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Johnson v. Charps Welding & Fabricating, Inc.

United States District Court, D. Minnesota

December 28, 2018

Glen Johnson, et al., Plaintiffs,
v.
Charps Welding & Fabricating, Inc, et al., Defendants.

          MEMORANDUM AND ORDER

          PAUL A. MAGNUSON UNITED STATES JUDGE

         This matter is before the Court on Defendants' Motion for Attorney's Fees and Costs (Docket No. 316) and Plaintiff's Motion for Review of the Clerk's Taxation of Costs (Docket No. 346). For the following reasons, Defendants' Motion is granted and Plaintiffs' Motion is denied.

         BACKGROUND

         This case arises from Defendants' alleged failure to make contributions to three multi-employer, jointly trusteed fringe benefit plans (the “Funds”) administered pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq. Plaintiffs are the trustees and fiduciaries of the Funds, and they brought this action to audit Defendants and recover contributions that Defendants allegedly owed to the Funds. The full factual background is set forth in the Court's August 20, 2018, Memorandum and Order granting Defendants' Motion for Summary Judgment. (Docket No. 311.) Defendants filed their Motion for Attorney's Fees and Costs on September 4, 2018. (Docket No. 316.)

         After considering the parties' memoranda and filing an Order on October 4, 2018, (Docket No. 343), this Court withdrew the Order in light of Plaintiffs' Objection (Docket No. 340) to Defendants' Bill of Costs (Docket No. 329). On October 29, 2018, the Clerk of Court entered a cost judgment awarding Defendants $149, 220.96 in taxable costs, $517.30 less than the amount they requested. (Docket No. 345.) On November 9, 2018, Plaintiffs filed a Motion for Review of the Clerk's Taxation of Costs. (Docket No. 346.)

         Defendants claim that ERISA allows the Court, in its discretion, to award them attorney's fees and costs pursuant to 29 U.S.C. § 1132(g)(1). They request $2, 096, 063.75 in attorney's fees and $525, 517.32 in costs, and argue that a balance of the five factors discussed in Lawrence v. Westerhaus demonstrates that an award of fees is appropriate. 749 F.2d 494, 496 (8th Cir. 1984). Defendants further argue that the Clerk's cost judgment is accurate and Plaintiffs' objections to their stated costs are baseless and successive.

         Plaintiffs claim that 29 U.S.C. § 1132(g)(2) applies to this action rather than § 1132(g)(1) and provides no statutory basis for Defendants' attorney's fees. This subsection applies only to plaintiffs who obtain “a judgment in favor of the plan.” § 1132(g)(2). Plaintiffs further argue that the Westerhaus factors show that Defendants are not entitled to fees, and that Defendants' bill of costs is overstated and includes several billings that are not eligible for award.

         DISCUSSION

         ERISA permits the Court “in its discretion [to] allow a reasonable attorney's fee and costs of action to either party.” Id. § 1132(g)(1). The Court has discretion to award costs and fees to any claimant who “has achieved some degree of success on the merits.” Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 245 (2010) (quotation omitted). In deciding whether to award attorney's fees, the Court should consider five factors: (1) “the degree of the opposing parties' culpability or bad faith”; (2) the opposing parties' ability to pay; (3) whether an award of fees would “deter other persons acting under similar circumstances”; (4) whether the fee claimant “sought to benefit all participants and beneficiaries” of the plan or “to resolve a significant legal question regarding ERISA”; and (5) “the relative merits of the parties' positions.” Westerhaus, 749 F.2d at 496 (alteration omitted). These factors are “general guidelines” and are “by no means exclusive or to be mechanically applied.” Martin v. Ark. Blue Cross & Blue Shield, 299 F.3d 966, 972 (8th Cir. 2002).

         An award of attorney's fees must also be reasonable. The Eighth Circuit has approved the use of the “lodestar” method to calculate attorney's fees in ERISA cases. See Brown v. Aventis Pharm., Inc., 341 F.3d 822, 829 (8th Cir. 2003). The lodestar is the number of hours reasonably expended times a reasonable hourly rate for those hours. Fish v. St. Cloud State Univ., 295 F.3d 849, 851 (8th Cir. 2002). Courts consider several factors under the lodestar method to determine the reasonableness of a fee, including the time and labor required, the novelty and difficulty of the legal questions, the skill required to perform the legal service, customary fees, and the outcome of the action. See Hensly v. Eckerhart, 461 U.S. 424, 430 n.3 (1983).

         A. Attorney's Fees Under ERISA

         Defendants' request for fees falls under § 1132(g)(1), which states: “(1) In any action under this subchapter (other than an action described in paragraph (2)) by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney's fee and costs of action to either party.”

         According to Plaintiffs, § 1132(g)(2) precludes the award of fees here. That section provides that fees shall be awarded “[i]n any action . . . 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 . . . .” Because Plaintiffs brought this lawsuit under § 1145, they claim that § 1132(g)(2) is the only authority for the award of attorney's fees, and this section allows that award only in favor of plan fiduciaries.

         But Plaintiffs' reading of ERISA's attorney's-fee provisions is too broad. The limitations of § 1132(g)(2) apply only when a fiduciary prevails and obtains a judgment in favor of a plan, not to all actions under § 1145. Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 252 (2010) (“only [parties] who obtain a judgment in favor of the plan may seek attorney's fees [under § 1132(g)(2)(D]”). Where, as here, a non-fiduciary Defendant prevails in an action brought under § 1145, the Court instead looks to § 1132(g)(1) to determine whether an award of fees is appropriate. Because § 1132(g)(2) does not apply to this action and § ...


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