D.C. District Court grants attorneys fees in partially-successful qui tam suit

by Ben Vernia | May 31st, 2011

On May 12, District Chief Judge Royce C. Lamberth granted the motion of a whistleblower for a partial award of attorneys fees against two defendants in a long-running case involving a conspiracy to rig bids on American-funded infrastructure development projects in Egypt.

The relator alleged that several companies and individuals conspired to rig bids on three contracts and, in the spring of 2007, a jury agreed. Chief Judge Lamberth issued a final judgment exceeding $90 million. A few months later, he granted the whistleblower’s attorneys fees request for over $7 million in fees and over $300,000 in expenses.

The defendants appealed to the D.C. Circuit which, in 2010, found that the claims for two of the three contracts in question were barred by the statute of limitations, and reversed judgment against three of the five defendants on the remaining contract, requiring a new trial for those defendants.

On remand, the defendants all argued that no fees should be awarded. The set of three prevailing defendants in the D.C. Circuit argued that there was no predicate basis for the award against them; the relator agreed, subject to a right to seek reinstatement if he prevails in a new trial.

The defendants who lost before the D.C. Circuit argued unsuccessfully that because the relator did not prevail against the three prevailing defendants, he could not recover from them, either. Chief Judge Lamberth wrote that the defendants’ position was contrary to established law, to the effect that all defendants in determining fees are jointly and severally liable.

Turning to the quantum of recovery, the two defendants argued that the fee award should be reduced by two-thirds (i.e., to compensate him for the one contract on which he prevailed before the Court of Appeals), and the relator argued that the fee should only be reduced by the ratio of the prevailing claim to the original judgment (i.e., a reduction of under 13%).

Chief Judge Lamberth, described the applicable test, set forth in the Supreme Court’s decision in Hensley v. Eckerhart as two steps: First, determine whether the prevailing claims are related to the losing claims; and Second, determine whether the success in the prevailing claim is proportional to counsel’s efforts. Applying this test, he first found that the claims were related:

The Court has little doubt that all claims brought by Mr. Miller are “related” under this standard. At its core, this case is not an amalgamation of independent contract disputes into a single lawsuit, but is best understood as an action concerning an overarching conspiracy between the defendants to rig the bidding system in order to extract excessive payments from USAID for development projects in Egypt.

Chief Judge Lambert also noted that the evidence presented at trial was interrelated: witnesses frequently discussed the various agreements, and key documents described the overall “seedy” conspiracy. More importantly, he wrote, both parties failed to discuss his prior rulings that the claims were interrelated – rulings which the Court of Appeals’ decision had left undisturbed.

Applying the second test of Hensley, Chief Judge Lamberth concluded that both parties’ proposed approach was too mechanistic. Reviewing the amount of pages and the number of references devoted to each claim in several pleadings, he concluded that the relator’s counsel had spent approximately 70% of their efforts on the prevailing claims and the overarching conspiracy. Noting, however, that the share of the judgment was higher (87.11%), he adopted 80% of the prior fee award as a compromise between the two figures.

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