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Administrator v. Kienast

May 2, 2008


The opinion of the court was delivered by: Terrence F. McVerry United States District Court Judge


Now pending before the Court is the PETITION FOR ATTORNEY FEES (Document No. 24), with brief and exhibits in support, filed by Plaintiffs. Defendant Fred Kienast has filed a response, appendix and brief in opposition (Document Nos. 27-29), and Plaintiffs have filed a reply brief (Document No. 31). The matter is ripe for disposition.

Factual and Procedural Background

The facts in this ERISA case are straight-forward. Defendant Fred Kienast was employed by Limbach Facility Services, Inc. ("Limbach") for fifty-two years, until his retirement from his position as Executive Vice President and Chief Executive Officer of the Pittsburgh branch in December 2002. Kienast was a participant in an ERISA defined contribution plan, the Limbach Holdings, Inc. Profit Sharing Retirement Plan (the "Plan"). In 2003, Kienast requested a distribution of his account balance in the Plan, which he anticipated would be approximately $700,000. On July 2, 2003, the Plan disbursed $312,595.67 to Kienast. In 2004, Kienast again requested a distribution of his account balance from the Plan. Due to an administrative error, the Plan approved this second request as well and disbursed an additional $218,816.97 to Kienast. In the fall of 2004, while responding to another inquiry from Kienast, the Plan discovered that it had erroneously made two distributions to Kienast and requested that he return the overpayment. Kienast ignored or denied the Plan's request, which triggered this litigation. On January 23, 2008, the Court granted Plaintiffs' Motion for Summary Judgment, commenting:

In summary, the merits of this case -- factual, legal and equitable -- weigh strongly in favor of Plaintiffs. Even if Kienast originally anticipated that his retirement payout would be higher, it was clear, at least after the reconciliation performed by Hewitt in late 2006, that he had wrongfully obtained a windfall of funds that rightfully belong to his fellow plan participants. It certainly promotes the ERISA goals of protecting the interests of Plan members and their beneficiaries, see id. at 1187, to require Kienast to return the overpayment.


Plaintiffs, as prevailing parties, seek an award of counsel fees and costs. Under ERISA, "the court in its discretion may allow a reasonable attorney's fee and costs of action." 29 U.S.C. § 1132(g)(1). To guide a district court in the exercise of its discretion in connection with such fee petitions, the United States Court of Appeals for the Third Circuit has established a five-factor test that must be considered:

(1) the offending party's culpability or bad faith;

(2) the ability of the offending party to satisfy an award of attorneys' fees;

(3) the deterrent effect of an award of attorneys' fees against the offending party;

(4) the benefit conferred on members of the pension plan as a whole; and

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

McPherson v. Employees' Pension Plan of American Re-Insurance Co., 33 F.3d 253, 254 (3d Cir. 1994) (citing Ursic v. Bethlehem Mines, 719 F.2d 670, 673 (3d Cir.1983). There is no presumption that a successful plaintiff in an ERISA suit should receive an award in the absence of exceptional circumstances. Id. A district court, when ruling on an ERISA fee petition, should articulate its analysis and conclusions on each of the Ursic factors. Defendant contends that all five Ursic factors weigh in favor of denying the fee petition and also contests the amount of fees claimed by Plaintiffs. The Court will address these arguments seriatim.

Ursic Factors

1. Offending Party's Culpability

In McPherson, the Court explained that a party is not culpable merely for taking a litigation position that did not prevail. On the other hand, culpability does not require a showing of bad faith. The Court defined the applicable standard as follows:

A losing party may be culpable, however, without having acted with an ulterior motive. In a civil context, culpable conduct is commonly understood to mean conduct that is "blameable; censurable; ... at fault; involving the breach of a legal duty or the commission of a fault.... Such conduct normally involves something more than simple negligence.... [On the other hand, it] implies that the act or conduct spoken of is reprehensible or wrong, but not that it involves malice or a guilty purpose."

33 F.3d at 256-57 (quoting Black's Law Dictionary (6th ed. 1990)).

This factor weighs in favor of an award of counsel fees. Kienast asked for, and received, a pension account balance payout twice. At some point, despite his skepticism regarding the specific account balance amount(s), it became clear that he had "double-dipped" and had through inadvertent mistake received far more than his fair share of the proceeds of the Plan. ...

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