Toussaint, et al. v. Mahoney, No. 09-3797 (2d Cir. 2011)
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Plaintiffs sued defendants, former directors of a retirees association of former unionized transportation workers, alleging, among other things, that defendants breached their fiduciary duty to the retirees association and its members by buying and maintaining a health insurance policy with premiums that far outstripped the benefits received by members. When defendants prevailed on all counts, defendants appealed the district court's denial of their fees motion. At issue was whether the district court erred in denying the fees motion in light of the recent Supreme Court decision, Hardt v. Reliance Standard Life Insurance Co. The court affirmed and held that the district court did not abuse its discretion in denying fees where, although the district court did not have the benefit of Hardt in reaching its decision, nothing in the district court's opinion contradicted Hardt or suggested that the district court would have decided the matter differently in light of Hardt. Accordingly, Hardt did not require the court to reverse or remand. The court also held that, when determining whether attorney's fees should be awarded to defendants, the court focused on whether plaintiffs brought the complaint in good faith.
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09-3797-cv Toussaint v. Mahoney 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term, 2010 (Argued: May 3, 2011 Decided: June 6, 2011) Docket No. 09-3797-cv ROGER TOUSSAINT, as President of Transport Workers Union, Local 100, ED WATT, as Secretary Treasurer of Transport Workers Union, Local 100, Plaintiffs-Appellees, JAMES MAHONEY, as the Director of the Transport Workers Union, Plaintiff-Counter-Defendant-Appellee, JOSEPH ALLMAN, BERNARD BEAVER, FRANK INGRAM, LAVERNE STUCKEY, MAURICE SCHIERMAN, MATTHEW TARNOWSKI, on their own behalf and on behalf of all others similarly situated, Plaintiffs-Appellees, v. JJ WEISER, INC., STANFORD J. COHEN, HARVEY T. GLUCK, Defendants, INTERBORO MUTUAL INSURANCE CO., Defendant-Cross-Defendant, Page 1 of 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 MICHAEL J. FITZPATRICK, JOHN MEEHAN, Defendants-Counter-Claimants-Third-Party PlaintiffsAppellants, LOCAL 100, TRANSPORT WORKERS UNION, TRANSPORT WORKERS UNION RETIREES ASSOCIATION, Third-Party Defendants.* Before: WALKER, CALABRESI, and WESLEY, Circuit Judges. Appeal from an order of the United States District Court for the Southern District of New York (Marrero, J.) entered on August 18, 2009, denying Defendants-CounterClaimants-Third-Party Plaintiffs-Appellants John Meehan and Michael J. Fitzpatrick s motion for fees and costs pursuant to Section 502(g) of the Employee Retirement Income Security Act of 1974, as amended ( ERISA ), 29 U.S.C. §§ 1001, et seq. AFFIRMED. NICHOLAS HANLON, Cary Kane LLP, for PlaintiffsAppellees. SUSZANNE TONGRING (Terrence Buehler, Touhy Touhy Buehler & Williams, LLP, on the brief), for Defendants-Counter-Claimants-Third-Party Plaintiffs-Appellants. * The Clerk of Court is directed to amend the caption as set forth above. Page 2 of 8 1 2 PER CURIAM: John Meehan and Michael Fitzpatrick ( Defendants ) are 3 former directors of a retirees association of former 4 unionized transportation workers. 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 In an underlying ERISA 10 members. 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. 17 646 F. Supp. 2d 582 (S.D.N.Y. 2009). 18 that decision. 19 Defendants prevailed on all counts, see Mahoney v. See Mahoney v. J.J. Weiser & Co., Defendants now appeal 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: Page 3 of 8 (1) [T]he degree of the offending party s culpability or bad faith, (2) the ability of the offending party to satisfy an award of attorney s fees, (3) whether an award of fees would deter other persons from acting similarly under like circumstances, (4) the relative merits of the parties positions, and (5) whether the action conferred a common benefit on a group of pension plan participants. 1 2 3 4 5 6 7 8 9 10 11 12 Chambless v. Masters, Mates & Pilots Pension Plan, 815 F.2d 13 869, 871 (2d Cir. 1987). 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 The district court reasoned: As to the first [Chambless] factor, though Defendants ultimately prevailed on the merits of their position in this Court and on appeal, under the circumstances that gave rise to the action at the time it was filed, there is no sufficient evidence of culpability or bad faith on Plaintiffs part in commencing the litigation. Concerning the need for deterrence reflected in the third factor, the Court agrees that given ERISA s policy of protecting plan beneficiaries, colorable claims pursued in good faith, even if ultimately unsuccessful, should not be discouraged by awards of attorney s fees to prevailing defendants. As regards the fourth factor, the relative merits of the parties positions, though Defendants arguments prevailed, Plaintiffs losing claims should be considered in the context of the absence of culpability or bad faith as determined in assessing the first factor. In this light, the Court finds that Plaintiffs position cannot be considered so substantially devoid of merit as to tip the Chambless factors dispositively in Defendants favor on this basis alone. Page 4 of 8 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. 2149 6 (2010). 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 Hardt held that the proper standard for determining 10 party. 11 recognized that its holding did not change the law in our 12 Court with respect to this issue. 13 (citing Miller v. United Welfare Fund, 72 F.3d 1066, 1074 14 (2d Cir. 1995)). 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. 19 prevailing party and some degree of success on the 20 merits is irrelevant here. 21 22 Id. at 2158; see also id. at 2157. Hardt See id. at 2156 n.2 In any event, there is no dispute that Accordingly, the difference between Hardt further pointed out that the Fourth Circuit s five-factor test for awarding § 1132(g)(1) fees which Page 5 of 8 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. 4 that consideration of these factors is not required for 5 channeling a court s discretion when awarding fees under [§ 6 1132(g)(1)]. 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. Id. Id. at 2158. Hardt concluded Hardt nevertheless [did] not foreclose 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. 14 apply but is not required to apply the Chambless factors 15 in channeling [its] discretion when awarding fees under 16 § 1132(g)(1). 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. 20 § 1132(g)(1). 21 § 1132(g)(1) analysis by determining whether a party has 22 achieved some degree of success on the merits, but it is See id. at 2158. A court may So long as a party has 29 U.S.C. Thus, a district court must begin its Page 6 of 8 1 not required to award fees simply because this pre-condition 2 has been met. 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 Cf. Taafee v. Life Ins. Co. of N. Am., --- F. 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. 12 to reverse or remand. 13 observation that the five factors very frequently suggest 14 that attorney s fees should not be charged against ERISA 15 plaintiffs. 16 2000) (internal quotation marks omitted). 17 slant toward ERISA plaintiffs is necessary to prevent the 18 chilling of suits brought in good faith. 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. Accordingly, Hardt does not require us Hardt also does not disturb our Salovaara v. Eckert, 222 F.3d 19, 28 (2d Cir. This favorable Id. For this After a thorough review of the record, we conclude Page 7 of 8 1 that the district court did not abuse its discretion in 2 denying fees in the present case. 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 10 See McDonald ex rel. Based on the foregoing, the order of the district court is hereby AFFIRMED. Page 8 of 8
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