December 5, 2018
A recent Law 360 story by Danielle Nichole Smith, “Hospital Plan Rips ‘Overreaching’ $2.4M Fee Bid in ERISA Suit,” reports that the retirement plan for a Montana hospital told a federal judge that a request for $2.4 million in attorneys’ fees was “grossly excessive” after a $293,946 settlement resolving claims that the plan flouted the Employee Retirement Income Security Act. The Retirement Plan for Employees of Northern Montana Hospital said in its objection that the $2.4 million fee request was “plainly overreaching” and needed to be reduced, noting that the amount was more than eight times the amount of monetary recovery. And the proposed class counsel’s lodestar was $2 million more than that of the defendants’ attorneys, the plan said.
“The plaintiff’s attorneys’ fee request is grossly excessive by any measure,” the plan said. “The fee request exemplifies the problem that led the Supreme Court to mandate that attorneys’ fee awards remain ‘reasonable in relation to the results obtained.’”
The settlement in the case provided $125,776 to named plaintiff Dr. Joel Cleary for retirement benefits he was wrongly denied and $168,170 to a proposed class of 175 plan participants whose benefits had been miscalculated, according to the plan’s objection. The settlement also provides injunctive relief, requiring the plan to comply with ERISA statutes governing benefit determination and claims procedure, the plan said. The plan contended, however, that the injunctive measures didn’t provide any meaningful relief or benefit since the plan had already complied with ERISA. So the injunctive relief didn’t have any monetary value to consider when calculating attorneys’ fees, the plan said.
The Keller Rohrback LLP attorneys representing the proposed class had asked for the fees in November after the settlement with the plan and administrative committee was reached. In support of their motion, the attorneys described their experience with ERISA cases and the work they performed in the suit. The attorneys said they devoted a significant amount of time and effort to the case and that the rates they charged were what they typically billed clients whose cases weren’t handled on a contingency basis and had been approved in complex ERISA cases. The attorneys also requested $75,086 in costs.
In the fee request, the attorneys also noted that the time they devoted to the suit kept them from working on other cases or taking on other representations. The attorneys said they spent nearly 3,600 hours on the case as of October. But the plan said that the attorneys’ lodestar amount was unreasonable, arguing that the reasonable hourly rate in Montana for ERISA cases was a lot less than what the attorneys requested. The defendants’ attorneys only billed a total of $270,500 through October, the plan said.
If the court chose to use the lodestar method, the class’s attorneys’ lodestar had to be adjusted downward considering the results obtained, the plan said. Additionally, the case didn’t present novel or difficult questions since the defendants didn’t dispute that Cleary was owed benefits or that the proposed class’s benefits had been miscalculated, the plan said.
The plan told the court that the percentage-of-recovery method was the best way to calculate the fees and that the $293,946 should be treated as a “constructive common fund” for determining such a percentage. Though 25 percent was the “benchmark” for attorneys’ fees in the Ninth Circuit, the plan said it wouldn’t object to a 50 to 75 percent award since the recovery was so modest.
The case is Cleary v. Retirement Plan for Employees of Northern Montana Hospital et al., case number 4:16-cv-00061, in the U.S. District Court for the District of Montana.