Opinion
CASE NO. 5:05-CV-942.
September 14, 2007
OPINION ORDER [Resolving Doc. No. 28]
Plaintiff William Criss ("Criss") asks the Court to grant his motion to recover attorney fees and expenses. [Doc. 28.] The Defendant opposes Plaintiff's motion. [Doc. 29.] For the reasons stated below, the Court DENIES Plaintiff's request for fees and expenses.
I. Background
The instant case arises out of the Defendant's determination that the Plaintiff is subject to delays in payment of the full amount of his early retirement pension because the Plaintiff worked in the "Sheet Metal Industry" for an employer not associated with a union associated with the Defendant. [Doc. 20.] The Defendant, Sheet Metal Workers' National Pension Fund, is a multiemployer defined benefit pension plan (the "Fund"). Id. Plaintiff participated in the Fund based upon his employment for employers required to contribute to the Fund under collective bargaining agreements with the Sheet Metal Workers' International Association, Local No. 33 ("Local No. 33"). Id.
Plaintiff Criss was a member of Local No. 33 from June 15, 1967 through July 30, 1992. [Doc. 21.] Thereafter, the Plaintiff began working for the Hoover Company ("Hoover") and became a member of the International Brotherhood of Electrical Workers Local No. 1985, AFL-CIO ("IBEW Local No. 1985"), which does not contribute to the Fund. Id. Plaintiff Criss remained an employee of Hoover through 2004. At that time, he requested benefit information from the Defendant. Id. The Defendant eventually informed the Plaintiff that he was entitled to receive without postponement only the early retirement pension benefits that he earned before September 1, 1988. Id. Payment of those benefits earned after that date, however, would be postponed until August 1, 2012. Id.
The Fund reached this decision after determining that the Plaintiff's work for Hoover between 1992 and 2004 constituted work in the "Sheet Metal Industry." [Doc. 23.] Pursuant to Section 5.06(b) of the Fund's plan documents, the Defendant may delay the early retirement date of a plan participant by six months "for every calendar quarter in which a Participant . . . performs at least one hour of employment in the Sheet Metal Industry that is not covered by a Collective Bargaining Agreement between the Union and the employer . . ." Id.
Plaintiff Criss appealed the Defendant's determination to the Fund's Appeals Committee, arguing that his employment for Hoover was not in the Sheet Metal Industry, but the Committee denied his appeal. [Doc. 22.] The Plaintiff then challenged the benefit determination in this Court, alleging that the Fund abused its discretion in interpreting the Plan. Id.
This Court reviewed the Defendant's decision under a standard of whether the determination of benefits was arbitrary and capricious. [Doc. 26.] On December 11, 2006, the Court found in favor of the Defendant. Id. Plaintiff then filed this instant motion for attorney's fees and expenses under 29 U.S.C. § 1132(g)(1) on December 26, 2006. [Doc. 28.] Defendant opposed the motion. [Doc. 29.] This Court referred Plaintiff's motion for fees and expenses to Magistrate Judge James Gallas on February 28, 2007, but after waiting a significant period, terminated the referral on September 11, 2007. [Docs. 30, 31.]
II. Discussion
Plaintiff Criss argues that he is entitled to $4,979.26 in attorney fees and expenses pursuant to 29 U.S.C. § 1132(g)(1). For the following reasons, this Court disagrees.
ERISA establishes that the Court may award a non-prevailing party reasonable attorney fees and costs "in the Court's discretion." 29 U.S.C. § 1132(g)(1); Winpisinger v. Aurora Corp., 469 F.Supp. 782, 785 (N.D. Ohio 1979). The attorney fees provisions of ERISA should be liberally interpreted to safeguard the retirement rights of those who participate in employee benefit plans, even when relatively small amounts of money are involved. See Chambless v. Masters, Mates, Pilots Pension Plan, 815 F.2d 869, 872 (2nd Cir. 1987); Smith v. CMTA-IAM Pension Trust, 746 F.2d 587, 589 (9th Cir. 1984). The Sixth Circuit has identified five factors that a district court should consider in determining whether an award of attorney fees and costs is appropriate under 29 U.S.C. § 1132(g)(1). Armistead v. Venitron Corp., 944 F.2d 1287, 1301 (6th Cir. 1991). These factors are as follows:
(1) [T]he degree of the opposing party's culpability or bad faith; (2) the opposing party's ability to satisfy an award of attorney's fees; (3) the deterrent effect of an award on other persons under similar circumstances; (4) whether the party requesting fees sought to confer a common benefit on all participants and beneficiaries of an ERISA plan or resolve significant legal questions regarding ERISA; and (5) the relative merits of the parties' positions.Armistead, 944 F.2d at 1301 (citing Sec'y of the Dep't of Labor v. King, 775 F.2d 666, 669 (6th Cir. 1985)). See also Moore v. LaFayette Life Ins. Co., 458 F.3d 416, 445 (6th Cir. 2006).
This Court will consider each of the five factors in turn.
A. The Degree of the Opposing Party's Culpability or Bad Faith
When this Court considered the Defendant Fund's decision previously, it was constrained to review the case under a judicial standard of whether the Fund's benefit determination was arbitrary and capricious. Under this narrow standard of review, the Court ruled in the Defendant's favor. [Doc. 26.] Although the Defendant's actions were found not to be arbitrary or capricious because of the extremely broad definition of "Sheet Metal Industry" in the plan documents, this Court does not believe that the Defendant acted in good faith in making its benefits determination. The Fund failed to conduct a substantive, original investigation of Plaintiff's job description at Hoover or the circumstances surrounding the union proceedings brought against Plaintiff Criss in 1992. The Fund admitted that it relied heavily on the 1992 proceedings in making its benefits determination, but failed to research the matter beyond reading a short letter summarizing the allegations and result. [Doc. 23.] As this Court has noted before, the administrative record upon which the Defendant relied in arriving at its benefits decision says nothing about the type of work in which Plaintiff Criss was involved with at Hoover. [Doc. 26.]In its response to the Plaintiff's instant motion to recover fees and expenses, Defendant Fund correctly states that ERISA does not require an evidentiary hearing on appeals of initial benefits denials. [Doc. 29.] The claims procedures required by ERISA do not mandate that an appeals committee investigate a matter beyond an evaluation of the documents submitted by the parties and the materials contained in the participant's pension record. ERISA, however, is explicit in its requirement that a claimant who appeals an adverse benefit determination receive a "reasonable opportunity for a full and fair review." 29 C.F.R. § 2560.503-1(h)(2).
In this case, the Court believes that, while Defendant's benefits determination was not arbitrary or capricious, Defendant's decision-making process did not ensure that Plaintiff had a full and fair review of his claims. This Court understands the administrative burden that Defendant would have if it were forced to conduct 100,000 independent investigations each year, but the Court also notes the injustice that arises when ERISA's purpose of protecting retirement rights is undermined by incomplete and cursory reviews of participants' cases. The Court has not called for Defendant to launch its own external investigation of Plaintiff's case, but remains troubled that the Defendant did not at least review the easily accessible administrative record with more care. Thus, this Court finds that, while Defendant's determination was not arbitrary or capricious, the Fund's current appellate process seems to lack the good faith effort at meaningful review that ERISA requires.
B. The Ability of the Offending Party to Satisfy an Award of Attorney Fees
While the potential bad faith of the Defendant's actions weigh in favor of awarding attorney fees to Plaintiff Criss, the Court finds that the Defendant lacks the ability to satisfy an award of attorney's fees without impairing the rights of other fund participants. The Defendant notes that it is seriously underfunded and Plaintiff presents no evidence to the contrary. [Doc. 29.] In 2005, the Fund had accrued liabilities of $5,151,074,791, while the value of its assets was only $2,826,944,974. Id.
C. The Deterrent Value of an Award of Attorney's Fees
The Court finds that awarding attorney's fees and costs to Plaintiff Criss would provide some deterrent effect on persons acting similarly in other cases. In essence, the Defendant won because the Court need evaluate the Appeals Committee's decision under a minimally demanding judicial standard of review. Therefore, a court's decision to award attorney fees to a non-prevailing claimant would likely fail to result in any changes to large multi-employer pension funds' appeals processes. An award of attorney fees and costs would give some deterrent value to future cursory review of applications for benefits.D. The Relative Merits of the Party's Positions
This Court has already addressed the relative merits of the parties' positions in this case. Under the arbitrary and capricious standard of review, the Defendant's benefit determination is meritorious and prevails. However, as previously suggested, if this Court were able to review the Fund's benefits determination de novo, it is likely that the Court would have found in Plaintiff's favor and ordered the Fund to reconsider its benefits determination.
E. The Conferral of Common Benefit Upon Pension Plan Participants
This Court finds that neither the purpose nor the effect of Plaintiff's case confers a common benefit upon pension plan participants. The Sixth Circuit has awarded attorneys' fees to parties that seek to resolve "significant legal issues" under ERISA because such litigation confers a common benefit upon all pension plan participants and adds to the knowledge of how the fund operates. See Moon v. Unum Provident Corp., 461 F.3d 639, 645 (6th Cir. 2006). However, in this case, the litigation focused on a relatively unique factual dispute over the meaning of the term "Sheet Metal Industry" and the nature of the work in which Plaintiff was actually engaged. The case did not seek to resolve or involve significant legal disputes that would likely impact further plan participants. Additionally, the aforementioned under-funding of the Fund means that an award of attorney fees to Plaintiff Criss will directly reduce the availability of pension money for other plan participants to their detriment. Furthermore, because Plaintiff's case involves unique factual issues, it lacks a significant deterrent value and is unlikely to have major impact upon many Fund application reviews.
III. Conclusion
While this Court believes that the Defendant should have engaged in a more substantive evaluation in determining Plaintiff's benefits, the Court must deny Plaintiff's motion for fees and expenses under the five-factor King test. Most importantly, this Court concludes that an award of attorney fees would not sufficiently affect any significant number of applications and that the instant action has not conferred a common benefit upon pension plan participants. For these reasons, the Court DENIES Plaintiff's motion to recover fees and expenses.
IT IS SO ORDERED.