Campbell v. United of Omaha Life Ins. Co.

283 F.Supp.3d 1138

Antonio CAMPBELL, Plaintiff,

v.UNITED OF OMAHA LIFE INSURANCE COMPANY and J & B Importers Welfare Plan, Defendants.

Case No. 2:14–cv–00623–JEO

United States District Court, N.D. Alabama, Southern Division, Southern Division.

Signed October 18, 2017

Thomas O. Sinclair, Sinclair Law Firm, Birmingham, AL, for Plaintiff.

Henry Tonsmeire Morrissette, Hand Arendall LLC, Mobile, AL, John S. Johnson, Hand Arendall LLC, Birmingham, AL, for Defendants.

MEMORANDUM OPINION AND ORDER

John E. Ott, Chief United States Magistrate Judge

This case arises under the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq. ("ERISA"). The Court previously found that the Defendants improperly denied Plaintiff Antonio Campbell's claim for disability benefits. What remains is Plaintiff's Petition for Attorneys' Fees and Costs. (Doc. 83). The petition is opposed in part by Defendant United of Omaha Life Insurance Company ("United of Omaha"). (Doc. 84). The matter is fully briefed and supported by the parties. Upon consideration, the Court finds the petition is due to be granted in part and denied in part as discussed below.

I.

The Court previously ruled on the parties' cross-motions for summary judgment, finding that United of Omaha's benefits determination was not reasonable concerning the period through October 2012. The Court further found that the denial of benefits determination was reasonable beyond that date. After Plaintiff filed a motion for reconsideration, the Court granted the motion and remanded the matter to the Plan administrator for further proceedings.

Plaintiff was awarded "a fully favorable decision ... on remand." (Doc. 85).

The Court retained jurisdiction over the case to afford Plaintiff's counsel an opportunity to submit their petition for attorneys' fees pursuant to Federal Rule of Civil Procedure 54(d)(2)(B). (See Doc. 59 at 2, n.3). Plaintiff now seeks $87,623.50 in attorneys' fees and $4,286.26 in costs for a total of $91,909.76. (Doc. 83 at 11). He has requested an hourly rate of $450 to $500 for his lead attorney, Thomas O. Sinclair, and an hourly rate of $225 for Mr. Sinclair's co-counsel, Lee P. Fernon, Jr. (Doc. 83–5). United of Omaha argues that an attorney's fee award of not more than $41,573.00 is appropriate. (Doc. 84 at 18). United of Omaha does not challenge Plaintiff's request for costs. (Id. )

United of Omaha asserts Plaintiff is not entitled to recover the entire requested fee because (1) "Plaintiff's 'success' is offset by the fact that the Court dismissed" his other claims; (2) the relevant factors for the Court's consideration favor a denial of the petition; (3) the claimed hourly rates are unreasonable; (4) some of the hours claimed are not recoverable; and (5) Plaintiff has not demonstrated that the number of hours expended by counsel is reasonable.

A.

Under ERISA, "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). A claimant "must show 'some degree of success on the merits' before a court may award attorney's fees under § 1132(g)(1)." Hardt v. Reliance Stand. Life Ins. Co. , 560 U.S. 242, 254, 130 S.Ct. 2149, 176 L.Ed.2d 998 (2010). Once it is established that a party had "some degree" of success, the Eleventh Circuit Court of Appeals "require[s] district courts to consider five factors when deciding whether to award fees to a prevailing party:

(1) the degree of the opposing parties' culpability or bad faith;

(2) the ability of the opposing parties to satisfy an award of attorney's fees;

(3) whether an award of attorney's fees against the opposing parties would deter other persons acting under similar circumstances;

(4) whether the parties requesting attorney's fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA itself; [and]

(5) the relative merits of the parties' positions."

AirTran Airways, Inc. v. Elem , 767 F.3d 1192, 1201 (11th Cir. 2014) (quoting Freeman v. Continental Ins. Co. , 996 F.2d 1116, 1119 (11th Cir. 1993) ). "No one of these factors is necessarily decisive, and some may not be apropos in a given case, but together they are the nuclei of concerns that a court should address in applying [ 29 U.S.C. § 1132(g) ]." Iron Workers Local No. 272 v. Bowen , 624 F.2d 1255, 1266 (5th Cir. 1980).¹

The first matter in this case is whether Plaintiff achieved some degree of success on the merits. The Court finds that Plaintiff did achieve the requisite degree of success to warrant an award of attorney's fees. Through the efforts of Plaintiff's counsel, the record demonstrates that Plaintiff was awarded "a fully favorable decision ... on remand." (Doc. 85). The Court concludes Plaintiff has cleared the first hurdle. This requires the Court to move on to the five factors enumerated above.

As to the first factor, the "culpability or bad faith" of United of Omaha, Plaintiff argues that the defendant "culpably breached its fiduciary duties and issued an unreasonable decision that ignored and misstated the medical evidence of record." (Doc. 83 at 3). Plaintiff further argues that United of Omaha "compounded that culpability when it chose to uphold that decision and deny Plaintiff's much needed benefits." (Id. )

"[B]ad faith is more than mere negligence; it is the conscious doing of a wrong, where an attorney knowingly or recklessly pursues a frivolous claim or engages in litigation tactics that needlessly obstruct the litigation of non-frivolous claims, or [involves] deliberate deception, gross negligence or recklessness." Cross v. Quality Mgmt. Group, LLC , 491 Fed.Appx. 53, 55 (11th Cir. 2012) (quotation marks and citations omitted).² This is an incredibly high standard to meet. While the Court did find that United of Omaha's denial in this matter was arbitrary and capricious, it did not find that United of Omaha consciously acted to wrong Plaintiff. Additionally, United of Omaha's counsel did not act recklessly, with gross negligence or in a deliberately deceptive manner, or pursue a frivolous claim. Stated another way, United of Omaha simply was wrong in its determination. However, Plaintiff's situation is compelling. His doctors concluded he was disabled. Having had the opportunity to see Plaintiff at a hearing on a motion in this case, the court notes that his debilitating condition was, at that juncture, obvious. United of Omaha's counsel also had an opportunity to see Plaintiff, but that does not warrant a finding against United of Omaha on this first factor. Thus, evaluation of this factor tends to favor United of Omaha.

As to the second factor—the ability to satisfy an award—there is no dispute United of Omaha has the ability to satisfy an award. Thus, this factor weighs in favor of Plaintiff.

As to the third factor—deterrence of other persons acting in similar circumstances—Plaintiff argues that "the deterrent effect of awarding fees in cases like Plaintiff's cannot be understated because [t]here are no statutory punitive damages in ERISA litigation, so the only real avenue for deterrence is the award of attorneys' fees." (Doc. 83 at 4). Plaintiff continues:

Otherwise, there is simply no reason for an insurer to pay benefits at all because the most they could stand to lose is the past benefits they should have paid in the first place. Given the scant resources of disabled workers, the deferential standard of review, and low rate of return for ERISA attorneys, ERISA insurers are given wide latitude to pressure participants into taking low settlements or simply throwing up their hands and giving up.

(Id. ) United of Omaha "acknowledges that the prospect of a fee award likely deters other insurance companies in a similar situation." (Doc. 84 at 4). However, United of Omaha counters that "insurers are already bound by duties imposed by law and the particular plan documents." (Id. at 4–5). It further argues that "[t]he possibility of a fee award should not be used to push insurers to pay claims that are not payable because doing so would violate the insurer's duties to other participants in the plan." (Id. at 5). Premised on Plaintiff's ability to navigate the difficult path to show that United of Omaha acted unreasonably and the fact that an attorney's fee award is certainly a deterrent to future unreasonable benefits decisions, the Court finds this factor weighs in favor of Plaintiff and an award of attorney's fees in this case.

As to the fourth factor—benefit to others or resolution of a significant legal issue—Plaintiff argues that to the extent this factor has any application, "his motion for reconsideration did address the legally significant question of the proper remedy in overturning an insurer's denial of benefits." (Doc. 83 at 5). He goes on to argue, "Put in other terms, courts may now review the results of this Court's labor and see that where a claimant asks for remand (particularly where there is some ambiguity in the record), the court is not constrained to rendering a decision on the merits based on the record." (Id. ) United of Omaha counters that this factor does not apply here, but, even if it did, it favors the denial of the request for fees. Specifically, United of Omaha asserts that the Court did not resolve a significant ERISA legal question in this case or resolve a plan interpretation issue that benefitted other plan participants. (Doc. 84 at 5).

After the Court issued its initial opinion finding for Plaintiff and ordering United of Omaha to award specific, limited benefits to Plaintiff, he filed a motion for reconsideration, arguing that the correct course was for the Court to remand the matter to the administrator. The Court agreed, stating:

As to the second matter, [concerning a remand to the administrator,] the court finds that Campbell's argument is well-founded to the extent the court determined his LTD benefits properly terminated as of October 2012. Despite its prior ruling, the

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