Martin v. Arkansas Blue Cross and Blue Shield

• Citation: 299 F.3d 966
• Decision Date: 16 August 2002
• Docket Number: No. 00-3420.,00-3420.
• Parties: Brian MARTIN, Individually and as the Administrator of the Estate of Norma Martin, deceased, Appellant, v. ARKANSAS BLUE CROSS AND BLUE SHIELD, a Mutual Insurance Company, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

299 F.3d 966

Brian MARTIN, Individually and as the Administrator of the Estate of Norma Martin, deceased, Appellant, v. ARKANSAS BLUE CROSS AND BLUE SHIELD, a Mutual Insurance Company, Appellee.

No. 00-3420.

United States Court of Appeals, Eighth Circuit.

Submitted: January 15, 2002.

Filed: August 16, 2002.

COPYRIGHT MATERIAL OMITTED

Don R. Elliott, Jr., argued, Fayetteville, AR (Bobby Lee Odom, on the brief), for appellant.

David R. Matthews, argued, Rogers, AR, for appellee.

Before WOLLMAN,¹ Chief Judge, McMILLIAN, BOWMAN, BEAM, LOKEN, HANSEN,² MORRIS SHEPPARD ARNOLD, MURPHY, BYE, and RILEY, Circuit Judges.

BEAM, Circuit Judge.

Brian Martin appeals the district court's denial of attorney fees in this case under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq. We affirm.

I. BACKGROUND

Norma Martin asked Arkansas Blue Cross and Blue Shield (the Plan) to certify benefits for a lung transplant pursuant to an ERISA employee welfare benefit plan in which she participated. After the Plan denied benefits, Martin sued, alleging that benefits had been wrongfully denied.

The district court held that a procedural irregularity rendered the Plan's denial unreasonable and ordered the Plan to certify coverage for the lung transplant. Martin then petitioned for attorney fees, and asked for a contingent fee based on the cost of the lung transplant surgery (one-third of $125,000, or $41,666.67). The district court denied the petition for fees. The district court applied the five-factor test set forth in Lawrence v. Westerhaus, 749 F.2d 494, 495-96 (8th Cir.1984), and determined that the factors weighed in favor of the Plan. The district court acknowledged the Landro v. Glendenning Motorways, Inc., 625 F.2d 1344, 1356 (8th Cir.1980), presumption in favor of awarding fees absent special circumstances, and concluded that "consideration of the Lawrence factors leads the Court to believe that plaintiffs are not entitled to shift their attorneys' fee onto the shoulders of defendant in this matter."

The district court also denied the fee petition on the alternative ground that Martin had not offered evidence concerning the number of hours reasonably spent on the litigation, or the reasonable hourly rate for such services, holding that a contingent fee award was inappropriate in an ERISA case. Martin filed a motion for reconsideration, setting forth an hourly fee request in the amount of $11,091. Martin brought this appeal after the district court denied the motion for reconsideration.³

II. DISCUSSION

ERISA's fee-shifting provision unambiguously gives the district court discretion to award attorney fees to "either party." 29 U.S.C. § 1132(g). In making this determination, a district court abuses its discretion when there is a lack of factual support for its decision, or when it fails to follow applicable law. Richards v. Aramark Servs., Inc., 108 F.3d 925, 927 (8th Cir.1997).

This case involves the conundrum of what, exactly, is the applicable law for ERISA attorney fee applications in this circuit. On one hand, our circuit was one of the first to apply the presumption in favor of prevailing ERISA plaintiffs. In Landro, we held that the prevailing plaintiff was entitled to a presumption in favor of a fee award-limited by the losing defendant's ability to show special circumstances in support of denying an award. 625 F.2d at 1356. We noted that the losing defendant had the burden of proving those special circumstances. Id. at 1356 n. 19. Then, in Westerhaus, 749 F.2d at 496, we identified a five-factor test⁴ designed to aid the district court in making its discretionary determination regarding fees, but failed to mention the presumption. See also Jacobs v. Pickands Mather & Co., 933 F.2d 652, 659 (8th Cir.1991) (stating that court should consider the enumerated Westerhaus factors in exercising its discretion concerning whether to award attorney fees).

Lutheran Medical Center v. Contractors, Laborers, Teamsters and Engineers Health and Welfare Plan, 25 F.3d 616, 623-24 (8th Cir.1994) appears to be the first case in which we referred to the five-factor test and the presumption in the same analysis. In Lutheran Medical we affirmed the district court's decision to award fees to the plaintiff, and noted that "the Plan has not shown any special circumstances. Moreover, the district court exhaustively considered all five factors set forth in Jacobs." Id. at 624. Also, in affirming the district court's award of attorney fees in Stanton v. Larry Fowler Trucking, Inc., 52 F.3d 723, 730 (8th Cir. 1995), we noted that the defendant bore the burden of showing special circumstances to preclude an attorney fees award, and credited the district court's consideration of the five-factor test in its decision to award fees to the plaintiff. Id. at 729-30. See also Milone v. Exclusive Healthcare, Inc., 244 F.3d 615, 620 (8th Cir.2001) (referring to both the presumption and five-factor test).

A review of our sister circuits indicates that the First, Third, Fourth, Fifth, Sixth, Eleventh,⁵ and D.C. circuits have all considered the presumption and expressly rejected its application. E.g., Cottrill v. Sparrow, Johnson & Ursillo, Inc., 100 F.3d 220, 226 (1st Cir.1996); Eddy v. Colonial Life Ins. Co. of Am., 59 F.3d 201, 205-06 (D.C.Cir.1995); Quesinberry v. Life Ins. Co. of N. Am., 987 F.2d 1017, 1030 (4th Cir.1993); Ellison v. Shenango Inc. Pension Bd., 956 F.2d 1268, 1274 (3d Cir. 1992); Armistead v. Vernitron Corp., 944 F.2d 1287, 1302 (6th Cir.1991); Iron Workers Local No. 272 v. Bowen, 624 F.2d 1255, 1266 (5th Cir.1980).

The Second and Tenth circuits do not use the presumption, but have not considered and expressly rejected it. E.g., Chambless v. Masters, Mates & Pilots Pension Plan, 815 F.2d 869, 871 (2d Cir. 1987); Gordon v. United States Steel Corp., 724 F.2d 106, 109 (10th Cir.1983).⁶ In fact, the Tenth Circuit is the genesis of the five-factor test, as first enunciated in Eaves v. Penn, 587 F.2d 453, 465 (10th Cir.1978).

Finally, the Seventh and Ninth Circuits appear to utilize some version of both the five-factor test and a presumption in conducting the discretionary attorney fee analysis. See McElwaine v. U.S. West, Inc., 176 F.3d 1167, 1172 (9th Cir.1999) (spelling out the five-factor test and stating that court should also apply the special circumstances rule); Little v. Cox's Supermarkets, 71 F.3d 637, 644 (7th Cir.1995) (noting that courts can use either the five-factor test or a "modest presumption" and that under either formulation, "the `bottom-line question' is the same: was the losing party's position substantially justified and taken in good faith, or was that party simply out to harass its opponent").

In the cases that expressly rejected the presumption, the proponent of the presumption generally analogized the ERISA fee-shifting structure to the similar fee-shifting statute in civil rights cases, citing particularly to Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983). Hensley clarified the standards for attorney fees in civil rights cases, and the Court noted that prevailing plaintiffs may ordinarily recover attorney fees unless special circumstances make an award unjust. Id. at 429 (citing Newman v. Piggie Park Enters., Inc., 390 U.S. 400, 402, 88 S.Ct. 964, 19 L.Ed.2d 1263 (1968) (per curiam)). The cases rejecting the Newman and Hensley approach in ERISA cases reason that despite similar language in the civil rights fee-shifting statutes and ERISA's fee-shifting provision,⁷ the overall aims of the civil rights statutes are quite different from ERISA's purpose. E.g., Eddy, 59 F.3d at 204-05. ERISA protects statutorily-created economic interests, while the civil rights statutes protect constitutionally-based dignitary and individual economic interests, which are uniquely important to our nation as a whole. Id. The Eddy court also reasoned that it would belittle the stature accorded civil rights cases to apply the fee-shifting presumption in other types of cases. Id. at 205. And, while the legislative history of the civil rights statutes indicated a presumption is warranted in those case, ERISA lacks similar legislative history. Id.

We agree with the reasoning in Eddy and find that ERISA does not closely correspond with the fee-shifting scheme in the civil rights statutes. Instead, ERISA's language is neutral in its reference to fees, similar to the statute construed by the Supreme Court in Fogerty v. Fantasy, Inc., 510 U.S. 517, 533, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994). In Fogerty, the Court considered whether the Copyright Act's fee-shifting provision, 17 U.S.C. § 505, was analogous to the civil rights fee-shifting statutes. 510 U.S. at 522. The plaintiff in Fogerty asserted there should be a dual standard (treating prevailing plaintiffs more favorably) for Copyright Act fee determinations as established in Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 421, 98 S.Ct. 694, 54 L.Ed.2d 648 (1978), for Title VII cases. The Court rejected this analogy, despite similar language in the statutes. 510 U.S. at 523-25. The Court credited the "important policy objectives of the Civil Rights statutes," and noted that these objectives were absent in a case involving the Copyright Act. Id. at 523.

Like the Copyright Act as construed in Fogerty, ERISA involves vindication of statutory, economic rights. Also like the Copyright Act, and as admitted by counsel at argument, there is a dearth of legislative history on ERISA, and certainly none which suggests that it was enacted to further important societal goals or ""`polic[ies] that Congress considered of the highest priority.'"" Id. (quoting Christiansburg, 434 U.S. at 418, quoting Piggie Park, 390 U.S. at 402.). Instead, both the Copyright Act and ERISA have neutral, discretionary attorney fee language, and equally neutral (or sparse) legislative history concerning attorney fees.

Finally, the "American Rule" that...