Royal v. National Football League Management Council

Background

Andre Royal sued the Retirement Board of the Bert Bell/Pete Rozelle NFL Player Retirement Plan, several Board members, the National Football League Management Council, and the National Football League Players Association. He alleged violations of disclosure requirements under Section 102(a) of the Employee Retirement Income Security Act (ERISA). He also alleged that the Board, the Management Council, and the Players Association breached fiduciary duties by failing to provide him with a written summary of his retirement plan and by failing to monitor the Board.

The Management Council moved to dismiss, arguing that Royal had not adequately alleged that it was a fiduciary of the plan and that it had not breached any fiduciary duty. Royal did not oppose the Management Council’s motion within the time set by the court. Instead, he voluntarily dismissed his claims against the Management Council and the Players Association without prejudice. Separately, after briefing, the court granted the Board’s motion to dismiss and dismissed Royal’s claims against the Board with prejudice as time-barred.

The Management Council then sought attorney fees under Section 502(g)(1) of ERISA. It argued that Royal should have known his claims were meritless based partly on a report and recommendation in a prior case involving a different plaintiff. It also argued that Royal’s extensive copying of another complaint showed culpability or bad faith.

Legal standard

Section 502(g)(1) gives a court discretion to award reasonable attorney fees and costs to either party in an ERISA action. Under the Supreme Court’s interpretation of that provision, a party seeking fees must first show “some degree of success on the merits.” This requires more than trivial success or a purely procedural victory; it does not necessarily require a favorable judgment on every claim.

The court relied on Second Circuit precedent distinguishing between relief obtained because of the other party’s voluntary conduct after minimal litigation and relief caused by a court action addressing the merits. A voluntary dismissal can support a fee award when a court’s merits-related action prompted the dismissal, but the party seeking fees must establish that connection.

After determining that threshold, the court may exercise discretion about whether to award fees. The court discussed five factors commonly used in the Second Circuit: the other party’s culpability or bad faith, ability to pay, deterrence, the relative merits of the parties’ positions, and whether the litigation conferred a common benefit on plan participants. The court explained that these factors must be applied in a way that supports ERISA’s purpose of protecting employee-benefit-plan beneficiaries.

Court’s analysis

The court held that the Management Council had not shown some degree of success on the merits. Royal dismissed the claims after minimal litigation, and the court had made no merits ruling about those claims. The Management Council’s belief that its motion to dismiss would have succeeded was not enough. Unlike a case in which a court’s summary-judgment ruling cast doubt on remaining claims and prompted their dismissal, nothing the court did here related to the merits caused Royal’s dismissal. The fact that the dismissal was without prejudice also distinguished this case from the precedent discussed by the court.

The court independently concluded that it would decline to award fees even if ERISA permitted an award in these circumstances. It did not view Royal as culpable merely because he dismissed his claims, and it did not find his reliance on another plaintiff’s complaint significant. Royal filed his suit before the report and recommendation in the other case, and even a final judgment there would not have barred Royal’s claims.

The court also expressed concern that awarding fees could improperly discourage ERISA beneficiaries from bringing claims, including claims ultimately found to lack merit. It found no indication that Royal’s lawsuit threatened the plan’s financial solvency or harmed other plan participants. Because the suit sought redress for an alleged failure to provide summary plan descriptions, a successful case would not have shifted benefits away from other participants.

Disposition

The court denied the National Football League Management Council’s motion for attorney fees. The denial rested both on the Council’s failure to establish the required degree of success on the merits and on the court’s independent decision not to exercise its discretion to award fees.