Taaffe v. Life Insurance Co. of North America
769 F. Supp. 2d 530
S.D.N.Y.2011Background
- Taaffe, a UBS employee, sued LINA under ERISA seeking LTD benefits, prejudgment interest, and fees.
- LINA paid Taaffe $165,000 for LTD benefits covering August 27, 2008 to April 26, 2010, after Unum approved Taaffe's claim.
- The LTD Plan defines disability differently from the STD Plan; LINA administers LTD claims when notified of Unum approval.
- LINA admitted Taaffe was disabled as of February 27, 2008, and benefits should have begun earlier, creating a timeframe of delay.
- Taaffe moved for prejudgment interest and fees; the court awarded $12,244.68 interest, $53,305.88 in fees, and $511.70 in costs.
- The court calculated prejudgment interest from August 27, 2008 to April 20, 2010, at 9% per annum.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether prejudgment interest is due on LTD benefits | Taaffe argues interest compensates for loss due to delay. | LINA contends no prejudgment interest unless litigation success occurred. | Yes; prejudgment interest awarded as part of full compensation. |
| Appropriate rate for prejudgment interest | Nine percent New York rate should apply. | Treasury rate should apply under 28 U.S.C. § 1961. | Nine percent rate chosen. |
| Whether Taaffe is entitled to attorneys' fees under ERISA § 1132(g)(1) | Taaffe seeks fees for achieving relief in the complaint. | LINA argues limited or no fees if not 'on the merits'. | Taaffe entitled to fees; eligibility hinges on 'some success on the merits' rather than Chambless factors. |
| Scope and reasonableness of attorneys' fees and hours | Rates and hours reasonable given ERISA practice and firm experience. | Hours are excessive; challenge to specific time entries. | Rates reasonable; hours reduced by 15% for excesses; total reasonable fees $53,305.88. |
| Award of costs | Costs totaling $511.70 are recoverable. | Costs should be limited. | Costs awarded in the amount of $511.70. |
Key Cases Cited
- Slupinski v. First Unum Life Ins. Co., 554 F.3d 38 (2d Cir.2009) (guides prejudgment interest in ERISA as compensation for loss)
- Jones v. UNUM Life Ins. Co. of Am., 223 F.3d 130 (2d Cir.2000) (factors for prejudgment interest and remedial purpose of ERISA)
- City of Milwaukee v. Cement Div., Nat'l Gypsum Co., 515 U.S. 189 (U.S. Supreme Court 1995) (prejudgment interest as compensatory and remedial)
- Gierlinger v. Gleason, 160 F.3d 858 (2d Cir.1998) (damages as lost wages justify prejudgment interest in ERISA)
- First Jersey Sec., Inc. v. Western, 101 F.3d 1450 (2d Cir.1996) (court's discretion on prejudgment interest rate and calculation)
- Hardt v. Reliance Standard Life Ins. Co., 560 U.S. _ (U.S. Supreme Court 2010) (fee-shifting standard: 'some success on the merits' suffices for fees)
- Locher v. UNUM Life Ins. Co. of Am., 389 F.3d 288 (2d Cir.2004) (ERISA attorney's fees liberally construed to vindicate retirement rights)