Bublitz v. E.I. Dupont De Nemours and Co.
| Decision Date | 27 August 2002 |
| Docket Number | No. 4:00-CV-90375.,No. 4-00-CV-90247.,No. 4:00-CV-90286.,4-00-CV-90247.,4:00-CV-90286.,4:00-CV-90375. |
| Citation | 224 F.Supp.2d 1234 |
| Parties | Ann E. BUBLITZ and Dorothy A. Pierce, Individually and on Behalf of Themselves and All Persons Similarly Situated, Plaintiffs, v. E.I. DUPONT DE NEMOURS AND COMPANY and Pioneer Hi-Bred International, Inc., Defendants. Jeanne Foster, Plaintiff, v. E.I. duPont de Nemours and Company and Pioneer Hi-Bred International, Inc., Defendants. William Pennington, Plaintiff, v. E.I. duPont de Nemours and Company and Pioneer Hi-Bred International, Inc., Defendants. |
| Court | U.S. District Court — Southern District of Iowa |
Frank B. Harty, Michael W. Thrall, Gerald J. Newbrough of Nyemaster Goode Voights West Hansell & O'Brien, Des Moines, IA, Larry S. Pozner, Denver, CO, for Plaintiffs.
John B. Gordon, Brian Melendez, Steven L. Severson of Faegre & Benson, Minneapolis, MN, Michael A. Giudicessi, Faegre & Benson, Des Moines, IA, for Defendants.
The Court has before it Plaintiffs' Combined Application for Award of Attorneys' Fees and Expenses. After settling the merits of this lawsuit, the parties undertook an abbreviated proceeding concerning attorneys' fees and expenses. That proceeding involved initial briefs, limited discovery, a three day hearing, and post-hearing briefs. The matter is now fully submitted. For the following reasons, the Court grants Plaintiffs' motion in part and denies it in part.
Plaintiffs' combined motion is based on three lawsuits against Defendants Pioneer Hi-Bred International, Inc. ("Pioneer")1 and E.I. duPont de Nemours and Company ("DuPont"). The first suit was a class action brought by Plaintiffs Ann Bublitz and Dorothy Pierce on April 21, 2000. In that suit, they sought to represent themselves as well as 263 other Pioneer employees who were similarly situated with respect to the benefit plan at issue. The complaint alleged four counts under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq.: Count I was a claim for enforcement and declaration of plan benefits against Pioneer and DuPont; Count II was a breach of fiduciary duty claim against Pioneer and DuPont; Count III was a claim against DuPont for interference with protected rights; and Count IV was an equitable relief claim against Pioneer and DuPont asking the Court to toll the three-year period during which participants are entitled to exercise their rights under the plan for the pendency of this action. The other two suits were brought by Jeanne Foster and William Pennington individually, both alleging ERISA claims with respect to the benefit plan. But it is the class action that is at the heart of the dispute here.
The benefit plan at issue in these cases is called the Change in Control Severance Compensation Plan for Management Employees ("CIC" Plan). It was created by Pioneer at least in part to protect itself from the adverse effects of attempted takeovers. To that end, the CIC Plan provides generous severance benefits in the event of a takeover in order to encourage people to work in an environment where takeover threats are real. Benefits consisted of three times a participant's annual compensation, plus health, dental, and life insurance coverage for twelve months.
On October 1, 1999, DuPont took over Pioneer and effected a Change in Control as that term is defined in the CIC Plan. More than just a Change in Control, however, was necessary to trigger benefits under the CIC Plan. The plan participant also must be subject to an involuntary termination within three years of the Change in Control.
The CIC Plan defines involuntary termination as either a termination other than a termination for cause, or the participant's resignation or retirement for a "Stated Good Reason." Under Section 2.1(t) of the CIC Plan, a "Stated Good Reason" is "a written determination by a participant that he [or she] reasonably and in good faith cannot continue to fulfill responsibilities for which he [or she] was employed." Plaintiffs refer to this as a "subjective" trigger. The plan also identifies a number of specific actions by Pioneer that give rise to a conclusive presumption that the participant's determination is reasonable and in good faith, which Plaintiffs refer to as "objective" triggers. These objective triggers include the following: (a) a reduction in the participant's base salary; (b) a failure to continue in effect any bonus plan; (c) a failure to continue any benefit or compensation plan; (d) an assignment to the participant of any duties inconsistent with the participant's duties, responsibilities, or status immediately prior to the Change in Control, or changes in the participant's reporting responsibilities, title, or office; and (e) a requirement that the participant change the location of his or her job or office, so that the participant will be based more than 30 miles away from where he or she was based. The meaning of "Stated Good Reason" and whether it had been triggered was the basis of Plaintiffs' enforcement of plan benefits claims.
Claims for CIC Plan benefits had to be made in writing to the Severance Committee. Participants then had the ability to appeal the decision of the Severance Committee to the Authorization Committee. The composition and conduct of these committees was the basis for Plaintiffs' breach of fiduciary claims.
Finally, and most significantly for purposes of this matter, the CIC Plan contained an attorney fee provision. Section 9.1 of the CIC Plan states: "The Company shall pay all legal fees, costs of litigation, and other expenses incurred by each Participant or the Participant's beneficiary as a result of the Company's contesting the validity, enforceability or interpretation of the Plan." This provision serves as the basis for some of Plaintiffs' counsel's arguments on the matter currently before the Court.
Before the Court certified the class action, Defendants offered the CIC participants a "Retention Proposal." As indicated by its name, the Retention Proposal was designed to provide participants with an incentive to remain at Pioneer. It offered each participant a stock option grant valued at three times the employee's total compensation as of October 1, 1999. The options would then become vested on October 1, 2002, if the employee was still employed by Pioneer. In exchange for the stock options, participants had to waive their rights under the Change in Control Plan, accept a new Transitional Severance Plan (which provides benefits in certain circumstances when an employee suffers an involuntary termination before his or her stock options vest wherein the definition of "involuntary termination" is narrower than that in the Change in Control Plan), and agree not to participate in litigation regarding the Change in Control Plan. Although there was some dispute regarding the manner in which Defendants could communicate such an offer, the Court eventually allowed Defendants to present the Retention Proposal directly to the proposed class members, but only in writing. In addition, the Court required Defendants to file all communications regarding the Retention Proposal with the Court and required them to give the participants at least ten days to consider it. Defendants presented the Retention Proposal to the putative class members on September 29, 2000 and gave them until October 18, 2000 to accept it.
Approximately 84% of the putative class accepted the Retention Proposal. The class size was further reduced by employees who applied for and received CIC benefits before the Retention Proposal and employees who refused to sign the Retention Proposal but were then able to apply for and receive CIC benefits. On July 25, 2001, the Court certified a class of seventeen people defined as follows:
Pioneer Pay Band III and Pay Band IV employees who were, as of April 21 2000, the date this action was filed, "Employees" as defined in Section 2.1(i) of the Pioneer Hi-Bred International, Inc. Change in Control Severance Compensation Plan For Management Employee ("Change in Control Plan" or "Plan"), excluding persons who signed the Retention Proposal and persons who received full Change in Control Plan benefits (including attorney fees and costs).
The Court designated Pierce and Robert D. York as class representatives. Bublitz applied for and received CIC benefits before the class certification, and withdrew as a class representative, though she still remained as a member of the class claiming entitlement to attorneys' fees and costs. Pierce, who had applied for benefits at the time of certification, received benefits before the case was settled. Class representative York had already applied for and had been denied benefits. As class counsel, the Court designated Frank B. Harty, Gerald J. Newbrough, Michael W. Thrall, Julie M. Williamson, Daniel M. Reilly, and Larry S. Pozner. Plaintiff York was also represented individually by Michael J. Carroll.2
The parties settled all three lawsuits on March 11, 2002. By this time the class consisted of only nine unnamed class members, plus York, Pierce, and Bublitz. The settlement resulted in Defendants agreeing to pay all of the CIC benefits of the unnamed class members, almost all of York's CIC benefits, and all of the CIC benefits for Pennington and Foster. This amounts to $7,524,943.40. An addendum to the settlement figure is that the CIC benefits of the unnamed class members will not actually be paid unless and until they choose to leave Pioneer. Throughout these proceedings, however, the Court has presumed an intent to leave for those who refused to sign the Retention Proposal. To their credit, Plaintiffs did not negotiate attorneys' fees and costs as part of the settlement on the merits, but instead chose to seek fees and expenses in a separate proceeding.
Plaintiffs' counsel identify two bases for an award of attorneys' fees and expenses. The first basis Plaintiffs' c...
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