Jones v. Life Insurance Company of North America et al
Filing
58
ORDER granting Plaintiff's Motion for Attorney Fees 52 ; denying Defendant's Motion for Attorney Fees 53 , but granting Defendant's Motion to the extent it seeks a reduction in the amount of Plaintiff's requested attorney's fees and costs. Clerk to close case. Signed by Hon. Michael A. Telesca on August 10, 2011. (MK)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
________________________________________
CHARLES R. JONES,
Plaintiff,
08-CV-6586
DECISION
and ORDER
v.
LIFE INSURANCE COMPANY OF NORTH
AMERICA
Defendants.
________________________________________
INTRODUCTION
Plaintiff, Charles R. Jones (“Plaintiff”), brought this action
pursuant to the Employee Retirement Security Act of 1974, 29 U.S.C.
§§ 1001 et seq. (“ERISA”), seeking long term disability benefits
under
an
employee
benefit
plan
(the
“Plan”)
issued
by
Insurance Company of North America (“LINA” or “Defendant”).
Life
In a
Decision and Order dated May 20, 2011, this Court granted in part
and denied in part both parties’ motions for summary judgment.
(Docket #51). Both Plaintiff and LINA now move for attorney’s fees
and costs pursuant to 29 U.S.C. § 1132 (g)(1).
opposed.
Both motions are
Plaintiff’s motion for attorney’s fees and costs is
granted, however the fees and costs requested are reduced for the
reasons set forth herein.
Defendant’s motion for attorney’s fees
and costs is denied.
Plaintiff also moves for an award of back benefits in the
amount of $25,722.60 and pre-judgment interest in the amount of
1
$900.29.
LINA does not contest the award of back benefits or pre-
judgment interest, but its calculations are slightly different:
$26,730.60 for back benefits and $893.13 for pre-judgment interest.
Because Plaintiff has not contested LINA’s alternate calculations
and
because
the
parties’
calculations
are
not
significantly
different, this Court Orders that LINA pay Plaintiff $26,730.60 in
back benefits and $893.13 in pre-judgment interest.
BACKGROUND
The background of this case is set forth in this Court’s
Decision and Order granting in part and denying in part the
parties’ motions for summary judgment. Accordingly, the facts are
only repeated here as necessary to explain this Court’s decisions
on the instant motions.
On May 20, 2011, this Court granted Plaintiff’s motion for
summary judgment to the extent that he sought long-term disability
benefits under the Plan.
This Court specifically found that
Plaintiff was disabled under the Plan definition of disability and
that LINA failed to consider relevant evidence from Plaintiff’s
treating physicians, denying him a full and fair review of his
claim. Without reaching the actual merits, this Court dismissed
Plaintiff’s claim for breach of a fiduciary duty, as it was largely
duplicative of his claim for benefits and the relief he sought was
identical.
This
Court
also
granted
LINA’s
2
cross-motion
for
summary
judgment
on
its
claim
for
offset,
based
on
the
Plan
and
a
reimbursement agreement signed by Plaintiff, requiring that he
reimburse LINA to the extent that benefits were overpaid based on
his receipt of social security disability benefits.
LINA was then
ordered to calculate and pay Plaintiff back-benefits pursuant to
the Plan, with interest, less $35,877.40, the amount Plaintiff owed
LINA pursuant to the Plan and reimbursement agreement.
DISCUSSION
Plaintiff
now
seeks
attorney’s
fees
in
the
amount
of
$115,837.50, representing 202.5 hours of work performed by Howard
D. Olinsky, Esq., a partner at Olinsky & Shurtliff at a rate of
$350 per hour; 34.2 hours performed by Jaya A. Shurtliff, Esq, a
partner at Olinsky & Shurtliff, at a rate of $350 per hour; and
132.6 hours of work performed by Marcie P. Eaton, a associate in
her second year at Olinsky & Shurtliff, at a rate of $250.00 per
hour.
Plaintiff also seeks costs in the amount of $1,126.93.
Defendant argues that this Court should not exercise its discretion
to
award
Plaintiff
attorney’s
fees
and
costs
and,
in
the
alternative, that the fees requested are excessive and that costs
incurred prior to this lawsuit should be excluded.
Defendant cross-moves for an award of attorney’s fees in the
amount of $43,596.80, representing 9 hours of work performed by
Fred N. Knopf, Esq., a partner at Wilson, Elser, Moskowitz, Edelman
& Dicker, LLP, at a rate of $284 per hour; and 176.9 hours of work
3
performed by Emily A. Hayes, Esq., now a partner at Wilson, Elser,
Moskowitz, Edelman & Dicker, LLP, at a rate of $232 per hour.
Defendant also seeks costs in the amount of $2,851.15.
Plaintiff
argues
costs
that
awarding
Defendant
attorney’s
fees
and
is
inappropriate in this case and that Plaintiff’s requested fees are
reasonable. Plaintiff has not responded to Defendant’s argument
that certain costs should be excluded.
I.
Award of Attorney’s Fees and Costs
29 U.S.C. § 1132(g)(1) states, “[i]n any action under this
subchapter...by a participant, beneficiary, or fiduciary, the court
in its discretion may allow a reasonable attorney's fee and costs
of action to either party.”
Prior to the Supreme Court’s recent
decision in Hardt v. Reliance Standard Life Insurance Co., --- U.S.
----, 130 S. Ct. 2149 (2010),
interpreting § 1132, courts in this
Circuit and others used a set of factors to determine whether a
district court should exercise its discretion under § 1132 to award
attorney’s fees and costs. See Hardt, at 2158 (discussing use of
factors in the Fourth Circuit); see also Chambless v. Masters,
Mates
&
Pilots
Pension
Plan,
815
F.2d
869,
871
(2d
Cir.1987)(outlining the factors employed in the Second Circuit).
The Court in Hardt held that the test for determining whether a
court should exercise its discretion to award fees to either party
pursuant to § 1132, is whether that party achieved “some degree of
success on the merits.” Hardt, 130 S.Ct. at 2158.
4
“A claimant does
not satisfy that requirement by achieving trivial success on the
merits or a purely procedural victory, but does satisfy it 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. (internal citations omitted).
The Supreme Court, however, did not foreclose the possibility
that a district court might utilize a set of factors to determine
whether to exercise its discretion, if it has initially determined
that a party is eligible for a fee award because it has achieved
some degree of success on the merits. Id. at note 8.
Recently, the
Second Circuit stated, “[a] court may apply—but is not required to
apply—the Chambless factors in channeling its discretion when
awarding fees under § 1132(g)(1).
So long as a party has achieved
some degree of success on the merits.” See Toussaint v. JJ Weiser,
Inc., --- F.3d ----, 2011 WL 2175987, *2 (2d Cir. 2011).
Here, both parties achieved some degree of success on the
merits. Plaintiff was successful in his claim that he was entitled
to long-term disability benefits under the Plan, and LINA was
successful on its counterclaim for offset, which reduced the back
benefits owed Plaintiff by more than 50%. Accordingly, pursuant to
Hardt, both parties are eligible for attorney’s fees and costs.
However, further examination of the facts and circumstances of this
case is necessary to determine whether and to whom attorney’s fees
5
and costs should be awarded. Therefore, this Court will consider
the five-factors outlined in Chambless in analyzing the parties’
fee applications.
In Chambless, the Second Circuit stated that the consideration
of fee applications is based on the following five factors: “(1)
the degree of the offending party's culpability or bad faith, (2)
the
ability
of
the
offending
party
to
satisfy
an
award
of
attorney's fees, (3) whether an award of fees would deter other
persons from acting similarly under like circumstances, (4) the
relative merits of the parties' positions, and (5) whether the
action conferred a common benefit on a group of pension plan
participants.”1 815 F.2d 869, 871. These factors are considered in
light of the relative positions of the parties, as the Second
Circuit noted in Toussaint, “Hardt also does not disturb our
observation that ‘the five factors very frequently suggest that
attorney's fees should not be charged against ERISA plaintiffs.’”
Toussaint at *2 (citing Salovaara v. Eckert, 222 F.3d 19, 28 (2d
Cir.2000).
For example, with respect to the first factor, the
relative “culpability” typically weighs in favor of the plaintiff
because a “losing defendant must have violated ERISA, thereby
depriving
plaintiffs
of
rights
under
a
[benefits]
plan
and
violating a Congressional mandate.” See Salovaara, 222 F.3d at 28.
1
The fifth factor is not at issue in this case, as there is no evidence that this lawsuit or
Defendant’s counterclaim for offset conferred any benefit on any other plan participant.
Accordingly, this Court only considers the first four factors.
6
On the other hand, a losing plaintiff, typically is only unable to
prove his case or in error for some other reason. Id.
Considering the first factor, while this Court found that LINA
was
entitled
to
offset
a
portion
of
the
back-benefits
owed
Plaintiff, and determined that Plaintiff’s arguments with respect
to the counterclaim were without merit, this Court does not find
that Plaintiff’s culpability in failing to abide by his contractual
obligation
in
the
first
instance
outweighs
the
Defendant’s
culpability in failing to consider relevant evidence in examining
Plaintiff’s claim for benefits.
The Court also does not find that
Plaintiff acted in bad faith in bringing his claim for benefits and
there is no evidence that his failure to timely reimburse Defendant
pursuant to the reimbursement agreement was in done bad faith,
rather than by mere mistake or oversight.
Further, while this
Court found that Plaintiff was entitled to long term disability
benefits under the plan, and now finds that Defendant is culpable
by failing to grant Plaintiff a full and fair review of his claim,
Plaintiff has not shown that Defendant’s conduct rises to the level
of bad faith.
Similarly, with respect to the fourth factor, the merits of
Plaintiff’s claim for benefits do not necessarily outweigh the
merits of Defendant’s claim for offset and vice versa.
And the
Court does not find that either party raised frivolous arguments,
although some were ultimately found to be without merit.
7
However, given that the majority of the parties’ arguments
and analysis of the facts dealt with Plaintiff’s entitlement to
long-term disability benefits, Defendant’s counterclaim, while not
insignificant, would necessarily have taken fewer attorney hours.
The Court cannot find that even if Plaintiff is culpable, and even
if defendant was successful on the merits of its counterclaim, that
it should be granted attorney’s fees for time which was spent on
defending against his claim for benefits. And, following the same
reasoning, Plaintiff should not be denied the full amount of
claimed attorney’s fees based on an unsuccessful defense to a
counterclaim,
which
was
a
minor
portion
of
this
lawsuit.
Accordingly, this Court finds that factors one and four tip in
favor of the Plaintiff’s claim for attorney’s fees and costs.
I find that the deterrence factor also tips slightly in favor
of the Plaintiff. It may be the case that future plaintiffs could
be deterred from failing to abide by contractual obligations,
should Plaintiff be denied attorney’s fees and Defendant granted
attorney’s fees; however, it is also just as likely that a person
who has been denied benefits to which he believes he is entitled,
would refrain from reimbursing an insurance company until his
claims are decided with finality, as it is possible that the monies
required to be reimbursed could be offset against any back-benefits
owed, which people in Plaintiff’s position may lack the resources
to pay outright.
While I do not condone Plaintiff’s failure to
8
abide by this obligation, I cannot say that denying Plaintiff
attorney’s
fees
or
awarding
Defendant
attorney’s
fees
would
necessarily deter future plaintiff’s from acting in the same
manner.
Further,
deterrence
factor
the
Second
should
be
Circuit
used
as
has
stated
that
“[t]he
a
shield,
to
protect
beneficiaries from the fear of having to pay to pursue an important
ERISA claim in the event of failing to prevail, and not as a sword
to
discourage
beneficiaries
from
pursuing
certain
meritless
claims.” Seitzman v. Sun Life Assurance Co. of Canada, Inc. 311
F.3d 477, 486 (2d Cir. 2002).
However, in contrast, this Court
does find that an award of attorney’s fees to Plaintiff would
likely deter a similarly situated ERISA plan insurer from failing
to conduct a full and fair review of the medical evidence when
reviewing claims for disability benefits. Accordingly, I find that
this factor tips in favor of the Plaintiff.
With respect to the second factor, this Court finds that this
factor weighs in favor of the Plaintiff. While Plaintiff has not
specifically contested his ability to pay an award of attorney’s
fees, or provided the Court with financial information regarding
his ability to pay, the Court notes that he is currently an
unemployed,
social
Plaintiff’s
ability
security
to
pay
disability
an
award
recipient.
of
Therefore,
attorney’s
fees
is
diminished by his economic status, and he would suffer greater
financial difficulty than would LINA.
9
LINA does not argue that it
lacks the ability to pay an award of attorney’s fees and costs, but
argues that this factor is neutral.
This Court disagrees.
For the reasons stated above, this Court finds that the
Chambless factors favor Plaintiff’s fee application.
Accordingly,
Plaintiff’s motion for attorney’s fees and costs is granted, and
Defendant’s cross-motion for attorney’s fees and costs is denied.
Because this Court determines that Defendant should not be awarded
attorney’s fees and costs, the Court need not address Plaintiff’s
remaining
argument
regarding
the
timeliness
of
Defendant’s
application.
II. Reasonableness of Attorney’s Fees
Defendant also argues that Plaintiff’s requested fees are
unreasonable because the hourly rates and the amount of time spent
on particular tasks was excessive. To determine whether attorney’s
fees are reasonable, courts multiply the number of hours reasonably
expended by the reasonable hourly rate. Hensley v. Eckerhart, 461
.S. 424, 434 (1983).
The Court will also consider the results
obtained and will exclude hours that are not reasonably expended or
that are “excessive, redundant, or otherwise unnecessary,” and
“exclude any hours dedicated to severable, unsuccessful claims.”
Klimbach v. Spherion Corp., 467 F.Supp. 2d 323, 331 (W.D.N.Y.
2006)(citing Hensley, 461 U.S. at 434, 103 S.Ct. 1933; New York
Ass'n for Retarded Children v. Carey, 711 F.2d 1136, 1146 (2d
Cir.1983); Quaratino v. Tiffany & Co., 129 F.3d 702 (2d Cir.1997)).
10
To determine the reasonable hourly rate, courts look to fees
charged by attorneys of similar skill in the community.
Stenson, 465 U.S. 886, 895 (1984).
Blum v.
The burden is on the fee
applicant to produce sufficient evidence regarding the reasonable
hourly rate. Klimbach, 467 F.Supp. 2d at 331.
Plaintiff requests an hourly rate of $350 for partners and
$250 for a second-year associate. Plaintiff cites to several cases
in the Southern District of New York and to cases in the District
Courts in California.
Plaintiff has not carried his burden of
showing that $350 for partners and $250 for a second-year associate
are reasonable hourly rates in this community, i.e. the Western
District of New York. This District has previously awarded fees in
ERISA cases at an hourly rate of $250 for partners and $180 for
associates. See e.g. Klimbach, 467 F.Supp. 2d at 332; Geist v.
Hartford Life and Acc. Ins. Co., No. 07-CV-0064, 2010 WL 5392647
(W.D.N.Y. November 29, 2010). Accordingly, I find that a reduction
in the hourly rate is appropriate.
Partners Olinsky and Shurtliff
will be awarded fees at an hourly rate of $300 per hour and Eaton
at an hourly rate of $200 per hour.
Further, the time spent on opposing Defendant’s counterclaim
should
be
Plaintiff
subtracted
was
from
unsuccessful
the
in
reasonable
this
claim.
hours
expended,
Accordingly,
as
the
following hours which were specifically attributed to defending
against the counterclaim are excluded: 10.2 hours for Howard
11
Olinsky, 1.5 hours for Jaya Shurtliff and 3 hours for Marcie Eaton.
Lastly, this Court finds that a 10% across the board reduction
in fees is appropriate given the fact that many of attorneys’ time
sheet entries are vague and appear to be duplicative, and some
reveal the failure to properly delegate purely administrative
tasks. For example, many of the entries list the work performed by
all attorneys as “draft” or “redraft” motions for summary judgment
or “memorandum.”
It appears that some of this work may have been
duplicative, given that both partners and the associate have
several entries for the same function, without further explanation.
While it is obvious that the associate’s work was reviewed by the
partners, it is unclear from the entries who reviewed the document
at what time, whether both partners reviewed the document, which
would
seem
to
duplicate
work,
or
whether
the
partners
were
reviewing separate sections or legal arguments. It is also unclear
what “memorandum” is being referred to in the entries, as Plaintiff
submitted multiple memoranda, so it is impossible to determine
whether the work on the “memorandum” was reasonable.
The time
sheet also lists many entries of .2 hours for Howard Olinsky’s
review of court filing notices.
It seems that
such a clerical
task would not require the experience of a partner at a law firm,
and could easily be accomplished by a lower level associate or an
administrative staff member. Lastly, the time records list several
entries for the receipt and review of the administrative record.
12
For instance, one entry by Howard Olinsky (presumably far into the
litigation as it is listed among entries related to the motions for
summary judgment) logs 6 hours for the “receipt and review of
voluminous
discovery
documents”
submitted
in
connection
with
Defendant’s motion for summary judgment.
However, the documents
filed
were
in
connection
with
that
motion
already
in
the
Plaintiff’s possession, as part of the administrative record, and
Plaintiff
was
represented
by
the
same
attorneys
at
the
administrative level. This suggests that Plaintiff’s counsel should
have been familiar with all documents submitted and that 6 hours to
review the records was excessive, particularly because Plaintiff
had already begun preparing his own motion for summary judgment
based on the same materials.
Accordingly, Plaintiff is awarded attorney’s fees as follows:
192.3 hours of work performed by Howard D. Olinsky, Esq., at a rate
of $300 per hour ($57,690); 32.7 hours performed by Jaya A.
Shurtliff, Esq, at a rate of $300 per hour ($9,810); and 129.6
hours of work performed by Marcie P. Eaton, at a rate of $200.00
per hour ($25,920);
minus
a
10% across
the
board
deduction,
totaling $84,078.
Plaintiff has not responded to Defendant’s argument that the
costs incurred prior to the commencement of this lawsuit should not
be compensable.
Accordingly, Plaintiff is also awarded costs in
the amount of $874.22, which represents all of Plaintiff’s costs
13
incurred after this litigation was filed.
CONCLUSION
For the reasons set forth below, Plaintiff’s motion for
attorney’s fees and costs is granted, and Plaintiff is awarded
attorney’s fees in the amount of $84,078 and costs in the amount of
$874.22. Defendant’s cross-motion for attorney’s fees and costs is
denied.
The Clerk of the Court is direct to close this case.
ALL OF THE ABOVE IS SO ORDERED.
s/Michael A. Telesca
MICHAEL A. TELESCA
United States District Judge
Dated:
Rochester, New York
August 10, 2011
14
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