Brasley v. Fearless Farris Service Stations, Inc. et al

Filing 167

MEMORANDUM DECISION AND ORDER granting 156 Plaintiff's Motion for Attorney Fees; denying 157 Defendant's Motion for Attorney Fees. Defendants shall pay $390,153.60 in attorney fees and $537.67 in costs. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by cjm)

Brasley v. Fearless Farris Service Stations, Inc. et al

Doc. 167

UNITED STATES DISTRICT COURT F O R THE DISTRICT OF IDAHO

E D W A R D BRASLEY, et al., C a s e No. 1:08-CV-173-BLW Plaintiffs, v. M E M O R A N D U M DECISION AND ORDER

F E A R L E S S FARRIS SERVICE S T A T IO N S , INC., et al., Defendants.

IN T R O D U C T IO N T h e Court has before it Plaintiffs' Motion for Award of Attorney Fees (Dkt. 156) a n d Defendants' Motion for Attorney Fees and Costs (Dkt. 157). L E G A L STANDARD T h e Court "in its discretion may allow a reasonable attorney's fee and costs of a c tio n to either party" in an ERISA action. Simonia v. Glendale Nissan/Infiniti Disability P la n , 608 F.3d 1118, 1120 (9th Cir. 2010); see also 29 U.S.C. § 1132(g)(1). The party c la im in g fees and costs need not be the prevailing party, but must show some degree of

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success on the merits. Id. (citing Hardt v. Reliance Standard Life Ins. Co., 130 S.Ct. 2 1 4 9 , 2156-59 (2010). A "claimant can satisfy that requirement if the court can fairly call th e outcome of the litigation some success on the merits without conducting a lengthy in q u ir[ y] into the question whether a particular party's success was substantial or o c c u rre d on a central issue." Id. at 1120-21 (citing Hardt, 130 S.Ct. at 2156-59). Once a party establishes "some degree of success on the merits," the Court may e x e rc ise its discretion to grant fees and costs under § 1132(g)(1). Id. In the Ninth C irc u it, a district court exercising its discretionary must consider five factors set forth in H u m m e ll v. S.E. Rykoff & Co., 634 F.2d 446 (9th Cir.1980). The factors are: "(1) the d e g re e of the opposing parties' culpability or bad faith; (2) the ability of the opposing p a rtie s to satisfy an award of fees; (3) whether an award of fees against the opposing p a rtie s would deter others from acting under similar circumstances; (4) whether the p a rtie s requesting fees sought to benefit all participants and beneficiaries of an ERISA p la n or to resolve a significant legal question regarding ERISA; and (5) the relative merits o f the parties' positions." Id. ANALYSIS 1. Plaintiffs' Motion for Attorney's Fees T h e Court will grant Plaintiff's request for a fee award. There is no question P la in tif f s attained some degree of success on the merits in this case. After issuing its F in d in g s of Fact and Conclusions of Law, the Court entered a final judgment in favor of

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all but two plaintiffs on Counts One, Two and Three. Only plaintiff Elliott's claims and P la in tif f s ' request for statutory penalties under Count Four were denied. T h e Court ordered Defendants to comply with ERISA and create and fund a plan, q u a lif ie d and consistent with the requirements of ERISA for Plan participants currently e m p lo ye d by Stinker Stores, Inc. The Court also ordered Defendants to purchase and p ro v id e to each plaintiff no longer employed by Stinker Stores, Inc. an annuity g u a ra n te e in g payment of monthly retirement benefits to each individual under the terms o f the Plan. Accordingly, Plaintiffs attained at least some degree of success on the merits. The Court will therefore address the five Hummell factors. A. Culpability or Bad Faith

A s explained in the Court's Findings of Fact and Conclusions of Law, sometime in th e 1980s, Fearless Farris Service Stations, Inc. ("Fearless") established a retirement plan, re f e rre d to as the Fearless Farris Service Stations, Inc. Deferred Compensation Plan (the " P la n " ). In 2002, certain purchasing entities formed by Defendants Charley Jones and S h a w n Davis purchased the common stock and assets of Fearless Farris Service Stations, In c ., Fearless Farris Wholesale, Inc., and their various subsidiary entities. As a result of th e purchase agreement, Jones/Davis became the sole shareholders and owners of F e a rle ss and its subsidiaries, which are all now part of Stinker Stores, Inc. ("Stinker"). S o o n after they acquired Fearless and its subsidiaries, Defendants sought to te rm in a te the Plan. Defendants provided the Plan participants with a memorandum

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stating that the "Plan is terminated effective 7/22/03." Joint Trial Ex. 6. It also stated th a t "[t]he company has no financial obligation to you as a result of the plan termination." Id. In an earlier, related case, one of the Plan participants, Ted Roberts, sued D e f e n d a n ts for terminating the Plan. The case was handled by Judge William F. Nielson f ro m the Eastern District of Washington, sitting by designation. As explained in more d e ta il in the Court's Findings of Fact and Conclusions of Law, Judge Nielsen concluded th a t the Plan was subject to ERISA, and that Defendants breached their fiduciary duties to f o llo w ERISA requirements for the Plan. Judge Nielsen required Defendants to make a rra n g e m e n ts to pay Roberts his benefits under the Plan. E v e n with that judgment in hand, Defendants forced Plaintiffs to bring this suit in o rd e r to obtain their benefits under the Plan. Only two months into this case, the Court d e te rm in e d that Judge Nielsen's findings of fact and conclusions of law in the Roberts c a s e had a preclusive effect to the extent Judge Nielsen made determinations generally a p p lic a b le to the Plan. Still, Defendants pressed on until this Court issued a final ju d g m e n t requiring Defendants to fulfill their duties under the Plan. T h e Court recognizes that at some point during this litigation, Defendants e s s e n tia lly conceded that they owed Plaintiffs an obligation under the Plan. However, the c a s e still proceeded all the way to trial. This shows at least some degree of culpability or

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bad faith on the part of Defendants.1 B. A b ility to Satisfy a Fee Award

D e f e n d a n ts concede that their ability to pay is greater than that of Plaintiffs. They s u g g e s t that any fee award will come from the general assets of Stinker which are not lim itle s s . Still, there is no real dispute that Defendants have the ability to pay a fee a w a rd . C. W h e th e r Fee Award Would Deter Others

D e f e n d a n ts contend that the unique circumstances of this case make this factor irre le v a n t. Defendants state that they have agreed to pay the benefits to former employees a n d provide an ERISA Plan for current employees. As explained above, the Court re c o g n iz e s that at some point during this litigation Defendants conceded they would be re q u ire d to pay benefits to Plaintiffs. However, that concession was not as voluntary as D e f e n d a n ts might suggest. As evidenced by the record, this matter went all the way to a b e n c h trial where Defendants were ultimately ordered by the Court to pay Plaintiffs their b e n e f its under the Plan. Under these circumstances, the Court finds that a fee award w o u ld deter other defendants in a similar situation from attempting to terminate a re tire m e n t plan.

Defendants reference this Court's earlier order denying both parties' request for fees on cross-motions for summary judgment. Neither party extensively briefed the fee issue at that point, and the Court simply noted that neither party addressed the summary judgment motions in a frivolous or vexatious manner. The Court is now addressing the fee issue with a complete record and extensive briefs by the parties, which gives the Court a better opportunity to decide the fee issue on the merits.
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D.

W h e th e r Plaintiffs Sought to Benefit All Participants and Beneficiaries

D e f e n d a n ts concede that Plaintiffs brought this action in part to benefit all p a rtic ip a n ts . E. R e la tiv e Merits of the Parties' Positions

The merits of the case are born out by the results. Plaintiffs prevailed on the bulk o f their claims, and Defendants were ordered to provide them with the benefits promised in the original Plan. Defendants prevailed only as to plaintiff Elliott's claims ­ one of a p p ro x im a te ly thirty plaintiffs ­ and on the statutory penalties claim. The merits of P la in tif f s ' claims outweigh the merits of Defendants' claims. 2. D e fe n d a n ts ' Motion for Attorney's Fees T h e Court will deny Defendants' request for a fee award. Defendants contend that th e y are entitled to fees for successfully defending plaintiff Elliott's claims, successfully d e f e n d in g the statutory penalties claim, and for any work done after the mediation b e c a u s e they agreed to pay benefits under the Plan at that point. A s explained above, a party claiming fees and costs need not be the prevailing p a rty, but must show some degree of success on the merits. Simonia, 608 F.3d at 1120. However, a trivial success or procedural victory does not satisfy this requirement. Id. (c itin g Hardt, 130 S.Ct. at 2156-59). Under the circumstances of this case, the Court concludes that successfully d e f e n d in g against plaintiff Elliott's claims was a trivial success. He was only one of

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approximately thirty plaintiffs, and his benefits would have been limited by his short time w ith the company. As for the request for any fees incurred post-mediation, the Court f in d s no merit in Defendants' argument. Although the Court recognizes that Defendants g e n e ra lly agreed they owed Plaintiffs benefits under the plan at that point, that concession w a s hollow until this Court entered its judgment. With respect to the statutory penalties claim, the Court finds that Defendants did, in fact, obtain a degree of success on the merits. The statutory penalties claim could have b e e n significant had Plaintiffs prevailed. However, the Court finds that the Hummell factors weigh against granting Defendants' request for a fee award. F irs t and foremost, the Court finds no culpability or bad faith on the part of P la in tif f s . As explained in detail in the Court's Findings of Fact and Conclusions of Law, P la in tif f s sought statutory penalties for Defendants' failure to provide Summary Plan D e s c rip tio n s in conformance with the form and contents requirements of ERISA § 102, S u m m a ry Annual Reports under ERISA § 104(b)(3), and Participant Benefit Statements in accordance with ERISA § 105(a). The award of administrative penalties was within th e discretion of the Court. 29 U.S.C. § 1132(c)(1). In this case, Defendants did not dispute or offer evidence that Plaintiffs did not re q u e s t the documents or that they provided the documents to Plaintiffs. Instead, D e f e n d a n ts suggested that the particular circumstances of this case supported the Court e x e rc isin g its discretion against an award of penalties. The Court agreed. However, that

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does not change the fact that the claim had some validity based on the facts. Therefore, P la in tif f s did not act in bad faith in bringing the claim for statutory penalties. T h e remaining Hummell factors also weigh against a fee award. There is no in d ic a tio n that Plaintiffs have much, if any, ability to satisfy a fee award, and the Court w o u ld not want to deter others from acting as Plaintiffs did in this case. Moreover, for th e most part, Defendants specifically fought to limit Plaintiffs claims to the named p la in tif f s as opposed to all Plan participants. Finally, as explained above, Plaintiffs c la im s were more meritorious than Defendants. Accordingly, the Court will exercise its d is c re tio n not to grant Defendant's request for a fee award. However, as explained b e lo w , the Court will reduce Plaintiffs' fee award to account for these areas where P la in tif f s did not prevail. 3. A m o u n t of Fees Defendants Must Pay Plaintiffs T h e Ninth Circuit follows the hybrid lodestar/multiplier approach as the proper m e th o d for determining the amount of attorney's fees in ERISA actions. Van Gerwen v. G u a r a n te e Mut. Life Co., 214 F.3d 1041, 1045 (9th Cir. 2000). This approach has two p a rts . First, the Court determines the lodestar amount by multiplying the number of hours re a s o n a b ly expended on the litigation by a reasonable hourly rate. Id. The party seeking f e e s must provide the Court with evidence of the hours worked and rates claimed. Id. The Court should exclude hours which are not reasonably expended because they are e x c e s s iv e , redundant, or otherwise unnecessary. Id

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Second, the Court may adjust the lodestar upward or downward using a multiplier. Id. This adjustment is based on factors not subsumed in the initial calculation of the lo d e s ta r. Id. However, the lodestar amount is presumptively the reasonable fee amount, s o a multiplier may be used to adjust the lodestar amount only in "rare and exceptional c a s e s , supported by both specific evidence on the record and detailed findings by the lo w e r courts that the lodestar amount is unreasonably low or unreasonably high." Id. (In te rn a l quotations and citations omitted). A review of the attorney declarations filed in support of Plaintiffs' request for fees re v e a ls that they were reasonable and sufficiently broken down into specific categories b a s e d on particular tasks, with some exceptions. The Court will address those exceptions a n d Defendants concerns below. A. H o u r ly Rates

D e f e n d a n ts take issue with the hourly rates billed by Plaintiffs' attorneys. The C o u rt must determine a reasonable hourly rate by considering the experience, skill and re p u ta tio n of the attorneys requesting fees. Schwarz v. Secretary of Health and Human S e r v ic e s , 73 F.3d 895, 906 (9th Cir. 1995). "A district court should calculate this re a s o n a b le hourly rate according to the prevailing market rates in the relevant community, w h ic h typically is the community in which the district court sits." Id. (Internal quotations a n d citations omitted). The relevant community in this case is Boise, Idaho, where this C o u rt sits.

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The Court has reviewed the affidavits of Plaintiffs' attorneys. These affidavits re v e a l that the rates charged by Plaintiffs' attorneys are reasonable. Mr. Huntley has over f if ty years of experience, much of it in front of this Court. His hourly rate of $350.00 is in line with other attorneys with similar experience in this market. Mr. Mandell has n e a rly thirty years of experience, mostly with ERISA matters. He too has practiced b e f o re this Court, and his hourly rate of $315.00 is also in line with attorneys with similar e x p e rie n c e in this market. Mr. Hughes has approximately fifteen years of experience, m u c h of it in the ERISA field. His hourly rate of $225.00 is also in line with someone w ith that experience in this market. Finally, the billing rates for Ms. McKinney and Mr. S c o tt are representative of new associates in this market. (See e.g., Suter v. National R e h a b Partners Inc., et al., 1:03-CV-15-BLW, Dkt. 103; LaPeter v. Canada Life In s u r a n c e of America, 1:06-CV-121-BLW; Dkt. 123). B. S p e c ific Objections by Defendants

D e f e n d a n ts argue that Plaintiffs' counsel failed to separate fees for work attributed to the claims on which Plaintiffs' prevailed from the claims on which they lost. These in c lu d e billings for work done on behalf of Elliott, as well as work done on the statutory p e n a ltie s cause of action. A review of the cost bills suggests there is some truth to D e f e n d a n ts ' contention. However, it is likely impossible for the attorneys to separate th e s e out. It is reasonable to believe that much of counsel's work overlapped ­ that is, m u c h of counsel's work likely involved more than one plaintiff and more than one cause

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of action. Separating these out in a billing statement in most circumstances would be too m u c h to ask of counsel. Moreover, much of this overlapping work would still be properly re c o v e ra b le because it also benefitted the other plaintiffs and claims on which Plaintiffs p re v a ile d . Therefore, rather than try to separate out these fees, which is likely impossible, th e Court finds that reducing Plaintiffs' fee award by 10% overall will reasonably account f o r these matters. This is so because Elliott was only one of approximately thirty p la in tif f s , and the statutory penalties claim was not at the heart of the litigation. T h e Court also notes that the relevant case law does not seem to suggest that the C o u rt must award fees on a claim by claim basis. As explained above, a party claiming f e e s need not be the prevailing party, so long as "the court can fairly call the outcome of th e litigation some success on the merits without conducting a lengthy inquir[y] into the q u e s tio n whether a particular party's success was substantial or occurred on a central is su e ." Simonia, 608 F.3d at 1120. The Court believes an argument could be made that P la in tif f s should recover all fees regardless of whether they prevailed on every claim. However, the Court feels that the better course is to discount the fees as explained above. Doing so seems more in line with the bulk of the Hummell factors. It more accurately a d d re s s e s the degree of Defendants' bad faith, deters other plaintiffs from advancing less p ro m isin g claims, and takes into consideration the merits of both parties' claims. D e f e n d a n ts also take issue with Plaintiffs' counsel's claim for fees associated with th e ir expert, Dr. Slaughter. The Court finds that it was not unreasonable for counsel to

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use Dr. Slaughter as an expert, even if the Court did not ultimately rely on his findings. Defendants cite no authority for the proposition that a fee award should be parsed out a c c o rd in g to whether a witness was ultimately relied upon by the judge or jury. The C o u rt will not remove the fees attributed to time spent with Dr. Slaughter from the fee a w a rd . D e f e n d a n ts next take issue with the number of motions and matters Plaintiffs b ro u g h t before the Court. The Court will not second guess counsel's every move in the c a s e in order to determine whether fees are appropriate, except to say that the Court is in tim a te ly familiar with the complexities of this case, and Plaintiffs' motion practice did n o t seem overly excessive to the Court. Defendants point out that Mr. Huntley's cost bill includes entries for timekeeper C F H at $350.00 per hour without any explanation of who that is or why he or she is e n title d to bill the client in that amount. The Court agrees with Defendants' concern, and w ill subtract the amounts billed by CFH from the fee award. A review of the cost bill s h o w s a total of $3,740.00 billed by CFH on 3/30/09, 3/31/09 and 4/01/09. D e f e n d a n ts suggest that Plaintiffs seek fees for redundant and unnecessary a tto rn e y work. Defendants suggest that Plaintiffs' counsel often had matters reviewed by m o re than one attorney. This was not unreasonable in this case. Both parties hired s p e c ia liz e d ERISA lawyers as well as experienced litigators to work on the case. Given th e complexities of this case, which this Court experienced first hand, it was not

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unreasonable to have both types of attorneys review matters. D e f e n d a n ts indicate that it is important for the Court to "consider . . . the fact that P la in tif f s ' counsel completely fails to account for the payment of attorney fees by D e f e n d a n ts for Katherine Ryan, or apportion fees before or during mediation for s e ttle m e n t of payment of Roberts." Def's Br. P. 17, Dkt. 161. The Court is not s u f f ic ie n tly informed regarding these settlement agreements to consider them ­ there are n o affidavits or declarations regarding the payment of any such fees in the record. C. M u ltip lie r

P la in tif f s ask the Court for a 2x multiplier. As explained above, the Court may a d ju s t the lodestar upward or downward using a multiplier. Van Gerwen, 214 F.3d at 1 0 4 5 . However, the lodestar amount is presumptively the reasonable fee amount, so a m u ltip lie r may be used to adjust the lodestar amount only in "rare and exceptional cases, s u p p o rte d by both specific evidence on the record and detailed findings by the lower c o u rts that the lodestar amount is unreasonably low or unreasonably high." Id. (Internal q u o ta tio n s and citations omitted). Some factors the Court should consider include the f o llo w in g : "(1) the time and labor required; (2) the novelty and difficulty of the issues; (3) th e skill requisite to perform the legal service properly; (4) the preclusion of employment b y the attorney due to acceptance of the case; (5) the customary fee; (6) time limitations im p o s e d by the client or the circumstances; (7) the amount involved and the results o b ta in e d ; (8) the experience, reputation and ability of the attorneys; (9) the

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"undesirability" of the case; (10) the nature and length of the professional relationship w ith the client; and (11) awards in similar cases." Id. at 1145, n.2. Here, the Court finds that the bulk of these factors do nothing one way or the other to affect application of a multiplier. Therefore, the Court is not persuaded that this is the ra re or exceptional case where a multiplier is appropriate. Although the case was c o m p le x and it took significant time and effort to obtain the judgment for Plaintiffs, the C o u rt feels that the fees listed in counsel's cost bills accurately reflect the work done on th e case. Of particular significance, the Court notes that two law firms worked the case f ro m start to finish for Plaintiffs. Although the Court recognized that this was acceptable b e c a u s e of the complexities of the case, the Court also considers this a sort of 2x m u ltip lie r in and of itself. Accordingly, the Court will not apply a multiplier to the fee a w a rd . D. F in a l Fee Award

B a se d on the foregoing, the Court finds that Defendants must pay Plaintiffs a total o f $390,153.60 in fees.2 E. C o s ts

T h e Court "in its discretion may allow a reasonable attorney's fee and costs of a c tio n to either party" in an ERISA action. Simonia, 608 F.3d at 1120 (emphasis added);

This amount is reached by taking $196,595.00 billed by the Huntley Law Firm, adding $240,649.00 billed by the ERISA Law Group, subtracting $3,740.00 billed by CFH, and subtracting 10% for work attributed to the Elliott and statutory penalties claims.
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2

see also 29 U.S.C. § 1132(g)(1). For the reasons explained above, the Court will also a w a rd Plaintiffs their costs, but will deny Defendants' their costs. However, the Court a g re e s with Defendants' objection to most of Plaintiffs' costs. D e f e n d a n ts do not dispute Plaintiffs' claim for $355.56 in costs for clerks and s e rv ic e fees. The Court will grant Plaintiffs those costs. D e f e n d a n ts do object to costs incurred in ordering a transcript of testimony of C h a rle y Jones during the trial. Local Rule 54.1(c)(2) states in relevant part that "[c]opies o f transcripts for counsel's own use are not taxable unless approved in advance by the C o u rt." They were not approved in advance in this case. Accordingly, the costs are not ta x a b le , and the Court will deduct $198.00 from Plaintiffs' costs as requested by D e f e n d a n ts . D e f e n d a n ts also object to Plaintiffs' request for deposition costs related to d e p o s itio n s of Elliott, Ryan and Wayment. Defendants contend that Elliott showed no " s u c c e s s on the merits" as required by Simonia, so his deposition costs of $155.13 should n o t be awarded. The Court agrees. Defendants also note that Ryan's claims were settled, s o her deposition costs of $$138.38 also should not be allowed. The Court agrees ­ p re s u m a b ly that was part of the Ryan settlement. Finally, Defendants claim that W a ym e n t's deposition costs should not be awarded because the deposition was not used a t trial. That is not the standard. As explained above, Wayment showed a degree of s u c c e s s on the merits, so his deposition costs of $182.11 are properly taxable.

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Defendants object to Plaintiffs' discretionary costs in the amount of $4,674.88 re la te d to expert fees, mediation fees and mailing and telephone conference fees. With re s p e c t to expert fees, Defendants point to the Ninth Circuit decision holding that 29 U .S .C . § 1132(g)(1), ERISA § 502(g)(1)'s allowance for costs, empowers courts to award o n ly the types of costs typically allowed by 28 U.S.C. § 1920, and only in the amounts a llo w e d by that section itself, by 28 U.S.C. § 1821 or similar provisions. Agredano v. M u tu a l of Omaha Companies, 75 F.3d 541, 544 (9th Cir. 1996). Plaintiffs do nothing to d is p u te this. Accordingly, the Court will deny Plaintiffs' request for expert costs of $ 2 , 1 9 7 .0 8 . A s for the mediation, telephone and mailing costs, Plaintiffs cite no authority for a llo w in g such costs. Accordingly, the Court will deny those costs in the amount of $ 2 ,1 8 7 .5 0 , $121.42 and $168.42 respectively. Accordingly, Defendants shall pay P la in tif f s $537.67 in costs.3 ORDER I T IS ORDERED: 1. P la in tif f s ' Motion for Award of Attorney Fees (Dkt. 156) is GRANTED. Defendants shall pay Plaintiffs $390,153.60 in attorney fees and $537.67 in c o s ts .

The Court reaches this amount by adding $355.56 for clerks and service fees and $182.11 for the Wayment deposition fees. All other requests for costs are denied.
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2.

D e f e n d a n ts' Motion for Attorney Fees and Costs (Dkt. 157) is DENIED.

DATED: November 23, 2010

Honorable B. Lynn Winmill Chief U. S. District Judge

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