Antolik v. Saks Inc.

• Decision Date: 03 January 2006
• Docket Number: No. 4:03 CV 90203.,4:03 CV 90203.
• Citation: 407 F.Supp.2d 1064
• Parties: Michelle ANTOLIK, Sara Biris, Marleen Dixon, Anne Golke, Carol Jones, Jennifer Ladehoff, Susan McClellan, Darlene Owens, Linh Phantahavong, Susan Robeoltman, Dena Steinbach, Julie Vogeler, Connie Ward, Tosha Whitson, Cheryl Womack, on behalf of themselves and all others similarly situated, Plaintiffs, v. SAKS INCORPORATED, d/b/a Younkers, Defendant.
• Court: U.S. District Court — Southern District of Iowa

407 F.Supp.2d 1064

Michelle ANTOLIK, Sara Biris, Marleen Dixon, Anne Golke, Carol Jones, Jennifer Ladehoff, Susan McClellan, Darlene Owens, Linh Phantahavong, Susan Robeoltman, Dena Steinbach, Julie Vogeler, Connie Ward, Tosha Whitson, Cheryl Womack, on behalf of themselves and all others similarly situated, Plaintiffs, v. SAKS INCORPORATED, d/b/a Younkers, Defendant.

No. 4:03 CV 90203.

United States District Court, S.D. Iowa, Central Division.

January 3, 2006.

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Justin E. LaVan, LaMarca & Landry, George A. Lamarca, Lamarca & Landry PC, Des Moines, IA, for Michelle Antolik, Sara Biris, Marleen Dixon, Anne Golke, Carol Jones, Jennifer Ladehoff, Susan McClellan, Darlene Owens, Linh Phanthavong, Susan Robeoltman, Plaintiffs.

Amy M. Bjork, Angela Ellen Dralle, Dennis Wayne Johnson, Dorsey & Whitney LLP, Des Moines, IA, for Saks Incorporated, Defendant.

ORDER

PRATT, District Judge.

Before the Court is a motion, filed by Plaintiffs, entitled "Plaintiff's Motion for Attorney Fees and Expenses" (Clerk's No. 94). Plaintiffs previously filed a Bill of Costs (Clerk's no. 93), requesting that the Court award certain expenses. Because the amount requested in the Bill of Costs is included within Plaintiffs' requested expenses in the Motion for Attorney Fees and Expenses, the Court will consider both pleadings together. Defendant filed a resistance to Plaintiffs' Bill of Costs, and with permission of the Court, filed adversary submissions regarding Plaintiffs' requested attorneys' fees. See Clerk's Nos. 97, 103. The matters are fully submitted.

I. BACKGROUND

On March 16, 2003, Plaintiffs filed a Petition in the Iowa District Court in and for Polk County, Iowa, against Defendant Saks Inc. ("Saks"), alleging breach of contract, promissory estoppel, violation of Iowa Code chapter 91A (Wage Payment Collection Law), and fraudulent misrepresentation. Defendant removed the matter to this Court on April 14, 2003, on the basis of both federal subject matter jurisdiction and diversity of citizenship. On August 13, 2003, the Court issued an Order on Defendant's Motion to Dismiss Plaintiffs' claims. See Clerk's No. 19. The Court found that the Employee Retirement Income Security Act ("ERISA") preempted Plaintiffs' state law claims and dismissed those claims as a result. Plaintiffs were, however, provided an opportunity to file an Amended Complaint alleging a cause of action under ERISA. Plaintiffs' filed such an Amended Complaint on August 19, 2003 (Clerk's No. 20), but again reiterated the state law claims previously dismissed, with an added "In the Alternative" section raising a claim under ERISA and a claim for breach of fiduciary duty. Upon Defendant's Motion, the court struck the state law claims from the Amended Complaint, leaving only the ERISA and breach of fiduciary duty claims.

On June 14, 2005, Defendant filed a Motion for Summary Judgment as to both of Plaintiffs' claims. On July 15, 2005, Plaintiffs filed a cross Motion for Summary Judgment. On August 17, 2005, this Court issued an Order (Clerk's No. 68) denying Plaintiffs' Motion for Summary Judgment in its entirety, and denying Defendant's Motion for Summary Judgment on Plaintiffs' ERISA claim. The Court granted Defendant's Motion for Summary Judgment as to Plaintiffs' claim of breach of fiduciary duty. The ERISA claim was heard by bench trial on August 30 and 31, 2005. Having previously found that an October 27, 2000 letter which Defendant distributed to introduce and explain the 2000 Change of Control and Material Transactions Severance Plan ("Change of Control Plan"), was a faulty Summary Plan Description ("SPD"), the Court went on to consider, at trial, whether the terms of the undisclosed formal plan document and the faulty SPD were in conflict, and whether the Class Plaintiffs relied upon or were prejudiced by the faulty SPD. In its September 23, 2005, Findings of Fact, Conclusions of Law, and Order on Bench Trial (Clerk's No. 90, "Order"), the Court determined that there was a conflict between the formal plan document and the faulty SPD regarding the definition of "change of control." Order at 21. Accordingly, the Court concluded that the words of the SPD control the terms of the ERISA plan. Id. Moreover, the Court determined that the Class Plaintiffs were prejudiced by the misinformation found in the faulty SPD, and were, therefore, entitled to damages. Id. The Court ordered damages for Class Plaintiffs in the amount of $1,661,317.62, plus prejudgment interest, Id. at 24. The Court withheld judgment on the issue of costs and attorneys' fees pending additional briefing by the parties. Id. The additional briefing is complete and the Court now turns to the merits of Plaintiffs' Motion for Attorney Fees and Expenses.

II. ATTORNEYS' FEES AND EXPENSES

A. Attorneys' Fees

ERISA authorizes a court "in its discretion" to allow "a reasonable attorney's fee and costs of action to either party." 29 U.S.C. § 1132(g)(1). Although an award of attorneys' fees is not mandatory, see Lawrence v. Westerhaus, 749 F.2d 494, 495 (8th Cir.1984), there has historically been a presumption that a prevailing plan beneficiary should recover reasonable attorneys' fees unless "special circumstances" would make such an award inequitable. See Lutheran Med. Ctr. v. Contractors, Laborers, Teamsters and Eng'r Health and Welfare Plan, 25 F.3d 616, 623 (8th Cir.1994). In 2002, the Eighth Circuit Court of Appeals held that no such presumption in favor of awarding attorneys' fees exists in ERISA actions. Noting that the language of ERISA has "neutral, discretionary attorney fee language, and equally neutral (or spares) legislative history concerning attorney fees," the appellate court emphasized that the determination of whether to award attorneys' fees in ERISA actions is within the sound discretion of the district court, to be applied after considering "several non-exclusive factors." Martin v. Arkansas Blue Cross and Blue Shield, 299 F.3d 966, 971 (8th Cir.2002). Thus, in deciding whether to award attorneys' fees, a court should consider the five factors articulated in Westerhaus: (1) the opposing party's degree of culpability or bad faith; (2) its ability to pay; (3) the potential deterrent effect of a fee award; (4) whether the moving party sought to benefit all plan participants or beneficiaries or to resolve a significant legal question regarding ERISA; and (5) the relative merits of the parties' positions. These factors "are by no means exclusive or to be mechanically applied ... as a mechanical application of the factors may serve to undermine `both the substantive purpose of ERISA and the discretion vested in the courts to carry out that purpose.'" Martin, 299 F.3d at 972 (quoting Eddy v. Colonial Life Ins. Co. of Am., 59 F.3d 201, 207 (D.C.Cir.1995)). "Instead, the district courts should use the factors and other relevant considerations as general guidelines for determining when a fee is appropriate." Martin, 299 F.3d at 972; see also Beatty v. N. Cent. Cos., 282 F.3d 602, 6005 (8th Cir.2002) (recognizing that a district court "is not required to consider all of the factors in every case.").

1. Degree of culpability.

Plaintiffs argue that Defendant was extremely culpable in denying benefits under the October 27, 2000 Letter to its employees when it underwent an internal consolidation:

Saks put together a scheme to deliberately take advantage of the Class Plaintiffs. Its carefully crafted faulty SPD, together with the concealed definition of "change of control" in the formal plan document, reveals a high degree of culpability. This is a fair conclusion given that Saks knew of and preyed upon the Class Plaintiffs' insecurities after the Herberger's consolidation.

Clerk's No. 94, Pls.' Br. at 4. Defendant, on the other hand, insists that there is no evidence in the record indicating that it acted culpably or in bad faith:

Several members of Saks' management team who were involved in drafting and distributing the letter were under the impression that the October 27, 2000 letter was an accurate summary of the Change of Control Plan and clearly communicated the terms of the Change of Control Plan .... There was no intention on the part of Saks to mislead employees in distributing the letter. Saks had nothing but good intentions in adopting the Change of Control for the benefit and welfare of its employees.

Clerk's No. 96, Def.'s Br. at 2.

There is no doubt that the single greatest controversy in this case regarded the definition of "Change of Control." The term was used three times in the October 27, 2000 Letter, as discussed in the Court's Findings of Fact and Conclusions of Law. No separate definition of Change of Control was found in the letter, meaning that it must, in the context of ERISA law, be given its plain and ordinary meaning. While Defendant vehemently argued that the phrase was ambiguous, the Court found, as a matter of law, that it was not. Thus, when Younkers, a major business unit, came under the control of Carson Pirie Scott, a change of control within the meaning of the October 27 Letter occurred. Because the term change of control conflicted with another ERISA plan document, Plaintiffs were required to, and did, show detrimental reliance on the letter in order to succeed on their claim that Defendant violated ERISA by failing to grant them the benefits described in the Letter.

In the context of this case, the evidence showed that a period of unrest at Younkers existed prior to distribution of the October 27 Letter. There had been two major internal consolidations, and employees were leaving and concerned that Younkers would be consolidated with another division of Saks. The purpose of the October 27 Letter, as revealed by trial testimony, was to "allow people to return their focus to doing their job and doing the best work they are capable of doing." Trial Tr. vol. 2 at 303. More specifically, the Letter...