U.S. Ex Rel. Bobby L. Maxwell v. Kerr–mcgee Oil & Gas Corp..

• Decision Date: 02 June 2011
• Docket Number: Civil Action No. 04–cv–01224–MSK–CBS.
• Citation: 793 F.Supp.2d 1260
• Court: U.S. District Court — District of Colorado
• Parties: UNITED STATES of America ex rel. Bobby L. MAXWELL, Plaintiff,v.KERR–McGEE OIL & GAS CORPORATION, Defendant.

793 F.Supp.2d 1260

UNITED STATES of America ex rel. Bobby L. MAXWELL, Plaintiff,

v.KERR–McGEE OIL & GAS CORPORATION, Defendant.

Civil Action No. 04–cv–01224–MSK–CBS.

United States District Court, D. Colorado.

June 2, 2011.

Michael S. Porter, The Law Firm of Michael S. Porter, Wheat Ridge, CO, Richard C. LaFond, Richard C. LaFond, P.C., Daniel M. Reilly, Matthew David Spohn, Reilly Pozner, L.L.P., Denver, CO, for Plaintiff.Charles D. Tetrault, Vinson & Elkins, LLP, Washington, DC, Danielle Renee Voorhees, U.S. Securities & Exchange Commission, Gregory E. Goldberg, Holland & Hart, LLP, Scott S. Barker, Wheeler Trigg O'Donnell, LLP, Denver, CO, Marie R. Yeates, Vinson & Elkins, LLP, Houston, TX, for Defendants.

OPINION AND ORDER GRANTING, IN PART, APPLICATION FOR AWARD OF ATTORNEYS' FEES, EXPENSES AND COSTS

MARCIA S. KRIEGER, District Judge.

THIS MATTER comes before the Court pursuant to the Relator's Application for Award of Attorneys' Fees and Expenses and Costs (# 340), the Defendant's response (# 355), and the Relator's reply (# 356).

FACTS

Relator Bobby L. Maxwell brought this suit on behalf of the United States, pursuant to the False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq., alleging that Defendant Kerr–McGee Oil & Gas Corp. filed false royalty reports with the Minerals Management Service (“MMS”) concerning oil and gas leases on government land from 1999 to 2003. The false reports were discovered by Maxwell in his role as an auditor with the MMS, as part of an audit of the Defendant's royalty statements. Although the MMS disagreed with Maxwell's conclusions that the Defendant's royalty statements constituted false claims, Maxwell elected to bring this action as a relator.

The case was tried to a jury in January 2007, and the jury returned a verdict in favor of the Plaintiff, awarding $7,555.886.26 in damages. On September 16, 2010, 2010 WL 3730894, the Court entered judgment in favor of the Plaintiff and against the Defendant in the amount of $22,931,658.78, plus costs pursuant to Fed.R.Civ.P. 54(d)(1). (# 333.) That amount was based on a trebled damage award, totaling $22,667,658.78, and statutory penalties of $264,000, both awarded pursuant to 31 U.S.C. § 3729(a)(1). (# 332, at 2–10.) Both parties have appealed from the judgment (# 342, 346), and those appeals are pending in the Tenth Circuit.

In his pending application, Maxwell seeks $2,178,632.25 in attorneys' fees pursuant to 31 U.S.C. § 3730(d)(2) for the work of the three law firms that have represented him during this action. (# 340, at 3–5.) He also seeks an enhancement of one-third of this amount to account for the risk of non-payment given that his attorneys were working on a contingent fee basis. ( Id. at 5–7.) Third, he seeks recovery of his attorneys' expenses in the amount of $109,341.79 pursuant to 31 U.S.C. § 3730(d)(2). ( Id. at 9–10; # 345.) ¹ Finally, Maxwell seeks recovery of $329,186.13 in fees and expenses for his own work as an expert witness in the action. (# 340, at 10–11.)

The Defendant opposes the application, arguing that the attorneys' fees award should be reduced to $1.1 million to account for (1) the fact that the attorneys' fees sought are grossly disproportionate to the amount that Maxwell would recover; and (2) the limited degree of success achieved by Maxwell in the action. (# 355, at 4–10.) The Defendant bases both arguments on the fact that the contingency fee agreement between Maxwell and his attorneys entitles the attorneys to recover both a 55 percent contingency fee and any attorneys' fees award under 31 U.S.C. § 3730(d)(2). ( See id. Ex. 1.) The Defendant also argues against any enhancement of the fee award. ( Id. at 10–15.) Finally, the Defendant argues that expert fees and expenses are not recoverable under the FCA, and even if they are, Maxwell should not be able to recover his own expert fees and expenses in prosecuting the action. ( Id. at 15–18.)

ANALYSIS

I. Jurisdiction

Although the judgment in this action has been appealed, this Court retains jurisdiction to rule on this application for attorneys' fees, expenses, and costs. See McKissick v. Yuen, 618 F.3d 1177, 1196 (10th Cir.2010) (“[A]n award of attorney fees ... is perhaps the paradigmatic example of a collateral issue a district court may entertain after an appeal has been taken to th[e] court [of appeals].”); Bell v. Bd. of Cnty. Comm'rs of Jefferson Cnty., 451 F.3d 1097, 1101 n. 2 (10th Cir.2006) (“If fees are sought in the district court on the basis of a judgment that has been appealed, the court of appeals and district court each have jurisdiction over the distinct matters before them.”); Lancaster v. Indep. Sch. Dist. No. 5, 149 F.3d 1228, 1237 (10th Cir.1998) (“Although filing notice of appeal generally divests the district court of jurisdiction over the issues on appeal, ... [a]ttorney's fees awards are collateral matters over which the district court retains jurisdiction.”).

II. Attorneys' Fees

31 U.S.C. § 3730(d)(2) provides that, in a qui tam action in which the United States does not intervene, a prevailing relator shall receive his reasonable attorneys' fees and costs. 31 U.S.C. § 3730(d)(2). See also United States ex rel. Ritchie v. Lockheed Martin Corp., 558 F.3d 1161, 1172 (10th Cir.2009) (stating that the statute provides for an award of attorneys' fees and costs to a prevailing relator). The “lodestar”—the reasonable number of hours spent multiplied by a reasonable hourly rate—is the “presumptively reasonable” attorneys' fee. Homeward Bound, Inc. v. Hissom Mem'l Ctr., 963 F.2d 1352, 1355 (10th Cir.1992). See also United States ex rel. Ritchie v. Lockheed Martin Corp., No. 04–cv–01937, 2007 WL 1795865 (D.Colo. June 21, 2007) (using lodestar calculation in FCA case). However, “that presumption may be overcome in those rare circumstances in which the lodestar does not adequately take into account a factor that may properly be considered in determining a reasonable fee.” Perdue v. Kenny A. ex rel. Winn, ––– U.S. ––––, 130 S.Ct. 1662, 1673, 176 L.Ed.2d 494 (2010). “Determining a ‘reasonable attorney's fee’ is a matter that is committed to the sound discretion of a trial judge....” Id. at 1676.

Maxwell has submitted declarations and exhibits from his attorneys detailing the number of hours they spent on the action and their hourly rates. (# 340, Attachs. 1–2, 4–7.) Based on these figures, Maxwell seeks an award of $1,206,898.25 for the work of The Law Firm of Michael S. Porter, $745,542.50 for the work of Richard C. LaFond P.C., and $226,191.50 for the work of Reilly Pozner LLP, totaling $2,178,632.25. (# 340, at 5.) The Defendant does not specifically dispute the reasonableness of the number of hours spent by Maxwell's attorneys, or the reasonableness of their hourly rates. ( See generally # 355.) Thus the Court finds both the hours and the hourly rates as reasonable.

The Defendant argues that the total amount of fees sought is unreasonable, however, for two reasons. First, the Defendant contends that they are excessive when considered in light of the contingent fee agreement between Maxwell and his attorneys. ( Id. at 4–5.) The contingent fee agreement between Maxwell and his attorneys would entitle the attorneys to 55 percent of the entire recovery and to an attorney fee award under 31 U.S.C. § 3730(d)(2). ( Id. Ex. 1.) In essence, the Defendant argues that recovery of both sums is a windfall to Maxwell's attorneys. In addition, the Defendant also contends that the fees sought are unreasonable because the amount sought is disproportionate to the degree of success achieved by Maxwell in the action. ( Id. at 6–10.) The Court addresses each argument in turn.

The existence of a contingent fee agreement between Maxwell and his counsel does not justify reducing the lodestar amount of attorneys' fees owed by the Defendant under 31 U.S.C. § 3730(d)(2). This statute mandates the award of attorney fees as part of a fee-shifting policy. See United States ex rel. Taxpayers Against Fraud v. Gen. Elec. Co., 41 F.3d 1032, 1035 (6th Cir.1994) (“The FCA qui tam statutes [ ] contain a fee-shifting provision that aims at inducing ‘whistleblowers' to step forward and attorneys to pursue such actions.”); United States ex rel. Bahrani v. Conagra, Inc., No. 00–cv–1077, 2009 WL 2766805, at *3 (D.Colo. Aug. 28, 2009), vacated in part on other grounds, 624 F.3d 1275 (10th Cir.2010) (“In crafting the fee shifting provisions of the FCA, Congress used the term ‘shall’ to mandate an award of reasonable expenses, attorneys' fees and costs to a person who settles a claim or recovers a civil penalty and damages on behalf of the government.”). By its nature, fee-shifting is designed to shift all of the costs (including attorney fees) to the loser in an action. The fact that the winner's attorneys receive compensation from another source is irrelevant to the fee award.

The Supreme Court recognized this feature when addressing another fee-shifting statute, 42 U.S.C. § 1988, in Venegas v. Mitchell, 495 U.S. 82, 90, 110 S.Ct. 1679, 109 L.Ed.2d 74 (1990). There it observed that the statute:

controls what the losing defendant must pay [in attorneys' fees], not what the prevailing plaintiff must pay his lawyer. What a plaintiff may be bound to pay and what an attorney is free to collect under a fee agreement are not necessarily measured by the “reasonable attorney's fee” that a defendant must pay pursuant to a court order. Section 1988 itself does not interfere with the enforceability of a contingent-fee contract.

See also Quesada v. Thomason, 850 F.2d 537, 543 (9th Cir.1988) (stating that a defendant obligated to pay fees under 42 U.S.C. § 1988 “should not benefit from the private [contingency fee] agreement by being permitted to pay anything less than ... an otherwise reasonable lodestar fee”); Certain v. Potter, 330 F.Supp.2d 576, 589 (M.D.N.C.2004) (“Defendant's argument that [Plaintiff's attorney] might ultimately receive both the fee award and a...