Eckert v. Chauffeurs

MARIO ECKERT, ROBERT BAKER, STEVE BILLET, KEVIN BLOOM, JR.,SHAWN CLARK, KAREN DIETZ, HERBERT C. GARBER, GISBEL GARCIA, JR.,MARIO GAROFALO, BRADLEY HOCKENBERRY, MARTIN PARSON,and FRED WILSON, Plaintiffs v. CHAUFFEURS, TEAMSTERS AND HELPERS LOCAL UNION 776 PROFIT SHARING PLAN,CHAUFFEURS, TEAMSTERS AND HELPERS LOCAL UNION 776,EDGAR H. THOMPSON, and RONALD W. HICKS, Defendants

CIVIL ACTION NO. 1:15-CV-1920

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

September 17, 2018

(Chief Judge Conner)

MEMORANDUM

Plaintiffs commenced this action against defendants pursuant to the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. The court previously entered judgment against defendants Chauffeurs, Teamsters and Helpers Local Union 776 Profit Sharing Plan ("the Plan") and Chauffeurs, Teamsters and Helpers Local Union 776 ("the Union") for wrongful denial of benefits under ERISA and in favor of the Union and defendants Edgar H. Thompson ("Thompson") and Ronald W. Hicks ("Hicks") on an ERISA claim for breach of fiduciary duty. The court entered judgment for plaintiffs Herbert C. Garber ("Garber"), Mario Garofalo ("Garofalo"), and Fred Wilson ("Wilson") on a counterclaim for breach of fiduciary duty in violation of the Labor-Management Reporting and Disclosure Act ("LMRDA"), 29 U.S.C. § 501(a), and for Garofalo on an ERISA counterclaim for breach of fiduciary duty. Plaintiffs now seek attorney's fees and costs. (Doc. 63).

I. Factual Background & Procedural History¹

The Union administers an employee pension benefit plan subject to ERISA. Eckert, 306 F. Supp. 3d at 664. The Union's executive board sets the terms and conditions of Union employment and this authority extends to retirement benefits. Id. (citing Eckert v. Chauffeurs, Teamsters & Helpers Local Union 776 Profit Sharing Plan, No. 15-CV-1920, 2017 WL 959340, at *4 (M.D. Pa. Mar. 13, 2017)). Upon retirement or separation from covered employment, a plan participant may request benefits distribution. Id. In 2008, the Union established a new retirement benefit plan (hereinafter the "Plan"). Id. An employee became eligible for Plan participation after completing one year of covered service. Id. The executive board waived this requirement for anyone employed as of the Plan's effective date. Id.

Plaintiffs won election to the Union's executive board in October 2011 for the 2012-2014 term. Id. at 665. In response to grievances from Union employees about their pension benefits, secretary-treasurer Garofalo recommended, inter alia, amending or restating the pension plan to include a waiver of the one-year-of-service requirement for anyone employed on or before September 1, 2012. Id. at 665. The executive board reviewed the proposal documents, discussed the cost to the Union of implementing Garofalo's proposed change, and voted to approve the one-year-of-service waiver (hereinafter the "2012 Plan amendment"). Id. at 665-66. Of the six executive board members who voted to approve the 2012 Plan amendment, four did not personally benefit from the waiver. Id. at 666. The executive board designated Garofalo as one of two Plan trustees. Id.

At the July 2, 2012 general membership meeting, the executive board notified Union members of the 2012 Plan amendment. Id. Thompson and other Union members frequently asked the executive board questions about the 2012 Plan amendment and related matters at general membership meetings through August 2014. Id. The executive board explained that its one-year-of-service waiver mirrored the waiver executed in 2008. Id. In October 2014, Thompson and Hicks defeated plaintiffs for election to the Union's executive board. Id. After assuming office in January 2015, Thompson and Hicks were designated Plan trustees and plaintiffs requested distribution of their pension benefits under the Plan. Id. Following a review of Plan documents, executive board meeting minutes, and plaintiffs' request, defendants distributed pension benefits for all but the first year of covered service. Id. at 666-67. In denying plaintiffs benefits for their first year of covered service, defendants stated that they were unable to locate any Union records indicating that the 2012 Plan amendment was properly approved. Id. at 667.

Plaintiffs filed this action asserting one ERISA claim for wrongful denial of benefits against the Plan and the Union and one breach of fiduciary duty claim against the Union, Thompson, and Hicks. Defendants brought one ERISA counterclaim for breach of fiduciary duty against Garofalo and one LMRDA counterclaim for breach of fiduciary duty against Garber, Garofalo, and Wilson. The court ruled at summary judgment that the Union's bylaws vest the executive board with the authority to change retirement benefits which are set forth in the Plan's governing documents. Following a non-jury trial on October 23 and 24, 2017, the court ruled in favor of plaintiffs on their ERISA claim for denial of benefits. Garber, Garofalo, Wilson, Thompson, and Hicks each prevailed on the breach of fiduciary duty claims asserted against them, respectively.

Plaintiffs now move for attorney's fees and costs pursuant to 29 U.S.C. § 1132(g)(1). Plaintiffs are represented by the law firms of Barley Snyder LLP ("Barley Snyder") and the Law Offices of Peter J. Russo, PC ("Russo Law Offices"). (Doc. 64 at 13). During the early stages of this litigation, plaintiffs were represented by Goldberg Katzman, P.C. ("Goldberg Katzman). (Doc. 63-3 ¶ 1). Plaintiffs seek attorney's fees in the amount of $140,842.25 and costs in the amount of $7,311.15. (Doc. 63 ¶ 26; Doc. 64 at 13). Specifically, the legal team billed as follows:

Goldberg Katzman

• Attorney Michael J. Crocenzi ("Crocenzi")

? Time: 206.60 hours²

? Rate: $300.00

? Total: $61,980.00

• Attorney Camille Howlett ("Howlett")

? Time: 10.90 hours

? Rate: $200.00

? Total: $2,180.00

• Paralegal Jay Bishop ("Bishop")

? Time: 32.50 hours

? Rate: $125.00

? Total: $4,062.50

• Costs

? Total: $3,615.12³

Barley Snyder

• Attorney Crocenzi

? Time: 131.30 hours⁴

? Rate: $300.00

? Total: $39,390.00

• Costs

? Total: $2,161.25

Russo Law Offices

• Attorney Peter J. Russo ("Russo")

? Time: 103.70 hours⁵

? Rate: $300.00

? Total: $31,110.00

• Paralegal Ashley Malcolm ("Malcolm")

? Time: 9.83 hours

? Rate: $125.00

? Total: $1,228.75

• Costs

? Total: $1,534.78

(See Doc. 63 ¶ 26; Doc. 64 at 13; Doc. 63-4 at 19; Doc. 63-7 at 2). Plaintiffs submit that reasonable rates for the Harrisburg market are $300 per hour for experienced attorneys, $200 per hour for associates, and $125 per hour for paralegals. (Doc. 64 at 12; see also Doc. 63-3 ¶¶ 7-9; Doc. 63-4 ¶¶ 8-10; Doc. 63-5 ¶ 5; Doc. 63-6 ¶¶ 10, 13). The motion is fully briefed and ripe for disposition.

II. Legal Standard

ERISA grants courts discretionary authority to award reasonable attorney's fees and costs to either party in an action under Section 1132. 29 U.S.C. § 1132(g)(1). As a threshold matter, a party seeking attorney's fees and costs under ERISA must show "some degree of success on the merits" beyond a purely procedural or trivial victory. Templin v. Indep. Blue Cross, 785 F.3d 861, 865 (3d Cir. 2015) (quoting Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 252 (2010)). The court mustthen consider each of the following five factors in determining whether to exercise discretion in awarding attorney's fees and costs: (1) the offending party's degree of culpability or bad faith, if any; (2) the offending party's ability to satisfy an award of attorney's fees; (3) the deterrent effect on the offending party of awarding fees; (4) the benefit conferred on pension plan members as a whole; and (5) the relative merits of each party's respective position. Id. at 867 (quoting Ursic v. Bethlehem Mines, 719 F.2d 670, 673 (3d Cir. 1983)); Anthuis v. Colt Ind. Operating Corp., 971 F.2d 999, 1011 (3d Cir. 1992). A party need not demonstrate that all five factors weigh in its favor to receive an award of attorney's fees. Fields v. Thompson Printing Co., 363 F.3d 259, 275 (3d Cir. 2004).

III. Discussion

Plaintiffs seek attorney's fees and costs for their work on this litigation. Defendants acknowledge that plaintiffs prevailed on their claim for denial of benefits but argue that the Ursic factors weigh against an award of fees and costs. Defendants alternatively contend that plaintiffs' fee request should be reduced to account for plaintiffs' limited success on the merits. We begin with a review of the Ursic factors.

A. Culpability or Bad Faith

A party driven by "an ulterior motive or sinister purpose" acts in bad faith. McPherson v. Emps.' Pension Plan of Am. Re-Ins. Co., 33 F.3d 253, 256-57 (3d Cir. 1994) (citing Ford v. Temple Hosp., 790 F.2d 342, 347 (3d Cir. 1986)). Culpable conduct is blameworthy or censurable and usually exceeds simple negligence. Id. at 256-57 (quoting BLACK'S LAW DICTIONARY (6th ed. 1990)). A party may engage inculpable conduct, such as the breach of a legal duty, without malice or an ulterior motive. Id. Culpable conduct includes illogical or arbitrary denials of ERISA benefits. Music v. Prudential Ins. Co. of Am., No. 1:05-CV-1223, 2007 WL 3085606, at *2 (M.D. Pa. Oct. 19, 2007) (Conner, J.) (collecting cases). A court should consider whether the offending party was culpable "during the most relevant period of the litigation." Templin, 785 F.3d at 868. Culpable conduct by the party seeking attorney's fees, "on its own, does not cut against an award of attorney's fees." Id. Moreover, culpability is not established merely because the offending party took "a position that did not prevail in litigation." McPherson, 33 F.3d at 257.

The trial record is devoid of evidence that defendants acted in bad faith. To the contrary, defendants distributed plaintiffs' accrued pension benefits as requested except for the disputed first year of covered service. Eckert, 306 F. Supp. 3d at 667. And defendants correctly note that Thompson and Hicks denied plaintiffs' benefits request for their first year...