United States ex rel. Chiba v. Guntersville Breathables, Inc.

Decision Date09 October 2019
Docket NumberCIVIL ACTION NUMBER 5:17-CV-00760-HNJ
Citation421 F.Supp.3d 1241
Parties UNITED STATES of America, EX REL. Rich CHIBA and Drake Maples, Plaintiffs, v. GUNTERSVILLE BREATHABLES, INC., Defendant.
CourtU.S. District Court — Northern District of Alabama

Adam P. Plant, Robert E. Battle, Battle & Winn LLP, Birmingham, AL, for Plaintiffs.

C. Gregory Burgess, Andrew Mark Townsley, Lauren A. Smith, LaNier Ford Shaver & Payne P.C., Huntsville, AL, for Defendant.



This matter proceeds before the court on Relators' Motion for Reasonable Expenses, Attorneys' Fees, and Costs (Doc. 26), and their Motion to Strike Portions of Defendants' Response to Relators' Attorney's Fee Petition and Exhibits Accompanying That Response. (Doc. 43). The Defendant alleges the Relators perpetrated the wrongdoing underlying their Fair Claims Act qui tam claims, which disqualifies them from obtaining attorneys' fees. Moreover, the Defendant contends the FCA's government action and public disclosure bars preclude an award of attorneys' fees, and further, the court should reduce the fee request due to the Relators' partial success on their qui tam claims, as well as their lack of billing judgment as to certain hours expended by the Relators' attorneys.

As the analyses herein portray, the Relators secured prevailing party status pursuant to the FCA, entitling them to attorneys' fees, and the FCA does not preclude them from obtaining attorneys' fees due to their alleged wrongdoing. Furthermore, the government action and public disclosure bars do not foreclose the Relators' entitlement to attorneys' fees; pursuant to the terms of the applicable FCA provisions, those prohibitions typically apply to bar qui tam actions and claims, not attorneys' fee requests, and concomitantly, the court has already dismissed with prejudice the qui tam claims to which the prohibitions may apply. Moreover, the prohibitions' terms depict that the bars do not encompass the pre-suit disclosure at issue. Finally, the court will reduce the Relators' attorneys' fees award by some hours attributed to securing their share of the proceeds the Government obtained from the Defendant, yet the court will not reduce the requested award based upon the results the Relators obtained on their qui tam claims.

Therefore, for the reasons set out herein, the court GRANTS the Motion for Reasonable Attorneys' Fees, Certain Expenses, and Costs and MOOTS the Motion to Strike.


On May 10, 2017, Relators Rich Chiba and Drake Maples commenced this action against Defendants Guntersville Breathables, Inc. (GBI), R. Christopher Lumpkin, and Tori Chase Handley, pursuant to the False Claims Act, 31 U.S.C. §§ 3729 - 3733 ("FCA"). Relator Chiba served as GBI's manufacturing vice president from January 2011 to February 2015, and as manufacturing director before that period. Relator Maples worked for GBI from May 2005 to September 2014 as vice president of sales and then chief executive officer.

The complaint alleged GBI and the individual defendants failed to report, for customs duty purposes, the full value of goods imported from China, namely boot-foot waders1 and insulated knee boots (known as Alaska Tuff Marine boots). GBI declared the value of just one of the component products for the boot-foot wader, allegedly resulting in underpayment of customs duties approximating $700,000. GBI's declaration concerning the Alaska Tuff Marine boots resulted in a tariff rate of 9%, rather than the appropriate personal protective equipment rate of 37.5%, resulting in the underpayment of approximately $200,000 in customs levies. The complaint alleges Defendant Lumpkin (CEO assistant, logistics manager, and freight forwarder) instituted and perpetuated the scheme, with assistance from Defendant Handley (chief financial officer).

The United States intervened and settled with Relators and GBI the undervaluation claim involving the boot-foot waders, regarded by the parties as the Covered Conduct. The settlement released GBI from any civil or administrative monetary claim the United States may pursue for the Covered Conduct under the False Claims Act, 31 U.S.C. §§ 3729 - 3733 ; the Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801 - 3812 ; 19 U.S.C. §§ 1592 and 1595a of the Tariff Act of 1930, as amended; and the common law theories of unjust enrichment and fraud. GBI agreed to pay the United States $273,495.67, of which $151,942.04 represented restitution.2 The government gave the Relators a share of the recovery from GBI, amounting to an approximate three point downward departure from the 15% statutory minimum for a relator's share pursuant to the False Claims Act. 31 U.S.C. § 3730(d)(1).

The United States requested the court dismiss with prejudice all claims included in the settlement. However, the United States did not seek the dismissal of any remaining claims in this action beyond the scope of the Covered Conduct, including any claims Relators may have for costs and attorney fees pursuant to 31 U.S.C. § 3730(d)(1), any criminal liability, and any individual liability. The Relators moved to dismiss with prejudice the remaining claims regarding the misclassification of the knee boots as well as any claims against Defendants Lumpkin and Handley. (Doc. 25). The court entered an order on March 19, 2019, granting the United States' and Relators' motions, thereby dismissing all claims with prejudice. (Doc. 36).

The Relators filed their motion for attorneys' fees and costs after dismissal. Throughout this litigation, attorneys Robert E. Battle and Adam P. Plant of Battle & Winn LLP represented Relators. Relators seek attorneys' fees of $85,912.50 for 182.7 hours expended through March 5, 2019, ostensibly excluding time dedicated to non-intervened claims. In particular, Relators seek the following amounts for each attorney and paralegal providing representation and services during this litigation:

 Attorney/Paralegal Hourly Rate Hours Lodestar
                  Robert E. Battle       $525            39.8      $20,895.00
                  Adam P. Plant          $465            137.5     $63,937.50
                  Amy L. Rodgers         $200            3.7       $740.00
                  Mariah Hall            $200            1.7       $340.00
                                         Totals          182.7     $85,912.50

Relators also seek $1,234.41 in costs and expenses and $4,237.50 for expert witness fees. In addition, Relators seek recompense for the fees and costs of litigating their fee petition, which awaits presentation after adjudication of the instant Motion.


The False Claims Act provides the United States Government a right of recovery against any person who "knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval; [or] knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim." 31 U.S.C. § 3729(a)(1). In addition, the FCA allows private parties to file a qui tam action and serve as relators to recover damages on behalf of the United States. 31 U.S.C. § 3730(b). Violators of the FCA suffer liability to the government for a civil penalty between $5,000 and $10,000 per claim and treble damages. 18 U.S.C. § 3729(a)(1). In appropriate circumstances, the FCA entitles relators to a percentage of any recovery from a settlement or judgment plus reasonable attorneys' fees and costs. 31 U.S.C. § 3730(d).

As provided in the background, the Government intervened into this action to assume its prosecution, id. at § 3730(c), and subsequently reached a settlement with GBI. GBI agreed to pay the United States $273,495.67, and the Relators obtained an approximate 12% share of the United States' recovery. However, GBI argues the Relators should not receive attorneys' fees, or should receive a reduction in attorneys' fees, for various reasons.

As an initial matter, the court must determine whether the Relators are prevailing parties entitled to FCA attorneys' fees. The FCA deems a party a "prevailing" or successful relator entitled to attorneys' fees and costs in the following applicable circumstances:

If the Government proceeds with an action brought by a person under subsection (b), such person shall, subject to the second sentence of this paragraph, receive at least 15 percent but not more than 25 percent of the proceeds of the action or settlement of the claim, depending upon the extent to which the person substantially contributed to the prosecution of the action.... Any payment to a person under the first or second sentence of this paragraph shall be made from the proceeds. Any such person shall also receive an amount for reasonable expenses which the court finds to have been necessarily incurred, plus reasonable attorneys' fees and costs. All such expenses, fees, and costs shall be awarded against the defendant.

31 U.S.C.A. § 3730(d)(1) (emphasis added). The "starting point in discerning congressional intent is the existing statutory text," and "when the statute's language is plain, the sole function of the courts -- at least where the disposition required by the text is not absurd -- is to enforce it according to its terms." Lamie v. U.S. Tr. , 540 U.S. 526, 534, 124 S.Ct. 1023, 157 L.Ed.2d 1024 (2004) (citations and internal quotation marks omitted); see also United States v. AseraCare, Inc. , 938 F.3d 1278, 1292 (11th Cir. 2019) ("The analysis begins with the language of the relevant statute and regulations.") (citation omitted).

Applying the foregoing prescription here, § 3730(d)(1) plainly illustrates the circumstances in which a relator prevails and secures entitlement to attorneys' fees. The first sentence of § 3730(d)(1), which applies to the determination at bar, sets forth the method for calculating a relator's share of proceeds garnered by the United States in an FCA action in which it has intervened. Then, § 3730(d)(1)'s third sentence states that the United States shall award...

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