Curry v. Contract Fabricators Inc. Profit Sharing Plan

• Decision Date: 09 January 1990
• Docket Number: Nos. 88-7235,88-7448,s. 88-7235
• Parties: 11 Employee Benefits Cas. 2521 Alexander CURRY, Plaintiff-Appellee, v. CONTRACT FABRICATORS INCORPORATED PROFIT SHARING PLAN; Victor M. Haber, individually and in his formal capacity as President of Contract Fabricators, Inc.; et al., Defendants-Appellants. Alexander CURRY, Plaintiff-Appellant, Cross-Appellee, v. CONTRACT FABRICATORS INCORPORATED PROFIT SHARING PLAN; Victor M. Haber, individually and in his formal capacity as President of Contract Fabricators, Inc., et al., Defendants-Appellees, Cross-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 842

891 F.2d 842

11 Employee Benefits Cas. 2521

Alexander CURRY, Plaintiff-Appellee, v. CONTRACT FABRICATORS INCORPORATED PROFIT SHARING PLAN;

Victor M. Haber, individually and in his formal

capacity as President of Contract

Fabricators, Inc.; et al.,

Defendants-Appellants.

Alexander CURRY, Plaintiff-Appellant, Cross-Appellee, v. CONTRACT FABRICATORS INCORPORATED PROFIT SHARING PLAN;

Victor M. Haber, individually and in his formal capacity as

President of Contract Fabricators, Inc., et al.,

Defendants-Appellees, Cross-Appellants.

Nos. 88-7235, 88-7448.

United States Court of Appeals, Eleventh Circuit.

Jan. 9, 1990.

Theron Stokes, Kenneth L. Thomas, Massey, Means & Thomas, Montgomery, Ala., Joe R. Whatley, Jr., James E. Smith, Cooper, Mitch, Crawford, Kuykendall & Whatley, Birmingham, Ala., for Alexander Curry.

Thomas R. DeBray, Kaufman, Rothfeder & Blitz, Montgomery, Ala., for Contract Fabricators Inc. Profit Sharing Plan, et al.

Appeals from the United States District Court for the Middle District of Alabama.

Before TJOFLAT, Chief Judge, HATCHETT, Circuit Judge, and ESCHBACH ^*, Senior Circuit Judge.

TJOFLAT, Circuit Judge:

In this case, the defendant appeals the district court's award of civil penalties to the plaintiff under section 502(c) of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1132(c) (1982), and its award of attorneys' fees under section 1132(g), id. § 1132(g). Because district courts have discretion to award civil penalties under section 1132(c) and attorneys' fees under section 1132(g) and because the district court's decision was not an abuse of its discretion, we affirm.

I.

Alexander Curry worked approximately thirteen years as an employee of Contract Fabricators, Inc. (CFI). During the last ten years of his employment, Curry belonged to CFI's employee benefit plan. Victor Haber, CFI's president, administered the plan. As amended in 1977, the plan gave the administrator discretion to deny payment of benefits until a claimant reached a minimum retirement age of sixty-five. The amended plan eliminated a provision that had required the administrator to deny payment of benefits for two years to any claimant who had accepted employment with a competitor of CFI's located within a 500-mile radius of Montgomery, Alabama.

In 1983 when Curry left CFI, his benefits under the plan had vested. Upon his departure, Curry inquired about payment of his benefits. Haber informed him that, because he might go to work for a competitor, he would have to wait two years before receiving payment. Curry, therefore, waited two years. In the fall of 1985, he again tried to collect his benefits. Haber, however, still refused payment. At that point, Curry got himself a lawyer.

In November 1985, Curry's lawyer spoke with Haber by phone regarding the denial of benefits. Haber stated that, because Curry had gone to work for a competitor, he would receive no benefits until he reached age sixty-five. Curry's attorney requested that Haber send him plan documents supporting the denial of benefits. Haber agreed to send the documents and also referred Curry's attorney to the plan's accountant. When Curry's attorney contacted the accountant, however, the accountant refused to answer any questions because he had received no prior authorization from Haber. Curry's attorney also duplicated his request for documents in an undated letter, which the district court found was sent a few days after the attorney's phone conversation with Haber. When Haber failed to provide either the requested benefits or plan documents, Curry filed suit in August 1986. Shortly thereafter, Haber provided the documents as well as a claims form. Curry filled out the form and, after receiving it, Haber paid Curry his benefits.

Based on these events, the district court found that Haber had "fraudulently" used CFI's profit sharing plan to prevent Curry from going to work for a competitor and then to punish him for having worked for a competitor. That conduct, in the district court's view, constituted a violation of Haber's duty to provide plan documents as required under 29 U.S.C. § 1024(b)(4) (1982). ¹ The district court thus awarded Curry a civil penalty of $800 as authorized by 29 U.S.C. § 1132(c) (1982). ² The district court also awarded Curry attorneys' fees under 29 U.S.C. § 1132(g) (1982).

On appeal, CFI challenges the civil penalty, claiming that Curry failed to exhaust his administrative remedies and suffered no harm or prejudice as a result of Haber's failure to provide plan documents. CFI also challenges the award of attorneys' fees as an abuse of discretion; Curry cross-appeals, claiming that the district court improperly selected a low hourly fee rate. We reject all of these challenges and affirm the district court's judgment.

II.

A.

ERISA requires every employee retirement plan to establish a claims procedure, which must provide for adequate written denials of claims as well as an opportunity for "full and fair review" of benefit denials. 29 U.S.C. § 1133 (1982); see 29 C.F.R. § 2560.503-1 (1988). CFI's plan did provide for such procedures, requiring a claimant to file a written request with the plan administrator on an official claims form, guaranteeing written notice of denial within sixty days, and outlining procedures for further review of denied claims. ³

CFI argues that Curry failed to exhaust his administrative remedies under the plan before filing his ERISA claims in court. ⁴ According to CFI, Curry took no action in pursuit of his claim from November 1985, when Curry's attorney sent Haber the letter requesting plan documents, until August 1986, when Curry filed his lawsuit. CFI asserts that, even if Haber's failure to respond within sixty days to Curry's November letter constituted a denial of the claim under the plan's claims procedure, see supra note 3, ⁵ Curry still failed to request review under the procedures outlined in the plan, see id. ⁶ CFI argues that Curry failed to exhaust his administrative remedies and is therefore barred from bringing his ERISA claim to court.

CFI correctly asserts that a plaintiff must exhaust a plan's administrative remedies before bringing an ERISA suit. See Mason v. Continental Group, Inc., 763 F.2d 1219, 1227 (11th Cir.1985), cert. denied, 474 U.S. 1087, 106 S.Ct. 863, 88 L.Ed.2d 902 (1986). In so holding, this court in Mason rejected an argument that exhaustion should apply only to claims alleging violations of specific pension plans and not to claims brought under ERISA itself. See id. at 1227. Mason should not be read, however, as overruling well-established exceptions to the exhaustion requirement. In Amato v. Bernard, 618 F.2d 559 (9th Cir.1980), on which this court heavily relied in Mason, see 763 F.2d at 1226-27, the Ninth Circuit discussed the important policy concerns served by the exhaustion requirement: these include helping to "reduce the number of frivolous lawsuits under ERISA; to promote the consistent treatment of claims for benefits; to provide a nonadversarial method of claims settlement; and to minimize the costs of claims settlement for all concerned." Amato, 618 F.2d at 567-68; see Mason, 763 F.2d at 1227 (citing Amato ); Kross v. Western Elec. Co., 701 F.2d 1238, 1244-45 (7th Cir.1983). The Amato court, however, also emphasized that exceptions to the exhaustion requirement exist:

We recognize of course that despite the usual applicability of the exhaustion requirement,

there are occasions when a court is obliged to exercise its jurisdiction and is guilty of an abuse of discretion if it does not, the most familiar examples perhaps being when resort to the administrative route is futile or the remedy inadequate.

Amato, 618 F.2d at 568 (quoting Winterberger v. General Teamsters Auto Truck Drivers & Helpers Local Union 162, 558 F.2d 923, 925 (9th Cir.1977)); see Glover v. St. Louis-S.F. Ry., 393 U.S. 324, 329-30, 89 S.Ct. 548, 551, 21 L.Ed.2d 519 (1969); Vaca v. Sipes, 386 U.S. 171, 184-85, 87 S.Ct. 903, 914, 17 L.Ed.2d 842 (1967). See generally 4 K. Davis, Administrative Law Treatise § 26:1 (1983). In addition, the decision whether to apply the exhaustion requirement is committed to the district court's sound discretion and can be overturned on appeal only if the district court has clearly abused its discretion. Dale v. Chicago Tribune Co., 797 F.2d 458, 466 (7th Cir.1986), cert. denied, 479 U.S. 1066, 107 S.Ct. 954, 93 L.Ed.2d 1002 (1987); Janowski v. International Bhd. of Teamsters Local No. 710 Pension Fund, 673 F.2d 931, 935 (7th Cir.1982), vacated on other grounds, 463 U.S. 1222, 103 S.Ct. 3565, 77 L.Ed.2d 1406 (1983); Carter v. Signode Indus., 688 F.Supp. 1283, 1286 (N.D.Ill.1988); see Kross, 701 F.2d at 1244-45; Amato, 618 F.2d at 569.

We conclude that the district court did not abuse its discretion in not requiring Curry to exhaust his administrative remedies. In this case, CFI controlled the plan's administrative review procedures and exercised its control to deny Curry meaningful access to those procedures. Until Curry could obtain plan documents describing what remedies the plan made available and documenting the reasons that his claim had been denied, he was refused meaningful access to those procedures. CFI nevertheless asks us to require that Curry exhaust those very procedures to which CFI itself denied him access. The district court allowed Curry to proceed without having exhausted his administrative remedies, and we cannot say that it abused its discretion in doing so. When a plan administrator in control of the available review procedures denies a claimant meaningful access to those procedures, the district court has discretion not to require exhaustion. See Vaca, 386 U.S. at 185, 87 S.Ct. at 914; Amato, 618 F.2d at 568; Carter, 688 F.Supp. at 1286. ⁷ Indeed, under such circumstances as these, as the Amato court suggested, a district court would be "obliged to exercise its jurisdiction and [would be] guilty of an...