06-5712 | Omnilex

Full text

UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term, 2007

(Argued: May 29, 2008

Decided: June 18, 2009)

Docket No. 06-5712-CV

-X

JAMES LAFOREST, HENRIETTA LAFRINERE, ROBERT LINTZ, RALPH MINER,
LAVERNE SPENCER and IRENE WESOLOWSKI,

Plaintiffs-Appellees,

\- V. -

HONEYWELL INTERNATIONAL INC.,

Defendant-Third-Party-Plaintiff-Appellant,

MOTOR COMPONENTS, L.L.C., BAM ENTERPRISES INCORPORATED, MARK IV
INDUSTRIES, INC., ARVINMERITOR, INC. and PUROLATOR PRODUCTS
COMPANY,
Third-Party-Defendants,

FORMER CLEAN AIR HOLDING COMPANY,
Cross-Defendant.

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

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

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

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.
WILLIAM A. WERTHEIMER, JR., Bingham
Farms, Michigan, for Plaintiffs-
Appellees.

JOSEPH J. COSTELLO (Tamsin J.
Newman, of counsel), Morgan, Lewis
& Bockius LLP, Philadelphia,
Pennsylvania, for Defendant-Third-
Party-Plaintiff-Appellant.

SACK, Circuit Judge :

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' against it. The underlying action was brought to
enforce an employer's 1976 undertaking to guarantee an

"Although the fees sought in this case are for multiple
attorneys, we refer to them in the singular possessive,
'attorney's fee[], ' because that is the term used by [ERISA, 29
U.S.C. § 1132 (g) (1) ] in providing for such awards." NAACP V.
Town of E. Haven, 259 F.3d 113, 115 n.1 (2d Cir. 2001) .

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23

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

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

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.

# BACKGROUND

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

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

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

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

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

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

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.

1
2
3
4
5
6
7
8
9
10
11
12
13

14
15

16
17
18
19
20
21
22
23

1
2

# DISCUSSION

We previously ruled that the parties' settlement of all
claims "mooted all issues other than plaintiffs' pending motion
for attorneys' fees and costs." Honeywell, 468 F.3d at 164. We
therefore declined to address the merits of the district court's
grant of summary judgment on the issue of ERISA liability. Id.
Insofar as Honeywell argued that we should review the issue of
ERISA liability "because it could serve as a predicate for an
award of fees and costs, " we decided that because the district
court at the time had not yet awarded fees or costs, there was no
appealable final order addressing the issue. Id.

Because there is now an appealable final order
regarding fees and costs, that order is ripe for review. Both
parties seem to assume that we can now also review the issue of
ERISA liability. We disagree.

" [W]hen a case is settled, 'the losing party has
voluntarily forfeited his legal remedy by the ordinary processes
of appeal or certiorari.
1 11
Microsoft Corp. v. Bristol

Tech., Inc., 250 F.3d 152, 154 (2d Cir. 2001) (per curiam)
(quoting U. S. Bancorp Mortgage Co. v. Bonner Mall P'ship, 513
U.S. 18, 25 (1994) ) ; see also Long Island Lighting Co. v. Cuomo,
888 F.2d 230, 233 (2d Cir. 1989) ("Such a[] [settlement]
agreement clearly renders this case moot. "). "Appeal from a

3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

consent judgment is generally unavailable on the ground that the
parties are deemed to have waived any objections to matters
within the scope of the judgment. " New York ex rel. Vacco v.
Operation Rescue Nat'l, 80 F.3d 64, 69 (2d Cir. 1996) .

In the court-endorsed settlement agreement, the
defendants reserved only "their rights, including any rights on
appeal, to dispute whether any attorneys' fees or costs are
recoverable under 29 U.S.C. § 1132 (g), or on any other basis, as
well as the number of hours that might be recoverable and the
rate (s) ." Settlement Agreement | 15.3, LaForest v. Honeywell
Int'l, Inc., No. 03 Civ. 6248T (W.D.N.Y. Dec. 21, 2005) (Doc. No.
505) . The defendants thus did not expressly preserve the right
to appeal the ERISA judgment against them. We agree with the
First Circuit: " [F]or a party to consent to a judgment and still
preserve his right to appeal, he must reserve that right
unequivocally, as it will not be presumed." Coughlin v. Regan,
768 F.2d 468, 470 (1st Cir. 1985) .

That the settled ERISA claim may have constituted the
predicate to the fee award does not take that claim outside the
scope of the consent judgment. We confronted a similar situation
in Doyle v. Kamenkowitz, 114 F.3d 371 (2d Cir. 1997). There, the
district court granted partial summary judgment for a subset of
defendants, entitling them to an award of attorney's fees. Id.
at 373. The parties then settled the claims, but expressly

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

preserved the right to appeal a judgment awarding attorney's
fees. Id. at 374. The plaintiffs, against whom attorney's fees
were assessed, attempted to challenge the underlying orders
granting summary judgment that made attorney's fees possible on
the theory that those orders "constituted the predicate to the
fee judgment, by making the defendant officers prevailing
defendants for purposes of recovering fees." Id. (brackets and

internal quotation marks omitted). We declined to address the
correctness of the underlying summary judgment orders, concluding
that "all disputes bearing on the merits of the underlying action
were mooted by the Stipulated Order of Dismissal." Id. at 374-
75. We reach the same conclusion here.

The parties' arguments are premised on an assumption
that de novo review of the ERISA judgment is available. But
" [w] ant of jurisdiction . . . may not be cured by consent of the
parties." Indus. Addition Ass'n v. Comm'r, 323 U.S. 310, 313
(1945) . All disputes regarding the underlying merits of the
action have been rendered moot by the settlement. Cf. Agee v.
Paramount Commc'ns, Inc., 114 F.3d 395, 398 (2d Cir. 1997)
("Article III of the Constitution limits this Court to
consideration of appeals involving a live case or controversy. ") .
Our jurisdiction over this appeal extends only as far as the
attorney's fee award. See Doyle, 114 F.3d at 374 (reviewing fee

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23

1
2

award where settlement agreement "expressly preserved" the issue) .

A. Attorney's Fee Awards under ERISA; Standard of Review

We review the award of an attorney's fee in an ERISA
action for abuse of discretion. Paese v. Hartford Life &
Accident Ins. Co., 449 F.3d 435, 450 (2d Cir. 2006). A district
court "abuses its discretion if its conclusions are based on an
erroneous determination of law, or on a clearly erroneous
assessment of the evidence." Matthew Bender & Co. v. West Publ'g
Co., 240 F.3d 116, 121 (2d Cir. 2001) (internal quotation marks
and citations omitted) .

ERISA provides that " [i]n any action [brought under

ERISA]
by a participant, beneficiary, or fiduciary, the
court in its discretion may allow a reasonable attorney's fee and
costs of action to either party." 29 U.S.C. § 1132 (g) (1) . The
determination whether to "allow" an attorney's fee under ERISA
requires the court to weigh 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.

Chambless v. Masters, Mates & Pilots Pension Plan, 815 F.2d 869,
871 (2d Cir. 1987) .

3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29

B. The District Court's Decision

The district court, invoking the Chambless test,
decided that all five factors weighed in favor of granting the
plaintiffs' motion for a fee award. The court expressly analyzed
only two of the Chambless factors, however: the degree of the
offending party's culpability or bad faith and whether a fee
award would deter other persons from acting similarly under like
circumstances. The court decided that both factors weighed in
favor of a fee award, and concluded that the other three factors
were not in dispute. LaForest Order III, 2006 WL 3491213, at *2
n.4, 2006 U.S. Dist. LEXIS 87039, at *8 n.4. The court likely
elided its written analysis of the other three factors because
Honeywell, in its opposition to the motion for an attorney's fee,
stated that "if this were an ERISA case, Plaintiffs would be
entitled to some sort of fee award." Mem. in Opp'n to Pls. ' Mot.
for Att'ys' Fees and Costs 10, Laforest v. Honeywell Int'l Inc.,
No. 03 Civ. 06248T (W.D.N.Y. Jan. 30, 2006) (Doc. No. 514) .
Honeywell then went on to argue that the district court should
nonetheless "decline to award the entire sum requested by
Plaintiffs, " because "two of the Chambless factors -- culpability
and deterrence -- weigh against Plaintiff." Id. In light of
this possible concession, the district court, having decided not
to revisit its finding that ERISA liability was established,
apparently decided that these two factors were the only ones in
dispute, and that the three others -- the ability of the

23
24
25

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22

offending party to satisfy a fee award, the relative merits of
the parties' positions, and whether the action conferred a common
benefit on a group of pension plan participants -- were not.
With respect to the culpability factor, the district
court found that " [w]hile there [had been] no [prior] specific
finding of bad faith or culpable conduct on the part of
Honeywell" by the court, Honeywell had "reluctantly complied with
the Court's directives." LaForest Order III, 2006 WL 3491213, at
*2, 2006 U.S. Dist. LEXIS 87039, at *9. " [R]eluctant [] " may be a
proper characterization of Honeywell's compliance with the
court's orders, pursuant to its LMRA ruling, to provide the level
of coverage required under the Guaranty, as evidenced by the
injunction forcing Honeywell to comply. See LaForest I, 376 F.3d
48. But there is no evidence of which we are aware that
Honeywell was reluctant to comply with any subsequent court order
relating to the ERISA claim. It thus appears that the district
court based its culpability analysis on the conduct of Honeywell
regarding the litigation of the claim against it under the LMRA,
a statute that, unlike ERISA, does not provide for an award of an
attorney's fee. If this was what the court did, it was error.
See Chambless, 815 F.2d at 872 (requiring district court to
evaluate the five factors with respect to the ERISA claim rather
than other claims in the lawsuit) .

The district court also found that the deterrence
factor weighed in favor of finding that an attorney's fee was

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

justified because "an award of fees may deter defendants that are
similarly situated to Honeywell and other plan fiduciaries who do
not honor clear and unambiguous contractual obligations because
it is not in their economic interest to do so." LaForest Order
III, 2006 WL 3491213, at *2, 2006 U.S. Dist. LEXIS 87039, at *9-
*10. This appears to be a reference to Honeywell's breach of its
contractual obligations under the LMRA. While the court was
likely correct that fee awards may deter those who seek to break
their contractual obligations in violation of the LMRA, that is
beside the point. The question here is whether the award would
deter ERISA fiduciaries from unlawful behavior. Rather than
looking to Honeywell's behavior with regard to the LMRA, the
district court should have analyzed the Chambless deterrence
factor with reference solely to the ERISA claim.

III

For these reasons, we remand for the district court to
re-examine and clarify its analysis relating to the culpability
factor and the deterrence factor, focusing solely on the ERISA
claim.

The other three factors were not addressed by the
parties or by the district court. On remand, the district court
should decide whether they have effectively been conceded in the
plaintiffs' favor by Honeywell, and if not, consider them in the
first instance.

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

Finally, we note that our finding in Part I, above,
that we must treat ERISA liability as having been established
does not necessitate an award of an attorney's fee. Chief Judge
Jacobs has not persuaded us, however, by his partial dissent,
that on the current record and as a matter of law, an attorney's
fee award cannot be justified upon the district court's
completion of its re-analysis of the matter applying the
Chambless factors in accordance with this opinion.

# CONCLUSION

For the foregoing reasons, we vacate the district
court's judgment insofar as it awarded an attorney's fee to the
plaintiffs, and remand for the district court to analyze whether
an attorney's fee is justified based solely on the ERISA claim.

1
2
3
4
5
6
7
8
9
10
11
12
13

DENNIS JACOBS, Chief Judge, concurring in part and
dissenting in part :

Back in August 2003, the district court decided the
substantive issues in this case: the plaintiffs won summary
judgment on their claim under the Labor Management Relations
Act, 29 U.S.C. § 141, et seq., ( "LMRA"), and secured all the
benefits they were promised by Honeywell's predecessor-in-
interest. We affirmed in July 2004. The parties resolved
everything that remained in a settlement agreement approved
by the district court in 2005. But it has not been enough
for plaintiffs to litigate, and win, under the LMRA. They
continue litigating another theory of their complaint, which
presents for resolution other and novel legal questions,
solely to obtain the same relief, secured years earlier,
under a statute that provides for an attorney's fee (the
Employee Retirement Income Security Act of 1974, 29 U.S.C.
§ 1001, et seq., ("ERISA") ). This is the eternal afterlife
of litigation.

I join the Court's decision except insofar as the
majority is remanding for the district court to determine
whether an award of an attorney's fee is appropriate. I
would simply reverse the award of fees, on the ground that

the district court committed clear error in its analysis of
the factors listed in Chambless v. Masters, Mates & Pilots
Pension Plan, 815 F.2d 869, 871 (2d Cir. 1987), and that a
proper consideration of those factors forecloses any award
of fees. Specifically, remand is unnecessary because
plaintiffs cannot carry their burden of establishing that
the merits-based factors weigh in their favor. Because I
would reverse the district court's award of an attorney's
fee, I respectfully dissent from section III of the Court's
decision, and the mandate.

Of the five Chambless factors, just one (ability to
pay) militates in favor of a fee award:

(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.

Chambless, 815 F.2d at 871. I consider the remaining
factors one by one.

## I. Culpability or Bad Faith

The district court conceded that its prior decisions
made "no specific finding of bad faith or culpable conduct

on the part of Honeywell." LaForest v. Honeywell Int 'l,
Inc., No. 03 Civ. 6248T, 2006 WL 3491213, at *2, 2006 U.S.
Dist. LEXIS 87039, at *9 (W.D.N.Y. Dec. 1, 2006) ("LaForest
Order") . It nonetheless found that this factor weighed in
plaintiffs' favor because Honeywell complied "reluctantly"
with the court's orders, which pertained to the LMRA claim,
as manifested by Honeywell's continuing to litigate, after
issuance of the LMRA judgment, how to structure the relief

sought. But we have never held that mounting a defense
rises to the level of culpable conduct under Chambless. Cf.

United States v. Seltzer, 227 F.3d 36, 40 (2d Cir. 2000)
(observing that "zealous advocacy," absent bad faith, is
insufficient for imposition of sanctions against attorney) .

Moreover (as explained in the Court's opinion), the
district court based its culpability analysis on Honeywell's
conduct in litigating the LMRA claim, a statute that does
not provide for the award of attorneys' fees. The district
court made no finding of culpability or bad faith in
connection with the ERISA claim. The majority elects to
remand to permit the district court to clarify its position
on this issue. I believe that remand is gratuitous because
Honeywell manifestly acted in good faith when it took the

position (justified by our precedents) that plaintiffs
failed to state a cognizable ERISA claim. See Salovaara v.
Eckert, 222 F.3d 19, 29-30 (2d Cir. 2000) (declining to find
bad faith against party whose reading of ERISA statute was
neither "frivolous" nor "entirely devoid of merit"). It is
in fact very difficult to say what the ERISA claim here may
be, considering the lively questions as to whether the
Guaranty is an ERISA plan, see Fort Halifax Packing Co. v.
Coyne, 482 U.S. 1, 11 (1987), and whether Honeywell is an
ERISA employer, see Greenblatt v. Delta Plumbing & Heating
Corp., 68 F.3d 561, 575-76 (2d Cir. 1995). The district
court clearly erred in weighing this factor in plaintiffs'
favor.

### II. Deterrence

The district court found that a fee award would be
useful deterrence for Honeywell and others similarly
situated "who do not honor clear and unambiguous contractual
obligations because it is not in their economic interest to
do so." LaForest Order, 2006 WL 3491213, at *2, 2006 U.S.
Dist. LEXIS 87039, at *10. Here again, the district court
erroneously considered the deterrent influence of an ERISA
fee award on acts taken in the context of the LMRA claim.

The district court made no findings of deterrent value in
connection with the ERISA claim.

It is hard to see why Honeywell (or persons similarly
situated) should be deterred from litigating an ERISA claim
(such as plaintiffs' ) that is of such dubious merit.
Moreover, "it is unlikely that [an ERISA fee] award would
deter others from similar conduct [where] the defendant had
a colorable defense to the plaintiff's cause of action."
Leyda v. AlliedSignal, Inc., 322 F.3d 199, 210 (2d Cir.
2003) (internal quotation marks omitted). " [T]here was no
reason to infer that an award of fees would have any greater
deterrent effect than that resulting from the imposition of
liability
Id. at 211.

In view of the strength of Honeywell's defenses to the
ERISA claim, no effective deterrence would be achieved by a
fee award; indeed, there is no reason to wish that the
assertion of strong defenses should be suppressed. This
factor weighs against an award of fees.

#### III. Relative Merits

The district court did not explain why the relative
merits militated in favor of a fee award, apparently
assuming that this Chambless factor favored plaintiffs in

view of the pre-settlement ERISA liability ruling. This
assumption was error.

Throughout this litigation, Honeywell has vigorously
contested whether the Gauranty of benefits given by its
predecessor-in-interest constitutes an employee welfare
benefit plan. On appeal after the district court granted
summary judgment in favor of plaintiffs on the ERISA claim,
we concluded that Honeywell's obligation under the Guaranty
was an "ordinary contractual promise" to "guarantee" stable
benefit levels by paying insurance premiums if the
employees' benefits fell below a certain level. See
LaForest v. Former Clean Air Holding Co., 376 F.3d 48, 53
(2d Cir. 2004). It is difficult to reconcile this finding
with the conclusion that Honeywell is an "employer" for
purposes of ERISA. See Greenblatt, 68 F.3d at 575-76
(holding that a surety does not become an employer based on
its contractual obligation to "guarantee [] an employer's
ERISA obligations") .

In its decision granting an attorney's fee, the
district court declined to reconsider the very good question
of whether "this is an ERISA" case. That refusal was
justified insofar as Honeywell waived the right to

relitigate the order granting summary judgment under ERISA.
See Maj. Op. at 9-10 (citing Doyle v. Kamenkowitz, 114 F.3d
371 (2d Cir. 1997) ) . But the district court was not
deprived of the opportunity -- or relieved of the obligation --
to assess the strength of the parties' arguments in weighing
the "relative merits" Chambless factor. We stated in a
prior decision in this case that if "the district court's
decision regarding Honeywell's ERISA liability was in error
the pending motion for fees and costs would provide
the district court with an opportunity for
'self-correction. '" See Honeywell Int'l, Inc. v. Purolator
Prods. Co., 468 F.3d 162, 164 (2d Cir. 2006) (quoting In re
Grand Jury Proceedings, 827 F.2d 868, 871 (2d Cir. 1987)) .
Viewed indulgently, this factor presents a close
question. But a close question is insufficient to justify a
fee award, because the remaining factors weigh heavily in
Honeywell's favor.

##### IV. Common Benefit

The district court also failed to explain its analysis
of common benefit, again assuming that this factor favored
plaintiffs. But that assumption depends on finding that the
ERISA claim "conferred a common benefit on a group of
pension plan participants." Chambless, 815 F.2d at 871.

Because plaintiffs already won the relief they sought when
they prevailed on the LMRA claim, the ERISA claim conferred
no incremental benefit whatsoever. It is undisputed, as
this Court observed in a previous ruling in this case, that
the parties continued to litigate the ERISA claim "solely
because it could serve as a predicate for an award of fees
and costs." See Honeywell Int'l, 468 F.3d at 164.

Nor can it be argued that the ERISA claim conferred a
common benefit by motivating the settlement: (a) the
settlement was concluded only after the LMRA rulings were
affirmed by this Court; (b) Honeywell brought this appeal to
challenge the ERISA ruling, and plaintiffs joined issue on
the merits, evidencing the parties' belief (though mistaken)
that the ERISA issue remained open; and (c) it is conceded
on appeal that (were the issue justiciable) reversal of the
ERISA judgment would not affect the relief provided to
plaintiffs in the settlement. Thus, the common benefit
factor in the Chambless analysis weighs decisively against
an award of fees to plaintiffs.

\*
\*

As the district court's assessment of the Chambless
factors was clearly erroneous, an award of fees to
plaintiffs was an abuse of discretion. Remand is not

indicated because in any event the plaintiffs would be
unable to sustain their burden of establishing that the
merits-based Chambless factors weigh in their favor in
reverse the award of an attorney's fee.

connection

with

the

ERISA claim.

See

Savoie v. Merchants

Bank, 166

F.3d

456,

463 (2d Cir.

1999)

(" [T]he party seeking

fees

bore

the

burden of

establishing

entitlement to an

award

(internal quotation

marks

omitted) ) . I would

August Term, 2007 Argued: May 29, 2008 Decided: June 18, 2009 Docket No. 06-5712-CV… v. - Honeywell International Inc

Full text

Continue your research in ChatGPT or Claude