The Five Factor Test for Attorney's Fee Awards Under ERISA

Here’s a nice follow up ruling in the case of Curran v Camden National, a particularly interesting ERISA case that I discussed here. In this newest ruling, the United States District Court for the District of Maine denied the motion of the defendant - which had earlier successfully moved to dismiss the complaint against it - for an award of attorney’s fees under ERISA. The Court first stated the governing standard in the First Circuit on this issue, which is that: 

in an ERISA case, a prevailing plaintiff does not, merely by prevailing, create a presumption that he or she is entitled to a fee-shifting award [and there is no] creation of a presumption in favor of prevailing defendants. Rather . . . in the context of ERISA cases, the Court is to apply a five-factor analysis to determine the appropriateness of an award of attorney's fees to the prevailing party: (1) the degree of culpability or bad faith attributable to the losing party; (2) the depth of the losing party's pocket, i.e., his or her capacity to pay an award; (3) the extent (if at all) to which such an award would deter other persons acting under similar circumstances; (4) the benefit (if any) that the successful suit confers on plan participants or beneficiaries generally; and (5) the relative merit of the parties' positions.

The Court then went step by step through each factor, explaining how none warranted an award of attorney’s fees, despite the fact that the defendant had prevailed on a motion to dismiss - which is always a pretty good showing of a potentially severe absence of merit in the plaintiff’s claims. The Court explained that prevailing on such a motion alone cannot be enough to support an award of attorney’s fees, because if it was, it would discourage parties from proceeding with what may well be meritorious claims out of fear of being hit with an award of attorney’s fees if they are wrong in their analysis of the merits. The take home from the opinion in this case can only be that the standard for obtaining such an award, at least as a prevailing defendant, is pretty high, and if I were defending against a claim for attorney’s fees under ERISA, this is the case I would open my brief with.