Garrett v. Principal Life Insurance Co.

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT February 18, 2014
Elisabeth A. Shumaker
Clerk of Court
PATRICK GARRETT,
Plaintiff-Appellee,
v. No. 13-6142
(D.C. No. 5:09-CV-01378-M)
PRINCIPAL LIFE INSURANCE (W.D. Okla.)
COMPANY,
Defendant-Appellant.
ORDER AND JUDGMENT*
Before LUCERO and BALDOCK, Circuit Judges, and BRORBY, Senior Circuit
Judge.
This is an appeal by defendant Principal Life Insurance Company (Principal)
from the district court’s order that granted plaintiff Patrick Garrett’s motion for
attorney’s fees and prejudgment interest following the successful outcome of his suit
against Principal for medical benefits under an employee benefit plan governed by
*
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C.
§§ 1101-1461. We have jurisdiction under 28 U.S.C. § 1291 and affirm.
Background
Prior to entering its order for attorney’s fees and prejudgment interest, the
district court entered two orders that are relevant here. First, it found that Principal
was wrong when it denied Mr. Garrett’s claim for medical benefits. Next, it entered
an order that Principal owed Mr. Garrett the entire amount of his claim – $65,000.
We affirmed both orders in Appeal No. 13-6087. Having resolved the merits in favor
of Mr. Garrett, the court then considered Mr. Garrett’s motion for fees and
prejudgment interest. Concerning the fee request, the court found that it was
“reprehensible for [Principal to] . . . first . . . den[y] [the claim] based on non existing
exclusionary policy language and then four years later after [the court found
Principal] culpable, to seek a 50% reduction in benefits for a totally different
reason.” Aplt. App. at 209. As to prejudgment interest, the court found that an
award was “appropriate in this case to compensate [Mr. Garrett] for the lost use of
money to which he was legally entitled.” Id. at 211. It awarded Mr. Garrett fees in
the amount of $32,662.50 and prejudgment interest in the amount of $47,671.08.
Attorney’s Fees
“We review the district court’s decision whether or not to award attorney’s
fees and prejudgment interest for an abuse of discretion. . . .” Thorpe v. Ret. Plan of
Pillsbury Co., 80 F.3d 439, 445 (10th Cir. 1996). “To find that the district court
-2-
abused its discretion, we must have a definite conviction that the court,
upon weighing relevant factors, clearly erred in its judgment.” McGee v.
Equicor-Equitable HCA Corp., 953 F.2d 1192, 1209 (10th Cir. 1992) (internal
quotation marks omitted). Further, “[i]t is well established that an appellate court
plays a limited role in reviewing a district court’s award of attorney’s fees . . . and
deference is given to a district court’s judgment on the matter, since the district court
is in a better position to assess the course of litigation and quality of work.”
Id. (internal quotation marks omitted).
“A fee claimant need not be a prevailing party to be eligible for an award of
attorney’s fees . . . under ERISA.” Cardoza v. United of Omaha Life Ins. Co., 708
F.3d 1196, 1207 (10th Cir. 2013). Instead, “[a] court may award fees and costs under
29 U.S.C. § 1132(g)(1) as long as the fee claimant has achieved ‘some degree of
success on the merits.’” Id. (quoting Hardt v. Reliance Standard Life Ins. Co.,
560 U.S. 242, 245 (2010)).
There are “five factors a court may consider in deciding whether to exercise its
discretion to award attorney’s fees.” Id. They are:
(1) the degree of the opposing party’s culpability or bad faith; (2) the
opposing party’s ability to satisfy an award of fees; (3) whether an
award of fees would deter others from acting under similar
circumstances; (4) whether the party requesting fees sought to benefit
all participants and beneficiaries of an ERISA plan or to resolve a
significant legal question regarding ERISA; and (5) the relative merits
of the parties’ positions.
-3-
Id. But “[n]o single factor is dispositive and a court need not consider every factor in
every case.” Id.
As an initial matter, the court found that Mr. Garrett, having prevailed on his
claim for benefits, “clearly achieved some degree of success on the merits and is
eligible for attorney’s fees under 29 U.S.C. § 1132(g)(1).” Aplt. App. at 209
(internal quotation marks omitted). It then applied the five factors. As to the first
factor, the court explained that on two occasions, Principal “completely denied”
Mr. Garrett’s claim “for two different reasons,” and then sought a reduction in the
amount owed “for a totally different reason.” Id. As to the second factor, the court
found “there is no dispute that [Principal] is able to satisfy an award of attorney’s
fees.” Id. at 210. Concerning the third factor, the court found “that an award of
attorney’s fees would deter other plan administrators from acting in the same manner
under similar circumstances.” Id. In this regard, the court noted the potential for
Principal to repeat the same actions with other employees under this or a similar
group policy. As to the fourth factor, the court considered that, because Mr. Garrett
“was but one employee covered by the employee group policy,” his suit might benefit
other employees seeking benefits under the same policy. Id. Last, the court found
“that [Mr. Garrett’s] position was more meritorious than [Principal’s] position.” Id.
Principal argues that an award of attorney’s fees was inappropriate because
“[t]his was a highly unique case that would have no demonstrable impact on any
future claims decisions. There is no evidence that Principal Life has faced, or will
-4-
face in the future, the same unique question [Mr.] Garrett’s claim presented.” Aplt.
Opening Br. at 18. Taking this argument at face value, it does not matter whether
this was a “unique case” with no foreseeable future impact. These are just some of
the factors that the court may consider in deciding whether to award fees. Further,
the court was not obliged to consider these factors at all. See Cardoza, 708 F.3d
at 1207.
We also reject Principal’s argument that attorney’s fees were improper because
it “had an arguable basis for its decision to deny benefits.” Aplt. Opening Br. at 16.
This is not the law in this circuit. Instead, once Mr. Garrett achieved some degree of
success on the merits, the district court could exercise its discretion to award
attorney’s fees. See Cardoza, 708 F.3d at 1207.
The district court considered the relevant factors and explained why an award
of attorney’s fees was appropriate. We see no abuse of discretion.
Reasonableness
Principal argues that the amount of attorney’s fees awarded to Mr. Garrett was
unreasonable. First, Principal argues that “[Mr.] Garrett’s counsel spent 5.25 hours
related to the two Complaints his attorneys drafted which contained improper state
law bad faith claims and researching and unsuccessfully responding to the Motion to
Dismiss that Principal Life was forced to file to eliminate the improper claims.”
Aplt. Opening Br. at 20. However, Principal’s brief contains no citations to the
record and so we will not consider its argument. See Fed. R. App. P. 28(a)(9)(A)
-5-
(“The appellant’s opening brief must contain . . . citations to the authorities and parts
of the record on which the appellant relies. . . .”);1 see also Bronson v. Swensen,
500 F.3d 1099, 1104 (10th Cir. 2007) (“[W]e routinely have declined to consider
arguments that are . . . inadequately presented[] in an appellant’s opening brief.”).
Second, Principal seeks a reduction “for an hour of pre-litigation work.” Aplt.
Opening Br. at 21. It cites several district court decisions and cases from other
circuit courts of appeals that allegedly stand for the proposition that attorney’s fees
incurred in the administrative phase of ERISA proceedings are not recoverable.
Once again, we do not consider this argument because Principal has failed to cite to
the record. See Bronson, 500 F.3d at 1104.
Next, Principal argues that the district court should have reduced the award by
“$5,325.00 for 19 hours of time spent by counsel familiarizing themselves with the
basics of ERISA litigation.” Aplt. Opening Br. at 22. This court has “noted that time
spent reading background material designed to familiarize the attorney with the area
of the law would normally be absorbed into a firm’s overhead and that, therefore,
attempting to charge an adversary with time spent conducting background research is
presumptively unreasonable.” Case v. Unified Sch. Dist. No. 233, 157 F.3d 1243,
1253 (10th Cir. 1998). Again, however, Principal has failed to provide adequate
citations to the record for our review. For example, although Principal cites to three
1
This requirement is now set forth in Fed. R. App. P. 28(a)(8)(A), which took
effect on December 1, 2013.
-6-
pages of the appendix, it does not cite to any particular time entries. Instead,
Principal apparently expects us to forage through these pages and identify the entries
that allegedly relate to background research and then further parse them to determine
how much time is attributable to “reading background material.” This is not our
responsibility. See United States v. Rodriguez-Aguirre, 108 F.3d 1228, 1237 n.8
(10th Cir. 1997) (“[I]t is the appellant’s responsibility to tie the salient facts,
supported by specific record citation, to [its] legal contentions.” (citation omitted)
(internal quotation marks omitted)).
Last, Principal argues that the award of attorney’s fees should be reduced by
“3,750.00 for 12.5 hours of time researching and briefing the attorney fee
application,” because these fees were not incurred to pursue Mr. Garrett’s medical
benefits. Aplt. Opening Br. at 22. We have recognized as a general matter that “[a]n
award of reasonable attorney’s fees may include compensation for work performed in
preparing and presenting the fee application.” Case, 157 F.3d at 1254 (internal
quotation marks omitted).
Prejudgment Interest
The district court awarded Mr. Garrett prejudgment interest and tied this award
to the rate specified by Oklahoma law (15% per annum). In particular, it found
“that the rate of 15% per year would adequately, but not excessively, compensate
[Mr. Garrett] for the lost use of the money . . . [and] that this 15% rate is in no way
meant to punish [Principal] for any wrongdoing.” Aplt. App. at 211.
-7-
Principal argues that the district court’s use of Oklahoma’s prejudgment
interest rate was punitive and therefore unlawful. See Allison v. Bank One-Denver,
289 F.3d 1223, 1243 (10th Cir. 2002) (“We have held squarely that punitive damages
are not available in an ERISA action.”). However, we have approved of the use of
the relevant state’s statutory prejudgment interest rate, including Oklahoma’s, as
appropriate in ERISA cases as long as “nothing in the record suggests that the
award . . . is punitive.” Weber v. GE Grp. Life Assurance Co., 541 F.3d 1002, 1016-
17 (10th Cir. 2008). Because there is nothing in the record to suggest that the rate
was punitive, we conclude that the court did not abuse its discretion. See id.
(“Calculation of the rate for prejudgment interest . . . rests firmly within the sound
discretion of the trial court.”) (internal quotation marks omitted)).
The judgment of the district court is affirmed.
Entered for the Court
Wade Brorby
Senior Circuit Judge
-8-