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March 24, 2003


The opinion of the court was delivered by: Suzanne B. Conlon, United States District Judge


George Lowe ("Lowe") sued SRA/IBM Macmillan Pension Plan, HRSC Retirement Plans, the McGraw-Hill Employee Retirement Plan, and McGraw-Hill Companies, Inc. (collectively, "defendants"). Lowe sought declaratory judgment, recovery of benefits, and fees and costs pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132, et seq. Lowe's motion for an order of default for failure to appear or answer was granted in part. Minute Order of 4/24/01, Doc. No. 12. The court found defendants in technical default and ordered prove-up documents to be submitted. Id. Lowe filed a memorandum and affidavit in support of his request for damages, fees, and costs. On May 24, 2001, the court inadvertently entered default judgment against defendants. Minute Order of 5/24/01, Doc. No. 20. On defendants' motion, entry of judgment was vacated pursuant to Fed.R.Civ.P. 60(a). Minute Order of 3/5/03, Doc. No. 78. The court referred Lowe's motion for entry of judgment and request for attorneys' fees to a magistrate judge. Minute Orders of 6/4/01, Doc. No. 22; 6/8/01, Doc. No. 23. After an evidentiary hearing, the magistrate judge issued a report and recommendation regarding Lowe's motions for default judgment and petition for attorneys' fees. Minute Order of 12/11/02, Doc. No. 64. The magistrate also recommended that Geneva Lowe, SRA/IBM MacMillan Pension Plan, and HRSC-Retirement Plan, S-1 be dismissed as parties to this action. Id. Pursuant to Fed.R.Civ.P. 72(b), defendants object to the magistrate's recommendation to award statutory penalties and attorneys' fees.


I. Facts

Defendants do not object to the magistrate judge's statement of facts. Thus, the court adopts the magistrate's factual findings. United States v. Klein, 2001 WE 16554771, at *1 (N.D.Ill. 2001). Lowe is the surviving spouse of Geneva Lowe. Mrs. Lowe was a former employee of Science Research Associates ("SRA"). As an employee, she was entitled to certain pension benefits under the now-combined SRA/IBM-McGraw-Hill Companies Employee Retirement Plan.

In 1994, the SPA Plan became part of the McGraw-Hill Plan. Since then, McGraw-Hill assumed responsibility for administering the plan. Mrs. Lowe collected monthly benefits from the plan from 1993 until she died in January 1999. In March 1999, Annette Bell, Mrs. Lowe's executor, informed the plan that Mrs. Lowe died. A McGraw-Hill Plan administrator wrote Bell and provided a copy of a form that indicated Mrs. Lowe elected a single life annuity providing for monthly payments only during her lifetime. The plan payments ceased.

Lowe subsequently received notice from the Social Security Administration that he may be entitled to pension benefits from the plan. in reviewing his wife's plan documents, Lowe discovered an annuity election form that he and his wife signed November 23, 1992. That form did not indicate that Mrs. Lowe had only elected a single life annuity. Lowe mailed a copy of the Social Security notice to the McGraw-Hill Plan administrators and requested they provide him with claim papers to collect the benefits that may be due him from the plan. Jana Bittner, Coordinator of McGraw-Hill Retirement Plans, informed Lowe that his wife had elected a single life annuity that only provided a monthly pension during her lifetime. The letter invited Lowe to call if he had questions.

Lowe called Bittner to investigate his eligibility under the plan. In response to the call, Bittner sent Lowe McGraw-Hill's copy of the election form. The document was identical to Lowe's election form, except the form from Bittner contained a check next to the single life option, whereas his form did not. On July 24, 1999, Lowe wrote to Bittner and explained the election forms were different, he also requested (i) a copy of the plan, including payment benefits and rights, (ii) the signed documents that initiated Mrs. Lowe's benefit payments, (iii) a signed copy of the Social Security leveling option, and (iv) a copy of the documents referred to by Social Security indicating a payment due to Geneva Lowe's spouse. The plan administrators did not respond.

On September 11, 1999, Lowe again requested the plan administrator to send him the previously requested documents. In addition, he informed the plan administrator that if the matter was not resolved by November 30, 1999, he would seek legal advice. The plan administrator again failed to respond or provide reasonable explanation for the inaction.

Lowe then contacted the U.S. Department of Labor for assistance in obtaining copies of the plan and related documents. On November 15, 1999, Jonathan Kay, U.S. Department of Labor, sent Bitmer a request for a summary of the plan and a copy of the agreement by which the Lowes accepted the single life annuity. Bittner sent Kay the requested documents on February 29, 2000.

On January 4, 2001, Lowe filed a pro se complaint against defendants. On July 24, 2001, Lowe finally received a copy of the plan documents in anticipation of a possible settlement conference. Lowe contacted at least fifteen attorneys before finding one to assist him in the case. Defendants were aware the election form in their possession did not comply with the plan because the signatures were neither notarized nor witnessed. Defendants confirmed that proper procedures were not followed and as a result, Lowe was entitled to collect pension benefits.


I. Legal Standard

In reviewing a magistrate judge's report and recommendation, the district court must "make a de novo determination upon the record, or after additional evidence, of any portion of the magistrate judges disposition to which specific written objection has been made." Fed.R.Civ.P. 72(b). The district court may accept, reject, or modify the recommended decision, ...

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