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VELTRI v. BUILDING SERVICE 32B-J PENSION FUND

April 19, 2004.

ALFRED VELTRI, Plaintiff; -against- BUILDING SERVICE 32B — J PENSION FUND, and the TRUSTEES OF THE BUILDING SERVICE 32B — J PENSION FUND, Defendants


The opinion of the court was delivered by: HAROLD BAER, JR., District Judge

OPINION & ORDER

In the November 15, 2003 Opinion and Order, the Court granted plaintiff's cross — motion for summary judgment on his Employment Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. claim and directed defendants to recalculate plaintiff's pension benefits. Plaintiff now moves for attorneys' fees and costs. For the reasons set forth below, plaintiff's motion is granted.

I. BACKGROUND

  The facts of this case are set out in the Court's November 15, 2003 Opinion and Order, Veltri v. Bldg. Svc. 32B — J Pension Fund, No. 02 Civ. 4200, 2003 WL 22705124 (S.D.N.Y. Nov. 17, 2003), familiarity with which is presumed. Briefly, the Building Service 32B — J Pension Fund ("the Fund") is a multi — employer pension trust fund within the meaning of ERISA. Alfred Veltri ("Veltri") is eighty — two years young and held elevator operator and doorman positions covered by the Fund from 1957 to 1969 and again from June 1980 to 1992. The Fund determined Veltri's monthly pension payments to be $209.00 per month for April and May of 1992 and $212.00 per month thereafter. Veltri contacted the Fund on several occasions to inquire as to why his monthly payments were so low and why he was not credited for his years of employment between 1957 and 1969. The Fund explained that Veltri's prior period of employment was not credited towards his pension payments because of the Fund's break — in — service rule, under which Veltri was deemed to have incurred a break and thus lost all credit for his 1957 to 1969 employment because he did not work at least one month between 1960 and 1979. After several additional inquiries, Veltri retained an attorney, who requested Veltri's records of service, filed a claim for additional pension benefits, and ultimately filed suit. In the November 15, 2003 Opinion and Order, I ruled that the Fund's break — in — service rule was invalidated by ERISA and ordered the Fund to recalculate Veltri's pension benefits. On November 25, 2003, Veltri moved pursuant to Federal Rule of Civil Procedure ("Fed.R. Civ. P.") 54(d)(2) and ERISA § 502(g)(1), codified at 29 U.S.C. § 1132(g)(1), for attorneys fees in the amount of $23,400 and costs in the amount of $276, for a total of $23,626.*fn1

  On December 4, 2003, defendants filed a Notice of Appeal of the November 15, 2003 Opinion and Order. Although a Notice of Appeal normally divests the district court of jurisdiction, a district court retains jurisdiction to decide the issue of attorneys' fees and other collateral matters notwithstanding a pending appeal. E.g., Yurman Designs, Inc. v. PAJ, Inc., No. 98 CIV. 8697, 2001 WL 797474, at *2 (S.D.N.Y. July 12, 2001); see also Tancredi v. Metropolitan Life Ins. Co., 256 F. Supp.2d 196, 198-99 (S.D.N.Y. 2003) (observing that "the 1993 Advisory Committee Note to Rule 54(d)(2) . . . specifically note[s] that a district court remains free, notwithstanding an appeal from a judgment on the merits, to award attorneys' fees during the pendency of the appeal").

  II. DISCUSSION

 A. Standard for Awarding Attorneys' Fees and Costs

  Under ERISA § 502(g)(1), "the court in its discretion may allow a reasonable attorney's fee and costs of action to either party." Veltri has satisfied the initial requirement that claims for attorneys' fees and expenses be made by motion within fourteen days of entry of judgment. Fed.R.Civ.P. 54(d)(2). The decision to award reasonable attorneys' fees and costs therefore rests on consideration of the five factors outlined by the Second Circuit in Chambless v. Masters, Mates & Pilots Pension Plan, 815 F.2d 869, 871 (2d Cir. 1987): "(1) the degree of the offending party's culpability or bad faith, (2) the ability of the offending party to satisfy an award of attorney's fees, (3) whether an award of fees would deter other persons from acting similarly under like circumstances, (4) the relative merits of the parties' positions, and (5) whether the action conferred a common benefit on a group of pension plan participants." These factors are guiding criteria, but the party seeking the award need not establish all five and no one factor is dispositive. Zervos v. Verizon New York, Inc., No. 01 Civ. 685, 2002 WL 31553484, at *2 (S.D.N.Y. Nov. 13, 2002); Enright v. New York City Dist. Council of Carpenters Welfare Fund. No. 99 Civ. 671, 2001 WL 225032, at *14 (S.D.N.Y. March 8, 2001). While the decision of whether or not to award attorneys' fees lies within the sound discretion of the Court, ERISA's attorneys' fee provisions should be construed liberally to fulfill the statute's remedial purpose and protect the interests of pension recipients. Id. at 872, 873; Citrin v. Erikson, 918 F. Supp. 792, 799-800 (S.D.N.Y. 1996). Indeed, "attorney's fees may be awarded to the prevailing party under ERISA in the absence of some particular justification for not doing so." Birmingham v. SoGen — Swiss Int'l Corp. Ret. Plan, 718 F.2d 515, 523 (2d Cir. 1983). These considerations and the balance of the five Chambless factors counsel for an award of attorneys' fees and costs in this case.

 B. The Chambless Factors

  Defendants do not dispute their ability to pay, thus rendering the second factor inapposite. Defendants' arguments with respect to the relative merits of the parties' positions conflates the fourth factor with the first factor, which considers the offending party's culpability or bad faith. The fact that I granted summary judgment for Veltri in the January 15, 2003 Opinion and Order resolves the merits factor in favor of Veltri. Coram Healthcare Corp. v. CIGNA. 236 F. Supp.2d 312, 313 (S.D.N.Y. 2002) (deciding that the merits factor favored the party who prevailed at summary judgment). This leaves only the first, third, and fifth factors, which I address seriatim.

  The first factor examines the offending party's culpability or bad faith. A finding of culpability involves more than mere negligence, but does not require malice or any ulterior motive. Zervos, 2002 WL 31553484, at *2. "Instead, a party moving for attorneys' fees may demonstrate that the offending party was culpable or at fault in causing the dispute underlying the motion for attorney's fees or that the offending party acted arbitrarily and capriciously." Citrin, 918 F. Supp. at 800 (internal quotation marks and citations omitted). Veltri argues that defendants were culpable because they violated 29 U.S.C. § 1133 and 29 C.F.R. § 2560.503-1(g), which outline the administrative procedure for claims for benefits and appeals, when they failed to give Veltri full and fair review of his claim, respond to his requests for information and an appeal, or provide him with the requisite information upon denial of his claim. Defendants argue that at the time Veltri applied for benefits, the law in this Circuit was not yet settled as to whether the Fund's break — in — service rule was permissible under ERISA and currently there is a circuit split on this very issue. Defendants' argument raises a question about their culpability for enforcing the Fund's break — in — service policy. They do not, however, explain why the Fund did not respond to Veltri's repeated inquiries or provide the statutorily required information, which essentially deprived him of his administrative remedies. This inaction, particularly the Fund's failure to respond to Veltri's claim and appeal for additional benefits after Veltri retained counsel, could certainly be characterized as arbitrary and capricious or at least conduct that precipitated this litigation. The defendants were therefore culpable within the meaning of the first factor.

  The third factor examines whether an award of attorneys' fees and costs would deter similar conduct in the future. When weighing this factor, the Court may consider the deterrent effect the award would have on all employers. Algie v. RCA Global Communications, Inc., 891 F. Supp. 875, 893 (S.D.N.Y. 1994), aff'd, 60 F.3d 956 (2d Cir. 1995). Defendants argue that provided the November 15, 2003 Opinion and Order is upheld on appeal, the Fund has no incentive to misapply the law in the future, i.e. to deny benefits based on the break — in — service rule. Yet the Fund did misapply the law when it failed to afford Veltri notice of his rights or comply with his repeated inquiries, claim for additional benefits, and appeal, which was plainly required by law. As Veltri notes, the appeals procedure is an important component of the administrative scheme and defendants — and other employers — ought to be diligent in their responses to the inquiries, claims, and appeals of their retirement plan members. I therefore conclude that an award of attorneys' fees would provide incentives for a somewhat less cavalier attitude towards member inquiries in the future.

  The fifth factor assesses whether the plaintiff's action conferred a common benefit on pension plan participants. The parties agree that Veltri's suit, though on appeal, has caused a change in the Fund's break — in — service rule. They disagree as to whether there are other Fund members similarly situated who would benefit from such a change. On this record it cannot be said with certainty whether there are indeed other such members. While it appears that the Court's decision would, in fact, impact the Fund's decision — making, thus tipping this factor in favor of Veltri, Zevros, 2002 WL 31553484, at *4, it is ...


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