Bishop v. Osborn Transp., Inc.

• Decision Date: 26 April 1988
• Docket Number: Civ. A. No. 86-AR-1345-M.
• Citation: 687 F. Supp. 1526
• Parties: Guy H. BISHOP, Plaintiff, v. OSBORN TRANSPORTATION, INC., et al., Defendants.
• Court: U.S. District Court — Northern District of Alabama

687 F. Supp. 1526

Guy H. BISHOP, Plaintiff, v. OSBORN TRANSPORTATION, INC., et al., Defendants.

Civ. A. No. 86-AR-1345-M.

United States District Court, N.D. Alabama, M.D.

April 26, 1988.

Myron K. Allenstein, Roy Moore, Gadsden, Ala., for plaintiff.

George P. Ford, Simmons, Ford & Brunson, Gadsden, Ala., Maibeth J. Porter, Maynard, Cooper, Frierson & Gale, P.C., Birmingham, Ala., for Osborn Transp., Inc.

MEMORANDUM OPINION

ACKER, District Judge.

The court has for consideration the motion of plaintiff, Guy H. Bishop, for attorney's fees. It erroneously invokes 29 U.S. C. § 1332(9)(1), a non-existent statute. The court deduces that Bishop means to invoke 29 U.S.C. § 1132(g)(1), which 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.

Bishop's original motion for an award of fees for the trial court proceedings in his ERISA action was filed on March 16, 1987 before Bishop appealed to the Eleventh Circuit. That motion was held in abeyance pending the appeal.

Although the Eleventh Circuit affirmed this court in all respects by decision rendered on March 1, 1988, Bishop v. Osborn Transportation, Inc., 838 F.2d 1173 (11th Cir.1988), Bishop, on March 25, 1988, filed a supplemental motion for attorney's fees seeking to recover for the lawyer-hours spent on the unsuccessful appeal.

I. Attorney's Fees in ERISA Cases.

The subsection of the ERISA attorney's fee statute here invoked provides for a discretionary award and does not contain the "prevailing party" language of 42 U.S.C. § 1988, nor the language of similar import contained in 29 U.S.C. § 1132(g)(2)(D). See Smith v. CMTA-IAM Pension Trust, 746 F.2d 587 (9th Cir.1984), and Bittner v. Sadoff & Rudoy Industries, 728 F.2d 820 (7th Cir.1984). The relative merit of Bishop's positions, both at trial and on appeal, is but one of the factors to be considered. It is not the sine qua non for an award under § 1132(g)(1). See Sokol v. Bernstein, 812 F.2d 559, 561 (9th Cir.1987). Also, it must be kept in mind that not every "meritorious" claim is successful. A claim can have merit without prevailing.

The Eleventh Circuit in Nachwalter v. Christie, 805 F.2d 956, 961 (11th Cir.1986), pointed out that unlike the fee shifting provisions in other statutes, subsection 29 U.S.C. § 1132(g)(1) does not set forth criteria governing the court's determination of when to make fee awards. Similarly, the legislative history furnishes no guidelines. Id. In Iron Workers Local No. 272 v. Bowen, 624 F.2d 1255, 1266 (5th Cir.1980), the Fifth Circuit, in a decision binding on this court, adopted five factors as the nuclei of concerns governing the district court's discretionary determination of whether to award attorney's fees in an ERISA case:

(1) the degree of the opposing parties' culpability or bad faith; (2) the ability of the opposing parties to satisfy an award of attorneys' fees; (3) whether an award of attorneys' fees against the opposing parties would deter other persons acting under similar circumstances; (4) whether the parties requesting attorneys' fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA itself; and (5) the relative merits of the parties' positions.

Iron Workers, 624 F.2d at 1266 (footnotes and citations omitted).

This list of factors is not exclusive, and no single factor is necessarily dispositive under a given set of facts. Id. It is doubly important here that the court consider the five Iron Workers factors, since the Eleventh Circuit has held that the same factors which govern the award of attorney's fees at the trial stage govern the allowance of an award of attorney's fees for work performed on appeal. Nachwalter, 805 F.2d at 961.

II. The District Court's Authority to Award Fees For Appellate Proceedings.

Although 29 U.S.C. § 1132(g), as elucidated in Nachwalter, allows for the recovery of attorney's fees and costs incurred on appeal, and even allows the losing party, under certain circumstances, to recover attorney's fees, Sharron v. Amalgamated Insurance Agency Services, Inc., 704 F.2d 562, 569 (11th Cir.1983), Bishop did not prevail on his appeal. The fact that this court encouraged the appeal and would have thoroughly enjoyed being reversed for having held that ERISA precludes any and all awards of punitive damages in any ERISA case does not, in and of itself, provide a reason now for paying plaintiff out of defendants' pocket for "having tried."¹ More later on this subject.

Bishop did not seek directly from the Eleventh Circuit an award of fees for lawyer-hours spent on appeal, and the Eleventh Circuit did not address the issue of its own motion. The Eleventh Circuit was aware that this court had deferred its decision on whether to award fees and, if so, how much, because the Eleventh Circuit resolved the potential appellate jurisdictional bar presented by this court's reservation of the determination of the fee award by finding that a fee award under ERISA is collateral, and not integral to the merits of the ERISA action. Bishop v. Osborn, 838 F.2d at 1174.

Despite the Nachwalter holding that courts of appeals may exercise their authority to make an award, that decision does not purport to abrogate nor to erode the general rule that the award of attorney's fees on appeal should ordinarily be fixed in the first instance by the district court after it is presented with evidence as to the extent and nature of the services rendered. Perkins v. Standard Oil Co. of California, 399 U.S. 222, 223, 90 S.Ct. 1989, 1990, 26 L.Ed.2d 534 (1970) (award of attorney's fees for anti-trust violation); see Stone v. City of Wichita Falls, 668 F.2d 233 (5th Cir.Unit A, Feb. 18, 1982) (award under 42 U.S.C. § 1988). Thus, it is appropriate for this court to consider both of the applications for attorney's fees submitted by counsel for plaintiff, particularly since the identical factors are to be considered by the awarding court in assessing both applications.

III. Should the Court Award Fees for the Trial Court Proceedings?

Turning first to the application as related to the trial court proceedings, the five Iron Workers factors lead this court to the conclusion that this is a compelling case for an award of attorney's fees.

First and most significantly, the court in its final judgment of March 4, 1987, determined that "Osborn violated 29 U.S.C. § 1140, by selecting a date for Bishop's termination for the purpose of interfering with his attainment of medical benefits which were due him under the Plan as an employee lawfully terminated on September 11, 1985." Since Osborn purposefully, and in order to avoid paying benefits, altered the actual date of Bishop's discharge, this court expressed the opinion that such an outrageous action would allow exemplary damages and/or damages for mental pain and anguish if such relief were not foreclosed under the enforcement provisions of 29 U.S.C. § 1132 governing violations of § 1140. Thus, Osborn's highly culpable behavior, amounting to "bad faith," weighs heavily in favor of an award of fees in this case.

The second Iron Workers factor equally compels an award of fees. Osborn has not argued an inability to pay fees in this case nor that an award would cause it serious financial hardship. Bishop, himself, is indigent and was granted in forma pauperis status for his appeal. This factor recognizes that the relative abilities of the parties to pay attorney's fees is relevant. This factor not only militates against awards of fees against employee plaintiffs in favor of defendant employers, but has also been aptly compared to a factor in considering the award of fees under LMRDA, 29 U.S.C. § 401 et seq. CMTA-IAM, 746 F.2d at 590. The Supreme Court said about that section:

"Not to award counsel fees in cases such as this would be tantamount to repealing the Act itself by frustrating its basic purpose.... An individual union member could not carry such a heavy financial burden. Without counsel fees the grant of federal jurisdiction is but a gesture for few union members could avail themselves of it."

Id. (quoting Hall v. Cole, 412 U.S. 1, 13, 93 S.Ct. 1943, 1950, 36 L.Ed.2d 702 (1973)).

Bishop's right to recover his rightful benefits should not be nullified, as a practical matter, by forcing him to incur attorney's fees which would exceed his potential award. Based on this economic reality alone, the CMTA-IAM court concluded:

Absent special circumstances, a prevailing ERISA employee plaintiff should ordinarily receive attorney's fees from the defendant.

Id.

Deterrence, the third criterion to be considered, is highly relevant in this case, since the Eleventh Circuit has now precluded an award of punitive damages in ERISA cases even under these egregious circumstances. A fee award may be a weak substitute for the imposition of punitive damages, the usual jurisprudential device for deterring future culpable conduct on the part of entities who act as Osborn did here. Still, it is better than nothing. Fulfilling this goal of deterrence by imposing fees adds coherence to the enforcement scheme under § 1132.

The fourth factor provides another basis for an award in this case. In Howard v. Parisian, 807 F.2d 1560, 1565 (11th Cir. 1987), the Eleventh Circuit acknowledged that Massachusetts Mutual Life Insurance Co. v. Russell, 473 U.S. 134, 146, 105 S.Ct. 3085, 3091-98, 87 L.Ed.2d 96 (1985), did not resolve the question of whether punitive damages may be recovered under § 1132(a), even under circumstances where the employer's culpability in interfering with an employee's right to benefits in violation of § 1140 is demonstrated. It was for this reason that this court encouraged Bishop to appeal, because of the need to obtain a binding expression from the Eleventh Circuit. Had Bishop prevailed on appeal and...