Fura v. Federal Express Corporation Long Term Disability Plan et al

Filing 34

OPINION AND ORDER granting in part and denying in part 29 Motion for Attorney's Fees. Signed by District Judge John Corbett O'Meara. (WBar)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
EDWARD FURA,
Plaintiff,
Case No. 10-13298
v.
Hon. John Corbett O’Meara
FEDERAL EXPRESS CORPORATION
LONG TERM DISABILITY PLAN, et al.,
Defendants.
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OPINION AND ORDER GRANTING IN PART AND DENYING
IN PART PLAINTIFF’S MOTION FOR ENTRY OF FINAL JUDGMENT
Before the court is Plaintiff’s motion for entry of final judgment, attorney’s fees, costs,
and interest, which has been fully briefed. Pursuant to L.R. 7.1(f)(2), the court did not hear oral
argument. For the reasons stated below, Plaintiff’s motion is granted in part and denied in part.
I.

Attorney’s Fees
Seeking long-term disability benefits pursuant to ERISA, Plaintiff Edward Fura prevailed

in this matter on cross-motions for summary judgment. Plaintiff now seeks attorney’s fees,
costs, and interest as well as the entry of a final judgment.
The court has discretion to award the prevailing party reasonable attorney’s fees and
costs pursuant to 29 U.S.C. § 1132(g). In determining whether to award attorney’s fees, the
court must consider the following factors:
(1) the degree of the opposing party’s culpability or bad faith; (2)
the opposing party’s ability to satisfy an award of attorney’s fees;
(3) the deterrent effect of an award on other persons under similar
circumstances; (4) whether the party requesting fees sought to
confer a common benefit on all participants and beneficiaries of an

ERISA plan or resolve significant legal questions regarding
ERISA; and (5) the relative merits of the parties’ positions.
Secretary of Dept. of Labor v. King, 775 F.2d 666, 669 (6th Cir. 1985); Moon v. Unum Provident
Corp., 461 F.3d 639, 642-43 (6th Cir. 2006). No single factor is determinative, rather, “they are
considerations representing a flexible approach.” Moon, 461 F.3d at 643.
The court finds that all but the fourth factor weigh in favor of an award of attorney fees.
As Defendants point out, a decision to overturn a plan administrator’s decision as arbitrary and
capricious does not necessarily indicate culpability or bad faith. See Moon, 461 F.3d at 643.
Here, however, the court found that Aetna relied upon the conclusory findings of peer reviewers
who did not examine Plaintiff and ignored, without explanation, the findings of Plaintiff’s
treating physicians. Under such circumstances, the Sixth Circuit has found a sufficient degree of
culpability to weigh in favor of an attorney’s fee award. Id. at 643-44.
Defendants can also presumably satisfy an attorney’s fee award.1 This factor weighs in
favor of Plaintiff. See Moon, 461 F.3d at 644.
Additionally, “the facts of this case are not so unique that they fail to serve any
deterrence value to other insurance companies under similar circumstances.” Id. at 645. The
court in Moon noted “important principles that all plan administrators should heed,” such as
ensuring a “thorough review of the administrative record” and that physicians generally base
their opinions on “an actual physical examination of the claimant.” Id. The court further noted
that an attorney fee award “should deter other insurance companies from making the same
arbitrary decisions” as the defendant. This court agrees that an attorney fee award may serve to

1

Although Defendants suggest that Plaintiff has not submitted evidence of the Plan’s
ability to pay, Defendants have not seriously contended that the Plan lacks the necessary funds.
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deter Defendants and other insurance companies from making arbitrary decisions in reliance
upon their own medical experts to the exclusion of the claimant’s treating physicians.
As for the relative merits of the parties’ positions, the court found that “on this record,
Fura is clearly entitled to benefits.” Order at ¶ 15. This factors weighs in favor of an award of
attorney’s fees.
Given that the first, second, third, and fifth factors weigh in favor of an award of fees,
and no factor weighs heavily against such an award, the court finds attorney’s fees to be
appropriate in this case. The court must now determine a reasonable fee.
A reasonable fee is one that is “adequately compensatory to attract competent counsel yet
which avoids producing a windfall for lawyers.” Geier v. Sundquist, 372 F.3d 784, 791 (6th Cir.
2004) (citation omitted). Determining a reasonable fee begins with calculating the product of a
“reasonable hourly rate” and the “number of hours reasonably expended on the litigation.”
Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). “A district court has broad discretion to
determine what constitutes a reasonable hourly rate for an attorney.” Wayne v. Village of
Sebring, 36 F.3d 517, 533 (6th Cir. 1994). A useful guideline in determining a reasonable hourly
rate is the “prevailing market rate . . . in the relevant community,” Blum v. Stenson, 465 U.S.
886, 895 (1984), defined as “that rate which lawyers of comparable skill and experience can
reasonably expect to command within the venue of the court of record.” Adcock-Ladd v. Sec’y
of Treasury, 227 F.3d 343, 350 (6th Cir. 2000).
Plaintiff’s attorneys request a fee of $25,222.50, which represents 129.8 hours of work on
this matter, including reviewing the administrative record, conducting legal research, preparing a
motion for judgment on the administrative record, preparing for oral argument, and drafting the

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motion for fees. Specifically, Plaintiff seeks a rate of $200 per hour for associate Jesse Young,
who completed the majority of the work on the case; $350 per hour for partner Daniel Swanson;
$200 per hour for associate Michael Chichester; and $75 per hour for paralegal Paul Burkett.
Based upon the court’s experience in similar cases, the court finds these rates to be reasonable.
See State Bar of Michigan, 2010 Economics of Law Practice Survey (median rate for Southfield,
Michigan, attorneys is $265; southern Oakland County, $250).
The court also finds that Plaintiff’s counsel’s billing records are sufficiently detailed and
that the time expended on this matter is reasonable. The court further finds that the total amount
requested is reasonable given the work necessary to litigate this case and that there is no basis to
enhance or reduce the award. See Barnes v. City of Cincinnati, 401 F.3d 729, 745-46 (6th Cir.
2005) (discussing Johnson factors courts consider to adjust fees).
II.

Prejudgment Interest
It is within the court’s sound discretion to award pre-judgment interest in an ERISA case,

consistent with equitable principles. See Ford v. Uniroyal Pension Plan, 154 F.3d 613 (6th Cir.
1998); Caffey v. UNUM Life Ins. Co., 302 F.3d 576 (6th Cir. 2002). The court finds that prejudgment interest is appropriate to compensate Plaintiff for the wrongful deprivation of his
monthly disability benefits since August 2009.
Although the statute does not prescribe a method or rate for calculating pre-judgment
interest, the Sixth Circuit has held that a rate based upon the post-judgment interest rate in 28
U.S.C. § 1961 is appropriate. Ford, 154 F.3d at 618; Caffey, 302 F.3d at 585. In Caffey, the
court approved the district court’s use of a blended rate of interest, which averaged the 52-week
Treasury Bill rate over the relevant time period. Caffey, 302 F.3d at 585. Instead of the 52-

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week Treasury Bill rate, 28 U.S.C. § 1961 currently provides for “a rate equal to the weekly
average 1-year constant maturity Treasury yield, as published by the Board of Governors of the
Federal Reserve System.” The Sixth Circuit also approved the use of the stream-of-benefits
model to calculate pre-judgment interest, which “calculated the interest due on each monthly
payment of disability benefits beginning with the date that each payment was due.” Id.
Plaintiff has undertaken to calculate pre-judgment interest based upon the stream-ofbenefits model, which is appropriate. However, Plaintiff bases his calculations upon a 6%
interest rate, which is significantly higher than the one-year constant Treasury yield (currently
.19% as published on www.federalreserve.gov/releases/h15/current). In light of Ford, Caffey,
and 28 U.S.C. § 1961, the court finds no legal basis to award interest at 6%. Plaintiff shall
recalculate prejudgment interest consistent with this opinion and order.
III.

COBRA Payments
Plaintiff contends that the judgment should include $14,477.68 in order reimburse him

for COBRA insurance payments as “consequential damages.” Defendants object because
Plaintiff did not seek this relief in his complaint and because Plaintiff has not demonstrated that
such damages are recoverable. The court agrees that, absent appropriate pleading and briefing,
such an element of damages cannot be merely inserted into the judgment. The court will deny
Plaintiff’s request for reimbursement of COBRA payments.
IV.

Indemnification for Income Taxes
Plaintiff also seeks an unspecified amount to offset any increased tax liability he may

incur by receiving a lump-sum payment of past due benefits. Plaintiff has not provided legal
authority in support of such a request. Therefore, the court will not permit this element of

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damages.
ORDER
IT IS HEREBY ORDERED that Plaintiff’s motion for entry of final judgment is
GRANTED IN PART and DENIED IN PART. Plaintiff shall submit a proposed final judgment
consistent with this opinion and order.

s/John Corbett O'Meara
United States District Judge
Date: July 10, 2012

I hereby certify that a copy of the foregoing document was served upon counsel of record
on this date, July 10, 2012, using the ECF system.

s/William Barkholz
Case Manager

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