Alberth v. Southern Lakes Plumbing & Heating Inc, 2:19-cv-00062

Background

Plaintiff Raymond Alberth sued Southern Lakes Plumbing & Heating and its owner Scott Plucinski under ERISA for benefits and statutory relief relating to an employer-purchased life insurance policy that insured Alberth.
At summary judgment the court found an ERISA plan existed and defendants violated 29 U.S.C. § 1132(a)(1)(A) by failing to provide policy documents; three issues (cash-value payout option, vesting after five years, survival after termination, and penalties) proceeded to trial.
After trial the court held the policy had a cash-value payout option that vested after five years and survived termination; Alberth was awarded $32,048.81 (cash value), $8,700.00 in statutory penalties, and $2,778.99 prejudgment interest.
Alberth moved for attorney’s fees under 29 U.S.C. § 1132(g)(1), seeking $62,775.00; defendants opposed, arguing their position was substantially justified and challenging rates, hours, administrative billing, proportionality, and certain expenses.
The court found Alberth achieved the Hardt “some degree of success” threshold, applied the Seventh Circuit five-factor framework (and related substantial-justification inquiry), concluded Plucinski acted in bad faith, and that factors 1, 4, and 5 favored fees while factors 2 and 3 did not.
The court approved Attorney Alan Olson’s $450/hour rate, reduced billed time by 8.75 hours for administrative tasks (leaving 130.75 hours), computed a lodestar of $58,837.50, allowed $514.74 for online research, and awarded attorneys’ fees and expenses totaling $59,352.24.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Entitlement to fees under §1132(g)(1)	Alberth achieved some success and thus is eligible for fees; court should award reasonable fees.	Defendants say their position was substantially justified; no fees should be awarded.	Court: Hardt threshold met; applying five-factor analysis, defendants’ bad-faith conduct and other factors support awarding fees.
Reasonableness of hourly rate	Olson’s $450/hr is market-based and supported by a fee survey and judge’s declaration.	Rate is excessive relative to prevailing market.	Court: $450/hr is reasonable for Olson given experience and local market.
Reasonableness of hours / billing practices	Hours (~139.5) are reasonable for litigation; block billing acceptable here; seek full fees less appropriate reductions.	Hours include block (cluster) billing and administrative/clerical tasks that should be disallowed or reduced.	Court: Block billing not so egregious; reduced billed time by 8.75 hours for administrative entries; final billable hours 130.75.
Proportionality / settlement offers / expenses	Fees justified despite disparity with damages; online research was an out-of-pocket expense client paid.	Fees vastly exceed recovery; plaintiff unreasonably rejected settlement offers; online research should not be billed.	Court: Disparity alone not dispositive; plaintiff reasonably rejected late offers; awarded online research expense; total award $59,352.24.

Key Cases Cited

Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242 (U.S. 2010) (plaintiff must show "some degree of success on the merits" to be eligible for fees under §1132(g)(1)).
Temme v. Bemis Co., 762 F.3d 544 (7th Cir. 2014) (discusses post-Hardt approaches and affirms continued use of five-factor and substantial-justification analyses).
Raybourne v. Cigna Life Ins. Co. of New York, 700 F.3d 1076 (7th Cir. 2012) (articulates the five-factor test for awarding ERISA fees and focuses on whether the losing position was substantially justified).
Bittner v. Sadoff & Rudoy Indus., 728 F.2d 820 (7th Cir. 1984) (describes modest presumption favoring fee awards but limits on punitive purpose).
Hensley v. Eckerhart, 461 U.S. 424 (U.S. 1983) (lodestar method and adjustment for degree of success).
Stark v. PPM Am., Inc., 354 F.3d 666 (7th Cir. 2004) (defines lodestar as reasonable hours multiplied by reasonable rate).
City of Burlington v. Dague, 505 U.S. 557 (U.S. 1992) (strong presumption that lodestar represents a reasonable fee).
Anderson v. AB Painting & Sandblasting Inc., 578 F.3d 542 (7th Cir. 2009) (courts should scrutinize fee awards that are grossly disproportionate to damages).
Alexander v. Gerhardt Enterprises, Inc., 40 F.3d 187 (7th Cir. 1994) (rejected rigid proportionality requirement between fees and damages).
Pickett v. Sheridan Health Care Ctr., 664 F.3d 632 (7th Cir. 2011) (burden on fee claimant to show hourly rate is reasonable).