United States District Court, S.D. Indiana, Indianapolis Division
KENNETH W. FARR, Plaintiff,
ROLLS-ROYCE CORP., ET AL., Defendants.
JANE MAGNUS-STINSON, District Judge.
Plaintiff Kenneth W. Farr brought this suit against Defendants Rolls-Royce Corp., Rolls-Royce North American, Inc., Rolls-Royce North America Holdings, Inc., and Rolls-Royce North American (USA) Holdings Co. (collectively, "Rolls-Royce"), alleging violations of the Employee Retirement Income Security Act ("ERISA") and state law. [Filing No. 1.] The Court granted summary judgment to Rolls-Royce on Mr. Farr's ERISA claim and declined to exercise supplemental jurisdiction over Mr. Farr's state-law claims, and Final Judgment was entered. [Filing No. 34; Filing No. 35.] Presently pending before the Court are Rolls-Royce's Motion for Attorney Fees pursuant to 29 U.S.C. § 1132(g)(1), [Filing No. 50], Mr. Farr's Motion for Attorney Fees pursuant to 28 U.S.C. § 1927, [Filing No. 60], and Mr. Farr's Motion for Evidentiary Hearing on Rolls-Royce's Motion for Attorney Fees, [Filing No. 61].
In conjunction with the final brief on these motions, the Court was informed that Mr. Farr has initiated a Chapter 13 Bankruptcy proceeding, [Filing No. 65-1], which triggers an automatic stay in this case as to Mr. Farr, see 11 U.S.C. § 362. Therefore, Mr. Farr's Motion for Attorney Fees, [Filing No. 60], and Mr. Farr's Motion for Evidentiary Hearing, [Filing No. 61], are DENIED WITHOUT PREJUDICE. As to Rolls-Royce's Motion for Attorney Fees, Rolls-Royce seeks attorneys' fees jointly and severally from Mr. Farr and Mr. Farr's counsel. [ See Filing No. 50 at 4; Filing No. 52 at 8.] Due to the automatic stay, Rolls-Royce's request for attorneys' fees from Mr. Farr is DENIED WITHOUT PREJUDICE. For the reasons explained below, Rolls-Royce's request for attorneys' fees from Mr. Farr's counsel is DENIED WITH PREJUDICE.
The Court draws the following factual background from its opinion granting Rolls-Royce's Motion for Summary Judgment. [Filing No. 34.]
Mr. Farr was employed by Rolls-Royce for over sixteen years, from 1994 to 2011. [Filing No. 25-1 at 2; Filing No. 32-1 at 1.] During his employment, Rolls-Royce offered all "Legacy Employees, " such as Mr. Farr, an incentive payment to transition from the "EPO/PPO" health benefit plan to a high-deductible health benefit plan (the "Incentive Program"). [Filing No. 25-1 at 3.] The Incentive Program offered Legacy Employees a lump sum payment of "up to $75, 000.00 based on years of credited service." [Filing No. 32-2 at 1.] The payment for a particular employee depended on the number of years the employee had worked for Rolls-Royce multiplied by an amount corresponding to the year during which the employee agreed to transition to the highdeductible plan ($2, 500 in 2011; $1, 250 in 2012; $1, 000 in 2013). [Filing No. 32-2 at 1.] On August 9, 2011, Mr. Farr signed a document agreeing to take part in the Incentive Program. [Filing No. 32-1 at 5.] Based on his sixteen years of service, Mr. Farr was entitled to $40, 000 under the Incentive Program. [Filing No. 32-1 at 5.] Rolls-Royce never paid Mr. Farr any money pursuant to the Incentive Program. [Filing No. 32-1 at 2.]
Mr. Farr was terminated by Rolls-Royce, and following his termination, brought the instant suit to recover the $40, 000 he maintained he was owed under the Incentive Program. [Filing No. 1.] Rolls-Royce moved for summary judgment on Mr. Farr's claims, arguing that the Incentive Program was not an ERISA plan and thus Mr. Farr's ERISA claim necessarily failed. [Filing No. 23.] The Court agreed, and thus granted Rolls-Royce's Motion for Summary Judgment. [Filing No. 34.]
Mr. Farr's pending Chapter 13 bankruptcy proceeding triggered an automatic stay in this case with respect to him. See 11 U.S.C. § 362. Therefore, the Court only addresses whether Rolls-Royce is entitled to attorneys' fees under ERISA from Mr. Farr's counsel. Because the parties' arguments regarding the propriety of an award of attorneys' fees under ERISA from Mr. Farr or Mr. Farr's counsel are identical, the Court refers to the arguments as Mr. Farr's for simplicity's sake, even though the Court decides the issue only with respect to Mr. Farr's counsel.
ERISA provides that "[i]n any action under this subchapter... 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). Rolls-Royce argues that it is entitled to attorneys' fees pursuant to § 1132(g)(1), [Filing No. 52; Filing No. 58], while Mr. Farr maintains that § 1132(g)(1) is inapplicable, [Filing No. 57]. First, the parties dispute whether fees can be awarded pursuant to ERISA given that the Court found that it lacked subject-matter jurisdiction over Mr. Farr's ERISA claim. Second, even if fees can be awarded under § 1132(g)(1), the parties dispute whether fees are warranted in this case. The Court addresses each of the arguments in turn.
A. The Court's Decision Regarding Mr. Farr's ERISA Claim was a Decision on the Merits; Therefore Rolls-Royce can Pursue Fees under § 1132(g)(1)
Mr. Farr contends that Rolls-Royce cannot seek fees under § 1132(g)(1)-which applies only to "any action under this subchapter"-because the Court determined that it lacked subject-matter jurisdiction over Mr. Farr's ERISA claim. [Filing No. 57 at 5-8.] Rolls-Royce responds that the cases cited by Mr. Farr in support of his argument were decided before the Supreme Court's decision in Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242 (2010), where, according to Rolls-Royce, the Supreme Court held ...