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Zenone v. Alltel Corp.

February 8, 2007

JOHN ZENONE PLAINTIFF
v.
ALLTEL CORPORATION D/B/A ALLTEL INFORMATION SERVICES, INC., ET AL. DEFENDANTS



ORDER

On March 16th, the Court found that MetLife, the insurer of defendants' long term disability plan and claims administrator, failed to adequately consider plaintiff's extensive medical history and relied on erroneous information from his employer regarding his ability to work. The Court remanded this ERISA case to the plan administrator with instructions to receive additional evidence and make a determination as to the extent of plaintiff's disability and the amount of monthly benefits that would be owed in the event that he is found eligible for benefits. In addition, the Court directed that the case be administratively terminated without prejudice to being reopened for further proceedings.

Plaintiff, through his attorney James W. Stanley, Jr., filed a motion, on March 30th, for approval of attorney's fees and costs on the basis that he was the prevailing litigant entitled to a discretionary award of attorney's fees. He seeks fees in the amount of $2,500.00 for 12.5 itemized hours at a rate of $200.00 per hour in addition to the filing fee of $150.00.

On April 19th, defendants filed a response asserting that plaintiff is not a "prevailing party" as he has not succeeded on any claim stated in his complaint as the Court did not award benefits, but remanded the case to the administrator. They also argue that, when the five factors utilized by the Eighth Circuit in determining whether to award fees under ERISA are applied here, an award of fees is not appropriate. Defendants contend that there is no evidence that MetLife acted with bad faith in deciding plaintiff's claim, nor did the Court make any such finding. They further argue that fact that MetLife may have the ability to pay the fees does not alone merit an award of such fees and that a "deterrent effect" is unwarranted and unnecessary as MetLife did not act with bad faith. Defendants continue that this case does not present a significant legal question regarding ERISA, nor does it involve an issue common to other ERISA plan participants as the Court remanded this case for review and consideration of case-specific information. Finally, they assert that in evaluating the relevant merits of the parties' positions, MetLife made a good faith, reasonable argument for the Court to uphold its discretionary decision.

Plaintiff's former attorney, C. James Kubicek, filed a motion, on April 25th, for approval of attorney's fees in the amount of $11,745.00 for 78.30 itemized hours at a rate of $150.00 per hour plus the filing fee of $150.00 and service costs and medical records of $80.99.

On May 5th, defendants filed a response that repeats the arguments in the April 19th response and well as adding that the combined request for fees in the two motions of $14,245.00 is unreasonable as defendants' fees and costs have been $9,268.00 and $353.17 respectively.

Less than six months ago, the Eighth Circuit addressed the issue of ERISA attorney fees in the case of Starr v. Metro Systems, Inc., 461 F.3d 1036, 1040-1041 (8th Cir. 2006), which is set out below:

We review the district court's decision to award or deny attorney fees for an abuse of discretion. Sheehan v. Guardian Life Ins. Co., 372 F.3d 962, 968 (8th Cir. 2004); see 29 U.S.C. § 1132(g)(1) (stating that a court, in its discretion, may allow a reasonable attorney's fee and costs to either party in an action under ERISA). That being said, this court has previously emphasized the role of ERISA's remedial nature in determining whether to award fees, stating:

ERISA is remedial legislation which should be liberally construed to effectuate Congressional intent to protect employee participants in employee benefit plans. A district court considering a motion for attorney's fees under ERISA should therefore apply its discretion consistent with the purposes of ERISA, those purposes being to protect employee rights and to secure effective access to federal courts.

Welsh v. Burlington N., Inc., Employee Benefits Plan, 54 F.3d 1331, 1342 (8th Cir. 1995) (citations, internal quotations, ellipsis, and brackets omitted). Therefore, although there is no presumption in favor of attorney fees in an ERISA action, a prevailing plaintiff rarely fails to receive fees. See Martin v. Arkansas Blue Cross & Blue Shield, 299 F.3d 966, 972 (8th Cir. 2002) (en banc). In exercising its discretion, we have set forth the following list of five non-exclusive of factors for consideration:

(1) the degree of culpability or bad faith of the opposing party; (2) the ability of the opposing party to pay attorney fees; (3) whether an award of attorney fees against the opposing party might have a future deterrent effect under similar circumstances; (4) whether the parties requesting attorney fees sought to benefit all participants and beneficiaries of a plan or to resolve a significant legal question regarding ERISA itself; and (5) the relative merits of the parties' positions.

Id. at 969 & n. 4 (citing Lawrence, 749 F.2d at 495-96).

In the proceedings below, the district court found that the balance of the above factors weighed in favor of Metro. Considering ERISA's remedial nature and the facts of this case, we disagree for the reasons stated below.

The district court denied Starr's motion for attorney fees after rejecting Starr's assertion that Masanz perjured her testimony regarding the COBRA notice and Metro's recordkeeping. However, the absence of bad faith is not dispositive. We note that Starr brought the case individually and on behalf of his daughter, not as a class action. Nevertheless, the remaining factors favor Starr and indicate an award of attorney fees is in order.

First, the defendants undisputedly have the ability to pay. Second, the deterrent effect of an award of fees deserved more weight. An award of attorney fees will serve as an incentive to Metro and the administrator to pay closer attention to their COBRA notice handling ...


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