Employment Law Report
“Some Degree of Success”: ERISA and Awards of Attorneys’ Fees
The general American rule is simply this: every party in an action is responsible for his or her own attorneys’ fees. But there are statutes that provide for awards of attorneys’ fees in the context of specific actions. Of course, the language of these provisions is far from uniform, though most only allow the prevailing party to recover such costs.
The Employee Retirement Income Security Act, or ERISA, is not so specific. ERISA provides that “the court in its discretion may allow a reasonable attorney’s fee and costs of action to either party.” In Hardt v. Reliance Standard Life Insurance Co., issued May 24, 2010, the Supreme Court took up the issue of whether this statute means what it says, or whether it contains an implication that a party must prevail in order to receive such an award. Ms. Hardt had filed a suit against Reliance, her employer’s long-term disability insurance provider. Though the district court ruled against her motion for summary judgment, it found compelling evidence that she was completely disabled, and remanded the case back to Reliance so that they might reconsider their previous denial of her claim. Upon reconsideration, Reliance granted her claim. Ms. Hardt then initiated this action for attorneys’ fees under ERISA. She won at the district court level, but lost on appeal because she had not fully prevailed on the merits in her original action.
On review, the Court held that, despite the American tradition, the statute contained no implied requirement that a party prevail on the merits of its case before it would be eligible to receive an award of attorneys’ fees. Yet the Court did not follow this strict textualist argument to its logical conclusion; instead, it relied on a previous case with similar circumstances, Ruckelshaus v. Sierra Club (1983). Ruckelshaus dealt with a similarly-worded statute granting attorney’s fees without an explicit prevailing party requirement. However, as Congress did not indicate in that statute that it “meant to abandon historic fee-shifting principles and intuitive notions of fairness,” the Court held that a party is eligible to receive such fees only as long as it obtains “some degree of success on the merits.”
In this case, the Court applied that standard to find that Ms. Hardt had obtained the requisite degree of success in the district court’s order to remand, even though it denied her motion for summary judgment. That the district court had ruled in a way that was favorable to Ms. Hardt’s underlying complaint against Reliance was sufficient–she had achieved “some degree of success.”
The heart of Ms. Hardt’s original claim in the district court was that Reliance had not properly reviewed all of the evidence when it initially denied her claim. Now, even though the district court never found directly in her favor, Reliance is saddled with paying her attorneys’ fees as a result of its essentially admitted oversight. Even though the Court was careful to indicate that the result in this case was strongly fact-dependent, the result clearly seems to lower the bar to future actions for attorneys’ fees in this area of the law.