Kennedy et al v. ABB Inc. et al
Filing
718
ORDER entered by Judge Nanette Laughrey. Plaintiffs' Motion for Attorneys' Fees and Costs [Doc. # 649] is GRANTED. The Court finds that a reasonable award of attorneys' fees and costs is as follows: $12,947,747.68 in attorneys 039; fees and $489,985.00 in taxable and nontaxable costs to be paid jointly and severally by Defendants ABB and Fidelity; $1,712,834.85 in costs to be paid out of the Class damages award; and $25,000.00 from the Class recovery to be paid to each of the three named Plaintiffs as an incentive award. (Kanies, Renea)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
CENTRAL DIVISION
RONALD TUSSEY, et al.,
Plaintiffs,
v.
ABB, INC., et al.,
Defendants.
)
)
)
)
)
)
)
)
)
Case No. 06-04305-CV-C-NKL
ORDER
Pending before the Court is a motion for attorneys’ fees and costs by Plaintiffs.
[Doc. # 649]. For the reasons set forth below, the Court GRANTS attorneys’ fees and
costs as follows: attorneys’ fees in the amount of $12,947,747.68, and taxable and
nontaxable costs of $489,985.65, to be paid jointly and severally by Defendants ABB,
Inc., and Fidelity; costs of $1,712,834.85, to be paid out of the Class damages award; and
$25,000.00 to each of the three named Plaintiffs as an incentive award, to be paid jointly
and severally by Defendants ABB and Fidelity.
I.
Background
This case involves two 401(k) retirement plans run by Defendants ABB, Inc., John
W. Cutler, Jr., Pension Review Committee of ABB, Inc., Pension & Thrift Management
Group of ABB, Inc., and Employee Benefits Committee of ABB, Inc. (collectively
“ABB”), with services provided by Defendants Fidelity Management Trust Company and
Fidelity Management & Research Company (collectively “Fidelity”). After having tried
this matter over a four-week period and reviewed extensive records and testimony, the
1
Court found that Defendants breached their fiduciary duties to Plaintiffs under the
Employee Retirement Income Security Act (“ERISA”). In addition to providing
injunctive relief, the Court found ABB Defendants jointly and severally liable for $35.2
million in monetary damages, and Fidelity Defendants jointly and severally liable for
$1.7 million in monetary damages.
Pursuant to ERISA’s fee-shifting provision, Plaintiffs request $14,356,209.00 in
attorney fees and $2,098,029.86 in costs. Plaintiffs request that Defendants be held
jointly and severally liable for $14,001,052.61 in fees and $350,560.67 in costs, and that
the remainder be paid by Class members. In addition, Plaintiffs request that the named
Plaintiffs receive an award of $25,000.00 each.
II.
The ERISA Award
A.
Fee-Shifting under ERISA
The Court has discretion to award attorney’s fees under ERISA’s fee-shifting
provision. 29 U.S.C. § 1132(g)(1); see also Lawrence v. Westerhaus, 749 F.2d 494, 496
(8th Cir. 1984). “[A]lthough there is no presumption in favor of attorney fees in an
ERISA action, a prevailing plaintiff rarely fails to receive fees.” Starr v. Metro Sys., Inc.,
461 F.3d 1036, 1041 (8th Cir.2006) (citing Martin v. Ark. Blue Cross & Blue Shield, 299
F.3d 966, 972 (8th Cir.2002)). In determining whether a fee award is proper, the court
considers the following factors: “(1) the degree of the opposing parties' culpability or bad
faith; (2) the ability of the opposing parties to satisfy an award of attorneys' fees; (3)
whether an award of attorneys' fees against the opposing parties could deter other persons
acting under similar circumstances; (4) whether the parties requesting attorneys' fees
2
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.” Leonard v. Sw. Bell Corp. Disability Income Plan, 408 F.3d 528, 532
(8th Cir. 2005) (referencing Lawrence, 749 F.2d at 496). It is not necessary for the Court
to review each factor “exhaustively and explicitly.” Griffin v. Jim Jamison, Inc., 188
F.3d 996, 997 (8th Cir. 1999). Rather, these factors are “general guidelines which
provide direction to the district court, while also facilitating meaningful appellate
review.” Martin v. Arkansas Blue Cross & Blue Shield, 299 F.3d 966, 972 (8th Cir.
2002) (emphasis in original) (internal quotes omitted).
Having weighed these factors, the Court determines that an award of fees and
costs is appropriate in this case. ABB breached its fiduciary duties of both loyalty and
prudence to the retirement plans, as a result of which it benefitted significantly while plan
beneficiaries were deprived of millions of dollars. Fidelity, while less culpable, also took
plan assets in violation of its fiduciary duty. The case also involved significant novel
legal questions regarding the extent of the fiduciary duties owed by plan administrators
under ERISA and will have a general deterrent effect on similarly situated fiduciaries.
Plaintiffs sought to benefit all participants and beneficiaries of the pension plans and, but
for their actions, the Defendants would continue to violate ERISA. In addition, the
results of this case may help benefit other plan beneficiaries, in the event of similar
litigation, by further clarifying the duty of loyalty and prudence owed by record keepers
and employers. Finally, there is no question regarding Defendants’ ability to pay
attorneys’ fees in addition to the judgment.
3
B.
Lodestar Calculation
Awards under fee-shifting statutes are calculated using the lodestar method. City
of Burlington v. Dague, 505 U.S. 557, 562, 112 S. Ct. 2638, 2641 (1992) (“The
“lodestar” figure has, as its name suggests, become the guiding light of our fee-shifting
jurisprudence.”). The lodestar figure is “the product of reasonable hours times a
reasonable rate.” Id. at 559, 2640; see also Fish v. St. Cloud State Univ., 295 F.3d 849,
851 (8th Cir. 2002). To determine the lodestar amount, the Court may consider:
(1) the time and labor required; (2) the novelty and difficulty of the
questions; (3) the skill requisite to perform the legal service properly; (4)
the preclusion of employment by the attorney due to acceptance of the case;
(5) the customary fee; (6) whether the fee is fixed or contingent; (7) time
limitations imposed by the client or the circumstances; (8) the amount
involved and the results obtained; (9) the experience, reputation, and ability
of the attorneys; (10) the ‘undesirability’ of the case; (11) the nature and
length of the professional relationship with the client; and (12) awards in
similar cases.
United HealthCare Corp. v. Am. Trade Ins. Co., 88 F.3d 563, 574 n.9 (8th Cir. 1996)
(referencing Hensley v. Eckerhart, 461 U.S. 424, 428, 103 S. Ct. 1933, 1937 (1983)). It
is important that the district court provides a “concise but clear explanation” of the
reasons for the fee award. Hensley, 461 U.S. at 437, 103 S. Ct. at 1941.
The central contention between the parties is what market should be used to assess
a “reasonable” fee. Defendants would have the Court assess Plaintiffs’ fee based on the
local market rate in Kansas City, Missouri, while Plaintiffs argue their fee should be
assessed based on the national rate for complex litigation. “A reasonable hourly rate is
usually the ordinary rate for similar work in the community where the case has been
litigated.” Fish, 295 F.3d at 851-52. However, in a complex matter, the relevant market
4
“may extend beyond the local geographic community” and include the national market or
a market for a particular legal specialization. Casey v. City of Cabool, Mo., 12 F.3d 799,
805 (8th Cir. 1993). The Eighth Circuit has recognized that where plaintiffs’ attorneys
are “leaders in the field” and have “extensive experience” in a specialized area, they tend
to be “able to handle the case in a shorter length of time than a local lawyer, without
comparable experience,” and so a higher rate is appropriate. Planned Parenthood, Sioux
Falls Clinic v. Miller, 70 F.3d 517, 519 (8th Cir. 1995) (affirming the district court’s
approval of higher hourly rates based on the specialized skill of counsel). And contrary
to Defendants’ assertions, Plaintiffs need not show that no local attorney would have
taken their case to prove that local rates should not apply; Planned Parenthood merely
requires that Plaintiffs’ counsel possess special expertise. Id; see also Torgeson v. Unum
Life Ins. Co. of Am., 2007 WL 433540 at *6 (N.D. Iowa Feb. 5, 2007).
It is well established that complex ERISA litigation involves a national standard
and special expertise. See, e.g., Torgeson, 2007 WL 433540 at *6; Dobson v. Hartford
Fin. Services Group, Inc., 2002 WL 31094894 at *3 (D. Conn. Aug. 2, 2002); Mogck v.
Unum Life Ins. Co. of Am., 289 F. Supp. 2d 1181, 1191 (S.D. Cal. 2003). Plaintiffs’
attorneys are clearly experts in ERISA litigation. The litigation was complex in size and
subject matter, involved novel questions of law, and spanned nearly six years. The Court
thus finds that a reasonable rate in this case would be best assessed against national rates
for complex specialized litigation. The Court may also take into account awards in
similar cases. In a 2009 case involving Plaintiff’s counsel, the firm of Schlicter, Bogard,
and Denton, the court approved hourly rates for this firm according to the following
5
schedule: for attorneys with 25 years or more experience, $800 per hour; for attorneys
with 15-24 years of experience, $625 per hour; 5-15 years of experience, $450 per hour;
2-4 years of experience, $325 per hour; and for professional support staff, $125 per hour.
Eshelman v. Client Services, Inc., et al., No: 0822-cv-00763 (22d Cir. Mo. Dec. 7, 2009).
[Doc. # 650, Exhibit # 1-2 to Boyko Decl.]. Based on these rates, in 2010 an Illinois
district court found that a reasonable blended rate for Plaintiffs’ counsel was $514.60 per
hour. Will v. Gen. Dynamics Corp., 2010 WL 4818174 at *3 (S.D. Ill. Nov. 22, 2010).
Defendants argue that because this litigation began in 2006, application of current
rates is inappropriate. However, when lengthy litigation has delayed the payment of
attorneys’ fees, it is proper to calculate the lodestar based on contemporary rates. The
Supreme Court has determined that “an appropriate adjustment for delay in payment –
whether by application of current rather that historic rates or otherwise” may be “part of a
‘reasonable attorney's fee.’” Missouri v. Jenkins by Agyei, 491 U.S. 274, 284, 282, 109 S.
Ct. 2463, 2469, 2468 (1989). Applying Jenkins, the Eighth Circuit recognized that it is
appropriate to award attorneys’ fees “based on current rates for past services when
payment of attorneys' fees is delayed.” Little Rock Sch. Dist. v. State of Ark., 127 F.3d
693, 697 (8th Cir. 1997) (finding compensation was not appropriate where delay was
short and the result of Plaintiffs’ own actions); see also Gates v. Deukmejian, 987 F.2d
1392, 1406 (9th Cir. 1992) (“district courts have the discretion to compensate prevailing
parties for any delay in the receipt of fees by awarding fees at current rather than historic
rates in order to adjust for inflation and loss of the use funds.”); Chambless v. Masters,
Mates & Pilots Pension Plan, 885 F.2d 1053, 1060 (2d Cir. 1989) (a district court has a
6
“duty to consider this factor of delay” in awarding attorneys’ fees); Iqbal v. Golf Course
Superintendents Ass'n of Am., 900 F.2d 227, 228 (10th Cir. 1990) (affirming the district
court’s approval of a higher rate because of “‘inflation and the awards of other judges in
this district’ and because of the delay in payment of the attorneys' fees.”). The reason for
applying current fee rates is that an uncompensated delay in payment can discourage
otherwise willing attorneys from taking plaintiffs who cannot afford counsel. El-Tabech
v. Clarke, 616 F.3d 834, 839 (8th Cir. 2010). Additionally, contrary to Defendants’
assertions, the Supreme Court has recognized that the relative youth or inexperience of
attorneys at the beginning of litigation does not prevent them from being compensated at
market rate when their performance has been “excellent.” City of Riverside v. Rivera,
477 U.S. 561, 570, 106 S. Ct. 2686, 2692 (1986).
Plaintiffs request that the rate found reasonable by the Illinois district court in
2010 be increased by 10.7% to account for an increase in fees for sophisticated legal
practice. However, the Court is mindful that “reasonableness” must also accord with the
current national rate. “When determining reasonable hourly rates, district courts may rely
on their own experience and knowledge of prevailing market rates.” Hanig v. Lee, 415
F.3d 822, 825 (8th Cir.2005).1 The Court finds that a partner rate of $800 per hour is on
1
Defendants rely on Jorstad v. IDS Realty Trust for the proposition that “the hourly rates which
were found to be reasonable by the district court” based on the judges’ “personal knowledge
and… the case law in the ‘area’ of ‘class action securities litigation’ are “excessive and find no
support in the law in this circuit.” 643 F.2d 1305, 1312 (8th Cir. 1981). However, in Jorstad, the
Eighth Circuit considered the district court’s assessment to be unreasonable because the
plaintiffs’ attorneys had not substantiated their fee claims by providing detailed records “relating
to standard hourly rates” for their firm or a “complete breakdown of who spent time in what
endeavors.” Id. at 1312. This is not the case here, where Plaintiffs’ attorneys have provided
documentation of rates and hours as well as past fee awards.
7
the upper end of that charged by national law firms in 2012. See, e.g., “Billing Rates
2012,” Missouri Lawyers Weekly (August 6, 2012). Additionally, comparison of
Plaintiffs’ requested fees to the fees Defendants paid their attorneys may also be relevant
to determining reasonableness. See Dependahl v. Falstaff Brewing Corp., 653 F.2d 1208,
1220 (8th Cir. 1981). Where the “litigation has been long and complex, involving both
unique facts and novel questions of law…, the defendant's fees may provide the best
available comparable standard to measure the reasonableness of plaintiffs' expenditures in
litigating the issues of the case.” Chicago Prof'l Sports Ltd. P'ship v. Nat'l Basketball
Ass'n., 1996 WL 66111 at *3 (N.D. Ill. Feb. 13, 1996). The partner hourly rate used for
Plaintiffs’ counsel by the Will court, $800, is slightly more than the highest hourly rates
paid to the law firm partners who were counsel for Defendant Fidelity ($549-$731), and
somewhat higher than the partners who served as Counsel for Defendant ABB ($615675).
Given the above, the Court sees no reason to increase the rate applied by the
Illinois district court in 2010. The Court finds that a blended rate of $514.60 is
appropriate in this case. A high rate such as this should amply compensate Plaintiffs’
attorneys for the time and labor invested in this case lasting more than half a decade, as
well as the novelty and difficulty of the questions involved. Plaintiffs have submitted
documentation of 25,160.8 hours of work on this case to the Court. At the blended
hourly rate of $514.60, this would equal a lodestar fee of $12,947,747.68.
1.
Lodestar Enhancement
8
Plaintiffs request fees in excess of the lodestar amount calculated pursuant to
ERISA’s fee-shifting statute. Plaintiffs’ primary justification for their request is their
concern that the lodestar will not sufficiently encapsulate the risk they undertook in
pursuing such novel and complex litigation. Lodestar enhancements are only permissible
in “rare” and “exceptional” circumstances, “and require specific evidence that the
lodestar fee would not have been ‘adequate to attract competent counsel.’” Perdue v.
Kenny A. ex rel. Winn, 130 S. Ct. 1662, 1674 (2010) (quoting Blum v. Stenson, 465 U.S.
886, 899, 104 S. Ct. 1541, 1549 (1984)). The Eighth circuit has held that if a plaintiff “is
able to establish that without an adjustment for risk [he] would have faced substantial
difficulties in finding counsel in the local or other relevant market, he may be entitled to
an enhancement of the lodestar to the extent “necessary to bring the fee within the range
that would attract competent counsel.” Jackson v. Rheem Mfg. Co., 904 F.2d 15, 16-17
(8th Cir. 1990) (citing Pennsylvania v. Delaware Valley Citizens' Council for Clean Air,
483 U.S. 711, 733, 107 S. Ct. 3078, 3099 (1987) (O'Connor, J., concurring in part and
concurring in judgment)) (internal quotes omitted). Generally, however, lodestar
enhancements to account for risk are considered unnecessary, on the grounds that such an
enhancement “would likely duplicate in substantial part factors already subsumed in the
lodestar.” City of Burlington v. Dague, 505 U.S. 557, 562, 112 S. Ct. 2638, 2641.
The Court finds that it is not necessary to enhance the lodestar in this case, since
the lodestar calculated above adequately compensates for the risk inherent in this type of
litigation by taking into account factors like novelty, difficulty, complexity, and length of
the litigation.
9
2.
Lodestar Reduction
“The product of reasonable hours times a reasonable rate does not end the inquiry.
There remain other considerations that may lead the district court to adjust the fee upward
or downward, including the important factor of the ‘results obtained.’” Quigley v.
Winter, 598 F.3d 938, 959 (8th Cir. 2010) (quoting Hensley, 461 at 434, 103 S. Ct. 1933).
Defendants advocate for a reduction of the lodestar amount for several reasons. First,
they oppose the number of hours requested on the grounds that some of these hours are
not properly documented. “Counsel for the prevailing party should make a good faith
effort to exclude from a fee request hours that are excessive, redundant, or otherwise
unnecessary.” Hensley, 461 U.S. at 434, 103 S. Ct. at 1939-40 (internal quotes omitted);
see also Toppins v. Hartford Life & Acc. Ins. Co., 2009 WL 4728993 (W.D. Mo. Dec. 4,
2009). Inadequate documentation may justify reducing a fee award. H.J. Inc. v. Flygt
Corp., 925 F.2d 257, 260 (8th Cir. 1991). However, in this case the Court finds that
Plaintiffs’ documentation was sufficient to indicate how the hours requested were spent.
The Court also finds that the claimed number of hours, 25,160.8, is reasonable given the
complexity of the case. See, e.g., In re BankAmerica Corp. Sec. Litig., 228 F. Supp. 2d
1061, 1065 (E.D. Mo. 2002) aff'd, 350 F.3d 747 (8th Cir. 2003) (finding 22,393.4 hours
reasonable in complex 4 year securities fraud class action); In re Charter
Communications, Inc., Sec. Litig., 2005 WL 4045741 (E.D. Mo. June 30, 2005) (finding
13,633.7 hours reasonable in a 2 ½ year class action); In re Xcel Energy, Inc., Sec.,
Derivative & ''ERISA'' Litig., 364 F. Supp. 2d 980, 996 (D. Minn. 2005) (finding
10,401.67 hours over 2 ½ years reasonable in a securities fraud and ERISA class action).
10
Defendants also argue that Defendant ABB should not be liable for hours worked
litigating against Defendant Fidelity, and vice versa. However, where the claims against
multiple defendants are so intertwined that hours spent developing a claim against one
cannot be easily distinguished from those spent developing a claim against the other, a
court is not required to separate out each successful claim in determining the award. City
of Riverside v. Rivera, 477 U.S. 561, 571, 106 S. Ct. 2686, 2692 (1986) (finding that
downward adjustment was not appropriate where there was “a common core of facts” and
much of the case was spent ferreting out relative liability); see also Phillips v. Missouri,
2000 WL 33910092 at *2 (W.D. Mo. Mar. 29, 2000); Hensley v. Eckerhart, 461 U.S.
424, 435, 103 S. Ct. 1933, 1940 (1983). Neither must a fee award necessarily be reduced
where one of the defendants was ultimately found to have less liability than the other.
See Griffin v. Jim Jamison, Inc., 188 F.3d 996, 998 (8th Cir. 1999) (holding that it was
not appropriate to reduce the amount of time spent litigating against both defendants).
The instant case involved complex, intertwined issues that implicated both Fidelity and
ABB. ABB and Fidelity jointly defended against class certification and the merits of this
action; jointly endorsed all defense experts; and conducted a joint trial defense. It was
clear from their public conduct that they acted as a coordinated team. On this basis, the
Court finds that the claims against the Defendants shared a common core of facts, and
that the hours spent litigating the various claims against each are too enmeshed to be
easily distinguishable.
Defendants also argue for reducing the total lodestar amount because Plaintiffs
received damages significantly less than the amount originally claimed, and prevailed on
11
just one of several claims against Defendant Fidelity. Although “a fees claimant must
show some degree of success on the merits before a court may award attorney's fees
under § 1132(g)(1),” Hardt v. Reliance Standard Life Ins. Co., 130 S. Ct. 2149, 2158,
176 (2010) (internal quotes omitted), a fee award “should not be reduced merely because
a party did not prevail on every theory raised in the lawsuit.” Hendrickson v. Branstad,
934 F.2d 158, 164 (8th Cir. 1991). This is particularly so where “[t]he claims on which
plaintiffs did not prevail were closely related to the claims on which they did prevail.”
City of Riverside v. Rivera, 477 U.S. 561, 571, 106 S. Ct. 2686, 2692 (1986). A plaintiff
prevails “when actual relief on the merits of his claim materially alters the legal
relationship between the parties by modifying the defendant's behavior in a way that
directly benefits the plaintiff.” Shrader v. OMC Aluminum Boat Group, Inc., 128 F.3d
1218, 1220 (8th Cir. 1997) (quoting Farrar v. Hobby, 506 U.S. 103, 111-12, 113 S. Ct.
566, 573 (1992)); see also Leonard v. Sw. Bell Corp. Disability Income Plan, 408 F.3d
528, 533 n.3 (8th Cir. 2005). A court has considerable discretion to “tailor[] the fee to
reflect a relationship to the results obtained,” Shrader v. OMC Aluminum Boat Group,
Inc., 128 F.3d 1218, 1221 (8th Cir. 1997), and may award fees where “the lawsuit has
resulted in a substantial recovery for the Plan that is significantly greater than the court's
fee award.” Felber v. Estate of Regan, 117 F.3d 1084, 1088 (8th Cir. 1997).
In the instant case, Plaintiffs prevailed overwhelmingly in the overall litigation,
recovering $36.9 million in damages for their Class. Although their proposed global
damages theory would have allowed a recovery much greater than the one the Court
ultimately granted, this is not reflective of the merits of their claim, the most relevant
12
inquiry. Plaintiffs in fact submitted multiple ways to calculate damages. In addition,
while the Plaintiffs’ recovery was primarily against ABB and not Fidelity, the Defendants
have not shown that Plaintiffs’ damages would have been substantially greater if Fidelity
had been found to be responsible for the actions of ABB, as a co-fiduciary.
For the foregoing reasons, the Court will not reduce the lodestar.
III.
Joint & Several Liability
Non-prevailing defendants are generally held jointly and severally liable for
attorneys’ fees and costs, regardless of an individual defendant's degree of culpability.
See Walter v. Clarion Mortg. Capital, Inc., 2010 WL 1170136 at *2 (W.D. Mo. Mar. 23,
2010); Concord Boat Corp. v. Brunswick Corp., 309 F.3d 494, 497 (8th Cir. 2002)
(stating that “[j]oint and several liability for costs is the general rule”). This is especially
true where plaintiff’s claims against defendants are “extremely inter-related, arising out
of the same transaction or occurrence or series of occurrences and sharing common
questions of law and fact.” Walter, 2010 WL 1170136 at *2; see also Hendrickson v.
Branstad, 934 F.2d 158, 164 (8th Cir. 1991). Plaintiffs’ claims against ABB and Fidelity
clearly satisfy these criteria. The Defendants also each played a substantial role in the
litigation and presented a joint legal defense, advancing many of the same arguments.
See, e.g., Fenster v. Tepfer & Spitz, Ltd., 301 F.3d 851, 859-60 (7th Cir. 2002) (joint and
several liability was appropriate where defendants were not “truly strangers,” but
cooperated with each other and maintained the same legal positions throughout the
litigation). Defendant Fidelity argues that because Plaintiffs’ recovery against them was
ultimately much less than against Defendant ABB, they should not be jointly and
13
severally liable for attorneys’ fees. However, the Eighth Circuit has held that even where
a defendant’s role in the litigation was “minor,” because the defendant relied on his codefendants to litigate common issues, he could be held jointly and severally responsible
for attorneys’ fees. Carhart v. Stenberg, 192 F.3d 1142, 1152 (8th Cir. 1999) aff'd, 530
U.S. 914, 120 S. Ct. 2597 (2000); see also Doe v. Nixon, 2011 WL 3962669 at *7 (E.D.
Mo. Aug. 25, 2011). The Eighth Circuit noted that in such a case, “[h]ow the defendants
choose to allocate the fees among themselves is entirely up to them.” Carhart v.
Stenberg, 192 F.3d at 1152. For the above reasons, the Court finds that joint and several
liability is appropriate in this case.
IV.
Costs
A.
Taxable Costs
Federal Rule of Civil Procedure 54 governs awards of costs to prevailing parties.
Fed. R. Civ. P. 54(d)(1). The court may only award such costs as are enumerated in 28
U.S.C. § 1920 or “some other statutory authorization.” Smith v. Tenet Healthsystem SL,
Inc., 436 F.3d 879, 889 (8th Cir. 2006); see also W. Virginia Univ. Hospitals, Inc. v.
Casey, 499 U.S. 83, 86, 111 S. Ct. 1138, 1141 (1991). Taxable costs that may be shifted
under § 1920 include: fees of the clerk and marshal; fees for transcripts necessarily
obtained for use in the case; fees for printing and witnesses; costs of copying where
copies are necessarily obtained for use in the case; docket fees; and compensation of
court appointed experts and interpreters. 28 U.S.C. § 1920. Plaintiffs have submitted
documentation of taxable costs totaling $104,791,44. [Doc. # 646]. The Court finds that
14
these taxable costs are reasonable and supported by sufficient documentation, and are
properly shifted to Defendants under § 1920.
B.
Nontaxable Costs
In addition to costs made taxable under § 1920, reasonable out-of-pocket expenses
of the kind normally charged to clients may be shifted to defendants under a fee-shifting
statute. Sturgill v. United Parcel Serv., Inc., 512 F.3d 1024, 1036 (8th Cir. 2008); see
also Owner-Operator Indep. Drivers Ass'n v. Ledar Transp., 2009 WL 2170086 at *2
(W.D. Mo. July 20, 2009) (holding that the Truth in Leasing regulations did not provide
for shifting of costs, and so plaintiffs were limited to recovering costs permitted under §
1920). ERISA permits a court in its discretion to award costs of an action to either party.
29 U.S.C. § 1132(g)(1); In re UnitedHealth Group Inc. S'holder Derivative Litig., 631
F.3d 913, 918 (8th Cir. 2011). Reasonable out-of-pocket expenses may include costs of
attorney travel, computerized research, court reporters, phone and fax, air couriers,
postage, mediation, and class notification. See In re BankAmerica Corp. Sec. Litig., 228
F. Supp. 2d 1061, 1066 (E.D. Mo. 2002) aff'd, 350 F.3d 747 (8th Cir. 2003); Kelly v.
Bowen, 862 F.2d 1333, 1335 (8th Cir. 1988); but see Emery v. Hunt, 272 F.3d 1042, 1048
(8th Cir. 2001) (denying reimbursement for overhead, including postage expenses, time
spent preparing itemized billing statements, and copies where the purpose was not clearly
marked; approving telephone expenses and reasonable document copy expenses).
Plaintiffs have submitted affidavits regarding nontaxable costs in the amount of
$2,098,029.06. [Docs. ## 650, 699, 708]. These nontaxable costs break down as
follows: $108,712.77 for copies; $15,227.16 for delivery charges; $93,324.02 for
15
deposition related expenses; $57,585.70 for electronic discovery; $392.25 for mediation;
$3,638.41 for phone charges; $241.01 for printing; $1,696.70 for a private process server;
$12,951.94 for non-computerized research; $56,790.91 for trial expenses; $34,633.34 for
online research; and $1,712,834.85 for expert witness and consulting fees. The nonprevailing party bears the burden of overcoming the presumption that the prevailing party
is entitled to costs. 168th & Dodge, LP v. Rave Reviews Cinemas, LLC, 501 F.3d 945,
958 (8th Cir. 2007). Defendants have not challenged Plaintiffs’ request for cost-shifting.
Regarding all the but the last two nontaxable costs claimed, the Court finds that such
costs are reasonable out-of-pocket expenses typically billed to clients, and may
reasonably be shifted to Defendants under ERISA.
1.
Online Legal Research Costs
In addressing the remainder of Plaintiffs’ costs, a specific discussion of
computerized or online legal research is necessary. Plaintiffs state they have expended
$34,633.34 on online research. Several decades ago, the Eighth Circuit held that costs for
computerized research may not be shifted to the defendants. Standley v. Chilhowee R-IV
Sch. Dist., 5 F.3d 319, 325 (8th Cir. 1993); see also Leftwich v. Harris-Stowe State Coll.,
702 F.2d 686, 695 (8th Cir. 1983). However, in a recent case, the Eighth Circuit carved a
large exception to this prohibition, distinguishing Standley and Leftwich from cases
where expenses are reimbursed pursuant to settlement. In re UnitedHealth Group Inc.
S'holder Derivative Litig., 631 F.3d 913, 918 (8th Cir. 2011). In so holding, the Eighth
Circuit noted that the prevailing view among other circuits is to award costs of online
research. Id. at 918-919. Since then, two district courts in the Eighth Circuit have
16
recognized an implicit overruling of Leftwich and Standley with regard to certain feeshifting statutes and agreements. Gilster v. Primebank, 2012 WL 3518507 at *44 (N.D.
Iowa Aug. 14, 2012) (Title VII); BP Group, Inc. v. Capital Wings Airlines, Inc., 2011
WL 4396938 at *4 (D. Minn. Sept. 21, 2011) (private contract). Gilster reasoned that
Title VII’s fee shifting provision could include online research by reading the In re
UnitedHealth Group decision in tandem of the Eighth Circuit’s recent holding in Sturgill
v. United Parcel Service, in which the Eighth Circuit held that Title VII permits the
shifting of “reasonable out-of-pocket expenses incurred by the attorney which are
normally charged to a fee paying client.” Sturgill v. United Parcel Serv., Inc., 512 F.3d
1024, 1036 (8th Cir. 2008) (internal quotes omitted). As the Gilster court reasoned, such
reasonable expenses today includes online research fees, and so according to Sturgill
such fees could be shifted under Title VII. Gilster, 2012 WL 3518507 at *44. The
Supreme Court has held that “our case law construing what is a ‘reasonable’ fee applies
uniformly to all” fee-shifting statutes. City of Burlington v. Dague, 505 U.S. 557, 562,
112 S. Ct. 2638, 2641 (1992). Although express differences between the language of
Title VII and ERISA may give rise to different interpretations in some cases, see Martin
v. Arkansas Blue Cross & Blue Shield, 299 F.3d 966, 969 (8th Cir. 2002) (finding no
presumption of fees for the prevailing party under ERISA because unlike Title VII,
ERISA permitted the court to award fees to “either party”), this is not the case here. As
the Supreme Court made explicit in City of Burlington, the issue of what constitutes
“reasonable” fees and costs is the same inquiry under both statutes. The Court therefore
finds the Gilster court’s reasoning under Title VII to apply equally to ERISA’s fee17
shifting provision. As such, pursuant to In re UnitedHealth Group and Sturgill, online
research costs may be shifted to the non-prevailing party as reasonable out-of-pocket
expenses under ERISA. Plaintiffs’ $34,633.34 in online research costs may therefore be
shifted to Defendants, for a total of $385,194.21 in nontaxable costs.
2.
Consulting Expert Costs
The Plaintiffs also request $1,712,834.85 for testifying and consulting expert fees.
Testifying witnesses may be reimbursed under § 1920 up to amounts specified in 28
U.S.C. § 1821. Crawford Fitting Co. v. J. T. Gibbons, Inc., 482 U.S. 437, 441, 107 S. Ct.
2494, 2497 (1987) (Ҥ 1821 specifies the amount of the fee that must be tendered to a
witness, § 1920 provides that the fee may be taxed as a cost, and Rule 54(d) provides that
the cost shall be taxed against the losing party”); see also Emmenegger v. Bull Moose
Tube Co., 33 F. Supp. 2d 1127, 1136 (E.D. Mo. 1998); Magelky v. BNSF Ry. Co., 2008
WL 2949260 at *2 (D.N.D. July 28, 2008) (discussing Crawford’s implicit overruling of
prior Eighth Circuit precedent permitting recovery of expert fees above the § 1821
amount). The Supreme Court has held that expert fees may not be shifted to the
defendants under a fee-shifting statute unless the statute explicitly so provides. W.
Virginia Univ. Hospitals, Inc. v. Casey, 499 U.S. 83, 99, 111 S. Ct. 1138, 1147 (1991).
Because ERISA does not specifically provide for shifting expert fees, these costs are not
shiftable to defendants. Emmenegger v. Bull Moose Tube Co., 33 F. Supp. 2d 1127, 1136
(E.D. Mo. 1998).
V.
Class Responsibility for Fees and Costs
18
If the award granted under a fee-shifting statute is less than that specified by the
contingent fee contract between claimant and counsel, then “claimant's counsel may
collect from the claimant the difference” between the statutory award and the contract.
Talbott v. Bowen, 832 F.2d 111, 112 (8th Cir. 1987); see also Venegas v. Mitchell, 495
U.S. 82, 90, 110 S. Ct. 1679, 1684, 109 L. Ed. 2d 74 (1990); Wilmington v. J.I. Case Co.,
793 F.2d 909, 923 (8th Cir. 1986); Jackson v. Rheem Mfg. Co., 904 F.2d 15, 17 (8th Cir.
1990). According to Plaintiffs’ Counsel, their agreement with Class Representatives was
for a contingent fee of 1/3 of recovery. The Court awarded $36.9 million in monetary
damages, 1/3 of which is $12.3 million. The Court has concluded that a reasonable fee
under ERISA is $12,947,747.68, slightly more than the amount Plaintiffs’ counsel would
receive under the contingency fee contract. Therefore, it is not necessary to require the
Class to pay any additional attorneys’ fees.
Plaintiffs argue that the total amount of damages awarded should include the value
of injunctive relief as well as monetary damages, estimating the value of the injunctive
relief award at $1.48 million per anum. However, as the Ninth Circuit noted, injunctive
relief may be included in a calculation of a fee percentage “only in the unusual instance
where the value to individual class members of benefits deriving from injunctive relief
can be accurately ascertained.” Staton v. Boeing Co., 327 F.3d 938, 974 (9th Cir. 2003).
Plaintiffs’ calculation of the value of the injunctive relief is tenuous and unsupported by
sufficient documentation. Therefore, the Court finds that including the alleged value of
the injunctive relief in the amount of damages for purposes of determining the contingent
fee recovery is inappropriate.
19
Plaintiffs’ counsel request that costs that cannot be shifted to Defendants under
ERISA be paid out of the damage award to Plaintiffs pursuant to the contingent fee
arrangement with the Class Representatives. Defendants argue that the Class damages
award cannot be used to pay fees and costs because that would constitute assignment or
alienation of a plan benefit, which ERISA prohibits. 29 U.S.C. § 1056(d)(1) (“[B]enefits
provided under the plan may not be assigned or alienated.”). The Court agrees with
Plaintiffs’ interpretation that “benefit” does not include assets in a defined contribution
plan that have not yet been distributed. If it were otherwise, this would lead to the absurd
result that “the plan administrator would be prohibited from debiting participants'
accounts even to cover expenses that ERISA and the Plan specifically contemplate they
will bear.” Milgram v. Orthopedic Associates Defined Contribution Pension Plan, 666
F.3d 68, 73 (2d Cir. 2011) (holding that ERISA’s anti-alienation rule did not prevent
defined contribution pension plan assets from being used to satisfy a judgment). Because
ERISA explicitly provides that civil enforcement actions may be brought by beneficiaries
against their benefit plans, 29 U.S.C.A. § 1132(a)(1), it “clearly contemplates the
enforcement of money judgments against benefit plans.” Mackey v. Lanier Collection
Agency & Serv., Inc., 486 U.S. 825, 832, 108 S. Ct. 2182, 2187 (1988). Therefore, an
award of fees out of damages paid to a Class of plan beneficiaries cannot be considered
an assignment or alienation of benefits in violation of the statute.
Although costs may be recoverable from damages awarded the Class, the Court
must still “monitor contingency fee arrangements” to ensure that the costs claimed are
reasonable. Ross v. Douglas County, Neb., 244 F.3d 620, 622 (8th Cir. 2001). Here,
20
Plaintiffs’ Counsel attest to having spent more than $1.7 million on testifying and
consulting experts. Given the complexity of this litigation and the necessity of expert
testimony, the Court finds this to be a reasonable amount. Therefore, the Court finds that
an appropriate cost for Plaintiffs’ testifying and consulting experts to be paid out of the
Class recovery is $1,712,834.85.
VI.
Named Plaintiffs’ Awards
Plaintiffs request that each of the three named Plaintiffs receive $25,000.00 for
prosecuting this case. Relevant considerations in determining whether to grant an
incentive award to named plaintiffs include actions plaintiffs took to protect the interests
of the class; the degree to which the class has benefitted from those actions; and the
amount of time and effort plaintiffs expended in pursuing the litigation. In re U.S.
Bancorp Litig., 291 F.3d 1035, 1038 (8th Cir. 2002); see also In re Charter
Communications, Inc., Sec. Litig., 2005 WL 4045741 at *25 (E.D. Mo. June 30, 2005);
Zilhaver v. UnitedHealth Group, Inc., 646 F. Supp. 2d 1075, 1085 (D. Minn. 2009). The
Court finds that the named Plaintiffs, Mr. Tussey, Mr. Fisher, and Mr. Pinnell, have been
actively involved in pursuing this litigation, to the benefit of the entire Class. As such, an
incentive award of $25,000.00 each is appropriate.
VII.
Conclusion
For the reasons stated above, it is hereby ORDERED that Plaintiffs’ Motion for
Attorneys’ Fees and Costs [Doc. # 649] is GRANTED. The Court finds that a reasonable
award of attorneys’ fees and costs is as follows: $12,947,747.68 in attorneys’ fees and
$489,985.00 in taxable and nontaxable costs to be paid jointly and severally by
21
Defendants ABB and Fidelity; $1,712,834.85 in costs to be paid out of the Class damages
award; and $25,000.00 from the Class recovery to be paid to each of the three named
Plaintiffs as an incentive award.
s/ Nanette K. Laughrey
NANETTE K. LAUGHREY
United States District Judge
Dated: November 2, 2012
Jefferson City, Missouri
22
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?