Friley v. Unum Provident

Full title: Robyn L. Friley, Plaintiff, v. UNUM Provident, Defendant

Court: United States District Court, N.D. Ohio, Eastern Division

Date published: Mar 6, 2006

Case No. 1:03CV2589 (N.D. Ohio Mar. 6, 2006)

Opinion

Case No. 1:03CV2589.

March 6, 2006

MEMORANDUM OF OPINION

JOHN MANOS, Senior District Judge

On December 22, 2003, Robyn L. Friley, plaintiff, filed the above-captioned action against UNUM Life Insurance Company of America, defendant, alleging improper denial of her long-term disability benefits. She sought the Court's review. She also requested attorney fees and costs pursuant to 29 U.S.C. § 1132(g)(1).

On November 1, 2005, the Court found that UNUM's denial of benefits was improper and ordered it to make permanent long-term disability payments to plaintiff. The Court also gave the parties a time period to brief the issue of attorney fees and costs.

I.

On November 14, 2005, plaintiff filed her brief in support of request for attorney fees. On November 28, 2005, defendant responded. For the following reasons, the motion for attorney fees is granted in part.

In the motion, plaintiff's counsel requests $61,675.00 in attorney fees along with a multiplier of 1.5 making the total award $92,512.50.

Defendant opposes the award of attorney fees. Specifically, UNUM argues that four of the five factors determining an award of attorney's fees weighs in its favor. Furthermore, it argues the amount requested is excessive; and as to the enhancement, there is no basis in fact or law for such an award.

A. The King Factors

A court shall consider the following five factors in exercising its discretion to grant attorney's fees under 29 U.S.C. § 1132(g):

(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.

Hoover v. Provident Life and Acc. Ins. Co., 290 F.3d 801, 809 (6^th Cir. 1996) quoting King, 775 F.2d 666, 669 (6^th Cir. 1985). (King factors)

The Court has substantial discretion in determining whether to make an award. The King factors are mere guides, not all factors will be relevant in a given case, and no single factor is necessarily dispositive. Firestone Tire Rubber Co. v. Neusser, 810 F.2d 550 (6^th Cir. 1987).

As to the first factor, and as the "or" in King demonstrates, bad faith and culpability are not the same. Culpability has been defined as "blameworthiness." See Pelchat v. UNUM Life Insurance Co.of America, No. 3:02CV7282, 2003 U.S. Dis. WL 21479170, at *2 n. 1 (N.D. Oh June 25, 2003) (citing Black's Law Dictionary 385 (7^th Ed. 1999). Another circuit defined it as "implying that the act or conduct spoken of is reprehensible or wrong, but not that it involves malice or a guilty purpose."Id. (citing) Werner v. Upjohn Co., Inc., 628 F.2d 848-856-57 (4^th Cir. 1980) (citing Black's Law Dictionary (4^th Ed. 1968)).

1. Culpability or Bad Faith of Defendant.

Under the first factor, UNUM argues that its actions were reasonable. It paid Plaintiff's claim for several months before determining that she no longer met the definition of disability under the plan. Furthermore, the definition of disability changed after 24 months to an "any occupation" standard, which it believed Plaintiff met. Lastly, UNUM argues that its denial was reasonable in light of the fact that plaintiff's claim against another entity for social security disability benefits had been denied.¹

1 The Court first learned that plaintiff's claim for social security benefits was allowed was when she filed her motion for attorney fees. Plaintiff's Brief in Support at p. 9.

Plaintiff argues that UNUM has shown some degree of culpability or bad faith arising from the process it used to deny Plaintiff's benefits. UNUM's in-house doctors did not examine the Plaintiff. They simply reviewed the reports given to them by Plaintiff's treating physicians. UNUM doctors agreed with Plaintiff's doctors regarding the medical evidence. But UNUM disagreed as to the amount of exertion Plaintiff could assert. On this basis alone, UNUM denied the claim. Plaintiff presented much evidence to support a finding of her total disability. UNUM offered only conclusory opinions rendered by a non-examining physician who offered no medical evidence or justification, other than to contradict Plaintiff's treating physician.

For these reasons, the Court finds that Plaintiff has shown sufficient culpability on behalf of UNUM. Therefore, this factor favors an award for attorney fees.

2. UNUM's Ability to Satisfy an Award of Attorney's Fees.

As to the second factor, UNUM concedes its ability to satisfy an award of reasonable attorney's fees.

3. Deterrent Effect.

As to the third factor — the deterrent effect of a fee award on other insurance companies — Plaintiff contends that an award of attorney's fees is necessary to prevent UNUM from denying other participants' claims in the future.

UNUM argues that if the Court awards attorney fees in this case, it may have an opposite deterrent effect by encouraging plans to pay questionable claims in order to avoid liability for attorney's fees. It cites to Anderson v. Proctor Gamble, 220 F.3d at 455 (6^th Cir. 2000), which can be distinguished. It involved a request for attorney fees after a successful administrative appeal to plan trustees. The Anderson Court held that ERISA does not permit parties to recover attorney fees for legal work performed during the administrative phase of a benefits proceeding. Here, Plaintiff's request for attorney fees only covered time spent after she filed her complaint in federal court. It does not cover any attorney fees during the time period in which she was exhausting her administrative remedies.

Because of UNUM's culpable conduct, an award of attorney's fees may deter other insurance companies from proceeding in the same manner. The Court finds this factor weighs in support of an award of attorney's fees.

4. Common Benefit.

As to the fourth factor, the Court should consider whether the plaintiff sought to confer a common benefit on all participants of an ERISA plan or resolve significant legal questions regarding ERISA. Armistead v. Vernitron Corp., 944 F.2d 1287, 1301-02 (6^th Cir. 1991).

UNUM argues that no significant legal question was decided, nor was any benefit conferred on other participants of the plan at issue.

Plaintiff argues that this case has conferred a benefit upon McDonald's workers across the United States.² This case resolved a legal question for other McDonald's employees who participate in UNUM's long-term disability plan. The Court held that the plan requires a de novo review, not the "arbitrary and capricious" standard of review.

2 As mentioned in the memorandum of opinion awarding disability benefits, plaintiff was a manager of a McDonald's restaurant and a participant of UNUM's long-term disability plan.

The Court agrees with the Plaintiff. As to the specific plan at issue, this case gives some guidance that the McDonald's plan does not grant discretion to the plan administrator but results in a de novo review. This resolves a legal question for any McDonald's employee that may have disability insurance under the same plan.

The Court finds that this factor also favors an award of attorney's fees.

5. Relative Merits of Parties' Positions.

For all of the above reasons, as well as the reasons in the Memorandum of Opinion dated November 1, 2005, the fifth factor — the relative merits of the parties' positions — favors the plaintiff.

Taking into consideration the above factors, attorney's fees for plaintiff are warranted. Next, the Court will consider the elements of the lodestar method.

B. Calculation of the Amount.

Counsel for plaintiff seeks $61,675 in attorneys' fees based on hourly rates of $350 for lead counsel, $200 per hour for an associate, and $75 and $50 per hour for paralegals.³ Based upon the itemized fees submitted by counsel, this amount appears to be based solely on the hours expended multiplied by counsel's hourly rates.

3 The following is a breakdown of hours by plaintiff's attorneys: Lead Counsel - Associate - Paralegal-$75/hour Paralegal-$50/hour $350/hour $200/hour 80.75 hours 166.25 hours 4.25 hours .5 hour

The Sixth Circuit requires a district court to apply the "lodestar" method in calculating the appropriate fee award.Bldg. Serv. Local 47 Cleaning Contractors Pension Plan v. Grandview Raceway, 46 F.3d 1392, 1401 (6^th Cir. 1995). The lodestar method requires multiplying "the number of hours reasonably expended on the litigation . . . by a reasonable hourly rate." Hensley v. Eckerhart, 461 U.S. 424, 433 (1983).

The Fifth Circuit enunciated twelve factors that trial courts may consider in calculating reasonable attorney fee awards. Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 171-19 (5^th Cir. 1974). The Supreme Court determined that "Johnson's `list of 12' . . . provides a useful catalog of the many factors to be considered in assessing the reasonableness of an award of attorney's fees. . . ." Blanchard v. Bergeron, 489 U.S. 87 (1989). These twelve factors are: (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 other 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.

Pashcal v. Flagstar Bank, 297 F.3d 431, 434-35 (6^th Cir. 2002) (citations omitted). The Sixth Circuit has held that a trial court may apply the Johnson factors during its initial calculation of the attorney-fee award or when the court is considering a request for an enhancement. Id. at 434 (citingUnited Slate, Tile Composition Roofers v. G M Roofing Sheet Metal Co., 732 F.2d 495, 502-03 n. 3 (6^th Cir. 1984) (stating that the trial court should first conduct the initial evaluation, then examine the award against several factors, including the Johnson factors, but also noting that trial courts usually subsume the analysis of those factors within the initial calculation.)

1. Reasonable Hourly Rates

Plaintiff's counsel requests an hourly rate of $350 for his services, $200 for the services of his associate and $75 and $50/hour for the services of paralegals. Counsel attaches an affidavit stating that these rates are "commensurate with the rates charged by other similarly situated law firms in the Cleveland, Ohio area for cases similar to the lawsuit." Exh. 1, ¶ 5, Affid. Of David Welling. The hourly rates assigned for attorney's services must be consistent "with those prevailing in the community for similar services by lawyers of reasonably, comparable skill, experience, and reputation." Blum v. Stenson, 465 U.S. 886, 896 n. 11 (1984). A reasonable rate is one that will attract adequate counsel but will not produce a windfall to the attorneys. Northcross v. Board of Educ. Of Memphis City Schs., 611 F.2d 624, 638 (6^th Cir. 1979), cert. denied, 447 U.S. 911 (1980).

Defendant has not objected to the hourly rates charged by plaintiff's legal team, and the Court being familiar with prevailing rates in the local community based upon attorney's fee awards it has made in other cases, finds the requested rates to be reasonable. See Loranger v. Stierheim, 10 F3d 776 (11^th Cir. 1994) (The Court is "`itself an expert on the question and may consider its own knowledge and experience concerning reasonable and proper fees and may form an independent judgment either with or without the aid of witnesses as to value.'" Id. At 781 (citation omitted)). Therefore, the hourly rate component of the lodestar equation is $350 per hour for lead counsel; $200 per hour for associate counsel; $75 or $50 per hour for the paralegals.

2. Reasonable Hours Expended

Turning to the reasonableness of hours billed, plaintiff's counsel has spent a total of 251.75 hours on this case. The benchmark for determining the reasonableness of the hours expended on the litigation is the concept of billing judgment. The Supreme Court has emphasized that in the exercise of responsible billing judgment, "[c]ounsel for the prevailing party should make a good faith effort to exclude from a fee request hours that are excessive, redundant, or otherwise unnecessary, just as a lawyer in private practice ethically is obligated to exclude such hours from his fee submission." Hensley, 461 U.S. at 434.

Defendant has challenged the total hours billed as excessive. It argues that counsel seeks to improperly charge over 250 hours for an action involving no discovery and no testimony, and in which the court decided the case upon cross-motions based on an administrative record. It specifically objects to approximately 20 hours plaintiff's counsel spent on researching the law and drafting document requests, when in fact plaintiff was only entitled to the claim file which she had been provided. The Court agrees. It will disallow the 19.25 hours charged by plaintiff's counsel related to discovery that was not necessary under ERISA law.⁴ This amounts to $4,062.50, which will be subtracted from Plaintiff's request of $61,675.

4 These hours occurred on January 5, 2004 through January 29, 2004. Lead counsel spent 2.75 hours; associate counsel spent 15 hours and the paralegals spent a total of 1.5 hours on the discovery issue.

Accordingly, the plaintiff is entitled to $57,612.50 in attorney fees.

C. Multiplier.

Plaintiff also requests that the lodestar award should be enhanced by 50% (a multiplier of 1.5) and she thus requests a total award of fees in the amount of $92,512.50. Defendant argues that the lodestar amount is excessive for this type of routine ERISA case and that there is no basis in fact or law for a multiplier. The Court finds an enhancement to be without merit. In considering the Johnson factors, the lodestar amount is reasonable. Therefore, the Court will not enhance the award.

II.

The plaintiff is hereby awarded $57,612.50 in attorney fees.

IT IS SO ORDERED.

(The Court calculates this total amount to be $61,856.25).