Eighth Circuit Affirms District Court’s Award of Prejudgment Interest, Liquidated Damages and Attorneys’ Fees to Welfare and Pension Plans

In Marshall v. Anderson Excavating & Wrecking Co., No. 19-3040, __F.4th__, 2021 WL 3436326 (8th Cir. Aug. 6, 2021), Plaintiffs, a union and trustees of a welfare and pension plan, sued Anderson Excavating and Wrecking Co. for contributions it allegedly owed to the plans, in addition to interest, liquidated damages, and attorneys’ fees and costs. This is the matter’s second trip to the Eighth Circuit Court of Appeals. On the first appeal, the court determined that the district court erred in applying the alter-ego doctrine to justify an award of unpaid contributions for an alleged employee’s work. On remand, the district court removed all contributions for the employee’s work and recalculated the amount of prejudgment interest, liquidated damages, and attorneys’ fees. “The district court found Anderson Excavating liable to the plaintiffs for delinquent contributions under § 1145 and entered judgment against it and in favor of the plaintiffs in the amount of $11,956.96 in unpaid contributions; $8,817.96 in prejudgment interest; $8,817.96 in liquidated damages; $38,331 in attorneys’ fees; and $516.50 in nontaxable costs.” Anderson Excavating appealed again. The Eighth Circuit affirmed.

With respect to prejudgment interest, Anderson Excavating agreed to bind itself to the Plan’s trust agreements. The court determined that the district court did not err in concluding that the Delinquent Policy and Procedure’s (“DPP”) interest rate applied because ERISA directs that interest on unpaid contributions shall be determined by using the rate provided under the plan and the DPP validly adopted by the trustees specified an interest rate of 1.5 percent of the total contributions owed for each delinquent period. The district court awarded more than the amount calculated by Plaintiffs and did not set forth the mathematical calculation, but the court’s calculation is easily discernible from the record. With respect to liquidated damages, the district court based its award upon the amount of prejudgment interest which is required by ERISA. Lastly, the court determined that the district court did not abuse its discretion in awarding $39,287.34 in attorneys’ fees. The district court followed the court’s earlier mandate and nothing in its prior opinion limited the district court’s consideration of the fee award. With respect to the amount of fees, the court rejected a strict rule requiring proportionality between damage awards and fee awards in ERISA cases. While proportionality can be a consideration, it cannot be used as the sole determinant of a lodestar-based fee award. The district court adequately justified its award of fees: the award was “sufficiently proportional to the plaintiffs’ degree of success, both monetary and nonmonetary, and consider[ed] the extent to which the plaintiffs’ expenses were engendered by Anderson Excavating’s recalcitrance and sloppy bookkeeping.” The district court also found the fee award would encourage Anderson Excavating to be more reasonable and careful going forward. Further, the fee award, which was half of the amount sought by plaintiffs, would encourage the plaintiffs to take a more measured approach to their pursuit of claims.