Appeal by Arthur and Mildred Chambless from orders of the United States District Court for the Southern District of New York, Robert L. Carter, J., denying their request for attorney's fees and refusing to amend the judgment to specify the amount of an ERISA pension benefit. Affirmed in part and reversed in part.
Before: FEINBERG, Chief Judge, VAN GRAAFEILAND and PIERCE, Circuit Judges.
This case requires review of the standards for the award of attorney's fees under the Employee Retirement Income Security Act (ERISA) 29 U.S.C. §§ 1001-1461. Plaintiffs Arthur and Mildred Chambless (Chambless appeal from orders of the United States District Court for the Southern District of New York, Robert L. Carter, J., denying their motion for an award of attorney's fees and their motion to amend the judgment. For reasons set forth below, we affirm in part and reverse in part.
This is the second time this case has come before us. On the prior appeal and cross-appeal, we affirmed Judge Carter's holding that a pension plan amendment postponing and reducing Chambless' pension rights was arbitrary and capricious and therefore void. Chambless v. Masters, Mates & Pilots Pension Plan, 772 F.2d 1032 (2d Cir. 1985), cert. denied, 475 U.S. 1012, 106 S. Ct. 1189, 89 L. Ed. 2d 304 (1986). Although familiarity with that opinion is assumed, we will recite those facts necessary to understand the present appeal.
Chambless originally brought suit against the Masters, Mates & Pilots Pension Plan (the Plan), its trustees, its administrator and a variety of other parties. The complaint alleged a host of wrongs, including various ERISA violations, restraint of trade and breach of the duty of fair representation. Judge Carter granted defendants summary judgment on many of Chambless' claims, see Chambless v. Masters, Mates & Pilots Pension Plan, 571 F. Supp. 1430 (S.D.N.Y. 1983), and dismissed others at the close of Chambless' case at trial. What remained was Chambless' contention that Amendment 47 of the Plan was arbitrary and capricious.
Amendment 47 was part of an effort by the International Organization of Masters, Mates & Pilots (the Union) to pressure older deck officers to retire, thereby creating openings for younger officers so that the younger officers would be content with their union affiliation. As part of this effort, the Union began assigning senior deck officers to lower grade, and lower paying, assignments, Chambless v. Masters, Mates & Pilots Pension Plan, 602 F. Supp. 904, 911 (S.D.N.Y. 1984), aff'd, 772 F.2d 1032 (2d Cir. 1985), cert. denied, 475 U.S. 1012, 106 S. Ct. 1189, 89 L. Ed. 2d 304 (1986). Since pension benefits under the Plan are wage-related, accepting lower paying jobs reduced their senior officers' pensions.
An older deck officer who refused to accept the low grade assignments had the option of either retiring or entering the employ of a company not affiliated with the Plan. Amendment 47 decreased the attractiveness of the latter option, however, by providing that an unretired officer, with vested rights under the Plan, who worked for a company that did not participate in the Plan would not receive pension benefits until age 65. In contrast, a retired officer who subsequently worked for a plan participant had to wait no more than six months after he again retired for his pension benefits to resume, regardless of his age. Thus, by delaying their pensions, Amendment 47 effectively punished plan participants for working for non-participant employers. See 772 F.2d at 1039.
The punitive effect of Amendment 47 on Chambless was twofold. By accepting work from a company not participating in the Plan, Chambless would not only forfeit rights to his pension for the almost ten years until he reached age 65, but because of the wage-related provision, "the forfeiture carried an added penalty of halving the benefits . . . he would receive." 602 F. Supp. at 910. Chambless, who had accepted work outside the Plan, brought suit to contest the validity of Amendment 47. The district court found that Amendment 47 violated ERISA, 602 F. Supp. 904, and this court affirmed the judgment and remanded "for a determination of the benefits which Chambless would have received in 1977," 772 F.2d at 1043.
After our decision in this case, Chambless moved in the district court to amend the prior judgment in order to calculate the pension benefit to which he was entitled and for an award of attorney's fees. The district court summarily denied the request to amend the judgment and in a separate opinion denied the request for attorney's fees. We first address the request for attorney's fees.
An application for attorney's fees in an ERISA case is governed by 29 U.S.C. § 1132(g)(1).*fn1 Ordinarily, the decision is based on five factors: (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. See Ford v. New York Central Teamsters Pension Fund, 506 F. Supp. 180, 183 (W.D.N.Y. 1980), aff'd., 642 F.2d 664 (2d Cir. 1981) (per curiam).
Judge Carter applied the five-factor test to Chambless' motion for attorney's fees. Although he concluded that each of the first four factors "must be decided in plaintiffs' favor" and that Chambless' suit did confer a common benefit, he declined to award fees. The decision of whether to award fees lines within the discretion of the district court. See Fase v. Seafarers Welfare and Pension Plan, 589 F.2d 112, 116 (2d Cir. 1978). However, because Chambless satisfied each element ...