On May 24, 2010, the U.S. Supreme Court ruled that a claimant seeking benefits under an ERISA-covered plan need not prove she was a “prevailing party” in order to be eligible for attorney’s fees under ERISA, specifically 29 U.S.C. §1132(g)(1). The nearly unanimous decision in Hardt v. Reliance Standard Ins. Co., No. 09-448, paves the way for district courts to award attorney’s fees to plaintiffs who show only some success on the merits (such as a remand to the plan administrator), but not an outright victory.
The case involved a participant, Hardt, who based on impairments related to carpal tunnel syndrome, requested long-term disability benefits under the plan. Reliance denied Hardt’s claim. The district court held that Reliance failed to consider all the relevant medical evidence and remanded the case to the plan administrator for reconsideration of Hardt’s claim. The court added that if Reliance did not adequately consider all the evidence within 30 days of its order, “judgment will be issued in favor of Ms. Hardt.” On remand, Reliance awarded her long-term disability benefits. Hardt then sought attorney’s fees under ERISA, and the district court awarded her $39,149 in attorney’s fees. Reliance appealed. The Fourth Circuit vacated the fee award holding the district court order remanding Hardt’s benefits claim to Reliance did not make her a “prevailing party.” The court found that only plaintiffs who obtain enforceable judgments on the merits or secure court-ordered consent decrees are entitled to recover attorney’s fees under ERISA citing, Buckhannon Bd. & Care Home Inc. v. W. Va. Dep’t of Health & Human Res., 532 U.S. 598 (2001).
The Supreme Court overturned the Fourth Circuit’s decisi on. Reading the plain language of ERISA, the Supreme Court found no basis for the assertion that ERISA’s fee provision requires “prevailing party” status. The Court said that its “prevailing party” precedents do not govern here because that term of art does not appear in Section 502(g). The Court added that ERISA unambiguously allows a court to award attorney’s fees “in its discretion…to either party.” The Court also found that while a court’s use of the five-factor test is permissible when deciding whether to award attorney’s fees, consideration of the five factors is “not required for channeling a court’s discretion when awarding fees under this section.” Instead, the Court found a party must show “some degree of success on the merits” that is not “trivial” or “purely procedural” before a court may award fees. The Court found that Petitioner Hardt had achieved some success on the merits, and that the district court had properly exercised its discretion to award her fees. Thus, the Court reversed the decision of the Fourth Circuit.
Following the Hardt decision, district courts will be able to award attorney’s fees to plaintiffs who obtain a remand or other decision less than a total victory but sufficient to show some success on the merits. Significantly, though, Hardt also seems to contradict the cases limiting, overtly or otherwise, the right of prevailing defendants to recover attorney’s fees. If the lower courts construe Hardt as rejecting previous multi-factor tests and lessening the showing required to award attorney’s fees to the winner in an ERISA case, the increased availability of fee awards to defendants in ERISA actions could change the dynamics of ERISA litigation. As district courts still have discretion to award fees, however, whether Hardt will make it easier for successful defendants to get fees remains to be seen.