Schuman v. Aetna Life Ins. Co.

JEFF SCHUMAN, Plaintiff, v. AETNA LIFE INS. CO., et al., Defendants.

No. 3:15-cv-01006 (SRU)

UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT

June 20, 2017

RULING ON MOTION FOR ATTORNEYS' FEES AND COSTS

Jeff Schuman filed suit against three defendants—Ahold USA's Master Welfare Benefit Plan, the Administrative Committee of Ahold USA as Plan Administrator, and Aetna Life Insurance Co. as Claims Administrator—alleging that they violated the Employee Retirement Income Security Act ("ERISA") by denying him long-term disability benefits. On March 20, 2017, I issued a ruling on the parties' cross-motions for summary judgment, in which I granted in part and denied in part the defendants' motion, and denied Schuman's motion in its entirety. In light of various inadequacies in the record, however, I ordered that the case be remanded to the claims administrator for a correct evaluation of Schuman's long-term disability claim.

Schuman now has moved for attorneys' fees and costs under ERISA § 502(g)(1), arguing that he is entitled to fees and costs because he successfully obtained a remand order. The defendants respond that Schuman is not entitled to fees because both parties requested remand in the alternative, and because I rejected the majority of Schuman's arguments on the merits. I conclude that Schuman has shown eligibility for fees and costs under ERISA, but that, in light of the equitable Chambless and Johnson factors, Schuman's fee award should be reduced from the amount sought. Therefore, I grant Schuman's motion in part and deny it in part.

I. Standard of Review

Section 1132(g)(1) of ERISA provides that "[i]n 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." 29 U.S.C. § 1132(g)(1). The Supreme Court has held that, under the language of the statute, "a fee claimant need not be a 'prevailing party' to be eligible for an attorney's fees award." Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 252 (2010). Instead, a claimant need only "show 'some degree of success on the merits' before a court may award attorney's fees under [section] 1132(g)(1)." Id. at 255 (quoting Ruckelshaus v. Sierra Club, 463 U.S. 680, 694 (1983)). "[S]ome degree of success on the merits" demands more than "'trivial success on the merits' or a 'purely procedural victor[y].'" Id. (quoting Ruckelshaus, 463 U.S. at 688 n.9). The court must be able to "fairly call the outcome of the litigation some success on the merits without conducting a lengthy inquir[y] into the question whether a particular party's success was 'substantial' or occurred on a 'central issue.'" Id. (quoting Ruckelshaus, 463 U.S. at 688 n.9) (other internal quotation marks omitted).

"[W]hether a plaintiff has obtained some degree of success on the merits is the sole factor that a court must consider in exercising its discretion," but the court may also look to the factors set forth in Chambless v. Masters, Mates & Pilots Pension Plan, 815 F.2d 869 (2d Cir. 1987). See Donachie v. Liberty Life Assurance Co. of Bos., 745 F.3d 41, 46 (2d Cir. 2014). Under Chambless, in determining whether to award attorneys' fees, the court may consider:

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

(2) [the] ability of opposing parties to satisfy an award of attorneys' fees;

(3) whether an award of attorneys' fees against the opposing parties would deter other persons acting under similar circumstances;(4) whether the parties requesting attorneys' 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.

Donachie, 745 F.3d 41, 46 (2d Cir. 2014) (quoting Hardt, 560 U.S. at 249 n.1; citing Chambless, 815 F.2d at 871 (same factors, but with order of fourth and fifth reversed)). Because "Congress intended the fee provisions of ERISA to encourage beneficiaries to enforce their statutory rights," those provisions "must be liberally construed to protect the statutory purpose." Slupinski v. First Unum Life Ins. Co., 554 F.3d 38, 47 (2d Cir. 2009) (internal quotation marks omitted). In particular, "granting a prevailing plaintiff's request for fees is appropriate absent 'some particular justification for not doing so.'" Donachie, 745 F.3d at 47 (quoting Birmingham v. SoGen-Swiss Int'l Corp. Ret. Plan, 718 F.2d 515, 523 (2d Cir. 1983)).

II. Background

The background of this case is set forth at length in Schuman v. Aetna Life Insurance Co., 2017 WL 1053853, at *2-*9 (D. Conn. Mar. 20, 2017). Essentially, Schuman claimed that the defendants violated ERISA by failing to provide him with disability benefits to which he was entitled. On the parties' cross-motions for summary judgment, I determined that Schuman "raised several genuine issues regarding whether his claims determination was decided in a manner consistent with the claims-procedure regulations." Id. at *15. Those "violations," I held, were "sufficient under Halo [v. Yale Health Plan, 819 F.3d 42 (2d Cir. 2016)] to trigger de novo review of the defendants' determination that Schuman" was not entitled to long-term disability benefits. Id. at *18. Because it remained "unclear from the Administrative Record whether either party presented sufficient evidence during the initial claim review and appeal process to determine whether Schuman me[t]" the plan's test for long-term disability, "remand [was]appropriate to supplement the Administrative Record with information necessary to permit Aetna to make an appropriate evaluation of Schuman's [long-term disability] claim." Id. Accordingly, I ordered that Schuman's case be remanded to the claims administrator.

Both sides had moved in the alternative for remand, but on March 22, 2017, the Clerk entered judgment in favor of the defendants. Judgment, Doc. No. 83. Schuman moved to alter or amend the judgment on April 7, 2017, arguing that he had requested a remand and so judgment should enter in his favor. See Mot. Alter or Amend Judgment, Doc. No. 84, at 1. On April 21, 2017, I granted Schuman's motion in part and denied it in part, stating that, because "[b]oth [sides] moved in the alternative for remand, . . . judgment should not be entered 'in favor of' either party." Order, Doc. No. 86. I ordered the Clerk to "amend the judgment so that the reference to judgment entering in favor of the defendant is deleted, and the judgment simply directs remand to the claims administrator." Id. The Clerk filed the Amended Judgment in favor of neither side on April 25, 2017. Am. Judgment, Doc. No. 87.

On April 18, 2017, Schuman moved for attorneys' fees and costs in the amount of approximately $167,000.¹ Schuman argues that he has obtained "some degree of success on the merits"—as required to recover attorneys' fees under ERISA—by securing a remand and "demonstrating Aetna's numerous violations of the claims procedure regulation." See Mem. Supp. Mot. Att'y Fees, Doc. No. 85-6, at 5 (other capitalization omitted). He also contends an award of attorneys' fees is favored under the Second Circuit's Chambless factors. See id. at 8. The defendants opposed Schuman's motion on May 9, 2017, asserting that Schuman "did not achieve any 'degree of success on the merits'" and that attorneys' fees should be denied or"substantially reduced" under the Chambless factors. Mem. Opp'n Mot. Att'y Fees, Doc. No. 88, at 1-2. Schuman replied to the defendants' opposition on May 22, 2017. See Reply Mem. Supp. Mot. Att'y Fees, Doc. No. 89.

III. Discussion

Following the Supreme Court's decision in Hardt, "whether a plaintiff has obtained some degree of success on the merits is the sole factor that a court must consider in exercising its discretion." Donachie, 745 F.3d at 46. If I determine that Schuman has "obtained some degree of success on the merits," then I "may apply—but [am] not required to apply—the Chambless factors in 'channeling [my] discretion when awarding fees' under [section] 1132(g)(1). Toussaint v. JJ Weiser, Inc., 648 F.3d 108, 110 (2d Cir. 2011) (quoting Hardt, 560 U.S. 255 & n.8). Although the Chambless factors are no longer mandatory, I consider it advisable to "deploy th[at] useful framework" in deciding whether to award Schuman fees. Donachie, 745 F.3d at 46; see also, e.g., Dwinell v. Fed. Express Long Term Disability Plan, 2017 WL 1371254, at *2 (D. Conn. Apr. 14, 2017) (applying Chambless factors after holding that ERISA fee claimant had established "some success on the merits"); Valentine v. Aetna Life Ins. Co., 2016 WL 4544036, at *5-*6 (E.D.N.Y. Aug. 31, 2016) (same); but see Dimopoulou v. First Unum Life Ins. Co., 2017 WL 464430, at *2 (S.D.N.Y. Feb. 3, 2017) ("declin[ing] to consider the Chambless factors"); Wallace v. Grp. Long Term Disability Plan, 2015 WL 4750763, at *6 (S.D.N.Y. Aug. 11, 2015) (same). Therefore, I first will consider whether Schuman has "become eligible for a fees award" by obtaining "some degree of success on the merits." See Hardt, 560 U.S. at 255 & n.8. If Schuman has shown that he is eligible for a fee award, then I shall "consider the five factors" set forth in Chambless "in deciding whether to award attorney's fees." Id. at 255 n.8.

A. Did Schuman achieve "some degree of success on the merits"?

Schuman asserts that he "achieved some degree of success on the merits" by "obtaining a remand and demonstrating Aetna's numerous violations of the claims procedure regulation." Mem. Supp. Mot. Att'y Fees, Doc. No. 85-6, at 5 (capitalization omitted). The defendants respond that Schuman hardly can characterize remand as "some degree of success on the merits" because they, too, requested remand as an alternative remedy. Mem. Opp'n Mot. Att'y Fees, Doc. No. 88, at 3. The defendants recall that I ordered a remand because the long-term disability standard "had not been properly applied by either party during the...