10-2284 & 10-3046 Kolbe & Kolbe Health & Welfare Benefit Plan v. The Medical College of Wisconsin, Inc.

Listen to this article

Employment
ERISA; attorney fees

Where an ERISA claim was not brought in bad faith, it was error to order the plaintiff to pay the defendant’s attorney fees.

“In this case, the district court found ‘that a closer look at the applicable law would have alerted plaintiffs’ counsel to the lack of merit of most of their arguments’ and found ‘an element of “shabbiness” about plaintiffs’ conduct.’ Kolbe & Kolbe Health & Welfare Benefit Plan v. Medical Coll. of Wis., Inc., No. 09-cv-205-bbc, 2010 U.S. Dist. LEXIS 60904, at *5 (W.D. Wis. June 18, 2010). More specifically, the court found that plaintiffs’ claim under § 502(a)(3) ‘was clearly without merit,’ id. at *6, and also concluded that plaintiffs were not substantially justified in bringing their state common law claims, id. at *12. The district court, however, did find that plaintiffs had substantial justification to bring its claim for federal common law unjust enrichment. Id. at *10. In reaching these conclusions, the district court looked to both of the tests mentioned above, and ultimately ordered plaintiffs to pay $62,149.93 for work done in the defense of plaintiffs’ § 502(a)(3) and state law claims. We find that this was an abuse of the district court’s discretion.”
“Here, we find that plaintiffs’ litigation position in bringing all of their claims was substantially justified and taken in good faith without the purpose of harassing defendants. In fact, the district court noted that it would be hard-pressed to characterize plaintiffs’ claims as ‘harassment’ in this case. That, coupled with the fact that we find that plaintiffs’ litigation position was certainly not unreasonable, leads us to conclude that the district court abused its discretion in awarding attorney fees in this case. Accordingly, the district court’s award of attorney fees is reversed.”
Affirmed in part, and Reversed in part.

10-2284 & 10-3046 Kolbe & Kolbe Health & Welfare Benefit Plan v. The Medical College of Wisconsin, Inc.

Appeals from the United States District Court for the Western District of Wisconsin, Crabb, J., Herndon, J.

Full Text