In a long-running False Claims Act (FCA) case, Judge Lamberth grants most of the attorneys' fees and costs requested by the successful relator. However, he joins other D.D.C. judges in criticizing several aspects of billing practices, such as block billing. He also criticizes use of the so-called enhanced Laffey matrix that one of the plaintiff's firms sought to use, while allowing the other firm to use market rates that are even higher than the Laffey rates (i.e., senior associates or junior partners at 485/hour, partners at 510, 625, 650, and 750/hour). He also refuses to award enhanced lodestar fees (i.e., double recovery), on the grounds that those should only be awarded in truly exceptional cases where a plaintiff could not find any other counsel and had unpopular claims (see footnote 82, below). The opinion runs to almost 170 pages. Although arising under the FCA, the opinion discusses case law from other employment statutes, including Title VII and FMLA, so it is of broader applicability and should be read by those submitting fee petitions in the DDC. Some excerpts follow: Miller v. Bill Harbert International Construction, No. 1995-CV-1231 (Aug. 12, 2008)
MEMORANDUM OPINION
Winston Churchill prescribed magnanimity in victory. See Winston S. Churchill, THE SECOND WORLD WAR, VOLUME I: THE GATHERING STORM xiii (1948). But Churchill, of course, spoke of war, not litigation.
On August 10, 2007, relator emerged victorious in this False Claims Act ("FCA") suit of epic duration when this Court entered judgment against six defendants1 for over $90 million. (See generally Judgment [883].) He now seeks another $20 million in attorneys' fees and costs.
. . . III. Relator's Attorneys' Fees
Relator also seeks an award of "reasonable attorneys' fees" against defendants under the FCA. "The initial estimate of a reasonable attorney's fee is properly calculated by multiplying the number of hours reasonably expended on the litigation times a reasonable hourly rate." Blum v. Stenson, 465 U.S. 886, 888 (1984).18 A strong presumption exists that the product of these two variables - the "lodestar figure" - represents a "reasonable fee." Pennsylvania v. Del. Valley Citizens' Council for Clean Air, 478 U.S. 546, 565 (1986). Upward adjustments of the lodestar are warranted only in "rare" and "exceptional" cases, where supported by "specific evidence" and detailed findings. Blum, 465 U.S. at 899-901.
In calculating relator's fee award, the Court must thus make three separate determinations: (1) what constitutes a "reasonable hourly rate" for his counsel's services; (2) which among his counsel's claimed work hours were "reasonably expended on the litigation"; and (3) whether relator has offered "specific evidence" demonstrating this to be the "rare" case in which a lodestar enhancement is appropriate, and if so, in what amount. The Court considers each issue in turn.
A. Reasonable Rate
In calculating this component of the lodestar, the Court must resolve two contested issues: (1) which source(s) should supply the reasonable rate; and (2) whether current or historical rates should apply to work performed prior to 2007.
1. Established vs. Matrix-Derived Rates
In this Circuit, "an attorney's usual billing rate is presumptively the reasonable rate, provided that this rate is 'in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience and reputation.'" Kattan by Thomas v. District of Columbia, 995 F.2d 274, 278 (D.C. Cir. 1993) (quoting Blum, 465 U.S. at 896 n.11).
[W]hen fixed market rates already exist, there is no good reason to tolerate the substantial costs of turning every attorneys fee case into a major ratemaking proceeding. In almost every case, the firms' established billing rates will provide fair compensation. The established rates represent the opportunity cost of what the firm turned away in order to take the litigation; they represent the lawyers' own assessment of the value of their time. Laffey v. Northwest Airlines, Inc., 746 F.2d 4, 24 (D.C. Cir. 1984) (emphasis in original), overruled on other grounds by Save Our Cumberland Mountains, Inc. v. Hodel, 857 F.2d 1516 (D.C. Cir. 1988). "[T]he burden is on the fee applicant to produce satisfactory evidence - in addition to the attorney's own affidavits - that the requested rates" align with prevailing rates. Blum, 465 U.S. at 896 n.11. See also Covington v. District of Columbia, 57 F.3d 1101, 1107 (D.C. Cir. 1995) ("a fee applicant's burden in establishing a reasonable hourly rate entails a showing of at least three elements: the attorneys' billing practices; the attorneys' skill, experience, and reputation; and the prevailing market rates in the relevant community").
a. Wilmer Hale
Relator asks that his attorneys be compensated at their standard billing rates, and he has submitted a declaration from his lead counsel, Robert Bell, that provides these standard rates for Wilmer Hale personnel. (See Bell Decl. ¶ 108, Ex. 2 to Mot. for Fees, Costs, and Expenses [930].) As one might expect, Bell avows that the requested rates are within the range of prevailing market rates charged by large law firms in the District of Columbia for lawyers and paralegals of similar experience and qualifications. (See id. ¶¶ 104, 109.) To supplement Bell's own assertions, relator offers declarations from two local attorneys. The first, Stephen L. Braga, now a partner at Baker Botts - like Wilmer Hale, a large, international law firm - has practiced complex, civil litigation in the District since 1982. . . . The second attorney declarant, Steven K. Davidson, currently a partner at Steptoe & Johnson - another large, international law firm - has practiced commercial litigation in the District since 1985. . . .
. . . Relator's evidence demonstrates that Wilmer Hale's established billing rates - those charged to all litigation clients - align with the established rates of lawyers of reasonably comparable skill, experience, and reputation in the D.C. legal community. See Kattan, 995 F.2d at 278. Thus, the Court will accord these rates a presumption of reasonableness. See Covington, 57 F.3d at 1110.
. . . First, simple reference to the Laffey matrix cannot defeat the presumption of reasonableness accorded relator's requested rates. Though it "serves as a useful starting point for determining prevailing market rates in the District of Columbia," Cobell, 407 F. Supp. 2d at 170, the Laffey matrix is not the only acceptable starting point. Our Court of Appeals has never held that Laffey rates are the only rates that a court may consider reasonable. Instead, it has advised that "an attorney's usual billing rate is presumptively the reasonable rate, provided that this rate" aligns with prevailing community rates. Kattan by Thomas v. District of Columbia, 995 F.2d 274, 278 (D.C. Cir. 1993). "[F]ee claimants must provide the court with specific evidence of the prevailing community rate." Jordan, 691 F.2d at 521. See also Blum, 465 U.S. at 896 n.11 (fee applicant must "produce satisfactory evidence - in addition to the attorney's own affidavits - that the requested rates" align with prevailing rates). This evidence may include the Laffey matrix, in its original form and/or as updated by the USAO. See Covington, 57 F.3d at 1110. But it may also consist of comparable fee awards or affidavits from knowledgeable local practitioners, such as those relator has submitted here. See Jordan, 691 F.2d at 521. If non-conformity with updated USAO Laffey rates could doom a petitioner's request, this would moot the evidentiary showing envisioned by Blum. See 465 U.S. at 896 n.11. It would effectively impose a ceiling on the rates courts can award pursuant to fee-shifting statutes - a ceiling never endorsed by Congress. Neither it nor the courts have ever "propose[d] . . . that all attorneys be remunerated at the same rate, regardless of their competence, experience, and marketability." Save Our Cumberland Mountains, Inc. v. Hodel, 857 F.2d 1516, 1522 n.4 (D.C. Cir. 1988).
Second, the Supreme Court clarified in Blum that a reasonable hourly rate should ordinarily reflect the quality of counsel's representation. See 465 U.S. at 899. Defendants balk at the "mega-law firm rates" relator seeks. (HII's Opp'n [949] at 30.) But these rates reflect counsel's "mega-law firm"-quality representation. Having observed more than a few attorneys in the past twenty years, this Court is well-suited to judge the quality of counsel's representation, both in the courtroom and in written submissions. By this Court's assessment, relator's counsel - particularly the more junior trial team members - acquitted themselves admirably. Their zealous, polished, and astute advocacy justifies, and is reflected in, their established billing rates. . . . Had Wilmer Hale not been able to call on its "mega-law firm" resources, plaintiffs might have struggled to meet these "overwhelming demands." See Wilcox v. Sisson, No. 02-1455, 2006 U.S. Dist. LEXIS 33404, at *8 (D.D.C. May 25, 2006) (Collyer, J.) ("The market generally accepts higher rates from attorneys at firms with more than 100 lawyers than from those at smaller firms - presumably because of their greater resources and investments . . . .").
b. Wiley Rein
Relator also seeks compensation for work performed by four Wiley Rein attorneys (other than Bell) and two paralegals. (Bell Decl. ¶103, Ex. 2 to Mot. for Fees, Costs, and Expenses [930].) . . . For the other five professionals, however, relator has provided neither their current billing rates nor those of their Wiley Rein peers. Instead, he asks that their work be compensated at rates derived from economist Kavanaugh's Laffey matrix. (See id. ¶ 104.) Unlike the USAO's matrix, which calculates inflation based on the metropolitan D.C. Consumer Price Index ("CPI"), Kavanaugh's version relies on a legal services sub-component of the broader, national CPI. (See Kavanaugh Decl. ¶ 9, Ex. 4 to Mot. for Fees, Costs, and Expenses [930].) Kavanaugh's alternative methodology has achieved only limited acceptance in this District. As he did in Salazar, Kavanaugh presents a well-reasoned, if condensed, economic argument for his index's superiority. (See id. ¶¶ 9-14.) Nevertheless, after reviewing his declarations, the Court is not convinced. Kavanaugh's matrix incorporates price inflation data specific to the market for legal services, while the USAO matrix relies on data specific to the Washington, D.C. metropolitan area. (Id. ¶ 9.) Kavanaugh's matrix thus reflects national inflation trends, while the USAO matrix accounts for price inflation within the local community - a crucial distinction. As the Supreme Court and our Court of Appeals have both emphasized, rates used in calculating the lodestar should accord with those "prevailing in the community." Blum, 465 U.S. at 896 n.11 (emphasis added); see also Covington v. District of Columbia, 57 F.3d 1101, 1108 (D.C. Cir. 1995) ("plaintiff must produce data concerning the prevailing market rates in the relevant community") (emphasis added). Kavanaugh's matrix does not comply with this mandate for geographic specificity. Hence, with due respect to its colleagues, the Court declines to adopt Kavanaugh's methodology. It will thus award fees for the remaining five Wiley Rein professionals at USAO Laffey matrix rates
2. Current vs. Historical Rates
The time entries included in relator's fee petition span a thirteen-year period: Wiley Rein personnel devoted time to this case from 1995-1999, and Wilmer Hale's involvement has stretched from 1999-2007. . .
. . . In 1911, Ambrose Bierce described litigation as "[a] machine which you go into as a pig and come out of as a sausage." AMBROSE BIERCE, THE DEVIL'S DICTIONARY 72 (1979 ed.). Since Bierce's day, the process has become, if anything, more drawn out and contentious. Recognizing that in many cases, an attorney may put in years of effort before realizing any tangible return, the Supreme Court has held that a "reasonable attorney's fee" awarded pursuant to a fee-shifting statute should account for delay in payment. See Missouri v. Jenkins, 491 U.S. 274, 282 (1989).
ii. Block Billing
Defendants also criticize counsel's use of block billing - that is, their time entries aggregate all tasks performed for this case on a given day, with no indication as to how much time counsel spent on each individual task.62 As our Court of Appeals has observed, block billing "make[s] it impossible for the court to determine, with any degree of exactitude, the amount of time billed for a discrete activity," leaving the court "to estimate the reduction to be made because of such insufficient documentation." In re Olson, 884 F.2d 1428-29. See also Role Models Am., Inc., 353 F.3d at 971 (time records that "lump together multiple tasks[] mak[e] it impossible to evaluate their reasonableness"). In Cobell, this Court refused to "undertake the futile task of separating plaintiffs' block entries into their constituent tasks and apportioning a random amount of time to each." 407 F. Supp. 2d at 160. Instead, it "exercise[d] the discretion accorded it by the Hensley Court and reduce[d] the time requested." Id. (citing Hensley v. Eckerhart, 461 U.S. 424, 437 n.12 (1983)). Relator attempts to justify his counsel's block time entries by turning again to fellow attorneys' declarations: Davidson contends block billing is "[t]he most prevalent practice among firms in the Washington, D.C. marketplace," and Braga characterizes it as "standard fare in today's billing world." . . . Davidson also insists that more truly contemporaneous time-keeping would be "burdensome" and "disruptive to the flow of work involved." (Davidson Supplemental Decl. ¶ 8, Ex. 2 to [957].)
Such platitudes fail the common sense test. Wilmer Hale's time records clearly reveal a policy of billing in six-minute increments, while Wiley Rein's counsel seem to have billed in fifteen-minute increments. In several instances, an individual attorney performed only one task on this case in a given day and billed only six or fifteen minutes. (See, e.g., 6/30/2006 HS (0.10 hours billed for "confer with Ms. O'Connor"); 12/9/1998 RBB (0.25 hours billed for "telephone call with Mr. Dillon re status of investigation").) Thus, counsel were clearly able, under both firms' existing record-keeping systems, to document the time spent on individual tasks. The Court acknowledges that more consistently precise time-keeping might prove somewhat disruptive to work-flow, but in a fee-shifting case, it is necessary to facilitate subsequent judicial review. Most saliently, counsel's time entries are riddled with conferences, telephone calls, and meetings involving multiple professionals, but it is impossible to determine how long these conclaves lasted - or, as noted above, what subject matter they involved. Without such basic details, the Court simply cannot ascertain whether this time was reasonably expended. Because relator's counsel's time records "lump together multiple tasks, making it impossible to evaluate their reasonableness," this Court finds that a wholesale reduction in the lodestar is appropriate. See Role Models Am., Inc., 353 F.3d at 971. It will thus reduce the tentative lodestar by a further 10 percent.
D. Enhancement
A "strong presumption" exists that the lodestar figure, without more, constitutes a reasonable fee award. City of Burlington v. Dague, 505 U.S. 557, 562 (1992). Yet in "rare" and "exceptional" cases, a fee applicant may rebut this strong presumption against upward adjustments to the lodestar by producing "specific evidence" that shows "an adjustment is necessary to the determination of a reasonable fee." Blum, 465 U.S. at 898-99 (emphasis added).
Absent such "specific evidence," an enhancement for quality of representation would constitute "a clear example of double counting." Id. Additionally, though relevant, the result obtained "normally should not provide an independent basis for increasing the fee award." Id. at 900. Indeed, as another court in this district has observed, these two factors are necessarily intertwined: "a review of [] exceptional results is integral to an analysis of the quality of representation." McKenzie v. Kennickell, 684 F. Supp. 1097, 1106 (D.D.C. 1988) (Parker, J.) Two years later, the Court adopted an even less permissive stance with respect to lodestar enhancements. See Pennsylvania v. Del. Valley Citizens' Council for Clean Air, 478 U.S. 546 (1986). There, the Court elevated Blum's presumption that the lodestar represents the reasonable fee to a strong presumption, explaining that fee-shifting statutes "were not designed as a form of economic relief to improve the financial lot of attorneys, nor were they intended to replicate exactly the fee an attorney could earn through a private fee arrangement with his client." Id. at 565. To that end, both quality of representation and results obtained "are presumably fully reflected in the lodestar amount." Id. Fundamental ethical principles dictate this conclusion. Id. at 565-66.
Thus, to avoid double counting, "the overall quality of performance ordinarily should not be used to adjust the lodestar." Id. at 566. See also Donnell, 682 F.2d at 254 ("We have found it all too common for the district courts to adjust the lodestar upward to reflect what the courts view as a high . . . quality of representation. This trend should stop.").
. . . Furthermore, the Supreme Court's opinion in Delaware Valley forecloses this line of argument: "In short, the lodestar figure includes most, if not all, of the relevant factors constituting a 'reasonable' attorney's fee, and it is unnecessary to enhance the fee . . . in order to serve the statutory purpose of enabling plaintiffs to secure legal assistance." 478 U.S. at 566 (emphasis added).
[FOOTNOTE 82]
82 Relator relies on two, out-of-Circuit cases in which specific facts persuaded courts that an enhancement was necessary to enable plaintiffs to secure legal counsel. See Knop v. Johnson, 712 F. Supp. 571 (W.D. Mich. 1989); Allen v. Freeman, 694 F. Supp. 1554 (S.D. Fla. 1988). These factually distinct cases merely illustrate the "rare" circumstances in which fee enhancements remain appropriate. . . .
Like Judge Carnes of the Eleventh Circuit, this Court believes an enhancement would likely be entirely appropriate in cases such as Allen and Knop, where "an attorney's representation vindicates the federal rights of an unpopular client and as a result that attorney suffers a loss of standing in the community which damages his practice and income." Kenny A. v. Perdue, Nos. 06-15514 & 06-15874, 2008 U.S. App. LEXIS 14204, at *59-60 (11th Cir. July 3, 2008). As examples, Judge Carnes cited "an attorney who represents a pedophile attacking a sexual offender registration law on Due Process grounds, or perhaps [] an attorney in a small Bible Belt town who succeeds in having a popular public religious practice enjoined as contrary to the Establishment Clause." Id. at *61. This Court agrees that when a lawyer risks permanent harm to his career to defend fundamental, if unpopular, legal principles, the lodestar may be inadequate to fully compensate him for this extraordinary sacrifice.
[END FOOTNOTE 82]
Finally, though the Court commends counsel's performance - particularly that of the more junior attorneys - it concludes the lodestar, calculated using counsel's established billing rates, adequately reflects this superior quality of representation. In Donnell, our Court of Appeals lamented district courts' increasing predilection for "adjust[ing] the lodestar upward to reflect what the courts [subjectively] view as a high . . . quality of representation," urging that "[t]his trend should stop." 682 F.2d at 254. It stops here. . . .
CONCLUSION
For the reasons set forth above, the Court shall grant in part and deny in part relator's motion for attorneys' fees, costs, and expenses [930]. Pursuant to 31 U.S.C. section 3730(d)(1), the Court shall order defendants BHIC, HUK, Bilhar, HII, and HC to pay relator $7,245,169.07 in reasonable attorneys' fees, and $287,025.52 in reasonable expenses, which this Court finds were necessarily incurred - in total, $7,532,194.59.
Further, the Court shall grant plaintiffs' bills of costs [928, 929]. Pursuant to Federal Rule of Civil Procedure 54(d)(1) and Local Civil Rule 54.1, the Court shall direct the Clerk to tax $54,437.87 in costs to all defendants, including Anderson, on the United States' behalf. It shall further direct the Clerk to tax $31,973.96 to defendants BHIC, HUK, Bilhar, HII, and HC on relator's behalf.
A separate order shall issue this date.
Signed by Royce C. Lamberth, Chief Judge, August 12, 2008.
(Alan R. Kabat, Bernabei & Wachtel, PLLC)
Comments