Moon v. Unum Provident Corp.

• Citation: 461 F.3d 639
• Decision Date: 29 June 2006
• Docket Number: No. 05-1974.,05-1974.
• Parties: Diane M. MOON, Plaintiff-Appellant, v. UNUM PROVIDENT CORP., Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 639

461 F.3d 639

Diane M. MOON, Plaintiff-Appellant, v. UNUM PROVIDENT CORP., Defendant-Appellee.

No. 05-1974.

United States Court of Appeals, Sixth Circuit.

Submitted April 26, 2006.

Decided and Filed June 29, 2006.^*

COPYRIGHT MATERIAL OMITTED

Christopher D. Morris, Ryan, Jamieson, Hubbell & Morris, Kalamazoo, MI, for Plaintiff-Appellant.

K. Scott Hamilton, Phillip J. Derosier, Dickinson, Wright, PLLC, Detroit, MI, for Defendant-Appellee.

Before KEITH and COLE, Circuit Judges; MILLS, District Judge.^**

PER CURIAM.

Plaintiff-Appellant Diane M. Moon ("Moon" or "Plaintiff") appeals the district court's order denying her application for attorney's fees and costs. For the reasons set forth below, we REVERSE the judgment of the district court and REMAND with instructions to enter an order awarding Moon attorney's fees and costs.

I. BACKGROUND

A. Factual and Procedural Background

The instant appeal arises out of a prior Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., action for long-term disability ("LTD") benefits between Moon and Defendant-Appellee Unum Provident Corporation ("UNUM" or "Defendant"). This Court resolved the underlying litigation in Moon's favor. See Moon v. Unum Provident Corp., 405 F.3d 373 (6th Cir.2005) ("Moon I").

In Moon I, Moon appealed the district court's denial of her motion for judgment on the administrative record and the district court's judgment finding that UNUM's final decision to terminate her LTD benefits was not arbitrary and capricious. A majority panel of this Court disagreed, reversed the district court's decision, and remanded the case for entry of judgment in favor of Moon. The majority concluded that UNUM's final decision upholding the termination of Moon's LTD benefits was arbitrary and capricious. The dissent in the case concluded, on narrow grounds, that, under the highly deferential arbitrary and capricious standard, the district court did not err in upholding the denial of benefits. The dissent did note, however, that "[w]ere we to view the matter under a de novo standard, I might very well decide otherwise." Id. at 382.

On April 21, 2005, subsequent to her successful appeal to this Court, Moon petitioned this Court to grant an order directing the district court to conduct an evidentiary hearing to award her attorney's fees pursuant to 29 U.S.C. § 1132(g)(1) of ERISA. This Court declined to grant Moon's requested relief and instead decided, "[t]he better course is to leave the question of attorney fees to the district court in the first instance. . . [w]e therefore instruct the district court to determine whether an award of attorney fees is appropriate in this case." (J.A. at 57) (6th Cir. Order remanding the case to the district court to decide the issue of attorney's fees in the first instance). Thereafter, the case was remanded to the district court to decide whether to grant Moon's request for attorney's fees. After submission of the briefs, but without a hearing on the issue, the district court denied Moon's motion for attorney's fees. See Moon v. Unum Provident Corp., 408 F.Supp.2d 463 (W.D.Mich.2005) ("Moon II"). The district court reached its conclusion after analyzing the five factors articulated in Sec'y of Dep't of Labor v. King, 775 F.2d 666, 669 (6th Cir.1985) (per curiam), commonly called the "King factors." See Moon II, 408 F.Supp.2d at 465.

On July 20, 2005, Moon timely filed the instant appeal seeking review of the district court's denial of her request for attorney's fees.¹

II. ANALYSIS

A. STANDARD OF REVIEW

We review a district court's denial of a request for attorney fees to a prevailing claimant under ERISA for an abuse of discretion. See Ford v. Uniroyal Pension Plan, 154 F.3d 613, 620 (6th Cir. 1998). "An abuse of discretion occurs when the district court relies on clearly erroneous findings of fact, . . . improperly applies the law, . . . or . . . employs an erroneous legal standard." Barner v. Pilkington North America, Inc., 399 F.3d 745, 748 (6th Cir.2005) (internal quotation marks and citation omitted). This Circuit "has defined an abuse of discretion as a definite and firm conviction that the trial court committed a clear error of judgment." Eagles, Ltd. v. American Eagle Found., 356 F.3d 724, 726 (6th Cir.2004) (quoting Arban v. West Publ'g Corp., 345 F.3d 390, 404 (6th Cir.2003)) (internal quotation marks omitted); see also Anderson v. Procter & Gamble Co., 220 F.3d 449, 452 (6th Cir.2000) ("This court reviews for abuse of discretion the district court's denial of the plaintiff's request for attorneys' fees pursuant to 29 U.S.C. § 1132(g)(1)").

B. DISCUSSION

In an action by a plan participant, the district 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 Sixth Circuit utilizes the following five-factor King test to assess whether a district court properly exercised its discretion in awarding fees: (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) the deterrent effect of an award on other persons under similar circumstances; (4) whether the party requesting fees sought to confer a common benefit on all participants and beneficiaries of an ERISA plan or resolve significant legal questions regarding ERISA; and (5) the relative merits of the parties' positions.² See First Trust Corp. v. Bryant, 410 F.3d 842, 851 (6th Cir.2005). No single factor is determinative, and thus, the district court must consider each factor before exercising its discretion. See Schwartz v. Gregori, 160 F.3d 1116, 1119 (6th Cir.1998).

These factors are not statutory and typically not dispositive. See First Trust, 410 F.3d at 851. Rather, they are considerations representing a flexible approach. Id. In this case, however, the district court relied entirely on this legal framework in reaching its conclusion that Moon was not entitled to attorney's fees. Therefore, in reviewing the district court's decision for an abuse of discretion, we must review his findings as to each of the five King factors. In King, this Court adopted the Ninth Circuit standard that, "an abuse of discretion exists only when the court has the definite and firm conviction that the district court made a clear error of judgment in its conclusion upon weighing relevant factors." 775 F.2d at 669; see also Foltice v. Guardsman Products, Inc., 98 F.3d 933, 939 (6th Cir.1996). Finally, in our Circuit, there is no presumption that attorney's fees will be awarded. See Maurer v. Joy Technologies, Inc., 212 F.3d 907, 919 (6th Cir.2000) (citation omitted).

Our review of the five King factors leads us to the conclusion that the district court abused its discretion in denying Moon's motion for attorney's fees.

1. Degree of Opposing Party's Culpability or Bad Faith

In Moon II, the district court held that UNUM had not engaged in bad faith or culpable conduct and that UNUM did not possess an ill motive. See 408 F.Supp.2d at 465-66. We disagree. In a separate case, a panel of this Court stated,

[a]n arbitrary and capricious denial of benefits does not necessarily indicate culpability or bad faith. However, in this case, [Defendant] ignored overwhelming evidence of [Plaintiff's] disability, and, instead denied her claim based on a theory that lacked legitimate foundation. [Defendant] then sought to defend this theory with reference to isolated snippets from the record.

Heffernan v. UNUM Life Ins. Co. of America, 101 Fed.Appx. 99, 109 (6th Cir. 2004) (unpublished opinion).

In the instant case, the prior panel in Moon I concluded that UNUM's decision to repeatedly deny Moon's claims for disability benefits was arbitrary and capricious because they did not provide a reasoned explanation that supported their outcome. See Moon I, 405 F.3d at 381-82. For example, it is undisputed in the record that the physician on whose opinion UNUM wholly relied never examined Moon, "[the physician] arrived at his opinion not upon examination of Moon, but rather upon what our discussion here shows was a selective review of administrative record." Id. at 381. See also Spangler v. Lockheed Martin Energy Sys., Inc., 313 F.3d 356, 359-62 (6th Cir.2002) (observing that a selective review of the administrative record is inappropriate). In addition, the physician, upon whom the plan administrator relied, was also an employee of UNUM; this Court took issue with this fact, stating, "when a plan administrator's explanation [as to why they terminated a person's benefits] is based on the work of a doctor in its employ, we must view the explanation with some skepticism." Id. at 381-82 (citing Univ. Hosp. of Cleveland v. Emerson Elec. Co., 202 F.3d 839, 846 (6th Cir.2000) (holding that a plan administrator's conflict of interest is a factor to consider when reviewing for whether the administrator's decision was arbitrary or capricious)).

Applying these facts to the question of whether the district court erred when it determined UNUM did not engage in culpable conduct, the answer is clear UNUM engaged in culpable conduct and this factor should be weighed in Moon's favor and against UNUM. Not only did UNUM deny Moon's claims based solely on the opinion of a physician in its employ, but they also repeatedly denied her claims even though this physician ignored substantial evidence in the administrative record indicating she was disabled and the physician never examined Moon. Therefore, we must reject the district court's conclusion that "Defendant pursued their position in good faith and did not engage in any misconduct during the investigation or proceedings before this Court or on appeal." Moon II, 408 F.Supp.2d at 465. Without question, UNUM's wholesale adoption of the opinion of an interested physician, who based his findings on selective information in the administrative record and did not examine Moon, is...