Lowe v. McGraw-Hill Companies, Inc., No. 03-1888.

CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)
Writing for the CourtPosner
Citation361 F.3d 335
Decision Date15 March 2004
Docket NumberNo. 03-1888.,No. 03-1954.
PartiesGeorge LOWE, Plaintiff-Appellee, Cross-Appellant, v. McGRAW-HILL COMPANIES, INC., et al., Defendants-Appellants, Cross-Appellees.

Page 335

361 F.3d 335
George LOWE, Plaintiff-Appellee, Cross-Appellant,
v.
McGRAW-HILL COMPANIES, INC., et al., Defendants-Appellants, Cross-Appellees.
No. 03-1888.
No. 03-1954.
United States Court of Appeals, Seventh Circuit.
Argued October 28, 2003.
Decided March 15, 2004.

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COPYRIGHT MATERIAL OMITTED

Page 337

Robert E. Haney (argued), Marks, Marks & Kaplan, Chicago, IL, for Plaintiff-Appellant.

Cathryn E. Albrecht (argued), Marks, Marks & Kaplan, Chicago, II, for Defendant-Appellee.

Before BAUER, POSNER, and WILLIAMS, Circuit Judges.

POSNER, Circuit Judge.


An ERISA plan (the other defendants can be ignored) appeals from the district judge's imposition, after an evidentiary hearing, of statutory penalties and attorneys' fees for failure to comply with the plaintiff's requests for plan documents. The plaintiff, George Lowe, cross-appeals, challenging the judge's order setting aside under Rule 60(a) of the Federal Rules of Civil Procedure a default judgment that she had entered in his favor earlier and that was more favorable to him than the contested judgment, entered later, from which the plan appeals.

The facts, as distinct from their interpretation, are not in dispute. Lowe's wife was a retired employee of a company that was acquired by McGraw-Hill, and the company's retirement plan was merged into the McGraw-Hill plan. She collected retirement benefits from the plan for several years, and then died. Her executor informed the plan of her death, whereupon payments ceased because the plan had in its possession a form that indicated that she had chosen to take her benefits as a single-life annuity, which meant that her husband would not receive any benefits should he survive her. For this cutting out of the spouse to be effective, however, a waiver had to be signed by the spouse and the signature either witnessed by a representative of the plan or notarized. 29 U.S.C. § 1055(c)(2)(A)(iii); Lasche v. George W. Lasche Basic Profit Sharing Plan, 111 F.3d 863, 866 (11th Cir.1997). The waiver that the plan had was signed by Mr. Lowe, all right, but his signature was neither witnessed nor notarized.

Looking through his wife's papers, Lowe found the same form that his wife had signed, but on his copy there was no check mark in the single-life annuity box, as there was on the plan's copy. On July 24, 1999, Lowe wrote the plan requesting relevant documents, such as the retirement plan itself. There was no response. In September Lowe wrote again, and again got no response. He turned to the Department of Labor for help. The Department requested some of the documents from the plan. The plan complied with the Department's request three months later, but without bothering to send copies to Lowe, who meanwhile, on January 4, 2001, had brought this suit against the plan for survivor benefits. Not until July 24, 2001, did the plan give Lowe the documents he had requested, and at the same time it acknowledged his right to survivor benefits of $277.90 a month because his signature on the form waiving surviving spouse's rights had not been witnessed or notarized. By this time Lowe had obtained a default order, but it was not until March of 2003 that the judgment that the plan has appealed was entered. The judgment awarded him survivor benefits in the amount the plan had acknowledged owing him, plus statutory penalties of $35,050 determined by multiplying $50 a day by the 701 days that had elapsed between the

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plan's deadline (see next paragraph) for giving Lowe the documents he had requested and the date on which it finally did give them to him, and $19,274.64 in attorneys' fees for his efforts in getting the plan to acknowledge at last that it owed him survivor's benefits. We shall discuss the plan's challenge to these awards first and then recount the circumstances leading up to the cross-appeal. We note with regret that the almost two-year interval between the entry of the order of default and the entry of the final judgment, in a case involving simple facts and modest stakes, argues poor case management.

A failure to honor a request for plan documents by a plan's participant or beneficiary within 30 days of the request exposes the plan to a statutory penalty of $100 (now $110) a day. 29 U.S.C. § 1132(c)(1); 29 C.F.R. § 2575.502c-1. Because the statute provides no criteria to guide determination of the amount to be awarded within that limit, that determination is left to the discretion of the district judge. Ziaee v. Vest, 916 F.2d 1204, 1210 (7th Cir.1990); McDonald v. Pension Plan of NYSA-ILA Pension Trust Fund, 320 F.3d 151, 163 (2d Cir.2003). The judge did not abuse her discretion in assessing a $50 a day penalty against the plan. The plan's delay in giving Lowe documents to which he was clearly entitled was egregious, driving him to hire a lawyer and entangling him in litigation culminating in an absurd cross-appeal (of which more later). The offender — the McGraw-Hill plan — is a substantial entity that cannot claim to lack the resources necessary for processing document requests expeditiously. Not that poverty would be a defense, but it might — we do not hold that it would; the question is not presented — be a mitigating circumstance. Cf. Hicks v. Feiock, 485 U.S. 624, 638 n. 9, 108 S.Ct. 1423, 99 L.Ed.2d 721 (1988); South Suburban Housing Center v. Berry, 186 F.3d 851, 854-55 (7th Cir.1999); Huber v. Marine Midland Bank, 51 F.3d 5, 10 (2d Cir.1995).

McGraw-Hill pleads for lenity on the ground that its records concerning Mrs. Lowe were "in disarray" because it had just acquired her employer and also that it thought Mrs. Lowe had waived survivor benefits. Although Lowe's signature on the waiver form was not witnessed or notarized, the employee of the plan who handled Lowe's request for documents thought that the attestation might be on another page that had gotten lost in the shuffle. He never bothered to tell Lowe this, however, and the "lost page" never did turn up and so far as we know never existed. The plan's pleas for mercy are in any event in conflict with one another, because the disorganization of its records should have alerted it to the possibility that evidence that Lowe's signature had been notarized would never turn up. And anyway doubt about the validity of the wife's election does not explain a failure to send Lowe a copy of the plan or make any other response to him.

The plan's only respectable argument against the penalty ruling is that the judge made a factual error. She mistakenly believed that Lowe had sent the plan his copy of his wife's form, the copy in which the box for electing a single-life annuity had not been checked. Deference in appellate review of a discretionary decision by the first-line decision-maker presupposes that he has got the facts and the law right. But if it is reasonably clear that correcting the error would not lead to a different decision, the error is harmless and the decision will stand. Kwasny v. United States, 823 F.2d 194, 196 (7th Cir. 1987). That is the case here. The reason the plan could not lawfully deny survivor's benefits to Lowe was not that his copy of the form indicated that his wife had intended

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him to have those benefits, for his copy might have been erroneous or a fabrication, but that the plan's copy was missing an essential element of an effective waiver of a survivor's benefits, namely an attestation of Lowe's signature. To have assumed that the missing attestation would turn up and on that basis to decline even to communicate with Lowe for nearly two years was not only unjustifiable, but flagrantly so, and we cannot imagine that drawing a minor factual error to the district judge's attention would have changed her decision. The McGraw-Hill plan can consider itself lucky that only half the maximum penalty was imposed. Compare Krueger Int'l, Inc. v. Blank, 225 F.3d 806, 811 (7th Cir.2000); Law v. Ernst & Young, 956 F.2d 364, 375 (1st Cir.1992). We add that the plan could have determined the significance of the judge's factual mistake by moving under Fed.R.Civ.P. 59 for reconsideration of her decision.

ERISA authorizes (with immaterial exceptions) the award of reasonable attorneys' fees to a prevailing plaintiff in a suit for benefits. 29 U.S.C. § 1132(g)(1). Because the award will be paid out of plan assets, to the possible harm of the other participants and beneficiaries (vested benefits in ERISA retirement plans are federally insured — but not fully, 29 U.S.C. §§ 1322, 1322a, 1322b; Nachman Corp. v. Pension Benefit Guaranty Corp., 446 U.S. 359, 375 and n. 23, 100 S.Ct. 1723, 64 L.Ed.2d 354 (1980); Operating Engineers Local 139 Health Benefit Fund v. Gustafson Construction Corp., 258 F.3d 645, 653 (7th Cir.2001)), prevailing plaintiffs in ERISA cases are not awarded attorneys' fees as a matter of course, as in civil rights litigation. Instead they must show that the plan's litigating position was not "substantially justified." Bittner v. Sadoff & Rudoy Industries, 728 F.2d 820, 830 (7th Cir.1984). Some cases employ instead a multifactor test to determine entitlement to attorneys' fees in ERISA cases. But as we pointed out in Bowerman v. Wal-Mart Stores, Inc., 226 F.3d 574, 592-93 (7th Cir.2000), the factors in the...

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153 practice notes
  • Leister v. Dovetail, Inc., No. 07-2242.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • October 23, 2008
    ...penalties for failing to furnish ERISA plan documents to a requesting plan participant or beneficiary in Lowe v. McGraw-Hill Cos., 361 F.3d 335, 338 (7th Cir.2004); see also Bartling v. Fruehauf Corp., 29 F.3d 1062, 1068 (6th Cir.1994); Rodriguez-Abreu v. Chase Manhattan Bank, N.A., 986 F.2......
  • Animal Sci. Prod.s Inc. v. China Nat'l Metals & Minerals Import & Export Corp.. ., No. Civ. 05-4376(GEB).
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • April 1, 2010
    ...accept such “dog ate my homework” defense/evidentiary submission, and the Court will not change this rule. See Lowe v. McGraw-Hill Cos., 361 F.3d 335 (7th Cir.2004) (refusing to accept the claim that evidence vanished and noting “[t]his ‘the dog ate my homework’ defense [is] no defense at a......
  • Hakim v. Accenture U.S. Pension Plan, Case No. 08–cv–3682.
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
    • October 3, 2012
    ...test is used to “structure or implement, rather than to contradict” the substantially justified test. Lowe v. McGraw–Hill Companies, Inc., 361 F.3d 335, 339 (7th Cir.2004). The Seventh Circuit recently limited its inquiry to determining whether “plaintiffs' litigation position was substanti......
  • Kenseth v. Dean Health Plan Inc., No. 08–cv–1–bbc.
    • United States
    • United States District Courts. 7th Circuit. Western District of Wisconsin
    • February 14, 2011
    ...plaintiff still would have to show that defendant's position was not “substantially justified,” Lowe v. McGraw–Hill Companies, Inc., 361 F.3d 335, 339 (7th Cir.2004), something plaintiff does not even attempt to argue. Hardt did not call into question this aspect of this circuit's standard ......
  • Request a trial to view additional results
153 cases
  • Leister v. Dovetail, Inc., No. 07-2242.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • October 23, 2008
    ...penalties for failing to furnish ERISA plan documents to a requesting plan participant or beneficiary in Lowe v. McGraw-Hill Cos., 361 F.3d 335, 338 (7th Cir.2004); see also Bartling v. Fruehauf Corp., 29 F.3d 1062, 1068 (6th Cir.1994); Rodriguez-Abreu v. Chase Manhattan Bank, N.A., 986 F.2......
  • Animal Sci. Prod.s Inc. v. China Nat'l Metals & Minerals Import & Export Corp.. ., No. Civ. 05-4376(GEB).
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • April 1, 2010
    ...accept such “dog ate my homework” defense/evidentiary submission, and the Court will not change this rule. See Lowe v. McGraw-Hill Cos., 361 F.3d 335 (7th Cir.2004) (refusing to accept the claim that evidence vanished and noting “[t]his ‘the dog ate my homework’ defense [is] no defense at a......
  • Hakim v. Accenture U.S. Pension Plan, Case No. 08–cv–3682.
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
    • October 3, 2012
    ...test is used to “structure or implement, rather than to contradict” the substantially justified test. Lowe v. McGraw–Hill Companies, Inc., 361 F.3d 335, 339 (7th Cir.2004). The Seventh Circuit recently limited its inquiry to determining whether “plaintiffs' litigation position was substanti......
  • Kenseth v. Dean Health Plan Inc., No. 08–cv–1–bbc.
    • United States
    • United States District Courts. 7th Circuit. Western District of Wisconsin
    • February 14, 2011
    ...plaintiff still would have to show that defendant's position was not “substantially justified,” Lowe v. McGraw–Hill Companies, Inc., 361 F.3d 335, 339 (7th Cir.2004), something plaintiff does not even attempt to argue. Hardt did not call into question this aspect of this circuit's standard ......
  • Request a trial to view additional results

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