Tussey v. ABB, Inc., Case No. 06-04305-CV-C-NKL

Decision Date02 November 2012
Docket NumberCase No. 06-04305-CV-C-NKL
PartiesRONALD TUSSEY, et al., Plaintiffs, v. ABB, INC., et al., Defendants.
CourtU.S. District Court — Western District of Missouri

Pending before the Court is a motion for attorneys' fees and costs by Plaintiffs. [Doc. # 649]. For the reasons set forth below, the Court GRANTS attorneys' fees and costs as follows: attorneys' fees in the amount of $12,947,747.68, and taxable and nontaxable costs of $489,985.65, to be paid jointly and severally by Defendants ABB, Inc., and Fidelity; costs of $1,712,834.85, to be paid out of the Class damages award; and $25,000.00 to each of the three named Plaintiffs as an incentive award, to be paid jointly and severally by Defendants ABB and Fidelity.

I. Background

This case involves two 401(k) retirement plans run by Defendants ABB, Inc., John W. Cutler, Jr., Pension Review Committee of ABB, Inc., Pension & Thrift Management Group of ABB, Inc., and Employee Benefits Committee of ABB, Inc. (collectively "ABB"), with services provided by Defendants Fidelity Management Trust Company and Fidelity Management & Research Company (collectively "Fidelity"). After having tried this matter over a four-week period and reviewed extensive records and testimony, theCourt found that Defendants breached their fiduciary duties to Plaintiffs under the Employee Retirement Income Security Act ("ERISA"). In addition to providing injunctive relief, the Court found ABB Defendants jointly and severally liable for $35.2 million in monetary damages, and Fidelity Defendants jointly and severally liable for $1.7 million in monetary damages.

Pursuant to ERISA's fee-shifting provision, Plaintiffs request $14,356,209.00 in attorney fees and $2,098,029.86 in costs. Plaintiffs request that Defendants be held jointly and severally liable for $14,001,052.61 in fees and $350,560.67 in costs, and that the remainder be paid by Class members. In addition, Plaintiffs request that the named Plaintiffs receive an award of $25,000.00 each.

II. The ERISA Award
A. Fee-Shifting under ERISA

The Court has discretion to award attorney's fees under ERISA's fee-shifting provision. 29 U.S.C. § 1132(g)(1); see also Lawrence v. Westerhaus, 749 F.2d 494, 496 (8th Cir. 1984). "[A]lthough there is no presumption in favor of attorney fees in an ERISA action, a prevailing plaintiff rarely fails to receive fees." Starr v. Metro Sys., Inc., 461 F.3d 1036, 1041 (8th Cir.2006) (citing Martin v. Ark. Blue Cross & Blue Shield, 299 F.3d 966, 972 (8th Cir.2002)). In determining whether a fee award is proper, the court considers the following factors: "(1) the degree of the opposing parties' culpability or bad faith; (2) the ability of the opposing parties to satisfy an award of attorneys' fees; (3) whether an award of attorneys' fees against the opposing parties could deter other persons acting under similar circumstances; (4) whether the parties requesting attorneys' feessought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA itself; and (5) the relative merits of the parties' positions." Leonard v. Sw. Bell Corp. Disability Income Plan, 408 F.3d 528, 532 (8th Cir. 2005) (referencing Lawrence, 749 F.2d at 496). It is not necessary for the Court to review each factor "exhaustively and explicitly." Griffin v. Jim Jamison, Inc., 188 F.3d 996, 997 (8th Cir. 1999). Rather, these factors are "general guidelines which provide direction to the district court, while also facilitating meaningful appellate review." Martin v. Arkansas Blue Cross & Blue Shield, 299 F.3d 966, 972 (8th Cir. 2002) (emphasis in original) (internal quotes omitted).

Having weighed these factors, the Court determines that an award of fees and costs is appropriate in this case. ABB breached its fiduciary duties of both loyalty and prudence to the retirement plans, as a result of which it benefitted significantly while plan beneficiaries were deprived of millions of dollars. Fidelity, while less culpable, also took plan assets in violation of its fiduciary duty. The case also involved significant novel legal questions regarding the extent of the fiduciary duties owed by plan administrators under ERISA and will have a general deterrent effect on similarly situated fiduciaries. Plaintiffs sought to benefit all participants and beneficiaries of the pension plans and, but for their actions, the Defendants would continue to violate ERISA. In addition, the results of this case may help benefit other plan beneficiaries, in the event of similar litigation, by further clarifying the duty of loyalty and prudence owed by record keepers and employers. Finally, there is no question regarding Defendants' ability to pay attorneys' fees in addition to the judgment.

B. Lodestar Calculation

Awards under fee-shifting statutes are calculated using the lodestar method. City of Burlington v. Dague, 505 U.S. 557, 562, 112 S. Ct. 2638, 2641 (1992) ("The "lodestar" figure has, as its name suggests, become the guiding light of our fee-shifting jurisprudence."). The lodestar figure is "the product of reasonable hours times a reasonable rate." Id. at 559, 2640; see also Fish v. St. Cloud State Univ., 295 F.3d 849, 851 (8th Cir. 2002). To determine the lodestar amount, the Court may consider:

(1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the skill requisite to perform the legal service properly; (4) the preclusion of employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the 'undesirability' of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases.

United HealthCare Corp. v. Am. Trade Ins. Co., 88 F.3d 563, 574 n.9 (8th Cir. 1996) (referencing Hensley v. Eckerhart, 461 U.S. 424, 428, 103 S. Ct. 1933, 1937 (1983)). It is important that the district court provides a "concise but clear explanation" of the reasons for the fee award. Hensley, 461 U.S. at 437, 103 S. Ct. at 1941.

The central contention between the parties is what market should be used to assess a "reasonable" fee. Defendants would have the Court assess Plaintiffs' fee based on the local market rate in Kansas City, Missouri, while Plaintiffs argue their fee should be assessed based on the national rate for complex litigation. "A reasonable hourly rate is usually the ordinary rate for similar work in the community where the case has been litigated." Fish, 295 F.3d at 851-52. However, in a complex matter, the relevant market"may extend beyond the local geographic community" and include the national market or a market for a particular legal specialization. Casey v. City of Cabool, Mo., 12 F.3d 799, 805 (8th Cir. 1993). The Eighth Circuit has recognized that where plaintiffs' attorneys are "leaders in the field" and have "extensive experience" in a specialized area, they tend to be "able to handle the case in a shorter length of time than a local lawyer, without comparable experience," and so a higher rate is appropriate. Planned Parenthood, Sioux Falls Clinic v. Miller, 70 F.3d 517, 519 (8th Cir. 1995) (affirming the district court's approval of higher hourly rates based on the specialized skill of counsel). And contrary to Defendants' assertions, Plaintiffs need not show that no local attorney would have taken their case to prove that local rates should not apply; Planned Parenthood merely requires that Plaintiffs' counsel possess special expertise. Id; see also Torgeson v. Unum Life Ins. Co. of Am., 2007 WL 433540 at *6 (N.D. Iowa Feb. 5, 2007).

It is well established that complex ERISA litigation involves a national standard and special expertise. See, e.g., Torgeson, 2007 WL 433540 at *6; Dobson v. Hartford Fin. Services Group, Inc., 2002 WL 31094894 at *3 (D. Conn. Aug. 2, 2002); Mogck v. Unum Life Ins. Co. of Am., 289 F. Supp. 2d 1181, 1191 (S.D. Cal. 2003). Plaintiffs' attorneys are clearly experts in ERISA litigation. The litigation was complex in size and subject matter, involved novel questions of law, and spanned nearly six years. The Court thus finds that a reasonable rate in this case would be best assessed against national rates for complex specialized litigation. The Court may also take into account awards in similar cases. In a 2009 case involving Plaintiff's counsel, the firm of Schlicter, Bogard, and Denton, the court approved hourly rates for this firm according to the followingschedule: for attorneys with 25 years or more experience, $800 per hour; for attorneys with 15-24 years of experience, $625 per hour; 5-15 years of experience, $450 per hour; 2-4 years of experience, $325 per hour; and for professional support staff, $125 per hour. Eshelman v. Client Services, Inc., et al., No: 0822-cv-00763 (22d Cir. Mo. Dec. 7, 2009). [Doc. # 650, Exhibit # 1-2 to Boyko Decl.]. Based on these rates, in 2010 an Illinois district court found that a reasonable blended rate for Plaintiffs' counsel was $514.60 per hour. Will v. Gen. Dynamics Corp., 2010 WL 4818174 at *3 (S.D. Ill. Nov. 22, 2010).

Defendants argue that because this litigation began in 2006, application of current rates is inappropriate. However, when lengthy litigation has delayed the payment of attorneys' fees, it is proper to calculate the lodestar based on contemporary rates. The Supreme Court has determined that "an appropriate adjustment for delay in payment - whether by application of current rather that historic rates or otherwise" may be "part of a 'reasonable attorney's fee.'" Missouri v. Jenkins by Agyei, 491 U.S. 274, 284, 282, 109 S. Ct. 2463, 2469, 2468 (1989). Applying Jenkins, the Eighth Circuit recognized that it is appropriate to award attorneys' fees "based on...

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