Appeal from the United States District Court for the Northern District of California. D.C. No. CV-91-0069-CAL. Charles A. Legge, District Judge, Presiding.
Before: Alfred T. Goodwin and Stephen Reinhardt, Circuit Judges, Samuel P. King, Senior District Judge.*fn* Opinion by Judge Goodwin.
Plaintiffs ("Trust Funds") appeal the award of attorneys' fees to Defendants, the Lucins, pursuant to a California wrongful attachment statute. The Trust Funds argue that either the wrongful attachment statute (at least to the extent that it authorizes attorneys' fees for the work done in the underlying ERISA action) or the fee award itself is preempted by ERISA's attorneys' fee provision.
The underlying action was brought pursuant to § 501 of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132, et. seq., and § 301 of the Labor Management Relations Act of 1947, 29 U.S.C. § 185, et seq. The district court had federal question jurisdiction pursuant to 29 U.S.C. § 1331, and this Court has jurisdiction pursuant to 28 U.S.C. 1291.
The Trust Funds sought unpaid employee fringe benefit contributions pursuant to a welfare benefit plan from the restaurant Il Pirata (owned by the Lucins) for the period from January 1, 1989 through March 1991. Pursuant to state law, the district court granted the Trust Funds a Writ of Attachment on $46,500 held for the Lucins, in a liquor license escrow, pending the outcome of the case on the merits. The Lucins unsuccessfully attempted to have the attachment lifted prior to their favorable decision on the merits. The district court ultimately granted the Lucins' motion for summary judgment but denied their motion for attorneys' fees or costs under ERISA.
The district court's denial of attorneys' fees was affirmed by this Court in an unpublished decision issued December 7, 1993.*fn1 The Lucins then filed a Motion for Judgment Enforcing Liability for Undertaking for Wrongful Attachment.*fn2 The district court granted the motion, holding that, as a matter of state law, the attachment had been wrongful, as demonstrated by the failure of the Trust Funds to succeed on the merits of the claim. It then awarded the Lucins $74,410.00 in damages, including interest in the amount of $7,235.10, costs in the amount of $3,757.18, and attorneys' fees in the amount of $63,557.50. The district court included in its attorneys' fees calculation the amount of fees attributable to the Lucins' successful effort to defeat the ERISA action. The court reasoned that in order to win the wrongful attachment action, the Lucins necessarily had to prevail in the ERISA action. See Reachi v. National Automobile & Casualty Insurance Co., 37 Cal. 2d 808, 811, 236 P.2d 151 (1951) (where the only manner by which the attachment can be discharged is to defend and win the principal action on the merits, attorneys' fees are recoverable); See also Granny Goose Foods, Inc. v. Brotherhood of Teamsters & Auto Truck Drivers Local No. 70, 415 U.S. 423, 436 n.10, 39 L. Ed. 2d 435, 94 S. Ct. 1113 (1974) (federal courts must apply state attachment law).
The Trust Funds argue that in a case in which the propriety of awarding attorneys' fees against ERISA plaintiffs has been ruled upon previously by both the district court and this court, with both courts denying such fees, a subsequent award of the fees pursuant to a state statutory provision must be deemed to conflict with ERISA and be preempted as a matter of law. We agree. ERISA preempts an award of attorneys' fees for work done in an ERISA action when those fees are determined according to the standards of a state statute and the state standards differ from the standards that are applicable under ERISA. At times the Trust Funds appear to argue that the state wrongful attachment statute itself, at least as applied, is preempted. However, it is neither necessary nor desirable to invalidate the state statute. Accordingly, we limit our analysis to the lawfulness of the fee award.
In our earlier memorandum Disposition determining the merits of this action, we affirmed the district court's denial of attorneys' fees on the basis of our assessment of the five factors that this court and the district courts must consider in deciding a motion for attorneys' fees under ERISA:
In Hummell v. S.E. Rykoff & Co., 634 F.2d 446 (9th Cir. 1980), we specified five factors that should be considered when reviewing motions for attorney's fees under Section 502(g)(1):
(1) the degree of the opposing parties' culpability or bad faith;
(2) the ability of the opposing parties to satisfy an award of fees;
(3) whether an award of fees against the opposing parties would deter others from acting ...