Opinion ID: 776745
Heading Depth: 3
Heading Rank: 1

Heading: Pre-Litigation Fees and Costs

Text: 34 We first address the availability of an award for fees incurred during the initial administrative claims process. Section 1332(g)(1) authorizes a district court to award attorney's fees and costs incurred in any action under this subchapter. Therefore, to determine the scope of 1332(g)(1), we must determine whether Congress intended the term action to be limited to judicial suits or to broadly cover administrative proceedings related to the judicial suit. Looking first to the text of 1132(g)(1), the statute's language supports an interpretation of the term action restricted to formal judicial proceedings. Used in a statute, the term action traditionally connotes a formal adversarial proceeding under the jurisdiction of a court of law. See Black's Law Dict. 28 (6th ed. 1990) (defining action as [t]erm in its usual legal sense means a lawsuit brought in a court; a formal complaint within the jurisdiction of a court of law ... The legal and formal demand of one's right from another person or party made and insisted on in a court of justice.... It includes all the formal proceedings in a court of justice attendant upon the demand of a right made by one person of another in such court, including an adjudication upon the right and its enforcement or denial by the court.) (citation omitted); Ballentine's Law Dict. 18-19 (3d ed. 1969) (defining action as [a] judicial proceeding, either in law or in equity, to obtain relief at the hands of a court. A judicial remedy for the enforcement or protection of a right, or a legal proceeding in which a plaintiff claims against a defendant ...); Webster's Third New Int'l Dict. 21 (1990) (defining action as a deliberative or authorized proceeding ... a legal proceeding by which one demands or enforces one's right in a court of justice ... a judicial proceeding for the enforcement or protection of a right, the redress or prevention of a wrong, or the punishment of a public offense ...). 35 The broader statutory scheme of ERISA also provides support for a construction of the fee-shifting provision limited to actions under the jurisdiction of a court of law. Section 1132(g)(1) authorizes fees in any action under this subchapter. Thus, the use of the term action in subsection (g)(1) must be defined coterminously with the use of the term throughout the subchapter. Section 1132(e) grants exclusive jurisdiction to United States District Courts over civil actions under this subchapter that involve persons designated by a separate provision of ERISA. It moreover grants concurrent jurisdiction to federal and state courts over other types of actions. Thus, by designating that only specific courts of law have jurisdiction over the actions described in § 1132(e), the subchapter strongly implies that the word action denotes formal proceedings under the jurisdiction of a court of law. 4 36 Two Circuits have addressed whether pre-litigation fees and costs are authorized by ERISA, and both have concluded that they are not. First, in Cann v. Carpenters' Pension Trust Fund, 989 F.2d 313 (9th Cir.1993), the Ninth Circuit disallowed an award of fees incurred in administrative proceedings prior to a suit being filed in a district court, construing ERISA as limiting the award to fees incurred in the litigation in court. Id. at 316. The word `action' generally designates only proceedings in court, not administrative proceedings even though necessary and valuable. Id. Similarly, the Sixth Circuit in Anderson v. Procter & Gamble Co., 220 F.3d 449 (6th Cir.2000), held that a plaintiff who prevailed in securing benefits during administrative proceedings before her plan administrator could not recover fees for that proceeding. Because Anderson is requesting attorneys' fees only for exhaustion of administrative remedies, and because she prevailed on her claims at the administrative stage and thus did not seek review in the courts, she could not prevail in her request for fees. Id. at 454. In both of these cases, the courts emphasized that neither the text nor the policies underlying ERISA support the award of pre-litigation costs. Id. at 454-56; Cann, 989 F.2d at 316-17; see also McElwaine v. U.S. West, Inc., 176 F.3d 1167, 1172 n. 8 (9th Cir.1999) (noting that [f]ees are not available for the administrative portion of an ERISA appeal that preceded litigation in the district court); Gustafson v. Kennametal, Inc., No. 00-CIV-7396, 2001 WL 25722, at  (S.D.N.Y. Jan. 10, 2001) ([29 U.S.C. 1132(g)(1)] does not grant individuals the right to compensation for attorneys' fees incurred during the administrative portion of the claim process.); Aminoff v. Ally & Gargano, Inc., 95-CIV-10535, 1996 WL 675789, at  (S.D.N.Y. Nov. 21, 1996) (Under the plain language of [29 U.S.C. § 1132(g)(1)], plaintiffs cannot recover fees incurred in settling the dispute because no litigation was ever instituted.). 37 Although the Supreme Court has yet to address this question in the ERISA context, its cases interpreting other fee-shifting statutes support our conclusion. In New York Gaslight Club, Inc. v. Carey, 447 U.S. 54, 61, 100 S.Ct. 2024, 64 L.Ed.2d 723 (1980), the Court found that Title VII of the Civil Rights Act of 1964 allows the recovery of costs incurred prior to suit being brought in a court of law. The Court noted that Title VII's fee-shifting statute authorizes fees for legal work in any action or proceeding. 42 U.S.C. 1988(b). Congress' use of the broadly inclusive disjunctive phrase `action or proceeding' indicates an intent to subject the losing party to an award of attorney's fees and costs that includes expenses incurred for administrative proceedings. N.Y. Gaslight Club, 447 U.S. at 61, 100 S.Ct. 2024. Although not dispositive, we note that the text of ERISA contains no similar reference to proceedings, providing strong evidence that Congress did not intend ERISA to have as broad a reach as Title VII. Compare id. at 61, 100 S.Ct. 2024 with Cann, 989 F.2d at 317. 38 Peterson contends that the Supreme Court decisions in Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 478 U.S. 546, 106 S.Ct. 3088, 92 L.Ed.2d 439 (1986), and Sullivan v. Hudson, 490 U.S. 877, 109 S.Ct. 2248, 104 L.Ed.2d 941 (1989), support the award of pre-litigation fees and costs. Although it is true that in Delaware Valley the Court held that Congress's use of only the word action rather than action or proceeding was not a sufficient indication that Congress intended [the fee-shifting provision] to apply only to judicial, and not administrative, proceedings, Delaware Valley, 478 U.S. at 559, 106 S.Ct. 3088, it is important to note in both Delaware Valley and Hudson, the Court authorized only the award of fees incurred during an administrative proceeding that occurred after a court of law assumed jurisdiction over the case. See id. at 558, 106 S.Ct. 3088; 490 U.S. at 879, 109 S.Ct. 2248. Thus, neither case supports the proposition that ERISA should be interpreted as providing for pre-litigation fees and costs. 39 In sum, both the text of § 1132(g)(1) and cases interpreting that provision lead to the conclusion that ERISA authorizes the award only for fees incurred in relation to a suit filed in a court of competent jurisdiction. Therefore, Peterson may not collect fees incurred during the initial administrative process. 5 40