     09-3797-cv
     Toussaint v. Mahoney

 1                      UNITED STATES COURT OF APPEALS
 2
 3                              FOR THE SECOND CIRCUIT
 4
 5
 6
 7                               August Term, 2010
 8
 9        (Argued: May 3, 2011                  Decided: June 6, 2011)
10
11                            Docket No. 09-3797-cv
12
13
14      ROGER TOUSSAINT, as President of Transport Workers Union,
15      Local 100, ED WATT, as Secretary Treasurer of Transport
16                       Workers Union, Local 100,
17
18                                                    Plaintiffs-Appellees,
19
20   JAMES MAHONEY, as the Director of the Transport Workers Union,
21
22                                 Plaintiff-Counter-Defendant-Appellee,
23
24    JOSEPH ALLMAN, BERNARD BEAVER, FRANK INGRAM, LAVERNE STUCKEY, MAURICE
25    SCHIERMAN, MATTHEW TARNOWSKI, on their own behalf and on behalf
26                  of all others similarly situated,
27
28                                                    Plaintiffs-Appellees,
29
30                                      –v.–
31
32            JJ WEISER, INC., STANFORD J. COHEN, HARVEY T. GLUCK,
33
34                                                              Defendants,
35
36                          INTERBORO MUTUAL INSURANCE CO.,
37
38                                              Defendant-Cross-Defendant,
39
40
41

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 1                    MICHAEL J. FITZPATRICK, JOHN MEEHAN,
 2
 3             Defendants-Counter-Claimants-Third-Party Plaintiffs-
 4                                                      Appellants,
 5
 6    LOCAL 100, TRANSPORT WORKERS UNION, TRANSPORT WORKERS UNION RETIREES
 7                               ASSOCIATION,
 8
 9                                              Third-Party Defendants.*
10
11
12
13   Before:
14              WALKER, CALABRESI, and WESLEY, Circuit Judges.
15
16        Appeal from an order of the United States District
17   Court for the Southern District of New York (Marrero, J.)
18   entered on August 18, 2009, denying Defendants-Counter-
19   Claimants-Third-Party Plaintiffs-Appellants John Meehan and
20   Michael J. Fitzpatrick’s motion for fees and costs pursuant
21   to Section 502(g) of the Employee Retirement Income Security
22   Act of 1974, as amended (“ERISA”), 29 U.S.C. §§ 1001, et
23   seq.
24
25        AFFIRMED.
26
27
28
29              NICHOLAS HANLON, Cary Kane LLP, for Plaintiffs-
30                    Appellees.
31
32              SUSZANNE TONGRING (Terrence Buehler, Touhy Touhy
33                    Buehler & Williams, LLP, on the brief), for
34                    Defendants-Counter-Claimants-Third-Party
35                    Plaintiffs-Appellants.
36
37
38
39
40



          *
             The Clerk of Court is directed to amend the caption as
     set forth above.

                                  Page 2 of 8
 1   PER CURIAM:

 2        John Meehan and Michael Fitzpatrick (“Defendants”) are

 3   former directors of a retirees association of former

 4   unionized transportation workers.     In an underlying ERISA

 5   action, the retirees association and six of its members

 6   alleged, among other things, that Defendants breached their

 7   fiduciary duty to the retirees association and its members

 8   by buying and maintaining a health insurance policy with

 9   premiums that far outstripped the benefits received by

10   members.      Defendants prevailed on all counts, see Mahoney v.

11   J.J. Weiser & Co., 564 F. Supp. 2d 248 (S.D.N.Y. 2008),

12   aff’d 339 Fed. App’x 46 (2d Cir. 2009) (summary order), and

13   sought fees and costs pursuant to 29 U.S.C. § 1132(g)(1).

14   On August 18, 2009, the United States District Court for the

15   Southern District of New York (Marrero, J.) denied

16   Defendants’ fees motion.      See Mahoney v. J.J. Weiser & Co.,

17   646 F. Supp. 2d 582 (S.D.N.Y. 2009).      Defendants now appeal

18   that decision.

19        In denying Defendants’ motion, the district court

20   applied our Court’s five-factor test for evaluating

21   applications for attorney’s fees pursuant to 29 U.S.C.

22   § 1132(g)(1), considering:


                                 Page 3 of 8
 1            (1) [T]he degree of the offending party’s
 2            culpability or bad faith, (2) the ability
 3            of the offending party to satisfy an award
 4            of attorney’s fees, (3) whether an award of
 5            fees would deter other persons from acting
 6            similarly under like circumstances, (4) the
 7            relative merits of the parties’ positions,
 8            and (5) whether the action conferred a
 9            common benefit on a group of pension plan
10            participants.
11
12   Chambless v. Masters, Mates & Pilots Pension Plan, 815 F.2d

13   869, 871 (2d Cir. 1987).    The district court reasoned:

14                 As to the first [Chambless] factor,
15            though Defendants ultimately prevailed on
16            the merits of their position in this Court
17            and on appeal, under the circumstances that
18            gave rise to the action at the time it was
19            filed, there is no sufficient evidence of
20            culpability or bad faith on Plaintiffs’
21            part   in   commencing    the   litigation.
22            Concerning   the    need   for   deterrence
23            reflected in the third factor, the Court
24            agrees that given ERISA’s policy of
25            protecting plan beneficiaries, colorable
26            claims pursued in good faith, even if
27            ultimately unsuccessful, should not be
28            discouraged by awards of attorney’s fees to
29            prevailing defendants.
30                 As regards the fourth factor, the
31            relative merits of the parties’ positions,
32            though Defendants’ arguments prevailed,
33            Plaintiffs’   losing    claims  should   be
34            considered in the context of the absence of
35            culpability or bad faith as determined in
36            assessing the first factor. In this light,
37            the Court finds that Plaintiffs’ position
38            cannot be considered so substantially
39            devoid of merit as to tip the Chambless
40            factors dispositively in Defendants’ favor
41            on this basis alone.
42


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 1   Mahoney, 646 F. Supp. 2d at 586 (internal citations

 2   omitted).

 3       Defendants contend that the district court erred in

 4   light of the Supreme Court’s intervening decision in Hardt

 5   v. Reliance Standard Life Insurance Co., 130 S. Ct. 2149

 6   (2010).     Hardt held that the proper standard for determining

 7   whether a fee claimant is eligible for § 1132(g)(1) fees is

 8   whether the claimant has achieved “some degree of success on

 9   the merits,” not whether the claimant was a “prevailing

10   party.”     Id. at 2158; see also id. at 2157.   Hardt

11   recognized that its holding did not change the law in our

12   Court with respect to this issue.     See id. at 2156 n.2

13   (citing Miller v. United Welfare Fund, 72 F.3d 1066, 1074

14   (2d Cir. 1995)).    In any event, there is no dispute that

15   Defendants achieved both prevailing party status and some

16   degree of success on the merits in this case because the

17   district court granted summary judgment in their favor and

18   we affirmed.    Accordingly, the difference between

19   “prevailing party” and “some degree of success on the

20   merits” is irrelevant here.

21       Hardt further pointed out that the Fourth Circuit’s

22   five-factor test for awarding § 1132(g)(1) fees – which


                                Page 5 of 8
 1   mirrors our Court’s own Chambless factors – “bear[s] no

 2   obvious relation to § 1132(g)(1)’s text or to our

 3   fee-shifting jurisprudence.”    Id. at 2158.    Hardt concluded

 4   that consideration of these factors is “not required for

 5   channeling a court’s discretion when awarding fees under [§

 6   1132(g)(1)].”   Id.   Hardt nevertheless “[did] not foreclose

 7   the possibility that . . . a court may consider the five

 8   factors . . . in deciding whether to award attorney’s fees.”

 9   Id. at 2158 n.8.

10       Hardt’s recognition that courts need not apply the

11   Chambless factors does not mean, as Defendants suggest, that

12   the district court abused its discretion when it used the

13   Chambless factors to structure its analysis.      A court may

14   apply – but is not required to apply – the Chambless factors

15   in “channeling [its] discretion when awarding fees” under

16   § 1132(g)(1).   See id. at 2158.   So long as a party has

17   achieved “some degree of success on the merits,” id., a

18   “court in its discretion may allow a reasonable attorney’s

19   fee and costs of action to either party.”      29 U.S.C.

20   § 1132(g)(1).   Thus, a district court must begin its

21   § 1132(g)(1) analysis by determining whether a party has

22   achieved “some degree of success on the merits,” but it is


                               Page 6 of 8
 1   not required to award fees simply because this pre-condition

 2   has been met.    Cf. Taafee v. Life Ins. Co. of N. Am., --- F.

 3   Supp. 2d ---, 2011 WL 723586, at *9 (S.D.N.Y. Feb. 23, 2011)

 4   (concluding that “‘some success on the merits’ . . . is all

 5   a fee claimant must show to be eligible to collect

 6   attorneys’ fees”).

 7       Here, although the district court did not have the

 8   benefit of Hardt in reaching its decision, nothing in the

 9   district court’s opinion contradicts Hardt or suggests that

10   the district court would have decided the matter differently

11   in light of Hardt.    Accordingly, Hardt does not require us

12   to reverse or remand.    Hardt also does not disturb our

13   observation that “the five factors very frequently suggest

14   that attorney’s fees should not be charged against ERISA

15   plaintiffs.”    Salovaara v. Eckert, 222 F.3d 19, 28 (2d Cir.

16   2000) (internal quotation marks omitted).   This “favorable

17   slant toward ERISA plaintiffs is necessary to prevent the

18   chilling of suits brought in good faith.”    Id.   For this

19   reason, when determining whether attorney’s fees should be

20   awarded to defendants, we focus on the first Chambless

21   factor: whether plaintiffs brought the complaint in good

22   faith.   After a thorough review of the record, we conclude


                               Page 7 of 8
 1   that the district court did not abuse its discretion in

 2   denying fees in the present case.   See McDonald ex rel.

 3   Prendergast v. Person Plan of the NYSA-ILA Pension Trust

 4   Fund, 450 F.3d 91, 96 (2d Cir. 2006) (“Given the district

 5   court’s inherent institutional advantages in this area, our

 6   review of a district court’s fee award is highly

 7   deferential.”); see also Zervos v. Verizon N.Y., Inc., 252

 8   F.3d 163, 169 (2d Cir. 2001).

 9       Based on the foregoing, the order of the district court

10   is hereby AFFIRMED.




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