Hakim v. Accenture United States Pension Plan et al
Filing
222
MEMORANDUM Opinion and Order Signed by the Honorable Robert M. Dow, Jr on 10/3/2012. Mailed notice(tbk, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
OMAR HAKIM,
Plaintiff,
v.
ACCENTURE UNITED STATES
PENSION PLAN, ACCENTURE LLP,
ACCENTURE INC., ACCENTURE LLC,
and ACCENTURE LTD.,
Defendants.
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Case No.: 08-cv-3682
Judge Robert M. Dow, Jr.
MEMORANDUM OPINION AND ORDER
Before the Court are Defendant’s bill of costs [202], Defendant’s motion for leave to file
instanter reply brief in support of bill of costs [213], and Defendant’s motion for attorneys’ fees
[216]. For the reasons set forth below, the Court denies Defendant’s motion for attorneys’ fees
[216], but awards Defendant costs in the amount of $1,969.97.
The Court also grants
Defendant’s motion for leave to file instanter reply brief in support of its bill of costs [213].
I.
Background
In its September 29, 2011 opinion, the Court granted Defendant’s motion for
reconsideration of the Court’s August 16, 2010 order in light of the Seventh Circuit’s decision in
Howell v. Motorola, Inc., 633 F.3d 552 (7th Cir. 2011). The Court previously had granted
Defendant’s motions to dismiss and for summary judgment as to all claims except for Count IV.
As to that count, the Court concluded that by virtue of the anti-alienation provision of ERISA,
the release that Plaintiff executed did not bar his claim for additional benefits based on alleged
violations of ERISA Section 204(h). On January 21, 2011, the Seventh Circuit in Howell held
that a similar release was enforceable as to an ERISA claim for additional ERISA plan benefits.
Accordingly, Defendant asked the Court to reconsider its August 16 Order in light of the Howell
decision. The Court did and found that, in light of the Seventh Circuit’s decision in Howell, the
anti-alienation provision did not apply and thus Plaintiff’s claim was barred under the terms of
the release that he signed. The Court dismissed Count IV and entered final judgment in favor of
Defendant and against Plaintiff. After the entry of judgment in its favor, Defendant filed a Bill
of Costs, seeking an award in the amount of $11,055.13. Defendant also requests attorneys’ fees
in the amount of $1,214,253.00. Plaintiff objects to both requests.
II.
Analysis
A.
Applicable Standard
Defendant seeks costs pursuant to 28 U.S.C. § 1920 and Federal Rule of Civil Procedure
54(d)(1) and attorneys’ fees pursuant to 29 U.S.C. § 1132(g). Plaintiff maintains that 29 U.S.C.
§ 1132(g)(1), not Rule 54(d), supplies the correct standard for analyzing the availability of both
costs and fees in the ERISA context. With respect to fees, § 1132(g) clearly governs. As the
Court sets forth below, in regard to costs, the answer is hazier.
Rule 54(d)(1) provides that “[u]nless 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). The Seventh Circuit has stated that “ERISA includes such an
express provision” (Nichol v. Pullman Standard, Inc., 889 F.2d 115, 121 (7th Cir. 1989)), as §
1132(g)(1) of the ERISA statute explicitly provides that “[i]n any action under this subchapter *
* * by a participant, beneficiary, or fiduciary, 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). Thus, the Seventh
Circuit’s statement in Nichol suggests that courts apply § 1132(g)(1), rather than Rule 54(d), in
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determining whether an ERISA party should be awarded costs. This distinction presumably is
material because the Seventh Circuit has recognized only two situations in which the denial of
costs under Rule 54(d) might be warranted (the first involves misconduct of the party seeking
costs and the second involves a pragmatic exercise of discretion to deny or reduce a costs order if
the losing party is indigent) (Mother & Father v. Cassidy, 338 F.3d 704, 708 (7th Cir. 2003);
Rivera, 469 F.3d at 634-35)), while district courts appear to enjoy broader discretion under §
1132(g)(1). See Nichol, 889 F.2d at 121 (stating that declining “to award attorneys’ fees and
costs to ERISA defendants, even prevailing defendants, would rarely constitute an abuse of
discretion”) (internal quotation marks omitted); see also Jackman Fin. Corp. v. Humana Ins. Co.,
641 F.3d 860, 866 (7th Cir. 2011) (recognizing that § 1132(g)(1) creates a presumption in favor
of awarding costs and fees to the prevailing party, but characterizing that presumption as
“modest” and “rebuttable”); Hess v. Reg–Ellen Mach. Tool Corp., 367 F. App'x 687, 690 (7th
Cir. 2010). In other words, 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). On the other hand, § 1132(g)(1) provides that a court “may allow a
reasonable attorney’s fee and costs of action to either party.” 28 U.S.C. § 1132(g)(1) (emphasis
added). 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). How the differences actually shake out in application remains to be seen, but on
their face, the two standards appear to differ in degree.
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In the face of these competing standards, a split exists among district judges as to
whether, consistent with Nichol, costs in an ERISA action are governed by 29 U.S.C. §
1132(g)(1) or whether Rule 54(d)(1) supplies the relevant standard in the ERISA context as well.
See Lingis v. Motorola, Inc., --- F. Supp. 2d --- , 2012 WL 1969332, at *2-3 (N.D. Ill. June 1,
2012) (concluding that ERISA § 1132(g)(1) governs the award of costs and sustaining plaintiffs’
objections to award of cost); George v. Kraft Foods Global, Inc., 2010 WL 1976826, at *1-2
(N.D. Ill. May 24, 2010) (“It is equally evident that Section 1132(g)(1) supplants Rule 54(d)(1)
as the standard governing whether to award costs to a prevailing party in ERISA lawsuits.”);
Brieger v. Tellabs, Inc., 652 F. Supp. 2d 925, 926 (N.D. Ill. 2009) (concluding that ERISA §
1132(g)(1) governs the award of costs and applying Rule 54 would be contrary to the plain
language of both Section 1132(g)(1) and Rule 54(d)(1)); Keach v. U.S. Trust Co., 338 F. Supp.
2d 931, 934 (C.D. Ill. 2004) (adopting plaintiff‘s position that “awards of costs are governed by
the discretionary language of 29 U.S.C. § 1132(g)(1), rather than the presumptive standard of
Rule 54(d)”); but see Rogers v. Baxter Int’l, Inc., 2011 WL 941188 (N.D. Ill. Mar. 16, 2011)
(finding sufficient discretion in both Rule 54(d) and § 1132(g)). Furthermore, the Seventh
Circuit has stated recently that it “has never grappled directly with the subject, and it is not
appropriate to read oblique remarks as answering a question not squarely posed.” Loomis v.
Exelon Corp., 658 F.3d 667, 674 (7th Cir. 2011). In Loomis, the Seventh Circuit did not resolve
the issue, but noted that only one Court of Appeals has accepted the argument that Ҥ 1132(g)(1)
does not ‘provide otherwise’ than Rule 54(d) because [§ 1132(g)(1)] never forbids an award of
costs.” Id. 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
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“established a presumption against an award of costs,” in contrast to Rule 54(d)’d 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. Despite the court’s skepticism, it did not resolve the issue,
leaving district courts with Nichol as the decision that most directly addresses the issue. See
Nichol, 889 F.2d at 121 (observing that § 1132(g) (1) is “such an express provision”).
The Seventh Circuit and district courts have not applied the Nichol precedent
consistently.
In several cases, courts have 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). This Court too has applied Rule 54(d) without considering whether § 1132(g)(1)
provides the appropriate standard. See Holmstrom v. Metropolitan Life Ins. Co., 2011 WL
2149353, at *7-8 (N.D. Ill. May 31, 2011). In other cases, the Seventh Circuit has applied §
1132(g)(1) without analyzing its 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 243, 250–51 (7th Cir. 1995). The court of
appeals also has 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); see also 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) (affirming an award of costs without referencing Rule 54(d) or §
1132(g)(1)).1
1
Defendant suggests that a finding that § 1132(g) supplants Rule 54(d) would be contrary to Hecker and
White. However, it appears from these decisions (as well as the Court’s own experience in Holmstrom)
that the applicability of § 1132(g) was not raised by any of the parties in these cases. Rather, the
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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 could upset the balance Congress struck between encouraging plaintiffs
to bring actions that “seemed reasonable at the outset” and deterring frivolous lawsuits. Id. But
even more importantly, the clearest guidance from the Seventh Circuit is found in Nichol.
Giving appropriate deference to 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). See Cooper Indus.,
Inc., 543 U.S. at 170; see also Heidelberg v. Ill. Prisoner Review Bd., 163 F.3d 1025, 1026 n. 1
(7th Cir. 1998) (noting that precedents of a higher court that have “direct application in a case”
remain binding, even where subsequent rulings by the higher court could be read to be
inconsistent with some of the reasoning in the case that has direct application); Brieger v.
Tellabs, Inc., 652 F. Supp. 2d 925, 926-27 (N.D. Ill. 2009). Consequently, § 1132(g)(1) governs
the award of both costs and fees in this case.
B.
Attorneys’ Fees
Section 1132(g)(1) of Title 29 provides that “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). In Hardt v.
Reliance Standard Life Insurance Co., the Supreme Court recently interpreted ERISA’s fee
arguments were confined to the standard set forth in Rule 54(d). Thus, a finding that § 1132(g) controls
an award of costs in ERISA cases does not imply anything about Hecker and White, because that issue
was not before the Seventh Circuit in those cases, nor was it directly before this Court in Holmstrom.
Cooper Indus., Inc. v. Aviall Servs., Inc., 543 U.S. 157, 170 (2004) (“‘Questions which merely lurk in the
record, neither brought to the attention of the court nor ruled upon, are not to be considered as having
been so decided as to constitute precedents.’”) (quoting Webster v. Fall, 266 U.S. 507, 511 (1925)).
Hecker and White say nothing about § 1132(g) or Nichol; they merely address the issues actually raised
by the parties.
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shifting provision, holding that a court may award fees to an ERISA litigant if she has achieved
“some degree of success on the merits.”
130 S.Ct. 2149, 2157–58 (2010).
This ruling
supplanted this circuit’s “prevailing party” standard for awarding fees in ERISA cases. Id.; see
also Young v. Verizon’s Bell Atlantic Cash Balance Plan, 2010 WL 4226445 at *4 (N.D. Ill. Oct.
20, 2010); Huss v. IBM Medical and Dental Plan, 418 Fed. Appx. 498, at *12 (7th Cir. April 13,
2011) (unreported) (“[T]he Supreme Court recently clarified that § 1132(g)(1) does not limit
attorney’s fees awards to a ‘prevailing party’; rather, it affords district courts the discretion to
award fees to ‘either party.’”).
There is no doubt that Defendant here achieved “some degree of success on the merits”
as the Court granted Defendant’s motion to dismiss on certain counts, granted Defendant’s
motion for summary judgment on the majority of the remaining counts, and then later granted
Defendant’s motion to reconsider on the remaining count. The Court then entered judgment in
favor of Defendant and against Plaintiff. However, the inquiry does not end there. Once a party
has achieved “some degree of success on the merits,” a court must exercise its discretion to
determine whether an award of attorney’s fees should be granted. Hardt, 130 S.Ct. at 2158; see
also DeBartolo v. Health & Welfare Dept. of the Const. and General Laborers’ Dist. Council of
Chicago, 2011 WL 1131110, at *1 (N.D. Ill. March 28, 2011); Young, 2010 WL 4226445, at *6.
Prior to Hardt, the Seventh Circuit recognized two tests to guide a court’s discretion regarding
whether a fee award is appropriate under 29 U.S.C. § 1132(g)(1). See Stark v. PPM America,
Inc., 354 F.3d 666, 673 (7th Cir. 2004) (citing Quinn v. Blue Cross & Blue Shield Ass’n, 161
F.3d 472, 478 (7th Cir. 1998)). Both tests essentially ask the same question, “was the losing
party’s position substantially justified and taken in good faith, or was the party simply out to
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harass the opponent?” Stark, 354 F.3d at 673 (quoting Bowerman v. Mal–Mart Stores, Inc., 226
F.3d 574, 593 (7th Cir. 2000)).
Under the first test, “an award of fees to a successful defendant may be denied if the
losing party’s position was both ‘substantially justified’-meaning something more than nonfrivolous, but something less than meritorious-and taken in good faith, or if special
circumstances make an award unjust.” Herman v. Central States, S.E. and S. W. Areas Pension
Fund, 423 F.3d 684, 696 (7th Cir. 2005); see also Stark v. PPM America, Inc., 354 F.3d 666, 673
(7th Cir. 2004). Under the second test, courts look to the following five factors to determine
whether a fee award is appropriate: 1) the degree of the offending parties’ culpability or bad
faith; 2) the degree of the ability of the offending parties to satisfy personally an award of
attorney’s fees; 3) whether or not an award of attorney’s fees against the offending parties would
deter other persons acting under similar circumstances; 4) the amount of benefit conferred on
members of the pension plan as a whole; and 5) the relative merits of the parties’ positions.
Quinn, 161 F.3d at 478. The five-factor test is used to “structure or implement, rather than to
contradict” the substantially justified test. Lowe v. McGraw-Hill Companies, Inc., 361 F.3d 335,
339 (7th Cir. 2004). The Seventh Circuit recently limited its inquiry to determining whether
“plaintiffs’ litigation position was substantially justified and taken in good faith or whether they
were out to harass defendants.” Kolbe & Kolbe Health & Welfare Benefit Plan v. Medical
College of Wisconsin, Inc., 657 F.3d 496, 506-07 (7th Cir. 2011); see also Huss, 418 F. App’x at
512 (citing Herman v. Cent. States, Se. & Sw. Areas Pension Fund, 423 F.3d 684, 696 (7th Cir.
2005)). Thus, the Court proceeds with the Kolbe court’s inquiry, while keeping in mind the fivepart test. Jackman Financial Corp. v. Humana Ins. Co., 641 F.3d 860, 867 (7th Cir. 2011)
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(observing that the “five-factor test is often used in conjunction with the ‘substantially justified’
test and largely involves the same inquiry.”).2
“In determining whether the losing party’s position was ‘substantially justified,’ the
Supreme Court has stated that a party’s position is ‘justified to a degree that could satisfy a
reasonable person.’ ” Trustmark, 207 F.3d at 884 (quoting Pierce v. Underwood, 487 U.S. 552,
565 (1988)). A position is not substantially justified if it is without a “solid basis.” Prod. &
Maint. Employees’ Local 504 v. Roadmaster Corp., 954 F.2d 1397, 1405 (7th Cir. 1992). In
ruling on the summary judgment motion, the Court found Plaintiff’s litigation position to be
somewhat compelling and certainly not unreasonable. See also Kolbe & Kolbe, 657 F.3d at 5067. The Plan prevailed on some counts early on, but ultimately prevailed in toto only when the
Court granted its motion to reconsider regarding whether a boilerplate release and waiver of
claim executed by Plaintiff as a part of a reduction in force was sufficient to bar his § 204(h)
notice claim after an intervening Seventh Circuit decision prompted the Court to do so. The
Court previously denied the Plan’s motion for summary judgment on the same issue, applying
nearly three decades of Seventh Circuit law. Thus, the Plan’s ultimate victory was founded on a
perceived change in the law—a question which is being appealed to the Seventh Circuit. See
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Both the Seventh Circuit and the Supreme Court have questioned the five-factor test’s continued
vitality. See Sullivan v. William A. Randolph, Inc., 504 F.3d 665, 672 (7th Cir. 2007) (noting that the
five-factor test “adds little * * * to the simpler test, and perhaps has outlived its usefulness”); Hardt, 130
S.Ct. at 2158 (observing that because the five-factor tests used by a number of circuits “bear no obvious
relation to § 1132(g)(1)’s text or to our feeshifting jurisprudence, they are not required for channeling a
court’s discretion when awarding fees under this section”). And following Hardt, courts in this district
have questioned the ongoing utility of either test. See, e.g., Raybourne v. Life Insurance Company of New
York, 2011 WL 528864, at *2, (N.D. Ill. Feb.8, 2011) (“It is difficult to image the continued futility [sic]
of the substantial justification test in light of Hardt’ s adoption of the ‘some degree of success’
standard.”); Young, 2010 WL 4226445 at *10. Most recently, in Huss v. IBM Medical and Dental Plan,
2011 WL 1388543, at *12 (7th Cir. April 13, 2011), the Seventh Circuit concluded that even after Hardt,
application of its “traditional” twin tests was still relevant to “inform the court’s analysis” regarding
whether an award of fees is appropriate. Id.
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also Lingis v. Motorola, Inc., --- F. Supp. 2d --- , 2012 WL 1969332, at *2-3 (N.D. Ill. June 1,
2012) (noting that the law governing one of the plaintiffs’ principal claims was not settled at the
time plaintiffs filed suit, and that the appeal in this action resolved an open question in the
Seventh Circuit). The Court concludes that Plaintiff’s litigation position was substantially
justified and taken in good faith and not for the purpose of harassing Defendant.
Consideration of the remaining factors does not change the Court’s view. The ability-topay factor weighs in favor of Plaintiff. The fees sought by Defendant would impose a crippling
hardship on Plaintiff. Looking at whether an award might deter others acting under similar
circumstances, the Court concludes that this factor favors neither party. A grant of attorneys’
fees may have a chilling effect on beneficiaries seeking redress for legitimate claims, while a
denial of attorneys’ fees may encourage lawsuits by parties with no chance of success. Where,
as here, the ultimate issue raised was debatable under the facts and law, deterrence is not as
important a concern as it would be if Plaintiff’s claim were plainly lacking merit. The fourth
factor, benefit to other members of the pension plan, is largely irrelevant in an individual dispute
such as the instant case. Finally, the fifth factor (relative merit) is, as the court in Sullivan noted,
“an oblique way of asking whether the losing party was substantially justified in contesting his
opponent’s claim or defense.” 504 F.3d at 672. As previously set forth, the Court concludes that
Plaintiff was substantially justified in his position.
ERISA is a remedial statute that protects the interests of plan participants, and, as alluded
to earlier, an appropriate consideration is the impact of awarding fees to the Plan in the context
of providing participants with a forum to adjudicate ERISA benefits. See Stark v. PPM Am.,
Inc., 354 F.3d 666, 673 (7th Cir. 2004) (“ERISA’s remedial purpose is to protect, rather than
penalize participants who seek to enforce their statutory rights”). To saddle a plan participant
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who brings a good-faith action with crippling attorneys’ fees (Defendant requests more than $1.2
million) would thwart ERISA’s purpose. Meredith v. Navistar Int'l Transp. Co., 935 F.2d 124,
128 (7th Cir. 1991) (“[a]dherence to this policy often counsels against charging fees against
ERISA beneficiaries since private actions by beneficiaries seeking in good faith to secure their
rights under employee benefit plans are important mechanisms for furthering ERISA’s remedial
purpose”). Furthermore, there is no indication that Plaintiff was out to harass Defendant; simply
taking a position with which the Court ultimately disagrees does not automatically render
Plaintiff’s position meritless (as Defendant appears to suggest). Plaintiff’s position, although not
successful, “had an understandable foundation.” Jackman Financial Corp. v. Humana Ins. Co.,
641 F.3d 860, 867 (7th Cir. 2011). Plaintiff survived in part Defendant’s multiple motions to
dismiss, won a number of discovery motions, and temporary prevailed in part on the Plan’s
multi-pronged motion for summary judgment, all in the fast-moving landscape of ERISA
litigation. Indeed, the Court noted in its decision on the contentious cross-motions for summary
judgment that “[b]ased on the current record, the Court finds that there is a genuine issue of
material fact as to whether Defendant’s use of e-mail was reasonably calculated to ensure
delivery.” While Plaintiff did not ultimately prevail on the motion to reconsider, the course of
this litigation simply doesn’t square with a finding that he sued in bad faith or merely to harass
the Plan.
Thus, whether or not the substantial justification or five-factor test remain viable, the
Court concludes that Defendant is not entitled to its attorneys’ fees. Tagging an individual
defined benefit plan participant with more than a $1.2 million in fees, when the most he could
have hoped to get out of the lawsuit was far less, is antithetical to the remedial scheme set forth
in the ERISA statute, and the Court, in its discretion, declines to do so. See, e.g., Jackman Fin.
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Corp., 641 F.3d at 867 (affirming the denial of costs or fees to defendants even in cases resolved
against plaintiffs on summary judgment); Herman v. Central States, Southeast and Southwest
Areas Pension Fund, 423 F.3d 684, 695-96 (7th Cir. 2005). The Court concludes that Plaintiff
has overcome the “modest presumption” that a prevailing party in an ERISA case is entitled to
its attorneys’ fees under § 1132(g)(1), and the Court sustains Plaintiff’s objections to the award
of fees.
Because the Court has concluded that Defendant is not entitled to its fees, it is
unnecessary to examine the specifics of Defendant’s fee petition.
C.
Bill of Costs
Although the Court concludes that § 1132(g)(1) also governs the cost inquiry, it does not
necessarily follow that the Court must use the “substantially justified” test in determining
whether to award costs in an ERISA action. That test was formulated by the Seventh Circuit as a
constraint on the court’s discretion when considering an award of attorney’s fees. Bittner, 728
F.2d at 828–30. In explaining the “substantially justified” standard, the Bittner court contrasted
the legislative history and purpose of ERISA with that of the Civil Rights Attorney’s Fees
Awards Act, which was designed to encourage civil rights litigation “by allowing prevailing
plaintiffs to obtain an award of attorney’s fees almost as a matter of course.” Id. at 829. “There
is nothing comparable in the legislative history of ERISA; nor do pension plan participants and
beneficiaries constitute a vulnerable group whose members need special encouragement to
exercise their legal rights, like a racial minority.” Id. The court adopted the “substantially
justified” test as “a model for courts that must try to give meaning to the word ‘discretion’” in §
1132(g)(1). Id. at 830. The court described the standard as “the intermediate position between
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automatic fee shifting (or nearly automatic, as in the Civil Rights Attorney’s Fees Awards Act)
and the common law position which allows shifting only against the frivolous litigant.” Id.3
But common law treats costs differently than attorneys’ fees. See Charles Alan Wright,
Arthur R. Miller, & Mary Kay Kane, 10 FEDERAL PRACTICE AND PROCEDURE § 2665 at 199–201
(3d ed. 1998). As previously stated, the default rule provides a presumption that costs are
awarded to the prevailing party, and the burden is on the non-prevailing party to overcome this
presumption. Fed. R. Civ. P. 54(d); Rivera v. City of Chicago, 469 F.3d 631, 634 (7th Cir.
2006). Furthermore, the Court has not come across any precedent suggesting that Congress
intended to discourage an award of costs under § 1132(g)(1) in the majority of ERISA cases.
Although ERISA is a remedial statute and should not be construed to impose unnecessary costs
on beneficiaries, other remedial statutes (such as § 1983) allow for the imposition of costs using
the standard of Rule 54(d).
See Rivera, 469 F.3d at 634.
Thus, rather than using the
“substantially justified” standard, the Court concludes that a sensible approach in this case is to
borrow the widely-used standard for awarding costs under Rule 54(d)(1)—giving the court
discretion (as § 1132(g)(1) explicitly states) but starting with a presumption in favor of awarding
costs—while keeping in mind the Supreme Court’s pronouncement in Hardt—that costs are
available to a party who has achieved “some degree of success on the merits.” Nothing in the
text of § 1132(g)(1) suggests a different standard and this approach comports with common law
considerations and the general view that costs be awarded to the victor.
3
Compare the Equal Access to Justice Act (“EAJA”), 28 U.S.C. § 2412(d)(1)(A), which provides for a
reasonable attorney's fee to the prevailing party “unless the court finds that the position of the United
States was substantially justified or that special circumstances make an award unjust.” 728 F.2d at 830.
The “substantially justified” test in EAJA applies only to attorney's fees. See 28 U.S.C. § 2412(d)(1)(A).
A court has greater discretion to award costs depending on the circumstances. 28 U.S.C. § 2412(a)(1)
(costs “may be awarded”); Cruz v. Comm'r of Social Sec., 630 F.3d 321, 325–26 (3d Cir. 2010).
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Turning to the specifics of Defendant’s requests for costs, the Court notes that 28 U.S.C.
§ 1920 sets the proper measure of recoverable costs. Tidemann v. Nadler Golf Car Sales, Inc.,
224 F.3d 719, 726 (7th Cir. 2000). Nothing in the language of § 1132(g)(1), which permits an
award of “costs of action,” suggests that the limits on taxable costs under § 1920 are
inapplicable. See Agredano v. Mutual of Omaha Cos., 75 F.3d 541, 544 (9th Cir. 1996) (“We
therefore hold that [§ 1132(g)(1)’s] allowance for ‘costs of action’ empowers courts to award
only the types of ‘costs' allowed by 28 U.S.C. § 1920”). Thus, the list of recoverable costs
includes (1) fees of the clerk and marshal, (2) fees for transcripts, (3) witness fees and expenses,
(4) fees for copies of papers necessarily obtained for use in the case, (5) docket fees, and (6)
compensation for court-appointed experts and interpreters. 28 U.S.C. § 1920; see also Republic
Tobacco Co. v. N. Atl. Trading Co., Inc., 481 F.3d 442, 447 (7th Cir. 2007). Defendants claim
$11,055.13 in costs – $9,054.81 for fees of the court reporter for all or any part of the transcript
necessarily obtained for use in the case, $1412.62 for fees for witnesses, and $587.70 for
exemplification and copies of papers necessarily obtained for use in the case. The Court now
addresses whether the amounts requested are reasonable and supported by the record.
1.
Court Reporting and Transcription Fees
Defendant seeks $9,054.81 in court reporting fees pursuant. The Court awards deposition
charges if the deposition appears reasonably necessary in light of the facts known at the time of
the deposition. See Little v. Mitsubishi Motors N. Am., Inc., 514 F.3d 699, 702 (7th Cir. 2008)
(per curiam); Mother & Father, 338 F.3d at 708. In this district, the costs of a transcript shall not
exceed the regular copy rate established by the Judicial Conference of the United States. See
N.D. Ill. L.R. 54.1(b). The applicable rates pursuant to the Judicial Conference for depositions
and trials conducted after November 1, 2007, are $3.65 per page for ordinary transcripts, $4.25
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per page for fourteen day transcripts, and $4.85 per page for seven day transcripts.
See
http://www.ilnd.uscourts.gov/home/clerksoffice/CLERKS_OFFICE/CrtReporter/trnscrpt.htm.
Reasonable attendance fees also are recoverable under Section 1920(2). See, e.g., Held v. Held,
137 F.3d 998, 1002 (7th Cir. 1998) (“As for the deposition attendance fees charged by the court
reporter, we have previously held that even though these fees are not specifically mentioned in
the statute, the district court may award them in its discretion pursuant to 28 U.S.C. § 1920(2)”);
Finchum v. Ford Motor Co., 57 F.3d 526, 534 (7th Cir. 1995) (same).
“Where a party seeking costs fails to specifically identify the number of pages in a
requested transcript, no costs will be awarded. Indeed, without this information, it is impossible
for the Court to determine whether specific costs are reasonable and necessary.” Shah v. Village
of Hoffman Estates, 2003 WL 21961362, at *1 (N.D. Ill. Aug. 14, 2003); see also Alexander v.
CIT Tech Fin. Servs., 222 F. Supp. 2d 1087, 1090 (N.D. Ill. 2002); Teerling v. Fleetwood Motor
Homes of Ind., Inc., 2001 WL 883699, at *2 (N.D. Ill. Aug. 2, 2001). With only a single
exception, the transcript invoices submitted in support of Defendant’s bill of costs do nothing
more than demonstrate that Defendant paid for transcripts in a particular lump-sum amount.
Defendant does not disclose the number of pages purchased, nor the price per page. Without
these variables—which are regularly submitted to this Court with bills of costs—the Court
cannot conclude whether the amounts requested are reasonable. See Rogers v. Baxter Int’l, Inc.,
2011 WL 941188, at *4 (N.D. Ill. Mar. 16, 2011) (denying request for $173,150.00 in costs for
expert witness expenses because court could not ascertain from materials provided by prevailing
party whether any part of requested amount was compensable under relevant statutes); Highway
Commercial Services, Inc. v. Midwest Trailer Repair, Inc., 2011 WL 3159128, at *2 (N.D. Ill.
July 26, 2011) (noting that “even as to the unchallenged costs, [the court] must still ensure that
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each proposed cost is allowed under § 1920, is reasonable, and is necessary to the litigation.”);
see also Farmer v. Arabian Am. Oil Co., 379 U.S. 227, 235 (1964) (“Items proposed by winning
parties as costs should always be given careful scrutiny.”); Little v. Mitsubishi Motors N. Am.,
Inc., 514 F.3d 699, 702 (7th Cir. 2008). The one exception is the invoice for the November 18,
2009 hearing transcript, which discloses both the number of pages and the price per page (within
the maximum rate set forth by the Judicial Conference). The Court concludes that this cost
($43.65) is recoverable. However, as to the remainder of the transcription fees, the Court cannot
determine whether those costs were reasonable and necessary and therefore those costs are not
recoverable.
Accordingly, the Court awards Defendant the reduced amount of $43.65 for
transcript costs.
2.
Fees for Exemplification and Copies – 28 U.S.C. § 1920(4)
Defendant seeks $587.70 in photocopying and exemplification costs pursuant to 28
U.S.C. § 1920(4), which allows a judge to tax as costs “[f]ees for exemplification and copies of
papers necessarily obtained for use in the case.” See Tchemkou v. Mukasey, 517 F.3d 506, 513
(7th Cir. 2008). Courts interpret this section to mean that photocopying charges for discovery
and court copies are recoverable, but charges for copies made for attorney convenience are not.
See Kulumani v. Blue Cross Blue Shield Ass’n, 224 F.3d 681, 685 (7th Cir. 2000); McIlveen v.
Stone Container Corp., 910 F.2d 1581, 1584 (7th Cir. 1990). Under Section 1920(4), the
prevailing party is “not required to submit a bill of costs containing a description so detailed as to
make it impossible economically to recover photocopying costs.” Northbrook Excess & Surplus
Ins. Co. v. Proctor & Gamble, 924 F.2d 633, 643 (7th Cir. 1991). Instead, the prevailing party
need only provide the best breakdown obtainable from the records. See id.
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The Court has reviewed the supporting materials (including invoices) attached to
Defendants’ bill of costs and finds that the amounts requested are reasonable. The amounts
requested are within the bounds of copying costs previously found to be reasonable, and
Defendant has provided an exhibit in support of its request for exemplification costs. See, e.g.,
Kaplan v. City of Chicago, 2009 WL 1940789, at *4 (N.D. Ill. July 6, 2009) (“courts in this
district have found photocopying costs between $0.10 and $0.20 per page to be reasonable”);
Shanklin Corp., 2006 WL 2054382, at *4 (same). Therefore, the Court awards Defendant
$587.70 in photocopying and exemplification costs under Section 1920(4).
3.
Witness Fees
Defendants seeks to recover $1,412.62 for the travel and lodging expenses paid to
witnesses for their depositions, including: $1,284.12 to Julianne Grace, who traveled from
Charlotte, North Carolina to Chicago, Illinois for her deposition in this matter; $74.00 to Traci
Melody related to her deposition in this matter; and $54.50 to Yvette Molina, who traveled from
New Jersey to New York for her deposition in this matter. These expenses are recoverable under
28 U.S.C. §§ 1821 and 1920(3). See Majeske v. City of Chicago, 218 F.3d 816, 825-26 (7th Cir.
2000) (“Collectively, 28 U.S.C. §§ 1821 and 1920(3) authorize the award of costs to reimburse
witnesses for their reasonable travel and lodging expenses.”). Defendant attached an exhibit to
its bill of costs that contains an itemization of expenses associated with the witnesses’
depositions and some supporting documentation. With respect to Ms. Grace and Ms. Molina,
Defendant specified and attested to the costs incurred, and the Court finds the requested amount
for each witness to be reasonable. However, in regard to Ms. Melody, Defendant failed to
provide any details as to the $74.00 requested; therefore, this cost is not recoverable, and the
Court awards Defendant the reduced amount of $1,338.62 for witness fees.
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III.
Conclusion
For these reasons, the Court denies Defendant’s motion for attorneys’ fees [216], but
awards Defendant costs in the amount of $1,969.97 The Court also grants Defendant’s motion
for leave to file instanter reply brief in support of bill of costs [213].
Dated: October 3, 2012
______________________________
Robert M. Dow, Jr.
United States District Judge
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