Court Opinion

ID: 3004473
Source: CourtListenerOpinion
Date Created: 2015-09-24 22:57:22.540669+00
Date Added: 2024-06-11T12:42:39.025820
License: Public Domain

In the

United States Court of Appeals
              For the Seventh Circuit

Nos. 10-1889 & 10-3083

L ISA P AKOVICH,
                                             Plaintiff-Appellee,
                              v.

V ERIZON LTD P LAN,
                                         Defendant-Appellant.

            Appeal from the United States District Court
                 for the Southern District of Illinois.
      No. 3:09-cv-00090-MJR-PMF—Michael J. Reagan, Judge.

        A RGUED A PRIL 6, 2011—D ECIDED JULY 22, 2011

 Before F LAUM, E VANS, and T INDER, Circuit Judges.
  F LAUM, Circuit Judge. This case comes to us for a
second time. Lisa Pakovich worked as a retail sales repre-
sentative for Verizon when she became disabled and
sought long-term disability benefits under Verizon’s
ERISA plan (“the Plan”) after a series of back surgeries.
On the first appeal, we reversed the district court’s deci-
sion that Pakovich was ineligible for long-term dis-
ability benefits after the first twenty-four months and
2                                   Nos. 10-1889 & 10-3083

remanded to Broadspire Services, Inc., the Plan Adminis-
trator, to determine her eligibility for benefits during
that time period.
  Having not heard from the Plan for almost five
months, Pakovich again filed suit under ERISA, this time
claiming that the Plan’s silence constituted a deemed
denial of her benefit claim. She requested disability
benefits pursuant to ERISA § 502(a)(1)(B), 29 U.S.C.
§ 1132(a)(1)(B), and attorney fees pursuant to ERISA
§ 502(g), 29 U.S.C. § 1132(g). A little over a month
later, the Plan informed her that it would pay the benefits
she requested in her complaint and shortly thereafter
moved to dismiss the case as moot. The district court
denied the motion, issued a judgment against the Plan
for the exact amount it had agreed to pay Pakovich, and
later denied Pakovich’s motion for fees.
  We vacate the district court’s decision granting
Pakovich summary judgment on her benefit claim, but
affirm its denial of her fee request.

                      I. Background
  Pakovich initially filed suit under ERISA § 502(a) against
Broadspire, seeking long-term disability benefits from
the ERISA Plan after Broadspire determined that she
was no longer entitled to them (“Pakovich I”). The district
court concluded that Broadspire’s decision to terminate
Pakovich’s long-term disability benefits under the “own
occupation” standard (under which Pakovich must
have been unable to perform the essential functions of
Nos. 10-1889 & 10-3083                                      3

her sales position with Verizon to receive benefits) was
arbitrary and capricious, and thus that Pakovich was
entitled to disability benefits for the first twenty-four
months. It further found that she was not entitled to
disability benefits beyond twenty-four months because
she did not qualify under the “any occupation” standard
(under which benefits were available only if Pakovich
was disabled from all occupations). It thus awarded
Pakovich benefits from May 14, 2004, through July 16,
2004, but denied benefits beyond July 16.
  On appeal, we reversed the district court’s decision that
Pakovich was ineligible for benefits beyond twenty-four
months and remanded to the Plan Administrator to
determine her eligibility for benefits during that time
period. Pakovich v. Broadspire Servs., Inc., 535 F.3d 601, 607
(7th Cir. 2008). We also denied her request for attorney
fees, costs, and expenses incurred on appeal. Id. We
issued our opinion on July 24, 2008, and the district court
remanded Pakovich’s claim to the Plan Administrator
on September 4, 2008.
   Having not heard whether the Plan would pay “any
occupation” benefits for almost five months, Pakovich
filed a second suit (“Pakovich II”) on January 30, 2009,
under ERISA § 502(a)(1)(B), this time against the Plan,1
claiming that the Plan’s failure to determine her benefits
between September 4, 2008, and January 29, 2009, con-

1
  The suit was originally filed against Broadspire, Verizon
Communications, Inc., and AETNA Insurance Company, but
the Plan was later substituted as the proper defendant.
4                                  Nos. 10-1889 & 10-3083

stituted a “deemed denial” of her benefits claim. She
sought all the benefits to which she was entitled under
the terms of the Plan, interest on all unpaid amounts, and
legal fees, costs, and expenses incurred in pursuing
the case.
  On March 6, 2009, a little over a month after filing
Pakovich II, Pakovich’s counsel learned from the Plan’s
claim handler that the Plan had agreed to pay her “any
occupation” benefits from July 15, 2004. On April 7, 2009,
Pakovich was sent a letter with a check that paid back
benefits and past due interest owed since 2004. The
letter also indicated that Pakovich would continue to
receive benefits from the Plan as long as she remained
qualified. The payments compensated Pakovich for
the entire amount she sought for her benefit claim in
Pakovich II.
  On April 14, 2009, the defendants in Pakovich II filed
a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(1) for lack of subject matter jurisdiction,
arguing that the case was moot because the Plan had
paid the benefits Pakovich sought in her complaint and
agreed to continue paying them in the future as long as
she remained eligible. After the district court denied
the motion, Pakovich filed a motion for summary judg-
ment that sought monthly benefits in the amount the
Plan was already paying her and attorney fees. The
Plan cross-moved for summary judgment.
  On March 24, 2010, the district court granted summary
judgment for Pakovich, concluding that she was disabled
under the “any occupation” standard and ordering the
Plan to pay Pakovich disability benefits on a monthly
Nos. 10-1889 & 10-3083                                    5

basis until she turned sixty-five years old or Verizon,
consistent with the terms of the Plan and ERISA, deter-
mined that Pakovich was no longer entitled to the bene-
fits. The district court denied Pakovich’s request
for attorney fees in a separate opinion and later rejected
her Rule 60 motion to reconsider that decision.
  The Plan appeals the district court’s decision that
Pakovich’s benefit claim was not moot, and Pakovich
appeals the district court’s denial of her request for fees.
After briefly discussing jurisdiction, we review each
argument in turn.

                      II. Discussion
A. Appellate Jurisdiction
   Briefing came in two rounds, the first addressing the
district court’s mootness decision, the second regarding
its denial of Pakovich’s motion for fees. The first briefs
debate whether the matter was a final order under
28 U.S.C. § 1291 when the district court had yet to rule
on Pakovich’s motion for fees. This case comes to us as
one consolidated appeal with nothing pending in the
district court. We thus exercise jurisdiction pursuant to
28 U.S.C. § 1291.

B. Mootness
  Pakovich’s complaint in Pakovich II seeks long-term
disability benefits under a deemed denial theory—claiming
that the Plan had not notified Pakovich of whether
6                                   Nos. 10-1889 & 10-3083

she was eligible for benefits under the “any occupation”
provision almost five months after the district court
remanded her case to the Plan Administrator—and legal
fees under ERISA § 502(g), ERISA’s fee-shifting provi-
sion. Despite the fact that the Plan had paid Pakovich
the benefits she requested in her complaint and agreed
to continue paying into the future, the district court
determined that Pakovich’s claim for benefits was not
moot. It then granted Pakovich summary judgment on
her benefits claim, ordered the Plan to pay her long-
term disability benefits, and later denied Pakovich’s
request for attorney fees.
  On appeal, the Plan argues that the district court
lacked subject matter jurisdiction because the case was
moot after it agreed to pay the benefits Pakovich
requested in her complaint. “ ‘Whether a case has been
rendered moot is a question of law that we review de
novo.’ ” Zessar v. Keith, 536 F.3d 788, 793 (7th Cir. 2008)
(quoting Fed’n of Adver. Indus. Representatives, Inc. v. City
of Chi., 326 F.3d 924, 928-29 (7th Cir. 2003)). We
conclude that Pakovich’s benefit claim became moot
when the Plan paid it in full, but that the district
court retained equitable jurisdiction to adjudicate her
fee claim.
  Federal courts lack subject matter jurisdiction when a
case becomes moot. In re Repository Techs., Inc., 601 F.3d
710, 716-17 (7th Cir. 2010); Cornucopia Inst. v. U.S. Dep’t
of Agric., 560 F.3d 673, 676 (7th Cir. 2009). Accordingly,
“if an event occurs while a case is pending . . . that
makes it impossible for the court to grant any effectual
Nos. 10-1889 & 10-3083                                      7

relief whatever to a prevailing party, the [case] must be
dismissed.” Cornucopia Inst., 560 F.3d at 676 (internal
quotation marks and citations omitted). While an “entire
claim is not mooted simply because the specific relief
it sought has been rendered moot, [to avoid dismissal
based on mootness, the party seeking relief] must . . .
demonstrate that the court’s adjudication would affect
it in some way.” Id.; see also United States v. Segal, 432
F.3d 767, 773 (7th Cir. 2005) (“When making a mootness
determination, we consider . . . whether it is still
possible to fashion some form of meaningful relief to the
[plaintiff] in the event he prevails on the merits.” (internal
quotation marks and citations omitted)). Importantly,
a claim for fees cannot save a case from becoming
moot. Cornucopia Inst., 560 F.3d at 676.
  We agree with the Plan that Pakovich’s benefit claim is
moot and that the district court erred in concluding
otherwise. After Pakovich filed her complaint and
before the Plan moved for dismissal, the Plan paid
Pakovich the benefits she requested in her complaint,
including the amount she was owed at the time and the
proper amount going forward. Since Pakovich had re-
ceived everything she requested in her benefit claim,
that claim became moot and the district court lacked
jurisdiction to enter summary judgment against the
Plan. See Silk v. Metro. Life Ins. Co., 310 Fed. Appx. 138,
139-140 (9th Cir. 2009) (finding that a claim for “own
occupation” benefits became moot after the defendant
paid the benefits) (not selected for publication); see also
Cornucopia Inst., 560 F.3d at 675-76 (holding that a FOIA
claim becomes moot after the government produces all
8                                   Nos. 10-1889 & 10-3083

documents a plaintiff requests); Holstein v. City of Chi., 29
F.3d 1145, 1147-48 (7th Cir. 1994) (finding a claim moot
where the defendant offered the plaintiff all damages
to which he was entitled).
  Finding Pakovich’s benefit claim moot leaves us with
a more challenging question. Because “a claim for attor-
neys’ fees is separate from the merits of the action,”
Cornucopia Inst., 560 F.3d at 676 (citing Budinich v. Becton
Dickinson & Co., 486 U.S. 196, 200 (1988)), we must
address whether the district court retained jurisdiction
to adjudicate Pakovich’s claim for attorney fees under
ERISA § 502(g) after her underlying benefit claim
became moot. We conclude that it did.
   In the FOIA context, courts exercise equitable jurisdic-
tion to adjudicate fee claims in similar circumstances.
Specifically, when a plaintiff seeks information under
FOIA and associated attorney fees, courts retain
equitable jurisdiction to adjudicate the fee claim after
the defendant produces the requested information and
thus renders the FOIA claim moot. See, e.g., Cornucopia
Inst., 560 F.3d at 676-78; Anderson v. U.S. Dep’t of Health &
Human Servs., 3 F.3d 1383, 1385 (10th Cir. 1993) (“Dis-
missing the [FOIA] action as moot . . . did not affect plain-
tiff’s right to seek attorney’s fees; the fee request
‘survive[d] independently under the court’s equitable
jurisdiction.’ ” (quoting Carter v. Veterans Admin., 780
F.2d 1479, 1481 (9th Cir. 1986)).
  We extend our FOIA jurisprudence into the ERISA
context, and hold that where a plan participant or benefi-
ciary sues to recover benefits under ERISA § 502(a) on a
Nos. 10-1889 & 10-3083                                       9

deemed denial theory and attorney fees under ERISA
§ 502(g), and the plan pays the benefit claim in full
shortly after the plaintiff files suit, courts retain equitable
jurisdiction to adjudicate the fee claim. Were courts to
lack jurisdiction, opportunistic plans could routinely
delay deciding whether to pay benefit claims until partici-
pants and beneficiaries file suit, effectively requiring
them to incur legal costs unrecoverable under ERISA
§ 502(g) in order to receive benefits to which they are
legally entitled. In this case, if plans routinely pay bene-
fit claims in full shortly after participants and benefi-
ciaries file suit, seeking, perhaps, to avoid having to
pay the plaintiff’s costs for bringing the ERISA suit, plans
could significantly blunt ERISA § 502(g). That provision
permits certain ERISA plaintiffs who achieve “some
degree of success on the merits” of their ERISA suits to
recover the legal costs they incurred in achieving that
success. Hardt v. Reliance Standard Life Ins. Co., 130 S.Ct.
2149, 2152, 2158 (2010) (quoting Ruckelshaus v. Sierra Club,
463 U.S. 680, 694 (1983)); see also 29 U.S.C. § 1132(g).
Thus, if courts lacked jurisdiction over claims for
attorney fees in cases like Pakovich’s, a financial barrier
to seeking ERISA benefits would exist such that plain-
tiffs should sue for benefits only if their expected
recovery of benefits exceeded their legal fees. Such a
barrier would contradict one of ERISA’s primary
policies, to protect “the interests of participants in em-
ployee benefit plans and their beneficiaries . . . by pro-
viding for appropriate remedies, sanctions, and ready
access to the Federal courts.” 29 U.S.C. § 1001(b). Permit-
ting courts to exercise equitable jurisdiction thus effectu-
10                                 Nos. 10-1889 & 10-3083

ates Congress’s intent. After concluding that the
district court retained jurisdiction over Pakovich’s claim
for attorney fees, we now turn to the substance of its
decision.

C. Attorney Fees
  Pakovich requested attorney fees and costs under
ERISA § 502(g) for her appeal in Pakovich I and for the
entirety of Pakovich II. We denied her request for fees
and costs incurred on appeal in Pakovich I. After, the
district court denied her request for fees in Pakovich II
and her motion for reconsideration under Federal Rule
of Civil Procedure 60(b), which permits courts to “relieve
a party . . . from a final judgment, order, or proceeding
for . . . mistake, inadvertence, surprise, or excusable
neglect,” and, among other things, for “any other
reason that justifies relief.” FED. R. C IV. P. 60(b).
  Pakovich challenges the district court’s denial of her
fee claim under ERISA § 502(g) and her motion to recon-
sider. We review the district court’s initial decision
for abuse of discretion, Herman v. Cent. States, Se. & Sw.
Areas Pension Fund, 423 F.3d 684, 695 (7th Cir. 2005), and
“we apply an ‘extremely deferential’ abuse of discretion
standard” when reviewing the district court’s denial of
Pakovich’s motion for reconsideration, Eskridge v. Cook
Cnty., 577 F.3d 806, 808 (7th Cir. 2009) (quoting Easley
v. Kirmsee, 382 F.3d 693, 697 (7th Cir. 2004)). “Because
relief under Rule 60(b) is ‘an extraordinary remedy and
is granted only in exceptional circumstances,’ a district
Nos. 10-1889 & 10-3083                                      11

court abuses its discretion only when ‘no reasonable
person could agree’ with the decision to deny relief.”
Eskridge, 577 F.3d at 809 (quoting McCormick v. City of
Chi., 230 F.3d 319, 327 (7th Cir. 2000)).
   ERISA § 502(g)(1) provides that “[i]n any action under
this subchapter . . . by a participant, beneficiary, or fidu-
ciary, the court in its discretion may allow a reasonable
attorney’s fee and costs of action to either party.” 29 U.S.C.
§ 1132(g)(1). When the district court denied Pakovich’s
fee petition, our case law provided that only “pre-
vailing parties” were entitled to recover under ERISA
§ 502(g)(1). See, e.g., Sullivan v. William A. Randolph, Inc.,
504 F.3d 665, 670 (7th Cir. 2007). Since, the Supreme
Court held that “a fee claimant need not be a ‘prevailing
party’ to be eligible for an attorney’s fees award under
§ 1132(g)(1).” Hardt, 130 S.Ct. at 2156; see also Huss v.
IBM Med. & Dental Plan, Nos. 10-1061, 10-2749, slip op.
at 27, 2011 WL 1388543, at *12 (7th Cir. Apr. 13, 2011).
Instead, it explained that a claimant must show “ ‘some
degree of success on the merits’ before a court may
award attorney’s fees under § 1132(g)(1).” Id. at 2158
(quoting Ruckelshaus, 463 U.S. at 694). It further wrote
that “ ‘trivial success on the merits’ or a ‘purely
procedural victor[y]’ ” is inadequate, but that it is
sufficient “if the court can fairly call the outcome of the
litigation some success on the merits without con-
ducting a ‘lengthy inquir[y] into the question whether a
particular party’s success was ‘substantial’ or occurred on
a ‘central issue.’ ” Id. (quoting Ruckelshaus, 463 U.S. at 688,
n.9). Hardt did not, however, modify the second step
in evaluating a fee petition. Id at 2158 n.8. Accordingly,
12                                        Nos. 10-1889 & 10-3083

after concluding that a party has shown “some degree
of success on the merits” and is thus eligible for fees,
courts must determine whether fees are appropriate.
Huss, slip op. at 27-28, 2011 WL 1388543, at *12. To award
fees, “court[s] must find the non-prevailing party’s litiga-
tion position was not substantially justified.” Huss, slip
op. at 28, 2011 WL 1388543, at *12. Although we have
used a five-factor test to inform the “substantially justi-
fied” standard,2 the inquiry focuses on “whether the
[d]efendant[’s] litigation position was substantially justi-
fied and taken in good faith or whether [it was] out
to harass [the plaintiff].” Id. at *13, slip op. at 28.
  We affirm the district court’s denial of Pakovich’s
request for fees and costs. In its initial decision denying
fees and costs, the district court considered Pakovich
a “prevailing party,” concluded that the Plan’s opposi-
tion to Pakovich II did not meet the standard of good
faith, and ultimately found a fee award warranted. But

2
    The five factors include:
      (1) the degree of the offending parties’ culpability or bad
      faith; (2) the degree of the ability of the offending parties to
      satisfy personally an award of attorneys’ fees; (3) whether
      or not an award of attorneys’ fees would deter other
      persons acting under similar circumstances; (4) the
      amount of benefit conferred on members of the pension
      plan as a whole; and (5) the relative merits of the parties’
      positions.
Herman, 423 F.3d at 696 (internal quotation marks and citations
omitted).
Nos. 10-1889 & 10-3083                                    13

it nonetheless denied Pakovich’s fee claim based on our
denial of her request for fees on appeal in Pakovich I
and her failure to properly substantiate her claim in
Pakovich II. In particular, it explained that Pakovich
did not provide receipts, invoices, or vouchers to verify
the costs she sought. It further reasoned that there was
no documentation supporting her request for fees that
would indicate a reasonable hourly rate or the amount
of time reasonably spent on the case, among other
things. See Stark v. PPM Am., Inc., 354 F.3d 666, 674 (7th
Cir. 2004) (“The burden of proving the market rate is on
the applicant.”). It wrote that Pakovich submitted
merely an invoice showing the billing charges from her
counsel and someone referred to as “SGS,” whom the
district court could not identify. The district court was
unwilling to speculate on whether the fees and costs
were reasonable, and thus denied Pakovich’s claim.
   Pakovich then moved for reconsideration under
Rule 60(b), contending that she had substantiated her
claim in the form of an affidavit reflecting that the parties
agreed that her counsel’s rate of $300 and her paralegal’s
rate of $90 were reasonable. The district court again
denied Pakovich’s claim, this time explaining that she
had attached the affidavit as an exhibit to her motion
for summary judgment instead of her fee petition (she
filed both documents on the same day), and that her
petition did not refer the court to the affidavit filed with
her motion for summary judgment. It further noted that,
among other things, the affidavit purported to include
an exhibit reflecting the time and expenses Pakovich’s
counsel devoted to the litigation that was not attached
14                                      Nos. 10-1889 & 10-3083

to the petition, and that her petition cited to multiple
exhibits that itemized her counsel’s time, but that one
was not attached. Pakovich does not challenge these
findings on appeal.
  Thus, we need not determine whether Pakovich
achieved “some degree of success on the merits” under
Hardt or whether the Plan’s conduct was “substantially
justified.” 3 We must decide solely whether the district
court abused its discretion by denying Pakovich’s fee
claim based on our denial of fees in Pakovich I and her
inadequate filings in Pakovich II.
  Pakovich cites no authority demonstrating that the
district court abused its discretion. First, she requests
that we grant the fees from Pakovich I that we have
already denied, contending that we should reevaluate
our decision in Pakovich I in light of the Plan’s conduct
in Pakovich II. We disagree. On rehearing in Pakovich I,
we explained that “assuming . . . Broadspire Services is
the ‘loser,’ it cannot be said that its position on appeal
was simply to harass Pakovich, when it was defending
the district court’s approach to a novel issue in this Cir-

3
   That said, we recognize that exercising equitable jurisdic-
tion in cases like Pakovich’s would be unhelpful if similar
plaintiffs could not meet the standard in Hardt. We believe
that a plan participant or beneficiary achieves “some degree
of success on the merits,” and is thus eligible for attorney
fees under § 502(g), where she, as here, seeks to recover benefits
on a deemed denial theory and the plan pays the entire
amount requested shortly after the plaintiff files suit.
Nos. 10-1889 & 10-3083                                       15

cuit.” Pakovich v. Broadspire Servs., Inc., 2008 U.S. App.
LEXIS 17597, at *2 (7th Cir. Aug. 14, 2008). The fact that
the Plan engaged in more questionable conduct after
Pakovich I, which formed the basis of Pakovich II, does not
alter our conclusion that its conduct in Pakovich I was
substantially justified. Pakovich II involves a benefit claim
based on a deemed-denial theory, a theory not pursued
in Pakovich I. Further, to the extent Pakovich asks us to
overturn case law that directs courts to determine
whether the losing party’s position was “substantially
justified,” see, e.g., Huss, slip op. at 28, 2011 WL 1388543, at
*12, she provides no compelling reason for doing so. See
Mers v. Marriott Int’l Group Accidental Death & Dismember-
ment Plan, 144 F.3d 1014, 1023 n.5 (7th Cir. 1998) (“We
require compelling reasons to overturn Circuit prece-
dent.”).
  Pakovich’s arguments for fees incurred in Pakovich II
are similarly unpersuasive. First, she concedes that the
district court had discretion to deny her fee claim, but
points out that the Plan did not challenge the time her
counsel claims to have devoted to the case, her counsel’s
hourly rate, or the costs sought, and argues that the
district court thus abused its discretion in denying fees.
Pakovich misunderstands the law. The district court
was not obliged to award fees merely because the
Plan did not specifically oppose those elements of
Pakovich’s fee claim, especially when Pakovich’s fee
petition nowhere argued that a $300 rate was reasonable;
it merely used that figure to calculate its fees in one
of the exhibits attached to its petition. It was Pakovich’s
burden to present evidence of a reasonable rate, see Stark
16                                  Nos. 10-1889 & 10-3083

v. PPM Am., Inc., 354 F.3d 666, 674 (7th Cir. 2004), among
other things, and the district court had no obligation
to scour Pakovich’s filings looking for evidence that
might have satisfied that burden. Further, we disagree
with Pakovich’s contention that the Plan conceded in its
opposition to her fee petition that $300 was a reasonable
hourly rate. It merely calculated for the sake of argument
the fees to which it believed Pakovich should be entitled
if the court used the rate Pakovich requested; it did not
concede that the rate was reasonable. Finally, Pakovich’s
argument that her failure to adequately substantiate
her fee request was inadvertent and excusable under
Rule 60(b) is unhelpful. Without more, we find no
abuse of discretion.

                    III. Conclusion
  For the foregoing reasons, we V ACATE the district
court’s decision granting summary judgment for Pakovich
on her benefits claim, and A FFIRM its denial of her fee
request.

                          7-22-11