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Schuman v. Aetna Life Ins. Co.

United States District Court, D. Connecticut

June 20, 2017

JEFF SCHUMAN, Plaintiff,
v.
AETNA LIFE INS. CO., et al., Defendants.

          RULING ON MOTION FOR ATTORNEYS' FEES AND COSTS

          STEFAN R. UNDERHILL Stefan R. Underhill United States District Judge

         Jeff Schuman filed suit against three defendants-Ahold USA's Master Welfare Benefit Plan, the Administrative Committee of Ahold USA as Plan Administrator, and Aetna Life Insurance Co. as Claims Administrator-alleging that they violated the Employee Retirement Income Security Act (“ERISA”) by denying him long-term disability benefits. On March 20, 2017, I issued a ruling on the parties' cross-motions for summary judgment, in which I granted in part and denied in part the defendants' motion, and denied Schuman's motion in its entirety. In light of various inadequacies in the record, however, I ordered that the case be remanded to the claims administrator for a correct evaluation of Schuman's long-term disability claim.

         Schuman now has moved for attorneys' fees and costs under ERISA § 502(g)(1), arguing that he is entitled to fees and costs because he successfully obtained a remand order. The defendants respond that Schuman is not entitled to fees because both parties requested remand in the alternative, and because I rejected the majority of Schuman's arguments on the merits. I conclude that Schuman has shown eligibility for fees and costs under ERISA, but that, in light of the equitable Chambless and Johnson factors, Schuman's fee award should be reduced from the amount sought. Therefore, I grant Schuman's motion in part and deny it in part.

         I. Standard of Review

         Section 1132(g)(1) of ERISA provides that “[i]n any action under this subchapter . . . by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney's fee and costs of action to either party.” 29 U.S.C. § 1132(g)(1). The Supreme Court has held that, under the language of the statute, “a fee claimant need not be a ‘prevailing party' to be eligible for an attorney's fees award.” Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 252 (2010). Instead, a claimant need only “show ‘some degree of success on the merits' before a court may award attorney's fees under [section] 1132(g)(1).” Id. at 255 (quoting Ruckelshaus v. Sierra Club, 463 U.S. 680, 694 (1983)). “[S]ome degree of success on the merits” demands more than “‘trivial success on the merits' or a ‘purely procedural victor[y].'” Id. (quoting Ruckelshaus, 463 U.S. at 688 n.9). The court must be able to “fairly call the outcome of the litigation some success on the merits without conducting a lengthy inquir[y] into the question whether a particular party's success was ‘substantial' or occurred on a ‘central issue.'” Id. (quoting Ruckelshaus, 463 U.S. at 688 n.9) (other internal quotation marks omitted).

         “[W]hether a plaintiff has obtained some degree of success on the merits is the sole factor that a court must consider in exercising its discretion, ” but the court may also look to the factors set forth in Chambless v. Masters, Mates & Pilots Pension Plan, 815 F.2d 869 (2d Cir. 1987). See Donachie v. Liberty Life Assurance Co. of Bos., 745 F.3d 41, 46 (2d Cir. 2014). Under Chambless, in determining whether to award attorneys' fees, the court may consider:

(1) the degree of opposing parties' culpability or bad faith;
(2) [the] ability of opposing parties to satisfy an award of attorneys' fees;
(3) whether an award of attorneys' fees against the opposing parties would deter other persons acting under similar circumstances;
(4) whether the parties requesting attorneys' fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA itself; and
(5) the relative merits of the parties' positions.

Donachie, 745 F.3d 41, 46 (2d Cir. 2014) (quoting Hardt, 560 U.S. at 249 n.1; citing Chambless, 815 F.2d at 871 (same factors, but with order of fourth and fifth reversed)). Because “Congress intended the fee provisions of ERISA to encourage beneficiaries to enforce their statutory rights, ” those provisions “must be liberally construed to protect the statutory purpose.” Slupinski v. First Unum Life Ins. Co., 554 F.3d 38, 47 (2d Cir. 2009) (internal quotation marks omitted). In particular, “granting a prevailing plaintiff's request for fees is appropriate absent ‘some particular justification for not doing so.'” Donachie, 745 F.3d at 47 (quoting Birmingham v. SoGen-Swiss Int'l Corp. Ret. Plan, 718 F.2d 515, 523 (2d Cir. 1983)).

         II. Background

         The background of this case is set forth at length in Schuman v. Aetna Life Insurance Co., 2017 WL 1053853, at *2-*9 (D. Conn. Mar. 20, 2017). Essentially, Schuman claimed that the defendants violated ERISA by failing to provide him with disability benefits to which he was entitled. On the parties' cross-motions for summary judgment, I determined that Schuman “raised several genuine issues regarding whether his claims determination was decided in a manner consistent with the claims-procedure regulations.” Id. at *15. Those “violations, ” I held, were “sufficient under Halo [v. Yale Health Plan, 819 F.3d 42 (2d Cir. 2016)] to trigger de novo review of the defendants' determination that Schuman” was not entitled to long-term disability benefits. Id. at *18. Because it remained “unclear from the Administrative Record whether either party presented sufficient evidence during the initial claim review and appeal process to determine whether Schuman me[t]” the plan's test for long-term disability, “remand [was] appropriate to supplement the Administrative Record with information necessary to permit Aetna to make an appropriate evaluation of Schuman's [long-term disability] claim.” Id. Accordingly, I ordered that Schuman's case be remanded to the claims administrator.

         Both sides had moved in the alternative for remand, but on March 22, 2017, the Clerk entered judgment in favor of the defendants. Judgment, Doc. No. 83. Schuman moved to alter or amend the judgment on April 7, 2017, arguing that he had requested a remand and so judgment should enter in his favor. See Mot. Alter or Amend Judgment, Doc. No. 84, at 1. On April 21, 2017, I granted Schuman's motion in part and denied it in part, stating that, because “[b]oth [sides] moved in the alternative for remand, . . . judgment should not be entered ‘in favor of' either party.” Order, Doc. No. 86. I ordered the Clerk to “amend the judgment so that the reference to judgment entering in favor of the defendant is deleted, and the judgment simply directs remand to the claims administrator.” Id. The Clerk filed the Amended Judgment in favor of neither side on April 25, 2017. Am. Judgment, Doc. No. 87.

         On April 18, 2017, Schuman moved for attorneys' fees and costs in the amount of approximately $167, 000.[1] Schuman argues that he has obtained “some degree of success on the merits”-as required to recover attorneys' fees under ERISA-by securing a remand and “demonstrating Aetna's numerous violations of the claims procedure regulation.” See Mem. Supp. Mot. Att'y Fees, Doc. No. 85-6, at 5 (other capitalization omitted). He also contends an award of attorneys' fees is favored under the Second Circuit's Chambless factors. See Id. at 8. The defendants opposed Schuman's motion on May 9, 2017, asserting that Schuman “did not achieve any ‘degree of success on the merits'” and that attorneys' fees should be denied or “substantially reduced” under the Chambless factors. Mem. Opp'n Mot. Att'y Fees, Doc. No. 88, at 1-2. Schuman replied to the defendants' opposition on May 22, 2017. See Reply Mem. Supp. Mot. Att'y Fees, Doc. No. 89.

         III. Discussion

         Following the Supreme Court's decision in Hardt, “whether a plaintiff has obtained some degree of success on the merits is the sole factor that a court must consider in exercising its discretion.” Donachie, 745 F.3d at 46. If I determine that Schuman has “obtained some degree of success on the merits, ” then I “may apply-but [am] not required to apply-the Chambless factors in ‘channeling [my] discretion when awarding fees' under [section] 1132(g)(1). Toussaint v. JJ Weiser, Inc., 648 F.3d 108, 110 (2d Cir. 2011) (quoting Hardt, 560 U.S. 255 & n.8). Although the Chambless factors are no longer mandatory, I consider it advisable to “deploy th[at] useful framework” in deciding whether to award Schuman fees. Donachie, 745 F.3d at 46; see also, e.g., Dwinell v. Fed. Express Long Term Disability Plan, 2017 WL 1371254, at *2 (D. Conn. Apr. 14, 2017) (applying Chambless factors after holding that ERISA fee claimant had established “some success on the merits”); Valentine v. Aetna Life Ins. Co., 2016 WL 4544036, at *5-*6 (E.D.N.Y. Aug. 31, 2016) (same); but see Dimopoulou v. First Unum Life Ins. Co., 2017 WL 464430, at *2 (S.D.N.Y. Feb. 3, 2017) (“declin[ing] to consider the Chambless factors”); Wallace v. Grp. Long Term Disability Plan, 2015 WL 4750763, at *6 (S.D.N.Y. Aug. 11, 2015) (same). Therefore, I first will consider whether Schuman has “become eligible for a fees award” by obtaining “some degree of success on the merits.” See Hardt, 560 U.S. at 255 & n.8. If Schuman has shown that he is eligible for a fee award, then I shall “consider the five factors” set forth in Chambless “in deciding whether to award attorney's fees.” Id. at 255 n.8.

         A. Did Schuman achieve “some degree of success on the merits”?

         Schuman asserts that he “achieved some degree of success on the merits” by “obtaining a remand and demonstrating Aetna's numerous violations of the claims procedure regulation.” Mem. Supp. Mot. Att'y Fees, Doc. No. 85-6, at 5 (capitalization omitted). The defendants respond that Schuman hardly can characterize remand as “some degree of success on the merits” because they, too, requested remand as an alternative remedy. Mem. Opp'n Mot. Att'y Fees, Doc. No. 88, at 3. The defendants recall that I ordered a remand because the long-term disability standard “had not been properly applied by either party during the administrative review process.” Mem. Opp'n Mot. Att'y Fees, Doc. No. 88, at 3. Moreover, they note that I ruled “against [Schuman] on virtually all of the issues he raised, ” and that some flaws I identified in the defendants' vocational analysis had the effect of being “perhaps over[ly] generous[]” to Schuman. Id. at 3. Thus, the defendants assert that I “decided neither side ‘got it right, '” and that therefore Schuman's “‘degree of success'-if at all-was . . . purely procedural.” Id. at 4.

         In Hardt, the Supreme Court expressly declined to decide “whether a remand order, without more, constitutes ‘some success on the merits' sufficient to make a party eligible for attorney's fees.” Hardt, 560 U.S. at 256. “The Second Circuit has not answered th[at] question, ” either, see Valentine, 2016 WL 4544036, at *4, but most courts that have addressed the issue “have held that a remand to the plan administrator for review of a claimant's entitlement to benefits . . . is sufficient success on the merits to establish eligibility for fees under section 1132(g)(1).” See Gross v. Sun Life Assurance Co., 763 F.3d 73, 77-78 (1st Cir. 2014) (citing, e.g., McKay v. Reliance Standard Life Ins. Co., 428 F. App'x 537, 546-47 (6th Cir. 2011); Barnes v. AT&T Pension Benefit Plan-Nonbargained Program, 963 F.Supp.2d 950, 962-63 (N.D. Cal. 2013); McCarthy v. Commerce Grp., 831 F.Supp.2d 459, 463, 493 (D. Mass. 2011)); see also, e.g., Dwinell, 2017 WL 1371254, at *2 (“[S]ome kinds of remands might be for highly technical or clerical reasons, ” but a remand “essential to a full and fair consideration of plaintiff's claim . . . is sufficient to constitute ‘some success on the merits.'”); Dimopoulou, 2017 WL 464430, at *1 (“Courts in the Second Circuit have awarded fees . . . in ERISA actions based solely on achieving a remand for further consideration by the administrative body.”) (collecting cases); Valentine, 2016 WL 4544036, at *4 (“[M]any courts have concluded that remand . . . without more, constitutes success on the merits.”) (collecting cases). Although those decisions do not bind me, I am persuaded by their reasoning as well as by the weight of judicial consensus.

         The courts that have held “remand simpliciter is enough” have observed that “a remand for further administrative proceedings commonly results from a substantive review of the evidence.” Gross, 763 F.3d at 78. In such circumstances, a remand order entails “two positive outcomes.” Id. First, the court will have “f[ound] that the administrative assessment of the claim was in some way deficient.” Id. Second, the plaintiff will have a “renewed opportunity to obtain benefits or compensation” on remand. Id. Both “positive outcomes” apply here. In ruling on the motions for summary judgment, I held that “the administrative assessment of [Schuman's] claim was . . . deficient, ” due in part to the defendants' numerous “[v]iolation[s] of the claims procedure regulation, ” at least one of which “could plausibly have changed the outcome of the appeal.” See id.; Schuman, 2017 WL 1053853, at *15. Moreover, Schuman will have a “renewed opportunity to obtain benefits” on remand. See Gross, 763 F.3d at 78; Schuman, 2017 WL 1053853, at *18 (remanding so that the defendants can “make an appropriate evaluation of Schuman's [long-term disability] claim”). Therefore, Schuman has achieved at least the level of “some success, even if not major success, ” that many courts have held sufficient to establish eligibility for attorneys' fees under ERISA. See Hardt, 560 U.S. at 254.

         The defendants suggest that because they too asked for remand, “[n]either side prevailed” and Schuman achieved only a “purely procedural victory.” Mem. Opp'n Mot. Att'y Fees, Doc. No. 88, at 4-5. Certainly, neither party sought remand as its preferred remedy, and Schuman has not “prevailed” by obtaining an outright award of benefits. See Id. But under Hardt, “a fee claimant need not be a ‘prevailing party' to be eligible for an attorney's fees award under [section] 1132(g)(1).” Hardt, 560 U.S. at 252. By securing a remand after the defendants denied him benefits, Schuman achieved a result that was more favorable to him-and less favorable to the defendants-than the status quo. In my view, that “partial[]” degree of success on the merits is enough to render Schuman eligible for attorneys' fees under ERISA. See Id. at 254 (emphasis removed). Although the defendants' argument remains pertinent to the ‚Äúrelative merits of the parties' ...


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