Prevailing Plaintiff Denied Attorney’s Fees

June 30, 2010 | Appeals | Insurance Coverage

The plaintiff in this case brought a lawsuit under ERISA against Liberty Life Assurance Company of Boston after the insurer denied her claim for partial disability benefits. After the parties filed motions for summary judgment, the district court remanded the matter to the insurer for further administrative review of her claim. The district court instructed the insurer to consider evidence that the plaintiff had submitted with her summary judgment motion but that had not been included in the administrative record. The insurer again denied the plaintiff’s claim, and both parties then submitted supplements to their existing motions for summary judgment.

The district court granted summary judgment to the plaintiff after concluding that the insurer had abused its discretion by failing to evaluate the plaintiff’s medical records “in their totality.” The insurer appealed to the U.S. Court of Appeals for the Eighth Circuit, challenging both the merits of the district court’s judgment and its decision to remand the case for further administrative review. The Eighth Circuit affirmed.

The plaintiff subsequently moved for attorney’s fees and costs under an ERISA provision that provides that a district court may in its discretion “allow a reasonable attorney’s fee and costs of action to either party.” In deciding whether to award attorney’s fees, the district court considered the following factors:

(1) the degree of the opposing parties’ culpability or bad faith;

(2) the ability of the opposing parties to pay attorneys’ fees;

(3) whether an award of attorneys’ fees against the opposing parties could deter other persons acting under similar circumstances;

(4) whether the parties requesting attorney’s fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA itself; and

(5) the relative merits of the parties’ positions.

The district court determined that only one of the factors clearly weighed in favor of an attorney’s fee award and that was the insurer’s ability to pay. Moreover, the district court further concluded that although the final factor – the relative merits of the parties’ positions – tipped slightly in favor of an award, the remaining factors weighed against one. It denied her motion, and the plaintiff appealed to the Eighth Circuit, asserting that the district court had erred in its assessment of the relevant factors in its decision on her motion for attorney’s fees and costs.

In its decision, the Eighth Circuit explained that it an appellate court should not overturn a district court’s determination regarding an attorney’s fee award absent an abuse of discretion.  An abuse of discretion occurs “when the district court commits a clear error of judgment in weighing the relevant factors.”

The appellate court noted that the plaintiff first contended that the district court erred in finding a lack of culpability or bad faith on the insurer’s part. She asserted that the insurer’s culpability ws evident from the district court’s conclusion that the administrator had abused its discretion by conducting a cursory review of her claim for benefits. As the Eighth circuit noted, the district court had disagreed with that contention, reasoning that even though the plaintiff had ultimately prevailed on her claim, the insurer’s decision to deny benefits did not amount to culpable conduct because substantial evidence existed in the record to support its conclusion that the plaintiff was not disabled. The appellate court observed that a plan administrator’s decision to deny benefits is not culpable conduct if it was supported by substantial evidence.

The plaintiff also claimed on appeal that the district court had made a clear error of judgment with respect to whether a fee award in this case would have a significant deterrent effect. She argued that an award would deter the insurer and other insurers from conducting cursory claim reviews. The district court acknowledged the plaintiff’s argument, but also considered the effect the denial of fees could have in discouraging unnecessarily prolonged ERISA litigation. The district court determined that the deterrence factor weighed against a fee award, noting that the actions of the plaintiff’s counsel “did more to unreasonably multiply these proceedings than any litigating position Liberty Life took.” Although the plaintiff placed blame on the insurer for the time and resources expended in this lawsuit, the Eighth Circuit found that the district court was in the best position to evaluate the relative roles of the parties in extending the litigation, and it gave “great deference to that decision.”

Next, the plaintiff challenged the district court’s finding on the fourth factor, common benefit to plan participants. She contended that her claim would in fact benefit all plan participants indirectly because it would motivate the insurer to conduct a more thorough evaluation of future claims for benefits. The Eighth Circuit explained, however, that the common benefit factor involved a “subjective element” in that a claimant must have “sought to benefit” all plan participants. The plaintiff did not contend that she “sought to benefit all participants and beneficiaries” by bringing her claim for benefits, according to the Eighth Circuit, and therefore it found that the district court did not abuse its discretion by finding that this factor weighed against an attorney’s fee award.

Finally, the plaintiff argued that the merits of the case were strongly on her side. The Eighth Circuit explained that although she ultimately prevailed, the insurer’s position “nevertheless had merit.” It then concluded that the district court had not made a “clear error of judgment” in weighing the relevant factors, that the only factor the district court found to weigh clearly in favor of an award of attorney’s fees was the insurer’s ability to pay, which factor alone did not justify an award where other factors weighed against one, it affirmed the district court order. [Willcox v. Liberty Life Assurance Co. of Boston, 2010 U.S. App. Lexis 6248 (8th Cir. March 25, 2010).]

Court Rejects FMLA Claims By Plaintiff Who Was Terminated Before Company Executives Knew Of FMLA Leave Request

In this case, the plaintiff, a sales associate selling homes in housing developments in Sarasota, Florida, for Pulte Home Corp., alleged that she fell and injured her foot in June 2007; she did not initially request any leave from work at Pulte as a result of this injury. In July, the plaintiff received two written warnings from her supervisor and was placed on a 30 day performance improvement plan.

On August 17, the plaintiff contacted a Pulte human resources representative and requested leave under the Family and Medical Leave Act for the period of time during which she was scheduled to have surgery on her foot. The plaintiff was sent the relevant forms and also was provided with contact information so that she could file a claim for short term disability benefits. The plaintiff alleged that she attempted to have her supervisor sign her leave form on the same day, but the supervisor was in her office with her door shut, and the plaintiff was never able to ask for approval.

Also on that day, the plaintiff met with a disgruntled customer who had complained to Pulte’s chief executive officer about a situation with a home she was purchasing. After meeting with the plaintiff, the customer spoke and complained to Pulte’s vice president of sales and marketing. That executive called Pulte’s director of sales to discuss the situation. The following day, Pulte decided to terminate the plaintiff. When the plaintiff reported to work on August 20, the director of sales informed her of that decision.

The plaintiff filed a complaint in federal district court as a result of her termination. The director of sales testified in his pre-trial deposition that he decided to terminate the plaintiff based on her failure to address the issues in her performance improvement plan, including the lack of communication with customers and infractions regarding attitude and teamwork, and also the situation with disgruntled customer, and that he had not been aware of any request by her for FMLA leave at the time he made the decision. Pulte’s vice president of sales and marketing testified that she first became aware of the plaintiff’s request for leave in an e-mail dated August 20, and that the decision to terminate her had been made on August 18.

The district court granted Pulte’s motion for summary judgment as to the plaintiff’s FMLA retaliation and ERISA interference claims on the ground that there was no evidence in the record that management at Pulte had been aware of the plaintiff’s FMLA leave request at the time the decision was made to terminate her. The district court granted summary judgment as to the FMLA interference claim on the basis that the plaintiff had failed to provide any medical evidence substantiating her alleged medical condition and entitlement to FMLA leave. The district court further concluded that the plaintiff failed to present evidence that she submitted a valid request for FMLA leave. The district court alternatively granted summary judgment on the FMLA interference claim based on a finding that the plaintiff would have been terminated regardless of any request for FMLA leave. The plaintiff appealed to the U.S. Court of Appeals for the Eleventh Circuit, arguing that the decision maker at Pulte was aware of her request for FMLA leave or disability benefits before deciding to terminate her employment and that the temporal proximity of one day between her termination and her requests for FMLA and short-term disability benefits, and the circumstances of the termination, could prove that the termination and requested benefits were not wholly unrelated.

In its decision, the appellate court found that, even accepting that there was a question of fact as to whether Pulte’s director of sales or its vice president of sales and marketing had decided to terminate the plaintiff, no evidence in the record rebutted the affirmative evidence offered by Pulte that both of these executives were unaware of the plaintiff’s FMLA request at the time the decision was made to terminate her employment. The Eleventh Circuit also found that there was  no evidence to support a finding that either executive had known of any application for short term benefits by the plaintiff at the time the decision was made to terminate her employment. Because the plaintiff failed to present sufficient evidence to create a genuine issue of fact as to causal connection for her FMLA retaliation and ERISA interference claims, Pulte was entitled to summary judgment on those claims, the appellate court ruled.

With respect to the plaintiff’s FMLA interference claim, the appellate court explained that the right to commence FMLA leave is not absolute, and that an employee can be dismissed, preventing her from exercising her right to commence FMLA leave, without thereby violating the FMLA, if the employee would have been dismissed regardless of any request for FMLA leave. In this case, it ruled, the unrebutted evidence that the decision maker was not aware, at the time of the decision to terminate the plaintiff, of her request to commence FMLA leave established as a matter of law that her termination was for reasons other than her requested leave. Pulte was, therefore, entitled to summary judgment on the FMLA interference claim, the Eleventh Circuit concluded. [Krutzig v. Pulte Home Corp., 2010 U.S. App. Lexis 7029 (11th Cir. Apr. 5, 2010).]

Circuit Court Decides That ADA Can Obligate Employer To Accommodate Employee’s Disability-Related Difficulties In Getting To Work, If Reasonable

The plaintiff in this case, a cashier at the Rite Aid store in Old Forge, Pennsylvania, was diagnosed with “retinal vein occlusion and glaucoma in her left eye,” and eventually became blind in that eye. Although able to see out of her right eye and to perform her duties at work, the plaintiff informed her supervisor that her partial blindness made it dangerous and difficult for her to drive to work at night. The plaintiff claimed, and Rite Aid did not dispute, that public transportation was not an option for the plaintiff because bus service ended at 6 p.m. and there were no taxis. Nonetheless, the plaintiff alleged that her supervisor told her that she would not be assigned only to day shifts because it “wouldn’t be fair” to the other workers.

The plaintiff’s doctor sent her supervisor a note that recommended that the plaintiff “not drive at night,” but her supervisor again informed the plaintiff that she was unwilling to assign the plaintiff to exclusively day shifts, and she continued to schedule the plaintiff for a mixture of day and night shifts. The plaintiff relied on her family to shuttle her to and from work for night shifts.

After the second conversation with her supervisor, the plaintiff discussed her desire to change to day shifts with her union representative. He contacted the plaintiff’s supervisor to discuss the matter, but then told the plaintiff that he “got nowhere” with her. The plaintiff resigned, submitting her resignation in a handwritten note that gave two weeks’ notice and that stated, “I feel I have not been given fair treatment. There has been prejudice against me. I have been picked on and lies have been told about me. No one deserves that kind of treatment.” The plaintiff subsequently filed suit against Rite Aid under the Americans with Disabilities Act for failure to accommodate her partial blindness, for constructive discharge, and for retaliation.

After the parties moved for summary judgment, the district court granted Rite Aid’s motion. It held that the plaintiff’s vision problem qualified her as disabled under the ADA, and it reasoned that a reasonable juror could so conclude from her testimony that she had “substantial difficulties with depth perception,” making it difficult for her to drive at night.

The district court held, however, that the plaintiff had not suffered any adverse employment action cognizable under the ADA. In particular, the district court granted Rite Aid summary judgment on the plaintiff’s failure to accommodate claim, noting that the parties had agreed that the plaintiff “did not need an accommodation to perform her job once she arrived at work.” In light of that agreement, the district court stated that the accommodations that the plaintiff sought “had nothing to do with the work environment or the manner and circumstances under which she performed her work,” and thus Rite Aid had no duty to accommodate the plaintiff in her commute to work. In so holding, the district court concluded that “the ADA is designed to cover barriers to an employee’s ability to work that exist inside the workplace, not difficulties over which the employer has no control,” and that imputing a duty to accommodate the plaintiff was tantamount to “mak[ing] an employer responsible for how an employee gets to work, a situation which expands the employer’s responsibility beyond the ADA’s intention.”

The plaintiff appealed, arguing that the district court had erred in holding that Rite Aid had no duty to accommodate her shift request. The appellate court found that the reach of the ADA was not so limited, and it held that under certain circumstances the ADA can obligate an employer to accommodate an employee’s disability-related difficulties in getting to work, if reasonable. One such circumstance was when the requested accommodation was a change to a workplace condition that was entirely within an employer’s control and that would allow the employee to get to work and perform the employee’s job, the appellate court declared. It then stated that a change in shifts “could be that kind of accommodation.”

Accordingly, the appellate court remanded the case to the district court for a trial on the plaintiff’s failure to accommodate claims, including on the reasonableness of the plaintiff’s request and whether it would have created an undue burden for Rite Aid. [Colwell v. Rite Aid Corp., 2010 U.S. App. Lexis 7249 (3rd Cir. Apr. 8, 2010).]


MICHELLE L. BAILEY, Plaintiff-Appellant, v. PREGIS INNOVATIVE PACKAGING, INC., Defendant-Appellee.


2010 U.S. App. Lexis 6909; April 2, 2010, Decided

POSNER  , Circuit Judge. The district court granted summary judgment for the defendant in this suit under the Family and Medical Leave Act, 29 U.S.C. §§ 2601 et seq. The appeal raises several issues, but only two warrant discussion; the others have no possible merit.

The defendant in this case, Pregis Innovative Packaging, Inc., fired the plaintiff because she had received more than eight “points” for absenteeism during a 12 month period – a firing offense under Pregis’ “no-fault attendance policy.” The plaintiff argued, however, that she would not have received so many points had she not taken two absences in July 2006 – and she contended that these absences were leaves to which the Family and Medical Leave Act entitled her.

The plaintiff brought suit and the dispute reached xxxxxx, and if this is correct the defendant could not lawfully penalize her for taking them. 29 U.S.C. § 2615(a)(1); 29 C.F.R. § 825.220(c); Phillips v. Quebecor World RAI, Inc., 450 F.3d 308, 310 (7th Cir. 2006);  [*2] Novak v. MetroHealth Medical Center, 503 F.3d 572, 577-78 (6th Cir. 2007). But to be entitled to take leaves protected by the Act in July 2006, she had to have “been employed for at least 1,250 hours of service with [her] employer during the previous 12-month period.” 29 U.S.C. § 2611(2)(A)(ii). And she hadn’t been–unless, as she argues, she is entitled to toll the 12-month period for the 56 days during that period in which she was on FMLA leave–that is, unless she is entitled to add, to the time she worked during those 12 months, the time she worked during the 56 days that preceded the 12 months.

Tolling ordinarily adds time to the end of a limitations period. Suppose a two-year statute of limitations began to run on January 1, 2008, but was tolled for six months beginning on July 1, 2008, because the defendant had agreed to waive any defense based on the statute of limitations for that period while the parties tried to work out a settlement. Then the statute of limitations would expire not on December 31, 2009, but on June 30, 2010. The problem for the plaintiff in this case is that the 1,250-hour qualifying minimum must be satisfied before she can take any further FMLA leave. So  [*3] she wants to be credited with hours worked for a period, before the 12 months, that is equal to the FMLA leave she took during the 12 months that preceded the leave that caused her to be fired.

There is no basis for such a contortion of the statute–no hint in the statute or elsewhere that Congress envisaged and approved such a circumvention of the requirement that an applicant for FMLA leave have worked 1,250 hours in the preceding 12 months. We can’t find a case directly on point, but are supported in our conclusion by the refusal of courts including our own to interpret the statutory term “service” in an expansive fashion that would dilute the 1,250-hour requirement. See Pirant v. U.S. Postal Service, 542 F.3d 202, 208-09 (7th Cir. 2008) (employee could not count time spent putting on work uniform as “hours of service” for FMLA eligibility); Mutchler v. Dunlap Memorial Hospital, 485 F.3d 854, 858 (6th Cir. 2007) (employee could not count bonus “hours” awarded for working weekends toward the 1,250 minimum because they weren’t “hours actually worked”); Plumley v. Southern Container, Inc., 303 F.3d 364, 372 (1st Cir. 2002) (“hours of service” include “only those hours actually worked  [*4] in the service and at the gain of the employer” and so did not include hours in which the plaintiff did no work but for which he was awarded backpay in an arbitration proceeding against the employer).

The plaintiff’s second argument is that the defendant retaliated against her for taking FMLA leave. Such retaliation violates the Act. See 29 U.S.C. § 2615(a)(1) (“it shall be unlawful for any employer to interfere with, restrain, or deny the exercise of or the attempt to exercise any right provided under this subchapter”); 29 C.F.R. § 825.220(c) (“the Act’s prohibition against ‘interference’ prohibits an employer from discriminating or retaliating against an employee or prospective employee for having exercised or attempted to exercise FMLA rights”). A “point,” which as we know jeopardizes a worker’s employment with the defendant, is removed 12 months after it is imposed. But as we also know, the defendant does not count time on leave, including FMLA leave, toward the 12 months. Therefore it takes someone like the plaintiff, who has taken FMLA leave, longer to wipe the slate clean than it would take an otherwise similar employee who had not taken FMLA leave in the preceding 12 months.

The  [*5] Act provides that taking FMLA leave “shall not result in the loss of any employment benefit accrued prior to the date on which the leave commenced.” 29 U.S.C. § 2614(a)(2). An initial question is whether a removal of absenteeism points is an “employment benefit.” If it isn’t, the plaintiff wasn’t deprived of anything that the Family and Medical Leave Act protects.

It is a “benefit” in approximately the sense in which granting parole is a benefit to the parolee; it reduces a penalty. A more positive light in which to view the defendant’s 12-month erasure policy, however, is that every time an employee completes 12 months of work he accrues a right to have incurred up to 8 absenteeism points without losing his job.

But is this right an employment benefit within the meaning of the Act? The Act defines “employment benefits” as “all benefits provided or made available to employees by an employer, including group life insurance, health insurance, disability insurance, sick leave, annual leave, educational benefits, and pensions.” 29 U.S.C. § 2611(5). As the list of “employment benefits” is not exhaustive, the fact that it does not mention removal of absenteeism points has no significance.  [*6] And the word “all” suggests that “employment benefits” should probably be construed broadly.

The Department of Labor, which administers the Family and Medical Leave Act, has issued an opinion letter (FMLA-100, 1999 WL 1002428 (Jan. 12, 1999)) saying that removal of absenteeism points is indeed an employment benefit within the meaning of the Act. Opinion letters issued by government agencies, including the Department of Labor, are “entitled to respect”–but only to the extent that they have “power to persuade.” Christensen v. Harris County, 529 U.S. 576, 587, 120 S. Ct. 1655, 146 L. Ed. 2d 621 (2000), quoting Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944); see also CenTra, Inc. v. Central States, Southeast & Southwest Areas Pension Fund, 578 F.3d 592, 601 (7th Cir. 2009); Catskill Development, L.L.C. v. Park Place Entertainment Corp., 547 F.3d 115, 127 (2d Cir. 2008). There is no reasoning in this opinion letter. It just states a conclusion, which unless self-evident has no power to persuade. Arriaga v. Florida Pacific Farms, L.L.C., 305 F.3d 1228, 1238 (11th Cir. 2002), rejected the position asserted in an opinion letter of the Department of Labor because the letter “[did] not offer any reasoning” for its conclusion.  [*7] And Kilgore v. Outback Steakhouse of Florida, Inc., 160 F.3d 294, 303 (6th Cir. 1998), did the same thing with Department of Labor opinion letters that “provide[d] no reasoning or statutory analysis to support their conclusion.” See also Catskill Development, L.L.C. v. Park Place Entertainment Corp., supra, 547 F.3d at 127.

We therefore give no weight to the letter; nevertheless we think the better interpretation of the statute is that wiping a point off the absenteeism slate is indeed an employment benefit. Although Congress’s purpose in making 12 months the minimum period for requiring the employer to grant FMLA leave was to exclude temporary and seasonal workers, see S. Rep. No. 3, 103d Cong., 1st Sess. 23 (1993), the defendant presumably chose 12 months as the length of time for absenteeism points to remain on the employee’s record because the employee’s working continuously for that length of time would be an indication that despite an occasional unauthorized absence he was a dependable worker after all. He would have earned forgiveness for the absence that had caused him to be given a point.

For the employer to deduct, from the 12 months, leave taken–for whatever reason–is consistent  [*8] with, and indeed a natural corollary of, no-fault attendance policies, which are common, see, e.g., “Attendance Policies: Absenteeism Without Breaking the Law,” Business Management Daily, Aug. 1, 2008, (visited March 31, 2010), and (depending on the precise terms) are consistent with the Family and Medical Leave Act. The Act is intended for the protection of workers who despite taking FMLA leave are committed to working for their employer. The intent is thus not simply to help families but “to balance the demands of the workplace with the needs of families.” 29 U.S.C. § 2601(b)(1). No-fault attendance policies (called “no fault” because they do not require or permit the employee to justify an absence by presenting a note from his doctor or equivalent evidence of justification–a process considered demeaning by many employees, as well as being administratively burdensome to the employer and easily abused) are consistent with this aim.

But while the removal of absenteeism points is, we conclude, an employment benefit, this cannot help the plaintiff. We must attend to the  [*9] language of section 2614(a)(2): taking FMLA leave “shall not result in the loss of any employment benefit accrued prior to the date on which the leave commenced.” The clause that we have italicized implies that a benefit that accrues after leave commenced is not protected. The implication is made explicit by section 2614(a)(3)(A), which says that the Act does not entitle an employee to “the accrual of any . . . employment benefits during any period of leave.” If removal of absenteeism points (commonly though misleadingly called “attendance points”) is an employment benefit, it is one that accrues 12 months after an absence. Until then the employee has no right to have an absenteeism point removed. An employee who worked for 11 months and was on leave the other month (say he began work on January 1 and was still employed on December 31, but was on leave during the month of July) cannot add the month that he was on leave in order to obtain a benefit available to an employee who worked for 12 months rather than 11, because the employee is not entitled to “the accrual of any . . . employment benefits during any period of leave.”

An employee must not be penalized by being deprived, just  [*10] because he is on family leave, of a benefit that he has earned (i.e., that has accrued to him) by working. But by the same token he cannot, when on family leave, accrue benefits that accrue only by working. The statute is explicit that an employee does not accrue seniority by being on family leave, 29 U.S.C. § 2614(a)(3)(A), because seniority is a reward for working; and similarly we conclude that an employee does not accrue absenteeism forgiveness when on leave, because that too is a reward for working. The defendant’s no-fault attendance policy is a lawful method of determining whether an employee has, despite absences, a sufficiently strong commitment to working for his employer to wipe an absence off his record. The plaintiff failed to demonstrate that commitment.


Reprinted with permission from the July 2010 issue of the Employee Benefit Plan Review – From the Courts.  All rights reserved.

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