United States District Court, D. Alaska
TIMOTHY M. BURGESS, District Judge.
Plaintiff Emilio Avila ("Avila") moves for attorney's fees, costs, and prejudgment interest on his previously awarded Long Term Disability benefits ("LTD benefits"). Defendant and Third-Party Plaintiff Pediatrix Medical Group Long Term Disabililty Plan ("the Plan") and Standard Insurance Company ("Standard") (together "Defendants") oppose these motions in part. For the reasons stated below, Avila's motions for attorney's fees, costs, and prejudgment interest are GRANTED in part and DENIED in part.
1. Motion for Attorney's Fees
Under the ERISA statute, "the court, in its discretion may allow a reasonable attorney's fee and costs of the action to either party." In Hardt v. Reliance Standard Life Ins. Co. , the Supreme Court held that an ERISA plaintiff need not be a "prevailing party" in order to obtain an award of attorney's fees, rather, they must achieve "some degree of success on the merits." "Some degree of success" is more than a mere "trivial" or "purely procedural" victory. After determining whether a plaintiff has achieved "some degree of success on the merits, " the court must consider the following " Hummell " factors in deciding whether to exercise their discretion to award attorney's fees:
(1) the degree of the opposing parties' culpability or bad faith; (2) the ability of the opposing parties to satisfy an award of fees; (3) whether an award of 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.
It is generally presumed that a successful ERISA plaintiff will recover attorney's fees absent "special circumstances" that would render an award "unjust."
An award of attorney's fees under ERISA is calculated under the "hybrid lodestar / multiplier approach." Under that approach, the court first multiplies the "number of hours reasonably expended by the attorney(s) on the litigation by a reasonable hourly rate, raising or lowering the lodestar according to" various factors identified by the Ninth Circuit. The party seeking an award of attorney's fees bears the burden of establishing the reasonableness of its claimed rate and number of hours. The court must determine the reasonable hourly rate in light of "the experience, skill, and reputation of the attorney requesting fees" and may exclude hours that are "excessive, redundant, or otherwise unnecessary."
The factors that may support adjustments to the lodestar amount in "rare cases" include: (1) the time and labor required, (2) the novelty and difficulty of the questions involved, (3) the skill requisite to perform the legal service properly, (4) the preclusion of other employment by the attorney due to acceptance of the case, (5) the customary fee, (6) whether the fee is fixed or contingent, (7) time limitations imposed by the client or the circumstances, (8) the amount involved and the results obtained, (9) the experience, reputation, and ability of the attorneys, (10) the "undesirability" of the case, (11) the nature and length of the professional relationship with the client, and (12) awards in similar cases.
Here, the "Defendants acknowledge that Avila has prevailed to a sufficient degree, such that some award of fees is proper." Thus, the Court need not discuss whether attorney's fees weigh the Hummel factors to determine whether attorney's fees are appropriate. However, the parties differ as to what amount of fees is proper. Avila requests $47, 160 in attorney's fees, which he reaches by charging $300 an hour for 157.2 total hours spent on the case.
Defendants argue that Avila should recover no more than $19, 012.50 in attorney's fees. Defendants do not object to the $300 per hour rate, but object to the inclusion of 42.4 attorney house spent "on unsuccessful claims against Sun Life and 24.3 hours [on] his unsuccessful challenge to Standard's damage calculation." Defendants further argue that "the lodestar amount should be reduced by at least 25% to reflect Avila's severe miscalculation of the value of this lawsuit, which resulted in the rejection of a settlement offer two years ago worth more than the damages awarded, and caused more than 111 hours (almost - of all the hours billed) in unnecessary work." Thus, Defendants argue that Avila should recover attorney's fees for no more than 84.5 hours, which yields a recovery of $25, 350. They also argue that the $25, 350 should be reduced by 25% based on Avila's miscalculation of the lawsuit and rejection of a settlement offer, based on the theory that "[a]ttorney's fees accumulated after a party rejects a substantial offer provide minimal benefit to the prevailing party..." Therefore, the Defendants request that Avila be awarded no more than $19, 012.50 in attorney's fees.
The Court agrees with Avila that his attorney's fees should not be reduced by 25%. The Defendants' argument that the attorney's fees accumulated after the rejection of a settlement offer brought little additional value to the litigation is negated by the fact that with this victory, Avila retains the right to apply for benefits in the future. The settlement offer, though it was slightly more than Avila was ultimately awarded, required that he release Standard from all future liability and a potential future LTD claim. Given that Avila had a brain tumor and his work has substantially changed since then, it is understandable that he viewed a release of future liability as an unacceptable condition of settlement. The value of a potential future LTD benefits claim, which he may still bring, outweighs the fact that he rejected the settlement offer.
The Defendants also object to 42.4 hours of attorney time spent on claims against Sun Life Financial Insurance ("Sun Life"). The Court ruled that Sun Life was not liable for Avila's LTD benefits, but instead that Standard owed Avila LTD benefits. Avila sued only the Plan after he was denied LTD benefits by both Standard and Sun Life. The Plan in turn brought Sun Life into the case. Sun Life then filed a Fourth-Party Complaint against both Avila and Standard. The Court agrees with Avila that the dispute between the insurers over who had the responsibility to pay his LTD benefits was not of his making and does not warrant a reduction in the amount of attorney's fees. ...