In two recent cases issued on the same day, the Second Circuit reversed the denial by EDNY judges of attorney fee awards under federal statutory fee shifting provisions. One of the cases had unusual facts that prompted not only a remand but a rare directive for reassignment, because the trial judge sua sponte conducted his own investigation which led him to deny a fee award.

On March 11, 2014, the Second Circuit issued a summary order in Costello v. Flatman LLC, No. 13-1446 (Mar. 11, 2014), vacating an order by Judge Sterling Johnson, Jr. denying the plaintiff’s motion for attorneys’ fees under the Americans With Disabilities Act (the “ADA”). In particular, the Second Circuit remanded and reassigned the case because Judge Johnson had conducted his own investigation of the premises at issue and determined that plaintiff’s counsel had not succeeded in remedying the ADA violations and therefore did not deserve attorneys’ fees. The judge’s own investigation occurred after the plaintiff obtained a default judgment against the defendant for violations of the ADA and moved for attorneys’ fees. The district court visited the businesses sued in the plaintiff’s eight lawsuits, and saw that the “‘alleged structural deficiencies preventing access to persons with disabilities still exist.’” Slip Op. at 3 (quoting district court). As a result, Judge Johnson held that plaintiff’s counsel “never sought to remedy these failings” and thus was not entitled to a fee award.

The Circuit remanded and vacated the denial of the fee award on the ground that that structural defects in the buildings that prevented access to the disabled did not represent the kind of fact appropriate for judicial notice because “it is not clear” that such defects are “not subject to reasonable dispute” or that the district court’s conclusions could be “readily determined from sources whose accuracy cannot reasonably be questioned.” A separate basis for dismissal, and which also required reassignment, was the trial judge’s own impromptu investigation: “the district court’s error in conducting its own investigation of the restaurants and taking judicial notice of its findings.” The Second Circuit did not state that the decision to conduct his own investigation made the judge biased, but held he would likely have difficulty on remand putting his own findings out of his mind.

Also on March 11, 2014, the Second Circuit issued a decision in Donachie v. Liberty Mutual Ins. Co. et al., Nos. 12-2996-CV (Lead), 12-3031 (XAP), concerning the scope of the district court’s discretion in award fees to a prevailing ERISA plaintiff. At the trial court level, the plaintiff obtained summary judgment “on his claim for long-term disability benefits pursuant to ERISA.” Nevertheless, the plaintiff’s request for a fee award was denied “based on the conclusion that defendant did not act in bad faith.” In reversing, the Second Circuit held that under ERISA, the district cout may award fees to a plaintiff who had any degree of success on the merits. The district court did not have to consider any other factors. However, if the district court chose to go further and consider other factors, it was then required to consider all five factors identified in the Second Circuit for such a fee award. Here, the trial court erred by analyzing only one faactor. As the circuit noted,

[A] district court’s discretion to award attorneys’ fees under ERISA is not unlimited, inasmuch as it may only award attorneys’ fees to a beneficiary who has obtained some degree of success on the merits. . . . [W]hether a plaintiff has obtained some degree of success on the merits is the sole factor that a court must consider in exercising its discretion. Although a court may, without further inquiry, award attorneys’ fees to a plaintiff who has had some degree of success on the merits, . . . courts retain discretion to consider five additional factors in deciding whether to award attorney’s fees. Those five factors, known in this Circuit as the Chambless factors are:

(1) the degree of opposing parties’ culpability or bad faith; (2) ability of opposing parties to satisfy an award of attorneys’ fees; (3) whether an award of attorneys’ fees against the opposing parties would deter other persons acting under similar circumstances; (4) whether the parties requesting attorneys’ fees 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.. . .

[However,] if a court chooses to consider factors other than a plaintiff’s success on the merits in assessing a request for attorneys’ fees, Chambless still provides the relevant framework in this Circuit, and courts must deploy that useful framework in a manner consistent with our case law. A court cannot selectively consider some factors while ignoring others.

(Internal quotations and citations omitted) (bold emphasis added).