Johnson v. Charps Welding & Fabricating, Inc.

Background

Plaintiffs were trustees and fiduciaries of three jointly administered, multi-employer employee-benefit plans. They sued Charps Welding & Fabricating, Inc., several other defendants, and Kenneth Charpentier seeking an audit and payment of allegedly unpaid contributions under the Employee Retirement Income Security Act of 1974, or ERISA. The court had previously granted defendants’ motion for summary judgment and entered judgment for defendants. Defendants then moved for attorney’s fees and costs.

Defendants requested $2,096,063.75 in attorney’s fees and $525,517.32 in costs under 29 U.S.C. § 1132(g)(1). Plaintiffs argued that a different ERISA provision applied and did not authorize fees for defendants. Plaintiffs also argued that the relevant factors did not support an award and that defendants’ requested costs and billing were overstated.

Attorney’s Fees

ERISA permits a court, in its discretion, to award a reasonable attorney’s fee and costs to either party. The court applied five factors identified by the Eighth Circuit: the opposing party’s culpability or bad faith, ability to pay, deterrence, whether the fee claimant sought to benefit plan participants or resolve a significant ERISA question, and the relative merits of the parties’ positions.

The court found the culpability or bad-faith factor neutral. Although plaintiffs prolonged the litigation, continued litigating despite a lack of evidence, and inadequately cited the record, the court found no evidence of frivolous claims or improper motives. The court also noted that plaintiffs had sometimes succeeded or partially succeeded during the litigation.

The ability-to-pay factor favored an award. Based on record documents, the court found that the plaintiffs had sufficient combined resources to satisfy the award. The court also found that deterrence favored an award because plaintiffs had failed to produce evidence supporting their claims, engaged in disorganized discovery, used expert reports inconsistently, and filed unnecessary motions with duplicative and unsupported arguments. The court concluded that an award could deter weak claims and over-litigated ERISA cases without discouraging legitimate efforts to recover plan contributions.

The factor concerning benefits to ERISA participants or resolution of a significant ERISA question weighed against an award. Defendants conceded that they had not sought to benefit all plan participants or beneficiaries, and the court found that the case had not resolved a significant ERISA legal question. The relative-merits factor favored defendants because plaintiffs continued pursuing joint-venture and alter-ego arguments without sufficient facts, evidence, or record citations.

The court concluded that three of the five factors favored awarding fees and that the factors, considered together, made an award appropriate. The court therefore rejected plaintiffs’ argument that the applicable ERISA provision provided no basis for defendants’ fees.

Amount of Fees

The court used the lodestar method, which calculates fees by multiplying reasonable hours by a reasonable hourly rate. Defendants claimed 8,779.35 billable hours and hourly rates ranging from $265 to $345 for partners and $175 to $250 for associates.

The court found that some partners performed tasks that associates could have handled at lower rates, that the claimed $240 associate rate was too high in the circumstances, and that some entries were duplicative or too general. The court also considered defendants’ varying degrees of success during the litigation and plaintiffs’ over-litigation without bad faith. It reduced the cumulative hourly rate to $225 and reduced the claimed hours by 50 percent, resulting in a fee award of $987,676.88.

Costs and Disposition

The court found sufficient documentary support for the requested costs and exercised its discretion to award the full $525,517.32. Judge Paul A. Magnuson ordered that defendants’ motion for attorney’s fees and costs was granted, and ordered plaintiffs to pay defendants $987,676.88 in attorney’s fees and $525,517.32 in costs.