D'Emanuele v. Montgomery Ward & Co., Inc.

• Decision Date: 30 August 1990
• Docket Number: No. 88-6505,88-6505
• Citation: 904 F.2d 1379
• Parties: , 12 Employee Benefits Ca 1782 Salvatore D'EMANUELE, Plaintiff-Appellant, v. MONTGOMERY WARD & CO., INC., Long Term Disability Plan & Trust; Montgomery Ward & Company, Inc., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1379

904 F.2d 1379

59 USLW 2012, 12 Employee Benefits Ca 1782

Salvatore D'EMANUELE, Plaintiff-Appellant, v. MONTGOMERY WARD & CO., INC., Long Term Disability Plan &

Trust; Montgomery Ward & Company, Inc., et al.,

Defendants-Appellees.

No. 88-6505.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Oct. 4, 1989.

Decided June 5, 1990.

As Amended on Denial of Rehearing

Aug. 30, 1990.

Herbert Hafif, Law Office of Herbert Hafif, Claremont, Cal., James J. Guziak, James J. Guziak, A P.C., Santa Ana, Cal., for plaintiff-appellant, Salvatore D'Emanuele.

Richard D. Roth, Reid & Hellyer, Riverside, Cal., for the defendants-appellees Montgomery Ward & Co., Inc., and Montgomery Ward & Co., Inc., Long Term Disability Plan and Trust.

Appeal from the United States District Court for the Central District of California.

Before WALLACE, PREGERSON and ALARCON, Circuit Judges.

ALARCON, Circuit Judge:

Salvatore D'Emanuele appeals from the order of the district court awarding him attorney's fees of $76,125.00 in his ERISA action pursuant to 29 U.S.C. Sec. 1132(g). D'Emanuele requests that we vacate and remand the district court's award of attorney's fees. D'Emanuele claims that the district court erred by (1) failing to apply properly the hybrid lodestar/multiplier analysis for fee determination; (2) failing to offer a clear and concise explanation to support the fee award; and (3) failing to conduct a hearing in violation of due process. In addition, both D'Emanuele and Montgomery Ward seek attorney's fees for this appeal. We vacate the district court's order and remand with directions.

I. PERTINENT FACTS

On October 3, 1983, after exhausting his administrative remedies, D'Emanuele filed a pro se complaint in state court for long term disability benefits against Montgomery Ward & Co. and Montgomery Ward & Co. Long Term Disability Plan and Trust. Montgomery Ward removed the case to federal court. D'Emanuele, facing involuntary dismissal, obtained counsel. An amended complaint was filed on April 24, 1985, seeking relief under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. Sec. 1001.

Montgomery Ward filed a motion for summary judgment on November 11, 1986. D'Emanuele filed a cross motion for summary judgment on January 5, 1987. While the summary judgment motions were under submission, D'Emanuele filed a second amended complaint adding a claim under the Racketeer Influenced and Corrupt Organizations Act of 1970, 18 U.S.C. Secs. 1961-1968. On August 25, 1987, the district court issued its Memorandum of Decision and Order on the summary judgment motions. The district court, in denying Montgomery Ward's motion and granting D'Emanuele's motion in part, held that the Montgomery Ward & Co. Long Term Disability Plan and Trust "(a) imposed a substantive standard not required by the provisions of the Plan Document; (b) committed prejudicial violations of plaintiff's ERISA procedural due process rights; (c) rendered a final decision that is not supported by substantial evidence; and (d) acted in bad faith."

Thereafter, the parties entered into settlement negotiations. A settlement was reached on November 25, 1987. The settlement agreement was filed with the district court under seal. On February 1, 1988, the district court approved the settlement. Pursuant thereto, the ERISA and RICO claims were dismissed with prejudice. The agreement further provided that D'Emanuele would receive attorney's fees in an amount deemed reasonable by the district court.

A motion for attorney's fees was filed on May 24, 1988. Counsel for D'Emanuele requested compensation for 1242.48 hours of his time at the rate of $175/hour ($217,434.00), 37.81 hours of his associate attorney's time at $135/hour ($5,104.34), and 153 hours of his legal assistants' time at $65/hour ($9,945.00) for a total fee of $232,483.34. D'Emanuele's attorney also The district court scheduled a hearing for determination of attorney's fees on June 20, 1988. Thereafter, the district court vacated the hearing date and took the issues raised concerning the fee application under submission.

requested that the fee be increased by a multiplier of 2.5 for work completed prior to the date the district court granted D'Emanuele partial summary judgment and by a multiplier of 1.75 for the work necessary to effect a settlement for an additional $312,191.59. The total fee requested was $544,674.93. Payment of attorney's fees for the time required for the preparation of the fee application was also requested. Counsel informed the district court that he worked 134.6 hours on the motion for attorney's fee. At $175 an hour, the amount claimed for preparation of the motion for attorney's fees totaled $23,555.

On September 21, 1988, the district court filed its order awarding D'Emanuele attorney's fees. The order provides as follows:

The court, after carefully considering all papers on file concerning plaintiff's application for attorney's fees in the above-entitled action, makes the following order:

(1) Plaintiff is awarded attorney's fees in the amount of $76,125.00. This amount is reasonable given the nature and resolution of this case, and reflects a finding by the Court that plaintiff's reasonable attorney's fees should be 525 hours at $145.00 per hour. The Court, on several occasions, noted its concern over the manner in which plaintiff's counsel was proceeding with this case. For reasons recited at an earlier sanctions proceeding, the Court will not reward plaintiff's counsel for time put into such matters as rejected filings, responses to sanctions, ex parte motions to shorten time, unreasonably lengthy time put into research, and overly voluminous filings, and, accordingly, has discounted plaintiff's submitted hours to a reasonable amount.

2. The Court will not upwardly adjust this award of fees, as plaintiff's counsel suggests.

II. THE APPROPRIATE LEGAL STANDARDS

A. Applicability of Lodestar Analysis to ERISA

D'Emanuele contends that the district court failed to make a proper determination of the "lodestar" figure or to apply the relevant factors for awarding attorney's fees under the law of this circuit. D'Emanuele also contends that the district court should have considered the factors set forth in Hummell v. S.E. Rykoff, 634 F.2d 446, 452-53 (9th Cir.1980), in fixing the proper fee. In response, Montgomery Ward argues that this circuit has never applied the lodestar/multiplier factors in ERISA cases.

D'Emanuele's reliance on Hummell is misplaced. Hummell does not apply to the determination of the amount of attorney's fees. The factors set forth in Hummell guide the district court in determining whether any attorney's fees should be granted under 29 U.S.C. Sec. 1132(a). Because the parties stipulated that attorney's fees should be granted, the Hummell factors have no application.

We next turn to the question whether the lodestar/multiplier approach is applicable in calculating attorney's fees under ERISA. Montgomery Ward contends that the lodestar/multiplier approach is not required in ERISA cases. The Supreme Court, in Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983), stated that the standards for determining fee awards set forth in that opinion "are generally applicable in all cases in which congress has authorized an award of fees to a 'prevailing party.' " Id. at 433 n. 7, 103 S.Ct. at 1939 n. 7. Unlike the attorney's fee provision of 42 U.S.C. Sec. 1988 that was at issue in Hensley, however, ERISA does not limit attorney's fees to a "prevailing party." See 29 U.S.C. Sec. 1132(g) (1982) (allowing attorney's fees to parties at court's discretion). This distinction does not affect the applicability of Hensley to the calculation of an attorney's fee award under ERISA. Those statutes that limit an award to the "prevailing party" control the decision whether a party is entitled to any The analysis adopted in Hensley for determining attorney's fee awards is a hybrid lodestar/multiplier approach. We affirmed the use of the lodestar/multiplier factors in an ERISA case in Kim v. Fujikawa, 871 F.2d 1427, 1434-35 (9th Cir.1989), although we did not expressly adopt its use for all ERISA cases. Id. Hensley does not preclude us from applying the lodestar/multiplier in ERISA cases in determining the amount of attorney's fees. Accordingly, we expressly hold that the lodestar/multiplier factors should be considered in determining the amount to be awarded in an ERISA case.

fees. The fact that Congress has permitted an award of fees to a non-prevailing party in ERISA cases should not affect the standards for determining the amount of attorney's fees. See Hensley, 461 U.S. at 434-37, 103 S.Ct. at 1939-41 (discussing the appropriate methods for determining the extent to which a party is a "prevailing party"). The principle that different rules, namely the Hummell factors, may apply under ERISA in determining whether attorney's fees should be awarded does not affect the calculation of the amount of attorney's fees once the decision has been made to grant them.

1. The "Lodestar" Analysis

The lodestar/multiplier approach adopted by the Supreme Court in Hensley is essentially a two-part test. United Steelworkers v. Phelps Dodge Corp., 896 F.2d 403, 406 (9th Cir.1990). First, the court must determine a "lodestar" amount by multiplying the number of hours reasonably expended on the litigation by a reasonable hourly rate. Hensley, 461 U.S. at 433, 103 S.Ct. at 1939; Cunningham v. County of Los Angeles, 879 F.2d 481, 484 (9th Cir.1988). Second, the court may increase or decrease the lodestar fee based on factors identified by this circuit in Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir.1975), cert. denied, 425 U.S. 951, 96 S.Ct. 1726, 48 L.Ed.2d 195 (1976), that are not subsumed within the initial calculation of the lodestar. Hensley, 461 U.S. at 434 n. 9, 103 S.Ct. at 1940 n. 9 (referring to factors identified in Johnson v....