Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_04-cv-03283/USCOURTS-cand-3_04-cv-03283-2/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1001 E.R.I.S.A.: Employee Retirement

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United States District Court

For the Northern District of California

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C-04-3283 Report & Recommendation Re Attorneys’ Fees Page 1 of 10

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

BURNETT THOMAS,

Plaintiff,

v.

UNUM LIFE INSURANCE CO, ET AL.,

Defendants.

________________________________/

No. C 04-3283 MJJ (JL)

REPORT AND RECOMMENDATION RE

PLAINTIFF’S MOTION FOR AWARD OF

ATTORNEY’S FEES AND COSTS

(DOCKET NO. 29)

Introduction

Under the Employee Retirement Income Security Act (“ERISA”), a court will award

full and reasonable attorney’s fees to a party who obtains excellent results that accomplish

the aims of litigation. In the case at bar, Plaintiff obtained an excellent result and achieved

in part the aims of litigation. Applying the Hummell analysis, the facts of the case support

awarding attorney’s fees. To determine the amount of fees awarded, the court determines

the ‘lodestar’ figure by multiplying the number of hours reasonably spent on litigation by a

reasonable hourly rate. Plaintiff’s attorneys’ hours and hourly rates are generally

reasonable, except for excessive hours spent drafting the complaint and summons. 

Plaintiff is also entitled to recover costs as mandated by 28 U.S.C. § 1920.

Case 3:04-cv-03283-MJJ Document 47 Filed 01/25/06 Page 1 of 10
United States District Court

For the Northern District of California

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C-04-3283 Report & Recommendation Re Attorneys’ Fees Page 2 of 10

Factual Background

Plaintiff Burnett Thomas began working for United Insurance Company of America in

August, 1998. Ms. Thomas sold insurance and collected premiums door to door. During

her employment she developed plantar fascitis, a painful condition, in both feet. Ms.

Thomas also developed osteoporosis of the spine causing hip and back pain which

prevented her from sitting for prolonged periods of time. 

Ms. Thomas had purchased disability insurance coverage underwritten by Unum Life

Insurance Company of America. The coverage obliged Unum during the first 24 months of

the insured’s disability to pay monthly benefits if the insured was limited from performing

the substantial and material duties of her regular occupation. After the 24 month period,

the policy required that the insured be, “unable to perform the duties of any gainful

occupation for which you are reasonably fitted by education, training or experience.” Ms.

Thomas filed her claim for benefits in August of 2000. Unum claimed Ms. Thomas could

physically perform sedentary work. After a functional capacity evaluation following 24

months of disability benefits, Unum terminated her benefits on May 30, 2003. Ms. Thomas

appealed the termination of her benefits, but Unum denied her appeal. Ms. Thomas then

retained counsel to pursue her claim against Unum. 

Procedural Background

Plaintiff filed a complaint in Superior Court of the State of California to recover

disability benefits under a policy issued by Defendant on July 9, 2004. Defendant removed

the case to Federal Court on August 11, 2004. Judge Jenkins referred the matter to

Alternative Dispute Resolution on December 21, 2004. The parties reached a settlement

on April 5, 2005 following a private mediation with the Hon. Edward Infante (Ret.), prior to

filing summary judgment motions. The amount of the settlement is confidential and was

submitted under seal for this Court’s consideration. The agreement provides that the

district court has jurisdiction to hear any requests for attorney’s fees and costs arising from

the litigation. Plaintiff filed this Motion for Award of Attorneys’ Fees and Costs on August

Case 3:04-cv-03283-MJJ Document 47 Filed 01/25/06 Page 2 of 10
United States District Court

For the Northern District of California

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C-04-3283 Report & Recommendation Re Attorneys’ Fees Page 3 of 10

23, 2005. It was referred to this Court pursuant to 28 U.S.C. §636(b) and Civil Local Rule

72.

Legal Argument & Analysis

Attorney’s Fees in ERISA Litigation

Generally, each party in a lawsuit shall bear its own costs for attorney’s fees, absent

express statutory authorization to the contrary. Hensley v. Eckerhart, 461 U.S. 424, 429

(1983). Under ERISA, 29 U.S.C. § 1132(g), the court in its discretion may grant a

prevailing plaintiff attorney’s fees and costs. A reasonable attorney’s fee is, “one that is

adequate to attract competent counsel, but [that does] not produce windfalls to attorneys.” 

Blum v. Stenson, 465 U.S. 886, 897 (1984). Often, statutory provisions grant attorney’s

fees to the prevailing party awarded relief by the court. However, settlement provisions

may allow a “successful” party to petition the court for attorney’s fees. Smith v. CMTA-IAM

Pension Trust, 746 F.2d 587, 589 (9th Cir. 1984). Parties are entitled to attorney’s fees, “if

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

parties sought in bringing suit.” Mogck v. Unum Life Insurance Co. of Am., 289 F.Supp.2d

1181, 1188 (S.D.Cal. 2003). 

Prevailing Party

Generally, courts define a prevailing party as one awarded some relief by the courts. 

Buckhannon Board & Care Home, Inc. v. W. Virginia Dept. of Health and Human

Resources, 532 U.S. 598, 603 (2001). The court in Buckhannon ruled that for a party to

receive attorney’s fees for success on a claim under the Fair Housing Act (“FHA”) and the

Americans with Disabilities Act (“ADA”), direct relief by the court is required. “Enforceable

judgments on the merits and court-ordered consent decrees create the ‘material alteration

of the legal relationship of the parties’ necessary to permit an award of attorney's fees.” Id.

at 604.

Buckhannon also applies to attorney’s fees under other federal statutes. Congress,

in enacting ERISA, 29 U.S.C. § 1132(g), did not enact the prevailing party standard, which

Case 3:04-cv-03283-MJJ Document 47 Filed 01/25/06 Page 3 of 10
United States District Court

For the Northern District of California

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C-04-3283 Report & Recommendation Re Attorneys’ Fees Page 4 of 10

creates a more liberal protection for participants in employee benefit plans. Smith, 746

F.2d at 589. 

In this case, Plaintiff received a settlement from Defendant as a result of court

instructions that the parties engage in Alternative Dispute Resolution (“ADR”). This

settlement must be viewed as a realization by Plaintiff of some of the goals of the litigation. 

Thus Plaintiff has standing as a prevailing party for the court to determine whether an

award of attorney’s fees is appropriate.

The settlement agreement includes a provision for attorney’s fees. Defendant

argues that under the terms of the settlement California law controls, which precludes

attorney’s fees. Defendant cites law relevant only to settlements arising from contractual

disputes. Here, the case arose from a federal statute. The settlement expressly confers

exclusive jurisdiction on the United States District Court for any litigation involving the

settlement agreement. The federal court therefore retains jurisdiction and the authority to

apply federal law to a petition for attorney’s fees. See Kokkonen v. Guardian Life Ins. Co.

of Am., 511 U.S. 375 (1994). The settlement functions as a binding contract because of

the power of the court to enforce the agreement and the legal relationships that it creates. 

Buckhannon, 532 U.S. at 604. Ultimately, this settlement acts as a material alteration of

the legal relationship between the parties sufficient to render Plaintiff a prevailing party. 

Appropriateness of Attorney’s Fees 

The court in Hummell v. S.E. Rykoff & Co. listed the following factors to guide the

court in exercising its discretion under 29 U.S.C. § 1132(g): (1) the degree of the opposing

parties’ culpability or bad faith; (2) the ability of the opposing parties to satisfy an award of

fees; (3) whether an award of fees against the opposing parties would deter others from

acting under similar circumstances; (4) whether the parties 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, 454 (9th Cir. 1980). Although the court is bound to follow

the Hummell analysis, all factors need not be given equal weight, nor even be considered

Case 3:04-cv-03283-MJJ Document 47 Filed 01/25/06 Page 4 of 10
United States District Court

For the Northern District of California

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C-04-3283 Report & Recommendation Re Attorneys’ Fees Page 5 of 10

in every case. Williams v. UNUM Life Ins. Co. of Am., 1996 WL No. 162972, (N.D.Cal.

1996).

Hummell Analysis

As to part one of the test, Plaintiff argues that Defendant denied Plaintiff’s claim in

bad faith, because the policy did not require objective medical evidence to uphold a claim

of disability. No ruling of the court supports Plaintiff’s argument that Defendant acted in

bad faith. Part one of the test does not favor an award of attorney’s fees. 

As to part two, Defendant concedes that it has the resources to pay an award for

attorney’s fees. However, Defendant argues that this factor should not be considered

alone. Part two falls weakly in Plaintiff’s favor. 

As to part three, this case does not act as a deterrent to others. The matter was

settled out of court with no assignment of liability to Defendant. This factor does not weigh

either for or against the awarding of fees. 

As to part four, by virtue of the settlement Plaintiff is the only party to benefit from

her claim. Plaintiff argues that she also filed a breach of fiduciary duty claim against the

fund, and that she attempted to resolve an important issue yet to be determined in ERISA

cases, the availability of “make-whole” relief. Defendant argues that both of these claims

lacked merit. The claim for breach of fiduciary duty was allowed after a motion to dismiss,

while the claim for “make-whole” relief was dismissed because of the lack of Ninth Circuit

authority on the issue. The fourth part marginal supports Plaintiff.

Finally, part five weighs in favor of Plaintiff. Plaintiff argues that the settlement

reflects the strength of her position. Defendant argues that the court dismissed many of

Plaintiff’s impermissible state law claims and that the court assigned no liability to

Defendant. This court find that part five supports Plaintiff because she recovered a portion

of what she sought in the litigation. 

After examining all the factors, the court finds there is a basis to award reasonable

attorney’s fees to Plaintiff.

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United States District Court

For the Northern District of California

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C-04-3283 Report & Recommendation Re Attorneys’ Fees Page 6 of 10

Amount of Attorney’s Fees

The court must first consider whether “the results obtained were excellent and

constituted the total accomplishment of the aims of the suit.” Swann v. CharlotteMecklenburg Board of Education, 66 F.R.D. 483, 484 (W.D.N.C. 1975). The court may

limit the award for hours that were not reasonably expended. Hensley, 461 U.S. at 434. 

For example, an attorney may not receive fees for unsuccessful claims completely

unrelated to the successful claims. Hensley, 461 U.S. at 435. Otherwise, when

determining fees under ERISA, “the court must determine a ‘lodestar’ amount by

multiplying the number of hours reasonably expended on the litigation by a reasonable

hourly rate.” D’Emanuele v. Montgomery Ward & Co. 904 F.2d 1379, 1383 (9th Cir. 1990);

(overruled on other grounds by Burlington v. Dague, 505 U.S. 557 (1992)). Fees may be

enhanced based upon an adjustment factor or multiplier. Id. For example in “a risky

contingent fee arrangement constitutes an exceptional circumstance requiring

enhancement.” Id. at 1384. The court must consider the records, detailing hours and

rates, and any rejection of the requested amounts should be fully explained. Id.

 In this case, Plaintiff succeeded in the general purpose of the litigation and obtained

an “excellent” result. Counsel obtained a significant portion of the damages requested in

Plaintiff’s mediation brief. The remaining question is whether the total hours expended and

hourly rate for Plaintiff’s attorneys are reasonable based upon the preceding factors. 

Hours Billed

Plaintiff presents affidavits and billing records to substantiate 173.43 hours for this

case. Plaintiff argues that her attorneys’ skills in ERISA matters helped the parties to

achieve unusual efficiency in this case. Defendant responds that much of the time was

spent researching and litigating issues a true ERISA expert would know to be frivolous. 

Defendant claims that Plaintiff spent 57.6 attorney hours and 24.4 paralegal hours

defending claims which were unavailable as a matter of law. Plaintiff contends that these

claims involve emerging issues of ERISA litigation and therefore were not frivolous. 

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United States District Court

For the Northern District of California

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C-04-3283 Report & Recommendation Re Attorneys’ Fees Page 7 of 10

Plaintiff denies filing state law claims and insists all claims were federal under ERISA. This

Court finds that all claims filed in the original complaint fall under ERISA statutes. 

Defendant further argues that Plaintiff spent 31.3 attorney hours and 11.8 paralegal hours

pointlessly opposing Defendant’s motions to dismiss. However, because Plaintiff’s claim

for breach of fiduciary duty was allowed to proceed, the hours spent opposing the motion to

dismiss were not frivolous, nor in bad faith. The Court notes that claims of breach of

fiduciary duty are common in ERISA litigation. 

Defendant also contends that 19.6 administrative hours which Plaintiff billed should

not be reimbursed as attorney’s fees, because administrative tasks handled by paralegals

should not be billed at an attorney’s hourly rate. Generally, the cost of support staff

employed by counsel performing administrative tasks is subsumed within counsel’s hourly

rate as overhead. Roberts v. Interstate Distributor Co., 242 F.Supp.2d 850, 860 (D.Or.

2002). Hours spent by a paralegal performing administrative tasks should be deducted

from the hours claimed by Plaintiff. On the other hand, Plaintiff should receive

compensation for work by paralegals that would normally be performed by an attorney. 

Failure to compensate hours claimed and documented for legal assistants and associate

attorneys is an abuse of discretion absent some explanation. D’Emanuele, 904 F.2d at

1387. In fact, such an allocation reduces Plaintiff’s and ultimately Defendant’s costs. 

The Court examined the time sheets submitted by Plaintiff’s attorneys. They show

that Plaintiff’s paralegals updated intake forms, conducted research, updated the calendar,

drafted correspondence with Plaintiff and reviewed court dockets and files. (Decl.

Coleman, Exh. A, p 1-10.) The court finds that these tasks are normally performed by an

attorney in the absence of a paralegal and are therefore compensable as attorney’s fees. 

Defendant argues that the court should reduce attorney hours spent in mediation

with Judicial Arbitration and Mediation Services (“JAMS”), even though it was mandated by

the court as part of the litigation. The court has discretion to award the JAMS fee to the

prevailing party as costs. This expense appears to be a necessary and unavoidable cost

of litigation that directly relates to the settlement and resolution of this case.

Case 3:04-cv-03283-MJJ Document 47 Filed 01/25/06 Page 7 of 10
United States District Court

For the Northern District of California

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C-04-3283 Report & Recommendation Re Attorneys’ Fees Page 8 of 10

Defendant argues that Plaintiff spent 31 hours preparing for mediation which it

argues is excessive for a process it refers to as “straightforward”. ERISA matters tend to

be fact intensive and attorneys are expected to spend significant hours preparing for

conferences and other proceedings. Mogck, 289 F.Supp.2d at 1192. Any mediation that

facilitates settlement requires both sides to present the merits of their case and full

preparation. 

The court notes the substantial member of hours spent drafting the complaint and

issuing summonses to the parties. The Court finds some of these hours to be excessive

for attorneys who are experts in ERISA matters. Plaintiff claims that substantial time was

spent researching novel issues of law generated by a recent Supreme Court decision. 

Plaintiff further claims that significant time was also spent researching and deciding

whether to sue the plan in addition to pursuing make-whole relief. In total Plaintiff’s

attorneys claim at least 22 hours on the complaint and at least 9.8 paralegal hour on the

complaint and summons. This Court recommends that the hours be reduced by half.

In summary, Plaintiff requests 173.43 hours in its motion for attorney’s fees plus an

additional 9.3 hours for the reply brief totaling $56,819.60. This Court recommends

deducting half of the 22 hours for the complaint and half of the 9.8 paralegal hours spent on

the complaint and summons for a total off 162.43 and 4.9 hours respectively. 

Hourly Rate

In determining the reasonable hourly rate for ERISA litigation, the court may

consider both the relevant community of attorneys in the district, in addition to a national

standard for ERISA attorneys. Mogck, 289 F.Supp.2d at 1191-92. Both sides present

affidavits suggesting different rates. To their own affidavits, Plaintiff’s attorneys add

affidavits from attorneys Kantor, Feinberg, and Harris. Mr. Coleman states that half his

practice is devoted to ERISA matters and half to other insurance matters. Mr. Coleman

claims his rate is $350 per hour. Mr. Levinson claims his rate to be $425 per hour. Plaintiff

also sets the hourly rate for Rebecca Grey at $265 per hour. Plaintiff requests a rate

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United States District Court

For the Northern District of California

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C-04-3283 Report & Recommendation Re Attorneys’ Fees Page 9 of 10

of $125 per hour for paralegals. Defendant attorney’s affidavit states ERISA claims

litigation should be set at $230 per hour. Defendant presents no authority for this claim and

does not address the rate for Mr. Levinson in its memorandum. 

Defendant offers little to contradict the claim that Mr. Levinson and Mr. Coleman are

ERISA experts. Neither does Defendant contradict their reputation and experience as

described in the affidavits. Plaintiff objects to the rate suggested by Defendant since

ERISA prosecutors may receive higher hourly rates than ERISA defenders representing

corporate clients. Courts recognize that in complex ERISA cases plaintiffs’ cases are often

undesirable, and therefore plaintiffs’ counsel may charge a higher hourly fee. Mogck Id. at

1191. Ultimately, there is insufficient evidence in the record to find Plaintiff’s hourly rate

unreasonable. This Court recommends that Plaintiff’s claimed rates be used to determine

the lodestar amount. 

Plaintiff’s Costs

A plaintiff may only recover litigation costs under express provisions of a statute of

the United States. A court may award costs in an action under 29 U.S.C. § 1132(g)(1) as

allowed by 28 U.S.C. § 1920, and only in amounts allowed by either § 1920 itself, 28

U.S.C. § 1821, or similar provisions. Agredano v Mutual of Omaha Cos. 75 F.3d 541 (9th

Cir. 1996). Specifically, under 28 U.S.C. § 1920, a judge or clerk of any court of the United

States may tax as costs the following: (1) fees of the clerk and marshal; (2) fees of the

court reporter for all or any part of the stenographic transcript necessarily obtained for use

in the case; (3) fees and disbursements for printing and witnesses; (4) fees for

exemplification and copies of papers necessarily obtained for use in the case; (5) docket

fees under section 1923 of this title; and (6) compensation of court appointed experts. 

Plaintiff is also entitled as a prevailing party to receive costs for JAMS. Plaintiff should

recover all of the above costs.

/ / /

/ / /

/ / /

Case 3:04-cv-03283-MJJ Document 47 Filed 01/25/06 Page 9 of 10
United States District Court

For the Northern District of California

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C-04-3283 Report & Recommendation Re Attorneys’ Fees Page 10 of 10

Conclusion

Plaintiff’s settlement makes her a prevailing party entitled to an award of attorney’s

fees under 29 U.S.C. § 1132(g). The Hummell analysis suggests that an award of

attorney’s fees is appropriate. Plaintiff presents a sufficient foundation for the hours billed

and the hourly rates claimed. Defendant argues that Plaintiff pursued frivolous claims that

were not recoverable. The record shows that in fact Plaintiff was successful in pursuing

one of these claims, and all of the pleaded claims are permitted under the ERISA statutes. 

This court recommends that Plaintiff’s attorneys be awarded fees at the suggested rates,

for the requested hours except for excess hours spent on the complaint and summons. 

This court also recommends that Plaintiff recover costs incurred during the course of

litigation. 

Respectfully submitted,

DATED: January 25, 2006

__________________________________

JAMES LARSON

 Chief United States Magistrate Judge

Case 3:04-cv-03283-MJJ Document 47 Filed 01/25/06 Page 10 of 10