Free Motion for Attorney Fees - District Court of Arizona - Arizona

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LAW OFFICES MOHR, HACKETT, PEDERSON, BL AKLEY & RANDOLPH, P.C.
2800 NORTH CENTRAL AVENUE, SUITE 1100 PHOENIX, ARIZONA TELEPHONE FACSIMILE 85004-1043 (602) 240-3000 (602) 240-6600

(AZ BAR FIRM NO. 0046600)

Robert C. Hackett (AZ Bar No. 001588) ([email protected]) Daniel P. Beeks (AZ Bar No. 012628) ([email protected])

Attorneys for Defendant Metropolitan Life Insurance Company

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

Sybol Terrell-Sims, a married woman,

) ) Plaintiff, ) ) v. ) ) American Express Company, (MetLife), ) a New York Corporation, and ) ) Metropolitan Life Insurance Co., a ) Tennessee Company, ) ) Defendant. ) )

No. CV 03-1340 PHX SRB DEFENDANT METROPOLITAN LIFE INSURANCE COMPANY'S MOTION FOR AWARD OF ATTORNEYS' FEES AND RELATED NON-TAXABLE EXPENSES

Pursuant to Local Rule of Civil Procedure 54.2(b) and 29 U.S.C. §1132(g)(1), defendant Metropolitan Life Insurance Company ("MetLife") requests that this Court award MetLife its attorneys'' fees and related non-taxable expenses (collectively "Fees"). Applicable Judgment MetLife seeks to recover its Fees in connection with the judgment entered by the Court on May 19, 2006. This judgment was in turn based on the Court's findings of fact and conclusions of law, and order similarly dated May 19, 2006. In paragraph 29 of its conclusions of law, the Court held that "No award will be

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made except upon motion filed in accordance with LRCiv. 54.2 and upon briefing of the standard for award of fees and costs to a prevailing plan fiduciary." Statutory Authority Entitling MetLife to the Award MetLife seeks to recover its Fees in this ERISA action pursuant to 29 U.S.C. §1132(g)(1), which grants discretion to the Court to award attorneys' fees and costs. This statute provides in relevant part that "in any action under this subchapter . . . by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney's fee and costs of action to either party." Fair Estimate of Amount of Fees Pursuant to LRCiv. 54.2(b)(2), MetLife will file its memorandum of points and authorities in support of this motion, and all supporting documentation required by LRCiv. 54.2(d) within 60 days following the entry of May 19, 2004 judgment. For purposes of the present motion, MetLife estimates that the amount of its request will be slightly in excess of $20,500.00. As of May 31, 2006, MetLife had incurred Fees and related expenses as follows:
Date of Bill 01/27/04 04/28/05 11/22/05 02/27/06 05/31/06 06/05/06 Totals Hours 16.5 21.3 7.4 17.3 45.8 2.0 110.3 Fees 2,887.50 3,727.50 1,295.00 3,027.50 8,015.00 350.00 19,302.5 Disbursements 47.26 136.88 42.88 34.99 610.96 8.00 881.0 Total 2,934.76 3,864.38 1,337.88 3,062.49 8,625.96 358.00 20,183.5

In addition to the above amounts, MetLife has incurred Fees in preparing this motion, and anticipates incurring additional Fees in preparing its memorandum of points and authorities and supporting documentation required by LRCiv. 54.2(c) and (d).

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Standard for Award of Fees and Costs to a Prevailing Plan Fiduciary1 In its conclusions of law, the Court requested additional briefing regarding the standard for deciding whether to award fees and costs to a prevailing plan fiduciary in an ERISA action. In order to determine the appropriateness of an award of Fees in an ERISA action, the court should generally consider five factors: (1) the degree of the opposing parties' culpability or bad faith; (2) the ability of the opposing party to satisfy an award of fees; (3) whether an award of fees . . . 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, 453 (9th Cir. 1980); see also Elliot v. Fortis Benefits Ins. Co., 337 F.3d 1138, 1148 (9th Cir. 2003). These factors are all relevant, but not binding, and no one of the factors by itself is decisive. Paddack v. Morris, 783 F.2d 844, 846 (9th Cir. 1986). These factors apply equally in cases where a defendant has prevailed and is seeking Fees, as in a case where the plaintiff has prevailed. Estate of Shockley v. Alyeska Pipeline Serv. Co., 130 F.3d 403, 408 (9th Cir. 1997) (the Hummell factors provide a level playing field, without favoring one side or the other).2

MetLife will brief the standards applied in considering whether to award attorneys' fees in more detail when it subsequently files its memorandum of points and authorities as provided in LRCiv. 54.2(b)(2). 2 MetLife acknowledges that the Ninth Circuit has observed that the balance of these factors frequently suggest that attorney's fees should not be charged against ERISA plaintiffs. Tingey v. Pixley-Richards West, Inc., 958 F.2d 908, 909 (9th Cir. 1992).
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1.

Plaintiff's Culpability or Bad Faith

A finding of bad faith is not necessarily a prerequisite to awarding Fees under 29 U.S.C. §1132(g)(1). Credit Managers Ass'n v. Kennesaw Life & Accident Ins. Co., 25 F.3d 743, 749 n.3 (9th Cir. 1994). In order to avoid a finding of bad faith under the Hummell factors, Plaintiff must have had a reasonable belief that she could prove an actionable ERISA claim. Cline v. Industrial Maintenance Eng'g & Contr. Co., 200 F.3d 1223, 1236 (9th Cir. 2000); Credit Managers Ass'n 25 F.3d at 749. Plaintiff and her attorneys could not have had a reasonable belief that they could prove an actionable ERISA claim when the claim was originally filed, as Plaintiff had not yet exhausted her administrative remedies. See Findings of Fact at ¶ 61. See also Allocco v. Metropolitan Life Ins. Co., 256 F. Supp. 2d. 1023, 1032 (D. Ariz. 2003) (dismissing long term disability claims when employee and her attorney failed to exhaust administrative appeals prior to filing litigation). Plaintiff similarly could not have had a reasonable belief that she could prevail after MetLife stipulated to allow Plaintiff to complete the administrative appeal process, and issued its August, 2005 decision denying Plaintiff's claim. By that point, MetLife had consulted with three board-certified experts who found that Plaintiff was not disabled. See Conclusions of Law ¶ 21. Plaintiff had no experts to contradict these experts. In fact, some of Plaintiff's own treating physicians were skeptical of her claim because there was no clear-cut etiology for her complaints. See Findings of Fact ¶ 34 and ¶ 41. 2. Plaintiff's Ability to Satisfy an Award of Fees

Plaintiff advised the Court at oral argument that she had recently purchased a new home in Maricopa, Arizona, and had recently returned to work. Thus, it appears that Plaintiff has the ability to satisfy an award of Fees. To the extent the Court believes it needs additional evidence on this subject, MetLife suggests that the Court follow the course taken by the District Court for the

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Central District of California in a recent similar case, in which the Court ordered a plaintiff to submit a declaration of her family's net worth under penalty of perjury, including copies of her last three income tax returns. See Epstein v. Unum Life Ins. Co. of Am., 2004 U.S. Dist. LEXIS 22463 at *7 (C.D. Cal. 2004). 3. Deterring Others From Acting Under Similar Circumstances

This factor favors an award of Fees if a plaintiff has relentlessly pursued groundless claims. Credit Managers Ass'n v. Kennesaw Life & Accident Ins. Co., 25 F.3d 743, 748 (9th Cir. 1994). Even after MetLife had pointed out the problems with Plaintiff's case in the Joint Case Management Plan on November 25, 2003, and again in the Joint Proposed Pretrial Order, Plaintiff insisted on going forward with her litigation with no evidence to demonstrate that MetLife had abused its discretion in denying her claim. An award of Fees against Plaintiff would deter others from pursuing similar groundless litigation over ERISA benefits, which needlessly increase the costs paid by employers and/or employees for such benefits. 4. Issues Although an argument could be made that by defending against actions by employees who attempt to collect benefits when they are not really disabled, MetLife does seek to benefit all participants by keeping the costs of the system low for the all workers who participate in ERISA plans, Epstein v. Unum, 2004 U.S. Dist. LEXIS 22463 at *10, the Ninth Circuit has indicated that this factor is "more appropriate to a determination of whether to award fees to a plaintiff than a defendant." Tingey v. PixleyRichards West, Inc., 958 F.2d 908, 909 (9th Cir. 1992). To the extent this factor is relevant, "this case involved no question not easily resolved by reference to the terms of the plan and well-settled law; indeed, for the reasons discussed in the [Court's Findings of Fact and Conclusions of Law], plaintiff's Benefit to Other Participants or Resolution of Significant Legal

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claim was particularly anemic on the merits." See Ghorbani v. PG&E Group Life Ins., 100 F. Supp. 2d 1165, 1169 (N.D. Cal. 2000). 5. The Relative Merits of the Parties' Positions

This factor clearly favors MetLife. As discussed in connection with the first factor, Plaintiff had failed to even exhaust her administrative remedies before filing suit. After the administrative appeal process was finally exhausted, Plaintiff presented no evidence to demonstrate that MetLife abused its discretion in denying her claim. The Balance of the Hummell Factors Favors an Award of Fees to MetLife While it is rare for a court to award Fees to an employer or insurer in ERISA litigation, this is an exceptional case. Plaintiff and her attorney caused MetLife to incur tens of thousands of dollars of Fees defending this groundless claim. Plaintiff

needlessly increased MetLife's Fees by failing to cooperate in preparing the proposed pretrial, failing to appear for the pretrial conference, and appearing over an hour late for trial. The other employees of American Express should not be forced to subsidize Plaintiff's relentless pursuit of her baseless claim. DATED: June 5, 2006 MOHR, HACKETT, PEDERSON, BLAKLEY & RANDOLPH, P.C. By /s/ Daniel P. Beeks Robert C. Hackett Daniel P. Beeks Suite 1100 2800 North Central Avenue Phoenix, Arizona 85004-1043 Attorneys for Defendant Metropolitan Life Insurance Company COPIES of the foregoing mailed June 5, 2006 to: The Honorable Susan R. Bolton United States District Court of Arizona 401 West Washington, SPC 50 Phoenix, AZ 85003-0001
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Sybol Terrell-Sims P.O. Box 93428 Phoenix, Arizona 85070 Plaintiff /s/ Daniel P. Beeks

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