Van Loo et al v. Cajun Operating Company et al

Filing 133

OPINION AND ORDER DENYING Plaintiffs' Second Motion for Attorney's Fees 125 . Signed by District Judge Laurie J. Michelson. (KJac)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
DONALD VAN LOO, et al.,
Plaintiff,
v.

Case No. 2:14-cv-10604
Honorable Laurie J. Michelson
Magistrate Judge David Grand

CAJUN OPERATING COMPANY
d/b/a CHURCH’S CHICKEN,
Defendant.
OPINION AND ORDER DENYING PLAINTIFFS’ SECOND MOTION FOR
ATTORNEY’S FEES [125]
Donna Van Loo, the daughter of Plaintiffs Donald and Harriet Van Loo, was employed by
Defendant Cajun Operating Company d/b/a/ Church’s Chicken (“Church’s”). Donna purchased
life insurance through a policy that Church’s purchased through Reliance Standard Life Insurance
Company, naming Plaintiffs as her beneficiaries. Donna passed away in 2012, having increased
her level of coverage over the preceding four years. When Plaintiffs attempted to collect the
benefits, Reliance denied the claim based on Donna’s failure to submit an evidence of insurability
form (“EIF”). Plaintiffs sued both Church’s and Reliance, asserting that Donna had been misled
regarding the EIF requirement. Ultimately, the Court dismissed Plaintiffs’ claims against Reliance,
but granted summary judgment to Plaintiffs on their claim that Church’s breached a fiduciary duty
to Donna by failing to inform her that an EIF would be required for the level of coverage she had
selected. The Court subsequently awarded Plaintiffs $127,623.06 in fees, plus costs. Church’s

appealed the summary judgment decision, which was affirmed. Plaintiffs now seek to recover
$57,274.50 in attorney’s fees related to the defense of the appeal. This motion will be denied.1
I.
Plaintiffs brought their case pursuant to the Employee Retirement Income Security Act of
1974 (“ERISA”). ERISA § 502(g)(1) provides that “[i]n an action under this title . . . 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).
In evaluating whether a fee award is appropriate, the court must evaluate the following
factors:
(1) the degree of the opposing party’s culpability or bad faith; (2) the opposing
party’s ability to satisfy an award of attorney’s fees; (3) the deterrent effect of an
award on other persons under similar circumstances; (4) whether the party
requesting fees sought to confer a common benefit on all participants and
beneficiaries of an ERISA plan or resolve significant legal questions regarding
ERISA; and (5) the relative merits of the parties’ positions.
Shelby Cty. Health Care Corp. v. Majestic Star Casino, 581 F.3d 355, 376 (6th Cir. 2009) (citation
omitted); see also Sec’y of Dep’t of Labor v. King, 775 F.2d 666, 669 (6th Cir.1985) (creating the
five-factor test). “No single factor is determinative.” Moon v. Unum Provident Corp., 461 F.3d
639, 642–43 (6th Cir. 2006) (per curiam).
Unlike the prior request for fees, the first and third factors now weigh heavily against an
award for appellate fees. The second and fourth factors are unchanged from the Court’s prior

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In their Reply, Plaintiffs ask the Court to strike Church’s Response as untimely. The Court
recognizes that Church’s filed its Response three days late. As Plaintiffs highlight, Fed. R. Civ. P.
6(d) was amended in 2016 to remove electronic service as a mode of service that allows parties
three additional days to respond. Assuming Church’s counsel was unaware of the recent change,
the Court will not strike Church’s Response. All prior briefing was timely and the Court believes
counsel will comply going forward.
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opinion on fees. (R. 120.) The last factor, although now evaluated through the relative merits of
the claims on appeal, remains neutral.
When fees are sought for an appeal, the court will review the first factor by determining
“whether the appellant pursued this appeal in bad faith and not whether the appellant’s conduct
which resulted in litigation warrants a finding of bad faith or culpability.” Schwartz v. Gregori,
160 F.3d 1116, 1119–20 (6th Cir. 1998). Courts determine the intent of an appeal by looking to its
legal basis. See id., at 1120 (finding that the appeal was not brought in bad faith or frivolous
because there was an intervening Supreme Court case which resulted in the appeal bringing a novel
issue before the Circuit); see also DeVoll v. Burdick Painting, Inc., 35 F.3d 408, 414 (9th Cir.
1994) (finding that the appellate claims were neither frivolous nor made in bad faith as they “were
supported by existing out-of-circuit law or good faith arguments to extend, modify, or reverse the
law of this Circuit”).
There is no basis for the Court to find that Church’s appeal was brought in bad faith or was
frivolous. Indeed, Church’s primary claim on appeal was a novel legal issue in the Sixth Circuit
that had very little relevant case law on point. (R. 128, PID 3264.) Notably, the Department of
Labor felt the issue important enough to join as amicus curiae. (Sixth Circuit ECF No. 23.) And
there is nothing about the Court of Appeals’ opinion or its denial of en banc review that suggests
the appeal was frivolous or brought in bad faith. This case presented challenging ERISA issues
and Church’s was quite careful to narrow the scope of the appeal. This factor, therefore, weighs
heavily against a fee award.
Deterrence also weighs against a fee award. The court must take care not to award fees
when the fear of a fees award could deter an otherwise meritorious appeal. Schwartz, 160 F.3d at
1120-1121 (“a party contemplating appeal of a unanswered legal question regarding ERISA with

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general applicability, such as here, ought not to be deterred for fear of an attorney’s fees award”).
Plaintiffs argue that because the appeal did not concern a “legal question regarding ERISA with
general applicability” deterrence is not a concern. (R. 130, PID 3283.) Deterrence, however, is a
concern whenever an appeal has merit, not just when the question is of general applicability. See
Cook v. Liberty Life Assur. Co. of Boston, 334 F.3d 112 (1st Cir. 2003) (“There is no reason to
deter a plausible but ultimately unsuccessful appeal.”); see also Rodriguez v. Tennessee Laborers
Health & Welfare Fund, 2007 WL 2692133 (M.D. Tenn. Sept, 12, 2007) (“defendant makes the
meritorious argument that parties with legitimate grounds for appeal ought not be deterred from
that course of action ‘for fear of an attorney’s fee award’”) (quoting Schwartz). Given the merit of
Church’s appeal, this factor weighs against granting an award.
The last factor looks at the relative merits of the positions on appeal. See Schwartz, 160
F.3d at 1121. Because they prevailed in the Sixth Circuit, Plaintiffs argue that this factor should
clearly be in their favor. (R. 125, PID 3216.) Prevailing in an appeal, however, is not sufficient to
have this factor weigh heavily in your favor. See Schwartz, 160 F.3d at 1121 (finding that
prevailing party was not heavily favored by the last factor given the strength of the appellant’s
argument); see also Rodriguez, at *2 (finding that last factor did not necessarily weigh in the
prevailing party’s favor because of appellant’s clearly meritorious arguments). Church’s
arguments had merit and sought to resolve an unresolved area of the law in its favor. Nothing in
this Court’s opinion or the Sixth Circuit’s opinion suggests otherwise. This factor is therefore
neutral.
Unlike the prior motion for fees, two factors now weigh heavily against granting fees.
Because the appeal had merit, and because the Court does not wish to deter future meritorious
appeals, the King factors weigh against a fee award.

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II.
For these reasons, Plaintiffs’ Second Motion for Attorney’s Fees is DENIED.

SO ORDERED.
s/Laurie J. Michelson
LAURIE J. MICHELSON
U.S. DISTRICT JUDGE

Dated: September 18, 2017

CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was served upon counsel of record
and any unrepresented parties via the Court=s ECF System to their respective email or First Class
U.S. mail addresses disclosed on the Notice of Electronic Filing on September 18, 2017.
s/Keisha Jackson
Case Manager

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