Interpleader • Attorneys’ Fees • Ordinary Course of Business

Prudential Ins. Co. of America v. Estate of Desimone, PICS Case No. 12-2151 (E.D. Pa. Oct. 25, 2012) Bartle, J. (9 pages).

Plaintiff Prudential Insurance Company of America brought interpleader action to resolve disputed claims to employee benefits due as a result of death of decedent. Prudential filed motion for attorneys’ fees and costs incurred in bringing interpleader action. The court granted Prudential’s motion in part, minus small amount of redundant attorneys’ fees.

The decedent had been an employee of Prudential and participated in four employee benefit plans. After his death, Prudential faced competing claims to benefits from the plans from decedent’s former spouse, his adult children, his purported common law wife, and her children. Prudential brought an interpleader action to resolve the claims among the parties, all of whom were defendants. Prudential submitted billing records from its attorneys at Morgan, Lewis & Bockius.

Not all defendants responded to the motion for attorneys’ fees. One defendant contended that Prudential’s motion should be denied because determining the proper payee of benefits falls within the ordinary course of Prudential’s business. The court disagreed. Interpleader is an equitable remedy which allows a person holding property to join two or more persons asserting claims to that property in a single suit. Whether to award an interpleader plaintiff attorneys’ fees is within the sound discretion of the court if the plaintiff is a disinterested stakeholder who had conceded liability, has deposited the disputed funds with the court, and has sought a discharge from liability. An interpleader plaintiff is not required to prove the merit of potential claims before bringing the action.

A court may deny fees to an interpleader plaintiff if determining the proper payee of benefits falls within the ordinary course of plaintiff’s business, and the plaintiff filed the action simply to “free itself from ongoing litigation or the vexation of multiple lawsuits.” It was not within the ordinary course of Prudential’s business to determine the proper beneficiaries of decedent. Prudential brought the interpleader action in its capacity as decedent’s employer-sponsor and plan administrator, and not as in insurer. The interpleader action was not part of the ordinary course of Prudential’s business as an employer and, therefore, it was entitled to attorneys’ fees and costs.

Although no defendant contested the amount of the attorneys’ fees, the court independently determined that some of the billing by Morgan Lewis was redundant, specifically attendance at status conferences by both the partner and associate on the case. Time was deducted from the associate’s billing.

The award of attorneys’ fees and costs are generally awarded against the interpleader fund, but may, in the discretion of the court, be taxed against one of the parties when their conduct justifies it. Prudential did not spend significant additional time because of any one party’s actions and, therefore, attorneys’ fees were awarded against the interpleader fund as a whole.