Seventh Circuit rules multi-part tests tend to be "redundant, incomplete, and unclear".

Byline: Wisconsin Law Journal Staff

Attorneys in federal court looking to overturn multi-part tests got some support in an Oct. 5 Seventh Circuit decision, iterating previous cases opining that such tests tend to be "redundant, incomplete, and unclear." In the case, the trustees of a multiemployer pension plan brought suit in federal court against an employer under ERISA seeking contributions to the plan. The district court found that the suit was not substantially justified, and awarded the defendant employer roughly $56,000 in attorney fees. The trustees appealed, but the Seventh Circuit affirmed in a decision by Judge Richard A. Posner. Attorneys Fees After finding that the district court properly awarded summary judgment to the employer, the court turned to the award of attorney fees, authorized in ERISA cases pursuant to 29 U.S.C. 1132(g)(2). The court noted that, in ERISA cases, any prevailing party can recover such an award, unless the loser's position had substantial justification. Bittner v. Sadoff & Rudoy Industries, 28 F.2d 820 (7th Cir. 1984). However, another case sets forth a five-factor test for determining the award of fees. Janowski v. International Brother-hood of Teamsters, 673 F.2d 931, 940 (7th Cir. 1982), vacated on other grounds: "(1) the degree of the offending parties' culpability or bad faith; (2) the degree of the ability of the offending parties to satisfy personally an award of attorneys' fees; (3) whether or not an award of attorneys' fees against the offending parties would deter other persons acting under similar circumstances; (4) the amount of benefit conferred on members of the pension plan as a whole; and (5) the relative merits of the parties' positions." The court proceeded to criticize use of the five-factor test both as "one too many," and as substantively flawed. Test Flaws The court noted that the first factor, bad faith, is irrelevant, because courts have inherent authority to award attorney fees as a sanction for bad faith anyway. The second factor, ability to pay, the court also found an irrelevant factor, because a pension plan will rarely be unable to afford an award of attorney fees. The court found the third factor, deterrence, to be "empty," because it cannot be determined, in any particular case, whether the award of fees will have a deterrent effect; instead, only a systematic practice of awarding fees could be a deterrent. Finally, the court found the fourth and fifth factors to be...