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Steven J. Feinstein, M.D., et al v. Saint Luke's Hospital

September 25, 2012

STEVEN J. FEINSTEIN, M.D., ET AL.,
PLAINTIFFS
v.
SAINT LUKE'S HOSPITAL, ET AL., DEFENDANTS



The opinion of the court was delivered by: Stengel, J.

MEMORANDUM

In October 2011, I granted the defendants' motion to dismiss this action which had been brought under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. The defendants filed a motion for an award of attorneys' fees and costs. See 29 U.S.C. § 1132(g)(1). The plaintiffs have responded in opposition. For the following reasons, I find that the defendants are entitled to attorneys' fees and costs, andI will grant the motion except for the defendants' request for an upward adjustment of the lodestar.

I. BACKGROUND

The plaintiffs were employed as specialist physicians at St. Luke's Hospital in Bethlehem, Pennsylvania until late November 2008. They filed this action alleging violations of their ERISA rights in connection with the St. Luke's Hospital Pension Plan and St. Luke's Executive Retirement Benefit Restoration Plan. The fourteen-count complaint also included common law claims for breach of fiduciary duty, breach of contract, misrepresentation, tortious interference with business relationships/restriction of trade, and requests for injunctive relief.

The defendants filed a motion to dismiss the complaint which I granted following a hearing and careful review of the record. The defendants subsequently filed this motion as the successful party in this action.

II. STANDARD OF REVIEW

A district court has discretion to award a "reasonable attorney's fee and costs of action" under ERISA. 29 U.S.C. § 1132(g)(1). However, fees may only be awarded to a party who achieves "some degree of success on the merits." Hardt v. Reliance Standard Life Ins. Co., 130 S.Ct. 2149, 2158 (2010). This standard requires more than "trivial success on the merits" or a "purely procedural victory." Id. at 2158. It is important to note that there is no presumption that a successful party in an ERISA action should receive an award in the absence of exceptional circumstances. McPherson v. Employees' Pension Plan of American Re-Insurance Company, Inc., et al., 33 F.3d 253, 254 (3d Cir. 1994); see also Ellison v. Shenango, Inc. Pension Bd., 956 F.2d 1268, 1275 (3d Cir. 1992) (there is no presumption that a prevailing party is entitled to attorneys' fees under Section 502(g)(1) of ERISA, 29 U.S.C. § 1132(g)(1)).

Prior to the Supreme Court's decision in Hardt, courts in the Third Circuit applied a five factor test to determine whether to award attorneys' fees in ERISA actions. Ursic v. Bethlehem Mines, 719 F.2d 670, 673 (3d Cir. 1983). Those factors are: (1) the offending parties' culpability or bad faith; (2) the ability of the offending parties to satisfy an award of attorneys' fees; (3) the deterrent effect of an award of attorneys' fees against the offending parties; (4) the benefit conferred on members of the pension plan as a whole; and (5) the relative merits of the parties' position." Id.

In Hardt, the Supreme Court held that, while not required, after meeting the "some degree of success" test, a court may still consider the five factor test to determine whether to award attorneys' fees. Hardt, 130 S.Ct. at 2158 n.8. Because it will be helpful to the parties, I will proceed with a consideration of the Ursic factors.

III. DISCUSSION

A. The Ursic Factors

The Ursic factors are not requirements in the sense that a party must demonstrate all of them in order to warrant an award of attorney's fees, but rather they are elements a court must consider in exercising its discretion. Fields v. Thompson Printing Co., 363 F.3d 259, 275 (3d Cir. 2004). The factors are flexible guidelines, and no single factor is determinative.

1. Culpability or Bad Faith

Under the first factor, a court considers whether the non-prevailing party's conduct involved bad faith or engaged in culpable conduct. McPherson, 33 F.3d at 257. Bad faith normally connotes an ulterior motive or sinister purpose. Ford v. Temple Hosp., 790 F.2d 342, 347 (3d Cir. 1986). A losing party may be culpable, however, without having acted with an ulterior motive. A party is not culpable merely because it has taken a position that did not prevail in litigation. In a civil context, culpable conduct is commonly understood to mean conduct that is blameable, censurable, involving the breach of a legal duty or the commission ...


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