Filed: Aug. 04, 2015
Latest Update: Apr. 11, 2017
Summary: NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _ No. 14-1126 _ M.D. STEVEN S. SIMRING, United States of America, ex rel. v. RUTGERS, The State University of New Jersey; UNIVERSITY HOSPITAL; NEW JERSEY MEDICAL SCHOOL; JAMES LAWLER; JOHN DOES 1-25, (Employees of University of Medicine and Dentistry), UMDNJ-University Hospital and/or New Jersey Medical School; CHAIRMAN OF THE BOARD UNIVERSITY PHYSICIAN ASSOCIATES; MICHAEL SAULICH; CATHERINE GIBBONS; UNIVERSITY PHYSICIAN ASSOC
Summary: NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _ No. 14-1126 _ M.D. STEVEN S. SIMRING, United States of America, ex rel. v. RUTGERS, The State University of New Jersey; UNIVERSITY HOSPITAL; NEW JERSEY MEDICAL SCHOOL; JAMES LAWLER; JOHN DOES 1-25, (Employees of University of Medicine and Dentistry), UMDNJ-University Hospital and/or New Jersey Medical School; CHAIRMAN OF THE BOARD UNIVERSITY PHYSICIAN ASSOCIATES; MICHAEL SAULICH; CATHERINE GIBBONS; UNIVERSITY PHYSICIAN ASSOCI..
More
NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
________________
No. 14-1126
________________
M.D. STEVEN S. SIMRING,
United States of America, ex rel.
v.
RUTGERS, The State University of New Jersey;
UNIVERSITY HOSPITAL; NEW JERSEY MEDICAL SCHOOL;
JAMES LAWLER; JOHN DOES 1-25, (Employees of University of Medicine and
Dentistry), UMDNJ-University
Hospital and/or New Jersey Medical School; CHAIRMAN OF THE BOARD
UNIVERSITY PHYSICIAN ASSOCIATES;
MICHAEL SAULICH; CATHERINE GIBBONS; UNIVERSITY PHYSICIAN
ASSOCIATES OF NEW JERSEY INC.
M.D. Steven S. Simring,
Appellant
________________
Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil Action No. 3-04-cv-03530)
District Judge: Honorable Peter G. Sheridan
________________
Submitted Under Third Circuit LAR 34.1(a)
March 2, 2015
Before: AMBRO, SCIRICA, and ROTH, Circuit Judges
(Opinion filed: August 4, 2015)
________________
OPINION*
________________
AMBRO, Circuit Judge
There are few cases judges like less than disputes over attorneys’ fees. And the
tedium of reviewing reams of spreadsheets in the service of lining lawyers’ pockets is
exponentially greater for district and magistrate judges than for us on appeal.
Nonetheless, we must review fee applications and draft clear accounts of why a fee is
awarded or not. The District Court in this case put in yeoman’s work trying to guide the
parties to a negotiated settlement, but when the parties’ intransigence forced the Court to
rule on the fee petition, it did not include enough information in its opinion to allow for
meaningful appellate review. With regret, though we affirm in part, we also vacate in
part and remand.
I. Background
This appeal results from Dr. Steven S. Simring’s False Claims Act (FCA) suit
alleging that the University of Medicine and Dentistry of New Jersey (now part of
Rutgers University) engaged in a lengthy, multimillion-dollar scheme to bill taxpayers
twice for the same services. The FCA was passed during the Civil War to root out frauds
perpetrated by contractors with the Government. It allows private individuals to sue on
behalf of the United States; such Plaintiffs are called “relators,” as the law also requires
*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
2
them to transmit (or “relate”) their allegations to the Government. The United States
must decide whether to intervene in the relator’s lawsuit, lending the Government’s
substantial expertise, negotiating leverage, and investigative resources to the cause.
When Simring filed the suit, Henry F. Furst was his lawyer. Simring informed the
U.S. Department of Justice (DOJ) of his allegations, and the DOJ launched an
investigation to determine whether it would intervene. The United States’ decision to
intervene (or not) is typically the most consequential moment of an FCA case. Hence, in
representing Simring, Furst devoted much of his energy to convincing the DOJ to take
part in the case. For assistance in this crucial task, he enlisted Harry Litman, a former
U.S. Attorney for the Western District of Pennsylvania and now a well-regarded lawyer
in private practice. In 2008, four years after Simring notified the DOJ of his case, the
Government decided to intervene, and in June 2009 the parties settled for $4.45 million
(this and all other large numbers in our opinion are approximate).
The FCA entitles a prevailing relator to “reasonable attorneys’ fees.” 31 U.S.C.
§ 3730(d)(1), and after the settlement Simring promptly sought to recover fees for Furst
and Litman. When he did not immediately succeed, Simring engaged the law firm of
Stone & Magnanini. Regrettably, the litigation over Furst and Litman’s fees has lasted
six years so far, and this appeal is but the latest—and not the last—chapter.
In December 2010, Simring petitioned the District Court for a total of $1.08
million in aggregate fees and costs to compensate Furst, Litman, and Stone & Magnanini.
The petition consisted of the lawyers’ billing records, their hourly rates, and evidence of
the rates of other lawyers in the community. Though Rutgers did not dispute Simring’s
3
entitlement to fees, it argued that Furst and Litman charged too high a rate for too many
hours. In October 2012, a Magistrate Judge drafted a Report and Recommendation
(R&R) suggesting that Stone & Magnani be awarded nothing and that the other lawyers
receive in total $366,000. Simring promptly lodged objections with the District Court,
which allowed Stone & Magnanini to file a petition for work performed up to May 8,
2013. The Court then modified the recommended ruling in part to award Stone &
Magnanini $313,000 and to increase the compensation for Litman by $54,000 (the
aggregate fees awarded were thus $733,000). Simring moved for reconsideration, and
the motion was granted in part on December 16, 2013, to award $18,000 previously
denied for engaging a consultant who advised on encouraging DOJ intervention.
On December 31, Simring petitioned for attorneys’ fees for work done between
May 8 and December 31. The District Court denied this motion. Simring appeals,
arguing that Furst and Litman remain not fully compensated for their work before May 8,
2013, and that all his lawyers were entitled to compensation for their work after that date.
We refer to the R&R, and the District Judge’s opinion insofar as it approved the R&R,
collectively as the decision of “the District Court,” and when we mean to differentiate
between the Judges’ decisions, we discuss the opinion of the District Judge or the
Magistrate Judge.
II. Discussion
A. Governing Law
A relator must receive “reasonable” attorneys’ fees when an FCA suit results in a
settlement in which the defendant agrees to pay money. 31 U.S.C. § 3703(d). Fees are
4
presumed reasonable when calculated using the “lodestar” method, by which a court
assigns a reasonable hourly rate and multiplies that rate by the reasonable number of
hours expended on the litigation. Pennsylvania v. Del. Valley Citizens’ Council for Clean
Air, 478 U.S. 546, 564 (1986). In calculating the fee, a court may assign different rates
or amounts of time to different categories of tasks. For example, a district court acts
within its discretion when it determines that it would be reasonable for an attorney to
charge less for time spent filing papers than for drafting a brief. Cf. id. at 567. The total
fee (F) is the product of the reasonable hourly rate (R) and the reasonable number of
hours (H), or, in mathematical terms, F = R × H. Where a court determines that different
hourly rates or numbers of hours are appropriate for given types of tasks, it must do a
separate calculation for each type (t) such that Ft = Rt × Ht. The reasonable fee is the
sum of each value for Ft.
A reasonable hourly rate is the “prevailing [rate] in the community for similar
services by lawyers of reasonably comparable skill, experience and reputation.” Blum v.
Stenson, 465 U.S. 886, 896 n.11 (1984). To determine a reasonable number of hours, the
starting point is the number actually spent on the litigation, but a district court may
“exclude hours that are not reasonably expended. Hours are not reasonably expended if
they are excessive, redundant, or otherwise unnecessary.” Rode v. Dellarciprete,
892
F.2d 1177, 1183 (3d Cir. 1990) (citation omitted). Compensable time includes hours
spent on tasks “useful and of a type ordinarily necessary to secure the final result
obtained from the litigation.” Del. Valley, 478 U.S. at 561 (internal quotation marks
omitted). A court may deduct inadequately documented hours. Rode, 892 F.2d at 1183.
5
B. The Fee Applications
1. Matters on Which We Affirm
The District Court held that Furst’s proposed billing rate of $450 per hour was
reasonable. Neither party disputes this holding.
The Court also reduced Litman’s hourly rate from $850 per hour to $625. Simring
challenges this determination, as he contends that Litman charged his paying clients $850
per hour and that the evidence Rutgers mustered to rebut the rate was unreliable.
Although it agreed with Simring that Rutgers’ evidence in support of its proposed hourly
rate was unhelpful, the Court considered affidavits offered in connection with Furst’s
application to determine Litman’s rate. Even though they were offered in support of
Furst’s rate, to the Court they showed that a lawyer of Litman’s skill and experience in
New Jersey would reasonably have charged $625 per hour. 1
1
The parties dispute whether the relevant community is, as Rutgers urges, New Jersey
(where the lawsuit was filed) or, as Simring contends, Washington, D.C. (where the DOJ
was encouraged to intervene). Our initial opinion in this matter accepted Simring’s
apparent concession that the issue “is ultimately immaterial.” Reply Br. at 18; see also
Simring Br. at 48 (“Litman’s usual billing rate in fact set the value of his services in the
New Jersey market, as well as nationwide.”); id. at 49–50 (arguing that an affidavit by a
different FCA lawyer that he billed at similar rates in New Jersey, another affidavit by a
former New Jersey U.S. Attorney, National Law Journal surveys of billing rates in New
Jersey, and decisions of New Jersey bankruptcy courts, all support Litman’s rate); Reply
Br. at 19 (same). Simring moved for panel rehearing on the grounds that we
misconstrued his argument and that he has not conceded that the relevant forum is
immaterial. To mitigate any possible perception of unfairness, we address the merits of
the parties’ dispute over the proper forum.
We affirm the District Court’s choice of New Jersey—see R&R at 5 n.3. We have
held that the proper forum for calculating attorneys’ fees is the one “in which the
litigation is lodged.” Interfaith Cmty. Org. v. Honeywell Int’l, Inc., 426 F.3d 694, 704
(3d Cir. 2005) (quoting Report of the Third Circuit Task Force on Court Awarded
6
On appeal, Simring argues that the Court erred in considering evidence offered in
support of Furst’s—not Litman’s—rate and that it should not have looked to evidence
Simring introduced to reduce the rate he was seeking. Rather, he believes the Court was
only entitled to rely on Rutgers’ evidence to dispute Litman’s rate. But the Court was
permitted to consider all the evidence in the record and draw reasonable inferences from
it regardless of its proponent. It properly “rejected the prevailing party’s evidence of
rates” when that evidence failed to persuade. Loughner v. Univ. of Pittsburgh, 260 F.3d
173, 180 (3d Cir. 2001). Perceiving no abuse of discretion in the determination that $625
was a reasonable hourly rate, we affirm that reduction.
Attorney Fees (hereinafter “Task Force Report”),
108 F.R.D. 237, 261 (1985).
Notwithstanding that Litman negotiated with Government lawyers in Washington, D.C.,
we think it plain that the litigation here was “lodged” in New Jersey, as that is where the
Complaint was filed. Cf. Task Force Report at 261 (recommending district courts create
Fee Advisory Committees “on a district-by-district basis to reflect regional differences”
to promote “objectivity and efficiency” even though “standardized rates . . . will
undercompensate certain attorneys and overcompensate others”). There are two
exceptions to this “forum rate” rule: (1) “when the need for the special expertise of
counsel from a distant district is shown”; and (2) “when local counsel are unwilling to
handle the case.” Interfaith Cmty. Org., 426 F.3d at 705 (internal quotation marks
omitted). Simring’s only argument in favor of either of these exceptions is the
conclusory remark that “[t]he undisputed evidence in the record would justify application
of these exceptions here.” Simring Br. at 47 n.18. In the absence of support for this
conclusion, we decline to apply either exception.
Although we grant panel rehearing in this limited extent, we also hold that
Simring’s petition, which will not result in an increased fee for Litman, is not the sort of
task that we consider “useful and of a type ordinarily necessary to secure the final result
obtained from the litigation,” Del. Valley, 478 U.S. at 561 (internal quotation marks
omitted), and thus should not be included in his final fee petition before the District
Court. The rehearing petition sought to change, in Simring’s own words, an “ultimately
immaterial” (and quite arguably correct) point in our opinion, and it is only for the sake
of complete accuracy that we issue this amended version.
7
Simring also claims the District Court erred in using rates in effect at the time the
fee petitions were filed instead of when the fees were ordered. We have held, however,
that “[w]hen attorney’s fees are awarded, the current market rate must be used,” and that
“the current market rate is the rate at the time of the fee petition,” Lanni v. New Jersey,
259 F.3d 146, 149 (3d Cir. 2001), notwithstanding the delay between the time of the
petition and the time of the final award (at least two years in Lanni, given the date of our
mandate). We therefore affirm the District Court’s choice of date for calculating Furst
and Litman’s rates.
2. Matters on Which We Vacate
Simring engaged three law firms in this litigation. He presented different billing
records for each firm involved; each sought compensation for different work at different
hourly rates. Those billing records should be analyzed separately except where efforts
were duplicative. For the most part, the District Court analyzed the lawyers’ hourly rates
separately, but, when discussing why the hours Furst and Litman spent on certain tasks
needed to be reduced, it analyzed those lawyers’ bills together.
The most significant problem with the approach of not differentiating between the
submitted billing records is that Furst and Litman had different billing methods: Furst
“task billed,” meaning that he recorded the amount of time he spent on each discrete task
separately, while Litman “block billed,” that is, he listed all of his tasks performed on a
given day and then recorded the total amount of time per day he spent on Simring’s case.
Block billing makes it more difficult for courts to review hours expended because we do
not know how many hours a lawyer spent on a discrete task. For reasons that are not
8
clear, the Magistrate Judge wrote her R&R as if both attorneys block billed and noted that
this approach made it difficult to discern which tasks were compensable and which were
not; the District Judge did not disturb this misreading of Furst’s records. On remand, the
Court should clarify which specific entries of each lawyer are unreasonable. To the
extent block billing poses problems for its review, those problems are relevant only to the
petition for Litman’s fees, as Furst did not block bill. 2
a. Administrative Tasks
The Magistrate Judge recommended that Furst and Litman’s rates be reduced to
$95 per hour for “simple legal and/or administrative tasks that could have been
performed by an associate, paraprofessional, or secretary.” Mag. Op. at 23. She cited
three examples of these tasks, but did not inform the parties which specific time entries
she recommended compensating at $95 per hour. This decision makes us unable to
determine whether the rate was appropriately reduced. We also note that grouping
“simple legal and/or administrative tasks” may well have conflated substantially different
functions: a simple legal task often requires at a minimum three years of legal education
followed by admission to the bar even to be allowed by law to perform it; a simple
administrative task typically does not. Similarly, a task that must be performed by an
associate generally ought to be compensated at a higher rate than a task that can be
2
We note that, should the Court deem it advisable, it would act within its discretion if it
ordered Litman to “re-format and re-submit [his] billing records” to make them more
easily reviewable. Gonzalez v. City of Maywood, 729 F.3d 1196, 1204 (9th Cir. 2013).
9
performed by a paralegal. But we do not actually know what tasks the District Court
considered to be worthy of this fee reduction nor how many hours they accounted for.
b. Reduced Billing Categories
The Magistrate Judge further recommended several reductions to the number of
hours contained in both lawyers’ billing records. Specifically, she did so for: “vaguely
described time”; “review and discussion of newspaper articles detailing breaking and
entering at UMDNJ’s offices”; “communicating and meeting with state deputy
attorney[s] general[]”; “negotiating and recovering Dr. Simring’s share from the
[G]overnment”; “searching for and communicating with expert witnesses who were never
ultimately retained”; hours spent when “counsel reviewed materials, performed legal
research, conferred with one another, and drafted a Second Amended Complaint”; “time
spent . . . retaining Mr. Litman’s firm, including but not limited to[] running a potential
conflicts check[] and the possibility of retaining other counsel”; and fees for seeking fees.
Mag. Op. 25–30. With the exception of the recommended reduction for fees-on-fees, the
District Judge agreed with the Magistrate Judge.
However, neither Judge recorded how many hours these categories represented or
which billing entries they matched. The closest the Magistrate Judge got was the citation,
“See Furst and Litman Billing Records,” Mag. Op. at 29, which is not a helpful indication
of the source of her information. We cannot review the reasonableness of these
deductions without knowing what they were.
In addition to the vagueness of the reductions for the number of hours spent on
these tasks, Simring makes well-taken objections to the District Court’s decision that any
10
hours spent on three specific categories of tasks were per se unreasonable:
communicating with the New Jersey Attorney General’s Office; preparing for possible
expert testimony; and preparation of a second amended complaint.
The Court disallowed time spent communicating with the State Attorney General’s
office because “the Attorney General of New Jersey never intervened or otherwise
formally joined in this action.” Mag. Op. at 26. Similarly, the Magistrate Judge cited
that there was “no discovery in this case,” and that the experts Simring’s counsel
communicated with were not ultimately retained, as the reasons why the hours spent
developing an expert case were not reasonable. Id. at 27. The District Court also held
that time spent drafting a second amended complaint was wasted simply for the reason
that the document was not filed.
The error in these reductions is that they assume it is always a waste of time to
pursue a litigation strategy that does not produce a tangible result before the Court. And
although the District Judge recognized the Magistrate Judge’s overstated focus on in-
court and court-supervised advocacy, he did not disturb the Magistrate Judge’s reduction
of hours for these tasks. Whether the New Jersey Attorney General formally joined the
action, whether an expert was retained, and whether a second amended complaint was
filed, do not answer whether making those preparations was “useful and of a type
ordinarily necessary” to the result Simring got. Del. Valley, 478 U.S. at 561. In many
cases, diligent lawyers will pursue many lines of inquiry both in factual investigation and
legal research that may not end up formally becoming a part of a court’s record. But
background work cannot categorically be deemed time wasted. To be sure, if Furst and
11
Litman performed these tasks to pad their bills (at a time when it was unclear whether
they would receive anything), the hours spent on them would be unreasonable. But if a
reasonable FCA attorney in building her case would have consulted experts or state
officials or would have drafted an amended complaint at the time Furst and Litman did
so, then the requested fees can be awarded. Cf. Planned Parenthood v. Attorney Gen. of
State of New Jersey, 297 F.3d 253, 270–71 (3d Cir. 2002) (awarding fees for time spent
preparing expert who did not testify).
c. Litman’s Legal Research
We also vacate the reduction in Litman’s hourly rate for any day on which he did
any legal research. As already noted, Litman block billed, obfuscating exactly how much
time he spent on any given task. To address this lack of clarity, on any day in which one
of the tasks Litman performed was listed as “legal research,” the District Court reduced
his hourly rate from $625 to $450.
Many Courts of Appeals have endorsed applications of across-the-board
reductions in hourly rates due to the vagaries of block billing. See McAfee v. Boczar, 738
F.3d 81, 90 (4th Cir. 2013); Torres-Rivera v. O’Neill-Cancel,
524 F.3d 331, 340 (1st Cir.
2008); Welch v. Metro. Life Ins. Co.,
480 F.3d 942, 948 (9th Cir. 2007); Robinson v. City
of Edmond,
160 F.3d 1275, 1281 (10th Cir. 1998). We need not determine whether we
agree with this approach, as we vacate on the ground that the District Court’s decision to
apply a 39% reduction to Litman’s hourly rate to all days when he conducted legal
research is arbitrary. Legal research is an essential part of a lawyer’s job and should not
always be deemed “associate level” work. Mag. Op. at 13. Nor does any amount of legal
12
research on a given day so infect a lawyer with indolence that the value of all the work
done on the whole day should be reduced by more than a third. We do not decide that
Litman is entitled to compensation for every hour he claims; we only hold that more
reasoning must accompany the ultimate decision.
d. Fees-on-Fees
We further vacate the decision not to award fees-on-fees to Furst and Litman for
the time spent litigating the fee petition before engaging Stone & Magnanini. The only
reasoning offered was that it was “unfair” to bill Rutgers for so many lawyers. Dist. Op.
at 5. But the principal question is whether the product of the relevant hourly rates and the
amount of time spent by all the lawyers and paraprofessionals involved is reasonable. If
the decision to bring in a third law firm resulted in a duplication of efforts, that would be
a reasonable ground to disallow a portion of the requested fees. Again, we do not
necessarily quarrel with the result the District Court reached, but we simply do not have
enough information to gauge whether that result reflected a reasonable rate charged for a
reasonable number of hours.
e. Supplemental Fee Petition
The District Court denied Simring’s petition for fees incurred between May 8 and
December 31, 2013. The only reasoning in the Court’s Order is that “Relator has already
been more than reasonably compensated for the time spent by his lawyers.” As we have
held before, “if the district court’s fee-award opinion is so terse, vague, or conclusory that
we have no basis to review it, we must vacate the fee-award order and remand for further
proceedings.” Gunter v. Ridgewood Energy Corp., 223 F.3d 190, 196 (3d Cir. 2000). It
13
may be that the lawyers’ work between May and December of 2013 was entirely
noncompensable, but before we decide we would benefit from the District Court’s
analysis of whether the work performed was “useful and of a type ordinarily necessary to
secure the final result obtained from the litigation.” Del. Valley, 478 U.S. at 561.
III. Conclusion
We affirm much of the District Court’s decision, though we vacate the fee award
in part and remand for further proceedings. As we do not know how the Court evaluated
the time entries submitted, we are unable to review whether the reductions it made
resulted in reasonable rates and hours, the two ingredients that yield a lodestar fee. Thus
we vacate in part and remand.
14
