Chicago Graphic Arts Health & Welfare Plan v. Castaneda et al

Filing 36

MEMORANDUM OPINION signed by Judge Charles P. Kocoras on 2/7/2008.Mailed notice(sct, )

C h i c a g o Graphic Arts Health & Welfare Plan v. Castaneda et al

D o c . 36

UNITED STATES DISTRICT COURT N O R T H E R N DISTRICT OF ILLINOIS E A S T E R N DIVISION

C H IC A G O GRAPHIC ARTS HEALTH & W E L F A R E PLAN, a multiemployer plan, b y ROBERT MILLER AND JAMES M A D D E N , in their capacity as Trustees. P l a i n t i ffs , v s. R O L A N D O CASTANEDA, SR., in d iv id u ally and as "Next Friend" to R o lan d Castaneda, Jr., and R O L A N D O CASTANEDA, JR., D e fe n d a n t s .

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M E M O R A N D U M OPINION C H A R L E S P. KOCORAS, District Judge: T h is matter comes before the court on the motion of Plaintiffs Chicago Graphic A rts Health & Welfare Plan, Robert Miller, and James Madden (collectively referred to as "the Plan") for attorneys' fees and nontaxable expenses. For the reasons set forth b elo w , the motion is granted in part and denied in part. BACKGROUND T h is case involved a dispute between the Plan and Defendants Rolando C astan ed a, Sr. (Rolando Sr.) and Rolando Castaneda, Jr. ("Rolando Jr."). In late July 2 0 0 3 , Rolando Jr. received medical treatment that was paid for by the Plan. His father, R o la n d o Sr., was a participant in the Plan at that time. The Castanedas brought a state-

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co u rt action against the parties responsible for causing Rolando Jr.'s injuries and ev en tu ally settled for $137,500. The Plan asserted a subrogation claim for the amounts it expended for Rolando Jr.'s medical care. The Plan filed a motion for summary judgment, which was granted after it went u n a n s w e re d by the Castanedas. The amount awarded in damages, $8,379.48, was p ro m p tly paid to the Plan. Shortly after the ruling issued, the Plan requested an award o f costs consisting of the $350 filing fee for the case; this request was also granted. N o w , pursuant to 29 U.S.C. § 1132(g)(1), the Plan requests attorneys' fees and n o n ta x ab le expenses totalling $12,424.93 claimed to have been incurred in the p ro secu tio n of this suit. L E G A L STANDARD U n d er the so-called "American rule," a party to a lawsuit pays its own attorneys' fees absent some sort of authority to shift the burden, such as a statute, a rule of p ro c e d u re, or prior agreement of the parties. See, e.g., 42 U.S.C. § 1988; West L a fa y e tte Corp. v. Taft Contracting Co., Inc., 178 F.3d 840, 842 (7th Cir. 1999); Fed. R . Civ. Proc. 37(a)(4)(A). The Employee Retirement Income Security Act ("ERISA") p ro v id es such authority in the form of 29 U.S.C. § 1132(g)(1), which states that a court m ay award reasonable attorneys' fees and costs to a prevailing party in an action by a p lan fiduciary. With these principles in mind, we turn to the Plan's motion. D IS C U S S IO N T h e grant of summary judgment in this case conferred prevailing party status on th e Plan. In the Seventh Circuit, a request from a prevailing party in an ERISA case -2-

can be examined under either of two methods. See Quinn v. Blue Cross and Blue S h ield Ass'n, 161 F.3d 472, 478 (7th Cir. 1998). The first is a five-factor test, which co n sid e rs the degree to which the losing party demonstrated bad faith; 2) the losing p arty's ability to pay an award of fees; 3) whether an award of fees would discourage fu tu re similar behavior by others; 4) how much the members of the pension plan as a w h o le benefitted from the action; and 5) the comparative merit of the positions ad v an ced by the parties. See id. The second inquires whether the position taken by the lo sin g party was substantially justified. Id. We begin by examining whether the Castanedas demonstrated bad faith. Prior to the filing of the complaint in this case, they took the position that Illinois law p reclu d ed recovery because of the anti-subrogation provisions of the Family Expense A ct. However, the law upon which they based this assertion applies to insured plans, n o t self-funded plans such as the one in this case, which are exempt from state reg u latio n under 29 U.S.C. § 1144(b)(2)(B). See, e.g., Estate of Lake v. Marten, 946 F . Supp. 605, 608-10 (N.D. Ill. 1996); Health Cost Controls v. Rogers, 909 F. Supp. 5 3 7 , 542-44 (N.D. Ill. 1994). The legal underpinning of their resistance to this suit has b een consistently rejected in this district for over a decade, and there is no argument w ith in their submissions that they sought, in good faith, to change the law with respect to this kind of case. Despite having been informed of this line of case law before the actio n commenced, the Castanedas persisted in their course of action up to and in clu d in g final judgment pursuant to a motion that they did not see fit to answer. T h o u g h we hesitate to paint this as unabashed harassment, neither is it well-founded

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e n o u g h to tip the first factor away from the Plan. The fifth factor of the first test, which lo o k s to the relative merits of each party's position, is similarly impacted by the C astan ed as' actions on this score. As to the second factor, the Castanedas contend that they are unable to pay any aw ard of fees because they must petition the state probate court to release funds held in trust for Rolando Jr.'s benefit. Though it presents a hurdle, this fact does not tra n s la te into an inability to pay a fee award. As a result, this factor weighs somewhat in the Plan's favor. M o v in g to the third point, the deterrent effect presented by an award of fees in th is case is slight; we are not persuaded that the facts of this case will be oft-repeated, p articu larly the Castanedas' resistance to paying the lien amount when faced with the case law the Plan supplied. However, there is some chance that an award would cause seco n d thoughts in those contemplating a recalcitrant approach. Finally, on the fourth factor, funds that could have been used for the benefit of a ll Plan participants were instead expended in prosecuting this case. However, the total c la im e d injury (medical expenses paid plus fees and costs expended) is less than $ 2 5 ,0 0 0 , which is not a massive sum. Consequently, this factor is in the Plan's favor, b u t only slightly so. P u ttin g all of these factors together, we conclude that the Castanedas were not su b stan tially justified in pursuing their chosen course in this case. As a result, we co n clu d e that an award of reasonable attorneys' fees under 29 U.S.C. § 1132(g)(1) is w arran ted and turn to a consideration of the reasonableness of the amount sought.

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A s the party seeking an award of fees, the Plan bears the burden of proving both th e reasonableness of the number of hours worked and of the rates claimed. See S p eg o n v. Catholic Bishop of Chicago, 175 F.3d 544, 550 (7th Cir. 1999). In support o f the reasonableness of the hourly rates claimed, the Plan relies upon the affidavit of P h ilip O'Brien, a Wisconsin attorney. An attorney's affidavit attesting that his or her ra te s are fair and reasonable is insufficient by itself to satisfy the burden of showing th at the rate is reasonable. Id. at 556. However, the Plan's chances of prevailing are salv ag ed by the uncontroverted assertion that the Plan paid fees totalling $11,800.67. T h at the client considered the attorneys' work to be worth that amount constitutes the b est evidence of the market value of the services rendered. See Stark v. PPM America, In c ., 354 F.3d 666, 675 (7th Cir. 2004). Once a party requesting fees presents evidence o f the market rate for its services, the burden shifts to the party opposing the award to sh o w that the rate should be lowered. Id. at 674-75. The Castanedas do not provide an y argument or evidence that would support lowering the rates of the Plan's attorneys. A cco rd in g ly, we conclude that the rates charged were reasonable. With respect to the number of hours worked, the Plan has supplied its billing re co rd s , but few entries give any description of the services rendered. Descriptions that are provided include a telephone call regarding a discovery conference, e-filing d o cu m en ts, identifying tasks related to the motion for summary judgment, and co n d u ctin g computerized research. Each of these tasks is a reasonable endeavor for an attorney to perform. A comparison of the court appearances listed in the case d o c k e t to the bills for local counsel reveals fees incurred on two occasions when local

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co u n sel appeared before this court on business related to this case. Finally, 18.5 atto rn ey hours were expended during the time allotted for summary judgment briefing; th is is a reasonable amount of time for a motion of this type. Because the Plan has not p ro v id ed us any means of assessing the reasonableness of the remaining amounts, the req u est to award them is denied. C o m b in in g the hours that were identifiably spent in reasonable pursuit of this litig atio n with the rates discussed yields a total of $5,668.50, and we find that an award o f that amount is appropriate. The additional nontaxable expenses sought by the Plan sh o u ld have been brought in conjunction with the previously considered (and awarded) b ill of costs. Because they were not, we will not allow the Plan to take a second shot at them now. CONCLUSION B a s e d on the foregoing, the motion for attorneys' fees is granted in part and d en ied in part. Plaintiffs are awarded $5,668.50 in attorneys' fees.

Charles P. Kocoras U n ited States District Judge D a te d : February 7, 2008

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