PHILIP R. MARTINEZ, District Judge.
On this day, the Court considered the following pleadings filed in the above-captioned cause: Defendants Fresenius Medical Care North America and Larry Ramirez's (Fresenius Defendants)
After due consideration, the Court is of the opinion that it should sustain in part and deny in part the Relator's objections to the bills of costs of Fresenius Defendants and Chavez; grant in part and deny in part Fresenius Defendants' motion for attorney's fees; and deny Chavez's motion for attorney's fees in this matter for the reasons explained below.
On September 26, 2006, Relator filed a sealed complaint against Fresenius and Chavez, and on behalf of the United States of America (the United States, or the Government), alleging violations of the False Claims Act. On November 21, 2007, the Government informed the Court that it had elected not to intervene in the action. Docket No. 20, Cause No. 06-CV-336-PRM. On December 19, 2007, the Court unsealed the case pursuant to Relator's motion. Docket No. 25, Cause No. 06-CV-336-PRM. Meanwhile, on July 10, 2007, Relator filed a sealed complaint against Fresenius, Chavez, and Larry Ramirez
The Fresenius Defendants and Chavez each filed motions to dismiss. Docket Nos. 26, 36. On September 2, 2008, the Court dismissed Relator's common law claims of payment by mistake and unjust enrichment for lack of standing, and Relator's retaliation claims against Ramirez. "Order Granting in Part and Denying in Part Defendants' Motions to Dismiss," Docket No. 64. The parties continued to conduct extensive discovery and filed a number of discovery-related motions, which the Court referred to a United States Magistrate Judge for disposition.
On June 5, 2009, Relator submitted her Fourth Amended Complaint. Docket No. 180. On June 17, 2009 and June 19, 2009, respectively, the Fresenius Defendants and Chavez filed substantively identical motions to dismiss portions of the Fourth Amended Complaint (Docket Nos. 188, 201), which the Court granted in their entirety on January 21, 2010 (Docket No. 408). In granting the motions to dismiss, the Court dismissed two causes of action and determined that a six-year statute of limitations applied. Docket No. 408.
Relator, Fresenius, and Chavez also each filed motions for summary judgment, and related evidentiary motions pertaining to certain affidavits and expert testimony. See Docket Nos. 125, 155, 156, 161, 190, 224, 228, 257, 320. The Court subsequently excluded the testimony of two of Relator's experts, computational linguist Jason Baldridge and nephrologist Kenneth Kokko, and limited the scope of the testimony of two other experts, Jean Bishop, a specialist on health care fraud, and Peggy Knudsen, a registered nurse and dialysis facility consultant. See Trial Record; Docket Nos. 413, 414, 454, 455, 456, 457; Text Orders of Feb. 20, 2010.
On February 1, 2010, a jury having been empaneled, the case proceeded to trial, and Relator presented evidence in support of her claims over the course of three weeks
On February 25, 2010, the jury rendered a verdict in favor of defendants. Docket No. 453. On March 31, 2010, the Court entered final judgment in favor of defendants and against Relator on all counts. Docket No. 459. The bills of costs and motions for attorneys' fees that form the subject of the instant order followed.
Federal Rule of Civil Procedure 54(d)(1) states that "[u]nless a federal statute, these rules, or a court order provides otherwise, costs—other than attorney's fees— should be allowed to the prevailing party."
"[D]istrict courts have broad discretion in taxing costs of court." Alberti v. Klevenhagen, 46 F.3d 1347, 1358 (5th Cir. 1995). However, Section 1920 of Title 28 imposes some limitations on the district court's discretion to tax costs. Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 441-42, 107 S.Ct. 2494, 96 L.Ed.2d 385 (1987). "Section 1920 enumerates expenses that a federal court may tax as a cost under the discretionary authority found in Rule 54(d)." Id. Under § 1920, taxable costs include clerk fees, fees for printed or electronically recorded transcripts necessarily obtained for use in the case, fees and disbursements for printing and witnesses, and fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case, among other things. 28 U.S.C. § 1920.
The prevailing party must demonstrate that its costs are recoverable under Fifth Circuit precedent, and "the prevailing party should not burden the Court with costs that are clearly not recoverable under the law." Maurice Mitchell Innovations, L.P. v. Intel Corp., 491 F.Supp.2d 684, 686 (E.D.Tex.2007).
Section 3730 of Title 31 permits the prevailing defendant in a False Claims Act case to recover attorney's fees:
31 U.S.C. § 3730(d)(4). "[T]he award of fees under the false claims act is reserved for rare and special circumstances." United States ex rel. Rafizadeh v. Continental Common, Inc., 553 F.3d 869, 875 (5th Cir. 2008) (quoting Pfingston v. Ronan Eng'g Co., 284 F.3d 999, 1006-1007 (9th Cir. 2002)).
A finding of any one of the three conditions listed—the action was clearly frivolous, clearly vexatious, or brought primarily for the purposes of harassment—is sufficient for an award of attorney's fees. Mikes v. Straus, 274 F.3d 687, 704-705 (2d Cir.2001). An action is "clearly frivolous" when it has no arguable support in existing law, nor any reasonably based suggestion for its extension, modification, or reversal. See Rafizadeh, 553 F.3d at 875; Farguson v. MBank Houston, N.A., 808 F.2d 358, 359 (5th Cir.1986). An action is "clearly vexatious" or "brought primarily for purposes of harassment" when "the plaintiff
In addition to § 3730(d)(4), the defendants argue that an award of attorneys' fees is appropriate in this case based upon 28 U.S.C. § 1927. Under that statute, an attorney may be held personally responsible for the prevailing party's attorneys fees under certain circumstances:
28 U.S.C. § 1927.
Sanctions under § 1927 are punitive in nature and require evidence of "bad faith, improper motive, or reckless disregard of the duty owed to the court." Edwards v. Gen. Motors Corp., 153 F.3d 242, 246 (5th Cir.1998). "To shift the entire cost of defense, the claimant must prove, by clear and convincing evidence, that every facet of the litigation was patently meritless, . . . and counsel must have lacked a reason to file the suit and must wrongfully have persisted in its prosecution through discovery, pre-trial motions, and trial." Procter & Gamble Co. v. Amway Corp., 280 F.3d 519, 525 (5th Cir. 2002).
"The district court must make detailed factual findings when imposing large sanctions in a complex case with an extensive record." Id. at 526. Section 1927 "authorizes awards only for actual fees and costs which proscribed conduct has caused" and a "district court must . . . determine the excess fees and costs incurred by the opponents" in meeting unreasonable and vexatious conduct. Browning v. Kramer, 931 F.2d 340, 346 (5th Cir.1991).
The Fresenius Defendants submitted a bill of costs in the amount of $81,923.18. Chavez requested reimbursement for costs in the amount of $33,301.86.
"[P]revailing parties are entitled to recover the costs of original depositions and copies" under § 1920 "provided they were `necessarily obtained for use in the case.'" Fogleman v. ARAMCO, 920 F.2d 278, 285 (5th Cir.1991). "[A] deposition need not be introduced into evidence at trial in order to be `necessarily obtained for use in the case.'" Id.
Relator apparently concedes that the defendants are entitled to their respective costs for the original depositions. That is, Relator does not contest that the taking of each deposition listed by the defendants was necessary for use in the case. Indeed, the majority of the individuals deposed eventually testified at trial. Those few who did not testify either appeared on
Relator opposes only the additional deposition-related charges for the video recording of several depositions, production of rough ASCII transcripts of depositions, and, with respect to Chavez, shipping costs. The Court's analysis will therefore be limited to the question of whether video depositions, ASCII transcripts (and other electronic versions of depositions), and shipping costs are recoverable and whether they were necessary for use in the case.
Video depositions were taken for several, but not all witnesses in this case. Fresenius Defendants did play portions of video depositions on several occasions during the trial for purposes of impeachment, including the cross examination of Relator and the expert witness Jean Bishop. The Court finds that video depositions may be recoverable costs, see § 1920(2); S & D Trading Academy, LLC v. AAFIS, Inc., 336 Fed.Appx. 443 (5th Cir.2009), but that the video depositions were not necessary for use in the case, with the exception of the depositions of Relator herself. Ordinary deposition transcripts were adequate for trial preparation and for use at trial for most witnesses. The video depositions of Relator only were necessary for use in the case because her allegations, and thus her credibility, were central to the merits of her case. Relator's depositions, including the video, played an important role in the cross examination of Relator which in turn proved essential to Fresenius Defendants' successful motions for judgment as a matter of law on the retaliation case. Therefore, the defendants are entitled to recover video deposition costs
There is some debate as to whether costs for various kinds of electronic versions of depositions are recoverable. See Kellogg Brown & Root Intern., Inc. v. Altanmia Commercial Marketing Co. W.L.L., No. H-07-2684, 2009 WL 1457632 at *4-*5 (S.D.Tex. May 26, 2009) (summarizing cases). In this case, Fresenius Defendants request costs for ASCII discs, and Chavez requests costs for "E-Transcripts" and "scrunch" copies of a selected number of depositions. Whether or not these costs are recoverable as a matter of law under § 1920, the defendants have not shown that the electronic or modified versions of depositions were necessary for use in this case. While these resources were undoubtedly useful in the drafting of motions and preparation for trial, the Court finds that they were primarily a convenience to the parties and costs will not be taxed for ASCII, "E-Transcripts," or "scrunch."
Finally, the Court finds that any costs associated with shipping of depositions are not recoverable under § 1920, and thus costs billed by Chavez for shipping of depositions shall not be taxed against Relator. See, e.g., Longo v. Chao, No. EP-06-CV-307-KC, 2008 WL 2783509, at *4 (W.D.Tex. July 8, 2008) (Cardone, J.).
The Relator does not object to the award of costs for the copying of trial
With respect to Chavez, however, the invoice for copies includes the following items: "Copy Services—Color Blowbacks" (at 65 cents per page); "Document Prep, Imaging, and Reconstruction" in both black and white and color (at 18 and 65 cents per page respectively), "DVD Creation" (at $30.00 per DVD), and project and data management (for a combined $95.00). The Court finds that these items were not necessarily obtained for use in the case and cannot be taxed as costs against Relator.
In sum, the Fresenius Defendants are entitled to costs of copying from Relator as requested ($2,902.92), while Chavez is entitled to costs itemized for basic, black and white copying only ($6,265.42).
"To award the cost of daily transcripts, the court must find that they were not obtained primarily for the convenience of the parties but were necessarily obtained for use in this case." Studienge-sellschaft Kohle mbH v. Eastman Kodak Co., 713 F.2d 128, 133 (5th Cir.1983). A finding of necessity is a factual finding. Id. (citing United States v. Kolesar, 313 F.2d 835, 839 (5th Cir.1963)). It is not an abuse of discretion to decline to tax the costs of daily trial transcripts obtained primarily for the convenience of counsel. Brumley Estate v. Iowa Beef Processors, Inc., 704 F.2d 1362, 1363-64 (5th Cir.1983).
The Court acknowledges that Fresenius Defendants used the daily transcripts effectively in several stages of the trial, including cross-examination, the motion for judgment as a matter of law, and closing argument. The Court nevertheless finds that the daily transcripts were a convenience to Fresenius Defendants and not necessary to their defense of the case. Fresenius Defendants had a large team of able attorneys and legal support staff that could take notes during the course of the trial on the testimony of witnesses and the rulings of the Court. The trial was relatively lengthy and complex, but not to a degree where daily transcripts were required to present a defense. Rather, daily transcripts were primarily for the convenience of Fresenius Defendants. Therefore, the Court will sustain Relator's objections to the taxing of costs for daily transcripts.
Local Rule CV-7(i) imposes certain requirements for motions for attorney's fees. Among other things, the rule mandates that (a) counsel for the parties meet and confer to attempt to resolve disputed issues related to attorney's fees, and that a motion for attorney's fees should certify that such a conference has occurred and its outcome; (b) the party submit detailed supporting documents and an affidavit certifying the reasonableness and veracity of the claimed hours and rates; and (c) the party submit a memo setting forth the method for the computation of fees with citation to authority.
Neither the Fresenius Defendants nor Chavez complied with Local Rule CV-7(i)
The Court finds that the defendants' procedural failures do not preclude review of their motions on the merits, nor do they require the Court to deny the motions. While careful attention to and thorough compliance with local rules is critical to successful practice in the Court, and while motions may be struck for failure to comply with local rules, the purposes of Local Rule CV-7(i) were achieved here. Exhibits submitted in connection with the motions reveal that, at some point, some emails were exchanged between the parties on the subject, demonstrating that they conferred in a limited, informal way.
Local Rule CV-1(e) provides that "[a]ny judge of this Court may waive any requirement of these rules regarding the administration of that judge's specific docket." The Court finds that a waiver of the specific obligations of Local Rule C7(i) is appropriate in this case under the circumstances.
The Court begins by noting that Relator does not dispute the amount or reasonableness of the attorney's fees as outlined by Fresenius Defendants in their motion.
Fresenius Defendants request from Relator the attorney's fees incurred in defending the retaliation portion of the case only, which represented a relatively small and contained portion of the litigation as a whole. Fresenius Defendants claim that Relator "pursued her retaliation case for years when she knew the core allegation. . . was false," and that they are entitled to fees from Relator pursuant to § 3730 or
Although the parties do not address the question, the Court harbors reservations as to whether it may order payment of attorney's fees on the retaliation case alone under § 3730. The Court can locate no case that orders payment of attorney's fees to a defendant in a False Claims Act retaliation action without simultaneously ordering attorney's fees for the defense of FCA case itself. That is, no court has awarded attorney's fees for the defense of a retaliation case without a finding that the accompanying False Claims Act claim (which generally dominates the litigation) was clearly frivolous, clearly vexatious, or brought primarily for the purposes of harassment.
The Court need not address this issue, however, because it will find instead that Fresenius Defendants are entitled to a portion of the attorney's fees requested for the retaliation action from Relator's counsel
The Court makes the following findings in support of this conclusion:
(1) The retaliation complaint in this action included allegations that Relator was constructively discharged and subjected to intentional infliction of emotional distress. The allegations relied heavily for their factual basis on a letter that Relator wrote to Larry Ramirez, dated July 3, 2007,
(2) On September 2, 2008, the Court denied Fresenius Defendants' motion to dismiss the retaliation claims because Relator had alleged that Ramirez directed her to aid in Fresenius's efforts to conceal Medicare fraud and that she refused to do so, allegedly resulting in adverse employment actions. Docket No. 64 (Order Granting in Part and Denying in Part Defendants' Motions to Dismiss) at 19.
(3) During her first deposition, on November 5, 2008, Relator answered questions regarding the July 3 letter and the alleged retaliatory actions taken against her at Fresenius Medical Care, North America. She responded "no" to the question "Were you ever asked to lie to Medicare auditors?" Fresenius Defs.' Mot. for Att'ys' Fees, Ex. C (Gonzalez Dep., Nov. 5, 2008). She responded "no" to the question "Did anybody ever tell you that it was a requirement of your job to lie to Medicare auditors about anything?" Id. She responded "no" to the question "Did you ever view it as a requirement of your job to lie to Medicare auditors?" Id.
(4) On December 14, 2008, following the first deposition of Relator, counsel for Relator submitted an errata sheet containing 101 substantive corrections, a number of which pertained to the retaliation allegations, among other things. For example, the answer to the question: "Did you ever have the feeling that somebody at Fresenius wanted you to hide anything about Devora seeing patients, dictating medical records, or writing progress notes for Medicare auditors?" was changed from "no" to "yes". Fresenius Defs.' Mot. for Att'ys' Fees 5.
(5) On March 12, 2009, in Relator's second deposition, she confirmed the accuracy of portions of her July 3 letter. Fresenius Defs.' Mot. for Att'ys' Fees, Ex. B (Gonzalez Dep., Mar. 12, 2009).
(6) At trial, Relator testified under cross examination that her attorney, Attorney Stanton, assisted her in preparing the July 3 letter. Trial Tr. 146, Feb. 18, 2010 (Vol. 10). She also stated in her trial testimony, consistent with her first deposition, that several of the critical assertions in the July 3 letter were not accurate:
Trial Tr. 148-149, Feb. 18, 2010 (Vol. 10).
(7) At trial, Relator further testified that she and Attorney Stanton "worked together" on the errata, and that her attorney's assistance included "literally wording [the] changes" to her earlier sworn deposition answers. Trial Tr. 160, 161, Feb. 18, 2010 (Vol. 10).
(8) At trial, counsel for Relator elected not to call Larry Ramirez to testify in the case-in-chief (on the False Claims Act or retaliation counts). However, Larry Ramirez was named as a defendant in the retaliation complaint and he was the central figure alleged to have engaged in retaliatory conduct against Relator.
Based on these specific factual findings, and reasonable inferences therefrom, the Court finds by clear and convincing evidence that counsel for Relator unreasonably and vexatiously multiplied the proceedings when he submitted the errata sheet for Relator's deposition and continued to prosecute the retaliation case through trial. In the absence of convincing evidence to the contrary, the Court presumes good faith mistake
The Court infers, from the testimony and the facts as found, an improper motive on the part of Relator's counsel in pursing the retaliation action following the submission of the errata sheet. The alterations to the deposition testimony, which were contradicted by Relator at trial, went to the very heart of the retaliation complaint. This is critical to the finding that the pursuit of the retaliation complaint
Relator's argument that counsel's actions do not merit sanction because the retaliation case proceeded to trial is not well taken. First, some claims in the retaliation claim were in fact dismissed from the case at a very early stage. See Order Granting in Part and Denying in Part Defendants' Motions to Dismiss (Docket No. 64). Second, the remainder of the claims survived the motion to dismiss stage because the Court was obligated to assume the truth of the allegations in the complaint. See Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir.2007). Counsel for Relator made allegations, presumably in good faith, at the pleading stage, but vexatiously bolstered and pursued those claims at later stages of discovery and through trial.
In sum, counsel for Relator manufactured deposition responses for their client, without regard to their truth, in order to push the retaliation case toward trial. Once at trial, they pursued the claims without offering any plausible evidence. Instead, Relator's testimony revealed that the claims had no basis in fact. Counsel's conduct caused many individuals to needlessly expend significant amounts of time, resources, and energy. Hence, the Court finds that the conduct is sanctionable.
Chavez contends that Relator had no basis for the False Claims Act claims against him because the scienter element of the statute requires proof of a "knowing" violation of law, but Relator repeatedly testified that Chavez was an honest person and never intentionally did anything wrong. Chavez's Mot. For Atty's' Fees 1. In her response, Relator disputes the issue of Chavez's entitlement to fees as well as the sufficiency of the documentation supporting the reasonableness of the fees.
The Court finds that Chavez is not entitled to attorney's fees because the False Claims Act action against him was not clearly frivolous, clearly vexatious, or brought primarily for the purposes of harassment under § 3730(d)(4), nor did counsel for Relator unreasonably and vexatiously multiply the proceeding for purposes of § 1927 sanctions. While ultimately not successful, Relator did have a sufficient basis to pursue the False Claims Act case against Chavez. The Court, having had the opportunity to see and hear all the summary judgment evidence and trial evidence in this case, concludes that Relator had a reasonable basis for her allegations.
The Court is mindful that direct evidence of an actor's mental state is rare, and that fact-finders generally rely on circumstantial evidence and reasonable inferences in False Claims Act cases. See generally United States ex rel. Taylor-Vick v. Smith, 513 F.3d 228 (5th Cir.2008). In
For similar reasons, the Court declines to hold counsel for Relator personally responsible for the attorney's fees incurred by Chavez. Counsel did not unreasonably and vexatiously multiply the proceedings on the False Claims Act against Chavez.
On April 9, 2002, the Court affirmed an order for sanctions issued by a United States Magistrate Judge against Relator. See Docket Nos. 103, 131. The order required Relator to pay for costs and fees associated with her re-deposition in light of the errata sheets submitted. See Docket No. 103. As of this date, the sanctions order has not been amended, withdrawn, stayed, or appealed and therefore stands as a binding order of the Court. Relator "acknowledges that the prior sanctions award pertaining to her deposition remains outstanding." She does not dispute the amount identified by Fresenius Defendants in fees and costs ($2,734.00)
Given for foregoing analysis, the Court finds that Relator is responsible for costs as to Fresenius Defendants as follows:
Deposition of: Rebecca Gonzalez (11/5/08) $ 2,613.00
Arturo Orozco (2/2/09) 1,620.00
Ramiro Devora (2/3/09) 2,465.00
Melissa Arvizu (2/12/09) 354.30
Monica Esparza (2/12/09) 312.21
Cecilia Herrera (2/12/09) 209.36
Larry Ramirez (2/12/09) 371.01
Cesar Del Valle (2/17/09) 462.72
Rebecca Gonzalez (3/12/09) 2,125.00
Rebecca Gonzalez (3/13/09) 1,377.50
Alfonso Chavez (3/18/09) 2,030.00
Alfonso Chavez (3/28/09) 1,675.00
Peggy Knudsen (4/23/09) 1,745.00
Kenneth Kokko (4/25/09) 1,104.00
Jean Bishop (4/26/09) 2,333.00
Sidney Kaplan (4/27/09) 387.50
Monica Esparza (5/18/09) 412.09
Sylvia Contreras (5/18/09) 411.80
Alfonso Chavez (5/19/09) 1,495.00
Joseph Pulliam (5/27/09) 1,537.88
Jason Baldridge (5/29/09) 1,220.00
Hector Montes (6/3/09) 104.00
Yvette Lazarin (6/3/09) 50.00
Jack Stovall (6/3/09) 66.00
Joanna Ray (6/3/09) 80.00
Rose Gailey (6/3/09) 142.00
Alfonso Chavez (6/29/09) 510.00
Sylvia Morales (6/29/09) 265.00
Robert McGorty (7/1/09) 257.80
Ron Castle (7/1/09) 484.60
Tracy Franklin (7/1/09) 244.40
Ron Castle (8/24/09) 106.21
Alfonso Chavez (9/26/09) 612.29
Monica Esparza (9/26/09) 75.80
Ramiro Devora (9/26/09) 227.19
Sylvia Morales (9/26/09) 123.75
Henry South (9/28/09) 1,436.35
Copies: 2,902.92
TOTAL: $33,949.68
Relator is responsible for the following costs as to Chavez:
Deposition of: Rebecca Gonzalez (11/5/08) 1,050.25
Arturo Orozco (2/2/09) 568.00
Ramiro Devora (2/3/09) 906.00 Melissa Arvizu (2/12/09) 354.30 Monica Esparza (2/12/09) 312.21 Cecilia Herrera (2/12/09) 209.36 Larry Ramirez (2/12/09) 371.01 Cesar Del Valle (2/17/09) 462.72 Rebecca Gonzalez (3/12/09) 726.25 Rebecca Gonzalez (3/13/09) 448.50 Alfonso Chavez (3/18/09) 732.00 Alfonso Chavez (3/28/09) 590.00 Peggy Knudsen (4/23/09) 618.00 Kenneth Kokko (4/25/09) 520.00 Jean Bishop (4/26/09) 1,113.75 Sidney Kaplan (4/27/09) 387.50 Monica Esparza (5/18/09) 265.09 Syvia Contreras (5/18/09) 271.80 Alfonso Chavez (5/19/09) 518.00 Joseph Pulliam (5/27/09) 773.45 Jason Baldridge (5/29/09) 510.00 Hector Montes (6/3/09) 310.00 Yvette Lazarin (6/3/09) 175.00 Jack Stovall (6/3/09) 215.00 Joanna Ray (6/3/09) 250.00 Rose Gailey (6/3/09) 405.00 Alfonso Chavez (6/29/09) 217.50 Sylvia Morales (6/29/09) 265.00 Robert McGorty (7/1/09) 124.60 Ron Castle (7/1/09) 229.00 Tracy Franklin (7/1/09) 129.20 Ron Castle (8/24/09) 106.21 Alfonso Chavez (9/26/09) 2,333.79 Monica Esparza (9/26/09) 275.80 Ramiro Devora (9/26/09) 873.69 Sylvia Morales (9/26/09) 466.25 Henry South (9/28/09) 687.47 Copies: 6,265.42 TOTAL: $25,037.12
Counsel for Relator must pay attorney's fees to Fresenius Defendants in the amount of $15,360.00.
Finally, Relator remains under a prior order of the Court to pay Fresenius $2,734.00 in attorney's fees, of which $2,334.00 remains to be paid.
Accordingly, the Court issues the following orders on fees and costs:
