Flohrs v. Eli Lilly Company
Filing
94
MEMORANDUM AND ORDER. Defendants motion for attorneys fees (Dk. 84) is granted in part and denied in part in accordance with the terms of this memorandum. Plaintiffs motion for extension of time (Dk. 89) is denied as moot. See attached for more det ails. Signed by U.S. District Senior Judge Sam A. Crow on 7/31/2013. Mailed to pro se party: Mr. William J. Flohrs, 10633 W. 123rd Street, Overland Park, KS 66213 by certified mail; Certified Tracking Number: 70111150000202884275 and regular mail. (bmw)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
WILLIAM J. FLOHRS,
Plaintiff,
v.
Case No. 12-2439-SAC
ELI LILLY AND COMPANY and
AON HEWITT BENEFIT PAYMENT
SERVICES, LLC,
Defendants.
MEMORANDUM AND ORDER
This ERISA case comes before the Court on Defendant Eli Lilly and
Company’s motion for attorneys’ fees, costs, and expenses. Plaintiff opposes
the motion (Dk. 88, 91). Costs are determined by the Clerk’s office as a
matter of course, so this memorandum shall deal solely with the disputed
attorneys’ fee request.
I. General Principles – ERISA Fee Awards
ERISA's attorney's fees provision, 29 U.S.C. § 1132(g)(1), provides “in
any action under this subchapter … by a participant, beneficiary, or fiduciary,
the court in its discretion may allow a reasonable attorney's fee and costs of
action to either party.” Under this section, “it is within the district court's
sound discretion to determine whether a party is entitled to attorney's fees
as the result of an action brought under ERISA.” Pitman v. Blue Cross and
Blue Shield of Oklahoma, 217 F.3d 1291 (10th Cir. 2000), quoting Gordon v.
United States Steel Corp., 724 F.2d 106, 108 (10th Cir. 1983).
Under ERISA, a party who has received some degree of success on the
merits may recover fees from the opposing party.
A fee claimant need not be a prevailing party to be eligible for an
award of attorney's fees and costs under ERISA. Hardt v. Reliance
Standard Life Ins. Co., 560 U.S. 242, 130 S.Ct. 2149, 2152, 176
L.Ed.2d 998 (2010). A court may award fees and costs under 29
U.S.C. § 1132(g)(1) as long as the fee claimant has achieved “some
degree of success on the merits.” Id.
This court has established five factors a court may consider in
deciding whether to exercise its discretion to award attorney's fees and
costs: (1) the degree of the opposing party's culpability or bad faith;
(2) the opposing party's ability to satisfy an award of fees; (3)
whether an award of fees would deter others from acting under similar
circumstances; (4) whether the party requesting fees sought to benefit
all participants and beneficiaries of an ERISA plan or to resolve a
significant legal question regarding ERISA; and (5) the relative merits
of the parties' positions. Gordon v. U.S. Steel Corp., 724 F.2d 106,
109 (10th Cir. 1983). No single factor is dispositive and a court need
not consider every factor in every case. McGee v. Equicor–Equitable
HCA Corp., 953 F.2d 1192, 1209 n. 17 (10th Cir. 1992).
Cardoza v. United of Omaha Life Ins. Co., 708 F.3d 1196, 1207 -1208 (10th
Cir. 2013). These five factors are not exclusive and no single factor is
dispositive. See Gordon, 724 F.2d at 109 (noting the district court should
consider these five factors “among others.”); McGee v. Equicor-Equitable
HCA Corp., 953 F.2d 1192, 1209, n. 17 (10th Cir. 1992) (finding the factors
“are merely guidelines, and while courts need not consider each factor, no
single factor should be held dispositive.”)
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Defendant, having won its motion for summary judgment on all issues,
has achieved a great degree of success on the merits. The sole matter on
which Defendant did not prevail is its counterclaim, which the Court
dismissed for lack of jurisdiction without having reached its merits. See Dks.
49, 79. The Court is thus free to exercise its discretion regarding a fee
award.
II. Factors in Deciding to Award Fees
Because neither party has suggested other factors for the Court’s
consideration and none cries out for attention, the Court examines solely the
five factors noted above.
A. Plaintiff’s Culpability or Bad Faith
Defendant contends that Plaintiff’s acts were both culpable and in bad
faith.
1. No Bad Faith
Defendant shows the Court that Plaintiff repeatedly engaged in acts
during discovery which, in the Court’s view, if undertaken by an attorney,
would likely violate ethical rules and could warrant sanctions. See Dk. 90, p.
14. But bad faith in the fee factor context most likely means “[d]ishonesty of
belief or purpose.” United States v. Lain, 640 F.3d 1134, 1138 (10th Cir.
2011) (examining attorneys’ fees under Hyde Amendment). The Court is not
persuaded that Plaintiff acted in bad faith, as nothing in the record shown to
this Court reflects that Plaintiff’s belief in his claims was not sincere or that
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his purpose was other than to recover the benefits which he erroneously yet
sincerely believed were owed to him.
2. Some Culpability
“Culpability means that conduct was more than negligent and was
reprehensible or wrong.” Local Union No. 98, Intern. Broth. of Elec. Workers
v. Morris, 2004 WL 2102073, 1 (E.D.Pa. 2004) (interpreting ERISA fee
statute). Culpability means that conduct “involve[d] ... the commission of a
fault.” McLean v. Continental Cas. Co., 1997 WL 566117, 3 (S.D.N.Y.1997)
(interpreting ERISA fee statute). The Court finds that Plaintiff’s pursuit
against a new defendant (Aon Hewitt) of claims identical to those the Court
had recently dismissed in the summary judgment order, without presenting
any distinguishing facts or reasonable legal argument for a different result,
demonstrates a moderate degree of culpability.
B. Plaintiff’s Ability to Pay Fees
Defendant contends that the record suggests Plaintiff is able to satisfy
a fee award because: 1) Plaintiff received $202,918.83 less taxes and
withholdings in 2008 as severance pay; 2) Plaintiff informed the Court on
multiple occasions during this case that he is employed and travels for work,
sometimes internationally; and 3) Plaintiff paid the filing fee in this case. In
response, Plaintiff neither asserts that he is unable to pay attorneys’ fees nor
denies Defendant’s assertions. Instead, Plaintiff responds that he has only
$4500 in savings, that he is offended by Defendant’s representation that he
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has endless resources, and that Defendant once again breached its privacy
policy by disclosing the amount of his severance pay. The Court finds that
Plaintiff is able to satisfy a fee award.
C. Deterrent Effect
The Court next examines whether awarding fees would deter conduct
of the kind in which the Plaintiff engaged. Defendant asserts that awarding
fees would deter Plaintiff and others from filing speculative litigation on
thinly based grounds. Plaintiff’s response does not address this specific
issue. The Court finds that a fee award would serve the purpose of deterring
Plaintiff and others from filing suits that lack any colorable claim.
D. Significance/Benefit to Others
The next factor asks whether the Defendant sought to benefit all
participants and beneficiaries of an ERISA plan or to resolve a significant
legal question regarding ERISA. Defendant contends that by defeating
Plaintiff’s claim for additional benefits from the Plan, it preserved Plan assets
and thus benefitted the other Plan participants and beneficiaries. The
Plaintiff does not directly address this issue.
The Court finds that this factor does not have significant weight.
Defendant did preserve Plan assets and thus benefitted the other Plan
participants and beneficiaries to the extent of Plaintiff’s claim, but the issues
presented in this case were unique to the Plaintiff and did not involve a
significant legal question regarding ERISA.
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E. Relative Merits of the Parties' Positions
Defendant alleges that Plaintiff’s suit was frivolous and that none of his
claims was supported by fact or law. Plaintiff disagrees, but notes solely that
his suit was commenced at Defendant’s direction by its letter dated February
23, 2011. Defendant replies that this letter is merely a statement of appeal
rights required by ERISA, not an invitation for Plaintiff to pursue a frivolous
lawsuit.
The Court finds Plaintiff’s suit to be frivolous, meaning it is “[l]acking a
legal basis or legal merit; not serious; not reasonably purposeful.” Lain, 640
F.3d at 1137. Plaintiff ignored the Plan document’s time limitation for filing
suit, flaunted the clear terms of his severance and release, and asserted
estoppel claims not recognized in this jurisdiction, all without asserted
justification or reasonable excuse. As the Court’s summary judgment order
found, none of Plaintiff’s claims had any merit, and each of Plaintiff’s
unfounded claims was defeated in multiple and independent ways. This
factor significantly favors the Defendant’s fee award.
On balance, the factors weigh heavily in favor of awarding fees to the
Defendant. Accordingly, the Defendant shall be awarded reasonable fees.
III. Reasonableness of Fees Requested
Any award of attorney fees must be reasonable. Uselton v. Comm'l
Lovelace Motor Freight, Inc., 9 F.3d 849, 853 (10th Cir. 1993). In statutory
fee cases such as this, courts generally use the lodestar method to calculate
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attorney fees. Brown v. Phillips Petroleum Co., 838 F.2d 451, 453-54 (10th
Cir. 1988). That method requires the Court to multiply the number of hours
reasonably expended on the litigation by the reasonable hourly rate. Perdue
v. Kenny A. ex rel. Winn, 559 U.S. 542, 130 S.Ct. 1662, 1669 (2010). The
Court then determines whether that lodestar figure is subject to upward or
downward adjustment by analyzing the factors set forth in Johnson v.
Georgia Highway Express, Inc., 48 F.2d 714, 717–19 (5th Cir. 1974) (“the
Johnson factors”). Id. at 453. See Gottlieb v. Barry, 43 F.3d 474, 483 (10th
Cir. 1994). Those factors are: (1) time and labor required, (2) novelty and
difficulty of question presented by the case, (3) skill requisite to perform the
legal service properly, (4) preclusion of other employment by the attorneys
due to acceptance of the case, (5) customary fee, (6) whether the fee is
fixed or contingent, (7) any time limitations imposed by the client or
circumstances, (8) amount involved and results obtained, (9) experience,
reputation and ability of the attorneys, (10) “undesirability” of the case, (11)
nature and length of the professional relationship with the client and (12)
awards in similar cases. Rosenbaum v. MacAllister, 64 F.3d 1439, 1445
(10th Cir. 1995).
Fees Requested
Neither Defendant’s motion nor its memorandum states the amount of
fees it requests. The motion makes a “preliminary estimate” of fees, but
notes the amount may be adjusted based on a final calculation. Dk. 84, p. 3.
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Defendant’s memorandum states that it has “incurred” a total of $87,949.50
in fees. The Court believes that Defendant is seeking that amount, consisting
of $62,950.80 in fees by Faegre Baker Daniels, $13,539.60 in fees for Shook
Hardy Bacon’s defense of Lilly, and $11,459.10 in fees for Shook Hardy
Bacon’s defense of Aon Hewitt. See Dk. 90, Exh. 22.
Redactions
The Court first addresses the issue of redactions. Defendant notes
parenthetically that its pro forma records in support of its request for
attorney fees have been “redacted to protect the attorney-client privilege.”
Dk. 90, p. 18. The movant bears the burden of establishing entitlement to
an award and documenting the appropriate hours expended and hourly
rates. See Case v. Unified Sch. Dist. No. 233, 157 F.3d 1243, 1249–50 (10th
Cir. 1998). By resting on a redacted version of invoices in an attempt to
preserve any applicable privilege that may attach to them, Defendant takes
the risk of failing to meet its burden of justifying its fee request. See e.g.,
Nationwide Payment Solutions, LLC v. Plunkett, 831 F.Supp.2d 337, 339340 (D.Me. 2011) and cases cited therein.
Defendant does not note where it has made redactions, but the
narratives contain unusual blank spaces which the Court speculates may
represent multiple redactions. Most of the suspected redactions are
inconsequential because the information remaining for the redacted entries
is sufficient to show the nature of the work performed by the attorneys. But
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the following three entries have been redacted to such an extent that they
fail to do so:
1/13/13, Page, .2 hours, $57.60, “Consider [presumed redaction ]
issue.”
1/17/13, Baggott, .8 hours, $215.20, “[presumed redaction] for Eli
Lilly and Aon.”
1/28/13, Baggott, .3 hours, $80.70, “[presumed redaction] to Eli Lilly
and forward to client.”
These fees, totaling $353.50, shall therefore be disallowed.
Hours
Plaintiff raises three objections to the hours expended by Defendant:
1) Multiple attorneys and local counsel were unnecessary in this case; 2)
Attorneys spent too much time drafting the summary judgment motion,
drafting simple emails, and doing other tasks; and 3) Defendant should have
settled the case during the scheduling conference process by September 20,
2012, so is responsible for its own fees. The Court examines these
objections in turn.
First, Plaintiff contends that Local Rule 83.5.3 permits Lilly’s in-house
Indiana attorneys to represent Lilly in this district. But Plaintiff does not
show the Court any language in the rule supporting his unique interpretation
that attorneys not registered in this district could practice here without
associating with local counsel.
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Secondly, the Court has closely examined whether an inordinate
amount of time was spent on some tasks. Attorneys normally do not bill a
client for all hours expended in litigation, and “an applicant should exercise
‘billing judgment’ with respect to a claim of the number of hours worked.”
Ellis v. Univ. of Kan. Med. Ctr., 163 F.3d 1186, 1202 (10th Cir. 1998)
(quoting Malloy v. Monahan, 73 F.3d 1012, 1018 (10th Cir. 1996)). To show
billing judgment, counsel for plaintiff should make a good-faith effort to
exclude from a fee request hours that are excessive, redundant or otherwise
unnecessary and the Court has a corresponding obligation to exclude hours
not “reasonably expended” from the calculation. Id. This is so even when an
attorney seeks a statutory fee award. See Hensley v. Eckerhart, 461 U.S.
424, 434, 103 S.Ct.1933, 1939–1940 (1983), quoting Copeland v. Marshall,
641 F.2d 880, 891 (D.C.Cir. 1980).
Although the declarations from the attorneys do not reflect that they
exercised billing judgment, the pro formas nonetheless show a write down of
attorney fees on many bills. See e.g., Dk. 90 Exh. 9, showing the following
fee write downs: 9/30/12, $794; 10/31/12, $1997; 11/30/12, $1997;
12/31/12, $1997; 1/31/13, $1314; 2/28/13, $1520; 3/31/13, $1520;
4/30/13, $1520; and 5/31/13, $1520. The Court has specifically examined
Plaintiff’s cited examples, as well as the other recorded time spent on
specified tasks, and finds the time spent to be reasonable, given the nature
of Plaintiff’s claims and the number of his filings.
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Lastly, Plaintiff has failed to show that Defendant continued this
litigation unnecessarily or for any improper purpose. Defendant abided by
the discovery rules which are designed to achieve procedural fairness to all
the parties, and cannot be faulted if it did not settle the case earlier, or
comply with Plaintiff’s demands outside those rules, or condone Plaintiff’s
misunderstanding of the discovery process. This case is typical of those
prosecuted by pro se parties who repeatedly file documents not permitted by
the rules but which warrant some response by the opposing party,
unnecessarily increasing the cost of litigation for all.
Hourly Rates
Although Plaintiff does not challenge the hourly rates charged, the
Court has an independent duty to review them. In setting the hourly rate,
“the court should establish, from the information provided to it and from its
own analysis of the level of performance and skills of each lawyer whose
work is to be compensated, a billing rate for each lawyer based upon the
norm for comparable private firm lawyers in the area in which the court sits
calculated as of the time the court awards fees.” Ramos v. Lamm, 713 F.2d
546, 555 (10th Cir. 1983), overruled on other grounds by Pennsylvania v.
Del. Valley Citizens' Council For Clean Air, 483 U.S. 711 (1987). Defendant’s
reference to prevailing rates in Indiana is thus irrelevant. A reasonable
hourly rate comports with rates “prevailing in the community for similar
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services for lawyers of reasonably competent skill, experience, and
reputation.” Blum v. Stenson, 465 U.S. 886, at 896 n. 11 (1984).
Defendant’s motion does not include any evidence1 of the prevailing
rates in the Topeka and northeast Kansas legal market. Compare Kansas
Judicial Watch v. Stout, 2012 WL 1033634, 11 (D.Kan. 2012). Instead,
Defendant cites recent Kansas cases which have determined the
reasonableness of various fees.
“A district judge may turn to her own knowledge of prevailing market
rates as well as other indicia of a reasonable market rate.” Metz v. Merrill
Lynch, Pierce, Fenner & Smith, Inc., 39 F.3d 1482, 1493 (10th Cir. 1994)
(citation omitted). To determine a reasonable rate, the Court focuses on
“what lawyers of comparable skill and experience practicing in the area in
which the litigation occurs would charge for their time.” Ramos, 713 F.2d at
555.
The Court finds the hourly rates charged by the Kansas attorneys and
their staff to be reasonable. But the hourly rates charged in 2013 by Indiana
attorney Gutwein, who has less than 13 years’ experience as an attorney,
and Clark, who has less than five years’ experience, are not reasonable in
this jurisdiction. Further, Defendant’s fee application fails to state how many
years’ experience associate attorney Gentry has, so the Court presumes she
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Mr. Gutwein states that “to the best of [his] knowledge,” his requested rates are
reasonable in … the District of Kansas, Dk 90, Exh. 8, but he shows no basis of knowledge
for that assertion.
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has less than five years’ experience. Similarly, the application fails to explain
why “litigation support analyst” Dowden merits fees greater than an
associate’s fee, what the nature of her work is, or her length of experience
(except to note her being with the firm for two years in what appears to be
an IT capacity). Accordingly, the Court shall reduce those fees as follows:
Rate Sought/Awarded
Reduction
Fee Adjustment
Gutwein II $360 $305
$55 x 13 hours (in 2013) =
Clark
$257 $180
$77 x 50.70 hours (in 2013) =
Gentry
$195 $180
$15 x 4.6 hours (in 11/12) =
-69.00
Dowden
$225 $180
$45 x .6 hours (on 9/21/12) =
-27.00
Total rate reduction
-715.00
-3,903.90
$4,714.90
Adding this amount to the amount above ($353.50) results in a total fee
reduction of $5,068.40. The lodestar amount is thus $82,881.10. Having
reviewed the relevant Johnson factors within the analysis above, the Court
finds that this amount needs no further adjustment. Accordingly, the Court
awards $82,881.10 in fees to the Defendant.
IT IS THEREFORE ORDERED that Defendant’s motion for attorneys’
fees (Dk. 84) is granted in part and denied in part in accordance with the
terms of this memorandum.
IT IS FURTHER ORDERED that Plaintiff’s motion for extension of time
(Dk. 89) is denied as moot.
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Dated this 31st day of July, 2013 at Topeka, Kansas.
s/ Sam A. Crow
Sam A. Crow, U.S. District Senior Judge
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