Opinion
No. 1:04-cv-44.
August 2, 2005
MEMORANDUM AND ORDER
I. Introduction
Currently pending before the Court is the motion of plaintiff, Julie Evans ("Evans") for an award of attorney's fees and costs in the amount of $18,492.00 pursuant to Fed.R.Civ.P. 54(d)(1) and (d)(2) and pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132(a)(1)(B) [Doc. No. 37]. Defendant, Metropolitan Life Insurance Company ("MetLife") has filed a response opposing Evans' motion for attorney's fees and costs [Doc. No. 39-1]. Evans has also filed a reply to MetLife's response to the motion for attorney's fees and costs [Doc. No. 40].
Consequently, Evans' motion for an award of attorney's fees and costs pursuant to Fed.R.Civ.P. 54(d)(1) and (d)(2) and 29 U.S.C. § 1132(a)(1)(B) [Doc. No. 37] is now ripe for review. For the reasons set forth in detail below, Evans' motion for attorney's fees and costs [Doc. No. 37] will be DENIED. II. Background
The Court is aware that shortly after Evans filed her motion for attorney's fees and costs [Doc. No. 37], MetLife filed a timely notice of appeal of the underlying judgment in favor of Evans [Doc. No. 38]. Although the filing of a notice of appeal transfers jurisdiction from the district court to the court of appeals, it is well-established that a timely notice of appeal in the underlying action does not deprive the district court of jurisdiction to consider a post-judgment motion for attorney's fees. Jankovich v. Bowen, 868 F.2d 867, 871 (6th Cir. 1989) (per curiam).
On April 28, 2005, this Court entered an Order granting Evans' motion for a judgment on the administrative record [Doc. No. 28]. That Order reversed MetLife's termination of Evans' claim for ERISA long term disability ("LTD") benefits as of December 21, 2002. Id. Accompanying the Court's April 28, 2005 order was a separate memorandum opinion, which discussed the facts of the underlying action as well as the reasons for the Court's finding that MetLife's termination of Evans' LTD benefits was arbitrary and capricious [Doc. No. 35].
III. Evans' Motion for Attorney's Fees [Doc. No. 37]
As noted, Evans moves for an award of attorney's fees and costs in the amount of $18,492.00 pursuant to Fed.R.Civ.P. 54(d)(1) and (d)(2) and ERISA, 29 U.S.C. § 1132 [Doc. No. 37]. Attached to Evans' motion for attorney's fees and costs is an itemized schedule of attorney time and costs [Doc. No. 37, pp. 2-6].
MetLife has filed a response which opposes Evans' request for an award of attorney's fees and costs. Specifically, MetLife asserts that Evans is not entitled to an award of attorney's fees because she cannot satisfy the five factors set forth by the Sixth Circuit in Secretary of Dep't of Labor v. King, 775 F.2d 666, 669 (6th Cir. 1985) (per curiam) as guidelines for the use of district courts in determining whether to grant attorney's fees under ERISA [Doc. No. 39-1, pp. 1-10]. MetLife further contends that the itemized schedule of attorney time and costs which is attached to Evans' motion does not adequately support her request for an award of $18,492.00 in fees and costs. Id., pp. 11. Finally, MetLife also: (1) asserts that the attorney fee rates sought by Evans' counsel are not reasonable; (2) asserts that Evans' counsel cannot be awarded any fees for work prior to February 9, 2004, when the administrative phase of Evans' claims for long-term disability ("LTD") benefits ended; and (3) asserts that Evans is not entitled to costs because she has not filed a "bill of costs" as required by 28 U.S.C. § 1920. Id. at pp. 11-13.
In her reply to MetLife's response to her motion for attorney's fees and costs, Evans asserts: (1) she can establish the five factors articulated by the Sixth Circuit in King; (2) that the itemized schedule of attorney time and costs does adequately support her request for fees, including the hourly rate requested [Doc. No. 40].
A. Standard of Review
Under § 502(g)(2) of ERISA, 29 U.S.C. § 1132(g)(2), an award of attorney's fees is mandatory when a fiduciary has successfully sued to enforce her employer's obligation to make contributions to a multi-employer plan. Foltice v. Guardsman Products, Inc., 98 F.3d 933, 936 (6th Cir.), cert. denied, 520 U.S. 1143, 117 S. Ct. 1312, 137 L.Ed.2d 475 (1997). In all other situations, ERISA provides that "[a] court in its discretion may allow a reasonable attorney's fee and costs of action to either party." Id. (citing ERISA § 502(g)(1), 29 U.S.C. § 1132(g)(1)).
The Sixth Circuit has recognized no presumption as to whether or not attorney's fees should be awarded in an ERISA action. Id. (citing Armistead v. Vernitron Corp., 944 F.2d 1287, 1301-02 (6th Cir. 1991)). Rather, the Sixth Circuit has stated that a district court should utilize the following five factors in deciding whether to exercise discretion under 29 U.S.C. § 1132(g)(1):
"(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." Foltice, 98 F.3d at 936 (quoting King, 775 F.2d at 669). None of the five King factors standing alone is determinative, a district court must consider each of the five factors before deciding whether or not to exercise its discretion. Schwartz v. Gregori, 160 F.3d 1116, 1119 (6th Cir. 1998).B. Analysis (1) the degree of MetLife's culpability or bad faith
Evans contends that MetLife's actions in denying her LTD benefits were culpable and in bad faith [Doc. No. 40, pp. 2-3]. Specifically, Evans asserts that MetLife's reliance upon uncorroborated statements of unidentified witnesses and surveillance videos that did not corroborate the unidentified witness statements were clearly an act of bad faith. Id. at p. 2. Further, Evans asserts that MetLife's reliance on her employer's offer to provide her with an accommodation for her disability was an act of bad faith because the offer of accommodation was unrealistic. Id.
MetLife, on the other hand, contends that its actions were not culpable or in bad faith. [Doc. No. 39-1, p. 4]. Rather, MetLife asserts that two independent medical consultants reviewed Evans' file and concluded that she could perform a sedentary work, which included the reasonable accommodation — the modified Inventory Control Supervisor position — offered in good faith by her employer. Id. MetLife further asserts that it did carefully examine all of plaintiff's medical records. Id.
In this instance, the Court finds that MetLife's actions do not show that it acted culpably or in bad faith in terminating Evans LTD benefits under the plan. First, MetLife had a fiduciary duty to review and evaluate Evans' eligibility for plan benefits under the ERISA plan documents. MetLife's actions in carrying out that obligation were performed neither culpably nor in bad faith. Rather, as stated below, although the Court found that MetLife's denial of LTD benefits was arbitrary and capricious, the Court concludes that this was more akin to an honest mistake rather than a deliberate or bad faith attempt to deny benefits. Foltice, 98 F.3d at 937.
In this instance, MetLife received reports from unidentified co-workers of Evans that she had been engaged in activity inconsistent with her claims of disability. Pursuant to its fiduciary duty to determine Evan's eligibility for benefits, MetLife placed Evans' under surveillance. The surveillance did show Evans engaging in some activity, but overall the Court concluded that the results of the surveillance did not fully corroborate the reports of the unidentified co-workers.
Further, after MetLife concluded that Evans could engage in sedentary activity, Evans employer informed MetLife that it could reasonably accommodate the restrictions/limitations imposed by her condition. The Court has no doubt that the offer of reasonable accommodation by Evans' employer was genuine and that MetLife had a duty to evaluate the offer of reasonable accommodation. Again, the Court found that MetLife's reliance on the offer of reasonable accommodation was arbitrary and capricious, because although the position offered did accommodate the majority of the restrictions imposed by Evans' condition, it did not accommodate all of the restrictions. However, MetLife's reliance on the offer of reasonable accommodation was not so egregious or outlandish as to render such reliance either culpable or in bad faith.
Accordingly, the Court finds that this factor weighs heavily in favor of MetLife and against an award of attorney fees.
(2) MetLife's ability to satisfy an award of attorney's fees
This factor is not in dispute. In its response to Evans' motion for attorney's fees and costs, MetLife has conceded "that it would have the ability to satisfy an award of attorney's fees in this litigation . . ." [Doc. No. 39-1, p. 6]. (3) the deterrent effect of the judgment in favor of Evans on other persons under similar circumstances
Evans contends that MetLife's behavior in denying her LTD benefits should be deterred and that an award of attorney's fees and costs would further such deterrence. Evans identifies the type of behavior which she contends should be deterred: (1) MetLife's reliance on unidentified witnesses; (2) MetLife's use of surveillance; and (3) MetLife's reliance on the assertion of Evan's employer that it could offer her a position that could reasonably accommodate the limitations imposed by her condition. [Doc. No. 40, pp. 3-4].
MetLife, on the other hand, contends that it acted in good faith and consistent with its obligations as a fiduciary under the Plan. [Doc. No. 39-1, p. 7]. MetLife asserts that it did nothing more than perform its fiduciary duties under the LTD plan and that any award of attorney's fees/costs would have a chilling effect which would deter fiduciaries from carefully reviewing claims for benefits under ERISA plans. Id. Thus, MetLife contends that an award of attorney's fees would have limited effect as a deterrent, but would interfere with the exercise of the responsibilities of ERISA fiduciaries under ERISA plans.
In this instance, the Court finds that an award of attorney's fees is not necessary to deter future misconduct by ERISA fiduciaries/plan administrators. Although the Court found that MetLife's denial of LTD benefits was arbitrary and capricious because the results of the surveillance of Evans did not corroborate the reports of unidentified witnesses who allegedly observed Evans engaging in activities inconsistent with her claims of disability, there could be instances where surveillance would corroborate such reports. Thus, the Court sees no reason to deter the use of surveillance by ERISA plan administrators in all situations by awarding attorney's fees.
Likewise, although the Court finds that MetLife's reliance on the offer of a reasonable accommodation was arbitrary and capricious because the particular accommodation being offered by Evans' employer addressed many, but not all of, the limitations imposed by her condition, the Court sees no reason to deter ERISA plan administrators/fiduciaries from considering an employer's offer of a reasonable accommodation. This would be especially true where the employer can, and does, offer a reasonable accommodation addressing all of the limitations imposed by an employees allegedly disability condition. Clearly, there is no need to deter an ERISA plan administrator/fiduciary from considering an offer of reasonable accommodation which addresses all of the employees limitations in deciding to grant or deny benefits under an ERISA.
The Court further notes that the arbitrary and capricious standard was used to review MetLife's benefits decision in the underlying action "in order to avoid excessive judicial interference with plan administration." Daniel v. Eaton Corp., 839 F.2d 263, 267 (6th Cir. 1988). The Court is somewhat reluctant to use the fee-shifting provisions of ERISA as Evans suggests in order to force MetLife or other plan administrators to be more lenient in reviewing claims for disability benefits. That would, or at least could, constitute judicial interference with plan administration. Further, Evans has simply failed to show the kind of egregious or deliberate action on the part of MetLife in the underlying action which would necessitate the use of the fee-shifting or cost-shifting provision of ERISA as a deterrent.
Therefore, contrary to Evan's position the Court finds that the deterrent effect of its decision in favor of Evans is limited to the facts of this particular action and that this factor weighs heavily in favor of the denial of the award of benefits. This is especially true where, as here, the Court finds that MetLife's act of denying LTD benefits to Evans was more akin to an honest mistake than it was deliberate, or bad faith, conduct on the part of MetLife. Foltice, 98 F.3d at 937.
(4) whether Evans sought to confer a common benefit on all participants and beneficiaries of an ERISA plan or resolve significant legal questions regarding ERISA
Evans asserts that she conferred a benefit on everyone who has a disability policy and has also conferred a benefit on other participants in the LTD plan. [Doc. No. 40, pp. 4-5]. MetLife responds that the opinion in favor of Evans does not resolve a significant legal question under ERISA and that it does not confer a common benefit on the participants and beneficiaries of the ERISA plan.
In this instance, the Court finds that this factor weighs in favor of MetLife because this Court's decision in favor of Evans did not resolve a significant legal question regarding ERISA nor did it confer a common benefit on the participants and beneficiaries of the LTD plan. Rather, the effect of this Court's decision in favor of Evans is limited to her claim for LTD benefits alone. Evans suggests that she has conferred a common benefit on all participants in the plan because her victory over MetLife in this action will force it to be more lenient in deciding future disability claims under the Plan. However, nothing in this Court's decision in Evans favor confers a common benefit on the participants or beneficiaries of the LTD plan. As a result of the Court's decision, Evans will receive LTD benefits, but no one else will.
Further, nothing in this Court's decision in favor of Evans alters MetLife's duties, responsibilities or obligations as a fiduciary to make eligibility obligations pursuant to and under the Plan documents. Finally, contrary to Evans' contentions, it does not automatically follow as a matter of course that merely because the Court found that MetLife's decision denying LTD benefits to Evans was arbitrary and capricious that MetLife will be more lenient in construing future claims for LTD benefits under the Plan.
Accordingly, the Court finds that this factor strongly favors MetLife and the denial of an award of attorney's fees.
(5) the relative merits of Evans' and MetLife's positions
Evans asserts that the relative merits of the positions of the parties to this action favors her request for an award of attorney's fees because the Court found that MetLife's denial of LTD benefits was arbitrary and capricious. [Doc. No. 40, pp. 4-5]. MetLife, on the other hand, contends that the merits of Evans position do not significantly outweigh the merits of its position. More specifically, MetLife asserts that the mere fact that the Court found that MetLife's denial of LTD benefits was arbitrary and capricious, does not mean that MetLife's position had no merit. [Doc. No. 39-1].
The Court finds that the relative merits of Evans position slightly outweighs the merits of MetLife's position. Although the Court did find that MetLife's denial of benefits was arbitrary and capricious, MetLife's position was not so egregious, outlandish or ridiculous so as to strongly weigh in favor of an award of attorney's fees. Further, the Court notes that one purpose of the ERISA fee-shifting statute is to allow litigants in ERISA cases to obtain competent counsel and to fairly balance the costs of litigation between the parties. See Carter v. Montgomery Ward Co., 76 F.R.D. 565, 568 (E.D. Tenn. 1976). Thus, the Court finds that this factor weighs in favor of an award of attorney's fees.
Thus, the Court has found that the first, third and fourth King factors weigh heavily against an award of attorney's fees. The second King factor weighs heavily in favor of an award of attorney's fees while the fifth King factor weighs in favor of an award of attorney's fees. As the majority of the King factors weigh against an award of attorney's fees, that aspect of Evans' motion for an award of attorney's fees and costs [Doc. No. 37] will be DENIED. IV. Evans' Motion for Costs [Doc. No. 37]
As noted, § 502(g)(2) of ERISA, 29 U.S.C. § 1132(g)(2) provides that "[a] court in its discretion may allow . . . costs of action to either party." Foltice, 98 F.3d at 936 (quoting ERISA § 502(g)(1), 29 U.S.C. § 1132(g)(1)) (emphasis in original). In deciding whether to award fees and costs in an ERISA action, the Sixth Circuit has adopted the five factor King test. Hoover v. Provident Life and Acc. Ins. Co., 290 F.3d 801, 809 (6th Cir. 2002). Thus, applying the five King factors, which are discussed in detail, supra, the Court concludes that aspect of Evans motion for attorney's fees and costs which seeks an award of costs should denied for the same reasons as Evans' motion for an award of attorney's fees. Accordingly, that aspect of Evans' motion for an award of attorney's fees and costs which seeks an award of costs [Doc. No. 37] will be DENIED. V. Conclusion
The Court has not addressed the other issues raised by MetLife; namely, that: (1) the itemized schedule of attorney time and costs which is attached to Evans' motion does not adequately support her request for an award of $18,492.00 in fees and costs; (2) the hourly rates for the attorney's fees sought by Evans are not reasonable; (3) Evans' counsel cannot be awarded any attorney's fees for work performed prior to February 9, 2004, when the administrative phase of Evan's claim for LTD benefits ended; and (4) Evans is not entitled to costs because she has not filed a "bill of costs" as required by 28 U.S.C. § 1920, because those issues have been rendered moot as the result of this Court's finding that Evans is not entitled to attorney's fees and costs based upon the application of the five King factors.
In accordance with the discussion set forth above:
(1) That aspect of Evans' motion for attorney's fees and costs which seeks an award of attorney's fees pursuant to Fed.R.Civ.P. 54(d)(1) and (d)(2) and ERISA, 29 U.S.C. § 1132, [Doc. No. 37] is DENIED; and
(2) That aspect of Evans' motion for attorney's fees and costs which seeks an award of costs pursuant to Fed.R.Civ.P. 54(d)(1) and (d)(2) and ERISA, 29 U.S.C. § 1132, [Doc. No. 37] is DENIED.
SO ORDERED.