Tuesday, May 12, 2015

3d Cir. on Attorney's Fees Under ERISA

I took last week off from blogging to wrap up my first year of teaching employment law at Penn State. Now I'm back with an exciting new development from the Third Circuit . . . a precedential decision on the standard for awarding attorney's fees under ERISA! Okay, "exciting" might not be exactly the right word here.

On Friday, the Third Circuit decided Templin v. Independence Blue Cross (opinion here). Under ERISA, a party is eligible for attorney's fees if it achieves "some degree of success on the merits." In Templin, the party settled a dispute over interest for $68,000.

The lower court held that the plaintiff had not achieved "some success" because the parties settled their case "without a judgment from the Court" and the $68,000 was "trivial" in comparison to the millions of dollars originally sought.

The Third Circuit applied the "catalyst theory" to determine eligibility. The Court addressed two sub-issues on this point:
[1.]To succeed under a catalyst theory of recovery, evidence that judicial activity encouraged the defendants to settle is not necessary. All that is necessary is that litigation activity pressured a defendant to settle or render to a plaintiff the requested relief . . . .  
[2.] [A] party is eligible for attorney’s fees where his or her litigation efforts resulted in a voluntary, non-trivial, and more than procedural victory that is apparent to the court without the need to conduct a lengthy inquiry into whether that success was substantial or occurred on a central issue.
The Court concluded that the plaintiffs were eligible for attorney's fees in this case. Judicial activity was not required, and the $68,000 - while relatively small - was still a non-trivial and more than procedural victory.

However, whether they actually get attorney's fees depends on the lower court's discretion, applying the five Ursic factors. The Third Circuit described those factors, and reversed and remanded the case back to the trial court to apply them.