The United States v. DePuy Orthopaedics, Inc.

• Decision Date: 24 January 2022
• Docket Number: Civil Action 12-10896-MPK[1]
• Court: U.S. District Court — District of Massachusetts
• Parties: THE UNITED STATES OF AMERICA and THE STATE OF NEW YORK ex rel. DR. ANTONI NARGOL & DR. DAVID LANGTON, Relators, v. DEPUY ORTHOPAEDICS, INC., DEPUY, INC., and JOHNSON & JOHNSON SERVICES, INC., Defendants.

THE UNITED STATES OF AMERICA and THE STATE OF NEW YORK ex rel. DR. ANTONI NARGOL & DR. DAVID LANGTON, Relators, v. DEPUY ORTHOPAEDICS, INC., DEPUY, INC., and JOHNSON & JOHNSON SERVICES, INC., Defendants.

Civil Action No. 12-10896-MPK^[1]

United States District Court, D. Massachusetts

January 24, 2022

MEMORANDUM AND ORDER ON DEPUY'S MOTION FOR ATTORNEYS' FEES AND COSTS (#643).

PAGE KELLEY Chief United States Magistrate Judge

I. Introduction.

In May 2012, Dr. Antoni Nargol and Dr. David Langton brought this qui tam action against DePuy Orthopaedics, Inc., DePuy, Inc. and Johnson & Johnson Services, Inc. (collectively DePuy) under the False Claims Act (FCA), 31 U.S.C §§ 3729 et seq., and the New York state false claims act. (##1; 219.)^[2] At issue was the metal-on-metal (MoM) hip replacement device DePuy manufactured under its “Pinnacle” product line (the Pinnacle or the Pinnacle device). (#219 ¶ 6.) Relators alleged that over a five-year period, DePuy illegally promoted and sold a significant number of Pinnacle devices that fell outside FDA-approved manufacturing specifications, causing false claims to be submitted to Medicare and Medicaid. See Id. ¶¶ 88, 104, 179-181, 349.

A key issue in this action was relators' role as experts and consultants in multi-district litigation (MDL) involving the Pinnacle device and another MoM hip replacement device manufactured by DePuy, called “ASR.” In those roles, relators had access to confidential information subject to protective orders. (#103 at 18; #522-21.) Relators had been warned by multiple courts that they were required to comply with the protective and court orders that governed their use of that confidential information. See e.g., #101; #103 at 18; #249; #414. In addition, they had been chastised repeatedly for failing to comply with those orders. See, e.g., #104 at 22, 27; #103 at 18; #414. In March 2021, DePuy moved to strike allegations and to dismiss the complaint, (#519), citing relators' use of confidential information in their second amended complaint as a basis for dismissal. The court denied the motion, (#542), but later allowed it on reconsideration, (#605). The court found that relators had violated their confidentiality obligations as well as several court orders pertaining to same and dismissed the action with prejudice under Federal Rule of Civil Procedure 41(b). Id.

DePuy has moved for attorneys' fees and costs associated with litigating this case between December 20, 2019, and the present. (#644 at 6.) Relators oppose the motion. (#673.) For the reasons discussed below, DePuy's motion for fees and costs (#643) is allowed in part. II. DePuy's Motion for Fees and Costs.

DePuy did not request attorneys' fees in connection with its motion to strike and dismiss or its motion for reconsideration. (##519; 522; 545; 546.) Instead, the relief requested was dismissal of relators' claims with prejudice, which the court granted. (#522 at 40; #546 at 11; #605 at 26.) DePuy now seeks its fees and costs from both relators and their counsel. (#644 at 5.)

“Parties to civil litigation are generally responsible for their own attorney's fees under the so-called ‘American Rule.'” Torres-Santiago v. Municipality of Adjuntas, 693 F.3d 230, 234 (1st Cir. 2012). In some instances, however, certain rules and statutes, as well as the court's inherent authority, provide exceptions to this rule. See Spooner v. EEN, Inc., 644 F.3d 62, 66 (1st Cir. 2011). DePuy cites several sources of authority in support of their request: (1) 31 U.S.C. § 3730(d)(4); (2) Federal Rules of Civil Procedure 37(a)(5)(A) and 37(b)(2); (3) 28 U.S.C. § 1927; and (4) the court's inherent authority to order sanctions.^[3]

A. 31 U.S.C. § 3730(d)(4).

DePuy seeks attorneys' fees and costs under the FCA, citing 31 U.S.C. § 3730(d)(4). (#644 at 15.) That provision provides that,

[i]f the Government does not proceed with the action and the person bringing the action conducts the action, the court may award to the defendant its reasonable attorneys' fees and expenses if the defendant prevails in the action and the court finds that the claim of the person bringing the action was clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment.

31 U.S.C. § 3730(d)(4) (emphasis added). Such an award is within the district court's discretion. See Lu v. Harvard Sch. of Dental Med., No. 00-cv-11492, 2002 U.S. Dist. LEXIS 30683, at *11 (D. Mass. Mar. 29, 2002) (declining to exercise discretion in spite of conduct that met the standard articulated by § 3730(d)(4)); see also Pfingston v. Ronan Eng'g Co., 284 F.3d 999, 1006-1007 (9th Cir. 2002) (stating, in the context of a request by a prevailing defendant, that “[t]he award of fees under the False Claims Act is reserved for rare and special circumstances”).

As a starting matter, DePuy must have “prevail[ed] in the action” to be eligible for attorneys' fees under § 3730(d)(4). “The ‘prevailing party' is the party who ‘prevailed on the merits of at least some of his claims.'” Covidien LP v. Esch, 427 F.Supp.3d 152, 159 (D. Mass. 2019) (quoting Spooner, 644 F.3d at 66); see Buckhannon Bd. & Care Home v. W.Va. Dep't of Health & Human Res., 532 U.S. 598, 603 n.4 (2001) (noting that the Supreme Court interprets various “fee-shifting provisions consistently” when identifying a “prevailing party”). In non-FCA cases, courts in this district have found that a defendant in a case dismissed with prejudice is a prevailing party because “a dismissal with prejudice is tantamount to a judgment on the merits.” Lenfest v. Verizon Enter. Sols., LLC, No. 13-cv-11596, 2015 U.S. Dist. LEXIS 26271, at *7 (D. Mass. Mar. 4, 2015). Outside of this district, courts reviewing fee requests have reached the same result on different grounds, focusing on whether “there [is] a ‘judicially sanctioned change in the legal relationship of the parties'” to determine whether one party has prevailed. Dattner v. Conagra Foods, Inc., 458 F.3d 98, 101 (2d Cir. 2006) (quoting Buckhannon Bd. & Care Home, 532 U.S. at 605). In the context of § 3730(d)(4), courts taking this approach have found that dismissal with prejudice renders such a change, because a plaintiff is no longer able to assert legal claims against the defendant. See, e.g., United States ex rel. Grynberg v. Praxair, Inc., 389 F.3d 1038, 1057 (10th Cir. 2004) (finding defendant to be prevailing party for purposes of § 3730(d)(4) where action was dismissed for lack of jurisdiction and relator could no longer bring claims, thus changing legal relationship of the parties); United States ex rel. Atkinson v. Pa. Shipbuilding Co., 528 F.Supp.2d 533, 542-543 (E.D. Pa. 2007) (finding defendant to be prevailing party where FCA case was functionally dismissed with prejudice). Under either rubric, the court finds that DePuy is the prevailing party.

For purposes of § 3730(d)(4), “[a] claim is frivolous when, viewed objectively, it may be said to have no reasonable chance of success and present no valid argument to modify present law.” United States ex rel. Bierman v. Orthofix Int'l, N.V., 113 F.Supp.3d 414, 429 (D. Mass. 2015). “Vexatious and harassing claims are those instituted maliciously or without good cause.” Atkinson, 528 F.Supp.2d at 544. The court cannot find that relators' claims were “clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment.” 31 U.S.C. § 3730(d)(4). This case was dismissed due to relators' violations of court orders, not because the court found their claims lacked merit or were brought for an improper purpose. In addition, relators' claims were similar in substance to successful MDL cases brought against DePuy, which suggests that their claims were not completely baseless.^[4] Awarding fees and costs under the FCA would therefore be inappropriate. See Atkinson, 528 F.Supp.2d at 543 (declining to deem relator's claims lacking in merit or vexatious without evidence that his claims “were so unfounded as to meet the high standard required to award attorney fees and expenses under § 3730(d)(4)”).

B. Federal Rule of Civil Procedure 37(b)(2).

DePuy seeks sanctions under Rule 37 for discovery abuses. (#644 at 22.) Under Rule 37(b), instead of or in addition to other enumerated sanctions, a “court must order the disobedient party, the attorney advising that party, or both to pay the reasonable expenses, including attorney's fees, caused by the [discovery] failure, unless the failure was substantially justified or other circumstances make an award of expenses unjust.” Fed.R.Civ.P. 37(b)(2)(C).^[5]

The court dismissed this action under Rule 41(b), citing relators' failure to comply with court orders. (#605 at 21-25.) It did not dismiss the action as a sanction for discovery abuses under Rule 37(b), which was an alternative form of relief that DePuy sought in its motion to strike and dismiss. See #522 at 11 (listing dismissal under Rule 41(b) and Rule 37(b)(2)(A)(iii) as alternative bases for relief). There is therefore no basis for awarding fees or costs under Rule 37.

C. 28 U.S.C. § 1927.

DePuy also requests fees against counsel for relators, citing 28 U.S.C. § 1927, which provides that

[a]ny attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct.

28 U.S.C. § 1927. That section “does not apply to ‘[g]arden-variety carelessness or even incompetence,' but instead requires that the ‘attorney's actions . . . evince a studied disregard of the need for an orderly judicial process, or add up to a reckless breach of the...