When Can a Claimant Recover Attorneys’ Fees From an Insurance Company That Denies a Claim: Attorneys’ Fees Under ERISA

By Eric L. Buchanan

Copyright © 20111

While clients are responsible for paying their own attorneys the fee that was agreed-to, one of the good parts about ERISA is that it allows for a party to seek attorneys’ fees from the other party, which may pay those fees entirely, or at least offset those fees.  Normally, this means that someone has to take an ERISA case all the way through the court process, and win or get a judgment in his or her favor, in order to seek fees.  So, when a disabled person decides to settle, attorneys’ fees are not awarded.  But, in cases where an insurance company won’t offer enough money to settle a case, or refuses to settle, and the disabled person or other type of ERISA claimant wins, a court can award attorneys’ fees in their favor.

While not all ERISA cases go far enough to result in an award of attorneys’ fees, a person who has been denied ERISA benefits, or benefits under any insurance offered through work, should consult an attorney who understands the ERISA attorney fee provisions, and will seek to obtain the most in attorneys’ fees that can be reasonably be awarded, which sometimes can reduce the amount a client has to pay his or her attorney.

At Eric Buchanan and Associates, we understand the ERISA attorneys’ fee rules, and will fight for our clients to make sure they get the best possible outcome in their cases, including ensuring ERISA attorneys’ fees are sought.  We understand these rules and will use them in our clients’ favor.

The following is a paper Eric Buchanan has presented at several attorney conferences, teaching other attorneys about ERISA attorneys’ fees.

“A request for attorneys’ 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.  This paper does not contain cases from every circuit on every issue, but provides an overview of the common issues that come up in ERISA fee litigation.

ERISA’s statutory authority

ERISA § 502(g)(1) (29 U.S.C. § 1132(g)(1)), (Attorneys’ 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 attorneys’ fee and costs of action to either party.”

When are fees available under ERISA?

Fees are available for a remand:

The Supreme Court most recently addressed the question of when attorneys’ fees are available in ERISA cases in Hardt v Reliance Standard Life Ins. Co., 130 S.Ct. 2149 (2010).  In a case where the District Court had remanded a claim back to the Plan for further consideration3, the Court of Appeals for the Fourth Circuit had held that such a remand did not make a plaintiff a prevailing party, and, therefore, the Plaintiff in that case was not entitled to ERISA attorneys’ fees.4  The Supreme Court disagreed, and explained that requiring a party to be a “prevailing party” was contrary to the language of the statute.

We reject this interpretation as contrary to § 1132(g)(1)’s plain text. We hold instead that a court “in its discretion” may award fees and costs “to either party,” ibid., as long as the fee claimant has achieved “some degree of success on the merits,” Ruckelshaus v. Sierra Club, 463 U.S. 680, 694, 103 S.Ct. 3274, 77 L.Ed.2d 938 (1983).

Hardt, 130 S.Ct. at 2152.  The Supreme Court came to this conclusion after analyzing the statutory language, and noted that the term “prevailing party” is not found in the statute, but, rather, that the statute allows a court to award fees, in its discretion, to “either party.” Id., at 2156.

The Supreme Court went on to explain that, while a party need not be a “prevailing party” in the technical sense, a party should still obtain some success to be awarded attorneys’ fees.  The Court explained that, under the American Rule, parties are responsible for their own attorneys’ fees unless a statute says otherwise.  The Court then compared the language of many fee shifting statutes, and noted that many, if not most of them, contained language requiring a party to be a “prevailing party.”  However, the Court noted that, even in those few statutes, like this one, that did not require a party to be a “prevailing party,” Congress did not intend for courts to abandon the American Rule. Id., at 2156-8.

Comparing its previous cases discussing fee-shifting statutes without a prevailing party requirement to the ERISA attorneys’ fee provision, the court concluded that a party must still obtain “some degree of success on the merits” before attorneys’ fees should be awarded. Id., at 2158.  The Court explained that meant:

A claimant does not satisfy that requirement by achieving “trivial success on the merits” or a “purely procedural victor[y],” but does satisfy it if the court can fairly call the outcome of the litigation some success on the merits without conducting a “lengthy inquir[y] into the question whether a particular party’s success was ‘substantial’ or occurred on a ‘central issue.’”

Id. (internal citations omitted).

Interestingly, the Court clarified that it was not a holding that a remand, alone, is enough to entitle a party to fees, but rather, the facts of this case “establish that Hardt has achieved far more than ‘trivial success on the merits’ or a ‘purely procedural victory.’ ” Id., at 2159.  The Court explained that, “[b]ecause these conclusions resolve this case, we need not decide today whether a remand order, without more, constitutes ‘some success on the merits’ sufficient to make a party eligible for attorneys’ fees under § 1132(g)(1).” Id.

In finding that the proper analysis was to determine whether a party had achieved “some degree of success on the merits,” the Supreme Court also found that, when exercising discretion under the ERISA fee statute, courts are not bound by the “five factor test previously used by the Fourth Circuit (which, in fact, had been adopted by almost every circuit; see discussion below).  The Court explained, “[b]ecause these five factors bear no obvious relation to § 1132(g)(1)’s text or to our fee-shifting jurisprudence, they are not required for channeling a court’s discretion when awarding fees under this section.”

However, the Supreme Court did not reject the “five factor” test entirely, but rather,

We do not foreclose the possibility that once a claimant has satisfied this requirement, [of “some degree of success on the merits,”] and thus becomes eligible for a fees award under § 1132(g)(1), a court may consider the five factors adopted by the Court of Appeals, see n. 1, supra, in deciding whether to award attorneys’ fees.

Id., n.8.  Thus, while not required, courts may still apply the “five factor” test in exercising their discretion.

Fees are available for a remand, even if the Plaintiff ultimately loses on the merits:

Since the Hardt decision was issued, courts have explored just what qualifies as “some degree of success on the merits.”  For example, in the Sixth Circuit, in a case that was remanded because a claims administrator failed to apply the correct version of the Plan, and the case was remanded, the Court of Appeals affirmed an award of attorneys’ fees made by a district court before a final decision was made one way or the other.  In McKay v. Reliance Standard Life Ins. Co., 428 Fed.Appx. 537, 546-547, (6th Cir., 2011, unpublished), the Plaintiff claimed he became disabled at around the time his employer changed coverage from a Unum LTD policy to a Reliance Standard Policy.  Both insurance companies denied the claim, essentially arguing that the Plaintiff became disabled, if at all, while the other company’s policy was in place.  The district court found that Unum’s denial was not arbitrary and capricious, but that Reliance had made its decision using the wrong version of their Plan, and the court remanded to Reliance to reconsider under the correct plan.  The Plaintiff petitioned for attorneys’ fees, which were awarded by the district court.

The district court, and ultimately the Court of Appeals, found that neither insurance company’s denial was unreasonable; however, the Court of Appeals affirmed the district court’s award of attorneys’ fees.  The Court of Appeals explained,

The district court outlined the applicable law and provided a thorough explanation of its conclusion that an award was appropriate. No abuse of discretion occurred here. See Gaeth, 538 F.3d at 528–29 (noting that “[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.” (citation omitted)).

Reliance argues in vain that the Supreme Court’s decision in Hardt supports its position. Reliance is correct that the Court in Hardt did not give unlimited authority to courts to award fees under § 1132(g)(1). Hardt, 130 S.Ct. at 2158 (reminding readers that a “judge’s discretion is not unlimited.” (citation omitted)). Instead, it found that § 1132(g)(1) requires a claimant to show “some degree of success on the merits,” and not merely a “trivial success on the merits” or a “purely procedural victory.” Id. (citations and quotation marks omitted). Here, the district court explicitly concluded that McKay’s receipt of “another shot” at his claimed benefits was a “success on the merits because his case was remanded for further consideration”; in other words, McKay “achieved some degree of success” by achieving a remand. Indeed, McKay was just like the Hardt claimant in that he “persuaded the District Court to find that the plan administrator … failed to comply with the ERISA guidelines” and that, as a result, he “did not get the kind of review to which [he] was entitled under the applicable law.” Hardt, 130 S.Ct. at 2159 (internal citation and quotation marks omitted). Reliance’s reliance on Hardt is misplaced; Hardt supports McKay’s position.

McKay, 428 Fed.Appx. at 546-547.

Following Hardt, other courts have reached similar conclusions, awarding fees for a remand.  For example, in Olds v. Retirement Plan of Intern. Paper Co., Inc.,  2011 WL 2160264, 3 (S.D.Ala.,2011), the Court awarded the full amount of attorneys’ fees requested by Plaintiff following a remand back to the plan to conduct a full and fair review.  The court noted, “That the relief the plaintiff received on this meritorious claim is a full and fair administrative review rather than a guaranteed award of benefits . . . does not convert his substantial success on that claim into failure or trivial success.” Id.)

Similarly, in Blajei v. Sedgwick Claims Mgmt. Servs., 2010 U.S. Dist. LEXIS 102793 (E.D. Mich. Sept. 28, 2010), a district court remanded a case back to an administrator, after finding the administrator acted arbitrarily by relying on an IME that did not address, much less rebut a treating physician’s opinion, and by relying on medical records reviews that cherry-picked the evidence, and further, the administrator “breached the procedural protections provided by ERISA and its implementing regulations.” Id, at 4.

Following Hardt, the court Blajei found that it could easily determine that the Plaintiff was successful without a “length inquiry” into whether the success was substantial or reached a central issue; the court found, “[w]hile Plaintiff was not awarded [continuing benefits], Plaintiff achieved ‘some degree of success on the merits.’ The termination of benefits by Sedgwick, GM, and the GM EBPC has been found arbitrary, and Plaintiff is now entitled to a fresh review of her claim.” Id, at 8.

If the insurance company decides to pay a claim while a court case is pending, a court may still award fees:

What happens if an insurance company changes its mind and decides to pay a claim while litigation is going on but before the court makes a ruling on the merits or enters judgment?  A Colorado District Court has held that attorneys’ fees may be available in that situation, finding that to be “some success on the merits” under Hardt.

In Hollingshead v. Stanley Works Long Term Disability Plan, 2012 U.S. Dist. LEXIS 175253, (D. Colo. Dec. 11, 2012), a plaintiff filed his complaint in December 2010, alleging that Aetna had not paid benefits due under the plan, and also had not made a final decision on the Plaintiff’s claim.  Ten months later, in October 2011, while the case was pending before the court, but before the court entered judgment, Aetna reversed its denial of Plaintiff’s claims, and in December 2011 paid the plaintiff’s claim.  Id, at 2.  The Plaintiff sought fees, and the Defendant argued that the Plaintiff should not be awarded fees, because the Plaintiff did not obtain a judgment.  Id, at 4.

The court noted, “[o]nly after Plaintiff filed this lawsuit and engaged in extensive litigation and motion practice did Defendant Aetna ultimately reverse its finding and award Plaintiff benefits under the Plan. Indeed, Plaintiff endured a nearly two-year fight to obtain benefits that were originally paid to him, but later taken away.”  Id, at 5. The court rejected the Defendant’s arguments, and held that “a Plaintiff is not required to first obtain a judgment on the merits in order to recovery reasonable attorneys’ fees and costs in an ERISA action, and the Court will not impose such a hurdle.”  Id, at 5-6.

Similar cases may be found in other circuits.  For example, in Kirkpatrick v. Liberty Mut. Group, Inc., 2012 U.S. Dist. LEXIS 83925 (S.D. Ind. June 18, 2012), where the court ordered a remand, after finding that the insurance company’s decision to deny benefit was arbitrary and capricious, and specifically, where a review of the claim decision “reveals a physician-review process that is simply riddled with obvious errors and inconsistencies,” and award of fees for remand was appropriate. Id, at 9. In Kirkpatrick, the Defendant argued that the award would be premature, because the Defendant had appealed the order remanding (something that many circuits would not allow); the court disagreed, and held that the remand, and reasons for it, provided some success on the merits.  However, after setting the amount of fees owed, the court did agree with the Defendants to stay enforcement of the order pending the outcome of the appeal. Id, at 11.

Achieving “some success on the merits” is not an automatic entitlement to an award of attorneys’ fees, especially when the Defendant is the party achieving success:

Also, some courts have explained how the “five factor” test should be applied after the Supreme Court said in Hardt that the test may still be used after the initial threshold requirement of “some success on the merits” had been met.  In Toussaint v. JJ Weiser, Inc., 648 F.3d 108, 111 (2d Cir. 2011), a successful Defendant sought attorneys’ fees, and argued that, because the Defendant achieved “some success on the merits,” the court abused its discretion by not awarding attorneys’ fees.

The Court of Appeals disagreed, and explained that the “five factor” test should still be used where those factors are applicable.  The Second Circuit had previously adopted the five factor test in Chambless v. Masters, Mates & Pilots Pension Plan, 815 F.2d 869, 871 (2d Cir.1987).  The Second Circuit found that Hardt

does not disturb our observation that “the five factors very frequently suggest that attorney’s fees should not be charged against ERISA plaintiffs.” Salovaara v. Eckert, 222 F.3d 19, 28 (2d Cir.2000) (internal quotation marks omitted). This “favorable slant toward ERISA plaintiffs is necessary to prevent the chilling of suits brought in good faith.” Id. For this reason, when determining whether attorney’s fees should be awarded to defendants, we focus on the first Chambless factor: whether plaintiffs brought the complaint in good faith. After a thorough review of the record, we conclude that the district court did not abuse its discretion in denying fees in the present case

Toussaint, 648 F.3d at 111.  See, also, Tomlinson v. El Paso Corp., 2011 WL 1158637, 4 (D.Colo.,2011) (Finding that Hardt did not mandate an award of fees simply by achieving “some success on the merits,” but rather, when considering the five factors previously adopted by the Tenth Circuit in Graham v. Hartford Life & Acc. Ins. Co., 501 F.3d 1153, 1162 (10th Cir.2007), the court denied Defendant’s motion for approximately $1.5 million in attorneys’ fees).

What does the court consider in setting ERISA attorneys’ fees (the five-factor test):

Prior to the Supreme Court’s decision in Hardt, supra, every circuit had adopted a five-step analysis to be used in setting attorneys’ fees.  See n. 1, supra. In Hardt, the Supreme Court found that the five-factor test need not be followed, but that, once the threshold requirement of “some success on the merits” was met, the five-factor test may be used to aid courts in exercising their discretion in determining whether fees may be awarded.  While very few cases have discussed these factors since Hardt, there is a long history of cases discussing the factors pre-Hardt.  These cases may still be relevant to the analysis now.

Again, the “five factors” to be considered are:

(1) the degree of the opposing party’s culpability or bad faith;  (2) the opposing party’s ability to satisfy an award of attorneys’ 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 Chambless v. Masters, Mates & Pilots Pension Plan, 815 F.2d 869, 871 (2d Cir.1987); Quesinberry v. Life Ins. Co. of North Am., 987 F.2d 1017, 1029 (4th Cir. 1993), 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.

While not all factors must be present, because no single factor is determinative, some circuits say that the court must consider each factor before exercising its discretion. See e.g., Wells v. United States Steel, 76 F.3d 731, 736 (6th Cir.1996); Ursic v. Bethlehem Mines, 719 F.2d 670, 673 (3d Cir. 1983) (a district court must consider all five factors); and 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 plaintiff’s good faith in asserting an ERISA claim and the relative merits of the ERISA claims to deny defendant’s 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).

For what work are fees available under ERISA?

Fees are generally only available for “court  time.”

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 held that, “[29 U.S.C.] § 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., 282 F.3d 112, 121, (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.) Time spent preparing to file the law suit counts as “court time.”

Cann v. Carpenters’ Pension Trust Fund, 989 F.2d at 316, 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.); and Schneider v Wisconsin UFCW Unions & Employers Health Plan, 13 F. Supp. 2d 837, 841 (E.D. Wis. 1998).
Fees may be available for the time spent before the administrator, if the case is remanded by the Court subject to the Court’s jurisdiction.

Several Circuits have held that, if a district court remands a claim back to the administrator, that decision is not a final, appealable, order.  See, e.g. Bowers v. Sheet Metal Workers’ Nat’l Pension Fund, 365 F.3d 535, 537 (6th Cir. 2004) and Shannon v. Jack Eckerd Corporation, 55 F.3d 5612 (11th Cir. 1995) (relying on since overturned principle that SS remand orders are non-appealable).  Therefore, when a court remands, it has not issued a final decision, it has retained jurisdiction over the case.  Since it has retained jurisdiction, arguably, the attorney time spent on remand is also “court time” and may be tie for which attorneys’ fees may be claimed.

In addressing an analogous issue, the Supreme Court has held that time spent on administrative remand, while a court maintained jurisdiction, was “court time” and that attorneys’ fees may be awarded for the time spent on further administrative proceedings while a court retained jurisdiction over the matter.  Sullivan v. Hudson, 490 U.S. 877, 892 (1989) (attorneys’ fees awarded under the Equal Access to Justice Act for time spent on remand to Commissioner of Social Security while a court maintained jurisdiction.)

In Sullivan, the Supreme Court held that “administrative proceedings may be so intimately connected with judicial proceedings as to be considered part of [a] civil action for purposes of a fee award.”  The Court explained that this intimate connection exists where a party has brought a suit which remains within the court’s jurisdiction and “depends for its resolution upon the outcome of the administrative proceedings.”  501 U.S. at 97.  See also, Melkonyan v. Sullivan, 111 S. Ct. 2157, 2162 (1991)  (Explaining that Sullivan v. Hudson “stands for the proposition that in those cases where the district court retains jurisdiction of the civil action and contemplates entering a final judgment following the completion of administrative proceedings, a claimant may collect EAJA fees for work done at the administrative level” even though such fees are normally only available for work done in court.)  And see also,Pennsylvania v. Delaware Valley Citizens’ Council for Clean Air, 478 U.S. 546, 561 (1986) (attorneys’ fees awarded under Clean Air Act for time expended pursuing enforcement of consent decree); Johnson v. US, 554 F.2d 632, 633 (4th Cir. 1977) (attorneys’ fees awarded during remand of case to Civil Service Commission) (“In a sense this remanded administrative proceeding was ancillary to [the plaintiff’s] initial action in the district court.”)

Many courts have applied this logic to award attorneys’ fees for time spent on “remand.”   See, e.g., Peterson v. Continental Cas. Co., 282 F.3d 112, 121 (2d Cir. 2002) (“The fact that a court orders additional fact finding or proceedings to occur at the administrative level does not alter the fact that those proceedings are part of the ‘action’ as defined by ERISA.”); Rote v. Titan Tire Corp., 611 F.3d 960, (8th Cir. 2010) (allowing attorney fees during administrative remand); Seal v. John Alden Life Ins. Co., 437 F. Supp.2d 674, 685 (E.D. Mich. July, 13 2006)Lindbergh v. UT Medical Group, 2006 WL 42174 at *4, note 7 (W.D. Tenn. Jan. 6, 2006) (unreported case ).

In one informative case, Richards v. Johnson & Johnson, 2010 WL 3219138, 8 (E.D.Tenn.,2010), the Plaintiff was denied bees for time spent on remand, but only because the Plaintiff sought fees for that time while the claim was still pending on remand, and the Plan had not made a decision, so the court did not yet know whether the remand would result in some success for the Plaintiff.  The court5 in Richards noted that, “[e]ach of the district courts [in the Sixth circuit] that has addressed the applicability of Anderson to post-suit fees has concluded that fees incurred after a remand are recoverable,” citing to Seal,supra; Delisle v. Sun Life Assur. Co. of Canada, 2007 WL 4547884, at *5 (E.D.Mich.2007) (holding that post-remand fees were recoverable); and Smith v. Bayer Corp. Long Term Disability Plan, 2006 WL 3053472, at *7 (E.D.Tenn.2006) (same).  The Richards court noted that in all those cases, the benefits had been awarded on remand or after the claim returned to the court. Id, at *8. So, while the Richards court denied fees for the remand, the court explained that this decision “should not be construed to express an opinion as to whether, assuming Plaintiff wins her benefits on remand (as in Seal ) or in a second suit (as in Delisle ), she in entitled to fees she incurs during administrative remand.” Id, at n. 7.

The Anderson case, supra, (the Sixth Circuit case holding fees were not available for work at the administrative level in an ERISA case), is distinguishable from cases where the court remands back to the administrator, because, in Anderson, the plaintiff filed suit to recover attorneys’ fees after her claim was approved at the administrative level, prior to ever filing suit.  Id., 220 F.3d at 452.  She filed suit later, after she had won her case, seeking only to recover fees incurred during the normal claims process.  Id.  The Sixth Circuit distinguished Sullivan on the basis that the administrative proceedings for which the Plaintiff sought fees were not conducted pursuant to a court order and were not closely related to the substance of the issues before the court.  Id. at 454.  The Plaintiff never sought judicial review of her benefits claim; she had already won her benefits before she filed a complaint in court.  Id.  The court focused heavily on the pre-litigation nature of the requested fees, noting that exposure to liability for pre-litigation attorneys’ fees would place undue pressure on a plan administrator to approve claims that the administrator believed in good faith to be invalid.  Id. at 455.

Fees may be sought for the time spent litigating the request for fees.

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).

Is there a presumption that attorneys’ fees will be awarded?

The Hardt case, and cases subsequent, supra, suggest that, if a party achieves “some success on the merits,” then the court should exercise its discretion to determine if fees should be awarded.  Nothing in the Hardt cases suggest there should be a presumption that fees should or should not be awarded, but the Court did suggest that a lower court certainly could consider the five-factor test to determine if fees should be awarded.  However, if a court were to look to pre-Hardt cases for guidance, Courts of Appeal have varied in their analysis whether there is a presumption that fees should 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), citingFreeman 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 [ERISA’s 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, 281 F.3d62, 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).

Fees against a losing plaintiff

While the Supreme Court explained in Hardt, supra, that a court may exercise its discretion to award fees once a party achieves “some success on the merits,” the Court also said that the five-factor test may still be used to guide the court’s discretion.  As explained above, the Court of Appeals for the Second Circuit has addressed this issue since Hardt, in Toussaint v. JJ Weiser, Inc., 648 F.3d 108, 111 (2d Cir., 2011), supra, and found that, by applying the five factors, fees should not be awarded against a losing plaintiff who brought his claim in good faith. Id, (A “favorable slant toward ERISA plaintiffs is necessary to prevent the chilling of suits brought in good faith.”)

The Second Circuit Court of Appeals’ opinion in Toussaint is consistent with other Supreme Court precedent, addressing whether it is appropriate to award attorneys’ fees against an unsuccessful plaintiff, in the context of the right to petition the government for redress.  For example, BE & K Const. Co. v. N.L.R.B., 122 S.Ct. 2390, (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.”  Id.

Prior to Hardt, other courts had already set a high standard before fees would be charged against a losing ERISA plaintiff.  See, e.g. 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 attorneys’ 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) (explaining that “it generally is sufficient that plaintiff bears his own attorneys’ fees and costs to deter ‘institution of a frivolous or baseless suit;’” therefore, because most ERISA participants do not have substantial assets or net worth to begin with, the threat of the plaintiff incurring his own attorneys’ fees is more than sufficient deterrent, without the threat of having to pay the winning side’s fees.

In the Seventh Circuit, the court looks to the factor of whether the claim by the Plaintiff was brought in “bad faith” and explained that the party seeking fees would have to submit competent evidence 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).

In Hoover v. Armco, Inc., 915 F.2d 355 (8th Cir. 1990), the Court of Appeals 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 for an ulterior purpose.” [citing] Actors’ Equity Assn. v. American Dinner 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. 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 court’s 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 twelve factors.  Johnson v. Georgia Highway Exp., Inc., 488 F.2d 714 (5th Cir. 1974).  Johnson explains that the factors are:

(1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the skill requisite to perform the legal service properly; (4) the preclusion of employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the “undesirability” of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases.

488 F.2d at 717-19. These factors were derived directly from the American Bar Association Code of Professional Responsibility, Disciplinary Rule 2-106. Id.

“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 lawyer’s 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 should be considered “reasonably expended” as part of the “lodestar” calculation?        

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 “reasonable” 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 in determining the reasonable hourly rate?

The starting point for determining the reasonable hourly rate for attorneys’ is the attorneys regular or published rate.  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 applicant’s counsel can command in the market is itself highly relevant proof of the prevailing community rate.” National Ass’n of Concerned Veterans v. Secretary of Defense, 675 F.2d 1319, 1326 (D.C. Cir. 1982).  However, such affidavits should be supported with 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 Ass’n of Concerned Veterans, 675 F.2d at 1325.  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 affiant’s personal knowledge about specific rates charged by other lawyers or rates for similar litigation.” Id. at 1325-1326.6

Evidence from prior cases can also be used to determine what hourly rate is reasonable.  “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 Ass’n 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.7  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 lawyer’s 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).

Courts may also consider evidence from third party sources.  For example, 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 EAJA cases, another federal fee shifting statute.  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.8

Another issue that comes up is whether fees should be enhanced under the Lodestar method if the attorneys’ contract with his client is contingent. Many 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 $98,960 for 503.8 hours of attorney work to recover $67,000 in benefits, which 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); Porter v. Elk Remodeling, Inc.,  2010 WL 3395660, 10, 2010 U.S. Dist. LEXIS 89037  (E.D.Va.,2010) (After the Plaintiff was awarded $49,988.90 in damages, the court awarded $76,672.60 in general litigation attorneys’ fees and $33,139.80 in fees associated with a sanctions motion); Grochowski v. Ajet Constr. Corp., 2002 U.S. Dist. LEXIS 5031, 2002 WL 465272 at *2 (S.D.N.Y. Mar. 27, 2002) (In a Fair Labors Standards Act case, where plaintiffs were awarded approximately $26,000 in damages, the court awarded $97,207.50 in attorneys fees.  The court explained, “[c]ourts should not place an undue emphasis on the amount of the plaintiff’s recovery because an award of attorney fees here ‘encourage[s] the vindication of congressionally identified policies and rights.’ ” citing to Fegley v. Higgins, 19 F.3d 1126, 1134–35 (6th Cir.1994)); Baird v. Boies, Schiller & Flexner LLP, 219 F. Supp. 2d 510, 519-20 & n.7 (S.D.N.Y. 2002) (In a gender discrimination case, Plaintiffs accepted an offer of judgment of $37,500, plus reasonable attorneys’ fees and costs to be set by the Court.  The court awarded $54,723.93 in attorneys’ fees.)

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 Ass’n of Concerned Veterans v. Secretary of Defense, 675 F.2d 1319, 1326 (D.C. Cir. 1982).9  Unless the fee applicant’s evidence is so weak that it may be challenged as unsubstantiated, “in the normal case the [opposing party] must either accede to the applicant’s 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)(2) Attorneys’ Fees.

(A) Claim to Be by Motion. A claim for attorneys’ fees and related nontaxable expenses must be made by motion unless the substantive law requires those fees to be proved at trial as an element of damages.

(B) Timing and Contents of the Motion. Unless a statute or a court order provides otherwise, the motion must:

(i)  be filed no later than 14 days after the entry of judgment;

(ii) specify the judgment and the statute, rule, or other grounds entitling the movant to the award;

(iii) state the amount sought or provide a fair estimate of it; and

(iv) disclose, if the court so orders, the terms of any agreement about fees for the services for which the claim is made.

(C) Proceedings. Subject to Rule 23(h), the court must, on a party’s request, give an opportunity for adversary submissions on the motion in accordance with Rule 43(c) or 78. The court may decide issues of liability for fees before receiving submissions on the value of services. The court must find the facts and state its conclusions of law as provided in Rule 52(a).

(D) Special Procedures by Local Rule; Reference to a Master or a Magistrate Judge. By local rule, the court may establish special procedures to resolve fee-related issues without extensive evidentiary hearings. Also, the court may refer issues concerning the value of services to a special master under Rule 53 without regard to the limitations of Rule 53(a)(1), and may refer a motion for attorneys’ fees to a magistrate judge under Rule 72(b) as if it were a dispositive pretrial matter.

Time limits are usually strictly applied

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 held that the Defendant’s appeal of a preliminary injunction granted to a § 1983 plaintiff did not toll the time for filing of plaintiff’s 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 Portions of this paper were previously presented at the 2002, 2007, and 2011ATLA/AAJ conferences; however, the author retained the copyright.

2 Examples of fee-shifting statutes from other areas of federal law include: The Civil Rights Attorney’s 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 government’s position is not substantially justified under the Equal Access to Justice Act, 5 U.S.C. § 504 and 28 U.S.C. § 2412.

3 The Supreme Court explained that the District Court below had denied the insurance company’s motion for summary judgment for multiple reasons, but also denied Hardt’s motion for summary judgment.  Even though the District Court found “compelling evidence” that “Ms. Hardt [wa]s totally disabled due to her neuropathy,” and was “inclined to rule in Ms. Hardt’s favor,” the district court instead ruled that “it would be unwise to take this step without first giving Reliance the chance to address the deficiencies in its approach.” Hardt, 130 S.Ct. at 2154.  On remand, Reliance found her to be disabled and awarded her approximately $55,000 in past-due benefits.

4 At the time, the Fourth Circuit applied a three-step analysis to determine whether fees should be awarded under ERISA.  The Supreme Court explained, Id., at 2154-5, that analysis as it existed in the Fourth Circuit:

At step one of that framework, a district court asks whether the fee claimant is a “ ‘prevailing party.’ ” Id., at 15a-16a (quoting Martin v. Blue Cross & Blue Shield of Virginia, Inc., 115 F.3d 1201, 1210 (C.A.4 1997), and citing Buckhannon Board & Care Home, Inc. v. West Virginia Dept. of Health and Human Resources, 532 U.S. 598, 603, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001)). If the fee claimant qualifies as a prevailing party, the court proceeds to step two and “determin[es] whether an award of attorneys’ fees is appropriate” by examining “five factors.” FN1 App. to Pet. for Cert. 16a. Finally, if those five factors suggest that a fees award is appropriate, the court “must review the attorneys’ fees and costs requested and limit them to a reasonable amount.” Id., at 17a (citing Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983)).

FN1. These factors are: “ ‘(1) the degree of opposing parties’ culpability or bad faith; (2) ability of opposing parties to satisfy an award of attorneys’ fees; (3) whether an award of attorneys’ fees against the opposing parties would deter other persons acting under similar circumstances; (4) whether the parties requesting attorneys’ fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA itself; and (5) the relative merits of the parties’ positions.’ ” App. to Pet. for Cert. 16a (quoting Quesinberry v. Life Ins. Co. of North Am., 987 F.2d 1017, 1029 (4th Cir. 1993)).

5 This analysis is found in the Magistrate Judge’s Report and Recommendation, which was subsequently accepted and adopted in its entirety by the district court. Richards v. Johnson & Johnson  2010 WL 3219133, 10 (E.D.Tenn.,2010)

6 Practice pointer: 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.

7 A “souk” is a market place in an Arab village. [footnote not in original]

8 These cases were filed under the Equal Access to Justice Act, not ERISA, but many of the techniques overlap.

9 I do not use LEXIS, but I have been told that the LEXIS version of this case omits this very helpful language.  It is in the WESTLAW version.  Its exclusion from the LEXIS version appears to be an error.

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