Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_05-cv-01883/USCOURTS-casd-3_05-cv-01883-5/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1132 E.R.I.S.A.-Employee Benefits

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

TERESA E. NEATHERY, an individual,

Plaintiff,

CASE NO. 05 CV 1883 JM (CAB)

ORDER GRANTING MOTION

FOR INTEREST, ATTORNEY’S

FEES, AND COSTS

Doc. No. 170 

vs.

CHEVRON TEXACO CORPORATION

GROUP ACCIDENT POLICY NO. OK

826458 AND ACCIDENT POLICY NO.

SLG-000784, group welfare benefits plans

under ERISA, and DOES 1 through 10,

inclusive,

Defendants.

Plaintiff Teresa Neathery (“Neathery”) brought this action to recover accidental life insurance

proceeds under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001

et seq. Defendants are Voluntary Group Accident Insurance Plan and On-the-Job Accident Insurance

Plan, erroneously sued as Chevron Texaco Corporation Group Accident Policy No. OK 826458 and

Accident Policy No. SLG-000784 (collectively “Defendants”or “the Plans”). Life Insurance Company

of North America (“LINA”) is the administrator of the Plans. This court initially affirmed LINA’s

decision to deny benefits, but was overturned by the Ninth Circuit Court of Appeals. (Doc. Nos. 132,

134). On remand, this court reversed LINA’s decision to deny benefits and entered judgment in favor

of Neathery. (Doc. No. 167). 

Neathery now moves the court to award prejudgment interest on the accidental death benefits

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of $775,000, for attorney’s fees, and for certain non-statutory costs. (Doc. No. 170). Defendants filed

an opposition, and Neathery filed a reply to the opposition. (Doc. Nos. 184, 188). 

I. BACKGROUND

The long history of this case has been recounted in detail in prior orders of the this court. (See

Doc. No. 167). Nonetheless, a brief recounting is necessary here. Neathery’s husband died following

a car crash while he was working for ChevronTexaco. (Id.) Neathery applied for benefits from the

Plans but LINA denied her claim, asserting that Neathery’s husband died as the result of a medical

emergency and not an accident. (Id.) Neathery appealed administratively. (Id.) When LINA did not

respond in the required time frame, Neathery filed this suit. (Id.) 

Following a bench trial, this court affirmed LINA’s decision to deny benefits. (Doc. No. 132).

Plaintiff successfully appealed to the Ninth Circuit Court of Appeals. (Doc. No. 148). The Ninth

Circuit reversed this court’s decision because this court improperly relied on a report submitted by

forensic pathologist Dr. James Lewis after the administrative record had closed. (Id.) On remand, this

court reversed LINA’s denial of benefits. 

During the pendency of this lawsuit, Neathery’s financial condition has declined. Neathery’s

husband was the primary earner in the family. (Doc. No. 170, Declaration of Theresa Neathery,

hereinafter “Neathery Decl.,” ¶ 8). Neathery earned $9.40 per hour working as a bus driver, but has

since lost her job. (Neathery Decl. ¶¶ 8, 16). Trying to make ends meet, Neathery refinanced her

home and later took out additional mortgages. (Neathery Decl. ¶¶ 8, 12, 14). Neathery’s home was

ultimately foreclosed upon, however, and Neathery lost approximately $70,000 in equity she had

accumulated. (Neathery Decl. ¶¶ 4, 28). Neathery also withdrew early the contents of her 401(k)

savings totaling approximately $100,000. (Neathery Decl. ¶ 23). Meanwhile, Neathery has

accumulated approximately $14,000 in credit card debt. (See Neathery Decl. ¶ 25). 

Throughout the litigation, Neathery has been represented by Timothy Lemucci, local counsel

from Bakersfield, California, and the law firm Miller, Monson, Peshel, Polacek & Hoshaw (“Miller,

Monson”). (Doc. No. 170, Declaration of Timothy Lemucci, hereinafter “Lemucci Decl.,” ¶ 8; Doc.

No. 170, Declaration of Thomas Monson, hereinafter “Monson Decl.,” ¶ 8). Two attorneys from

Miller, Monson—Thomas Monson and Susan Horner—did most of the work on the case, with Ms.

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Horner billing the vast majority. (See Monson Decl. ¶ 9, Ex. 1, Ex. 2, Ex. 3, Ex. 4). Both Monson

and Horner are experienced ERISA litigators. (Monson Decl. ¶ 5; Doc. No. 170, Declaration of Susan

Horner, hereinafter “Horner Decl.,” ¶ 8). Although Lemucci and Miller, Monson represent Neathery

on a contingent fee bases, they have maintained contemporaneous billing records for the matter.

(Monson Decl. ¶ 8). These records indicate that Neathery’s counsel have billed a total of 1,668.2

hours to this matter, plus paralegal and secretarial time. (Monson Decl. ¶ 20-22; Lemucci Decl. ¶ 14-

20). The value of these services, according to counsel, is $801,943.50. (Monson Decl. ¶ 21; Lemucci

Decl. ¶ 25). 

II. LEGAL STANDARDS

The award of prejudgment interest, attorney’s fees, and costs under ERISA is within the

district court’s discretion. Blankenship v. Liberty Life Ins. Co. of Boston, 486 F.3d 620, 627 (9th Cir.

2007) (citations omitted) (prejudgment interest); Nelson v. EG&G Energy Measurements Group, Inc.,

37 F.3d 1384, 1392 (9th Cir. 1994) (attorney’s fees); Landwehr v. DuPree, 72 F.3d 726739 (9th Cir.

1995) (costs). 

III. DISCUSSION

A. Prejudgment Interest

“A district court may award prejudgment interest on an award of ERISA benefits at its

discretion.” Blankenship v. Liberty Life Ins. Co. of Boston, 486 F.3d 620, 627 (9th Cir. 2007)

(citations omitted). The court should exercise its discretion as guided by fairness and a balancing of

the equities. Landwehr v. DuPree, 72 F.3d 726, 739 (9th Cir. 1995) (citations omitted). 

The court finds it appropriate to award Neathery prejudgment interest in this case. Neathery

has waited over five years from the time of her husband’s death to receive the life insurance benefits

she is due. During that time, in large part because she did not have access to the life insurance

benefits, Neathery has accumulated substantial credit card debt, lost her home (including significant

equity) to foreclosure, and emptied her 401(k) account. Under these circumstances, prejudgment

interest is required to make Neathery whole. Cf. Peterson v. Federal Express Corp. Long Term

Disability Plan, 525 F. Supp. 2d 1125, 1130 (D. Ariz. 2007). 

The purpose of prejudgment interest is to fully compensate the plaintiff for “the losses incurred

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as a result of [the defendant’s] nonpayment of benefits.” Dishman v. UNUM Life Ins. Co. of Am., 269

F.3d 974, 988 (9th Cir. 2001). “The interest rate prescribed for post-judgment interest under 28

U.S.C. § 1961 is appropriate for fixing the rate of pre-judgment interest unless the trial judge finds,

on substantial evidence, that the equities of that particular case require a different rate.” GroszSalomon v. Paul Revere Life Ins. Co., 237 F.3d 1154, 1164 (9th Cir. 2001). The interest rate

prescribed by 28 U.S.C. § 1961 would provide Neathery with $142,365 in prejudgment interest. (Doc.

No. 170 at 10). 

Neathery contends that the interest rate prescribed by 28 U.S.C § 1961 will not adequately

compensate her for her losses. To support this contention, she points primarily to the loss of her home

equity (approximately $70,000), the loss of her 401(k) savings (approximately $100,000), and her

accumulated credit card debt (approximately $14,000). These losses, however, are not solely the

product of LINA’s denial of benefits. The losses were exacerbated by the loss of Neathery’s job and

subsequent unemployment, which is unconnected to this case. Moreover, on the other side of the

equitable scale, there is no indication that Defendants have earned a high rate of return on the money

improperly withheld from Neathery. Cf. Grosz-Salomon, 237 F.3d at 1164. 

The court finds that Neathery has not shown by substantial evidence that the statutory amount

will not fully compensate her for “the losses incurred as a result of [LINA’s] nonpayment of benefits.”

Dishman, 269 F.3d at 988. Therefore, the court grants prejudgment interest in the amount of $142,365

as proscribed by 28 U.S.C. § 1961. See Grosz-Salomon, 237 F.3d at 1164. 

B. Attorney’s Fees

Under ERISA, a court may award a reasonable attorney’s fee. 29 U.S.C. § 1332(g)(1). “As

a general rule, ERISA employee plaintiffs should be entitled to a reasonable attorney’s fee ‘if they

succeed on any significant issue in litigation which achieves some of the benefit the parties sought in

bringing suit.’” Smith v. CMTA-IAM Pension Trust, 746 F.2d 587, 589 (9th Cir. 1984) (quoting

Hensley v. Eckerhart, 461 U.S. 424, 433 (1983)). Neathery prevailed in her suit for life insurance

benefits, therefore she is entitled to a reasonable attorney’s fee. 

To determine a reasonable attorney’s fee in an ERISA case, the court applies the hybrid

lodestar/multiplier approach. Van Gerwen v. Guarantee Mutual Life Co., 214 F.3d 1041, 1045 (9th

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1

 Defendant claims that these attorney’s fees are not recoverable because they were not

requested from the Court of Appeal per Ninth Circuit Rule 39-1.6. However, a request to the Ninth

Circuit is not a prerequisite in these circumstances when fees are authorized by statute. See Twentieth

Century Fox Film Corp. v. Entertainment Distributing, 429 F.3d 869, 884 (9th Cir. 2005); Cabrales

v. Los Angeles, 935 F.2d 1050, 1051 (9th Cir. 1991). 

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Cir. 2000). First, the court determines the lodestar amount by “multiplying the number of hours

reasonably expended on the litigation by a reasonable hourly rate.” Id. Second, the court may adjust

the lodestar amount using a multiplier based on factors not subsumed within the lodestar calculation.

Id. The multiplier, however, is only proper in exceptional cases where the lodestar amount is

unreasonable. Id. 

First, the court must determine “the number of hours reasonably expended on the litigation.”

Id. Neathery’s counsel break down their work in this litigation into four phases. Phase 1 covers the

beginning of the litigation through the initial decision by this court. Phase 2 covers the appeal to the

Ninth Circuit. Phase 3 covers the district court proceedings on remand up to entry of judgment. Phase

4 covers time spend preparing this motion for prejudgment interest, attorney’s fees, and costs. 

For Phase 1, the first round of litigation in district court, Neathery’s counsel—including

attorneys and paralegals—ostensibly billed 1043.5 hours. (Monson Decl., Ex. 1) Upon careful review

of the billing records, the court finds that fewer hours are reasonable. As experienced ERISA

litigators, counsel should avail themselves of the institutional knowledge, banked research and briefs,

and other efficiencies that are the province of experienced attorneys. Yet, Neathery’s counsel spent

extensive time researching, drafting, and reviewing for every aspect of the case. While thorough

preparation is a boon to clients, reasonable attorneys must also consider what their clients are willing

to pay—both the hourly rate and the time spent—for their services. Cf. Welch v. Metro. Life Ins. Co.,

480 F.3d 942, 946 (9th Cir. 2007). Therefore, the court finds the following amounts of time

reasonable: 20 hours for Mr. Monson, 300 hours for Ms. Horner, and 50 hours of paralegal time. 

For Phase 2, the Ninth Circuit appeal, Neathery’s counsel billed 511.4 hours.1

 (Monson Decl.,

Ex. 2). The court’s review of the billing records indicates that this too is somewhat inflated. Many

of the arguments made before the Ninth Circuit had already been researched, drafted, and presented

to the district court. While additional preparation for an appeal is certainly appropriate, Neathery’s

counsel again failed to capitalize on the efficiencies afforded experienced attorneys. Therefore, the

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court finds the following amounts of time reasonable: 12 hours for Mr. Monson, 250 hours for Ms.

Horner, and 100 hours of paralegal time. 

For Phase 3, the second round of litigation in district court, Neathery’s counsel billed 267.6

hours. (Monson Decl., Ex. 3). Having reviewed the billing records, the court finds it appropriate to

lower this number only slightly. The vast majority of counsel’s time was reasonably spent, although

there is still some failure to capitalize on the work already expended in preparing for the first bench

trial and the appeal. Therefore, the court finds the following amounts of time reasonable: 35 hours

for Mr. Monson, 185 hours for Ms. Horner, and 15 hours of paralegal time. 

For Phase 4, bringing this motion for prejudgment interest, attorney’s fees, and costs,

Neathery’s counsel billed 108.5 hours. This number is grossly excessive, particularly because counsel

are experienced ERISA litigators who undoubtedly bring motions for fees and interest on a regular

basis. These are not difficult legal issues, so the majority of billable time should be spent by

paralegals or secretaries gathering billing records and other necessary information. Therefore, the

court finds the following amounts of time reasonable: 3 hours for Mr. Monson, 6 hours for Ms.

Horner, and 10 hours for paralegals. 

Finally, Neathery’s local counsel, Mr. Lemucci, billed 17 hours of his time plus an additional

6.45 hours of paralegal and 5 hours of secretarial time. Based upon Lemucci’s declaration, the

majority of this time (10 hours of attorney time) was spent preparing his and Neathery’s declarations

to support this motion for attorney’s fees. The court finds that reasonable amounts of time for these

efforts are 12 hours of attorney time, 4 hours of paralegal time, and 3 hours of secretarial time. 

After determining the time reasonably spent on litigation, the court must determine a

reasonable hourly rate for the attorneys and paralegals who worked on the case. In determining an

appropriate hourly rate, the court does not make reference to the actual rates charged to the prevailing

party, rather “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, 480 F.3d at 946 (quoting Davis v. City and County of San

Francisco, 976 F.2d 1536, 1545 (9th Cir. 1992)). 

Neathery requests rates of $525 per hour for Mr. Monson, $500 per hour for Ms. Horner, and

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 $917,365 is the sum of the $775,000 awarded in benefits plus the $142,365 in prejudgment

interest. 

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$450 per hour for Mr. Lemucci. The paralegal rates are $125 per hour for the Miller, Monson

paralegals and $75 per hour for Mr. Lemucci’s paralegals. Mr. Lemucci requests $22 per hour for his

secretary’s work. To begin, the court finds that the paralegal and secretary rates are reasonable. The

attorney rates, however, are inflated. 

The court does not question the experience or credentials of Neathery’s counsel. But there is

no evidence that counsel’s requested fees reflect the rates that they charge “paying clients for legal

work of similar complexity.” Welch, 480 F.3d at 946. Counsel represent Neathery on a contingent

fee basis. Neathery’s declaration makes it clear that she would be unable to pay counsel’s requested

rates even if she was willing. Indeed, counsel’s requested attorney’s fees of $801,943.50 nearly

matches the $917,365 award that Neathery has received.2 This information casts doubt whether

counsel’s requested rates are in fact their market rates. 

In addition, Ms. Horner requests a rate commensurate with supervising partners while she

handled nearly all aspects of the litigation, including the most basic legal tasks normally done by

associates. Mr. Lemuccis requests a high rate despite his lack of ERISA experience and minimal

contributions. These considerations further suggest lower rates than those requested. Therefore, the

court finds the following rates reasonable: $450 per hour for Mr. Monson, $350 per hour for Ms.

Horner, and $300 per hour for Mr. Lemucci. 

Finally, the court determines that this is not one of those exceptional cases in which the

lodestar amount is not reasonable. See Van Gerwen, 214 F.3d at 1045. Therefore, the court awards

the lodestar amount of $310,625 in attorney’s fees to Miller Monson and $3,891 to Mr. Lemucci. 

C. Costs

Under ERISA, a court may allow costs to either party. 29 U.S.C. § 1132 (g)(1). Neathery

requests $9,750 in costs to compensate two expert witnesses who reviewed the contents of the Lewis

report during the first bench trial. These costs are reasonable, therefore the court awards them to

Neathery. 

IV. CONCLUSION

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For the foregoing reasons, the court GRANTS Plaintiff’s motion for prejudgment interest,

attorney’s fees, and costs. Prejudgment interest is awarded in the amount of $142,365. Attorney’s

fees are awarded in the amount of $314, 516. Non-statutory costs are awarded in the amount of

$9,750.

IT IS SO ORDERED.

DATED: October 30, 2009

 Hon. Jeffrey T. Miller

 United States District Judge

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