Litigation

High Court Rejects ‘Prevailing Party’ Standard In ERISA Fees Case

WASHINGTON, D.C. — (Mealey’s) The U.S. Supreme Court on May 24 ruled that Employee Retirement Income Security Act Section 502(g)(1) provides a district court discretion to award fees and costs to either party as long as that party has achieved “some degree of success on the merits,” rejecting the interpretation that a fee claimant must be a prevailing party to be eligible for such an award (Bridget Hardt v. Reliance Standard Life Insurance Company, No. 09-448, U.S. Sup.).

Justice Clarence Thomas wrote for the court that “[t]he words ‘prevailing party’ do not appear in” Section 502(g)(1) and that nothing in the text “purport[s] to limit the availability of attorney’s fees to a ‘prevailing party.’  Instead, [Section 502(g)(1)] expressly grants district courts ‘discretion’ to award attorney’s fees ‘to either party.’ [Emphasis added.)”

In the instant case, the court held that disability claimant Bridget Hardt was eligible for attorney fees on her claim for disability benefits against Reliance Standard Life Insurance Co., even though Hardt failed to win summary judgment on her benefits claim, because the U.S. District Court for the Eastern District of Virginia “found ‘compelling evidence that Ms. Hardt is totally disabled due to her neuropathy,’ and stated that it was ‘inclined to rule in Ms. Hardt’s favor’ on her benefits claim, but declined to do so before ‘first giving Reliance the chance to address the deficiencies in its’ statutorily mandated ‘full and fair review of that claim.’”

“These facts establish that Hardt . . . achieved ‘some success on the merits,’ and the District Court properly exercised its discretion to award Hardt attorney’s fees in this case,” the court said.  The Supreme Court’s ruling reversed the Fourth Circuit U.S. Court of Appeals’ July 14 per curiam opinion that concluded that the District Court’s remand order was not an enforceable judgment on the merits because the District Court did not award benefits and, therefore, Hardt was not entitled to attorney fees.

Justice John Paul Stevens filed a separate opinion concurring in the judgment.

[Editor's Note:  Full coverage will be in the June issue of Mealey’s Litigation Report: ERISA.  In the meantime, the opinion is available at www.mealeysonline.com or by calling the Customer Support Department at 1-800-833-9844.  Document #54-100609-003Z.  For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]

For more information, call editor Joan Grossman at 610-205-1101, or e-mail her at joan.grossman@lexisnexis.com.