Board of Trustees of the Hotel and Restaurant Employees Local 25 and Employers' Health and Welfare Fund v. Jpr, Inc.

RANDOLPH, Circuit Judge,

concurring in part and dissenting in part:

I dissent from the portion of the majority opinion relating to attorney’s fees. In my view, employee plans are not entitled to recover more than their actual cost of legal services.

When a plan wins its case, the court “shall award” the plan “reasonable attorney’s fees and costs of the action, to be paid by the defendant,” 29 U.S.C. § 1132 (g)(2). It is true that language like this appears in 42 U.S.C. § 1988 (and countless other fee-shifting statutes); that Blum v. Stenson, 465 U.S. 886 , 104 S.Ct. 1541 , 79 L.Ed.2d 891 (1984), interpreted § 1988 to mean that a “reasonable” fee should be calculated by using the market hourly rate rather than the rate actually charged; and that Independent Federation of Flight Attendants v. Zipes, 491 U.S. 754 , 758 n. 2, 109 S.Ct. 2732 , 2735 n. 2, 105 L.Ed.2d 639 (1989), said that similarities in the language of fee-shifting statutes are a “strong” indicator of similarities in meaning. But Fogerty v. Fantasy, Inc., 510 U.S. 517 , 114 S.Ct. 1023 , 127 L.Ed.2d 455 (1994), “squelched” — to use the Seventh Circuit’s word — “[a]ny tendency to treat all attorneys’ fees statutes as if they were insignificant variations on § 1988.” Stomper v. Amalgamated Transit Union, Local 241, 27 F.3d 316, 318 (7th Cir.1994). After Fogerty , “[d]ifferent statutes receive individual analysis,” or should. Id.

As to the particular statute before us, it seems to me that a eost-of-service award, in combination with the other provisions in § 1132(g)(2), fully accomplishes “Congress’s preeminent purpose ... to keep ERISA plans solvent,” maj. op. at 805. Victorious plans are entitled not only to reasonable attorney’s fees and the amount of the delinquent contributions, but also to double interest on those contributions and to any other “legal and equitable relief ... the court deems . appropriate.” 29 U.S.C. § 1132 (g)(2)(A)-(E). In the face of provisions furnishing ample deterrence for delinquent employers and ample compensation to victorious plans, I see no good reason why a plan should also be awarded more than its lawyers charged it. The majority thinks that unless market-based fees are awarded, plans will be unable to hire “competent counsel.” Maj. op. at 804. This strikes me as doubly mistaken. For one thing it assumes that expensive counsel necessarily equals competent counsel, an equation not borne out by my experience. For another thing it contemplates only one kind of fee arrangement — one requiring the client to turn over the excess to its lawyer. We apparently have that arrangement in this case. But in other cases the retainer agreement may be such that the plan, rather than its below-market-rate lawyer, keeps the windfall. I have no way of knowing which is the more common fee agreement in these sorts of eases and neither do the other judges on this court.

My colleagues charge the district court with the duty of deciding whether the lawyers in this case gave the plan a discount for “public-spirited reasons.” This sounds like a rule saying that market rates will be awarded only if the lawyers never expected to receive market rates. A lawyer cannot be acting out of public spirit in a case, I suppose, if he hopes or expects to collect the full going rate. At least that is the theory. Yet once the majority’s rule goes into place, every reasonable lawyer representing an employee benefit plan against an employer— reasonable because the lawyer has read my colleagues’ opinion — will hope to recover fees at the market rate. And that is scarcely the only difficulty. Consider the conundrum posed by lawyers who had mixed motives for taking the case at less than the market rate. Suppose, for instance, the law firm thought that by representing the plan at a discount, it was doing some public good; that besides, the case would help fill in some gaps on the firm’s timesheets; that the case would be a useful training ground for a young associate or two; that taking the case might lead to, or help retain, full-fee paying clients; and that if the firm won, it would wind up getting the *810 going rate anyway. I suspect that such a range of motives would typically be uncovered if one probed deeply enough. Then no one would be able to say where “public spirit-edness” ended and self interest began, or what imaginary scale determines which outweighs the other. This only reinforces my belief that § 1132(g)(2) — correctly interpreted- — permits victorious plans to be reimbursed for no more than their cost of legal services. But as between a rule awarding market rates only when the below-market lawyer satisfies the majority’s motivational criterion, and a rule awarding market rates in every case, the latter is clearly the lesser evil, if for no other reason than it is better to clear up a mess than to create one.