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Chapman v. Choicecare Long Island Long Term Disability Income Plan

May 16, 2007

CHERYL CHAPMAN, PLAINTIFF,
v.
CHOICECARE LONG ISLAND LONG TERM DISABILITY INCOME PLAN, DEFENDANT.



The opinion of the court was delivered by: Hurley, Senior District Judge

MEMORANDUM AND ORDER

Plaintiff Cheryl Chapman ("Plaintiff" or "Chapman"), as the prevailing party in this ERISA action, seeks attorneys' fees and costs in the amount of $72,435.01 pursuant to 29 U.S.C. § 1132(g)(1). In a Memorandum of Decision and Order dated January 21, 2005 ("January 21, 2005 Memo & Order"), the Court denied Plaintiff's request. Plaintiff appealed the Court's denial. On appeal, the United States Court of Appeals for the Second Circuit vacated this Court's judgment and remanded the case for further consideration. See Chapman v. ChoiceCare Long Island Long Term Disability Income Plan, No. 05-0687, 2005 WL 3556194 (2d Cir. Dec. 29, 2005) ("Chapman II"). In particular, the Second Circuit instructed this Court: (1) to "consider whether the legal precedent established by this case and the benefits that that precedent might confer on other plan participants make an award of attorney's fees appropriate," id. at *2, and (2) to perform "an independent analysis of Chapman's application for costs." Id. at *1.

With the Circuit Court's directives in mind and for the reasons stated, infra, the Court denies Plaintiff's application for attorneys' fees, but grants in part and denies in part her application for costs.

I. BACKGROUND

A. Pre-Chapman II History

The facts and procedural history of this case prior to Chapman II have been set forth in the Second Circuit's first decision in this case, Chapman v. ChoiceCare Long Island Long Term Disability Income Plan, 288 F.3d 506 (2d Cir. 2002) ("Chapman I"), in this Court's May 28, 2004 Memorandum of Decision and Order ("May 28, 2004 Memo & Order"), and in this Court's January 21, 2005 Memo & Order, familiarity with all three of which is presumed. For convenience, the Court reiterates the following:

Plaintiff commenced this action on June 29, 1998, seeking (1) a declaratory judgment that she was disabled under the Defendant ChoiceCare Long Island Long Term Disability Plan ("Defendant" or "ChoiceCare"), and (2) an order directing ChoiceCare to pay her disability benefits. Initially, this Court granted ChoiceCare's summary judgment motion and dismissed Plaintiff's case on March 1, 2001.

Plaintiff appealed, and on April 29, 2002, the Second Circuit vacated this Court's judgment and remanded the case to resolve[, inter alia,] whether plaintiff's mental illness impaired counsel's efforts to file a timely request for review. (January 21, 2005 Memo & Order at 1-2.)

On remand from Chapman I, Defendant withdrew its claim that Plaintiff failed to timely file her request for administrative review. (May 28, 2004 Memo & Order at 3.) The Court then proceeded with an evidentiary hearing to determine whether Plaintiff's mental disability prevented her from timely filing her claim for benefits.*fn1 After that hearing, during which considerable evidence outside of Chapman's administrative record was introduced, it was determined that Plaintiff was entitled to equitable tolling; thus, the Defendant was directed to consider Plaintiff's claim as if timely filed. (See id. at 10.) In doing so, Defendant did not focus solely on the pre-litigation medical information it had received from Plaintiff, but rather broadened its review to include the supplemental materials thereafter provided including the pivotal testimony elicited from Plaintiff's two witnesses at the equitable tolling hearing, viz. Doctors Daryl DiDio and Shobhan Lal. Based on the expanded record, the Defendant determined that Plaintiff was entitled to benefits under the plan and paid the claim. See Br. of Appellee [Def.] at 6, Chapman II, 2005 WL 5012405 (2d Cir. July 25, 2005).

B. The Court's Initial Decision on Plaintiff's Motion for Attorneys' Fees and Costs

As already indicated, this Court initially denied Plaintiff's Motion for Attorneys' Fees and Costs. In its January 21, 2005 Memo & Order, the Court went through the five factors courts consider when determining whether to award attorneys' fees in an ERISA action. (See January 21, 2005 Memo & Order at 2-7.) These factors, often referred to in the Second Circuit as the "Chambless factors," are:

(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.

Chambless v. Masters, Mates & Pilots Pension Plan, 815 F.2d 869, 871 (2d Cir. 1987).

This Court found that the first factor favored Defendant in that the evidence demonstrated "that First Unum did not act in 'bad faith' when it denied Plaintiff's claim." (January 21, 2005 Memo & Order at 5-6.) As to the second factor, the "Defendant [did] not dispute [Plaintiff's assertion] that it has the ability to pay the attorney's fees and costs," leading the Court to conclude "that the second factor, ability to pay, weighs in [P]laintiff's favor." (Id. at 6 (citing Zervas v. Verizon New York, Inc., No. 01 CV 685, 2002 WL 31553484, at *3 (S.D.N.Y. Nov. 13, 2002)("defendants do not contest this factor, and accordingly, this factor . . . favors [plaintiff].").) With respect to the third factor, deterrence, the Court found that "First Unum denied Plaintiff's claim in accordance with the time limits of the contract, as equitable tolling had not yet been established." (Id. at 7.) Therefore, this factor favored Defendant. Since Plaintiff ultimately prevailed in the underlying action, the Court found the fourth factor favored Plaintiff. (See id.) Finally, as to the fifth factor, the Court stated, without explanation, that "there is no real benefit to any class." (Id.) Therefore, the Court ruled against Plaintiff on this factor. (See id.)

The Court did not engage in any independent analysis of Plaintiff's requests for costs.

C. The Second Circuit's Summary Order

In its Summary Order, the Second Circuit "reject[ed] Chapman's arguments that the district court's rulings on the first and third factors were abuses of discretion." Chapman II, 2005 WL 3556194, at *2. The Circuit Court made no mention of factors two and four, those being the two factors favoring Plaintiff. It did, however, direct this Court to consider again the fifth Chambless factor and to conduct an independent analysis of the Plaintiff's application for costs.

D. A Summary of the Parties' Filings Since the Remand

Upon the case's remand to this Court, the Court allowed the parties to submit supplemental letter briefs. Both parties filed opening letter briefs and reply letters.

1. Plaintiff's Opening Letter Brief

Apparently not heeding the Second Circuit's holding as to the first and third factors--that upheld this Court's determinations--Plaintiff argues anew for findings favoring her as to these two factors. (See Letter from John W. DeHaan, Esq., Binder & Binder, at 2-3, to Hon. Denis R. Hurley, U.S. District Judge, U.S. District Court, Eastern District of New York, (Feb. 24, 2006) ("Chapman's Letter Br.").) Chapman also argues that "[i]n this case, a significant issue of law relating to ERISA was resolved." (Id. at 3 (emphasis added).) This, in turn, favors a finding for Chapman on the fifth factor--the "common benefit" prong of the analysis. (See id.) To support her argument, Plaintiff asserts, "A WestLaw KeyCite Report on the initial decision of the Second Circuit [i.e., Chapman I] . . . shows that it has been cited 132 times since April 29, 2002, on the issue of Equitable Tolling." (Id. (footnotes omitted).) Chapman contends, that "[t]he number of other courts, parties and scholars that recognize the legal issues set forth in this case demonstrate its significance." (Id.)

2. Defendant's Opening Letter Brief

Predictably, Defendant rejects Plaintiff's position that this case forges new legal precedent. (See Letter from Evan L. Gordon, Esq., to Hon. Denis R. Hurley, U.S. District Judge, U.S. District Court, Eastern District of New York, (Feb. 24, 2006) ("ChoiceCare's Letter Br.").) Rather, Defendant endeavors to dispel any weight Plaintiff would have the Court give to the numerous citations of Chapman I; according to the Defendant, "when Chapman [I] is cited in the ERISA context, it is typically cited for the proposition (which we espoused) that an ERISA claimant must exhaust her administrative remedies (cited nine times) or as part of a discussion as to which parties may be sued in an ERISA action (also cited nine times)." (Id. at 3 (footnotes omitted).*fn2 ) Significantly, the Defendant states: "We found Chapman [I] cited in only one ERISA equitable tolling case, with both the Second Circuit and the district court discussing Chapman [I] extensively. Garcia Ramos v. 1199 Health Care Employees Pension Fund, 2004 WL 1276952 (S.D.N.Y.), aff'd, 413 F.3d 234 (2d Cir. 2005)." (Id. at 3-4.) Relying primarily on the Circuit decision in Garcia Ramos, Defendant posits that Chapman I has "not create[d] a precedent establishing equitable tolling of limitations periods in ERISA cases" and, therefore, "there is no precedent that might confer a benefit on 'other plan participants.'" (ChoiceCare's Letter Br. at 6.)

In essence, it is Defendant's position that this case is a unique exception to the rule that where a plaintiff is represented by counsel during the time sought to be tolled, equitable tolling will not be had; the rule of this case is limited to its unusual facts and circumstances. (See id. at 6-7.)

Defendant also asserts that Plaintiff's counsel "did not make a complete record at the administrative level [i.e., the level upon which First UNUM made its initial determination as to whether Plaintiff was entitled to benefits], but attempted to do so in litigation." (Id. at 10.) Indeed, it was upon that expanded post-Chapman I remand record that First UNUM reversed course and found Plaintiff disabled. (See id. at 9-10, as well as the letter referenced therein, to wit, UNUM Provident's Aug. 16, 2004 Letter to Pl.'s Counsel, attached as Ex. A to ChoiceCare's Letter Br.) As a result, Defendant argues "plaintiff may well have received benefits to which she might otherwise not have been entitled." (Id. at 10.) Given the totality of the circumstances, including this last scenario, Defendant advocates the application of the American Rule as the more appropriate and fair resolution of Plaintiff's request for attorneys' fees. (See id.)

The Defendant also argues that each party should bear its own costs. First, Defendant would have the Court include expert witness fees, if at all, as part of an award of attorneys' fees, and then, if granted, limited to statutory fees and mileage for witnesses. (See id. at 11-12.) Second, relying on Federal Rule of Appellate Procedure 39(a)(4), the Defendant states a taxing of costs may only be had on a court order; since there is not, nor should there be any such order, Defendant should not bear Plaintiff's appellate costs. (See id. at 11.) Finally, Defendant argues that there is no statutory authority deeming postal charges recoverable. (See id.)

3. Plaintiff's Reply Letter

In her reply letter, Plaintiff argues that the fifth prong of the attorneys' fees test is a two-fold consideration. That is, the Court must consider whether the case conveyed a benefit to other plan members or whether the case decided a significant question of law under ERISA. (See Letter from John W. DeHaan, Esq., Binder & Binder, at 1-2, to Hon. Denis R. Hurley, U.S. District Judge, U.S. District Court, Eastern District of New York, (Mar. 17, 2006) ("Chapman's Reply Letter").) She also reiterates her position that Chapman I "conveys a significant benefit to all plans and their administrators, as it clarified the applicability of Equitable Tolling and gives them much needed guidance." (See id. at 4 (emphasis added).) Plaintiff also argues that Chapman I has legal significance since "[i]f both Defendant and th[e District] Court's prior ruling on Defendant's culpability are correct, then the legal significance of [Chapman I] is incontrovertible, because the Second Circuit reversed this Court on this point and remanded for a determination on the applicability of Equitable Tolling." (Id. at 4.)

Finally, as to costs, Chapman asserts that the law within this Circuit is that a "[c]ourt may not arbitrarily use its discretion to deny an award of costs to the victorious party." (Id. at 6 (citing Trans World Airlines, Inc. v. Hughes, 515 F.2d 173, 177 (2d Cir. 1975).) Plaintiff also informs the Court that she has submitted a revised application for costs that should address issues raises by Defendant. (See id. at 6.)

4. Defendant's Reply Letter

In its Reply Letter, Defendant reasserts - quoting Garcia Ramos - that the Second Circuit did not establish an equitable tolling precedent in Chapman I. (See Letter from Evan L. Gordon, Esq., to Hon. Denis R. Hurley, U.S. District Judge, U.S. District Court, Eastern District of New York, (Mar. 17, 2006) ("ChoiceCare's Reply Letter.")) Likewise, Defendant reiterates that Plaintiff's bald reliance on the number of times Chapman I has been cited in other cases is misleading and a careful review of these other cases shows the citing of Chapman I is in support of "general propositions that were established long before Chapman [I]." (Id. at 2.) "Garcia Ramos is really the only case that discusses Chapman [I] in the ERISA equitable tolling context--and it rejects the notion that Chapman [I] established a precedent in this regard." (Id. (footnote omitted).) Defendant also asserts:

Plaintiff next states that, "[p]rior to this decision, claimants may have been denied merely because they were too disabled to file a claim within the specified time period. After this decision, claimants that are so disabled may still get relief under the principle of Equitable Tolling." Yet, the benefit plan specifically provides that the claimant can give notice and proof of claim beyond the initial time deadlines if it was not reasonably possible for her to do so earlier. See AR 18 (notice and proof of claim). At best, Chapman [I] is a sui generis exception to the general rule that equitable tolling will not be permitted to a claimant who had retained counsel, as plaintiff had, but still filed late. (Id. at 3.) In Defendant's view, "Plaintiff's counsel has not shown any 'clarified rule,' nor has he shown that the ChoiceCare plan itself has benefit[t]ed from this litigation, let alone that any plan or plan participant (other than plaintiff) has benefit[t]ed." (Id.)

The Defendant advances an interesting argument regarding the taxing of costs. It is Defendant's position that since it "has paid benefits to plaintiff even though plaintiff may not have been entitled to benefits at all" (id.), as Defendant asserts is evident from the administrative record below, but which Defendant chose to pay in deference to this Court's findings on tolling, it should be spared from having to shoulder Plaintiff's costs in bringing this action. (See id.) In sum, Defendant presents the equitable argument that since it allowed Plaintiff to further develop her medical record following the Chapman I remand, which resulted in Plaintiff being awarded benefits,

[t]he administrator should not be placed in a worse position (through the assessment of costs and/or fees) than it would have been in had it not voluntarily chosen to expand the sparse medical record to include ...


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