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Category: Fees Paid by Gov't / Taxpayers

California Challenges Fee Entitlement in Tribes’ Gaming Appeal

October 28, 2022

A recent Law 360 story by Caleb Symons, “California Rebuffs Tribes’ Bid for $1.1M Atty Fee in Gaming Appeal reports that California and its governor, Gavin Newsom, say five Native American tribes that earlier this year won a Ninth Circuit decision over their gaming negotiations with the state are not entitled to more than $1.1 million in attorney fees, since federal Indian law offers no such relief.  That dispute comes several months after the Ninth Circuit gave the five tribes — the Chicken Ranch Rancheria of Me-Wuk Indians, the Chemehuevi Indian Tribe, the Hopland Band of Pomo Indians, the Robinson Rancheria of Pomo Indians and the Blue Lake Rancheria of the Wiyot, Yurok and Hupa Indians — major leverage in their gaming negotiations.

In the wake of that decision, in which a panel of the appellate court prohibited California from adding to the tribes' new gaming compacts any regulatory topics not directly tied to gambling, tribal leaders have sought to recoup $1,130,679 they estimated spending on the litigation.  California fired back, saying the tribes are ineligible for that relief because the federal Indian Gaming Regulatory Act contains no provision for recovering such expenses.

Nor can the tribes turn to state civil procedure to recoup their attorney fees, Newsom and other state officials argued, since the case involved only questions of the federal Indian gaming law, not state law.  The Ninth Circuit has already determined — in the 2018 case Independent Living Center of Southern California Inc. v. Kent — that such claims are valid exclusively in litigation over state law, according to California.

"The tribes' attempt to expand Kent to permit state law attorneys' fees awards in federal court cases that do not adjudicate a state law claim remains wholly without support," the state said.  In their Sept. 26 motion, the five Native tribes said their request of $1.1 million in attorney fees was based on reduced rates and reflected a proper "lodestar" amount, defined as the product of the number of hours reasonably spent on the litigation and a reasonable hourly rate for the attorneys.

That calculation, on the high end, proposes $980 per hour for Lester J. Marston of Rapport and Marston, which represents all the tribes except the Blue Lake Rancheria.  At the low end, it proposes $300 per hour for Marston's son, a law clerk at the same firm.  But even if the tribes are, in fact, eligible to recoup such expenses, California and Newsom responded, the state is immune from furnishing those funds under the 11th Amendment of the U.S. Constitution.

California never waived its sovereign immunity in the litigation, the state added, calling the tribes "mistaken" for contending that it set aside its immunity under a statute that allows for lawsuits against the state that are related to the federal Indian gaming act.  That statute, known as Section 98005, allows for "good faith" litigation under the Indian gaming act but does not waive California's immunity to attorney fees, according to state officials.  "Because Section 98005 is silent on attorneys' fees, the statute does not 'unequivocally' waive the state's immunity to a claim for such fees," they said.

Feds Ordered to Pay Attorney Fees to Reimburse NY Hospital

August 18, 2022

A recent Law 360 story by Anna Scott Farrell, “Gov’t Ordered To Reimburse NY Hospital $1.7M in Legal Fees” reports that the U.S. Court of Federal Claims ordered the government to reimburse NewYork-Presbyterian Hospital $1.7 million in attorney fees for defending itself against doctors who claimed their payroll taxes were wrongly withheld and eventually settled.  The court's decision answered "a unique question of law" about whether a statute requiring the government to reimburse employers for payroll-tax claims extends to the employer's cost to litigate or negotiate such claims, according to the decision published.  "The short answer is that it does," the court said.

At the center of the decision was a textual parsing of Section 3102(b) of the Internal Revenue Code, which requires the government to indemnify employers against claims for taxes withheld under the Federal Insurance Contributions Act.  The law, as written by Congress, reads, "Every employer required so to deduct the tax shall be liable for the payment of such tax, and shall be indemnified against the claims and demands of any person for the amount of any such payment made by such employer."

The court disagreed with the government's position that the phrasing of "any such payment" should apply in a limited context to the payment for "claims and demands" made by the employer. It sided with the hospital's "most natural reading," which included the last part of the sentence — that the payment should apply to "any such payment made by such employer."  Further, the court said, "the plain meaning of 'indemnified' clearly encompasses attorneys' fees and costs."

The decision is a mile marker in a long battle that started in 2013, when three doctors who had worked as residents at the hospital blamed the hospital for the loss of tens of thousands of dollars in FICA payroll taxes on their wages when they were trainees.  The Internal Revenue Service had recently given the trainees a window of time to claw back their tax contributions for the years when they were considered students who weren't required to pay those taxes.  In their suit against the hospital, the doctors said it should have helped them recover the wages in time by filing protective FICA tax refund claims on their behalf, according to court filings.

The hospital settled with the residents in 2015, agreeing to pay them $4.5 million toward their lost wages plus their attorney's fees, bringing the total settlement amount to $6.6 million.  A year after the settlement, the hospital sued the IRS, seeking reimbursement of the $6.6 million it had paid the residents.  The Court of Federal Claims initially rejected the hospital's bid for reimbursement, but a three-member panel on the Federal Circuit overturned that ruling, saying the hospital was entitled to reimbursement from the government.

Feds Push Back on $1.9M Fee Request in GMO Salmon Action

April 28, 2022

A recent Law 360 story by Mike Curley, “Feds Push Back On Bid For $1.9M Fees in GMO Salmon Suit” reports that the federal government has opposed a motion from environmental groups seeking $1.9 million in attorney fees and costs in a suit alleging the U.S. Food and Drug Administration wrongly approved the first genetically modified salmon for human consumption, saying the "excessive" fees request follows a "narrow" suit victory.  In an opposition brief, the government said the groups, led by the Institute for Fisheries Resources, saw limited success and repeated losses in the suit, prevailing narrowly on only three of the 14 claims, including losing all claims under the Food, Drug and Cosmetic Act.

That limited success should in turn limit the amount that the court awards in fees, according to the brief, and the government said if the court decides to award fees at all, they should be capped at $246,333.37, while expenses should max out at $1,135.91.  In particular, the government said, the groups should not be able to recover fees for their unsuccessful claims, such as the claims under the FDCA and the bulk of their claims under the National Environmental Policy Act.

The plaintiffs sued the FDA in March 2016, claiming the agency's groundbreaking 2015 approval of a genetically engineered salmon for human consumption poses unknown dangers to food, health and the environment.  AquaBounty used genetic material from a Pacific Chinook salmon and from another fish, the ocean pout, to create a line of fish that grow to full size in about half the standard time, according to court documents.  U.S. District Judge Vince Chhabria in November 2020 found the FDA should have looked deeper into regulating genetically modified salmon, saying the agency didn't meaningfully analyze what might happen to normal salmon if the genetically engineered salmon were able to establish a population in the wild.

The environmental groups asked for the $1.9 million in attorney fees in March, after a previous bid — seeking $2.9 million — was rejected in February.  In March's motion, the groups said they had cut down their billable hours to 3,190.6.  In the brief, the government further argued that the plaintiffs had used "unreasonable" hourly rates that go beyond the market standards in the attorneys' home markets by using the benchmark of San Francisco rates despite three out of four core counsel working out of Portland, Oregon and Seattle.

And the hours claimed are excessive, the government wrote, with the plaintiffs presenting vague time entries and block billing that make it impossible for the government defendants to figure out what hours apply to which claims.  In addition, the time sheets include hours that are not compensable, the government wrote, such as hours spent in separate regulatory proceedings, client solicitation, media activities and challenges to the FDA's deliberative processes.

In other cases, the attorneys' time sheets included duplicative time entries for overlapping efforts among multiple attorneys, resulting in excessive hours for which they should not be billed.  The government also challenged particular time entries linked to tasks that they say were well in excess of the actual time spent on those actions, such as 240 hours marked as being spent on a procedural motion that "did not necessitate so many hours."

Finally, the government argued that the plaintiffs should not be granted any fees under the Equal Access to Justice Act, which allows fees to be granted to the prevailing party unless the government shows its actions were substantially justified.  Both the FDA's approval decision and its conduct in the litigation were substantially justified, the government argued, saying the FDA had diligently examined AquaBounty's application and the U.S. Fish and Wildlife Service concurred with its determination.  That the government prevailed on the bulk of the claims in the suit is further evidence that its position was reasonable, according to the brief, and therefore no fees should be awarded under the EAJA.

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.