Lanpher v. Metropolitan Life Insurance Company & Bank America
MEMORANDUM AND OPINION and ORDER MetLife shall pay $394,033.95 in damages plus interest to Lanpher. MetLife shall pay post-judgment interest on any delinquent amounts pursuant to 28 U.S.C. 1961. (Written Opinion). Signed by Chief Judge John R. Tunheim on August 18, 2015. (DML)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
RICHARD K. LANPHER,
Civil No. 12-2561 (JRT/JSM)
AND ORDER ON DAMAGES
METROPOLITAN LIFE INSURANCE
COMPANY and BANK OF AMERICA,
successor to Merrill Lynch & Co., Inc., as
employer and plan administrator of The
Merrill Lynch & Co., Inc., Supplemental
Long Term Disability Plan,
Katherine L. MacKinnon and Sarah J. Demers, LAW OFFICES OF
KATHERINE L. MACKINNON, P.L.L.C., 3744 Huntington Avenue,
St. Louis Park, MN 55416, for plaintiff.
William D. Hittler, NILAN JOHNSON LEWIS PA, 120 South Sixth
Street, Suite 400, Minneapolis, MN 55402, for defendant Metropolitan
Life Insurance Company.
Wood W. Lay, WINSTON & STRAWN LLP, 100 North Tryon Street,
Charlotte, NC 28202; and Blake J. Lindevig, FAEGRE BAKER
DANIELS LLP, 90 South Seventh Street, Suite 2200, Minneapolis, MN
55402, for defendant Bank of America.
Plaintiff Richard K. Lanpher (“Lanpher”) was an employee at Merrill Lynch
(succeeded by Defendant Bank of America, referred to as “Merrill Lynch” throughout),
and was eligible for his employer’s Basic Long Term Disability Benefits plan and
Supplemental Long Term Disability (“SLTD”) Benefits plan.
(Mem. Op. & Order on
Cross Mots. for Summ. J. (“Order”) at 1-2, Sep. 29, 2014, Docket No. 77.)1 To enroll in
the SLTD plan, Lanpher was required to obtain approval from the plan’s insurer,
Metropolitan Life Insurance Company (“MetLife”). (Id. at 2.) Lanpher submitted his
application and received a letter from MetLife stating that he had been approved, but
there is no evidence MetLife communicated this change to Merrill Lynch, and the
required insurance premiums were not deducted from Lanpher’s paychecks. (Id. at 2-3.)
Lanpher sought disability benefits after he ended his employment on account of
depression. (Id. at 2.) MetLife granted him benefits under the Basic plan, but not under
the SLTD plan. (Id.)
Lanpher brought this action under the Employee Retirement Income Security Act
(“ERISA”), 29 U.S.C. §§ 1001, et seq., alleging that MetLife improperly denied him
benefits under the SLTD plan, and that MetLife and/or Merrill Lynch breached their
fiduciary duties by failing to enroll him properly in the SLTD plan and subsequently
denying him benefits on that account. (Order at 3-4.) All parties moved for summary
judgment, with Lanpher moving only against MetLife. (Id. at 3.) This Court concluded
that it was an abuse of discretion and an unreasonable interpretation of the policy
document for MetLife to conclude that Lanpher was not entitled to SLTD benefits. (Id.)
In the alternative, the Court concluded that Lanpher would be entitled to equitable relief
on account of MetLife’s breach of fiduciary duty. (Id. at 4.) Accordingly, the Court
granted Lanpher’s motion for partial summary judgment against MetLife. (Id. at 54.)
The Court also ordered Lanpher and MetLife to ascertain whether any disputes exist
regarding the appropriate amount of damages, and to submit letter briefs if a dispute
Unless otherwise noted, the Court will cite to the CM/ECF pagination.
exists. (Id. at 54-55.) Both parties submitted letter briefs outlining areas of agreement
and disagreement, and the Court held a hearing on May 12, 2015. (See Richard K.
Lanpher Letter Brief (“Lanpher Letter”), Oct. 28, 2014, Docket No. 78; MetLife Letter
Brief (“MetLife Letter”), Nov. 4, 2014, Docket No. 79.) Pursuant to the calculations
discussed below, the Court will grant damages to Lanpher in the amount of $394,033.95.
The parties agree on many of the elements that make up the damages amount in
this case. For example, they agree that Lanpher is entitled to $75,000 in attorney’s fees;
on the timeframe for which Lanpher is entitled to SLTD benefits; and that MetLife is
entitled to $26,471.20 for the reimbursement of premiums. (See Lanpher Letter at 1; see
MetLife Letter at 1-2 & n.1; see also id., Ex. 2.)
The parties dispute, however, whether Lanpher is entitled to any benefits due to
the amount of deferred compensation Lanpher earned in 2006. At the hearing, Lanpher
indicated that he earned two deferred compensation amounts in 2006, totaling
$40,705.59.2 The parties also dispute whether Lanpher should receive any benefits in
recognition of a $30,073.68 stock-related payment Lanpher received in 2006.
Lanpher Letter, Ex. D at 28.) MetLife contends that Lanpher has waived any claim to the
deferred compensation and that the stock payment should not be included because the
Lanpher conceded at the hearing that that the $107,218.80 in deferred compensation he
received in 2006 should not be included in the calculation.
plan explicitly excludes “stock-based compensation” under its definition of Eligible
Annual Compensation (“EAC”).3 (MetLife Letter, Ex. 1 at 5.)
Although the Court acknowledges that Lanpher only recently produced evidence
of deferred compensation benefits that he earned in 2006, the Court will still consider
that evidence and find that Lanpher has not waived any argument regarding deferred
compensation. The Court must endeavor to award the correct amount of damages and
will not ignore the recent submissions from Lanpher regarding deferred compensation.
As a result, the Court will include in its damages calculation the $40,705.59 in deferred
compensation Lanpher earned in 2006. The Court also concludes, however, that the
$30,073.68 stock option payment Lanpher received in 2006, (see Lanpher Letter, Ex. D at
28), is “stock-based compensation” under the policy that will not be calculated, (see
MetLife Letter, Ex. 1 at 5).
After reviewing the record, the Court will otherwise rely on the “EAC” and
monthly supplemental earnings calculation provided by Lanpher in his letter, (see
Lanpher Letter, Exs. E & F), and updated at the hearing. This calculation is supported by
the 2006 payroll history Lanpher provided in his exhibits. (See id., Ex. D.)
Based on the updated calculation worksheet provided by Lanpher at the hearing,
and subtracting the $30,073.68 stock option payment, the Court reaches a sub-total
eligible payroll amount of $300,286.76.
Adding in the $40,705.59 in deferred
compensation, the Court reaches an EAC amount of $340,992.35. The Court will then
subtract the $60,000 in compensation that is uninsured per the SLTD policy, reaching a
MetLife uses the term “Predisability Earnings” (“PDE”), which is essentially
synonymous with “Eligible Annual Compensation.” (See MetLife Letter, Ex. 1 at 4.)
supplemental earnings amount of $280,992.35. That amount, divided by twelve, results
in a monthly supplemental earnings amount of $23,416.03. Sixty percent of that amount
is the final monthly supplemental earnings amount: $14,049.62.
INTEREST AND FINAL CALCULATION
The more complex part of the damages analysis is the determination of
prejudgment interest. The parties appear to agree that Lanpher is entitled to interest
pursuant to 28 U.S.C. § 1961 and, with some discrepancies, they agree to an interest rate
that applies to each month’s benefits. (Lanpher Letter at 1; id., Ex. A; MetLife Letter at
2; id., Ex. 2.) MetLife states that
[i]nterest is calculated on [the monthly benefit amount] using the monthly
Treasury Constant Maturities – 1 Year rates. As the SLTD benefit is paid
at the end of each month, the payment would be subject to the interest rate
in effect the following month (e.g., the benefit paid on June 30, 2008 would
accrue interest at the July 2008 rate).
(MetLife Letter at 2.) Neither MetLife nor Lanpher cites any authority for this interest
The relevant statute states that:
Interest shall be allowed on any money judgment in a civil case
recovered in a district court. Execution therefor may be levied by the
marshal, in any case where, by the law of the State in which such court is
held, execution may be levied for interest on judgments recovered in the
courts of the State. Such interest shall be calculated from the date of the
entry of the judgment, at 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, for the calendar week
preceding.[FN1] the date of the judgment. The Director of the
Administrative Office of the United States Courts shall distribute notice of
that rate and any changes in it to all Federal judges.
28 U.S.C. § 1961(a) (emphasis added).
The Eighth Circuit has stated that “28 U.S.C. § 1961 provides the proper measure
for determining rates of both prejudgment and postjudgment interest.” Mansker v.
TMG Life Ins. Co., 54 F.3d 1322, 1331 (8th Cir. 1995) (emphasis added) (ERISA case);
see also Ewald v. Royal Norwegian Embassy, No. 11-CV-2116, 2015 WL 1746375, at
*21 (D. Minn. Apr. 13, 2015) (noting that, under Mansker, in a case arising under federal
ERISA law, “[t]he question of whether interest is to be allowed, and also the rate of
computation, is a question of federal law where the cause of action arises from a federal
statute” (internal quotation marks omitted)).
Because Section 1961 provides the measure of interest for prejudgment interest,
the language of that provision should govern the interest award in this case, as the parties
appear to concede. (Lanpher Letter at 1.) In light of the language of the provision, which
sets the rate based on the relevant Treasury rate from the week preceding judgment, the
Court will not adopt the interest rate calculation advanced by the parties, which instead
uses different rates, based on the Treasury rate during each month Lanpher should have
received a benefit. “Judgment” under Section 1961 does not mean the day, week, or
month the harm occurred, but instead refers to the Court’s damages determination.
Wilson v. Union Pac. R.R. Co., 56 F.3d 1226, 1233 (10th Cir. 1995) (“The simple text of
the statute resolves the issue: a prevailing party in a civil action may collect interest on
‘any money judgment . . . . Such interest shall be calculated from the date of the entry of
the judgment.’ 28 U.S.C. § 1961(a). No ambiguity here permits multiple constructions;
the date to which the statute refers is the date of entry of the money judgment.”). As
such, only one rate is at issue, and it is the rate from the week preceding this Order.
Decisions in this circuit support this approach.
In Tussey v. ABB Inc., for
example, the court – citing Mankser – concluded that the interest rate under Section 1961
should be calculated from the week preceding judgment, not the date when the losses
were due. Tussey v. ABB Inc., No. 06-4305, 2012 WL 2368471, at *4-*5 (W.D. Mo.
June 21, 2012); see also Emmenegger v. Bull Moose Tube Co., 33 F. Supp. 2d 1123, 1125
(E.D. Mo. 1998) (“The Court erred by using the rates applicable when the various
amounts became due, rather than the rate applicable immediately before the judgment.”).
Indeed, in Parke v. First Reliance Standard Life Insurance Co. – the decision
underlying the Eighth Circuit decision cited by Lanpher with respect to interest, (Lanpher
Letter at 2 n.6) – this Court calculated prejudgment interest using one rate, applied to
various benefit amounts from different months. Parke v. First Reliance Standard Life
Ins. Co., No. 99-1039, 2003 WL 131731, at *1-*2 & n.2 (D. Minn. Jan. 8, 2003), aff’d in
part, rev’d in part on other grounds, 368 F.3d 999, 1006-09 (8th Cir. 2004) (affirming the
Court’s prejudgment interest calculation). The Court reached a similar conclusion in
Nelson v. Metropolitan Life Insurance Co., No. 07-2326, 2010 WL 153040, at *10 n.6
(D. Minn. Jan. 11, 2010).
In sum, the Court will use an interest rate calculation that comports with Section
1961. This judgment is dated August 18, 2015. The interest rate at issue, for last week,
the week ending on Friday, August 14, 2015, is .39 percent.4 The Court then calculates
the interest from each of the dates listed in the two spreadsheets, until the date of
judgment, compounded annually. See 28 U.S.C. § 1961(b). Using this calculation, the
See Selected Interest Rates (Weekly) – H.15, Board of Governors of the Federal Reserve
System (Aug. 17, 2015), http://www.federalreserve.gov/releases/h15/current/.
benefits due are $337,190.88. The total interest accrued is $8,314.27.5 The total benefits
and interest amount due is $345,505.15.
The Court will then subtract the unpaid premium amount of $26,471.20, which
results in a net supplemental disability benefits amount of $319,033.95. The Court will
then add $75,000 for attorney’s fees, to reach a total amount due of $394,033.95. This
amount comports with the SLTD policy, the relevant law, and also falls roughly halfway
The following table shows the Court’s interest calculations:
between the final calculations of Lanpher and Met Life.6 In addition, the Court will order
MetLife to pay post-judgment interest on any delinquent payments. See S.E.C. v. Brown,
No. 06-1213, 2010 WL 1780144, at *4 (D. Minn. Apr. 30, 2010) (“[Defendant] shall pay
post-judgment interest on any delinquent amounts pursuant to 28 U.S.C. § 1961.”).
Based on the foregoing, and all the files, records, and proceedings herein, IT IS
HEREBY ORDERED that MetLife shall pay $394,033.95 in damages plus interest to
Lanpher. MetLife shall pay post-judgment interest on any delinquent amounts pursuant
to 28 U.S.C. § 1961.
LET JUDGMENT BE ENTERED ACCORDINGLY.
DATED: August 18, 2015
at Minneapolis, Minnesota.
JOHN R. TUNHEIM
United States District Court
Lanpher also asks the Court to remand this case to MetLife so he can make a claim for
SLTD benefits based on physical disability, versus the mental illness disability underlying these
damages. MetLife argues that a remand is not appropriate, because Lanpher has waived his
opportunity to make an argument based on physical disability. MetLife notes that when Lanpher
received Basic benefits from MetLife due to mental illness, he failed to appeal to seek physical
disability benefits. The Court agrees that Lanpher has waived this argument and will not remand
the case to MetLife.
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