Eddy v. Colonial Life Ins. Co. of America, 94-7043

• Decision Date: 12 September 1995
• Docket Number: No. 94-7043,94-7043
• Citation: 59 F.3d 201,313 U.S. App. D.C. 205
• Parties: , 64 USLW 2080, 19 Employee Benefits Cas. 1609 Joan EDDY, Executrix of the Estate of James Peter Eddy, Appellant, v. COLONIAL LIFE INSURANCE COMPANY OF AMERICA, Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 201

59 F.3d 201

313 U.S.App.D.C. 205, 64 USLW 2080,

19 Employee Benefits Cas. 1609

Joan EDDY, Executrix of the Estate of James Peter Eddy, Appellant, v. COLONIAL LIFE INSURANCE COMPANY OF AMERICA, Appellee.

No. 94-7043.

United States Court of Appeals District of Columbia Circuit.

Argued March 2, 1995.

Decided July 7, 1995.

Rehearing and Suggestion for Rehearing In Banc Denied Sept.

12, 1995. ^*

Appeal from the United States District Court for the District of Columbia (No. 88cv01038).

Patricia A. Smith argued the cause and filed the briefs for appellant.

Elizabeth J. Haegelin argued the cause for appellee. With her on the brief was Frank J. Martell.

Before WALD, RANDOLPH and ROGERS, Circuit Judges.

Opinion for the court filed by Circuit Judge ROGERS.

Dissenting opinion filed by Circuit Judge RANDOLPH.

ROGERS, Circuit Judge:

Appellant's decedent, James Peter Eddy, sued the Colonial Life Insurance Company of America, Inc., for violating its fiduciary duty under the Employee Retirement Income Security Act ("ERISA") with respect to his group health and life insurance plans. Eddy alleged that he had sought information from Colonial Life about the possibility of extending his coverage after his employer terminated the plans, and that Colonial Life had erroneously informed him that an extension of coverage was not possible. After a two-day bench trial, the district court entered judgment for Colonial Life. This court reversed because the district court had applied too narrow a view of Colonial Life's fiduciary duties, which include the "duty upon inquiry to convey to a lay beneficiary like Eddy correct and complete material information about his status and options when a group policy is cancelled." Eddy v. Colonial Life Ins. Co., 919 F.2d 747, 750 (D.C.Cir.1990) ("Eddy I" ). Upon remand, the district court ruled in appellant's favor, ¹ retroactively reinstating Eddy's health insurance policy and awarding appellant the proceeds of the life insurance policy and medical costs (less premiums due). The district court referred appellant's request for attorneys' fees to a magistrate judge, who applied the five-factor analysis of Hummell v. S.E. Rykoff & Co., 634 F.2d 446 (9th Cir.1980), and determined that appellant should not be awarded attorneys fees. Eddy v. Colonial Life Ins. Co., 844 F.Supp. 790, 795 (D.D.C.1994). The district court adopted the magistrate judge's report and recommendation, thus denying the motion for fees. Id. at 792.

Appellant appeals from the denial of attorneys' fees on the grounds that the district court erred as a matter of law in adopting the Hummell standard and, alternatively, abused its discretion in applying the Hummell factors. We hold that the district court adopted the correct approach, weighing the factors relevant to an award of attorneys' fees without presuming that an award to the prevailing plaintiff is appropriate absent exceptional circumstances. We thus endorse the approach to ERISA attorneys' fees awards in Hummell, rather than import to ERISA the test in Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983), for awarding such fees under civil rights statutes. However, upon examination of the district court's evaluation of the Hummell factors, we conclude that a remand is required.

I.

ERISA provides that "[i]n 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." 29 U.S.C. Sec. 1132(g)(1). The district court's decision whether to grant attorneys' fees is reviewed only for abuse of discretion. E.g., Mullins v. Kaiser Steel Corp., 642 F.2d 1302, 1320 (D.C.Cir.1980). Neither the statute nor the legislative history indicates whether or how that discretion should be guided. ² In Grand Union Co. v. Food Employers Labor Relations Ass'n, 808 F.2d 66, 71 (D.C.Cir.1987), the court acknowledged that the award of ERISA attorneys' fees could be governed by either the "less demanding" standard of Hensley, 461 U.S. at 429, 103 S.Ct. at 1937, which presumes that attorneys' fees should be awarded absent exceptional circumstances, or the "more exacting" standard of Hummell, 634 F.2d 446, which requires consideration of five factors relating to attorneys' fees without a presumption that such fees should be awarded. See also T.I.M.E.-DC, Inc. v. I.A.M. National Pension Fund, 616 F.Supp. 400, 403 (D.D.C.1985). Heretofore it has been unnecessary for the court to choose between the standards because the outcome on appeal would not have been affected. Grand Union, 808 F.2d at 71-72; T.I.M.E.-DC, Inc., 616 F.Supp. at 403. In the instant case we must choose.

At the outset, we join every circuit in concluding that it is appropriate to provide guidance to the district court in exercising its discretion to award attorneys' fees under ERISA. Such guidance ensures that the district court considers relevant factors, thereby providing a measure of uniformity, and enables meaningful appellate review. Nothing suggests that in vesting discretion in the district court, Congress intended that there would be no standards to guide the exercise of that discretion. To the contrary, Congress has enacted many statutes vesting discretion in the courts to award attorneys' fees, ³ and for some of these statutes, the courts have developed factors to guide the exercise of discretion. E.g., Tax Analysts v. United States Dept. of Justice, 965 F.2d 1092, 1093-94 (D.C.Cir.1992) (attorneys' fees under the Freedom of Information Act ("FOIA")); Lieb v. Topstone Indus., Inc., 788 F.2d 151, 156 (3d Cir.1986) (Copyright Act 17 U.S.C. Sec. 505). Thus, when Congress enacted ERISA, it was aware of the judicial practice of adopting factors to guide the exercise of discretion. See Cannon v. University of Chicago, 441 U.S. 677, 696-98, 99 S.Ct. 1946, 1957-58, 60 L.Ed.2d 560 (1979); Lorillard v. Pons, 434 U.S. 575, 580, 98 S.Ct. 866, 869-70, 55 L.Ed.2d 40 (1978); see also H.R.CONF.REP. NO. 1380, 93d Cong., 2d Sess. 9-10 (1974). The Supreme Court recently validated the practice of using "several nonexclusive factors" in determining whether to award attorneys' fees so long as the factors are faithful to the statutory purpose. See Fogerty v. Fantasy, Inc., --- U.S. ----, ---- n. 19, 114 S.Ct. 1023, 1033 n. 19, 127 L.Ed.2d 455 (1994) (fee award under Copyright Act). The question remains which approach to guiding the district courts' discretion best comports with ERISA and its purposes.

The Hensley Standard: Analogy to Civil Rights Statutes. In the civil rights context, where the statutes vest district courts with discretion to award attorneys' fees, the Supreme Court has recognized a presumption that successful plaintiffs should be awarded attorneys' fees absent special circumstances. See Hensley v. Eckerhart, 461 U.S. at 429, 103 S.Ct. at 1937 (construing 42 U.S.C. Sec. 1988). Appellant contends that the court should award her attorneys' fees by analogy to fee shifting in the civil rights context, as the Eighth Circuit did in Landro v. Glendenning Motorways, Inc., 625 F.2d 1344, 1356 (8th Cir.1980). She further maintains that all successful ERISA actions, like civil rights actions, vindicate important national policies and that a presumptive award of attorneys' fees is necessary to create the proper incentives to pursue such litigation. Although we agree that ERISA lawsuits vindicate important interests, we are unpersuaded that these interests justify the presumptive award of fees.

The Supreme Court validated the presumptive award of attorneys' fees to prevailing plaintiffs when it construed Title II of the Civil Rights Act, 42 U.S.C. Sec. 2000a-3(b), in Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 88 S.Ct. 964, 19 L.Ed.2d 1263 (1968). The Court deemed the presumption appropriate because a plaintiff in a Title II action acts as a " 'private attorney general,' vindicating a policy that Congress considered of the highest priority." Piggie Park, 390 U.S. at 402, 88 S.Ct. at 966. Subsequently, the Court extended this rationale to other civil rights attorneys' fees provisions. Northcross v. Board of Educ., 412 U.S. 427, 93 S.Ct. 2201, 37 L.Ed.2d 48 (1973) (Emergency School Aid Act, 20 U.S.C. Sec. 1617); Albemarle Paper Co. v. Moody, 422 U.S. 405, 415, 95 S.Ct. 2362, 2370, 45 L.Ed.2d 280 (1975) (Title VII of the Civil Rights Act, 42 U.S.C. Sec. 2000e-5(k)); Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 417, 98 S.Ct. 694, 698, 54 L.Ed.2d 648 (1978) (same). More recent cases, including Hensley, provide for the presumptive award of attorneys' fees to prevailing plaintiffs in light of legislative history unequivocally endorsing such a presumption. Hensley, 461 U.S. at 429, 433 n. 7, 103 S.Ct. at 1937, 1939 n. 7 (citing legislative history that Congress intended the same standards to apply to award of attorneys' fees under 42 U.S.C. Sec. 1988 as under Title II as construed by Piggie Park ); Donnell v. United States, 682 F.2d 240, 245 (D.C.Cir.1982) (same, attorneys' fees under the Voting Rights Act, 42 U.S.C. Sec. 1973l(e)).

Although the discretionary language in the fee-shifting provisions in these civil rights statutes ⁴ is similar to that in ERISA's attorneys' fees provision, see 29 U.S.C. Sec. 1132(g)(1), there are crucial differences. The interests furthered by ERISA differ substantially from those furthered by the civil rights statutes. ⁵ See Iron Workers Local No. 272 v. Bowen, 624 F.2d 1255, 1265 (5th Cir.1980). Civil rights are constitutionally based; ERISA rights are statutory. In addition, ERISA protects economic interests, while the civil rights statutes advance dignitary as well as economic interests. Compare S.REP. NO. 872, 88th Cong., 2d Sess., pt. 1, at 11 (1964), 1964 U.S.C.C.A.N. 2355, 2365 (noting economic cost of discrimination and its damage to "national unity and self-respect") and H.R.REP. NO. 914, 88th Cong., 1st Sess., pt. 2, at 1 (1963), 1964...