United States of America v. Deuter et al

Filing 28

MEMORANDUM DECISION AND ORDER RE: ATTORNEYS' FEES, EXPENSES, AND COSTS - IT IS THEREFORE ORDERED THAT: Relator Stuart Hallam's Amended Motion for Attorneys' Fees and Costs (Dkt. 24 ) is GRANTED in part and DENIED in part. Relator Hall am is awarded attorneys' fees in the amount of $35,579.00, expenses in the amount of $865.56, and costs in the amount of $402, for a total award of $36,846.56. The award shall be paid by Defendants jointly and severally. Signed by US Magistrate Judge Raymond Edward Patricco, Jr. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (hs)

UNITED STATES DISTRICT COURT
DISTRICT OF IDAHO

Case No. 1:23-cv-00348-REP

UNITED STATES OF AMERICA, ex rel.
STUART HALLAM,
Plaintiff,

MEMORANDUM DECISION AND
ORDER RE: ATTORNEYS’ FEES,
EXPENSES, AND COSTS

vs.
BRETT DEUTER, an individual, DEUTER
CONSTRUCTION, LLC, an Idaho limited
liability company; and ENLIGHTEN, LLC,
an Idaho limited liability company d/b/a
Enlighten Construction Services and
EnlightenHome,
Defendants.

Pending before the Court is Relator Stuart Hallam’s Amended Motion for Attorneys’
Fees and Costs (Dkt. 24). For the reasons set forth below, the Court grants the motion with one
reduction.
PROCEDURAL HISTORY
Relator Stuart Hallam filed this qui tam action on August 4, 2023. (Dkt. 1). The
Complaint alleged that Defendants Brett Deuter, Deuter Construction LLC, and Enlighten, LLC
violated the False Claims Act (“FCA”), 31 U.S.C. § 3729, by engaging in Paycheck Protection
Program (“PPP”) and Economic Injury Disaster Loan (“EIDL”) fraud. Id. Relator Hallam
formally served the United States with notice of the lawsuit on November 9, 2023. (Dkt. 4).
After investigating the allegations, the United States initiated settlement negotiations with
Defendants. In June 2024, the parties reached an agreement in principle. (Dkt. 8).

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On July 2, 2024, the United States filed a notice of its election to intervene for the
purposes of settlement. (Dkt. 8).
On August 29, 2024, the parties submitted a joint motion to approve a consent judgment
(Dkt. 20). As part of this motion, Defendants admitted liability under the FCA and agreed to pay
a judgment in the amount of $850,000. Id. Finally, the parties agreed that Relator Hallam could
seek an award of reasonable attorneys’ fees and costs under 31 U.S.C. § 3730(d)(1) and that
Defendants could oppose the award. Id. at 6.
On October 2, 2024, Relator Hallam filed his Amended Motion for Attorneys’ Fees and
Costs requesting that the Court award him attorneys’ fees in the amount of $39,287.00, expenses
in the amount of $865.56, and costs in the amount of $402, for a total award of $40,554.56.
LEGAL STANDARD
Under the FCA, a prevailing relator is entitled to an award against the defendant for
“reasonable expenses which the court finds to have been necessarily incurred, plus reasonable
attorneys’ fees and costs.” 31 U.S.C. § 3730(d). To determine the amount of “reasonable
attorneys’ fees” under this statute, courts use the lodestar method. See Tahara v. Matson
Terminals, Inc., 511 F.3d 950, 955 (9th Cir. 2007) (“Use of the ‘lodestar method’ to calculate
attorney’s fees under a federal fee-shifting statute is proper.”); see also United States ex re. Sant
v. Biotronik, Inc., 716 F. App’x 590, 592 (9th Cir. 2017) (unpublished) (applying the lodestar
method in an FCA case).
“The lodestar method is a two-step process.” Kelly v. Wengler, 822 F.3d 1085, 1099 (9th
Cir. 2016). First, the court calculates the lodestar by multiplying the number of hours reasonably
expended on the litigation by a reasonable hourly rate. Id. Second, the court decides whether to

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increase or reduce the presumptively reasonable lodestar fee to account for factors that are not
subsumed within the lodestar figure. Id.
At both stages of the process, the initial burden is on the party seeking fees to submit
satisfactory evidence to support the fee request. For example, a party seeking fees must provide
time sheets detailing the work performed on the case and affidavits establishing that the hourly
rates requested are “in line with the prevailing market rate of the relevant community.” Carson
v. Billings Police Dep’t, 470 F.3d 889, 891 (9th Cir. 2006). Once this information has been
provided, the party opposing the fee application carries the burden of rebuttal. Gates v.
Deukmejian, 987 F.2d 1392, 1397-98 (9th Cir. 1992).
DISCUSSION
I.

Attorneys’ Fees

Relator Hallam and his Counsel have submitted declarations and time sheets establishing
that his attorneys billed him $39,287.00 over the course of the lawsuit for 86.7 hours of legal
work. They argue that the time spent on the case and the hourly rates charged by Counsel are
both reasonable and that the Court, accordingly, should award Relator Hallam full compensation
for his legal fees.
Defendants oppose this request.1 Defendants ask the Court to reduce the requested fee
award “by at least 75%” to account for “vague and repetitive entries, excessive time on simple
tasks, unnecessary client communications, . . . time spent on settlement negotiations unrelated to

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Defendants’ response was filed five days after the stipulated due date, see Stip. at 2 (Dkt. 22),
and Relator Hallam asks the Court to disregard it as untimely. Reply at 1 (Dkt. 27). Relator
Hallam, however, alleges no prejudice from the five-day delay in filing. In addition, the Court
has a strong preference for resolving motions on the merits. The Court, therefore, will consider
Defendants’ untimely response. See Applied Information Sciences Corp., v. eBay, Inc., 511 F.3d
966, 969 n.1 (9th Cir. 2007) (a district court has discretion to consider untimely papers).
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the litigation,” and failure to exercise “billing judgment.” Ds’ Rsp. at 5 (Dkt. 26). Defendants
do not challenge the hourly rates charged by Relator Hallam’s Counsel. Nor do Defendants or
Relator Hallam ask the Court to deviate from the lodestar figure. The only dispute before the
Court is whether Relator Hallam has presented sufficient evidence to justify the 86.7 hours his
Counsel spent litigating the case. With one exception, the Court agrees that these hours were
adequately documented and reasonably expended.
a. Counsel’s billing entries are sufficiently detailed.
Defendants’ first argument is that “many” of Counsel’s billing entries provide
“insufficient detail regarding the nature of the work completed.” Ds’ Rsp. at 3-4 (Dkt. 26).
Defendants provide two examples to support this position. First, Defendants argue that it was
insufficient for Counsel to bill for “background research necessary to draft and submit an FCA
Claim” without providing substantive details about the “nature of the research or its relevance to
the complaint.” Id. at 3. Second, Defendants insist that an entry regarding the provision of
information to the United States is too vague because the entry does not state what documents
were being coordinated or how they were relevant to the litigation. Id. at 3-4.
Defendants demand a level of detail that the law does not require. When submitting
entries for an attorneys’ fee award, attorneys are “not required to record in great detail how each
minute of their time was expended.” USW v. Ret. Income Plan for Hourly-Rated Emples. of
ASARCO, Inc., 512 F.3d 555, 565 (9th Cir. 2008) (citing Hensley v. Eckerhart, 461 U.S. 424,
437 n.12 (1983) (cleaned up). Attorneys need only “keep records in sufficient detail that a
neutral judge can make a fair evaluation of the time expended, the nature and need for the
service, and the reasonable fees to be allowed.” Id. (citing Hensley, 461 U.S. at 441 (Burger,
C.J., concurring). Counsel’s billing entries satisfy this standard.

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b. The time expended drafting the Complaint was reasonable.
Defendants’ second argument is that Counsel spent excessively long drafting the
complaint. Ds’ Rsp. at 4 (Dkt. 26). In addition to billing for background research, Counsel
expended 26.6 hours between July 5, 2023 and August 4, 2023 drafting, preparing, reviewing,
revising, and filing the complaint. Time Sheet at 2-3 (Dkt. 24-3). Given the length of the
complaint and the complexity of the subject matter, the Court finds that these hours were
reasonably expended.
In making this determination, the Court is mindful that the lodestar method is designed to
“roughly approximate[] the fee that the prevailing attorney would have received if he or she had
been representing a paying client who was billed by the hour in a comparable case.” Perdue v.
Kenny A., 559 U.S. 542, 551 (2010); see also Moreno v. City of Sacramento, 534 F.3d 1106,
1111 (9th Cir. 2008) (“The number of hours to be compensated is calculated by considering
whether, in light of the circumstances, the time could reasonably have been billed to a private
client.”). Here, Relator Hallam’s attorneys billed him monthly for their legal work, and Relator
Hallam has paid these bills. Stidham Decl. ¶ 6 (Dkt. 24-2). This reduces the risk of overbilling.
Because Relator Hallam was paying out-of-pocket for legal services, he had an incentive to
contest inflated billing entries and encourage his attorneys to work efficiently. The Court affords
these payment decisions considerable deference. See Moreno, 534 F.3d at 1112 (“By and large,
the court should defer to the winning lawyer’s professional judgment as to how much time he
was required to spend on the case; after all, he won, and might not have, had he been more of a
slacker.”).

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c. The time spent on client communication was reasonable.
Defendants’ next argument is that Counsel spent an “inordinate amount of time”
communicating with their client about non-substantive matters. Ds’ Rsp. at 4 (Dkt. 26). The
Court is not persuaded. Client communication is an important aspect of representation. Having
reviewed the billing records, the Court finds that the hours expended on client communication
were reasonable.
d. The time spent negotiating a higher Relator share is not compensable.
Defendants’ final argument is that Relator Hallam’s Counsel spent a substantial amount
of time negotiating a higher relator share and that this time should not be charged to Defendants.
Ds’ Rsp. at 5 (Dkt. 26). The text of the FCA is silent about this issue. Numerous courts,
however, have reasoned that qui tam defendants should not be forced to reimburse relators for
time expended bargaining with the government over the relator share. See Caputo v. Tungsten
Heavy Powder, Inc., No. 3:18-CV-2352-W-AHG, 2021 WL 12158988, at *2 (S.D. Cal. Oct. 28,
2021) (collecting cases). As these cases point out, defendants do not participate in these
negotiations and can do nothing to hasten or prolong their conclusion. Id. The Court agrees with
this reasoning.
Here, Relator Hallam’s Counsel spent approximately 23.4 hours on settlement
negotiations.2 While some of this time related to broader settlement negotiations, a subset of it
involved convincing the government to grant Relator Hallam a higher percentage of the
judgment. On July 30, 2024, for example, Mr. McCurdy billed Relator Hallam 1.3 hours for
various work “regarding the percentage owed to Stuart Hallam as Relator.” Time Sheet at 5

2

See Time Sheet at 4-6 (Dkt. 24-3) (billing entries dated May 29, 2024 - July 2, 2024 and July
12, 2024 – August 28, 2024).
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(Dkt. 24-3). Over the following two weeks, Counsel continued to bill for ongoing settlement
negotiations with the government regarding the relator share. Id. at 5 (billing entries dated July
31, 2024 – August 12, 2024). These billing entries total 7.2 hours at $515 per hour, for a total of
$3,708. The Court will subtract this amount from the final lodestar calculation.
II.

Reasonable Expenses

Relator Hallam alleges that he incurred $865.56 in expenses traveling to Boise to meet
with the United States Attorney’s Office regarding this case. Hallam Decl. ¶ 3 (Dkt. 24-4).
Defendants do not challenge to the necessity of this trip or the reasonableness of Relator
Hallam’s travel costs. The Court, accordingly, will award Relator Hallam $865.56 in expenses
under 31 U.S.C. § 3730(d)(1).
III.

Costs

Relator Hallam also seeks reimbursement of the $402.00 filing fee. Bill of Costs (Dkt.
17). “[U]nder the FCA, fees, expenses, and costs are three distinct categories.” United States ex
rel. Lindenthal v. General Dynamics Corp., 61 F.3d 1402, 1413 (9th Cir. 1995). A court,
consequently, may award costs to a prevailing relator under Federal Rule of Civil Procedure
54(d)(1), in addition to awarding attorneys’ fees and expenses under § 3730. Id. The Court will
grant Relator Hallam’s unopposed request for $402 in costs.
IT IS THEREFORE ORDERED THAT:
1. Relator Stuart Hallam’s Amended Motion for Attorneys’ Fees and Costs (Dkt. 24) is
GRANTED in part and DENIED in part.
2. Relator Hallam is awarded attorneys’ fees in the amount of $35,579.00, expenses in the
amount of $865.56, and costs in the amount of $402, for a total award of $36,846.56.

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3. The award shall be paid by Defendants jointly and severally.

January 06, 2025

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