Howell v. Koenemann, et al
Filing
483
MEMORANDUM Opinion and Order Signed by the Honorable Rebecca R. Pallmeyer on 6/1/2012: Mailed notice(etv, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
STEPHEN G. LINGIS, DONALD L. SMITH,
and PETER D. WHITE, on Behalf of
Themselves and a Class of Persons
Similarly Situated,
Plaintiffs,
v.
MOTOROLA, INC., THE PROFIT SHARING
COMMITTEE of MOTOROLA, INC., RICK
DORAZIL, CHRISTOPHER B. GALVIN,
ROBERT L. GROWNEY, H. LAURANCE
FULLER, ANNE P. JONES, JUDY C.
LEWENT, WALTER E. MASSEY,
NICHOLAS NEGROPONTE, JOHN E.
PEPPER, JR., SAMUEL C. SCOTT III,
GARY L. TOOKER, JOHN A. WHITE,
and CARL F. KOENEMANN,
Defendants.
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No. 03 C 5044
Hon. Rebecca R. Pallmeyer
MEMORANDUM OPINION AND ORDER
This case is again before the court for resolution of a lingering dispute concerning allocation
of costs incurred in an unsuccessful ERISA class action brought against the Motorola Profit Sharing
Plan. The action arose from a drop in the value of Motorola’s shares that Plaintiffs attribute to the
disclosure of material information concerning approximately $2 billion in high-risk loans Motorola
made to Telsim Mobil Telekomunikasyon Hizmetleri A.S. (“Telsim”), a Turkish telecommunications
company. Telsim ultimately defaulted on the loans, which were secured only by a pledge of Telsim
stock. At the same time, Telsim tripled the number of its outstanding shares, thus substantially
diluting Motorola’s collateral. This debacle spawned a series of lawsuits, including an action by
Motorola against the family that controlled Telsim, Motorola Credit Corp. v. Uzan, 274 F. Supp. 2d
481 (S.D.N.Y. 2003), aff’d in part, vacated in part, 388 F.3d 39 (2d Cir. 2009); a securities class
action brought by shareholders against Motorola in this court, In re Motorola Sec. Litig., 505 F.
Supp. 2d 501 (N.D. Ill. 2007); and this ERISA “stock drop” case. In this action, Motorola employees
who held Motorola stock in their individual retirement accounts brought suit against the Motorola
401(k) Plan, alleging that Defendants (Plan fiduciaries and Motorola officials), breached their
fiduciary duty to Plan participants by continuing to offer Motorola stock as an investment option
when they knew that problems with the Telsim deal made that option imprudent. Plaintiffs also
alleged that Defendants misrepresented Motorola’s financial health to Plan participants, and failed
to adequately appoint, monitor, and inform Plan fiduciaries.
In it first summary judgment ruling, this court entered judgment in favor of Defendants on
the ground that claims brought by the original named Plaintiff, Bruce G. Howell, were barred by a
waiver and release that Howell signed at the end of his employment. See Howell v. Motorola, Inc.,
No. 03 C 5044, 2005 WL 2420410 (N.D. Ill. Sept. 30, 2005), aff’d, 633 F.3d 552 (7th Cir. 2011);
cert. denied sub nom. Lingis v. Dorazil, 132 S. Ct. 96 (2011). Plaintiffs Stephen Lingis, Donald
Smith, and Peter White (“Plaintiffs”) were then substituted for Howell, and the court certified the
case for class treatment on September 28, 2007. (Order [256].) On motions for summary
judgment, the court again granted judgment in favor of Defendants, ruling that they had not
breached a duty imposed by ERISA and that they could rely on the “safe harbor” established by
section 404(c) of the Act, 29 U.S.C. § 1104(c). See Lingis v. Motorola, Inc., 649 F. Supp. 2d 861
(N.D. Ill. 2009), aff’d sub nom. Howell v. Motorola, Inc., 633 F.3d 552; cert. denied sub nom. Lingis
v. Dorazil, 132 S. Ct. 96.
While Howell’s appeal was pending before the Seventh Circuit and Plaintiffs’ class claim
was pending before this court, Defendants filed a timely bill of costs for $4,694.70 related to
Howell’s action, pursuant to Federal Rule of Civil Procedure 54(d). At the time the court decided
that motion, Rule 54(d) provided, “Except when express provision therefor is made either in a
statute of the United States or in these rules, costs other than attorneys’ fees shall be allowed as
of course to the prevailing party unless the court otherwise directs . . . .” FED. R. CIV. P. 54(d)(1)
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(2006) (emphasis added). The court concluded that section 502 of ERISA—pursuant to which “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)—constituted an express exception to the application of Rule 54(d). (Order
[203], at 5-6.) Applying § 1132(g)(1), the court denied Defendants’ petition for costs on March 12,
2007, on the grounds that Defendants did not challenge Plaintiff Howell’s good faith or argue that
his position was not substantially justified. (Id. at 6.) The court further observed that Plaintiff Howell
had survived a “hard-fought motion to dismiss and, although the court concluded Howell himself
lack[ed] standing, his arguments to the contrary were not insubstantial.” (Id.)
Defendants now bring a timely bill of costs in connection with the court’s second summary
judgment order, the one dismissing the class action brought by Plaintiffs Lingis, Smith, and White
on its merits. Defendants seek recovery of $84,214.02 in costs pursuant to Rule 54(d). Plaintiffs
filed an objection for reasons mirroring this court’s 2007 ruling declining to tax costs against Howell.
More recently, Defendants filed Notice of Supplemental Authority in support of their bill of costs.
Defendants claim this authority, Loomis v. Exelon Corp., 658 F.3d 667 (7th Cir. 2011), undermines
the reasoning in this court’s previous order. For the reasons explained below, the court sustains
Plaintiffs’ objection to an award of costs.
DISCUSSION
I.
Applicable Cost Provision
Rule 54(d) creates a presumption in favor of awarding costs to the prevailing party—unless
another statute creates an exception. In support of their argument that § 1132(g)(1) is not a
statutory exception within the meaning of Rule 54(d), Defendants note that Rule 54(d) was
amended in 2007. That rule now provides, in relevant part, “Unless a federal statute, these rules,
or a court order provides otherwise, costs—other than attorney’s fees—should be allowed to the
prevailing party.” FED. R. CIV. P. 54(d)(1). Defendants see a change in this amendment; they argue
that because § 1132(g)(1) does not prohibit the award of costs, it does not “provide otherwise.”
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Defendants’ attempt to leverage the amended language is misplaced. As the Advisory Committee’s
note makes plain, the changes were part of a “general restyling of the Civil Rules” and “are intended
to be stylistic only.” FED. R. CIV. P. 54(d) advisory committee’s note to 2007 Amendments. Courts
within this district have rejected similar arguments predicated on the stylistic changes. See George
v. Kraft Foods Global, Inc., No. 07-1713, 2010 WL 1976826, at *2 (N.D. Ill. May 14, 2010)
(Schenkier, Mag. J.) (rejecting the argument that Seventh Circuit precedent recognizing §
1132(g)(1) as an express exception under Rule 54(d)(1) is no longer applicable after that rule’s
amendment); Brieger v. Tellabs, Inc., 652 F. Supp. 2d 925, 927 (N.D. Ill. 2009) (Kennelly, J.)
(same). To the extent that the amended language might support legal arguments that diverge from
the pre-amendment Rule 54(d) jurisprudence, the court remains bound by precedent.
As this court noted in its 2007 Order denying costs, the Seventh Circuit decision that most
directly addresses the issue is Nichol v. Pullman Standard, Inc., 889 F.2d 115 (7th Cir. 1989). In
Nichol, the district court had dismissed the plaintiff’s ERISA claim because he had signed a
severance agreement relinquishing his rights to long-term disability benefits, but the court denied
the defendant’s petition for costs and attorneys’ fees. Id. at 116. The Seventh Circuit affirmed. Id.
at 122. Quoting the exception in Rule 54(d) for cases where a “express provision” is made by
federal statute, the Seventh Circuit observed that § 1132(g)(1) was “such an express provision.”
Id. at 121.
The Seventh Circuit has not applied the Nichol precedent consistently, however. In several
cases, the court has applied Rule 54(d) to ERISA actions without discussing whether § 1132(g)(1)
displaces Rule 54(d). See, e.g., White v. Sundstrand Corp., 256 F.3d 580, 585-86 (7th Cir. 2001);
McIlveen v. Stone Container Corp., 910 F.2d 1581, 1584 (7th Cir. 1990). In other cases, the
Seventh Circuit has applied § 1132(g)(1) without commenting on that provision’s relationship to
Rule 54(d). See, e.g., Bowerman v. Wal-Mart Stores, Inc., 226 F.3d 574, 592-93 (7th Cir. 2000);
Little v. Cox’s Supermarkets, 71 F.3d 638, 644 (7th Cir. 1995); Anderson v. Flexel, Inc., 47 F.3d
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243, 250-51 (7th Cir. 1995). In yet another case, the court appeared to apply § 1132(g)(1) in
affirming a district court’s denial of an attorneys’ fee petition, but affirmed the district court’s grant
of costs under Rule 54(d). See Quinn v. Blue Cross & Blue Shield Ass’n, 161 F.3d 472, 478-79 (7th
Cir. 1998). In a more recent case, the court affirmed an award of costs without referencing Rule
54(d) or § 1132(g)(1). See Hecker v. Deere & Co., 556 F.3d 575, 591 (7th Cir. 2009) (Hecker I),
reh’g denied, 569 F.3d 708 (7th Cir. 2009) (Hecker II). Defendants’ brief relies heavily on Hecker,
but that case is not particularly helpful because the parties appeared to dispute what types of costs
should be allowed, not whether an award of costs was appropriate in the first place.
In Loomis v. Exelon Corp., the supplemental authority Defendants brought to the court’s
attention, the Seventh Circuit declined to resolve these inconsistencies, but included dicta strongly
indicating that § 1132(g)(1) does supplant Rule 54(d) in ERISA cases. The court noted that only
one Court of Appeals has accepted the argument that “§ 1132(g)(1) does not ‘provide otherwise’
than Rule 54(d) because [§ 1132(g)(1)] never forbids an award of costs”—the exact argument
Defendants make in this case. Loomis, 658 F.3d at 674 (citing Quan v. Computer Sciences Corp.,
623 F.3d 870, 888-89 (9th Cir. 2010)). The court was skeptical of the Ninth Circuit’s conclusion,
observing that even if a statute did not forbid an award to the prevailing party, the statute would “be
otherwise” if it “established a presumption against an award of costs,” in contrast to Rule 54(d)’s
presumption in favor of such an award, or if the statute established the opposite presumption, in
favor of the winner paying the loser’s costs. Id.
As the Seventh Circuit suggested, Rule 54(d) and § 1132(g) differ on the degree to which
an award of costs is presumptive. A court’s discretion to deny costs under Rule 54(d) is subject
to a “strong presumption that the prevailing party will recover costs.” Mother & Father v. Cassidy,
338 F.3d 704, 708 (7th Cir. 2003) (emphasis added). The Seventh Circuit has recognized only two
narrow exceptions, involving the misconduct of the prevailing party or the indigence of the losing
party. See id.; see also Rivera v. City of Chicago, 469 F.3d 631, 636 (7th Cir. 2006) (describing
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the indigence exception as “a narrow one” and noting that the losing party still bears the burden of
overcoming the presumption). Prior to the 2007 amendments, the court identified the textual
support for this presumption in Rule 54(d)(1)’s direction that courts award costs “as of course.”
Cassidy, 338 F.3d at 708. Although that language is absent in the amended version, the use of the
normative phrase “should be allowed” can be read to give rise to the same presumption, even if it
is less exhortative than the phrase “shall be allowed” in the prior version. In any event, as
mentioned above, the 2007 amendments are intended to generate no substantive change.
Section 1132(g)(1), which provides for an award of costs and fees, is less firm. Instead,
under that statute, a court “may allow a reasonable attorney’s fee and costs of action to either
party,” suggesting that courts have greater discretion to award or deny costs. Though an award
of costs is therefore not mandatory under § 1132(g)(1), such an award is more broadly available
under that section: The Supreme Court has interpreted § 1132(g)(1) as allowing award of fees and
costs to “partially prevailing parties”—parties that have achieved some degree of success on the
merits—a more generous standard than Rule 54(d). Hardt v. Reliance Standard Life Ins. Co., 130
S. Ct. 2149, 2157 (2010) (quoting Ruckelshaus v. Sierra Club, 436 U.S. 680, 688 (1983)); cf. Smart
v. Local 702 Int’l Bhd. of Elec. Workers, 573 F.3d 523, 525 (7th Cir. 2009) (“A party prevails for
purposes of Rule 54(d) when a final judgment awards it substantial relief.”). While the Seventh
Circuit has recognized that § 1132(g)(1) creates a presumption in favor of awarding costs and fees
to the prevailing party, the court has characterized that presumption as “modest” and “rebuttable.”
Hess v. Reg-Ellen Mach. Tool Corp., 367 F. App’x 687, 690 (7th Cir. 2010); see also Jackman Fin.
Corp. v. Humana Ins. Co., 641 F.3d 860, 866 (7th Cir. 2011); Laborers’ Pension Fund v. Lay-Com,
Inc., 580 F.3d 602, 615 (7th Cir. 2009); Herman v. Cent. States, Se. & Sw. Areas Pension Fund,
423 F.3d 684, 695-96 (7th Cir. 2005). As discussed more fully below, the Seventh Circuit has
affirmed the denial of costs under § 1132(g)(1) where the losing party’s positions, while
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unsuccessful, were made in good faith and were “substantially justified.” See, e.g., Jackman Fin.
Corp., 641 F.3d at 866.
Public policy concerns also militate in favor of applying § 1132(g)(1)’s less presumptive costand-fee-shifting provision in cases where defendants seek costs from plaintiffs. In crafting ERISA’s
remedial scheme, Congress chose to provide for a private right of action, empowering plan
participants and beneficiaries to act as “private attorneys general” to vindicate the Act’s regulatory
objectives. See Marquardt v. N. Am. Car Corp., 652 F.2d 715, 720 n.6 (7th Cir. 1981). Applying
Rule 54(d)’s stronger presumption in favor of awarding costs to prevailing defendants would upset
the balance Congress struck between encouraging plaintiffs to bring actions that “seemed
reasonable at the outset” and deterring frivolous lawsuits. Id.
Bound by the Seventh Circuit’s holding in Nichol and the dicta in Loomis, the court
concludes that § 1132(g)(1) “provides otherwise” than Rule 54(d). Consequently, it is § 1132(g)(1)
that governs the award of costs in this case.
II.
Appropriateness of Costs Under § 1132(g)(1)
As noted, § 1132(g)(1) provides for an award of both costs and attorneys’ fees. The
Seventh Circuit has long recognized two tests for determining whether such an award is
appropriate. Under the first test, a court considers multiple factors: “(1) the degree of the offending
party’s culpability or bad faith; (2) the ability of the offending party to satisfy personally an award
of attorney fees; (3) whether an award of attorney fees would deter other persons acting under
similar circumstances; (4) the amount of benefit conferred on members of the plan as a whole; and,
(5) the relative merits of the parties’ positions.” Jackman Fin. Corp., 641 F.3d at 866. The Seventh
Circuit has recognized that this test “‘is oriented toward the case where the plaintiff rather than the
defendant prevails and seeks an award of attorney’s fees.’” Nichol, 889 F.2d at 121 (quoting Bittner
v. Sadoff & Rudoy Indus., 728 F.2d 820, 829 (7th Cir. 1984), overruled on other grounds by
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McCarter v. Ret. Plan for Dist. Managers of Am. Family Ins. Grp., 540 F.3d 649, 654 (7th Cir.
2008)).
Given the disconnect between several of the factors and cases where prevailing defendants
seek an award of fees and costs, the Seventh Circuit created a second test, derived by analogy
from the Equal Access to Justice Act (“EAJA”), 28 U.S.C. § 2412(d)(1)(A). See Bittner, 728 F.2d
at 830 (observing that the EAJA “entitles a prevailing party in many types of suit against the
government to a reasonable attorney’s fee ‘unless the court finds that the position of the United
States was substantially justified or that special circumstances make an award unjust.’”); see also
Pierce v. Underwood, 487 U.S. 552, 565 (1988) (holding that the EAJA’s “substantially justified” test
means “‘justified in substance or in the main’—that is justified to a degree that could satisfy a
reasonable person”). As applied in the ERISA context, “an award of fees to a successful defendant
in an ERISA suit ‘may be denied if the plaintiff’s position was both “substantially justified”—meaning
something more than non-frivolous, but something less than meritorious—and taken in good faith,
or if special circumstances make an award unjust.’” Jackman Fin. Corp., 641 F.3d at 866 (quoting
Herman, 423 F.3d at 696; Harris Trust & Sav. Bank v. Provident Life & Accident Ins. Co., 57 F.3d
608, 616-17 (7th Cir. 1995)). By allowing for special circumstances, the Bittner test incorporates
the other factors from the five-factor test, where relevant. See Bittner, 728 F.2d at 830 (“The
exception for special circumstances that would make an award of fees unjust in a particular case
imparts flexibility to the standard and continuity with the cases that use a multi-factored approach.”).
The Seventh Circuit has observed that the “five-factor test is often used in conjunction with
the ‘substantially justified’ test and largely involves the same inquiry.” Jackman Fin. Corp., 641
F.3d at 866; see also Nichol, 889 F.2d at 121 (“Cases in this Circuit subsequent to Bittner seem to
have adopted both systems.”). Courts do not err by applying one test over the other, however. “It
is difficult to imagine a situation in which the application of one test rather than the other would alter
[the] decision concerning the propriety of an award of costs or fees.” Nichol, 889 F.2d at 121-22.
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The bottom-line question under either approach is the same: “‘was the losing party’s position
substantially justified and taken in good faith, or was that party simply out to harass its opponent?’”
Herman, 423 F.3d at 696 (quoting Quinn, 161 F.3d at 478).
Defendants argue that the Seventh Circuit’s recent decision in Loomis casts doubt on the
“substantially justified” test. In Loomis, the Seventh Circuit affirmed an award of costs to the
defendants in a case where the district court dismissed the plaintiffs’ ERISA claims. Loomis, 658
F.3d at 674-75. Plaintiffs challenged the award, arguing on appeal that only litigants who proceed
in bad faith or to harass may be required to pay costs under § 1132(g)(1). The Seventh Circuit
rejected this argument, concluding that “[l]anguage in some appellate opinions declaring ‘bad faith’
vital to an award under § 1132(g)(1) did not survive Hardt.” Id. at 675.1 Although Loomis made
clear that a finding of bad faith is not required for a court to award costs, the Seventh Circuit did not
explain what standards district courts should apply to guide their discretion. The court expressly
noted that it was not ruling on Bittner’s “substantially justified” test. Id.
Until such time as the Seventh Circuit directly addresses the issue, this court is bound by
the tests recognized in Bittner. In any event, the court does not see these tests as conflicting with
the Seventh Circuit’s holding in Loomis. Under Loomis, absence of bad faith on the part of the
losing party cannot be given dispositive weight by a court when it considers whether an award of
costs is appropriate. But that does not mean that a party’s good faith is not relevant, either under
factor (1) of the five-factor test or under the “substantially justified” test. To the contrary, the Bittner
court recognized that “[a]lthough the plaintiff’s good faith is not alone enough to prevent the court
1
As discussed above, the Supreme Court interpreted § 1132(g)(1) to allow district
courts, at their discretion, to award fees and costs where a party has achieved “some degree of
success on the merits.” Hardt, 130 S. Ct. at 2152. The Seventh Circuit did not specify which
appellate decisions contained language to the contrary, but the court notes that several post-Bittner
decisions identify the common question between the two tests in terms of whether “there is reason
to believe that the losing party engaged in litigation merely to harass its opponents.” Nichol, 889
F.2d at 122.
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from awarding the defendant reasonable attorney’s fees . . . it may in a special case be evidence
of exceptional circumstances that would make the award unjust.” Bittner, 728 F.2d at 830.
III.
Plaintiffs’ “Substantially Justified” ERISA Claims
Because Defendants seek costs from Plaintiffs in this case, the court considers Defendants’
petition under the “substantially justified” test. The court notes, first, that Defendants do not allege
that Plaintiffs brought this lawsuit merely to harass, and there is no evidence of bad faith on the part
of Plaintiffs. Neither does this case appear to involve special circumstances that would make an
award unjust, such as a plaintiff’s inability to pay an award. Defendants do contest whether
Plaintiffs claims were substantially justified, however.
In support of their argument that Plaintiffs’ claims lacked a solid basis, Defendants cite to
Nichol, in which the Seventh Circuit affirmed a district court’s denial of costs where the plaintiff’s
position “was sufficient to withstand [the defendant’s] motion for summary judgment.” 889 F.2d at
121. Although proceeding to a trial on the merits is an indication that a plaintiff had substantial
justification for bringing suit, this court does not read Nichol to require the conclusion that any claim
that does not survive a motion for summary judgment necessarily lacks a substantial justification.
The Seventh Circuit has affirmed the denial of costs or fees to defendants even in cases resolved
against plaintiffs on summary judgment. See, e.g., Jackman Fin. Corp., 641 F.3d at 867; Harris
Trust & Sav. Bank, 57 F.3d at 616-17; Herman, 423 F.3d at 696.
Defendants also cite to the depositions of the three named class representatives—in which
each Plaintiff testified to his belief that Motorola should have continued to offer Motorola stocks as
an investment option throughout the investment period—as evidence that Plaintiffs’ imprudent fund
selection claim lacked a solid basis in fact. Indeed, the court noted that troublesome testimony in
the summary judgment decision, and it expressed skepticism that the case could proceed as a
class action when the class representatives disagreed with the central premise of that claim. See
Lingis, 649 F. Supp. 2d at 880 n.10. The court further noted, however, that “[w]hether an appointed
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class representative can waive a cause of action on behalf of the entire class based on his own
statements is a difficult question.” Id. The court does not conclude from these statements alone
that Plaintiffs’ class claims lacked substantial justification when initiated.
Although it is a close question, the court concludes that Plaintiffs’ ERISA action was justified
to a sufficient degree to satisfy a reasonable person. As both this court and the Seventh Circuit
noted, information about the major risks Motorola took in lending to Telsim, resulting in a loss of
approximately $2 billion, was material and undisclosed. See Howell, 633 F.3d at 555, 571; Lingis,
649 F. Supp. 2d at 866-67. These facts were sufficient to preclude summary judgment in the
parallel securities litigation class action. Motorola Sec. Litig., 505 F. Supp. 2d at 561.2 It was not
unreasonable for Plaintiffs to believe that the Telsim debacle could serve as the predicate for an
ERISA action, especially because Defendants, as fiduciaries of the Plan, arguably had a greater
duty toward Plan participants than to investors at large.3 The court also notes that the law
governing one of Plaintiffs’ principal claims (imprudent fund selection) was not settled at the time
Plaintiffs filed suit, and that the appeal in this action resolved an open question in the Seventh
Circuit.4 Though the evidence in this case was not sufficient to establish Plaintiffs’ claims, their
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Plan participants were excluded from that class, and therefore did not benefit from
the settlement reached in that case. See Lingis, 649 F. Supp. 2d at 875 n.8; see also In re
Motorola Sec. Litig., 644 F.3d 511, 513 (7th Cir. 2011) (affirming this court’s denial of the Plan’s
claim to a share of the Motorola settlement proceeds).
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Of course, any argument that plan fiduciaries should use material nonpublic
information for the benefit of plan participants may run afoul of insider trading laws, though the
question remains unresolved. See Rogers v. Baxter Int’l Inc., 521 F.3d 702, 706 (7th Cir. 2008).
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As the Seventh Circuit recognized in Loomis, this case was part of a series of cases,
litigated around the same time, that challenged the fund sponsor’s selection of funds offered to plan
participants. Loomis, 658 F.3d at 669 (citing Hecker I, 556 F.3d 575; Hecker II, 633 F.3d 552;
Howell, 633 F.3d 552; Spano v. The Boeing Co., 633 F.3d 574 (7th Cir. 2011); George v. Kraft
Foods Global, Inc., 641 F.3d 786 (7th Cir. 2011)). This court, relying on Hecker I, concluded that
§ 404(c) shielded Defendants from the imprudent fund selection claim. See Lingis, 649 F. Supp.
2d at 877-78; see also Hecker I, 556 F.3d at 589 (“Even if § 1104(c) does not always shield a
fiduciary from an imprudent selection of funds under every circumstance that can be imagined, it
does protect a fiduciary that satisfies the criteria of § 1104(c) and includes a sufficient range of
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litigation position was not indefensible. The court concludes that Plaintiffs have overcome the
“modest presumption” that a prevailing party in an ERISA case is entitled to reimbursement under
§ 1132(g)(1).
CONCLUSION
For the above reasons, the court sustains Plaintiffs’ objections to an award of costs to
Defendants. The parties will bear their own costs.
ENTER:
Dated: June 1, 2012
_________________________________________
REBECCA R. PALLMEYER
United States District Judge
options . . . .”). In its decision on rehearing in Hecker II, decided seven days after this court granted
summary judgment in Lingis, the Seventh Circuit clarified its position, explaining that its holding in
Hecker I did not stand for the broad proposition that the ERISA safe harbor applies to imprudent
fund selection claims. See Hecker II, 569 F.3d at 710-11.
In affirming this court’s ruling on summary judgment, the Seventh Circuit noted that whether
an imprudent fund selection claim falls within ERISA’s § 404(c) safe harbor was an open question.
Howell, 633 F.3d at 567. Advancing the law of the circuit, the Seventh Circuit agreed with Plaintiffs’
position, supported by the Secretary of Labor’s amicus curiae brief, that the safe harbor does not
apply to claims arising from “the selection of plan investment options and the decision to continue
offering a particular investment vehicle.” Id. Nevertheless, the Seventh Circuit affirmed this court’s
dismissal of Plaintiffs’ imprudence theory because the evidence did not sufficiently establish a
breach of fiduciary duty. Id. at 568-69.
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