Gerwen v. Guarantee Mutual Life

• Citation: 214 F.3d 1041
• Decision Date: 10 February 2000
• Docket Number: No. 98-56028,98-56028
• Parties: (9th Cir. 2000) MARIA VAN GERWEN, Plaintiff-Appellant, v. GUARANTEE MUTUAL LIFE COMPANY, a corporation; PARTICIPATING EMPLOYERS, an ERISA plan; LONG TERM DISABILITY PLAN FOR THE EMPLOYEES OF AVNET, INC., Defendants-Appellees
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 1041

214 F.3d 1041 (9th Cir. 2000)

MARIA VAN GERWEN, Plaintiff-Appellant, v. GUARANTEE MUTUAL LIFE COMPANY, a corporation; PARTICIPATING EMPLOYERS, an ERISA plan; LONG TERM DISABILITY PLAN FOR THE EMPLOYEES OF AVNET, INC., Defendants-Appellees.

No. 98-56028

U.S. Court of Appeals for the Ninth Circuit

Argued and Submitted February 10, 2000--Pasadena, California

Filed June 1, 2000

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

Charles J. Fleishman, Beverly Hills, California, for the plaintiffappellant.

Paul F. Hannabach, Rancho Santa Margarita, California, for the defendants-appellees.

Appeal from the United States District Court for the Central District of California. D.C. No. CV-96-08272-LGB(CTx)

Before: Pamela Ann Rymer and Raymond C. Fisher, Circuit Judges, and Lloyd D. George, District Judge.^*

OPINION

FISHER, Circuit Judge:

This case presents the question whether -and if so, how -a district court may permissibly reduce an attorney's fees award under federal fee-shifting statutes to reflect poor quality of representation.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff Maria Van Gerwen sued defendants under ERISA S 502 for improperly denying her past and future benefits under an ERISA long term disability plan. Following discovery, the parties filed cross-motions for summary judgment and the district court granted Van Gerwen's motion, ruling that Van Gerwen was entitled to benefits under the plan as well as $40,412 in damages.

Van Gerwen moved for attorney's fees for 127.25 hours at a rate of $300 an hour -a total of $38,175.¹ The court awarded only $14,212.50 in fees. Relying on defendants' evidence that the customary hourly rate for an ERISA plaintiff's attorney is "no more than $200 per hour" and Van Gerwen's evidence that the range of hourly rates for an ERISA plaintiff's attorney is $175-350, the district court concluded $200 was a reasonable hourly rate. The court then awarded fees for only 94.75 hours, because it found that only the administrative record was relevant evidence and that Van Gerwen's attorney unnecessarily spent hours on discovery unrelated to that record. Finally, the district court reduced the total amount of attorney's fees by a multiplier of .75 based on the poor quality of the attorney's work. The court reasoned that the "Statement of Genuine Issues" opposing defendants' motion for summary judgment submitted by Van Gerwen's attorney contained no citations to evidentiary material as required by Federal Rule of Civil Procedure 56(e) and Local Rule 7.14.2. Moreover, the court noted the attorney's filings in support of summary judgment did not cite to the administrative record or any other evidentiary material. The court concluded the attorney's performance "imperiled his client's likelihood of prevailing in this case" and therefore reduced the award of attorney's fees accordingly.

Van Gerwen contends the district court erred in relying on quality of representation in applying the .75 multiplier. She also argues the court erred in deducting hours from her request for time spent on discovery unrelated to the administrative record and for ensuring the integrity of the record, and the court improperly considered the contingency nature of her fee agreement with the attorney in determining the reasonable hourly rate for the attorney's services. We vacate the district court's attorney's fee determination because, on the record before us, it appears the district court may have erroneously relied on quality of representation both in calculating the lodestar amount and in applying a downward multiplier.

STANDARD OF REVIEW

Under ERISA S 502(g), a district court has discretion to award reasonable attorney's fees. See 29 U.S.C. S 1132(g)(1) (1994). We review for abuse of discretion a district court's decision to award or deny attorney's fees in an ERISA action, see Friedrich v. Intel Corp., 181 F.3d 1105, 1113 (9th Cir. 1999); McElwaine v. U.S. West, Inc., 176 F.3d 1167, 1171 (9th Cir. 1999), as well as a district court's determination of the amount of reasonable attorney's fees. See D'Emanuele v. Montgomery Ward & Co., 904 F.2d 1379, 1384 (9th Cir. 1990); Sapper v. Lenco Blade, Inc., 704 F.2d 1069, 1073 (9th Cir. 1983).

DISCUSSION

This court has adopted the hybrid lodestar/multiplier approach used by the Supreme Court in Hensley v. Eckerhart, 461 U.S. 424 (1983), as the proper method for determining the amount of attorney's fees in ERISA actions. See McElwaine, 176 F.3d at 1173; D'Emanuele, 904 F.2d at 1383. The lodestar/multiplier approach has two parts. First, a court determines the "lodestar" amount by multiplying the number of hours reasonably expended on the litigation by a reasonable hourly rate. See D'Emanuele, 904 F.2d at 1383; Hensley, 461 U.S. at 433. The party seeking an award of fees must submit evidence supporting the hours worked and the rates claimed. See Hensley, 461 U.S. at 433. A district court should exclude from the lodestar amount hours that are not reasonably expended because they are "excessive, redundant, or otherwise unnecessary." Id. at 434. Second, a court may adjust the lodestar upward or downward using a "multiplier " based on factors not subsumed in the initial calculation of the lodestar.² See Blum v. Stenson, 465 U.S. 886, 898-901 (1984) (reversing upward multiplier based on factors subsumed in the lodestar determination); Hensley, 461 U.S. at 434 n.9 (noting that courts may look at "results obtained" and other factors but should consider that many of these factors are subsumed in the lodestar calculation). The lodestar amount is presumptively the reasonable fee amount, and thus a multiplier may be used to adjust the lodestar amount upward or downward only in " `rare' and `exceptional' cases, supported by both `specific evidence' on the record and detailed findings by the lower courts" that the lodestar amount is unreasonably low or unreasonably high. See Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 478 U.S. 546, 565 (1986) (quoting Blum, 465 U.S. at 898-901); Blum, 465 U.S. at 897; D'Emanuele, 904 F.2d at 1384, 1386; Cunningham v. County of Los Angeles, 879 F.2d 481, 487 (9th Cir. 1989).

I. THE DISTRICT COURT'S RELIANCE ON QUALITY OF REPRESENTATION TO REDUCE THE AMOUNT OF ATTORNEY'S FEES BY A MULTIPLIER OF .75

Van Gerwen argues the district court abused its discretion by using a .75 multiplier to reduce the amount of attorney's fees below the lodestar amount, improperly using the multiplier to factor in the quality of her attorney's representation, a factor already accounted for in calculating the lodestar. On the record as it now stands, we agree.

Quality of representation is generally considered at the lodestar stage in determining what is a reasonable hourly rate. See Blum 465 U.S. at 899. To factor quality of representation also into the multiplier risks double counting. In Blum, the Court rejected use of a multiplier to increase the fee award where the district court had already awarded fees at the upper end of the range based on factors that included the high quality of the attorneys' representation. Id. at 899-90. Blum recognized that in rare cases the lodestar amount might be unreasonable and considerations such as "the important factor of the results obtained" might lead a district court permissibly to adjust a fee upward or downward. Id. at 897 & n.14. Nonetheless, the Court made clear (as have we) that, absent exceptional circumstances, it is impermissible to use the multiplier to adjust the lodestar fee for quality of representation. In the context of an upward adjustment, as in Blum, such an adjustment is justified only in the rare case where there is specific evidence that the quality of service was superior in light of the hourly rates charged and the success was exceptional. Id. at 899; see also Delaware Valley, 478 U.S. at 567-68 (reversing upward multiplier because lower court did not specifically find that quality of representation was not reflected in lodestar and party presented no evidence that result was outstanding).

By the same token, a district court may not rely on quality of representation to apply a downward multiplier unless, at the very least, the district court makes a detailed finding based on specific evidence that the quality of service was inferior in light of the hourly rate selected in setting the lodestar amount. In Cunningham, we concluded quality of representation cannot be considered at the multiplier stage, "at least in the absence of specific evidence that the attorney's performance is exceptional or abysmal." 879 F.2d at 487 (citing Blum, 465 U.S. at 899-900, and Delaware Valley, 478 U.S. at 566-67); see also D'Emanuele, 904 F.2d at 1384 (concluding that under Blum, quality of representation generally should not be relied upon to multiply lodestar amount "upward or downward." (emphasis added)).

In the present case, the district court did not explain whether or to what extent it considered quality of representation when it determined the lodestar amount. We infer from the court's selection of an hourly rate at the low end of the range submitted by Van Gerwen that the $200 rate reflected the court's assessment of the attorney's quality of representation. See Delaware Valley, 478 U.S. at 565 (concluding that quality of representation is "presumably fully reflected in the lodestar amount"). We affirmatively know from the district court's findings that it did consider quality of representation at the multiplier stage. In arriving at the .75 multiplier, the district court cited substantial evidence of the attorney's poor quality of representation, such as his failure to cite to evidentiary material either in support of Van Gerwen's motion for summary judgment as required by Federal Rule of Civil Procedure 56(e) and Local Rule 7.14.2 or in opposition to the defendants' motion. See, e.g., Nilsson, Robbins, Dalgarn, Berliner, Carson & Wurst v. Louisiana Hydrolec, 854...