112 Lab.Cas. P 11,453, 11 Employee Benefits Ca 1870
Arthur M. CHAMBLESS and Mildred H. Chambless,
Plaintiff-Appellants, Cross-Appellees,
v.
MASTERS, MATES & PILOTS PENSION PLAN, Stephen P. Maher,
Administrator of the Masters, Mates & Pilots Pension Plan,
C.J. Bracco, Richard M. Casselberry, Michael Di Prisco, E.
Gras, George Groh, Justin Gross, James R. Hammer, James J.
Hayes, Martin F. Hickey, Charles Jess, Francis E. Kyser,
Charles Landry, Orion A. Larson, Robert J. Lowen, Lloyd
Martin, J. Eric May, David Merritt, Thomas E. Murphy, Henri
L. Nereaux, William Ott, Martin Pecil, Franklin J. Riley,
Jr., William I. Ristine, A.C. Scott, Captain John Smith,
Rupert Soriano, Ernest Swanson, Michael Swayne, Allen
Taylor, Nicholas Telesmanic, Kenneth P. Wenthen, C.E.
Witcomb, in their fiduciary capacity as Trustees of the
Masters, Mates & Pilots Pension Plan, Defendants-Appellees,
Cross-Appellants.
Nos. 1071, 1223, Dockets 88-7892, 88-7928.
United States Court of Appeals,
Second Circuit.
Argued May 9, 1989.
Decided Sept. 12, 1989.
Arthur M. Wisehart, New York City (Russell G. Pelton, Wisehart & Koch, New York City, of counsel), for plaintiffs-appellants.
Bettina B. Plevan, New York City (Joseph Baumgarten, Proskauer Rose Goetz & Mendelsohn, New York City, of counsel), for defendants-appellees.
Before KEARSE, CARDAMONE, and PIERCE, Circuit Judges.
CARDAMONE, Circuit Judge:
The litigation that brings this appeal before us began nine years ago in 1980. The case has wended its way into our Court twice before. On this third visit, two over-arching issues are presented: Whether the district court's award of actuarially-adjusted benefits is the equivalent of an award of retroactive benefits, inconsistent with our prior ruling in this case; and, whether the district court abused its discretion in calculating the amount of attorney's fees that plaintiffs' counsel may recover.
With respect to the first issue, we earlier ruled that appellant was not entitled to recover retroactive benefits. On remand, the district court awarded appellant actuarially-adjusted benefits, which amounts to exactly the same thing. The attorney's fees issue, attendant upon the benefits suit, has like Frankenstein's monster taken on a life of its own and threatens to become a second major litigation, despite the Supreme Court admonishment against such happening. See Hensley v. Eckerhart,
I FACTS
In light of the above, we may safely assume familiarity with the factual background and prior proceedings, and set forth only those facts necessary to identify the parties, the dispute and its procedural posture.
The appellant is Arthur M. Chambless, a licensed deck officer in the United States Merchant Marine. He became a member of the International Organization of Masters, Mates & Pilots (union) in 1944. The union negotiated a multi-employer-funded pension plan (Plan) for deck officers working for shipping companies that are signatories to the Plan. The Plan, its administrators, and its trustees are the remaining defendants.
Chambless complained that the union hastened the early retirement of its older members by assigning them to low-paying jobs. He sought early retirement from the union in April of 1977 and went to work for a ship that was not owned by a signatory to the Plan. As a result, the union informed him that he was no longer in good standing. Citing newly enacted Plan Amendments 46 and 47, the Plan's administrator notified Chambless that because he continued to work for a non-signatory ship, he had not truly retired, was not entitled to a union pension at that time, and could not receive his pension under the Plan until 1986 when he would be 65 years old.
The Plan provides monthly wage-related retirement benefits for employees with service of 30 years or longer equal to the greater of either $470 or 60 percent of pay. Pay is defined by looking to the highest-paying five consecutive years in the 10 years immediately preceding retirement. The Plan therefore informed Chambless that when he retired, his monthly benefit would be $470 per month rather than the approximately $970 per month he would have received if he had been allowed to retire in 1977, when his pension would have been calculated using 1967-77 as base years--the period when his income was at its zenith.
The tortuous procedural history of this case began in 1980 when Chambless and his wife as plaintiffs brought suit against defendants, inter alia, the union, the Plan, and Chambless' former employers. Essentially, the complaint alleged that because Chambless had worked for a non-Plan ship, the Plan had discriminatorily forfeited his pension, causing him to receive $470 at age 65 rather than $920 at age 55. Chambless asserted a plethora of claims including violations of the Employee Retirement Income Security Act of 1974, 29 U.S.C. Sec. 1001 et seq. (1982) (ERISA), antitrust violations, waiver and estoppel, breach of duty of fair representation, infliction of emotional distress, and breach of fiduciary duty.
Many of appellant's claims and several named defendants were dismissed following cross-motions for summary judgment. See Chambless v. Masters, Mates & Pilots Pension Plan,
Chambless' counsel then moved for attorney's fees pursuant to Sec. 502(g) of ERISA, 29 U.S.C. Sec. 1132(g). The district court denied the request on the grounds that plaintiff's "vexatious[ ] and wasteful[ ] litigation strategy" outweighed his success on the ERISA claim. It also denied plaintiff's motions to amend the judgment to state the amount of his benefits. No. 80 Civ. 4258 (RLC) (S.D.N.Y. June 23, 1986). We affirmed the district court's refusal to amend its judgment before the benefits had commenced on the grounds that the motion was premature, but reversed and remanded for the district court to "determine and award a reasonable fee for the time spent on Chambless' vindicated ERISA claim."
That brings us to the decisions that we now review. As the opinion of the district court with which we disagree is unpublished, we set forth its conclusions in some detail. See Chambless v. Master, Mates & Pilots Pension Plan, No. 80 Civ. 4258,
Initially, Chambless had characterized his complaint as a "seamless web," see Chambless IV,
To calculate an hourly rate for Chambless' attorneys that reflected both inflation and delayed payment because of the protracted history of the case, the district court divided the litigation into two time periods subject to different hourly rates, but declined to add interest to the award on the grounds that its rates for the earlier hours were generous enough to compensate for the time that elapsed since the services had been rendered. The hourly rates for both time spans were what the district court determined to represent the market rate for small to medium-sized firms. In addition, the fee calculation reimbursed Chambless' attorneys for the payroll cost of paralegals and law clerks rather than their customary billable hourly rate, which plaintiff had sought. This portion of the award was similarly reduced by 30 percent for inadequate documentation and unrelated claims.
Turning to Chambless' pension benefits, the court denied his request for post-1977 cost-of-living adjustments on the grounds that the Plan allows such increases only to actual benefit recipients. As a result, plaintiff could not receive cost-of-living adjustments for years before he retired when he was not yet a recipient. Significantly, the district court accepted Chambless' argument that his benefits should be actuarially adjusted to reflect the fact that his life expectancy was shorter when he began receiving benefits in 1986 than when he attempted to retire in 1977. Such an increase, the district court concluded, was not the functional equivalent of retroactive benefits. The district court therefore set Chambless' benefits at $2,689.02, or approximately three times the amount he would have received in 1977.
After plaintiff had accepted the district court's invitation to make certain other submissions, including a supplemental fee application, the district court, upon reargument, fine-tuned plaintiff's fee award to $451,990.50, but rejected all other arguments.
II DISCUSSION
A. Chambless' Benefits
This discussion assesses the propriety of the district court "actuarially adjusting"--more than tripling--Chambless' monthly benefits from $859.43 to $2,689.02.
It is axiomatic that once a court of appeals decides a question, the district court must follow that ruling upon remand. See Doe v. New York City Dept. of Social Servs.,
In its July 20 opinion, the district court recognized "the undisputed fact" that Chambless may not receive retroactive benefits. Nonetheless, it awarded the economic equivalent, labeling it "actuarial adjustment" rather than "retroactive benefit," as if the two were distinct, like apples and oranges. It attempted to sharpen its distinction by noting that an actuarial adjustment
would not alter the total amount of pension benefits to which [Chambless] is entitled over the course of his expected lifetime. It would merely recognize that that amount will now be payable over a shorter period of time. Thus, viewed from the perspective of his total projected lifetime benefits, the adjustment plaintiff seeks would not increase his benefits.
Decision at 37.
We have no quarrel with the observation that a 65-year-old has a shorter life expectancy than a 55-year-old. But the fallacy in the July 20 opinion is its underlying assumption that Chambless was entitled to a set sum--evidently based on life expectancy--regardless of how long he was on the Plan's pension rolls. Based on this erroneous premise, the district court compensated Chambless believing that because he would be paid for a shorter period of time, the amount of each payment should be increased. Chambless has not pointed to, nor have we found, a section of the Plan regulations that specifically or even implicitly suggests that claimants must receive a given total amount of benefits. As Chambless is not entitled to a specific total sum, obviously no adjustment is necessary to make sure that he receives such an award.
In addition, the district court erred by focusing on how and when the benefits were paid to Chambless--apparently defining "retroactive benefits" to mean a lump sum payment for benefits previously withheld. But the reason we disallowed retroactive payments had nothing to do with whether or not they were paid at once. We recognized previously that Plan pensioners cannot receive retirement benefits until they actually retire; Chambless did not retire from the maritime industry until 1986. See Chambless III. This was the rationale for denying plaintiff retroactive payments, defined as payments for the years 1977-86. Payments that in any way compensate Chambless for the years 1977-86 are retroactive benefits--regardless of how they are labeled--and regardless of whether Chambless receives them in one lump sum in 1986 or, as the district court directed, in monthly installments after 1986.
Accordingly, the district court should enter judgment directing the Plan to provide Chambless with a monthly benefit of $859.43 per month, the amount he would have received under the husband and wife pension plan option had he been allowed to retire in 1977. We affirm Judge Carter's ruling that now that Chambless has begun to receive benefits, he is entitled to whatever cost-of-living adjustments the Plan has awarded other recipients from the date of his application in October of 1986. Because the adjustment to Chambless' benefits was incorrect, the issue of whether plaintiff should be awarded interest on that adjustment is moot.
B. The Amount of Attorney's Fees
We note at the outset that our scope of review on an award of attorney's fees is circumscribed. An assessment of such an award entails a detailed ad hoc inquiry into the particular case. See Blanchard v. Bergeron, --- U.S. ----,
With the exception of reimbursement for paraprofessionals necessitated by a recent Supreme Court case to be discussed below--rendered after Judge Carter's opinion--we cannot say there has been an abuse of discretion. Hence, Judge Carter's rulings on attorney's fees and costs are affirmed in all other respects for substantially the reasons stated in his exhaustive opinions of July 20, 1988 and September 16, 1988. But we take this opportunity to add a few comments.
1. Reimbursement for Paralegals and Law Clerks
The district court awarded appellant's attorneys the payroll cost--rather than the customary billing rates--for paralegals and law clerks who worked on this litigation. This allowed counsel to break even--but without making a profit--for its use of paraprofessionals. In focusing on cost rather than the prevailing market rate, the district court properly followed our holding in City of Detroit v. Grinnell Corp.,
Chambless argued that Grinnell was no longer good law, relying on United States Football League v. National Football League,
In Jenkins the High Court ruled that a reasonable attorney's fee should be calculated to reimburse paralegals at market rates rather than cost, where that is the custom of the local legal community. The Supreme Court noted that "separate billing [for paralegals] appears to be the practice in most communities today." --- U.S. at ----,
2. Setting Plaintiffs' Hourly Rate by Reference to Small to Medium Firms
After determining the number of hours reasonably needed to litigate the prevailing case, the district court under the "lodestar" analysis ascertained a reasonable rate by which to multiply the number of hours. The Supreme Court has stated that awards of attorney's fees must be calculated according to "the prevailing market rates in the relevant community...." Blum v. Stenson,
The burden was on Chambless to establish his hourly rate with "satisfactory evidence--in addition to the attorney's own affidavits...." Id.; see also Hensley,
Moreover, the Manhattan Lawyer article itself supports the proposition that smaller firms may be subject to their own prevailing market rate. See Manhattan Lawyer, May 11, 1987, at 31, col. 1 ("Raising rates has been trickier for mid-sized and smaller firms because blue-chip clients frequently turn to them thinking they'll get lower bills."). In light of plaintiff's proffered evidence, it is hardly surprising that the district court chose to interject its own knowledge.
3. Fee Parity
We are similarly unpersuaded by Chambless' demand for "fee parity" with the Plan's counsel--a "large" firm, which was paid under an insurance policy. See Sokolowski v. Aetna Life & Casualty Co.,
Further, in the circumstances of this case, the fees the Plan paid its counsel are not particularly helpful in setting a reasonable rate for Chambless' attorneys. The two parties had entirely different stakes in the litigation. Chambless brought the suit primarily to recover his own individual Plan benefits, even though he achieved a broader effect. The Plan, in contrast, is composed of numerous participants like Chambless, and it had already been the defendant in a class action suit that raised issues analogous to those raised in the instant litigation. See Sokolowski,
There may be instances when district courts will want to consider--among the myriad of other factors--the fees charged by opposing counsel. Cf. Taylor v. Scarborough,
4. Delay in the Payment of Fees
To spare the parties yet a fourth appeal to this Court, we acknowledge the observation in Missouri v. Jenkins that "an appropriate adjustment for delay in payment--whether by the application of current rather than historic hourly rates or otherwise" is consistent with the goals of fee-shifting statutes. --- U.S. at ----,
III CONCLUSION
The award of pension benefits is reversed and the case is remanded for an award of benefits consistent with this opinion. The case is also remanded for an award of paralegal fees consistent with Missouri v. Jenkins. The rulings on attorney's fees and costs are otherwise affirmed.
Reversed in part, affirmed in part, and remanded.