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Attorney Fees under ERISA
Disability Claims Administered by the SSA
EAJA Fees in Social Security Cases
ERISA 502(c) Actions
ERISA Subrogation
How to Tell if an Insurance Claim is Preempted by ERISA
Levels of Appeal for Social Security Cases
Sequential Evaluation Process
Worker's Compensation Offset
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Disability Insurance AttorneyAttorneys Fees under ERISA Eric Buchanan, Attorney at Law Copyright 2004[1] |  |
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A request for attorney's fees should not result in a second major litigation. Hensley v. Eckerhart, 461 U.S. 424, 439, 103 S.Ct. 1933, 1941 (1983). ERISA attorneys fees The American rule in litigation provides that generally, each party in a lawsuit is responsible for his or her own attorneys fees, unless there is a statutory exception. Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975). ERISA contains such a statutory exception, allowing parties to petition for attorneys fees. There are many similarities between the fee-shifting provision in ERISA and the fee-shifting statutes in other federal statutes.[2] For example, courts typically apply the lodestar method when setting the fees under fee-shifting statutes, including ERISA. On the other hand, the fee-shifting provision in ERISA has some important differences form typical fee-shifting statutes. For example, the ERISA fee shifting statute does not specifically require that a party seeking fees be a prevailing party as is typically required in most federal fee-shifting schemes. Also, in many circuits there is no presumption that attorneys fees will be awarded in an ERISA case. Not all the cases cited below are ERISA cases, because many issues are common to all fee-shifting statutes, and many issues are addressed by non-ERISA cases ERISAs statutory authority: ERISA 502(g)(1) (29 U.S.C. 1132(g)(1)), (Attorney's fees and costs) states: In any action under this subchapter [other than actions on behalf of the plan under 29 U.S.C. 1145, ERISA 515 dealing with employer contributions to a multi-employer plan], the court in its discretion may allow a reasonable attorney's fee and costs of action to either party. For what work are fees available under ERISA? Attorneys fees are available for work before the district court and during appellate litigation. Secretary of Dep't of Labor v. King, 775 F.2d 666, 670 (6th Cir.1985). The general rule in ERISA cases is that a plaintiff must exhaust her administrative remedies before filing a case in court. Most courts have held that the time spent exhausting administrative remedies, before the case is filed, is not compensable time under the ERISA fee shifting provision. For example the Second Circuit has recently held that, [ERISA] 1132(g)(1) authorizes a district court to award fees incurred only after a district court has assumed jurisdiction over a case. Thus, fees incurred in administrative proceedings prior to filing suit in the district court are unavailable. . . Peterson v. Continental Cas. Co., ___F.3d___, 2000 U.S. Dist LEXIS 18977, 2002 WL 234246 (2nd Cir. 2002) (interpreting the word action to mean formal judicial proceedings) See also Cann v. Carpenters' Pension Trust Fund, 989 F.2d 313 (9th Cir. 1993) (not allowing an award of fees incurred in administrative proceedings prior to a suit being filed in a district court, construing ERISA "as limiting the award to fees incurred in the litigation in court." Id. at 316.); and see also Anderson v. Proctor & Gamble Co., 220 F.3d 449 (6th Cir. 2000) (a plaintiff who prevailed in securing benefits during administrative proceedings before her plan administrator could not recover fees for that proceeding.) However, the court in Peterson v. Continental Cas. Co. also held that if the court orders that the case be remanded back to the insurance company for further consideration, that additional time spent on the administrative remand would be compensable. Cann v. Carpenters' Pension Trust Fund, 989 F.2d 313, 316 (9th Cir. 1993), also holds that time spent preparing for litigation (preparing the appeal, conferences with client, etc. are compensable because the time is spent on tasks necessary for the litigation.) See also LaSelle v. Public Service Co. of Colorado Severance pay Plan, 988 F.Supp. 1348, 1352 (D. Colo. 1997)(Interviews, consultation, preliminary research, and various additional tasks unrelated to the administrative appeal all can, and generally do, occur before work is commenced on the complaint and are compensable.) See also Schneider v Wisconsin UFCW Unions & Employers Health Plan, 13 F. Supp. 2d 837, 841 (E.D. Wis. 1998). Time devoted to the prosecution of the attorney fee motion itself is appropriately included in the resulting award of fees. See Mogck v. UNUM Life Ins. Co. of America, 289 F.Supp.2d 1181, 1194 (S.D.Cal. 2003). What does the court consider in setting ERISA attorneys fees (the five-factor test): A district court is required to consider the following factors: (1) the degree of the opposing party's culpability or bad faith; (2) the opposing party's ability to satisfy an award of attorney's fees; (3) the deterrent effect of an award on other persons under similar circumstances; (4) whether the party requesting fees sought to confer a common benefit on all participants and beneficiaries of an ERISA plan or resolve significant legal questions regarding ERISA; and (5) the relative merits of the parties' positions. Secretary of Department of Labor v. King, 775 F.2d 666, 669 (6th Cir.1985). See also Schwartz v. Gregori, 160 F.3d 1116, 1119 (6th Cir. 1998), Lain v. UNUM Life Ins. Co. of America, 279 F.3d 337, 347-348 (5th Cir. 2002) (listing the same five factors with slightly different wording), and Hummell v. Rykoff & Co, 634 F.2d 446, 453 (9th Cir. 1980) (applying essentially the same factors in the Ninth Circuit.) Not all factors must be present to justify an award of assessed attorneys fees. Curry v. Contract Fabricators, Inc. Profit Sharing Plan, 891 F.2d 842, 849 (11th Cir. 1990)(these five factors are the 'nuclei of concerns [,]' ... which should guide but not control the district court's decision. (internal quotes and citations omitted)); See also Schwartz v. Gregori, 160 F.3d 1116, 1119 (6th Cir. 1998) stating no single factor is determinative. Because no single factor is determinative, the court must consider each factor before exercising its discretion. See Wells v. United States Steel, 76 F.3d 731, 736 (6th Cir.1996). The Court of Appeals in the third circuit has held that a district court must consider all five factors. See Ursic v. Bethlehem Mines, 719 F.2d 670, 673 (3d Cir. 1983). See also McPherson v. Employees' Pension Plan of American Re Insurance Co., 33 F.3d 253 (3d Cir. 1994). "[I]n each instance in which the district court exercises its fee-setting discretion, it must articulate its considerations, its analysis, its reasons and its conclusions touching on each of the five factors delineated in Ursic." Anthuis v. Colt Industries Operating Corp., 971 F.2d 999, 1012 (3d Cir. 1992). But other courts have held that a district court is not required to consider all the factors. See Beatty v. North Central Companies, Inc., 2002 WL 277277 (8th Cir. 2002) (The district court may weigh the plaintiffs good faith in asserting an ERISA claim and the relative merits of the ERISA claims to deny defendants attorneys fees, even when the ERISA cause of action is brought against the defendant employer while other litigation between the parties is ongoing); see also Griffin v. Jim Jamison, Inc., 188 F.3d 996, 997-98 (8th Cir. 1999). Is there a presumption that attorneys fees will be awarded? Some courts have held there is no presumption that attorneys fees will be awarded in an ERISA case. See Foltice v. Guardsman Prods., Inc., 98 F.3d 933, 936 (6th Cir.1996) (citing Armistead v. Vernitron Corp., 944 F.2d 1287, 1302-03 (6th Cir.1991)); See also Wright v. Hanna Steel Corp., 270 F.3d 1336, 1343 (11th Cir, 2001), citing Freeman v. Continental Ins. Co., 996 F.2d 1116, 1121 (11th Cir.1993). (Pursuant to 20 U.S.C. 1132(g)(1), the court, in its discretion, may allow a reasonable attorney's fee and costs of action to either party. 29 U.S.C. 1132(g)(1). The law provides no presumption in favor of granting attorney's fees to a prevailing claimant in an ERISA action. " Id, at 1119). Other courts have held that where the defendant has abused his discretion, the court may award fees, using language that implies there is a presumption that fees will be awarded. For example, the Court of Appeals in the Fifth Circuit stated: If an administrator has made a decision denying benefits when the record does not support such a denial, the court may, upon finding an abuse of discretion on the part of the administrator, award the amount due on the claim and attorneys' fees. . . We find such an abuse of discretion here, and we will remand to the district court for a determination of damages and reasonable attorney's fees. Vega v. National Life Ins. Services, Inc., 188 F.3d 287, 302 (5th Cir. 1999). The Court of Appeals for the Seventh Circuit has held:there is a modest presumption that the prevailing party in an ERISA case is entitled to a fee. See Bowerman v. Wal-Mart Stores, Inc., 226 F.3d 574, 592 (7th Cir. 2000). Although we have formulated the test for when attorneys' fees should be awarded under ERISA in various ways, we have recently noted that the various formulations boil down to the same bottom-line question: "Was the losing party's position substantially justified and taken in good faith, or was that party simply out to harass its opponent?" Id at 593. See also Hess v. Hartford Life & Acc. Ins. Co., 274 F.3d 456, 464 (7th Cir. 2001); and Bittner v. Sadoff & Rudoy Indus., 728 F.2d 820, 830 (7th Cir. 1984).In the Ninth Circuit, there is a presumption that the plaintiff as a prevailing party always gets fees, unless special circumstances would render such an award unjust. McElwaine v. U.S. West Inc., 176 F.3d 1167, 1172 (9th Cir. 1999). Furthermore, in the Ninth Circuit, a court is admonished to keep at the forefront ERISA's remedial purposes that [ERISAs provisions] should be liberally construed in favor of protecting participants in employee benefit plans. citing Smith v. CMTA-IAM Pension Trust, 746 F.2d 587, 589 (9th Cir. 1983). When are attorneys fees available and when are they not available? Fees are not available under ERISA if the result of the lawsuit is a holding that ERISA does not apply to the cause of action. Typically, fees are not available if the court holds that ERISA did not apply to the lawsuit. If the underlying case is dismissed due to lack of subject matter jurisdiction (i.e., if a federal court holds that there is no federal subject matter jurisdiction because the underlying case is not an ERISA case) then the court does not have jurisdiction to hear a petition for attorneys fees under ERISA. See, e.g. Knight v. Knight, 207 F.3d 1115 (9th Cir.2000) (The Court of Appeals addressed the propriety of entertaining an attorney fee application under Section 502(g)(1) of ERISA, when the underlying action had been dismissed for lack of subject matter jurisdiction. Held: because the district court lacked subject matter jurisdiction under ERISA to hear the plaintiff's substantive claim, it similarly lacked jurisdiction "to apply the statute's cost and fee-shifting provision ..." Id. at 1116-1117.) See also Rocco v. New York State Teamsters Conference Pension and Retirement Fund, ___ F.3d___, 2002 WL 220886 (2nd Cir. 2002) (a party who succeeds in defeating a claim that ERISA is applicable is not entitled to attorney's fees under ERISA for defending that claim.) See also Trans World Airlines, Inc. v. Sinicropi, 84 F.3d 116, 117 (2nd Cir. 1996) (per curiam), cert. denied, 519 U.S. 949, 117 S.Ct. 360, 136 L.Ed.2d 252 (1996). Is prevailing party status necessary in order to be awarded attorneys fees? This section addresses two overlapping issues. If a party does not prevail, can that party still be awarded attorneys fees under ERISA? Second, if the party does not prevail on the merits because the other party voluntarily changes its behavior after the lawsuit is started, will that prevent the award of attorneys fees? Most fee shifting statues have a requirement in the text of the statute that a party must be a prevailing party in order to be awarded attorneys fees. ERISA has no such requirement. Many courts have explicitly held that a party need not prevail on an ERISA claim in order to qualify for attorneys fees. See, e.g. Oster v. Barco, 869 F.2d 1215, 1221-2 (9th Cir. 1989) (We have held that section 502(g)(1) allows for the recovery of attorney's fees and costs incurred in an appeal regardless of the outcome. Citing Sokol v. Bernstein, 812 F.2d 559, 561 (9th Cir. 1987)); see also Saltarelli v. Bob Baker Group Medical Trust, 35 F.3d 382, 387 (9th Cir. 1994) (Recovery of attorney's fees does not necessarily depend upon the outcome.) In Fletcher-Merrit v. NorAm Energy Corp., 250 F.3d 1174, 1181 (8th Cir. 2001) the Court of Appeals conducted the five-factor analysis, even though the Plaintiff lost on the merits. See also Sharron v. Amalgamated Ins. Agency Services, Inc., 704 F.2d 562, 569 (11th Cir. 1983) ("under ERISA . . . the losing party may under certain circumstances be entitled to attorney's fees); but see Miles v. New York State Teamsters Conf. Pension & Retirement Fund Employee Pension Benefit Plan, 698 F.2d 593, 602 (2nd Cir. 1983), cert. denied, 464 U.S. 829 (1983) (Although success on the merits is not, in theory, indispensable to an award of attorneys' fees under 29 U.S.C. 1132(g)(1), rarely will a losing party in an action such as this be entitled to fees. At least three of the five factors ordinarily considered in reviewing requests for attorneys' fees under 1132(g)(1) are affected by success on the merits.) Prevailing party status is required in the Fourth Circuit. In Martin v. Blue Cross & Blue Shield of Va., Inc., 115 F.3d 1201 (4th Cir. 1997), the Fourth Circuit explicitly held that "only a prevailing party is entitled to consideration for attorneys' fees in an ERISA action." Id, at 1210. However, the Fifth Circuit in Gibbs v. Gibbs, 210 F.3d 491, 510 (5th Cir. 2000) (on rehearing) conducted a thorough survey of the case law on this issue. The Gibbs court noted that the Fourth Circuits holding in Martin was misplaced, explaining Specifically, the Martin court cites to cases from the First, Third, Fifth, Seventh, Ninth, and D.C. Circuits as having "imposed a prevailing party requirement" on an award of fees under ERISA. Our review of the decisions cited by the Martin court reveals that many of the circuits, while stating that awards of attorneys' fees are appropriate for prevailing parties in ERISA actions, do not in so stating, foreclose the ability of non-prevailing parties to obtain an award of fees. And of those cases cited, only one decision from the Seventh Circuit can be read as going so far as to actually require a party to prevail before a district court could consider an award of attorneys' fees. Id. The other issue addresses the question whether fees should be awarded if the defendant voluntarily changes its behavior so that the court need not issue a decision on the merits. A recent Supreme Court case addressed the availability of fees under the fee-shifting provisions of the Fair Housing Amendments Act and the Americans with Disabilities Act. Buckhannon Board and Care v. West Va. Dept. of Health, 532 U.S. 598, 121 S. Ct. 1835, 149 L.Ed.2d 855 (2001). In that case, Plaintiffs challenged a policy of the government of West Virginia; while the claim was pending the state legislature changed the state law, mooting the plaintiffs claim. Plaintiffs argued that their lawsuit was the catalyst for the change. The Supreme Court held that merely being a catalyst for change was not enough to warrant prevailing party status for purposes of receiving attorneys fees.Defendants in ERISA cases have recently argued that, where settlement is reached or where the insurance company agrees to pay benefits, or for some other similar reason the case becomes moot because the defendant voluntarily changes its behavior, then an award of attorneys fees is not appropriate. Winning parties in ERISA cases have responded that the reasoning in Buckhannon does not apply in an ERISA case, because ERISA has no requirement of prevailing party status. At least one court has specifically held that the plaintiff is entitled to attorneys fees up to the time that the defendant agrees to pay the claim, in a case decided before Buckhannon. McElwaine v. US West, Inc., 176 F.3d 1167, 1174 (9th Cir. 1999.) Fees against a losing plaintiff The Supreme Court has recently addressed attorneys fees against an unsuccessful plaintiff in the context of the right to petition the government for redress. BE & K Const. Co. v. N.L.R.B., 122 S.Ct. 2390, 2396 70 USLW 4647 (2002) holds that the "[t]he right of access to the courts is ... but one aspect of the right of petition." However, there is a line of cases thus establishes that while genuine petitioning is immune from antitrust liability, sham petitioning is not. Collins Pension & Ins. Comm. of the So. Cal. Rock Prods., 144 F.3d 1279 (9th Cir. 1998) [Finding plaintiffs' position weak, but its claims not frivolous or made in bad faith, therefore denial of attorney's fees not abuse of discretion. citing Hope v. Int'l Bhd of Elec. Workers, 785 F.2d 826, 831 (9th Cir. 1986). Buchanan v. Reliance Std. Life Ins. Co., 1998 U.S. Dist. LEXIS 12957 (D.Ka. 1998): ["it generally is sufficient that plaintiff bears his own attorneys' fees and costs to deter institution of a frivolous or baseless suit." --a losing Plaintiff (alleged) plan participants incurring of ones own attorneys fees is more than sufficient deterrent, since most . . participants do not have substantial assets or net worth to begin with. Even in the 7th Cir., culpable bad faith would be reflected by litigation in which competent evidence is submitted reflecting that the losing Plaintiff engaged in litigation just to harass the Defendant opponent. Meredith v. Navistar, 935 F.2d 124, 128-28 (7th Cir. 1991). Hoover v. Armco, Inc., 915 F.2d 355 (8th Cir. 1990), found, "The district court, however, may award attorney's fees to a prevailing defendant under the bad faith exception to the American Rule. Id. Under the bad faith exception, a trial court may award attorney's fees . . . when it finds "the losing party has 'acted in bad faith, vexatiously, wantonly, or for oppressive reasons.'" [citing] Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 258-59, 44 L. Ed. 2d 141, 95 S. Ct.1612 (1975) (quoting F.D. Rich Co. v. United States ex rel. Indus. Lumber Co., 417 U.S. 116, 129, 94 S. Ct. 2157, 40 L. Ed. 2d 703 (1974)). [in Hoover, the plaintiff "intentionally advanced a frivolous contention Theatre Institute, 802 F.2d 1038, 1043 (8th Cir. 1986). After Armco fired him, Hoover brought and doggedly pursued a baseless retaliatory discharge claim out of spite. This is bad faith.", nevertheless finding the district court did not abuse its discretion in denying Armco fees on Hoover's ERISA claim]. The court continued: "The award of attorney's fees can have an "undesirable chilling effect on an attorney's legitimate ethical obligation to represent his [or her] client zealously." Ford v. Temple Hospital, 790 F.2d at 349. As noted by the Supreme Court in Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 421-22, 98 S. Ct. 694, 54 L. Ed. 2d 648 (1978), it is important that a district court resist the understandable temptation to engage in post hoc reasoning by concluding that, because a plaintiff did not ultimately prevail, his [or her] action must have been unreasonable or without foundation. This kind of hindsight logic could discourage all but the most airtight claims, for seldom can a prospective plaintiff be sure of ultimate success. No matter how honest one's belief that he [or she] has been the victim of discrimination, no matter how meritorious one's claim may appear at the outset, the course of litigation is rarely predictable. Decisive facts may not emerge until discovery or trial. The law may change or clarify in the midst of litigation. Even when the law or the facts appear questionable or unfavorable at the outset, a party may have an entirely reasonable ground for bringing suit." Appealing a fee determination The standard of review of district courts fee determination is abuse of discretion. Tiemeyer v. Community Mut. Ins. Co., 8 F.3d 1094, 1101-02 (6th Cir.1993). [A]n abuse of discretion exists only when the court has the definite and firm conviction that the district court made a clear error of judgment in its conclusion upon weighing relevant factors. Foltice v. Guardsman Prods., Inc., 98 F.3d 933, 939 (6th Cir. 1996)(quoting Secretary of Dep't of Labor v. King, 775 F.2d 666 at 669), cert. denied, 520 U.S. 1143, 117 S.Ct. 1312, 137 L.Ed.2d 475 (1997). A district court has discretion in determining the fee award. Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S.Ct. 1933 (1983). However, It remains important, however, for the district court to provide a concise but clear explanation of its reasons for the fee award. When an adjustment is requested on the basis of either the exceptional or limited nature of the relief obtained by the plaintiff, the district court should make clear that it has considered the relationship between the amount of the fee awarded and the results obtained. Jordan v. Multnomah County, 815 F.2d 1258, 1263-1264 (9th Cir 1987). Calculating fees to be awarded Once it is determined that the plaintiff is entitled to attorneys' fees, it is incumbent upon the district court to utilize the lodestar method to determine the amount to be awarded. Lain v. UNUM Life Ins. Co. of America, 279 F.3d 337, 348 (5th Cir. 2002) (citing Wegner v. Standard Ins. Co., 129 F.3d 814, 822 (5th Cir. 1997)). The calculation of the lodestar figure requires the district court to assess the reasonable number of hours expended on the litigation and the reasonable hourly rates for the participating attorneys, and then multiply the two figures together to arrive at the lodestar. Id. at 348. Lodestar factors In order to calculate the lodestar figure, the court should consider the twelve lodestar factors. Johnson v. Georgia Highway Exp., Inc., 488 F.2d 714 (5th Cir. 1974). Johnson explains that the factors are:
The most useful starting point for determining the amount of a reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate. This calculation provides an objective basis on which to make an initial estimate of the value of a lawyers services. Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933 (1983). The Court explained that the burden is on the prevailing party to establish the hours and rate claimed: The party seeking an award of fees should submit evidence supporting the hours worked and rates claimed. Where the documentation of hours is inadequate, the district court may reduce the award accordingly. Id. The Supreme Court further considered the proper application of the lodestar method in Blum v. Stenson, 465 U.S. 886, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984); Riverside v. Rivera, 477 U.S. 561, 106 S.Ct. 2686, 91 L.Ed.2d 466 (1986); Pennsylvania v. Delaware Valley Citizens' Council, 478 U.S. 546, 106 S.Ct. 3088, 92 L.Ed.2d 439 (1986) (Delaware Valley Citizens' Council I ); and Pennsylvania v. Delaware Valley Citizens' Council, 483 U.S. 711, 107 S.Ct. 3078, 97 L.Ed.2d 585 (1987) (Delaware Valley Citizens' Council II ). Taken together, these cases hold that the lodestar as calculated in Hensley presumptively includes all of the twelve [lodestar] factors derived from the ABA Code of Professional Responsibility DR 2-106 (1980) . . .except on rare occasions the factor of results obtained. . . Norman v. Housing Authority of City of Montgomery, 865 F.2d 1292, 1299 (11th Cir. 1988). In other words, in most cases, the entire calculation will be to take the reasonable market rate and multiply it by the hours reasonably expended. The lodestar factors are largely subsumed in the hourly rate requested and in the decision as to what hours were reasonably expended. Factors such as the skills and experience of the attorney, for example, are subsumed in the market rate that is included in the basic calculation. See Hensley 461 U.S. at n. 9, Delaware Valley, 106 S.Ct. at 3098, and Norman 865 F.2d at 1300; See also Mares v. Credit Bureau of Raton, 801 F.2d 1197, 1201 (10th Cir 1986). Courts do not allow an enhancement to the lodestar fee for a contingency contract. City of Burlington v. Dague, 505 U.S. 557, 112 S.Ct. 2638, 120 L.Ed.2d 449 (1992); This rule has been applied in the ERISA context. See, e.g. Cann v. Carpenters' Pension Trust Fund, 989 F.2d 313, 316 (9th Cir. 1993); Murphy v. Reliance Standard Life Ins. Co., 247 F.3d 1313, 1314 (11th Cir 2001). What hours are compensable? In Hensley, 461 U.S. at 435. The Court cited with approval the previous cases that held that Where a plaintiff has obtained excellent results, his attorney should recover a fully compensatory fee. Normally this will encompass all hours reasonably expended on the litigation, and indeed in some cases of exceptional success an enhanced award may be justified. In these circumstances the fee award should not be reduced simply because the plaintiff failed to prevail on every contention raised in the lawsuit. See Davis v. County of Los Angeles, 8 E.P.D. 9444, at 5049 (CD Cal.1974). See also Norman v. Housing Authority of City of Montgomery, 865 F.2d 1292 (11th Cir. 1988).How do you prove the hourly rate? A reasonable hourly rate is the prevailing market rate in the relevant legal community for similar services by lawyers of reasonably comparable skills, experience, and reputation. Blum v. Stenson, 465 U.S. at 895-96 n. 11, 104 S.Ct. at 1547 n. 11. Satisfactory evidence at a minimum is more than the affidavit of the attorney performing the work. Blum, 465 U.S. at 896 n. 11, 104 S.Ct. at 1547 n. 11. What evidence is to be considered: --Affidavits or testimony from other attorneys: Evidence of rates may be adduced through direct evidence of charges by lawyers under similar circumstances or by opinion evidence. The weight to be given to opinion evidence of course will be affected by the detail contained in the testimony on matters such as similarity of skill, reputation, experience, similarity of case and client, and breadth of the sample of which the expert has knowledge. Norman, 836 F.2d at 1299. But, generalized and conclusory information and belief affidavits from friendly attorneys presenting a wide range of hourly rates will not suffice. National Assn of Concerned Veterans v. Secretary of Defense, 675 F.2d 1319, 1325 (D.C. Cir. 1982). The affidavits should state what type of litigation the rates refer to, whether that is a current rate or past rate, whether it is an average or for a specific attorney. The best evidence would be the hourly rate customarily charged by the affiant himself or by his law firm. . . or based on the affiants personal knowledge about specific rates charged by other lawyers or rates for similar litigation. Id. at 1325-1326. When submitting an affidavit in a federal case, the easiest way to do an affidavit is to use the form set out in 28 U.S.C. 1746. --The attorneys own billing rate The counsel for the prevailing party may submit specific evidence of his or her actual billing practice during the relevant time period. . .This information. . . will provide important substantiating evidence of the prevailing community rate. . .[T]he actual rate that applicants counsel can command in the market is itself highly relevant proof of the prevailing community rate. Id. at 1326. --Evidence from prior cases Evidence submitted by attorney fee applicants in prior cases may also be relied on in compiling an attorney fee application. There is no requirement that each attorney develop all of the evidence for the hourly rate he seeks from scratch. National Assn of Concerned Veterans, 675 F.2d at 1326. Evidence submitted by attorneys in prior cases may be used again as evidence; however, fee applicants should argue against courts using prior awards as setting the fee in current cases where the lower rates in older cases do not reflect the current market rate. The Eleventh Circuit has found cause to caution against the use of prior awards in setting hourly rates. Firstly, use of prior awards has an improper collateral estoppel and issue preclusion effect, making prior awards binding on individuals who were not parties to, and thus had no influence on, the prior litigations. Also, obedience to precedent is static, holding rates at the same level for long periods of time. This is directly contrary to what we all know about market rates: they go up, particularly to reflect cost of living and inflation. Thus, the Eleventh Circuit held: prior awards are not direct evidence of prior behavior; the court is not a legal souk.[4] Of course there is some inferential evidentiary value to the prior award, because in theory the prior court based the award on the market rate. But giving prior awards controlling weight over the superior evidence of a lawyers actual billing rate equates to giving the prior awards issue-preclusive value against a party whose interests were not even arguably represented in the prior litigation. Dillard v. Greensboro, 213 F.3d 1347, 1355 (11th Cir. 2000).--Evidence from third party sources. I have had success using the Altman Weil corporation Survey of Law Firm Economics as evidence from an objective third party as to prevailing rates. In an unpublished case in the Eastern District of Tennessee, the Court considered The 1998 Survey of Law Firm Economics, to ascertain the market rate for attorney compensation. Hackney v. Apfel, 3:98-cv-58 (E.D. Tenn., Memorandum and Order on EAJA fees, August 13, 1999). The court found the Altman Weil Survey to be relevant and persuasive evidence of a reasonable prevailing market rate. . . Id. (emphasis added). However, in a more recent case concerning the hourly rates for paralegals, London v. Halter, 134 F.Supp.2d 940 (E.D.Tenn. 2001) the same court was not persuaded by The 2000 Small Firm Economic Survey that the market rate for paralegals was higher than $45 an hour.[5] --Whether the fee was contingent or not. Courts will not enhance a lodestar amount in a fee-shifting case based on a contingency contract. City of Burlington v. Daugue, 505 U.S. 557, 112 S.Ct. 2638 (1992). However, where the contingency fee results in a fee lower than the lodestar amount, the contingency fee is not a limit on the amount that can be recovered. Blanchard v. Bergeron, 489 U.S. 87, 109 S.Ct. 939, 103 L.Ed.2d 67 (1989). Is the amount recovered a cap on the attorneys fees? Several courts have that the amount recovered is not a cap on attorneys fees and have awarded fees in excess of the actual benefits awarded. See, e.g., West v. Aetna, 188 F.Supp.2d 1096 (N.D.Iowa, 2002) (fee awarded was 147 % of the benefits recovered); Wilson, et. al. v. Independence Blue Cross, 1999 U.S. Dist. LEXIS 9309 (E.D.Penn.,1999) (fee of $63,344.90 awarded against recovered benefits of $6,800 and equitable relief); and Bell v. United Princeton Properties, 884 F.2d 713 (3d.Cir.,1989)(awarding an attorneys' fee which was 103 % of the recovered benefits). Rebuttal evidence Once a fee applicant has provided support for his requested rate, the burden falls on the [opposing party] to go forward with evidence that the rate is erroneous. And when the [opposing party] attempts to rebut the case for a requested rate, it must do so by equally specific countervailing evidence. National Assn of Concerned Veterans v. Secretary of Defense, 675 F.2d 1319, 1326 (D.C. Cir. 1982).[6] Unless the fee applicants evidence is so weak that it may be challenged as unsubstantiated, in the normal case the [opposing party] must either accede to the applicants requested rate or provide specific contrary evidence tending to show a lower rate would be appropriate. Id. A party opposing a fee award must meet its rebuttal burden by producing evidence (including declarations of other counsel) challenging the accuracy and reasonableness of the hours charged. Blum v. Stenson, 465 U.S. 886, 896 n.11 (1984); Gates v. Deukmejian, 987 F.2d 1392, 1397-1398 (9th Cir. 1992); Envtl. Protection Info. Ctr. v. Pacific Lumber, Co., 229 F.Supp.2d 993, 1005 (N.D.Cal. 2002). The failure to provide such evidence waives the challenger's right to an evidentiary hearing before the District Court on any factual questions at issue in a fee dispute. Blum, 465 U.S. at 892 n.5. Rule 54 and the timing of fee petitions: General Rule ERISA does not provide for a specific deadline for the filing a fee petition with the court. If the court does not grant attorneys fees in its judgment, or state by when the winning party should file a petition for fees, the safest approach is to file a fee petition within 14 days of the judgment, as set out in Fed. R. Civ. P. 54. Courts have held that a motion for fees and costs under 1132(g)(1) falls under Fed. R. Civ. P. 54. Bittner v. Sadoff & Rudoy Indus., 728 F.2d 820 (7th Cir. 1984). In addition, Rule 54 sets out general rules for what must be disclosed and what may be discovered in fee litigation, absent specific statutory guidance. This rule refers to specific substantive law. Rule 54 usually should be considered in addition to or in conjunction with the procedures for seeking and proving attorneys fees and costs that is set out in the substantive statute under which fees are claimed. Rule 54 states in part:
(d) Costs; Attorneys Fees. . . Courts have held that the failure to comply with the 14-day requirement set forth in Rule 54(d)(2) constitutes a waiver of the right to seek attorneys fees. See, e.g., Allen v. Murph, 194 F.3d 722, 723-24 (6th Cir.1999); United Industries, Inc. v. Simon-Hartley, Ltd., 91 F.3d 762, 765-66 (5th Cir.1996). Do not assume that the time is tolled. For example, a district court recently held that the Defendants appeal of a preliminary injunction granted to a 1983 plaintiff did not toll the time for filing of plaintiffs application for fees and costs. Doe v. Terhune, 121 F. Supp.2d 773 (D.N.J. 2000). Check the local rules Note that Rule 54 paragraph (d)(2)(D) allows the local court to set up its own procedures for deciding fee issues.
[1] This paper was previously presented at the 2002 ATLA conference; however, the author retained the copyright. [return to text]
[2] Examples of fee-shifting statutes from other areas of federal law include: The Civil Rights Attorneys Fees Awards Act of 1976, 42 U.S.C. 1988, The Freedom of Information Act, 5 U.S.C. 552(a)(4)(E), The Privacy Act of 1974, 5 U.S.C. 552a, and the Government-in-the-Sunshine Act. 5 U.S.C. 552b, The Truth-in-Lending Act, 15 U.S.C. 1640(a), 1667b(a), 1667d(a) (1982), the Fair Credit Reporting Act, 15 U.S.C. 1681n, 1681o (1982), and the Fair Debt Collection Practices Act, 15 U.S.C. 1692k(a) (1982). Fee may be collected from the government if the governments position is not substantially justified under the Equal Access to Justice Act, 5 U.S.C. 504 and 28 U.S.C. 2412.[return to text] Eric Buchanan, Donna Green, and Scott Wilson are Certified as Social Security Disability Specialists by the Tennessee Commission on Continuing Legal Education and Specialization. Copyright 2003 - Eric Buchanan & Associates, PLLC - All Rights Reserved |
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