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LaForest v. Honeywell Int'l

June 18, 2009



Appeal from a judgment of the United States District Court for the Western District of New York (Michael A. Telesca, Judge) granting summary judgment for the plaintiffs on their ERISA claim, and awarding them an attorney's fee pursuant to 29 U.S.C. § 1132(g). We conclude that because the ERISA claim was subsequently settled along with all the other substantive claims, the parties cannot appeal from the ERISA judgment. We vacate the award of an attorney's fee because it was predicated on an analysis of both the ERISA claim and, erroneously, a separate LMRA claim. We remand for the district court to consider whether an attorney's fee was warranted based solely on the ERISA claim.

The opinion of the court was delivered by: Sack, Circuit Judge

Argued May 29, 2008

Before: JACOBS, Chief Judge, CALABRESI and SACK, Circuit Judges. Chief Judge Jacobs concurs in part and dissents in part in a separate opinion.


The defendant, Honeywell International, Inc., ("Honeywell") appeals from a judgment of the United States District Court for the Western District of New York (Michael A. Telesca, Judge) in order to challenge the court's award of an attorney's fee*fn1 against it. The underlying action was brought to enforce an employer's 1976 undertaking to guarantee an undiminished level of benefits to employees of three unionized manufacturing plants that the employer had sold to another company. The employees, now employed by the remote successor of the acquiring company, brought suit against Honeywell in its capacity as a successor to the seller, alleging violations of the Labor Management Relations Act, 29 U.S.C. § 141, et seq., ("LMRA"), the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq., ("ERISA"), and contractual rights. In an order that we affirmed in relevant part on a previous appeal, see LaForest v. Former Clean Air Holding Co., 376 F.3d 48 (2d Cir. 2004) ("LaForest I"), the district court entered summary judgment in favor of the plaintiffs under the LMRA. Honeywell eventually complied with that order and the benefit level was secured.

This appeal concerns three orders entered after the district court ruled in plaintiffs' favor under the LMRA: (1) an order dated December 11, 2003, and entered several days thereafter, granting a motion for summary judgment to the plaintiffs on the ERISA claim, LaForest v. Honeywell Int'l, Inc., No. 03 Civ. 6248T (W.D.N.Y. Dec. 15, 2003) (Doc. No. 379) ("LaForest Order I"); (2) a December 21, 2005, consent judgment entered pursuant to a settlement agreement, LaForest v. Honeywell Int'l, Inc., No. 03 Civ. 6248T (W.D.N.Y. Dec. 21, 2005) (Doc. No. 506) ("LaForest Order II"); and (3) a December 1, 2006, order granting the plaintiffs' motion for an attorney's fee, LaForest v. Honeywell Int'l, Inc., No. 03 Civ. 6248T, 2006 WL 3491213, 2006 U.S. Dist. LEXIS 87039 (W.D.N.Y. Dec. 1, 2006) ("LaForest Order III"). Honeywell argues that the district court's December 2003 determination that the case arises under ERISA was erroneous, and that there is therefore no valid predicate judgment upon which to base an attorney's fee award. But because the 2005 settlement encompassed the ERISA claim, and Honeywell reserved only the right to challenge an award of an attorney's fee, Honeywell now has no right to appeal the ERISA judgment. We therefore do not address the merits of the district court's December 2003 determination.

We do, however, review LaForest Order III, the district court's December 2006 order granting an attorney's fee. We conclude that the court erred in basing its fee analysis at least in part on Honeywell's conduct relating to the claim brought under the LMRA. Because the fee award was granted pursuant to a statute permitting fees only for claims arising under ERISA, not the LMRA, we remand for the court to consider whether plaintiffs are entitled to an attorney's fee based solely on their ERISA claim.


In the underlying lawsuit, now settled, the plaintiffs, once employees of Honeywell's remote predecessor Bendix Corporation, sought to establish Honeywell's liability to the plaintiffs under a 1976 "Guaranty" in which Bendix promised to pay insurance premiums necessary to maintain benefit levels for the members of the plaintiff class if the benefits were ever reduced by a successor employer. The Guaranty was entered into in connection with the divestiture by Bendix, pursuant to a 1974 consent decree it entered into with the Federal Trade Commission, see LaForest I, 376 F.3d at 50, of three unionized manufacturing facilities. In order to induce workers at the divested facilities to continue their employment under new ownership, Bendix agreed, in the Guaranty, to preserve their employee welfare and pension benefits for life, at the level in place at Bendix on April 1, 1976, or at a different level subsequently agreed upon between their new employer and the union. Honeywell -- as a successor of Bendix -- is bound by the terms of the Guaranty. Honeywell Int'l, Inc. v. Purolator Prods. Co., 468 F.3d 162, 163 (2d Cir. 2006) ("Honeywell").

In 2002, after the ownership of the plants had passed through several hands, the plaintiffs' benefits were reduced during stalled negotiations for a new collective bargaining agreement. The plaintiffs brought this class action to enforce the Guaranty against Honeywell, asserting a claim under the LMRA, a claim under ERISA, and a claim for promissory estoppel. In sequential rulings, the district court awarded summary judgment on the plaintiffs' LMRA claim, and issued a preliminary injunction essentially providing the plaintiffs with all the relief they sought. On a previous appeal, we affirmed those rulings. See LaForest I, 376 F.3d at 61.

While the appeal of the LMRA ruling was pending, the plaintiffs moved for summary judgment on their ERISA claim. Honeywell opposed the motion and cross-moved for summary judgment on the grounds that under ERISA (i) the Guaranty is not a "plan," and (ii) Honeywell is not an "employer" or otherwise a proper defendant.

On December 11, 2003, the district court found in the plaintiffs' favor on the ERISA claim. LaForest Order I. The court decided that the defendants' liability, previously established under the LMRA, could have been based, alternatively, on ERISA. Id. at 10-11. The ERISA ruling had no impact on the substantive relief previously granted to the plaintiffs. The district court denied Honeywell's petition to certify the ERISA decision for interlocutory appeal.

After we affirmed the LMRA rulings in LaForest I and remanded that part of the case to the district court for clarification and modification of the preliminary injunction, all parties to the litigation -- the plaintiffs, Honeywell, and the third-party defendants -- entered into a settlement agreement resolving all of the plaintiffs' substantive claims. The settlement agreement explicitly preserved the issue of Honeywell's liability for an attorney's fee and costs pursuant to 29 U.S.C. § 1132(g). On December 21, 2005, the district court approved the settlement agreement and entered a consent judgment dismissing all of the plaintiffs' claims with prejudice. LaForest Order II.

After entry of the consent judgment, the plaintiffs moved for an attorney's fee award pursuant to ERISA. While that motion was pending, Honeywell appealed from the district court's 2003 ERISA liability ruling. We decided that "the parties' subsequent settlement mooted all issues other than plaintiffs' pending motion for attorneys' fees and costs." Honeywell, 468 F.3d at 164. We acknowledged that Honeywell was seeking review of the ERISA ruling in order to prevent it from "serv[ing] as a predicate for an award of fees and costs," id., but declined to exercise jurisdiction because the district court had not yet set the amount of the fees and costs, and the appeal might become moot if the district court decided to award no fees at all, id.

On December 1, 2006, the district court decided that the fee request for $932,878 was excessive, and granted a reduced award of $712,038.01 in fees, together with $38,038.01 in costs. LaForest Order III. This appeal, which combines a second appeal of the ERISA judgment with a first appeal of the attorney's fee award, followed.



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