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PERRECA v. GLUCK

December 3, 2004.

ALFRED PERRECA, et al., Plaintiffs,
v.
MICHAEL GLUCK, et al., Defendants.



The opinion of the court was delivered by: RONALD ELLIS, Magistrate Judge

OPINION AND ORDER

I. INTRODUCTION

Before this Court is a motion by plaintiffs Alfred and Marie Perreca seeking attorney's fees and costs pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"). 29 U.S.C.A. § 1132. For the following reasons, the motion is DENIED.

  II. BACKGROUND

  The facts of this case have been set forth in Perreca v. Gluck, 295 F.3d 215, 218-20 (2d Cir. 2002). Following that decision, a jury trial was held on February 24-28, 2003. The first question on the Special Verdict Form asked whether Alfred Perreca had been promoted to the job of night manager before January 1, 1965. The second question asked whether he should be credited with service back to his original start date of 1959. The jury answered "Yes" to the first question and "No" to the second. Judgment was thereupon entered for defendant. Plaintiffs moved to amend the judgment pursuant to Federal Rule of Civil Procedure 59, asking this Court to order that Perreca recover benefits from January 1, 1965, because the jury had found that he had been promoted before that date. The Court granted the motion, and this application followed. III. DISCUSSION

  A. General Standard For Fees Under ERISA

  ERISA provides that "[i]n any action under this subchapter (other than an action described in paragraph (2)) 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); see also Jones v. Unum Life Ins. Co. of America, 223 F.3d 130, 138 (2d Cir. 2000); Miller v. United Welfare Fund, 72 F.3d 1066, 1074 (2d Cir. 1995); Chambless v. Masters, Mates & Pilots Pension Plan, 815 F.2d 869, 871 (2d Cir. 1987) ("Chambless"). Although the Court has discretion, "this circuit strongly favors awarding reasonable attorney's fees and costs to a prevailing plaintiff absent a `particular justification' or `special circumstances [which] would make it unjust.'" Zervos v. Verizon New York, Inc., 2002 WL 31553484, at *2 (S.D.N.Y. Nov. 13, 2002) (citations omitted).

  Defendants assert that special circumstances exist in this case which warrant denial of the application for fees and costs. They argue that the jury's negative response on the credited service date, as well as the narrow issue presented to it, constitute such circumstances. See Defendants' Memorandum of Points and Authorities in Opposition to Plaintiffs' Motion for Attorney's Fees ("Def. Mem.") at 8. They maintain that Perreca raised numerous claims that were not considered by the jury, and the jury found against him on the central issue presented for its consideration, that is, whether he was entitled to pension benefits from his 1959 hire date. This fact alone does not preclude recovery. "Litigants in good faith may raise alternative legal grounds for a desired outcome" without being penalized in attorney's fees and costs. Hensley v. Eckerhart, 461 U.S. 424, 435 (1983). In addition, the jury verdict was returned with a finding that a promotion had occurred earlier than defendants had claimed, and Perreca received some relief with the amended judgment. From the record, this Court finds no special circumstances warranting a dismissal of plaintiffs' motion.

  B. Was Perreca a Prevailing Party?

  A plaintiff must be a prevailing party to recover an attorney's fee under ERISA. Kaiser Steel Corp. v. Mullins, 455 U.S. 72, 89 (1982). Defendants argue that the plaintiffs are not the prevailing party because of the original judgment for defendants. "An altogether sufficient support for the court's decision not to award attorney's fees under ERISA is that the attorney obtained no relief under that statute." Fase v. Seafarers Welfare and Pension Plan, 589 F.2d 112, 116 (2d Cir. 1978). However, that judgment was later amended to grant partial relief. As in Hensley, which involved a § 1988 award, "a district court considering a motion for attorney's fees under ERISA should apply its discretion consistent with the purposes of ERISA, those purposes being to protect employee rights and to secure effective access to federal courts." Smith v. CMTA-IAM Pension Trust, 746 F.2d 587, 589 (9th Cir. 1984). Defendants argue nevertheless that the jury was only asked by plaintiffs to decide a very narrow issue of fact. However, plaintiffs may meet the standard for a prevailing party if they win on a significant issue. See, e.g., Smith, 746 F.2d at 589-90.

  Here, the central issue at trial, as well as in the original complaint, was the date of Perreca's promotion to night manager. Defendants maintained that the promotion occurred in 1966, but conceded that, if Perreca had been promoted before 1966, he would be entitled to benefits from 1965. See Defendants' Reply Affirmation to Plaintiffs' Opposition to Defendants' Motion for Summary Judgment ("Def. Repl. Aff.") at 7. The jury found for Perreca on this issue. The jury's finding was a significant victory for plaintiffs, and established Perreca's entitlement to coverage based on the earlier promotion date. Therefore, this Court finds plaintiffs to be the prevailing party for ERISA purposes.

  C. Application of the Chambless Factors

  In order to determine whether a prevailing party in an ERISA action can recover attorney's fees, the Second Circuit relies on a five-pronged test: "(1) the degree of the offending party's culpability or bad faith, (2) the ability of the offending party to satisfy an award of attorney's fees, (3) whether an award of fees would deter other persons from acting similarly under like circumstances, (4) the relative merits of the parties' positions, and (5) whether the action conferred a common benefit on a group of pension plan participants." Chambless, 815 F.2d at 871. "No one of these factors is necessarily decisive, and some may not be apropos in a given case, but together they are the nuclei of concerns that a court should address in applying section 502(g)." Iron Workers Local No. 272 v. Bowen, 624 F.2d 1255, 1266 (5th Cir. 1980). Additionally, the balancing of these five factors allows the Court sufficient flexibility to ...


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