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Brasley v. Fearless Farris Service Stations, Inc.

United States District Court, D. Idaho

November 29, 2018

EDWARD BRASLEY, et al., Plaintiff,
v.
FEARLESS FARRIS SERVICE STATIONS, INC., et al., Defendants.

          MEMORANDUM DECISION AND ORDER

          B. Lynn Winmill Chief U.S. District Court Judge.

         INTRODUCTION

         The Court has before it Plaintiffs' Renewed Motion for Attorney Fees (Dkt. 351) and Motion for Order for Leave to File Supplemental Briefing (Dkt. 356). The motions are fully briefed and at issue. For the reasons explained below, the Court will GRANT the Renewed Motion for Attorney Fees in part (Dkt. 351), and the Motion for Leave to File Amended Briefing (Dkt. 356) will be DEEMED MOOT.

         BACKGROUND

         The background of this case is well known to each party. Previously, this Court considered Plaintiffs' Motion for Attorney Fees (Dkt. 313) and held that Plaintiffs had not attained “some degree of success on the merits.” (Dkt. 323). On appeal, the Ninth Circuit disagreed. See Brasley v. Fearless Farris Serv. Stations, 714 Fed.Appx. 790, 791 (9th Cir. 2018). On remand, the Court now considers whether the factors delineated in Hummell v. S.E. Rykoff & Co., 634 F.2d 446, 453 (9th Cir. 1980) justify a discretionary award of both district court and appellate attorney fees. Id.

         LEGAL STANDARD

         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., 560 U.S. 242, 252 (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, 560 U.S. at 255). 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. The five factors set forth in Hummell v. S.E. Rykoff & Co., 634 F.2d 446 (9th Cir. 1980) guide this Court's decision.

         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.

         “None of the Hummell factors is necessarily decisive; various permutations and combinations can support an award of attorney fees.” Paddack v. Morris, 783 F.2d 844, 846 (9th Cir. 1986). Unless Defendants can show the existence of “special circumstances [that] would render such an award unjust, ” the Court's discretionary decision will stand. McElwaine v. U.S. W., Inc., 176 F.3d 1167, 1172 (9th Cir. 1999).

         ANALYSIS

         1. Plaintiffs' Motion for Attorney Fees Prior to Appeal

         The court will grant Plaintiffs' request for a fee award at the district court level. The Ninth Circuit determined, on appeal, that Plaintiffs had attained some degree of success in this Court (9th Cir. Dkt. 54). For that reason, the Court now applies the Hummel factors to the fees incurred between 2010 and 2015.

         (1) Culpability/Bad Faith

         Both parties urge this Court to consider different conduct when weighing the first factor. Defendants suggest the court weigh the Plaintiffs' post-judgment conduct. Def.'s Opp. Br., Dkt. 352, pp. 10-11. However, in this case, the Defendants are the “non-claiming party.” See Micha v. Sun Life Assurance of Can., Inc., 874 F.3d 1052, 1058 (9th Cir. 2017). As such, the Defendants conduct is squarely at issue and will not be disregarded.

         Plaintiffs, on the other hand, would have this Court consider all of Defendants' conduct before and after the time of filing in 2008. Dkt. 351, pp. 2-8. In support of this view, Plaintiffs cite to Micha v. Sun Life Assurance of Can., Inc., which holds that the court must consider any pre-appeal bad faith or culpability in determining whether to award attorney fees. 874 F.3d at 1058. However, Micha concerned a factually distinct case.

         In Micha, the plaintiffs were awarded litigation attorney fees and the defendants appealed to insulate itself from the award of fees. Id. at 1054-55. The defendants then aggressively fought the award on appeal, even filing a petition for certiorari, causing significant expenses to the appellees. Id. Unlike Micha, here Plaintiffs were awarded attorney fees by this Court, which were paid. Dkt. 173. Now Plaintiffs move for attorneys' fees a second time. Unlike the defendants in Micha, here Defendants were not attempting to insulate themselves by appealing an award of fees after the 2010 trial. Rather, it was Plaintiffs who challenged the sufficiency of Defendants' compliance with the judgment, which continued the litigation. Thus, Micha is distinguishable from the case at hand.

         Indeed, the Court previously determined that forcing the Plaintiffs to litigate these issues at a jury trial with a judgment in hand constituted “at least some degree of culpability or bad faith on the part of Defendants.” Dkt. 167. But Defendants paid or settled that order of $390, 153.60 in attorney fees after the 2010 trial. Dkt. 172. To again consider those acts would be unjust. Fairness requires this Court to consider whether Defendants acted with bad faith solely during post-judgment litigation.

         After the Court issued its Amended Judgment, Defendants were left to “fund a plan, qualified and consistent with the requirements of ERISA.” Dkt. 145, ¶ 6. Defendants attempted to create this qualified plan, but upon Plaintiffs' objection the Special Master ultimately determined that “the Defendants [could not] fully comply with the Court's Amended Judgment and related Order because doing so would violate ERISA or tax law.” Dkt. 245, pp. 12. Thus, the Court's Amended Judgment left Defendants between a rock and a hard place: no matter how they proceeded, Defendants would ultimately be in violation of federal law or the Amended Judgment.

         To hold that Defendants' effort to comply with the Amended Judgment constituted bad faith would punish Defendants for trying to resolve this issue in accordance with the Court's terms. Instead, the Court faults the subsequent litigation on a lack of precedent and the inherent complexities of ERISA law. For this reason, bad faith will not be attributed to Defendants' post-judgment conduct.

         (2) Ability to Satisfy a Fee Award

         When an action is brought by an ERISA beneficiary, a defendants' “ability to pay should weigh strongly in favor of an award of attorney fees. Micha, 874 F.3d at 1058 (citing Smith v. CMTA-IAM Pension Trust, 746 F.2d 587, 590 (9th Cir. 1984)). Like in 2010, Defendants concede that their ability to pay is greater than that of Plaintiffs. Dkt. 352-1, pp. 11. Yet, Defendants also argue that Plaintiffs' counsel are “well able to absorb the loss of attorney fees for their pre-appeal conduct.” Id. This argument improperly conflates two distinct factors: (1) bad faith, and (2) the parties ability to satisfy an award. In considering the latter, the Court evaluates the “resources available to the pensioners” not their attorneys. Smith, 746 F.2d at 590. Because Defendants do not dispute their ability to pay a fee award or argue that Plaintiffs are better suited to do so, this factor weighs in favor of Plaintiffs.

         (3) Whether A Fee Award Would Deter Others

         While an award of attorney's fees may deter future defendants from short changing judgments awarded for ERISA violations, Defendants argue that such an award may also encourage plaintiffs to frivolously challenge compliance with the court judgments. These are serious risks. On one hand, courts impose judgments in ERISA cases with the expectation that beneficiaries will be made whole. See McElwaine, 176 F.3d at 1171-74 (an award would “deter other employers from forcing beneficiaries to undertake costly litigation to preserve their claims”). On the other, courts want to deter beneficiaries from bringing meritless claims.

         Yet, the Ninth Circuit has characterized Plaintiffs' post-judgment conduct in a favorable light. On appeal, the Court found that Plaintiffs had some success on their claims in post-judgment litigation. To the extent that Defendants argue that a large portion of the fees sought in this matter are related to the unsuccessful and meritless positions Plaintiffs took post-judgment, the Court rejects that argument. Because the Court of Appeals held that Plaintiffs' post-judgment claims had merit, imposing a fee award against Defendants would more likely deter employers from short changing employees' ERISA judgments than encourage “other litigants from relentlessly pursuing groundless [post-judgment] claims.” Credit Managers Assoc. v. Kennesaw Life & Acc. Ins. Co., 25 F.3d 743, 748 (9th Cir. 1994). Therefore, the third Hummel factor also weighs in favor of an award of attorney fees.

         (4) Benefit to All Participants/Significant Legal Questions

         There are two considerations within the fourth Hummel factor. The first concerns whether Plaintiffs sought to benefit all participants and beneficiaries. Hummel, 634 F.2d at 453. As to this question, the Court agrees with Plaintiffs' characterization of the 2010-2015 litigation as impacting “most or all Participants.” Dkt. 353, pp. 9. From 2008 to 2010, Plaintiffs represented 28 Participants from the 1995 Plan liquidated by Defendant. Dkt. 351, pp. 4. Approximately twelve participants settled their claims with Defendants from 2010 to 2015, leaving seventeen Participants to benefit from Plaintiffs' post-judgment work. Id. Given that a majority of the remaining Plan beneficiaries were represented, the Court agrees that Plaintiffs sought to benefit all remaining participants post-judgment.

         Next the Court determines whether Plaintiffs sought to resolve any significant legal questions. Hummel, 634 F.2d at 453. Defendants invite the Court to focus, in large part, on the past three years of post-judgment litigation. Defendants argue that litigation from 2015-2018 has only focused on attorney fees, and therefore should not constitute a significant legal question. The Court declines to restrict its analysis to the prior three years. Before 2015, Plaintiffs litigated some important ERISA issues concerning Defendants' satisfaction of the Amended Judgment. These issues were important because they related to the repayment of Plaintiffs' liquidated benefits. Others were not. Because these issues did or would have benefited the seventeen remaining participants, this factor weighs in favor of Plaintiffs' award.

         (5) Relative Merits of the Parties' Position

         Although Plaintiffs overstate their success on the merits of this case, the last Hummel factor also weighs in favor of granting attorney fees. In addition to the outcome of the underlying suit, the court may analyze under this factor whether the law was clear at the time of litigation, whether the losing party had a strong equitable argument despite it ultimately being foreclosed on, and whether the losing party's position was simply “incorrect” rather than “unmeritorious”. Honolulu Joint Apprenticeship & Training Comm. of United Assoc. Local Union No. 675 v. Foster, 332 F.3d 1234 (9th Cir. 2003). When considering the fifth factor, “courts should be careful neither to penalize [parties] for seeking to ...


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