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Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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FILED 

u~ited Scates Court of Appeals 

Tr.nth Ciro1it 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

JAN 5 - 1990 

&OBERT L. HOECKER 

Clerk 

SHEET METAL J.A.C. TRAINING SCHOOL, ) 

INC., a corporation; THE NATIONAL ) 

TRAINING FUND FOR THE SHEET METAL ) 

AND AIR CONDITIONING INDUSTRY, a trust; ) 

JAMES E. ROTH; EDWARD J. CARLOUGH, ) 

two of the present trustees, thereof, ) 

) 

Plaintiffs-Appellees, ) 

) 

V • ) 

) 

BRIAN GRIFFIN, ) 

) 

Defendant-Appellant. ) 

ORDER AND JUDGMENT* 

No. 88-2903 

(D.C. No. 87-C-814-B) 

(N.D. Okla.) 

Before MOORE, BARRETT, and BRORBY, Circuit Judges. 

After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

34(a); 10th Cir. R. 34.1.9. 

submitted without oral argument. 

The case is therefore ordered 

This action was filed below pursuant to the enforcement 

provisions of the Employee Retirement Income Security Act of 1974 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

Appellate Case: 88-2903 Document: 01019958736 Date Filed: 01/05/1990 Page: 1 
(ERISA), 29 U.S.C. § 1132. Plaintiffs-appellees sought to enforce 

the terms of an apprentice sheet metal scholarship loan agreement 

against defendant in the amount of $4,614.12, plus interest, 

costs, and attorney's fees. Defendant-appellant defended the 

action on the grounds that 1) he had signed the loan agreements 

under duress and 2) no consideration was given for the loans 

because plaintiffs owed defendant a preexisting duty to provide 

him with four years of training under both the apprenticeship 

agreement and the apprenticeship standards in effect prior to his 

signing of the promissory notes for the scholarship loan 

agreements. Following a jury trial, judgment was entered for 

defendant. 

Defendant then moved for attorney's fees pursuant to 29 

U.S.C. § 1132(9)(1)(1980) which provides that "[i]n any action 

under this subchapter by a participant, beneficiary, or 

fiduciary, the court in its discretion may allow a reasonable 

attorney's fee and costs of action to either party." The district 

court denied defendant's fee application, and 

followed. 

this appeal 

The standard of review of the denial of attorney's fees in an 

ERISA action is abuse of discretion by the district court. Gordon 

v. United States Steel Corp., 724 F.2d 106, 108 (10th Cir. 1983); 

Gray v. New England Tel. & Tel. Co., 792 F.2d 251, 259 (1st Cir. 

1986); Paddack v. Morris, 783 F.2d 844, 846 (9th Cir. 1986). See 

also Sage v. Automation, Inc. Pension Plan & Trust, 845 F.2d 885, 

895-96 (10th Cir. 1988). 

To hold that the district court abused its discretion, this 

court must have a definite conviction that the district court upon 

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Appellate Case: 88-2903 Document: 01019958736 Date Filed: 01/05/1990 Page: 2 
weighing relevant factors clearly erred in its judgment. Gordon 

v. United States Steel Corp., 724 F.2d at 108; Paddack v. Morris, 

783 F.2d at 846; Hummell v. S. E. Rykoff & Co., 634 F.2d 446, 452 

(9th Cir. 1980). 

The factors to be considered, among others, are those first 

set forth by this court in Eaves v. Penn, 587 F.2d 453 {10th Cir. 

1978): 

(1) the degree of the opposing parties' culpability or 

bad faith; (2) the ability of the opposing parties to 

personally satisfy an award of attorney's fees; (3) 

whether an award of attorney's fees against the opposing 

parties would deter others from acting under similar 

circumstances; (4) whether the parties requesting fees 

sought to benefit all participants and beneficiaries of 

an ERISA plan or to resolve a significant legal question 

regarding ERISA; and (5) the relative merits of the 

parties' positions. 

Gordon v. United States Steel Corp., 724 F.2d at 109 (emphasis 

added). Thus the district court is not restricted from 

considering other factors. Gray v. New England Tel. & Tel. Co., 

792 F.2d at 258 (five factors are guidelines); Nachwalter v. 

Christie, 805 F.2d 956, 961-62 (11th Cir. 1986)(five factors guide 

but do not control district court's decision). 

Most courts follow this or a similarly worded five-part test. 

See Gray v. New England Tel. & Tel. Co., 792 F.2d at 257 {citing 

cases); Nachwalter v. Christie, 805 F.2d at 961-62 {citing cases); 

Carpenters S. Cal. Admin. Corp. v. Russell, 726 F.2d 1410, 1415 

n.9 (9th Cir. 1984). But see Bittner v. Sadoff & Rudoy Indus., 

728 F.2d 820, 830-31 (7th Cir. 1984){adopting Equal Access to 

Justice Act attorney fee standard of awarding fees to defendants 

in ERISA cases). 

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Appellate Case: 88-2903 Document: 01019958736 Date Filed: 01/05/1990 Page: 3 
ERISA is primarily intended to protect the interests of plan 

beneficiaries and participants. Gray v. New England Tel. & Tel. 

Co., 792 F.2d at 259. Landro v. Glendenning Motorways, Inc., 625 

F.2d 1344, 1356 (8th Cir. 1980)(ERISA should be liberally 

construed in favor of persons meant to be benefited); Nachwalter 

v. Christie, 805 F.2d at 960 (central goal of ERISA is to protect 

interests of employees and beneficiaries 

plans). Although the district court listed 

in employee benefit 

the factors to be 

considered when ruling on attorney's fees, it apparently did not 

have the remedial purposes of ERISA in mind. Smith v. CMTA-IAM 

Pension Trust, 746 F.2d 587, 589 (9th Cir. 1984). 

In particular, 

liberally construed 

ERISA's attorney's fees provision must be 

to protect the statutory purpose (of 

vindicating retirement rights), even when small amounts are 

involved. Chambless v. Masters, Mates & Pilots Pension Plan, 815 

F.2d 869, 872 (2d Cir. 1987); Smith v. CMTA-IAM Pension Trust, 746 

F.2d at 589 (ERISA should be liberally construed in favor of 

protecting participant in employee benefit plans); Landro v. 

Glendenning Motorways, Inc., 625 F.2d at 1356 (prevailing 

participant should ordinarily recover attorney's fees unless 

special circumstances would make award unjust); Hollenbeck v. 

Falstaff Brewing Corp., 605 F. Supp. 421, 437 (E.D. Mo. 

1984)(same), aff'd, 780 F.2d 20 (8th Cir. 1985). The burden of 

proof of special circumstances making an attorney's fees award 

unjust is on the losing party. See Landro v. Glendenning 

Motorways, Inc., 625 F.2d at 1356 n.19 (burden of proving special 

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Appellate Case: 88-2903 Document: 01019958736 Date Filed: 01/05/1990 Page: 4 
circumstances rendering fees to prevailing § 1132 plaintiffs 

unjust should be on losing defendant). 

The district court made several findings pursuant to the 

Eaves guidelines, but provided no analysis underlying its 

determination not to award fees. The court found that the action 

was not brought in bad faith. However, although bad faith would 

always justify a fee award, it is not required. Smith v. CMTA-IAM 

Pension Trust, 746 F.2d at 590. See also Terpinas v. Seafarer's 

Int'l Union, Pacific Dist., 722 F.2d 1445, 1448 (9th Cir. 

1984)(trial court erred in refusing to award ERISA fees solely on 

finding of absence of bad faith); Gray v. New England Tel. & Tel 

Co., 792 F.2d at 259 (no one factor dispositive in awarding fee); 

Carpenters S. Cal. Admin. Corp. v. Russell, 726 F.2d at 1416 

(same); Paddack v. Morris, 783 F.2d at 846 (same). 

The court also determined that while plaintiffs have the 

ability to pay defendant's attorney's fees, such payment "would 

not be appropriate." We note, however, that the relative ability 

of the parties is relevant, particularly where an employee 

participant may have limited resources. See Smith v. CMTA-IAM 

Pension Trust, 746 F.2d at 590 (based on relative ability alone, 

prevailing employee plaintiff in ERISA action should ordinarily 

receive attorney's fees absent special circumstances). 

Here, a sole plan participant defending an action against him 

for over four thousand dollars has been vindicated in his refusal 

to pay an invalidly exacted loan agreement, but at a cost to him 

(agreed to by the parties as reasonable) of more than the loan 

repayment itself. Thus, the relative ability to satisfy an award 

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Appellate Case: 88-2903 Document: 01019958736 Date Filed: 01/05/1990 Page: 5 
of attorney's fees cannot weigh accept in favor of this defendant. 

See Paddack v. Morris, 783 F.2d at 847 (defendant employer awarde d 

fees in action against her by trustees and agents); Marquardt v. 

North Am. Car Corp., 652 F.2d 715, 719 (7th Cir. 198l)(assessing 

fees a gai nst individual would have been unjust). 

The district court next determined that the third and fourth 

factors (deterrence of others and either benefit to all plan 

participants or resolution of significant ERISA legal question) 

had little weight in this instance. If certain factors (such as 

the absence of a significant legal issue) are neutral, these 

factors simply carry no weight in the calculus. Paddack v. 

Morris, 783 F.2d at 847. See also Nachwalter v. Christie, 805 

F.2d at 962 (factors two and three would not be applied to appeal 

fee consideration where evidence was insufficient); Carpenters S. 

Cal. Admin. Corp. v. Russell, 726 F.2d at 141 6 (some factors may 

not be pertinent in given case). Nor will failure of a plan 

participant's action to confer a common benefit on a group of 

pension plan participants necessarily bar recovery of attorney's 

fees. Ford v. New York Cent. Teamsters Pension Fund, 642 F.2d 

664, 665 (2d Cir. 1981), aff'g, 506 F. Supp. 180 (W.D.N.Y. 1980); 

Korn v. Levine Bros. Iron Works Corp., 574 F. Supp. 836, 844 

(S.D.N.Y. 1983)(same); Hollenbeck v. Falstaff Brewing Corp., 605 

F. Supp. at 437. 

Accordingly, these two factors simply do not figure in the 

anal ysis and should not be we i ghed against the prevailing party 

because they are not present under this factual setting. 

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Appellate Case: 88-2903 Document: 01019958736 Date Filed: 01/05/1990 Page: 6 
Finally, we note that the district court made no 

determination as to the relative merits of the parties' positions. 

This is, in the final analysis, the result obtained. See Smith v. 

CMTA-IAM Pension Trust, 746 F.2d at 590. In this case the jury 

determined that defendant was justified in refusing to repay the 

loans. Plaintiffs have not challenged that determination by 

appeal. The result obtained should not prove more costly than 

capitulating to plaintiffs' demands for repayment of the loan. It 

would simply be fundamentally unfair to burden this defendant with 

the cost of defending this litigation. See Marquardt v. North Am. 

Car Corp., 652 F.2d at 718-19 (injustice would result in requiring 

plan participant to personally satisfy fee award). See also 

Operating Eng'rs Pension Trust v. Gilliam, 737 F.2d 1501, 1506 

(9th Cir. 1984)(defendant employer entitled to attorney's fees). 

We conclude that the district cou r t, in this case, erred in its 

judgment. Gordon v. United States Steel Corp., 724 F.2d at 108. 

With respect to defendant's request for attorney's fees in 

connection with this appeal, defendant may file such motion with 

the district court. See Trustees of Colorado Statewide 

Ironworkers (Erector) Joint Apprenticeship & Training Trust Fund 

v. A & P Steel, Inc., 824 F.2d 817, 819 (10th Cir. 1987). We 

agree that 29 U.S.C. § 1132(g)(l) allows for the recovery of 

attorney's fees incurred on appeal. Nachwalter v. Christie, 805 

F.2d at 961; see also Carpenters S. Cal. Admin. Corp. v. Russell, 

726 F.2d at 1417; Operating Eng'rs Pension Trust v. Gilliam, 737 

F.2d at 1506. 

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Appellate Case: 88-2903 Document: 01019958736 Date Filed: 01/05/1990 Page: 7 
• 

REVERSED and REMANDED with directions to award defendant 

attorney's fees. 

The mandate shall issue forthwith. 

ENTERED FOR THE COURT 

PER CURIAM 

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