Askew v. R.L. Reppert, Inc.

DERRICK ASKEW, Plaintiff, v. R.L. REPPERT, INC.; RICHARD L. REPPERT; R.L. REPPERT, INC. EMPLOYEES PROFITSHARING 401(K) PLAN; and R.L. REPPERT, INC. MONEY PURCHASEPLAN (DAVIS BACON PLAN), Defendants.

No. 5:11-cv-04003

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF PENNSYLVANIA

July 20, 2020

OPINION

Plaintiff's Motion for Attorney's Fees and Costs, ECF No. 206 - Denied

Joseph F. Leeson, Jr. United States District Judge

I. BACKGROUND

This action was initiated by Plaintiff Derrick Askew, a former employee of Defendant R.L. Reppert Inc., complaining that Reppert failed to properly contribute to its employees' 401(k) Pension Plan and failed to produce requested Plan documents when the error was discovered. After significant litigation, part of the action was disposed of on summary judgment and the remaining claims proceeded to a bench trial.¹ Judgment was entered in Askew's favor as to that part of Count One alleging Reppert failed to provide plan documents for its Employees Profit Sharing 401(k) Plan in a timely manner and to produce the custodial agreement with Nationwide Trust Company, FSB, and to that part of Count Four alleging Reppert failed toconduct audits of the 401(k) Plan. See ECF Nos. 132-133, 160-161. Conversely, judgment was entered against Askew and in favor of Reppert as to those parts of Counts One and Four alleging Reppert's failure to conduct audits of the Davis Bacon Plan, and on Counts Two, Three, Five, and Six. See id.² The Court ordered Reppert to engage a qualified public accountant to conduct an examination of the financial statements, and of other books and records, of the 401(k) Plan, consistent with the requirements of 29 U.S.C. § 1023(a)(3)(A) for the plan years 2008 through 2011 and to amend the annual reports submitted on behalf of the 40l(k) Plan, if necessary. See id. Additionally, the Court imposed a $15,959.00 document penalty on Reppert for failing to timely produce Plan documents. See id. The decision was affirmed on appeal. See ECF No. 169; Askew v. R.L. Reppert, Inc., 721 F. App'x 177 (3d Cir. 2017).

This Court granted Askew's unopposed request to defer filing an attorney fee petition until thirty days after Reppert provided the final audit report. See ECF No. 172. Reppert completed the audits as directed, and Askew's objections thereto were overruled. See ECF Nos. 202-203. Now pending is Askew's Motion for Attorney's Fees and Costs. See Mot., ECF No. 206. For the reasons set forth below, this Court, in its discretion, denies the motion.

II. LEGAL STANDARDS

The Employee Retirement Income and Security Act ("ERISA") gives a court discretion in awarding reasonable attorney's fees and costs to either party. See Ursic v. Bethlehem Mines, 719 F.2d 670, 673 (3d Cir. 1983) (citing 29 U.S.C. § 1332(g)(1)). It is not automatically mandated that a prevailing party receive an award of attorney's fees. Id. (citing Iron Workers Local No. 272 v. Bowen, 624 F.2d 1255, 1265 (5th Cir. 1980)). Rather, the Third Circuit Courtof Appeals has "instructed that there is no presumption that a successful plaintiff in an ERISA suit should receive an award in the absence of exceptional circumstances." McPherson v. Employees' Pension Plan of Am. Re-Insurance Co., 33 F.3d 253, 254 (3d Cir. 1994). The merits of a motion for attorney's fees is determined through a three-step process:

1. whether the claimant achieved some degree of success on the merits,

2. whether the award of attorney's fees is appropriate based on the five Ursic factors," and

3. if attorney's fees are appropriate under the Ursic factors, whether the requested amount of fees and costs is reasonable.

See Viera v. Life Ins. Co. of North America, No. 09-3574, 2013 WL 3199091, *2 (E.D. Pa. June 25, 2013) (citing generally Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242 (2010)).

Under the first step, it is required that a claimant either be a "prevailing party" in a matter or achieve "some degree of success on the merits" to be granted attorney's fees. See Hardt, 560 U.S. at 244. To be a prevailing party, a claimant must succeed on a central issue or essentially succeed in obtaining the relief he seeks for his claims. See Ruckelshaus v. Sierra Club, 463 U.S. 680, 688 (1983). On the other hand, if the claimant is not a prevailing party, it is only required that the claimant achieves more than a "trivial success on the merits" that is not a "purely procedural victory." See Hardt, 560 U.S. at 255 (citing Ruckelshaus, 463 U.S. at 694).

As to the second step, the Ursic factors are:

1. the degree of the opposing party's culpability or bad faith,

2. the opposing party's ability to satisfy an award of attorney's fees,

3. whether an award of attorney's fees against the opposing party would deter others under similar circumstances, 4. the benefit conferred on members of the pension plan as a whole, and

5. the relative merits of the losing party's position.

See Viera, 2013 WL 3199091 (citing Ursic, 719 F.2d at 673). The factors are not a rigid test, but provide a useful general framework for analyzing a motion for attorney's fees. Viera, 2013 WL 3199091, at *2 (citing Fields v. Thompson Printing Co., 376 F.3d 259, 275 (3d Cir. 2004)). In utilizing this test, none of the factors are "decisive. . . but together they are the nuclei of concerns that a court should address in applying the ERISA." Id.

III. ANALYSIS

A. Success on the Merits

The Court entered judgment in favor of Askew on part of his claims in Counts One and Four, and in favor of Reppert in all other respects. Even though Askew did not prevail on every claim, the judgment imposed a penalty of $15,959.00 on Reppert for failing to timely produce documents, and required Reppert to engage an auditor and conduct an audit of four Plan years. Thus, Askew's success on the merits was neither trivial nor purely procedural. Moreover, Reppert concedes that Askew achieved some measure of success on the merits. See Resp. 9, ECF No. 207. Consequently, the first step for analyzing the merits of a motion for attorney's fees is satisfied.

B. Ursic Factors

Only the fourth Ursic factor weighs in favor of granting Askew's motion for attorney's fees and costs. The first, third, and fifth factors weigh against the imposition of attorney's fees and costs; and the second factor is essentially neutral. Thus, under the Ursic factors, imposing attorney's fees on Reppert would not be appropriate.

1. Factor 1: Reppert's Culpability / Bad Faith

Under the first factor, "bad faith normally connotes an ulterior motive or sinister purpose." McPherson, 33 F.3d at 256. However, ulterior motives are not required. See id. "[C]ulpable conduct is commonly understood to mean conduct that is 'blameable; censurable; . . . at fault; involving the breach of a legal duty or the commission of a fault. . . . Such conduct normally involves something more than simple negligence. . . . [On the other hand, it] implies that the act or conduct spoken of is reprehensible or wrong, but not that it involves malice or a guilty purpose.'" Id. (quoting Black's Law Dictionary (6th ed. 1990)).

Here, Reppert's actions in failing to disclose documents to Askew, as well as its failure to perform an audit for certain Plan years were not performed in bad faith, nor with culpability.³ In regard to failing to disclose documents, Judge Gardner, after a bench trial, determined that although Reppert "withheld documents intentionally and not inadvertently, it did so with something less than bad faith." See Adjudication 37, ECF No. 160. The trial court concluded that Reppert believed it was not required to divulge the information under 29 U.S.C. § 1024(b)(4), and that "[this] belief was neither frivolous nor unreasonable" due to the lack of legal precedent on the issue. See id. at 45 (citing Opinion, ECF No. 132). It stated that whether § 1024(b)(4) even required Reppert to produce the Nationwide agreement was "a close question." See id. Further, even though the trial court found that the $1,800 charge Reppert's attorney required to disclose the documents to Askew's attorney was "impermissible and excessive," the delay in delivering the documents was a product of "an unfortunate breakdown in communications between the parties." Id. at 37-39. The trial court explained that the impositionof a "moderate penalty" gave credit to Reppert "for those communications, in which it is evident that defendant was working with plaintiff in good faith to determine which documents it needed to produce." See id. at 41. The trial court stated, "[p]unishing Reppert, Inc. for failing to comply with a requirement it was reasonably not aware of would not provide it or any other plan administrator any future incentive to comply with requirements it is not reasonably aware of, and it would be unfair." Id. at 46. On appeal, the Third Circuit Court of Appeals quoted this language and found "no abuse of discretion in this determination." See Askew, 721 F. App'x at 185. Thus, because Reppert's failure to disclose documents was not unreasonable and was caused by an array of factors not solely attributable to Reppert, Reppert did not act with culpability or in bad faith pursuant to the first Ursic factor.

Similarly, in filing a simplified annual report without an audit, Reppert did not act with culpability or in bad faith. A simplified annual report, which is exempted from the audit requirement, may be filed when a plan has between 80 and 120 participants at the beginning of a plan year if a simplified annual report was also filed the previous year. See 29 C.F.R. § 2520.103-1(d). Here, there was no dispute that prior to 2008 the 401(k) Plan had fewer than 100 participants, and only a simplified annual report was required and was filed. See Adjudication 47 (citing 29 U.S.C. § 1024(a)(2)). It was also undisputed that in 2012 the Plan had more than 120 participants and Reppert was required to, and did, file a standard annual report and conduct the necessary audit. See id. at 47-48. Between 2008 and ...