Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_05-cv-01782/USCOURTS-cand-4_05-cv-01782-9/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 28:1441 Petition for Removal- Labor/Mgmnt. Relations

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

NANCY HYDER,

Plaintiff,

v.

KEMPER NATIONAL SERVICES, INC.,

LUMBERMAN'S MUTUAL INSURANCE CO.,

BROADSPIRE SERVICES, INC., VODAFONE

AMERICAS, INC., VODAFONE AMERICAS,

INC., SHORT TERM DISABILITY PLAN,

VODAFONE AMERICAS, INC., LONG TERM

DISABILITY PLAN, VODAFONE EMPLOYEE

HEALTH PLAN, VODAFONE EMPLOYEE DENTAL

PLAN, VERIZON WIRELESS, INC., and

DOES 1 TO 50, inclusive,

Defendants.

 /

No. C 05-1782 CW

ORDER GRANTING

PLAINTIFF'S

MOTION FOR

ATTORNEY'S FEES

Plaintiff Nancy Hyder moves for attorney's fees in the amount

of $95,540 from Defendants Kemper Insurance Co., Lumberman's Mutual

Insurance Co., and their successor-in-interest Broadspire Services,

Inc., (collectively, Insurance Defendants) and Vodafone Americas,

Inc., Long Term Disability Plan, and Vodafone Americas, Inc., Short

Term Disability Plan (collectively, Disability Plan Defendants). 

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1

In this order, all references to "Defendants" apply to the

Insurance and Disability Plan Defendants only. 

2

Defendants oppose the motion.1 The matter was submitted on the

papers. Having considered all of the papers filed by the parties,

the Court grants Plaintiff's motion.

BACKGROUND

On April 29, 2005, Plaintiff filed suit alleging five causes

of action arising from denials of disability benefits, stock

options and retiree health and dental coverage. Her complaint

included claims against Insurance Defendants, Disability Plan

Defendants, Vodafone Americas, Inc., Vodafone Employee Health Plan,

Vodafone Employee Dental Plan and Verizon Wireless. Against

Insurance Defendants, Plaintiff brought claims of (1) breach of the

duty of good faith and fair dealing and (2) breach of contract. In

the alternative, Plaintiff brought a claim against Disability Plan

Defendants and Insurance Defendants for (3) denial of benefits in

violation of the Employee Retirement Income Security Act (ERISA),

29 U.S.C. § 1132. Plaintiff also brought claims (4) against

Vodafone for breach of contract based on the denial of stock

options and (5) against Vodafone Employee Health Plan, Vodafone

Employee Dental Plan and Verizon Wireless, Inc., for denial of

benefits due under an ERISA plan, 29 U.S.C. § 1132(a)(1)(B) and

(c)(1).

On June 29, 2005, the Court granted Insurance Defendants and

Disability Plan Defendants' motion to dismiss the first and second

causes of action, finding that they were preempted by ERISA. On

June 30, 2006, the Court denied Insurance Defendants and Disability

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Plan Defendants' motion for summary judgment and granted

Plaintiff's cross-motion for partial summary judgment on her third

cause of action. The Court found that Plaintiff was entitled to

benefits under both the Long Term and Short Term Disability Plans. 

On October 11, 2006, the Court entered an order awarding Plaintiff

$29,689.49 in net short-term disability back benefits, $332,457.93

in net long-term disability back benefits, $5,597 per month in ongoing long-term disability benefits and pre-judgment interest to be

compounded monthly at the rate described in Title 28 U.S.C. 

§ 1961(a). The relevant parties settled the remaining claims and

the Court entered judgment on April 18, 2007.

Plaintiff now moves to recover $95,540 in attorney's fees. In

support of the motion Plaintiff submits the declaration of her

attorney, Richard Johnston, detailing the hours he spent on the

case and requesting renumeration at the rate of $425 per hour, his

current rate for ERISA matters. Mr. Johnston's declaration

indicates that he has significant experience in ERISA litigation. 

DISCUSSION

I. Attorney's Fees Under ERISA

ERISA provides that "the court in its discretion may

allow a reasonable attorney's fee and costs of action to either

party." 29 U.S.C. § 1132(g)(1). The Ninth Circuit has adopted a

five-part test to determine whether attorney's fees should properly

be awarded under ERISA: (1) the degree of the opposing party's

culpability or bad faith; (2) the ability of the opposing party to

satisfy an award of fees; (3) whether an award of fees against the

opposing party would deter others from acting in similar

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circumstances; (4) whether the party requesting fees sought to

benefit all participants and beneficiaries of an ERISA plan or to

resolve a significant legal question regarding ERISA; and (5) the

relative merits of the parties' positions. Hummell v. S.E. Rykoff

& Co., 634 F.2d 446, 453 (9th Cir. 1980). No one of these Hummell

factors is decisive, and some may not be pertinent in a given case. 

Smith v. CMTA-IAM Pension Trust, 746 F.2d 587, 590 (9th Cir. 1984);

Carpenters' S. Cal. Admin. Corp. v. Russell, 726 F.2d 1410, 1416

(9th Cir. 1984). The Hummell factors "reflect a balancing" and not

all factors must weigh in favor of a fee award. McElwaine v. U.S.

West, Inc., 176 F.3d 1167, 1173 (9th Cir. 1999).

The Ninth Circuit has stated that when applying the Hummell

factors, a district court "must keep at the forefront ERISA’s

remedial purposes that 'should be liberally construed in favor of

protecting participants in employee benefit plans.'" Id. at 1172

(citing Smith, 746 F.2d at 589). The court should consider ERISA’s

purpose “to protect employee rights and to secure effective access

to federal courts.” Smith, 746 F.2d at 589. Finally, a motion for

attorney's fees in an ERISA case requires application of a “special

circumstances” rule under which a successful ERISA participant

"should ordinarily recover fees unless special circumstances would

render such an award unjust." Elliott v. Fortis Benefits Ins. Co.,

337 F.3d 1138, 1148 (9th Cir. 2003) (citing McElwaine, 176 F.3d at

1172).

Plaintiff argues that the five Hummell factors weigh in favor

of awarding attorney's fees and that there are no special

circumstances which would render an award unjust. Defendants argue

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that the Hummell factors do not support an award of attorney's fees

in this case, but do not argue that special circumstances exist or

apply. The Court discusses each factor in turn.

A. Bad Faith or Culpability

Plaintiff argues that Defendants' decision to deny her

benefits "was characterized by bad faith and demonstrated

significant culpability." Plaintiff's Motion at 7. For example,

Plaintiff notes that Defendants never responded to her letter

indicating that her appeal was timely. In addition, Plaintiff

points out that Defendants informed her that they were

investigating her disability status, but later denied her

application for short-term disability benefits as untimely and

therefore denied her long-term disability benefits because she had

not received short-term benefits. As the Court stated in its order

granting Plaintiff's motion for partial summary judgment,

Defendants' communication with Plaintiff contained unexplained

"irregularities and inconsistencies." June 30, 2006 Order at 18.

Defendants counter that the Court never found that their

arguments were made in bad faith and that two of the three claims

against them were dismissed. However, the Ninth Circuit has held

that while "bad faith is a factor that would always justify an

award, it is not required.” Smith v. CMTA-IAM Pension Trust, 746

F.2d 587, 590 (9th Cir. 1984). Further, that two of the three

claims against Defendants were dismissed because they were

preempted by ERISA says nothing about Defendants' culpability.

This factor weighs in favor of awarding attorney's fees. 

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B. Ability to Pay

Defendants do not contest that they are able to satisfy a fee

award. This factor accordingly weighs in favor of awarding

attorney's fees to Plaintiff. According to Smith, absent special

circumstances, a prevailing ERISA employee should ordinarily

receive attorney's fees from the defendant based on this factor

alone. 746 F.2d at 590. 

C. Deterrence

Plaintiff argues that an award of attorney's fees will

dissuade Defendants from denying benefits in the same confusing and

inconsistent manner in future cases. Defendants argue that because

the denial was based on a simple timing issue, unique to

Plaintiff's case, there is no possibility for deterrence in the

future. However, in granting Plaintiff's motion for partial

summary judgment, the Court found the application of the time bar

was unreasonable with respect to the Short Term Disability Plan

because Defendants had not supplied Plaintiff with plan documents

and because she received misleading information from her employer.

Further, the Court found that the time bar was not enforceable with

respect to the Long Term Disability Plan because of the misleading

nature of Defendants' communications with Plaintiff.

Because an award of attorney's fees would deter Defendants

from unreasonably imposing the time bar in future cases, this

factor weighs in favor of awarding attorney's fees.

D. Benefit

Plaintiff acknowledges that the result in this case primarily

benefits herself, but argues that the Court's finding that

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Defendants acted unreasonably and unfairly will help future

claimants. There may be some benefit to other plan participants in

ensuring that Defendants do not improperly invoke the time bar. 

This factor weighs in favor of awarding attorney's fees.

E. Relative Merits of the Parties' Positions

Plaintiff argues that the fifth factor weighs heavily in her

favor because the Court decided in her favor that Defendants

wrongfully denied her benefits. Defendants do not dispute

Plaintiff’s argument. 

Based on the Court’s judgment in favor of Plaintiff, the Court

finds that the fifth factor weighs in favor of awarding attorney's

fees. See Smith, 746 F.2d at 590 ("The fifth Hummell factor, the

relative merit of the parties' positions, is, int the final

analysis, the result obtained by plaintiff."). 

All the Hummell factors weigh in favor of awarding Plaintiff

attorney's fees in this case. 

 II. Fee Calculation

In the Ninth Circuit, reasonable attorney's fees are

determined by first calculating the "lodestar." Jordan v.

Multnomah County, 815 F.2d 1258, 1262 (9th Cir. 1987). "The

'lodestar' is calculated by multiplying the number of hours the

prevailing party reasonably expended on the litigation by a

reasonable hourly rate." Morales v. City of San Rafael, 96 F.3d

359, 363 (9th Cir. 1996). There is a strong presumption that the

lodestar figure represents a reasonable fee, Jordan, 815 F.2d at

1262; however, the district court may adjust the award from the

lodestar figure upon consideration of additional factors that may

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bear upon reasonableness. Kerr v. Screen Guild Extras, Inc., 526

F.2d 67, 70 (9th Cir. 1975).

Determining a reasonable hourly rate is a critical inquiry. 

Jordan, 815 F.2d at 1262 (citing Blum v. Stenson, 465 U.S. 886, 895

n.11). In establishing the reasonable hourly rate, the district

court should take into account (1) the novelty and complexity of

the issues, (2) the special skill and experience of counsel,

(3) the quality of representation, (4) the results obtained,

Cabrales v. County of Los Angeles, 864 F.2d 1454, 1464 (9th Cir.

1988), and (5) the contingent nature of the fee agreement. City of

Burlington v. Dague, 505 U.S. 557, 562-63 (1992). These factors

are subsumed in the initial lodestar calculation, and should not

serve as independent bases for adjusting fee awards. Morales, 96

F.3d at 363-64. Reasonable fees are generally calculated according

to the prevailing market rates in the forum district. Gates v.

Deukmejian, 987 F.2d 1392, 1405 (9th Cir. 1992). 

The Supreme Court has recognized that, while it is appropriate

for the district court to exercise its discretion in determining an

award of attorney's fees, it remains important for the court to

provide "a concise but clear explanation of its reasons for the fee

award." Hensley v. Eckerhart, 461 U.S. 424, 437 (1983); Hall v.

Bolger, 768 F.2d 1148, 1151 (9th Cir. 1985) (in computing an award,

the district court should provide a "detailed account of how it

arrives at appropriate figures for 'the number of hours reasonably

expended' and 'a reasonable hourly rate'") (quoting Blum, 465 U.S.

at 898).

Defendants argue that Plaintiff's request for fees is

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excessive because both the $425 hourly rate and the number of hours

claimed are too high. 

A. Hourly Rate

Plaintiff submits the declaration of Daniel Feinberg, an ERISA

attorney practicing in the area whose hourly rate is $575. 

Feinberg Declaration ¶ 8. Since 1988, Feinberg has represented

Plaintiffs. Feinberg declares that he believes his rate is

reasonable and within market rates for ERISA specialists at his

experience level. Id. In 2006, Feinberg was awarded fees at the

hourly rate of $495 for work performed on a case between 2004 and

2006. Id.

Plaintiff's counsel in this case declares that he has

practiced primarily in the fields of insurance and benefits law

since graduating from law school in 1986. Johnston Declaration at

¶ 6. He previously defended ERISA plans and now represents

plaintiffs in ERISA cases. Id. Since February, 1999, counsel has

"maintained a solo practice dedicated significantly to the

representation of claimants in ERISA cases." Id. He states that

$425, the rate he requests, is his "current rate for ERISA matters,

and is based on [his] evaluation of the current state of the market

for lawyers of [his] experience and qualifications." Id. 

In addition, Plaintiff cites recent cases from this district,

awarding fees in ERISA cases at hourly rates from $395 to $495 per

hour. See, e.g., Farhat v. Hartford Life Acc. Ins. Co., 2006 WL

2521571 at *8 (N.D. Cal.) (awarding at rate of $435 per hour and

citing cases awarding up to $495 per hour); Fleming v. Kemper

Nat'l, 373 F. Supp. 2d 1000, 1012 (N.D. Cal. 2005) ($450 per hour).

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Where Plaintiff has provided evidence "'regarding prevailing

fees in the community, and rate determinations in other cases,' the

Ninth Circuit has implied that defendants cannot simply disagree

with this evidence, but should 'support their arguments with any

affidavits or evidence of their own regarding legal rates in the

community.'” Farhat, 2006 WL 2521571 at *7 (citing United

Steelworkers of America v. Phelps Dodge Corp., 896 F.2d 403, 407

(9th Cir. 1990)). 

Defendants have not done so. Instead, Defendants argue that

Albion Pacific Property Resources v. Seligman, 329 F. Supp. 2d

1163, 1167 (N.D. Ca. 2004), limits the attorney's fees claim to

only the rate charged by "reasonably competent counsel." However,

Albion and the other cases Defendants cite in support of this

argument are not ERISA cases. In a recent ERISA case, the Ninth

Circuit held that "billing rates should be established by reference

to the fees that private attorneys of an ability and reputation

comparable to that of prevailing counsel charge their paying

clients for legal work of similar complexity." Welch v. Metro.

Life Ins. Co., 480 F.3d 942, 946 (9th Cir. 2007) (internal

quotations omitted); see also, D'Emanuele v. Montgomery Ward & Co.,

904 F.2d 1379, 1384 (9th Cir. 1990). 

Therefore, Plaintiff's counsel's fees will be awarded at a

rate of $425 per hour.

B. Number of Hours

Plaintiff's counsel states in his sworn declarations that he

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2

This includes 10.6 hours spent on Plaintiff's reply to the

opposition to this motion for attorney's fees.

11

has spent 224.8 hours on this case.2 Defendants contest the

request for fees for the 22.6 hours Plaintiff's counsel spent on

the state causes of action that were dismissed as preempted by

ERISA. In addition, Defendants contest the 0.3 hours counsel

attributes to a jury demand because ERISA does not allow for a

jury. 

In her opposition to the motion to dismiss, Plaintiff argued

that the two state law claims against Insurance Defendants were not

preempted because ERISA only preempts cases against benefit plans

themselves. The Court concluded that those claims were preempted

and granted Defendants' motion to dismiss. Nonetheless, as

Plaintiff points out, the Ninth Circuit has held that in applying

29 U.S.C. § 1132(g), the ERISA attorney's fees provision, "the

Hummell factors should be 'liberally construed in favor of

protecting participants in employee benefits plans.'" Elliot, 337

F.3d at 1148 (quoting McElwaine, 176 F.3d 1167, 1172 (9th Cir.

1999)). Therefore, the Elliot court affirmed the district court's

award of fees, including fees for time spent on state law claims

that were found to be preempted. 

As discussed above, all of the Hummell factors weigh in favor

of awarding Plaintiff attorney's fees. Further, the Ninth Circuit

has also held that where "claims upon which the plaintiff failed to

prevail were related to the plaintiff's successful claims," the

Court should "evaluate[] the 'significance of the overall relief

obtained by the plaintiff in relation to the hours reasonably

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expended on the litigation.'" Thorne v. City of El Segundo, 802

F.2d 1131, 1141 (9th Cir. 1986) (quoting Hensley v. Eckerhart, 461

U.S. 424, 435 (1983)). If the Court finds that Plaintiff has

achieved "'excellent results' full compensation may be appropriate,

but if only 'partial or limited success' was obtained, full

compensation may be excessive." Id. Such decisions are within the

Court's discretion. The Court finds that Plaintiff has achieved

"excellent results." As a result of this action, she is entitled

to significant back benefits as well as prospective benefits. 

Therefore, an award of fees for the full 224.8 hours of Plaintiff's

counsel's time is appropriate. 

CONCLUSION

For the foregoing reasons, the Court GRANTS Plaintiff's motion

and awards her $91,035 in fees to be paid jointly and severally by

the liable Defendants forthwith. 

IT IS SO ORDERED.

Dated: 6/14/07 

CLAUDIA WILKEN

United States District Judge

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