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Employment – ERISA – Attorney’s Fees

A retired union member who won his case to halt defendant company and pension fund’s deduction of union fees from his disability benefits to recoup a $26,000 overpayment, now wins attorney’s fees of $39,780.94 under the federal ERISA statute, because defendants’ breach of fiduciary duty made them culpable in the matter, in this case from the Big Stone Gap U.S. District Court.

For almost seven years, defendants, The Brink’s Company and The Brink’s Company Pension-Retirement Plan, failed to deduct the value of plaintiff’s union retirement benefits from his monthly disability benefits payments. This resulted in approximately $26,000 in overpayments. To rectify the error, in September 2005, the plan began deducting the union benefits from plaintiff’s monthly disability checks – projected to recoup the $26,000 overpaid with interest (a total of more than $50,000).

Plaintiff, under several different theories, claimed defendants had to cease both monthly deductions and repay the money already deducted.

On July 13, 2009, this court granted partial summary judgment to each side, finding that the monthly deductions for union benefits were reasonable and could continue, but defendants could not recover any of the $26,000 already paid because it resulted from a breach of their fiduciary duty of care.

Defendants were ordered to stop the deductions for overpayment and return the approximately $7,000 already deducted.

The pertinent factors weigh in favor of granting fees to plaintiff. While he concedes that defendants did not exhibit bad faith, it is nonetheless fair to conclude that this factor weighs in favor of a fee award because defendants’ behavior was culpable. A fiduciary breach is evidence of culpability.

Defendants are culpable, not for making the initial miscalculation, but in their failure to uncover it in a timely manner. The plan’s administrators first erred by failing to double-check, rather than “rubber stamp,” the benefits calculation. The benefits calculation represents the monthly income of plaintiff.

This figure had (and has0 a significant economic impact on plaintiff and his ability to plan for the future. Therefore, the plan’s administrators owed it to plaintiff to check such an important calculation.

Plaintiff was not the only person who had his benefits miscalculated. For a period of time, plan administrators made the same mistake over and over again. In 2001, plan administrators finally discovered that they had failed to subtract retirement benefits from many participants’ monthly payments, but they chose not to perform a special review to immediately uncover the error. Their repeated gaffes – neglecting to double-check the original calculation, electing not to conduct a special review immediately after the mistake was discovered, and then missing the error in the following few annual review – resulted in plaintiff relying on the incorrect monthly benefit amount for nearly seven years. Consequently, defendants are culpable in this matter.

No one claims it would be a hardship for defendants to pay the fees, and awarding fees will serve as a deterrent to other benefits plan administrators. Plaintiff admitted he did not seek to benefit other plan participants, and this case did not resolve any significant legal ERISA issue.

The amount of monetary relief awarded in this case, approximately $7,000, is not enough to justify the cost of litigation. Therefore, if fees are not awarded, the next similarly situated beneficiary might be inhibited from litigating, and other plan administrators might be permitted to breach their fiduciary duties without consequence.

Plaintiff’s lawyer requests $39,780.94 in fees, a 43 percent reduction from the unadjusted lodestar figure of $69,921.25. This reduction is sufficient to discount for plaintiff’s limited success.

I find plaintiff is entitled to attorney’s fees of $39,780.94 and expenses of $3,794.55, while defendants are not entitled to attorney’s fees or costs.

Phillips v. The Brink’s Co. (Jones, J.) (Published) No. 2:08cv00031, Oct. 31, 2009; USDC at Big Stone Gap, Va. VLW 009-3-593, 15 pp.

VLW 009-3-593

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