Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_05-cv-03478/USCOURTS-cand-4_05-cv-03478-2/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 28:1331 Fed. Question

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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

JOHN E. KING,

Plaintiff,

v.

GE FINANCIAL ASSURANCE COMPANY,

PHOENIX HOME LIFE MUTUAL COMPANY, THE

SONOMA NATIONAL BANK GROUP LONG TERM

DISABILITY PLAN, and SONOMA NATIONAL

BANK,

Defendants. /

No. C 05-3478 CW

ORDER DENYING

PLAINTIFF'S

APPLICATION FOR

AN ORDER TO SHOW

CAUSE AND

GRANTING MOTION

FOR AWARD OF

ATTORNEYS' FEES

Plaintiff John E. King has filed an ex parte application for

an order to show cause why Defendants GE Financial Assurance

Company, Phoenix Home Life Mutual Insurance Company, The Sonoma

National Bank Group Long Term Disability Plan and Sonoma National

Bank should not be sanctioned for failure to comply with the

Court’s March 28, 2006 Order Granting Plaintiff’s Motion for

Judgment (hereinafter the March 28, 2006 Order). Defendants have

responded to the order to show cause. Plaintiff separately moves

pursuant to 29 U.S.C. § 1132(g) for an award of attorneys’ fees. 

Defendants oppose the motion for attorneys’ fees. The matters were

decided on the papers. Having considered all of the papers filed

by the parties, the Court denies Plaintiff’s application for an

order to show cause and grants Plaintiff’s motion for attorneys’

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United States District Court

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fees, as described below. 

BACKGROUND

The present dispute is related to Plaintiff’s first lawsuit

against Defendants in this Court, King v. GE Financial Assurance

Co., No. C 02-4144 (King I) for violations of his rights under the

Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq.

(ERISA). In that action, the Court found that Defendants abused

their discretion by terminating Plaintiff’s long-term disability

benefits. King I, Oct. 8, 2003 Order Granting Plaintiff’s Mot. for

J. and Denying Defs.’ Cross-Mot. at 11. The Ninth Circuit affirmed

this finding, and its mandate was spread on July 14, 2005. 

Subsequently, Defendants paid Plaintiff the total amount of

the judgment. Without giving Plaintiff notice of a decision to

terminate his benefits again, however, Defendants refused to pay

any further benefits for the period after August 31, 2003. 

Plaintiff filed this second lawsuit (King II) on August 26, 2005,

seeking to enforce the Court’s October 8, 2003 King I order in his

favor. 

This King II lawsuit was resolved by cross-motions for

judgment pursuant to Federal Rule of Civil Procedure 52. The Court

found that Defendants’ failure to continue paying Plaintiff’s

benefits, in the absence of a new determination that he was not

disabled, violated the clear implication of the King I judgment. 

The Court ordered Defendants to pay Plaintiff’s benefits from

September 1, 2003, and to continue to pay them unless and until

Defendants acquired sufficient evidence that Plaintiff is no longer

disabled, and terminated his benefits in accordance with the policy

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and ERISA. March 28, 2006 Order at 7. The Court also awarded

Plaintiff pre- and post-judgment interest and attorneys’ fees and

costs. Id. 

On March 29, 2006, Plaintiff’s attorney, Julian M. Baum, wrote

to Defendants notifying them of the Court’s order and asking them

to tender the full payment on or before April 4, 2006. March 29,

2006 Letter from Mr. Baum to Kevin P. McNamara and Michael W.

Melendez. Defendants’ counsel responded that additional

information regarding Plaintiff’s sources of income would be

required in order to calculate the actual benefits to which he was

entitled. April 4, 2006 Letter from Mr. Melendez to Mr. Baum. Mr.

Melendez quoted the “Calculation of The Monthly Benefit” portion of

the Plan, which states, 

The Monthly Benefit will be payable subject to all the terms

of the policy, including, but not limited to, the reductions

for Other Income. If you are Partially Disabled, the Monthly

Benefit will be payable in accordance with the REHABILITATION

part of the Certificate. 

The Plan's section on “Other Income” lists categories of benefits

or amounts that are considered other income, including worker's

compensation; disability benefits under a compulsory benefit law;

other disability benefits; employer-funded retirement benefits;

Social Security retirement or disability benefits; and income from

a formal or informal salary continuance plan. Ex Parte Appl.,

Insurance Policy Excerpts, RE060. The Plan goes on to state,

We will only consider as Other Income that amount which, when

added to your Gross Monthly Benefit, exceeds 100% of your

Basic Monthly Earnings. By Gross Monthly Benefit we mean the

amount of your Monthly Benefit prior to any reductions by

Other Income.

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Id. Part of the definition of the term “partially disabled” is

that an individual be able to perform at least one material duty on

either a full-time or a part-time basis; “part time basis,” in

turn, means a “regular work schedule of fewer than 30 hours per

week.” Id. at RE055, RE057. 

Mr. Melendez asked for copies of Plaintiff’s past State and

federal tax returns, financial records demonstrating all income

derived from Plaintiff’s farm, and information “regarding all other

sources of income generated from any of his activities.” Mr. Baum

responded to the letter the same day, stating that Plaintiff had

had no earnings since 2003 and that the rehabilitation portion of

the Plan cited by Mr. Melendez was inapplicable. Mr. Baum asked

Mr. Melendez to inform him “immediately” if Defendants would comply

with the Court’s March 28, 2006 order, and notified him that

otherwise Plaintiff intended to file an ex parte application for an

order to show cause. Mr. Melendez left Mr. Baum a voice message on

April 5, 2006, stating that he would discuss the matter with his

clients and respond in the next couple of days. Baum Decl. ¶ 12. 

Plaintiff filed his application on April 6, 2006 without further

communication with Defendants. Mr. Melendez again wrote to Mr.

Baum, stating that Defendants intended to pay Plaintiff’s benefits

subject to a reservation of rights, but reiterating the request for

additional financial information. April 7, 2006 Letter from Mr.

Melendez to Mr. Baum. On April 10, Plaintiff served a notice of

deposition of a corporate defendant under Federal Rule of Civil

Procedure 30(b)(6), scheduled for April 25, 2006. Baum Supp. Decl.

¶ 6. 

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On April 20, Defendants sent Plaintiff a check in the amount

of $34,333.75, “in full payment of the back benefits ordered by

this Court, plus interest.” Melendez Supp. Decl. ¶ 2. The check

was provided subject to a “full reservation of rights and

defenses.” Id., Ex. A, April 20, 2006 Letter from Mr. Melendez to

Mr. Baum. Defendants also informed Plaintiff that he had been

placed back “on claim,” meaning that he would be receiving monthly

disability benefits. After some negotiation, Plaintiff agreed to

cancel the Rule 30(b)(6) deposition. Baum Supp. Decl. ¶¶ 7-8. 

In Mr. Baum’s reply declaration, however, he claims that the

$34,333.75 is only a partial payment. He reasons that the terms of

the Plan allow Defendants to offset their disability benefit

obligations by the amount of Social Security Disability (SSD)

benefits only if the SSD benefits plus the Plan benefits are more

than Plaintiff's former basic monthly earnings. Mr. Baum states,

on information and belief, that the total of the SSD benefits

Plaintiff currently receives and the amount owed by Defendants does

not equal or exceed 100 percent of his former monthly earnings at

Sonoma National Bank, and thus the SSD payments cannot be used to

offset Defendants’ disability benefit obligations. Id. ¶ 9(b). 

In support of Plaintiff's motion for attorneys’ fees, Mr. Baum

submits a billing statement reflecting $60,515.75 in attorneys’

fees incurred by him and his partner, Robert C. Weems, in the King

II litigation. In addition, Michael J. Rubino submits a billing

statement reflecting $10,918.60 in attorneys' fees incurred in King

II. Mr. Rubino states that he was retained to assist in

Plaintiff's representation in order to provide independent advice

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to Plaintiff because of Defendants' contention that Baum & Weems

"erred in its professional advice and duties to plaintiff, such

that this suit was completely barred by the doctrine of res

judicata." Rubino Decl. ¶ 3. 

DISCUSSION

I. Application for Order to Show Cause

Plaintiff’s application for an order to show cause why Defendants

should not be sanctioned for failure to comply with the Court’s

March 28, 2006 order is mooted in part by Defendants’ agreement to

pay at least a portion of the benefits owed. 

However, the parties continue to dispute the proper

calculation of benefits. Specifically, they appear to dispute

whether Plaintiff’s Social Security Disability benefits may be used

to offset the long-term disability benefits under the Plan. The

parties also dispute whether Plaintiff must at this time provide

Defendants with documentation of his income, and if so the extent

of the required documentation. 

Because Defendants have made a substantial, although possibly

partial, payment and have reinstated Plaintiff's benefits, the

motion for an order to show cause is denied. Because Plaintiff's

reply brief raises significant new issues, which Defendants have

not had an opportunity to address, these remaining disputes are not

appropriate for adjudication at this time. Within two weeks of the

date of this order, Defendants may file a surreply addressing these

remaining disputed issues. However, if Defendants allege that

Plaintiff is only partially disabled and maintains a regular work

schedule of less than thirty hours a week, Defendants must make a

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new determination, in accordance with the Plan and based on

sufficient evidence, that Plaintiff is no longer completely

disabled. See March 28, 2006 Order at 4-5. 

The denial of Plaintiff’s application for an order to show

cause is without prejudice to renewal. Any renewed application

will be decided on the papers. 

II. Attorneys’ Fees and Costs

A. Applicable Law

In the Ninth Circuit, reasonable attorneys' 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

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.

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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 attorneys' 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).

B. Analysis

As a preliminary matter, Defendants argue that Plaintiff has

failed properly to state a demand for attorneys' fees because he

has not complied with Civil Local Rule 54-6(a), which requires

counsel to "meet and confer for the purpose of resolving all

disputed issues relating to attorney's fees before making a motion

for award of attorney's fees." In this case, however, the Court

had already determined that Plaintiff would be entitled to an award

of attorneys' fees, and Defendants' opposition does not suggest

that a meeting now would be fruitful. Therefore, the Court will

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not order Plaintiff to comply with Rule 54-6(b)'s meet and confer

requirement. 

1. Baum & Weems Hourly Rates

Defendants generally suggest that Mr. Baum's rate is excessive

because the overall amount of fees requested exceeds Plaintiff's

recovery. The Court notes that the amount of Plaintiff's recovery

is still subject to dispute, and that Defendants' analysis fails to

account for the value of reinstatement of benefits. However, even

assuming that the attorneys' fee award is double that of

Plaintiff's recovery, it would still be reasonable under the

circumstances here, where Defendants' own intransigent conduct has

necessitated a duplicative action. Furthermore, as the Court noted

in its order awarding attorneys' fees in King I, failure to award

full fees in small cases would make it difficult for plaintiffs in

such cases to obtain their benefits. King I, June 14, 2004 Order

Granting Pl.'s Mot. for Recovery of Att'ys Fees and Costs 9-10. 

This Court has previously found rates of $395 and $350 per

hour to be reasonable in the San Francisco Bay Area market for Mr.

Baum and Mr. Weems, respectively, in light of each attorney’s

education, experience, knowledge and qualifications, for work done

in connection with another ERISA case in 2003 and 2004. See Order

Granting Pl.’s Mot. for Att’ys Fees, May v. Metro. Life Ins. Co.,

No. C 03-5056 CW (N.D. Cal., Apr. 7, 2005). 

Here, Plaintiff has submitted additional declarations showing

that Mr. Baum and Mr. Weems' rates have increased to $415 and $400

per hour, respectively. Gregory L. Surman, a former partner with

the law firm of Gibson, Dunn & Crutcher, declares that he considers

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Mr. Baum to be a highly skilled ERISA litigation attorney, and

that, on information and belief, Mr. Baum and Mr. Weems' hourly

rates are within the prevailing market rates charged by skilled

ERISA counsel in the San Francisco and Los Angeles areas. 

Defendants object to Mr. Surman's declaration on the grounds

that his statements regarding ERISA attorneys' rates are based on

"information and belief." However, Defendants submit no evidence

in the form of declarations or affidavits that the hourly rates

represented in Plaintiff's declarations are unreasonable or

excessive. The Court finds that Baum & Weems' new hourly rates

requested by Plaintiff are reasonable in light of the prevailing

market rates for similarly skilled and experienced ERISA attorneys.

2. Number of Hours Expended by Baum & Weems

Defendants object to the hours spent by Mr. Baum after the

March 28, 2006 order granting judgment in Plaintiff's favor,

particularly to those spent on his work on the ex parte application

for an order to show cause. Even though no order to show cause was

ultimately necessary, see Section I above, the record does not show

that Defendants would have resumed payments to Plaintiff in the

absence of the application for an order to show cause or the Rule

30(b)(6) notice. The Court finds that Plaintiff's application was

not unnecessary, especially in light of Defendants’ past conduct. 

Accordingly, the Court finds to be reasonable the 2.5 hours spent

by Mr. Baum and the 0.2 hours spent by Mr. Weems relating to the ex

parte application for an order to show cause. 

Defendants provide no support for their argument that postjudgment discussions between Mr. Baum and the mediator "have

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nothing to do with the litigation for which fees are being sought." 

Mr. Baum declares that the discussions with the mediator were, in

fact, related to this litigation. Baum Decl. ¶ 2. It is clear

that the parties continue to dispute the calculation of benefits. 

Therefore, the Court finds that the 0.8 hours spent by Mr. Baum

communicating with the mediator was reasonable and is compensable. 

The Court overrules Defendants' additional objections that

certain activities were unnecessary or are not adequately

described; Baum & Weems' billing statement is sufficiently detailed

and the activities described were reasonably necessary. In total,

the Court finds that Mr. Baum reasonably spent 143.9 and Mr. Weems

reasonably spent 0.7 hours relating to this action. 

3. Mr. Rubino's Hourly Rate

Mr. Rubino's declaration details his hourly billing rate and

professional experience. He is a Phi Beta Kappa graduate of the

University of California at Los Angeles, and a 1987 graduate of

Hastings College of the Law. He has ten years of experience as an

arbitrator for the Orange County Bar Association's mandatory fee

arbitration program, and states, based on this experience, that his

requested $395 per hour rate is reasonable and within the

prevailing market rate for litigators of his experience and

training. In addition, Plaintiff submits the declaration of Donald

Hamman, the head of litigation for the law firm of Stradling,

Yocca, Carlson & Rauth, who declares that he considers Mr. Rubino

to be highly skilled and that Mr. Rubino's hourly rate is within

the prevailing market rates in southern California for lawyers of

his education and experience. 

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Defendants argue that Mr. Rubino should not be compensated at

a rate similar to Mr. Baum and Mr. Weems, because Mr. Rubino has

less ERISA experience. However, the litigation services Mr. Rubino

rendered did not include complex ERISA questions, but rather drew

on his general business litigation expertise. Defendants submit no

evidence in the form of declarations or affidavits that Mr.

Rubino's requested hourly rate is unreasonable or excessive. 

Accordingly, the Court finds that the hourly rate requested by

Plaintiff for Mr. Rubino is reasonable in light of the prevailing

market rates for similarly skilled and experienced attorneys.

4. Number of Hours Expended by Mr. Rubino

Defendants argue generally that Mr. Rubino's services were

unnecessarily duplicative of those provided by Mr. Baum. However,

Defendants identify no support for their characterization of Mr.

Rubino's services as merely duplicative "oversight." It was

reasonable for Baum & Weems to advise Plaintiff to consult with Mr.

Rubino regarding Defendants' ill-advised res judicata defense,

which alleged errors by Mr. Baum. Moreover, as Plaintiff notes,

the mere fact that two attorneys attended the Case Management

Conference and mediation or analyzed papers regarding the

dispositive motion does not mean that the two attorneys' work is

unnecessarily duplicative. In this context of this case, the Court

finds that there is no evidence of overstaffing and that the hours

spent by Mr. Rubino were reasonable. 

 However, clerical and secretarial work is not compensable as

attorneys' fees. Davis v. City and County of San Francisco, 976

F.2d 1536, 1543 (9th Cir. 1992) vacated in part on other grounds at

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984 F.2d 345 (9th Cir. 1993). The Court finds that the time Mr.

Rubino spent making arrangements to go to Oakland and checking the

availability of flights is not compensable. Therefore, the Court

reduces the number of hours for which Mr. Rubino may be compensated

by 0.4, for a total of 25.9 hours. 

CONCLUSION

In conclusion, the Court awards attorneys’ fees for 145.05

hours claimed by Mr. Baum, 0.8 hours claimed by Mr. Weems and 25.9

of the hours claimed by Mr. Rubino, at the rates requested, for a

total of $60,515.75 to Baum & Weems and $10,230.50 to Mr. Rubino. 

The Court also awards to Mr. Rubino the $530.10 requested in costs. 

Defendants shall pay these amounts forthwith. As described above,

Defendants may file a surreply of no more than ten pages within two

weeks of the date of this order. 

IT IS SO ORDERED.

Dated: 6/30/06

 

CLAUDIA WILKEN

United States District Judge

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