IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
__________________________
No. 01-30174
__________________________
RELIABLE HOME HEALTH CARE, Inc.; LOUIS T. AGE, Jr.,
Plaintiffs-Appellants-Cross Appellees,
versus
UNION CENTRAL INSURANCE COMPANY; Et Al,
Defendants,
GLAPION GROUP, Inc.; ROBERT JODY SANDERSON; WALTER A. GLAPION,
Jr.; AMERICAN AUTOMOBILE INSURANCE COMPANY,
Defendants-Appellees-Cross-Appellants.
__________________________
No. 01-30331
__________________________
RELIABLE HOME HEALTH CARE, Inc.; LOUIS T. AGE, Jr.,
Plaintiffs-Appellants,
versus
UNION CENTRAL INSURANCE COMPANY; Et Al,
Defendants,
GLAPION GROUP, Inc.; ROBERT JODY SANDERSON; WALTER A. GLAPION,
Jr.; AMERICAN AUTOMOBILE INSURANCE COMPANY,
Defendants-Appellees.
___________________________________________________
Appeals from the United States District Court
for the Eastern District of Louisiana
___________________________________________________
July 10, 2002
Before DUHÉ, DeMOSS, and CLEMENT, Circuit Judges.
CLEMENT, Circuit Judge:
Reliable Home Health Care, Inc. (“Reliable”) filed suit
against the Glapion Group, Inc. (“Glapion”) for breach of its
fiduciary duties arising out of a deferred compensation plan
created by Glapion for Reliable. This case involves a claim of
breach of fiduciary duty under ERISA. Prior to trial, Reliable
settled with Union Central Insurance Co. (“Union Central”) for
$165,000. Following a bench trial, the district court found that
Glapion breached its fiduciary duty to Reliable by failing to
advise Reliable it would lose the cash surrender value in its
insurance policies if it stopped paying premiums or by failing to
recover the money after it was lost. The court found Glapion
liable for $58,075.87, the cash surrender value of the policies.
However, no damages were awarded because the court held that
Reliable was made whole by its settlement with Union Central. The
court also held that each party was to bear its own costs but did
award Glapion costs and attorneys’ fees in the amount of $8,264.75
for an unsuccessful attempt to take trial testimony via video
conference due to plaintiff’s lack of cooperation. Both parties
timely appealed the court’s decision. For the following reasons,
2
we AFFIRM in part and REVERSE in part.
I. Facts and Proceedings
Louis Age (“Age”) is the CEO for Reliable, a Medicare
certified home health care agency doing business in and around New
Orleans. Reliable’s services include in-home nursing, nursing aid,
and rehabilitation services. Age was a licensed insurance broker
formerly employed by Union Central. Glapion, owned and operated by
Walter A. Glapion, Jr. and Robert J. Sanderson (“Sanderson”), was
an agent for Union Central. Mr. Glapion was the general manager
for Union Central and wrote insurance for it in addition to other
insurance companies.
In 1992, Age contacted Mr. Glapion, a former colleague,
concerning having Glapion create deferred compensation plans for
Age and other executive employees of Reliable. Age forwarded a
copy of a deferred plan seeking one similar to it. He also sent
copies of the Medicare regulations for such plans which preclude
the use of whole life policies as funding mechanisms. Age informed
Glapion that he wanted a deferred compensation plan containing
group insurance in addition to a cash product, preferably an
annuity.
As a Medicare provider, Reliable was entitled to reimbursement
for necessary and reasonable costs which included premiums for
payment of policies, including the policies which provided the
funding mechanism for the deferred compensation plan. Pursuant to
the Medicare cost reimbursement system, Medicare reimburses its
3
providers, such as Reliable, through interim payments throughout
the course of the provider’s fiscal year. At the end of each
fiscal year, the provider prepares and submits a cost report and
trial balance to an intermediary, an organization under contract to
the Department of Health and Human Services, for approval. Blue
Cross/Blue Shield of New Mexico was designed by the Health Care
Financing Administration (“HCFA”) as its intermediary for
Louisiana. David Fiedler was the intermediary who audited and
approved Reliable’s cost reports.
Glapion wrote a pension plan for Reliable which was rejected
in February 1993 by Fiedler because it included a whole life
insurance policy. As a result, Glapion employed an attorney to
create an adequate deferred compensation plan for Reliable. The
attorney created a prototype for Glapion in September 1993. In
March 1994, Fiedler approved the prototype. Glapion used the
prototype to make the plan for Reliable and used Selectex as a
funding mechanism. The prototype, completed in 1993, was backdated
and signed to reflect a November 1992 date, the date on which the
Plan was initially created for Reliable. The Plan was signed by
Sanderson on behalf of Age.1
Despite assertions that he did not sign nor ever see the
1
Age argues that Sanderson was not authorized to sign any
documents on his behalf. However, testimony elicited at trial
indicated that Age did give other people authority to sign his
name.
4
deferred compensation plan, Age paid the premiums from 1992 until
April 1994. Additionally, from 1992 to 1997, Reliable submitted
cost reports detailing costs for which it sought reimbursement.
The cost reports were submitted to Fiedler who issued a Notice of
Program Reimbursement (“NPR”) and reimbursed Reliable for costs
incurred through the payment of premiums for these years. Age
signed the reports certifying that all costs claimed on the reports
were permissible under Medicare regulations.
Sanderson was told by Union Central that Reliable’s policy was
paid up to date with a credit of $39,858.29 on February 22, 1996.
A check from Union Central was received in the amount of
$15,490.93, made payable to Liberty Bank and Trust, the custodian
of Reliable’s plan on October 7, 1996.2 Sanderson advised Age to
discontinue payments until a determination could be made as to the
whereabouts of approximately $24,000, the difference between the
credit Reliable was told it had and the $15,000 check it received.3
On December 31, 1996, Age was informed by Union Central that he
owed $135,418.78 and would be terminated retroactive to April 1,
1994, the date of the last payment, unless the Plan was made
2
While Liberty was the designated custodian and owner of the
policies by the Plan, no money was ever deposited with Liberty on
behalf of Reliable. No escrow account was ever opened. Dividend
checks sent from Union Central to Liberty on behalf of the
Reliable participants were endorsed by Liberty and then delivered
to the participants.
3
Unbeknownst to Sanderson, Age had stopped paying premiums
to Union Central in April 1994.
5
current by June 1, 1997. Once Union Central conducted the
accounting, Glapion advised Age to resume paying the premiums in
order to make the Plan current. Age did not resume payment of the
premiums. When the policy was terminated, its cash surrender value
was severely depleted because Union Central had instituted the
automatic loan provisions of the policies to pay for the delinquent
premiums. Age claims he was unaware of the existence of this
provision.
Reliable filed suit against Glapion and Union Central, but
prior to trial Reliable settled with Union Central for $165,000.
The case was then tried before the district court against Glapion
for the breach of fiduciary duty claim. Following the bench trial,
the court concluded that Glapion had breached its fiduciary duty to
Reliable by failing to advise Reliable of the loss of its cash
surrender values or negligently failing to cease the relationship
with Union Central prior to the depletion of its assets. The
district court concluded that Reliable suffered a loss of
$58,075.87, the cash surrender value of the policies when the
automatic loan provision took effect. However, Reliable was
precluded from recovering the loss because it had been fully
compensated through its settlement with Union Central. Both
Glapion and Reliable appealed the district court’s decision.
II. Analysis
A. Standard of Review
As a threshold matter, we address the appropriate standard of
6
review. The existence of an ERISA plan is a question of fact. See
Gahn v. Allstate Life Ins. Co., 926 F.2d 1449 (5th Cir. 1991).
Accordingly, we review the district court’s determination for clear
error. See Fed.R.Civ.Pro. 52(a). The legal conclusions reached by
the district court in applying those facts is de novo. The issue
of fiduciary status is a mixed question of law and fact. Reich v.
Lancaster, 55 F.3d 1034, 1044 (5th Cir. 1995).
B. Did a Valid Plan Exist?
The parties dispute whether a plan ever existed. The
district court held that a plan did exist. Reliable submits that
there is no evidence to support the district court’s conclusion
that a deferred compensation plan was created specifically for
Reliable, while Glapion asserts that there is ample evidence that
a plan did in fact exist based on Reliable’s actions. We conclude
that the district court was correct in finding that a plan did
exist.4
1. Was a Deferred Compensation Plan Created for Reliable?
Age first commissioned Glapion to create a deferred
compensation plan for Reliable’s executive employees in 1992.
Reliable requested a plan containing group insurance and a cash
product, preferably an annuity. The initial plan submitted to
Fiedler for approval contained an LFP policy, which is a whole life
4
Because there was a valid plan, ERISA clearly governs this
action. See Title 29 U.S.C. §§1002(A), 1003(a).
7
policy. Fiedler denied approval of the Plan for failure to comply
with Medicare regulations. In 1993, Glapion retained the services
of an attorney to draft a new plan prototype to replace the initial
plan. The prototype was approved by Fiedler in March 1994. The
prototype was applied to the Reliable Plan adding Selectex as the
funding mechanism. Reliable argues that the Reliable Plan,
although similar to the prototype approved by Medicare, was never
actually approved. The prototype was submitted for approval
without the funding mechanism. Glapion maintains that Fiedler
specifically approved Selectex as a funding mechanism. Because the
Plan was not ultimately approved until 1994, Glapion had the Plan
back-dated to reflect a November 1992 date, the date when the
initial Plan was signed by Age. The district court concluded that
a plan was created and approved.5 We agree.
Reliable submits that, if the Plan was valid, it needed to be
reviewed by an intermediary before it could be approved. Because
this was never done, no plan existed. The problem with this line
of reasoning is that HCFA and the intermediary, Fiedler, assumed a
plan to be in effect. Reliable submitted annual cost reports
beginning in 1992 and was reimbursed for the premiums paid into the
Plan. Whether it was appropriate for the intermediary to reimburse
5
The district court concluded that: “the credible evidence
demonstrates that the Medicare approved plan consisted of the
prototype plan, the plan description, and the participation
agreements. Moreover, the Fiedler and Booth letters show
acceptance of the plan by Medicare pursuant to its regulations.”
8
Reliable because no plan existed until 1994 is not an issue
reviewable by this Court. For, under Medicare regulations, an
intermediary’s decision as to the total amount of reimbursement
owed to a provider is final and binding and cannot be revisited
after three years. See 42 C.F.R. §§ 405.1803, 405.1885. Any
negligence on the part of Glapion in not creating a valid plan
until two years after Reliable began paying premiums was negated by
the fact that HCFA and the intermediary assumed that a plan existed
as reimbursements were issued for the premiums paid by Reliable
into the nonexistant plan. Reliable was reimbursed by Medicare for
the premiums it paid into the plan whether it existed or not prior
to 1994.
2. Was Selectex a Permissible Funding Mechanism for
Deferred Compensation Plans?
The district court concluded that Selectex6 was a valid
funding mechanism for the Reliable Plan. Reliable claims that
Selectex was a whole life policy precluded by the Plan and by
Medicare regulations.7 As a result, the Plan was invalid. While
6
The record indicates that Seletex is a form of whole life
policy with a rapid cash value growth akin to a retirement income
contract. Robert Lindenberger, a senior field sales vice-
president for Union Central, testified that, while it was a
limited pay whole life policy, it fit the definition of a
retirement income contract, permissible under Medicare.
7
Reliable relies on the Provider Reimbursement Manual, an
interpretive guideline published by the HCFA, the agency within
HHS that administers Medicare. The manual does not have the
effect of law. It is persuasive at best. See Sta-Home Home
9
there does not seem to be a dispute that whole life policies were
precluded by the Plan and by Medicare, the parties dispute whether
Selectex was a whole life policy. There is no doubt that the
funding mechanism used was not one desired by Reliable. However,
that does not make it an invalid funding mechanism for purposes of
the existence of a valid plan under Medicare. Whether HCFA or the
intermediary actually approved the specific Reliable Plan and its
funding mechanism, the fact is that it was deemed permissible.
Reliable sought and received reimbursements for the premiums it
paid into a nonexistant plan and subsequently into an existent plan
albeit one with an undesirable funding mechanism. The fact that
the funding mechanism used was not the one specified by Reliable
does not make it invalid under Medicare. Whole life insurance
policies can be used to fund deferred compensation plans. However,
in a case such as this, a regulatory agency has excluded the use of
certain types of policies to fund deferred compensation plans.
Medicare expressly precludes the use of whole life policies to fund
deferred compensation plans. For five years, Age submitted cost
reports and reimbursement requests for the premiums paid into the
Selectex policies, and, for five years, Fiedler approved Reliable’s
cost reports and reimbursement requests. Had Selectex been an
Health Agency, Inc., v. Shalala, 34 F.3d 305, 310 (5th Cir.
1994).
10
improper funding mechanism under Medicare, Reliable would not have
been reimbursed for the premiums paid into the policies. Because
reimbursements were made for a plan funded by Selectex, Selectex
cannot be considered an ordinary whole life policy.
C. Whether the Reliable Plan is an Unfunded Deferred Compensation
Plan for Executive Level Employees Exempting Glapion from the
Fiduciary Duties of ERISA.
ERISA’s coverage provisions provide that ERISA shall apply to
any employee benefit plan with certain enumerated exceptions. A
plan falling within such exceptions is one “which is unfunded
and...maintained by an employer primarily for the purpose of
providing deferred compensation for a select group of management or
highly compensated employees.” 29 U.S.C. §1101(a)(1). These
plans, also known as “top hat” plans are exempt from ERISA’s
fiduciary provisions as well as its participation, vesting, and
funding provisions. See 29 U.S.C. §§ 1051(2), 1081(a)(3), and
1101(a)(1).
In order to establish whether a plan qualifies as a top hat
plan exempt from ERISA’s fiduciary duties it must be (1) unfunded
and (2) maintained by an employer primarily for the purpose of
providing deferred compensation for a select group of management or
highly compensated employees. See Demery v. Extebank Deferred
Compensation Plan, 216 F.3d 283, 287 (2nd Cir. 2000). There is no
doubt that the Reliable Plan was created to provide deferred
11
compensation to high level employees. The issue remains whether
the Plan was unfunded. ERISA does not define what makes a plan
funded or unfunded for determining qualification in a top hat plan
nor has this Circuit directly addressed whether a plan is funded
for purposes of exemption from ERISA’s fiduciary provisions.8
The Second Circuit recently addressed the issue in Demery.
Bank officers filed suit against the bank for breach of fiduciary
duty in relation to a deferred compensation plan. The issue before
the court was whether the plan was maintained primarily for a
select group of high level employees. The plan was found to be a
“top hat” plan, and the court’s discussion on funding is
instructive. The Second Circuit had previously held that a plan
was unfunded in a situation where the benefits were paid “solely
from the general assets of the employer.” 216 F.3d at 287, quoting
Gallione v. Flaherty, 70 F.3d 724, 725 (2nd Cir. 1995). Adopting
a standard set forth in Miller v. Heller, 915 F.Supp. 651 (S.D.N.Y.
1996), the court asked whether the beneficiary could “‘establish,
through the plan documents, a legal right any greater than that of
an unsecured creditor to a specific set of funds from which the
employer is, under the terms of the plan, obligated to pay the
8
In Spacek v. The Maritime Association, I L A Pension Plan,
134 F.3d 283, 296 (5th Cir. 1998), we noted, in dicta, that top
hat plans “are not subject to ERISA’s full panoply of
regulations.”
12
deferred compensation.’” Demery, 216 F.3d at 287, quoting Miller at
660. Looking at the plan, the court concluded that it did not give
the plaintiffs any greater legal right to the funds than that
possessed by an unsecured creditor.
The Eighth Circuit has also addressed the issue. “Funding
implies the existence of a res separate from the ordinary assets of
the corporation. All whole life insurance policies which have a
cash value with premiums paid in part by corporate contributions to
an insurance firm are funded plans.” Dependahl v. Falstaff Brewing
Corp., 653 F.2d 1208, 1214 (8th Cir. 1981). In Dependahl, the
insurance policy purchased by the company was owned by the
employee. The Dependahl plan was a whole life insurance plan by
which the named beneficiaries of the participant would receive
annuity income benefits upon the participant’s death, and the
employer would recover annual premiums previously paid plus
interest. Id. at 1213.
In Belsky v. First National Life Insurance Co., 818 F.2d 661
(8th Cir. 1987), the Eighth Circuit held that a plan funded through
life insurance policies could still be considered unfunded as long
as the policies were not separated from the general assets of the
company. The Belsky court distinguished between funded and
unfunded plans by finding that a plan was “funded when benefits are
paid through a specific insurance policy and unfunded when they are
13
paid from the employer’s general assets.” 818 F.2d at 663. The
Belsky policy provided retirement and disability benefits in
addition to death benefits. The policy also specifically provided
that the rights of the executive would be those of an unsecured
creditor. Id. The language of the Belsky plan explicitly stated
that the policy became an asset of the bank with no separate res.
The Department of Labor (“DOL”), in an advisory opinion, has
also provided guidance on the issue. Op. Dep’t Labor 92-13 A (May
19, 1992). “[A]ny determination of the ‘unfunded’ status of an
‘excess benefit’ or ‘top hat’ plan of deferred compensation
requires an examination of the surrounding facts and circumstances,
including the status of the plan under non-ERISA law.” DOL has
indicated that great weight should be given to the tax consequences
of such plans. See Op. Dep’t Labor 92-13 A; Miller, 915 F.Supp.
651, 659 (holding that a “plan is more likely than not to be
regarded as unfunded if the beneficiaries under the plan do not
incur tax liability during the year that the contributions to the
plan are made.”)
Therefore, in determining whether a plan is “funded” or
“unfunded” under ERISA, a court must first look to the surrounding
facts and circumstances, including the status of the plan under
non-ERISA law. Second, a court should identify whether a policy is
funded by a res separate from the general assets of the company.
14
In so doing, the mere fact that a plan is funded through an
insurance policy is not dispositive of a plan’s status as funded or
unfunded for ERISA purposes.
Glapion maintains that the Plan was unfunded while Reliable
asserts that the Plan was funded. Citing the language of the
Plan, Reliable asserts that it has a res separate from the assets
of the company such that it cannot be considered unfunded. Section
3.1 of the Plan provides:
This Plan is intended to be a welfare benefit plan that
provides either a Death Benefit or Separation Benefit
(but not both) to each Participant. All benefits under
the Plan shall be provided through the Policy or Policies
selected by the Administrator for purchase on the life of
each Participant. Each Policy shall be issued to and
held by the Custodian for the purpose of providing
benefits payable under the Plan to the Participant
insured under such Policy. All Employer Contributions
shall be applied to the cost of such Policies, and in no
event shall the employer be liable for the payment of
benefits not paid by the Insurer under the Policy(s).
The particulars of the Policy(s) issued for each
Participant in connection with this Plan shall be
reflected on a schedule to the enrollment application for
such Participant.
Reliable is of the opinion that the fact that benefits were funded
and paid through an insurance policy makes the Plan “funded” for
ERISA purposes. We disagree. See Demery, 216 F.3d 283(finding a
plan funded with life insurance contracts to be unfunded).
Section 3.2 of the Plan states:
For each Plan Year and in lieu of payment of additional
compensation to the Participant, the Employer shall
15
contribute to the applicable Insurer, on behalf of each
Participant whose participation has not ceased during the
Plan Year, the amount required to maintain in effect the
Policy(s) purchased on the life of the Participant for
the purpose of funding the Plan benefits payable to such
Participant, less any Plan forfeitures available to
reduce Employer Contributions. The total contributions
made under this Plan on behalf of a Participant for a
Plan Year shall not exceed twenty percent (20%) of the
Participant’s Compensation for the year. In no event
shall a Participant be required or permitted to make
contributions to the Plan.
The language of the Plan in addition to the jurisprudence and the
DOL advisory opinion lead us to the conclusion that the Reliable
Plan was an unfunded top hat plan and therefore exempt from ERISA’s
fiduciary duties.
The policies purchased by Reliable were not owned by the
participants. The only right afforded to the participants under
the Plan was to designate death beneficiaries. Participants did
not make contributions to the Plan. In fact, they were prohibited
from so doing. See Section 3.2, supra. In addition, the Plan does
not intend for participants to incur tax liability in conjunction
with the payment of premiums.9
D. Whether Reliable’s Fraud Claims are Preempted by ERISA.
Even though top hat plans are exempt from certain ERISA
requirements, they are not exempt from its reporting, disclosure,
9
Section 3.3 provides a mechanism by which the employer can
request a cash distribution be made to a participant from the
policy in an amount necessary to pay any tax costs incurred as a
result of Reliable’s payment of premiums.
16
administration, or enforcement provisions. See 29 U.S.C. §§ 1021-
1045. Reliable argues that, if a valid plan did exist, the fraud
allegations are not preempted because they do not directly “relate
to” the Plan. Reliable argues that Glapion’s liability depends on
whether it fraudulently induced Reliable to pay premiums to Union
Central based on Reliable’s belief, caused by Glapion, that Union
Central had expertise in the executive benefit market which was
false. Glapion argues that Reliable’s fraud claims are mere
disguises for its breach of fiduciary duty claims. The claims
concern the creation, operation, and subsequent failure of the Plan
and are therefore directly “related to” the Plan making it subject
to preemption.
ERISA expressly “supercede[s] any and all State laws insofar
as they may now or hereafter relate to any employee benefit plan.”
29 U.S.C. § 1144(a). “A state law ‘relates to’ an employee benefit
plan 'if it has a connection with or reference to such plan.’”
Rozzell v. Security Servs., Inc., 38 F.3d 819, 821 (5th Cir.1994)
(quoting Shaw v. Delta Air Lines, 463 U.S. 85, 96-97 (1983)).
ERISA preempts a state law claim “if (1) the state law claim
addresses an area of exclusive federal concern, such as the right
to receive benefits under the terms of an ERISA plan; and (2) the
claim directly affects the relationship between the traditional
ERISA entities--the employer, the plan and its fiduciaries, and the
17
participants and beneficiaries.” Hubbard v. Blue Cross & Blue
Shield Ass'n, 42 F.3d 942, 945 (5th Cir. 1995). It is “well-
established that the ‘deliberately expansive’ language of [Section
514(a)]...is a signal that it is to be construed extremely
broadly.” Corcoran v. United Healthcare, Inc., 965 F.2d 1321, 1328
(5th Cir. 1992)(citations omitted).
Reliable cites Smith v. Texas Children’s Hospital, 84 F.3d 152
(5th Cir. 1996), and Hook v. Morrison Milling Co, 38 F.3d 776 (5th
Cir. 1994) in support of its position that ERISA does not preempt
its fraud claims. In Smith, we held that preemption did not apply
to the plaintiff’s fraudulent inducement claim because the claim
was not necessarily dependent upon Smith’s rights under the ERISA
plan. 84 F.3d at 155. Smith alleged that she relinquished her
accrued benefits with her previous employer in reliance upon Texas
Children's alleged misrepresentations. Because her claim was not
based solely on Texas Children’s denial of benefits, we concluded
that she could have a claim based on the benefits she lost as a
result of being induced to leave her former employer.
In Hook, we concluded that a plaintiff’s unsafe workplace
claim did not relate to her ERISA plan and was therefore not
preempted. The plaintiff in Hook was injured in an accident at
work, and the ERISA plan paid her medical expenses. Subsequently,
she filed a claim for wrongful discharge and negligence against her
18
employer. We considered whether “the underlying conduct...[could]
be divorced from its connection to the employee benefit plan."
Hook, 38 F.3d at 783, quoting, Christopher v. Mobil Oil
Corporation, 950 F.2d 1209, 1220 (5th Cir.1992). Hook’s cause of
action was based on her allegation that the employer failed to
maintain a safe workplace, not from a dispute over the
administration of the ERISA plan or the disbursement of benefits
therefrom. Hook, 38 F.3d at 783.
The fraud claims asserted by Reliable involve Glapion’s
failure to inform Reliable that the Plan was not implemented in
1992 when Age signed the Trust Agreement and whether an invalid
funding mechanism was used. We find this Court’s decision in
Christopher more analogous to the present facts than Smith or Hook.
The allegations in Christopher of fraud, negligence, and breach of
contract were based on “Mobil’s amendment of an ERISA-governed
employee benefit plan and Mobil’s disclosure to its employees of
the terms of the plan.” 950 F.2d at 1218. We noted that the plan
as it existed prior to the amendment and the language of the
amendment would have to be examined in order to adjudicate the
plaintiffs’ claims. The Court found that such analysis, given the
expansiveness of Section 514(a) warranted preemption. We conclude
that the same reasoning applies to the instant case. The
underlying conduct alleged by Reliable cannot be severed from its
19
connection to the Plan. Therefore, we affirm the district court’s
determination that Reliable’s state law claims are preempted.
E. Remaining Claims.
1. Costs and Attorneys’ Fees
The district court entered judgment ordering each party to
bear its own costs. We have taken the position that when a
district court does not award costs to a prevailing party, it must
give reasons for so doing. Walters v. Roadway Exp., Inc., 557 F.2d
521, 526-27 (5th Cir. 1977); See also Schwarz v. Folloder, 767 F.2d
125, 131 (5th Cir. 1985). In light of our reversal on the merits,
on remand, if the district court concludes not to award costs,
reasons should be given.
2. Costs and Attorneys’ Fees Related to the Taking of Trial
Depositions.
During trial, the district court allowed counsel for
Glapion to take the testimony of two Union Central employees via
video conference. The effort was unsuccessful due to plaintiff
counsel’s lack of cooperation. The court ordered the depositions
to be taken in person and indicated that the plaintiffs would be
taxed costs and expenses for the depositions. Glapion submitted a
cost summary of the taking of the depositions totaling $8,264.75.
We affirm the district court’s decision to tax costs and expenses
against Reliable in conjunction with the taking of the
20
depositions.10
III. Conclusion
We conclude that a valid funding mechanism and plan existed
and that Reliable’s state law fraud claims are preempted. We also
conclude that Glapion is exempt from ERISA’s fiduciary duties
because the Reliable Plan is an unfunded top hat plan. We
therefore reverse the district court’s determination that Glapion
was a fiduciary and that it breached its duty to Reliable. We also
reverse and remand the district court’s decision not to award
attorney’s fees and costs in a manner consistent with this opinion.
10
Reliable argues that it was forced to pay Glapion for
items which are not compensable by statute or the Federal Rules.
We disagree. The record clearly indicates that Reliable forced
the added expense of taking trial depositions after agreeing to a
video examination during trial. While not all the items listed
by Glapion in submitting its costs in conjunction with the
deposition are taxable under Title 28 U.S.C. §1920, they were
nonetheless appropriate and within the court’s discretion on
alternative grounds.
21
Reliable Home Health Care, Inc. v. Union Central Insurance
Court: Court of Appeals for the Fifth Circuit
Date filed: 2002-07-10
Citations: 295 F.3d 505
Copy CitationsCombined Opinion