In the 2010 case, Hardt v. Reliance Standard Life Insurance Company, the U.S. Supreme Court in 2010 made clear that the standard regarding a lower court’s award of attorney’s fees in an ERISA matter was “some degree a success on the merits”.  The court made it clear that it was not required for lower courts to use five factor tests which had been developed and used by most courts for some time.

However, the 2nd Circuit in Donachie v.  Liberty Life Assurance Company of Boston, 2014 WL 928971 (2nd Circuit March 11, 2014) concluded that when district courts exercise their discretion, which is not unbounded, it must do so using a framework developed by the 2nd Circuit back in 1987.  This framework is called the five factor test.  The 5 factors are:

  1. the degree of the opposing parties culpability or bad faith;
  2. the ability of opposing parties to satisfy an award of attorney’s fees;
  3. whether an award of attorney’s fees against the opposing parties would deter other persons acting under similar circumstances;
  4. whether parties requesting attorney’s fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve significant legal questions regarding ERISA itself;
  5. and the relative merits of the parties’ positions.

The 11th Circuit has affirmed utilization of the same basic factors in one of our cases, Wright v. Hannah Steel, 270 F. 3d.1336 (11th Cir. 2001).  While the Supreme Court has held this is not required, it does provide a basis against which to measure the district court’s exercise of discretion.