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Media Alerts - Templin v. Independence Blue Cross - Third Circuit
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May 11, 2015
  Templin v. Independence Blue Cross - Third Circuit
Headline: Litigation Activity a Catalyst for Attorney's Fees Under ERISA, Third Circuit Holds

Area of Law: ERISA, Attorneys' Fees

Issues Presented:

Under ERISA, does litigation activity that produces a settlement suffice to establish "some degree of success on the merits" for purposes of awarding attorney's fees under that statute?

Brief Summary:

Plaintiffs sought pre-settlement interest on insurance claims arising under ERISA and obtained a second settlement for that interest. Subsequently, Plaintiffs sought to obtain attorney's fees. The district court denied the request on the ground that no judicial action had taken place which was required for to show the requisite degree of success to be eligible for attorney's fees. The Third Circuit held that litigation activity generally, and not merely judicial action, is sufficient to justify the "success" necessary to be eligible for attorney's fees. Further, the Third Circuit held that the district court had improperly applied mandatory factors for granting or denying attorney's fees and remanded on that basis.

Extended Summary:
Plaintiffs sought attorney's fees after settling ERISA denial of benefits litigation with Defendant insurance companies and their request was denied. The Third Circuit had previously affirmed the denial of attorney's fees and remanded for a determination of whether Plaintiffs were owed interest on the delayed payment of benefits. The insurance companies ultimately settled on the interest claims and Plaintiffs again sought attorney's fees and costs of $349,385.15. The district court denied attorney's fees on the grounds that Plaintiffs had failed to show the required "degree of success on the merits" largely because the case had settled before liability was determined and because the amount settled for was far smaller than the amount originally sought. The district court rejected the applicability of the "catalyst" theory - where litigation produces a settlement - when there was no judicial action taken to produce it.

The Third Circuit first examined the general applicability of the catalyst theory under ERISA. The Third Circuit noted that a claimant does not have to be a prevailing party in a judicial proceeding to recover attorney's fees under ERISA. The Third Circuit held that the catalyst theory is therefore available and district courts are granted broad discretion in awarding attorney's fees based on whether plaintiff achieved some degree of success on the merits. The Third Circuit then held it was error to exclude litigation activity as a potential catalyst for settlement. Where the settlement award is non-trivial on a non-procedural matter, the Third Circuit held that litigation activity is sufficient to establish the required degree of success for attorney's fees under ERISA and judicial action is not required.
Finally the Third Circuit examined the district court's application of the mandatory "Ursic factors" for determining whether to grant attorney's fees. The Third Circuit held that the district court had misapplied the factors and reversed and remanded the district court's decision for reapplication of the Ursic factors.

Find the full opinion at:

Panel: Ambro, Fuentes, and Nygaard, Circuit Judges

Argument Date: October 21, 2014

Date of Issued Opinion: May 8, 2015

Docket Number: No. 13-4493

Decided: Reversed and Remanded

Case Alert Author: Philip Jones


Timothy S. Cole, Esq., Anthony J. Pauduano, Esq. (argued) for Plaintiffs

David L. Comerford, Esq., Katherine M. Katchen, Esq. (argued), Matthew R. Varzally, Esq. for Appellees Independence Blue Cross and QCC Insurance Co.

John P. Kahn, Esq., Jeffrey M. Kolansky, Esq., Mark J. Oberstaedt, Esq. (argued) for Appellee Carefirst Inc.

Author of Opinion: Nygaard, Circuit Judge

Circuit: Third Circuit

Case Alert Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 05/11/2015 02:25 PM     3rd Circuit  

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