McIntyre v. Reliance Standard Life Insurance Company

Background

Melissa A. McIntyre brought an action under the Employee Retirement Income Security Act (ERISA) against Reliance Standard Life Insurance Company after Reliance terminated her long-term disability benefits. The court initially granted McIntyre summary judgment under a de novo review standard. The Eighth Circuit vacated that decision and sent the case back, directing the court to use an abuse-of-discretion standard instead. On remand, the court again granted McIntyre summary judgment, finding that Reliance abused its discretion in terminating her benefits.

McIntyre then sought attorney fees and costs. The request covered $73,542.44 as described in the background section, but the court ultimately addressed and awarded $72,542.44 for the period from May 29, 2019, through September 5, 2021. That amount included $617.44 in costs and fees and costs incurred during the appeal. McIntyre also sought the $50,000 that the parties had previously agreed would cover fees and costs incurred through May 28, 2019.

Entitlement to Fees

ERISA allows a court to award attorney fees and costs at its discretion. The court applied the five factors from Lawrence v. Westerhaus: the opposing party’s culpability or bad faith, its ability to pay, the deterrent effect of an award, whether the litigation benefited ERISA participants or resolved an important ERISA question, and the relative merits of the parties’ positions.

The court found that all five factors supported an award. It found Reliance significantly culpable because it took 204 days to issue its decision, exceeding the 90-day statutory limit, and because its delay helped Reliance obtain the only evidence supporting the denial of benefits. The court also found that Reliance had sufficient assets to pay the award. It determined that an award could deter similar violations and benefit other claimants by showing that violations of claims-processing requirements can have consequences. Finally, McIntyre had succeeded on the merits because the court found, even under the more deferential abuse-of-discretion standard, that Reliance improperly denied her benefits.

Amounts Awarded

The court held that McIntyre was entitled to the previously agreed $50,000 for fees and costs incurred through May 28, 2019. The order made payment of that amount contingent on McIntyre being the prevailing party in any further appeal covered by the order. Reliance did not dispute the agreement or the reasonableness of that amount.

The court also held that it had authority to decide McIntyre’s request for $32,895 in fees and costs incurred during the appeal. It rejected Reliance’s argument that McIntyre had to seek those fees in the Eighth Circuit under that court’s local rule. The court concluded that McIntyre had achieved some success on the merits in the litigation as a whole, which satisfied the ERISA standard for seeking fees.

The court awarded $72,542.44 for fees and costs incurred from May 29, 2019, through September 5, 2021. It used the requested $71,925 in attorney fees rather than a higher amount produced by one calculation because McIntyre had requested the lower amount. The court found reasonable the hourly rates of $425 for Katherine MacKinnon and $275 for Nicolet Lyon, as well as the hours billed. It rejected Reliance’s request to reduce fees for research by MacKinnon, finding that the structure of her two-person firm made delegation to the lower-rate attorney impractical.

Order

Judge John R. Tunheim granted McIntyre’s motion for attorney fees. The order required Reliance to pay $50,000 for fees and costs incurred before May 28, 2019, subject to the stated further-appeal condition, and $72,542.44 for fees and costs incurred from May 29, 2019, through September 5, 2021. The order stated that the award did not waive or prejudice McIntyre’s ability to seek additional fees and costs for proceedings after September 5, 2021.