Loberg et al v. Cigna Group Insurance et al
MEMORANDUM OPINION - The Court finds that the motion 65 should be granted in part and denied in part. Computing the interest daily and compounding annually to the date of judgment, in accord with § 1961, the Court finds that plaintiffs are entitled to prejudgment interest in the amount of $121.13. A separate order will be entered in accordance with this memorandum opinion. Ordered by Senior Judge Lyle E. Strom. (AOA)
IN THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF NEBRASKA
JANELL M. LOBERG and RUSS
CIGNA GROUP INSURANCE and
LIFE INSURANCE COMPANY OF
This matter is before the Court on plaintiffs’ motion
for attorney’s fees, costs, and prejudgement interest (Filing No.
The Court finds that the motion should be granted in part
and denied in part.
I. Attorney’s Fees and Costs
ERISA § 502(G) provides that “the court in its
discretion may allow a reasonable attorney’s fee and costs of
The Eighth Circuit has set out five factors for courts
to consider in determining whether to grant attorney’s fees:
(1) the degree of the opposing
parties' culpability or bad faith;
(2) the ability of the opposing
parties to satisfy an award of
(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 sought to benefit
all participants and beneficiaries
of an ERISA plan or to resolve a
significant legal qeustion [sic]
regarding ERISA itself; and
(5) the relative merits of the
Lawrence v. Westerhaus, 749 F.2d 494, 496 (8th Cir. 1984)
(quoting Iron Workers Local No. 272 v. Bowen, 624 F.2d 1255, 1266
(5th Cir. 1980)).
A. Applying Westerhaus
First, the defendant’s actions in pursuing this claim
are not entirely free of impropriety.
The Court remanded
plaintiffs’ case to LINA because defendants had applied one
standard for determining whether Wade Loberg’s death was an
accident and then proceeded to argue a different standard should
be applied by the Court in its review of the denial.
was the original standard wrong, the Court suspected that LINA
was applying a per se rule of denial for alcohol related
In September of 2010, the District Court of Minnesota
granted summary judgment against LINA because it failed to apply
the subjective elements and the “highly likely” standard from
Wickman even after it remanded the case to LINA to do just that.
McClelland v. Life Ins. Co. of N. Am., CIV. 08-4945 MJD/AJB, 2010
WL 3893695 (D. Minn. Sept. 30, 2010) aff'd, 679 F.3d 755 (8th
Cir. 2012) (citing Wickman v. Northwestern Nat’l Ins. Co., 908
F.2d 1077 (1st Cir. 1990)).
A little over four months later,
this Court remanded this case to LINA to apply the Wickman
standard in very similar circumstances.
Yet, the analysis in
LINA’s second review of the administrative record differed little
from its original analysis in this case or from the analysis that
LINA submitted to the District of Minnesota.
certainly had a right to disagree with the decision in
McClelland, its failure to distinguish McClelland or to justify
resubmission of arguments rejected by a federal court in the same
circuit under similar circumstances was less than forthright.
Further, defendants continue to use general language of
reasonableness even though the Court has established that the
appropriate standard is “highly likely.”
There may not be
sufficient evidence to conclude that the defendants’ conduct
rises to the level of bad faith.
faith is not dispositive.”
“However, the absence of bad
Starr v. Metro Sys., Inc., 461 F.3d
1036, 1041 (8th Cir. 2006).
Second, the Court finds, and the defendants do not
dispute, that it is able to satisfy an award of fees and costs in
Third, though the issue in this particular case is
hopefully fully settled by the Eighth Circuit’s affirmation of
McClelland, McClelland v. Life Ins. Co. Of N. Am., 679 F.3d 755
(8th Cir. 2012), payment of attorney’s fees will provide
deterrence against the general practice of ERISA administratorinsurers denying legitimate claims on dubious grounds or applying
standards inconsistent with settled law.
Fourth, by pursuing this claim to conclusion despite
the disproportionate amount of legal work required, plaintiffs
have helped to settle the law on this issue, helping to ensure
that other plan beneficiaries will receive the coverage they
reasonably expected based on the language of the policy.
and McClelland were just two of the many cases in which LINA has
suggested that alcohol related deaths are not “accidents.”
Fifth, the relative merits weigh in favor of awarding
As noted above, defendants continued to pursue arguments
rejected by a federal district court in a similar suit without
any attempt to distinguish the cases or address that court’s
Plaintiffs were fully successful in
proving their claim and recovered the full extent of the damages
Having weighed the Westerhaus factors, the Court finds
that attorney’s fees are appropriate.
B. Reasonable Amount of Attorney’s Fees and Costs
The appropriate starting point for determination of
reasonable legal fees is the lodestar method.
Eckerhart, 461 U.S. 424, 433-34 (1983).
The Court finds the
requested hourly rate schedule reasonable for this type of work
and the defendants do not challenge this amount.
claim a combined total of 280.7 hours spent pursuing this case by
law clerks, associates, and partners.
Plaintiffs ask for an
additional $500 for preparation of the most recent reply brief.
The Court must exclude from this calculation any hours not
Id. at 434.
First, the Court will dispense with some of defendants’
Defendants correctly assert the clear and
conclusive finding of the circuit that ERISA does not allow fees
associated with pre-litigation administrative proceedings.
v. First Reliance Standard Life Ins. Co., 368 F.3d 999, 1011 (8th
Defendants seek to exclude fees for 3.2 hours logged
before the filing of this suit.
However, defendants do not
actually associate these hours with pre-litigation administrative
The timing of these hours and notations in the logs
themselves indicate that the hours were spent in pre-litigation
consultations and preparation of filings for litigation.
Court will not exclude these hours on this basis.
Defendants next seek exclusion of 3.3 hours dedicated
to discovery issues because discovery is not allowed in this type
of case and because the discovery was never served.
some discovery was allowed in this case.
A motion to conduct
discovery was granted by this Court in an order dated May 10,
The fact that any discovery associated with that order was
never served is irrelevant.
Many courses of action are pursued
and then abandoned as the parties adapt their strategies to the
progress of the litigation.
Further, though the standard of
review in this type of ERISA case is abuse of discretion, which
generally limits the evidence to the administrative record, some
limited discovery is allowed in cases where the same entity “both
determines whether an employee is eligible for benefits and pays
benefits out of its own pocket.”
554 U.S. 105, 108 (2008).
Metro. Life Ins. Co. v. Glenn,
Thus, research and pursuit of
discovery is not per se unreasonable, and the Court will not
reduce the fee award on this basis.
The defendants also take issue with time spent
researching state insurance regulations.
Though it is
understandable that a plaintiff’s attorney might research state
law claims early in the litigation process, some log entries
indicate such research well after the removal to federal court
and the point at which the parties should have been aware of the
robust nature of ERISA preemption over state law claims.
Accordingly, the 4.0 hours devoted to such research in February
and March of 2011 will not be included in the Court’s
Defendants’ arguments regarding vague billing entries
and excessive time accorded to certain tasks overlap because of
the large number of hours and entries with notations such as
“work on brief” and “research ERISA”.
Further, many of
plaintiffs’ entries include four to ten different tasks.
possible that “incomplete and imprecise billing records preclude
meaningful review by the district court of the fee applicant for
‘excessive, redundant, or otherwise unnecessary’ hours.”
Inc. v. Flygt Corp., 925 F.2d 257, 260 (8th Cir. 1991) (quoting
Hensley, 461 U.S. at 434).
Still, the Court recognizes that at least some of the
hours logged in this way must have been necessary to the pursuit
of this case.
Likewise, though the Court recognizes some
categories of billing for the firm’s associate would be unusually
high for an experienced attorney, the associate is new to the
profession and plaintiffs’ counsel, in accord with industry
practice, has assigned much lower hourly rates to account for the
level of experience and training.
Furthermore, up to the time
when the Eighth Circuit released its decision in McClelland, this
was a complicated case with some out-of-circuit precedent that
Finding that the lack of specificity makes it
impossible for the Court to accurately determine whether some
billings were excessive or redundant, the Court will reduce the
billings of the firm’s law clerk and associate by 20%.
The properly adjusted lodestar calculation totals
$38,122.00 for 89.4 hours worked by a partner at $250 per hour,
69.8 hours worked by an associate at $140 per hour, and 80 hours
worked by a law clerk at $75.00 per hour.
Defendants also point
out that the requested fees significantly exceed the amount of
The Court notes that plaintiffs received the full
$17,500 amount in controversy and that plaintiffs’ pursuit of
this claim to final judgment despite the disproportionate
economics will contribute to the success of other beneficiaries
whose claims are rejected on similar grounds or who can avoid the
costs of litigation altogether because their claim is not denied.
The Court finds that no further reduction is necessary.
Adding costs and the additional $500 requested for time
spent on plaintiffs’ reply brief, the Court finds plaintiffs are
entitled to $38,687.00 in attorney’s fees and costs.
II. Prejudgment Interest
“The 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.”
Falstaff Brewing Corp., 653 F.2d 1208, 1218 (8th Cir. 1981).
“ERISA itself provides no express statutory authority for the
award of prejudgment interest.”
Id. at 1219.
Because the amount
of the policy benefits was never in question and was due upon the
plaintiffs’ filing of a claim, and because the defendants had use
of the money from the time of filing until it was actually paid,
the Court finds that prejudgment interest is suitable to afford
plaintiffs “appropriate equitable relief.”
U.S.C. § 1132(a)(3)(B)).
Id. (quoting 29
In addition, there are no exceptional
circumstances that would make an award of prejudgment interest
The Eighth Circuit has held that “federal law governs
the issue of interest and its rate.”
In particular, the
circuit established 28 U.S.C. § 1961 as the guide for setting the
appropriate interest rate.
At the time of that decision,
§ 1961 provided that the interest rate for prejudgment interest
under federal law would be determined by applicable state law.
Id. (citing 28 U.S.C. § 1961 (1976)).
However, the current
version of the statute indicates that interest shall be
“calculated . . .
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. [sic] the date of the judgment.”
28 U.S.C. § 1961(a).
The rate for the week prior to the Court’s August 14,
2012, judgment was 0.18%.
Plaintiffs propose that interest be
computed from October 14, 2008 -- the date plaintiffs estimate
that LINA received the claim.
Defendants do not contest this
date and the Court finds that date reasonable.
interest daily and compounding annually to the date of judgment,
in accord with § 1961, the Court finds that plaintiffs are
entitled to prejudgment interest in the amount of $121.13.
separate order will be entered in accordance with this memorandum
DATED this 17th day of September, 2012.
BY THE COURT:
/s/ Lyle E. Strom
LYLE E. STROM, Senior Judge
United States District Court
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