Opinion
CV 00-4485 (CBA) (ARL).
July 13, 2006
REPORT AND RECOMMENDATION
This matter was referred to the undersigned by District Judge Carol B. Amon for a report and recommendation as whether the plaintiff is entitled to an award of attorneys' fees and costs, and if so, the proper amount to be awarded. The matter was fully briefed prior to referral. For the reasons set forth below, the undersigned recommends that the plaintiff be awarded attorneys' fees in the amount of $56,545.20.
DISCUSSION
The facts and procedural history of this case are recited in the district court's opinion dated September 30, 2005. Plaintiff presently seeks an award of attorneys' fees in the amount of $57,252.45 as well as unspecified additional attorneys' fees and costs incurred in complying with the district court's direction to submit a joint plan reinstating the plaintiff as a participant. The defendants oppose the application for attorneys' fees in its entirety.
A. Plaintiff's Entitlement to an Award of Attorneys' Fees
Here, the plaintiff claims that he is entitled to reasonable attorneys' fees pursuant to ERISA's equitable remedies scheme under ERISA Section 502(g)(1), 29 U.S.C. § 1132(g)(1). However, as plaintiff acknowledges, the award or denial of legal fees under ERISA is discretionary. See 29 U.S.C. § 1132(g)(1) ("[i]n any action under this title . . . by participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney's fee and costs of action to either party."); Mendez v. Teachers Ins. and Annuity Assoc., 982 F.2d 783, 788 (2d Cir. 1992).
In determining whether to award attorneys' fees in an ERISA action, courts in the Second Circuit consider the following five-factors: (1) the degree of the offending party's culpability or bad faith; (2) the ability of the offending party to satisfy an award of attorney's fees; (3) whether an award of fees would deter other persons from acting similarly under like circumstances; (4) the relative merits of the parties' positions; and (5) whether the action sought to confer a common benefit on a group of pension plan participants. Chambless v. Masters, Mates Pilots Pension Plan, 815 F.2d 869, 871 (2d Cir. 1987); Lijoi v. Continental Casulty Co., 414 F. Supp.2d 228, 249 (E.D.N.Y. 2006). The failure to prevail on one factor is not dispositive. See,e.g., Mendez, 982 F.2d at 789 ("the absence of one of the five factors need not preclude an award of attorneys' fees"); Ford v. N.Y. Cent. Teamsters Pension Fund, 642 F.2d 664, 665 (2d Cir. 1981); Lijoi, 414 F. Supp.2d at 249. Rather, courts are to be mindful that "ERISA's attorney's fee provisions must be liberally construed to protect the statutory purpose of vindicating retirement rights, even when small amounts are involved."Chambless, 815 F.2d at 872. Moreover, "the Second Circuit favors awarding attorneys' fees to prevailing plaintiffs in ERISA cases `in the absence of some particular justification for not doing so.'" Citrin v. Erikson, 918 F. Supp. 792, 800 (S.D.N.Y. 1996) (quoting Birmingham v. SoGen-Swiss Int'l Corp. Ret. Plan, 718 F.2d 515, 523 (2d Cir. 1983)).
Addressing these factors, the court considers the first (the degree of the offending party's culpability or bad faith) and fourth (relative merits of the parties' positions) factors together as they are intertwined. Paese v. Hartford Life and Accident Insurance Co., 2006 WL 1418571, *12 (2d Cir. May 24, 2006) (finding "the fact that the district court analyzed the different Chambless factors together, and allowed one factor to influence the others, was reasonable") (citing Seitzman v. Sun Life Assurance Co., 311 F.3d 477, 483 (2d Cir. 2002) ("We consider jointly the first and fourth Chambless factors, which in this case are intertwined.")). Chambless requires that a court consider "the degree of the offending party's culpability or bad faith" when evaluating an application for attorneys' fees.Chambless, 815 F.2d at 871. However, a plaintiff need not show bad faith to recover attorneys' fees and may instead demonstrate that the offending party was culpable or at fault in causing the dispute underlying the motion for attorneys' fees. Paese, 2006 WL 1418571 at *12 (explaining that "culpability" and "bad faith" are distinct standards).
In support of his claim, plaintiff asserts that the defendants acted in bad faith and were culpable when they denied him pension benefits after demanding contributions from him amounting to some $119,122.59 over a twenty-five year period. In support of this position, plaintiff points out that the district court found that the defendants "acted recklessly" by proceeding for over twenty-five years on the basis that the plaintiff was a qualified participant, when they could have discovered, with "attentiveness or care", that Arnold was not eligible for benefits under the terms of the plan. (Memorandum Opinion of September 30, 2005, p. 17). Citing to the same opinion, the defendants maintain that the district court endorsed the merits of their position in finding that they "did not act capriciously or arbitrarily in excluding Arnold as a sole proprietor or self-employed person." (Id. at p. 8). The Fund argues that this finding precludes an award of attorneys' fees based on culpable conduct. The Fund further asserts that the District Court's reliance on equitable estoppel as a basis for granting relief also precludes a finding of culpability.
"A losing party may be culpable . . . without having acted with an ulterior motive. . . . Such conduct normally involves something more than simple negligence. [It] implies that the act or conduct spoken of is reprehensible or wrong, but not that it involves malice or a guilty purpose." T M Meat Fair, Inc. v. United Food and Commercial Workers, No. 00 Civ. 7968 FM, 2002 WL 31202711, *2 (S.D.N.Y. Sept. 25, 2002) (quoting Algie v. RCA Global Communication, Inc., 891 F. Supp. 875, 891 (S.D.N.Y. 1994), aff'd, 60 F.3d 956 (1995) (quoting McPheason v. Employees' Pension Plan of American Re-Insurance Co., 33 F.3d 253, 256-57 (3d Cir. 1994)). This case is unique in that while the Fund's decision to deny the plaintiff benefits was ultimately in accordance with the plan language, this determination was inconsistent with the Fund's position over the previous twenty-five years when the Fund insisted that plaintiff was covered by the plan and required him to make contributions. The Fund's failure to correctly assess the plaintiff's eligibility for benefits, until he was virtually on the eve of retirement, and after the Fund had pursued an arbitration award forcing plaintiff to increase his contributions to the plan, clearly supports a finding of culpability. Algie, 891 F. Supp. at 890-91 (finding defendants culpable "at least to some modest degree" given their "alternative and shifting theories"). Indeed, the district court's opinion that "the Fund `acted recklessly' by proceeding for over twenty-five years on the basis that Arnold was a qualified participant" as well as its determination that had the Fund exercised "attentiveness or care" it would have identified plaintiff's status at an earlier point compel a finding of culpability. (Memorandum Opinion of September 30, 2005, p. 17). The Fund can take no comfort in the District Court's finding that it did not act arbitrarily and capriciously. In so finding, the District Court merely concluded that after twenty-five years of reckless conduct and inattentiveness, the Fund finally got plaintiff's status right. Moreover, the Fund is incorrect in its assertion that the District Court's reliance on equitable estoppel as a basis for granting relief precludes a finding of culpability because satisfaction of the culpability factor is not conditioned on the success of the legal theory presented to the court. Rather, culpability may be established where the offending party caused the dispute underlying the motion for attorneys' fees, as is the case here. Paese, 2006 WL 1418571 at *12. Considering this history, the court finds that the culpability factor clearly weighs in plaintiff's favor.
Given the unique circumstances in this case as summarized above and detailed in the district court's opinion, the factor relating to the merit of the parties' positions is admittedly a closer call. While as a legal matter the Fund's decision to deny benefits was correct under the plan and therefore had merit, it did not prevail in this litigation because the district court applied the doctrine of equitable estoppel. On balance, given the fact that the plaintiff achieved the result sought in this litigation, albeit under different legal principles, the undersigned finds that the relative merit of the parties' positions weighs in plaintiff's favor. This finding is also supported by the district court's opinion, that it would have ordered restitution if it had not determined that the plaintiff was entitled to pension benefits under equitable estoppel. Thus, this factor would weigh in plaintiff's favor as the prevailing party. Citrin, 918 F. Supp. at 800, 802 (explaining that "the Second Circuit favors awarding attorneys' fees to prevailing plaintiffs in ERISA cases" and finding the "merit" factor weighed in petitioners' favor where they had prevailed in the underlying litigation); Lijoi v. Continental Casulty Co., 414 F. Supp.2d 228, 249 (E.D.N.Y. 2006) (finding the relative merits of the parties' positions weighed in the prevailing plaintiff's favor).
Even if this factor weighed against the plaintiff, it would not preclude an award of fees. La Barbara v. J.E.T. Resources, Inc., 396 F. Supp.2d 346, 350-51 (E.D.N.Y. 2005) (awarding plaintiff attorneys' fees despite finding that relative merit of parties' positions weighed against such an award).
Turning next to the second factor, the ability of the defendants to satisfy an award of attorneys' fees, the defendants do not dispute this factor. Thus, the undersigned finds that defendants have the ability to satisfy an award of attorneys' fees and this factor weighs in favor of such an award. Brown v. Board of Trustees of the Building Service 32B-J Pension Fund, 392 F. Supp.2d 434, 447 (E.D.N.Y. 2005) ("[D]efendants do not dispute their ability to pay, so this factor also is met.").
As to the third factor, whether an award of fees would deter other persons from acting similarly under like circumstances, the plaintiff states that awarding fees in this case "would deter a careless and somewhat cavalier approach to the withholding of benefits," as plan administrators would be exposed to the likelihood of unfavorable court judgments accompanied by legal fees. The defendants counter that, as Trustees, they are already duty-bound to interpret and apply the plan's provisions regardless of the risk that they could be charged with their adversaries' attorneys' fees. While the defendants correctly assert that are under a duty to adhere to the plan's provisions, this assertion ignores the fact that an award of attorneys' fees would likely encourage other fund administrators to exercise more care when they seek enforcement of plan provisions as did the instant defendants when they sought an arbitration award. The knowledge that courts may award attorneys' fees against plan administrators who recklessly pursue contributions without consideration of plan provisions and eligibility will likely encourage others to exercise greater care in this regard. Thus, the undersigned finds that an award of attorneys' fees to the plaintiff in the instant case would serve as a deterrent and, accordingly, this factor is satisfied.
Finally, the court turns to the fifth factor, whether the action sought to confer a common benefit on a group of pension plan participants. As conceded by plaintiff, this matter concerns but one individual. However, plaintiff argues that it would inure to the benefit of all plan participants by strengthening and clarifying the equitable remedies portion of ERISA law and discouraging the adoption of "meritless and self-interested interpretations of clear policy language." Snead v. Defendant Life Ins. Co. of Am., 824 F.Supp. 69, 75 (E.D. Va. 1993). With respect to this factor, this court finds merit in the defendants' position which is essentially that this action confers no common benefit on other plan participants. However, the absence of this factor does not alone preclude an award of attorneys' fees.Mendez, 982 F.2d at 789 (citing Ford v. New York Central Teamsters Pension Fund, 642 F.2d 664, 665 (2d Cir. 1981) (per curiam) (Under ERISA "the failure of plaintiffs' action to confer a common benefit on a group of pension plan participants does not bar their recovery of attorney's fees."); Almonte v. General Motors Corp., No. 95 Civ. 5173, 1997 WL 363815, *7 (S.D.N.Y. Aug. 22, 1997) (citations omitted).
Given the foregoing analysis, the court finds that each of the first four factors support plaintiff's demand for attorneys' fees. Mindful of the Second Circuit's instruction that "ERISA's attorney's fee provisions must be liberally construed to protect the statutory purpose of vindicating retirement rights,"Chambless, 815 F.2d at 872, together with its preference for "awarding attorneys' fees to prevailing plaintiffs in ERISA cases `in the absence of some particular justification for not doing so.'" Citrin, 918 F. Supp. at 800 (quoting Birmingham, 718 F.2d at 523), the undersigned recommends that attorneys' fees in this matter be awarded to the plaintiff. Accordingly, the court next considers the proper amount to be awarded.
B. Determination of the Amount of Attorneys' Fees Awarded to Plaintiff
The determination of the amount of fees to be awarded is governed by the "lodestar" approach in this Circuit. Grant v. Martinez, 973 F.2d 96, 99 (2d Cir. 1992). Under this approach, "the number of hour reasonably expended on the litigation is multiplied by a reasonable hourly rate for attorneys. . . ." Id. at 99.
Reasonableness of the Hourly Rates:
The court first addresses the hourly rates for the attorneys who worked on this matter. The Declaration of Richard B. Ziskin states that the Ziskin Law Firm LLP worked on this matter since 2000 and billed the plaintiff for the attorneys identified below at the following rates:
Richard B. Ziskin: $225 per hour from 2000 through December 2003 $240 per hour from January 2004 through December 2004 $260 per hour from January 2005; Suzanne H. Ziskin: $225 per hour from 2000 through December 2003 $240 per hour from January 2004 through December 2004 $260 per hour from January 2005; Robert M. Ziskin: $265 per hour from 2000 through December 2003 $285 per hour from January 2004. It is settled law that the hourly rate should be "`in line with those [rates] prevailing in the community for similar services of lawyers of reasonably comparable skill, experience, and reputation.'" Cruz v. Local Union No. 3 of the IBEW, 34 F.3d 1148, 1159 (2d Cir. 1994) (quoting Blum v. Stetson, 465 U.S. 886, 896 n. 11 (1984)). The relevant community that a district court should consider is usually "`the district in which the court sits,' unless there has been a showing that `special expertise of counsel from a . . . [different] district was required.'" Id. (quoting Polk v. New York State Dep't of Correctional Servs., 722 F.2d 23, 25 (2d Cir. 1983)). Defendants have neither contested these rates nor addressed the issue of what is the prevailing rate for attorneys in this district with similar skill, experience and reputation. In this district, prevailing rates have ranged from $200-$300 for partners, $200-$250 for senior associates and $100-$150 for junior associates. See, e.g.,Commission Express National, Inc. v. Rikhy, No. CV 03-4050(CPS), 2006 WL 385323, *6 (E.D.N.Y. Feb. 17, 2006); Aiello v. Town of Brookhaven, CV 94-2622(FB), 2005 U.S. Dist. Lexis 11462, at *17-18 (E.D.N.Y., June 13, 2005); King, 325 F. Supp.2d 169-70;Duke v. County of Nassau, CV 97-1495(JS), 2003 U.S. Dist. Lexis 26536, at *5-6 (E.D.N.Y. April 14, 2003). Plaintiff's papers set forth the position and experience of the individuals other than Suzanne Ziskin reflected on the time records and their rates fall within these ranges. (Decl. of Richard Ziskin at at ¶ 8). Given that the plaintiff's papers do not provide any guidance as to the appropriateness of the rate charged for attorney Suzanne Ziskin, the court, in its discretion, recommends a reduction to $150 per hour for the 9.25 hours spent by Suzanne Ziskin on this matter.Reasonableness of Time Spent:
To establish the number of hours reasonably expended on a litigation, the party seeking an award of attorneys' fees "must document the application with contemporaneous time records" that specify "the date, the hours expended, and the nature of the work done." New York State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1148 (2d Cir. 1983). Here, the plaintiff has submitted the declaration of his attorney, Richard B. Ziskin, together with a copy of the computer printout of his firm's billing register detailing the required information. See Declaration of Richard B. Ziskin and "Exhibit A" annexed thereto. Plaintiff asserts that his attorneys spent a total of 251.25 hours on this litigation exclusive of the time spent preparing the instant fee application and has supported that assertion with the billing register. Id. at ¶ 6. Defendants do not challenge the reasonableness of the time spent.
The undersigned finds that the time spent by plaintiff's counsel on this matter is reasonable and the defendants do not contend otherwise. Accordingly, it is recommended that plaintiff be awarded attorneys' fees in the amount of $56,545.20 representing 251.25 hours at the rates set forth above.
Costs:
Costs are reimbursable "as long as they were incidental and necessary to the representation" of the client. Securities and Exch. Comm'n v. Goren, 272 F. Supp. 2d 202, 214 (E.D.N.Y. 2003) (internal quotation omitted). While the plaintiff claims to be seeking reimbursement for costs in addition to attorneys' fees, he does not indicate the amount of costs being sought and fails to submit any documentation in support of his claim. To the contrary, the entire amount demanded represents attorneys' fees. Thus, the undersigned recommends that plaintiff's request for costs be denied.
RECOMMENDATION
For all the reasons set forth above, the undersigned recommends that the plaintiff be awarded fees in the amount of $56,545.20 and costs in the amount of $0.00 for a total award of $56,545.20. A copy of this Report and Recommendation is being sent to the plaintiff. The plaintiff is directed to serve the defendants with a copy by certified mail, return receipt requested, and to file proof of service with the court. Any objections to this Report and Recommendation must be filed with the Clerk of the Court with a courtesy copy to the undersigned within 10 days of service. Failure to file objections within this period waives the right to appeal the District Court's Order. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72; Beverly v. Walker, 118 F.3d 900, 902 (2d Cir. 1997); Savoie v. Merchants Bank, 84 F.3d 52, 60 (2d Cir. 1996).