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Gurasich v. IBM Retirement Plan

United States District Court, N.D. California

July 12, 2016





         Plaintiff Joan Gurasich ("Plaintiff") brought this action under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., against Defendant IBM Retirement Plan ("IBM Plan"), as well as Defendant International Business Machines Corporation ("IBM") as the Plan Administrator (collectively "Defendants"). Plaintiff prevailed on her claim for retirement benefits under the IBM Plan and now moves for attorneys' fees and prejudgment interest. Motion for Attorneys' Fees and Prejudgment Interest ("Mot.") [Docket No. 69].

         For the following reasons, Plaintiff's motion is granted in part. Plaintiff is awarded attorneys' fees in the amount of $249, 871.50 and prejudgment interest in the amount of $2, 398.31.

         I. BACKGROUND

         The factual history of this case is set out fully elsewhere.[1] A brief history follows.

         A. Plaintiff's Employment History

         Plaintiff began working for ROLM Corporation ("ROLM") on January 24, 1980. In 1984, IBM acquired ROLM. As a result of that acquisition, Plaintiff became an IBM employee and a participant in the IBM Plan.

         After leaving IBM on February 15, 1990, Plaintiff worked at Siemens PN from February 19, 1990 until July 24, 1997, and became a vested participant in the Siemens Retirement Plan. On February 1, 2012, Plaintiff began receiving a monthly benefit under the Siemens Retirement Plan, which was calculated based on an employment history from January 24, 1980 to July 24, 1997, even though Plaintiff did not begin working for Siemens until February 19, 1990.

         B. Plaintiff's Claim for Benefits Under the IBM Plan

         In the years following her separation from IBM, the IBM Plan sent Plaintiff numerous communications stating that she had a vested benefit under that plan. On April 2, 2013, Plaintiff sent a Pension Election Confirmation package to the IBM Employee Services Center. On July 10, 2013, Plaintiff called the IBM Employee Services Center and was told that she was not eligible under the IBM Plan. Plaintiff requested a written explanation of the basis for the denial of her claim. On October 1, 2013, the Plan Administrator sent Plaintiff a denial letter, explaining that Plaintiff had terminated her employment with IBM in 1990 pursuant to an agreement between IBM and ROLM, which included a pension asset transfer of Plaintiff s IBM employment service to ROLM for inclusion in any subsequent ROLM pension benefit calculation. The letter stated that, because the IBM Plan had already paid a benefit on Plaintiffs behalf for her service from January 24, 1980 to February 15, 1990, Plaintiff was ineligible for any future IBM pension benefit or service calculations. Finally, the letter explained that ROLM had since been acquired by Siemens, and that IBM had made an inquiry to Siemens and determined that Plaintiff was receiving Siemens pension benefits that included her previous IBM service dates.

         On October 8, 2013, Plaintiffs attorney, Kathryn Curry ("Curry"), sent a letter to the Plan Administrator requesting documents related to her claim for benefits. On November 11, 2013, the Plan Administrator responded to Plaintiffs request by forwarding a July 9, 2013 email exchange between Siemens and the IBM Plan that confirmed that Plaintiffs Siemens pension was based on service from 1980 to 1997, plus copies of the 1989 and 1994 IBM Retirement Plans. Curry requested a copy of the 1990 purchase agreement between IBM and ROLM that was referenced in the denial of her claim, but the Plan Administrator did not provide one.

         Plaintiff, through Curry, appealed the denial of her claim for IBM Plan benefits on December 3, 2013. On March 6, 2014, the Plan Administrator upheld the denial of Plaintiff's claim.

         C. Procedural History

         On June 24, 2014, Plaintiff, through her attorneys Curry and Tracy Tierney ("Tierney"), filed a complaint against Defendants asserting four claims under ERISA: 1) recovery of Plan Benefits pursuant to 29 U.S.C. § 1132(a)(1)(B); 2) breach of fiduciary duties pursuant to 29 U.S.C. § 1104; 3) equitable relief pursuant to 29 U.S.C. § 1132(a); and 4) failure to provide requested plan information pursuant to 29 U.S.C. § 1132(c).

         Defendants filed a motion for partial dismissal, which the court denied. [Docket Nos. 18, 24.] Defendants subsequently moved for summary judgment on all four of Plaintiff's claims, and Plaintiff made a cross motion for summary judgment on her first and fourth claims. [Docket Nos. 35, 42.] The court issued an order granting summary judgment to Plaintiff on her first claim for recovery of plan benefits, denying as moot her second and third claims for equitable relief, and granting summary judgment to Defendants on the fourth claim for failure to provide requested plan information. Order on Motions for Summary Judgment ("MSJ Order") [Docket No. 60]. On February 11, 2016, the court entered judgment awarding Plaintiff past due benefits under the IBM Plan in the amount of $47, 966.10, as well as future benefits pursuant to the terms of the Plan (providing for monthly payment of $978.90). [Docket No. 65.] Plaintiff filed a Bill of Costs, and the Clerk granted $400.00 in taxable costs against Defendants. [Docket Nos. 68, 76.] Plaintiff subsequently filed the present motion, requesting an award of attorneys' fees pursuant to 29 U.S.C. § 1132(g) in the amount of $285, 160.50, consisting of $276, 958.00[2] for work through the Motion, and $8, 202.50 for work on the Reply brief. Plaintiff also seeks $7, 672.36 in prejudgment interest. Mot. at 15-16.

         Plaintiff argues that she is entitled to reasonable attorneys' fees and costs as the prevailing party because there are no special circumstances that would render such an award unjust. Plaintiff further requests that the court, in its discretion, award prejudgment interest at a higher rate than the formula prescribed for post-judgment interest under 28 U.S.C. § 1961.

         Defendants oppose the motion. Defs.' Opposition ("Opp'n.") [Docket No. 72]. They argue that Plaintiff should not be awarded fees and prejudgment interest at all, but if she is, the requested amounts should be drastically reduced. They argue that the amount of fees should be reduced to reflect the fact that Defendants prevailed on Plaintiffs fourth claim for failure to provide plan information. They also argue that some of the requested fees are excessive and duplicative, especially in light of the work that Plaintiffs attorneys did on her Administrative Appeal for benefits, as well as Plaintiffs counsel's professed experience and expertise in ERISA law.

         II. ANALYSIS

         A. Plaintiff's Entitlement to a Fee Award

         Plaintiff requests an award of attorneys' fees pursuant to 29 U.S.C. § 1132(g) because she achieved success on her claim for benefits under the IBM Plan. She argues that the factors set forth by the Ninth Circuit in Hummell v. S. E. Rykoff & Co., 634 F.2d 446, 453 (9th Cir. 1980), support a fee award.

         1 The Prevailing Party is Entitled to Attorneys' Fees Unless Special Circumstances Render Such an Award Unjust

         Section 502(g)(1) of ERISA gives the court discretion to award attorneys' fees. 29 U.S.C. § 1132(g)(1). The Supreme Court has held that a fee claimant may be entitled to attorneys' fees if the claimant shows "some degree of success on the merits." Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 255 (2010). In addition, the Ninth Circuit has held that a prevailing plan participant such as Plaintiff "should ordinarily recover an attorney's fee unless special circumstances would render such an award unjust." Smith v. CMTA-IAM Pension Tr., 746 F.2d 587, 589 (9th Cir. 1984) (internal quotations and citation omitted). As the Ninth Circuit has explained, ERISA "is remedial legislation which should be liberally construed in favor of protecting participants in employee benefit plans" and, specifically, "to afford them effective access to federal courts." Id.

         Defendants concede that Plaintiff meets the threshold in Hardt, but argue that an analysis of the Hummell factors warrants denial of Plaintiff's fee request. Opp'n. at 3, 5.

         2. Application of the Hummell Factors

         Once a court determines that an ERISA fee claimant has achieved some degree of success on the merits, the court "must consider" the factors set forth in Hummell, 634 F.2d 446, to guide its discretion under § 1132(g). See Simonia v. Glendale Nissan/Infiniti Disability Plan, 608 F.3d 1118, 1119, 1121 (9th Cir. 2010). In exercising this discretion, district courts should consider the following factors:

(1) the degree of the opposing parties' culpability or bad faith; (2) the ability of the opposing parties to satisfy an award of fees; (3) whether an award of fees against the opposing parties would deter others from acting under similar circumstances; (4) whether the parties 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.

Hummell, 634 F.2d at 453. "No one of the Hummell factors . . . is necessarily decisive, and some may not be pertinent in a given case." Carpenters S. Cal. Admin. Corp. v. Russell, 726 F.2d 1410, 1416 (9th Cir. 1984) (citation omitted). Courts generally construe the Hummell factors in favor of participants in employee benefit plans. McElwaine v. U.S. W., Inc., 176 F.3d 1167, 1172 (9th Cir. 1999) ("When we apply the Hummell factors, we must keep at the forefront ERISA's purposes that ‘should be liberally construed in favor of protecting participants in employee benefit plans'") (citation omitted). Plaintiff argues that each of these factors supports an award of fees. Defendants contend that all of the Hummell factors, save the second, weigh in favor of denying a fee award. The court addresses each factor below.

         a.The Degree of the Opposing Parties' Culpability or Bad Faith

         Under Hummell, a party's "culpability" does not require a finding of bad faith. IBM's failure to fulfill its legal duty is sufficient to support an award of fees. See Smith, 746 F.2d at 590. ("Although bad faith is a factor that would always justify an award, it is not required."); Caplan v. CNA Fin. Corp., 573 F.Supp.2d 1244, 1248 (N.D. Cal. 2008); King v. Cigna Corp., No. C 06-7025 CW, 2007 WL 4365504, at *2 (N.D. Cal. Dec. 13, 2007) ("[F]rom a legal perspective, Defendants are ‘culpable' in that they were found to owe Plaintiff a legal duty that they were not fulfilling").

         The court granted summary judgment for Plaintiff because IBM abused its discretion in denying her claim for benefits based on an inference, rather than an investigation of the underlying facts, where IBM had the ability to confirm the disputed facts through reviewing its own records and where Plaintiff provided concrete evidence in support of her position. MS J Order at 12-13. The court concluded that IBM's denial of benefits without relevant information, especially personnel and benefits records in the control of a plan administrator, amounted to an abuse of discretion and a failure to fulfill its legal duties to Plaintiff See Booton v. Lockheed Med. Ben. Plan, 110 F.3d 1461, 1463-64 (9th Cir. 1997) (finding that denial of a claim without obtaining relevant information is an abuse of discretion); Kunin v. Benefit Tr. Life Ins. Co., 910 F.2d 534, 538 (9th Cir. 1990) (burden is on plan to obtain adequate information to make decision).

         Thus, the first factor weighs in favor of a fee award.

         b. Ability of Defendants to Satisfy an Award of Fees

         Defendants concede that they are able to satisfy a fee award. Opp'n. at 6. As the Ninth Circuit explained: "Based on this factor alone, absent special circumstances, a prevailing ERISA employee plaintiff should ordinarily receive attorney's fees from the defendant." Smith, 746 F.2d at 590. The court reasoned that, absent fee shifting, it is generally difficult for an individual plan participant to carry the heavy burden of litigating a denial of benefits. Id The same reasoning applies here. The second factor thus weighs in favor of a fee award.

         c. Degree to Which an Award Will Deter Future Conduct

         The court finds that the third factor also favors awarding fees to Plaintiff ERISA does not authorize an award of compensatory or punitive damages for bad faith behavior. See Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 147 (1985) (holding compensatory and punitive damages not available remedies for ERISA benefit claims). As a result, courts acknowledge that an award of attorneys' fees and costs is a way of deterring violations of ERISA. Caplan, 573 F.Supp.2d at 1248 ("[A]n award of attorneys' fees could serve to deter other plan administrators from denying meritorious disability claims. This could indirectly benefit other individuals."); Carpenters S. Cal. Admin. Corp., 726 F.2d at 1416 ("If defendant employers face the prospect of paying attorney's fees for successful plaintiffs, they will have added incentive to comply with ERISA.").

         A fee award will deter IBM and other plan administrators from denying plan benefits based on inference and conjecture, without verifying facts within the plan administrator's control. This factor also weighs in favor of a fee award.

         d. Whether Plaintiff Sought to Benefit Other Participants or Resolve a Significant Legal Issue

         Plaintiffs suit did not seek relief for other plan participants besides herself; she sought to recover her own pension benefits. Plaintiff argues that the court's determination in this case will benefit other plan participants. This is a stretch. This case focused heavily on the specific factual circumstances of Plaintiff s employment with a number of related corporate entities. To the extent that the court's decision may help other plan participants, any such benefit is already captured in the previous factor as deterrence against a future failure to properly investigate information within the Plan Administrator's control.

         This factor is neutral at best.

         e. The Relative Merits of the Parties' Positions

         Finally, the fifth factor-the relative merits of the parties' positions-favors a fee award. In ruling on the cross-motions for summary judgment, the court found that IBM's denial of benefits without consulting relevant and accessible information amounted to a failure to fulfill its legal duties to Plaintiff Further, Defendants failed to investigate the facts underlying Plaintiffs claim even after Plaintiff submitted concrete evidence in support of her ...

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