Toussaint v. Mahoney

09-3797-cv
Toussaint v. Mahoney
1 UNITED STATES COURT OF APPEALS
2
3 FOR THE SECOND CIRCUIT
4
5
6
7 August Term, 2010
8
9 (Argued: May 3, 2011 Decided: June 6, 2011)
10
11 Docket No. 09-3797-cv
12
13
14 ROGER TOUSSAINT, as President of Transport Workers Union,
15 Local 100, ED WATT, as Secretary Treasurer of Transport
16 Workers Union, Local 100,
17
18 Plaintiffs-Appellees,
19
20 JAMES MAHONEY, as the Director of the Transport Workers Union,
21
22 Plaintiff-Counter-Defendant-Appellee,
23
24 JOSEPH ALLMAN, BERNARD BEAVER, FRANK INGRAM, LAVERNE STUCKEY, MAURICE
25 SCHIERMAN, MATTHEW TARNOWSKI, on their own behalf and on behalf
26 of all others similarly situated,
27
28 Plaintiffs-Appellees,
29
30 –v.–
31
32 JJ WEISER, INC., STANFORD J. COHEN, HARVEY T. GLUCK,
33
34 Defendants,
35
36 INTERBORO MUTUAL INSURANCE CO.,
37
38 Defendant-Cross-Defendant,
39
40
41
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1 MICHAEL J. FITZPATRICK, JOHN MEEHAN,
2
3 Defendants-Counter-Claimants-Third-Party Plaintiffs-
4 Appellants,
5
6 LOCAL 100, TRANSPORT WORKERS UNION, TRANSPORT WORKERS UNION RETIREES
7 ASSOCIATION,
8
9 Third-Party Defendants.*
10
11
12
13 Before:
14 WALKER, CALABRESI, and WESLEY, Circuit Judges.
15
16 Appeal from an order of the United States District
17 Court for the Southern District of New York (Marrero, J.)
18 entered on August 18, 2009, denying Defendants-Counter-
19 Claimants-Third-Party Plaintiffs-Appellants John Meehan and
20 Michael J. Fitzpatrick’s motion for fees and costs pursuant
21 to Section 502(g) of the Employee Retirement Income Security
22 Act of 1974, as amended (“ERISA”), 29 U.S.C. §§ 1001, et
23 seq.
24
25 AFFIRMED.
26
27
28
29 NICHOLAS HANLON, Cary Kane LLP, for Plaintiffs-
30 Appellees.
31
32 SUSZANNE TONGRING (Terrence Buehler, Touhy Touhy
33 Buehler & Williams, LLP, on the brief), for
34 Defendants-Counter-Claimants-Third-Party
35 Plaintiffs-Appellants.
36
37
38
39
40
*
The Clerk of Court is directed to amend the caption as
set forth above.
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1 PER CURIAM:
2 John Meehan and Michael Fitzpatrick (“Defendants”) are
3 former directors of a retirees association of former
4 unionized transportation workers. In an underlying ERISA
5 action, the retirees association and six of its members
6 alleged, among other things, that Defendants breached their
7 fiduciary duty to the retirees association and its members
8 by buying and maintaining a health insurance policy with
9 premiums that far outstripped the benefits received by
10 members. Defendants prevailed on all counts, see Mahoney v.
11 J.J. Weiser & Co., 564 F. Supp. 2d 248 (S.D.N.Y. 2008),
12 aff’d 339 Fed. App’x 46 (2d Cir. 2009) (summary order), and
13 sought fees and costs pursuant to 29 U.S.C. § 1132(g)(1).
14 On August 18, 2009, the United States District Court for the
15 Southern District of New York (Marrero, J.) denied
16 Defendants’ fees motion. See Mahoney v. J.J. Weiser & Co.,
17 646 F. Supp. 2d 582 (S.D.N.Y. 2009). Defendants now appeal
18 that decision.
19 In denying Defendants’ motion, the district court
20 applied our Court’s five-factor test for evaluating
21 applications for attorney’s fees pursuant to 29 U.S.C.
22 § 1132(g)(1), considering:
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1 (1) [T]he degree of the offending party’s
2 culpability or bad faith, (2) the ability
3 of the offending party to satisfy an award
4 of attorney’s fees, (3) whether an award of
5 fees would deter other persons from acting
6 similarly under like circumstances, (4) the
7 relative merits of the parties’ positions,
8 and (5) whether the action conferred a
9 common benefit on a group of pension plan
10 participants.
11
12 Chambless v. Masters, Mates & Pilots Pension Plan, 815 F.2d
13 869, 871 (2d Cir. 1987). The district court reasoned:
14 As to the first [Chambless] factor,
15 though Defendants ultimately prevailed on
16 the merits of their position in this Court
17 and on appeal, under the circumstances that
18 gave rise to the action at the time it was
19 filed, there is no sufficient evidence of
20 culpability or bad faith on Plaintiffs’
21 part in commencing the litigation.
22 Concerning the need for deterrence
23 reflected in the third factor, the Court
24 agrees that given ERISA’s policy of
25 protecting plan beneficiaries, colorable
26 claims pursued in good faith, even if
27 ultimately unsuccessful, should not be
28 discouraged by awards of attorney’s fees to
29 prevailing defendants.
30 As regards the fourth factor, the
31 relative merits of the parties’ positions,
32 though Defendants’ arguments prevailed,
33 Plaintiffs’ losing claims should be
34 considered in the context of the absence of
35 culpability or bad faith as determined in
36 assessing the first factor. In this light,
37 the Court finds that Plaintiffs’ position
38 cannot be considered so substantially
39 devoid of merit as to tip the Chambless
40 factors dispositively in Defendants’ favor
41 on this basis alone.
42
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1 Mahoney, 646 F. Supp. 2d at 586 (internal citations
2 omitted).
3 Defendants contend that the district court erred in
4 light of the Supreme Court’s intervening decision in Hardt
5 v. Reliance Standard Life Insurance Co., 130 S. Ct. 21496 (2010). Hardt held that the proper standard for determining
7 whether a fee claimant is eligible for § 1132(g)(1) fees is
8 whether the claimant has achieved “some degree of success on
9 the merits,” not whether the claimant was a “prevailing
10 party.” Id. at 2158; see also id. at 2157. Hardt
11 recognized that its holding did not change the law in our
12 Court with respect to this issue. See id. at 2156 n.2
13 (citing Miller v. United Welfare Fund, 72 F.3d 1066, 1074
14 (2d Cir. 1995)). In any event, there is no dispute that
15 Defendants achieved both prevailing party status and some
16 degree of success on the merits in this case because the
17 district court granted summary judgment in their favor and
18 we affirmed. Accordingly, the difference between
19 “prevailing party” and “some degree of success on the
20 merits” is irrelevant here.
21 Hardt further pointed out that the Fourth Circuit’s
22 five-factor test for awarding § 1132(g)(1) fees – which
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1 mirrors our Court’s own Chambless factors – “bear[s] no
2 obvious relation to § 1132(g)(1)’s text or to our
3 fee-shifting jurisprudence.” Id. at 2158. Hardt concluded
4 that consideration of these factors is “not required for
5 channeling a court’s discretion when awarding fees under [§
6 1132(g)(1)].” Id. Hardt nevertheless “[did] not foreclose
7 the possibility that . . . a court may consider the five
8 factors . . . in deciding whether to award attorney’s fees.”
9 Id. at 2158 n.8.
10 Hardt’s recognition that courts need not apply the
11 Chambless factors does not mean, as Defendants suggest, that
12 the district court abused its discretion when it used the
13 Chambless factors to structure its analysis. A court may
14 apply – but is not required to apply – the Chambless factors
15 in “channeling [its] discretion when awarding fees” under
16 § 1132(g)(1). See id. at 2158. So long as a party has
17 achieved “some degree of success on the merits,” id., a
18 “court in its discretion may allow a reasonable attorney’s
19 fee and costs of action to either party.” 29 U.S.C.
20 § 1132(g)(1). Thus, a district court must begin its
21 § 1132(g)(1) analysis by determining whether a party has
22 achieved “some degree of success on the merits,” but it is
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1 not required to award fees simply because this pre-condition
2 has been met. Cf. Taafee v. Life Ins. Co. of N. Am., --- F.
3 Supp. 2d ---, 2011 WL 723586, at *9 (S.D.N.Y. Feb. 23, 2011)
4 (concluding that “‘some success on the merits’ . . . is all
5 a fee claimant must show to be eligible to collect
6 attorneys’ fees”).
7 Here, although the district court did not have the
8 benefit of Hardt in reaching its decision, nothing in the
9 district court’s opinion contradicts Hardt or suggests that
10 the district court would have decided the matter differently
11 in light of Hardt. Accordingly, Hardt does not require us
12 to reverse or remand. Hardt also does not disturb our
13 observation that “the five factors very frequently suggest
14 that attorney’s fees should not be charged against ERISA
15 plaintiffs.” Salovaara v. Eckert, 222 F.3d 19, 28 (2d Cir.
16 2000) (internal quotation marks omitted). This “favorable
17 slant toward ERISA plaintiffs is necessary to prevent the
18 chilling of suits brought in good faith.” Id. For this
19 reason, when determining whether attorney’s fees should be
20 awarded to defendants, we focus on the first Chambless
21 factor: whether plaintiffs brought the complaint in good
22 faith. After a thorough review of the record, we conclude
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1 that the district court did not abuse its discretion in
2 denying fees in the present case. See McDonald ex rel.
3 Prendergast v. Person Plan of the NYSA-ILA Pension Trust
4 Fund, 450 F.3d 91, 96 (2d Cir. 2006) (“Given the district
5 court’s inherent institutional advantages in this area, our
6 review of a district court’s fee award is highly
7 deferential.”); see also Zervos v. Verizon N.Y., Inc., 252
8 F.3d 163, 169 (2d Cir. 2001).
9 Based on the foregoing, the order of the district court
10 is hereby AFFIRMED.
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