Flohrs v. Eli Lilly & Co.

Decision Date31 July 2013
Docket NumberCase No. 12-2439-SAC
CourtU.S. District Court — District of Kansas

This ERISA case comes before the Court on Defendant Eli Lilly and Company's motion for attorneys' fees, costs, and expenses. Plaintiff opposes the motion (Dk. 88, 91). Costs are determined by the Clerk's office as a matter of course, so this memorandum shall deal solely with the disputed attorneys' fee request.

I. General Principles - ERISA Fee Awards

ERISA's attorney's fees provision, 29 U.S.C. § 1132(g)(1), provides "in any action under this subchapter ... by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney's fee and costs of action to either party." Under this section, "it is within the district court's sound discretion to determine whether a party is entitled to attorney's fees as the result of an action brought under ERISA." Pitman v. Blue Cross andBlue Shield of Oklahoma, 217 F.3d 1291 (10th Cir. 2000), quoting Gordon v. United States Steel Corp., 724 F.2d 106, 108 (10th Cir. 1983).

Under ERISA, a party who has received some degree of success on the merits may recover fees from the opposing party.

A fee claimant need not be a prevailing party to be eligible for an award of attorney's fees and costs under ERISA. Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 130 S.Ct. 2149, 2152, 176 L.Ed.2d 998 (2010). A court may award fees and costs under 29 U.S.C. § 1132(g)(1) as long as the fee claimant has achieved "some degree of success on the merits." Id.
This court has established five factors a court may consider in deciding whether to exercise its discretion to award attorney's fees and costs: (1) the degree of the opposing party's culpability or bad faith; (2) the opposing party's ability to satisfy an award of fees; (3) whether an award of fees would deter others from acting under similar circumstances; (4) whether the party requesting fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA; and (5) the relative merits of the parties' positions. Gordon v. U.S. Steel Corp., 724 F.2d 106, 109 (10th Cir. 1983). No single factor is dispositive and a court need not consider every factor in every case. McGee v. Equicor-Equitable HCA Corp., 953 F.2d 1192, 1209 n. 17 (10th Cir. 1992).

Cardoza v. United of Omaha Life Ins. Co., 708 F.3d 1196, 1207 -1208 (10th Cir. 2013). These five factors are not exclusive and no single factor is dispositive. See Gordon, 724 F.2d at 109 (noting the district court should consider these five factors "among others."); McGee v. Equicor-Equitable HCA Corp., 953 F.2d 1192, 1209, n. 17 (10th Cir. 1992) (finding the factors "are merely guidelines, and while courts need not consider each factor, no single factor should be held dispositive.")

Defendant, having won its motion for summary judgment on all issues, has achieved a great degree of success on the merits. The sole matter on which Defendant did not prevail is its counterclaim, which the Court dismissed for lack of jurisdiction without having reached its merits. See Dks. 49, 79. The Court is thus free to exercise its discretion regarding a fee award.

II. Factors in Deciding to Award Fees

Because neither party has suggested other factors for the Court's consideration and none cries out for attention, the Court examines solely the five factors noted above.

A. Plaintiff's Culpability or Bad Faith

Defendant contends that Plaintiff's acts were both culpable and in bad faith.

1. No Bad Faith

Defendant shows the Court that Plaintiff repeatedly engaged in acts during discovery which, in the Court's view, if undertaken by an attorney, would likely violate ethical rules and could warrant sanctions. See Dk. 90, p. 14. But bad faith in the fee factor context most likely means "[d]ishonesty of belief or purpose." United States v. Lain, 640 F.3d 1134, 1138 (10th Cir. 2011) (examining attorneys' fees under Hyde Amendment). The Court is not persuaded that Plaintiff acted in bad faith, as nothing in the record shown to this Court reflects that Plaintiff's belief in his claims was not sincere or thathis purpose was other than to recover the benefits which he erroneously yet sincerely believed were owed to him.

2. Some Culpability

"Culpability means that conduct was more than negligent and was reprehensible or wrong." Local Union No. 98, Intern. Broth. of Elec. Workers v. Morris, 2004 WL 2102073, 1 (E.D.Pa. 2004) (interpreting ERISA fee statute). Culpability means that conduct "involve[d] ... the commission of a fault." McLean v. Continental Cas. Co., 1997 WL 566117, 3 (S.D.N.Y.1997) (interpreting ERISA fee statute). The Court finds that Plaintiff's pursuit against a new defendant (Aon Hewitt) of claims identical to those the Court had recently dismissed in the summary judgment order, without presenting any distinguishing facts or reasonable legal argument for a different result, demonstrates a moderate degree of culpability.

B. Plaintiff's Ability to Pay Fees

Defendant contends that the record suggests Plaintiff is able to satisfy a fee award because: 1) Plaintiff received $202,918.83 less taxes and withholdings in 2008 as severance pay; 2) Plaintiff informed the Court on multiple occasions during this case that he is employed and travels for work, sometimes internationally; and 3) Plaintiff paid the filing fee in this case. In response, Plaintiff neither asserts that he is unable to pay attorneys' fees nor denies Defendant's assertions. Instead, Plaintiff responds that he has only $4500 in savings, that he is offended by Defendant's representation that hehas endless resources, and that Defendant once again breached its privacy policy by disclosing the amount of his severance pay. The Court finds that Plaintiff is able to satisfy a fee award.

C. Deterrent Effect

The Court next examines whether awarding fees would deter conduct of the kind in which the Plaintiff engaged. Defendant asserts that awarding fees would deter Plaintiff and others from filing speculative litigation on thinly based grounds. Plaintiff's response does not address this specific issue. The Court finds that a fee award would serve the purpose of deterring Plaintiff and others from filing suits that lack any colorable claim.

D. Significance/Benefit to Others

The next factor asks whether the Defendant sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA. Defendant contends that by defeating Plaintiff's claim for additional benefits from the Plan, it preserved Plan assets and thus benefitted the other Plan participants and beneficiaries. The Plaintiff does not directly address this issue.

The Court finds that this factor does not have significant weight. Defendant did preserve Plan assets and thus benefitted the other Plan participants and beneficiaries to the extent of Plaintiff's claim, but the issues presented in this case were unique to the Plaintiff and did not involve a significant legal question regarding ERISA.

E. Relative Merits of the Parties' Positions

Defendant alleges that Plaintiff's suit was frivolous and that none of his claims was supported by fact or law. Plaintiff disagrees, but notes solely that his suit was commenced at Defendant's direction by its letter dated February 23, 2011. Defendant replies that this letter is merely a statement of appeal rights required by ERISA, not an invitation for Plaintiff to pursue a frivolous lawsuit.

The Court finds Plaintiff's suit to be frivolous, meaning it is "[l]acking a legal basis or legal merit; not serious; not reasonably purposeful." Lain, 640 F.3d at 1137. Plaintiff ignored the Plan document's time limitation for filing suit, flaunted the clear terms of his severance and release, and asserted estoppel claims not recognized in this jurisdiction, all without asserted justification or reasonable excuse. As the Court's summary judgment order found, none of Plaintiff's claims had any merit, and each of Plaintiff's unfounded claims was defeated in multiple and independent ways. This factor significantly favors the Defendant's fee award.

On balance, the factors weigh heavily in favor of awarding fees to the Defendant. Accordingly, the Defendant shall be awarded reasonable fees.

III. Reasonableness of Fees Requested

Any award of attorney fees must be reasonable. Uselton v. Comm'l Lovelace Motor Freight, Inc., 9 F.3d 849, 853 (10th Cir. 1993). In statutory fee cases such as this, courts generally use the lodestar method to calculateattorney fees. Brown v. Phillips Petroleum Co., 838 F.2d 451, 453-54 (10th Cir. 1988). That method requires the Court to multiply the number of hours reasonably expended on the litigation by the reasonable hourly rate. Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 130 S.Ct. 1662, 1669 (2010). The Court then determines whether that lodestar figure is subject to upward or downward adjustment by analyzing the factors set forth in Johnson v. Georgia Highway Express, Inc., 48 F.2d 714, 717-19 (5th Cir. 1974) ("the Johnson factors"). Id. at 453. See Gottlieb v. Barry, 43 F.3d 474, 483 (10th Cir. 1994). Those factors are: (1) time and labor required, (2) novelty and difficulty of question presented by the case, (3) skill requisite to perform the legal service properly, (4) preclusion of other employment by the attorneys due to acceptance of the case, (5) customary fee, (6) whether the fee is fixed or contingent, (7) any time limitations imposed by the client or circumstances, (8) amount involved and results obtained, (9) experience, reputation and ability of the attorneys, (10) "undesirability" of the case, (11) nature and length of the professional relationship with the client and (12) awards in similar cases. Rosenbaum v. MacAllister, 64 F.3d 1439, 1445 (10th Cir. 1995).


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