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United States, ex rel. Palmer v. C & D Technologies, Inc.

United States District Court, E.D. Pennsylvania

April 25, 2017

C & D TECHNOLOGIES, INC., Defendant.


          GENE E.K. PRATTER United States District Judge


         The devil often lurks in the details of lawyers' billing records. It is a hellish judicial duty to review and resolve disputed attorneys' fee petitions, particularly in cases, like this one, where the adversaries fan the flames at virtually every opportunity. To listen to the combatants, the Court is being asked, according to one side, to acknowledge, with considerable recompense, long-suffering avenging angels, or, on the other hand, to once and for all quell avariciousness and inefficiency and only give the devil what is reasonably due.[1] It is surely no surprise that determining what is “reasonably due” leads to this Memorandum.


         In this False Claims Act action, Donald Palmer claimed that C&D Technologies manufactured and shipped some 349 defective batteries to the United States government for use in ICBM missile launch controls. Following a criminal investigation that had been instigated, at least in part, as a result of Mr. Palmer's claims, the government closed the investigation, electing to take no action against C&D.

         Mr. Palmer was a Senior Design and Development Engineer for C&D from 2007 through 2011. He claimed that the batteries manufactured per C&D's government contract were not manufactured to specifications. In particular, Mr. Palmer claimed that C&D failed to use the proper grit material and pressure in preparing and sealing the covers and jars of the batteries. Initially, Mr. Palmer also claimed that he was fired from his job in retaliation for reporting the manufacturing problems to senior C&D management, but he withdrew that claim when he was confronted with the fact that he had released all of his employment claims in exchange for a severance package.

         Mr. Palmer did initiate this Qui Tam litigation, however. Consistent with the ultimate results of the criminal investigation, the government declined to intervene in this case.[2]

         After some four years of litigation, the parties at first appeared to accept finally the Court's encouragement to engage in active mediation activities in the summer of 2014. Mr. Palmer, the Relator, then demanded a settlement of $1.5 million, plus fees and costs. The 2014 negotiations were unsuccessful. During those discussions, C&D reportedly advised Mr. Palmer's attorneys of C&D precarious financial condition, including sharing with them a C&D financial statement.

         Some months later, in the spring of 2015, Mr. Palmer filed a Second Amended Complaint in which he expanded his demands for alleged damages to some $30, 000, 000. Summary judgment motion practice then ensued, culminating in the Court's denial of the cross motions. Ultimately, the parties settled the case for $1.7 million, representing about 6% of the total amount demanded in Mr. Palmer's Second Amended Complaint.[3] As a statutorily technical matter, the settlement makes Mr. Palmer a “prevailing party”, arguably entitling him to an award of fees and costs under the False Claims Act.[4]

         Although the parties supposedly settled the substance of the case, they have been unable to reach an agreement on fees. The parties initially submitted their position papers on the fees issues to the Court in January 2016. At that time, Mr. Palmer's counsel sought $2, 367, 904.85 in attorneys' fees as of December 31, 2015.[5] C&D responded that the reasonable fee amount should have been no more than about half that amount, arguing essentially that the case had been over-staffed and over-worked by the Relator's various sets of lawyers, and that the fee petition was based on the wrong hourly rates and included duplicative entries, inappropriate submissions such as for travel time and, finally, that there should be a reduction of the amount awarded for degree of success, or rather, lack of success, given the modest settlement amount.

         The Court repeatedly offered certain guidance for possibly bridging the chasm and directed the parties' counsel to exchange various pertinent information in an effort to minimize areas of disagreement. Counsel were equally slow to do so, and the hoped for exercise that the Court intended as a way to persuade counsel of the benefits of good faith and good sense achieved very little - other than to lead to an exchange dueling briefs, innuendo and insults.

         Mr. Palmer's lawyers appear to believe that the key to resolving this dispute is to increase their fee demand. They now want $3, 278, 115.99 in fees, almost $1 million more than the fees they sought a year ago and almost twice the dollar amount of the settlement they reached. They now choose to use higher hourly rates than they originally used to calculate their fee demand, rates that they have somehow and for some reason “extrapolated” from actual Community Legal Services hourly rates. For their part, the lawyers for C&D oppose the fee demand, unhelpfully describing their opponents as “disingenuous”, “opportunistic” and looking to “recover . . . a boon of attorneys' fees” that they describe as “exorbitant” and having been based on “hours amassed” and supported by “regurgitated”, “biased”, and “self-serving” opinions.

         As a result, counsel seemingly overlook the fact that the Court was at all times well aware of who was doing what, to what possible end and has been entirely attentive to the at times puzzling performance of the professional duties of the lawyers. The discussion that follows reflects the Court's hands-on contemporaneous evaluation (and necessary attendant factual findings) of the services performed and for which payment is sought. The parties have declined the Court's encouragement to navigate their own ships through the fee swells.[6] The Court will do so for them, lest one or both of them find themselves and their clients wrecked upon the rocky shoals without even a paddle.


         I. Applicable Legal Standard

         The False Claims Act provides that a successful relator “shall…receive reasonable attorneys' fees and costs.” 31 U.S.C. § 3730 (d)(2). “Fees are presumed reasonable when calculated using the ‘lodestar' method, by which a court assigns a reasonable hourly rate and multiplies that rate by a reasonable number of hours on the litigation.” Simring v. Rutgers, 634 Fed. App'x. 853, 857 (3d Cir. 2015). Here, although he endeavors to place the ultimate burden on C&D to undermine the fee application, Mr. Palmer (as the nominal champion of his lawyers, who are, obviously, the interested parties on this issue) bears the burden of establishing the reasonableness of the rate(s) claimed and the hours allegedly logged and claimed. Loughner v. Univ. of Pittsburgh, 260 F.3d 173, 178-80 (3d Cir 2001).

         To determine the reasonable hourly rate(s), the Court most typically looks to the prevailing rate charged by lawyers in the community where the matter is being litigated and professional services performed, considering lawyers of equivalent experience, proficiency and reputation. Simring, 634 Fed. App'x. at 857. (As will be addressed below, even this rather rudimentary proposition is a subject of dispute in this case.) Then, to find a reasonable number of hours, not unexpectedly, the initial benchmark would be the number of hours actually devoted to the subject activity.

         But, for good or ill, the Court's job is far more challenging than to be a disengaged robotic calculator, because, while the Court cannot sua sponte reduce the fees being sought, the Court may indeed respond to meritorious objections to exclude hours that are not reasonably spent on the alleged activity, such as hours that are excessive, redundant or otherwise unnecessary. Simring, 634 Fed. App'x. at 857. See also Interfaith Cmty. Org. v. Honeywell Int'l, Inc., 426 F.3d 694, 713 (3d Cir. 2005). To discharge its duties, the Court must conduct a “thorough and searching analysis.” Zebroski v. Gouak, Civil Action No. 09-1857, 2011 WL 3565223, at *2 (E.D. Pa. Aug. 12, 2011). Of course, while these duties fall within the Court's broad but sound discretion, the exercise of that discretion should be well within conventional guideposts. See, e.g., Boles v. Wal-Mart Stores, 650 Fed. App'x. 125 (3d Cir. 2016). The Court has endeavored to do just that here, giving due regard to the exhibits proffered by C&D, the affidavits submitted by Relator and the Court's firsthand knowledge of the case.

         Based on the Court's detailed efforts to persuade these parties and counsel to reach an amicable resolution of this fee dispute, it should come, once again, as no surprise to them that the Court's primary guideposts, with varying comparative primacy (depending upon the specific matter being examined), are the following:

• For which tasks is compensation merited? And which not?
• As performed by how many and which lawyers?
• For how much time?
• At what hourly or other ...

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