* This order and judgment is not binding precedent, except under the doctrines of

law of the case, res judicata, and collateral estoppel. The court generally disfavors the citation of orders and judgments; nevertheless, an order and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3. 

## F I L E D United States Court of Appeals Tenth Circuit 

### APR 3 1998 

### PATRICK FISHER Clerk UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

NELSON B. PHELPS, individuallyand as representative of all preJanuary 1, 1991, Plan Participants and Plan Beneficiaries and for the benefit of U.S. WEST RETIREE HEALTH CARE MEDICAL PLANS AND U.S. WEST RETIREE DENTAL CARE PLANS, Plaintiffs - Appellants, No. 97-1270 (D. Colorado) (D.C. No. 95-Z-2759)

v. U.S. WEST, INC., and U.S. WEST, INC., EMPLOYEES’ BENEFIT COMMITTEE,

Defendants - Appellees.

ORDER AND JUDGMENT *

Before SEYMOUR , ANDERSON , and LUCERO , Circuit Judges.1 There are actually nine retiree health care plans at issue here. SeeAppellant’s Br.

at 3-4. For purposes of clarity in this opinion, they will be referred to collectively as “the Plan.” US West is the sponsor of the Plan, and US West’s Employees’ Benefit Committee (“EBC”) is the named fiduciary and plan administrator. Id.

2 This means that generally, plan participants may visit almost any health-care provider, but they are responsible for an annual deductible and co-insurance for office visits. Plan participants are reimbursed for reasonable and customary expenses. Appellant’s App. at 201. -2- Nelson B. Phelps appeals from the district court’s denial of his motion for attorney’s fees under the Employee Retirement Incom e Security Act (“ERISA”) § 502(g)(1), 29 U.S.C. § 1132(g)(1). Phelps argues on appeal that the district court abused its discretion in denying his motion f or attorney’s fees because he was the “prevailing party” in the litigation, and t he factors used in determining whether to grant attorney’s fees under § 502(g)(1) weigh in his favor. We affirm.

BACKGROUND In March 1990, Mr. Phelps retired from his position as an Executive Director of US West Human Resources. When he retir ed, Phelps, along with approximately 30,000 other former US West employees who retired prior to January 1, 1991, was covered by the US West Health Care Medical Plan (“the Plan”). 1 The Plan is a traditional indemnity plan, 2 and at the time he retired, Phelps was assured by US West representatives that “US West was committed to-3-

providing . . . health and dental care benefits for life and that the level of coverage would not be reduced.” Appellant’s Br. at 4. Five years after Phelps retired, however, US West b egan what Phelps perceived as a concentrated campaign “to enroll the 30,000 pre-’91 retirees in Health Maintenance Organizations (‘HMOs’).” Appell ant’s Br. at 5. Phelps viewed the use of HMOs as a reduction in the level of his health care and became concerned that none of US West’s guarantees of life time unreduced indemnity plan coverage were memorialized in the governing Pl an documents. In particular, Phelps was concerned by the Plan’s reservation-of-r ights clause, which stated that US West “reserves the right to terminate or amend [ the Plan] at any time with respect to any or all classes of current or future Participants (including Retired Employees), subject to applicable limitations of th e law.” Appellant’s App. at
114. Because of his concern, in August 1995, Phelps file d a class-wide administrative claim with the EBC, demanding that t he EBC obtain a resolution from the US West, Inc., Board of Directors formally acknowledging that US West was contractually bound not to reduce or eliminate lifetime health coverage for pre-1991 retirees. Appellant’s App. at 117. Phelp s also demanded that the EBC amend the Plan by eliminating the reservation-of-ri ghts clause and inserting language memorializing its commitment to the pre-19 91 retirees. Id. Then, in3 US West’s traditional administrative procedure allows the company 90 days to

respond to administrative claims. Appellant’s App. at 214. Although he was aware of the general 90-day response period, Appellant’s App. at 261, Phelps filed his lawsuit in federal court after only 75 days. Phelps asserts that he was not required under ERISA to exhaust administrative remedies because his claim was not a claim for payment of benefits. Appellant’s Br. at 6 n.1. -4- November, before receiving a response to his admini strative claim, 3 Phelps filed a federal class action suit against US West under ERI SA § 502(a)(3)(B), 29 U.S.C. § 1132(a)(3)(B), seeking injunctive relief and an o rder declaring the rights of all pre-1991 retirees to lifetime, unreduced indemnity- plan coverage. About a week after Phelps filed his lawsuit, the EB C denied his administrative claim because it had “no authority t o require the US West, Inc. Board of Directors to issue resolutions of any natu re.” Appellant’s App. at 215. The EBC nevertheless assured Phelps that “[g]iven t hat the Company has clearly, publically [sic], and continually acknowledged its health care commitment to pre1991 retirees, the Plan will be amended to formaliz e this long-standing commitment.” Id. Phelps’ appeal of this decision was denied. Approximately two months later, in January 1996, US West formally amended the Plan’s language to guarantee unreduced lifetime indemnity plan coverage to every employee that retired prior to 19 91. Phelps nevertheless proceeded with his lawsuit because he remained conc erned that language in the4Phelps complains that although the Magistrate Judge originally granted an

evidentiary hearing, he subsequently vacated the evidentiary hearing and then denied Phelps’ demand for permission to supplement the briefs by submitting additional exhibits (although he did allow Phelps to supplement his briefs with additional authority). See Appellant’s Br. at 24 n.5; Appellant’s App. at 312-13, 320, 339. Because each party filed a substantial number of affidavits and exhibits, seeAppellant’s App. at 73-280, 285-309, and because Phelps’ request to supplement was made more than a year after briefing was completed and included many exhibits already in the record, we cannot say that the Magistrate Judge erred in his decision to not consider further evidence. SeeFlorence Nightingale Nursing Serv. Inc. v. Blue Cross/Blue Shield of Alabama , 41 F.3d 1476, 1485 (11th Cir. 1995) (stating that evidentiary hearings are not required on the attorney’s fee issue). Phelps also complains that because the Magistrate Judge did not comment on Phelps’ affidavit in his recommendation, he must not have even considered it. Appellant’s Br. at 23. We find this assertion unpersuasive. -5- amendment allowed US West to freeze “reasonable and customary charge reimbursement schedules” at January 1996 values. Finally, in February 1996, during the deposition of the Secretary of the EBC, US West resolved Phelps’ lingering question re garding the reimbursement schedules, and the parties entered into a stipulati on of dismissal. The next day, Phelps filed a motion seeking attorney fees of $27, 072.50 pursuant to ERISA § 502(g)(1), 29 U.S.C. § 1132(g)(1), and requesting an evidentiary hearing. Appellant’s App. at 61. The district court referre d the matter to a Magistrate Judge. After extensive briefing and the submission of evid ence, 4 the Magistrate recommended that the district court deny Phelps’ mo tion for attorney fees because-6-

Phelps was not the prevailing party in the litigati on and because the factors used to determine whether to grant attorney’s fees under § 502(g)(1) did not weigh in his favor. Appellant’s App. at 342-44. After cons idering Phelps’ objections to the Magistrate’s recommendation and US West’s respo nse, the district court adopted the Magistrate’s recommendation and denied Phelps’ motion for attorney’s fees. Phelps filed a timely notice of appeal.

DISCUSSION We review the district court’s decision whether to award attorney’s fees for an abuse of discretion and will reverse “only upon reaching ‘a definite conviction that the court, upon weighing relevant factors, cle arly erred in its judgment.’” Thorpe v. Retirement Plan of Pillsbury Co. , 80 F.3d 439, 445 (10th Cir. 1996) (quoting Gordon v. United States Steel Corp. , 724 F.2d 106, 108 (10th Cir. 1983)). ERISA provides that in any action brought by an ERI SA plan participant, “the court in its discretion may allow a reasonable attorney’s fee and costs of action to either party.” ERISA § 502(g)(1), 29 U.S .C. § 1132(g)(1). Although the statute is not express on this point, most courts, including this one, have interpreted ERISA to allow an award of attorney’s f ees only to prevailing parties. See, e.g. , Kaiser Steel Corp. v. Mullins , 455 U.S. 72, 89 n.14 (1982); Arfsten v.5 In the case cited by Phelps, we held that material misrepresentations about future

plan offerings do not constitute a breach of fiduciary duty under ERISA unless the misrepresentations were made after the employer had “seriously considered” the future offering. SeeHockett v. Sun Co. , 109 F.3d 1515, 1522-24 (10th Cir. 1997). The “serious consideration” standard, as defined in Hockett , is inapplicable here. -7- Frontier Airlines, Inc. Retirement Plan for Pilots , 967 F.2d 438, 442 n.3 (10th Cir. 1992); Martin v. Blue Cross & Blue Shield of Va., I nc. , 115 F.3d 1201, 1210 (4th Cir.) (collecting cases), cert. denied , 118 S. Ct. 629 (1997). But see Tourangeau v. Uniroyal, Inc. , 101 F.3d 300, 308 n.6 (2d Cir. 1996). Phelps argues that he was the prevailing party beca use US West did not begin “serious consideration” of the Plan amendmentuntil after he filed his administrative claim and lawsuit. Appellant’s Br. at 28-30. 5 The burden here, however, is not on US West to show prior “serious c onsideration.” Rather, because the suit was disposed of without full litig ation on the merits, the burden was on Phelps to show that his suit was a “catalyst ” or “material factor” in obtaining concessions from US West and that US Westdid not act for “wholly gratuitous” reasons in response to his suit. See Hooper v. Demco, Inc. , 37 F.3d 287, 292 (7th Cir. 1994) (quotations omitted). While the timing of the amendment, as outlined abov e, may indirectly support Phelps’ claim that he was the prevailing pa rty, the evidence as a whole does not. For example, although Phelps presented t he affidavit of a Retiree Advisory Board member, stating the Manager of Healt h Care Administration,-8-

Marie Serold, had admitted that the Plan amendment was caused by Phelps’ lawsuit, Appellant’s App. at 90, US West presented the equally convincing affidavit of Marie Serold herself, supported by the affidavit of another Retiree Advisory Board member, stating that Serold had not attributed the Plan amendment to Phelps’ lawsuit. Appellant’s App. at 230-31, 279. And although Phelps presented a letter written by the President and CEO of US West Communications, Inc., which stated that less than 2 4 hours after Phelps’ lawsuit was filed, US West polled the EBC members and reach ed an agreement to amend the Plan, Appellant’s App. at 123, US West presente d the affidavit of the EBC’s Secretary, which clarified that US West had been co nsidering how to best resolve this very issue since the spring of 1995 and was no t motivated to act by Phelps’ lawsuit. Appellant’s App. at 202-03. On the record as a whole, we cannot say that the di strict court abused its discretion in determining that Phelps did not cause US West to amend the Plan and thus was not the prevailing party in the litiga tion. Because we conclude that Phelps did not meet the threshold requirement of sh owing he was the prevailing party, it is unnecessary for us to reach Phelps’ ar gument that the factors used to6Because the granting of attorney’s fees under ERISA is not to be done as a matter

of course, in Gordon v. United States Steel Corp. , we specified five nonexclusive factors to guide the district court’s decision. These factors are: (1) the degree of the opposing parties’ culpability or bad faith; (2) the ability of the opposing parties to personally satisfy an award of attorney’s fees; (3) whether an award of attorney’s 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. Gordon , 724 F.2d at 109. Here, the Magistrate Judge analyzed the Gordonfactors and found they did not weigh in Phelps’ favor. SeeAppellant’s App. at 342-44. We have reviewed the record, and if we were to address this issue, we could not say the Magistrate Judge’s view of the evidence is unreasonable or unsupported.

7US West also argues that Phelps’ underlying claim was either unripe because US West had never reduced or threatened to reduce the pre-1991 retirees’ health benefits, is now moot because of the January 12, 1996, Plan amendment, or is barred by ERISA’s three-year statute of limitations because Phelps should have been aware of the reservation-of-rights clause when he retired in 1990. Appellee’s Br. at 13-15, 21 (citing ERISA § 413(2)). Because we are affirming the district court’s denial of Phelps’ attorney’s fees, it is unnecessary for us to address these jurisdictional issues concerning the underlying action. SeeNorton ex rel. Chiles v. Mathews , 427 U.S. 524, 532 (1976) (stating that the Court has reserved difficult questions of jurisdiction “when the case alternatively could be resolved on the merits in favor of the same party”). -9- determine whether to grant attorney’s fees under ER ISA to prevailing parties weigh in his favor. 6

CONCLUSION We conclude that the district court did not abuse i ts discretion in denying Phelps’ motion for attorney fees. 7-10-

AFFIRMED.
ENTERED FOR THE COURT

Stephen H. Anderson Circuit Judge