Local 259 v. Metro Auto Ctr

Opinions of the United
2007 Decisions States Court of Appeals
for the Third Circuit
9-4-2007
Local 259 v. Metro Auto Ctr
Precedential or Non-Precedential: Precedential
Docket No. 05-4974
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 05-4974
____________
UNITED AUTOMOBILE WORKERS LOCAL 259
SOCIAL SECURITY DEPARTMENT,
v.
METRO AUTO CENTER,
Appellant.
____________
On Appeal from the United States District Court
for the District of New Jersey
(No. 03-cv-02123)
District Judge: Honorable Joseph A. Greenaway, Jr.
Argued November 8, 2006
Before: SLOVITER, CHAGARES and GREENBERG, Circuit
Judges.
____________
(Filed September 4, 2007)
Joseph M. Labuda (Argued)
Milman & Heidecker
3000 Marcus Avenue, Suite 3W3
Lake Success, NY 11042
Counsel for Appellant
Jeremy E. Meyer (Argued)
Cleary & Josem
1420 Walnut Street, Suite 300
Philadelphia, NY 19102
Counsel for Appellee
OPINION OF THE COURT
CHAGARES, Circuit Judge.
This is an appeal from an award of attorneys’ fees for an
action brought by a union pension and welfare fund against an
employer pursuant to the Employee Retirement Income Security
Act of 1974, 29 U.S.C. §§ 1001-1461 (“ERISA”). After granting
a motion for summary judgment in favor of the fund, the District
Court ordered the employer to pay attorneys’ fees. The employer
appeals, arguing that the District Court should have dismissed the
fund’s application for fees as untimely and, in the alternative, that
the amount of the award was unreasonable.
We conclude that the motion for fees was timely and that the
fee award was reasonable. Accordingly, we will affirm the District
Court. In so doing, we consider two questions left unanswered by
this Court’s previous decisions: first, whether a trial court must
award interest under 29 U.S.C. § 1132(g)(2)(B) on an employer’s
delinquent contributions that were unpaid at the time a suit was
filed but paid by the time of judgment, and, second, whether
proportionality necessarily limits mandatory fee awards in the
ERISA context. We answer yes to the first question and no to the
second.
I.
Plaintiff United Automobile Workers Local 259 Social
Security Fund (“the Fund”) is a union pension and welfare fund.
Defendant Metro Auto Center (“Metro”) is an employer obligated
by a collective bargaining agreement to pay monthly contributions
to the Fund. On May 7, 2003, the Fund filed a complaint in the
United States District Court for the District of New Jersey pursuant
to ERISA § 515, 29 U.S.C. § 1145, seeking unpaid contributions
2
totaling $1,928.00, as well as interest on the unpaid contributions
and attorneys’ fees. In March 2004, while the action was pending,
Metro paid the Fund $964.00, but denied that it owed the Fund
another $964.00.
The parties then filed cross-motions for summary judgment.
By an order dated December 8, 2004, the District Court denied
Metro’s motion for summary judgment and granted the Fund’s
motion. The District Court Judge signed the order on December
13, 2004, and the clerk entered it on December 14, 2004.
On January 14, 2005, the Fund moved for attorneys’ fees
and costs in the amount of $35,304.89 pursuant to ERISA §
502(g)(2)(D), 29 U.S.C. § 1132(g)(2)(D), which instructs courts to
award reasonable fees to prevailing plans in actions to collect
delinquent contributions under ERISA § 515, 29 U.S.C. § 1145.
On October 20, 2005, the District Court entered an order granting
the Fund $28,623.14 in fees, a $6,681.75 reduction from the
amount requested. The District Court concluded the full amount
requested was unreasonable because it included fees for work spent
on legal matters not necessary to the successful claim for
contributions. The District Court refused Metro’s request to reduce
the award in order to create proportionality between the fee award
and the underlying damages. Additionally, the District Court
rejected Metro’s objection that 67 hours of charges were
“excessive,” noting Metro provided “no specific explanation
setting forth why this Court should agree.” United Auto. Workers,
Local 259 Soc. Sec. Dep’t v. Metro Auto Ctr., No. 03-cv-02123,
slip op. at 4 (D.N.J. Oct. 20, 2005) (unpublished) (order granting
motion for fees).
II.
It is undisputed that ERISA mandates an award of
reasonable attorneys’ fees when, as here, a fund prevails in an
action for unpaid contributions pursuant to 29 U.S.C. § 1145. See
29 U.S.C. § 1132(g)(2)(D); Bd. of Trs. of Trucking Employees of
N. Jersey Welfare Fund, Inc. v. Centra, 983 F.2d 495, 509 (3d Cir.
1992); Penn Elastic Co. v. United Retail & Wholesale Employees
Union, 792 F.2d 45, 47-48 (3d Cir. 1986). The relevant procedures
3
for filing requests for fees are dictated by the Federal Rules of Civil
Procedure and the Local Civil Rules of the United States District
Court for the District of New Jersey. See Fed. R. Civ. P. 54(d);
D.N.J. L. Civ. R. 54.2; Planned Parenthood of Cent. N.J. v. Att’y
Gen. of N.J., 297 F.3d 253, 259-61 (3d Cir. 2002).
Metro appeals the award granted to the Fund on two
grounds. First, Metro argues the District Court should have
dismissed the Fund’s application for fees as untimely. Second,
Metro argues the fee award is unreasonable.
Because the District Court’s order of October 20, 2005,
reduced the fee award to a definite amount, it was a final decision.
See Interfaith Cmty. Org. v. Honeywell Int'l, Inc., 426 F.3d 694,
701 (3d Cir. 2005). Accordingly, we have jurisdiction over the
District Court’s order granting fees. See 28 U.S.C. § 1291.
A.
We first consider whether the Fund’s request for fees was
timely. We review the legal interpretation of procedural rules de
novo. Planned Parenthood, 297 F.3d at 259.
Rule 54 of the Federal Rules of Civil Procedure provides
that motions for attorneys’ fees must be filed no later than fourteen
days after entry of judgment, unless otherwise provided by statute
or order of the court. Fed. R. Civ. P. 54(d)(2)(B). Rule 54.2 of the
Local Civil Rules of the United States District Court for the
District of New Jersey provides “an attorney seeking compensation
for services or reimbursement of necessary expenses shall file with
the Court an affidavit within 30 days of the entry of judgment or
order, unless extended by the Court,” setting forth information
about the services rendered. We have previously held that Local
Civil Rule 54.2 extends the time within which to file for fees from
fourteen days to thirty as a standing order of the district court. See
Planned Parenthood, 297 F.3d at 261.
In this case, the Fund filed its application for attorneys’ fees
on January 14, 2005, thirty-one days after the clerk entered the
District Court’s summary judgment order. The parties agree that
4
the rules provide a thirty-day time period within which to file a
request for fees, and they agree that the clock starts to run when the
District Court enters final judgment on the underlying claim. They
disagree, however, about whether December 14, 2004, the date of
entry of the summary judgment order, should be considered the
date of entry of a final judgment giving rise to the fee request.
1.
At the outset, we must consider the application of Rule 58
of the Federal Rules of Civil Procedure to the time period for a
motion for fees. Rule 58 is most well known for clarifying the time
within which an appeal must be taken, but it also clarifies the
timing of post-trial motions.1 Rule 58(a) provides “[e]very
judgment and amended judgment must be set forth on a separate
document” except for those disposing of certain motions. If a
separate document is required, but no separate document is issued,
a court must deem the judgment’s date of entry as 150 days after its
entry in the civil docket. Fed. R. Civ. P. 58(b). We mechanically
apply Rule 58 to prevent uncertainties as to the date on which a
judgment is entered, see United States v. Indrelunas, 411 U.S. 216,
221-22 (1973) (per curiam); In re Cendant Corp. Sec. Litig., 454
F.3d 235, 243-44 (3d Cir. 2006), because “[d]etermining the date
of entry is critical for motion practice under the Federal Rules of
Civil Procedure[] and for the timely filing of a notice of appeal.”
United States v. Fiorelli, 337 F.3d 282, 287 (3d Cir. 2003)
(footnote omitted).
1
See 11 Charles A. Wright, et. al, Federal Practice &
Procedure § 2781 (1995):
Rule 58 is intended to resolve “the old, old question of
when is a judgment a judgment.” It is of great importance
in litigation to know precisely what the judgment is and
when it was entered. The time in which to make post-trial
motions runs from the entry of judgment as does the time
when execution may issue. Most important, however, is the
fact that the time for appeal runs from the entry of the
judgment.
5
Metro argues Rule 58(a) does not require a separate
document for a judgment to trigger the time period of a Rule 54(d)
fees motion. The text of Rules 58 and 54 require that we reject this
argument. Rule 58 addresses the “time of entry” for judgments for
the “purposes of these rules” and Rule 54 requires motions for fees
to be filed within 14 days after the “entry of judgment.” Rule 58
enumerates certain exceptions to its formalities, none of which are
relevant here.2 Therefore, when an order does not comply with
Rule 58, there is no immediate “entry of judgment” triggering the
time period for Rule 54(d) motions. In such circumstances, the
time period begins 150 days after entry of the order, as set forth in
Rule 58(b).3
2
The exceptions to Rule 58 are listed in Rule 58(a)(1):
Every judgment and amended judgment must be set forth on
a separate document, but a separate document is not
required for an order disposing of a motion:
(A) for judgment under Rule 50(b);
(B) to amend or make additional findings of fact
under Rule 52(b);
(C) for attorney fees under Rule 54;
(D) for a new trial, or to alter or amend the judgment,
under Rule 59; or
(E) for relief under Rule 60.
Metro argues that the District Court’s summary judgment order did
not need to be a separate document because Rule 58 provides “a
separate document is not required for an order disposing of a
motion . . . for attorney fees under Rule 54.” Fed. R. Civ. P.
58(a)(1) & (a)(1)(C) (emphasis added). Metro misunderstands the
import of this exception to the separate-document requirement. The
exception would be relevant if the Court was concerned with the
timeliness of an appeal from an order denying a motion for fees, but
it is not relevant to whether an application for fees was timely.
There is no exception to the separate-document requirement for
orders deciding underlying cases in which fees can be sought.
3
The Advisory Committee Notes confirm that Rule 58’s
formalities are intended to clarify the time periods for motions
6
Accordingly, if the District Court’s December 14 summary
judgment order is not a separate document, the time period for an
application for fees provided by Rule 54(d) (and extended by
D.N.J. L. Civ. R. 54.2) began to run 150 days after December 14.
More specifically, if the December 14 order was not a separate
document, the Fund’s motion for fees was timely.
2.
An order is considered a separate document for purposes of
Rule 58 if it satisfies three requirements: “first, the order must be
self-contained and separate from the opinion; second, the order
must note the relief granted; and third, the order must omit (or at
least substantially omit) the District Court’s reasons for disposing
of the parties’ claims.” Cendant Corp., 454 F.3d at 241 (citing
Local Union No. 1992 of Int’l Bhd. of Elec. Workers v. Okonite
Co., 358 F.3d 278, 285 (3d Cir. 2004)).
Here, the District Court’s order granting summary judgment
satisfied the first and third requirements of the separate-document
rule, but did not specify the relief to which the Fund was entitled.4
made pursuant to Rule 54. See Fed. R. Civ. P. 58, 2002 advisory
committee’s note (“[I]n the cases in which court and clerk fail to
comply with this simple requirement [of a separate document], the
motion time periods set by Rules 50, 52, 54, 59, and 60 begin to
run after expiration of 150 days from entry of the judgment in the
civil docket as required by Rule 79(a).”); see also Fiorelli, 337 F.3d
at 287 (using Rule 58 to determine the timeliness of a motion to set
aside a conviction pursuant to 28 U.S.C. § 2255).
4
The order was a self-contained document and did not
include the court’s reasoning. It provided, in its entirety:
This matter having come before the Court on the
cross-motions of the parties (Docket Nos. 24, 25, 26 and 27)
for summary judgment, pursuant to Fed. R. Civ. P. 56; and
this Court having reviewed the parties’ submissions and
having heard oral argument; and for the reasons set forth in
this Court’s forthcoming Opinion and upon good cause
7
Metro argues the amount of the relief could easily be determined
by 29 U.S.C. § 1132(g)(2), even though the amount was not
explicit in the District Court’s order. See Vitale v. Latrobe Area
Hosp., 420 F.3d 278, 281 (3d Cir. 2005) (describing a narrow
exception to the general rule regarding final orders that treats an
order as final as long as the relief can be determined through a
mechanical and uncontroversial calculation even if relief is not
specified in the order); Skretvedt v. E.I. DuPont De Nemours, 372
F.3d 193, 200 n.8 (3d Cir. 2004) (same).5
Section 1132(g)(2) of title 29 of the United States Code
dictates the relief prevailing funds are due in a § 1145 action for
unpaid contributions. It provides,
In any action under this subchapter by a fiduciary for or on
behalf of a plan to enforce section 1145 of this title in which
a judgment in favor of the plan is awarded, the court shall
award the plan—
(A) the unpaid contributions,
appearing,
IT IS on this 8th day of December, 2004,
ORDERED that Defendant’s motion for summary
judgment on Plaintiff’s complaint and on its Counterclaim
(Docket Nos. 24, 25, and 26) in this matter are DENIED;
and it is further
ORDERED that Plaintiff’s cross-motion for
summary judgment on its Complaint and Defendant’s
Counterclaim (Docket No. 27) should be GRANTED; and
it is further
ORDERED that a copy of this Order be served on
the parties within 7 days of the entry of this Order.
United Auto. Workers, Local 259 Soc. Sec. Dep’t v. Metro Auto
Ctr., No. 03-cv-02123 (D.N.J. Dec. 14, 2005) (order granting pl.
motion for summary judgment).
5
For the purposes of this appeal, we will assume that this
exception to “final judgment” applies to the separate-document
requirements of Rule 58.
8
(B) interest on the unpaid contributions,
(C) an amount equal to the greater of—
(i) interest on the unpaid contributions, or
(ii) liquidated damages provided for under the plan in
an amount not in excess of 20 percent (or such higher
percentage as may be permitted under Federal or State law)
of the amount determined by the court under subparagraph
(A),
(D) reasonable attorney’s fees and costs of the action, to be
paid by the defendant, and
(E) such other legal or equitable relief as the court deems
appropriate.
For purposes of this paragraph, interest on unpaid
contributions shall be determined by using the rate provided
under the plan, or, if none, the rate prescribed under section
6621 of Title 26.
The Fund argues the District Court did not simply have an
uncontroversial, ministerial calculation to perform once it granted
summary judgment because this Court has not provided guidance
on how to interpret 29 U.S.C. § 1132(g)(2)(B). Specifically, given
that Metro paid a portion of the delinquent contributions while
litigation was pending, the Fund asserts it was unclear whether the
District Court would award interest on those previously paid fees,
as well as interest on the portion still unpaid by the time of
judgment.6
In awarding a “judgment in favor of the plan” the District
Court had to award “the unpaid contributions” and the “interest on
the unpaid contributions.” 29 U.S.C. § 1132(g)(2)(A), (B). The
phrase “unpaid contributions” in 29 U.S.C. § 1132(g)(2)(B) could
6
The Fund does not argue that the District Court’s ability
to award “legal or equitable relief as the court deems appropriate,”
29 U.S.C. § 1132(g)(2)(E), prevented the relief from being
uncontroversially and ministerially calculated after the court
granted summary judgment. We, therefore, do not address this
argument.
9
refer either to contributions owed at the time suit commenced or
contributions owed at the time judgment was entered. Several
courts have determined that § 1132(g)(2) remedies apply to all
contributions that are unpaid at the time a plan files suit, even if
those debts are partially satisfied before judgment. See Operating
Eng’rs Local 139 Health Benefit Fund v. Gustafson Constr. Corp.,
258 F.3d 645, 654 (7th Cir. 2001); Nw. Adm’rs, Inc. v.
Albertson’s, Inc., 104 F.3d 253, 257 (9th Cir. 1996); Iron Workers
Dist. Council v. Hudson Steel Fabricators & Erectors, Inc., 68 F.3d
1502, 1507 (2d Cir. 1995); Carpenters Amended & Restated Health
Ben. Fund v. John W. Ryan Constr. Co., 767 F.2d 1170, 1172 (5th
Cir. 1985); see also Carpenters & Joiners Welfare Fund v.
Gittleman Corp., 857 F.2d 476, 478 (8th Cir. 1988) (holding the
term “unpaid contributions” in § 1132(g)(2)(C) means
“contributions unpaid at the time suit was filed, rather than
contributions which were delinquent for some time but which were
paid up before suit was filed”).
At least one court, however, has prevented a fund from
recovering interest on delinquent contributions that were paid
between filing and judgment. Mich. Carpenters Council Health &
Welfare Fund v. C.J. Rogers, Inc., 933 F.2d 376, 388 (6th Cir.
1991). In C.J. Rogers, the Court of Appeals for the Sixth Circuit
reasoned that § 1132(g)(2)(B) “appl[ies] only if there [are] unpaid
contributions on the date of the award” because 1132(g)(2)
“provides that upon ‘a judgment in favor of the plan’ the court shall
award the plan ‘the unpaid contributions’ and ‘interest on the
unpaid contributions.’” Id. at 388 (quoting § 1132(g)(2)(A) & (B)
(emphasis added by C.J. Rogers, Inc.)).
We conclude the better interpretation of § 1132(g)(2)(B)
requires that plans be awarded interest on contributions unpaid at
the time the suit is filed. As the Court of Appeals for the Second
Circuit acknowledged, § 1132(g)(2)(B) refers to unpaid
contributions “not to establish a limit on qualifying judgments, but
rather because the amount of an award of interest or liquidated
damages should logically be predicated upon the amount of the
unpaid contributions originally at issue.” Iron Workers, 68 F.3d at
1507. The payment of interest compensates plans for one kind of
“‘cost[] incurred in connection with delinquencies,’” that is, the
10
loss of interest. Bd. of Trs. of Hotel & Rest. Employees Local 25
v. JPR, Inc., 136 F.3d 794, 803 (D.C. Cir. 1998) (quoting Staff of
Sen. Comm. on Labor and Human Resources, 96th Cong., 2d Sess.,
S. 1076, The Multiemployer Pension Plan Amendments of 1980:
Summary and Analysis of Consideration (Comm. Print 1980)
43-44); see also Laborers Health & Welfare Trust Fund for N. Cal.
v. Advanced Lightweight Concrete Co., 484 U.S. 539, 546 n.12
(1988). The purpose of the provision would be defeated if we
allowed employers to avoid paying interest simply by satisfying
their debt moments before the court issues judgment. See Iron
Workers, 68 F.3d at 1508 (“Permitting delinquent employers to
avoid paying § 1132 penalties after suit is filed . . . would largely
thwart the purpose of § 1132(g)(2) to provide plan fiduciaries with
an effective weapon against delinquent employers. It would also
anomalously cause only employers with legitimate legal arguments
(. . . awaiting final judgment) to pay ancillary relief.”) (citations
omitted); John W. Ryan Constr., 767 F.2d at 1175 (“In fact, [the
defendant-employer’s] interpretation of § 1132(g)(2) would reward
bad faith employers who insist on the spectre of adverse judgment
before making payments they know or even concede to be
delinquent and, at the same time, penalize good faith employers
who litigate delinquencies through judgment because of a genuine
dispute about whether money is owed.”); Gilles v. Burton Constr.
Co., 736 F.2d 1142, 1146 n.6 (7th Cir. 1984) (“After suit is filed,
we doubt that employers who are delinquent in their contributions
can avoid the mandatory relief provisions of section 1132(g)(2)
through the device of offering to pay only the overdue
contributions.”).
Accordingly, the District Court could properly award the
Fund interest on those delinquent contributions that Metro paid
while the action, brought pursuant to 29 U.S.C. § 1145, was
pending. We recognize, however, that neither the District Court
nor the parties knew our position on this issue at the time of the
summary judgment order. The parties could not be assured of the
relief that would be awarded after the grant of summary judgment.
Because the District Court’s order granting summary
judgment provided neither the amount of relief granted, nor left
only a ministerial calculation, the order cannot be considered a
11
separate document for purposes of Rule 58. Without a separate
document, the thirty-day limit for the fee request did not begin to
run until 150 days after entry of the order. The Fund’s request for
fees was therefore timely.
B.
We turn next to the reasonableness of the fee award. We
review a district court’s award of fees for abuse of discretion and
review a district court’s factual determinations, “including [the
court’s] determination of an attorney’s reasonable hourly rate and
the number of hours he or she reasonably worked on the case,” for
clear error. Interfaith Cmty. Org., 426 F.3d at 703 n.5. We
exercise plenary review over the legal standard that the district
court used in calculating the award. See id.; Bell v. United
Princeton Props., Inc., 884 F.2d 713, 718 (3d Cir. 1989).
Metro argues the District Court awarded an unreasonably
high fee to the Fund. In addition to complaining that the hours
awarded were excessive and the work was vaguely described,
Metro contends that the District Court erred by not reducing the fee
award so as to make it proportional to the amount of the underlying
damages recovered. Since we have not previously ruled on
whether a fee awarded pursuant to 29 U.S.C. § 1132(g)(2)(D) must
be proportional to the amount of unpaid contributions recovered,
we will focus our attention on that issue. Before we reach it,
however, we will briefly address Metro’s other claims.
1.
ERISA allows a prevailing plan to recover “reasonable
attorney’s fees.” 29 U.S.C. § 1132(g)(2)(D). “The most useful
starting point for determining the amount of a reasonable fee” is
the lodestar calculation. Hensley v. Eckerhart, 461 U.S. 424, 433
(1983). Under this well-settled approach, a court determines the
reasonable number of hours expended on the litigation multiplied
by a reasonable hourly rate. The product is a presumptively
reasonable fee, but it may still require subsequent adjustment. Id.
at 434; Pennsylvania v. Del. Valley Citizens’ Council for Clean
Air, 478 U.S. 546, 565 (1986). In this case, Metro does not
12
challenge the hourly rate charged but does suggest the hours
claimed by the Fund, and awarded by the District Court, were
excessive and insufficiently supported.
In requesting, challenging, and granting attorneys’ fees,
specificity is critical. A request for fees must be accompanied by
“fairly definite information as to hours devoted to various general
activities, e.g., partial discovery, settlement negotiations, and the
hours spent by various classes of attorneys.” Evans v. Port Auth.,
273 F.3d 346, 361 (3d Cir. 2001). And “[w]here the
documentation of hours is inadequate, the district court may reduce
the award accordingly.” Hensley, 461 U.S. at 433.
While the Fund’s records describing the hours spent on
various activities could have benefitted from added specificity, the
detail they provided allowed the District Court to determine
whether the costs claimed were unreasonable for the work
performed. See Washington v. Phila. County Ct. Com. Pl., 89 F.3d
1031, 1037 (3d Cir. 1996) (“[S]pecificity should only be required
to the extent necessary for the district court to determine if the
hours claimed are unreasonable for the work performed.”)
(quotation marks and citation omitted). Moreover, we agree with
the District Court that Metro’s complaints of excessive hours were
imprecise. See Bell, 884 F.2d at 720 (“[W]e emphasize that the
adverse party’s submissions cannot merely allege in general terms
that the time spent was excessive.”). Metro did not provide the
District Court with adequate justifications to reduce the hours of
the Fund’s fees, and has not presented them to us. We will not
disturb the court’s conclusion that the number of hours expended
on the successful 29 U.S.C. § 1145 action was reasonable.
Metro additionally argues that the District Court erred in not
reducing the fee award in light of Metro’s offer of judgment made
pursuant to Rule 68 of the Federal Rules of Civil Procedure.7
7
Rule 68 provides that if judgment finally obtained is not
more favorable than the offer of judgment, the offeree must pay the
costs incurred after the offer. Rule 68 further provides that “[a]n
offer not accepted shall be deemed withdrawn and evidence thereof
13
Courts have recognized that “fees accumulated after a party rejects
a substantial offer provide minimal benefit to the prevailing party.”
Moriarty v. Svec, 233 F.3d 955, 967 (7th Cir. 2000). Metro,
however, never presented the Fund with a “substantial offer.”
Metro initially offered to settle for the amount of unpaid
contributions, but its offer did not include costs, fees, or interest
incurred up to that point by the Fund. The Fund rejected the offer,
indicating that it would be a breach of fiduciary duty for the Fund
to waive interest on the unpaid contributions. Metro again failed
to provide a substantial offer when it responded to this rejection—it
reduced its offer by half.
We see no reason to overturn the District Court’s finding of
reasonable hours and reasonable rates, and we do not agree with
Metro that its offer of judgment needed to factor into the award.
The District Court fulfilled its obligation to consider carefully the
reasonableness of the fee request and made no clear errors in its
findings of fact.8
2.
Having concluded that the District Court did not err in its
is not admissible except in a proceeding to determine costs.” As
applied to a fee-shifting statute, if the statute indicates attorneys’
fees are part of the costs, then fees are included in Rule 68’s post-
offer costs. See Marek v. Chesny, 473 U.S. 1, 9 (1985) (“[A]ll
costs properly awardable in an action are to be considered within
the scope of Rule 68 ‘costs.’ Thus, absent congressional
expressions to the contrary, where the underlying statute defines
‘costs’ to include attorney’s fees, we are satisfied such fees are to
be included as costs for purposes of Rule 68.”). Compare 29
U.S.C. § 1132(g)(2)(D) (allowing recovery of “fees and costs”)
with 42 U.S.C. § 1988(b) (allowing recovery of “fee[s] as part of
the costs”). Metro does not argue the cost-shifting provision of
Rule 68 applies to this case and the Fund does not challenge the
admissibility of Metro’s Rule 68 offer in this proceeding.
8
The District Court’s reduction of the Fund’s fee request
by $6,681.75 further demonstrates its thoroughness.
14
lodestar calculation, we now turn to whether the District Court
should have downwardly adjusted the lodestar because the fee
award was disproportionate to the amount of the unpaid
contributions recovered. Although multiplying a reasonable
number of hours by a reasonable rate produces a presumptively
reasonable fee, that “does not end the inquiry. There remain other
considerations that may lead the district court to adjust the fee
upward or downward.” Hensley, 461 U.S. at 434; see also
Delaware Valley Citizens’ Council, 478 U.S. at 565. The
categories of considerations that justify adjusting the lodestar have
changed over time. “Originally, it was contemplated that the
lodestar could be adjusted upward or downward depending on a
variety of factors, see Lindy Bros. Builders, Inc. of Phila. v.
American Radiator & Standard Sanitary Corp., 487 F.2d 161,
167-69 (3d Cir. 1973), but more recently the Supreme Court has
sharply limited the number of factors which can be considered in
adjusting the lodestar amount.” Brytus v. Spang & Co., 203 F.3d
238, 242 (3d Cir. 2000). See City of Burlington v. Dague, 505
U.S. 557, 567 (1992) (holding courts may not adjust the lodestar
amount because an attorney was retained on a contingent-fee
basis); Blum v. Stenson, 465 U.S. 886, 898-99 (1984) (holding the
novelty and complexity of a case are reflected in the lodestar and
do not warrant post-lodestar adjustment); Id. at 899 (holding an
upward adjustment to the lodestar for quality of service is only
applicable in “exceptional” cases).
The question for us here—whether courts must downwardly
adjust a 29 U.S.C. § 1132(g)(2)(D) fee award to keep it
proportional to the damages—is as of yet unaddressed by the
Supreme Court. The Supreme Court has, however, addressed
disproportionate attorneys’ fees awarded in the civil rights context.
A four-Justice plurality of the Court in City of Riverside v. Rivera,
477 U.S. 561 (1986), refused to adopt a “rule of proportionality”
for 42 U.S.C. § 1988 fees because such a rule “would make it
difficult, if not impossible, for individuals with meritorious civil
rights claims but relatively small potential damages to obtain
redress from the courts” and thus would undermine “Congress’
purpose in enacting § 1988.” City of Riverside, 477 U.S. at 578
(Brennan, J., joined by Marshall, Blackmun, and Stevens, JJ.).
Justice Powell cast the fifth vote to affirm the fee award of $
15
245,456.25 for a case in which plaintiffs were awarded $ 33,350 in
damages. Id. at 585-86 (Powell, J., concurring in judgment). In
the margin of his concurring opinion, Justice Powell stated “[i]t
probably will be the rare case in which an award of private
damages can be said to benefit the public interest to an extent that
would justify the disproportionality between damages and fees
reflected in this case.” Id. at 586 n.3.
Justice Powell’s footnote in City of Riverside seems to
suggest courts should generally award only proportionate fees, and
should consider the public interest served by the underlying case
before awarding disproportionate fees. See, e.g., Moriarty v. Svec,
233 F.3d 955, 967-68 (7th Cir. 2000) (relying on Justice Powell’s
concurrence to support the proposition that “proportionality
concerns are a factor in determining what a reasonable fee is”). In
Cunningham v. City of McKeesport, 807 F.2d 49 (3d Cir. 1986),
however, we determined Justice Powell’s opinion did not mandate
that courts adopt a “rule of proportionality.” In that case, we stated
we did not have to “[apply] the thrust of Justice Powell’s somewhat
enigmatic footnote” and require courts to “consider the extent to
which the public interest was vindicated by the award if the fee
sought is disproportionate to the damages awarded.” Id. at 53. We
explained,
First, this interpretation represents at most the view of a
lone Justice and was not endorsed by any of the other eight
. . . . Second, we have doubts about Justice Powell’s
statement that only the rare case justifies disproportionate
fee awards . . . . Finally, we consider application of Justice
Powell’s reasoning problematic . . . . In the absence of an
explicit mandate, we are reluctant to begin the difficult task
of developing standards by which we might incorporate
proportionality principles into the attorney’s fee calculus.
Id. at 53-54 (citation and footnote omitted); see also Washington,
89 F.3d at 1041.
Thus, we have rejected a rule of proportionality in civil
rights cases. See, e.g., id. (“[A] court may not diminish counsel
fees in a section 1983 action to maintain some ratio between the
16
fees and the damages awarded.”). And, when asked to limit our
rejection of proportionality to 42 U.S.C. § 1988 fee awards, we
refused. In Northeast Women’s Center v. McMonagle, the plaintiff
brought a civil action under the Racketeer Influenced and Corrupt
Organizations Act, 18 U.S.C. §§ 1961-68 (“RICO”). 889 F.2d 466,
468 (3d Cir. 1989). We declared that “nothing in the language or
the legislative history of either § 1988 or [18 U.S.C.] § 1964(c)
[providing fees for RICO litigation] . . . support[s] the application
of a proportionality rule in the latter, but not the former.” Id. at
474.9
The language of these previously interpreted statutes—42
U.S.C. § 1988(b) (“. . . the court, in its discretion, may allow the
prevailing party, other than the United States, a reasonable
attorney’s fee as part of the costs . . . ”) and 18 U.S.C. § 1964(c)
(plaintiff “shall recover threefold the damages he sustains and the
cost of the suit, including a reasonable attorney’s fee . . . ”)—is
similar to the ERISA provision at issue here (“. . . the court shall
award the plan . . . reasonable attorney’s fees and costs of the
action . . .”).10 See Dague, 505 U.S. at 562 (implying that case law
construing the meaning of “reasonable” applies uniformly to fee-
9
We have previously been asked to consider the
proportionality of attorney fee awards in the ERISA context. Bell
v. United Princeton Props., Inc., 884 F.2d 713 (3d Cir. 1989). In
Bell we considered, but did not resolve, the inverse of Metro’s
argument. The plaintiff in that case challenged a district court’s
reduction of a fee award, claiming the court improperly required
proportionality between the attorneys’ fees and the damages award.
We commented that whether it would be an abuse of discretion for
a court to apply a proportionality rule to ERISA fees “is not
self-evident.” Bell, 884 F.2d at 724. We did not reach the
plaintiff’s claim because “[t]he district court nowhere articulated
that its reduction was based on a theory of proportionality.” Id.
10
The language of these provisions differ in one key
respect: 42 U.S.C. § 1988(b) and 18 U.S.C. § 1964(c) allow for
fees as part of costs, where as 29 U.S.C. § 1132(g)(2)(D) allows for
fees and costs. This difference may have significance, see supra
note 7, but it does not alter the meaning of “reasonable.”
17
shifting statutes with similar language); Indep. Fed’n of Flight
Attendants v. Zipes, 491 U.S. 754, 759 n.2 (1989) (emphasizing
that “fee-shifting statutes’ similar language is a strong indication
that they are to be interpreted alike”) (quotation marks omitted);
see also Smith v. City of Jackson, 544 U.S. 228, 233 (2005)
(“[W]hen Congress uses the same language in two statutes having
similar purposes, particularly when one is enacted shortly after the
other, it is appropriate to presume that Congress intended that text
to have the same meaning in both statutes.”). Nothing in the text
of 29 U.S.C. § 1132(g)(2)(D) suggests that to be “reasonable,” fees
must be proportional, cf. 42 U.S.C. § 1997e(d)(1)(B)(i) (providing
that a prisoner will not be awarded fees in a § 42 U.S.C. § 1988
action unless “the amount of the fee is proportionately related to
the court ordered relief for the violation”), and Metro offers no
argument specific to ERISA’s mandatory fee structure to ease our
longstanding concerns with requiring proportionality. As we have
previously explained with regard to another fee-shifting statute,
“[h]ad Congress believed . . . that attorneys’ fees should be
awarded only in some proportion to the plaintiff’s damages, it
could have easily eliminated or modified the attorneys’ fees
provision.” Northeast Women’s Ctr., 889 F.2d at 474. We will
“not impose such a change by judicial fiat.” Id.
Rejecting a proportionality rule with regard to §
1132(g)(2)(D) is consistent with the purpose of the provision.
ERISA provides “for appropriate remedies, sanctions, and ready
access to the Federal courts” in order to “protect interests of
participants in employee benefit plans and their beneficiaries.” See
29 U.S.C. § 1001(b). When employers violate their obligations to
make contributions as described by § 515 of ERISA, 29 U.S.C. §
1145, then § 502 of ERISA, 29 U.S.C. § 1132, provides a federal
cause of action.
Originally, ERISA allowed courts to award attorneys’ fees
in their discretion. In enacting the Multiemployer Pension Plan
Amendments Act of 1980, Congress amended ERISA to address
the “substantial number of employers” who “fail[] to make their
‘promised contributions’ on a regular and timely basis.” Advanced
18
Lightweight Concrete, 484 U.S. at 546.11 In the provisions of 29
U.S.C. § 1132(g)(2), Congress required courts to award attorneys’
fees and other remedies to prevailing plans. The Supreme Court
has stated that “[t]he legislative history of these provisions explains
that Congress added these strict remedies to give employers a
strong incentive to honor their contractual obligations to contribute
and to facilitate the collection of delinquent accounts.” Id. at 547.
“ERISA clearly assumes that [benefit plan] trustees will act
to ensure that a plan receives all funds to which it is entitled.”
Cent. States, Se. & Sw. Areas Pension Fund v. Cent. Transp., Inc.,
472 U.S. 559, 571 (1985). When delinquencies are small, the cost
of recovery may be disproportionate, and requiring proportionality
would, in effect, discourage plans from taking their claims to
federal courts. Moreover, § 1132(g)(2) was enacted to encourage
employers to make timely contributions, assist plans in their
recovery of delinquent contributions, and discourage excessive
litigation by defendants. See Advanced Lightweight Concrete, 484
U.S. at 546; JPR, 136 F.3d at 803-04. Funds are burdened by
employers who needlessly extend or complicate litigation for small
delinquencies just as they are burdened by employers who
needlessly extend or complicate litigation for larger delinquencies.
We do not read § 1132(g)(2) to limit the fee award of a plan
suffering the former situation simply because the amount of
underlying recovery is less.
11
A Senate report regarding the amendments to ERISA
recognized the “‘[f]ailure of employers to make promised
contributions in a timely fashion imposes a variety of costs on
plans. While contributions remain unpaid, the plan loses the
benefit of investment income . . . . [C]osts are incurred in detecting
and collecting delinquencies. Attorneys fees and other legal costs
arise in connection with collection efforts.’” Advanced
Lightweight Concrete, 484 U.S. at 546 n.12 (quoting Senate
Committee on Labor and Human Resources, 96th Cong., 2d Sess.,
S. 1076, The Multiemployer Pension Plan Amendments Act of
1980: Summary and Analysis of Consideration 43 (Comm. Print
1980)) (emphasis removed).
19
We are not alone in concluding that requiring
proportionality would neglect the language of ERISA and frustrate
its purpose. See Bldg. Serv. Local 47 v. Grandview Raceway, 46
F.3d 1392, 1401 (6th Cir. 1995) (“[I]n ERISA cases, there is no
requirement that the amount of an award of attorneys’ fees be
proportional to the amount of the underlying award of damages”);
Bd. of Trs. of the Hotel & Rest. Employees, Local 25 &
Employers’ Health & Welfare Fund v. Madison Hotel, Inc., 43 F.
Supp. 2d 8, 14 (D.D.C. 1999) (adopting the view of the Court of
Appeals for the Sixth Circuit that there is no proportionality
requirement); see also Operating Eng’rs Pension Trusts v. B&E
Backhoe, Inc., 911 F.2d 1347, 1355 (9th Cir. 1990) (refusing to
adopt a “‘de minimus’ rule to bar litigation where only a few hours
trust contribution is owing”). We join these courts to the extent
they reject a proportionality rule for mandatory fees awarded
pursuant to ERISA.12 In 29 U.S.C. § 1132(g)(2)(D), there is no
ratio of reasonability to which fees and damages must conform.
3.
Before we conclude, we address our dicta in Ursic v.
12
To support a proportionality rule, Metro cites to Moriarty
v. Svec, 233 F.3d 955 (7th Cir. 2000), which states
“disproportionality is not determinative . . . [but] the district court’s
fee order should evidence increased reflection before awarding
attorney’s fees that are large multiples of the damages recovered or
multiples of the damages claimed.” Id. at 968; see also id. at
967-68 (declaring “proportionality concerns are a factor in
determining what a reasonable fee is”). In that case, the Court of
Appeals for the Seventh Circuit relied on Justice Powell’s
concurrence in City of Riverside v. Rivera, 477 U.S. 561 (1986) for
its understanding of the relevance of proportionality. See
Moriarity, 233 F.3d at 967-968 (citing City of Riverside, 477 U.S.
at 585-86 & n.3). We note that our interpretation of the import of
Justice Powell’s concurrence, as described in Cunningham v. City
of McKeesport, 807 F.2d 49, 53-54 (3d Cir. 1986), apparently
differs from the interpretation of the Court of Appeals for the
Seventh Circuit.
20
Bethlehem Mines, 719 F.2d 670 (3d Cir. 1983). In that case, we
declared that “[w]hen monetary damages are awarded, the trial
court must consider the relationship between the fee award and the
amount of recovery . . . both in the context of determining the
lodestar and in determining whether to adjust the fee upward or
downward.” Id. at 677; see also Bell, 884 F.2d at 723 n.9
(describing language in Ursic as dicta). Ursic’s approach to fee
awards is consistent with the Supreme Court’s declaration that
“‘the most critical factor’ in determining the reasonableness of a
fee award ‘is the degree of success obtained.’” See Farrar v.
Hobby, 506 U.S. 103, 114 (1992) (quoting Hensley, 461 U.S. at
436). As we have explained, comparing damages awarded with the
amount of damages requested “may be one measure of how
successful the plaintiff was in his or her action, and therefore ‘may
be taken into account when awarding attorneys’ fees.’” See
Washington, 89 F.3d at 1042 (quoting Abrams v. Lightolier, 50
F.3d 1204, 1222 (3d Cir. 1995)). Because the focus is on the
“degree of success,” and not success as defined in absolute
numbers, this comparison does not necessitate proportionality. We
are aware, however, that our language in Ursic could be interpreted
to support a proportionality rule, and, although Metro does not rely
on that case, we briefly discuss how later Supreme Court cases
prevent such an interpretation.
In Ursic, we stated that for a fee to be reasonable, “there
must be a correlation between the ‘hours worked’ and ‘the total
recovery.’” Ursic, 719 F.2d at 677. We went on to state that “[t]he
mere fact that a fee is authorized by statute does not empower the
courts to set extravagant or disproportionate fees. The key word is
‘reasonable’ and that means in relation to the main litigation.” Id.
at 678.13 It is clear that Ursic remains good law insofar as it
suggests courts consider “billing judgment” in determining
13
In Ursic, we established the factors a court must consider
in determining whether to award fees pursuant to 29 U.S.C. §
1132(g)(1). Those factors are inapplicable to a fee award
mandated by 29 U.S.C. § 1132(g)(2). See Bd. of Trs. of Trucking
Employees of N. Jersey Welfare Fund, Inc. v. Centra, 983 F.2d
495, 508-09 (3d Cir. 1992).
21
reasonable hours. See Hensley, 461 U.S. at 434. To determine
whether the fee request excludes hours that are “excessive,
redundant, or otherwise unnecessary,” a district court can consider
the damages sought and obtained. See id. But insofar as we stated
in Ursic that the amount of damages recovered should be
considered identically in determining whether an attorney’s hours
are reasonable and whether the lodestar needs adjustment, the
Supreme Court has since indicated that this kind of “double
counting” is inappropriate. See Dague, 505 U.S. at 562-63; Del.
Valley Citizens’ Council, 478 U.S. at 565; Blum, 465 U.S. at 899-
900.
More importantly, any implication in Ursic that all fees must
be proportional to be reasonable is inconsistent with City of
Riverside v. Rivera. As explained above, in that case, a plurality
refused to require proportionality in awarding a “reasonable
attorney’s fee” for successful civil rights litigation. City of
Riverside, 477 U.S. at 576 (plurality opinion). Justice Powell
joined the plurality in affirming the disproportionate fee award.
Id. at 585 (Powell, J., concurring in judgment). City of Riverside,
therefore, holds that reasonable fees can, at least in certain
circumstances, be disproportionate with the amount of underlying
relief. See Marks v. United States, 430 U.S. 188, 193 (1977)
(“When a fragmented Court decides a case and no single rationale
explaining the result enjoys the assent of five Justices, the holding
of the Court may be viewed as that position taken by those
Members who concurred in the judgments on the narrowest
grounds.”) (quotation marks and alterations omitted).
In light of the text and purpose of 29 U.S.C. § 1132(g)(2),
Supreme Court case law, and our precedent, we hold that the
District Court did not err in refusing to adjust downwardly the
lodestar calculation simply because the fee award was
disproportionate to the damages award.
III.
For the foregoing reasons, we will affirm the District
Court’s award of attorneys’ fees to the Fund in the amount of
$28,623.14.
22