ERISA plaintiffs who recover through a settlement are eligible for attorneys' fees, rules the Third Circuit

Templin v. Independence Blue Cross, No. 13-4493 (3d Cir. May 8, 2015).

ERISA, unlike many other federal statutes, allows parties to recover attorneys’ fees even when they’re not “prevailing.” All that ERISA requires is a showing of “some degree of success on the merits.” This Third Circuit decision further defines what that showing requires.  

Here, a group of plaintiffs argued that they were entitled to interest on their delayed payment of benefits. The district court held a hearing on this issue, during which it commented that some interest would likely be appropriate—but it also encouraged the parties to reach a settlement, which they did. Under that settlement, the defendants paid the plaintiffs about $70,000 in interest. Touting that recovery, the plaintiffs sought attorneys’ fees under ERISA. The district court denied the application, reasoning that the plaintiffs hadn’t achieved any success on the merits because the court had never actually ruled on whether they were entitled to interest. 

The Third Circuit now reverses. “Some degree of success on the merits” doesn’t require judicial action. It just requires some success, which the plaintiffs here achieved through settlement. The plaintiffs are eligible for an award, so the case is remanded for the district court to properly use its discretion in deciding whether to award fees.