Pfieffer v. Schmidt Baking Company, Inc.
Filing
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MEMORANDUM. Signed by Judge Catherine C. Blake on 8/20/2013. (aos, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
RONALD PFIEFFER
v.
SCHMIDT BAKING CO., INC.
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Civil No. CCB-11-3307
MEMORANDUM
Plaintiff Ronald Pfieffer filed this ERISA action claiming that defendant Schmidt Baking
Co., Inc. (“Schmidt”), his former employer, was improperly offsetting the pension payments he
was due under the company’s pension plan with the pension benefits he was receiving from his
union. After a year of litigation, Schmidt reversed its position on the viability of the offset, began
paying pension benefits without the offset, and paid Pfieffer all of the back pension he claimed
he was owed.
The parties are now engaged in a protracted dispute regarding attorney’s fees. Pfieffer
sought discovery from Schmidt on attorney’s fees. Schmidt refused to engage in discovery,
taking the position that ERISA actions are limited to the administrative record. Pfieffer
subsequently filed a motion for attorney’s fees, and Schmidt has filed motions to strike several of
Pfieffer’s filings because Pfieffer has incorporated confidential materials Schmidt submitted
during mediation into his briefs. Schmidt has also filed a motion for summary judgment, arguing
that, because it has provided Pfieffer all the relief has sought, the case is moot. For the reasons
stated below, the court will dismiss the case as moot but retain jurisdiction over Pfieffer’s request
for attorney fees.
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BACKGROUND1
Pfieffer is a participant in Schmidt’s Pension Plan and Trust (“the plan”). The plan
apparently contained a provision that Schmidt believes permitted it to offset a plan participant’s
pension benefits with the amount a participant is entitled to under a separate union pension plan.
Schmidt discovered, in 2008, that its third-party service provider had not been applying this
“union offset provision,” so Schmidt directed the provider to begin applying it in calculating
benefits. (Def.’s Mot. Summ. J., Ex. 1 (“Mann Aff.”), ECF No. 44-1, ¶¶ 5-6). In March 2010,
Schmidt sued the provider for failing “to apply the union offset provision.” (Id. ¶ 7). At that time,
Schmidt requested documentation and discovery related to the union offset provision. (Id.).
Schmidt received over 21,000 pages in discovery. (Id.). According to Schmidt, at some point in
2008, Pfieffer’s union approached Schmidt about the union offset provision and threatened to
take legal action if Schmidt did not stop applying it to its members’ pensions. (Id. ¶ 8). The
union apparently agreed to refrain from legal action until Schmidt finished pursuing its claim
against the third-party provider. (Id.).
Pfieffer filed this action on November 17, 2011, several years after the time when
Schmidt began applying the union offset provision to his benefits and the union apparently
agreed not to pursue legal action. The case was referred to settlement in April 2012, and a
settlement conference was scheduled for September 17, 2012. On September 14, 2012, the
conference was postponed, and subsequently rescheduled for October 17, 2012. According to
Pfieffer, Schmidt represented “that the matter was to be settled,” so the settlement conference
was cancelled. (Correspondence from Pfieffer, ECF No. 30). Schmidt had not provided any
details regarding this settlement to Pfieffer until sometime after November 6, 2012. (See id.).
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For the purposes of resolving these issues, the court will largely adopt the facts as set forth in
Schmidt’s motion for summary judgment.
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During this time, according to Schmidt, the company “determined that the application of
the union offset provision to benefits earned under the Union Plan, although logical . . . and
although intended by the relevant parties, was not reflected in the various files and documents to
the extent that Schmidt would have preferred.” (Mann Aff. ¶ 10). On October 5, 2012, “Schmidt
informed all affected Pension Plan participants, including [Pfieffer], that the union offset
provision would no longer be applied to benefits[.]” (Id. ¶ 11). Schmidt subsequently provided
all pension plan participants, including Pfieffer, with “payment representing all prior offsets plus
interest.” (Id. ¶ 12). Schmidt also “amended its Pension Plan to clarify that the union offset
provision would not apply to any benefits accrued under the Union Plan.” (Id.). On January 29,
2013, Schmidt sent Pfieffer payment of all the back pension he claimed he was owed, and
Pfieffer continues to receive monthly benefit payments without the union offset. (Id. ¶ 13).
ANALYSIS
A. Mootness
Schmidt has filed a motion for summary judgment under Rule 56 on mootness grounds,
arguing that Schmidt’s back benefits payment to Pfieffer and affirmative policy change
constitute all the relief Pfieffer sought in this suit. If a case is moot, the court lacks subject-matter
jurisdiction. See, e.g., Warren v. Sessoms & Rogers, P.A., 676 F.3d 365, 370 (4th Cir. 2012)
(“[M]ootness principles derive from Article III of the Constitution, which mandates that federal
courts adjudicate only disputes involving ‘a case or controversy.’”) (citations and quotations
omitted); Simmons v. United Mortg. & Loan Inv., LLC, 634 F.3d 754, 763 (4th Cir. 2011). “A
case becomes moot ‘when the issues presented are no longer ‘live’ or the parties lack a legally
cognizable interest in the outcome.’ . . . [A] change in factual circumstances can moot a case; for
example, ‘when the claimant receives the relief . . . she sought to obtain through her claim,’ her
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claim becomes moot.’” Warren, 676 F.3d at 370 (citations and brackets omitted). Here, Pfieffer
agrees with Schmidt that “in a complete turn-around of its position . . . Schmidt agreed to pay
Mr. Pfieffer the full amount of his benefits sought by the Complaint plus interest” and that
Schmidt has amended Pfieffer’s written pension plan to clarify that it will no longer apply the
disputed benefit offset provision at issue. (Pl.’s Opp., ECF No. 47, at 2-3). This appears to
constitute all the relief Pfieffer sought to obtain in his complaint.
Pfieffer also notes, however, that his suit sought not only retroactive relief, in the form of
back pension benefits, but also prospective relief, in the form of all the future benefits to which
he is entitled until his death. Pfieffer suggests that, without relief from this court, there is no
guarantee that Schmidt will pay his full future benefits. But, Schmidt has not simply represented
to the court that it will no longer apply the offset, it has also amended Pfieffer’s pension plan “to
clarify that the union offset provision will not apply to any benefits accrued under the Union
Plan.” (Mann Aff. ¶ 12). While “mootness does not result from a defendant's voluntary cessation
of his allegedly illegal conduct unless it is clear that the behavior is unlikely to recur,” see
Pashby v. Delia, 709 F.3d 307, 316 (4th Cir. 2013), it is clear here that it would be all but
impossible for Schmidt to go back on its word and to reapply the offset provision to Pfieffer’s
benefits. Doing so would violate the express terms of Pfieffer’s plan, which has been amended to
reflect Schmidt’s change in policy, and immediately expose Schmidt to liability for a breach of
that agreement. Thus, there is no further “effectual relief” the court could grant. See Knox v.
SEIU, Local 1000, 132 S. Ct. 2277, 2287 (2012) (“A case becomes moot only when it is
impossible for a court to grant . . . any effectual relief whatever to the prevailing party. . . . As
long as the parties have a concrete interest, however small, in the outcome of the litigation, the
case is not moot.”) (internal citations, quotation marks, and brackets omitted). The best Pfieffer
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could have hoped for in this suit would have been full back benefits, plus interest, and an order
that Schmidt must permanently change its policy to prohibit application of the offset provision to
Pfieffer’s future pension benefits. This is precisely the relief that Schmidt has already provided.
In fact, Pfieffer’s suit, which was likely a significant impetus for Schmidt to change its overall
policy, has affected the pension plans and payments of all other similarly situated beneficiaries,
(Mann Aff. ¶ 12), further reducing any possibility that Schmidt would attempt to re-amend its
policy and begin applying the offset again. Accordingly, the case is moot. As mootness deprives
the court of subject matter jurisdiction, Pfieffer’s suit must be dismissed. Fed. R. Civ. P. 12(h)(3)
(“If the court determines at any time that it lacks subject-matter jurisdiction, the court must
dismiss the action.”).2
B. Attorney’s Fees
The court will retain jurisdiction over this action, however, to resolve the parties’
attorney’s fees dispute. “Where a court is divested of its subject matter jurisdiction over the
substantive claim by virtue of intervening mootness, it nonetheless retains jurisdiction to
‘consider collateral issues after an action is no longer pending.’” Samsung Electronics Co., Ltd.
v. Rambus, Inc., 398 F. Supp. 2d 470, 482 (E.D. Va. 2005) (quoting Cooter & Gell v. Hartmarx
Corp., 496 U.S. 384 (1990)). “‘[M]otions for costs or attorney’s fees are independent
proceedings supplemental to the original proceeding,’ and thus the imposition of costs and
attorney’s fees is not a judgment on the merits of an action for which there is no jurisdiction.” Id.
Furthermore, “[a] district court ‘in its discretion may allow a reasonable attorney’s fee
and costs of action to either party’ in an ERISA action.” Plasterers’ Local Union No. 96 Pension
Plan v. Pepper, 663 F.3d 210, 221-22 (4th Cir. 2011) (quoting ERISA, 29 U.S.C. § 1132(g)(1)).
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Thus, Schmidt’s motion for summary judgment will be denied as moot.
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“[A] fee claimant need not be a ‘prevailing party’ to be eligible for an attorney’s fees award
under § 1132(g)(1).” Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 130 S. Ct. 2149,
2156 (2010). Instead, a claimant may be entitled to fees “if the court can fairly call the outcome
of the litigation some success on the merits without conducting a lengthy inquiry into the
question whether a particular party’s success was ‘substantial’ or occurred on a ‘central issue.’”
Id. at 2158 (quotation marks, brackets, and citations omitted). Here, Pfieffer contends that he
achieved not only some—but essentially complete—success on the merits. Thus, he may be
entitled to attorney’s fees.
In the Fourth Circuit, however, the court, in deciding whether to exercise its discretion to
grant attorney’s fees, must also analyze the factors set forth in Quesinberry v. Life Ins. Co. of
North Am., 987 F.2d 1017 (1993), which are “general guidelines” and not a “rigid test.” See
Williams v. Metropolitan Life Ins. Co., 609 F.3d 622, 635 (4th Cir. 2010) (noting the continued
viability of the Quesinberry approach after Hardt). These factors are: “(1) [the] degree of
opposing parties' culpability or bad faith; (2) [the] ability of opposing parties to satisfy an award
of attorneys' fees; (3) whether an award of attorneys' fees against the opposing parties would
deter other persons acting under similar circumstances; (4) whether the parties requesting
attorneys' 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.” Id. (quoting Quesinberry, 987 F.2d at 1029). Because the court is “entitled to
consider the remedial purposes of ERISA to protect employee rights and secure effective access
to federal courts[,]” the court may also consider a successful plaintiff’s ability to pay their own
attorney in exercising its discretion under Quesinberry. Id. at 636. Because Schmidt has not yet
had an opportunity to respond to the substance of Pfieffer’s motion for attorney fees in light of
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these factors, which Pfieffer has thoroughly addressed, the court will grant Schmidt an
opportunity to file an opposition to Pfieffer’s motion.
C. Pfieffer’s Use of Confidential Mediation Communications
Furthermore, as explained above, fee disputes are separate, ancillary proceedings. Thus,
Pfieffer did not necessarily act improperly by attaching and incorporating confidential material
into his filings for the purpose of resolving such a dispute, because the local rules contemplate
the possibility of admitting such materials in proceedings aside from the one for which the
mediation was held. See Local R. 607.4 (D. Md. 2011) (“No such communication shall be
admissible in any subsequent proceeding except as permitted by the Federal Rules of
Evidence.”). In the interest of preserving future litigants’ expectations about the confidentiality
of this court’s ADR program, however, the court will grant Schmidt’s motion to strike to the
extent that the court has not relied on any confidential material in resolving Schmidt’s motion for
summary judgment, but the court will not strike Pfieffer’s filings in their entirety. The court
reserves ruling on whether it may be appropriate to consider confidential communications in the
course of resolving the parties’ fee dispute. Given the local rules, Pfieffer should have sought to
file any such communications under seal, and his motion to seal his opposition to Schmidt’s
motion to strike will be granted. Finally, under all the circumstances, Schmidt has not
demonstrated that Pfieffer should be sanctioned. Cf. In re Anonymous, 283 F.3d 627, 635-36 (4th
Cir. 2002) (considering but declining to impose sanctions in the context of 4th Cir. R. 33, which
requires absolute confidentiality of all mediation communications, even in subsequent
proceedings, “without prior approval of the Standing Panel on Attorney Discipline”).
CONCLUSION
For the reasons stated above, the court will dismiss this case as moot but retain
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jurisdiction to resolve Pfieffer’s motion for attorney’s fees. Schmidt will have 28 days from the
entry of the court’s order to respond to Pfieffer’s motion. Furthermore, because Pfieffer filed a
thorough motion for attorney’s fees without any additional discovery, the discovery Pfieffer
previously sought does not appear to be necessary at this time. Accordingly, Schmidt’s motion to
strike Pfieffer’s discovery requests will be granted, without prejudice to the renewal of Pfieffer’s
requests if they become necessary in connection with the fee dispute.
August 20, 2013
Date
/s/
Catherine C. Blake
United States District Court
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