Supreme Court Rules ERISA Fee Claimants Only Need Achieve Some Degree of Success And Need Not Be "Prevailing Parties" To Obtain Attorneys' Fees

In an emphatic 9-0 decision, the United States Supreme Court ruled that an ERISA fee claimant under 29 U.S.C. 1132(g)(1) need only obtain some degree of success as opposed to being a "prevailing party" under the court's Buckhannon precedent.  See Hardt v. Reliance Standard Life Insurance Co.,   http://www.supremecourt.gov/opinions/09pdf/09-448.pdf. 

In Hardt, Reliance denied Ms. Hardt's request for Long Term Disability ("LTD") benefits.  Ms. Hardt filed a claim under ERISA, alleging that Reliance wrongfully denied her benefits.  At the summary judgment stage, the District Court concluded that Reliance had failed to review all of the necessary medical evidence and, therefore, the benefits denial was not based on substantial evidence.  The District Court, however, did not issue a ruling.  Rather, the court remanded the case for Reliance to reconsider all of the medical evidence and act on Ms. Hardt's application for LTD.  Ultimately, Reliance awarded Ms. Hardt LTD.  Hardt then filed an application for attorneys' fees pursuant to 1132(g)(1).  The District Court awarded Hardt fees.

Reliance then appealed the fee award, arguing that Ms. Hardt was not a "prevailing party" under the United States Supreme Court precedent of Buckhannon in that there was (1) no enforceable judgment on the merits, or (2) no court ordered consent decree.  The Appeals Court agreed and vacated the award of attorneys' fees.

The United States Supreme Court in Hardt unanimously rejected the Appeals Court analysis and found that the award of attorneys' fees was appropriate.  Specifically, and significantly, the Court ruled that ERISA has two different fee shifting provisions.  The first, not at issue, 1132(g)(2), governing actions to recover delinquent employer contributions to multi-employer plans provides that fees be awarded only to prevailing parties.  Quite differently, 1132(g)(1), the provision at issue, only requires that the court use its discretion to determine whether either party is entitled to attorneys' fees.  The Court went on to rule that under Ruckelshaus v. Sierra Club, 463 U.S. 680, 694 (1983), the proper standard for fee shifting provisions providing discretion to the court is whether the fee claimant obtained "some degree of success."  The Court then ruled that Ms. Hardt had obtained more than some degree of success and was entitled to attorneys' fees under 1132(g)(1). 

This critical new ruling by the High Court should make ERISA claims much more enticing to plaintiffs' counsel as a plaintiff who effects change, as opposed to obtaining a judgment, may now be entitled to an award of attorneys' fees under ERISA.

Jury returns $250 Million Punitive Damages Verdict in Gender Class Action Against Novartis

A federal Jury in Manhattan handed down a $250 million punitive damages verdict against drug maker Novartis. http://www.bloomberg.com/apps/news?pid=20601100&sid=aIFrBtReIhKs.  This, just two days after the jury returned a verdict in favor of the 5,600 member class of female employees on all three counts of gender discrimination.  The class alleged, and the jury found, that Novartis discriminated against female employees in the terms and conditions of their employment, including disparate pay and promotional opportunities.  The staggering punitive damages award s believed to represent 3% of Novartis' 2009 net income.

DOL Issues Guidance On Internship Programs And Compliance With The FLSA

In April, the Department of Labor issued a Fact Sheet: Internship Programs Under The Fair Labor Standards Act.  http://www.dol.gov/whd/regs/compliance/whdfs71.pdf.  The Fact sheet provides guidance to assist in determining whether an intern for a "for-profit" private sector employer must be provided with minimum wage and overtime pay under the FLSA.  The DOL has identified six factors that must be considered when determining whether an internship or training program is legitimate and, therefore, interns need not be compensated:

1.  The internship, even though it includes actual operations of the facilities of the employer, is similar to training which would be given in an educational environment;

2.  The internship is for the benefit of the intern;

3.  The intern does not displace regular workers and is closely supervised by existing staff;

4.  The employer derives no immediate advantage from the activities of the intern and may, in fact, be impeded by the presence of the intern;

5.  The intern is not entitled to a job at the end of the internship; and

6.  There is an understanding that the intern is not entitled to wages for the time at the internship.

Common illegitimate "internships" involve unpaid positions where the "intern" is engaging in the operations of the business.  Where a student is asked to file, perform clerical work, or assist customers, the intern is providing productive work for the benefit of the employer and should be compensated.  Conversely, where the intern is shadowing rank-and-file employees and learning as opposed to working, that individual will likely be considered a legitimate intern, who need not be paid minimum wage or overtime.