Oldoerp v. Wells Fargo & Co.
| Decision Date | 12 June 2014 |
| Docket Number | Case No. 3:08-cv-05278 RS |
| Court | U.S. District Court — Northern District of California |
| Parties | KERILEI R. OLDOERP, Plaintiff, v. WELLS FARGO AND COMPANY LONG TERM DISABILITY PLAN; METROPOLITAN LIFE INSURANCE COMPANY, Defendants. |
In this ERISA action, which was closed in February 2014 following a bench trial, plaintiff Kirelei Oldoerp seeks $441,462 in attorney fees and $10,831.14 in litigation costs. Defendants Wells Fargo and Co. Long Term Disability Plan and Metropolitan Life Insurance Company (collectively "MetLife") oppose her motion, arguing she is entitled to few costs and no fees. In the alternative, MetLife seeks a significant reduction in the requested amount, contending counsel for Oldoerp billed an unreasonable number of hours, and at unjustifiably high rates. For the reasons explained below, Oldoerp is entitled to fees and costs, but not quite as much as she requests. Defendants are ordered to pay plaintiff $406,185 in attorney fees and $8,213.70 in taxable costs and out-of-pocket expenses, totaling an award of $414,398.70.
As an initial matter, the parties dispute whether fees should be awarded at all. In an ERISA action, fees are discretionary, not mandatory. See Hummell v. S.E. Rykoff & Co., 634 F.2d 446, 452 (9th Cir. 1980). "[A] court in its discretion may award fees and costs to either party, as long as the fee claimant has achieved 'some degree of success on the merits.'" Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 245 (2010) (quoting Ruckelshaus v. Sierra Club, 463 U.S. 680, 694 (1983)). MetLife does not dispute that Oldoerp achieved success on the merits. Nonetheless, it contends that under these circumstances—in particular, where defendants prevailed at the first bench trial, only for the Ninth Circuit to reverse upon a clarification of the proper standard of review—the court should decline to award fees.
In deciding whether to award fees in an ERISA action, a district court should consider, among other things, the five "Hummel factors":
(1) the degree of the opposing parties' culpability or bad faith; (2) the ability of the opposing parties to satisfy an award of fees; (3) whether an award of fees against the opposing parties would deter others from acting under similar circumstances; (4) whether the parties 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.
634 F.2d at 453. In applying these factors, the court "should apply its discretion consistent with the purposes of ERISA, those purposes being to protect employee rights and to secure effective access to federal courts." Smith v. CMTA-IAM Pension Trust, 746 F.2d 587, 589 (9th Cir. 1984). ERISA's fee provision should therefore "be read broadly to mean that a plan participant or beneficiary, if he prevails in his suit under § 1132 to enforce his rights under the plan, should ordinarily recover an attorney's fee unless special circumstances would render such an award unjust." Id. at 589 (internal quotations omitted).
A review of the Hummel factors reveals that while some tip in MetLife's favor, no "special circumstances" would render a fee award to Oldoerp unjust. See id. The first factor—the degree of culpability or bad faith—favors MetLife. Although defendants erred in denying Oldoerp's claim, there is no evidence that their actions were taken in bad faith. Moreover, as evidenced by the initial findings of fact and conclusions of law issued in 2011, defendants'conduct was defensible under an "abuse of discretion" standard. (See Findings of Fact and Conclusions of Law, May 2, 2011, ECF No. 47). While that standard is not applicable here, the prior findings nonetheless reflect defendants' relatively low culpability. The second factor weighs in Oldoerp's favor, as MetLife does not contest it can satisfy a fee award. The third factor, which focuses on the potential deterrent effect of a fee award, also tips in plaintiff's favor. A fee award could help ensure that, going forward, MetLife exercises more care in processing claims—especially claims pertaining to chronic fatigue, depression, and other conditions that may require the administrator to evaluate a claimant's self-reported symptoms. The fourth factor—whether the parties requesting fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA—implicates two considerations. First, Oldoerp brings this claim for herself and not for any other beneficiaries. This weighs slightly against a fee award. Second, however, Oldoerp's case ultimately helped clarify a significant legal question: Is an "abuse of discretion" standard appropriate where an ERISA Summary Plan Document vests discretion in the plan's administrator? On balance, therefore, the fourth factor is neutral. The fifth factor—the relative merits of the parties' positions—redounds in Oldoerp's favor. Plaintiff won every major disputed legal issue in this case: the appropriate standard of review (de novo), whether extrinsic evidence was admissible (yes), and whether MetLife erred in denying her claim (yes).
In sum, Oldoerp is entitled to attorney fees. There are no "special circumstances" that "would render such an award unjust." See 746 F.2d at 589. While defendants' initial success in this case is somewhat relevant to the first Hummel factor, it is far from sufficient to preclude a fee award.
Fee awards in ERISA actions are calculated using a hybrid lodestar/multiplier approach. See McElwaine v. U.S. West, Inc., 176 F.3d 1167, 1173 (9th Cir. 1999). This approach has two parts: (1) the court determines the lodestar amount by multiplying the number of hours reasonably expended in the litigation by a reasonable hourly rate; and (2) the court may adjust the lodestar upward or downward using a multiplier based on factors not subsumed in the initial calculation. Van Gerwen v. Guarantee Mutual Life Co., 214 F.3d 1041, 1045 (9th Cir. 2000).The party seeking an award of fees must submit evidence supporting the hours worked and the rates claimed. Id. The court may reduce these hours if the documentation is inadequate or if the hours are duplicative, excessive, or unnecessary. Id. "There is a strong presumption that the lodestar figure represents a reasonable fee, and a multiplier may be used only in rare or exceptional cases where the lodestar is unreasonably low or unreasonably high." Thivierge v. Hartford Life & Acc. Ins. Co., 2006 WL 2917926 (N.D. Cal. Oct. 11, 2006) (citing Van Gerwen, 214 F.3d at 1045).
The fee applicant bears the burden of producing satisfactory evidence "that the requested rates are in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation." Blum v. Stenson, 465 U.S. 886, 895, n.11 (1984). "Affidavits of the plaintiff['s] attorney and other attorneys regarding prevailing fees in the community, and rate determinations in other cases, particularly those setting a rate for the plaintiff['s] attorney, are satisfactory evidence of the prevailing market rate." United Steelworkers of America v. Phelps Dodge Corp., 896 F.2d 403, 407 (9th Cir. 1990). As a general rule, the forum district represents the relevant legal community. See Gates v. Deukmejian, 987 F.2d 1392, 1405 (9th Cir. 1992).
Russell Petti, Oldoerp's lead attorney, claims he is entitled to fees at the rate of $600/hour. In support, he submits (i) two declarations from other experienced ERISA attorneys, (ii) two declarations from former federal prosecutors, both of whom worked with Petti when he was an Assistant United States Attorney, and (iii) excerpts of rate determinations from other cases. This evidence provides ample justification for Petti's claimed rate of $600/hour. The rate determinations from other cases are especially persuasive. Most recently, in 2011, a district judge in the Central District of California held that $550 was a reasonable rate for Petti. See Dunner v. University of Southern California Long Term Disability Plan, 09-01732 (C.D. Cal. Apr. 26, 2011); (ECF No. 82, Exh. R). The year prior, a different judge in that same court held that $550 was a reasonable rate. See Whalen v. Standard Insurance Co., 09-0978 (C.D. Cal. Feb. 4, 2010); (ECF No. 82, Exh. Q). In addition, Petti attaches five other court orders in which district judges have granted his requested hourly rate. Given that at least three years have passedsince the entry of the Central District orders, and considering Petti's significant ERISA experience and demonstrated skill as an advocate, $600 is a reasonable hourly rate for his services.
MetLife faults Petti for failing to include declarations from attorneys practicing in the Northern District of California. Instead, all four declarants practice in Los Angeles. While MetLife is correct that the forum district represents the relevant legal community, see Gates, 987 F.2d at 1405, defendants do not argue that there is a meaningful distinction between rates charged by ERISA attorneys in the Northern and Central Districts.1 Furthermore, some California district courts have recognized that it is appropriate to apply a "national rate" when assessing ERISA fee requests:
Although the Court recognizes that the "relevant community," when determining appropriate attorneys' rates, is generally the one in which the district court sits, it is appropriate to consider the declarations of attorneys in other jurisdictions because ERISA cases involve a national standard, and attorneys practicing ERISA law in the Ninth Circuit tend to practice in different districts. Furthermore, the Court observes that ERISA cases are often considered to be complex, ERISA plaint...
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