Koenig v. Auto Data Processing , 156 F. App'x 461 ( 2005 )

Opinions of the United
2005 Decisions States Court of Appeals
for the Third Circuit
11-3-2005
Koenig v. Auto Data Processing
Precedential or Non-Precedential: Non-Precedential
Docket No. 03-3112
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 03-3112, 03-3231, 04-1826, 04-1827
HOWARD KOENIG; EMPLOYEELIFE.COM,
Appellees/Cross-Appellants
in Nos. 03-3231 and 04-1827
v.
AUTOMATIC DATA PROCESSING
Appellant/Cross-Appellee
in Nos. 03-3112 and 04-1826
Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil No. 99-cv-05816)
District Judge: Honorable Katharine S. Hayden
Argued June 28, 2005
Before: ROTH, RENDELL, and BARRY, Circuit Judges
(Filed November 3, 2005 )
Herbert J. Stern [ARGUED]
Stern & Kilcullen
75 Livingston Avenue
Roseland, NJ 07068
Anthony J. Laura
Reed Smith
One Riverfront Plaza
Newark, NJ 07102
Counsel for Appellant/Cross-Appellee
Automatic Data Processing
Noel C. Crowley [ARGUED]
Crowley & Crowley
20 Park Place
Suite 206
Morristown, NJ 07960
Counsel for Appellees/Cross-Appellants
Howard Koenig;
Employeelife.com
OPINION OF THE COURT
RENDELL, Circuit Judge.
Appellees Howard Koenig and Employeelife.com (“EEL”)1 brought this suit
against Appellant Automatic Data Processing (“ADP”) alleging that ADP wrongfully
denied Koenig severance benefits due under a Letter Agreement and Release
1
1 Since commencing this action, EEL has changed its name to “Benefit America.”
2
(“Agreement”) after Koenig allegedly breached the Agreement. Appellees also brought
federal antitrust claims against ADP. After determining that the Employee Retirement
Income Security Act (“ERISA”) applied to the claims under the Agreement, the District
Court granted Appellees’ motion for summary judgment on these claims, concluding that
the breach of the Agreement by Koenig was not material and did not justify the forfeiture
of all benefits. In subsequent opinions, the District Court also (1) denied ADP’s motion
for reargument on the ERISA claims; (2) granted ADP’s motion for judgment on the
pleadings regarding the antitrust claims and denied Appellees’ motion to amend the
complaint; and (3) denied Koenig’s motions for attorneys’ fees on the ERISA claims and
prejudgment interest on a stock option award, and granted Koenig’s motion for
prejudgment interest on a severance pay award. Both parties appealed.
The District Court had subject matter jurisdiction under 28 U.S.C. § 1331 and
under 29 U.S.C. § 1132(e), and we have jurisdiction under 28 U.S.C. § 1291. We will
reverse the judgment entered by the District Court and remand for further proceedings.
I.
ADP hired Koenig in May 1996 as a Senior Vice President of Operations Support
for the Employer Services Group, the largest of ADP’s four major groups. In April 1997,
Koenig was promoted to Corporate Vice President and became one of ADP’s top thirty
officers in a work force of approximately 37,000. As an executive, Koenig had access to
the company’s confidential and proprietary information regarding, inter alia, current
operations and performance, new products and technology, and strategic planning.
3
In January, 1999, ADP decided to eliminate Koenig’s position. Pursuant to ADP’s
published Severance Pay Plan (“Plan”), the parties negotiated and entered into the
Agreement, which detailed the terms and conditions upon which Koenig would receive
severance benefits. The benefits provided in the Agreement included, inter alia: (1)
monthly severance payments from March 1, 1999 until February 4, 2000, provided that if
Koenig obtained other employment during that time, he would receive 75% of the
remaining payments in a lump sum, minus a continuing $1,000 monthly payment until
February 4, 2000; (2) the right to exercise, within 15 days of the last monthly severance
payment, stock options previously granted under two separate agreements dated August
11, 1995 and November 11, 1997 (“Stock Option Agreements”), with the shares offered
in the former plan vesting on August 11, 1999 and the shares offered in the latter plan
vesting on February 4, 2000; (3) the right to keep a number of shares obtained under two
previous restricted stock agreements, with the vesting of restrictions on the first plan on
June 26, 1999 and on the second plan on July 1, 1999; and (4) continued participation in
ADP’s pension plan, retirement and savings plan, and savings-stock purchase plan until
February 4, 2000.
In consideration for these benefits, Koenig undertook certain obligations under the
Agreement, including: (1) a promise to maintain monthly contact with ADP regarding the
status of his employment search and to contact ADP immediately upon obtaining other
employment; (2) a renewed commitment to abide by non-disclosure, non-competition,
non-solicitation, and non-hire provisions Koenig agreed to in the Stock Option
4
Agreements;2 (3) a promise not to disclose the terms of the Agreement or any underlying
agreements to anyone other than his attorney, accountant, or tax advisor; and (4) a
promise not make any disparaging statements about ADP, its employees, or its products
or services. The Agreement further provided that if Koenig breached any of its terms,
“all monies to be paid by ADP under this Letter Agreement shall immediately cease, and
ADP shall have, in addition to all other rights or remedies provided in law or in equity by
reason of [the] breach, the right to the return of all monies paid pursuant to this Letter
Agreement.” Lastly, the Agreement provided that Koenig released all claims against
2
The August 11, 1995 and November 11, 1997 Stock Option Agreements contained
very similar provisions. In the November 1997 agreement, the “non-competition” clause
provided, in relevant part, that for at least twelve months after his employment with ADP,
Koenig would not “directly or indirectly, become or be interested in, employed by, or
associated with in any capacity, any person, corporation, partnership or other entity
whatsoever engaged in any aspect of ADP’s businesses or businesses ADP has formal
plans to enter on the date [he] cease[s] to be an ADP employee, in a capacity which is the
same or similar to any capacity in which [he] was involved during the last two years of . .
. employment by ADP.” The “non-disclosure” clause provided, in relevant part, that
during and after his employment, Koenig would not “use, or disclose to any Person any
confidential information, trade secrets and proprietary information of ADP, its vendors,
licensors, marketing partners or clients, learned by [him] during [his] employment and/or
any of the names and addresses of clients of ADP.” The “non-solicitation” clause
provided, in relevant part, that during the non-competition period, Koenig would not, on
his behalf or on behalf of another, “directly or indirectly, solicit, contact, call upon,
communicate with or attempt to communicate with any Person which was a client or a
bona fide prospective client of ADP before the Termination Date . . . .” The “non-hire”
clause provided in relevant part that during the non-competition period, Koenig would not
“directly or indirectly, hire, contract with, solicit or encourage to leave ADP’s employ
any ADP employee, or hire or contract with any former ADP employee within one year
after the date such person ceases to be an ADP employee.” Both Stock Option
Agreements also contained a choice of law clause providing that each was to be
“governed by, and construed in accordance with, the laws of the State of New Jersey.”
5
ADP existing as of the date of the Agreement arising out of or related to his employment
and termination thereof.
Less than a month after he was terminated from ADP, Koenig accepted an offer of
employment from SRA International, Inc. Although Koenig was on SRA’s payroll from
April 5, 1999 until August 15, 1999, he did not contact ADP regarding this employment.
While employed at SRA, Koenig also accepted employment as the Chief Executive
Officer of Pointment, Inc., starting on June 21, 1999. Koenig also did not contact ADP
regarding this employment. In August 1999, Pointment announced in a press release that
it was changing its name to EmployeeLife.com, Inc. (“EEL”) and that Koenig, its CEO,
had been previously employed by ADP. ADP did not learn of Koenig’s employment with
EEL until September 1999, when it discovered EEL’s website and alleged that a number
of the materials contained on the site had been developed by ADP. Shortly thereafter,
ADP cut off Koenig’s financial and stock option entitlements under the Agreement in
light of Koenig’s alleged breach.
On December 13, 1999, Koenig and EEL brought this action against ADP
alleging: (1) Sherman Act violations under 15 U.S.C. §§ 1 and 2; (2) ERISA violations
under 29 U.S.C. § 1132 for failure to pay severance benefits; and (3) breach of contract
claims to the extent that the Agreement was not governed by ERISA. ADP
counterclaimed against Koenig, alleging that he had breached his obligations under
various agreements with ADP.
Subsequent to the filing of this lawsuit, in a press release issued in January 2000,
6
EEL disclosed certain terms of the Agreement and accused ADP of violating the law.
Also several months after ADP had discontinued making severance payments to Koenig,
two ADP employees contacted Koenig regarding possible employment with EEL.
Koenig claims that he did not hire them, but instead referred them to EEL’s President.
Both employees were eventually hired by EEL, though one ultimately returned to ADP
after he was offered a higher position and increased salary.
II.
The District Court granted Koenig’s motion for summary judgment on the ERISA
claims. The Court determined that ERISA governed Koenig’s claims because they arose
out of the Agreement and the Agreement was entered into pursuant to the Plan, which
was a welfare benefit plan under ERISA, 29 U.S.C. § 1002(3). Koenig v. Automatic Data
Processing, No. 99-5816, slip op. at 23 (D.N.J. Apr. 3, 2002) (“April 3, 2002 Opinion”).
The Court rejected ADP’s argument that its action regarding Koenig’s severance benefits
was reviewable under an “arbitrary and capricious” standard, because ADP’s action did
not involve the discretionary award of benefits, but, rather, compliance with an agreement
setting forth the terms of the severance benefits.
Then, the Court applied New Jersey law in assessing the validity of ADP’s and
Koenig’s claims under the Agreement and the Stock Option Agreements. The Court
proceeded to analyze specific ways in which ADP claimed Koenig breached the
agreements, and determined that, based upon standard principles of law or facts of record,
Koenig had not breached either the non-compete or the non-hire provisions of the Stock
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Option Agreements, nor had he violated the confidentiality provision of the Agreement.3
The District Court then turned its attention to ADP’s claim that Koenig failed to
keep ADP apprised of his employment status or to provide written notice to ADP upon
obtaining employment with SRA and Pointment, a breach of ¶ 6 of the Agreement. Id. at
A35. The Court applied New Jersey contract law to “fill in gaps in ERISA,” id. at 38, and
concluded that ADP’s “sweeping and absolute denial of all of Koenig’s benefits in the
stipulated damages clause [¶ 8(d) of the Agreement] d[id] not reasonably exact damages
in relation to the breadth of Koenig’s breach.” Id. at 39. Because the Court found that
the stipulated damages clause enabled ADP to cease all of its obligations and seek
reimbursement for any benefits provided after any breach, regardless of its severity, the
Court concluded that it was an invalid penalty clause. Id. at 40. Determining that
Koenig’s breach did not go to the essence of the contract and was not a material breach,
the Court held ADP’s total repudiation of its responsibilities and demand for
reimbursement to be unreasonable. Id. at 40-41. The Court thus denied ADP’s motion
for summary judgment and granted summary judgment to Koenig, restoring to him the
benefits already received, the remaining unpaid monthly severance benefits, and the value
of remaining stock options. Id. at 41-42.
3
Although in the Background section of its opinion the District Court labels ¶ 4 of the
Stock Option Agreements the “Non-Hire Clause,” Koenig v. Automatic Data Processing,
No. 99-5816, slip op. at 5 (D.N.J. Apr. 3, 2002), in its Discussion, the Court refers to this
provision as the “non-solicitation clause.” Id. at 31. We adopt the District Court’s
original labels and refer to ¶ 4 of the Stock Option Agreements as the “non-hire
provision” and ¶ 3 of the agreements as the “non-solicitation provision.”
8
Thereafter, in an Opinion and Order dated June 27, 2002, the District Court denied
ADP’s motion for reargument, reinforcing its previous ruling that a de novo standard of
review was applicable in interpreting the Agreement, but also refusing to reconsider its
application of New Jersey law to evaluate the non-competition provision. Koenig v.
Automatic Data Processing, No. 99-5816, slip op. at 2 (D.N.J. Jun. 27, 2002) (“June 27,
2002 Opinion”).
In a later Opinion and Order dated June 30, 2003, the District Court granted
judgment on the pleadings to ADP on Koenig’s antitrust claims, concluding that Koenig
had not demonstrated: (1) antitrust injury (i.e., injury to competition rather than
competitors); (2) that ADP had engaged in illegal, concerted action; (3) an adequate
description of the relevant market; or (4) that ADP attempted to monopolize a relevant
market. Koenig v. Automatic Data Processing, No. 99-5816, slip op. at 4-11 (D.N.J. Jun.
30, 2003) (“June 30, 2003 Opinion”). The Court also denied Koenig’s motion to amend
the complaint.
As a final matter, in an Order and Opinion dated February 25, 2004, the District
Court denied Koenig’s motion for an award of attorneys’ fees under ERISA. The Court
concluded that Koenig had failed to comply with Local Civil Rule 54.2(b), which requires
that “[a]pplications for the allowance of counsel fees shall include an affidavit describing
all fee agreements and setting forth the amount billed to the client for fees and
disbursements and the amount paid.” Koenig did not adequately describe the fee
agreement he had with EEL stating only that EEL “provisionally paid” all his attorneys’
9
fees. Koenig v. Automatic Data Processing, No. 99-5816, slip op. at 2 (D.N.J. Feb. 25,
2004) (“February 25, 2004 Opinion”).
The parties press errors as to certain of the District Court’s rulings. ADP urges
that: (1) the District Court improperly applied New Jersey law and, as a result, improperly
restored benefits to Koenig notwithstanding his clear breach of the Agreement, and
(2) the District Court erred in applying a de novo standard rather than limiting its review
of ADP’s conduct to an “arbitrary and capricious” standard under ERISA. Koenig
argues, on cross-appeal, that: (1) the District Court improperly dismissed ADP’s antitrust
complaint and denied leave to amend, (2) the District Court erred in denying prejudgment
interest, and (3) the District Court erred in denying plaintiffs’ application for counsel fees
based on the violation of a local rule.
III.
“We exercise plenary review over summary judgment and we apply the same
standard that the lower court should have applied.” Farrell v. Planters Lifesavers Co., 206
F.3d 271, 278 (3d Cir. 2000). To affirm the grant of summary judgment, we must be
convinced that there is no genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law when the facts are viewed in the light most
favorable to the nonmoving party. Fed. R. Civ. P. 56(c). We exercise plenary review
over the District Court’s grant of a motion for judgment on the pleadings under Fed. R.
Civ. P. 12(c). Jablonski v. Pan Am. World Airways, Inc., 863 F.2d 289, 290 (3d Cir.
1988). We review the District Court’s denial of leave to amend a complaint for abuse of
10
discretion. Lorenz v. CSX Corp., 1 F.3d 1406, 1413 (3d Cir. 1993).
IV.
A. Appeal
1. Application of State Law to ERISA Claims Regarding Breach of the
Agreement
In order to determine whether the District Court applied the correct legal
principles, we must work our way through the nature of the ERISA claim at issue here.
“ERISA recognizes two types of employee benefit plans: ‘employee pension benefit
plans,’ and ‘employee welfare benefit plans.’ 29 U.S.C. § 1002(3) (1988). Severance
pay plans are classified under the statute as welfare benefit plans. 29 U.S.C. §§ 186(c),
1002(1)(B).” Deibler v. Local Union 23, 973 F.2d 206, 209 (3d Cir. 1992). As we
indicated in Taylor v. Continental Group, “[s]everance plans are often similar to
employment contracts, whose interpretation requires determining the intent of both
contracting parties.” 933 F.2d 1227, 1232 (3d Cir. 1991) (citing Firestone Tire & Rubber
Co. v. Bruch, 828 F.2d 134, 145 (3d Cir. 1987), rev’d on other grounds, 489 U.S. 101(1989)). The severance plan before us has the trappings of a “top hat” plan, which is
defined under ERISA as “a ‘plan which is unfunded and is maintained by an employer
primarily for the purpose of providing deferred compensation for a select group of
management or highly trained employees.’ 29 U.S.C. §§ 1051(2), 1081(a)(3), and
1101(a)(1).” Miller v. Eichleay Eng’rs, Inc., 886 F.2d 30, 34 (3d Cir. 1989); see also
Goldstein v. Johnson & Johnson, 251 F.3d 433, 442 (3d Cir. 2001) (“[Top hat] plans are
11
intended to compensate only highly-paid executives, and the Department of Labor has
expressed the view that such employees are in a strong bargaining position relative to
their employers and thus do not require the same substantive protections that are
necessary for other employees. We have held that such plans are more akin to unilateral
contracts than to the trust-like structure normally found in ERISA plans.”) (citations
omitted). At least one federal appellate court has construed this definition broadly to
cover a severance plan that included a contractual agreement that was individually
negotiated between the employer and an employee in a relatively strong bargaining
position and conferred benefits upon both parties. See Duggan v. Hobbs, 99 F.3d 307(9th Cir. 1996) (concluding that where a non-executive employee exerted influence over
the design and operation of his severance agreement, through negotiations involving
attorneys, to become the only employee ever to receive severance benefits, there was no
reason not to broadly construe the agreement as a top hat plan, which is exempt from the
trust-like provisions of ERISA and generally construed as a contract). Whether or not the
plan at issue qualifies as a top hat plan, courts have determined that plans and agreements
exhibiting these features are governed by ERISA and should be construed under the
federal common law of contract. See, e.g., Bock v. Computer Assocs. Int’l, Inc., 257
F.3d 700, 704 (7th Cir. 2001) (explaining that with respect to individual severance
agreements that are contractual in form, confer benefits on both employer and employee,
and are distinguishable from vested benefits under a pension plan, “[i]t has been
uniformly held that general principles of contract law–under the federal common law that
12
guides interpretation of ERISA plans–are to be applied to the interpretation of the
language of such severance agreements”) (citing Anstett v. Eagle-Picher Indus., Inc., 203
F.3d 501, 503 (7th Cir. 2000) (“the claim for separation benefits [under this ERISA plan]
is really a claim to enforce a contract”) (citation omitted); Grun v. Pneumo Abex Corp.,
163 F.3d 411, 419 (7th Cir. 1998) (“we construe [the severance compensation agreement]
in accordance with the federal common law under ERISA and general rules of contract
interpretation”); Collins v. Ralston Purina Co., 147 F.3d 592 (7th Cir. 1998); Murphy v.
Keystone Steel & Wire Co., 61 F.3d 560 (7th Cir. 1995); Hickey v. A.E. Staley Mfg., 995
F.2d 1385 (7th Cir. 1993); Taylor, 933 F.2d at 1232-33)); see also In re New Valley
Corp., 89 F.3d 143, 149 (3d Cir. 1996) (“Top hat plans are . . . governed by general
principles of federal common law. Here, that law is the federal common law of
contract.”) (citation omitted).
Here, there is no doubt that ADP’s Severance Pay Policy qualifies as a severance
pay plan governed by ERISA. 29 U.S.C. §§ 186(c), 1002(1)(B). Further, the Agreement
arising from the Plan was contractual in form. It was negotiated by the parties,
presumably at arm’s length given Koenig’s executive status, and it included an exchange
of obligations and benefits between the parties. Consequently, it is clear from the above-
cited cases that, regardless of whether or not the Agreement constitutes a top hat plan, it is
to be construed under the federal common law of contract.
Accordingly, ADP’s argument that the District Court applied the wrong law in
construing the Agreement is well taken. Although the District Court recognized that the
13
Agreement was governed by “general contract principles,” April 3, 2002 Opinion, at 24,
the Court did not cite or apply federal common law in its discussion of whether Koenig’s
alleged breaches of the Agreement and whether any such breaches were “material.”
Instead, without explanation, the Court applied New Jersey law, citing opinions by the
Supreme Court of New Jersey and federal courts construing New Jersey law in diversity
cases, and adhered, specifically, to New Jersey law principles of “forfeiture” in denying
ADP the right to withhold benefits as the Agreement provides by its terms. Moreover,
the District Court failed to consider whether the issue of materiality is a fact issue under
federal law and, therefore, not appropriate for summary judgment.
It is true that if there is no established federal common law on a given issue, the
Court may consult state law, including the law of the forum state, as a guide to fashioning
a rule that is consistent with the policies underlying the federal statute in question. See,
e.g., Heasley v. Belden & Blake Corp., 2 F.3d 1249, 1257 n.8 (3d Cir. 1993) (“Firestone
authorizes the federal courts to develop federal common law to fill gaps left by ERISA.
489 U.S. at 110 . . . . In developing federal common law, we can, of course, look to
analogous state law rules, ‘as long as [the] state law is consistent with the policies
underlying the federal statute at issue.’”) (citing Fox Valley & Vicinity Constr. Workers
Pension Fund v. Brown, 897 F.2d 275 (7th Cir.) (en banc), cert. denied, 498 U.S. 820,
112 L. Ed. 2d 41, 111 S. Ct. 67 (1990)). However, the District Court’s opinion does not
set forth its reasoning, nor do we have assurance that New Jersey law should necessarily
serve as a guide. Because we cannot be sure that the District Court would have arrived at
14
the same conclusion if it had applied federal common law, or established an appropriate
rule of federal law to govern in the absence of one, we will reverse the judgment and
remand for the Court to interpret the Agreement under the federal common law in the first
instance.
2. Standard of Review
ADP’s argument that the District Court erred in construing the Agreement de novo
without deferring to ADP’s interpretation as the administrator of the plan is unavailing, as
ADP’s action did not involve a decision regarding whether to award benefits, but rather
compliance with the Agreement detailing the provision of benefits. We find the District
Court’s conclusions on this point in its June 27, 2002 Opinion and Order denying ADP’s
motion for reargument to be sound. See Taylor, supra; June 27, 2002 Opinion, at 6.
B. Cross-Appeal
1. Antitrust Claims and Denial of Amendment to the Complaint
Koenig cross-appeals from the District Court’s grant of judgment on the pleadings
to ADP on the antitrust claims and the denial of Koenig’s motion to amend the complaint.
However, we find the District Court’s opinion of June 30, 2003 to adequately explain and
fully support its order and we believe it unnecessary to offer additional explanations and
reasons, as the District Court opinion was thorough and comprehensive. Therefore,
essentially for the reasons set forth in the District Court’s opinion, we will affirm the
grant of judgment on the pleadings to ADP and the denial of Koenig’s motion to amend
the complaint.
15
2. Prejudgment Interest
Koenig urges that the District Court should have awarded prejudgment interest on
the value of his stock options. The District Court awarded Koenig a money judgment
based on the value of the stock on the date he would have exercised the options, but
declined to award prejudgment interest, reasoning that a determination of whether Koenig
would have liquidated his stock on that date would be speculative and, further, ADP was
not unjustly enriched by retaining shares of its own stock. Koenig urges that interest is
necessary to make him whole. If on remand the District Court again awards Koenig
relief, we will not disturb its decision, in its discretion, to deny prejudgment interest. See
Taxman v. Board of Educ., 91 F.3d 1547, 1566 (3d Cir. 1996) (“The matter of
prejudgment interest is left to the discretion of the district court.”) We understand the
District Court’s view that a remedy that would restore the stock option value as of the
date of exercise necessarily involves some speculation as it cannot be known when
Koenig would have liquidated the stock. Given this variable, calculating an award with
“mathematical precision” is impossible, Eazor Express, Inc. v. Int’l Bhd. of Teamsters,
520 F.2d 951, 973 (3d Cir. 1975), and we cannot say that the District Court abused its
discretion in its decision to fashion an award without prejudgment interest after
accounting for this variable and considering the policies underlying such a decision. See
Fotta v. Trs. of the UMW Health & Ret. Fund of 1974, 165 F.3d 209, 212 (3d Cir. 1998)
(explaining that award of prejudgment interest is based on consideration of making the
claimant whole and preventing unjust enrichment). Accordingly, we will not require that
16
on remand the District Court modify this aspect of its ruling if Koenig is again successful.
3. Attorneys’ Fees
Koenig also objects to the District Court’s denial of attorneys’ fees under ERISA
based upon the New Jersey local rule requiring complete disclosure of all fee agreements
in applications for the allowance of counsel fees. While the normal standard of review of
fee determinations is abuse of discretion, we have announced a more exacting review of
ERISA fee awards, given the need of the Court to analyze the factors we set forth in Ursic
v. Bethlehem Mines, 719 F.2d 670, 673 (3d Cir. 1983). See, e.g., Anthuis v. Colt Indus.
Operating Corp., 971 F.2d 999, 1012 (3d Cir. 1992) (explaining that in reviewing a
District Court’s decision regarding the award of counsel fees in an ERISA case “we must
require that, in each instance in which the district court exercises its fee-setting discretion,
it must articulate its considerations, its analysis, its reasons and its conclusions touching
on each of the five factors delineated in Ursic”). Here, the District Court super-imposed a
local rule onto the otherwise federally mandated analysis, and did not engage in the latter
inquiry. While we recognize the right of local courts to monitor fee arrangements as
between attorneys and clients, we do not find this policy to be sufficient to overcome the
policy for awarding fees as a matter of federal law under a statutory scheme such as
ERISA. While the Court should no doubt enforce compliance with such local rules, we
conclude that failure to comply should not be grounds for denial, exclusive of other
considerations.
On remand, should the Court again grant underlying relief to Koenig, the issue of
17
the award of fees under ERISA according to the standards laid out in Ursic should be
reconsidered, with the Court free to mandate compliance with the disclosures required by
the local rule as a further condition to that award. Accordingly, we will vacate that aspect
of the Court’s order and remand for further consideration.
V.
For the reasons stated above, we will AFFIRM the grant of judgment on the
pleadings to ADP on the antitrust claims and the denial of Koenig’s motion to amend the
complaint, we will REVERSE the grant of summary judgment to Koenig on the ERISA
claims, the denial of Koenig’s motion for prejudgment interest on the stock options
award, and the denial of Koenig’s motion for attorneys’ fees, and we will REMAND for
further proceedings consistent with this opinion.
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