Opinion
Docket No. 00-CV-2464.
June 9, 2004
MEMORANDUM AND ORDER
Presently before the court is Defendants' Motion for Attorneys' Fees and Related Nontaxable Expenses. (Doc. No. 29.) For the following reasons, Defendants' Motion will be denied.
I. FACTUAL BACKGROUND
Plaintiff, Joseph Pascuzzo, D.O., filed an ERISA Complaint against the Defendants after he was terminated from his employment and denied an enhanced severance package under Aetna U.S. Healthcare's Employee Benefit Plan (the "Plan"). Plaintiff filed a Complaint alleging that by denying him an enhanced severance package, Defendants had violated 29 U.S.C. § 1132(a)(1)(B). On March 28, 2003, we granted Defendants' Motion for Summary Judgment. Defendants now seek to recover attorneys' fees and costs pursuant to 29 U.S.C. § 1132(g)(1), which provides as follows:
In any action under this subchapter (other than an action described in paragraph (2)) 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.
Defendants' Motion was not timely filed, as provided by FED. R. CIV. P. 54(d)(2), which requires a motion for attorneys' fees and costs to be filed within fourteen days of the entry of judgment unless the Court orders otherwise. Therefore, pursuant to FED. R. CIV. P. 6, Defendants requested that this Court grant them an enlargement of time and consider their Motion for Attorneys' Fees and Related Non-Taxable Expenses. We granted Defendants' Motion for Enlargement of Time, and now consider the merits of Defendants' request for attorneys' fees and related costs.
Rule 54(d)(2)(B) reads as follows:
Unless otherwise provided by statute or order of the court, the motion must be filed and served no later than 14 days after entry of judgment; must specify the judgment and the statute, rule or other grounds entitling the moving party to the award; and must state the amount or provide a fair estimate of the amount sought. If directed by the court, the motion shall also disclose the terms of any agreement with respect to fees to be paid for the services for which claim is made.
II. DISCUSSION
It is undisputed that Section 502(g)(1) of ERISA permits prevailing parties an award of attorney's fees and costs, if the district court determines that such an award is appropriate. Nevertheless, this decision is within the district court's discretion, and absent exceptional circumstances, there is no presumption that a prevailing party will receive such fees.McPherson v. Employees' Pension Plan of Am. Re-Ins. Co., 33 F.3d 253, 254 (3d Cir. 1994) ("We have further instructed that there is no presumption that a successful plaintiff in an ERISA suit should receive an award in the absence of exceptional circumstances.") "To guide district courts as they exercise their discretion in connection with such fee applications," (id.), the Third Circuit has established five factors that the court should consider:
(1) the offending parties' culpability or bad faith;
(2) the ability of the offending parties to satisfy an award of attorneys' fees;
(3) the deterrent effect of an award of attorneys' fees against the offending parties;
(4) the benefit conferred on members of the pension plan as a whole; and
(5) the relative merits of the parties' position.
Ursic v. Bethlehem Mines 719 F.2d 670, 673 (3d Cir. 1983). After applying the five-factors set forth in Ursic, we conclude that this case does not rise to the level of exceptional circumstances warranting an award of attorney's fees. 719 F.2d at 673.
Defendants claim that they are entitled to counsel fees because Plaintiff's conduct was "blameable, censurable, and wrong" (Defs.' Mem. of Law in Supp. of their Mot. for Attorneys' Fees and Related Non-taxable Expenses at 6), because "Plaintiff forced Aetna to incur substantial fees and costs in defending an action that Plaintiff himself knew had no merit." (Id. at 7.) In the Order of March 28, 2003, we granted Defendants' Motion for Summary Judgment. We did so because we concluded that Plaintiff's termination was not the result of "Re-Engineering, Reorganization or Staff Reduction." The parties agreed that Plaintiff would be entitled to recover under the Plan only if his job elimination was the result of "Re-Engineering, Reorganization or Staff Reduction." We ultimately concluded that Plaintiff's employment termination did not involve any of these three circumstances. Defendant contends that Plaintiff knew that his claim had no merit because he knew that he was terminated for refusing to sign a non-compete agreement. At this juncture, we need not explore whether Plaintiff understood that his firing was based on his refusal to sign a non-compete because even if Plaintiff did know that to be the case, it does not necessarily follow that he could not also believe that his position was, as he claims, reengineered. In fact, it was Plaintiff's position that the request to sign the non-compete agreement, along with other changes in his job, constituted reengineering. While we ultimately disagreed with Plaintiff's definition of reengineering, we do not find Plaintiff's lawsuit to be an act of bad faith, nor did we conclude that Plaintiff's acts were in any way culpable. "[A] party is not culpable merely because it has taken a position that did not prevail in litigation." McPherson, 33 F.3d at 257.
Defendants argue that because Plaintiff has earned between $150,000 and $160,000 annually over the past several years, that he is "fully capable of paying Aetna's attorneys' fees and costs." Defendants are requesting more than $57,000 in attorney's fees and costs. This is a substantial sum, even for someone with Plaintiff's income. Requiring Plaintiff to pay this amount would only serve to punish. Moreover, we are not persuaded by Defendants' argument that because "Plaintiff was clearly willing to pay the expenses necessary to finance his litigation of this action," (Defs.' Mot. for Attorneys' Fees and Related Non-taxable Expenses at 7), he should be required to pay Defendants' costs of defending the claim. We do not know what the arrangement was between Plaintiff and his attorney, however, being able to pay the costs of bringing suit does not suggest that the losing party is in a financial position to pay an additional $57,000 to the prevailing party.
Defendants also argue that granting their Motion will "serve as a particularly strong deterrent to future frivolous litigation." Defendants cite Vintilla v. United States Steel Corp. Plan For Employee Pension Benefits, 642 F. Supp. 295 (W.D. Pa. 1986) in support of their contention that the deterrent effect of awarding counsel fees will be "beneficial upon those who contemplate speculative litigation." (Defs.' Mem. of Law in Supp. of their Mot. for Attorneys' Fees and Related Non-taxable Expenses at 7 (quoting Vintilla, 642 F. Supp. at 297). In Vintilla, the plaintiffs instituted their lawsuit in the wrong venue and improperly named one of the Defendants. Id. at 296-97. In addition, several of the Vintilla plaintiffs were seeking double recovery because they had in fact already been compensated for their harm. Id. at 297. The court characterized plaintiffs actions as "culpable," "ill considered," and "speculative". Because of these extraordinary circumstances, the court observed that an award of attorneys' fees might deter similar litigation in the future. In the instant case, the circumstances are certainly not extraordinary. While we agreed with the Defendants' contention that summary judgment was proper, we did not conclude that this lawsuit was ill conceived or that Plaintiff was improperly using this Court. In addition, we are concerned that an award of attorneys' fees under these circumstances against this Plaintiff would only serve to deter legitimate ERISA claims.
Defendants argue that because we granted summary judgment, "all plan assets will remain intact," (Defs.' Mem. of Law in Supp. of their Mot. for Attorneys' Fees and Related Non-taxable Expenses at 7), and they emphasize that their defense "preserve[d] the financial integrity of the ERISA plan." (Id.) Certainly, Defendants' efforts saved the Plan from a payment to satisfy Plaintiff's claim and to that extent all Plan participants will benefit from those efforts. Vintilla, 642 F. Supp at 297. However, that alone does not justify the award of attorneys' fees.
Finally, considering the relative merits of the parties' positions, obviously this factor weighs in favor of Defendants as evidenced by our granting of Defendants' Motion for Summary Judgement. Nevertheless, we do not agree with Defendants' claim that the lawsuit was "illconceived and unjustified." Our decision to grant summary judgment for the Defendants does not, absent extraordinary circumstances, justify a grant of attorneys' fees and costs. Vintilla, 642 F. Supp. at 296 (holding that the Ursic factors "should be considered in balance and relationship to the others").
IV. CONCLUSION
For the foregoing reasons, we will deny Defendants' Motion for Attorneys' Fees and Related Non-taxable Expenses.
An appropriate Order follows.
ORDER
AND NOW, this ____ day of June, 2004, upon consideration of Defendants' Motion for Attorneys' Fees and Related Non-taxable Expenses, (Doc. No. 29), and all papers filed in support thereof and in opposition thereto, it is ORDERED that Defendants'Motion is DENIED.
IT IS SO ORDERED.