Court Opinion

ID: 6930931
Source: CourtListenerOpinion
Date Created: 2022-07-24 00:00:06.492253+00
Date Added: 2024-06-11T16:07:10.856998
License: Public Domain

BOOCHEVER, Circuit Judge,
dissenting:
Because I believe ERISA does not authorize an award of attorney’s fees to Kennesaw, I respectfully dissent.
Section 1132(g)(1) of ERISA provides: “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.” 29 U.S.C. § 1132(g)(1) (1988). The plain language of the statute clearly limits awards to actions brought by a participant, beneficiary, or fiduciary. CMA is none of these. The words of the statute thus do not justify awarding fees to Kennesaw.
Nothing in the legislative history of ERISA suggests an intent to authorize fee awards beyond what the plain language allows. The enforcement provisions of ERISA were
designed specifically to provide both the Secretary and participants and beneficiaries with broad remedies for redressing or preventing violations of [ERISA].... The intent of the Committee is to provide the full range of legal and equitable remedies available in both state and federal courts and to remove jurisdictional and procedural obstacles which in the past appear to have hampered effective enforcement of fiduciary responsibilities under state law or recovery of benefits due to participants.
S.Rep. No. 127, 93d Cong., 2d Sess. 35, reprinted in 1974 U.S.C.C.A.N. 4639, 4838, 4871. The few references to the attorney’s fees provision state that fees are available in actions by participants or beneficiaries. H.R.Conf.Rep. No. 1280, 93d Cong., 2d Sess. 327, reprinted in 1974 U.S.C.C.A.N. 5038, 5107; S.Rep. No. 383, 93d Cong., 2d Sess. 106, reprinted in 1974 U.S.C.C.A.N. 4890, 4989; H.R.Rep. No. 533, 93d Cong., 2d Sess. 21, reprinted in 1974 U.S.C.C.A.N. 4639, 4659. No mention is made of the wider equitable goals cited by the majority.
This court has previously relied on the plain language of § 1132(g)(1) in refusing to award fees when the action was not “by” an ERISA participant, beneficiary, or fiduciary. In M & R Investment Co. v. Fitzsimmons, 685 F.2d 283, 288 (9th Cir.1982), we affirmed the district court’s denial of attorney’s fees to ERISA trustees who successfully defended an action by an investment company alleging breach of a loan contract. We agreed with the district court that the “action by M & R was not ‘by’ a participant, beneficiary, or fiduciary, and therefore ... the attorneys’ fees section does not apply.” Id. See also Saladino v. I.L.G.W.U. Nat’l Retirement *753Fund, 754 F.2d 473, 477 (2d Cir.1985) (successful plaintiff who was not ERISA “participant” not entitled to attorney’s fees under § 1132(g)(1)). The same reasoning should apply in this ease.
Further, just two years ago we reversed an award of ERISA attorney’s fees to a third-party defendant insurer because the insurer was not an ERISA participant, beneficiary, or fiduciary. The plaintiff in Downey Community Hospital v. Wilson, 977 F.2d 470 (9th Cir.1992) was an ERISA plan employer who sued several defendants who had provided health care under the plan. The employer prevailed and won attorney’s fees. We affirmed the fee award to the employer, apparently because it brought the action as an ERISA fiduciary and administrator. Id. at 474 (remanding for recalculation of the amount). But we reversed the award of fees to the third-party insurer defendant, who had prevailed along with the employer. We held that the insurer defendant “does not qualify as a, prevailing party under ERISA because it is neither a participant, fiduciary, nor a beneficiary of. the plan.” Id. at 475. In doing so, we read the purpose and terms of the statute to authorize fee awards only to a prevailing party who is an ERISA participant, fiduciary, or beneficiary. The defendant in Downey was outside those categories and thus could not recover, even though the action was brought by an ERISA fiduciary. Id.
In my view, these precedents require that we reverse the attorney’s fee award for two reasons. First, the action was not brought “by” an ERISA participant, beneficiary, or fiduciary. As we wrote in M & R Investment, “[tjhere is no ambiguity in the wording of the section [1132(g)(1) ]. Perhaps if Congress had considered the situation we are faced with, it might have written the statute differently. However, it did not, and it is not within our power to amend the clear language of the statute.” 685 F.2d at 288. We reaffirmed that reliance on plain language in Downey, 977 F.2d at 474 (“There is no ambiguity in the wording of the statute.”).
Second, as the district court emphasized in its findings of fact [ER 65], Kennesaw, the prevailing defendant, itself is neither a participant, beneficiary, nor fiduciary under ERISA. Downey forbids a fee award to a non-ERISA defendant such as Kennesaw. 977 F.2d at 475.
The majority awards ERISA attorney fees to a prevailing non-ERISA defendant in an action brought by a non-ERISA party. Recognizing that the award is not authorized by the plain language of § 1132(g)(1), the opinion attempts to distinguish M & R Investment and Dourney by pointing out that CMA held itself out to be an ERISA fiduciary, implying that the statute reaches actions brought by parties merely claiming a relation to ERISA. Section 1132(g)(1) simply does not allow such an interpretation, and our cases reinforce the statute’s narrow reach.
Because I believe the district court was not authorized to consider an ERISA fee award in this ease, I would not decide whether the district court abused its discretion in deciding to award fees under the factors set out in Hummell v. S.E. Rykoff & Co., 634 F.2d 446, 453 (9th Cir.1980).
CMA’s litigation posture, however, certainly was not above suspicion. There are other ways, not limited to litigants bringing ERISA actions, to discourage protracted lawsuits based on groundless claims. The majority’s deterrence goal could be better served by an award of attorney fees to Ken-nesaw on the ground that CMA made its ERISA claims in bad faith. See Beaudry Motor Co. v. Abko Properties, Inc., 780 F.2d 751, 756 (9th Cir.1986) (award of fees to prevailing party proper if court finds losing party acted in bad faith), cert. denied, 479 U.S. 825, 107 S.Ct. 100, 93 L.Ed.2d 51 (1986). I would remand the fee award for reconsideration under the bad faith exception to the American rule, which otherwise requires that each party bear its own fees.