Fifth Circuit Holds ERISA Fee Awards Require Actual Merits Relief, Not “Moral Victories”

In Cloud v. Bert Bell/Pete Rozelle NFL Player Ret. Plan, No. 25-10337, —F. 4th—-, 2025 WL 3673303 (5th Cir. Dec. 18, 2025), the Fifth Circuit reversed an award of more than $1.8 million in attorneys’ fees under ERISA § 502(g)(1), holding that a claimant who ultimately obtained no substantive relief cannot recover fees based solely on favorable factual findings or judicial criticism of plan procedures.

Background

Former NFL running back Michael Cloud sought top-tier disability benefits under the Bert Bell/Pete Rozelle NFL Player Retirement Plan after suffering multiple concussions during his career. Although the Plan awarded him some benefits, it denied him eligibility for the highest benefit tier. Cloud sued under ERISA, alleging both wrongful denial of benefits and failure to provide a full and fair review.

The district court ruled in Cloud’s favor, ordered payment of top-tier benefits, and awarded approximately $1.2 million in attorneys’ fees plus $600,000 in conditional appellate fees. On appeal, however, a Fifth Circuit panel reversed the merits judgment in its entirety, concluding that Cloud was procedurally barred from reclassification because he failed to timely appeal his benefits determination—even assuming serious deficiencies in the Plan’s review process.

Despite that reversal, the district court reaffirmed its fee award on remand, reasoning that Cloud had achieved meaningful success by exposing systemic flaws in the Plan’s claims administration and securing detailed factual findings critical of the Plan.

The Fifth Circuit’s Analysis

The Fifth Circuit rejected that rationale and reversed, emphasizing that some degree of success on the merits is an indispensable prerequisite to any ERISA fee award. The court began by situating ERISA § 502(g)(1) within the broader framework of federal fee-shifting statutes. Although ERISA does not require a party to be a “prevailing party,” Supreme Court precedent makes clear that Congress did not abandon the foundational American Rule that unsuccessful litigants should not recover fees absent clear statutory authorization. Under Hardt v. Reliance Standard Life Insurance Co., 560 U.S. 242, (2010), a claimant must achieve “some degree of success on the merits,” which excludes purely procedural victories or trivial success.

Applying that standard, the court concluded that Cloud achieved no qualifying success at all. The earlier appellate decision had reversed the district court’s benefits award outright and directed entry of judgment for the Plan. As a result, Cloud obtained no benefits, no declaratory relief, no injunction, and no alteration of the parties’ legal relationship.

The panel squarely rejected Cloud’s argument that favorable factual findings or judicial criticism of the Plan’s conduct could satisfy Hardt. Drawing heavily on Hewitt v. Helms, 482 U.S. 755 (1987), the court explained that “moral satisfaction” from a judicial determination that one’s rights were violated—without accompanying relief—is not a merits victory. Even under ERISA’s more flexible fee standard, Congress merely expanded eligibility from fully prevailing parties to partially prevailing parties, not to litigants who lose outright.

The court also dismissed the district court’s attempt to characterize its findings as declaratory relief. Without any operative judgment granting rights or requiring action by the Plan, the findings amounted to nothing more than a procedural step—insufficient under Hardt, Ruckelshaus, and Fifth Circuit precedent. The court analogized the case to prior decisions denying fees where plaintiffs achieved reversals or favorable rulings that did not materially change the parties’ legal relationship.

In conclusion, the Fifth Circuit reversed the district court’s award of attorneys’ fees and rendered judgment in favor of the Plan, holding that Cloud’s complete lack of substantive relief foreclosed any fee recovery under ERISA § 502(g)(1). Although the district court had issued extensive factual findings critical of the Plan’s claims procedures, the court of appeals emphasized that such findings—unaccompanied by benefits, declaratory relief, or any alteration of the parties’ legal relationship—amounted to no more than a moral or procedural victory. Because Cloud ultimately “won nothing” from his ERISA suit, the court concluded that the fee award rested on an error of law and therefore constituted an abuse of discretion, requiring reversal.

Takeaway

The decision reinforces that ERISA fee awards are tied to concrete litigation outcomes, not narrative victories. Even extensive judicial criticism of plan conduct, or findings suggesting a claimant “should have” prevailed, will not support fees absent actual relief. For ERISA litigants, Cloud underscores that exposing procedural deficiencies—without securing benefits or enforceable relief—does not satisfy the “some success on the merits” threshold required for attorneys’ fees.