McKay v. Reliance Standard Life Insurance Company

Decision Date03 March 2009
Docket NumberCase No. 1:06-CV-267.
Citation654 F.Supp.2d 731
PartiesPaul McKAY, Plaintiff, v. RELIANCE STANDARD LIFE INSURANCE COMPANY, Unumprovident Corporation, and Unum Life Insurance Company, Defendants.
CourtU.S. District Court — Eastern District of Tennessee

Amanda E. Scales, Eric L. Buchanan, Eric, Buchanan & Associates, PLLC, Chattanooga, TN, for Plaintiff.

Brandon B. Cate, Quattlebaum, Grooms, Tull & Burrow PLLC, Springdale, AR, for Defendants.



Before the Court is a report and recommendation ("R & R") (Court File No. 47) from United States Magistrate Judge William B. Mitchell Carter recommending the award of attorney's fees to Plaintiff Paul McKay. Defendant Reliance Standard Life Insurance Company has filed an objection to the R & R (Court File No. 50) and Plaintiff has responded to the objection (Court File No. 52). For the reasons below, as well as the reasons set forth in the R & R, this Court will ACCEPT and ADOPT the magistrate judge's report and recommendation.


The action which occasioned the R & R arises under the provisions of the Employee Retirement Income Security Act, 29 U.S.C. §§ 1001 et seq. ("ERISA"). The background to Plaintiff's assertion of disability and grounds for his lawsuit against Defendant has been developed by the Court in the memorandum accompanying its September 28, 2007, 2007 WL 2897870, order dismissing Plaintiff's claims against Unumprovident Corporation and Unum Life Insurance Company (Court File No. 33). As part of that order, the Court remanded Plaintiff's claim against Defendant Reliance for further investigation (Court File No. 34). Specifically, Defendant was to determine (1) whether Plaintiff would fall within its "basic policy" or its "executive policy" during the time of his disability, and (2) once the appropriate policy was established, whether Plaintiff was covered by it under the policy's specific terms and definitions (Court File No. 33).

Shortly after entry of that order, Plaintiff moved for attorney's fees of $17,300.00 pursuant to ERISA § 502(g)(1), codified at 29 U.S.C. § 1132(g)(1) (Court File No. 36). Plaintiff amended his motion to make clear he sought attorney's fees only against Defendant Reliance, not Unumprovident Corporation or Unum Life Insurance Company (Court File No. 39). In his brief supporting the amended motion, Plaintiff argued that application of the five-factor test from Schwartz v. Gregori, 160 F.3d 1116, 1119 (6th Cir.1998), should result in an attorney's fee award to him. He also argued, citing various district court cases, that he became a "prevailing party" when he obtained a remand against Defendant and, as such, would be eligible for attorney's fees.

Defendant's response argued Plaintiff did not prevail by obtaining a remand and therefore was not entitled to a fee award (Court File No. 43). It argued that because a remand to a plan administrator for a decision is not an appealable final decision, Bowers v. Sheet Metal Workers' Nat'l Pension Fund, 365 F.3d 535, 538 (6th Cir. 2004), a fee award would be inappropriate because it is "an abuse of discretion for the district court to award attorney's fees to a losing party," Cattin v. Gen. Motors Corp., 955 F.2d 416, 427 (6th Cir. 1992). Defendant also cited its share of district court cases which refused to award attorney's fees after remand to a plan administrator. Additionally, Defendant contended, even if Plaintiff could be considered a prevailing party, he would not be entitled to fees under the Schwartz five-factor test.

In issuing the R & R (Court File No. 47), Magistrate Judge Carter took into consideration the cases cited by both parties. After considering the cases, and the language of 29 U.S.C. § 1132(g)(1), Judge Carter concluded "the better view concerning granting attorney's fees upon remand for a full and fair review under an arbitrary and capricious standard is that held by the cases cited by plaintiff (id. at 5). Turning to analyze the five Schwartz factors, Judge Carter held it was appropriate to award reasonable attorney's fees and costs to Plaintiff. He then used the lodestar method to calculate a fee figure of $17,300.00. Defendant timely filed an objection to the R & R (Court File No. 50) and Plaintiff timely responded (Court File No. 52).


This Court must conduct a de novo review of those portions of the report and recommendation to which objection is made and may accept, reject, or modify, in whole or in part, the magistrate judge's findings or recommendations. 28 U.S.C. § 636(b)(1)(C).


Defendant objects to two findings in the R & R. First, it argues a fee award is inappropriate at this time because Plaintiff has not "prevailed." Second, it argues that even if Plaintiff is a prevailing party, he is not entitled to a fee award under the five-factor test set forth in Schwartz v. Gregori, 160 F.3d 1116, 1119 (6th Cir.1998) (Court File No. 50).

A. Application of Prevailing Party Standard

29 U.S.C. § 1132(g)(1) provides: "In any action under this title . . . 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." In objecting to the R & R, Defendant repeats its argument that because a remand to a plan administrator is not a final decision on the merits, Plaintiff has not yet prevailed. Plaintiff responds that by achieving a remand, he has become eligible for attorney's fees.

Both parties, however, are missing the threshold question, which is whether a party must be deemed a "prevailing party" at all to be awarded attorney's fees under ERISA. On its face, the statute contains no prevailing party requirement, but leaves to the court's discretion whether to award attorney's fees. Some courts, however, have read a prevailing party requirement into § 1132(g)(1). There is a significant split of authority between—and within—federal appeals courts on whether § 1132(g)(1) requires a party to prevail for a fee award, and the Sixth Circuit has not ruled definitively on the issue. See Eric C. Surette, Annotation, Requirement that Party Prevail to Obtain Attorney's Fees under § 502(g) of ERISA, 172 A.L.R. Fed. 571 (2001) (identifying the circuit split and collecting cases).

The Second and Eleventh Circuits clearly reject the prevailing party requirement. Salovaara v. Eckert, 222 F.3d 19, 27 (2d Cir.2000) (reemphasizing the statutory language that "a court has discretion to award attorney's fees `to either party' in an ERISA action"); Freeman v. Cont'l Ins. Co., 996 F.2d 1116, 1119 (11th Cir. 1993) ("Unlike other fee-shifting provisions, which give the court discretion to award fees to a prevailing party, § 1132(g)(1) allows a court to award fees to either party. The law provides no presumption in favor of granting attorney's fees to a prevailing claimant in an ERISA action.") (citations omitted).

Conversely, the Fourth Circuit reads a prevailing party requirement into the statute. Martin v. Blue Cross & Blue Shield of Va., Inc., 115 F.3d 1201, 1210 (4th Cir.1997) ("Because of the strong suggestions in our own precedent, supported by the weight of authority from other circuits, we now make clear that in the Fourth Circuit, only a prevailing party is entitled to consideration for attorneys' fees in an ERISA action."). The Tenth Circuit also has a prevailing party requirement. Chambers v. Family Health Plan Corp., 100 F.3d 818, 828 (10th Cir.1996) (declining to award attorney's fees to plaintiff, or to remand to the district court for an explanation, because plaintiff did not prevail on any of his claims); Arfsten v. Frontier Airlines, Inc. Ret. Plan for Pilots, 967 F.2d 438, 442 n. 3 (10th Cir.1992) ("Because we reverse the district court's decision on the merits, plaintiff is not a prevailing party, and his arguments on attorney's fees are moot.").

Other circuits have conflicting authority within them. Compare Wade v. Hewlett-Packard Dev. Co. LP Short Term Disability Plan, 493 F.3d 533, 543 (5th Cir.2007) ("[W]e read [Salley v. E.I. DuPont de Nemours & Co., 966 F.2d 1011, 1017 (5th Cir.1992)] now as establishing, for ERISA's fee-shifting provision, a `prevailing party' test, analogous to the test under Fed.R.Civ.P. 54(d), for the award of costs. As Salley is the first case to discuss the award of costs under ERISA, Salley's application of the `prevailing party' test controls this case.") and Boggs v. Boggs, 82 F.3d 90, 94 n. 1 (5th Cir.1996), rev'd on other grounds, 520 U.S. 833, 117 S.Ct. 1754, 138 L.Ed.2d 45 (1997) (concluding a plaintiff did not prevail, and hence was not entitled to attorney's fees, because the Fifth Circuit affirmed the district court's denial of the plaintiff's request for declaratory judgment) with Gibbs v. Gibbs, 210 F.3d 491, 503 (5th Cir.2000) (concluding, after considering several conflicting cases, that "the greater weight of authority, from outside and within our own circuit, supports the notion that a party need not prevail in order to be eligible for an award of attorneys' fees under § 1132(g)(1) of ERISA").

The Seventh Circuit tilts more toward a prevailing party requirement, though there is also conflicting authority there. Compare Davis v. Chicago Mun. Employees Credit Union, 891 F.2d 182, 184 (7th Cir. 1989) ("A decision to shift fees under [§ 1132(g)(1)] is discretionary. We have tempered that discretion, however, by reading section 1132(g)(1) in conformity with other fee shifting statutes. Thus, as with 42 U.S.C. § 1988, one asking for a fee shift must be a prevailing party.") and Janowski v. Int'l Bhd. of Teamsters Local No. 710 Pension Fund, 812 F.2d 295 (7th Cir. 1987) (reversing the district court's attorney's fee award because plaintiffs did not meet the Seventh Circuit's prevailing party test) and Bittner v. Sadoff & Rudoy Indus., 728 F.2d 820, 829 (7th Cir.1984), overruled on other grounds by McCarter v. Ret. Plan...

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