F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
JUL 21 1998
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT
CLARENCE ROY SMITH; BETTY
SMITH,
Plaintiffs-Appellees,
v. No. 96-5168
ROGERS GALVANIZING CO.,
Defendant-Appellant.
Appeal from United States District Court
for the Northern District of Oklahoma
(D.C. No. 94-CV-982-B)
OPINION ON REHEARING
Stephen L. Andrew (D. Kevin Ikenberry with him on the brief), Stephen L.
Andrew & Associates, of Tulsa, Oklahoma, for the appellants.
Greggory T. Colpitts (Clifford R. Magee with him on the brief), of Tulsa,
Oklahoma, for the appellee.
Before SEYMOUR, Chief Judge, EBEL and BRISCOE, Circuit Judges.
BRISCOE, Circuit Judge.
After our opinion in this case was issued, Smith v. Rogers Galvanizing Co. ,
128 F.3d 1380 (10th Cir. 1997), Rogers Galvanizing Company filed a petition for
rehearing on three issues. We granted rehearing on two issues and allowed
Rogers to supplement the record on appeal with additional materials from the
district court file.
District court’s decision to reopen evidence on issue of damages
Plaintiffs’ claims under the Consolidated Omnibus Reconciliation Act
(COBRA), 29 U.S.C. §§ 1161-1168, were tried to the court. At trial, “[p]laintiffs
introduced evidence . . . concerning the total amount of medical expenses incurred
during the continuation coverage period, but did not introduce any evidence
concerning the extent to which those bills would have been covered under
defendant’s self-funded plan.” Smith , 128 F.3d at 1385. As reflected in their
post-trial brief, plaintiffs’ position was that any applicable premiums and
deductibles were “recoupments” which would be deducted from the total amount
of medical expenses only if affirmatively proved by Rogers. In response, Rogers
argued it was plaintiffs’ burden to demonstrate the net benefits to which they
were entitled under the Guardian plan and plaintiffs’ failure to present evidence
concerning applicable premiums and deductibles was fatal to their claim for
damages.
In its subsequent findings of fact and conclusions of law, the district court
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concluded Rogers failed to provide plaintiffs with adequate notice of their
COBRA rights upon Clarence Smith’s termination. Accordingly, the court
concluded plaintiffs were “entitled to collect from Rogers Galvanizing the amount
of any medical bills incurred during the continuation coverage period . . ., less
premium and applicable deductible (recoupment).” Appellant’s App. at 37.
However, because no evidence concerning plan coverage, monthly premiums, or
applicable deductibles had been introduced at trial, the court issued the following
directive to the parties:
On or before the 27th day of November, 1995, the parties are to
submit a Judgment in keeping with the above Findings of Fact and
Conclusions of Law for the Court’s approval. Failing in which the
Court will conduct an additional hearing on December 7, 1995, at
1:30 P.M., to determine Plaintiffs’ damages, including costs and a
reasonable attorneys fee. It is the Defendant’s burden to present
evidence regarding the June 1, 1993 new plan coverage, premium and
deductible. It is the Plaintiffs’ burden to establish which of
Plaintiffs’ medical expenses are covered thereunder and application
of the Oklahoma Health Care Authority lien.
Id. at 38. In accordance with the directive, Rogers analyzed plaintiffs’ medical
bills and determined the benefits due plaintiffs under the policy at issue.
Thereafter, the parties stipulated to the net damages recoverable by plaintiffs and,
consistent with the stipulation, the district court entered judgment in favor of
plaintiffs and against Rogers. 1
1
Prior to the stipulation, plaintiffs filed a motion to reopen discovery on
(continued...)
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Rogers contends the district court erred in reopening the case sua sponte to
accept additional evidence on the issue of damages. According to Rogers,
plaintiffs bore the burden of proof on the issue of damages and the court’s
decision “subvert[ed] the adversarial nature of the trial” by relieving plaintiffs
from the consequences of their decision not to present any evidence concerning
premiums, deductibles, and applicable benefits under the policy. Rogers argues
the district court’s judgment awarding benefits to plaintiffs should be reversed. 2
A district court has broad discretion to reopen a case to accept additional
evidence and that decision will not be overturned on appeal absent an abuse of
that discretion. Zenith Radio Corp. v. Hazeltine Research, Inc. , 401 U.S. 321,
331 (1971); Morsey v. Chevron, USA, Inc. , 94 F.3d 1470, 1477 (10th Cir. 1996).
In deciding whether to reopen, “[t]he court should consider the time the motion
[if any] is made, the character of additional testimony and the potential
prejudicial effect in granting or denying the motion.” Joseph v. Terminix Int’l
Co. , 17 F.3d 1282, 1285 (10th Cir. 1994). Ultimately, “fairness is the key
criterion” in determining whether to reopen. Blinzler v. Marriott Int’l, Inc. , 81
F.3d 1148, 1160 (1st Cir. 1996).
1
(...continued)
the issue of damages, which was denied by the district court as moot.
Rogers’ arguments pertain only to benefits awarded plaintiffs under the
2
Guardian policy, applicable after June 1, 1993.
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Here, the district court’s decision to reopen was made within one month of
the bench trial, after the court had determined plaintiffs had not been given
adequate notice of their COBRA rights. The decision was intended to effectuate
COBRA’s purpose of placing plaintiffs in the position they would have been in
had there been no violation on the part of Rogers. The additional evidence was
narrowly confined and largely uncontroverted. Indeed, the parties stipulated to
the net benefits due plaintiffs under the post-June 1, 1993, policy. Under these
circumstances, we fail to see how Rogers was unfairly prejudiced by the court’s
decision.
Nor are we persuaded the burden of proof issues in a COBRA case are so
clearly established that the district court overstepped its bounds in deciding to
accept additional evidence on the issue of damages. Although Rogers contends
the law clearly placed the burden of proof of damages on plaintiffs, our research
indicates there is almost no guidance on this issue. No circuit court has addressed
the issue and only a handful of district courts have directly or indirectly touched
on it. In Hamilton v. Mecca, Inc. , 930 F. Supp. 1540, 1555 (S.D. Ga. 1996), the
district court held plaintiff bears the burden of proof as to damages in an action to
recover COBRA benefits and therefore must present evidence concerning the
amount of expenses covered under the policy at issue. The court did not cite any
authority in support of its conclusion. Presumably, it based its holding on the fact
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that a plaintiff in a civil case typically carried the burden of demonstrating
damages. But see Stanton v. Larry Fowler Trucking, Inc. , 52 F.3d 723, 728 (8th
Cir. 1995) (concluding plan administrator bears burden at trial of proving
COBRA notice was given).
In contrast, three district courts have handled the issue of damages in a
manner similar to that used by the district court in this case. In Van Hoove v.
Mid-America Bldg. Maint., Inc. , 841 F. Supp. 1523 (D. Kan. 1993), the district
court concluded defendant failed to give plaintiff proper notice of her rights under
COBRA upon termination of her husband’s employment. Although evidence of
incurred medical expenses had been introduced at trial, the court held the
“medical bills alone [we]re not the proper measure of damages,” and that the
amount must be reduced “by any deductibles or co-payments, as well as the
premium that [plaintiff] would have had to pay had she elected continuation
coverage.” Id. at 1536. Accordingly, the court informed the parties it would
conduct “an evidentiary hearing to determine the appropriate damage award”
unless they could “reach an agreement regarding these matters.” Id.
In Ward v. Bethenergy Mines, Inc. , 851 F. Supp. 235 (S.D. W.Va. 1994),
the district court granted summary judgment in favor of plaintiff on her claim to
recover COBRA benefits, but held plaintiff’s “medical bills must be reduced by
the amount of any co-payments, deductibles or premiums.” Id. at 240.
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Accordingly, the court directed the parties to submit a proposed order “reflecting
the amount of damages owed to the Plaintiff.” Id.
In Phillips v. Riverside, Inc. , 796 F. Supp. 403 (E.D. Ark. 1992), plaintiff
claimed he was not given proper notice of his COBRA rights upon termination of
his employment. He sought payment of $38,597.08 in medical bills incurred
during the continuation coverage period. The district court agreed plaintiff was
not given adequate notice and directed defendant to “provide the same health
insurance benefits . . . that he would have had if he had elected continued
coverage under COBRA.” Id. at 411. More specifically, the court concluded
defendant was “liable to [plaintiff] for his medical bills of $38,597.08 incurred
during the eighteen month period, less applicable deductibles and premium fees.”
Id. The court directed plaintiff and defendant to agree upon a judgment and
submit it to the court for approval.
Having considered all of the relevant circumstances, we conclude the
district court’s decision to reopen to allow additional evidence on the issue of
damages was not an abuse of discretion.
Reasonableness of fee award
Plaintiffs sought $52,830 in fees, based on a total of 366.25 hours expended
by their two attorneys, multiplied by an hourly rate of $150. Rogers objected,
contending the requested hourly rate was excessive in light of the attorneys’
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experience, and the time sheets submitted in support of the request were “clearly
inflated.” The district court conducted an evidentiary hearing and the parties
presented testimony from local attorneys concerning the reasonableness of
plaintiffs’ request. The court concluded the time expended was reasonable but
reduced the requested hourly rates to $135 and $115 per hour and awarded
$44,022.50 in fees to plaintiffs.
Rogers continues to assert the award was excessive. More specifically,
Rogers claims plaintiffs’ counsel spent unnecessary time on certain tasks and
submitted time records for an unrelated collection matter, an unsuccessful motion
to compel discovery, and multiple representation at trial.
Under 29 U.S.C. § 1132(g)(1), an award of attorney fees to a prevailing
COBRA plaintiff must be “reasonable.” We review the district court’s award of
fees for an abuse of discretion. Stanton , 52 F.3d at 729. “We generally defer to
the district court’s judgment in reviewing an award of attorney’s fees because it
observes the attorney’s work and ‘has far better means of knowing what is just
and reasonable than an appellate court.’” Anderson v. Secretary of Health and
Human Serv. , 80 F.3d 1500, 1504 (10th Cir. 1996) (Freedom of Information Act
case) (quoting Trustees v. Greenough , 105 U.S. 527, 537 (1882)).
We have reviewed the record on appeal and conclude the district court did
not abuse its discretion in calculating the fee award. In particular, we note
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defense counsel made little effort during the evidentiary hearing to challenge the
specific entries now objected to on appeal and instead focused primarily on the
appropriateness of the hourly rates requested. Moreover, with respect to the two
time entries specifically discussed during the evidentiary hearing, plaintiffs’
expert witness opined the entries were reasonable. We find no basis in the record
for reversing the fee award.
The judgment of the district court is AFFIRMED.
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