Dasler v. EF Hutton, Civ. No. 4-85-1250.

• Citation: 698 F. Supp. 172
• Decision Date: 26 October 1988
• Docket Number: Civ. No. 4-85-1250.
• Parties: H.A. DASLER, et al. v. E.F. HUTTON, et al.
• Court: U.S. District Court — District of Minnesota

698 F. Supp. 172

H.A. DASLER, et al. v. E.F. HUTTON, et al.

Civ. No. 4-85-1250.

United States District Court, D. Minnesota, Fourth Division.

October 26, 1988.

Bruce C. Recher, Henson & Efron, Minneapolis, Minn., for plaintiffs.

J. David Jackson, Dorsey & Whitney, Minneapolis, Minn., for defendants.

ORDER

ROSENBAUM, District Judge.

This matter is before the Court on the motion of plaintiffs' counsel, the Henson & Efron law firm (Henson & Efron), for an award of attorneys' fees and costs pursuant to 29 U.S.C. § 1132(g)(1)¹ and 28 U.S.C. § 1920.² Defendant E.F. Hutton opposes such an award contending: first, Henson & Efron's request is untimely; second, even if the Court finds the attorneys' request timely, it should, in the exercise of its discretion, deny the application. Alternatively, if the Court allows an award of fees and costs, defendant asserts the requested amounts are unreasonable.

Based upon a review of the files, records, and proceedings herein, the Court grants Henson & Efron's motion in part and denies its request in part.

Background

A full recitation of the facts is unnecessary in this order. The nature of the case was set forth in some detail in the Court's orders of January 28, 1987, and March 31, 1988. Suffice it to say, this action was tried to a jury on the facts concerning plaintiffs' claim under § 10(b) of the Securities Exchange Act of 1934 (the Exchange Act), as amended, 15 U.S.C. § 78j(b), and Security Exchange Commission (SEC) Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5 (Count II), and to the Court with an advisory jury on the facts concerning plaintiffs' claim pursuant to § 409 of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1109 (Count I).³

After a two week trial, the jury rejected plaintiffs' claim pursuant to the Exchange Act and Rule 10b-5, but found, as an advisory jury, that there was a violation of ERISA. The Court was in accord and issued its order for judgment, findings of fact, and conclusions of law on March 31, 1988, finding defendant liable for breach of fiduciary duty under 29 U.S.C. § 1109.⁴

Timeliness

Henson & Efron filed its motion for attorneys' fees and costs under 29 U.S.C. § 1132(g)(1) on April 25, 1988—twenty-five days after the entry of judgment. Defendants suggest, first, Henson & Efron's request for fees and costs pursuant to § 1132(g)(1) is governed by Rule 59(e),⁵ Fed.R.Civ.P.; and, second, since plaintiffs' counsel filed its motion more than ten days after entry of judgment, its request is untimely and must be denied. Henson & Efron denies its application for fees is governed by Rule 59(e), claiming the timeliness of its motion is governed by local procedural rules. This Court agrees.

In White v. New Hampshire Dept. of Employment Security, 455 U.S. 445, 102 S.Ct. 1162, 71 L.Ed.2d 325 (1982), the Supreme Court "held that a request for attorney's fees under 42 U.S.C. § 1988 is not a motion to alter or amend the judgment within the meaning of ... Rule 59(e), because it does not seek `reconsideration of matters properly encompassed in a decision on the merits.'" Budinich v. Becton Dickinson and Co., ___ U.S. ___, 108 S.Ct. 1717, 1720, 100 L.Ed.2d 178 (1988) (quoting White, 455 U.S. at 451, 102 S.Ct. at 1166). The Supreme Court concluded "that `a request for attorney's fees under § 1988 raises legal issues collateral to' and `separate from the decision on the merits.'" Budinich, ___ U.S. at ___, 108 S.Ct. at 1720 (quoting White, 455 U.S. at 451-52, 102 S.Ct. at 1166). In sum, "such a motion ... `"does not imply a change in the judgment, but merely seeks what is due because of the judgment."'" Buchanan v. Stanship, Inc., ___ U.S. ___, 108 S.Ct. 1130, 1131, 99 L.Ed.2d 289 (1988) (quoting White, 455 U.S. at 452, 102 S.Ct. at 1166 (quoting Knighton v. Watkins, 616 F.2d 795, 797 (5th Cir.1980))).

In recognizing the collateral character of the fee issue, the White court quoted with approval the position taken by the Eighth Circuit. See White, 455 U.S. at 452-53 n. 14, 102 S.Ct. at 1166-67 n. 14 (quoting Obin v. District No. 9 of Intern. Ass'n, etc., 651 F.2d 574, 584 (8th Cir.1981)); see also Budinich, ___ U.S. at ___, 108 S.Ct. at 1720.

A claim for attorney's fees should be treated as a matter collateral to and independent of the merits of the litigation. Accordingly, the timeliness of a claim for fees should be governed by procedural rules that reflect the collateral and independent nature of the claim rather than by rules, such as the ten-day provision of Rule 59(e), that relate to the merits of the action.

Obin, 651 F.2d at 583; see also Gates v. Central States Teamsters Pension Fund, 788 F.2d 1341, 1343 (8th Cir.1986).

Thus, "a motion for attorney's fees can be made after the time for filing a motion to amend judgment under Rule 59(e) has passed because the motion raises a `collateral and independent claim.'" Young v. Powell, 729 F.2d 563, 566 (8th Cir.1984) (quoting Obin, 651 F.2d at 583); see Lupo, et al. v. R. Rowland and Company, 857 F.2d 482, 484-85, (8th Cir.1988). This Court can find "no rational basis for determining that a claim for attorneys' fees is collateral to and independent of the merits for some purposes but not for others." United States v. Estridge, 797 F.2d 1454, 1459 (8th Cir.1986).⁶

Plaintiffs' counsel filed its motion 25 days after entry of judgment. Local Rule 6 provides in relevant part that:

In any action in which attorneys' fees are recoverable, a motion for attorneys' fees must be delivered to the Clerk of Court within thirty days after the entry of judgment in the action ....

Henson & Efron's motion for fees and costs pursuant to 29 U.S.C. § 1132(g)(1), was, therefore, filed in a timely manner pursuant to Local Rule 6.

ERISA Attorneys' Fees

In any action under ERISA, "the court in its discretion may allow a reasonable attorney's fee and costs of action to either party." 29 U.S.C. § 1132(g)(1) (emphasis added). Thus, "the decision whether to award attorneys' fees under ERISA is discretionary, not mandatory." Lawrence v. Westerhaus, 749 F.2d 494, 495 (8th Cir.1984); see Fase v. Seafarers Welfare and Pension Plan, 589 F.2d 112, 116 (2d Cir.1978).

Exercising the Court's Discretion

When considering an application for attorneys' fees, the Eighth Circuit has indicated that a court should consider the following factors:

(1) the degree of the offending 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 could 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 qeustion sic regarding ERISA itself; and (5) the relative merits of the parties' positions.

Lawrence v. Westerhaus, 749 F.2d at 496 (citing Iron Workers Local No. 272 v. Bowen, 624 F.2d 1255, 1266 (5th Cir.1980)); see also Hollenbeck v. Falstaff Brewing Corp., 605 F.Supp. 421, 437 (E.D.Mo.1984). No one of these factors is necessarily decisive, and some may not be appropriate in a given case. Nonetheless, together they form the nuclei of concerns this Court should address in applying § 1132(g)(1). Iron Workers Local No. 272, 624 F.2d at 1266. This Court is mindful, however, that proper consideration of these factors generally leads to the conclusion that a prevailing plaintiff "`should ... recover an attorney's fee unless special circumstances render such an award unjust.'" Landro v. Glendenning Motorways, Inc., 625 F.2d 1344, 1356 (8th Cir.1980) (quoting Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 402, 88 S.Ct. 964, 966, 19 L.Ed.2d 1263 (1968)); Schoenholtz v. Doniger, 657 F.Supp. 899, 910 n. 5 (S.D.N.Y.1987); Hollenbeck, 605 F.Supp. at 437.

In consideration of these factors, the Court determines 1) defendant E.F. Hutton's violation of ERISA's fiduciary standard is clearly culpable conduct;⁷ 2) E.F. Hutton has the capability of satisfying an award of fees and costs; 3) awarding attorneys' fees may encourage others to comply with ERISA;⁸ 4) the damages awarded in this action are for the benefit of all participants of the Cornwall Clinic Profit Sharing Plan and their beneficiaries; and 5) concerning plaintiffs' ERISA claim, the relative merits of both parties' positions were decided in favor of plaintiffs. All things considered, the Court concludes plaintiffs' counsel is entitled to an award of reasonable attorneys' fees under 29 U.S.C. § 1132(g)(1).

Reasonable Attorneys' Fees

"The most useful starting point for determining the amount of a reasonable fee is to determine the lodestar, the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate." Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 1939, 76 L.Ed.2d 40 (1983). See also Zoll v. Eastern Allamakee Community Sch. Dist., 588 F.2d 246 (8th Cir.1978). Plaintiffs' counsel seeks a lodestar fee in the sum of $107,956.75 for attorneys' fees incurred through the date of its post-trial motions.⁹

"The product of reasonable hours times a reasonable rate does not end the inquiry. There remain other considerations that may lead the district court to adjust the fee upward or downward, including the important factor of the `results obtained.'"¹⁰ Hensley, 461 U.S. at 434, 103 S.Ct. at 1940 (quoting Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 718 (5th Cir. 1974)). This factor is crucial where, as here, plaintiff succeeded on only some of his claims for relief.¹¹

As a rule, "the fee award should not compensate counsel for those hours expended in pursuit of unsuccessful claims `distinct in all respects' from the successful claims." Catlett v. Missouri Highway and Transp. Com'n, 828 F.2d 1260, 1270 (8th Cir.1987) (quoting Hensley, 461 U.S. at 440, 103 S.Ct. at 1943)). In the present case, all of plaintiffs' claims involved a ...