;
(2) the ability of the opposing parties to satisfy an award of attorney’s
fees;
(3) whether an award of attorney’s fees against the opposing parties
would deter other persons acting under similar circumstances;

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(4) whether the parties requesting attorney’s fees sought to benefit all
participants and beneficiaries of an ERISA plan or to resolve a
significant legal question regarding ERISA itself; [and]
(5) the relative merits of the parties’ positions.
AirTran Airways, Inc. v. Elem, 767 F.3d 1192, 1201 (11th Cir. 2014) (quoting
Freeman v. Continental Ins. Co., 996 F.2d 1116, 1119 (11th Cir. 1993)). “No one
of these factors is necessarily decisive, and some may not be apropos in a given
case, but together they are the nuclei of concerns that a court should address in
applying Section 502(g).” Iron Workers Local No. 272 v. Bowen, 624 F.2d 1255,
1266 (5th Cir. 1980).1
It is uncontested here that Defendants achieved “some degree of success on
the merits.” See Hardt, 560 U.S. at 255. The Court next considers the five factors.
First, Defendants argue that Mr. Sumner brought this action in bad faith due to an
alleged conflict of interest presented by his role as both attorney and conservator
for Mr. Bauman. Defendants allege that an unconflicted attorney would have
pursued claims against the conservator who delivered the legally insufficient letter
to the Publix supermarket, but due to Mr. Sumner’s dual roles, that avenue was

1

In Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir. 1981), the Eleventh
Circuit adopted as binding precedent all of the decisions of the former Fifth Circuit
handed down prior to the close of business on September 30, 1981.
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foreclosed to Plaintiff. Defendants also fault Mr. Sumner for bringing claims in
state court before exhausting Plaintiff’s administrative remedies.
Defendants do not argue that Mr. Bauman was culpable, choosing instead to
focus on the conflict they identified. This Court, however, previously addressed
and chose not to disqualify Mr. Sumner based on the conflict claimed. ([13]). Mr.
Sumner’s pursuit of a claim for his ward to recover an amount for which he had a
good faith legal claim, albeit ultimately unsuccessful, do not rise to the level of
“culpable” or “bad faith” conduct that warrants attorney’s fees under ERISA. The
first prong of this analysis weighs against Defendants.
The second element tips in favor of Defendants. Mr. Sumner did not put
forth persuasive evidence that he would be unable to satisfy an award of attorney’s
fees.
Mr. Sumner’s decision to assert Mr. Bauman’s claim was grounded in a
plausible interpretation of the facts and the plan language. As a result, the third
and fifth elements tip in favor of denying attorneys’ fees. Defendants misstate the
law by essentially arguing that because they were ultimately successful at the
summary judgment stage, Plaintiff’s claim was without merit.
Having weighed the factors, the Court finds that attorney’s fees are not
warranted here, particularly in light of the fact that Mr. Sumner brought claims on
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behalf of his ward in good faith. Defendants’ motion for attorney’s fees under
ERISA is denied.
B.

Attorney’s Fees Pursuant to 28 U.S.C. § 1927

Title 28 U.S.C. § 1927 states:
Any attorney or other person admitted to conduct cases in any court of
the United States or any Territory thereof who so multiplies the
proceedings in any case unreasonably and vexatiously may be
required by the court to satisfy personally the excess costs, expenses,
and attorneys’ fees reasonably incurred because of such conduct.
28 U.S.C. § 1927. The Eleventh Circuit has interpreted the statute to impose three
essential requirements for an award of sanctions: (1) “the attorney must engage in
‘unreasonable and vexatious’ conduct”; (2) “that ‘unreasonable and vexatious’
conduct must be conduct that ‘multiplies the proceedings’”; and (3) “the dollar
amount of the sanction must bear a financial nexus to the excess proceedings, i.e.,
the sanction may not exceed the ‘costs, expenses, and attorney’s fees reasonably
incurred because of such conduct.’” Amlong & Amlong, P.A. v. Denny’s Inc, 500
F.3d 1230, 1239 (11th Cir. 2007) (quoting Peterson v. BMI Refractories, 124 F.3d
1386, 1396 (11th Cir. 1997). The Eleventh Circuit has “consistently held that an
attorney multiplies proceedings ‘unreasonably and vexatiously’ within the meaning
of the statute only when the attorney’s conduct is so egregious that it is
‘tantamount to bad faith.’” Id.; see also Schwartz v. Millon Air, Inc., 341 F.3d
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1220, 1225 (11th Cir. 2003) (“‘Bad faith’ is the touchstone.”); Avirgan v. Hull,
932 F.2d 1572, 1582 (11th Cir.1991).
The Court cannot conclude that Plaintiff’s conduct warrants sanctions under
28 U.S.C. § 1927. Mr. Sumner was, if anything, negligent in prematurely filing
suit before exhausting Plaintiff’s administrative remedies. Negligent conduct
alone is insufficient to show bad faith. The Court is unable to find, on the record
before it, that the claim is frivolous, or that any party acted in bad faith or in a
manner that unreasonably or vexatiously multiplied the proceedings in this action.
III.

CONCLUSION
For the foregoing reasons,
IT IS HEREBY ORDERED that Defendants’ Motion for Attorney’s Fees

[66] is DENIED.
IT IS FURTHER ORDERED that Plaintiff’s Motion for Oral Argument is
[77] is DENIED AS MOOT.
SO ORDERED this 23rd day of January, 2018.

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