Trial court’s reduced fee award to pension fund not abuse of discretion

A trial court did not abuse its discretion when it reduced the fee award requested by a multiemployer pension fund due to the plan’s limited success on the merits, as well as the proportional size of the fee award amount as compared to the damage award, the U.S. Court of Appeals in Boston (CA-1) has ruled.

A union pension fund sued an employer for contributions due under a collective bargaining agreement, alleging the employer failed to make required contributions in violation of ERISA and the Labor Management Relations Act. The trial court ruled in June 2011 that the fund was entitled to unpaid contributions, though less than the fund had requested. About six weeks later the trial court awarded fees and costs to the fund, but again in smaller amounts than requested. In an initial appeal, the First Circuit threw out the damage award but did not rule on the fee award.

The U.S. Supreme Court reversed the First Circuit earlier this year, holding that because the fund’s notice of appeal was untimely as to the damage award, the First Circuit lacked jurisdiction (see Ray Haluch Gravel Co. v. Cent. Pension Fund of the Int’l Union of Oper’g Eng’rs & Part’g Emp’rs, 134 S. Ct. 773 (2014). Thus the trial court’s damage award was final, and the First Circuit was instructed to turn to the fund’s challenge of the award of fees and costs.

Under ERISA Sec. 502(g)(2)(D), a trial court must award “reasonable” attorney’s fees and costs to a pension fund prevailing in a judgment under ERISA Sec. 515. Appellate courts review the ERISA fee award determination of a trial court under the “highly deferential” abuse of discretion standard.
The trial court first determined the fund attorneys’ lodestar amount (i.e., the number of reasonably worked hours multiplied by a reasonable hourly rate) to be $84,657. It then reduced that amount to $18,000, in addition to an expense reimbursement of $16,688.

While the appellate court commented that this reduction of the lodestar was “unusually large,” it nevertheless found the trial court’s two-pronged rationale for the reduction to be within that court’s discretion. First, the fund’s victory on the merits was a partial one: it was awarded about $27,000 in damages, having sought nearly $200,000. Second, the trial court noted the initial lodestar amount ($84,657) dwarfed the size of the damage award. The trial court was within its discretion to consider proportionality as one factor in determining the fee award, the appellate court explained. Case law cited by the fund simply says trial courts are not required to consider proportionality, not that they are forbidden from so doing.

Source: Central Pension Fund of the International Union of Operating Engineers and Participating Employers v. Ray Haluch Gravel Co. (CA-1).

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