United States District Court, D. Massachusetts
DIAHANN L. GROSS
SUN LIFE ASSURANCE COMPANY OF CANADA
RYA W. ZOBEL SENIOR UNITED STATES DISTRICT JUDGE.
that remains of this protracted benefits litigation is
Plaintiff's Motion for Interest, Attorneys' Fees and
Costs (Docket # 143). Assuming familiarity with the facts, I
address each issue below.
remand, the Court of Appeals has instructed consideration of
dual objectives in awarding prejudgment interest: first, to
make the plan participant whole, and second, to prevent
unjust enrichment. See Gross v. Sun Life Assur. Co. of
Canada, 880 F.3d 1, 19-20 (1st Cir. 2018). Plaintiff
urges application of a 12% rate, citing her borrowing and
opportunity costs, defendant's rate of return, and the
rate set by Massachusetts statute. See Mass. Gen.
Laws ch. 231, § 6C. Defendant maintains that the federal
rate under 28 U.S.C. § 1961, which this court previously
applied, remains appropriate, and argues that plaintiff has
failed to meet her burden of proof in substantiating damages.
the equities requires a more generous rate than the federal
rate I previously applied. See Cottrill v. Sparrow,
Johnson & Ursillo, Inc., 100 F.3d 220, 225 (1st Cir.
1996) (“Because ERISA is inscrutable on the subject, a
court that elects to award prejudgment interest in an ERISA
case has broad discretion in choosing a rate. In such a
situation, equitable considerations should guide the exercise
of judicial discretion”), abrogated on other
grounds by Hardt v. Reliance Standard Life Ins. Co., 560
U.S. 242 (2010). When the Cottrill court approved
the federal rate over Rhode Island's 12% rate, it was
4.12%. In contrast, at the time the instant complaint was
filed in 2009, the federal rate was only 0.37%. See
Gross, 880 F.3d at 21. This historically low rate does
not adequately compensate plaintiff, especially “as it
represents a completely risk-free rate of return.”
Smith v. Jefferson Pilot Fin. Ins. Co., No.
07-10228-PBS, 2010 WL 818788, at *3 (D. Mass. Mar. 5, 2010).
cost of making plaintiff whole is not entirely clear.
Although consideration of market-rate borrowing costs is
certainly appropriate, plaintiff has not substantiated her
claim of 12-14% borrowing rates. The federal prime rate,
“which better reflects the value of the unpaid money
over time, ” id. (and cases cited), has
averaged 3.37% since 2009. This rate admittedly fails to capture
plaintiff's risk of default, which she does not quantify
but has characterized as “high.” Docket # 109, at
16. She also grounds her opportunity cost of missed
investment in the return rate of the S & P 500 index,
which purportedly averaged 9.8% returns during the relevant
period. Docket # 144, at 7.
record is better established, if still incomplete, on the
second relevant consideration: preventing unjust enrichment.
Plaintiff has submitted financial reports showing
defendant's return on equity, but omits that information
for 2009-2011. See Docket # 144-4 (citing 9.5% ROE
in 2012, 18.9% in 2013, 12.2% in 2014, 12.6% in 2015, 12.4%
in 2016, and 12.8% through 2017's third quarter).
Although punitively high rates must be avoided, the Court of
Appeals has clearly instructed that “[a]warding
interest at a rate that does not recapture the lost value of
the money during the period it was withheld would create a
perverse incentive for a defendant to delay payments while it
earned interest on those funds.” Gross, 880
F.3d at 20 (citation omitted).
ERISA's silence on prejudgment interest rates, the Court
of Appeals has endorsed judicial use of “outside
sources, including state law, for guidance.”
Id. (quoting Cottrill, 100 F.3d at 224-25).
See Gallagher v. Park W. Bank and Trust Co., 951
F.Supp. 10, 14 (D. Mass.1997) (“This court will adopt
the 12 percent rate of Mass. Gen. L. ch. 231, § 6C. As
plaintiffs have argued, it would be inequitable for a breach
of an obligation to pay funds owed under a pension contract
in Massachusetts to generate less interest than a breach of a
simple contract.”). Though a Canadian corporation,
defendant's principal United States place of business is
in Massachusetts. “The state rate reflects the
Massachusetts legislature's considered view of the likely
rate of return on invested capital and the cost of borrowing
money, under the particular economic conditions of this
state.” Radford Tr. v. First Unum Life Ins. Co. of
Am., 321 F.Supp.2d 226, 257-58 (D. Mass. 2004),
rev'd in part, appeal dismissed in part, 491
F.3d 21 (1st Cir. 2007).
by aligning with defendant's uncontested earnings,
state rate prevents unjust enrichment without amounting to
punishment inconsistent with ERISA's compensatory scheme.
Accordingly, prejudgment interest is awarded at 12%
compounded annually for each monthly benefit and accruing
through the date of defendant's final payment.
Attorney Grabhorn's Post-Remand Fees
Court of Appeals recognized plaintiff's eligibility for
post-remand fees, Gross, 880 F.3d at 25, n. 30, and
she now seeks reimbursement for 322.8 hours of Attorney
Michael Grabhorn's time at $500 per hour, and 30.8 hours
of attorney Andrew Grabhorn's time at $250 per hour.
Defendant has already assented to attorney Jonathan
Feigenbaum's fee request for 32.85 hours at $625 per
hour, but opposes Michael Grabhorn's far greater request.
As grounds, defendant argues not only that Grabhorn's
request is unreasonably excessive, but also that his
documented misconduct in this case demands that his fees be
denied or reduced.
lodestar approach “is the method of choice for
calculating fee awards.” Matalon v. Hynnes,
806 F.3d 627, 638 (1st Cir. 2015). Under that approach, a
district court multiplies a reasonable hourly rate by the
number of reasonably expended hours - excluding time deemed
“excessive, redundant, or otherwise unnecessary.”
Id. The award may then be adjusted “based on
factors not captured in the lodestar calculation.”
rate, that defendant agreed to a $125 per hour increase on
Feigenbaum's request for reimbursement has no bearing on
Grabhorn's entitlement to the same increase for nearly
ten times as many hours. For the reasons upheld by the Court
of Appeals, Gross, 880 F.3d at 23-24, $375 remains
Grabhorn's reasonable hourly rate.
number of hours, it is not unreasonable that defendant's
hours in the five years since the 2013 remand would approach
the time he spent in the four years preceding it. Although
the issues have recently narrowed significantly, the period
in question nonetheless included another claim and review
process followed by another lengthy appeal on an expanded
record. Because plaintiff prevailed both before this court
and the First Circuit, the time need not be reduced to
reflect mixed results. Cf. De Jesus Nazario v. Morris
Rodriguez, 554 F.3d 196, 207 (1st Cir. 2009) (A
reasonable fee award “takes into account the quality of
results that the plaintiff obtained.”). Accordingly, I
decline defendant's invitation to eliminate as ...