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Board of Trustees of The Automobile Mechanics' Local No. 701 Union and Industry Welfare Fund v. Brown

United States District Court, N.D. Illinois, Eastern Division

April 23, 2015

BOARD OF TRUSTEES OF THE AUTOMOBILE MECHANICS' LOCAL NO. 701 UNION AND INDUSTRY WELFARE FUND, Plaintiff,
v.
ROBERT LEE BROWN and CASSANDRA SORENSEN, Defendants.

MEMORANDUM OPINION AND ORDER

JOHN W. DARRAH, District Judge.

On October 8, 2014, this Court entered a Stipulated Judgment Order, whereby the parties agreed to an entry of Judgment in favor of Plaintiff and against Defendant Robert Lee Brown in the amount of $28, 881.44. Plaintiff has filed a Motion for Attorney's Fees, pursuant to Section 502(g)(1) of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(g)(1). Brown has filed a Cross-Motion for Attorney's Fees, which seeks only to offset any fees awarded to Plaintiff and does not independently seek fees if none are awarded to Plaintiff.

BACKGROUND

In September 2004, Brown suffered a work-related injury. (Compl. ¶ 7.) His welfare benefit plan, the Automobile Mechanics' Local No. 701 Union and Industry Welfare Fund ("the Plan"), expended $28, 881.44 in medical expenses and $6, 847.11 in disability benefits, for a total of $35, 728.55, on his behalf. (Id. ¶¶ 7-8.) Brown subsequently initiated a worker's compensation claim based on his injuries and received a settlement payment. In December 2012, Plaintiff, acting on behalf of the Plan, filed this action for reimbursement of the benefits paid to Brown. Plaintiff alleged that, pursuant to the subrogation and reimbursement provision of the Plan's contract, Brown was required to reimburse the Plan in the event that Brown recovered money for his injuries from another source. (Id. ¶¶ 10-12.)

On April 16, 2013, the Court granted Brown's motion for leave to proceed in forma pauperis and appointed counsel to represent Brown. On October 30, 2013, upon Brown's motion, the Court dismissed the unjust enrichment and affirmative injunction claims from the Complaint. Following exchange of discovery, Brown made a Rule 68 Offer of Judgment to Plaintiff, representing the $28, 881.44 in medical benefits the Plan expended but not the disability benefits, which Plaintiff accepted.[1] The parties, however, could not agree on the issue of attorney's fees to be awarded.

LEGAL STANDARD

Pursuant to 29 U.S.C. § 1132(g)(1) of ERISA, "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). Under ERISA, "there is a modest presumption' in favor of awarding fees to the prevailing party, but that presumption may be rebutted." Senese v. Chicago Area I.B. of T. Pension Fund, 237 F.3d 819, 826 (7th Cir. 2001); see also Jackman Fin. Corp. v. Humana Ins. Co., 641 F.3d 860, 866 (7th Cir. 2011). In Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 255 (2010), the Supreme Court held that ERISA's provision is not limited only to the prevailing party; rather, the court may award fees to any party that has achieved "some degree of success on the merits." Id. Once a party has demonstrated "some degree of success on the merits, " courts then "must determine whether fees are appropriate." Pakovich v. Verizon Ltd. Plan, 653 F.3d 488, 494 (7th Cir. 2011) (citing Huss v. IBM Med. & Dental Plan, 418 F.Appx. 498, 511-12 (7th Cir. 2011)).

The Seventh Circuit has articulated two tests for analyzing the propriety of a fee request. Quinn v. Blue Cross and Blue Shield Ass'n, 161 F.3d 472, 478 (7th Cir. 1998). Under the first test, the following five factors are considered:

(1) the degree of the offending parties' culpability or bad faith; (2) the degree of the ability of the offending parties to satisfy personally an award of attorneys' fees; (3) whether or not an award of attorneys' fees would deter other persons acting under similar circumstances; (4) the amount of benefit conferred on members of the pension plan as a whole; and (5) the relative merits of the parties' positions.

Kolbe & Kolbe Health & Welfare Benefit Plan v. Med. Coll. of Wisconsin, Inc., 657 F.3d 496, 505-06 (7th Cir. 2011) (quoting Quinn, 161 F.3d at 478).

Under the second test, the court looks to whether "the losing party's position was substantially justified.'" Kolbe & Kolbe, 657 F.3d at 506 (quoting Quinn, 161 F.3d at 478). This test looks at "a party's posture during the case as a whole" and the "entire litigation background." Temme v. Bemis Co., 762 F.3d 544, 551 (7th Cir. 2014). However, both tests essentially ask the same question: "was the losing party's position substantially justified and taken in good faith, or was that party simply out to harass its opponent?" Bowerman v. Wal-Mart Stores, Inc., 226 F.3d 574, 593 (7th Cir. 2000) (citation omitted); see also Kolbe & Kolbe, 657 F.3d at 505-06 (describing both tests and observing that they seek the same information); see also Pakovich, 653 F.3d at 494 ("To award fees, court[s] must find the non-prevailing party's litigation position was not substantially justified.'") (quoting Huss, 418 F.Appx. at 512). For this reason, the five-factor test is used to "structure or implement, rather than to contradict" the substantially justified test. Lowe v. McGraw-Hill Co., 361 F.3d 335, 339 (7th Cir. 2004).[2]

ANALYSIS

Brown concedes that Plaintiff has achieved success on the merits because the parties agreed to the Stipulated Judgment Order. Brown argues, however, that an award of attorney's fees is not appropriate under either test outlined above. In his Cross-Motion, Brown contends that if fees are awarded, they should be offset by his attorney's fees because he also achieved some success on the merits. The ...


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