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District Court Grants Plaintiff's Motion for Attorneys' Fees Despite Defendants' Success on the Underlying Dispute

Posted by Corey F. Schechter | Jun 20, 2018 | 0 Comments

Erisa litigation 2

In a claim for disability benefits under ERISA, the court granted the plaintiff's motion for attorneys' fees and denied the defendant's request for attorneys' fees despite the defendant's success on the merits.

Olga Gorbacheva filed an ERISA lawsuit after her employer, Abbott Laboratories, denied Gorbacheva's continuing long-term disability benefits. The court remanded Gorbacheva's claim to the plan administrator to consider a favorable Social Security award and Functional Capacity Evaluation.

After further review, the plan administrator denied Gorbacheva's claim. The court granted the defendants' motion for summary judgment finding the plan administrator did not abuse her discretion in denying Gorbacheva's claim for disability benefits.

In Gorbacheva v. Abbott Laboratories Extended Disability Plan, et al., No. 5:14-cv-02524-EJD, 2018 WL 2387852 (N.D. Cal. May 25, 2018), the plaintiff filed a motion for attorneys' fees seeking $191,415 in fees and $1,201 in costs for time spent remanding the claim to the plan administrator. The defendants also filed a motion seeking $264,570 in attorneys' fees and almost $10,000 in costs.

The court granted the plaintiff's motion, in part (with a reduction in fees), and denied the defendants' motion for fees, even though the defendants were ultimately successful on the underlying merits of the case.

The court found that the defendants achieved “some degree of success on the merits.” However, the court found the majority of Hummell factors weighed against an award for attorneys' fees and costs for the defendants.

Hummell Five Factor Test

The court used the five-factor Hummel test to analyze the defendants' request for attorneys' fees. The five factors are as follows:

  1. The degree of the opposing parties' culpability or bad faith;
  2. The ability of the opposing parties to satisfy an award of fees;
  3. Whether an award of fees against the opposing parties would deter others from acting under similar circumstances;
  4. Whether the parties requesting fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA; and
  5. The relative merits of the parties' positions.

The court determined the plaintiff did not engage in bad faith, the plaintiff did not have any means to satisfy the requested award of attorneys' fees, and there was unlikely to be any deterrent effect for others. The court denied the defendant's motion and granted the plaintiff's motion in the amount of $172,273.50, plus costs.

San Diego ERISA Litigation Attorneys

In the recent Ninth Circuit published opinion, Micha v. Sun Life Assurance of Canada, No. 16-55053 (9th Cir. 2017), the Court analyzed the Hummell factors in unanimously reversing the decision of the district court and finding in favor of granting attorneys' fees to Group Disability Benefits Plan for Gynecologic Oncology Associates Partners, LLC (“the Plan”), represented by Marc S. Schechter and Corey F. Schechter of Butterfield Schechter LLP.

If you have any questions about attorneys fees in ERISA litigation, the law firm of Butterfield Schechter LLP is here to help. We are San Diego County's largest law firm with a focus on employee benefits law. Contact our office today with any questions on how we can help you and your company avoid costly litigation and fight for attorneys' fees if the case goes to court.

About the Author

Corey F. Schechter

Corey Schechter practices in the areas of Employee Benefits, Employee Stock Ownership Plans, Pension and Profit Sharing Plans, ERISA, ERISA Litigation, Business Law, Qualified Domestic Relations Orders (QDROs), and Employment and Labor Law.

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