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Micha v. Sun Life Assurance of Canada, Inc.

United States Court of Appeals, Ninth Circuit

October 31, 2017

John Paul Micha, M.D., an individual Plaintiff,
Sun Life Assurance of Canada, Inc., a Delaware corporation, Defendant/Cross-Defendant/Appellee, Group Disability Benefits Plan for Gynecologic Oncology Associates Partners, LLC, a California limited liability company, Defendant/Cross-Claimant/Appellant.

          Submitted August 22, 2016 [*]

         Appeal from the United States District Court No. 3:09-cv-02753-JM-BGS for the Southern District of California Jeffrey T. Miller, Senior District Judge, Presiding

          Marc S. Schechter and Corey F. Schechter, Butterfield Schechter LLP, San Diego, California, for Defendant/Cross-Claimant/Appellant.

          Michael B. Bernacchi and Keiko J. Kojima, Burke Williams & Sorensen LLP, Los Angeles, California, for Defendant/Cross-Defendant/Appellee.

          Before: Michael R. Murphy, [**] Kim M. Wardlaw, and Marsha S. Berzon, Circuit Judges.

         SUMMARY [***]

         ERISA / Attorney's Fees

         The panel reversed the district court's denial of appellate attorney's fees under 29 U.S.C. § 1132(g)(1) and remanded for calculation of a reasonable award of fees and costs in an ERISA case.

         The panel held that in analyzing a party's request for appellate attorney's fees under the Hummell test, a court must consider the entire course of the litigation, rather than focusing exclusively on the prior appeal. Weighing the five Hummell factors in light of all of a defendant's conduct, from its wrongful denial of the plaintiff's claim for ERISA benefits to its filing of a petition for a writ of certiorari, the panel held that the moving party was entitled to attorney's fees for the prior appeal, in which the panel had affirmed an award of litigation attorney's fees. The panel declined to consider the issue, not raised before the district court, whether fees-on- fees should be automatically awarded, without application of the Hummell test.

         Concurring, Judge Berzon wrote that, were the panel reaching the issue, she would hold that attorney's fees should be awarded automatically on appeal to a party that successfully defends the fees it was awarded at the district court, in ERISA cases as in others.




         This court generally employs the five-part test set out in Hummell v. S.E. Rykoff & Co., 634 F.2d 446 (9th Cir. 1980), to determine the appropriateness of awarding or denying a 29 U.S.C. § 1132(g)(1) ERISA-based request for appellate attorney's fees.[1] See Credit Managers Ass'n of S. Cal. v. Kennesaw Life & Accident Ins. Co., 25 F.3d 743, 752 (9th Cir. 1994); Operating Eng'rs Pension Trusts v. B & E Backhoe, Inc., 911 F.2d 1347, 1356-57 (9th Cir. 1990). The question presented here is whether in analyzing a party's request for appellate attorney's fees within the Hummell rubric, a court must consider the entire course of the litigation. The decision in Sokol v. Bernstein, 812 F.2d 559, 561 (9th Cir. 1987), compels an affirmative answer to that question. Accordingly, exercising jurisdiction pursuant to 28 U.S.C. § 1291, this court REVERSES the district court's denial of appellate attorney's fees and REMANDS the matter to the district court for calculation of a reasonable award of fees and costs.


         In Micha v. Group Disability Benefits Plan, we affirmed a § 1132(g)(1) award of litigation attorney's fees in favor of Group Disability Benefits Plan ("Group Disability") for Gynecologic Oncology Associates Partners, LLC ("GOA"). 597 Fed.Appx. 905, 906-08 (9th Cir. 2014). Micha concluded (1) Group Disability achieved "some success on the merits"[2]and (2) the district court did not abuse its discretion in concluding the five Hummell factors weighed in Group Disability's favor. Id. at 907 (quotations omitted). Micha specifically recognized that

[w]hen, in the course of the underlying litigation, the district court informed [Sun Life Assurance Company ("Sun Life")] it had serious concerns regarding Sun Life's handling of [Dr. John] Micha's claim for disability benefits, Sun Life settled the suit. When it did so, Sun Life fully vindicated Group Disability's interests in the lawsuit.


         Micha emphasized that the fee award in Group Disability's favor was a "remnant of discarded precedent" and noted that because of a significant, intervening change in this court's case law, our unpublished disposition was "likely of no practical significance to anyone other than the parties on appeal." Id. at 906 n.1.[4] Sun Life filed a Petition for a Writ of Certiorari, asserting the unpublished disposition in Micha would have wide-ranging repercussions.[5] But see id. Sun Life's petition for certiorari claimed Micha would (1) increase litigation over fee awards and (2) expand the class of individuals entitled to an award of attorney's fees, not only with regard to ERISA but also through "similar attorney's fees claims being filed in federal courts outside of the ERISA context." Group Disability filed an opposition to the petition and the Supreme Court denied Sun Life's request for certiorari. 135 S.Ct. 2894 (2015).

         Seeking a § 1132(g)(1) award of appellate attorney's fees for prevailing in Micha, Group Disability filed a Motion to Transfer Consideration of Attorney Fees on Appeal to the District Court for Determination. See Ninth Cir. R. 39-1.8 ("Any party who is or may be eligible for attorneys fees on appeal to this Court may . . . file a motion to transfer consideration of attorneys fees on appeal to the district court . . . from which the appeal was taken."). The panel granted the motion and before the district court Group Disability asked that its request for appellate attorney's fees be resolved with the five-factor test set out in Hummell.[6] The district court concluded that despite having achieved some success on the merits by prevailing on appeal, Group Disability was not entitled to appellate attorney's fees under the Hummell factors. The district court reasoned as follows: (1) Sun Life did not act in bad faith or with culpability as to the prior appeal because that appeal presented a novel issue (i.e., whether a nominal defendant could recover from a co-defendant based on the success of the plaintiff's case); (2) Sun Life's ability to pay an award was uncontested, but not determinative; (3) an award of fees would not deter future misconduct because (a) the prior appeal was not taken in bad faith and (b) Micha made clear the "facts of this case are unlikely to be repeated"; (4) the fourth factor, whether litigation provided a benefit to all plan participants or resolved a novel legal issue, was not implicated by Group Disability's fee request; and (5) the relative merits of the parties' positions on appeal favored Group Disability, but only slightly because Sun Life's prior appeal "was predicated upon fairly debatable legal arguments involving a novel ERISA issue." As should be clear from this recitation of the district court's reasoning, in analyzing the Hummell factors, the district court focused exclusively on Sun Life's actions and arguments on appeal in Micha and refused to consider Sun Life's conduct in the underlying suit Micha brought for disability benefits.

         III. ANALYSIS

         A. Forfeited Bases to Reverse the District Court

         1. Automatic-Entitlement Rule

         Group Disability asserts we should adopt the Seventh Circuit's automatic-entitlement rule and, on that basis, reverse the district court's denial of appellate attorney's fees. See Bandak v. Eli Lilly & Co. Ret. Plan, 587 F.3d 798, 803 (7th Cir. 2009) ("[A]ffirmance entitles an appellee who has properly been awarded an attorney's fee in the district court to an attorney's fee for successfully defending the district court's judgment in the court of appeals. Otherwise the purpose of the initial award-to shift the cost of litigation to the losing party-would be imperfectly achieved." (quoting Sullivan v. William A. Randolph, Inc., 504 F.3d 665, 672 (7th Cir. 2007))). We decline to consider this issue because it was never raised in the district court. See Hillis v. Heineman, 626 F.3d 1014, 1019 (9th Cir. 2010).[7]

         2. Prevailing-Party Presumption

         Group Disability claims the district court erred when it failed to apply a prevailing-party presumption in resolving its entitlement to appellate attorney's fees. See United Steelworkers of Am. v. Ret. Income Plan for Hourly-Rated Emps. of ASARCO, Inc., 512 F.3d 555, 564 (9th Cir. 2008) ("[A]s a general rule, the prevailing party on an ERISA claim is entitled to attorney's fees, unless special circumstances would render such an award unjust." (quotation omitted)). This issue was raised for the first time in Group Disability's motion for reconsideration. Citing this court's precedents, the district court refused to consider the issue. See Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000) (holding that a motion for reconsideration "may not be used to raise arguments or present evidence for first time when they could reasonably have been raised earlier in the litigation"). We review for abuse of discretion the denial of a motion for reconsideration. Smith v. Pac. Props. & Dev. Corp., 358 ...

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