On May 24, 2010, the U.S. Supreme Court issued its decision in Hardt v. Reliance Standard Life Insurance Company, which decisively interpreted the parameters of ERISA's discretionary fee-shifting provision, 29 U.S.C. § 1132(g)(1). In a unanimous decision (Justice Stevens concurring), the Supreme Court held that ERISA § 502(g)(1) permits lower courts the discretionary authority to award attorney's fees to either party, so long as the party has "achieved 'some success on the merits.'" [Quoting Ruckelshaus v. Sierra Club , 463 U.S. 680, 694 (1983)]. The Court reached this decision by interpreting § 502(g)(1)'s "plain and unambiguous statutory language" and concluding that § 502(g)(1) does not limit the award of statutory attorney's fees to prevailing parties, but instead, gives courts "'discretion' to award attorney's fees 'to either party.'" [Emphasis in original]. As part of this holding, the Court commented that, based on the language contained in ERISA's other feeshifting provision (§ 502(g)(2)(D)), which permits the recovery of attorney's fees for "plaintiffs who obtain 'a judgment in favor of the plan,'" Congress clearly intended to give either party the ability to recover attorney's fees pursuant to § 502(g)(1).
After concluding that either party may recover fees pursuant to § 502(g)(1), the Court addressed the standard under which such fees may be recovered. Based on its prior precedent in Ruckelshaus, the Court held that although a party need not be a "prevailing party" in the traditional sense of the phrase, a party must have had "some degree of success on the merits." To satisfy the "some degree of success on the merits" standard, a claimant must have achieved more than "'trivial success on the merits' or 'a purely procedural victor[y].'" [Quoting Ruckelshaus, alterations in original]. Rather, a district court may exercise its discretion to award attorney's fees when it "can fairly call the outcome of the litigation some success on the merits ... ."
Within the context of the plaintiff's claim for attorney's fees, the Supreme Court reversed the Court of Appeal's decision vacating the district court's attorney's fees award because, even though the plaintiff failed to prevail on summary judgment, she obtained a judicial order remanding the defendant's benefits decision and compelling the defendant to re-review the entirety of the claim for benefits within 30 days, "[o]therwise, judgment [would] be issued in favor of [the plaintiff]." According to the Court, this decision was "far more than 'trivial success on the merits' or a 'purely procedural victory'" and thus, the district court properly exercised its discretion when it awarded the plaintiff her attorney's fees under § 502(g)(1).
Notably, after adopting the "some success on the merits" standard for attorney's fees awarded pursuant to ERISA § 502(g)(1), the Court commented in footnote 8, somewhat cryptically, that it was not "foreclosing the possibility" that the Courts of Appeals' universally-adopted five-factor test for attorney's fees disputes may continue to have utility. However, the Court did not describe such utility and, in an earlier portion of the opinion, observed that "[b]ecause the five factors bear no obvious relation to § 1132(g)(1)'s text or to [the Court's] fee-shifting jurisprudence, [the five factors] are not required for channeling a court's discretion when awarding fees under [§ 502(g)(1)]."
Because the outcome of the action was largely dependent on the specific facts of the Hardt case, the "some degree of success on the merits" standard enunciated by the Court will no doubt continue to be litigated and clarified through future decisions in the lower courts.