Court Ordered Attorney's Fees under the Virginia Fraud Against Taxpayers Act and the federal False Claims Act
SCOTUS has issued two new opinions concerning court-awarded attorney's fees in the last year or so, and since the new Laffey Matrix was recently released, today's post will be on the topic of statutory attorney's fees.
As readers know, the Virginia Fraud Against Taxpayers Act (like the federal False Claims Act) provides for treble damages, civil penalties, and mandatory awards of attorney's fees against those who submit false or fraudulent claims to the Commonwealth. While neither of the two cases below are VFATA or FCA cases, the principles from these cases apply to any fee-shifting case.
In April of last year, Perdue v. Kenny A. ex rel. Winn, 130 S.Ct. 1662 (2010) produced much debate and received attention as a result of its confirmation of the possibility of a "fee-enhancement" over and above the lodestar method for extraordinary work. Although the holding that attorney's fee enhancements may be possible in rare and exceptional circumstances is the most frequently discussed element of the opinion, there is an additional angle that has been less explored.
The opinion is notable because it also labels as arbitrary those courts who simply adjust an attorney's fee award by a percentage. What seemed to trouble Justice Alito the most was not the fact that the fee was enhanced, but the fact that the fees were enhanced by 75%. “Why,” Justice Alito wondered, “did the court grant a 75% enhancement instead of the 100% increase that respondents sought? And why 75% rather than 50% or 25% or 10%?” The majority opinion emphasized that the district court “did not employ a methodology that permitted meaningful appellate review.”
So, while Virginia lawyers would do well not to hold their breath waiting on fee-enhancements, the silver lining in the Perdue opinion is this: there is now a strong argument that adjustments—whether up or down—need to be tied to specific evidence; moreover, an adjustment that is tied to nothing more than the Court's gut feeling may well turn out to be arbitrary and capricious.
Then, last month, a previously unresolved issue was decided by SCOTUS in Fox v. Vice, 563 U.S.__ (2011) (June 11, 2011). The facts of the case are as follows: the plaintiff brough a federal civil rights claim and, under the pendent jurisdiction of the Court, a state law claim for defamation. Defendants moved for summary judgment on plaintiff’s federal claims at the end of discovery.
The District Court granted summary judgment on the federal law claims, and remanded the state law claims to state court for adjudication. The District Court then awarded the defendant all of the attorney's fees, in the process failing to differentiate between those claims that would have been incurred in defending against non-frivolous state law claims.
The Supreme Court held that Section 1988 allows a defendant to recover reasonable attorneys fees that he or she would not have paid but for the frivolous claim – in other words, fees incurred in defending meritorious claims are not compensable. The question is one of allocation of the frivolous and non-frivolous claims.
The defendant must demonstrate to the trial court that it would not have incurred the fees “but for” the frivolous claim(s) in order to receive a fee award. Defendant should not receive a “windfall” simply because a frivolous claim was brought along with otherwise non-frivolous claims it would have had to defend anyway.
Posted by Zachary Kitts at 7/9/2011 4:50 PM 
Categories: False Claims Act Practice in Virginia, Litigation, Qui Tam practice in Virginia, Potential Uses of the Virginia Fraud Against Taxpayers Act, Practice Example The Utility of Qui Tam and Private Law Enforcement in Virginia, Virginia Whistleblowers, False Claims Act, Qui Tam litigation, legal blogs, Office of the Attorney General of Virginia
Tags: Federal False Claims Act Qui Tam Litigation in Virginia Utility of the Virginia Fraud Against Taxpayers Act State false claims act news Virginia Fraud Against Taxpayers Act Virginia Legal Blogs
Categories: False Claims Act Practice in Virginia, Litigation, Qui Tam practice in Virginia, Potential Uses of the Virginia Fraud Against Taxpayers Act, Practice Example The Utility of Qui Tam and Private Law Enforcement in Virginia, Virginia Whistleblowers, False Claims Act, Qui Tam litigation, legal blogs, Office of the Attorney General of Virginia
Tags: Federal False Claims Act Qui Tam Litigation in Virginia Utility of the Virginia Fraud Against Taxpayers Act State false claims act news Virginia Fraud Against Taxpayers Act Virginia Legal Blogs
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