Micha v. Group Disability Benefits Plan for Gynecologic Oncology Associates Partners, LLC

NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS FILED
FOR THE NINTH CIRCUIT
JAN 15 2015

MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
JOHN PAUL MICHA, M.D., an No. 12-55816
individual,
D.C. No. 3:09-cv-02753-JM-BGS
Plaintiff,
MEMORANDUM *
and

SUN LIFE ASSURANCE COMPANY OF
CANADA, a Delaware corporation,

Defendant-Cross-Defendant
- Appellant,

v.

GROUP DISABILITY BENEFITS PLAN
FOR GYNECOLOGIC ONCOLOGY
ASSOCIATES PARTNERS, LLC, a
California limited liability company,

Defendant-Cross-Claimant
- Appellee.

Appeal from the United States District Court
for the Southern District of California
Jeffrey T. Miller, Senior District Judge, Presiding

Argued February 6, 2014 Submitted January 15, 2015
Pasadena, California

*
This disposition is not appropriate for publication and may not be cited to
or by the courts of this circuit except as may be provided by Ninth Circuit Rule
36-3.
Before: WARDLAW, MURPHY, ** and BERZON, Circuit Judges.

The district court ordered Sun Life Assurance Company of Canada (“Sun

Life”) to pay Group Disability Benefits Plan for Gynecologic Oncology

Associates Partners, LLC (“Group Disability”) $38,216.75 in attorney’s fees.

29 U.S.C. § 1132(g)(1). Sun Life appeals. Exercising jurisdiction pursuant to

28 U.S.C. § 1291, this court affirms.

Group Disability is an employee welfare plan established and maintained to

provide disability benefits to employees of Gynecologic Oncology Associates

Partners, LLC (“GOA”). Group Disability purchased a disability policy from Sun

Life covering GOA’s employees, including Dr. John Micha. Micha sought

disability benefits from Sun Life. When Sun Life denied the claim, Micha

brought suit against Sun Life and Group Disability. 1 See 29 U.S.C.

§ 1132(a)(1)(B). In response to Micha’s suit, Group Disability filed an answer in

**
The Honorable Michael R. Murphy, Senior Circuit Judge for the U.S.
Court of Appeals, Tenth Circuit, sitting by designation.
1
This appeal, which arises under the Employee Retirement Income Security
Act of 1974 (“ERISA”), is a remnant of discarded precedent. In Everhart v.
Allmerica Financial Life Insurance Co., 275 F.3d 751, 756 (9th Cir. 2001), this
court held that 29 U.S.C. § 1132(a)(1)(B) “does not permit suits against a third-
party insurer to recover benefits when the insurer is not functioning as the plan
administrator.” Instead, under Everhart, the ERISA plan was the proper
defendant in a suit for benefits. Id. After the filing of the complaint giving rise
to this appeal, this court overruled Everhart. Cyr v. Reliance Standard Life Ins.
Co., 642 F.3d 1202, 1207 (9th Cir. 2011) (en banc). Because of this change, the
resolution of this case is likely of no practical significance to anyone other than
the parties on appeal.

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which it conceded each and every meaningful allegation in the complaint and

asserted Micha was entitled to disability benefits under the terms of the disability

policy issued to it by Sun Life. Group Disability also filed a cross-claim against

Sun Life; the cross-claim was labeled as a state-law-based request for declaratory

relief. Group Disability asserted Sun Life’s wrongful denial of Micha’s claim led

to the suit against it and, thus, any costs it was forced to expend to participate in

the lawsuit should be reimbursed by Sun Life.

When Sun Life settled with Micha, Group Disability sought its legal fees

from Sun Life. See 29 U.S.C. § 1132(g)(1). Sun Life resisted the fee request,

arguing as follows: (1) because Group Disability did not bring an ERISA-based

cause of action against it, Group Disability was not entitled to attorney’s fees

pursuant to § 1132(g)(1); (2) Group Disability did not achieve any success on the

merits; and (3) under the multi-factor test set out in Hummell v. S.E. Rykoff & Co,

634 F.2d 446, 453 (9th Cir. 1980), Group Disability was not entitled to a fee

award. The district court rejected each of these three contentions and awarded

fees to Group Disability.

1. Sun Life asserts Group Disability does not qualify for an award of

attorney’s fees under § 1132(g)(1) because it did not bring a separate ERISA-

based cross-claim against Sun Life. Sun Life focuses on the following

highlighted clauses of the statute: “In any action under this subchapter . . . by a

participant, beneficiary, or fiduciary, the court in its discretion may allow a

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reasonable attorney’s fee and costs of action to either party.” 29 U.S.C. §

1132(g)(1) (emphasis added).

Sun Life’s arguments ignore the fact it and Group Disability were both

parties to Micha’s underlying ERISA-based suit for benefits. 29 U.S.C.

§ 1132(a)(1)(B). Although Group Disability was denominated as Sun Life’s co-

defendant in that suit, it was co-defendant in name only. Group Disability was a

mere nominal defendant, named for the sole purpose of rendering Micha’s

complaint consistent with the now-overruled Everhart decision. 2 Thus, Micha’s

case involved two parties, both technically labeled defendants, that assumed fully

adverse litigation positions.

This court has made clear an award of attorney’s fees under § 1132(g)(1)

may be granted to more than one plaintiff. See, e.g., Nelson v. EG & G Energy

Measurements Grp., Inc., 37 F.3d 1384, 1392 (9th Cir. 1994). Such an award is

also proper under the unique facts of this case, i.e., when a district court is faced

with a party assuming the same position as the plaintiff, but that party is

nominally labeled a defendant solely for the purpose of procedural regularity. Cf.

Dolch v. United Cal. Bank, 702 F.2d 178, 181 (9th Cir. 1983) (holding, in context

of determining existence of diversity jurisdiction, courts are entitled to align the

parties according to their interest in the litigation and without regard to labels

2
The record in this case makes clear that Sun Life retained the sole power
to award or deny Micha’s request for benefits.

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applied to those parties in a complaint). In this unique case, the district court

acted within the bounds of its discretion when it implicitly realigned the parties to

reflect their true interests in this litigation and, then, awarded fees to Group

Disability as a prevailing plaintiff pursuant to § 1132(g)(1). 3

2. To be entitled to an award of attorney’s fees under § 1132(g)(1), Group

Disability must demonstrate “‘some degree of success on the merits’” and

demonstrate the five Hummell factors weigh in its favor. Simonia v. Glendale

Nissan/Infiniti Disability Plan, 608 F.3d 1118, 1121 (9th Cir. 2010). “We review

for an abuse of discretion the district court’s decision on a motion for attorney’s

fees.” Id.

Having concluded Micha’s ERISA suit against defendant Sun Life and

nominal-defendant/plaintiff-in-interest Group Disability is the proper vantage

from which to review the validity of the district court’s fee award, this court

easily rejects Sun Life’s arguments as to success on the merits. Sun Life

contends that in deciding whether an attorney’s fee award was appropriate, the

district court was required to focus on the relief Group Disability obtained on its

3
Arguing for a contrary result, Sun Life relies heavily on Corder v. Howard
Johnson & Co., 53 F.3d 225 (9th Cir. 1994). Corder does not support Sun Life’s
position. Corder does not address whether a nominal defendant like Group
Disability may be awarded fees as a prevailing plaintiff and expressly notes “a
non-enumerated party may be awarded attorney’s fees” under § 1132(g)(1) as
long as the “the party initiating the action was one of the enumerated parties.” Id.
at 229 n.3.

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own behalf. At each and every point necessary, Group Disability supported

Micha’s request for disability benefits as consistent with the insurance contract it

purchased from Sun Life. When, in the course of the underlying litigation, the

district court informed Sun Life it had serious concerns regarding Sun Life’s

handling of Micha’s claim for disability benefits, Sun Life settled the suit. When

it did so, Sun Life fully vindicated Group Disability’s interests in the lawsuit.

Nor did the district court abuse its discretion in determining Group

Disability’s actions in the suit were at least more than minimally responsible for

the success of the suit. Although Group Disability did not submit voluminous

filings, the district court is in the best position to evaluate how Group Disability

contributed to a resolution in Dr. Micha’s favor. This case settled after the

district court noted serious concerns about the way Sun Life undertook to resolve

Dr. Micha’s claim for benefits. The court’s comments came at the conclusion of

a hearing to resolve the scope of the district court’s standard of review, an issue

briefed by Group Disability. Thus, Group Disability participated in the key

aspects of the case that led to a settlement in Dr. Micha’s favor. 4

4
The bulk of Sun Life’s arguments as to this issue are more appropriately
addressed to the reasonableness of Group Disability’s fee request. Sun Life did
not, however, appeal the reasonableness of the fee award the district court granted
to Group Disability. Instead, it pointedly limited its appeal to the propriety of
any award in the first instance. Thus, any challenge to the reasonableness of the
amount of the fee award is waived.

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 3. Finally, Sun Life asserts the district court erred in applying the Hummell

factors to Micha’s suit, rather than to Group Disability’s state-based claim against

Sun Life. This issue is logically indistinct from Sun Life’s assertion it was

improper for the district court to base a fee award to Group Disability on Micha’s

original suit against Sun Life and Group Disability. That is, having determined

the district court was correct to base a fee award to Group Disability on Micha’s

underlying ERISA suit, rather than Group Disability’s state-law cross-claim, it

was likewise correct when it applied the Hummell factors to the suit upon which

the fee award was based.

The district court’s award of attorney’s fees to Group Disability is hereby

affirmed.

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