Wit v. United Behavioral Health

• Decision Date: 05 January 2022
• Docket Number: Case No. 14-cv-02346-JCS
• Parties: David WIT, et al., Plaintiffs, v. UNITED BEHAVIORAL HEALTH, Defendant.
• Court: U.S. District Court — Northern District of California

578 F.Supp.3d 1060

David WIT, et al., Plaintiffs,

v.UNITED BEHAVIORAL HEALTH, Defendant.

Case No. 14-cv-02346-JCS

United States District Court, N.D. California.

Signed January 5, 2022

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Meiram Bendat, Psych-Appeal, Inc., Santa Barbara, CA, Adam Abelson, Pro Hac Vice, Daniel Patrick Moylan, Pro Hac Vice, Martin Stanley Himeles, Jr., Pro Hac Vice, Zuckerman Spaeder LLP, Baltimore, MD, Aitan Goelman, Pro Hac Vice, Andrew Nathan Goldfarb, Carl Spencer Kravitz, Pro Hac Vice, Caroline E. Reynolds, Steven N. Herman, Zuckerman Spaeder LLP, Washington, DC, Anthony F. Maul, The Maul Firm, P.C., Oakland, CA, D. Brian Hufford, Jason S. Cowart, Zuckerman Spaeder LLP, New York, NY, Sara Louise Alpert Lawson, Zuckerman Spaeder LLP, Tampa, FL, for Plaintiffs David Wit, Natasha Wit, Brian Muir, Brandt Pfeifer, Lori Flanzraich, Cecilia Holdnak, Gary Alexander, Corinna Klein, David Haffner.

Christopher Flynn, April Nelson Ross, Crowell and Moring LLP, Washington, DC, Andrew John William Holmer, Jennifer Salzman Romano, Mana Elihu Lombardo, Crowell and Moring LLP, Joseph V. Bui, Greines Martin Stein and Richland LLP, Los Angeles, CA, Katharine Fiedler Barach, Nathaniel Philip Bualat, Thomas Francis Koegel, Crowell & Moring LLP, San Francisco, CA, Kelly T. Currie, Crowell and Moring, New York, NY, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS’ PETITION FOR ATTORNEYS’ FEES AND COSTS

Re: Dkt. No. 507

JOSEPH C. SPERO, Chief Magistrate Judge

I. INTRODUCTION

On February 1, 2021, having found Defendant United Behavioral Health ("UBH") liable for breaches of fiduciary duty and violations of the class members’ health insurance plans under ERISA, 29 U.S.C. §§ 1132(a)(1)(B) and (a)(3)(A), the Court entered judgment in this case. Dkt. 531. Presently before the Court is Plaintiffs’ Petition for Attorneys’ Fees and Costs ("Motion"). For the reasons stated below, the Motion is GRANTED in part and DENIED in part. The Court awards $19,628,071.88 in attorneys’ fees and $1,230,729.86 in costs as set forth below.¹

II. BACKGROUND

Zuckerman Spaeder LLP ("Zuckerman Spaeder"), Psych-Appeal, Inc. ("Psych-Appeal"), and The Maul Firm, P.C. ("The Maul Firm") (together, "Class Counsel") seek an award of attorneys’ fees incurred in this case in the following amounts: $25,197,592.85 (Zuckerman Spaeder), $1,796,580.00 (Psych-Appeal), $266,591.25 (The Maul Firm), and $514,130.64 (contract

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attorneys). Suppl. Decl. of Caroline E. Reynolds in Supp. of Pls.’ Reply in Supp. of their Pet. for Att'ys Fees and Costs ("Reynolds Reply Decl.") ¶ 8 & Ex. A. These amounts reflect a requested 1.5 multiplier on fees for work on the merits (but not on the instant motion) and are based on the following underlying lodestar amounts: $17,006,111.83 (Zuckerman Spaeder), $1,197,720.00 (Psych-Appeal), $177,727.50 (The Maul Firm) and $342,753.76 (contract attorneys). The requested lodestar amounts cover the period from January 2014 through October 31, 2020, and are based on current rather than historical rates, which Plaintiffs contend should be used in order to compensate them for the delay in payment resulting from years of litigation prior to entry of judgment. Mot. at 9; Reply at 1–2; Reynolds Reply Decl. ¶ 8.

In addition, Plaintiffs seek an award of costs in the amount of $1,242,399.95 incurred by Zuckerman Spaeder, see Reynolds Reply Decl., Ex. A & Revised Ex. 6,² and $2,683.59 in costs incurred by the Maul Firm.

III. ANALYSIS

A. Whether Plaintiffs Should be Awarded Fees and Costs Incurred in this Action

1. Legal Standards

Under ERISA, the court "in its discretion may allow a reasonable attorney's fee and costs of action to either party" in an action brought by a "participant, beneficiary, or fiduciary." 29 U.S.C. § 1132(g)(1). To obtain an award of attorneys’ fees under this section, parties must demonstrate that they achieved "some degree of success on the merits." Hardt v. Reliance Standard Life Ins. Co. , 560 U.S. 242, 255, 130 S.Ct. 2149, 176 L.Ed.2d 998 (2010). "A claimant does not satisfy that requirement by achieving ‘trivial success on the merits’ or a ‘purely procedural victor[y],’ but does satisfy it if the court can fairly call the outcome of the litigation some success on the merits without conducting a ‘lengthy inquir[y] into the question whether a particular party's success was substantial or occurred on a central issue.’ " Id. (quoting Ruckelshaus v. Sierra Club , 463 U.S. 680, 688 n.9, 103 S.Ct. 3274, 77 L.Ed.2d 938 (1983) (internal quotations omitted)).

Where the party has achieved some success but did not "prevail[ ] completely," the Court considers five factors, the " Hummell factors," in deciding whether to award fees and costs. Simonia v. Glendale Nissan/Infiniti Disability Plan , 608 F.3d 1118, 1121 (9th Cir. 2010) (quoting Hummell v. S.E. Rykoff & Co. , 634 F.2d 446, 453 (9th Cir. 1980) ). The Hummell factors are as follows:

(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.

Hummell , 634 F.2d at 453. The court may award fees and costs without considering the Hummell factors, however, if the plaintiffs "prevailed completely[,]" "received the entire relief sought, and resolved a significant legal question." Nelson v. EG&G Energy Measurements Grp., Inc. , 37 F.3d 1384, 1392 (9th Cir. 1994).

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2. Discussion

Plaintiffs contend they prevailed completely in this case and therefore, that the Court should award fees and costs without reaching the Hummell factors. They further assert, however, that the Hummell factors also support their request for attorneys’ fees and costs. UBH, on the other hand, contends Plaintiffs obtained only a procedural victory because the Court remanded for reprocessing instead of awarding benefits to the class members. Even if Plaintiffs satisfied the threshold established in Hardt , they argue, the Hummell factors do not support an award of fees and costs. The Court rejects UBH's argument that Plaintiffs obtained a purely procedural victory and concludes that the Hummell factors support an award of attorneys’ fees and costs. Therefore, it need not decide whether Plaintiffs prevailed completely in the case.

In support of its argument that Plaintiffs obtained a purely procedural victory, UBH cites cases in which district courts have denied requests for an award of fees and costs where the court did not decide whether benefits were due under ERISA but instead remanded to the plan administrator for determination of that question. Opp'n at 5–6 (citing Duncan v. Hartford Life & Accident Ins. Co. , 2013 WL 1785904, at *2 (E.D. Cal. Apr. 25, 2013) ; King v. Aetna Life Ins. Co. , 2011 WL 2682102, at *5 (C.D. Cal. July 7, 2011) ; Vivas v. Hartford Life & Accident Ins. Co. , 2013 WL 5226720, at *3 (S.D. Fla. June 17, 2013) ; Dickens v. Aetna Life Insurance Co. , 2011 WL 1258854 (S.D.W. Va. Mar. 28, 2011) ). It also points to Saffle v. Sierra Pacific Power Co. Long Term Disability Income Plan , 85 F.3d 455 (9th Cir. 1996) and Patterson v. Hughes Aircraft Co. , 11 F.3d 948, 951 n.4 (9th Cir. 1993) in support of its assertion that Plaintiffs’ fee request is premature because only after reprocessing will the Court be able to determine whether Plaintiffs obtained meaningful relief. Id. at 7–8.

None of the cases cited by UBH establishes a bright-line rule that a plaintiff who obtains a remand order in an ERISA case rather than an award of benefits does not qualify for an award of fees and costs under § 1132(g)(1). Indeed, such a rule would be contrary to the holding in Hardt , which requires only "some" success and does not condition fees and costs on an award of benefits. See Gross v. Sun Life Assur. Co. of Canada , 763 F.3d 73, 80 (1st Cir. 2014) (holding that under Hardt , "there is nothing incongruous about rewarding only the successful portion of a mixed decision" and that the plaintiff was entitled to fees based on obtaining "some" success where she had "secured a ruling on the standard of review that improved her likelihood of success on the merits of her claim and [would] impact all similar future claims" even though the court remanded to the claims administrator rather than awarding benefits); Huss v. IBM Med. & Dental Plan , 418 F. App'x 498, 512 (7th Cir. 2011) ("easily" concluding that under Hardt , plaintiff had demonstrated "some success on the merits" where he had "secured a reversal of the administrative denial of benefits, a remand for further proceedings involving a different controlling document, and the imposition of a statutory penalty against the Defendants."); Bain v. Oxford Health Ins. Inc. , No. 15-CV-03305-EMC, 2020 WL 1332080, at *2 (N.D. Cal. Mar. 23, 2020) ("Although the Supreme Court did not address the issue in Hardt , most courts have, in the wake of Hardt determined that a remand to a plan administrator – by itself – does in fact constitute some success on the merits."); Barnes v. AT&T Pension Benefit Plan – Nonbargained Program , 963 F. Supp. 2d 950, 962 (N.D. Cal. 2013) ;

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Olds v. Ret. Plan of Int'l Paper Co. , No. CIV.A. 09-0192-WS-N, 2011 WL 2160264, at *2–3 (S.D. Ala. June 1, 2011) ("The plaintiff claimed that the Plan violated his statutory right to a full and fair review, and the Court held that the Plan did indeed violate that right. That the relief the plaintiff received on this meritorious claim is a full and fair administrative review rather than a guaranteed award of benefits at the judicial or administrative level may speak to the quantum of his success on the merits of his claim, but it does not convert...