Bemis v. Hogue

• Decision Date: 13 June 1991
• Docket Number: 89-1767,Nos. 89-1697,s. 89-1697
• Citation: 935 F.2d 269
• Parties: Unpublished Disposition NOTICE: Sixth Circuit Rule 24(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Sixth Circuit. Marvin BEMIS, Plaintiff-Appellee/Cross-Appellant, v. John HOGUE, as Plan Administrator of the Franklin Electric Profit-Sharing Plan, Defendant-Appellant/Cross-Appellee, Franklin Electric, Inc., a Michigan Corporation, Defendant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 269

935 F.2d 269

Unpublished Disposition

NOTICE: Sixth Circuit Rule 24(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Sixth Circuit.

Marvin BEMIS, Plaintiff-Appellee/Cross-Appellant, v. John HOGUE, as Plan Administrator of the Franklin Electric Profit-Sharing Plan, Defendant-Appellant/Cross-Appellee Franklin Electric, Inc., a Michigan Corporation, Defendant.

Nos. 89-1697, 89-1767.

United States Court of Appeals, Sixth Circuit.

June 13, 1991.

Before KRUPANSKY and BOGGS, Circuit Judges, and CONTIE, Senior Circuit Judge.

PER CURIAM.

This case is a dispute between Marvin Bemis, a former employee of Franklin Electric, Inc., and his former boss, John Hogue, then President of Franklin Electric and an administrator of the plan. Bemis originally filed this suit in March 1983, bringing five claims against Hogue, two for violations of the Employee Retirement Income Security Act ("ERISA"). Bemis eventually prevailed on the ERISA claims, and he was awarded $10,290. The judge awarded attorney's fees to Bemis. The liability verdict is not being appealed. Instead this appeal and cross-appeal present three issues for review, all related to the award of fees. First, Hogue argues that the fees should be paid by the Franklin Electric profit-sharing plan rather than by him. We affirm the district court's ruling on this issue. However, because we find that the district court did not apply the correct legal standard in deciding whether to award fees, we remand for reconsideration on that issue. Additionally, both parties complain about the size of the fee award--Bemis thinks that the fee award should be larger, while Hogue thinks that it should be smaller. This issue may become moot, but we nonetheless provide instructions, should the court decide to award fees on remand.

I

Franklin Electric fired Bemis in March 1982. As an employee of Franklin Electric, Bemis had made contributions to the profit-sharing plan, which all agree was governed by the provisions of ERISA. Immediately after his termination, Bemis wrote to Hogue demanding payment of his nonforfeitable vested portion of the profit-sharing plan. Hogue refused to respond to repeated inquiries regarding his benefits, and he told Bemis to go through legal channels in order to get benefits. Sensing that Hogue was stonewalling, Bemis retained counsel and attempted to get information about the status of his claim from Hogue. Hogue remained unresponsive to all inquiries. In March 1983, about a year after being fired, Bemis filed a five-count complaint against Hogue and the Franklin Electric Company.

Counts I and II were ERISA claims. Count I alleged that Hogue had failed to notify him, as required by plan provisions and by ERISA, 29 U.S.C. Sec. 1133, when his claim for benefits was denied, and, further, that Hogue failed to provide him with the plan's review procedure, as also required by 29 U.S.C. Sec. 1133. Additionally, Count I alleged that Bemis had wrongfully been denied benefits after demanding payment of them. Count II alleged that Bemis had requested information regarding his claims pursuant to 29 U.S.C. Sec. 1024(b) and that Hogue had denied him the information, thereby entitling Bemis to damages pursuant to 29 U.S.C. Sec. 1132(c).

Counts III, IV, and V eventually dropped out of the case completely. All three related directly to the firing. Count III demanded overtime and liquidated damages under the Fair Labor Standards Act ("FLSA"). Count IV, also brought under the FLSA, demanded damages for overtime pay and for "willful" violations of the FLSA. Count V was a state-law claim for wrongful discharge.

These various other counts began to melt away as the case went on. In May 1984, Bemis voluntarily dismissed the FLSA claims without prejudice. In December, Judge Newblatt severed the state-law wrongful discharge claim, and dismissed it. Thus, by December 1984 only the ERISA claims remained.

Before Bemis could fully litigate his claim for benefits from the profit-sharing plan, events overtook him. The Franklin Electric Company went out of business and terminated its pension plan. Bemis, like all other plan beneficiaries, received a one-time lump-sum payment from the plan. Bemis received a payout of approximately $50,000 from the profit-sharing plan. Pursuant to a somewhat broadly-worded contingency fee arrangement, Bemis paid his attorney $17,000 upon receipt of this distribution from the profit-sharing plan. Bemis also made $7,000 in additional payments throughout the course of the litigation.

In April 1986, the court disposed of some of the issues in the case on cross motions for summary judgment. The court ruled that Bemis was entitled to his benefits, as he had claimed, but that the claim was moot, to the extent that benefits had already been paid. However, the court also determined that the amount of benefits was still at issue. The court also ruled that Bemis was entitled to damages pursuant to 29 U.S.C. Sec. 1132(c) for Hogue's failure to provide information. The court subsequently held a bench trial at which it ruled that the pension plan had already paid Bemis the appropriate amount of benefits. The trial judge also awarded Bemis $10,290 in damages for the Sec. 1132(c) violation. This award is not contested on appeal.

Bemis then moved for attorney's fees. Bemis initially requested $35,129.84 in fees. Hogue objected to this figure, arguing that much of the fees resulted from work unrelated to the ERISA claim. The court ordered Bemis to omit fees not attributable to the ERISA counts. Bemis responded by subtracting 25 hours from the prior bill but adding other expenses, therefore asking for even a higher figure. Hogue responded by moving for attorney's fees himself, and also by requesting an evidentiary hearing on the fees issue. The judge denied the first request outright, and he denied the second as premature. He then ordered discovery on the fees issue. In its ruling, before leaving the issue to the parties to hash out, it noted that Bemis sought $35,325. The court did not (as Bemis seems to believe) award him fees at that time. Instead, the court indicated that this was the amount he had claimed and invited the parties to join issue on the amount owed. Hogue deposed Bemis's lawyer, but he did not file any objections to the amount that Bemis claimed that he owed. Notwithstanding the failure to object, the court did not adopt Bemis's figure, instead awarding Bemis the amount actually paid by Bemis to his lawyer--$24,000. Both parties are dissatisfied with this amount. Bemis believes that he is entitled to the full $35,325, and Hogue maintains that the award of $24,000 should be reduced by $17,000--the amount received as the result of the payout of the plan funds received by all members of the Franklin Electric profit-sharing plan.

II

Hogue maintains that he should not be held personally liable for fees. Instead, he argues that the Franklin Electric profit-sharing plan should be the one to pay the fees. Hogue first argues that making him personally liable for fees would be inconsistent with the theory upon which the district court ordered recovery of fees. In applying 29 U.S.C. Sec. 1132(g), the district court originally ruled that the "common fund" theory of recovery was an appropriate means of interpreting the statute. See Alyeska Pipeline Service Company v. The Wilderness Society, 421 U.S. 240, 257, 95 S.Ct. 1612, 1621 (1975). The court ruled that, as the Franklin Electric Plan benefited from the litigation, the common fund should bear the costs of the payment. As we conclude below that it was not appropriate for the lower court to rely on the "common fund" theory, we reject the premise of Hogue's argument. In any event, Hogue's argument is not consistent with the statutory provision for the awarding of fees. 29 U.S.C. Sec. 1132(g)(1) provides:

In any action under this subchapter ... 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.

There is no provision in the statutory language that can be read to require the plan to pay whenever its members receive some benefit from litigation. Furthermore, the profit-sharing plan itself was never joined as a defendant, and Hogue himself made no attempt to involve the profit-sharing plan in the litigation. Assessing attorney's fees against an entity that was never a party to this litigation would raise serious due process problems. If Hogue believes that the Plan itself has the legal obligation to bear the burden of this litigation itself, he can launch a claim for indemnification against it.

Hogue also maintains that he was a trustee and not the plan administrator, and that as a result he cannot be held liable for damages under 29 U.S.C. Secs. 1024(b) & 1132(c). Thus, according to Hogue, he should not be held liable for fees. Hogue never even hinted at this argument below, and the time to raise it for the first time is long past. We do not consider contentions raised for the first time on appeal. Chandler v. Jones, 813 F.2d 773, 777 (6th Cir.1987). In any event, if Hogue is right (and we make no comment whatsoever on the merits of the claim) the argument would go to the legal sufficiency of Bemis's claim on the issue of liability. He is arguing, in effect, that Bemis joined the wrong person. The appropriateness of awarding fees against Hogue personally follows a fortiori from the award on the liability issue, which Hogue does not contest.

III

Having decided that Hogue is the party who has to pay any fees awarded to Bemis, we now turn to the issue of whether fees ought to have been awarded in the first instance. In its initial ruling, the district court concluded that the five-factor test of Eaves v. Penn, 587 F.2d 453 (10th Cir.1978), should not...