Almont Ambulatory Surgery Ctr. v. Ilwu-Pma Welfare Plan, 20-55464

Background

Multiple ambulatory surgery centers (Appellants) sued; the International Longshore and Warehouse Union–Pacific Maritime Association Welfare Plan (the Plan) defended and later sought attorney fees under ERISA.
The district court awarded the Plan $208,395.45 in attorney fees after subtracting over $650,000 in district-court-phase fees and reducing the remainder by 10% for non‑ERISA claims.
Appellants appealed, arguing (1) the Plan failed to disclose an insurance policy under FRCP 26, (2) an insurer (not the Plan) was the real party in interest and thus ineligible for ERISA fees, (3) the fee award improperly included non‑ERISA or district‑court fees, and (4) two appellants (San Diego and Orange Grove) lacked adequate notice/opportunity to be heard.
The Plan’s insurance policy covered defense costs only, not payments of judgments.
The district court separated billing for district and appellate phases, excluded district‑court fees, reduced fees for non‑ERISA issues, and allowed San Diego and Orange Grove to respond before entry of the award.

Issues

Issue	Appellants' Argument	Plan's Argument	Held
Whether the Plan violated FRCP 26 by not disclosing an insurance policy	Plan failed to disclose insurer covering defense costs, violating Rule 26	Rule 26 requires disclosure only of insurance that may satisfy a judgment, not defense‑cost‑only policies	No violation: the policy covered defense costs only, not judgments, so Rule 26 did not require disclosure
Whether an insurer (real party in interest) can recover ERISA attorney fees	Because insurer will receive recovered funds, insurer (not the Plan) is the real party in interest and cannot recover fees under ERISA	ERISA fee provision does not require out‑of‑pocket payment; fees are available when action is by participant/beneficiary/fiduciary — the Plan was a party	Plan eligible for fees: appellants were beneficiaries who brought the action; awarding fees to the Plan was proper
Whether the district court abused discretion in apportioning fees (excluding district‑court and non‑ERISA fees)	District court failed to exclude fees for district‑court proceedings and non‑ERISA claims, making award unreasonable	District court separated phases, shaved district‑court fees (~$650k), and further reduced amount by 10% for non‑ERISA issues	No abuse of discretion: reductions were made and remaining award did not show clear error given overlapping issues
Whether San Diego and Orange Grove received adequate notice/opportunity to be heard on the fee motion	They were not specifically named in moving papers and lacked adequate notice	Totality of circumstances shows adequate notice: Plan’s counsel conferred with all plaintiffs’ counsel, the Plan indicated fees would be sought against all plaintiffs, reply named them, they filed objections and argued at hearing	Adequate notice: considering all circumstances, they had opportunity to respond before fees were awarded

Key Cases Cited

Durham v. Lockheed Martin Corp., 445 F.3d 1247 (9th Cir. 2006) (jurisdiction to review district court fee orders)
Corder v. Howard Johnson & Co., 53 F.3d 225 (9th Cir. 1994) (ERISA fee awards may be appropriate where plan is a party regardless of insurer involvement)
Van Gerwen v. Guarantee Mut. Life Co., 214 F.3d 1041 (9th Cir. 2000) (standard of review for ERISA fee awards is abuse of discretion)
Downey Cmty. Hosp. v. Wilson, 977 F.2d 470 (9th Cir. 1992) (approach to trimming fee awards for nonrecoverable tasks)
Welch v. Metropolitan Life Ins. Co., 480 F.3d 942 (9th Cir. 2007) (district court's fee‑amount determinations reviewed for abuse of discretion)
Webb v. Sloan, 330 F.3d 1158 (9th Cir. 2003) (overlapping claims can justify less precise fee apportionment)
United States v. Castro, 78 F.3d 453 (9th Cir. 1996) (adequacy of notice judged by totality of the circumstances)
FTC v. Alaska Land Leasing, Inc., 799 F.2d 507 (9th Cir. 1986) (procedural fairness and notice principles in sanctions/fee proceedings)