Linda B. Jones v. Unum Life Insurance Company of America
Docket: 1999
Court: Court of Appeals for the Second Circuit; January 10, 2000; Federal Appellate Court
Linda B. Jones appealed a judgment from the U.S. District Court for the Southern District of New York, which denied her requests for attorney's fees, a higher rate of prejudgment interest, and other relief following her successful ERISA claim for long-term disability benefits against UNUM Life Insurance Company. The appeal was centered on the denial of these requests and the court's remand to UNUM for further consideration of Jones's entitlement to additional benefits. UNUM contested the appeal's timeliness, but the court determined it was timely. The appellate court affirmed the judgment regarding UNUM's potential future determinations of Jones's disability claim but vacated the denial of attorney's fees and prejudgment interest, remanding those issues for further proceedings. Jones had been employed as a legal administrator from August 1992 to April 29, 1994, and developed severe medical issues leading to her inability to work after an exacerbation of her condition on April 28, 1994. She applied for long-term disability benefits in October 1994, which UNUM denied, prompting her legal action.
On November 6, 1998, the district court ruled in favor of Linda B. Jones, granting her disability benefits for at least 24 months starting from October 1994, as the Group Policy required a review of disability determinations after 24 months and did not allow for payments during the first 180 days of disability. The court emphasized that the evidence from trained medical doctors was more credible than that from UNUM’s benefit analysts. The court also awarded prejudgment interest based on 28 U.S.C. § 1961 but denied Jones's requests for the return of premiums paid under the Conversion Policy and for attorneys' fees. Final judgment was entered on November 16, 1998. On November 30, 1998, Jones filed a motion for relief from judgment under FRCP 60(b)(6), seeking reconsideration of the denial of attorney's fees, a higher interest rate, and a refund of premiums. In a January 12, 1999 Order, the court partially granted her motion, allowing for the return of conversion policy premiums with interest, but denied the other requests. Jones appealed both the Judgment and the Postjudgment Order on February 9, 1999. On appeal, UNUM contested the jurisdiction based on the timing of the notice of appeal but was rejected. The appellate court vacated part of the judgment and remanded for further explanation regarding the denial of attorney's fees and the interest rate chosen by the district court.
UNUM argues that the notice of appeal filed by Jones was untimely, as it occurred more than 30 days after the Judgment entered on November 16, 1998. It contends that Jones's motion under Rule 60(b)(6) for relief from judgment did not toll the appeal period, citing that Rule 60(b)(6) does not affect the finality of a judgment, nor does it suspend its operation. Furthermore, UNUM claims that the motion primarily concerned attorney's fees, which are excluded from motions that toll the appeal period under Rule 4(a)(4) of the Federal Rules of Appellate Procedure.
However, the court notes that Jones's postjudgment motion should be treated as a motion under Fed. R. Civ. P. 59(e), which allows for altering or amending a judgment and automatically affects the finality of the judgment. A timely Rule 59(e) motion, filed within 10 days of the judgment, tolls the appeal period until the court disposes of that motion. In contrast, Rule 60(b) allows for relief from a final judgment without a strict deadline but does not typically affect the judgment's finality.
The court highlights that the interpretation of motions filed within 10 days of a judgment has evolved, and it is essential to analyze the timing and substance of Jones's motion to determine if it could extend the time for filing an appeal, regardless of its label. Overall, the distinction between the rules and their implications for appellate jurisdiction is central to the court's assessment.
A postjudgment motion filed within 10 days after the entry of judgment that seeks reconsideration of matters within the decision on the merits is treated as a motion to alter or amend the judgment under Rule 59(e), thus extending the appeal window. In 1993, FRAP Rule 4(a)(4) was amended to include certain Civil Rule 60(b) motions as those that automatically extend the time for appeal if filed within the same timeframe. The amendment clarified the classification of such motions, aligning with practices in various circuits that treated them as Rule 59(e) motions for appeal purposes. Although Civil Rule 60(b) does not affect judgment finality, motions within Rule 59(e) filed within 10 days do impact appeal timelines.
However, a Civil Rule 60(b) motion seeking only attorneys' fees within 10 days does not automatically extend the appeal period unless ordered by the district court. A motion that seeks reconsideration of a claim for the return of funds paid to a defendant can alter the merits decision and thus falls under Rule 59(e), extending the appeal period. Similarly, requests for prejudgment interest are considered part of the plaintiff's complete compensation and are tied to the merits, which also extends the appeal timeframe.
In the present case, Jones's appeal was deemed timely. Although her motion was labeled under Rule 60(b)(6) and aimed at reconsidering the denial of attorney's fees, it also sought changes regarding the denial of her claim for premium returns and prejudgment interest rates. These requests related to the merits of her claims, resulting in a successful reconsideration of the return of premiums.
The request for attorney's fees, originally denied in the Judgment, was included in a postjudgment motion that the district court addressed in its order on January 13, 1999. Consequently, the time for the parties to appeal the judgment began at that date, making Jones's notice of appeal, filed 27 days later on February 9, 1999, timely. Jones argues for the award of attorney's fees and a higher rate of prejudgment interest related to her disability benefits recovery, asserting these are essential to her full compensation and that the district court's denial lacked justification. While other aspects of the Judgment are affirmed, the case is remanded for the district court to provide specific findings on these issues for effective appellate review.
In actions under ERISA, a district court may award reasonable attorney's fees at its discretion, considering five factors: the offending party's culpability, their ability to pay, the deterrent effect of an award, the relative merits of the parties, and whether the action benefited other pension plan participants. The appellate review of attorney's fee awards is for abuse of discretion, which requires the district court to explain its rationale. A lack of articulated reasons for denying fees necessitates remand for further findings, as a mere citation of legal standards is insufficient for appellate evaluation. Specificity in applying the standard to the facts is essential for meaningful review.
The district court did not provide reasons for denying Jones's request for attorney's fees, preventing meaningful review of that denial. The court's discretion in awarding attorney's fees in ERISA cases is acknowledged, and it is determined that the district court should re-evaluate the appropriateness and amount of any fee award. Regarding prejudgment interest, the district court also retains discretion, considering factors such as full compensation, fairness, and the remedial purpose of ERISA. The absence of a federal statute governing prejudgment interest rates means that the court can adopt a rate that reflects the specific circumstances of the case, rather than being restricted to the government borrowing rate under 28 U.S.C. § 1961. In this case, the district court indicated that the interest rate for prejudgment interest should follow the post-judgment interest rate outlined in 28 U.S.C. § 1961.
The district court in Algie selected the 1961 postjudgment interest rate based on findings that prevailing interest rates during the plaintiffs' denial of benefits were lower than the state-law prejudgment rate, asserting the federal rate better reflected the potential return on unpaid benefits. This reasoning was affirmed by the Court. In contrast, the current district court did not provide similar findings for using the 1961 rate for Jones, preventing meaningful review due to the dissimilarities between the cases; Jones sought disability payments rather than severance payments. The district court could have considered the borrowing rate relevant to Jones, who had been unable to work prior to her claim.
On remand, the district court is instructed to clarify its rationale for adopting the 1961 rate or any higher rate. Jones contended that the district court should have retained jurisdiction over her potential entitlement to additional disability benefits beyond the initial 24-month period and should have mandated interest on those payments. These arguments were rejected, as ERISA requires exhaustion of administrative remedies before litigation unless a clear showing of futility is made, which Jones did not demonstrate.
The district court also could not address prejudgment interest before UNUM determined additional disability payments, as Jones's claim remained undetermined administratively, rendering her request for interest premature. The Court affirmed most of the district court's judgment but vacated the denial of attorney's fees and a higher prejudgment interest rate. The case is remanded for further proceedings consistent with this opinion, and an expedited briefing schedule will follow once jurisdiction is restored.
Costs for the current stage of the appeal are awarded to the plaintiff. Circuit Judge José A. Cabranes concurs with the Court's judgment and Judge Kearse's opinion but emphasizes that the issue of whether a party's time to appeal is extended by a motion under Federal Rules of Civil Procedure 59 or 60—specifically when seeking reconsideration of a district court's denial of attorney's fees as part of the judgment on the merits—remains unresolved in this Circuit. He references relevant case law, including Ramsey v. Colonial Life Ins. Co. of Am., which supports the extension of the appeal time when reconsideration of attorney's fees is involved, as well as other cases from the Seventh and Tenth Circuits that provide varying interpretations of this issue.
