Public Interest Bounty Hunters v. Bd. of Governors, Civ. A. No. C81-1184A.

• Decision Date: 30 September 1982
• Docket Number: Civ. A. No. C81-1184A.
• Citation: 548 F. Supp. 157
• Parties: PUBLIC INTEREST BOUNTY HUNTERS, etc., Plaintiff, v. BOARD OF GOVERNORS OF the FEDERAL RESERVE SYSTEM, et al., Defendants.
• Court: U.S. District Court — Northern District of Georgia

548 F. Supp. 157

PUBLIC INTEREST BOUNTY HUNTERS, etc., Plaintiff, v. BOARD OF GOVERNORS OF the FEDERAL RESERVE SYSTEM, et al., Defendants.

Civ. A. No. C81-1184A.

United States District Court, N. D. Georgia, Atlanta Division.

September 30, 1982.

COPYRIGHT MATERIAL OMITTED

William B. Hollberg, Atlanta, Ga., for plaintiff.

Kathie G. McClure, Asst. U. S. Atty., Atlanta, Ga., for defendants.

ORDER

ROBERT H. HALL, District Judge.

Now pending before this court is the defendants' motion seeking an award of attorneys' fees against Dr. Edwin Frederick Robert Gordon and Mr. William Hollberg, counsel for plaintiff Public Interest Bounty Hunters (hereinafter referred to as "Bounty Hunters").

While the circumstances giving rise to this lawsuit are quite complicated,¹ the facts relevant to the instant motion can be easily summarized. The nominal plaintiff, Bounty Hunters, is an instrumentality of the "Edwin Frederick Robert Gordon Foundation" (hereinafter referred to as "the Foundation"), of which Dr. Gordon is trustee. Bounty Hunters has brought this suit as a qui tam action under the False Claims Act, 31 U.S.C. §§ 231, 232. This Act grants a private citizen "informer" with standing to sue "on behalf of the United States" to enforce the Act's prohibition against false or fraudulent claims for monetary payments from the federal government. Bounty Hunters attempted to utilize this Act to obtain a writ of mandamus compelling the defendant federal bank regulators to investigate purported unsound banking practices allegedly occurring at non-defendant banking institutions.

The plaintiff's complaint was dismissed by this court for failure to state a claim on June 23, 1982. What remains for this court to decide is whether the fact that this case was brought at all, and/or the legal and logical untenability of plaintiff's arguments and contentions, justify an award of attorneys' fees against either the plaintiff, its attorney, or both. While the general principles relating to attorneys' fee awards are well-settled, resolution of this issue is complicated by defendants' assertion that Dr. Edwin F. Gordon, an individual not explicitly a party in this case, is in fact the person against whom attorneys' fees should be assessed.

Although the "American Rule" disfavors the allowance of attorneys' fees in the absence of explicit contractual or statutory authorization, Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975), notable common law exceptions to this rule have been carved out. In the context of the instant case, the most significant of these exceptions involves a court's inherent power to award fees against a losing party who has "acted in bad faith, vexatiously, wantonly, or for oppressive reasons." Id. at 258-9, 95 S.Ct. at 1622; Pfister v. Delta Air Lines, Inc., 496 F.Supp. 932 (N.D.Ga.1980); Gordon v. Heimann, Civil Action Nos. C80-1265A and C80-288A (N.D.Ga. Sept. 25, 1981) (Hall, J.) (made part of the record in this case by its attachment to plaintiff's Motion for Recusal, filed in this court on October 23, 1981). See also, Roadway Express, Inc. v. Piper, 447 U.S. 752, 100 S.Ct. 2455, 65 L.Ed.2d 488 (1980). In addition, 28 U.S.C. § 1927 as amended now permits courts to assess attorneys' fees personally and directly against an attorney who "multiplies the proceedings in any case unreasonably and vexatiously." Rule 11, F.R. Civ.P., providing that an attorney's required signature on a pleading constitutes a certification that the pleading is supported by reasonable grounds and is not interposed for purposes of delay, further corroborates the proposition that attorneys' fees can be charged against an attorney whose involvement in particular litigation results in an abuse of judicial process. Applying the above principles to the instant case, this court finds it appropriate to assess attorneys' fees against Dr. Gordon and inappropriate to assess them against William Hollberg.

I. Dr. Edwin Frederick Robert Gordon

Prior to the institution of the present action, Dr. Gordon in his individual capacity had filed thirteen federal lawsuits against officials of the Federal Reserve Board, the Comptroller of the Currency, and the Securities Exchange Commission, all alleging transactions and occurrences arising out of the same basic set of operative facts raised in his complaint in this lawsuit. In dismissing this lawsuit, this court found it unnecessary to rule on the res judicata effect of these actions upon the instant case, and declines again today to resolve this issue, although it is undisputed that the behavior of which Bounty Hunters here complains has been the subject of a large number of prior judicial proceedings.

The case presently before this court differs from the prior thirteen federal actions in name only. Although the nominal plaintiff is Bounty Hunters, even Dr. Gordon acknowledges that the real party in interest here is Dr. Gordon as trustee of the Edwin Frederick Robert Gordon Foundation. The pleading denominated "Second Response of Edwin F. Gordon and William B. Hollberg to Defendants Amended Motion and Brief for Attorneys' Fees" contains references to "just what Respondent Gordon has attempted in this action" (at page 4). As that pleading states, "admittedly, he Gordon has pursued a set of facts as trustee in this informer action which he has previously pursued as an individual" (at page 5).

Nonetheless, Dr. Gordon first maintains that attorneys' fees cannot be assessed against him because he is not a party to this lawsuit. In making this assertion, he relies on United States v. B. F. Goodrich, 41 F.Supp. 574 (S.D.N.Y.1941) for the proposition that because False Claims Act suits brought by informers are merely qui tam actions, the cause of action presented here belongs solely to the United States. In addition, Dr. Gordon argues that even if Bounty Hunters and not the United States is the plaintiff for purposes of this lawsuit, then Bounty Hunters alone, and not he as an individual, is liable for attorneys' fees.

Consideration of plaintiff's argument that the United States is the true plaintiff in this action begins with an examination of the procedural scheme established by 31 U.S.C. §§ 231 and 232. These sections provide authorization for the qui tam action that the plaintiff attempted to bring here. Section 232 explicitly permits enforcement of the substantive provisions of 31 U.S.C. § 231 by a private citizen. Such an "informer" plaintiff must notify the United States of his intent to pursue his qui tam action; the United States may then elect to intervene in the action. If such election occurs, then the United States becomes the plaintiff; the action is "carried on solely by the United States." 31 U.S.C. § 232(C). It is significant that in cases in which the United States does appear, it "shall not be bound by any action taken by the person who brought it i.e., the "informer", and may proceed in all respects as if it were instituting the suit." Id. If no appearance by the United States is made, however, then the informer may carry on his suit as long as he meets the "jurisdictional requirements" of the statute. In other words, while the lawsuit is technically brought "in the name of the United States" whether or not the United States chooses to appear, it is only through an affirmative and timely act of intervention that the United States will actually have a role to play in the ensuing litigation. The False Claims Act itself thus provides clear evidence that a qui tam suit brought by a private informer in which the United States elects not to intervene is qualitatively different from one in which an appearance by the United States actually alters the identity of the prosecuting party.

Recognizing that the plaintiff's complaint failed to state a claim, the United States chose not to intervene as a party plaintiff. Thus, this case was maintained by the plaintiff Bounty Hunters "as well for himself as for the United States." 31 U.S.C. § 232(B). Although brought "in the name of the United States" as required by § 232(B), it was carried on "at the sole cost and charge of" the plaintiff.

The central purpose of 31 U.S.C. § 232, and indeed of similar statutes authorizing qui tam actions, is to provide a private citizen who would otherwise have no judicially cognizable "interest" in rights protected by particular federal substantive provisions with an interest sufficient to give that individual the standing to sue to enforce these provisions. See, United States ex. rel. Marcus v. Hess, 317 U.S. 537, 63 S.Ct. 379, 87 L.Ed. 443 (1942); Associated Industries of New York State, Inc. v. Ickes, 134 F.2d 694 (2nd Cir. 1943). The qui tam plaintiff thus becomes a "person aggrieved" by defendants' purported behavior who has suffered "injury" of the constitutional magnitude required to confer upon him a claim against the defendants. Qui tam plaintiffs therefore stand in the position of "private attorneys general" whom Congress has "deputized" to enforce federal laws.

That the United States is itself not a party to a qui tam action in which it elects not to intervene is not altered by the two identifiable benefits which inure to the United States as a result of such lawsuits. Initially, the United States benefits from the deterrent effects that qui tam suits are intended to and in fact do have upon potential defendants. In addition, the United States profits financially from a successful qui tam prosecution in that it receives at least 75% of the damages recovered by the private plaintiff. 31 U.S.C. § 232(E)(2). Section 232 of the False Claims Act is thus analogous to 15 U.S.C. § 15, which authorizes private treble damage suits in antitrust cases, even when the United States has conducted or is concurrently conducting a criminal prosecution of the same defendants in its own name. The qui tam False Claims Act lawsuit is an adjunct to federal statutory and common law ...