The district court mostly granted the relators’ motion for award of attorneys’ fees and costs in their successfully settled qui tam case. Notably, the court found it reasonable for the relators to continue work on the case during multiple extended stays requested by the government while it conducted a separate criminal investigation. However, the court found the relators could not bill for their time working with the government on the criminal investigation and made a significant reduction to the overall request. The court also held the relators could not bill for time spent trying to convince the government to intervene, which it eventually declined to do.
The relators moved for an award of attorneys’ fees in their qui tam case alleging ANHAM USA Inc. won several contracts by fraudulent inducement. The defendants moved for leave to file a sur-reply.
The relators filed their complaint in 2014, alleging that the defendants violated the False Claims Act by fraudulently inducing certain government agencies to award two contracts to provide food, water, and transportation services. In 2017, the government declined to intervene and the court set a discovery schedule set to end on January 12, 2018. In October 2017, the government moved to stay the case for 90 days, arguing that continued discovery could harm a related criminal investigation. This motion and additional stays were granted, until the government finally requested an open-ended stay until the criminal matter was closed.
During the first stay, the relators continued working on their case and billed a significant number of hours. Eventually, on December 2, 2019, the parties globally settled the civil and criminal matters for a total of $45 million. The parties agreed that $27 million of that global settlement was attributed to the civil claims against the defendants and that the relators would be awarded a 27.5 percent share of that amount. Now the relators moved for an award of $5,702,779.99 in attorneys’ fees and $117,192.45 in costs. The relators also requested leave to file a “fees on fees” petition for fees incurred in connection with preparing and filing this motion, and the defendants have moved to request leave to file a sur-reply.
The defendants did not challenge the relators’ entitlement to a fee award, but objected to the amount. They specifically argued the relators should not be able to recover fees incurred on pre-complaint due diligence, unsuccessful efforts to convince the government to intervene, work performed during the period that this case was stayed, or work supporting the government’s related criminal investigation. The defendants also argued the award should be reduced by certain percentages to account for insufficiently descriptive billing, block-billed time entries, duplicative work, overstaffing, and the relators’ application of their attorneys’ 2020 rates to calculate the proposed fee award. The defendants also argued the relators’ relative lack of success should be considered.
The requested award included fees and costs incurred by fifteen lawyers, four litigation support members, and four paralegals. The court found the rates reasonable for a case of this magnitude and complexity. The court found the rates supported by the skill required to litigate the case; the customary fees for similar work; the experience, reputation, and ability of the attorney; and attorneys’ fees awards in similar cases.
Next, the court considered the defendants’ proposed exclusions. First, they argued the relators should not recover fees incurred on performing pre-complaint due diligence and other investigative work. The court found this argument without merit. The defendants admitted that while some recovery for time spent prior to filing the complaint is appropriate, they argued that because the relators’ counsel has significant experience with the False Claims Act it was “unreasonable” to spend nearly $66,055.04 in fees on work performed prior to filing the complaint. The court was unpersuaded, finding the case had to involve some pre-complaint work and that roughly $66,000 was reasonable for this effort.
Next, the defendants argued that the relators should not be compensated for work performed on their unsuccessful efforts to convince the government to intervene. The defendants argued the court should not award fees for “lobbying” efforts and that the court must exclude expenses relating to “false steps or avenues” that were unsuccessfully explored, even if the litigation lead to some form of recovery. The defendants asked the court to exclude $889,199.91 in fees billed during the government investigation period.
In response, the relators’ counsel noted that they worked on many routine tasks necessary to litigating the case, including preparing for meetings with the government, conducting targeted document review, providing the Department of Justice with legal analysis of issues, and answering the government’s questions. The relators also note that the government is the injured party in cases brought under the False Claims Act and that work they conducted to educate the government and cooperate during this phase is integral.
The court sided with the defendants. First, the court noted a substantial overlap between the relators’ justification for the work that was performed during the pre-complaint phase and that which was performed during the government investigation phase. The court also disagreed that efforts to convince the government to intervene were integral. While the relators’ legal analysis may have been helpful, the court doubted it was necessary, much less integral. The court found it unreasonable for the relators to bill for 1,419.85 hours for efforts that were unsuccessful, and as a result, could not have been necessary to the resolution of the case.
Next, the defendants argued that it was unreasonable for the relators to demand payment for 8,217.3 hours of work performed while the case was stayed. In response, the relators noted the stays were temporary and that they had no way to know whether the government would seek an extension until it did so. Therefore, it was reasonable for them to continue work on the case and their discovery obligations. The defendants argued the relators were in regular contact with the government and could have asked about future stays. Further, they noted that a number of hours billed reflected work done in the days immediately after a stay extension. The defendants sought a fee reduction of $2,842,363.18.
The court found the relators were entitled to continue work on the case during the stays, noting that the defendants could identify no controlling legal authority for the proposition that they should not, nor any tasks the relators should not have performed. Further, while the court’s stay relieved some of the pressures associated with upcoming deadlines, it did not order the relators to stop work on the case altogether. Despite the stay, the parties engaged in discovery-related negotiations, and after the more permanent stay was entered, the parties began settlement negotiations.
The court was less convinced by the relators’ request to recover fees incurred in support of the related criminal case. The defendants argued that fees for work on a criminal case are expressly unallowable by the terms of the FCA. They also argued the criminal case was only marginally connected to the civil matter, noting that the government’s request for the initial stay directly stated that the criminal investigation was not triggered by the civil litigation. Finally, the defendants also argued that because the proposed award did not clearly indicate how many hours were spent supporting the criminal case, the court should apply a 50 percent reduction.
In response, the relators cited Miller v. Holzmann for the proposition that they may recover fees incurred in conjunction with a criminal prosecution in a False Claims Act case. However, the court noted that in Holzmann, the criminal prosecution estopped the civil defendants from contesting liability on certain contracts which formed the basis of the civil case, and therefore the court awarded the relators fees in connection with their work assisting the government. The court found no correlation to this case, first noting the government declined to intervene here and expressly stated the cases were not connected. The court found no evidence that any of the relators’ work materially aided the government’s investigation, nor that the relators’ help in the criminal matter estopped the defendants from contesting liability.
However, the court did not agree to a 50 percent reduction in the overall fee request, because it could not conclude the relators worked equally on the civil and criminal investigations. Based on the relators’ evidence, the court instead applied a 20 percent reduction to the fees incurred during the stay period.
Next, the defendants argued that the remaining hours should be substantially reduced because they are not supported by sufficient time entries. The defendants argued that thousands of hours were vague and unsupported; that certain block time-entries did not provide enough information to determine whether they were reasonable; that the time entries were inflated by duplicative work and overstaffing; that the fees should not be based on each lawyer and staff members’ 2020 rates; and that the relators should not recover any “fees on fees.”
First, the court agreed that some work descriptions were brief, but it did not find that more detail would aid its analysis. Given the nature of the tasks, the court found the descriptions sufficient. The court also found the descriptions detailed enough to thwart the defendants’ challenge to block billing.
In connection to potential duplication, the court noted the relators already cut all fees of any timekeeper who billed less than 20 hours on the matter and reduced the fees of several key counsel by 15 percent. The court found these voluntary deductions adequately compensated for any duplicative work or overstaffing.
Next, the defendants argued that the award should not be based on the attorneys’ 2020 rates. In response, the relators argued that applying the 2020 rates is fair, because it compensates counsel for the delay in payment from the date the fee was generated. The court agreed with the defendants, but declined to apply the requested 20 percent reduction. Instead the court found a five percent reduction appropriate to account for the inflated fees while permitting recovery experience-based rate increases. Accordingly, the court reduced the proposed award by an additional $285,139.
Next, the court rejected the defendants’ assertion that the fee should be reduce because the relators were only partially successful. The court found no correlation between the amount of recovery–$27 million—and the alleged $8 billion amount of the scheme. The court agreed that the recovery was significant, especially considering the relators received nearly the maximum share allowed under the FCA.
Finally, the defendants argued that the relators should not recover their $117,192.45 in costs because they failed to produce receipts supporting their reasonableness. However, the court found that the lead counsel’s declaration and the relators’ exhibit sufficiently detailed the incurred expenses. However, the court denied the relators’ motion to recover fees for their counsel’s time preparing the fee request. The court also denied the defendants’ motion to file a sur-reply, finding it essentially repeated the same arguments in the defendants’ reply to the motion for fees.
