Opinion ID: 776983
Heading Depth: 2
Heading Rank: 4

Heading: Attorney Fees and Damages

Text: 35 In considering whether the district court abused its discretion in awarding attorney fees and costs to Lauder, we rely on Chambless v. Masters, Mates & Pilots Pension Plan, 815 F.2d 869 (2d Cir.1987). We recognized there that a five-factor test applies to the decision to award fees in an ERISA action, 1 and that the district court abuses its discretion if it misapplies the test. Id. at 871; see also Salovaara, 222 F.3d at 27-29. 36 At its hearing on attorney fees, the district court correctly identified the Chambless factors, which are: 37 (1) the degree of the offending party's culpability or bad faith, (2) the ability of the offending party to satisfy an award of attorney's fees, (3) whether an award of fees would deter other persons from acting similarly under like circumstances, (4) the relative merits of the parties' positions, and (5) whether the action conferred a common benefit on a group of pension plan participants. 38 Chambless, 815 F.2d at 871. The district court stated that, with respect to the first factor, it did not believe that First UNUM's rejection of Lauder's claim was proper under the policy or under applicable law. The court then found that First UNUM could satisfy an award of fees and that such an award would have a not insignificant deterrent effect. With respect to the fourth factor, the court found that none of First UNUM's positions in the litigation were frivolous or improper or anything of that sort. Finally, the court stated that no common benefit was conferred on a group because this was a single action. Weighing the factors, the district court concluded that an award of attorney fees to Lauder was warranted. 39 While we are unwilling to find that the district court abused its discretion in reaching this conclusion, we note that its analysis of the Chambless factors resulted in only one factor that weighed against First UNUM, namely, the lack of merit in its position on coverage. The findings on the second and third factors seem unremarkable, and therefore neutral, to us, especially because the district court did not specify what conduct it thought would be deterred by the award. It also seems that the court confused the first and fourth factors when it found with respect to the latter that First UNUM had made no frivolous or improper arguments. This suggests that while the court found First UNUM's position without merit, it did not find its actions were taken in bad faith. This lack of bad faith coupled with the court's finding of a lack of impact on a larger group — the fifth factor — make two factors in First UNUM's favor. Although we agree with the district court that First UNUM took the wrong position on coverage, it is not clear that that position was so egregiously wrong as to outweigh the other factors under Chambless. 40 We recognize that the degree of deference owed to a district court in these matters makes this case a close one, Salovaara, 222 F.3d at 29. In light of the apparent errors in the balancing process, however, we believe the best course is to vacate the district court's award of attorney fees and to remand the question to the court for further consideration. 41 Turning to the district court's calculation of the damages suffered by Lauder, we note that the figure arrived at by the court — $95,234 — was ordered without any explanation as to the method used to reach it. We are therefore unable to review whether the district court's calculation method was correct. Moreover, both parties assert that the calculation is wrong and should be set aside. Lauder thinks the figure is too low and argues that this Court should independently calculate the damages due to her, using the information supplied in the record. In contrast, First UNUM thinks it a usurpation of its role as claims administrator for any court to calculate the figure, and urges us to remand the calculation to First UNUM. 42 We decline Lauder's invitation to calculate her damages, believing this to be a task better suited to the district court. We also decline First UNUM's invitation to turn the calculation over to it, as the district court will have all the necessary information from the policy, and from hearings on this issue, to calculate Lauder's damages accurately. Thus, we vacate the award of damages made in this case and remand the issue of damages to the district court for further proceedings.