United States District Court, N.D. California
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For Quiller Barnes, Plaintiff: Bruce Frank Rinaldi, R. Joseph Barton, Cohen Milstein Sellers & Toll PLLC, Washington, DC; Cassie Springer, Michelle Lee Roberts, Springer & Roberts LLP, Oakland, CA.
For AT& T Pension Benefit Plan-NonBargained Program, Defendant: M'Alyssa Christianne Mecenas, Stephen Henry Harris, Paul Hastings LLP, Los Angeles, CA; Patrick W. Shea, Paul Hastings LLP, New York, NY; Regan A.W. Herald, Paul Hastings LLP, San Francisco, CA.
EDWARD M. CHEN, United States District Judge.
ORDER GRANTING PLAINTIFF'S MOTION FOR ATTORNEY'S FEES (Docket No. 355)
Plaintiff Quiller Barnes initiated this action on behalf of himself and a class, asserting that Defendant AT& T Pension Benefit Plan -- Nonbargained Program owed them additional benefits. Mr. Barnes asserted five claims for relief. On May 10, 2012, the Court addressed the parties' cross-motions for summary judgment on three of the claims. The Court granted Mr. Barnes summary judgment on Count I of the complaint but granted the Defendant Plan summary judgment on Counts II and V. Subsequently, the parties stipulated to dismissal of Counts III and IV. See Docket No. 309 (Order at 31). Mr. Barnes has appealed, inter alia, this Court's summary judgment order to the Ninth Circuit. See Docket No. 371 (notice of appeal). In the meantime, currently
pending before the Court is Mr. Barnes's motion for attorney's fees and nontaxable costs. Mr. Barnes is asking for more than $1.3 million in fees and $75,000 in costs. See Mot. at 2; see also Roberts Reply Decl. ¶ 3.
Having considered the parties' briefs and accompanying submissions, as well as the oral argument of counsel and all other evidence of record, the Court hereby GRANTS Mr. Barnes's motion but orders the parties to provide supplemental briefing so that the Court may determine what the exact amount of fees and costs awarded should be.
I. FACTUAL & PROCEDURAL BACKGROUND
Because the parties stipulated to dismissal of Counts III and IV, and because the viability of Count V is dependent on the viability of Count II, the critical claims in the instant case are Counts I and II. As noted above, the Court granted summary judgment to Mr. Barnes on Count I but granted the Defendant Plan summary judgment on Count II.
A. Count I -- Failure to Provide Adequate Notice
In Count I (an individual claim only), Mr. Barnes argued that the Defendant Plan had violated ERISA by failing to give him adequate notice of the specific reasons for the denial of his claim. The Court held that there was a violation of ERISA's notice requirements because, even though the Defendant Plan had given reasons for the denial, it did not cite the specific plan provision on which it had relied (§ 3.4(a)), nor had it quoted the language of the provision or given a close paraphrase; this affected the ability of Mr. Barnes to adequately appeal. See Docket No. 309 (Order at 8-9).
Ultimately, however, the Court declined to order any remedy because the normal remedy would be to remand to the plan administrator and, here, a remand would be " essentially pointless because it is now clear -- if only through this litigation -- that § 3.4(a) is the provision upon which the Defendant Plan relied." Docket No. 309 (Order at 9). Based on the record, it appears that Mr. Barnes had notice that the Defendant Plan was relying on § 3.4(a) at least as of February 5, 2010, when the Defendant Plan filed a motion for summary judgment and highlighted that provision in support of its position. See Docket No. 47 (Def.'s Mot. for Summ. Judg. at 4, 14) (highlighting § 3.4(a) and arguing that " [t]he plain language of the plan provisions in Section 3.4(a) . . . expressly prohibit a pension calculation for a rehired employee that ignores a prior cashout by the employee" ). It is plausible, however, that Mr. Barnes knew of § 3.4(a) slightly earlier, as, on January 26, 2010, he filed a motion for leave to amend his complaint, and the proposed amended complaint clearly relied on § 3.4(d)(3) of the plan. See Docket No. 39-1 (Prop. Am. Compl. ¶ 50). If Mr. Barnes was relying on § 3.4(d)(3), he likely knew of the other provisions in § 3.4, including § 3.4(a).
B. Count II -- Failure to Pay Full Pension Benefits
In Count II (a certified class claim), Mr. Barnes argued that the Defendant Plan had failed to pay full pension benefits. Initially, Mr. Barnes filed suit against the Defendant Plan as a lump-sum payee in his individual capacity only. However, on January 26, 2010, he moved to amend his complaint, and one of the amendments he proposed was to include class allegations. See Docket No. 39 (motion). The proposed class consisted of persons who had not been paid a benefit known as a " redetermined ATB," implicitly pursuant to § 3.4(d)(3) of the plan.
Under § 3.4(d)(3) of the Plan,
[i]f the Employee was receiving, or was eligible to receive, a monthly pension under the accelerated transition benefit [ATB] formula at his or her prior Termination of Employment, the Employee's Plan benefit at the Annuity Start Date(s) following his or her next Termination of Employment will be equal to (x) plus (y) where:
(x) is the monthly benefit payable at the Employee's prior Termination of Employment under Section 5.1, except that if the prior benefit was subject to an age discount under Section 5.2, and the Employee's service is bridged under Section 7.4(a), the benefit will be adjusted to reflect the Employee's age and Term of Employment under Section 7.7 at the Employee's next Termination of Employment; and
(y) is the monthly cash balance benefit under Section 4.5(b) based on allocations to the Employee's Account from the Employee's rehire date to the Annuity Start Date that applies to the cash balance benefit.
Docket No. 39-1 (Prop. Am. Compl. ¶ 50). The (x) value above represented the redetermined ATB. The (y) value above represented a separate benefit, known as the cash balance benefit. As a lump-sum payee, Mr. Barnes had been paid a cash balance benefit, but he had not been paid a redetermined ATB. Mr. Barnes asserted that he was also entitled to a redetermined ATB, and not just a cash-balance benefit, under § 3.4(d)(3). As indicated above, however, the Defendant Plan's position was that § 3.4(a), and not § 3.4(d)(3), governed the rights of lump-sum payees such as Mr. Barnes.
In Mr. Barnes's proposed amended complaint, the class was defined as follows:
(1) Participants of the PTG Pension Plan, who meet the following requirements:
(a) who terminated their employment with a company that participated in the PTG Pension Plan after March 22, 1996;
(b) who were eligible for a ATB, which, because they had not attained the requisite age or years of credited service, was subject to an ATB Discount,
(c) who were subsequently rehired by a company that participated in the PTG Pension Plan on or before October 31, 1997, and worked at least five additional years; and
(d) who, either (i) at their next termination, did not have their ATB adjusted to reflect their age and term of employment at their next termination of employment or (ii) are still employed at a Participating Company.
(2) Beneficiaries of any of the persons described in Group 1.
Docket No. 39-1 (Prop. Am. Compl. ¶ 15).
While the proposed class definition did not explicitly include annuitants as members of the class (in addition to lump-sum payees such as Mr. Barnes), implicitly, annuitants were included because an annuitant, like a lump-sum payee, could be an employee " receiving, or . . . eligible to receive, a monthly pension under the accelerated transition benefit [ATB] formula at his or her prior Termination of Employment" as stated in § 3.4(d)(3).  The proposed class, however, was expressly limited to persons who had not been given, in effect, a full ATB. See Docket No. 39-1 (Prop. Am. Compl. ¶ 15) (alleging, in class
definition, that class members did not, at their next termination, " have their ATB adjusted to reflect their age and term of employment at their next termination of employment" ). The proposed class did not put at issue any benefits other than the ATB, such as a cash balance benefit. Judge Patel granted the motion to amend.
Subsequently, Mr. Barnes moved for class certification. Judge Patel granted that motion as well, although she limited the class definition to lump-sum payees only -- i.e., excluding annuitants. See Docket No. 176 (Order at 12-13). A few months later, on December 20, 2010, Mr. Barnes moved to modify the class definition so that annuitants (in particular, deferred annuitants) would be included in the class. See Docket No. 199 (motion). More specifically, Mr. Barnes asked Judge Patel to adopt the original class definition that he had proposed based on 30(b)(6) deposition testimony that had been given on behalf of the Defendant Plan. See Docket No. 199 (Mot. at 6). As noted above, Mr. Barnes's original class definition was targeted to individuals who had not been given a redetermined ATB.
The Defendant Plan opposed the motion to modify. With respect to deferred annuitants, the Defendant Plan argued that Mr. Barnes had misconstrued the testimony of the 30(b)(6) deponent, Hannah Francis:
Plaintiff argues that, based on Ms. Francis's testimony, the Plan does not afford deferred annuitants with a " redetermined ATB" upon their second termination. The argument takes the term " redetermined ATB" out of context and ignores the sum and substance of Ms. Francis's testimony. If an employee does not elect to commence the distribution of his or her annuity and is rehired by a Participating Company, then upon the employee's second termination he or she is treated as if they never left the Company's employment at all, and the ATB is calculated taking into consideration the full, bridged term of service.
Docket No. 218 (Opp'n at 2). This was " directly contrary to the claim of Plaintiff herein, i.e. that he did not receive credit for his bridged service with respect to his ATB, while deferred annuitants do. As such, even if there could be some sort of claim with respect to deferred annuitants, Plaintiff Barnes is not similarly situated to them . . . ."  Docket No. 218 (Opp'n at 3) (emphasis in original).
On January 21, 2011, Mr. Barnes filed his reply brief in support of his motion to modify. In the reply, Mr. Barnes argued for the first time that just because a deferred annuitant could get a full ATB at second retirement missed the point. " The crux of Plaintiff's claim is that he was denied the full benefit under subsection 3.4(d)(3) . . . ." Docket No. 224 (Reply at 2) (emphasis added). " Mr. Barnes claims that he is entitled to benefits equaling (x) (a redetermined ATB) plus (y) (cash balance benefit). He was only given (y) because the Plan has interpreted subsection 3.4(d)(3) to apply to those participants who were receiving a monthly ATB pension at first retirement. Similarly, deferred annuitants are also denied (x) plus (y)" -- more specifically, while they got a full ATB (in effect (x)), they were not given in addition a cash balance benefit ( i.e., (y)). Docket No. 224 (Reply at 3) (emphasis in original). In short, deferred annuitants were getting (x), but not (y), and thus they too were denied the full benefits under § 3.4(d)(3). See also Docket No. 240 (Order at 7).
Ultimately, Judge Patel granted Mr. Barnes's motion to modify the class certification order. But notably, in granting the order, Judge Patel acknowledged that there had been a " slight shift [in] the focus of the litigation to the proper interpretation and application of section 3.4(d)(3) in its entirety, rather than its previous focus on the proper interpretation and application of the 'x' value within section 3.4(d)(3), namely, the redetermination of the ATB benefit upon successful bridging. " Docket No. 240 (Order at 7) (emphasis added).
Judge Patel ultimately modified class certification to reflect this change in focus -- now including a requirement that a class member " either (i) at their next termination, did not have their benefit calculated to include both an ATB adjusted to reflect their age and term of employment and a cash balance benefit (or a Career Average Minimum benefit) based on allocations to their account since rehire as set forth in section 3.4(d)(3) of the PTG Pension Plan or (ii) are still employed at Participating Company." Docket No. 240 (Order at 11) (emphasis added). Notably, if Judge Patel had simply adopted the original class definition as proposed by Mr. Barnes, that would have limited the class to those who did not get a redetermined ATB only; it would not have included those denied the cash balance benefit.
After the instant case was reassigned from Judge Patel to this Court, this Court adjudicated cross-motions for summary judgment. The Court rejected Mr. Barnes's argument that de novo review should apply to Count II and instead applied abuse-of-discretion review, tempered with slight skepticism because of the Defendant Plan's multiple interpretations of § 3.4(d)(3). See Docket No. 309 (assuming that it was appropriate to charge the Defendant Plan with three interpretations, only one of which was formally issued by the Benefit Plan Committee (" BPC" ), the entity charged with interpreting the plan; the other two interpretations were offered during this litigation). Under this standard of review, the Court held that the language of the plan was ambiguous and that the Defendant Plan's interpretation of the plan was reasonable and in good faith. See Docket No. 309 (Order at 30). More specifically, the Court held that it was reasonable for the Defendant Plan to interpret § 3.4(a) as being applicable to lump-sum payees (a position that the Defendant Plan had always taken). As for § 3.4(d)(3), in its final interpretation of this provision,  the Defendant Plan conceded that it applied to both immediate and deferred annuitants alike, entitling them to full benefits under § 3.4(d)(3). Given this interpretation, any relief sought by Mr. Barnes on behalf of deferred annuitants was rendered moot. See Docket No. 340 (Order at 3-4).
Although the Defendant Plan's final interpretation of § 3.4(d)(3) was that it would apply to both immediate and deferred annuitants, there actually were multiple interpretations of this provision. (In contrast, there were always only one interpretation of § 3.4(a) -- i.e., that it applied to lump-sum payees.) Moreover, those interpretations of § 3.4(d)(3) were not even made until after this lawsuit had been initiated.
As noted by the Court in its summary judgment order, § 3.4(d)(3) was never interpreted by the Defendant Plan -- including the BPC, the entity formally charged with interpreting the plan -- at any time during the administrative proceedings.
This was because, during the administrative proceedings, only lump-sum payees were expressly at issue (Mr. Barnes was a lump-sum payee) and, since the Defendant Plan concluded that § 3.4(a) applied to lump-sum payees, there was no need for it to even consider § 3.4(d)(3). See Docket No. 309 (Order at 12).
The first time that § 3.4(d)(3) became an issue was during this litigation. Mr. Barnes did not raise § 3.4(d)(3) at the outset of the lawsuit in January 2008; rather, he first brought up § 3.4(d)(3) on January 26, 2010 ( i.e., two years later), when he moved to file an amended complaint. See Docket No. 39 (motion); see also Docket No. 309 (Order at 13).
The first time that the Defendant Plan interpreted § 3.4(d)(3) was in March 2010, as part of a reply in support of a motion for summary judgment. Although the interpretation was not provided by the BPC specifically, it was nonetheless offered on behalf of the Defendant Plan and was supported by a declaration from Ms. Francis, the Director of Benefits for AT& T. The interpretation in March 2010 was that § 3.4(d)(3) applied to both immediate and deferred annuitants alike (but not lump-sum payees). See Docket No. 86 (Hannah Decl.); see also Docket No. 309 (Order at 13).
In November 2010, however, when Ms. Francis was deposed as the Defendant Plan's 30(b)(6) witness, she offered a different interpretation of § 3.4(d)(3). She testified that § 3.4(d)(3) applied only to immediate annuitants, but not deferred annuitants. Soon after the deposition, Mr. Barnes moved to amend the class certification order (on Count II) because of the above testimony by Ms. Francis. See Docket ...