Court Opinion

ID: 9488255
Source: CourtListenerOpinion
Date Created: 2023-08-05 12:40:27.661751+00
Date Added: 2024-06-11T17:52:47.248047
License: Public Domain

RANDOLPH, Circuit Judge,
dissenting:
Without specifying any standards, 29 U.S.C. § 1132(g)(1) vests “discretion” in the district courts to award attorney’s fees in ERISA cases: “the court in its discretion may allow a reasonable attorney’s fee and costs of action to either party.” To this exceedingly general provision, a provision like many other federal fee-shifting statutes, my colleagues now attach the five-factor “test” composed in Hummell v. S.E. Rykoff & Co., 634 F.2d 446, 453 (9th Cir.1980). The Hummell test, we are told, is “exacting” but “neither exclusive nor quantitative” (maj. op. at 203, 206), which means there may be other, unidentified factors lurking about, and that the factors already on the Hummell list carry no particular weight.
For the purpose of guiding discretion the majority has thus adopted what, in Chief Judge Posner’s words, is “the essential condition for standardless, discretionary judgment: a multifactor test with no weights on the factors.” Short v. Belleville Shoe Mfg. Co., 908 F.2d 1385, 1394 (7th Cir.1990) (concurring opinion). One might suppose that the majority’s engrafting a standardless formula onto a standardless statute in the interests of precision and “uniformity” (maj. op. at 203) is nothing more than a harmless exercise in delusion. But a bit more is involved. Multifactor tests of the Hummell variety may be easily manipulated. Whatever is done with Hummell, it is still the district courts, not the courts of appeals, who are supposed to be making the discretionary judgments. The majority sees things differently. Using Hummell to bestow discretion on itself, the majority manifests its desire to give ERISA plaintiffs attorney’s fees and then all but instructs the district court to make an award to the plaintiff in this case.
Consider the majority’s handling of deterrence, number 3 on the Hummell list and, so the majority supposes, “critical” despite its lack of any particular weight. Maj. op. at 208. What exactly is it that is getting deterred? Insurance companies know they had better explain to insureds that group policies about to expire can be converted into individual policies. Colonial was well aware of this long before the merits decision in this case (Eddy v. Colonial Life Ins. Co. of Am., 919 F.2d 747 (D.C.Cir.1990)). Insurance companies also know that if they do not explain, they may be hit with medical expenses incurred at a time when the insured’s policy had expired, at a time in other words when they were not collecting premiums. There is thus every reason for insurers to give the right advice and no reason why they would not do so. Colonial Life was already following the correct practice, which is why the original panel found it “inexplicable” that Eddy got the wrong advice. Eddy, 919 F.2d at 752. In any event, adding attorney’s fees cannot appreciably alter the deterrence calculus and the district court rightly recognized as much: “[T]he plaintiff’s victory on the merits is sufficient deterrence for insurers and ERISA trustees in similar cases. The prospect of a fee award provides no *211significant extra deterrence.” Eddy v. Colonial Life Ins. Co. of Am., 844 F.Supp. 790, 792 (D.D.C.1994).
One would have thought that the district court’s judgment on this matter was well within the range of its discretion. Not so. The majority sends the case back because the district court supposedly did not pay enough attention to something called “deterring the continuing injury that results when an insurer persists in its denial of ERISA rights,” (maj. op. at 208). “Continuing injury”? Eddy did not suffer any physical harm at the hands of Colonial Life. Eddy said he had received misleading advice, despite the company’s routine practice of informing those who were about to lose their group insurance coverage of their option to convert to an individual policy. Colonial put on a strong case that Eddy had not been misled. The majority’s so-called “continuing injury” thus must be Colonial’s defending against an ultimately successful claim the company had good reason to believe was not well-founded.
In effect, then, the majority has wielded the Hummell test to create the sort of presumption in favor of prevailing plaintiffs the Supreme Court rejected in Fogerty v. Fantasy, Inc., — U.S. -, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994). If awards of attorney’s fees follow plaintiffs’ victories, one might say — as my colleagues do — that this will deter defendants from defending lawsuits. But what of prevailing defendants? Like the fee-shifting statute in Fogerty, § 1132(g)(1) is supposed to be neutral with respect to parties. “Prevailing plaintiffs and prevailing defendants,” the Supreme Court held, “are to be treated alike.” — U.S. at-, 114 S.Ct. at 1033. Not according to the majority opinion in this case. The majority thinks awards of attorney’s fees should be used to deter denials of “ERISA rights.” Under that skewed vision, no prevailing defendant will ever get any Hummell points — whenever the defendant wins, it follows that no ERISA rights have been denied and thus no deterrence is needed.
The majority’s other Hummell factors are just as tilted in favor of plaintiffs. The courts must consider the “losing party’s ability to satisfy a fee award,” Grand Union Co. v. Food Employers Labor Relations Ass’n, 808 F.2d 66, 72 (D.C.Cir.1987). Maj. op. at 206. In the typical ERISA suit between a corporate defendant and an individual plaintiff, it is easy to see how this one will come out. Hummell number 4 is in the same vein — “the value of the victory to the plan participants and beneficiaries,” Grand Union, 808 F.2d at 72. Once again, if Colonial had won, it would have garnered no points under this heading. My colleagues chide the district court for misunderstanding factor 4. The panel’s original decision, they say, conferred a benefit by “providing a clear statement of the law of this circuit and making the law clear to Colonial Life itself,” (maj. op. at 209). This is demonstrably incorrect. The original case turned, as I have said, entirely on a factual dispute: Eddy claimed he had been misled; Colonial denied having misled him. The panel’s statement of “the law” merely repeated what Colonial already knew to be its obligation; indeed, the panel relied on the company’s existing practice, a practice the panel described as one “fully comport[ing]” with Colonial’s “fiduciary duty under ERISA,” 919 F.2d at 752. The panel’s decision, clear as it may have been, did not change the law and it did not change Colonial’s method of conducting business. Where then is the benefit to anyone other than the plaintiff? Here again, the majority’s result may be explained only on the basis that, despite the Supreme Court’s ruling in Fogerty, it is presuming sub silentio that prevailing plaintiffs should get attorney’s fee awards in ERISA cases.
Congress sometimes enacts statutes empowering agencies to promulgate “appropriate” standards and take certain factors “into account.” We routinely hold that this sort of legislation confers quite “broad” discretion, requiring only that the agency consider the factors in whatever structure it sees fit. Small Refiner Lead Phase-Down Task Force v. EPA 705 F.2d 506, 515-16 (D.C.Cir.1983); Weyerhaeuser Co. v. Costle, 590 F.2d 1011, 1046 (D.C.Cir.1978). I see no principled reason why district courts should not be accorded the same respect when they administer § 1132(g)(1). The district court in this case went down the list, evaluated the consid*212erations bearing on attorney’s fees and concluded that Eddy would not be given an award. Nothing was overlooked. The court’s decision should have been affirmed. The majority, however, remands the case because it disagrees about what may be, in the end, largely imponderables. Instead of giving deference, it usurps the district court’s discretion. And instead of applying § 1132(g)(1) in a neutral fashion, as the district courts must, it tilts decidedly in favor of the plaintiffs’ side of these controversies.