1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Old Dominion Freight Line Incorporated, et No. CV-20-01292-PHX-DLR al., 10 ORDER Plaintiffs, 11 v. 12 Kale Bowman, et al., 13 Defendants. 14 15 16 Before the Court are Plaintiffs’ motion for attorney fees (Doc. 53) and Defendant’s 17 motion to amend judgment (Doc. 55). Both are fully briefed. (Docs. 56-59.) The Court 18 addresses Defendant’s motion first. 19 I. Background 20 The Court recites the relevant factual background in its August 3, 2021 order. (Doc. 21 49.) These motions arise after the Court granted summary judgment in favor of Plaintiffs 22 in the amount of $137,175.99. (Doc. 49.) 23 II. Defendant’s Motion to Amend Judgment 24 Under Federal Rule of Civil Procedure 59(e), a party can move the Court to amend 25 its judgment within 28 days of entry. The Court has considerable discretion over such 26 motions because Rule 59(e) does not specify the grounds upon which relief may be granted. 27 See Allstate Ins. Co. v. Herron, 634 F.3d 1101, 1111 (9th Cir. 2011). Amending a judgment 28 after entry, however, is “an extraordinary remedy which should be used sparingly.” Id. 1 (citation and quotation omitted). There are four basic grounds upon which a Rule 59(e) 2 motion generally may be granted: (1) to correct manifest errors of law or fact upon which 3 the judgment rests; (2) in response to newly discovered or previously unavailable evidence; 4 (3) to prevent a manifest injustice; and (4) if an intervening change in controlling law 5 undermines the judgment. Id. Defendant’s arguments all sound under the first ground, to 6 correct manifest errors of law or fact upon which the judgment rests 7 A. Applying the Limitations Period to Defendant’s Counterclaim 8 Defendant argues that the Court failed to consider subsequent requests for 9 documents related to the plan when establishing the limitations period. True. The Court 10 did not consider those subsequent requests because a claim under 29 U.S.C. § 1132(c) 11 accrues on the date of “the earliest alleged refusal to provide the relevant information.” 12 Stone v. Travelers Corp., 58 F.3d 434, 439 (9th Cir. 1995) (emphasis added). Defendant 13 has not shown a manifest error of law or fact. 14 B. The Burden to Dispute the 2017 SPD’s Enforceability 15 Defendant next argues that the Court made a manifest error of law when it 16 improperly foisted upon him the burden to show that the 2017 SPD was unenforceable. 17 This misstates the law. The law requires a movant seeking to enforce an ERISA 18 subrogation provision must show that the document satisfies the requirements for a 19 governing document, none of which are to prove that the provision is enforceable. See 29 20 U.S.C. § 1102(b). As explained in the Court’s previous order, Plaintiff satisfied these 21 requirements and established the 2017 SPD as the governing plan. (Doc. 49.) Defendant 22 has shown no manifest error of law or fact. 23 C. Whether the 2017 SPD is Enforceable 24 Defendant contends that the Court made a manifest error when it found the 2017 25 SPD was enforceable. In attacking the 2017 SPD’s enforceability, Defendant could create 26 a genuine and material factual dispute in at least two ways: (1) providing another written 27 instrument purporting to be the operate plan document or (2) showing that the 2017 Plan 28 was not adopted through the procedures outlined by the previous operant plan. See, e.g., 1 Grosz-Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154, 1159 (9th Cir. 2001). But 2 Defendant took neither path. The 2017 is the only plan document before the Court. 3 Instead, Defendant argued that Plaintiffs failed to follow the amendment process outlined 4 in the 2017 SPD when it adopted the 2017 SPD. But that mechanism only describes how 5 Plaintiffs may amend the 2017 SPD, not the process it had to follow to adopt the 2017 SPD 6 itself, which would be the governing process. Thus, Defendant failed to establish the 7 existence of a material factual dispute. 8 III. Motion for Attorney Fees 9 A court in its discretion may award reasonable attorney fees and costs of an action 10 under ERISA to any party. 29 U.S.C. § 1132(g)(1). Although the statute vests judges with 11 broad discretion, the discretion is not unlimited. See Hardt v. Reliance Standard Life Ins. 12 Co., 560 U.S. 242, 255 (2010). Before fees may be awarded under § 1132(g)(1), a fees 13 claimant must show “some degree of success on the merits,” which requires more than 14 “trivial success on the merits” or a “purely procedural victory.” Id. The court may award 15 fees without lengthy inquiry into whether a party’s success was substantial or on a central 16 issue if the court can fairly call it “some success on the merits.” Id. 17 Defendant does not contest that Plaintiffs prevailed in this suit. Instead, he contests 18 the motion on the grounds that (1) Plaintiffs lack standing to recover attorney fees; (2) 19 Plaintiffs failed to provide the documentation required by Local Rule 54.2(d)(2); (3) 20 consideration of the Hummell1 factors weigh against an award of fees, and (4) the fees 21 requested by Plaintiffs are excessive and unreasonable. (Doc. 56 at 1.) The Court 22 addresses the merits of the motion and Defendant’s arguments below. 23 A. Standing to Recover Attorney Fees 24 As a threshold matter, Defendant argues that Plaintiffs are not entitled to recovery 25 any attorney fees because they did not incur attorney fees when a third party, UnitedHealth, 26 already paid those fees as part of a claims administration agreement. Indeed, Defendant 27 contends that UnitedHealth party is a real party in interest and the failure to join it is fatal 28 1Hummell v. S.E. Rykoff & Co., 634 F.2d 446 (9th Cir. 1980). 1 to Plaintiff’s motion for attorney fees. 2 The Court disagrees. “[A]ttorney fees can be awarded so long as the underlying 3 action was brought ‘by a participant, beneficiary, or fiduciary,’” just as it was in this matter. 4 Almont Ambulatory Surgery Ctr., LLC v. Int'l Longshoremen’s & Warehousemen's Union- 5 Pac. Mar. Ass’n Welfare Plan, No. 20-55464, 2021 WL 5002216, at *1 (9th Cir. Oct. 28, 6 2021) (quoting 29 U.S.C. § 1132(g)(1)). “ERISA does not require a party to have paid for 7 its defense out of pocket to receive a fee award.” Id.; cf. 29 U.S.C. § 1132(g)(1). 8 B. Compliance with Local Rules 9 In addition to meeting § 1132(g)(1)’s eligibility requirements, a party seeking 10 attorneys’ fees must also satisfy local rules, at least by “substantial compliance.” Gary v. 11 Carbon Cycle Arizona, 398 F.Supp.3d 468, 484 (D. Ariz. 2019). Defendant argues that 12 Plaintiffs failed to provide all the required documentation under the local rules., namely a 13 “complete copy of any written fee agreement.” LRCiv. 54.2(d)(2). Plaintiffs substantially 14 complied here, providing the agreement that set the rates between Plaintiff’s counsel and 15 UnitedHealth. (Doc.
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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Old Dominion Freight Line Incorporated, et No. CV-20-01292-PHX-DLR al., 10 ORDER Plaintiffs, 11 v. 12 Kale Bowman, et al., 13 Defendants. 14 15 16 Before the Court are Plaintiffs’ motion for attorney fees (Doc. 53) and Defendant’s 17 motion to amend judgment (Doc. 55). Both are fully briefed. (Docs. 56-59.) The Court 18 addresses Defendant’s motion first. 19 I. Background 20 The Court recites the relevant factual background in its August 3, 2021 order. (Doc. 21 49.) These motions arise after the Court granted summary judgment in favor of Plaintiffs 22 in the amount of $137,175.99. (Doc. 49.) 23 II. Defendant’s Motion to Amend Judgment 24 Under Federal Rule of Civil Procedure 59(e), a party can move the Court to amend 25 its judgment within 28 days of entry. The Court has considerable discretion over such 26 motions because Rule 59(e) does not specify the grounds upon which relief may be granted. 27 See Allstate Ins. Co. v. Herron, 634 F.3d 1101, 1111 (9th Cir. 2011). Amending a judgment 28 after entry, however, is “an extraordinary remedy which should be used sparingly.” Id. 1 (citation and quotation omitted). There are four basic grounds upon which a Rule 59(e) 2 motion generally may be granted: (1) to correct manifest errors of law or fact upon which 3 the judgment rests; (2) in response to newly discovered or previously unavailable evidence; 4 (3) to prevent a manifest injustice; and (4) if an intervening change in controlling law 5 undermines the judgment. Id. Defendant’s arguments all sound under the first ground, to 6 correct manifest errors of law or fact upon which the judgment rests 7 A. Applying the Limitations Period to Defendant’s Counterclaim 8 Defendant argues that the Court failed to consider subsequent requests for 9 documents related to the plan when establishing the limitations period. True. The Court 10 did not consider those subsequent requests because a claim under 29 U.S.C. § 1132(c) 11 accrues on the date of “the earliest alleged refusal to provide the relevant information.” 12 Stone v. Travelers Corp., 58 F.3d 434, 439 (9th Cir. 1995) (emphasis added). Defendant 13 has not shown a manifest error of law or fact. 14 B. The Burden to Dispute the 2017 SPD’s Enforceability 15 Defendant next argues that the Court made a manifest error of law when it 16 improperly foisted upon him the burden to show that the 2017 SPD was unenforceable. 17 This misstates the law. The law requires a movant seeking to enforce an ERISA 18 subrogation provision must show that the document satisfies the requirements for a 19 governing document, none of which are to prove that the provision is enforceable. See 29 20 U.S.C. § 1102(b). As explained in the Court’s previous order, Plaintiff satisfied these 21 requirements and established the 2017 SPD as the governing plan. (Doc. 49.) Defendant 22 has shown no manifest error of law or fact. 23 C. Whether the 2017 SPD is Enforceable 24 Defendant contends that the Court made a manifest error when it found the 2017 25 SPD was enforceable. In attacking the 2017 SPD’s enforceability, Defendant could create 26 a genuine and material factual dispute in at least two ways: (1) providing another written 27 instrument purporting to be the operate plan document or (2) showing that the 2017 Plan 28 was not adopted through the procedures outlined by the previous operant plan. See, e.g., 1 Grosz-Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154, 1159 (9th Cir. 2001). But 2 Defendant took neither path. The 2017 is the only plan document before the Court. 3 Instead, Defendant argued that Plaintiffs failed to follow the amendment process outlined 4 in the 2017 SPD when it adopted the 2017 SPD. But that mechanism only describes how 5 Plaintiffs may amend the 2017 SPD, not the process it had to follow to adopt the 2017 SPD 6 itself, which would be the governing process. Thus, Defendant failed to establish the 7 existence of a material factual dispute. 8 III. Motion for Attorney Fees 9 A court in its discretion may award reasonable attorney fees and costs of an action 10 under ERISA to any party. 29 U.S.C. § 1132(g)(1). Although the statute vests judges with 11 broad discretion, the discretion is not unlimited. See Hardt v. Reliance Standard Life Ins. 12 Co., 560 U.S. 242, 255 (2010). Before fees may be awarded under § 1132(g)(1), a fees 13 claimant must show “some degree of success on the merits,” which requires more than 14 “trivial success on the merits” or a “purely procedural victory.” Id. The court may award 15 fees without lengthy inquiry into whether a party’s success was substantial or on a central 16 issue if the court can fairly call it “some success on the merits.” Id. 17 Defendant does not contest that Plaintiffs prevailed in this suit. Instead, he contests 18 the motion on the grounds that (1) Plaintiffs lack standing to recover attorney fees; (2) 19 Plaintiffs failed to provide the documentation required by Local Rule 54.2(d)(2); (3) 20 consideration of the Hummell1 factors weigh against an award of fees, and (4) the fees 21 requested by Plaintiffs are excessive and unreasonable. (Doc. 56 at 1.) The Court 22 addresses the merits of the motion and Defendant’s arguments below. 23 A. Standing to Recover Attorney Fees 24 As a threshold matter, Defendant argues that Plaintiffs are not entitled to recovery 25 any attorney fees because they did not incur attorney fees when a third party, UnitedHealth, 26 already paid those fees as part of a claims administration agreement. Indeed, Defendant 27 contends that UnitedHealth party is a real party in interest and the failure to join it is fatal 28 1Hummell v. S.E. Rykoff & Co., 634 F.2d 446 (9th Cir. 1980). 1 to Plaintiff’s motion for attorney fees. 2 The Court disagrees. “[A]ttorney fees can be awarded so long as the underlying 3 action was brought ‘by a participant, beneficiary, or fiduciary,’” just as it was in this matter. 4 Almont Ambulatory Surgery Ctr., LLC v. Int'l Longshoremen’s & Warehousemen's Union- 5 Pac. Mar. Ass’n Welfare Plan, No. 20-55464, 2021 WL 5002216, at *1 (9th Cir. Oct. 28, 6 2021) (quoting 29 U.S.C. § 1132(g)(1)). “ERISA does not require a party to have paid for 7 its defense out of pocket to receive a fee award.” Id.; cf. 29 U.S.C. § 1132(g)(1). 8 B. Compliance with Local Rules 9 In addition to meeting § 1132(g)(1)’s eligibility requirements, a party seeking 10 attorneys’ fees must also satisfy local rules, at least by “substantial compliance.” Gary v. 11 Carbon Cycle Arizona, 398 F.Supp.3d 468, 484 (D. Ariz. 2019). Defendant argues that 12 Plaintiffs failed to provide all the required documentation under the local rules., namely a 13 “complete copy of any written fee agreement.” LRCiv. 54.2(d)(2). Plaintiffs substantially 14 complied here, providing the agreement that set the rates between Plaintiff’s counsel and 15 UnitedHealth. (Doc. 53-2 at 5-8.) The local rule does not require more documentation. 16 Contrary to Defendant’s assertion, the claims administration agreement between Plaintiffs 17 and UnitedHealth would not satisfy LRCiv. 54.2(d)(2) because it would not be an 18 agreement for attorney fees 19 C. The Hummell Factors 20 Having determined that Plaintiffs are eligible for an attorney fee award, the Court 21 must consider the Hummell factors before exercising discretion to award fees. Simonia v. 22 Glendale Nissan/Infinity Disability Plan, 608 F.3d 1118, 1121 (9th Cir. 2010). The 23 Hummell factors are: 24 (1) the degree of the opposing parties’ culpability or bad faith; (2) the ability of the opposing parties to satisfy an award of 25 fees; (3) whether an award of fees against the opposing parties would deter others from acting under similar circumstances; 26 (4) whether the parties requesting fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a 27 significant legal question regarding ERISA; and (5) the relative merits of the parties’ positions. 28 1 Hummell v. S.E. Rykoff & Co., 634 F.2d 446, 453 (9th Cir. 1980). “None of the Hummell 2 factors is necessarily decisive; various permutations and combinations can support an 3 award of attorney fees.” Paddack v. Morris, 783 F.2d 844, 846 (9th Cir.1986) (quoting 4 Maes v. Standard Ins. Co., 8 F. App’x 758, 761 (9th Cir. 2001)) (cleaned up). 5 1. The degree of Defendant’s culpability or bad faith 6 Bad faith may arise when a party needlessly prolongs the litigation. See, e.g., Raff 7 v. Belstock, 933 F.Supp. 909, 917 (N.D. Cal. 1996). Plaintiffs argue that Defendant acted 8 in bad faith by raising arguments the Court ultimately dismissed, seeking discovery into 9 the enforceability of the 2017 SPD, and filing a counterclaim alleging the existence of an 10 earlier plan. The tactics do not rise to the level of “needlessly” prolonging the litigation, 11 even if Plaintiffs wish the litigation had ended sooner. This factor weighs against awarding 12 attorney fees. 13 2. The ability of Defendant to satisfy an award of fees 14 Plaintiff argues that Defendant has the resources to pay, citing his recovery in the 15 Underlying Action. (Doc. 53 at 6.) Defendant does not dispute this, and so this factor 16 weighs in favor of awarding attorney fees. 17 3. Whether an award of fees against opposing parties would deter others 18 from acting under similar circumstances 19 This factor favors granting fees if they would have a deterrent effect on others 20 bringing frivolous actions or defenses. But this Court has already determined that 21 Defendant did not act in bad faith, so an attorney fee award in this case would deter litigants 22 from defending themselves in an ERISA suit. This factor weighs against awarding fees. 23 Trustees of Cent. States, Se. & Sw. Areas Pension Fund v. Golden Nugget, Inc., 697 F. 24 Supp. 1538, 1561 (C.D. Cal. 1988) (determining this factor did not favor a fee award when 25 the Court found no bad faith for the first Hummell factor). 26 4. Potential benefits to other ERISA beneficiaries or resolution of 27 significant legal questions 28 The Court addresses only the first prong, as the parties agree the matter did not 1 resolve any significant legal question. That first prong asks whether the party requesting 2 fees seeks to benefit all participants and beneficiaries. Plaintiffs cite Schwade v Total 3 Plastics, Inc., 837 F. Supp. 2d 1255, 1265 (M.D. Fla. 2011) for the proposition that 4 subrogation provisions serve a good purpose in that the recoupment of plan expenditures 5 by enhancing the viability of those plans and argues that any recovery of attorney fees here 6 would benefit plan beneficiaries. (Doc. 53 at 7.) This fails for two reasons. First, 7 Schwade’s analysis doesn’t concern the Hummell factors and thus does not control here. 8 Second, as Defendant argues, Plaintiffs have not shown that an attorney fee award would 9 benefit Plan participates because it is unclear whether the award would go to United 10 Healthcare or the Plan. Plaintiffs’ Reply does not address this ambiguity. Plaintiffs have 11 not met their burden here, and thus the Court declines to make a finding on this factor. See 12 Shelton v. Hawaii Carpenters' Pension, Health & Welfare, Apprenticeship, Vacation & 13 Holiday, & Annuity Tr. Funds, 951 F.2d 362, *2 (9th Cir. 1991). 14 5. The relative merits of both parties’ positions 15 As noted above, Plaintiffs received a favorable judgment on the ERISA claim. Also 16 stated above, the Defendant’s position was not entirely unmeritorious, though ultimately 17 unavailing. Thus, Plaintiffs’ position was relatively more meritorious than Defendant’s. 18 This factor weighs slightly in favor of awarding fees. See Golden Nugget, Inc., 697 F. 19 Supp. at 1561 (C.D. Cal. 1988). 20 6. Balancing the factors 21 On the one hand, Defendant marshalled a good faith defense (factor 1), and an 22 attorney fee award might deter other parties from bringing their own good faith defense in 23 similar circumstances (factor 3). On the other hand, Defendant can satisfy a fee award 24 (factor 2), and Plaintiffs’ position was relatively more meritorious (factor 5). Factor 4 25 carries no weight in this balancing. See Shelton, 951 F.2d at *2. On balance, the threat of 26 deterrence in light of Defendant’s good faith defense favors not awarding attorney fees. 27 V. Conclusion 28 Defendant has not shown cause to amend judgment, and Plaintiffs have not shown 1 || that attorney fees are appropriate here. 2 IT IS ORDERED that Defendant’s motion to amend judgment (Doc. 55) and || Plaintiffs’ motion for attorney fees (Doc. 53) are DENIED. 4 Dated this 28th day of March, 2022. 5 6 ‘boy tha 9 Upied States Dictria Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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