Prather v. Sun Life Financial Distributors, Inc.
Filing
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OPINION entered by Judge Richard Mills on 4/27/2017. The Plaintiff's Motion for Attorney's Fees and Costs, d/e 37 is ALLOWED. The Defendant shall pay the Plaintiff's attorney's fees in the amount of $29,575.50, as provide d in this order. Pursuant to the Bill of Costs, d/e [37-2], the Clerk will tax costs in the amount of $460.00. The Plaintiff's Motion for Prejudgment Interest, d/e 42 is ALLOWED in part, as provided in this order. The Defendant shall pay prejudgment interest in the amount of $10,936.59. Judgment to be amended accordingly. (SEE WRITTEN OPINION) (MAS, ilcd)
E-FILED
Thursday, 27 April, 2017 09:00:16 AM
Clerk, U.S. District Court, ILCD
IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF ILLINOIS
SPRINGFIELD DIVISION
LEE ANN PRATHER,
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Plaintiff,
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v.
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SUN LIFE FINANCIAL DISTRIBUTORS, INC., )
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Defendant.
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Case No. 14-3273
OPINION
RICHARD MILLS, United States District Judge:
There are two motions.
One is for Plaintiff’s attorney’s fees and costs.
The other is for prejudgment interest.
I. ATTORNEY’S FEES AND COSTS
This action was brought pursuant to the Employee Retirement Income
Security Act (ERISA) seeking benefits due under the terms of an employee benefit
plan. See 29 U.S.C. § 1132(A)(1)(b). Following the Mandate of the United States
Court of Appeals for the Seventh Circuit, the Court entered Judgment in favor of
Plaintiff Lee Ann Prather for the full amount of benefits sought.
(A)
Under ERISA, courts have the discretion to award “a reasonable attorney’s
fee and costs of action to either party.” 29 U.S.C. § 1132(g)(1). A party must
show “some degree of success on the merits” before claiming an attorney’s fee
award under § 1132(g)(1). See Hardt v. Reliance Standard Life Ins. Co., 560 U.S.
242, 245 (2010). As previously noted, the Plaintiff ultimately achieved complete
success on the merits of the lawsuit. The Seventh Circuit stated “[t]hat makes it an
easy case for us to exercise discretion favorably to her,” in awarding reasonable
attorney’s fees and costs on appeal. See Prather v. Sun Life and Health Insurance
Co., 852 F.3d 697, 2017 WL 1173697, at *1 (7th Cir. Mar. 30, 2017).
Another test the Seventh Circuit has used in considering an award of
attorney’s fees and costs involves an examination of the following factors: “1) the
degree of the offending parties’ culpability; 2) the degree of the ability of the
offending parties to satisfy an award of attorneys’ fees; 3) whether or not an award
of attorneys’ fees against the offending parties would deter other persons acting
under similar circumstances; 4) the amount of benefit conferred on members of the
pension plan as a whole; and 5) the relative merits of the parties’ positions.”
Temme v. Bemis Co., 762 F.3d 544, 547 (7th Cir. 2014). In examining these
factors when considering whether to award attorney’s fees and costs on appeal, the
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Seventh Circuit noted it had no information regarding the amount of benefit
conferred on members of the pension plan. See Prather, 852 F.3d 697, at *2.
However, the other four factors favored the Plaintiff. Because “[t]he score is 4 to 0
in favor of the plaintiff,” the Seventh Circuit stated that “[f]ee-shifting under
ERISA is entirely appropriate” in a case like this–when the insurance company
denied her claim “without medical evidence and then put her through all the hoops
of litigation.” See id.
Based on the foregoing, four of the five factors favor the Plaintiff and the
other factor favors either the Defendant or is simply inapplicable. Under either
standard–the Plaintiff’s complete success on the merits or the five-factor test–the
Plaintiff is entitled to an award of reasonable attorney’s fees and costs.
The Defendant correctly notes that this Court initially found in its favor. It
contends, therefore, that its denial of the Plaintiff’s claim cannot be held to be
unjustified.
Based on its defenses and this Court’s previous findings, the
Defendant alleges it is not culpable. Given that this Court is bound by the rulings
of the Seventh Circuit, this Court’s earlier ruling is no longer good law and cannot
be used by the Defendant to justify its position. The Seventh Circuit previously
stated, “Sun Life failed to make any plausible showing that the surgery on
Prather’s ankle, rather than the accident that necessitated the surgery, caused his
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death.” Prather v. Sun Life and Health Insurance Co., 843 F.3d 733, 735-36 (7th
Cir. 2016). That is now the law of the case. Accordingly, the Court finds that the
Plaintiff is entitled to an award of attorney’s fees and costs.
(B)
Attached to the Plaintiff’s Motion are the itemized time sheets of counsel.
The Plaintiff alleges the amount of time listed was reasonably required to prosecute
the district court proceeding and consult regarding the appeal and remand. The
Plaintiff seeks attorney’s fees in the total amount of $37,919.50 for the services of
Attorney Gregory P. Sgro, Legal Intern and Associate Attorney Benjamin M. Sgro
and Attorney Ellen C. Bruce of the law firm of Sgro, Hanrahan, Durr, Rabin &
Bruce, LLP, and reimbursable costs of $460.00.
The Defendant contends that, even assuming the Plaintiff is entitled to an
award of attorney’s fees, the amounts requested are “clearly excessive.” “The most
useful starting point for determining the amount of a reasonable fee is the number
of hours reasonably expended on the litigation multiplied by a reasonable hourly
rate.” Hensley v. Eckerhart, 461 U.S. 424, 433 (1983).
The Defendant alleges that Plaintiff’s attorneys’ fee petition charges for
rates as if counsel are experts in the field. However, they “spend staggering
amounts of time on the completion of simple tasks, the research of rudimentary and
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ultimately unsuccessful issues” and the filing of motions that should not have been
filed. See Doc. No. 40, at 11. The Defendant contends that, based on the level of
experience of Plaintiff’s counsel, they should not have spent as much time on those
relatively simple or straightforward tasks.
At the time legal services were rendered in this case, Attorney Gregory P.
Sgro had been admitted to the State of Illinois Bar for nearly 30 years. Given his
level of experience, the Court concludes that Mr. Sgro’s hourly rate of $345.00 per
hour is reasonable. Attorney Ellen C. Bruce had been admitted for nearly ten
years. The Court finds Ms. Bruce’s hourly rate of $250.00 to be reasonable.
The Court agrees with the Defendant that Benjamin M. Sgro’s hourly rate
for services performed as a legal intern should be lower than the rate he charged
while working as an associate attorney.
Mr. Sgro was admitted to the State of
Illinois Bar in 2015 and worked on this case as both a legal intern and an associate.
The time sheets show that Mr. Sgro was compensated at $175.00 per hour in both
capacities. The Court finds the $175.00 amount to be reasonable when Mr. Sgro
was providing services as an associate attorney. However, Mr. Sgro should be
compensated at a lower rate when acting as a legal intern. The Court finds that
$125.00 per hour is an appropriate amount for services provided by Mr. Sgro as a
legal intern.
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(C)
The Defendant states that Plaintiff appears to have included fees for services
rendered during the administrative review of the Plaintiff’s claim. A number of
courts have held that fees for those services are not recoverable. See Parke v. First
Reliance Standard Life Ins. Co., 368 F.3d 999, 1011 (8th Cir. 2004) (“We join the
Second, Fourth, Sixth, and Ninth Circuits in holding that the term “any action” in
29 U.S.C. § 1132(g)(1) does not extend to pre-litigation administrative
proceedings,” and reversing the portion of the fee award attributable to such
proceedings); see also Cann v. Carpenters’ Pension Trust Fund for Northern
California, 989 F.2d 313, 317 (9th Cir. 1993); Anderson v. Proctor & Gamble Co.,
220 F.3d 449, 452 (6th Cir. 2000). The Defendant contends that only time spent
drafting the actual complaint should be found to be compensable.
The Court agrees that pre-litigation fees should not be compensable under
ERISA, except for fees incurred based on a reasonable amount of time
investigating and/or researching the allegations and drafting of the complaint. The
Plaintiff’s complaint was filed on September 2, 2014. Attorney Gregory P. Sgro
has billed for services starting on February 10, 2014. There are approximately 30
itemized services listed between February 10, 2014 and September 2, 2014,
amounting to 11.1 hours of service prior to the filing of the complaint. The listings
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include correspondence, telephone conferences, ERISA research and working on
the complaint. The Court believes that, under the circumstances of this case, 5
hours would be a reasonable amount of time to perform the compensable services
associated with the complaint. Accordingly, the Court will reduce Mr. Sgro’s
claimed amount of 51.5 hours by 6.1 hours, resulting in 45.4 hours.
Attorney Benjamin M. Sgro began working on the case as a legal intern on
August 19, 2014, or approximately two weeks before the complaint was filed. He
claims 6.1 hours of work prior to September 2, 2014.
These hours include
researching and preparing a draft of the complaint, in addition to other tasks. The
Court will reduce Mr. Sgro’s fee request by 2.1 hours to properly account for the
amount of time he researched or worked on the complaint. Mr. Sgro will be
compensated for performing 4 hours of pre-litigation work as a legal intern.
Benjamin Sgro claimed 60.5 hours of work as a legal intern. That figure is
reduced by 2.1 hours for a total of 58.4 hours at $125.00, resulting in a total of
$7,300.00 for Mr. Sgro’s work as a legal intern.
Attorney Ellen C. Bruce lists 2.7 hours of pre-litigation work, most of which
relates to preparing the complaint in some manner. Ms. Bruce’s time claim will be
reduced by .2 hours for a total of 2.5 hours of pre-litigation work, thereby reducing
the total hours claimed from 22.3 to 22.1.
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The Defendant further alleges that the total number of hours expended on
this case (157.2) was disproportionate to the Plaintiff’s attorneys’ claimed level of
experience, resulting in redundancy and an excessive amount of hours claimed.
Moreover, the Defendant contends that work was duplicated and the case was
overstaffed.
Obviously, it is difficult at the conclusion of a case for a court to determine
how much work was necessary for counsel to perform in order to obtain a
favorable result. In considering the amount of appellate attorney’s fees to allow,
the Seventh Circuit reduced the Plaintiff’s appellate counsel’s fee amount based on
the hours listed as follows:
It remains to consider Sun Life's challenge to the amount of the
award of attorneys' fees ($37,170). We are persuaded by its
argument that 3.6 hours of the attorney's work should be
subtracted because they were hours devoted to simple
administrative tasks such as preparing the table of contents and
appendix of the brief, and formatting the brief; 4.4 hours
incurred by failing to delegate portions of the research, drafting,
and editing of the brief to a more junior attorney; and 2 hours
for preparation for oral argument, which was too much time
given the lawyer's experience in arguing in the courts of
appeals. The result of these adjustments is to reduce the number
of hours on which the $37,170 fee award is based from 59 to
49, yielding (with a further adjustment, reducing the attorney's
billing rate from $630 to $620, on the ground that the $630 rate
reflected an excessive rate increase of 5 percent from his hourly
rate of $600 in 2015) a total fee award of $30,380—which is
the amount we award the plaintiff.
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Prather, 852 F.3d 697, at *2. Some of the hours claimed by counsel for work in
this Court will be subtracted for similar reasons.
The Court has carefully reviewed the itemized statements of the three
attorneys who worked on this case for the Plaintiff. A number of hours claimed by
counsel are for tasks such as telephone or in-person conferences, correspondence
and e-mail exchanges. Some of that work appears to have been duplicative and
unnecessary. To account for those possibilities, the Court will further subtract 6
hours of services performed by Attorney Gregory P. Sgro, 2 hours of services
performed by Attorney Benjamin M. Sgro and 2 hours of services prepared by
Attorney Ellen C. Bruce.
Following these adjustments, the Court finds that Gregory P. Sgro should be
compensated for 39.4 hours of work. Based on 39.4 hours of work at $345.00 per
hour, the Court concludes that Mr. Sgro is entitled to $13,593.00 in attorney’s fees,
rather than the $17,767.50 claimed.
The Court finds that Attorney Benjamin M. Sgro should be compensated for
20.9 hours of work performed as an associate attorney. At $175.00 per hour, that
results in attorney’s fees of $3,657.50 for Mr. Sgro, instead of the $4,007.50
claimed.
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The Court finds that Attorney Ellen C. Bruce should be compensated for
20.1 hours. At $250.00 per hour, that results in attorney’s fees of $5,025.00,
instead of the $5,575.00 claimed.
The amount of fees claimed by the law firm was $37,919.50.
Upon
reviewing the itemized list of services, for the reasons stated herein, the Court finds
that Sgro, Hanrahan, Durr, Rabin & Bruce, LLP, is entitled to $29,575.50 in fees
for work performed on this case.
II. PRE-JUDGMENT INTEREST
The Plaintiff also seeks an award of pre-judgment interest. Prejudgment
interest “is simply an ingredient of full compensation that corrects judgments for
the time value of money.” Pickett v. Sheridan Health Care Center, 813 F.3d 640,
646 (7th Cir. 2016). “The basic purpose of prejudgment interest is to put a party in
the position it would have been in had it been paid immediately.” American Nat.
Fire Ins. Co. v. Yellow Freight Systems, Inc., 325 F.3d 924, 935 (7th Cir. 2003).
Therefore, prejudgment interest generally accrues from the date of the loss or from
the date on which the claim accrued. See id.
The Plaintiff requested pre-judgment interest in her complaint and amended
complaint and repeated her request in her motion for summary judgment. The
Plaintiff also requested an award of pre-judgment interest in her appellate brief.
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The Defendant notes that the Seventh Circuit did not order pre-judgment interest in
its opinion mandating that the Court reverse its judgment.
However, “[t]he
decision to award prejudgment interest lies within the discretion of the district
court.” Pickett, 813 F.3d at 647. Following the Seventh Circuit’s mandate, this
Court did not order that prejudgment interest be included in the amended
judgment.
The amended judgment in this case was entered on January 6, 2017. The
Plaintiff did not file her motion for prejudgment interest until March 6, 2017. The
Defendant contends that Plaintiff’s motion is untimely under Federal Rule of Civil
Procedure 59(e), which requires a motion to alter or amend judgment to be filed no
later than 28 days after the entry of judgment. To the extent the motion is untimely
under Rule 59(e), the Court can consider the motion under Rule 60(b). See Banks
v. Chi. Bd. of Educ., 750 F.3d 663, 666 (7th Cir. 2014) (“When a motion is filed
more than 28 days after the entry of judgment, whether the movant calls it a Rule
59(e) motion or a Rule 60(b) motion, we treat it as a Rule 60(b) motion.”).
The Court notes that Plaintiff has consistently requested pre-judgment
interest throughout this litigation. When this Court entered the amended judgment,
it did so two days after the Seventh Circuit’s mandate reversing the previous
judgment and directing the entry of judgment in favor of the Plaintiff. The parties
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did not file briefs requesting any particular relief. Although the Plaintiff should
have filed the motion sooner, the Court concludes that the failure to do so was
excusable under these circumstances.
The Plaintiff alleges that, because she has become both a widow and a single
mother of the Decedent’s two young children and, as a result of the incident giving
rise to this claim, an award of prejudgment interest would help compensate her for
the time she was forced to make ends meet without payment of the policy benefits
eventually awarded by the Court.
The Defendant asserts that several factors weigh against an award of prejudgment interest. These include: (1) the Plaintiff’s delay in providing requested
evidence during the claim review–the Defendant did not receive the Plaintiff’s
request for benefits until October 16, 2013 (Mr. Prather died on August 6, 2013)
and requested medical evidence on December 10, 2013 and January 6, 2014; and
(2) the Court’s initial judgment in Sun Life’s favor on March 29, 2016. The
Defendant contends that allowing prejudgment interest from the date of Mr.
Prather’s death would be inequitable based on the relative merits of the
Defendant’s position. Additionally, the Defendant did not have all of the relevant
evidence until January 2014, when it denied the Plaintiff’s claim based on the
autopsy and medical records.
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Although the Court initially found in its favor, the Defendant can no longer
rely on that result in support of its argument. As the Seventh Circuit observed,
“Even though she had a meritorious claim, the insurance company denied it
without medical evidence and then put her through all the hoops of litigation.”
Prather, 852 F.3d 697, 2017 WL 1173697, at *2. The Seventh Circuit found that
to be an appropriate reason to award attorney’s fees and costs. It is also a factor in
this Court’s determination that Plaintiff is entitled to prejudgment interest.
Upon considering the evidence in the record and the parties’ arguments, the
Court concludes that an award of pre-judgment interest is appropriate in order to
place the Plaintiff in the position she would have been in if the Defendant would
have allowed the claim when it had access to all of the medical evidence. Because
the Defendant had access to this information in January 2014, the Court concludes
that an award of prejudgment interest from January 2014 to the entry of judgment
in favor of the Plaintiff in January 2017 is appropriate.
Compound interest is the norm in federal litigation when prejudgment
interest is authorized. See Premium Plus Partners, L.P. v. Goldman Sachs & Co.,
648 F.3d 533, 538 (7th Cir. 2011). The Court finds that monthly compounding is
appropriate and the Court agrees with the Plaintiff that the Federal Prime Rate of
3.75% should be used to calculate the sum of interest due. Based on the Court’s
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calculation, compound interest on $92,000 at a rate of 3.75% over 3 years results in
$10,936.59 in interest due by the Defendant.
Ergo, the Plaintiff’s Motion for Attorney’s Fees and Costs [d/e 37] is
ALLOWED.
The Defendant shall pay the Plaintiff’s attorney’s fees in the amount of
$29,575.50, as provided in this Order.
Pursuant to the Bill of Costs [d/e 37-2], the Clerk will tax costs in the
amount of $460.00.
The Plaintiff’s Motion for Prejudgment Interest [d/e 42] is ALLOWED in
part, as provided in this Order.
The Defendant shall pay prejudgment interest in the amount of $10,936.59.
The Clerk shall amend the Judgment accordingly.
ENTER: April 27, 2017
FOR THE COURT:
/s/ Richard Mills
Richard Mills
United States District Judge
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