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Protecting, Negotiating and Litigating Statutory Attorneys’ Fees Under the False Claims Act

Protecting, Negotiating and Litigating Statutory Attorneys’ Fees Under the False Claims Act. TAXPAYERS AGAINST FRAUD Annual Conference October 2019 Zach Kitts, Jeremy Friedman and Susan Gouinlock Panelists. I. Fee Shifting is Essential to the Working of the FCA

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Protecting, Negotiating and Litigating Statutory Attorneys’ Fees Under the False Claims Act

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  1. Protecting, Negotiating and Litigating Statutory Attorneys’ Fees Under the False Claims Act TAXPAYERS AGAINST FRAUD Annual Conference October 2019 Zach Kitts, Jeremy Friedman and Susan Gouinlock Panelists

  2. I. Fee Shifting is Essential to the Working of the FCA “Such person [qui tam relator]shall also receive an amount for reasonable expenses which the court finds to have been necessarily incurred, plus reasonable attorneys’ fees and costs.” 31 U.S.C. § 3730 (d) A. Federal Fee Shifting Statutes in General Attorney fee awards are an integral and essential component of federal laws embodying important public policies. E.g., S. Rep. No. 94-1011, 94th Cong. 2d sess. (1976), reprinted in 1976 U.S.C.C.A.N. 5908 (civil rights). While guarding against a “windfall,” courts must set fees that are “adequate to attract competent counsel” to undertake cases that vindicate statutory purposes. Blum v. Stenson, 465 U.S. 886, 896-897 (1984) at (quoting S. Rep. No. 94-1011, at 6). SeeMoreno v. City of Sacramento, 534 F.3d 1106, 1111, (9th Cir. 2008) (“in making the award, the district court must strike a balance between granting sufficient fees to attract qualified counsel to civil rights cases, and avoiding a windfall to counsel”). B. FCA Statutory Purpose Requires Relators to Find Counsel Although it is oft-stated the statutory scheme is “designed to help fight fraud against the government by encouraging private individuals to come forward with information about fraud that might otherwise remain hidden,”United States ex rel. Barajas v Northrop Corp., 258 F.3d 1004, 1012 (9th Cir. 2001), there can be no recovery, and often no coming forward, when the relator is unable to hire an able attorney. In the Ninth Circuit, relators may not even prosecute a qui tam action unless represented. United States ex rel. Stoner v. Santa Clara County Office of Education, 502 F.3d 116 (9th Cir. 2007).

  3. C. 1986 Legislative History for the False Claims Act: [A] true marketplace rate in a False Claims Act case would be what competent counsel's expectations of an hourly rate would be at the time of the filing of the case understanding that payment will be made only after success is achieved, and only after the defendant is given the opportunity to challenge the amount requested, and where the judge or an appellate court may reduce the amount required, and where payment may not come until this process is concluded. In such cases, that rate would be substantially greater than a rate where payment was guaranteed on a monthly basis regardless of whether the case was won or lost. House Report, 132 Cong. Rec. H9382_03, 1986 WL 786917 (Cong. Rec.)

  4. II. Protecting Statutory Fees • Statutory Fees Belong to Relator, Unless Secured Through Retainer Evans v. Jeff D., 475 U.S. 717 (1986) – Statutory fees belong to party, “lump sum” settlement offers permitted U.S. ex rel. Virani v. Jerry M. Lewis Truck Parts & Equipment, Inc., 89 F.3d 574, 579 (9th Cir. 1996) – Fees awarded to counsel, not relator; concurrence: “absent a contractual assignment to the attorney, the False Claims Act requires payment of the attorneys' fee award to the party, with the ultimate disposition of the award dependent upon the contract between the attorney and client.” Abrogation recognized by United States v. Kim, 806 F.3d 1161, 1174 (9th Cir. 2015) (under EAJA , where Anti-Assignment Act voids the assignment involving fees recovered from government). Venegas v. Mitchell, 495 U.S. 82 (1990), – “statutory awards awards of fees can coexist with private fee arrangements.” If plaintiffs can waive their claims altogether, they certainly should be able to “assign part of their recovery to an attorney.” Carle, “The Settlement Problem in Public Interest Law,” 29 Stanford Law & Policy Review 1, 22-30 (2018) – The problem of Evans v. Jeff D. is solved by the solution in Venegas.

  5. B. Sample Retainer Language on Fees: 7. RELATOR acknowledges that in the event of a settlement, judgment or other recovery on the qui tam claims contained in the Lawsuit, RELATOR may be entitled to a portion of the damages and penalties awarded to or recovered by the federal government and/or state governments (the "Share Award"). A Share Award will typically range anywhere from 15% to 30% of the government’s recovery from the Defendants in the Lawsuit. In addition, the federal False Claims Act and certain comparable state laws allow a court to make an award of costs, expenses, and/or attorneys' fees (collectively, the "Statutory Fee and Expense Award") to Counsel and RELATOR from the Defendant. Any Statutory Fee and Expense Award would include compensation at reasonable hourly rates for the time expended by COUNSEL on the Lawsuit. 8. RELATOR agrees to have COUNSEL seek a Statutory Fee and Expense Award and agrees that such Statutory Fee Award is to be paid to and retained by COUNSEL in addition to any contingency fee earned by COUNSEL under this Agreement. Any expenses reimbursed by the Defendants in a Statutory Fee and Expense Award shall be paid to the party who paid such expenses, whether that be the RELATOR or COUNSEL. 9. To the extent a Statutory Fee and Expense Award is obtained by RELATOR through court order or settlement, RELATOR hereby assigns to COUNSEL, as additional compensation for COUNSEL'S representation, all of such Statutory Fee and Expense Award, as well as the right to seek any such awards. 10. If COUNSEL submits a Statutory Fee and Expense Award application to a court, and such court denies some portion of the application or reduces COUNSEL's normal hourly rates, RELATOR will not be responsible for the difference. Likewise, to the extent that as part of any settlement agreement with Defendant(s), COUNSEL agrees to waive any portion of COUNSEL's statutory fees, then RELATOR will have no obligation to COUNSEL with regard to the amounts so waived. COUNSEL will not be required to waive any portion of COUNSEL'S fees, costs or expenses as part of a settlement of the Lawsuit, although COUNSEL may choose to do so. 11. RELATOR agrees that if she were to refuse to permit COUNSEL to seek a Statutory Fee and Expense Award, RELATOR would reimburse COUNSEL for the amount of their reasonable fees from her share of any recovery in the Lawsuit.

  6. C. Protect Entitlement to Statutory Fees in DOJ/Defendant/Relator Settlement Agreement In Recitals: “Relator claims entitlement under 31 U.S.C. § 3730(d) and [state FCA] to a share of the proceeds of this Settlement Agreement and to Relator’s reasonable expenses, attorneys’ fees and costs.” In Terms and Conditions: “As a condition for Relator’s agreement herein, including dismissal of relator’s claims with prejudice, [defendant] agrees that Relator and its attorneys are entitled to reasonable expenses, attorney’s fees and costs pursuant to 31 U.S.C. § 3730(d) for intervened and non-intervened claims; provided, however, [defendant] expressly reserves the right to challenge the amounts and reasonableness of Relator’s claims for attorneys’ fees, expenses, and costs. The Parties agree that the United States District Court shall have continuing jurisdiction to issue orders with regard to any disputes over the amounts for expenses, attorney’s fees and costs. Relator and [Defendant] further agree that, should the parties be unable to reach an agreement on amounts, Relator may file a motion for attorney’s fees, costs and expenses in the District Court within 60 days of the date of dismissal seeking a determination by the Court.”

  7. Obtaining Fees Without Filing a Petition A. Watch your deadlines (14 day from judgment of dismissal in most jurisdictions) (unless time is extended in the settlement agreement; get defense counsel to agree to more time, or request an extension from the court. (What court wants to hear your fee petition?) B. Scrutinize your hourly time records to make sure all time is compensable; don’t give defense counsel an issue to use with the court 1. What will be argued as not compensable? a. Too many lawyers b. Administrative tasks c. Partners doing associate work d. Block billing that is to general e. Work done on claims that were “not successful” f. Work done by counsel for later-filed relators (first to file bar) g. Failure to maintain separate billing records for claims against different defendants C. Share your billing records with Counsel AFTER protecting yourself with an agreement that they are FRE 408 material and he cannot use them for anything ever or make work product from them. D. Are there other reasons to compromise? Yes. Courts are likely to order reductions if fee claimant does not make billing judgment reductions and your hourly rate may be reduced in this and then in other cases. But after A-C above, there should be no reluctance to file for a fully-compensable fee award.

  8. E. Considerations Why Negotiate If Agreement is Unlikely? • Show the court who forced the fees litigation. Avoid a “second major litigation.”Hensley v. Eckerhart, 461 U.S. 424, 437 (1983) Note: document your offers of compromise • Learn defense objections to your time records. What Role Should You Expect DOJ to Play? None. Issue of Timing – Should You Avoid Simultaneous Negotiations? • Evans v. Jeff D., 475 U.S. 717 (1986) – Fee opponents & the right to negotiate fees in settlement • Staged Negotiations: “Just Say No to Simultaneous Negotiations” • Intervened Cases – de facto process • Non-intervened cases – Should relator’s counsel insist?

  9. IV.   Litigating Statutory Fees A.        Legal Standards: the Objective Lodestar Methodology B.        Nuts and Bolts 1. Discovery – what, when 2. Fee Petition 3. Declarations C. Frequent Issues that Arise in Fees Litigation under FCA 1. Rates – local rates, national practice 2. Limited Success: non-covered conduct claims 3. Limited Success: dismissed or unresolved claims 4. Multiple defendants 5. First to file and Collateral Proceedings – battles with the government 6. Block billing and vague entries 7. Multiplier 8. Fees on Fees

  10. A. Legal Standards 1. The Adjusted Lodestar Methodology Statutory fees are determined by the adjusted lodestar methodology. Hensley v. Eckerhart, 461 U.S. 424, 433 (1983); Blum v. Stenson, 465 U.S. 886 (1984); Lindy Bros. Builders, Inc. v. American Radiator & Standard Sanitary Corp., 487 F.2d 161 (3d Cir. 1973). Using this method, the court first determines the “lodestar” or “touchstone”, defined as the number of hours reasonably expended in pursuit of the results obtained, multiplied by reasonable hourly rates; and second, may make adjustments to account for elements not already addressed. “12 Johnson factors” described in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974): (1) the time and labor required; (2) the novelty and difficulty of the questions involved; (3) the skill requisite to perform the legal service properly; (4) the preclusion of other employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the "undesirability" of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases.

  11. 2. Loadstar is“Objective and Predictable” Federal courts developed the adjusted lodestar methodology to give more certainty in the calculation of fees, and to guide parties in their settlement efforts to avoid “second major litigation” over fees. Hensley, 461 U.S. at 437. It provides “an objective basis on which to make an initial estimate of the value of a lawyer’s services.”Hensley, 461 U.S. at 433. It “produces an award that roughly approximates the fee that the prevailing attorney would have received if he or she had been representing a paying client who was billed by the hour in a comparable case;” and it “cabins the discretion of trial judges, permits meaningful judicial review, and produces reasonably predictable results.”Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 551-552 (2010).

  12. 3. Burden Shifting Fee applicant has the initial burden to substantiate the amount of fees claimed, starting with adequate time records of the number of hours actually expended in the litigation and evidence supporting the claimed market rate. Blum, 465 U.S. at 888. The “party opposing the fee application has a burden of rebuttal that requires submission of evidence to the district court challenging the accuracy and reasonableness of the . . . facts asserted by the prevailing party in its submitted affidavits.” Camacho v. Bridgeport Fin., Inc., 523 F.3d 973, 980 (9th Cir. 2008). Actual time expenditure should be reduced hour-by-hour, only when “counsel substantially exceeded the bounds of reasonable effort.” United States v. Metro Dist. Comm'n, 847 F.2d 12, 17 (1st Cir. 1988). The burden is on the fee opponent to prove well-documented time was “excessive, redundant or otherwise unnecessary,” United States v. $28,000 of U.S. Currency, 802 F.3d 1100, 1108 (9th Cir. 2015). “By and large, the court should defer to the winning lawyer’s professional judgment as to how much time” was required. Moreno v. City of Sacramento, 534 F.3d 1106, 1112 (9th Cir. 2008).

  13. 3. Burden Shifting cont.d’ “[I]f the fee target does not dispute the market rate or hours reasonably expended, and poses no other valid legal reason for denying the fee request, the district court’s inquiry should end after it determines whether the applicant’s fee request is facially reasonable. SeeUnited Steelworkers of Am. v. Phelps Dodge Corp., 896 F.2d 403, 407 (9th Cir. 1990) (holding that the district court must “presume reasonable” an uncontested market fee rate supported by sufficient evidence); Toussaint v. McCarthy, 826 F.2d 901, 904 (9th Cir. 1987) (awarding the full requested fee because the plaintiffs appropriately supported a fee application and the defendant did not contest the claimed rates or hours); see also Powell v. CIR, 891 F.2d 1167, 1173-74 (5th Cir. 1990) (explaining that an uncontested rate supported by evidence is prima facie reasonable).” [United States v. $28,000 of U.S. Currency, 802 F.3d 1100, 1105-06 (9th Cir. 2015).]

  14. B. Nuts and Bolts • Fee Discovery What: – Request Production of Defense Billing Records Comparable Hours McGinnis v. Kentucky Fried Chicken of Cal., 51 F.3d 805 (9th Cir. 1994) – defendant “spen[t] considerably more money losing than its adversary spent winning.” Fee claimants are entitled to the opportunity to compare their “efforts at the [merits] stage,” to those expended by defense counsel, and their fees and costs to “the total fees and costs incurred by the defendant in defending the case.” Henson v. Columbus Bank & Trust Co., 770 F.2d 1566, 1574-75 (11th Cir. 1985) – “most appropriate for the [district] court to have allowed discovery of” defendant’s attorney’s fees, especially since defendant spiritedly contested plaintiff’s claims at every stage, including the reasonableness of his petition for attorneys’ fees. Ackerley Commc'ns of Mass., Inc. v. Somerville, 901 F.2d 170, 172 n.5 (1st Cir. 1990) (“Although we recognize that comparisons between the number of hours spent by the attorneys for different parties may tell little about the quality of the work involved, we nevertheless think it worth noting the dramatic contrast that exists here for work that appeared at least roughly comparable”); Chrapliwy v. Uniroyal, Inc., 670 F.2d 760, 768, n. 18. (7th Cir. 1982) (“[T]he hours and hourly rates charged by the defendant’s attorneys provide a helpful guide in determining whether similarly high rates and hours requested by the plaintiffs were reasonable”)

  15. Fee Discovery, What: Request Production of Defense Billing Records Comparable Rates “While H&K's offices may be located outside the region, that fact is beside the point. Regardless of its location, the firm practices in this district, as is evidenced by their representation of Biotronik in this case. Accordingly, the rates H&K charges its clients for work it performs to litigate cases in this district has relevance to the prevailing market rate in Sacramento. Those rates are simply part of the universe of data from which one would determine the range for rates charged in this district by experienced and qualified attorneys to litigate cases of this nature. [United States v. Biotronik, Inc., 2015 U.S. Dist. LEXIS 35321, *17-19 (E.D. CA 2015).] United States ex rel. Liotine v. CDW-Gov't, Inc., 2013 U.S. Dist. LEXIS 138509, *20 (S.D. IL 2013) – Noting a “striking amount of undeniable incredulity” when qui tam defense counsel with less experience objected, but billed “at a rate that is 148% higher” than the rate suggested for relator’s lead counsel. United States ex rel. Poonam Rai, D.D.S. v. KS2 TX, P.C., 2019 U.S. Dist. LEXIS 53147, at *10-12 (D. Conn. 2019) – “no party, whether relator or defendant, was represented solely by counsel from within this District or the Southern District of Texas (where Relators first filed their complaint), providing further indication that a reasonable, paying client would be likely to hire national counsel to investigate and litigate this case”.

  16. Fee Discovery, What: Contention Interrogatories • Produce Relator’s Counsel’s Time Records • Request: “If you contend that any of the time entries provided to you by relator’s counsel are insufficient as a matter of record keeping – including but not limited to vagueness, ambiguity, impermissibly block-billed – please identify the time entry by date and state fully each objection, including any and all facts supporting the objection.” • Request: “If you contend that any of the time expended by relator’s attorneys or paralegals, as reflected in the time records provided to you by relator’s counsel, is unreasonable, excessive, duplicitous or otherwise non-compensable, please identify the time entry by date and state fully each objection, including any and all facts supporting the objection.” • “If you contend that $[claimed rate] per hour is outside the range of reasonable hourly rates in 2019 for attorneys with the knowledge, skills and experience possessed by Relator’s Attorney, for work performed on this, please identify the range of reasonable hourly rates in 2018 by attorneys with Relator’s Attorney’s knowledge, skills and experience, according to the legal marketplace for his services, and state fully the bases for your contentions.”

  17. Fee Discovery, When: Too Late, Too Early, Does it Matter? • Too late: “Discovery is closed” or too early: “No fee petition yet on file”? • Just make the motion when appropriate, let the court decide: Under Rules 26 and 54 of the Federal Rules of Civil Procedure, fee claimants may seek an order compelling production of the opponent’s billings in a post-judgment dispute over attorney’s fees and costs. Lobatz v. U.S. West Cellular of California, Inc., 222 F.3d 1142, 1148 (9th Cir. 2000); Hernandez v. George, 793 F.2d 264, 268 (10th Cir. 1986); Henson v. Columbus Bank & Trust Co., 770 F.2d 1566, 1574-75 (11th Cir. 1985). • Rule 54 confers discretion on the Court to resolve all fee-related issues. Advisory Committee Notes on the 1993 Amendments to Rule 54 (as an exercise of discretion, “[t]he court may order disclosure of additional information, such as that bearing on prevailing local rates or on the appropriateness of particular services for which compensation is sought”). See also id. (“On rare occasion[s] … the court may determine that discovery under Rules 26-37 would be useful to the parties”). • Most courts enforce fee discovery on a showing that the party requesting discovery “has substantial need for the materials to prepare its case[.]” Rule 26(b)(3)(A)(ii). Manual for Complex Litigation, Fourth, 14.224 (2004) (discovery in fee litigation should be allowed for information that the Court determines “is genuinely needed”).

  18. 2. Nuts and Bolts: Fee Petition Question of Timing • Rule 54(d)(2) of the Federal Rules of Civil Procedure: (A) Claim to Be by Motion. A claim for attorneys' fees and related nontaxable expenses must be made by motion unless the substantive law requires those fees to be proved at trial as an element of damages. (B) Timing and Contents of the Motion. Unless a statute or a court order provides otherwise, the motion must: … (i) be filed no later than 14 days after the entry of judgment; … • Local Rules (D) Special Procedures by Local Rule; Reference to a Master or a Magistrate Judge. By local rule, the court may establish special procedures to resolve fee-related issues without extensive evidentiary hearings. Also, the court may refer issues concerning the value of services to a special master under Rule 53 without regard to the limitations of Rule 53(a)(1), and may refer a motion for attorneys' fees to a magistrate judge under Rule 72(b) as if it were a dispositive pretrial matter. • Get More time – Settlement Agreement, Stipulation, Application with Court

  19. Nuts and Bolts: Fee Petition Structure of Fee Petition Introduction: Relator discovered fraud, looked for attorney Years in battle against fraudsters, interacting with US Tremendous results achieved, precedent set Counsel now seek to recover fees under objective standards Summary of Litigation Efforts/Tasks: tell the story in stages, assess time Summary of Litigation Achievements Legal Standards for Adjusted Lodestar Methodology Argument: Time Reasonable, Compensable Rates Claimed, Justified Lodestar Enhancement (or premium hourly rate?) Include Fee Chart and/or Proposed Order

  20. 3. Nuts and Bolts: Declarations Fee Claimant Declaration (Most important) Background and Experience of Lead Attorney, and Other Timekeepers Rates History Summary of Litigation Efforts/Tasks – State and Justify Time per Stage Summary of Litigation Achievements – Include Monetary and Non-Monetary Submission of Time Records Statement of hours Foundation for Records Description of Timekeeping/Record Practices Statement of Coordination Efforts Review for Billing Judgment Reductions Statement of Enhancement Factors Extraordinary Results Contingent Nature (Or is this Already in Premium Rate?) Preclusion of Other Significant Employment

  21. Nuts and Bolts: Declarations Expert Declarations – Topics • Market rates declarations. Foundation and factual bases for testifying to rates charged by attorneys within a geographic area or practice area; attestation of own rates charged, relevant fees history; significance of statutory fees to firm practice, effect on whether the firm takes on new cases, which ones to take; opinion on whether rates claimed are within, or even below, rates charged by attorneys with similar skills and experience. • Need for attorneys with specialized skills and knowledge to successfully litigate qui tam cases. Foundation for testimony on False Claims Act litigation; opinions and bases for opinions on the need for specialized skills and experiences. • National marketplace. Foundation for testimony on nationwide qui tam practice; opinions and bases for opinions on national practice, the need to charge higher-than-forum rates in order to attract competent counsel; statement of higher-than-forum rates even by venue-based counsel, when experienced qui tam practitioners. • Reasonableness of time expenditures. • Lodestar Enhancement or Multiplier.

  22. C. Frequent Issues in Fees Litigation Under FCA • Rates: local rates, national practice • Blum v. Stenson, 465 U.S. 886, 896 n. 11 (1984) suggests that “In almost every case, the firms’ established billing rates will provide fair compensation.” But, “a reasonable rate must align with ‘those prevailing in the community for similar services.’” • What is the “community”? Most courts say it’s geographic (in or near the district where the case is filed). • United States ex rel. Poonam Rai, D.D.S. v. KS2 TX, P.C., 2019 U.S. Dist. LEXIS 53147, at *10-12 (D. Conn. 2019)(“no party, whether relator or defendant, was represented solely by counsel from within this District or the Southern District of Texas (where Relators first filed their complaint), providing further indication that a reasonable, paying client would be likely to hire national counsel to investigate and litigate this case”). • United States ex rel. Liotine v. CDW-Gov't, Inc., 2013 U.S. Dist. LEXIS 138509 *16 (S.D. IL 2013) (“False Claims Act relator representation is, essentially, a nationwide practice”).

  23. Historic or Current Rates? To compensate for delay in payment, statutory attorneys’ fees are calculated using hourly rates current to the year of recovery. Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 555 (2010). Missouri v. Jenkins, 491 U.S. 274, 284 (1989).

  24. Sources for Establishing Market Rates • Specific, substantiated declarations from other attorneys, who testify to their own rates and, if plaintiffs’ counsel, support their testimony with examples and exhibits. • Defense counsel’s rates, through discovery, reported cases and PACER (declarations on fee petitions, in civil and Bankruptcy). • Laffey Matrix, Laffey v. Northwest Airlines, Inc., 572 F. Supp. 354, 371 (D.D.C. 1983) (used in DC are and some other jurisdictions) • Recent reported decisions of awards the geographic area • Survey data and published industry articles on trends in the legal marketplace

  25. Limited Success: Non-Covered Conduct/Non-Intervened Claims United States ex rel. Fallon v. Accudyne Corp., 97 F.3d 937 (7th Cir. 1996) – “Having settled the case, and therefore surrendered (in exchange for some valuable concession, no doubt) its opportunity to receive a decision on the merits, Accudyne offered its view of the merits as a reason to avoid paying the attorneys' fees it had agreed to pay” United States ex rel. Hernandez v. Therapy Providers, 2014 U.S. Dist. Lexis 146551 (N.D. IL 2014) – “When a qui tam case settles, like it did here and in Fallon, the question before the Court is ‘whether the [attorneys’] bill is reasonable, but not the question whether the United States (through the relators) “prevailed”’ on all counts.” United States ex rel. Poulton v. Anesthesia Associates. of Burlington, Inc., 87 F. Supp. 2d 351 (D. VT 2000) – Because the settlement did not “determine the relative merits of dismissed versus retained claims” neither the dismissal nor the denial of liability was reason to reduce relator’s counsel’s fees. U.S. ex rel. Averback v. Pastor Med. Assoc. P.C., 224 F. Supp. 2d 342, 350 n.7 (D. Mass. 2002) – non-intervened claims are not “unsuccessful” and it would violate the public policy behind the False Claims Act to parse attorneys billing records for time spent on non-intervened claims. But see United States ex rel. Doe v. Biotronik, Inc., 2015 U.S. Dist. LEXIS 144447 (E.D. Cal. 2015) – Reducing merits fees by 20% to account for non-covered conduct claims.

  26. Limited Success: Dismissed or Unresolved Claims “Limited Success” under Hensley v. Eckerhart, 461 U.S. 424 (1983). Lost claims, not arguments, motions or alternative theories Exclude hours expended exclusively on wholly unrelated claims Consider whether time claimed on related claims was reasonable in light of the success obtained Some FCA cases where “limited success” arguments were made: United States ex rel Longhi v. Lithium Power Techs., Inc., 575 F.3d 458, 475 (5th Cir. 2009) United States ex rel. Miller v. Bill Harbert Int'l Constr., 786 F. Supp. 2d 110, 118 (D.D.C. 2011) United States ex rel. Feldman v. Gorp, 2011 U.S. Dist. LEXIS 14914 (S.D.N.Y. 2011) United States ex rel. Nichols v. Omni H.C., Inc., 2009 U.S. Dist. LEXIS 9474 (M.D. GA 2009)

  27. Multiple Defendants, Prior Settlements Segregate time that can be segregated – exclusive, joint Joint and Several Liability for joint time United States ex rel. Miller v. Bill Harbert International Construction, Inc., 786 F. Supp. 2d 110, 117 (D.D.C. 2011) Dollar-for-dollar credit for prior settlement of joint time No “double discount” of hours after credit United States ex rel. Savage v. Washington Hanford Closure, No. 2:10-cv-0501-SMJ (E.D. WA Aug. 27, 2019)

  28. First to File Bar Defendants may argue that 2d and later filed relators are not “prevailing parties” so their attorney fees are not compensable. That defense to fees can be waived by not preserving it.United States v. Cmty. Health Sys., Inc., 666 F. App'x 410 (6th Cir. 2016) Practice pointers: -Careful wording in settlement agreement -Strike a relator sharing deal ‘early and often’ during the case after partial unsealing of the complaints (but that is not a clear path to recovery of statutory fees)

  29. “Government did all the work” “Finally, the Court will not reduce the numbers of hours for which Relator is awarded fees to account for her ‘limited role’ in the litigation after DOJ intervened. For one, the Court believes that Relator’s reduced post-intervention role is adequately reflected in the number of hours expended during that phase. Moreover, although DOJ may have taken a leading role in the litigation, Defendant has failed to show that Relator’s post-intervention efforts were ‘unnecessary,’ and the Court therefore finds the requested reduction to those hours unwarranted.” United States ex rel. Savage v. Washington Hanford Closure, No. 2:10-cv-0501-SMJ (E.D. WA Aug. 27, 2019) (citations omitted).

  30. “You were already paid fees out of share” Rejected by courts since Venegas v. Mitchell, 495 U.S. 82 (1990). “The existence of a contingent fee agreement between [relator] and his counsel does not justify reducing the lodestar amount of attorneys’ fees owed by the Defendant under 31 U.S.C. § 3730(d)(2). This statute mandates the award of attorney fees as part of a fee-shifting policy. See United States ex rel. Taxpayers Against Fraud v. Gen. Elec. Co., 41 F.3d 1032, 1035 (6th Cir. 1994) (“The FCA qui tam statutes [] contain a fee-shifting provision that aims at inducing ‘whistleblowers’ to step forward and attorneys to pursue such actions.”); [United States ex rel. Bahrani v. Conagra, Inc., 2009 U.S. Dist. LEXIS 77338 (D. Colo. 2009), vacated in part on other grounds, 624 F.3d 1275 (10th Cir. 2010)] (“In crafting the fee shifting provisions of the FCA, Congress used the term ‘shall’ to mandate an award of reasonable expenses, attorneys’ fees and costs to a person who settles a claim or recovers a civil penalty and damages on behalf of the government.”). By its nature, fee-shifting is designed to shift all of the costs (including attorney fees) to the loser in an action. The fact that the winner’s attorneys receive compensation from another source is irrelevant to the fee award. [United States ex rel. Maxwell v. Kerr-McGee Oil & Gas Corp., 793 F. Supp. 2d 1260, 1264-65 (D. Colo. 2011).]

  31. Proportionality Rejected by courts since Riverside v. Rivera, 477 U.S. 561 (1986) (declining to “adopt a strict rule that attorney’s fees . . . be proportionate to damages recovered”) Proportionality makes no sense when it comes to the public policies of the False Claims Act, as discussed at length in United States ex rel. Liotine v. CDW-Gov't, Inc., 2013 U.S. Dist. LEXIS 138509 (S.D. IL 2013). Defendants there argued “the amount of attorney fees sought (about $3.7 million) is 53% of the entire recovery in this case.” The court found this unpersuasive, as “many of the cases cited ... are cases where the attorney fee award was actually many times larger than the relief rewarded..” ... [I]t is not unreasonable especially when the public purpose of the False Claims Act and its fee-shifting provisions are considered.”Id. at *41. “Liotine, in partnership with the federal government, has achieved a substantial result that resulted in recovery for the United States. This type of recovery is rare. ... Congress mandated fee-shifting in False Claims Act cases. 31 U.S.C. §§ 3730(d), 3730(h). The size of the lodestar amount recommended here should serve to 1) encourage other highly-skilled professionals to engage in False Claims Act litigation and 2) have a deterrent effect on persons or corporations intending to engage in fraud against the federal government.”Id., at *43-44.

  32. Collateral Proceedings – Battles with the Government United States ex rel. Taxpayers Against Fraud v. General Electric Co., 41 F.3d 1032 (6th Cir. 1994). In Taxpayers, the court relied on Seventh Circuit law with a restricted view on liability for fees incurred in ancillary proceedings, held not entitled to claim post-settlement fees over relator’s share to the defendant. Inconsistent with the law of other circuits. E.g., the Ninth Circuit. Watson v. County of Riverside, 300 F.3d 1092, 1097 (9th Cir. 2003) San Francisco NAACP v. San Francisco Unified Sch. Dist., 284 F.3d 1163 (9th Cir. 2002) Elder v. National Conf. Of Bar Examiners, 2011 U.S.Dist. Lexis 102205 (N.D. CA 2011) United States v. City of San Diego, 18 F.Supp.2d 1090, 1100 (S.D. CA 1998) Argument: losing defendant pays all fees for work reasonable and necessary on behalf of winning claims for which a private client would pay Moore v. Jas. H. Matthews & Co., 682 F.2d 830, 839 (9th Cir. 1982) (attorneys entitled to compensation for “every item of service which, at the time rendered, would have been undertaken by a reasonable and prudent lawyer to advance or protect his client’s interest”)

  33. Block billing and Vague Entries How should an attorney segregate time expended on interrelated tasks during a block of time? To require segregation of time that was expended as a block is wasteful. Secalt S.A. v. Wuxi Shenxi Construction Machines Co., 668 F.3d 677, 690 (9th Cir. 2012) United Steelworkers v. Retirement Income Plan, 512 F.3d 555, 565 (9th Cir. 2008) “A district court should refrain from reducing fees until it first determines whether ‘sufficient detail has been provided so that [the Court] can evaluate what the lawyers were doing and the reasonableness of the number of hours spent on those tasks.’ The court must be ‘practical and realistic’ regarding how attorneys operate; if attorneys ‘have to document in great detail every quarter hour or half hour of how they spend their time . . . their fee[s] . . . will be higher, and the lawyers will simply waste precious time doing menial clerical tasks.’” Yenidunya Invs., Ltd. v. Magnum Seeds, Inc., 2012 U.S. Dist. LEXIS 20421 (E.D. CA 2012) (citations omitted).

  34. Block billing and vague entries Supplementing Evidence in the Reply? Given the nature of fee disputes – especially when the fee opponent holds back on objections until the opposition is on file – additional evidence and explanations provided along with reply briefs are often important to court decisions on fees. United States v. City & County of San Francisco, 748 F.Supp. 1416, 1420 (N.D. CA 1990) (detailed explanations submitted with reply counters opponent’s claim of vagueness), aff’d in part, modified in part sub nom Davis v. City & County of San Francisco, 976 F.2d 1536 (9th Cir. 1992), modified on other grounds 984 F.2d 345 (9th Cir. 1993) Dease v. City of Anaheim, 838 F.Supp. 1381, 1383 (C.D. CA 1993) (every contested entry justified in reply) Rosenfeld v. United States Department of Justice, 904 F.Supp.2d 988, 1005 (N.D. CA 2012) (relying on description of time expenditures made in reply brief) Quail Creek Petroleum Mgmt. Corp. v. XL Specialty Ins. Co., 129 Fed. Appx. 466, 470 (10th Cir. 2005) (supplemental declaration provided better detail on time expenditures) Hyldahl v. AT&T, 2009 U.S. Dist. LEXIS 72196 *2 (E.D. MI 2009) (purported “substantial new evidence and arguments” submitted with the reply “address defendant’s arguments and ‘elaborate’ on views expressed in the motion”) Doe v. Cargol, 2006 U.S. Dist. LEXIS 14102 (D.AZ. 2006) (considering new evidence submitted with reply “in the interest of thoroughness and justice”) Hester v. Orthalliance, Inc., 2004 U.S. Dist. LEXIS 31397 (N.D. GA 2004) (court has independent obligation to undertake fee determination, justifying consideration of supplemental evidence and argument presented by the fee claimant)

  35. Lodestar Multiplier UPWARD ADJUSTMENTS – FANTASY OR REALITY? • U.S. ex rel., Thomas Poulton v. Anesthesia Associates of Burlington, 87 F.Supp 2d 351 (D. Vt., 2000): • “[A]s the Court also finds that several of the claims raised in this case under the False Claims Act were “real risk-of-not-prevailing issues,” an upward adjustment of the loadstar is warranted. Thus, a ten percent upward adjustment is applied to the loadstar. • U.S., ex rel. Abbott-Burdick v. U. Med. Associates, 2:96-1676-12, 2002 WL 34236885, at *22 (D.S.C. May 23, 2002) (citing Poulton for the proposition that “it is only in rare cases that this figure will be adjusted” but providing no such adjustment given that the case was not exceptional) • U.S. ex rel. Sant v. Biotronik, Inc., 716 F. App'x 590, 593 n.2 (9th Cir. 2017) (not reaching the question of contingent risk enhancement after City of Burlington v. Dague, 505 U.S. 557 (1992), because the district “had already considered the contingent risk” in calculated attorneys’ fees.

  36. 12. Fees on Fees • Like other fee-shifting statutes, under the False Claims Act, prevailing relator’s counsel are entitled to fees for work establishing and collecting reasonable fees. United States ex rel. Simring v. Univ. Physician, 2013 U.S. Dist. LEXIS 179451 (D.N.J. 2013) • “This is so because it would be inconsistent to dilute a fees award by refusing to compensate attorneys for the time they reasonably spent in establishing their rightful claim to the fee.” Camacho v. Bridgeport Fin., Inc., 523 F.3d 973, 981 (9th Cir. 2008) • Gagne v. Maher, 594 F.2d 336, 344 (2d Cir. 1979) (denying fees for time spent obtaining them would “dilute the value of a fees award by forcing attorneys into extensive, uncompensated litigation”) • “[I]t’s now well established that time spent in preparing fee applications ... is compensable.” This is so, even where the district court does not award the applicant the full amount of fees he requests. ... On remand, the district court should employ the lodestar method for determining a reasonable fee for Plaintiffs’ attorneys’ work on the fee application.” Gonzalez v. City of Maywood, 729 F.3d 1196 (9th Cir. 2013) • The Supreme Court has rejected a separate standard for recovery of fees for the fee stage of litigation. Commissioner, I.N.S. v. Jean, 496 U.S. 154, 160-162 (1990)

  37. Fees on Fees – Lower Rates Due To “Simplicity”? Any argument for a lower rate for fees work due to simplicity “is a discredited notion that has not found favor in most courts.” Doe v. Crestwood, 764 F. Supp. 1258, 1262 (N.D. Ill. 1991). As explained by one district court, reducing the rate for “fees on fees” would amount to a double discount under Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 553 (2010). “[T]o the extent that the District now contends that the plaintiff’s follow-on fee application presented less complexity than her initial administrative action, the Court must therefore presume that this relative simplicity is ‘fully reflected in the number of billable hours recorded [by the plaintiff’s] counsel.’ Perdue, 559 U.S. at 553. In other words, any consideration of the relative complexity of the present fees litigation as compared to the plaintiff’s underlying administrative action is already incorporated into the reasonableness of the number of hours spent in litigating her request for fees before this Court.” Jones v. District of Columbia, 153 F. Supp. 3d 114, 124-25 (D.D.C. 2015).

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