Chambless v. Masters, Mates & Pilots Pension Plan

• Decision Date: 12 September 1989
• Docket Number: 1223,Nos. 1071,D,s. 1071
• Citation: 885 F.2d 1053
• Parties: 112 Lab.Cas. P 11,453, 11 Employee Benefits Ca 1870 Arthur M. CHAMBLESS and Mildred H. Chambless, Plaintiff-Appellants, Cross-Appellees, v. MASTERS, MATES & PILOTS PENSION PLAN, Stephen P. Maher, Administrator of the Masters, Mates & Pilots Pension Plan, C.J. Bracco, Richard M. Casselberry, Michael Di Prisco, E. Gras, George Groh, Justin Gross, James R. Hammer, James J. Hayes, Martin F. Hickey, Charles Jess, Francis E. Kyser, Charles Landry, Orion A. Larson, Robert J. Lowen, Lloyd Martin, J. Eric May, David Merritt, Thomas E. Murphy, Henri L. Nereaux, William Ott, Martin Pecil, Franklin J. Riley, Jr., William I. Ristine, A.C. Scott, Captain John Smith, Rupert Soriano, Ernest Swanson, Michael Swayne, Allen Taylor, Nicholas Telesmanic, Kenneth P. Wenthen, C.E. Witcomb, in their fiduciary capacity as Trustees of the Masters, Mates & Pilots Pension Plan, Defendants-Appellees, Cross-Appellants. ockets 88-7892, 88-7928.
• Court: U.S. Court of Appeals — Second Circuit

Page 1053

885 F.2d 1053

112 Lab.Cas. P 11,453, 11 Employee Benefits Ca 1870

Arthur M. CHAMBLESS and Mildred H. Chambless Plaintiff-Appellants, Cross-Appellees, v. MASTERS, MATES & PILOTS PENSION PLAN, Stephen P. Maher Administrator of the Masters, Mates & Pilots Pension Plan C.J. Bracco, Richard M. Casselberry, Michael Di Prisco, E Gras, George Groh, Justin Gross, James R. Hammer, James J. Hayes, Martin F. Hickey, Charles Jess, Francis E. Kyser, Charles Landry, Orion A. Larson, Robert J. Lowen, Lloyd Martin, J. Eric May, David Merritt, Thomas E. Murphy, Henri L. Nereaux, William Ott, Martin Pecil, Franklin J. Riley, Jr., William I. Ristine, A.C. Scott, Captain John Smith, Rupert Soriano, Ernest Swanson, Michael Swayne, Allen Taylor, Nicholas Telesmanic, Kenneth P. Wenthen, C.E. Witcomb, in their fiduciary capacity as Trustees of the Masters, Mates & Pilots Pension Plan, Defendants-Appellees, Cross-Appellants.

Nos. 1071, 1223, Dockets 88-7892, 88-7928.

United States Court of Appeals, Second Circuit.

Argued May 9, 1989.

Decided Sept. 12, 1989.

Arthur M. Wisehart, New York City (Russell G. Pelton, Wisehart & Koch, New York City, of counsel), for plaintiffs-appellants.

Bettina B. Plevan, New York City (Joseph Baumgarten, Proskauer Rose Goetz & Mendelsohn, New York City, of counsel), for defendants-appellees.

Before KEARSE, CARDAMONE, and PIERCE, Circuit Judges.

CARDAMONE, Circuit Judge:

The litigation that brings this appeal before us began nine years ago in 1980. The case has wended its way into our Court twice before. On this third visit, two over-arching issues are presented: Whether the district court's award of actuarially-adjusted benefits is the equivalent of an award of retroactive benefits, inconsistent with our prior ruling in this case; and, whether the district court abused its discretion in calculating the amount of attorney's fees that plaintiffs' counsel may recover.

With respect to the first issue, we earlier ruled that appellant was not entitled to recover retroactive benefits. On remand, the district court awarded appellant actuarially-adjusted benefits, which amounts to exactly the same thing. The attorney's fees issue, attendant upon the benefits suit, has like Frankenstein's monster taken on a life of its own and threatens to become a second major litigation, despite the Supreme Court admonishment against such happening. See Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S.Ct. 1933, 1941, 76 L.Ed.2d 40 (1983). This is the sixth opinion to be published in this case; we think it should be the last.

I FACTS

In light of the above, we may safely assume familiarity with the factual background and prior proceedings, and set forth only those facts necessary to identify the parties, the dispute and its procedural posture.

The appellant is Arthur M. Chambless, a licensed deck officer in the United States Merchant Marine. He became a member of the International Organization of Masters, Mates & Pilots (union) in 1944. The union negotiated a multi-employer-funded pension plan (Plan) for deck officers working for shipping companies that are signatories to the Plan. The Plan, its administrators, and its trustees are the remaining defendants.

Chambless complained that the union hastened the early retirement of its older members by assigning them to low-paying jobs. He sought early retirement from the union in April of 1977 and went to work for a ship that was not owned by a signatory to the Plan. As a result, the union informed him that he was no longer in good standing. Citing newly enacted Plan Amendments 46 and 47, the Plan's administrator notified Chambless that because he continued to work for a non-signatory ship, he had not truly retired, was not entitled to a union pension at that time, and could not receive his pension under the Plan until 1986 when he would be 65 years old.

The Plan provides monthly wage-related retirement benefits for employees with service of 30 years or longer equal to the greater of either $470 or 60 percent of pay. Pay is defined by looking to the highest-paying five consecutive years in the 10 years immediately preceding retirement. The Plan therefore informed Chambless that when he retired, his monthly benefit would be $470 per month rather than the approximately $970 per month he would have received if he had been allowed to retire in 1977, when his pension would have been calculated using 1967-77 as base years--the period when his income was at its zenith.

The tortuous procedural history of this case began in 1980 when Chambless and his wife as plaintiffs brought suit against defendants, inter alia, the union, the Plan, and Chambless' former employers. Essentially, the complaint alleged that because Chambless had worked for a non-Plan ship, the Plan had discriminatorily forfeited his pension, causing him to receive $470 at age 65 rather than $920 at age 55. Chambless asserted a plethora of claims including violations of the Employee Retirement Income Security Act of 1974, 29 U.S.C. Sec. 1001 et seq. (1982) (ERISA), antitrust violations, waiver and estoppel, breach of duty of fair representation, infliction of emotional distress, and breach of fiduciary duty.

Many of appellant's claims and several named defendants were dismissed following cross-motions for summary judgment. See Chambless v. Masters, Mates & Pilots Pension Plan, 571 F.Supp. 1430, 1459-60 (S.D.N.Y.1983) (Chambless I ). At trial, several more causes of action were dismissed at the close of plaintiffs' case, leaving only the issue of whether the Plan trustees, in applying Amendment 47 of the Plan, had violated ERISA when they caused Chambless to forfeit his pension until age 65. Ruling that the postponement and reduction of Chambless' benefits was arbitrary and capricious, the district court declared the forfeiture a nullity. It directed the trustees to approve Chambless' application for retirement--once he ceased working in the maritime industry--and to "treat the application as if it had been made in 1977 and grant him a wage related pension based on his 1967-1977 employment record." 602 F.Supp. 904, 913 (S.D.N.Y.1984) (Chambless II ). We affirmed and remanded "for a determination of the benefits which Chambless would have received in 1977." 772 F.2d 1032, 1043 (2d Cir.1985), cert. denied, 475 U.S. 1012, 106 S.Ct. 1189, 89 L.Ed.2d 304 (1986) (Chambless III ).

Chambless' counsel then moved for attorney's fees pursuant to Sec. 502(g) of ERISA, 29 U.S.C. Sec. 1132(g). The district court denied the request on the grounds that plaintiff's "vexatious[ ] and wasteful[ ] litigation strategy" outweighed his success on the ERISA claim. It also denied plaintiff's motions to amend the judgment to state the amount of his benefits. No. 80 Civ. 4258 (RLC) (S.D.N.Y. June 23, 1986). We affirmed the district court's refusal to amend its judgment before the benefits had commenced on the grounds that the motion was premature, but reversed and remanded for the district court to "determine and award a reasonable fee for the time spent on Chambless' vindicated ERISA claim." 815 F.2d 869, 872 (2d Cir.1987) (Chambless IV ). Further, we stated that since Chambless had, on September 1, 1986, begun to receive his benefits, any dispute he might have regarding the amount of his pension was ripe for presentation to the district court "to determine whether Chambless is now receiving benefits in the amount to which he is entitled." Id. at 873.

That brings us to the decisions that we now review. As the opinion of the district court with which we disagree is unpublished, we set forth its conclusions in some detail. See Chambless v. Master, Mates & Pilots Pension Plan, No. 80 Civ. 4258, 1988 WL 80170 (S.D.N.Y. July 20, 1988) (Carter, J.) (Decision). The district court awarded Chambless an actuarially-adjusted pension in the amount of $2,689.02 per month. It also awarded plaintiff's counsel $416,191.30 in attorney's fees for work related to the claim upon which Chambless had prevailed.

Initially, Chambless had characterized his complaint as a "seamless web," see Chambless IV, 815 F.2d at 872, and had requested fees of approximately $1.5 million for all legal work. Plaintiff then reduced this request by 25 percent to eliminate such claims as were clearly unrelated to the theory upon which he had prevailed. In calculating the fee, the district court found some of the submitted time sheets cryptic to the point of uselessness and accordingly reduced plaintiff's requested fee by 15 percent to "ensure that the fee award excludes inadequately documented expenditures of time." But Judge Carter concluded that the fee request was still excessive; Chambless' voluntary 25 percent reduction did not go far enough to eliminate work on claims unrelated to the favorable award. The district judge therefore reduced the fee by an additional 15 percent. As a result, Chambless' initial fee application was reduced by a total of 55 percent: 25 percent by Chambless himself, and court reductions of 15 percent for inadequate documentation and 15 percent to exclude time spent on unrelated claims.

To calculate an hourly rate for Chambless' attorneys that reflected both inflation and delayed payment because of the protracted history of the case, the district court divided the litigation into two time periods subject to different hourly rates, but declined to add interest to the award on the grounds that its rates for the earlier hours were generous enough to compensate for the time that elapsed since the services had been rendered. The hourly rates for both time spans were what the district court determined to represent the market rate for small to medium-sized firms. In addition, the fee calculation reimbursed Chambless' attorneys for the payroll cost of paralegals and law clerks rather than their customary billable hourly rate, which plaintiff had sought. This portion of the award was similarly reduced by 30 percent for inadequate documentation...