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Estate of Kevin Schwing v. the Lilly Health Plan; the Eli Lilly and Company Life

September 28, 2012

ESTATE OF KEVIN SCHWING, PLAINTIFF
v.
THE LILLY HEALTH PLAN; THE ELI LILLY AND COMPANY LIFE INSURANCE AND DEATH BENEFIT PLAN; THE ELI LILLY AND COMPANY HEALTH CARE FLEXIBLE SPENDING PLAN; THE ELI LILLY AND COMPANY DEPENDENT DAY CARE FLEXIBLE SPENDING PLAN; THE LILLY SEVERANCE PAY PLAN; THE ELI LILLY AND COMPANY HOLIDAY AND VACATION PLAN; THE LILLY DENTALPLUS PLAN; PCS PHARMACY BENEFITS MANAGEMENT SERVICE PROGRAM; THE LILLY EMPLOYEE SAVINGS PLAN; THE LILLY RETIREMENT PLAN; ELI LILLY AND COMPANY, INDIVIDUALLY AND AS PLAN SPONSOR, FIDUCIARY AND ADMINISTRATOR OF THE LILLY RETIREMENT PLAN, AND THE LILLY SEVERANCE PAY PLAN, AND THE ELI LILLY AND COMPANY HOLIDAY AND VACATION PLAN, AND THE LILLY HEALTH PLAN, AND THE LILLY DENTALPLUS PLAN, AND PCS PHARMACY BENEFITS MANAGEMENT SERVICE PROGRAM; THE EMPLOYEE BENEFITS COMMITTEE, AS ADMINISTRATOR AND NAMED FIDUCIARY OF THE LILLY RETIREMENT PLAN, AND THE LILLY SEVERANCE PAY PLAN, AND THE ELI LILLY AND COMPANY HOLIDAY AND VACATION PLAN, AND THE LILLY HEALTH PLAN, AND THE LILLY DENTALPLUS PLAN, AND PCS PHARMACY BENEFITS MANAGEMENT SERVICE PROGRAM; AND LILLY GLOBAL SHARES STOCK OPTION PLAN, DEFENDANTS



The opinion of the court was delivered by: James Knoll Gardner, United States District Judge

OPINION

This matter is before the court on Defendants' Petition for Attorneys' Fees and Costs filed September 30, 2011. *fn1

Plaintiff, Estate of Kevin Schwing's Response in Opposition to Defendants' Petition for Attorneys' Fees and Costs was filed October 14, 2011. *fn2

Oral argument was conducted before me on May 3, 2012. The matter was taken under advisement. Hence this Opinion.

For the following reasons, I deny Defendants' Petition for Attorneys' Fees and Costs. Specifically, I conclude that defendants have shown some degree of success on the merits. However, after balancing the five factors outlined by the United States Court of Appeals for the Thitrd Circuit in Ursic v. Bethlehem Mines, 719 F.2d 670, 673 (3d Cir. 1983), I exercise my discretion to deny defendants an award of attorneys' fees and costs in this case.

JURISDICTION This court has jurisdiction pursuant to 28 U.S.C. § 1331 because plaintiff's complaint alleges that defendants denied him benefits to which he was entitled pursuant to the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 to 1461 ("ERISA"), and thus poses a federal question. The court has exclusive jurisdiction over this ERISA action pursuant to 29 U.S.C. § 1132(e)(1) because plaintiff Kevin Schwing brought this civil action as a participant in a benefits plan governed by ERISA. The court has supplemental jurisdiction over plaintiff's pendent state law claims. See 28 U.S.C. § 1367.

VENUE Venue is proper pursuant to 29 U.S.C. § 1132(e)(2) because one or more of the defendants may be found in this judicial district.

PROCEDURAL HISTORY On August 22, 2003, plaintiff Kevin Schwing, now deceased, filed a six-count Complaint against the various defendants in this case. *fn3

Count One of plaintiff's Complaint alleges a cause of action--against defendants Eli Lilly and Company, Individually, and as Plan Sponsor, Fiduciary and Administrator of six of the ten benefit plans and programs; The Lilly Health Plan; and The Employee Benefits Committee as Administrator and Named Fiduciary of the same six benefit plans and programs--pursuant to ERISA for failure to provide adequate notice of COBRA benefits to plaintiff as required by 29 U.S.C. § 1166(a)(4)(A) and failure to pay benefits pursuant to 29 U.S.C. § 1132(a)(1).

Count Two alleges a cause of action against eight of the ten defendant employee benefit plans and programs *fn4 , pursuant to ERISA seeking payment of benefits under those plans and programs, and requesting an Order directing those plans and programs to give plaintiff proper notification of his rights and benefits pursuant to COBRA.

Count Three alleges a claim for interference with pension benefits against defendants The Lilly Retirement Plan, and The Lilly Employee Savings Plan in violation of ERISA (29 U.S.C. § 1140).

Count Four avers a breach of fiduciary duties by defendant Eli Lilly and Company in violation of ERISA.

Count Five is a claim for attorneys' fees and costs in the event plaintiff prevails pursuant to ERISA.

Finally, Count Six is a Pennsylvania state-law claim for breach of contract against defendants Eli Lilly and Company and Lilly GlobalShares Stock Option Plan, relating to stock options, and against defendant Eli Lilly and Company for reimbursement of expenses incurred by plaintiff.

Defendants were all served with plaintiff's Complaint by United States Certified Mail between September 8 and 15, 2003.*fn5

By Stipulation for Extension of Time to Respond to Complaint, approved by the Clerk of Court under former Rule 7.4(b)(2) of the Rules of Civil Procedure for the United States District Court for the Eastern District of Pennsylvania, *fn6 filed October 1, 2003, the parties agreed to give defendants until October 29, 2003 to "answer, move or otherwise respond to the Complaint in this matter...." *fn7

On October 29, 2003 Defendant's [sic] Answer to Plaintiff's Complaint was filed. The answer contained defendants' responses to the allegations contained in plaintiff's Complaint and contained sixteen defenses, including: failure to exhaust administrative remedies (Sixth Defense); plaintiff was not a participant in certain plans (Twelfth Defense); certain plans do not exist (Thirteenth Defense); the GlobalShares plan can not be sued (Fourteenth Defense); and plaintiff lacks standing to bring his claims (Sixteenth Defense).

By Stipulation of Dismissal With Prejudice as to Certain Named Defendants filed April 16, 2004, defendants The Lilly DentalPlus Plan, PCS Pharmacy Benefits Management Service Program and The Lilly Employee Savings Plan were dismissed as parties to this action, with prejudice. It was further stipulated that each party would bear its own attorneys' fees and costs.

On May 5, 2004, I conducted a Rule 16 status conference by telephone conference call with counsel for the parties. During the telephone conference, I, among other things, set deadlines for production of defendants' Rule 26(a) initial disclosures, production of expert witness reports by all parties, and filing dispositive motions. I also set a trial date. Those deadlines were memorialized in my Rule 16 Status Conference Order dated May 5, 2004 and filed May 21, 2004.

By Stipulation of Dismissal With Prejudice filed January 10, 2005, Count III was dismissed from the Complaint, and four of the defendants were dismissed as parties to this action with prejudice. *fn8 There is no mention in this stipulation regarding attorneys' fees and costs.

By my Order dated February 16, 2005 and filed February 17, 2005, Defendants' Motion for Summary Judgment filed November 30, 2004 was granted in part and denied in part and Plaintiff's Motion for Summary Judgment filed November 30, 2004 was denied in its entirety.

Specifically, Defendants' Motion for Summary Judgment regarding Count One of plaintiff's Complaint was granted as unopposed by consent.

Defendants' Motion for Summary Judgment regarding Count Two of plaintiff's Complaint was granted in part and denied in part. As noted above, by two prior stipulations of the parties, seven of the defendant benefit plans and programs were dismissed from this action. *fn9 In all other respects, summary judgment on Count Two was denied.

By prior agreement of counsel, Count Three of plaintiff's Complaint was dismissed. Moreover, Count Four of plaintiff's Complaint was dismissed by consent. Defendants' Motion for Summary Judgment regarding Count Five of plaintiff's Complaint was denied.

Finally, Defendants' Motion for Summary Judgment regarding Count Six of plaintiff's Complaint was granted in part and denied in part. Summary judgment was granted on Count Six of plaintiff's Complaint as it related to stock options. Summary judgment was denied on Count Six as it related to plaintiff's claim for reimbursement of expenses.

A non-jury trial was held before me on March 1, 2, 3, 4, 7 and 8, 2005. Closing arguments were conducted on November 22, 2005. Defendants' Post-Trial Brief was filed February 17, 2006. On February 27, 2006 Plaintiff, Kevin Schwing's Post-trial Brief was filed.

On September 29, 2006, after post-trial briefing and closing arguments, I issued an Adjudication and Verdict in favor of plaintiff Kevin Schwing and against defendants Eli Lilly and Company, The Lilly Severance Pay Plan, and The Employee Benefits Committee, in the amount of $102,130 on plaintiff's claim for benefits under the severance pay plan.

Furthermore, I found in favor of defendants Eli Lilly and Company, The Eli Lilly and Company Holiday and Vacation Plan, and The Employee Benefits Committee, and against plaintiff Kevin Schwing, on plaintiff's claim for vacation benefits. In addition, I found in favor of defendants Eli Lilly and Company, The Eli Lilly and Company Health Care Flexible Spending Plan, and The Employee Benefits Committee, and against plaintiff Kevin Schwing, on plaintiff's claim for medical benefits.

I also found in favor of defendants Eli Lilly and Company, the Lilly Global Shares Stock Option Plan, and The Employee Benefits Committee, and against plaintiff Kevin Schwing, on plaintiff's claim for stock options. Finally, I found in favor of defendant Eli Lilly and Company, and against plaintiff Kevin Schwing, on plaintiff's claim for reimbursement of his final expenses.

On October 26, 2006 defendants appealed my September 29, 2006 Verdict and Adjudication. On April 14, 2009 the United States Court of Appeals for the Third Circuit reversed that portion of my Verdict, and entered judgment in favor of defendants, regarding plaintiff's claim under the severance plan. *fn10 On November 23, 2012 plaintiff filed a petition for writ of certiorari with ...


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