Supreme Court Sets Standard for ERISA Attorney Fees

The U.S. Supreme Court on Monday set a new standard for litigants suing under Section 502(g)(1) of the Employee Retirement Income Security Act (ERISA) to be awarded attorneys’ fees.
Justice Clarence Thomas, writing for the court in Hardt v. Reliance Standard Life Insurance Co., ruled that the person only has to achieve “some degree of success on the merits (of the case)” and not meet the higher standard of being a “prevailing party” to be eligible for the attorneys’ fees award at the court’s discretion.

Thomas pointed out that not only does the ERISA section not include the words “prevailing party,” nothing else limits attorneys’ fee awards in that way. In fact, the section gives the court discretion to award such fees to either party.

The opinion draws a distinction with the language of another provision governing attorneys’ fee awards in certain multiemployer plan cases which limit such awards only to those who win a judgment in favor of the plan.   “The contrast between these two paragraphs makes clear that Congress knows how to impose express limits on the availability of attorney’s fees in ERISA cases,” Thomas wrote in the ruling.

Citing a 1983 Supreme Court case, the Thomas opinion explained that a litigant claiming attorneys’ fees does not satisfy the “ some degree of success” requirement by achieving “trivial success on the merits” but does satisfy it if the court can fairly call the outcome of the litigation some success on the merits without conducting a “lengthy inquir[y] into the question whether a particular party’s success was ‘substantial’ or occurred on a ‘central issue.’”

The case involved a legal battle between Bridget Hardt, a former executive assistant to the president of textile manufacturer Dan River Inc., and Reliance Standard Life Insurance Company over the denial of disability benefits for Hardt. While the company administered the Dan River’s Group Long-Term Disability Insurance Program Plan, Reliance decided whether an employee qualified for benefits and underwrote any such benefit award.

Hardt was granted attorneys’ fees by a federal trial court judge who said she had put forward “compelling evidence” of her disability from carpal tunnel and other ailments, but a federal appellate court threw out that decision.  The Supreme Court reversed the appellate ruling and sent the case back to the lower court for further proceedings.

The Supreme Court ruling is here.