UNITED STATES DISTRICT COURT 1 DISTRICT OF NEVADA 2 *** 3 UNITED STATES OF AMERICA 4 ex. rel., JOSHUA LUKE, 2:13-cv-01319-APG-VCF 5 Plaintiffs, vs. ORDER 6 7 HEALTHSOUTH CORPORATION, et al.,
8 Defendant.
9 Before the Court are relator Joshua Luke, for the law firms Morgan Verkamp LLC and Law 10 Office of Merril Hirsh PLLC, and Troutman Sanders LLP’s motions for attorneys’ fees. (ECF Nos. 242, 11 12 243, and 244). The motions are fully briefed (ECF Nos. 248, 249, 250, 251, and 252) and are both 13 granted in part. 14 I. Background 15 Relator filed this action under seal on July 24, 2013, alleging in part that defendants 16 (“HealthSouth”) submitted false claims for payments in violation of the False Claims Act (“FCA”), 31 17 U.S.C. § 3729 et seq. (ECF No. 1). The Washington, D.C. and Orange County, California offices of 18 Troutman Sanders, LLP (“Troutman”) represented Dr. Luke from 2013 until the Court disqualified 19 Troutman Sanders in 2017 due to a conflict-of-interest. (ECF No. 103). Relator continued to be 20 represented by Merril Hirsh (“Hirsh’) and retained Morgan Verkamp, LLC (“Morgan”), an Ohio law 21 firm whose practice focuses on False Claims Act cases. (ECF No. 244 at 5). The United States of 22 America initially declined to intervene in this case, so the relator maintained the action. (ECF No. 34). 23 On November 5, 2019, this Court dismissed all claims (except the claims for attorneys' fees and costs 24 25 1 under 31 U.S.C. § 3730(d)) pursuant to the terms of the settlement agreement entered into between the 1 relator, the United States of America, and the defendants. (ECF No. 235). 2 The relator argues that the Morgan and Hirsh law firms are entitled to reasonable fees and costs 3 4 for work by five attorneys, two paralegals, and one investigator. (ECF No. 244-1 at 10). Defendants 5 argue that Morgan and Hirsh’s fees are unreasonable because (1) the hourly rates are above Nevada 6 market rates, (2) that the firms’ billing is “partner heavy”; (3) that Morgan’s paralegal and investigator 7 rates are unsupported; (4) that the number of hours the firms request are unreasonable; and (5) that the 8 firms are not entitled to the requested fees and costs. (ECF No. 249). The relator disputes all defendants’ 9 assertions but voluntarily offers an across-the-board seven and a half percent lodestar reduction to 10 account for any concerns regarding the firms’ billing practices. (ECF No. 25 at 6). The relator argues in 11 support of the motion for fees and costs that: (1) there appear to be no attorneys practicing in Nevada 12 who focus their practice on qui tam litigation on behalf of whistleblowers like the Morgan and Hirsh 13 firms; and (2) that the defendants have offered no evidence to the contrary (defendants themselves are 14 represented by two large national firms and have not disclosed their rates). (Id. at 3). 15 Troutman argues it is entitled to all its fees and costs for the time period that it represented the 16 17 relator, from March 13, 2013 through November 10, 2017. (ECF No. 242 at 1). The defendants argue 18 that none of Troutman’s fees should be recoverable because the Court disqualified him due to a conflict 19 of interest. (ECF No. 249 at 4). Troutman argues in its reply that dual representation does not 20 automatically result in a conflict that bars attorneys’ fees. (ECF No. 252 at 2). Both the defendants and 21 Troutman argue in the alternative that the Court could limit Troutman’s fees to those incurred before the 22 conflict of interest arose. (ECF Nos. 249 at 4 and 252 at 5). Defendants argue in the alternative that 23 Troutman’s hours must be reduced to account for the conflict of interest from 761.8 hours to 500.27, 24 subtracting the hours Troutman worked after the conflict arose. (ECF No. 249 at 17). 25 2 Troutman does not dispute the defendants’ reduced hours in his argument in the alternative for 1 fees prior to the conflict, but Troutman states that Troutman incurred fees of $199,647.50 prior to 2 February 22, 2017. (ECF No. 252 at 5). Troutman also voluntarily reduces its fee request by an 3 4 additional ten percent to account for any concerns about billing, duplication, specificity, or any other 5 objections. (ECF No. 252-1 at 5). Troutman states that with his 10% voluntary deduction, his fees would 6 be $179,682.75 prior to February 22, 2017. (ECF No. 252 at 5). Troutman, however, does not provide 7 the Court with an updated lodestar calculation to show how many hours he calculated to obtain his 8 figures. 9 II. Analysis 10 The FCA includes a fee-shifting provision that requires defendants to reimburse successful 11 relators for expenses, fees and costs. 31 U.S.C. §3730(d)(2). The FCA entitles successful relators to an 12 award of “reasonable expenses which the court finds to have been necessarily incurred, plus reasonable 13 attorneys’ fees and costs.” Id. “[T]he most useful starting point for determining the amount of a 14 reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable 15 hourly rate” Hensley v. Eckerhart, 461 U.S. 424, 433 (1983); see also Carter v. Caleb Brett LLC, 757 16 17 F.3d 866, 868 (9th Cir. 2014)(“[A] reasonable fee award under a federal fee-shifting statute…a district 18 court must first calculate the lodestar by multiplying the number of hours expended by the reasonable 19 hourly rate.”). The district court may then adjust upward or downward based on a variety of factors. 20 Hensley, 461 U.S. at 434. 21 “[T]he fee applicant bears the burden of documenting the appropriate hours expended and hourly 22 rates” and submitting “evidence supporting the hours worked and rates claimed.” Id. at 433, 437. The 23 Court must also decide whether to increase or reduce the lodestar amount based upon factors 24 25 3 enumerated in Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir. 1975), 1 which is consistent 1 with Local Rule 54-14; see also Blum v. Stenson, 465 U.S. 886, 896 n.11, 104 S. Ct. 1541, 79 L. Ed. 2d 2 891 (1984)) (emphasizing the importance of using the “market rate” in calculating attorneys’ fees). Out- 3 4 of-market rates may be available, “if local counsel was unavailable, either because they are unwilling or 5 unable to perform because they lack the degree of experience, expertise, or specialization required to 6 handle properly the case.” Gates v. Deukmejian, 987 F.2d 1392, 1405 (9th Cir. 1992). 7 A district court has discretion in determining what fees are reasonable.” United States ex rel. 8 Cretney-Tsosie v. Creekside Hospice II, LLC, No. 2:13-cv-00167-APG-PAL, 2018 U.S. Dist. LEXIS 9 157961, at 6 (D. Nev. Sep. 17, 2018); citing to Chaudhry v. City of L.A., 751 F.3d 1096, 1100 (9th Cir. 10 2014). In exercising its discretion, “the court must provide a concise but clear explanation of its reasons 11 for the fee award.” Chaudhry, 751 F.3d at 1100. 12 Attorneys’ fees awards may include paralegal fees. See Missouri v. Jenkins by Agyei, 491 U.S. 13 274, 284, 109 S. Ct. 2463, 105 L. Ed. 2d 229 (1989); see also Agarwal v. Oregon Mut. Ins. Co., 2013 14 U.S. Dist. LEXIS 155647, 2013 WL 5882710, at 3 (D. Nev. Oct. 30, 2013) (awarding fees for paralegal 15 work).
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UNITED STATES DISTRICT COURT 1 DISTRICT OF NEVADA 2 *** 3 UNITED STATES OF AMERICA 4 ex. rel., JOSHUA LUKE, 2:13-cv-01319-APG-VCF 5 Plaintiffs, vs. ORDER 6 7 HEALTHSOUTH CORPORATION, et al.,
8 Defendant.
9 Before the Court are relator Joshua Luke, for the law firms Morgan Verkamp LLC and Law 10 Office of Merril Hirsh PLLC, and Troutman Sanders LLP’s motions for attorneys’ fees. (ECF Nos. 242, 11 12 243, and 244). The motions are fully briefed (ECF Nos. 248, 249, 250, 251, and 252) and are both 13 granted in part. 14 I. Background 15 Relator filed this action under seal on July 24, 2013, alleging in part that defendants 16 (“HealthSouth”) submitted false claims for payments in violation of the False Claims Act (“FCA”), 31 17 U.S.C. § 3729 et seq. (ECF No. 1). The Washington, D.C. and Orange County, California offices of 18 Troutman Sanders, LLP (“Troutman”) represented Dr. Luke from 2013 until the Court disqualified 19 Troutman Sanders in 2017 due to a conflict-of-interest. (ECF No. 103). Relator continued to be 20 represented by Merril Hirsh (“Hirsh’) and retained Morgan Verkamp, LLC (“Morgan”), an Ohio law 21 firm whose practice focuses on False Claims Act cases. (ECF No. 244 at 5). The United States of 22 America initially declined to intervene in this case, so the relator maintained the action. (ECF No. 34). 23 On November 5, 2019, this Court dismissed all claims (except the claims for attorneys' fees and costs 24 25 1 under 31 U.S.C. § 3730(d)) pursuant to the terms of the settlement agreement entered into between the 1 relator, the United States of America, and the defendants. (ECF No. 235). 2 The relator argues that the Morgan and Hirsh law firms are entitled to reasonable fees and costs 3 4 for work by five attorneys, two paralegals, and one investigator. (ECF No. 244-1 at 10). Defendants 5 argue that Morgan and Hirsh’s fees are unreasonable because (1) the hourly rates are above Nevada 6 market rates, (2) that the firms’ billing is “partner heavy”; (3) that Morgan’s paralegal and investigator 7 rates are unsupported; (4) that the number of hours the firms request are unreasonable; and (5) that the 8 firms are not entitled to the requested fees and costs. (ECF No. 249). The relator disputes all defendants’ 9 assertions but voluntarily offers an across-the-board seven and a half percent lodestar reduction to 10 account for any concerns regarding the firms’ billing practices. (ECF No. 25 at 6). The relator argues in 11 support of the motion for fees and costs that: (1) there appear to be no attorneys practicing in Nevada 12 who focus their practice on qui tam litigation on behalf of whistleblowers like the Morgan and Hirsh 13 firms; and (2) that the defendants have offered no evidence to the contrary (defendants themselves are 14 represented by two large national firms and have not disclosed their rates). (Id. at 3). 15 Troutman argues it is entitled to all its fees and costs for the time period that it represented the 16 17 relator, from March 13, 2013 through November 10, 2017. (ECF No. 242 at 1). The defendants argue 18 that none of Troutman’s fees should be recoverable because the Court disqualified him due to a conflict 19 of interest. (ECF No. 249 at 4). Troutman argues in its reply that dual representation does not 20 automatically result in a conflict that bars attorneys’ fees. (ECF No. 252 at 2). Both the defendants and 21 Troutman argue in the alternative that the Court could limit Troutman’s fees to those incurred before the 22 conflict of interest arose. (ECF Nos. 249 at 4 and 252 at 5). Defendants argue in the alternative that 23 Troutman’s hours must be reduced to account for the conflict of interest from 761.8 hours to 500.27, 24 subtracting the hours Troutman worked after the conflict arose. (ECF No. 249 at 17). 25 2 Troutman does not dispute the defendants’ reduced hours in his argument in the alternative for 1 fees prior to the conflict, but Troutman states that Troutman incurred fees of $199,647.50 prior to 2 February 22, 2017. (ECF No. 252 at 5). Troutman also voluntarily reduces its fee request by an 3 4 additional ten percent to account for any concerns about billing, duplication, specificity, or any other 5 objections. (ECF No. 252-1 at 5). Troutman states that with his 10% voluntary deduction, his fees would 6 be $179,682.75 prior to February 22, 2017. (ECF No. 252 at 5). Troutman, however, does not provide 7 the Court with an updated lodestar calculation to show how many hours he calculated to obtain his 8 figures. 9 II. Analysis 10 The FCA includes a fee-shifting provision that requires defendants to reimburse successful 11 relators for expenses, fees and costs. 31 U.S.C. §3730(d)(2). The FCA entitles successful relators to an 12 award of “reasonable expenses which the court finds to have been necessarily incurred, plus reasonable 13 attorneys’ fees and costs.” Id. “[T]he most useful starting point for determining the amount of a 14 reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable 15 hourly rate” Hensley v. Eckerhart, 461 U.S. 424, 433 (1983); see also Carter v. Caleb Brett LLC, 757 16 17 F.3d 866, 868 (9th Cir. 2014)(“[A] reasonable fee award under a federal fee-shifting statute…a district 18 court must first calculate the lodestar by multiplying the number of hours expended by the reasonable 19 hourly rate.”). The district court may then adjust upward or downward based on a variety of factors. 20 Hensley, 461 U.S. at 434. 21 “[T]he fee applicant bears the burden of documenting the appropriate hours expended and hourly 22 rates” and submitting “evidence supporting the hours worked and rates claimed.” Id. at 433, 437. The 23 Court must also decide whether to increase or reduce the lodestar amount based upon factors 24 25 3 enumerated in Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir. 1975), 1 which is consistent 1 with Local Rule 54-14; see also Blum v. Stenson, 465 U.S. 886, 896 n.11, 104 S. Ct. 1541, 79 L. Ed. 2d 2 891 (1984)) (emphasizing the importance of using the “market rate” in calculating attorneys’ fees). Out- 3 4 of-market rates may be available, “if local counsel was unavailable, either because they are unwilling or 5 unable to perform because they lack the degree of experience, expertise, or specialization required to 6 handle properly the case.” Gates v. Deukmejian, 987 F.2d 1392, 1405 (9th Cir. 1992). 7 A district court has discretion in determining what fees are reasonable.” United States ex rel. 8 Cretney-Tsosie v. Creekside Hospice II, LLC, No. 2:13-cv-00167-APG-PAL, 2018 U.S. Dist. LEXIS 9 157961, at 6 (D. Nev. Sep. 17, 2018); citing to Chaudhry v. City of L.A., 751 F.3d 1096, 1100 (9th Cir. 10 2014). In exercising its discretion, “the court must provide a concise but clear explanation of its reasons 11 for the fee award.” Chaudhry, 751 F.3d at 1100. 12 Attorneys’ fees awards may include paralegal fees. See Missouri v. Jenkins by Agyei, 491 U.S. 13 274, 284, 109 S. Ct. 2463, 105 L. Ed. 2d 229 (1989); see also Agarwal v. Oregon Mut. Ins. Co., 2013 14 U.S. Dist. LEXIS 155647, 2013 WL 5882710, at 3 (D. Nev. Oct. 30, 2013) (awarding fees for paralegal 15 work). In 2018 this Court found that reasonable Nevada market rates for paralegals in an FCA case to be 16 17 $150 per hour and that reasonable Nevada market rates for attorneys in an FCA case to range from $300 18 to $600 per hour. Cretney-Tsosie, No. 2:13-cv-00167-APG-PAL, 2018 U.S. Dist. LEXIS 157961, at 7. 19 This Court has also awarded $750 per hour as “reasonable and consistent” with Nevada market rates for 20 21 1 The Kerr factors are: “(1) the time and labor required, (2) the novelty and difficulty of the questions 22 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 23 fixed or contingent, (7) time limitations imposed by the client or the circumstances, (8) the amount 24 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, 25 and (12) awards in similar cases.” 4 an experienced partner at a civil litigation firm. Crew-Jones v. State Farm Mut. Auto. Ins. Co., 2012 U.S. 1 Dist. LEXIS 74360, at 3-4 (D. Nev. May 30, 2012). The Court has considered past holdings along with 2 the affidavits the parties submitted with their briefing. 3 4 a. Troutman’s Petition for Fees and Costs 5 “In determining what fees are reasonable, a district court may consider a lawyer’s misconduct, 6 which affects the value of the lawyer’s services. A court has broad equitable power to deny attorneys’ 7 fees (or to require an attorney to disgorge fees already received) when an attorney represents clients with 8 conflicting interests.” Rodriguez v. Disner, 688 F.3d 645, 653 (9th Cir. 2012). “[W]hen the ethical 9 violation in question is a conflict of interest between the attorney and the client (or between the attorney 10 and a former client), the appropriate fee for the attorney is zero,” if “the violation is one that pervades 11 the whole relationship.” U.S. ex rel. Virani v. Jerry M. Lewis Truck Parts & Equip., Inc., 89 F.3d 574, 12 579 (9th Cir. 1996). A law firm may be, “entitled to compensation only for services it rendered prior to 13 its breach of professional conduct [ ].” Id., citing to Jeffry v. Pounds, 67 Cal. App. 3d 6, 12, 136 Cal. 14 Rptr. 373, 377 (1977). 15 “An attorney may not recover fees when services were rendered in violation of the rules of 16 17 professional conduct.” Cohen v. Gold, No. 2:17-cv-00804-JAD-NJK, 2018 U.S. Dist. LEXIS 40661, at 18 11 (D. Nev. Mar. 12, 2018); citing to Frank Settelmeyer & Sons, Inc. v. Smith & Harmer, Ltd., 124 Nev. 19 1206, 197 P.3d 1051, 1059 (Nev. 2008). Mere dual representation does not automatically result in a 20 conflict of interest that bars attorneys’ fees. See Frank Settelmeyer & Sons, Inc., 197 P.3d at 1059 21 (finding “no conflict of interest necessitating consent or barring [the attorney’s] recovery of attorney 22 fees” despite dual representation). See also In re E. Sugar Antitrust Litig., 697 F.2d 524, 533 (3d 23 Cir.1982) (disgorgement of attorneys’ fees before ethical violation occurred is appropriate only where 24 the “breach of professional ethics is so egregious that the need for attorney discipline and deterrence of 25 5 future improprieties of that type outweighs” the concerns of providing “the client with a windfall” and 1 depriving the “attorney of fees earned while acting ethically”). 2 The Court considered the declaration of attorney Kevin Kieffer, which demonstrates that the 3 4 firm’s attorneys’ hourly rates ranged from $175 per hour for an associate attorney to $810 per hour for a 5 partner level attorney. (ECF No. 242-1 at 5). In 2017, the Court disqualified Troutman due to a conflict 6 of interest. (ECF No. 86). On February 22, 2017, Troutman attorneys agreed to represent HealthSouth 7 for lobbying services without obtaining its informed consent. (ECF No. 86). Black’s Law Dictionary 8 defines lobbying as an act of advocacy, “to try to influence (a decision-maker).” See Black’s Law 9 Dictionary (8th ed. 2004). The conflict is egregious here given that Troutman represented a client who 10 alleged that HealthSouth submitted fraudulent claims to the government for payments, and then 11 Troutman agreed to simultaneously advocate for HealthSouth to government officials to influence their 12 decision making. The Court finds that Troutman’s representation of both the relator and HealthSouth on 13 and after February 22, 2017 is a conflict that requires disgorgement of fees once conflict arose, and 14 Troutman is not entitled to any fees or costs for work on or after February 22, 2017. Troutman earned 15 fees while acting ethically from 2013 to 2017 prior to the conflict, and the Court finds that Troutman is 16 17 entitled to reasonable fees for that time period. The Court exercises its discretion and reduces the total 18 lodestar an additional eight percent, on top of Troutman’s voluntary ten percent, to deter future 19 improprieties. 20 b. Relator’s Motion for Fees and Costs 21 The Court considered the attorneys’ affidavits for the Morgan and Hirsh firms demonstrate a 22 range from $275 per hour for junior associates to $810 per hour for more experienced partners. Mr. 23 Morgan’s affidavit states that he has practiced law for nearly 40 years; he has focused his law practice 24 on whistleblower cases for the past 25 years. (ECF No. 244-1 at 2). Mr. Hirsh’s affidavit also states that 25 6 he has practiced law for nearly 40 years and he also focus his practice on FCA cases. (ECF No. 244-2 at 1 7). The defendants concede that the rates for the partner Rao and the associates’ rates are congruent 2 with Nevada market rates for FCA pursuant to Cretney-Tsosie, No. 2:13-cv-00167-APG-PAL, 2018 3 4 U.S. Dist. LEXIS 157961 at 7, but argue that all attorneys’ rates should be reduced by $50 for “partner 5 heavy” billing. (ECF No. 249 at 10). Defendants specifically dispute Mr. Morgan’s $700 per hour rate 6 and Mr. Hirsh’s $810 rate as being unreasonable market rates. The relator submitted evidence that 7 Investigator Strauch has 30 years investigating fraud against taxpayers in law enforcement. (ECF No. 8 250 at 4). 9 The Court reduced Mr. Morgan and Mr. Hirsh’s rate considering Nevada market rates given that 10 the relator litigated this case in this forum. The Court finds that the Nevada market rates are adequate 11 compensation to attract competent counsel yet avoid producing a windfall for lawyers. The Court also 12 considered the fact that there appear to be few if any lawyers in the community who are willing to take 13 high-risk whistleblower cases on a contingency, and that the Morgan firm is well informed on FCA 14 cases and had to enter this ongoing litigation after the Court disqualified Troutman. The Court also 15 considered the fact that rates have slightly increased over the last couple of years, and that the Morgan 16 17 and Hirsh firms are small with two assigned associates regarding whether the rates should be reduced for 18 partner heavy billing. The Court finds that no further reduction for alleged partner heavy billing is 19 warranted. The Court similarly reduced Troutman’s rates considering Nevada market rates. 20 21
24 // 25 7 c. Reasonable Rates 1 The Court determines that the reasonable Nevada market hourly rates for the Morgan and Hirsh 2 firm attorneys, investigator, and paralegals are as follows: 3 4 Paralegals $150 5 Jonathan Lischak $275 6 Ian Doig $325 7 Jay Strauch (investigator) $250 8 Sonya Rao $600 9 Rick Morgan $650 10 Merril Hirsh $710 11
12 The Court determines that the reasonable Nevada market hourly rates for Troutman for the 13 period prior to February 22, 2017 are as follows: 14 15 Paralegals and Librarians $150 16 Nick Harper $175 17 Paddy Browne $285 18 Candice Shang $365 19 Natalie Sacha $350 20 Thomas Prouty $425 21 Jeremy Burnette $375 22 Lauren Grochow $365 23 Daniel Streeter $520 24 25 8 Kevin Kieffer $595 1 Bryan Lavine $600 2 3 Merril Hirsh $710 4 5 d. Reasonable Hours 6 The defendants raise several objections to the number of hours for the Morgan and Hirsh firms 7 and it proposes significant cuts. The defendants also argue generally that Troutman’s hours should be 8 cut significantly due to its unethical behavior. 9 i. Block Billing, Duplicative, Excessive Travel Time, and Clerical Tasks 10 Block billing is “legitimate grounds for reducing or eliminating certain claimed hours, but not for 11 denying all fees.” Mendez v. Cty. of San Bernardino, 540 F.3d 1109, 1129 (9th Cir. 2008), overruled on 12 other grounds by Arizona v. ASARCO LLC, 773 F.3d 1050 (9th Cir. 2014). A fee applicant bears the 13 burden of submitting “evidence supporting the hours worked and rates claims,” but is “not required to 14 record in great detail how each minute of his time was expended.” Hensley v. Eckerhart, 461 U.S. 424, 15 16 437 n.12, 103 S. Ct. 1933, 76 L. Ed. 2d 40 (1983). “[P]laintiff’s counsel can meet its burden” regarding 17 documented hours, “by simply listing his hours and ‘identifying the general subject matter of his time 18 expenditures.’” Fischer v. SJB-P.D. Inc., 214 F.3d 1115, 1121 (9th Cir. 2000), citing to Davis v. City & 19 Cty. of San Francisco, 976 F.2d 1536, 1542 (9th Cir. 1992) vacated in part on other grounds, 984 F.2d 20 345 (9th Cir. 1993)) (quoting Hensley, 461 U.S. at 437 n. 12). 21 Courts may reduce, “lodestar hours for a variety of reasons, including duplicative work and 22 vague time sheet entries,” and “excessive time [ ]” In re : Wash. Pub. Power Supply Sys. Sec. Litig., 19 23 F.3d 1291, 1298 (9th Cir. 1994). “Findings of duplicative work should not become a shortcut for 24 reducing an award without identifying why the requested fee was excessive and by how much.” Moreno 25 9 v. City of Sacramento, 534 F.3d 1106, 1112 (9th Cir. 2008). “The Ninth Circuit has established that 1 travel time and clerical tasks are reasonably compensated at normal hourly rates if such is the custom in 2 the relevant legal market.” Comcast of Ill. X, LLC v. Jung Kwak, 2010 U.S. Dist. LEXIS 105809, 2010 3 4 WL 3781768 at 6 (D. Nev. Sept. 17, 2010) (citing Davis 976 F.2d at 1543). 5 The defendants identify nearly 900 entries as vague or block-billed and proposes an additional 6 twenty five percent reduction to all hours in this category. Courts (and clients) disfavor block billing 7 because it makes it difficult to discern how much time the attorneys spent on each activity. The Court 8 has reviewed the challenged entries, and each entry details the character of the work the attorney 9 performed. For example, defendants challenge Mr. Hirsh’s December 9, 2017 billing entry for 1.80 10 hours that states, “[b]egin to analyze Defendants’ Motion for a Protective Order and continue to draft 11 points for opposition[.]” Drafting points in opposition while reviewing a motion is often a simultaneous 12 part of an attorney’s analytical process and breaking this into multiple entries would be impractical. 13 Other challenged entries, such as Mr. Doig and Ms. Rao’s July 2, 2018 “doc review” and “review docs” 14 entries are concise; but conciseness is not synonymous with vague because the Ninth Circuit has found 15 that attorneys may bill entries in general categories. See e.g. Fischer 214 F.3d 1115 at 1121 (approving 16 17 an application that, “provided a summary of the time spent on a broad category of tasks such as 18 pleadings and pretrial motions (16.5 hours), settlement (4.2 hours), and court appearances (1.5 hours)). 19 The Court has reviewed the challenged entries in the vague category and finds that the descriptions 20 provide enough information to show that the time entries are reasonable and recoverable. 21 This Court agrees with defendants’ argument that plaintiffs should be paid Nevada rates because 22 they litigated in this forum, thus the Court must also consider the customs of the Nevada legal market in 23 considering billed travel time and clerical tasks. In Cretney-Tsosie v. Creekside Hospice II, LLC, No. 24 2:13-cv-00167-APG-PAL, this Court found that attorneys in Nevada usually bill travel time and clerical 25 10 tasks at normal rates. Id. at 10. Defendants also argue that the hours the Morgan and Hirsh firms spent 1 traveling were excessive. (ECF No. 249 at 13). Defendants have not presented any evidence that the 2 custom to bill travel and clerical time at normal rates has changed since 2018, and based on the Courts 3 4 experience and knowledge of the Nevada legal market, the Court finds that the challenged billing entries 5 in the categories of travel time and clerical tasks are reasonable based on the customs of the Nevada 6 legal market. The Court also finds that the billed entries for travel time associated with litigating this 7 case are not excessive. 8 The defendants’ arguments that the Morgan firm’s time entries are duplicative are unavailing. 9 The Court has reviewed the objected to entries and finds that the entries are not duplicative because the 10 Morgan firm has met its burden to show that it entered its billing at different times for similar, but 11 different, tasks. For example, defendants object to Mr. Doig’s two-time entries for “review d’s 12 production” on July 9 and July 10, 2018, but the relator explains that Mr. Doig reviewed their 13 production both days and entered two-time entries each day because he took a break for lunch. (ECF No. 14 250 at 8). The Court finds that the Morgan and Hirsh have substantiated their time entries, and the Court 15 will not reduce the lodestar amount beyond what the relator has already self-imposed. The Court reduces 16 17 Troutman’s hours from 761.8 hours to 500.27 hours in accordance with the defendants’ request (ECF 18 No. 249 at 17) due to Troutman’s unethical behavior leading to the Court’s disqualification. 19 ii. Limited Success 20 Defendants argue that because relator settled this case for only $4,000,000, the Court should 21 reduce the relator’s post-settlement fee award. The defendants cite to a Ninth Circuit FCA case where 22 the Ninth Circuit found that a district court may exercise its discretion and, “may reduce a request for 23 attorneys' fees when the applicant achieved only limited success in the underlying litigation. United 24 States v. Biotronik, Inc., 716 F. App'x 590, 593 (9th Cir. 2017), citing to Hensley v. Eckerhart, 461 U.S. 25 11 424, 440, 103 S. Ct. 1933, 76 L. Ed. 2d 40 (1983) ("A reduced fee award is appropriate if the relief, 1 however significant, is limited in comparison to the scope of the litigation as a whole."). 2 Relator counters that fee awards are mandatory under the FCA, a point recognized by this Court 3 4 in Cretney-Tsosie v. Creekside Hospice II, LLC, No. 2:13-cv-00167-APG-PAL at 3 ([t]he FCA includes 5 a mandatory fee-shifting provision), and points to a decision by a sister district court holding, “[u]nlike 6 the discretion afforded district courts in reviewing an award of fees to prevailing parties in civil rights 7 cases, Congress requires we award reasonable attorney’s fees and expenses to parties who recover 8 money for the United States under the False Claims Act.” CFI, LLC v. Victaulic Co., 2019 U.S. Dist. 9 LEXIS 153536, 1-2 (E.D. Pa., September 9, 2019) (awarding $1.2 million in fees following a recovery 10 of $600,000, id. at 32). 11 The facts show that the United States paid the relator the maximum thirty percent relator’s share, 12 which counters defendants’ limited success argument. Pursuant to 31 U.S.C.S. § 3730(d)(2), “the person 13 bringing the action or settling the claim shall receive an amount which the court decides is reasonable 14 for collecting the civil penalty and damages. The amount shall be not less than 25 percent and not more 15 than 30 percent of the proceeds of the action or settlement and shall be paid out of such proceeds.” The 16 17 Court finds there is no reason to reduce the lodestar amount beyond what counsel has already self- 18 imposed. 19 20 21
24 // 25 12 e. Lodestar Calculation 1 The Court calculates the lodestar figure and subtracts relator’s voluntary seven and a half 2 percent.2 3 4 Attorney Rate Hours Total 5 Paralegals $150 140.7 $21,105 6 Jonathan Lischak $275 49.5 $13,613 7 Ian Doig $325 759 $246,675 8 Jay Strauch $250 15.5 $3,875 9 (investigator) 10 Sonya Rao $600 767.7 $460,620 11 Rick Morgan $650 420.2 $273,130 12 Merril Hirsh $710 485.7 $344,847 13
14 Based on that calculation, the total before the voluntary reduction is $1,019,018 for the Morgan 15 firm and $344,847 for Hirsh. The voluntary seven and a half reduction brings the total fees to 16 $942,591.19 for the Morgan firm and $318,983.48 for Hirsh. 17 The Court next calculates the lodestar figure and subtracts Troutman’s voluntary ten percent and 18 the Court’s imposed eight percent reduction. 19
20 Attorney Rate Hours Total 21 Paralegals and $150 47.68 $7,152 L ibrarians 22 N ick Harper $175 4.5 $788 23 24 2 See Cretney-Tsosie No. 2:13-cv-00167-APG-PAL at 6 (applying relator’s voluntary fifteen-percent 25 reduction after reducing lodestar). 13 P addy Browne $285 20.74 $5,911 1 Candice Shang $365 7 6.26 $23,502 2 N atalie Sacha $350 64.39 $22,537 T homas Prouty $425 24.36 $10,353 3 J eremy Burnette $375 11.93 $4,474 4 L auren Grochow $365 13.84 $5,052 Daniel Streeter $520 1.05 $546 5 6 K evin Kieffer $595 111.98 $66,628 B ryan Lavine $600 24.3 $14,580 7 M erril Hirsh (partner) $710 111.11 $78,888
9 Based on that calculation, the total before the eighteen percent reduction for Troutman is 10 $244,742. The voluntary ten percent reduction brings the total fees to $220,268.12. The Court’s imposed 11 eight percent reduction brings the fee award to $200,688.73.3 12
13 // 14 15 16 17 18 19 20
21 3 The Court notes that Troutman’s requested fee award of $179,682.75 for fees prior February 22, 2017 (ECF No. 252 at 5) is lower than the Court’s calculation, even though the Court adopted the defendants’ 22 reduced hours (ECF No. 249 at 17) and reduced Troutman’s rates using the Nevada rates. Troutman’s reported fees prior to the conflict are even lower than the defendants’ suggested reduced fee of 23 $184,771.63. (ECF No. 249). Troutman does not provide an updated lodestar calculation in the 24 alternative in his reply or show how he calculated this figure. The Court finds that the additional eight percent decrease, on top of the voluntary ten percent, is a fair reduction overall, considering that 25 Troutman originally asked for $397,974.50 in fees in his petition. (ECF No. 242-1 at 5). 14 f. Costs and Expenses 1 Title 31 U.S.C. § 3730 also provides that the Court award reasonable costs and expenses to 2 successful qui tam relators who brought or settled the claim. The relator requests costs and expenses in 3 4 the amount of $95,111.87 incurred by the Morgan firm (ECF No. 244-1 at 13) and $4,599.67 incurred 5 by the Hirsh firm (ECF No.244-2). The defendants’ objections, including that the attorneys at the 6 Morgan firm should not have traveled for hearings and that their expert witnesses’ time entries were 7 vague, are unavailing. The relator’s attorneys, as pro hac vice counsel, had the right to appear in this 8 Court at hearings. The expert witnesses’ invoices are detailed and not vague. The Court finds that the 9 costs and expenses the Morgan and Hirsh firms incurred were reasonable and necessary expenditures. 10 Adding the costs to the lodestar calculated above, the total award of attorneys’ fees, costs, and expenses 11 is $1,037,703.06 for the Morgan firm and $323,583.15 for the Hirsh firm. 12 The Troutman firm states that it is entitled to costs (ECF No. 242 at 3) but failed to request costs 13 or include an itemization in its supporting declaration so that the Court could review whether the costs 14 or expenses were necessary or reasonable. Given (1) that the Court calculates a fee award using the 15 Nevada market rate (based on defendants’ hour-count calculation) that is higher than what the Troutman 16 17 firm self-calculated without explanation in its reply; and (2) that Troutman failed to calculate costs or 18 expenses: the Court finds that it is reasonable to award Troutman $0 in costs and expenses. 19 III. Conclusion 20 IT IS ORDERED that both the relator Joshua Luke and Troutman Sanders LLP’s motions for 21 attorneys’ fees and expenses (ECF Nos. 242 and 243) and are both GRANTED IN PART. 22 IT IS FURTHER ORDERED that relator Joshua Luke is entitled to $1,037,703.06 in attorneys’ 23 fees, costs, and expenses for the Morgan firm and $323,583.15 in attorneys’ fees, costs, and expenses for 24 the Hirsh firm. 25 15 IT IS FURTHER ORDERED that Troutman Sanders LLP is entitled to $200,688.73 in attorneys’
5 fees. 3 IT IS SO ORDERED. 4 DATED this 11th day of March 2020. Lod ect
CAM FERENBACH 6 UNITED STATES MAGISTRATE JUDGE 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 16