The opinion of the court was delivered by: Honorable B. Lynn Winmill Chief U. S. District Judge
MEMORANDUM DECISION AND ORDER
The Court has before it Plaintiffs' Motion for Award of Attorney Fees (Dkt. 156) and Defendants' Motion for Attorney Fees and Costs (Dkt. 157).
The Court "in its discretion may allow a reasonable attorney's fee and costs of action to either party" in an ERISA action. Simonia v. Glendale Nissan/Infiniti Disability Plan, 608 F.3d 1118, 1120 (9th Cir. 2010); see also 29 U.S.C. § 1132(g)(1). The party claiming fees and costs need not be the prevailing party, but must show some degree of success on the merits. Id. (citing Hardt v. Reliance Standard Life Ins. Co., 130 S.Ct. 2149, 2156-59 (2010). A "claimant can satisfy that requirement 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. at 1120-21 (citing Hardt, 130 S.Ct. at 2156-59).
Once a party establishes "some degree of success on the merits," the Court may exercise its discretion to grant fees and costs under § 1132(g)(1). Id. In the Ninth Circuit, a district court exercising its discretionary must consider five factors set forth in Hummell v. S.E. Rykoff & Co., 634 F.2d 446 (9th Cir.1980). The factors are: "(1) the degree of the opposing parties' culpability or bad faith; (2) the ability of the opposing parties to satisfy an award of fees; (3) whether an award of fees against the opposing parties would deter others from acting under similar circumstances; (4) whether the parties requesting fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA; and (5) the relative merits of the parties' positions." Id.
1. Plaintiffs' Motion for Attorney's Fees
The Court will grant Plaintiff's request for a fee award. There is no question Plaintiffs attained some degree of success on the merits in this case. After issuing its Findings of Fact and Conclusions of Law, the Court entered a final judgment in favor of all but two plaintiffs on Counts One, Two and Three. Only plaintiff Elliott's claims and Plaintiffs' request for statutory penalties under Count Four were denied.
The Court ordered Defendants to comply with ERISA and create and fund a plan, qualified and consistent with the requirements of ERISA for Plan participants currently employed by Stinker Stores, Inc. The Court also ordered Defendants to purchase and provide to each plaintiff no longer employed by Stinker Stores, Inc. an annuity guaranteeing payment of monthly retirement benefits to each individual under the terms of the Plan. Accordingly, Plaintiffs attained at least some degree of success on the merits. The Court will therefore address the five Hummell factors.
A. Culpability or Bad Faith
As explained in the Court's Findings of Fact and Conclusions of Law, sometime in the 1980s, Fearless Farris Service Stations, Inc. ("Fearless") established a retirement plan, referred to as the Fearless Farris Service Stations, Inc. Deferred Compensation Plan (the "Plan"). In 2002, certain purchasing entities formed by Defendants Charley Jones and Shawn Davis purchased the common stock and assets of Fearless Farris Service Stations, Inc., Fearless Farris Wholesale, Inc., and their various subsidiary entities. As a result of the purchase agreement, Jones/Davis became the sole shareholders and owners of Fearless and its subsidiaries, which are all now part of Stinker Stores, Inc. ("Stinker").
Soon after they acquired Fearless and its subsidiaries, Defendants sought to terminate the Plan. Defendants provided the Plan participants with a memorandum stating that the "Plan is terminated effective 7/22/03." Joint Trial Ex. 6. It also stated that "[t]he company has no financial obligation to you as a result of the plan termination." Id.
In an earlier, related case, one of the Plan participants, Ted Roberts, sued Defendants for terminating the Plan. The case was handled by Judge William F. Nielson from the Eastern District of Washington, sitting by designation. As explained in more detail in the Court's Findings of Fact and Conclusions of Law, Judge Nielsen concluded that the Plan was subject to ERISA, and that Defendants breached their fiduciary duties to follow ERISA requirements for the Plan. Judge Nielsen required Defendants to make arrangements to pay Roberts his benefits under the Plan.
Even with that judgment in hand, Defendants forced Plaintiffs to bring this suit in order to obtain their benefits under the Plan. Only two months into this case, the Court determined that Judge Nielsen's findings of fact and conclusions of law in the Roberts case had a preclusive effect to the extent Judge Nielsen made determinations generally applicable to the Plan. Still, Defendants pressed on until this Court issued a final judgment requiring Defendants to fulfill their duties under the Plan.
The Court recognizes that at some point during this litigation, Defendants essentially conceded that they owed Plaintiffs an obligation under the Plan. However, the case still proceeded all the way to trial. This shows at least some degree of culpability or bad faith on the part of Defendants.*fn1
B. Ability to Satisfy a Fee Award
Defendants concede that their ability to pay is greater than that of Plaintiffs. They suggest that any fee award will come from the general assets of Stinker which are not limitless. Still, there is no real ...