United States District Court, W.D. Michigan, Southern Division
[Copyrighted Material Omitted]
For Charles Huizinga, plaintiff, counter-defendant: Katherine Smith Kennedy, LEAD ATTORNEY, Pinsky Smith Fayette & Kennedy LLP, Grand Rapids, MI.
For Genzink Steel Supply and Welding Co., Ken Genzink, ndividually and/or Personally, Don Genzink, Individually and/or Personally, defendants: Mark H. Verwys, Sandra J. Densham, Plunkett Cooney (Grand Rapids), Grand Rapids, MI.
For Genzink Steel Supply and Welding Co., counter-claimant: Mark H. Verwys, Sandra J. Densham, Plunkett Cooney (Grand Rapids), Grand Rapids, MI.
CORRECTED OPINION and ORDER
HON. ROBERT J. JONKER, UNITED STATES DISTRICT JUDGE.
This matter is before the Court on Plaintiff Charles Huizinga's motion for attorney's fees (docket #218) and Defendants Genzink Steel Supply and Welding Co. and Ken Genzink's (collectively " Defendants" ) motion for attorney's fees (docket #220). Huizinga requests $171,748.45  in attorney's fees and $7,918.13 in costs. Defendants seek $332,607 in attorney's fees.
On March 4, 2010, Huizinga filed a four-count complaint, alleging (1) breach of ERISA fiduciary duty, (2) wrongful discharge under ERISA, (3) violation of the Michigan Whistle-blowers' Protection Act, and (4) violation of Michigan public policy. Defendants filed a counterclaim against Huizinga for breach of fiduciary duty. ( See docket #16 (amended counterclaim).) On June 4, 2010, Huizinga filed an amended complaint, adding a fifth claim for ERISA retaliation for Defendants' filing of a counterclaim in this case. (Docket #70.) On June 30, 2011, the Court granted summary judgment to Defendants on Counts Three through Five. (Docket #121.) The Court also granted Huizinga's motion for summary judgment with respect to Defendants' counterclaim, finding that " no reasonable fact-finder could conclude that [Huizinga] breached any applicable fiduciary duty he owed as an employee and CFO . . . based on the specific incidents alleged."  ( Id. at 2579.) On June 6, 2012, the Court also granted summary judgment in favor of Huizinga on his claim that Ken and Don Genzink breached their Employee Retirement Income Security Act (" ERISA" ) fiduciary duty to Genzink Steel Supply and Welding Company's 401k plan (" Plan" ) (Count One). (Docket #155.)
The Court held a four-day bench trial in May 2013 on the remaining two issues: (1) the appropriate remedy for Defendants' breach of their fiduciary duty (Count One), and (2) whether Huizinga was fired in retaliation for saying that he was going to inform the government of the fees charged by the Plan's administrator, Ron Roti (Count Two). On August 27, 2013, the Court ordered equitable remedies in Count One, including restitution in the amount of $320,964, and entered judgment in favor of Defendants on Count Two. ( See Opinion
and Order, docket #216; Judgment, docket #217.)
II. Legal Standards
ERISA § 502 provides, " [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). The Supreme Court's decision in Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 130 S.Ct. 2149, 176 L.Ed.2d 998 (2010), clarified that a fee claimant need not be a " prevailing party" to be eligible for attorney's fees under ERISA's fee-shifting statute. Id. at 254. Rather, eligibility for attorney's fees merely requires that the claimant achieve " some degree of success on the merits." Id. " Under § 502(g)(2) of ERISA (29 U.S.C. § 1132(g)(2)), the award of reasonable attorney fees is mandatory where a fiduciary has sued successfully to enforce an employer's obligation to make contributions to a multi-employer plan. In any other action under ERISA, however, the statute provides that 'the court in its discretion may allow a reasonable attorney's fee and costs of action to either party.' ERISA § 502(g)(1) (29 U.S.C. § 1132(g)(1))." Foltice v. Guardsman Prods., Inc., 98 F.3d 933, 936 (6th Cir. 1996)). There is " no presumption as to whether attorney fees will be awarded." Id. (citing Armistead v. Vernitron Corp., 944 F.2d 1287, 1301-02 (6th Cir. 1991)). A five-factor test articulated in Secretary of Labor v. King, 775 F.2d 666 (6th Cir. 1985), has become a practical benchmark for whether to award fees. These factors include:
(1) the degree of the opposing party's culpability or bad faith; (2) the opposing party's ability to satisfy an award of attorney's fees; (3) the deterrent effect of an award on other persons under similar circumstances; (4) whether the party requesting fees sought to confer a common benefit on all participants and beneficiaries of an ERISA plan or resolve significant legal questions regarding ERISA; and (5) the relative merits of the parties' positions.
King, 775 F.2d at 669. " [W]hile the five-factor King test is not required [after Hardt ], it still has validity in helping courts determine whether or not to award fees to a party that achieves some degree of success on the merits." Ciaramitaro v. Unum Life Ins. Co. of Am., 521 F.Appx. 430, 437 (6th Cir. 2013); see also Hardt, 560 U.S. at 255 n.8 (observing that after a court has determined that a claimant has achieved some success on the merits, a court " may" consider the five-factor test). " The King factors are not statutory, and so should be looked at holistically, with no one factor 'necessarily dispositive.'" Warner v. DSM Pharma Chems. N. Am., Inc., 452 F.Appx. 677, 681 (6th Cir. 2011) (quoting Foltice, 98 F.3d at 937).
The ERISA statute expressly grants courts discretion to award attorney's fees " to either party." 29 U.S.C. § 1132(g)(1). Nonetheless, in most ERISA cases, the nature of the King factors makes it less likely that the factors will favor an award to defendants. See, e.g., Toussaint v. JJ
Weiser, Inc., 648 F.3d 108, 111 (2d Cir. 2011) (" Hardt also does not disturb our observation that " the five factors frequently suggest that attorney's fees should not be charged against ERISA plaintiffs" ) (citing Salovaara v. Eckert, 222 F.3d 19, 28 (2d Cir. 2000)); West v. Greyhound Corp., 813 F.2d 951, 956 (9th Cir. 1987) (cautioning that the five factors " very frequently suggest that attorney's fees should not be charged against ERISA plaintiffs" ); Marquardt v. N. Am. Car Corp., 652 F.2d 715, 719-20 & n.6 (7th Cir. 1981) (" [U]sing the five-factor test, prevailing plaintiffs are more likely to be awarded attorney's fees than prevailing defendants. We recognize . . . that § 1132(g) differs from civil rights attorneys' fees provisions. But we believe that, although civil rights and ERISA plaintiffs may differ, some of the same factors militate against assessing attorneys' fees against plaintiffs in both types of cases." ).
In this case, both parties undoubtedly achieved a degree of success on ERISA claims. Huizinga won summary judgment on Count One, resulting in equitable relief, including a significant amount of restitution. At trial, Defendant Genzink Steel won on Count Two, the ERISA retaliation claim. Therefore, both parties achieved some degree of success on the merits within the meaning of Hardt . The Court will therefore consider whether the King factors favor an award to either party.
A. Defendants' Motion for Attorney's Fees
Defendants Ken Genzink and Genzink Steel seek $332,607 in attorney's fees. With respect to Defendants, the King factors weigh against granting an attorney's fees award.
1. Culpability or Bad Faith of the Opposing Party
Under the first King factor, the Court considers " the degree of the opposing party's culpability or bad faith." King, 775 F.2d at 669. Here, there is no evidence of culpability or bad faith. Rather, the Court finds that Huizinga pursued his ERISA claims with a deeply held and rational belief that he was terminated because he spoke out about the ERISA Plan. The timing of Huizinga's termination alone was suspicious. The Court ultimately found facts against Huizinga, but the Court did not and does not find that he had bad faith. This factor weighs against an award.
2. Opposing Party's Ability to Satisfy an Award
The Court next considers the opposing party's ability to satisfy an award. Huizinga argues that the Court should consider the relative economic positions of the parties because the fees requested by Defendants would be an onerous burden, and it was not the intention of the ERISA attorney's fees provision to expose plaintiffs to such risks. In this case, a company that, by its own testimony, is doing very well financially seeks recovery from an individual accountant who maintains part-time employment. The award sought reflects three times Huizinga's annual salary while employed at Genzink Steel and an even larger multiple of his current salary. This factor weighs against an award.
3. Deterrent Effect of an Award on Other Persons
This factor is an inquiry into the deterrent effect of an attorney's fees award on other parties, ...