Labor, sent Bittner a request for a summary of the plan and a copy of the agreement by which the
T.owes accepled the single life annuity. Bittner sent Kay the requested documents on February
29, 2000.

On January 4, 2001, Lowe filed a pro se complaint against defendants. On July 24, 2001,
Lowe finally reccived a copy of the plan documents in anticipation of a possible settlement
conference. Lowe contacted at least fiftecn attorneys before finding one to assist him in the case.
Defendants were aware the election form in their possession did not comply with the plan
because the signatures were neither notarized nor witnessed. Defendants confirmed that proper
procedures were not followed and as a result, Lowe was entitled to collect pension benefits.

DISCUSSION

I. Legal Standard

In reviewing a magistrate judge's report and recommendation, the district court must
"make a de novo determination upon the record, or after additional evidence, of any portion of
the magistrate judge's disposition to which specific written objection has been made." Fed. R.
Civ. P. 72(b). The district court may accept, reject, or modify the recommended decision, receive
further evidence, or recommit the matter to the magistrate judge with instructions. /d.
Il. The Magistrate Judge’s Recommendations

The magistrate judge recommended that judgment be entered in favor of Lowe and
against defendants The McCiraw-Hill Companics Employee Retirement Plans and the McGraw-
{Till Companies, Inc. as follows: (i) for $277.90 per month from March 1999 through the date of
judgment plus prejudgment simple interest of 4.25%, the current prime rate per annum on each

payment; (ii) for declaratory judgment that Lowe is entitled to $277.90 per month from the plan



Accordingly, the court adopts the magistrate’s recommendation to award $19,274.64 in
allorneys’ fees.
CONCLUSION
Delendants’ objections to the magistrate judge’s report and recommendation are
overruled, The court adopts the report and recommendation in full. Geneva Lowe, SRA/LBM.

MacMillan Pension Plan, and HRSC-Retirement Plan, S-1 are dismissed as parties.

March 24, 2003 ENTER:

Conlon

Suz B. Conlon
United States District Judge


participant requested the information, and that the administrator failed to provide the
information. Kleinhans v. Lisle Sav. Profit Sharing Trust, 810 F.2d 618, 622 (7th Cir. 1987).
The court’s primary focus should be on the administrator’s conduct, not the impact on the
participant. Ziaee v. Vest, 916 F.2d 1204, 1210 (7th Cir. 1991). Other factors the court may
consider include “bad faith or intentional conduct on the part of the administrator, the length of
the delay, the number of requests made and documents withheld, and the existence of any
prejudice to the participant.” Jackson v. J. Brach Corp., 937 F. Supp. 735, 738 (N.D. Ill.
1996).

The magistrate recommended the statutory penalty of $35,050 for McGraw-Hill’s failure
to provide Lowe with the documents he requested in July and September 1999. The magistrate
based this recommendation on findings that defendants knew the election form in their
possession did not comply with the plan and acted in bad faith in refusing to provide Lowe with
basic plan documents. Defendants argue that the penalty is unwarranted because they did not act
in bad faith and Lowe was not prejudiced. Specifically, defendants maintain that their failure to
provide plan documents was justificd because (i) their information was unorganized due to their
assumption of administrative responsibility over the SRA retirement plan, and (ii) the plan
administrator believed Lowe waived survivor benefits and was not entitled to plan documents.

Defendants’ lack of organization docs not justify or excuse their failure to comply with
statutory duties. Further, defendants’ belie! that Lowe was not entitled to plan documents is
unreasonable in light of Lowe’s letters of July 24 and September 11, 1999. ‘Those letters
informed defendants that Lowe's election form copy and McGraw-Hill’s clection form copy

differed in the choice of a single life annuity or an annuity with survivor benefits. The failure to



from the date of judgment until his death; (iii) for a penalty in the amount of $35,050, consisting
of $50 per day from August 23, 1999 through July 24, 2001 (701 days); and (iv) attorneys’ [ees
and costs in the amount of $19,274.64 through the date of the evidentiary hearing on November
20, 2002, plus additional fees incurred through the date of judgment, The magistrate judge also
recommended that Geneva Lowe, SRA/IBM MacMillan Pension Plan, and HRSC-Retirement
Plan, $-1 be dismissed as parties to this action, Geneva Lowe is not party to this litigation even
though she is listed as a plaintiff in the caption. The SRA/IBM-MacMillan Pension Plan and the
HRSC-Retircment Plan, 8-1, are also listed in the caption as defendants but no longer exist as
separate entities. Defendants objected to the magistrate’s recommendation that a statutory
penalty be imposed and attorneys’ fees awarded.
Ill. The Statutory Penalty

ERISA requires plan administrators to provide pension and benefit information to
participants or beneficiaries. 29 U.S.C. § 1024. Specifically, a plan administrator “shall, upon
written request of any participant or beneficiary, furnish a copy of the latest updated [plan]
summary, plan description, and the latest annual report, any terminal report, the bargaining
agreement, trust agreement, contract, or other instruments under which the plan iy established or
operated.” 29 U.S.C. § 1024(b)(4). If the administrator does not provide the information within
thirty days, the administrator is subject to statutory penalties. 29 U.S.C. § 1132(c)(1). ‘The
district court has discretion to impose a penalty of up to $100 per day for violations of §
1132(c)(1). Harsch v. Lisenberg, 956 F.2d 651, 662 (7th Cir. 1992); 29 U.S.C, § 1132(¢)(1). To

trigger the discretionary power to impose statutory penalties under 1132(c)(1), a participant must

establish that the administrator was required to make available the requested information, that the



discrepancy in the election forms, defendants acted in bad faith in failing to respond or provide
basic plan documents to him. These failures forced Lowe to take legal action, even after working
with a representative of the U.S. Department of Labor, In addition, once Lowe filed suit,
defendants failed to respond and were found in technical default. Defendants’ behavior suggests
they would not have sent the information at all if Lowe had not filed this lawsuit. Second,
McGraw-Hill, a large conglomerate, is able to satisfy an award of attomeys’ lees. Third, the
deterrent effect of an award of altorncys’ fees and the beneficial effects on future plan
participants are substantial.

Defendants’ position was not substantially justified. As noted above, defendants were not
justified in failing to provide basic plan documents because of'a lack of organization or belief
that Lowe was not entitled to plan benefits. Defendants knew of the discrepancies in the election
forms. Rather than take action as a fiduciary to determine a beneficiary’s monthly payment,
defendants simply ignored Lowe's requests for plan documents.

Defendants argue that the full amount of attomeys’ fees is not reasonable because fees for
an expert retained to interpret the plan are included, Defendants contend the fees are unnecessary
because the magistrate ultimately rejected the expert’s opinion, The court disagrees. The partics
disputed the amount of the monthly payment awarded to Lowe under the plan. PI. Res., Ex. 5, at
34. The court accepted the witness as an expert in administering pension plans. Jd, at 56.
Although the magistrate ultimately did not adopt the expert’s view, this docs not justify

defendants’ dilatory behavior in ignoring Lowe’s repeated requests for plan information.

Defendants do not object to the reasonableness of the hourly rate charged by Lowe’s counscl.



Mines edge Fora (UOT)

United States District Court, Northern District of Illinois

Name of Assigned Judge Suvanne B. Conlon Sitting Judge if Other
or Magistrate Judge than Assigned Judge
CASE NUMBER 01C 58 DATE 3/24/2003
CASE LOWE vs. SRA/IBM MACMILLIAN PENSION PLAN
TITLE

[In the follwing box (a) indicate the party filing the motion, e.g. plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
of the motion being presented.]

MOTION:

DOCKET ENTRY:

q) oO Filed motion of [ use listing in “Motion” box above.]

(2) aa] Brief in support of motion due

(G3) o Answer brief to motion due__.. Reply to answer bricfdue__.

(4) o Ruling/Hearing on Set for = ___alt

(3) Oo Status hearing[held/continued to] [set for/re-set forlon___set for___ att

(6) im) Pretrial conference[held/continued to] [set for/re-set for] on__set fort
(7) o Trial[set for/re-set for]on at

(8) oO [Bench/Jury trial] [Hearing] held/continued to at

(9) u This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

OFRCP4(m) ClLocal Rule 41.1 COFRCP41@)\) OO FRCPA1(a)(2).

(0) of [Other docket entry] Defendants’ objections to (he magistrate judge’s report and recommendation
of December 11, 2002 [68-1] are overruled. On the court’s own motion, Geneva Lowe, SRA/IBM
MacMillan Pension Plan, and HRSC-Retirement Plan, $-1 are dismissed. The magistrate judge's report
and recommendation of 12/11/02, Doc. No. 64 is adopted in full, ENTER MEMORANDUM OPINION

AND ORDER. 4 2 Onan

(1) ff [For further detail see order attached to the original minute order.]

No notices required, advised int open court | Spocurient’,
Number:

No notices requited

puryber of notices

UV | Notices mailed by judge’s staff,

Notitied counsel by telephone MAR, 5.2003
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Docketing to mail natives

Mail AO 450) form.

| Copy to Magistrate Judge Denlow.

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respond to a surviving spouse in thesc circumstances is unjustified. Therefore, the court adopts
the magistrate’s recommendation to assess the statutory penalty of $35,050 against defendants.
The $50 per day penalty is reasonable in light of defendants’ unjustifiable withholding of basic
plan documents and failure to satisfy statutory obligations. See Hess v. Hartford Life & Accident
Ins. Co,, 91 ¥.Supp.2d 1215, 1225 (C.D, II. 2000) (imposing $50.00 per day fine when
administrator “demonstrated remarkably bad judgment and apathy toward satisfying its
unequivocal obligations”).
IV. Attorneys’ Fees

LRISA vests courts with discretion to award reasonable attorneys’ fees and costs to a
beneficiary prevailing in an action involving delinquent contributions. 29 U.S.C. § 1132(g)(1).
‘Lwo tests are applied to determine whether a prevailing plaintiff deserves an award of attorneys”
fees. Quinn v. Blue Cross and Blue Shield Ass ‘n.,, 161 F.3d 472, 478 (1998). The first test
involves five factors: (i) the degrce of the offending parties’ culpability or bad faith; (ii) the
degrce of the ability of the offending parties to satisfy personally an award of attorneys’ fees; (iii)
whether an award of attorneys’ fees would deter other persons acting under similar
circumstances; (iv) the amount of benefit conferred on members of the pension plan as a whole;
and (v) the relative merits of the parties’ positions. Jd. The sccond test looks to whether the
losing parties’ position was “substantially justified.” Jd.

The magistrate recommended thal under either test, Lowe is entitled to an award of
attorneys’ fees. This court agrees. First, defendants’ degree of culpability is high. As
administrators of the plan, defendants admit to having a fiduciary relationship with Lowe.

Although initially Lowe’s status as a bencficiary was questionable, when Lowe disclosed the



discovered an annuity election form that he and his wife signed November 23, 1992. That form
did not indicate that Mrs. Lowe had only elected a single life annuity. Lowe mailed a copy of the
Social Security notice to the MeGraw-Hill Plan administrators and requested they provide him
with claim papers to collect the benefits that may be due him from the plan. Jana Bittner,
Coordinator of MeGraw-[ill Retirement Plans, informed Lowe that his wife bad elected a single
life annuity that only provided a monthly pension during her lifetime, The letter invited J.owe to
call ifhe had questions.

Lowe called Bittner to investigate his eligibility under the plan. Th response to the call,
Bittner sent Lowe McGraw-Hill’s copy of the election form. The document was identical to
Lowe's clection form, except the form from Bittner contained a check next to the single life
option, whereas his form did not. On July 24, 1999, Lowe wrote to Bittner and explained the
election forms were different. He also requested (i) a copy of the plan, including payment
benefits and rights, (ii) the signed documents that initiated Mrs. Lowe’s benefit payments, (iii) a
signed copy of the Social Security leveling option, and (iv) a copy of the documents referred to
by Social Security indicating a payment due to Geneva Lowe’s spouse. ‘The plan administrators
did not respond.

On September 11, 1999, Lowe again requested the plan administrator to send him the
previously requested documents. In addition, he informed the plan administrator that if the
matter was not resolved by November 30, 1999, he would seek legal advice. The plan
administrator again failed to respond or provide reasonable explanation for the inaction.

Lowe then contacted the U.S. Department of Labor for assistance in obtaining copics of

the plan and related documents, On November 15, 1999, Jonathan Kay, U.S. Department of


6/8/01, Doc. No. 23. After an evidentiary hearing, the magistrate judge issued a report and
recommendation regarding Lowe’s motions for default judgment and petition for attorneys’ fees.
Minute Order of 12/11/02, Doc. No. 64, The magistrate also recommended that Geneva Lowe,
SRA/IBM MacMillan Pension Plan, and HRSC-Retirement Plan, S-1 be dismissed as parties to
this action. Jd, Pursuant to Fed. R. Civ. P. 72(b), defendants object to the magistrate’s
recommendation to award statutory penaltics and attorneys’ fees.

BACKGROUND
I. Facts

Defendants do not object to the magistrate judge's statement of facts. Thus, the court
adopts the magistratc's factual findings. United States v, Klein, 2001 WI, 16554771, at *1 (N.D.
Ill. 2001). Lowe is the surviving spouse of Geneva Lowe. Mrs. Lowe was a former employee of
Science Research Associates (“SRA”). As an employee, she was entitled to certain pension
benefits under the now-combined SRAABM-McGraw-Hill Companies Employee Retirement
Plan.

In 1994, the SRA Plan became part of the McGraw-Hill Plan. Since then, McGraw-Ilill
assumed responsibility for administering the plan. Mrs. Lowe collected monthly benefits from
the plan from 1993 until she died in January 1999, In March 1999, Annette Bell, Mrs. Lowe’s
executor, informed the plan that Mrs, Lowe died. A McGraw-Hill Plan administrator wrote Bell
and provided a copy of a form that indicated Mrs. Lowe elected a single Jife annuity providing
for monthly payments only during her lifetime. The plan payments ceased.

Lowe subsequently received notice from the Social Security Administration that he may

be entitled to pension benetits from the plan. In reviewing his wile’s plan documents, Lowe



JN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
LASTERN DIVISION

GENEVA LOWE and GEORGE LOWE,

Plaintiffs, No. 01 € 58

v. Suzanne B. Conlon, Judge
SRA/IBM MACMILLAN PENSION PLAN
HRSC-RETIREMENT PLAN, 8-1, THE
MCGRAW-HILL COMPANIES EMPLOYEES
RETIREMENT PLAN and THE MCGRAW-HILL
COMPANIES,

DOCKETED

MAR 25 2003

eee eee eee ed

Defendants.

MEMORANDUM OPINION AND ORDER

Gcorge Lowe (“Lowe”) sued SRA/IBM Macmillan Pension Plan, HRSC Retirement
Plans, the McGraw-Hill Employee Retirement Plan, and McGraw-TIill Companies, Inc.
(collectively, “defendants”). Lowe sought declaratory judgment, recovery of benefits, and fees
and costs pursuant to the Employee Retirement Income Sccurity Act of 1974 (“ERISA”), 29
U.S.C. § 1132, ef seg. Lowe’s motion for an order of default for failure to appear or answer was
granted in part. Minute Order of 4/24/01, Doc. No. 12. The court found defendants in technical
default and ordered prove-up documents to be submitted. fd. Lowe filed a memorandum and
affidavit in support of his request for damages, fees, and costs. On May 24, 2001, the court
inadvertently entered default judgment against defendants. Minute Order of 5/24/01, Doc. No.
20, On defendants’ motion, entry of judgment was vacated pursuant to Fed. R. Civ. P. 60(a).
Minute Order of 3/5/03, Doc. No. 78. The court referred Lowe’s motion for entry of judgment
and request for attorneys’ fees to a magistrate judge. Minute Orders of 6/4/01, Doc. No. 22;

1

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