You know that a court has discretion to award attorney fees under ERISA if a party shows "some degree of success on the merits."
But how do you define "success"? A new third circuit case reminds one of that old Milton Berle line: "If opportunity doesn't knock, build a door."
Here's the case of Templin et al v. Independence Blue Cross et al., __ F.3d __ (3rd Cir. May 8, 2015)(Even voluntary settlements, where no judgment was entered, can result in an award of attorney fees under the "catalyst" theory.)
FACTS: Plaintiffs sought payment for blood-clotting products under an ERISA plan. Defendants moved to dismiss for failure to exhaust administrative remedies. The Court denied the motion and Defendants eventually paid the claims, and settled the claims. Plaintiffs then sought $349,385 in attorney fees.
DISTRICT COURT HELD: Attorney fees denied because the court had never made a substantive determination on whether Plaintiffs were entitled to the recovery, and the parties settled the claim "without a judgment from the Court."
THIRD CIRCUIT HELD: Reversed and attorney fees awarded.
- "[T]he ERISA statute does not limit fee awards to the prevailing party." Op. at 7.
- "[T]he Supreme Court has specifically acknowledged that attorney fees are available even 'without a formal court order.'" Op. at 8.
- At least four other circuits have adopted the "catalyst" theory to statutes that lack prevailing-party requirements. Op. at 8.
- "[U]nder the catalyst theory, 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...." Op. at 10.
- Plaintiffs sued for interest on unpaid amounts. The Court held plaintiffs were entitled to recovery of attorney's fees because the parties settled for "100% of the interest sought." [W]e find that the pressure of the lawsuit caused [Defendants] to change their position...." Op. at 11.
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