Court Opinion

ID: 75246
Source: CourtListenerOpinion
Date Created: 2010-04-26 09:08:01+00
Date Added: 2024-06-11T12:38:36.892365
License: Public Domain

[ PUBLISH]

                  IN THE UNITED STATES COURT OF APPEALS
                                                                                FILED
                            FOR THE ELEVENTH CIRCUIT                  U.S. COURT OF APPEALS
                             ________________________                   ELEVENTH CIRCUIT
                                                                            APR 20, 2001
                                 Nos. 99-11736, 99-13148                 THOMAS K. KAHN
                               ________________________                       CLERK

                             D. C. Docket No. 97-00182-CV-4

CLARENCE EDGAR MURPHY,

                                                                    Plaintiff-Appellee,

                                             versus

RELIANCE STANDARD LIFE INSURANCE
COMPANY,

                                                                    Defendant-Appellant.

                               ________________________

                      Appeals from the United States District Court
                          for the Southern District of Georgia
                            _________________________

                                       (April 20, 2001)

Before BIRCH and BLACK, Circuit Judges, and NESBITT*, District Judge.**

BLACK, Circuit Judge:

       *
         Honorable Lenore C. Nesbitt, U.S. District Judge for the Southern District of Florida,
sitting by designation.
       **
       Judge Nesbitt did not participate in this decision. This decision is rendered by a
quorum. 28 U.S.C. § 46(d).
       Appellant Reliance Standard Insurance Company appeals from the district

court’s order awarding Appellee Clarence Edgar Murphy disability benefits,

attorney’s fees, and costs under the Employee Retirement Income Security Act of

1974 (ERISA), 29 U.S.C. §§ 1001-1461. We affirm in part, reverse in part, and

remand.

                                                I.

       Appellee filed this action to recover disability benefits under ERISA. The

district court determined Appellee was entitled to $300,000 in benefits from

Appellant. In addition, the court determined Appellee was entitled to a reasonable

attorney’s fee and costs pursuant to ERISA’s attorney’s fee provision, 29 U.S.C.

§ 1132(g)(1).1 In calculating the fee, the district court considered the itemized costs

submitted by Appellee’s attorney and the terms of the contingent fee contract agreed

to by Appellee and his attorney.

       On appeal, Appellant raises the following three issues: (1) whether the district

court properly determined Appellee was entitled to benefits; (2) whether the district

court properly determined Appellee was entitled to a reasonable attorney’s fee and

costs; and (3) whether the district court properly considered the contingency fee

       1
         29 U.S.C. § 1132(g)(1) provides in relevant part: “In 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.”

                                                 2
agreement in calculating the attorney’s fee. We affirm without discussion the first two

issues raised by Appellant. See 11th Cir. R. 36-1. For the reasons discussed below,

we reverse and remand for recalculation of the fee award without an enhancement for

contingency.

                                          II.

      In calculating the attorney’s fee award, the district court considered the terms

of the contingent fee contract agreed to by Appellee and his attorney. The court did

so in reliance on Curry v. Contract Fabricators Inc. Profit Sharing Plan, 891 F.2d 842

(11th Cir. 1990). In Curry, this Court held that the district court did not abuse its

discretion by enhancing an award for attorneys’ fees based on a contingency fee

arrangement, explaining that “without such enhancement ERISA cases would not

attract competent counsel.” 891 F.2d at 850. This Court’s holding in Curry, however,

predates the Supreme Court’s ruling in City of Burlington v. Dague, 505 U.S. 557, 112

S. Ct. 2638 (1992), which called into question the use of contingency enhancements

under federal fee-shifting statutes. Accordingly, we must reconsider, in light of

Dague, whether a district court may consider a contingency fee arrangement when

calculating a fee award under ERISA’s attorney’s fee provision.

      In Dague, the district court, after ruling for the respondents on the merits,

determined that the respondents were entitled to reasonable attorneys’ fees under the

                                          3
relevant statutes, 33 U.S.C. § 1365(d) (Clean Water Act) and 42 U.S.C. § 6972(e)

(Solid Waste Disposal Act). The district court calculated the fee award by enhancing

the lodestar amount by 25%. The district court reasoned that the respondents’

attorneys were retained on a contingent-fee basis and that, absent a fee enhancement,

the respondents would have faced substantial difficulties in obtaining suitable counsel.

The Court of Appeals affirmed the fee award. The Supreme Court reversed, holding,

inter alia, that an enhancement for contingency is not permitted under the fee-shifting

provisions of the Clean Water Act and the Solid Waste Disposal Act. Dague, 505

U.S. at 567, 112 S. Ct. at 2643-44.

        In Dague, the Court noted that the fee-shifting language in the Clean Water Act

and Solid Waste Disposal Act “is similar to that of many other federal fee-shifting

statutes” and that “our case law construing what is a ‘reasonable’ fee applies

uniformly to all of them.” 505 U.S. at 562, 112 S. Ct. at 2641. The language of the

fee provisions at issue in Dague is substantially similar to the fee provision at issue

in this case, and the rationale set forth in Dague applies with equal force to actions

brought under ERISA.2 Accordingly, we hold that a contingency fee enhancement is

       2
         Both fee shifting provisions at issue in Dague authorized a court to “award costs of
litigation (including reasonable attorney . . . fees)” to a “prevailing or substantially prevailing
party.” 42 U.S.C. § 6972(e); 33 U.S.C. § 1365(d). The statutory language in the fee provision of
ERISA, at issue in this case, provides that “the court in its discretion may allow a reasonable
attorney’s fee and costs of action to either party.” 29 U.S.C. § 1132(g)(1).

                                                4
improper under ERISA’s attorney’s fee provision. Our holding is in accord with other

circuits that have addressed this issue. See e.g., Elmore v. Cone Mills Corp., 23 F.3d

855, 863 n.8 (4th Cir. 1994) (noting the applicability of Dague to ERISA’s attorney’s

fee provision and the inappropriateness of enhancement based on risk contingency);

Cann v. Carpenters’ Pension Trust Fund for Northern Cal., 989 F.2d 313, 318 (9th

Cir. 1993) (applying Dague to ERISA’s attorney’s fee provision, and holding fee

could not properly be enhanced for contingency); Drennan v. General Motors Corp.,

977 F.2d 246, 254 (6th Cir. 1992) (stating attorneys’ fees were invalid to the extent

they were enhanced under ERISA, and reversing and remanding for findings of fact

and statement of reasons).3

                                               III.

       We AFFIRM the district court’s determination that Appellee is entitled to

recover $300,000 in disability benefits under ERISA. We AFFIRM the district court’s

determination that Appellee is entitled to a reasonable attorney’s fee and costs. We

       3
         We are aware that the Seventh Circuit has permitted an enhancement for contingency in
an ERISA class action that resulted in the creation of a common fund. See Cook v. Niedert, 142
F.3d 1004, 1015 (7th Cir. 1998) (risk multipliers are appropriate in cases that are initiated under
ERISA and settled with the creation of a common fund); Florin v. Nationsbank of Ga., 34 F.3d
560, 564-65 (7th Cir. 1994) (same). In permitting the enhancement, however, the Seventh
Circuit made clear that the award in a common fund case is made pursuant to the principles of
equity, and not under ERISA’s fee provision. See Cook 142 F.3d at 1014 (noting “there is ample
reason to conclude that Congress (and the Supreme Court in Dague) did not intend to foreclose
resort to equitable powers in common fund cases”). The case before us today is not an ERISA
class action resulting in the creation of a common fund. Thus, we need not address whether a
court, acting pursuant to the principles of equity, could apply an enhancement in such a case.

                                                 5
REVERSE and REMAND for recalculation of the fee award, without an enhancement

for contingency.

      AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

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