Court: District Court, C.D. California; July 7, 2017; Federal District Court
The Court granted both Prudential Insurance Company of America’s motion for clarification and John Doe’s motion for entry of judgment and award of benefits, fees, and costs. This case involves a claim for benefits under the Employee Retirement Income Security Act (ERISA). Previously, the Court found that Prudential improperly terminated Doe's long-term disability benefits and ordered their reinstatement.
Prudential's motion highlighted inconsistencies between two terms from a prior order regarding Doe's entitlement to benefits. Specifically, Prudential pointed out that the language suggesting unconditional future benefits contradicted the Plan's stipulations, which allow for benefit termination if the claimant is no longer disabled or if there is deductible income. The Court clarified that it cannot grant benefits beyond what the Plan permits and that the intent of the order was not to establish unconditional future benefits but to confirm that the issue of Doe's disability status related to mental health limitations is settled. Furthermore, Prudential retains the right to monitor Doe's employment status to assess his ongoing eligibility for benefits under the Plan.
Prudential is permitted to monitor the Plaintiff's medical condition to determine ongoing eligibility for benefits, as the Plan stipulates that benefits must be terminated when the Plaintiff is "no longer disabled." The Court has agreed to adopt the language proposed by the Plaintiff in his Revised Proposed Judgment, which will modify the relief ordered in the Final Judgment.
Regarding benefits, the Plaintiff claims a total of $1,071,936 due, while Prudential asserts this amount should be reduced by $47,717 for SSDI payments that the Plaintiff agreed to reimburse. The Plaintiff acknowledges the SSDI amount and the reimbursement agreement but contends that Prudential previously argued against considering SSDI in this case. However, the Court counters that Prudential's fourth affirmative defense addresses offsets for any benefits due, and thus the reimbursement obligation stands. Consequently, the total benefits due to the Plaintiff are adjusted to $1,025,219.
The Plaintiff requests prejudgment interest at various rates: 14.75% (Prudential’s average return on equity since July 2013), 11.5% (reflecting potential investment income), or a minimum rate of 10% as per Cal. Ins. Code § 10111.2 for delayed payments. Prudential argues for a lesser rate based on 28 U.S.C. § 1961, which has fluctuated between 0.1% and 1.18%. While ERISA does not explicitly authorize prejudgment interest, the district court has the discretion to award it, typically at the rate set by § 1961 unless substantial evidence suggests a different rate is warranted. The interest is intended to compensate the Plaintiff for losses due to nonpayment of benefits.
Plaintiff has provided significant evidence of financial losses stemming from Prudential’s termination of his long-term disability (LTD) benefits, which he relied upon for daily expenses. As a result of this termination, Plaintiff reduced his investments in profitable equities and funds that would have yielded higher returns had his benefits continued. His investment advisors confirmed that a substantial portion of his portfolio earned average annual returns of 11.25% and 11.54% post-July 2013. This evidence satisfies the “substantial evidence” requirement for demonstrating loss of investment income, as established in Blankenship v. Liberty Life Assur. Co. of Boston.
To compensate for these losses, the Court determines a prejudgment interest rate of 11.5%, diverging from the standard Treasury bill rate of 0.1% to 1.18%. This rate is deemed fair for approximating the interest Plaintiff would have accrued had Prudential not wrongfully terminated his benefits. The Court declines to adopt Prudential’s average annual return of 14.75% for the interest rate, as it is not directly compensatory for Plaintiff’s losses.
Regarding attorneys’ fees, the Court grants Plaintiff's request for full payment based on Section 502(g)(1) of ERISA, which allows for reasonable fees to be awarded at the court's discretion. The Ninth Circuit typically awards fees to prevailing beneficiaries in ERISA cases unless special circumstances exist. Plaintiff is found to be the prevailing party after the Court ruled in his favor, reinstating his LTD benefits. Prudential does not contest Plaintiff’s status as the prevailing party or argue against the fee award on special circumstances grounds, but contends that the Hummell factors weigh against an award. The Court disagrees with Prudential's interpretation of these factors, emphasizing that a prevailing beneficiary is usually entitled to a fee award, as noted in Boston Mut. Ins. and affirmed by the Supreme Court in Hardt.
Plaintiff is recognized as the prevailing party, justifying the award of attorneys' fees under ERISA, which aims to protect participants in employee benefit plans and ensure their access to federal courts. The Court has discretion to award reasonable fees, calculated using the lodestar method, which multiplies the number of hours worked by a reasonable hourly rate. Plaintiff's counsel requests a rate of $650 per hour for 536.30 hours worked, totaling a lodestar of $348,595. This rate is supported by declarations from other ERISA attorneys confirming its reasonableness, and the Court finds it appropriate despite Prudential's objection that a lower rate of $600 was used earlier in the case. The Court acknowledges the potential delay in payment justifies using the current rate.
The Court has also determined that the 536.30 hours claimed by Plaintiff's counsel are reasonable. Prudential challenged specific charges, including 13.4 hours for collaboration, which the Court deemed reasonable due to the collaborative nature of the work. Additionally, the Court found 45.5 hours spent on document review appropriate, as it involved preparation for briefs and trial rather than mere review. Finally, the Court upheld the 116 hours spent drafting and editing trial briefs, recognizing the complexity and significance of these documents in the litigation outcome.
Prudential's objections to the hours billed by Plaintiff's counsel are largely dismissed by the Court. Prudential fails to specify excessive entries and the Court finds the hours spent on necessary tasks reasonable. The Court affirms that the time spent opposing Prudential's motion to strike (27.90 hours) and on a sur-reply (14.65 hours) is justified, noting that preparation for the sur-reply, despite being unsuccessful, is compensable. Prudential's criticism of 18.75 hours spent preparing for the bench trial, particularly by attorneys Bolt and Kim, is also rejected, as their involvement in mock trials is deemed necessary for effective preparation. Prudential's claims of duplicative billing are dismissed, with the Court recognizing that collaboration among attorneys for reviewing documents is standard practice. Additionally, the Court finds that the time entries do not constitute block billing and that the high hours are justified by the time-consuming nature of drafting documents. The Court calculates the lodestar at $348,595 based on 536.30 hours at a rate of $650/hour, without any adjustments requested by either party. Regarding costs, Plaintiff seeks $5,562.60, which Prudential does not contest, and the Court awards this amount. The Court grants Prudential’s Motion to Modify Order and John Doe’s Motion for Entry of Judgment, resulting in a separate Final Judgment to be issued.
