Opinion
Civil Action No. 04-1988.
August 27, 2004
MEMORANDUM
Before the court is the petition of defendant Michelle Morris for counsel fees in the amount of $9,167.08 under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(g)(1).
The plaintiffs, a local union and the trustees of associated employee benefit funds ("union"), sued Ms. Morris as an ERISA fiduciary to obtain payments Garney Morris, Inc. failed to make to the union's health and welfare funds as required by collective bargaining agreements. It also alleges she was liable under Pennsylvania's Wage Payment and Collection Law ("WPCL"), 43 P.S. § 260.1 et seq., for the corporation's failure to pay working dues to the union. On July 9, 2004, we granted defendant's motion to dismiss the complaint.
There was another defendant, John Robinson. The union has recently filed a voluntary notice of dismissal as to him. See Fed.R.Civ.P. 41(a).
Section 1132(g)(1) of ERISA provides that, in an action such as this, "the court in its discretion may allow a reasonable attorney's fee and costs of action to either party." InMcPherson v. Employees' Pension Plan, 33 F.3d 253 (3d Cir. 1994), the Court of Appeals reiterated five factors which a court must consider in exercising its discretion whether to grant Ms. Morris her counsel fees:
(1) the offending parties' culpability or bad faith;
(2) the ability of the offending parties to satisfy an award of attorneys' fees;
(3) the deterrent effect of an award of attorneys' fees against the offending parties;
(4) the benefit conferred on members of the pension plan as a whole; and
(5) the relative merits of the parties' position.
Id. at 254. See also, Ursic v. Bethlehem Mines, 719 F.2d 670, 673 (3d Cir. 1983).
We first turn to whether the union acted in bad faith or in a culpable manner. We conclude that it did not. Before it began suit, it had deposition testimony of Garnett Morris, Jr., the President of Garney Morris, Inc., that Ms. Morris had acted as the company's Chief Financial Officer. This company owed the union over $300,000 for benefits for its employees pursuant to a collective bargaining agreement. We subsequently dismissed the union's complaint against her for failure to state a claim upon which relief could be granted. We found that she was not liable as a matter of law as an ERISA fiduciary for payment of the funds in issue. Culpability means that conduct was more than negligent and was reprehensible or wrong. Id. As the Court of Appeals stated in McPherson, "[a] party is not culpable merely because it has taken a position that did not prevail in litigation." 33 F.3d at 257. The union's position was legally incorrect, but it did not rise to the level of culpability or bad faith.
The second factor concerns the union's ability to satisfy any award. The union concedes it has the means to pay the requested $9,167.08.
Under the third factor, awarding attorney's fees in this case will certainly deter the union from making the same legal error as it did here. It will no longer bring actions claiming that unpaid contributions become plan assets as soon as they are due when the underlying contract language does not so state. See Local Union No. 98, et al. v. Garney Morris, Inc., et al., No. Civ.A. 03-5272, 2004 WL 1151722 (E.D. Pa. May 24, 2004); Local Union No. 98, et al. v. Michelle Morris, et al., No. Civ.A. 04-1988, 2004 WL 1551673 (E.D. Pa. July 9, 2004).
As to factor (4), there were no benefits conferred on the members of any employee benefit fund as a whole. As to factor (5), Ms. Morris had the merits on her side while the union did not. A ruling in Ms. Morris' favor required a close reading of the pertinent sections of ERISA as well as the underlying contract.
Factors (1) and (4) favor the union. Factors (2), (3), and (5) favor Ms. Morris. While more factors favor Ms. Morris, I give more weight under the present circumstances to those favoring the union. Significantly, the union's conduct was not in bad faith or culpable in attempting to collect money owed to its employee benefit funds, and it has not attempted to prolong the litigation now that the court has dismissed the complaint against Ms. Morris. While the court decided in favor of Ms. Morris, the union's initial position was not frivolous. Moreover, this suit did not benefit any members of the employee benefit funds. On the contrary, any money ordered to be paid to Ms. Morris would necessarily reduce funds available for the benefit of such members who are out over $300,000.
It is, of course, unfortunate that Ms. Morris was sued and had to incur counsel fees to achieve the dismissal of this action, but ERISA simply does not provide an automatic award of counsel fees and costs to the prevailing party. See Ursic, 719 F.2d at 673.
Accordingly, the motion of Ms. Morris for counsel fees will be denied.
ORDER
AND NOW, this day of August, 2004, for the reasons set forth in the accompanying Memorandum, it is hereby ORDERED that the petition of defendant Michelle Morris for attorney's fees is DENIED.