Opinion
Civil No. 4-96-488 (JRT/RLE)
September 23, 2003
Alan M. Sandals, SANDALS LANGER, LLP, Philadelphia, PA, for plaintiffs
John R. Grogan, SANDALS LANGER, LLP, Philadelphia, PA, for plaintiffs
Seymour J. Mansfield, MANSFIELD, TANICK COHEN, P.A., Minneapolis, MN, for plaintiffs
John D. French, FAEGRE BENSON LLP, Minneapolis, MN, for defendant
Steven L. Severson, FAEGRE BENSON LLP, Minneapolis, MN, for defendant
Deborah A. Ellingboe, FAEGRE BENSON LLP, Minneapolis, MN, for defendant
Paul Martin Wolff, WILLIAMS CONNOLLY, Washington, D.C., for defendant
J. Alan Galbraith, WILLIAMS CONNOLLY, Washington, D.C., for defendant
ORDER ON PLAINTIFFS' MOTION FOR REVIEW OF COST JUDGMENT
This matter is before the Court on plaintiffs' motion for review of a cost judgment entered in favor of defendant Minnesota Mining and Manufacturing Company ("3M"). For the reasons set forth below, the Court grants plaintiffs' motion and vacates the cost judgment.
BACKGROUND
This case involved claims against 3M pursuant to the Employee Income Retirement Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. Harley v. Minn. Mining Mfg. Co., 42 F. Supp.2d 898, 900 (D. Minn. 1999), aff'd, 284 F.3d 901 (8th Cir. 2002), cert. denied, 537 U.S. 1106 (2003). Plaintiffs, representing a class of participants in and beneficiaries of 3M's Employee Retirement Income Plan ("the Plan"), alleged that 3M breached its duties under ERISA through making an improvident investment and thereby causing a loss to the Plan of approximately $80 million. 42 F. Supp.2d at 903-04. Although plaintiffs presented evidence on the merits sufficient to survive 3M's initial motion for summary judgment, id. at 916, the Eighth Circuit affirmed this Court's later Order granting summary judgment to 3M on the ground that plaintiffs lacked standing to maintain suit. 284 F.3d at 908. The law governing plaintiffs' standing in this Circuit was not settled at the time plaintiffs commenced this action.On January 17, 2003, 3M sought to tax costs against plaintiffs in accordance with Fed.R.Civ.P. 54(d)(1) and 28 U.S.C. § 1920. The Clerk entered a cost judgment against plaintiffs in the amount of $11,503.48 on February 3, 2003. Plaintiffs concede that 3M was the prevailing party and that 3M typically would be entitled to the costs reflected in the cost judgment under Fed.R.Civ.P. 54(d)(1). Plaintiffs contend, however, that the standard for awarding costs in an ERISA case differs from and supersedes Fed.R.Civ.P. 54(d)(1) and that 3M is not entitled to costs under the ERISA standard.
ANALYSIS
Fed.R.Civ.P. 54(d)(1) indicates that, in most circumstances, "costs other than attorney's fees shall be allowed as of course to the prevailing party." That rule, however, by its terms does not apply "when express provision [for an award of costs] is made . . . in a statute of the United States." Id. ERISA provides that, in an action brought "by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney's fee and costs of action to either party." 29 U.S.C. § 1132(g)(1). Plaintiffs accordingly contend that ERISA, rather than Fed.R.Civ.P. 54(d)(1), governs the cost award in this case. Although 3M insists that ERISA does not supersede Fed.R.Civ.P. 54(d)(1), the plain language of the Rule indicates that the specific statutory provision for a cost award in ERISA displaces the general rule allowing costs as a matter of course. The case law 3M cites stands primarily for the proposition that the categories of costs recoverable under ERISA are identical to the costs recoverable under 28 U.S.C. § 1920. Agredano v. Mutual of Omaha Cos., 75 F.3d 541, 544 (9th Cir. 1996); Dasler v. E.F. Hutton, 698 F. Supp. 172, 177 (D. Minn. 1988). None of those cases address the issue plaintiffs raise, which is whether the procedure for determining entitlement to costs under ERISA meaningfully differs from the procedure under Fed.R.Civ.P. 54(d)(1).The five-factor test first articulated in Lawrence v. Westerhaus, 749 F.2d 494, 496 (8th Cir. 1984) (per curiam), guides the district court in determining whether to award attorney's fees in an ERISA case. Martin v. Arkansas Blue Cross Blue Shield, 299 F.3d 966, 972 (8th Cir. 2002) (en banc), cert. denied, 123 S.Ct. 967 (2003). Plaintiffs argue that the Westerhaus analysis applies equally in determining whether to award costs in an ERISA case.
The Eighth Circuit has not explicitly endorsed that position, but the Eighth Circuit also consistently has applied the Westerhaus analysis in reviewing both attorney's fees and cost awards. See Fletcher-Merrit v. Noram Energy Corp., 250 F.3d 1174, 1179 (8th Cir. 2001) (indicating that the Westerhaus factors presented the appropriate considerations "in determining whether fees and costs should be awarded in an ERISA action") (emphasis added); Fink v. Union Cent. Life Ins. Co., 94 F.3d 489, 493 (8th Cir. 1996) (affirming district court's denial of attorney's fees and costs under Westerhaus). The Court thus agrees with plaintiffs that cost awards under ERISA are appropriately made under the Westerhaus analysis rather than Fed.R.Civ.P. 54(d)(1).
Plaintiffs' additional argument that a request for an award of costs must be made only to the court in the first instance, however, does not necessarily follow from this conclusion. A party may seek costs along with a petition for attorney's fees under 29 U.S.C. § 1 132(g)(1), but that procedure does not preclude submitting a bill of costs in the usual manner subject to court review under Fed.R.Civ.P.
That distinction is relevant here because, unlike Fed. R Civ. P. 54(d)(1), the Westerhaus analysis includes no presumption in favor of an award to the prevailing party. Martin, 299 F.3d at 971-72. Instead, the Court considers the following nonexclusive list of factors in evaluating whether to award costs:
(1) the degree of the opposing parties' culpability or bad faith; (2) the ability of the opposing parties to satisfy an award [of costs]; (3) whether an award [of costs] against the opposing parties could deter other persons acting under similar circumstances; (4) whether the parties requesting [costs] sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA itself; and (5) the relative merits of the parties' positions.Westerhaus, 749 F.2d at 496.
Without a presumption in favor of a cost award, the Westerhaus factors in balance militate against awarding costs to 3M. There is no question that plaintiffs commenced this action in good faith and sought to benefit all participants and beneficiaries of the Plan. Had 3M not kept the Plan folly funded, plaintiffs also had a strong chance of prevailing on the merits. The case, finally, had the effect of clarifying the principles governing standing under ERISA, and an award of costs against plaintiffs may deter others from bringing actions which similarly could serve to clarify the law. The record includes no evidence of plaintiffs' ability to satisfy the cost judgment but, even if they can, that factor alone cannot justify an award of costs on these facts.
ORDER
Therefore, based on the files, records and proceedings herein, IT IS HEREBY ORDERED that:
1. Plaintiffs' Motion for Review of Cost Judgment [Docket No. 132] is GRANTED.
2. The cost judgment in favor of defendant 3M [Docket No. 131]is VACATED.
3. 3M's request for an award of costs [Docket No. 123] is DENIED in its entirety.
LET JUDGMENT BE ENTERED ACCORDINGLY.