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Category: Fees Paid by Gov't

DC Judge Slams DOJ’s Fee Agreement with Arnold & Porter

November 24, 2020

A recent Law 360 story by Hailey Konnath, “DC Judge Slams DOJ’s $212K Fee Payment to Arnold & Porter,” reports that a District of Columbia federal judge criticized a deal in which the Trump administration will pay Arnold & Porter more than $212,000 in legal fees to resolve a battle over expedited traveler security clearance programs, calling the fees excessive and the government's conduct "embarrassing."

The U.S. Department of Homeland Security in August backed down from its defense of the policy barring New Yorkers from enrolling in some of U.S. Customs and Border Protection's Trusted Traveler Programs, including Global Entry, SENTRI, NEXUS and FAST.  The government also admitted that it violated the Administrative Procedure Act's rulemaking process in instituting the policy and admitted that it made "inaccurate or misleading statements" about the policy.

As part of the agreement ending the case, DHS said it would not stop New Yorkers from participating in Global Entry or other traveler programs on the basis of the state's refusal to provide the federal government with access to the New York State Department of Motor Vehicles' records, according to the settlement.  The government also agreed to cover the plaintiffs' counsel's fees.  To be clear, the parties don't need court approval to move forward with their agreement, U.S. District Judge Richard J. Leon noted in the order.  However, the government and Arnold & Porter were seeking a court order incorporating the deal into a final order of dismissal.

Judge Leon declined to do so, saying that while the other provisions of the agreement are fair and reasonable, "I am quite concerned, and have been from the outset, about the reasonableness of the amount of attorney fees agreed to by the parties."  In particular, the judge knocked the U.S. Department of Justice for not requesting the actual billing records from Arnold & Porter.  Those records show that eight total attorneys billed time on the case, a number of attorneys that he deemed "entirely unnecessary to the needs of the case."  The DOJ also chose not to suggest that attorney fees be calculated according to anything other than the firm's standard corporate rates, Judge Leon said.

Had the DOJ pushed for using rates established in the U.S. Attorney's Office's Laffey Matrix — and only covered the fees for four attorneys — the fee award would be just $82,562, he said.  "The court believes the Department of Justice should have been more aggressive in protecting the public fisc," the judge said.

Judge Lean added that "[p]erhaps, however, it is not so surprising that they weren't in this case.  After all, it is not every day the Department of Justice and their clients have to confess to written and oral misrepresentations on the record in a high profile case!"  It appears that Arnold & Porter — "unfortunately at the taxpayer expense" — simply capitalized on the government's desire to put the matter to rest as quickly as possible, he said in the order.  Judge Leon said he hopes that in the future, the DOJ's leadership will take the necessary steps to ensure that attorney fees it agrees to are indeed fair and reasonable.

As far as the conclusion of the Global Entry case, Judge Leon said the parties have two options: they can file a stipulation of dismissal or they can reduce the fees portion of their deal and get it incorporated into his final order of dismissal.  "The parties have made it clear to the court that their settlement agreement does not require judicial approval and is in fact self-executing," he said. "Fine."

He added, "Negotiating an agreement in a pro bono case that bypasses judicial approval and requires defendants to pay in excess of $200,000 in attorney fees might warrant a tip of the proverbial cap from fellow practitioners, but it is irrelevant to a judicial analysis of whether to incorporate the parties' agreement into an order of dismissal."

Stanton Jones, one of the Arnold & Porter attorneys on the case, told Law360 that it was "illegal for the federal government to try to deny Global Entry to New Yorkers in retaliation for its refusal to participate in immigration enforcement."  In a statement provided to Law360, Jones added that "all fees recovered in this case will be contributed to the Arnold & Porter Foundation, a tax-exempt private foundation that provides scholarships to minority law students, funds fellowships for recent law school graduates at tax-exempt organizations, and awards grants to other charitable and educational organizations."

EPA Agrees to Pay Attorney Fees in Truck Emission Rollback Action

September 23, 2020

A recent Law 360 story by Clark Mindock, “EPA To Pay $92K Atty Fees in Truck Emission Rollback Suit,” reports that the U.S. Environmental Protection Agency has agreed to pay nearly $92,000 to environmental groups for attorney fees over a challenge to the Trump administration's attempt to roll back heavy-duty truck emissions rules.  The settlement on attorney fees was announced in the D.C. Circuit and comes roughly two years after the EPA withdrew its rule, which sought to stop enforcing Obama-era greenhouse gas emissions standards for certain heavy-duty trucks.

The decision by the Trump administration to try to curb that enforcement sparked an emergency legal challenge mounted by the Sierra Club, Environmental Defense Fund and Center for Biological Diversity in the D.C. Circuit.  Less than a month after the challenge was filed, the court stayed the order pending further review and the EPA withdrew the rule shortly after.

The settlement announced didn't include an admission of fault from the EPA.  The $91,302.60 in attorney fees "has no precedential value as to any fact, claim, assertion of violation of any statute or regulation or defense in this lawsuit," according to the filing.

The settlement follows a legal skirmish in 2018 when the Trump administration decided to cease enforcing greenhouse gas emissions for certain heavy-duty trucks.  In announcing its enforcement decision in July of that year, the EPA said it wouldn't enforce certain provisions to the second phase of a rule implemented in October 2016, which regulate emissions from new trailers hauled by heavy-duty tractors that deal with so-called glider vehicles — trucks that are built with used powertrains including engines, transmissions or rear axles.

The decision not to enforce the provisions came after then-Assistant EPA Administrator Bill Wehrum said the agency's proposal the year prior to fully repeal the glider rules was taking longer than expected to finalize.  The three environmental groups sued quickly and asked for an emergency stay of the EPA's decision, telling the D.C. Circuit that the EPA's move "is an unlawful attempt by EPA to circumvent Clean Air Act's requirements and institute a shadow regulatory regime under the guise of exercising 'enforcement discretion.'"

The D.C. Circuit paused the rollback on July 18, 2018, a day after the challenge was filed.  The court said then that it needed "sufficient opportunity" to consider the emergency motion but warned against misconstruing the stay as an indicator of its opinion on the matter.  The EPA then pulled the rule change the following month and the court in turn granted a motion to dismiss the case.

Boston Calls $2.3M Fee Request ‘Beyond The Pale’

August 17, 2020

A recent Law 360 story by Brian Dowling, “Boston Calls Officers’ $2.3M Fee Request ‘Beyond The Pale’” reports that calling the request "beyond the pale," the city of Boston asked a federal judge to pare down a $2.3 million fee bid by Black police officers who won a $484,000 back pay ruling in a long-running discrimination case, citing a litany of issues including "egregiously high" hourly rates.  After being hit with the back pay ruling due to a promotion exam's disparate impact on Black officers, the city attacked the fee request by lawyers from Lichten & Liss-Riordan PC and Fair Work PC.

"The well-settled case law and the facts and circumstances presented by this case lead to the inexorable conclusion that the court should — indeed, must — reduce their requested fees and costs in fundamentally significant ways," the city wrote to U.S. District Judge William G. Young.

A primary contention in the city's opposition is that the officers' inclusion of nearly $1 million in legal fees and costs from an earlier related lawsuit, Lopez v. City of Lawrence.  The police officers have argued that the Lopez case laid the foundation for the success in the present case, Smith et al. v. City of Boston.  The Smith lawsuit focused on promotions from sergeant to lieutenant, whereas the Lopez case related to promotions from patrolman — the entry-level position — to sergeant.  The two tests were similar, but two different judges came to two different conclusions about them.

Saying there's no "legitimate basis" to include billing from the Lopez case, Boston explained that it dealt with "different exams, brought by different plaintiffs against different defendant cities … tried to a different judge, and which the plaintiffs indisputably lost at trial and on appeal."

The city said the entire amount billed from the Lopez case, $977,951.07, should be cut from the fee request.  Boston said further reductions were warranted because the officers failed to gain certification as a class action and the lawsuit fell short in pressing a claim that one of the two tests was discriminatory.

The city also argued the hours billed by the officers' attorneys are "extraordinarily high" and reflect the type of "excessive, redundant billing and overstaffing" that the First Circuit has taken issue with in the past.  Attorneys for the officers accounted for their hours "almost exclusively" using block billing, the practice of lumping together daily time spent on a case rather than itemizing specific tasks done for a client, the city said.

In an unrelated case in April, U.S. District Court Judge Nathaniel M. Gorton slashed nearly $2 million off a $2.7 million attorney fee request due to "pervasive shortcomings" including block billing.   Boston's analysis of Lichten & Liss-Riordan PC founder Harold Lichten's billing records showed many days with a single block of time for multiple tasks or generic tasks "so vague as to be all but meaningless," the city said.

The city also said Lichten failed to keep time records since mid-2015 and proposed cutting his undocumented hours since then from 274 to 137.  In addition to the volume of hours, Boston said the "egregiously high" hourly rates claimed by the attorneys need to be reduced.  The fees pegged the fair market rate for the lawyers who represented the officers at $700 per hour for Lichten and $450 and $350 per hour for the firm's attorneys Benjamin Weber and Zachary Rubin. 

"These rates are simply far above the market rate for lawyers of comparable experience and skill — both for work performed then and now," the city said.  In addition to the specific billing arguments detailed in the city's 23-page opposition, Boston said the court weighing the fee reward "must be mindful that it is limited taxpayer funds, necessary to provide public services, that are at stake."

Federal Circuit Backs Attorney Fee Cap in IDEA Cases

August 14, 2020

A recent Law 360 story by Andrew Karpan, “DC Circ. Backs Atty Fee Cap in Civil Right Row” reports that the D.C. Circuit rejected the efforts of attorneys representing hundreds of parents in a civil rights case to collect over $5 million in fees from Washington, D.C., and ruled that a congressional cap that strictly limited the amount they could collect in those cases was perfectly valid.

The opinion, authored by U.S. Circuit Judge Gregory Katsas, found that an appropriations rider Congress passed in 2009 did not violate the Takings Clause of the Fifth Amendment nor was it an illegal intervention into the court's power to award fees.  The rider expressly forbade Washington from paying more than $4,000 in attorney fees in any single civil rights case filed under the Individuals with Disabilities Education Act, which mandates special education services for kids.

Crucially, Judge Katsas wrote, Congress started limiting the city's ability to pay out legal fees in IDEA cases in 1999, which was before the parents in these cases filed suit.  "The fee cap does not interfere with any reasonable expectations, for each of the awards at issue was entered at a time when Congress had already limited the District's ability to pay IDEA fee awards," the judge said.  The ruling covered eleven separate IDEA cases, all of which preceded 2009 and all of which successfully alleged that Washington didn't provide a special needs education to students who qualified for one.

Back in 2015, a magistrate judge calculated the city's tab in those cases at about $3.7 million, along with another $1.3 million in interest, according to the ruling.  Two years later, a D.C. federal judge used the cap to trim the fee award to $220,000 but left the interest, which had notched up to $1.4 million by then.  Both the parents and the city challenged that ruling.  Congress, which provides funding to public schools in Washington through the District of Columbia Appropriations Act, had every reason to be concerned about using that budget to pay lawyers in IDEA cases, Judge Katsas observed.

The city's "long struggle" to comply with IDEA was costing it $10 million a year by the time Congress began limiting how much of that funding could be spent on fee payments in those cases, the ruling noted.  An appropriations rider passed in 2009 had instituted the permanent $4,000 cap on the awards.

The parents argued, in part, that the rider violated their rights to fees that a court had awarded them but the panel said shaving a fee award isn't "a per se taking."  Deciding to trim an award that had already been issued didn't misappropriate the powers of Congress either, the panel added.  Lawyers for the parents should also have known they wouldn't be able to collect more than $4,000 a case because the initial rider dated to 1999, Judge Katsas added.

But in addition to ruling that the cap was perfectly legal, the D.C. Circuit also scratched the $1.4 million in interest the parents had won.

"This principle is as old as the Republic," Judge Katsas mused on this point, citing a ruling the Supreme Court made in 1789, in Hoare v. Allen, and in which the court similarly scratched the interest on debts owed to a British creditor during the Revolutionary War, as the Constitutional Congress had expressly banned paying debts to British subjects.

Similarly, Judge Katsas wrote, Congress had banned Washington from paying lawyers in IDEA cases fees above a certain amount: interest couldn't be collected on fees above that amount either.  The panel sent the award back to a lower court to recalculate using the capped award instead. 

The D.C. Circuit ruled on an IDEA fee bid in a different case just last year, when a panel initially rejected a nearly $7 million fee award in a class action suit leveled under that law, ruling in that case that a lower court had used an invalid matrix for calculating fees.

GAO Says Attorney Fee Cap Applies to Former Small Business

August 7, 2020

A recent Law 360 story by Alyssa Aquino, “GAO Says Protest Fee Cap Applies to Former Small Biz,” reports that a Virginia company can't recoup the full legal costs of protesting a $19 million information technology task order because the former small business is subject to a cap on large business protesters' reimbursable legal fees, a federal watchdog has said.

The U.S. Government Accountability Office refused to direct the government to foot Harmonia Holdings Group LLC's entire $73,000 legal bill, finding that though the software company held small business status when it bid on the contract, the company was certified as a large company when it protested the award, according to a decision publicly released.  The GAO said it must be "vigilant" in settling requests for reimbursement.

"In our view, vigilance in evaluating the reasonableness of these requests for public funds is not served by permitting an entity that has certified … that it is no longer small, to benefit from a statutory provision designed to aid small businesses in pursuing protests," the GAO concluded.  The decision ran counter to Harmonia's claims that it was free from the large business cap because it held small business certification when it bid on the contract.

According to GAO filings, the U.S. Department of Agriculture's Animal and Plant Health Inspection Service issued a small-business task order in November 2018 to support its software systems.  AttainX Inc. nabbed the award, but Harmonia protested the deal at the GAO and scored a victory when the office found issues in the evaluation process.

Harmonia and the agriculture agency then grappled over Harmonia's resulting legal fees.  Harmonia sought repayment for the entire bill, but the agency countered with $30,000, saying the company was bound to a $150-per-hour cap on attorney fees, the GAO said.

The cap on fees doesn't clarify how to evaluate protesters whose size status changes between a solicitation and a bid protest, the watchdog acknowledged.  But the GAO pointed out that federal contracting law refers to payments to a "party" when it describes the fee cap, suggesting that size status at the time the bid protest began was the deciding factor.

The approach also falls in line with how federal courts award fees under the Equal Access to Justice Act, the GAO said, referring to the bill allowing an entity with a net value of $7 million or less to recoup the legal costs of suing the government.  "While the language in [federal contracting law] is not identical, we think the approach taken by the federal courts provides a good guideline for addressing the issue," the GAO said.