STEPHEN J. MURPHY, III, District Judge.
This is an ERISA denial-of-benefits class action, filed by named plaintiffs Michael Potter and Brett Boyer against Defendant Blue Cross Blue Shield of Michigan ("BCBS"). Plaintiffs sought benefits they were allegedly denied for Applied Behavior Analysis ("ABA") therapy for autism as well as declaratory and injunctive relief. The Court subsequently certified a class of individuals enrolled in or covered by a plan offered or administered by BCBS and governed by ERISA who were denied a claim for ABA therapy on the grounds that, pursuant to BCBS' 2010 Medical Policy, BCBS deemed the treatment to be "experimental." On March 30, 2013, 2013 WL 4413310, the Court entered judgment against BCBS and in favor of Plaintiffs, declared that BCBS' characterization of ABA therapy as "experimental or investigative" as applied to the claims of the class members, was and is arbitrary and capricious, overturned all denials of benefits on that basis, ordered the class members' claims for coverage of ABA therapy to be remanded to BCBS for readministration, and ordered BCBS to provide notice to the class at BCBS' sole expense.
On May 1, 2012, Plaintiffs filed the instant motion for attorney's fees and costs pursuant to § 502(g) of ERISA, Fed. R.Civ.P. 23(h) and 54(d)(2), L.R. 54.1 and 54.1.2, and 28 U.S.C. § 1920. The Court referred the motion to a United States Magistrate Judge. The magistrate judge conducted a hearing on October 23, 2013, and, in addition, to the original motion, response, and reply briefs, considered several subsequently filed "notices" of supplemental authority as well as response and reply briefs regarding those notices. On January 30, 2014, the magistrate judge issued a Report and Recommendation ("Report"), recommending that the motion be granted in part and reducing the amount of attorney's fees and costs requested by Plaintiffs.
BCBS has filed 11 timely objections challenging various aspects of the Report. Civil Rule 72 does not require the Court to hold a hearing when reviewing a magistrate judge's findings. Fed.R.Civ.P. 72; U.S. v. Raddatz, 447 U.S. 667, 674, 100 S.Ct. 2406, 65 L.Ed.2d 424 (1980) (holding 28 U.S.C. § 636 did not require a hearing for de novo review of a magistrate's findings); see also Estate of Wyatt v. WAMU/JP Morgan Chase Bank, No. 09-14919, 2012 WL 1622897 (E.D.Mich. May 9, 2012). After examining the record and considering BCBS' objections de novo, the Court concludes that its objections do not have merit. Accordingly, the Court will adopt the Report, and grant the motion for attorney's fees and costs to the extent recommended by the Report.
Civil Rule 72 provides that a party's specific written objections to a magistrate judge's Report filed within fourteen days of service are entitled to de novo review. See Fed.R.Civ.P. 72(b)(2); see also 28 U.S.C. § 636(b)(1) ("A judge of the court shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made.").
The Supreme Court has held that a claimant need not be a "prevailing party" to be eligible for attorney's fee under ERISA's fee-shifting statute, but rather, the Court may award fees and costs under the statute if the party requesting the award shows that he obtained "some degree of success on the merits." Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 254, 130 S.Ct. 2149, 176 L.Ed.2d 998 (2010). Nevertheless, "[e]ven under this more relaxed threshold for eligibility, [plaintiffs] must demonstrate [their] entitlement to attorney's fees." Geiger v. Pfizer, Inc., 549 Fed.Appx. 335, 338 (6th Cir.2013). In exercising its discretion as to whether to award fees under § 1132(g), this Court is to consider the following five factors established by the Sixth Circuit in Sec'y of Dep't of Labor v. King, 775 F.2d 666 (6th Cir.1985):
Id. at 669. "No single factor is determinative." Moon v. Unum Provident Corp., 461 F.3d 639, 642-43 (6th Cir.2006).
The Report first concludes that there is no question that Plaintiffs have achieved some success on the merits. Report & Recommendation Plaintiffs' Mot. for Attorney Fees, ("Report") 5, ECF No. 167. The Report notes that Plaintiffs were able to persuade the Court that the plan administrator's characterization of ABA therapy as "experimental or investigative" as applied to the claims of the class members is arbitrary and capricious and should not be upheld under ERISA. Id. at 5. The Report explained that the Court reversed the plan administrator's decision and ordered that the class members' claims for coverage of ABA therapy be remanded to BCBS for readministration consistent with the Opinion and Order. Id. The Report disagreed with BCBS' argument that an award of fees and costs is premature because the parties do not yet know the number of class members and how many are entitled to relief, explaining that courts within the Sixth Circuit have consistently held that a remand to the plan administrator constitutes a substantial success on the merits. Id. at 6.
The Report proceeds to analyze the King factors, noting that the parties did not dispute that the second and fourth factors were present. Id. at 6-7. The Report concludes that the Court's finding that BCBS' denial of benefits was arbitrary and capricious suggests that BCBS acted with culpability in denying benefits for ABA therapy. Id. at 7-10. The Report also finds that an imposition of attorney's fees and costs in the instant case will serve to deter other plan administrators from implementing internally inconsistent and ambiguous policies that are not properly supported by record evidence. Id. at
Plaintiffs request fees in the amount of $829,561. Id. In determining reasonable hourly rates, the Report first notes that such a rate is calculated according to the prevailing market rates in the relevant community, which, in the case at bar, is the Eastern District of Michigan. Id. at 13-15. Mr. Mantese claims hourly rates of $500 and his partners claim rates of $400, which the Report points out are in the 95th percentile of prevailing market rates for attorneys with similar experience. Id. at 16. The Report also considers that the Michigan State Bar Survey shows that the 75th percentile hourly rate for a managing partner is $315, and is $350 for equity and non-equity partners. Id. at 17. The State Bar Survey shows that the 75th percentile hourly rate for attorneys with between 16 and 35 years of experience is $300 per hour and the 95th percentile rate is $425 to $450 per hour. Id. In addition, the Report notes that the 75th percentile hourly rate for attorneys practicing consumer law is $350 and is $300 for those practicing insurance law. Id. Considering those factors, the Report concludes that $425.00 is a reasonable attorney fee for hours submitted by Mr. Mantese and $350.00 per hour is a reasonable fee for his law partners. Id. at 16.
Mr. Conway, a sole practitioner, claims a rate of $400 per hour. Id. The Report considered that the 75th percentile hourly rate for sole practitioners is $250 and the 95th percentile rate is $350 according to the State Bar Survey, and that, for attorneys with his level of experience, 16 to 25 years, the 75th percentile hourly rate is $300 and the 95th percentile hourly rate is $450. Id. As a result, the Report finds that $350 per hour is a reasonable hourly rate for Mr. Conway. Id. at 17-18.
The associates claim a $310 hourly rate, regardless of experience level, which is at the 95th percentile. Id. at 18. The Report notes that Plaintiffs did not submit any information regarding their experience level or years in practice. Id. BCBS sought to reduce their rates to the average rate, which is $203 per hour, and the Report states that the 75th percentile rate is $228. Id. at 16. The Report suggests that $250 per hour is a reasonable rate for the associates. Id. at 18-19.
The Report then turns to assess the number of hours billed, which Plaintiffs assert is 2243.5. Id. at 19. The Report explains that the billing entries submitted by Plaintiffs contain numerous instances of block billing in which all work by a time keeper performed on a particular date is included without specifying how much time was allotted to each individual task. Id. at 24. In addition, the Report points out that the billing records contain numerous vague time entries, generally referring to tasks, meetings, or communications without any indication of their general subject matter, number, or other justification. Id. The Report determines that such time entries do not provide sufficient detail regarding the task performed. Id. at 24-25. In light of Plaintiffs' burden of production, the block billing, the vague entries, and insufficient documentation, the Report concludes that the total fee request be reduced by five percent. Id. at 25.
The Mantese Firm bills in quarter-hour increments and the Conway Firm bills in tenth of an hour increments. Id. at 25-26. BCBS asserted that the fees should be reduced because the larger billing increments likely led to overbilling in many
The Report next addresses BCBS' concerns about billing for administrative or noncompensable task and excessive and duplicative billing. Id. The Report points to two instances presented by BCBS in which the billing records show multiple attorneys engaged in the same tasks with no indication of the specific contribution each lawyer made beyond simply reviewing another attorney's work. Id. at 31. The magistrate judge also notes, that, based on his review of BCBS' spreadsheet of objections to the billing records, five attorneys billed approximately 27 hours working on Plaintiffs' response to a motion for reconsideration. Id. at 32. The Report concludes that attorney time billed for "telephone call for client" and attorney travel time is compensable, but attorney time for clerical tasks such as "file organization" and "proofread correspondence and filing" is not compensable and fees for such time should be excluded. Id. at 33. As a result, the Report recommends excluding the following time entries:
Id. at 33-34. The Report concludes that the time the attorneys spent on press releases was minimal and will not be excluded. Id. at 34. In addition, the Report concludes that the time entries in which (1) six attorneys billed more than 35 hours for Plaintiffs' motion for summary judgment from July 18, 2011 to July 21, 2011, (2) five attorneys billed more than 27 hours for Plaintiffs' response to BCBS' motion for reconsideration from July 30, 2011 through August 2, 2011, and (3) billing more than 53 hours for preparation for a hearing from June 8, 2011 through June 23, 2011, all of which were identified in BCBS' spreadsheet of objections to Plaintiffs' billing records, are excessive and unreasonable, and, therefore, their amounts should be reduced by 25 percent. Id. at 34.
The Report declines to reduce the fee award because Plaintiffs achieved only "insignificant results," as urged by BCBS, because Plaintiffs did obtain a recovery for the class. Id. at 34-36. On the other hand, the Report rejects Plaintiffs' request for a fee enhancement, explaining that it is not necessary to enhance the fee because the lodestar calculation adequately compensates Plaintiffs for the risks inherent in this type of litigation and Plaintiffs have failed to establish that the case is rare or exceptional requiring an enhancement. Id. at 37.
The Report next considers Plaintiffs' request of $10,049.12 in costs. Id. at 38. The Report reviews decisions from other jurisdictions which support the view that costs under ERISA include nontaxable costs as long as they are reasonable out-of-pocket expenses incurred by the attorney that are normally charged to a fee-paying client in the course of providing legal services. Id. at 40. The magistrate judge states that, despite authority to the contrary, he is more persuaded by those courts that allow the recovery of costs in addition to those taxable under § 1920. Id. at 41. Therefore, the Report concludes that Plaintiffs' claimed telephone, postage, facsimile and travel costs should be allowed, but their claimed costs for meals and press releases should not be allowed
The Report addresses BCBS' argument that the costs for copying charges in particular should be reduced because they are insufficiently detailed. Id. The Report notes that copying costs are taxable under § 1920(4) provided that they are necessarily obtained for use in the case. Id. at 43. The magistrate judge explains that, as a practical matter, it would be difficult to document for what purpose every photocopy made in the course of pursuing a lawsuit was used. Id. Nevertheless, recognizing that documentation was lacking to some degree as to the purpose of the copies, the Report recommends a ten percent reduction in the amount requested for copies. Id. at 44. The Report also reduces the copying costs to $0.10 per copy, which is considered a reasonable rate. Id.
Finally, the Report considers BCBS' challenge to the costs of computer research. Id. The magistrate judge believes that those judges who have awarded the costs of computerized research are in the majority and the reasons for doing so are well-founded. As a result, the Report recommends awards for such costs, which are reasonable given the length and complexity of the litigation. Id. at 45.
The Report requires Plaintiffs to recalculate the amount of attorneys's fees and costs sought in accordance with the Report and resubmit their adjusted final requests by February 20, 2014, a requirement with which Plaintiffs have since complied. Id. at 45-46.
BCBS made 11 objections to the Report which will be addressed in turn.
BCBS argues that it was error for the Report to find that an award of fees and costs is not premature because the most important factor in determining the amount of the fee award is the degree of the plaintiff's success. BCBS maintains that the final amount of class recovery is still unknown.
"[A] fees claimant must show some degree of success on the merits before a court may award attorney's fees under § 1132(g)." Hardt, 560 U.S. at 255, 130 S.Ct. 2149 (internal quotation omitted). "A claimant does not satisfy that requirement by achieving trivial success on the merits or a purely procedural victory, but does satisfy it if the court can fairly call the outcome of the litigation some success on the merits without conducting a lengthy inquiry into the question of whether a particular party's success was substantial or occurred on a central issue." Id. (internal quotations omitted). In Hardt, the Supreme Court found that a court order remanding an ERISA claim for further consideration can constitute some success on the merits, although the Court expressly left open the issue of whether a remand order without more constitutes some success on the merits. Id. at 255-56, 130 S.Ct. 2149. But "[i]n the Sixth Circuit, a remand, alone, constitutes `some success on the merits' that makes an award of attorney's fees and costs available under § 1132(g)(1)." Thies v. Life Ins. Co. of N. Am., 839 F.Supp.2d 886, 890 (W.D.Ky. 2012).
BCBS correctly notes that Hardt is different from the instant case because, there, the motion for attorney's fees was made after the plan administrator readministered the claims. "However, nothing in Hardt precludes an award of attorney's fees where a district court remands to the plan administrator . . . where the plan administrator
BCBS next argues that the Report recommends billing rates that are excessive and without justification. In particular, BCBS contends that the Report does not explain why the rates for all the attorneys have been determined to be so high.
"The primary concern in an attorney fee case is that the fee awarded be reasonable, that is, one that is adequately compensatory to attract competent counsel yet which avoids producing a windfall for lawyers." Geier v. Sundquist, 372 F.3d 784, 791 (6th Cir.2004). The "lodestar" method is the "proper method for determining the amount of reasonable attorney's fees." Building Serv. Local 47 Cleaning Contractors Pension Plan v. Grandview Raceway, 46 F.3d 1392, 1401 (6th Cir.1995) (internal citations omitted). This approach involves two steps. First, the court calculates the "lodestar" by multiplying "the hours spent on a case by a reasonable hourly rate of compensation for each attorney involved." Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 478 U.S. 546, 563, 106 S.Ct. 3088, 92 L.Ed.2d 439 (1986). Second, the court "may then, within limits, adjust the `lodestar' to reflect relevant considerations peculiar to the subject litigation." Adcock-Ladd v. Sec'y of Treasury, 227 F.3d 343, 349 (6th Cir.2000).
A reasonable hourly rate is generally calculated according to the "prevailing market rates in the relevant community." Blum v. Stenson, 465 U.S. 886, 895, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984). "The `prevailing market rate' is that rate which lawyers of comparable skill and experience can expect to command within the venue of the court of record, rather than foreign counsel's typical charge for work performed within a geographical area where he maintains his office. . . ." Adcock-Ladd, 227 F.3d at 350. "The appropriate rate . . . is not necessarily the exact value sought by a particular firm, but is rather the market rate in the venue sufficient to encourage competent representation." Gonter v. Hunt Valve Co., 510 F.3d 610, 618 (6th Cir.2007). BCBS does not dispute that the relevant community is the Eastern District of Michigan.
Prevailing attorneys must justify the reasonableness of a requested fee award. Blum, 465 U.S. at 896 n. 11, 104 S.Ct. 1541. "To inform and assist the court in the exercise of its discretion, the burden is on the fee applicant to produce satisfactory evidence—in addition to the attorney's own affidavits that the requested rates are in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience and reputation." Id.
BCBS argues that Mr. Mantese's law partners are not entitled to the 75th percentile rate of $350 per hour. BCBS contends that Plaintiffs provided no evidence to justify their claimed billing rates, and, accordingly, they should receive at most, $282 per hour, which is the average rate for equity partners. The Report acknowledges that Plaintiffs did not provide information regarding their experience. Nevertheless, the award is supported by the complexity of the case and the Mantese firm's experience in handling matters of this sort.
BCBS asserts that the Report fails to explain why Mr. Conway is entitled to $350 per hour and urges that $300 per hour is a more than adequate rate. Again, the rate is adequately supported by the nature of the case as well as by Mr. Conway's experience.
BCBS contends that the Report fails to explain its recommended rate of $250 per hour for all of Mr. Mantese's associates. As the Report notes, Plaintiffs did not present the magistrate judge with information about their individual experience levels even though they had the opportunity to do so. Still, the rate, which is above the 75th percentile rate for associates, is justified by the firm's experience in this type of case and the difficulty of the case itself.
BCBS points to the Report's statement that "BCBS asserts that $113,802.50 of the Mantese Firm attorney's fees (through September 2011) and $187,994.00 of the Conway Firm attorney's fees, or a total of $301,796.50, should not be allowed for the reasons stated in their response." Report 20. BCBS notes that the Report fails to mention that, after Plaintiffs submitted an additional one and a half years of billing records for the Mantese Firm, BCBS submitted a revised spreadsheet, demonstrating that at least $641,269.00 should not be allowed. Although the Report may have misstated the exact amount of fees that BCBS challenged, the magistrate judge is clearly well-versed in BCBS' legal position. In light of the entire record, including the spreadsheet that BCBS contends was not reviewed, the magistrate judge's decision is appropriate.
BCBS also criticizes the Report's order that Plaintiffs submit an updated fee demand figure, with which Plaintiffs have already complied pending the Court's ruling on the Report and Recommendation. BCBS contends that these additional submissions are inappropriate and prejudicial. Nevertheless, "[s]upplemental attorneys' fees can be awarded in the same manner as attorneys' fees." McCombs v. Meijer
BCBS seeks an opportunity to object to the adjusted fee and cost figure and to any records Plaintiffs will submit. BCBS envisions objecting to the updated fee demand that will be considered by the magistrate judge. This Court sees the possibility that this will lead to an endless dispute regarding attorney's fees that will lead Plaintiffs to continue to generate fees that BCBS will challenge. Upon the entry of this order, therefore, the magistrate judge will merely consider and calculate the award of attorney's fees based on this order. BCBS will make no more new filings with the magistrate judge, but it will have the opportunity to file objections to the order before a final award is approved by this Court.
The Report imposes a 5 percent reduction for numerous entries of block billing and those with vague time periods in the record. Plaintiffs argue that because the Report cites cases that imposed a 10 percent reduction for similar deficiencies, the reduction should be increased to at least 10 percent.
"When confronted with a request for the award of attorney's fees in the face of inadequate billing records, courts in the Sixth Circuit often apply across-the-board fee reductions." Grant v. Shaw Envtl., Inc., No. 08-cv-350, 2013 WL 1305599, at *7 (E.D.Tenn. June 12, 2013). BCBS puts forth no case that requires the reduction to be 10 percent or greater. The Report properly notes the magistrate judge's discretion in determining the amount of the reduction. The Report also describes the vague and block billed entries it opposes in great detail. The Court agrees that the reduction is reasonable based on the records presented by Plaintiffs and will deny BCBS' objection.
The Report accepts the Mantese Firm's billing in quarter-hour increments and the Conway Firm's billing in tenth of an hour increments, determining that quarter-hour increments are not unreasonable in the instant case. BCBS objects that all time should be reduced to tenth of an hour increments because the Report has given no basis for its decision and the time records demonstrate that the reduction is required.
"Whether quarter-hour billing is reasonable is a matter within the discretion of the district court." Yellowbook, Inc. v. Brandeberry, 708 F.3d 837, 849 (6th Cir.2013). Some district courts do not reduce the requested fee awards when it is the regular practice of the law firm to bill in quarter-hour increments. See Does I, II, III v. Dist. of Columbia, 448 F.Supp.2d 137, 142 (D.D.C.2006) (collecting cases). "It would be inappropriate judicial micro-management to mandate billing practices by reducing a private firm's properly and adequately documented attorney's fees from the standard billing increment employed by the firm." Causeway Med. Suite v. Foster, No. 99-509, 2000 WL 533515, at *3 (E.D.La. May 2, 2000). Accordingly, it is reasonable to accept the Mantese Firm's regular practice of billing in quarter-hours.
BCBS provides no more than speculation that the Mantese Firm records contain
BCBS asks that the Court perform the calculation that the district court performed in Yellow Book USA Inc. v. Brandeberry, No. 10-cv-025, 2013 WL 2319142 (S.D.Oh. May 28, 2013),
Thus, BCBS' objection regarding quarter-hour billing is denied.
The Report concludes that the time entries in which (1) six attorneys billed more than 35 hours for Plaintiffs' motion for summary judgment from July 18, 2011 to July 21, 2011, (2) five attorneys billed more than 27 hours for Plaintiffs' response to BCBS' motion for reconsideration from July 30, 2011 through August 2, 2011, and (3) attorneys billed more than 53 hours for preparation for a hearing from June 8, 2011 through June 23, 2011, all of which were identified in BCBS' spreadsheet of objections to Plaintiffs' billing records, are excessive and unreasonable, and, therefore, their amounts should be reduced by 25 percent. Report at 34.
BCBS argues that the Report erroneously relies only on examples of overbilled tasks that were made for illustrative purposes in its briefing because of space constraints and should have scrutinized the time records more rigorously. BCBS also contends that Report should have analyzed its request that time billed for discovery be disallowed before rejecting it. The Report and a review of the record indicate that the magistrate judge has carefully considered all arguments regarding the allegations of overbilling. The Report simply reflects that the magistrate judge does not find BCBS' arguments persuasive rather than that he failed to rigorously scrutinize the record. The Court agrees that the reduction as made by the magistrate is reasonable.
BCBS also argues that the record shows an "inference that plaintiff's counsel improperly recorded the case time actually spent on task for one or more [ ] other cases." Objections 13. This argument, based on similar dates and amounts of time billed to other similar cases litigated by Plaintiffs' counsel, is speculative in light of Plaintiffs' reasonable argument that similar tasks can be done on similar pending cases on the same day to increase efficiency.
In addition, BCBS contends that it is disingenuous that counsel spent hours researching issues on which they were supposedly experts. Nevertheless, the instant case is a complex ERISA class action. "This argument seems to suggest that great attorneys do not have to work hard. In the Court's experience, the exact opposite is true. Most great attorneys realize that to achieve a goal, much hard work and toil is necessary, especially when entering uncharted legal territory." Cmtys. for Equity
Finally, BCBS argues that the 25 percent reduction for each task, rather than a global reduction in fees or a determination of a reasonable amount of time for each specific task, is arbitrary and inadequate. Although BCBS points to district courts that have taken each of the proposed routes, it has not presented any authority that the magistrate judge's decision here is improper or outside of his discretion. Thus, because the Court finds that the magistrate judge's conclusions regarding overbilling are reasonable, they will be adopted.
The Report concludes that attorney time billed for "telephone call for client" and attorney travel time is compensable, but attorney time for clerical tasks such as "file organization" and "proofread correspondence and filing" is not compensable and that fees for such time should be excluded. Report at 33. As a result, the Report recommends excluding the time entries labeled "Retrieved documents from Wayne Library," "File organization for case," "Continue and complete file organization," and "Proofread correspondence and filing." Id. at 33-4. The Report also concludes that the time the attorneys spent on press releases was minimal and will not be excluded. Id. at 34. BCBS objects that the attorney travel time and time spent on press releases should not be recoverable.
"`[T]ravel time is ordinarily billable and therefore appropriately included in an award of attorney's fees . . . `when the requested time is reasonable.'" Caudill v. Sears Transition Pay Plan, No. 06-cv-12866, 2011 WL 1595044, at *15 (E.D.Mich. April 26, 2011) (quoting Smith v. Columbia Gas of Ohio Grp. Med. Benefit Plan, No. 06-cv-00708, 2010 WL 319953, at *8 (S.D.Ohio Jan. 20, 2010)). BCBS challenges time Mr. Conway billed to travel to and from Lansing to attend a Michigan State Senate hearing on bills related to mandated coverage for the treatment of autism. BCBS contends that the attendance was not necessary to the case, having BCBS pay for travel from metropolitan Detroit to Lansing is unreasonable, and there is no justification for the amount of time spent. Plaintiffs have explained that the purpose of the travel was reasonable because BCBS moved for decertification of the class as moot based on the proposed legislation. The Court finds that reasonable travel time has been requested, particularly as Plaintiffs note that they have reduced the requested time to four hours in their adjusted request made in response to the Report.
"Some courts have found fees related to press relations reimbursable to the extent the hours expended `were reasonably necessary for the proper prosecution of the lawsuit,'" meaning "only those discussions with the press that contributed to communication with the class in a meaningful way and were necessary for the prosecution of the suit." Gratz v. Bollinger, 353 F.Supp.2d 929, 941 (E.D.Mich.2005) (quoting Keyes v. Sch. Dist. No. 1, Denver, Colorado, 439 F.Supp. 393, 408 (D.Colo. 1977)). Plaintiffs have made such a showing in their fee request, which justifies the
Therefore, the Court will deny BCBS' objection regarding non-compensable tasks.
BCBS objects that the Report did not thoroughly consider the two detailed spreadsheets it submitted describing each improper time entry. BCBS contends that it was improper for the Report to refuse to deduct time when Plaintiffs did not specifically explain why each of the challenged time entries were reasonable. BCBS, however, does not go into detail to explain why each of the entries is unreasonable except for the conclusory statements in the spreadsheets, such as "Excessive." As discussed above, having considered the entire record, the Court finds that the fee awarded by the magistrate judge is reasonable.
In its objection brief, BCBS provides detail about only one more allegedly overlooked argument: that the request of 176.8 hours for the fee motion is excessive. BCBS relies on the general rule the Sixth Circuit set forth in Coulter v. State of Tennessee, 805 F.2d 146 (6th Cir.1986), whereby "[i]n the absence of unusual circumstances, the hours allowed for preparing and litigating the attorney fee case should not exceed 3% of the hours in the main case when the issue is submitted on the papers without a trial." Id. at 151. BCBS claims that the total request at bar constitutes more than eight percent of the total fees and should be limited to three percent.
In Klein v. Cent. States, Southeast and Southwest Areas Health & Welfare Plan, 621 F.Supp.2d 537 (N.D.Ohio 2009), the district court found that ERISA claims present unusual circumstances that make Coulter inapplicable. Id. at 544-45. The court reasoned that the limitation should not apply to cases in which most of an attorney's work occurs in administrative proceedings before the case reaches the district court, which disadvantages plaintiffs' counsel. Id. Accordingly, the refusal to limit percentage of time devoted to the fee request to three percent of the total is not unreasonable. It also cannot be understated how vigorous BCBS' challenge to the fee award has been, which is made obvious by the extensive briefing before the magistrate judge, the numerous objections to the Report, and, indeed, the length of this order adopting the Report. "It is reasonable to expect that Plaintiff's counsel would have to spend more than the normally anticipated amount of time to respond to this lengthy, broad-based attack on the request for [ ] fees." Lee v. Javitch, Block & Rathbone, LLP, 568 F.Supp.2d 870, 874 (S.D.Ohio 2008). Accordingly, BCBS' objection is denied.
BCBS argues that Plaintiffs' fee award should be reduced because it contends that Plaintiffs achieved only "insignificant results." As the Report explains, the results in this case are not insignificant. The Court declared BCBS' policy arbitrary and capricious and ordered Plaintiffs' claims to be remanded to BCBS for redetermination, which is actual relief on the merits for Plaintiffs. Plaintiffs also note that, a little more than two weeks after Judgement was entered in this case, BCBS reversed its longstanding policy that ABA was experimental and issued a new policy statement taking the position
BCBS contends that success was limited because the Court decertified the majority of Plaintiffs' class. The entire class, however, was not decertified and the remaining class members received the result of redetermination. As discussed in Section I infra, attorney's fees may be awarded when there is some success on the merits. As a result, BCBS is incorrect in stating that the magistrate judge erred when he relied on Farrar v. Hobby, 506 U.S. 103, 113 S.Ct. 566, 121 L.Ed.2d 494 (1992) for the proposition that a Plaintiff prevails "when the actual relief on the merits of his claim materially alters the legal relationship between the parties by modifying the defendant's behavior in a way that directly benefits the plaintiff." Id. at 111-12, 113 S.Ct. 566.
The reasoning set forth on this issue in Heath v. Metro. Life Ins. Co., No. 09-cv-0138, 2011 WL 4005409 (M.D.Tenn. Sept. 8, 2011) is directly applicable to the instant case: "It would seem absurd to classify the [] decision to remand the case back to Defendant for further review as `limited success' in this situation. . . . It cannot be that an inadequate review that produces an insufficient basis for a benefits decision by the insurer or the court can result in a fee reduction due to the plaintiff's limited success in court." Id. at *11. See Cockrell v. Hartford Life & Accident Ins. Co., No. 11-2149, 2013 WL 2147454, at *7 (W.D.Tenn. May 15, 2013) ("Although this Court did not grant Cockrell's request for disability benefits, it did find that Hartford's denial of benefits was arbitrary and capricious. . . . Hartford may not benefit from a reduction in attorney's fee award when it was Hartford's inadequate and cursory review that prompted this litigation. Cockrell, like the plaintiff in Heath, has achived a level of success in security a remand of her case that entitles her to an undiluted award of attorney's fees.").
Furthermore, BCBS' statement that class recovery in the case will likely benefit seven people at the amount of $200,000 is speculative. All the members of the potential class, which consists of 120 members, benefitted by having their claims remanded whether or not BCBS determines they are entitled to benefits after readministration.
The fact that the class size certified is smaller than the class size plaintiffs originally sought is of no moment since Plaintiffs were successful. See Caudill, 2011 WL 1595044, at *16. Again, BCBS' attempts to distinguish Caudill from the instant case because it involved a $2.6 million money judgment for which the amount of attorney's fees was a fraction is flawed because it is based on a speculative and self-serving characterization of the monetary amount of benefits it may ultimately disperse to class members. BCBS' request that the fee award should be limited to the 1/3 typical percentage fee in private contingency arrangements has no basis in law or logic when applied to the rationale of the ERISA fee-shifting statute. Moreover, it is of no consequence that the Court approved a negotiated settlement of a much lower amount between Plaintiff's counsel and BCBS in an earlier case involving similar claims. See Johns v. Blue Cross Blue Shield of Michigan, No. 08-cv-12272 (E.D.Mich.).
BCBS also claims that any hours spent opposing BCBS' post-judgment proposed letter to the potential class members should be disallowed because BCBS prevailed on that motion and that Plaintiffs should not be able to recover any time for compiling the proposed administrative record which the Court ultimately struck. Nonetheless, "the standard is whether a reasonable attorney would have believed
BCBS challenges the Report's recommendation to award Plaintiffs costs in addition to those listed in 28 U.S.C. § 1920, which enumerates the type of costs that a judge or clerk of any court may tax, arguing that it is not possible to do so.
As with attorney's fees, the Court has broad discretion to award costs to parties in ERISA action who have shown some degree of success on the merits. See 29 U.S.C. § 1132(g)(1) (providing that the Court "in its discretion may allow a reasonable attorney's fee and costs of action to either party."). Civil Rule 54(d)(1) provides that "unless a federal statute, these rules, or a court order provides otherwise, costs—other than attorney's fees—should be allowed to the prevailing party." Fed. R.Civ.P. 54(d)(1). Furthermore, "[i]n a certified class action, the court may award reasonable attorney's fees and nontaxable costs that are authorized by law or by the parties' agreement" upon motion under Civil Rule 54(d)(2), subject to Civil Rule 23(h) procedures. Fed.R.Civ.P. 23(h). ERISA is silent on those costs other than attorney's fees that the Court may tax under the authority of Civil Rule 54(d).
BCBS is correct that some district courts in the Sixth Circuit have not permitted recovery for costs that are not allowed by § 1920, although the Sixth Circuit itself has not ruled on the issue.
The Court agrees with the magistrate judge's reasoning and that of the courts cited above that the award of costs is appropriate. Thus, BCBS' objection is denied.
BCBS' final objection is that the recommended reduction of 10 percent in the request for copying costs should be increased to 80% because, in Moore, 2013
The magistrate judge has properly determined that an award of fees and costs is not premature. The hourly rates recommended by the Report are all reasonable. In light of the entire record, including the spreadsheet that BCBS contends was not reviewed, the magistrate judge's decision is appropriate regarding hours. The 5 percent reduction for numerous entries of block billing and numerous vague time entries in the record is reasonable. The Report appropriately accepts both the Mantese Firm's and the Conway Firm's billing increments. The magistrate judge has made a reasonable determination regarding reductions for excessive billing. Both the travel time and fees related to press relations are compensable, and there is no longer a dispute regarding the press relations fees since Plaintiffs have voluntarily withdrawn that request. BCBS' objection that the magistrate judge overlooked its other arguments is baseless.
Furthermore, there is no basis to reduce the fee award for "insignificant results" because the class members benefitted from readministration of their claims even though Plaintiffs did not succeed in certifying the entire class they put forward.
Moreover, the decision to award costs is appropriate. In addition, the 10 percent reduction in reduction for costs related to copying is reasonable.
Therefore, the Court will adopt the Report as a whole and deny all of BCBS' objections. The Court accepts the recommendation that the magistrate judge will recommend a final award based on the adjusted final request that Plaintiffs have already submitted. (See ECF no. 176). Once the magistrate judge recommends an award, BCBS may object to the recommendation. To avoid the endless cycle of challenges to fee awards alluded to above, Plaintiffs must file any additional requests for attorney's fees covering a period beyond that discussed in the Report by motions for supplemental requests which the Court will address separately from this initial award.
MICHAEL HLUCHANIUK, United States Magistrate Judge.
Plaintiffs filed this putative class action on December 16, 2010, seeking benefits they were allegedly denied for Applied Behavior Analysis ("ABA") therapy for autism, as well as declaratory and injunctive relief. (Dkt. 1). The Court subsequently certified a class of individuals enrolled in or covered by a plan offered or administered by defendant Blue Cross Blue Shield of Michigan ("BCBS") and governed by ERISA who were denied a claim for ABA therapy on the grounds that, pursuant to BCBS's 2010 Medical Policy, BCBS deemed the treatment to be "experimental." (Dkt. 35, 60, 124). On March 30, 2013, 2013 WL 4413310, the Court entered judgment against BCBS and in favor of plaintiffs, declared that BCBS's characterization of ABA therapy as "experimental or investigative," as applied to the claims of the class members, was and is arbitrary and capricious, overturned all denials of benefits on that basis, ordered that the class members' claims for coverage of ABA therapy be remanded to BCBS for re-administration, and ordered BCBS to provide notice to the class at BCBS's sole expense. (Dkt. 125, 126).
On May 1, 2013, plaintiffs filed the instant motion for attorney's fees and costs pursuant to § 502(g)(1) of ERISA, Fed. R.Civ.P. 23(h) and 54(d)(2), L.R. 54.1 and 54.1.2, and 28 U.S.C. § 1920. (Dkt. 128). BCBS filed a response in opposition to plaintiffs' motion on May 20, 2013. (Dkt. 130). Plaintiffs filed a reply brief on June 6, 2013 (Dkt. 136), and BCBS filed a surreply brief on October 15, 2013. (Dkt. 148). The parties filed separate "Joint" Statements of Resolved and Unresolved Issues on October 16, 2013. (Dkt. 150, 151). Pursuant to notice, a hearing was held before the undersigned on October 23, 2013 (Dkt. 141), and plaintiffs' motion was taken under advisement. The parties subsequently filed several "notices" of supplemental authority, as well as response and reply briefs regarding those notices. (Dkt. 160-66). This matter is now ready for report and recommendation.
For the reasons set forth below, the undersigned
Section 502(g)(1) of ERISA provides: "In any action under this title . . . 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." 29 U.S.C. § 1132(g)(1); see also Fed.R.Civ.P. 23(h) (court may award fees and nontaxable costs in a certified class action). The United States Supreme Court has held that a claimant need not be a "prevailing party" to be eligible for attorney's fees under ERISA's fee-shifting statute; rather, the court may award fees and costs under the statute if the party requesting the award shows he or she obtained "some degree of success on the merits." Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 254, 130 S.Ct. 2149, 176 L.Ed.2d 998 (2010). The Court explained
However, "[e]ven under this more relaxed threshold for eligibility, [plaintiffs] must demonstrate [their] entitlement to attorney's fees." Geiger v. Pfizer, Inc., 549 Fed.Appx. 335, 338 (6th Cir.2013) (citing Foltice v. Guardsman Products, Inc., 98 F.3d 933, 936 (6th Cir.1996) ("[O]ur circuit recognizes no presumption as to whether attorney's fees will be awarded" to the prevailing party in an ERISA action)). In exercising its discretion as to whether to award fees under § 1132(g), this Court is to consider the five factors established by the Sixth Circuit in Secretary of Department of Labor v. King, 775 F.2d 666 (6th Cir.1985):
Id. at 669. These King factors are not statutory and thus should be viewed flexibly, see id., and "[n]o single factor is determinative." Moon v. Unum Provident Corp., 461 F.3d 639, 642-43 (6th Cir.2006).
First, there can be no question under Hardt and Sixth Circuit precedent that plaintiffs have achieved "some success on the merits." Plaintiffs were able to persuade the Court that the plan administrator's characterization of ABA therapy as "experimental or investigative," as applied to the claims of the class members, was and is arbitrary and capricious and that it should not be upheld under ERISA. The Court reversed the plan administrator's decision and ordered that the class members' claims for coverage of ABA therapy be remanded to BCBS for re-administration consistent with the Court's Opinion and Order. The Court stated that plaintiffs' claims for coverage were payable, other than those claims denied for other "specific valid reasons, plainly having nothing to do with the experimental/investigative exclusion," such as claims denied because they are time-barred. (Dkt. 125). The undersigned disagrees with BCBS's assertion, raised for the first time in its sur-reply brief, that an award of fees and costs is premature because the parties do not know the number of class members
Once a court determines that attorney's fees are available because a party has achieved "some degree of success on the merits," the court looks to the five King factors to help determine whether or not to award fees. See Ciaramitaro v. Unum Life Ins. Co. of Am., 521 Fed.Appx. 430, 437 (6th Cir.2013) ("[W]hile the five-factor King test is not required [after Hardt], it still has vitality in helping courts determine whether or not to award fees to a party that achieves some degree of success on the merits.") (citations omitted). Plaintiffs argue that they meet all five of the King factors. Defendant BCBS disputes that plaintiffs satisfy the first, third and fifth factors, and asserts that plaintiffs' motion for attorney's fees should be denied.
The first King factor is the degree of culpability or bad faith of the opposing party. Plaintiffs argue that BCBS's reliance on and defense of its unsupported policy on ABA therapy reflects both culpability and a self-serving, deliberate attempt to avoid paying for effective ABA therapy to its plan participants. Plaintiffs assert that the Court has held that BCBS's policy was "internally inconsistent, ambiguous, and, most fatally, not supported by the evidence in the record." (Dkt. 125, p. 18). BCBS responds that an arbitrary and capricious denial of benefits does not necessarily indicate culpability or bad faith. BCBS asserts that its 2010 Medical Policy Statement was the result of critical review, and although the Court disagreed with the conclusion in the 2010 Statement, nowhere in its opinion did this Court hold that BCBS acted in bad faith.
In remanding the benefits determination to BCBS, this Court determined that BCBS's denial of benefits was arbitrary and capricious. The undersigned notes that BCBS correctly states that "an arbitrary and capricious denial of benefits does not necessarily indicate culpability or bad faith." Heffernan v. UNUM Life Ins. Co. of Am., 101 Fed.Appx. 99, 109 (6th Cir. 2004). However, as the Sixth Circuit subsequently explained in Gaeth v. Hartford Life Insurance Company, 538 F.3d 524 (6th Cir.2008), "the court's case law by no means precludes a finding of culpability or bad faith based only on the evidence that supported a district court's arbitrary-and-capricious determination." Id. at 530 (emphasis in original, citing Moon, 461 F.3d at 644-45 (finding that the plan administrator was culpable for the same reason that its rejection of a disability claim was arbitrary and capricious—that is, it adopted wholesale the opinion of a physician in its employ "who based his findings on selective
As to the third King factor—the deterrent effect of an award of attorney's fees on other persons under similar circumstances—plaintiffs argue that an award of fees here sends a clear message to insurers that they must ensure that their coverage policies are properly supported and not arbitrary and capricious. BCBS contends that an award of fees is not necessary to deter future conduct in light of the fact that Michigan now mandates broad ABA coverage. Plaintiffs respond that the Michigan mandate does not apply to self-funded plans, and thus BCBS could continue to deny ABA coverage to all self-funded plan participants, but for the Court's ruling in this case. "The key question in analyzing this third factor is . . . whether the fee award would have a deterrent effect on other plan administrators." Gaeth, 538 F.3d at 532 (emphasis added). The undersigned suggests that an imposition of attorney's fees and costs here will serve to deter other plan administrators from implementing internally inconsistent and ambiguous policies that are not properly supported by the record evidence, and thus the third factor weighs in favor of the plaintiffs. See Caudill v. Sears Transition
Finally, the fifth King factor addresses the relative merits of the parties' positions, which requires a consideration of the relative strength of the parties' positions. BCBS argues that plaintiffs' motion should be denied because, it contends, plaintiffs achieved only partial success in that the Court's decision was narrower in scope than what plaintiffs' initially sought. Specifically, plaintiffs stipulated to the removal of the subclass of individuals deterred from making a claim for ABA therapy by BCBS's policy, and the Court narrowed the class to only those whose claims were denied on the basis of the 2010 Statement. (Dkt. 124). Plaintiffs respond that they have achieved the first ever litigated class judgment on the merits providing autism benefits under ERISA, and that the Court modified the class to focus on the 2010-2012 policy statement and that plaintiffs agreed to exclude the "deterreds" subclass in no way lessens plaintiffs' entitlement to fees and costs. The undersigned notes that plaintiffs here have overcome the arbitrary and capricious standard of review, which is highly deferential to the insurer, and "a number of district courts in the Sixth Circuit have found that where a plaintiff overcomes an arbitrary and capricious standard of review, and obtains a remand to the plan administrator, the plaintiff's position had more merit." Blajei, 2010 WL 3855239, at *8 (collecting cases); see also Thies, 839 F.Supp.2d at 894 ("Based on the decision to remand the case, the Court finds that the Plaintiffs' case is the one having more relative merit," even though there has not been a final decision by the insurance company on remand). In remanding the benefits determination to BCBS,' the Court found that "BCBS's medical policy is internally inconsistent, ambiguous, and most fatally, not supported by the evidence in the record," and thus remanded the class members' claims for ABA therapy for redetermination. The Court further found that "[a]ll class members who made a claim for ABA therapy that was denied by [BCBS] on the grounds that ABA therapy is deemed experimental or investigative shall have their denials overturned
In their motion for attorney's fees and costs, plaintiffs ask the Court to award attorney's fees in the amount of $752,234 for 2015.25 hours of work, as calculated under the "lodestar method." (Dkt. 128). Plaintiffs subsequently amended that request in their Joint Statement to fees in the amount of $829,651, for additional work performed to date. (Dkt. 150). "The primary concern in an attorney fee case is that the fee awarded be reasonable, that is, one that is adequately compensatory to attract competent counsel yet which avoids producing a windfall for lawyers." Geier v. Sundquist, 372 F.3d 784, 791 (6th Cir.2004). The "lodestar" method is the "proper method for determining the
A reasonable hourly rate is generally calculated according to the "prevailing market rates in the relevant community." Blum v. Stenson, 465 U.S. 886, 897, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984). Under Sixth Circuit law, "the `prevailing market rate' is that rate which lawyers of comparable skill and experience can expect to command within the venue of the court of record, rather than foreign counsel's typical charge for work performed within a geographical area where he maintains his office. . . ." Adcock-Ladd, 227 F.3d at 350. The Sixth Circuit has further held that "[t]he appropriate rate . . . is not necessarily the exact value sought by a particular firm, but is rather the market rate in the venue sufficient to encourage competent representation." Sykes v. Anderson, 419 Fed.Appx. 615, 618 (6th Cir.2011) (quoting Gonter v. Hunt Valve Co., 510 F.3d 610, 618 (6th Cir.2007) (district court did not abuse its discretion by choosing billing rate that fell about halfway between the parties' requested rates)); see also Coulter v. Tennessee, 805 F.2d 146, 148 (6th Cir. 1986) (reviewing 131 attorney fee shifting statutes, including ERISA, and noting "[t]he statutes use the words `reasonable' fees, not `liberal' fees. Such fees are different from the prices charged to well-to-do clients by the most noted lawyers and renowned firms in a region. Under these statutes a renowned lawyer who customarily receives $250 an hour in a field in which competent and experienced lawyers in the region normally receive $85 an hour should be compensated at the lower rate.").
Prevailing attorneys must justify the reasonableness of a requested fee award. Blum, 465 U.S. at 896 n. 11, 104 S.Ct. 1541. "To inform and assist the court in the exercise of its discretion, the burden is on the fee applicant to produce satisfactory evidence—in addition to the attorney's own affidavits—that the requested rates are in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience and reputation." Id.; see also Reed, 179 F.3d at 472 (the party requesting the fee award bears the burden to produce evidence in support of the rates claimed).
Here, the relevant community is the Eastern District of Michigan. See Adcock-Ladd, 227 F.3d at 350 (the "relevant community" is the legal community within the court's territorial jurisdiction). Plaintiffs submit an hourly rate of $400 to $500 for partners, $310 for associates, and $120 for legal assistants, and assert that these rates are reasonable. Plaintiffs state that the State Bar of Michigan's 2010 Billing Rate for the 95th percentile for managing partners is $500 and for associates is $310, and that the 95th percentile hourly rate for attorneys practicing Consumer Law is $515 and for attorneys practicing Insurance Law is $500. Plaintiffs also assert
First, addressing the claimed hourly rates of $500 for Mr. Mantese and $400 for his partners, the undersigned notes that plaintiffs list the 95th percentile rates for partners ($500-$515) and Mr. Mantese avers that "rates of $500 per hour for senior partners to $310 for associates are fair and reasonable market rates" "[f]or attorneys practicing in the highly specialized field of complex commercial litigation." (Dkt. 128-24, 128-25). While Mr. Mantese and his partners might very well be able to command rates of $400 to 500 per hour in the open market for legal services, the test for awarding fees is not primarily the worth of the attorney performing the services. See Gonter, 510 F.3d at 618. Rather, the standard is a rate that is sufficient to encourage competent attorneys in the relevant community to undertake the representation of similarly-situated plaintiffs. Id. The 75th percentile hourly rate for a Managing Partner as indicated in the State Bar Survey is $315, and $350 for equity and non-equity partners. For attorneys with between 16 and 35 years of experience, the 75th percentile rate is $300.00 per hour and the 95th percentile rate is $425 to $450 per hour. The 75th percentile hourly rate for attorneys practicing Consumer Law is $350, and for attorneys practicing Insurance Law is $300. Considering all of these factors the undersigned concludes that $425.00 per hour is a reasonable attorney fee for the hours submitted by Mr. Mantese and that $350.00 per hour is a reasonable attorney fee for the hours submitted by Mr. Mantese's partners.
Second, addressing Mr. Conway's claimed hourly rate of $400, the undersigned notes that Mr. Conway is a sole practitioner. The 75th percentile hourly rate for sole practitioners is $250 and the 95th percentile hourly rate is $350 in the State Survey. For attorneys with 16 to 25 years in practice, the 75th percentile hourly rate is $300 and the 95th percentile hourly rate is $450. Considering all of these factors, the undersigned concludes that $350.00 per hour is a reasonable hourly
Finally, as for the associates at the Mantese Firm, plaintiffs assert that all associates, regardless of experience level, are entitled to an hourly rate of $310, which represents the 95th percentile hourly rate for associates in the State Bar Survey. The undersigned notes that plaintiffs have not submitted any information on the experience level of those associates who worked on the case, including the years in practice for any of those associates, even though BCBS raised the absence of such information in its response to plaintiffs' motion for attorney's fees.
BCBS does not object to any of the hourly rates submitted by the paralegals who represented plaintiffs in this matter and those rates are therefore deemed reasonable.
Plaintiffs originally claimed to have spent a total of 1,975.25 hours prosecuting this action and sought an additional 40 hours to account for future attorney time necessary to complete work on the fee issue, for a total fee request of $752,234 for 2015.25 hours. (Dkt. 128). However, as of the filing of their Joint Statement, plaintiffs claimed to have expended an additional 228.25 hours, increasing their attorney's fees claim to $829,651, with $77,417 in fees incurred since filing the original motion. (Dkt. 150). BCBS argues that plaintiffs' billing records are defective for a number of reasons.
As the Sixth Circuit explained:
United States ex rel. Lefan v. Gen. Elec. Co., 397 Fed.Appx. 144, 148-49 (6th Cir. 2010). It is plaintiffs' burden to document "the appropriate hours expended and hourly rates." Hensley, 461 U.S. at 437, 103 S.Ct. 1933. "Where documentation of hours is inadequate, the district court may reduce the award accordingly." Id. at 433, 103 S.Ct. 1933. And, where the application for fees is voluminous, the court may order an across-the-board reduction in compensable hours. See Communities for Equity v. Michigan High Sch. Athletic Ass'n, 2008 WL 906031, at *4 (W.D.Mich. Mar. 31, 2008) (citation omitted). While "counsel need not `record in great detail' each minute he or she spent on an item. . . `the general subject matter should be identified' [and the billing entries have to be] read in the context of the billing statement as a whole and in conjunction with the timeline of the litigation." Imwalle v. Reliance Med. Products, Inc., 515 F.3d 531, 553-54 (6th Cir.2008).
BCBS argues that both the Mantese and Conway Firms' records contain frequent instances of block billing, and that "[i]n the Sixth Circuit, the law is clear that significant reductions in time are appropriate where block billing is used." Bell v. Prefix, Inc., 784 F.Supp.2d 778, 787 (E.D.Mich.2011). BCBS also complains that the descriptions in plaintiffs' billing records are impermissibly vague. Plaintiffs concede to some block billing and "occasional generally phrased entries," but argue "[b]lock billing is not impermissible," citing Renneker v. Comm'r of Soc. Sec., 2011 WL 6950510, at *8 (S.D.Ohio Dec. 8, 2011), adopted as modified by 2012 WL 12696 (S.D.Ohio Jan. 4, 2012), and that no reduction in fees is warranted. Plaintiffs further assert that they maintained sufficiently detailed records to discern that the time was reasonably expended on this litigation, and that their counsel "is not required to record in great detail how each minute of his time was expended," but rather "should identify the general subject matter of his time expenditures." Hensley, 461 U.S. at 437 n. 12, 103 S.Ct. 1933.
"[B]lock billing refers to the `time-keeping method by which each lawyer and legal assistant enters the total daily time spent working on a case, rather than itemizing the time expended on specific tasks.'" Renneker, 2011 WL 6950510, at *8 (quoting Robinson v. City of Edmond, 160 F.3d 1275, 1285 n. 9 (10th Cir.1998)). It is well-settled that "[t]he documentation offered in support of the hours charged must be of
As far as the undersigned is aware, while the practice of block billing is generally discouraged, the Sixth Circuit has never explicitly rejected that practice. However, courts in this district have addressed block billing and have reduced fees because of a parties' use of vague block billing. See, e.g., United Steel, Paper & Forestry, Rubber, Mfg., Energy, Allied Indus. & Serv. Workers Int'l Union, AFCIO v. Kelsey-Hayes Co., 2013 WL 2634815, at *4 (E.D.Mich. June 12, 2013) (reducing class counsel's requested fees, in part, "because of their use of vague block billing entries such as "review documents," "research legal issues," and "plan strategy")"; Gratz v. Bollinger, 353 F.Supp.2d 929, 939 (E.D.Mich.2005) (reducing the requested fees by ten percent due block billing and vague entries because block billing frustrates the Court's ability to determine whether a reasonable number of hours were expended on each tack). Other courts in the Sixth Circuit similarly recognize that "[c]ourts unquestionably have authority to downwardly adjust the fee claims because of block billing and vague entries." Swapalease, Inc. v. Sublease Exchange.com, Inc., 2009 WL 1119591, at *2 (S.D.Ohio Apr. 27, 2009); see also Heath v. Metro. Life Ins. Co., 2011 WL 4005409, at *10-11 (M.D.Tenn. Sept. 8, 2011) (reducing fees by 20% because counsel's block billing made it impossible to "ensure with a high degree of certainty that the hours allegedly expended were in fact expended in a reasonable, non-duplicative fashion").
Recognizing that the Court does have discretion in this area, the undersigned concludes that the billing entries submitted by plaintiffs contain numerous instances of block billing in which all work by a time keeper performed on a particular date is included, without specifying how much time was allotted to each individual task, such as:
(Dkt. 128-4; Dkt. 131-1). In addition, the billing records contain numerous vague time entries throughout, generally referring to tasks, meetings or communications, such as "Meeting with GM," "emails," "Conference with Co-Counsel," "Consult with DH," "reviewed correspondence," "research," and "telephone call with JC," without any indication of the general subject matter of such communications or tasks, the number of communications or
BCBS contends the Mantese Firm bills in quarter-hour increments, and that while the Conway Firm bills in tenths of an hour increments, Mr. Conway did not bill less than .3 hours for any tasks performed. BCBS asserts that plaintiffs' attorney's fees should be reduced because the larger billing increments likely led to overbilling in many instances. Plaintiffs respond that BCBS's argument is baseless and "[a]s long as the total number of billable hours is reasonable in relation to the work performed, the award should be affirmed," quoting B & G Mining, Inc. v. Dir., Office of Workers' Comp. Programs, 522 F.3d 657, 666 (6th Cir.2008).
The Sixth Circuit recently stated that "[w]hether quarter-hour billing is reasonable is a matter within the discretion of the district court." Yellowbook, Inc. v. Brandeberry, 708 F.3d 837, 849 (6th Cir.2013) (citing Bench Billboard Co. v. City of Toledo, 499 Fed.Appx. 538, 549 (6th Cir.2012) (upholding 7.5% reduction for unreasonableness), cert. denied, ___ U.S. ___, 133 S.Ct. 1252, 185 L.Ed.2d 181 (2013)). As the district court noted on remand, "[a]s one district court has observed, `very few telephone calls last more than one-tenth of an hour and . . . it rarely takes more than one-tenth of an hour to read an incoming letter or write a short outgoing letter.'" Yellow Book USA, Inc. v. Brandeberry, 2013 WL 2319142, at *8 (S.D.Ohio May 28, 2013) (quoting In re Tom Carter Enters., Inc., 55 B.R. 548, 549 (Bankr.C.D.Cal. 1985)). The Sixth Circuit explained, however, that because the concern with quarter-hour increments is over-billing, only fee reductions, not fee denials, are a proper exercise of the court's discretion. Yellowbook, 708 F.3d at 849 (explaining that the purpose of reductions is to counter over-billing, not punish the failure to use
BCBS alleges that plaintiffs have improperly billed time for administrative and other non-compensable tasks and that plaintiffs have grossly overstaffed and overbilled this case from the start, noting that eight of the nine attorneys at the Mantese Firm have billed time on this matter, in addition to Mr. Conway and paralegal time from both firms. BCBS asserts, as an example, that six attorneys allegedly worked on plaintiffs' July 2011 summary judgment motion and billed in excess of 35 hours on this motion, which was subsequently denied because it was not based on the administrative record. (Dkt. 63). BCBS further contends that plaintiffs' counsel spent over 53 hours preparing for and arguing two motions in one hearing—plaintiffs' motion for class certification and BCBS's motion for summary judgment—which time did not include the time the firms spent drafting the underlying briefs on the two motions. BCBS asserts that this is a gross duplication of effort and an unreasonable amount of time to bill for these two discrete tasks. And, BCBS argues, plaintiffs' counsel billed for discovery even after the Court ordered, on December 16, 2011, that the case was to be decided on the administrative record alone. BCBS states that this court has held "[w]hile a party is certainly entitled to having two attorneys represent him, the Court finds that it is not reasonable to consistently bill a party for two attorneys to do the same work/review each other's work." Bell, 784 F.Supp.2d at 787.
Plaintiffs argue in response that they did not overstaff or overbill this case, but that the time billed was necessary because of the significant complexity of both the scientific and legal issues in this case and the difficulty of opposing a well-funded opponent. Plaintiffs also assert that time spent on discovery is compensable and reasonable, given that the scheduling order provided for discovery to be completed by November 30, 2011, and BCBS itself served the first discovery in this case on June 15, 2011, and that plaintiffs had reason to seek discovery here, given BCBS's dual role as payor and administrator, citing Moss v. Unum Life Ins. Co., 495 Fed. Appx. 583, 596-97 (6th Cir.2012) ("[D]iscovery is limited in cases arising under ERISA" but is allowed in order to allege "bias" on the part of the administrator).
BCBS also argues that the Court should disallow fees expended on publicity and clerical and administrative tasks (such as "file organization," "work on press release," "numerous calls and emails from media," and "proofread correspondence and filing"), as well as for time spent before plaintiffs' engagement of the Mantese Firm. Plaintiffs respond that they did not include any "non-legal" tasks in their billing entries, and that the alleged non-legal tasks BCBS raises were inextricably intertwined with purely legal tasks performed by attorneys. Plaintiffs also contend that the "media" or "public relations" time entries for press releases were part of plaintiffs' ongoing and important obligations to initiate and maintain communication with as many class members as possible regarding this case. Regarding the pre-litigation
Statutes conferring attorney's fees on prevailing parties are "not designed as a form of economic relief to improve the financial lot of attorneys, nor were they intended to replicate exactly the fee an attorney could earn through a private fee arrangement with his client." Coulter, 805 F.2d at 149 n. 4 (citation omitted); see also Ursic v. Bethlehem Mines, 719 F.2d 670, 677 (3d Cir.1983) ("Nor do [courts] approve the wasteful use of highly skilled and highly priced talent for matters easily delegable to non-professionals or less experienced associates. Routine tasks, if performed by senior partners in large firms, should not be billed at their usual rates. A Michelangelo should not charge Sistine Chapel rates for painting a farmer's barn."). When determining whether hours claimed by a party were reasonably expended, "the standard is whether a reasonable attorney would have believed the work to be reasonably expended in pursuit of success at the point in time when the work was performed." Wooldridge v. Marlene Indus. Corp., 898 F.2d 1169, 1177 (6th Cir.1990), abrogated on other grounds by Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep't of Health & Human Res., 532 U.S. 598, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001). And, "[w]hile there is nothing inherently unreasonable about making an award for time spent by two or more lawyers engaged in the same representation, counsel bears the burden of showing his or her specific contribution." Gratz, 353 F.Supp.2d at 942 (citation omitted). "[I]f the same task is performed by more than one lawyer, multiple compensation should be denied. The more lawyers representing a side of the litigation, the greater the likelihood will be for duplication of services." Ramos v. Lamm, 713 F.2d 546, 554 (10th Cir.1983), overruled on other grounds by Pennsylvania v. Del. Valley Citizens' Council For Clean Air, 483 U.S. 711, 725, 107 S.Ct. 3078, 97 L.Ed.2d 585 (1987). "Decisions concerning which tasks an attorney performs and involving the allocation of personnel . . . will be left to the discretion of the professional unless the allocation is egregious [because] . . . [c]ompetent counsel are in the best position to determine how their time and the time of their associates can best be allocated." Communities for Equity, 2008 WL 906031 (citations omitted). However, courts have not allowed attorney's fees for administrative tasks such as "organized file," "sorting questionnaires" "filing" and "organize meeting." See, e.g., Caudill, 2011 WL 1595044, at *14-15; Gratz, 353 F.Supp.2d at 941 ("Plaintiffs should not be compensated for the hours their attorneys expended on media and public relations efforts").
BCBS has presented two instances where plaintiffs' billing records show multiple attorneys engaged in the same tasks, with no indication of the specific contribution the various lawyers made with respect to that task beyond simply reviewing another attorney's work. For example, BCBS points out that six plaintiffs' attorneys billed over 35 hours over three days for work reviewing and revising plaintiffs' motion for summary judgment, and billed over 53 hours for preparation for a hearing on two other motions, not counting the time billed briefing the two underlying motions. Further, the undersigned notes, based on its review of BCBS's spreadsheet of objections to plaintiffs' billing records, that five attorneys billed approximately 27 hours working on plaintiffs' response to
Based on the above, the undersigned concludes that attorney time billed for "telephone call with client" is compensable, as is attorney travel time. See Caudill, 2011 WL 1595044, at *15 (travel time is ordinarily billable and therefore appropriately included in an award of attorney's fees). However, attorney time for clerical tasks such as "file organization" and "proofread correspondence and filing" is not compensable and fees for such time should be excluded. See id. at *14-15; Allison v. City of Lansing, 2007 WL 2114726, at *1 (W.D.Mich. July 19, 2007) ("It is not appropriate to award attorney fees for strictly clerical tasks.") (collecting cases). Thus, the following time entries should be excluded:
Plaintiffs assert that the time spent on press releases was part of their ongoing obligation to initiate and maintain communications with as many class members as possible. The undersigned notes that this time is minimal and will not be excluded. Finally, as to BCBS's allegations of overstaffing and excessive billing, while the undersigned generally allows a fair amount of deference to the attorneys as to whether such time was reasonably necessary, the undersigned concludes that the specific time entries identified above—(1) six attorneys billing over 35 hours for plaintiffs' motion for summary judgment on July 18,
BCBS argues that plaintiffs' fee award should be reduced because it contends that plaintiffs achieved only "insignificant results." BCBS asserts that plaintiffs sought certification of a class of claimants going back to 2004, but the final class consisted only of those individuals whose claims were denied based on the 2010 Statement, which consists of, at the very most, 119 persons. BCBS argues that any fee award should be reduced because the Court decertified the majority of plaintiffs' class, citing Gradisher v. Check Enforcement Unit, Inc., 2003 WL 187416 (W.D.Mich. Jan. 23, 2003) (downward adjustment warranted where "[e]ven though a class was certified, no recovery was made on behalf of the class because the Court ultimately decertified the class"). BCBS further argues that Mr. Conway spent at least 12.6 hours compiling and defending plaintiffs' version of the administrative record, which was ultimately struck by the Court. Plaintiffs respond that the time they spent on tasks that were not ultimately successful is still reasonable and compensable, citing Wooldridge v. Marlene Industries Corporation, 898 F.2d 1169, 1177 (6th Cir.1990) ("[T]he standard is whether a reasonable attorney would have believed the work to be reasonably expended in pursuit of success at the point in time when the work was performed.").
The undersigned notes that this case is not like Gradisher, cited by BCBS, because unlike the plaintiff in Gradisher, plaintiffs here have achieved a recovery for the class. A plaintiff prevails "when the actual relief on the merits of his claim materially alters the legal relationship between the parties by modifying the defendant's behavior in a way that directly benefits the plaintiff." See Farrar v. Hobby, 506 U.S. 103, 111-12, 113 S.Ct. 566, 121 L.Ed.2d 494 (1992). Here, the Court declared BCBS's policy arbitrary and capricious and ordered plaintiffs' claims remanded for redetermination, and thus plaintiffs achieved "actual relief on the merits." This is simply not an "insignificant result." See Cockrell v. Hartford Life & Accident Ins. Co., 2013 WL 2147454, at *6-7 (W.D.Tenn. May 15, 2013) (refusing to classify plaintiff's obtaining of a remand as a "partial success" when it was defendant's failure to consider and adequately analyze plaintiff's claim that made judgment in plaintiff's favor possible). Moreover, the undersigned also recognizes that in some cases, such as here, plaintiffs' "claims for relief will involve a common core of facts or will be based on related legal theories." Hensley, 461 U.S. at 435, 103 S.Ct. 1933. When this occurs, counsel's time is devoted more generally to the litigation as a whole, "making it difficult to divide the hours expended on a claim-by-claim basis." Id. "In these circumstances the fee award should not be reduced simply because the plaintiff failed to prevail on every contention raised in the lawsuit." Id. ("Where a plaintiff has obtained excellent results, his attorney should recover a full compensatory fee."). The undersigned therefore declines to reduce plaintiffs' fee award for these reasons. See Caudill,
Plaintiffs seek a fee enhancement "sufficient to compensate for any amount by which the lodestar is less than" the amount stated in the motion. BCBS objects to the request for an enhancement, contending that enhancements should be rarely given and that plaintiffs have not justified an enhancement in these circumstances.
The United States Supreme Court has held that fee enhancements may be awarded in "rare" and "exceptional" circumstances where the lodestar fee would not have been "adequate to attract competent counsel." Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 130 S.Ct. 1662, 176 L.Ed.2d 494 (2010) (attorney seeking a fee enhancement must provide "specific evidence that the lodestar fee would not have been `adequate to attract competent counsel[.]'"). An enhancement may be appropriate when: (1) the hourly rate does not adequately measure the attorney's true market value; (2) the attorney's performance includes an extraordinary outlay of expenses and the litigation is exceptionally protracted; or (3) an attorney's performance involves an exceptional delay in the payment of fees. Id. The undersigned concludes that it is not necessary to enhance the fee award in this case because the lodestar calculated above adequately compensates plaintiffs for the risks inherent in this type of litigation and plaintiff has failed to establish that this is the "rare" or "exceptional" case requiring enhancement of fees. Accordingly, plaintiffs' request for an enhancement is denied.
Plaintiffs originally sought $9,464.52 in costs pursuant to Fed.R.Civ.P. 54(d), 28 U.S.C. § 1920 and 29 U.S.C. § 1132(g) (Dkt. 128), and amended that amount to $10,049.12 in their Joint Statement. (Dkt. 150). Plaintiffs assert that a court may grant an award of expenses that includes expenses not enumerated in 28 U.S.C. § 1920 provided they are the type of expenses that an attorney would normally pass along and bill separately to a client. See Gradisher, 2003 WL 187416; Vick v. Metro. Life Ins. Co., 2006 U.S. Dist. LEXIS 41708, at *18-20 (E.D.Mich. June 22, 2006). BCBS responds that plaintiffs are not entitled to recover costs that are not listed in 28 U.S.C. § 1920, citing W. Virginia Univ. Hosps., Inc. v. Casey, 499 U.S. 83, 87, 111 S.Ct. 1138, 113 L.Ed.2d 68 (1991) ("We are aware of no authority to support the counter-intuitive assertion that the term `costs' has a different and broader meaning in fee-shifting statutes than it has in the cost statutes that apply to ordinary litigation."). BCBS thus argues that telephone and postage costs are not taxable under 28 U.S.C. § 1920, and neither are facsimile costs, travel expenses, a luncheon between plaintiffs' attorneys, or the costs of news releases, and thus a total of $2,082.07 should be deducted from plaintiffs' claimed costs. See King v. Gowdy, 268 Fed.Appx. 389, 391 (6th Cir.2008) (holding "[d]istrict courts may not award costs not authorized by the statute [i.e., 28 USC 1920]").
Like attorney's fees, the Court has broad discretion to award costs to parties in ERISA actions who have shown some degree of success on the merits. See 29 U.S.C. § 1132(g)(1) (providing that the Court "in its discretion may allow a reasonable attorney's fee and costs of action to either party."); Hardt, 560 U.S. at 254, 130 S.Ct. 2149. Rule 54(d)(1) provides
BCBS also argues that plaintiffs' costs should be reduced because their expense records are insufficiently detailed. Specifically, as to copying charges, BCBS contends that the Conway Firms records simply state "Copies, Prints, and/or Scans," and the Mantese Firm records simply refer to "copying charges" per month, but that plaintiffs fail to describe the necessity of obtaining such copies. BCBS further argues that $0.25/copy (as charged by the Mantese Firm) is too high, and that $0.10 is reasonable. See Bell, 784 F.Supp.2d at 792 (holding $.10 per copy is a reasonable rate for reimbursement) (citations omitted). Thus, BCBS argues that a total of $3,013.45 should be subtracted from plaintiffs' claimed costs. The undersigned notes that copying costs are taxable under 1920(4), provided that "the copies are necessarily obtained for use in the case." With regard to photocopying charges, copying costs are generally limited to "those costs incurred for copies of documents prepared for the court's consideration or for the opposing party." Moore, 2013 WL 308960, at *5 (quoting Pion v. Liberty Dairy Co., 922 F.Supp. 48, 53 (W.D.Mich.1996)). Likewise, "[c]opies obtained only for the convenience of counsel, including extra copies of filed papers and correspondence, are ordinarily not recoverable." Id. (quoting Charboneau v. Severn Trent Labs., 2006 WL 897131, at *1 (W.D.Mich. Apr. 6, 2006)). "The burden is on the party seeking reimbursement for photocopying costs to show that the copies were necessary for use in the case." Id. However, the undersigned notes that, as a practical matter, it would be difficult to document what every photocopy made in the course of pursuing a lawsuit of this
BCBS further argues that plaintiffs cannot recover for costs of computer legal research because plaintiffs are already seeking attorney time spent researching, and to allow costs for research expenses would produce a windfall, and that $3,524.01 should be subtracted. As explained above, costs and expenses that an attorney generally charges to a client are recoverable in an ERISA action. While the Sixth Circuit has not specifically addressed the issue of whether computer legal research, such as WESTLAW or LEXIS, is recoverable, a number of other courts have done so. See, e.g., Gratz, supra, at 945 (computerized research costs awarded but reduction made based on costs being "exhorbitant"); Ousley v. General Motors Ret. Program for Salaried Emps., 496 F.Supp.2d 845, 852 (S.D.Ohio 2006) (awarding nontaxable costs under § 1132(g)(1) for computerized legal research, process server, and Federal Express expenses). The undersigned believes those judges who have awarded the costs of computerized research are in the majority and the reasons for doing so are well founded. Plaintiff is awarded their costs for computerized research, which the undersigned finds are reasonable given the length and complexity of the litigation.
For the reasons set forth above, the undersigned
Gerald Mantese $425.00 Mantese Firm Partners $350.00 Mantese Firm Associates $250.00 John Conway $350.00
Further, the time entries for clerical tasks identified herein, totaling 6.75 hours, shall be excluded, and the hours identified in this report as excessive and overstaffed shall be reduced by 25%. Finally, the total number of hours shall be reduced by 5% to account for vague and block billing entries included in the billing records. As for costs, plaintiffs' claimed costs for meals and press releases are not allowed, and costs for copies shall be reduced to $.10 per copy and the total costs for copies shall be reduced by 10%. Plaintiffs must recalculate the amount of attorney's fees and costs sought in accordance with this Report and Recommendation and resubmit their adjusted final request to the Court by February 20, 2014.
The parties to this action may object to and seek review of this Report and Recommendation, but are required to file any objections within 14 days of service, as provided for in Federal Rule of Civil Procedure 72(b)(2) and Local Rule 72.1(d). Failure to file specific objections constitutes a waiver of any further right of
Any objections must be labeled as "Objection No. 1," "Objection No. 2," etc. Any objection must recite precisely the provision of this Report and Recommendation to which it pertains. Not later than 14 days after service of an objection, the opposing party may file a concise response proportionate to the objections in length and complexity. Fed.R.Civ.P. 72(b)(2), Local Rule 72.1(d). The response must specifically address each issue raised in the objections, in the same order, and labeled as "Response to Objection No. 1," "Response to Objection No. 2," etc. If the Court determines that any objections are without merit, it may rule without awaiting the response.
Date: Jan. 30, 2014.
