United States of America, ex rel. John Rubar v. The Hayner Hoyt Corporation, et al

Filing 98

MEMORANDUM-DECISION and ORDER - That defendants' 30 motion to dismiss is GRANTED IN PART and DENIED IN PART as follows: GRANTED with respect to the FCA retaliation claim (fourth claim) as against Gary Thurston, Jeremy Thurston, Ralph Benne tt, Lemoyne Interiors, and 229 Constructors, LLC, the NIED claim (seventh claim) as against all defendants, and the tortious interference with contract claim (ninth claim) as against all defendants; and DENIED in all other respects. That defendants shall file an appropriate responsive pleading within the time allotted by the rules. That Rubar's 31 motion for attorneys' fees, costs, and expenses is GRANTED IN PART and DENIED IN PART as follows: GRANTED to the extent that attorneys& #039; fees in the amount of $206,374.50 and costs and expenses in the amount of $2,070.85 are imposed against defendants; and DENIED in all other respects. That Travelers' 65 motion to intervene is GRANTED and Travelers shall file its pleading on or before February 8, 2018. That the parties shall contact Magistrate Judge Hummel to schedule further proceedings in accordance with this order. Signed by Senior Judge Gary L. Sharpe on 1/25/2018. (jel, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
________________________________
UNITED STATES OF AMERICA,
EX REL. JOHN RUBAR,
Plaintiffs,

5:14-cv-830
(GLS/CFH)

v.
THE HAYNER HOYT
CORPORATION et al.,
Defendants,
v.
THE TRAVELERS
INDEMNITY COMPANY,
Proposed
Intervenor.
________________________________
APPEARANCES:
OF COUNSEL:
FOR THE PLAINTIFFS/
COUNTERDEFENDANTS:
U.S. Department of Justice
Albany Office
445 Broadway
James T. Foley Courthouse
Albany, NY 12201

ADAM J. KATZ, ESQ.

Sadowski Katz LLP
11 Broadway, Suite 615
New York, NY 10004

RAPHAEL KATZ, ESQ.
ROBERT W. SADOWSKI, ESQ.

Hancock Estabrook, LLP
1500 AXA Tower I

JOHN G. POWERS, ESQ.
PAUL J. TUCK, ESQ.

100 Madison Street
Syracuse, NY 13202
FOR THE DEFENDANTS/
COUNTERCLAIMANTS:
The Hayner Hoyt Corporation,
Jeremy Thurston, Gary Thurston,
LeMoyne Interiors, and Doyner, Inc.
Greenberg Traurig, LLP
DC Office
2101 L Street, N.W.
Washington, DC 20037

MELISSA P. PRUSOCK, ESQ.

Barclay Damon LLP
Syracuse Office
One Park Place
300 South State Street
Syracuse, NY 13202

JON P. DEVENDORF, ESQ.
KAYLA A. ARIAS, ESQ.

Ralph Bennett and
229 Constructors, LLC
Barclay Damon LLP
Syracuse Office
One Park Place
300 South State Street
Syracuse, NY 13202

JON P. DEVENDORF, ESQ.

FOR THE PROPOSED
INTERVENOR:
Barclay Damon LLP
Syracuse Office
One Park Place
300 South State Street
Syracuse, NY 13202

JON P. DEVENDORF, ESQ.

Gary L. Sharpe
2

Senior District Judge
MEMORANDUM-DECISION AND ORDER
I. Introduction
Plaintiff-relator John Rubar filed this qui tam action against
defendants Hayner Hoyt Corporation, Jeremy Thurston, Gary Thurston,
LeMoyne Interiors, Doyner, Inc., Ralph Bennett, and 229 Constructors,
LLC pursuant to the False Claims Act (FCA)1. (Compl., Dkt. No. 1.) The
United States elected to intervene for the limited purpose of effectuating a
settlement agreement between the parties, which resolved the FCA claims
regarding defendants’ fraudulent acquisition of construction contracts.
(Dkt. No. 12.) Rubar maintains an FCA retaliation claim2 and numerous
common law tort claims against defendants, which were not covered by the
settlement agreement. (3d Am. Compl., Dkt. No. 95.)
Pending is defendants’ motion to dismiss several of the remaining
claims, (Dkt. No. 30), Rubar’s motion for attorneys’ fees, costs, and
expenses, (Dkt. No. 31), and The Travelers Indemnity Company’s motion
to intervene, (Dkt. No. 65). For the following reasons, the parties’ motions
1

31 U.S.C. §§ 3729-3733.

2

31 U.S.C. § 3730(h).

3

are both granted in part and denied in part, and Travelers’ motion is
granted.
II. Background
A.

Facts3

Hayner Hoyt is a general contractor and construction management
firm operated by Gary and Jeremy Thurston. (3d Am. Compl ¶¶ 12, 15.)
Doyner and LeMoyne are wholly-owned subsidiaries of Hayner Hoyt. (Id.
¶¶ 13-14.) The Thurstons used Bennett, a service-disabled veteran
employed as their warehouse manager, as a figurehead to fraudulently
obtain federal contracts via a sham corporation, 229 Constructors, and to
funnel illicit subcontract fees into their coffers via Doyner and LeMoyne.
(Id. ¶¶ 25-36.)
Rubar worked closely with the Thurstons as Vice President of
Doyner, where he was employed for over two decades without ever
receiving a negative review or complaint. (Id. ¶¶ 11, 38.) Upon discovering
the fraudulent scheme, Rubar refused to participate in it or assist in its
coverup; instead, he notified the government and filed this qui tam action.

3

Unless otherwise noted, the facts are drawn from Rubar’s Third Amended Complaint
and presented in the light most favorable to him.

4

(Id. ¶¶ 39, 48.)
After identifying Rubar as a whistleblower, defendants threatened him
with criminal prosecution based on fabricated accusations, (id. ¶¶ 42-43),
terminated him from employment, (id.), eventually levied false charges
against him, (id. ¶¶ 47-54), stalked him, (id. ¶ 80), defamed him to several
newspapers, subcontractors, and employers, (id. ¶¶ 76-79, 84), maliciously
interfered with his business opportunities, (id. ¶¶ 84-86), caused him to be
terminated from subsequent employment, (id. ¶ 87), and attempted to
physically harm him by crashing into a car that they believed he was
driving, (id. ¶ 81).
B.

Procedural History

Although the United States reached a settlement agreement with
defendants regarding their fraudulent construction contract scheme, (Dkt.
No. 12, Attach. 1), Rubar maintains a retaliation claim under 31 U.S.C.
§ 3730(h) and several common law tort claims, (3d Am. Compl.).4

4

Specifically, these torts consist of defamation, intentional infliction of emotional
distress, negligent infliction of emotional distress, abuse of process, tortious interference with
contract, tortious interference with prospective business relations, false imprisonment, prima
facie tort, and malicious prosecution. (3d Am. Compl. ¶¶ 118-157.) Although not specified in
the complaint, the posture of both parties’ briefs indicate that these torts are brought under
New York State common law, (Dkt. No. 30, Attach. 1 at 5, 8-11; Dkt. No. 39 at 19-22, 24-25),
and the court treats them as such.

5

Defendants moved to dismiss Rubar’s claims of retaliation,
intentional infliction of emotional distress (IIED), negligent infliction of
emotional distress (NIED), tortious interference with contract and
prospective business relations, and prima facie tort. (Dkt. No. 30.)
Thereafter, defendants filed a partial answer5 to Rubar’s Second Amended
Complaint, which included their own common law tort counterclaims
against Rubar for “fraudulent, unlawful[,] and disloyal conduct undertaken
by Rubar over a span of several years while he was an employee of
Doyner.” (Dkt. No. 53 at 25-41.)
After some confusion born by procedural impropriety, (Dkt. Nos. 55,
94), Rubar filed a Third Amended Complaint, (3d Am. Compl., Dkt. No. 95).
Given defendants’ contention that “the . . . Third Amended Complaint does
not cure the deficiencies that have been identified in [d]efendants’ motion
to dismiss,” (Dkt. No. 56 at 2-3), the court applies defendants’ previouslyfiled motion to dismiss, (Dkt. No. 30), against this newly-amended
complaint.
In addition to resolving the arguments presented in defendants’

5

Defendants refused to answer the portion of Rubar’s claims that are now at the center
of their motion to dismiss. (Dkt. No. 53 at 20-22.)

6

motion to dismiss, the court must also resolve Rubar’s motion for attorneys’
fees, costs, and expenses related to the settled portion of the FCA claims,
(Dkt. No. 31), as well as a subsequent motion to intervene filed by
Travelers, (Dkt. No. 65).
III. Discussion
A.

Rule 12(b)(6) Motion to Dismiss
The standard of review under Federal Rule of Civil Procedure

12(b)(6) is well settled and will not be repeated here. For a full discussion
of the standard, the court refers the parties to its prior decision in Ellis v.
Cohen & Slamowitz, LLP, 701 F. Supp. 2d 215, 218 (N.D.N.Y. 2010).
1.

Retaliation Claim
a.

Proper Defendants

The FCA’s anti-retaliation provision provides that
[a]ny employee, contractor, or agent shall be entitled to all relief
necessary to make that employee, contractor, or agent whole, if
that employee, contractor, or agent is discharged, demoted,
suspended, threatened, harassed, or in any other manner
discriminated against in the terms and conditions of employment
because of lawful acts done by the employee, contractor, agent
or associated others in furtherance of an action under this
section or other efforts to stop [one] or more violations of [the FCA].
31 U.S.C. § 3730(h)(1). Generally, to set forth a retaliation claim under
7

this section, a relator must show that “(1) he engaged in activity protected
under the statute, (2) the employer was aware of such activity, and (3) the
employer took adverse action against him because he engaged in the
protected activity.” United States ex rel. Chorches for Bankr. Estate of
Fabula v. Am. Med. Response, Inc., 865 F.3d 71, 95 (2d Cir. 2017).
Rubar argues that by eliminating any reference to “employer” in a
2009 amendment to the FCA, Congress “effectively left the universe of
defendants undefined and wide-open.” (Dkt. No. 39 at 14-16) (quoting
Weihua Huang v. Rector & Visitors of Univ. of Va., 896 F. Supp. 2d 524,
548 n.16 (W.D. Va. 2012)). As such, he asserts a retaliation claim against
all defendants, including the Thurstons and Bennett. (3d Am. Compl.
¶¶ 114-117.) However, defendants contend that the 2009 amendment
does not allow a relator to maintain a retaliation claim against individuals
as opposed to their actual employers. (Dkt. No. 42 at 2-3).
Neither side points to a Second Circuit decision resolving this
relatively novel issue. However, courts in the Northern District have held
that, under the post-2009 version of § 3730(h), liability may not be
imposed on an individual either in an individual or official capacity. See,

8

e.g., Taylor v. N.Y. State Office for People with Developmental
Disabilities, No. 1:13–CV–740, 2014 WL 1202587, at *10 (N.D.N.Y. Mar.
24, 2014); Monsour v. N.Y. State Office for People with Developmental
Disabilities, No. 1:13–CV–0336, 2014 WL 975604, at *10-11 (N.D.N.Y.
Mar. 12, 2014). The Southern District recently considered this issue in
depth and they too joined “the overwhelming majority of courts, including
the Fifth Circuit, [that] have held that the current version of § 3730(h) does
not create a cause of action against supervisors sued in their individual
capacities.” Diffley v. Bostwick, 17-CV-1410, slip op. at 4 (S.D.N.Y. Dec.
6, 2017). Therefore, in an effort to promote consistency within this district
and for the reasons cited by defendants, (Dkt. No. 42 at 2-3), the court
grants defendants’ motion to the extent that it seeks dismissal of the FCA
retaliation claims against the Thurstons and Bennett.
Next, defendants urge the court to dismiss Rubar’s retaliation claim
against all defendants except Doyner because, in their view, the FCA
does not extend liability to a parent corporation and thus a claim can only
lie against Doyner—Rubar’s immediate “employer.” (Dkt. No. 30, Attach.
1 at 2-5; Dkt. No. 42 at 3-4.) Rubar argues that the court is free to pierce
the corporate veil in the FCA context using the alter ego doctrine and,
9

alternatively, that Hayner Hoyt maintained an “employment-like”
relationship with Rubar sufficient to fit within the scope of FCA liability.
(Dkt. No. 39 at 16-19.)
Given the high-level of control, commonality of ownership, and close
relationship between Hayner Hoyt and its subsidiaries, including Doyner,
(3d Am. Compl. ¶¶ 30-32), and other reasonable inferences that can be
drawn from this relationship, the court will not dismiss the retaliation claim
against Hayner Hoyt at this stage. However, Rubar does not allege facts
to demonstrate that either LeMoyne or 229 Constructors maintained a
similarly-situated relationship with him or level of control over him as an
employee. (See generally id.) Notably, Rubar also does not object to
defendants’ motion in this regard. (Dkt. No. 39 at 14-19.) Accordingly,
Rubar’s retaliation claim is dismissed as against 229 Constructors and
LeMoyne. See N.D.N.Y. L.R. 7.1(b)(3); Burns v. Trombly, 624 F. Supp. 2d
185, 197 (N.D.N.Y. 2008) (finding that a party’s failure to oppose a
properly-filed and sound motion is consent to the relief sought).
b.

Post-Employment Conduct

Defendants also seek dismissal of Rubar’s retaliation claim against

10

them to the extent that it relates to conduct occurring after Rubar was
terminated. (Dkt. No. 42 at 5.)
Although allegations consisting only of post-employment conduct
may not be actionable under FCA § 3730(h)(1), see Weslowski v. Zugibe,
14 F. Supp. 3d 295, 306 (S.D.N.Y. 2014) aff’d on alternative grounds, 626
F. App’x 20, 21 (2d Cir. 2015), the court is satisfied that Rubar has
sufficiently detailed conduct occurring before or at the time of his
termination to state an FCA retaliation claim. (3d Am. Compl. ¶¶ 40-43,
48.) Therefore, this portion of defendants’ motion is denied.
2.

IIED

Defendants also argue that the court should dismiss Rubar’s
common law claim for IIED because, as they posit, the complaint does not
contain allegations that satisfy the high standard of “extreme and
outrageous conduct,” (Dkt. No. 30, Attach. 1 at 5-8), or sufficient specifics
regarding the “severe emotional distress” Rubar suffered, (id. at 7), and
the alleged conduct falls within the ambit of Rubar’s defamation claim, (id.
at 8 n.2).
Indeed, the threshold for conduct that constitutes IIED is quite

11

demanding. See Murphy v. Am. Home Prods. Corp., 58 N.Y.2d 293, 303
(1983). However, the court finds that Rubar’s allegations demonstrate a
combination of public humiliation, threatening behavior, and other actions
contrary to public policy that is sufficiently “extreme and outrageous.”
See, e.g., Stuto v. Fleishman, 164 F.3d 820, 828-29 (2d Cir. 1999)
(collecting cases in which courts have sustained claims of IIED when a
collection of similar conduct was alleged). Additionally, Rubar has
sufficiently demonstrated plausible grounds to support a finding that he
suffered severe emotional distress. (3d Am. Compl. ¶¶ 88-91.) Lastly,
even assuming that claims are barred “where the conduct complained of
falls well within the ambit of other traditional tort liability,” Fischer v.
Maloney, 43 N.Y. 2d 553, 558 (1978), Rubar’s IIED claim does not fit
squarely within his other claims, which do not take into account the full
sequence of extreme and outrageous conduct or its byproducts.
Therefore, the portion of defendants’ motion pertaining to Rubar’s
IIED claim is denied.
3.

NIED

In addition to the legal elements shared with IIED, the tort of NIED is

12

generally “premised upon the breach of a duty owed to plaintiff which
either unreasonably endangers the plaintiff’s physical safety, or causes
the plaintiff to fear for his or her own safety.” Dawkins v. Williams, 413 F.
Supp. 2d 161, 179 (N.D.N.Y. 2006); see Mortise v. United States, 102
F.3d 693, 696 (2d Cir. 1996) (explaining that a plaintiff may establish NIED
under either a “bystander” or “direct duty” theory). Rubar seeks to recover
under a direct duty theory.6 Importantly, this duty must be specific to
Rubar and not some generalized, free-floating duty to society. See
Mortise, 102 F.3d at 696 (citing Johnson v. Jamaica Hosp., 62 N.Y.2d
523, 526-27(1984)).
Rubar alleges that “[d]efendants owed a special duty to [R]ubar as a
whistleblower.” (3d Am. Compl. ¶ 127.) Defendants argue that such an
assertion is insufficient to allege that Bennett owed him any special duty,
(Dkt. No. 30, Attach. 1 at 8-9), and that “any special duty [Rubar] alleges
he was owed by his employer could not exist after the conclusion of his
employment,” (id. at 9, n.3). Rubar tersely responds by arguing that

6

Because Rubar does not allege that he was a bystander who witnessed Bennett
crash into the car of a fellow employee, he can only recover if he “suffer[ed] an emotional
injury from defendant’s breach of a duty which unreasonably endangered h[is] own physical
safety.” Mortise, 102 F.3d at 696.

13

Bennett owed him “the duty of refraining from attempting to physically
harm him.” (Dkt. No. 39 at 24 n.10.)
First, Rubar’s claim that “[d]efendants owed a special duty to R[ubar]
as a whistleblower,” (3d Am. Compl. ¶ 127), is a legal conclusion that the
court is not bound to accept as true, see Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009). Rather, “[t]he question of the existence and scope of an
alleged tortfeasor’s duty is, in the first instance, a legal issue for the court
to resolve.” Alfaro v. Wal-Mart Stores, Inc., 210 F.3d 111, 114 (2d Cir.
2000) (internal quotation marks and citation omitted).
Rubar fails to adequately allege in his complaint, or argue in his
responsive papers, the existence of any post-termination duty that was
specifically owed to him by Doyner. Instead, the allegations merely
support the finding of “some amorphous, free-floating duty to society.”
Mortise, 102 F.3d at 696 (citing Johnson, 62 N.Y.2d at 526-27). As such,
to the extent that defendants had a specific duty while employing Rubar,
the alleged conduct occurring at or before the time of his termination, (3d
Am. Compl. ¶¶ 40-43, 48), was not “so outrageous in character, and so
extreme in degree, as to go beyond all possible bounds of decency, and to

14

be regarded as atrocious, and utterly intolerable in a civilized
community[.]” Murphy, 58 N.Y.2d at 303 (internal quotation marks and
citation omitted). For these reasons, Rubar’s NIED claim is dismissed in
its entirety.
4.

Tortious Interference with Contract

Under New York law, the elements of tortious interference with
contract are “(1) the existence of a valid contract between the plaintiff and
a third party; (2) the defendant’s knowledge of the contract; (3) the
defendant’s intentional procurement of the third-party’s breach of the
contract without justification; (4) actual breach of the contract; and (5)
damages resulting therefrom. Kirch v. Liberty Media Corp., 449 F.3d 388,
401 (2d Cir. 2006) (internal quotation marks and citation omitted).
Defendants argue that Rubar fails to allege defendants had
knowledge of any contract(s) between Rubar and a third-party or that any
contract was in fact breached. (Dkt. No. 30, Attach. 1 at 10-11.) Although
defendants’ knowledge may be reasonably inferred at this stage based on
the surrounding allegations, Rubar indeed fails to allege that a contract
was breached by a third-party. Instead, he merely states that, as a result

15

of defendants’ conduct, he was “forced to leave” and “lost his job at
[another company].” (3d Am. Compl ¶ 87.) Even if the court infers that
Rubar had an employment contract with this subsequent employer and
that it terminated him, (id. ¶¶ 83, 87), Rubar fails to allege that this
amounted to a contractual breach. Additionally, although Rubar alludes to
lost opportunities with subcontractors because of defendants’ conduct, (id.
¶¶ 84-86), he does not allege the existence of any specific contracts or
whether they were breached. Furthermore, Rubar does not respond to
this aspect of defendants’ argument in his opposition. (Dkt. No. 39 at 2425, 25 n.11.) As such, Rubar’s tortious interference with contract claim is
dismissed. See Burns, 624 F. Supp. 2d at 197.
5.

Tortious Interference with Prospective Business Relations

Similarly, defendants seek dismissal of Rubar’s tortious interference
with prospective business relations claim because “[Rubar] has failed to
allege any specific relationship with which any [d]efendant purportedly
interfered” or “that any [d]efendant had knowledge of any business
relationship that [Rubar] had with any specific third part[y.]” (Dkt. No. 30,
Attach. 1 at 11.) However, given that the court must draw all reasonable

16

inferences in favor of the non-moving party at this stage, Rubar’s
allegation that defendants interfered with his business relationship with
MCK Builders involving a masonry project, (3d Am. Compl. ¶ 86), is
enough for the court to deny defendants’ motion to dismiss this claim.
6.

Prima Facie Tort

Lastly, defendants argue that Rubar fails to plead special damages
with particularity, (Dkt. No. 30, Attach. 1 at 11-12), and a claim for prima
facie tort is inapplicable where another specified tort provides a remedy,
(Dkt. No. 42 at 10). However, these arguments fail because Rubar
sufficiently alleges that “on October 24, 2014, [d]efendant . . . informed a
client of [r]elator’s employer that it would not work with any company that
had any relation to [r]elator, which resulted in the loss of several hundred
thousand dollars.” (3d Am. Compl. ¶ 85.) This allegation alone cites lost
earnings in the amount of several hundred thousand dollars, see, e.g.,
Liberman v. Gelstein, 80 N.Y.2d 429, 434-35 (1992) (defining “special
damages” as “the loss of something having economic or pecuniary
value”), caused by defendants’ otherwise lawful conduct that is not
contained within the scope of a traditional tort, cf. Freihofer v. Hearst

17

Corp., 65 N.Y.2d 135, 142-43 (1985). As such, Rubar’s claim survives
dismissal at this stage.
7.

Settlement of Claims

Defendants note that their motion to dismiss the FCA claims
covered by the settlement agreement is premature. (Dkt. No. 32.)
Although the court takes notice of the settlement agreement regarding
Rubar’s first three claims, (Dkt. No. 12, Attach. 1), it will not take action on
these claims until it receives written confirmation from the United States
that it is in receipt of the full settlement payment, (id. at 17 ¶ 12). As
such, defendants’ motion to dismiss these claims, (Dkt. No. 30, Attach. 1
at 2), is denied with leave to renew.
B.

Attorney’s Fees and Costs
Since May 15, 2014, Rubar has been primarily represented by

attorneys Raphael Katz7 and Robert Sadowksi,8 who were aided by an

7

Katz is a partner with a decade of experience in all phases of qui tam litigation who
has successfully represented relators in numerous FCA cases. (Dkt. No. 31, Attach. 2 ¶¶ 1819.)
8

Sadowski is a partner and experienced litigator of nearly three decades who
previously supervised “the investigation, litigation[,] and settlement of fraud prosecutions under
the [FCA]” in his role as Health Care Fraud Coordinator in the United States Attorney’s Office
for the Southern District of New York. (Dkt. No. 31, Attach. 2 ¶ 19(a.))

18

associate, Michael DeRienzo, and support staff, Javier Santiago and
Klaudia Chudzik.9 (Dkt. No. 31, Attach. 1 at 2; Attach. 2 ¶¶ 6, 12, 20.)
Rubar’s attorneys request $387,460.00 in attorneys’ fees and $2,458.35 in
costs and expenses for the work performed on the portion of the qui tam
action that settled on March 11, 2016. (Dkt. No. 31, Attach. 1 at 2; Attach.
2 at 10-23; Dkt. No. 12, Attach. 1.) Defendants readily concede that
Rubar is entitled to attorneys’ fees, (Dkt. No. 37, Attach. 1 at 15), but
dispute the reasonableness of Rubar’s requested rates and number of
hours claimed, (id. at 5-25).10
Under the FCA, a relator who brings a successful qui tam lawsuit is
entitled to attorneys’ fees. See United States ex rel. Keshner v. Nursing

9

Rubar notes that, although attorneys from Sadowski Fischer PLLC originally
represented Rubar, “some incarnation” of Sadowski Katz LLP has been Rubar’s counsel since
the inception of this case. (Dkt. No. 31, Attach. 2 ¶ 3 & n.1.) As such, even though Rubar
divides invoices by firm, pinning down exactly which firm was representing Rubar when is
immaterial to the court’s analysis.
10

The only associated cost that defendants contest is the $775.00 process server fee
because Rubar “never requested that [d]efendants waive service of the complaint . . . [and] did
not provide the notice required by [Fed. R. Civ. P.] 4(d) before engaging in a process server to
serve the complaint.” (Dkt. No. 37, Attach. 1 at 24.) Although Rule 4(d) does allow a party to
recover costs associated with service of process when an opposing party fails to waive
service, Rubar seeks costs under the FCA, not pursuant to this rule. However, for the same
economical reasons underlying Rule 4(d), Rubar should have given defendants the opportunity
to avoid this expense. Therefore, the court reduces this expense by 50% to reflect both
Rubar’s unreasonableness and the uncertainty surrounding whether defendants would have
actually agreed to such a request. As such, Rubar is awarded $2,070.85 in costs and
expenses.

19

Pers. Home Care, 794 F.3d 232, 237 (2d Cir. 2015) (citing 31 U.S.C.
§ 3730(d)(1)). To determine a reasonable amount of attorneys’ fees,
courts use the lodestar method—the product of a reasonable hourly rate
and the hours reasonably spent on the case. See Millea v. Metro-North
R.R. Co., 658 F.3d 154, 166 (2d Cir. 2011); Miller v. City of Ithaca, No.
310-cv-597, 2017 WL 61947, at *2 (N.D.N.Y. Jan. 5, 2017). Generally,
the district court relies on the prevailing hourly rate from the district in
which it sits in calculating the lodestar. See Arbor Hill Concerned Citizens
Neighborhood Ass’n v. Cty. of Albany & Albany Cty. Bd. of Elections, 522
F.3d 182, 191 (2d Cir. 2008). However, “a district court may use . . . some
rate in between the out-of-district rate sought and the rates charged by
local attorneys . . . in calculating the presumptively reasonable fee if it is
clear that a reasonable, paying client would have paid those higher rates.”
Id.; see Bergerson v. N.Y. State Office of Mental Health, 652 F.3d 277,
289-90 (2d Cir. 2011). In determining what a reasonable client would be
willing to pay, the court considers several factors, including:
the complexity and difficulty of the case, the available expertise
and capacity of the client’s other counsel (if any), the resources
required to prosecute the case effectively (taking account of the
resources being marshaled on the other side but not endorsing
scorched earth tactics), the timing demands of the case, whether
20

an attorney might have an interest (independent of that of his
client) in achieving the ends of the litigation or might initiate the
representation himself, . . . and other returns (such as reputation,
etc.) that an attorney might expect from the representation.
Arbor Hill, 522 F.3d at 184.
Additionally, a district court may use a percentage deduction of the
requested fees “as a practical means of trimming fat from a fee
application[.]” McDonald ex rel Prendergast v. Pension Plan of the
NYSA-ILA Pension Tr. Fund, 450 F.3d 91, 96 (2d Cir. 2006) (internal
quotation marks and citation omitted). In determining the appropriate fee,
district courts have substantial deference and may use estimates based
on their overall sense of a suit. See Fox v. Vice, 563 U.S. 826, 838 (2011)
(“The essential goal in shifting fees . . . is to do rough justice, not to
achieve auditing perfection.”).
The court agrees with defendants that it would be unreasonable to
award attorneys’ fees at a rate common to New York City11—primarily
because the FCA is relatively straightforward, there are firms within this
district capable of handling such matters and obtaining similar results, and

11

Rubar’s counsel requests $850.00 and $650.00 per hour for Sadowski and Katz,
respectively. (Dkt. No. 31, Attach. 1 at 13-14; Attach. 2 ¶ 17.)

21

the FCA provides an incentive to take on a client given the prospect of
receiving a percentage of any award recovered by the government.12
However, the Northern District cases cited by defendants, (Dkt. No. 37,
Attach. 1 at 16-17), are somewhat outdated and do not reflect the
prevailing District rates. Instead, Rubar’s alternative request for $375.00
per hour, (Dkt. No. 31, Attach. 1 at 16), is well within the reasonable range
for partners and the most experienced attorneys, and the in-District
average is $280.00 per hour for less-experienced associates, and $150.00
per hour for paralegals.
Given Katz and Sadowski’s specialized expertise in FCA cases, the
length of time spent on the case, the amount involved in the case, and the
results obtained (for both Rubar as well as the United States), an award of
attorneys’ fees at the higher end of the prevailing District rate is
reasonable. Therefore, a reasonable, paying client seeking attorney
services would be willing to pay an hourly rate of $450.00 for Sadowski,
$400.00 for Katz, $280.00 for DeRienzo, and $150.00 for support staff.
Given the degree of vagueness in the annexed invoice entries, as

12

Here, for instance, Rubar will receive approximately $875,000.00 from the settled
claims. (Dkt. No. 12, Attach. 1 ¶¶ 1-2.)

22

highlighted by defendants, (Dkt. No. 37, Attach. 1 at 22-23), an acrossthe-board reduction of 10% is appropriate to accurately reflect the hours
allotted to the portion of Rubar’s FCA claims that settled.13 See Berkshire
Bank v. Tedeschi, No. 1:11–CV–0767, 2015 WL 235848, at *5 (N.D.N.Y.
Jan. 16, 2015), aff’d, 646 F. App’x 12 (2d Cir. 2016); Dotson v. City of
Syracuse, No. 5:04–CV–1388, 2012 WL 4491095, at *6 (N.D.N.Y. Sept.
28, 2012). Additionally, the court agrees with defendants, (Dkt. No. 37,
Attach. 1 at 21-22), that any travel time sought to be reimbursed by
Rubar’s counsel is appropriately reduced by 50%. See Skerritt v. County
of Greene, No. 1:13–CV–663, 2015 WL 5823984, at *3 (N.D.N.Y. Oct. 6,
2015); Clark v. Phillips, 965 F.Supp. 331, 336 (N.D.N.Y. 1997). As such,
Rubar’s requested travel time is reduced to 10.6 hours for Katz and 5.5
hours for Sadowski. (Dkt. No. 37, Attach. 2 at 24-25.)
Accordingly, a reasonable number of hours worked are as follows:

13

Defendants argue that various invoice entries should be specifically excluded
because they are associated with Rubar’s still-pending claims. (Dkt. No. 37, Attach. 1 at 1920.) However, the court finds that these entries appear to be sufficiently related to the
successfully-settled claims, see Quaratino v. Tiffany & Co., 166 F.3d 422, 425, 428 (2d Cir.
1999), and, to the extent the court is unable to decide if vague entries are sufficiently related to
the applicable claims, the 10% reduction provides an adequate remedy. Furthermore, the
court disagrees with defendants’ contention that all time entries purportedly related to Rubar’s
entitlement to an award under the FCA and clerical tasks must be excluded. (Dkt. No. 37,
Attach. 1 at 20-21.) In any event, the across-the-board reduction of 10% adequately
addresses these entries as well.

23

93.1 hours for Sadowski (98.6 hours less the 5.5 hour travel reduction),
420.4 hours for Katz (431 hours less the 10.6 hour travel reduction), 50.0
hours for DeRienzo, 30.0 hours for Santiago, and 5.0 hours for Chudzik.
(Dkt. No. 31, Attach. 2 at 8.) As such, the total amount of attorneys’ fees
are $41,895.00 for Sadowski ($450.00 x 93.1), $168,160.00 for Katz
($400.00 x 420.4), $14,000.00 for DeRienzo ($280.00 x 50.0), and
$5,250.00 for support staff ($150 x 35.0). After a 10% reduction
($22,930.50), the reasonable amount of attorneys’ fees awarded is
$206,374.50.
Thus, the court awards Rubar $206,374.50 in attorneys’ fees and
$2,070.85 in costs and expenses for a grand total of $208,445.35.
C.

Motion to Intervene
Defendants’ counterclaims seek to recover damages arising from

Rubar’s fraudulent conduct while Doyner employed him. (Dkt. No. 53 at
26-41.) Hayner Hoyt reported these losses and accordingly Doyner
recovered $246,127.22 under an indemnity agreement with Travelers.
(Dkt. No. 65, Attach. 2 ¶¶ 5, 13-16.) Travelers14 now seeks to intervene in
14

In its reply, intervenor’s counsel asserts that “[t]he proposed [i]ntervenor is The
Charter Oak Fire Insurance Company [(Charter Oak)], which is an affiliate of [Travelers] and

24

this action, pursuant to Fed. R. Civ. P. 24(a), to assert its subrogation and
reimbursement rights which are specifically provided for in the agreement.
(Dkt. No. 65, Attach. 6. at 1-2, Attach. 2 at 4.) Rubar objects to Travelers’
motion on the grounds that it is untimely, (Dkt. No. 66 at 5-7), and the
third-party’s interests are adequately represented by existing parties, (id.
at 7-10).
Pursuant to Fed. R. Civ. P. 24(a)(2),
[1] [o]n timely motion, the court must permit anyone to intervene
who . . . [2] claims an interest relating to the property or
transaction that is the subject of the action, [3] and is so situated
that disposing of the action may as a practical matter impair or
impede the movant’s ability to protect its interest, [4] unless
existing parties adequately represent that interest.
Despite Rubar’s contention that Travelers’ interest is adequately
represented by existing parties because they share the same counsel,
(Dkt. No. 66 at 7-8) (citing Carroll v. Am. Fed’n of Musicians of U. S. &
Canada, 33 F.R.D. 353, 353 (S.D.N.Y. 1963)), Travelers’ has

an underwriting company for Travelers. (Dkt. No. 69 at 1, n.1.) In fact, the reply opens by
stating “Charter Oak. . . respectfully submits this [r]eply . . . in further support of its [m]otion to
[i]ntervene in this acton to assert its subrogation and reimbursement rights.” (Id. at 1.)
(emphases added). To add to the confusion, the reply concludes by stating that “Travelers
respectfully requests that the [c]ourt grant its motion to intervene.” (Id. at 5.) (emphasis
added). Given that the motion pending before the court was submitted by Travelers, (Dkt. No.
65, Attach. 6), the court refers to Travelers as the proposed intervenor, and directs counsel to
do the same.

25

demonstrated an unparalleled interest in recovering the amount that they
disbursed under the indemnity agreement due to Rubar’s alleged conduct,
(Dkt. No. 65, Attach. 6 at 6-7). Rubar himself admits that “[Travelers’] and
[d]efendants’ interest[s] are potentially adverse.” (Dkt. No. 66 at 8.)
Furthermore, Travelers, as the insurer who has disbursed a
reimbursement, and Doyner, as the insured who collected the
reimbursement, are so situated that the ability to protect this interest may
be impaired by denying intervention. See N.Y. Pub. Interest Research
Grp., Inc. v. Regents of Univ. of State of N.Y., 516 F.2d 350, 352 (2d Cir.
1975) (finding that the stare decisis effect of an adverse decision should
not be ignored when deciding whether to permit intervention). Thus, the
issue boils down to timeliness.
A determination on timeliness resides within the court’s sound
discretion and requires it to consider the following factors: “‘(1) how long
the applicant had notice of the interest before it made the motion to
intervene; (2) prejudice to existing parties resulting from any delay; (3)
prejudice to the applicant if the motion is denied; and (4) any unusual
circumstances militating for or against a finding of timeliness.’” Ley v.
Novelis Corp., No. 5:14–cv–775, 2014 WL 3735720, at *2 (N.D.N.Y. July
26

29, 2014) (quoting United States v. Pitney Bowes, Inc., 25 F.3d 66, 70 (2d
Cir.1994)).
First, the motion to intervene was filed on January 3, 2017, within
four months of the filing of counterclaims in this matter. (Dkt. No. 53; Dkt.
No. 65.) As Rubar himself points out, the statute of limitations on the
proposed intervenor’s claim extended until at least January 23, 2017.
(Dkt. No. 66 at 6.) Although the statute of limitations has now lapsed, it
would be unjust to penalize proposed intervenor for a factor beyond their
control, such as a court’s deliberate consideration of their timely-filed
motion and proposed complaint. See U.S. for Use & Benefit of Canion v.
Randall & Blake, 817 F.2d 1188, 1192 (5th Cir. 1987) (“Once the party
seeking intervention has filed its motion to intervene with its proposed
complaint, it has done all it can do, in a timely sense, to commence its
action.”); Sec. & Exch. Comm’n v. Keller Bros. Sec. Co., 30 F.R.D. 532,
533-34 (D. Mass. 1962). Most importantly, the existing parties would not
be prejudiced by allowing the proposed intervenor to seek an assertion of
its subrogation rights in this matter as discovery is still ongoing and the
conduct that is the subject of proposed intervenor’s claims is already at
the forefront of this litigation.
27

As such, Travelers’ motion to intervene is granted. Travelers is
directed to file its complaint in intervention, (Dkt. No. 65, Attach. 2), on or
before February 8, 2018.
IV. Conclusion
WHEREFORE, for the foregoing reasons, it is hereby
ORDERED that defendants’ motion to dismiss (Dkt. No. 30) is
GRANTED IN PART and DENIED IN PART as follows:
GRANTED with respect to the FCA retaliation claim (fourth
claim) as against Gary Thurston, Jeremy Thurston, Ralph
Bennett, LeMoyne Interiors, and 229 Constructors, LLC, the
NIED claim (seventh claim) as against all defendants, and the
tortious interference with contract claim (ninth claim) as
against all defendants; and
DENIED in all other respects; and it is further
ORDERED that defendants shall file an appropriate responsive
pleading within the time allotted by the rules; and it is further
ORDERED that Rubar’s motion for attorneys’ fees, costs, and

28

expenses (Dkt. No. 31) is GRANTED IN PART and DENIED IN PART as
follows:
GRANTED to the extent that attorneys’ fees in the amount of
$206,374.50 and costs and expenses in the amount of
$2,070.85 are imposed against defendants; and
DENIED in all other respects; and it is further
ORDERED that Travelers’ motion to intervene (Dkt. No. 65) is
GRANTED and Travelers shall file its pleading on or before February 8,
2018; and it is further
ORDERED that the parties shall contact Magistrate Judge Hummel
to schedule further proceedings in accordance with this order; and it is
further
ORDERED that the Clerk provide a copy of this MemorandumDecision and Order to the parties.
IT IS SO ORDERED.
January 25, 2018
Albany, New York

29