# Chiba v. Guntersville Breathables Inc

> District Court, N.D. Alabama · October 9, 2019

URL: https://www.frixlaw.com/law-library/cases/9988985

## Case

- **Court:** District Court, N.D. Alabama
- **Decided:** October 9, 2019
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
NORTHEASTERN DIVISION

UNITED STATES OF AMERICA, )
RICH CHIBA AND DRAKE )
MAPLES, )
) CIVIL ACTION NUMBER
Plaintiffs, ) 5:17-CV-00760-HNJ
)
v. )
)
GUNTERSVILLE BREATHABLES, )
INC., )
)
Defendant. )

MEMORANDUM OPINION AND ORDER

This matter proceeds before the court on Relators’ Motion for Reasonable
Expenses, Attorneys’ Fees, and Costs (Doc. 26), and their Motion to Strike Portions of
Defendants’ Response to Relators’ Attorney’s Fee Petition and Exhibits Accompanying
That Response. (Doc. 43). The Defendant alleges the Relators perpetrated the
wrongdoing underlying their Fair Claims Act qui tam claims, which disqualifies them
from obtaining attorneys’ fees. Moreover, the Defendant contends the FCA’s
government action and public disclosure bars preclude an award of attorneys’ fees, and
further, the court should reduce the fee request due to the Relators’ partial success on
their qui tam claims, as well as their lack of billing judgment as to certain hours
expended by the Relators’ attorneys.
As the analyses herein portray, the Relators secured prevailing party status
pursuant to the FCA, entitling them to attorneys’ fees, and the FCA does not preclude

them from obtaining attorneys’ fees due to their alleged wrongdoing. Furthermore,
the government action and public disclosure bars do not foreclose the Relators’
entitlement to attorneys’ fees; pursuant to the terms of the applicable FCA provisions,
those prohibitions typically apply to bar qui tam actions and claims, not attorneys’ fee

requests, and concomitantly, the court has already dismissed with prejudice the qui tam
claims to which the prohibitions may apply. Moreover, the prohibitions’ terms depict
that the bars do not encompass the pre-suit disclosure at issue. Finally, the court will
reduce the Relators’ attorneys’ fees award by some hours attributed to securing their

share of the proceeds the Government obtained from the Defendant, yet the court will
not reduce the requested award based upon the results the Relators obtained on their
qui tam claims.
Therefore, for the reasons set out herein, the court GRANTS the Motion for

Reasonable Attorneys’ Fees, Certain Expenses, and Costs and MOOTS the Motion to
Strike.

2
BACKGROUND
On May 10, 2017, Relators Rich Chiba and Drake Maples commenced this action

against Defendants Guntersville Breathables, Inc. (GBI), R. Christopher Lumpkin, and
Tori Chase Handley, pursuant to the False Claims Act, 31 U.S.C. §§ 3729-3733
(“FCA”). Relator Chiba served as GBI’s manufacturing vice president from January
2011 to February 2015, and as manufacturing director before that period. Relator

Maples worked for GBI from May 2005 to September 2014 as vice president of sales
and then chief executive officer.
The complaint alleged GBI and the individual defendants failed to report, for
customs duty purposes, the full value of goods imported from China, namely boot-foot

waders1 and insulated knee boots (known as Alaska Tuff Marine boots). GBI declared
the value of just one of the component products for the boot-foot wader, allegedly
resulting in underpayment of customs duties approximating $700,000. GBI’s
declaration concerning the Alaska Tuff Marine boots resulted in a tariff rate of 9%,

rather than the appropriate personal protective equipment rate of 37.5%, resulting in
the underpayment of approximately $200,000 in customs levies. The complaint alleges
Defendant Lumpkin (CEO assistant, logistics manager, and freight forwarder)

1 The component products of the boot-foot wader consist of a boot and a garment upper, which
attach together to create the final product.

3
instituted and perpetuated the scheme, with assistance from Defendant Handley (chief
financial officer).

The United States intervened and settled with Relators and GBI the
undervaluation claim involving the boot-foot waders, regarded by the parties as the
Covered Conduct. The settlement released GBI from any civil or administrative
monetary claim the United States may pursue for the Covered Conduct under the False

Claims Act, 31 U.S.C. §§ 3729-3733; the Program Fraud Civil Remedies Act, 31 U.S.C.
§§ 3801-3812; 19 U.S.C. §§ 1592 and 1595a of the Tariff Act of 1930, as amended; and
the common law theories of unjust enrichment and fraud. GBI agreed to pay the
United States $273,495.67, of which $151,942.04 represented restitution. 2 The

government gave the Relators a share of the recovery from GBI, amounting to an
approximate three point downward departure from the 15% statutory minimum for a
relator’s share pursuant to the False Claims Act. 31 U.S.C. § 3730(d)(1).
The United States requested the court dismiss with prejudice all claims included

in the settlement. However, the United States did not seek the dismissal of any
remaining claims in this action beyond the scope of the Covered Conduct, including any
claims Relators may have for costs and attorney fees pursuant to 31 U.S.C. § 3730(d)(1),

any criminal liability, and any individual liability. The Relators moved to dismiss with

2 The Settlement Agreement contains an exhibit which identifies each boot-foot wader for which GBI
failed to report the full value.
4
prejudice the remaining claims regarding the misclassification of the knee boots as well
as any claims against Defendants Lumpkin and Handley. (Doc. 25). The court

entered an order on March 19, 2019, granting the United States’ and Relators’ motions,
thereby dismissing all claims with prejudice. (Doc. 36).
The Relators filed their motion for attorneys’ fees and costs after dismissal.
Throughout this litigation, attorneys Robert E. Battle and Adam P. Plant of Battle &

Winn LLP represented Relators. Relators seek attorneys’ fees of $85,912.50 for 182.7
hours expended through March 5, 2019, ostensibly excluding time dedicated to
non-intervened claims. In particular, Relators seek the following amounts for each
attorney and paralegal providing representation and services during this litigation:

Attorney/Paralegal Hourly Rate Hours Lodestar
Robert E. Battle $525 39.8 $20,895.00
Adam P. Plant $465 137.5 $63,937.50
Amy L. Rodgers $200 3.7 $740.00
Mariah Hall $200 1.7 $340.00
182.7 $85,912.50

Relators also seek $1,234.41 in costs and expenses and $4,237.50 for expert
witness fees. In addition, Relators seek recompense for the fees and costs of litigating
their fee petition, which awaits presentation after adjudication of the instant Motion.

5
ANALYSIS
The False Claims Act provides the United States Government a right of recovery

against any person who “knowingly presents, or causes to be presented, a false or
fraudulent claim for payment or approval; [or] knowingly makes, uses, or causes to be
made or used, a false record or statement material to a false or fraudulent claim.” 31
U.S.C. § 3729(a)(1). In addition, the FCA allows private parties to file a qui tam action

and serve as relators to recover damages on behalf of the United States. 31 U.S.C. §
3730(b). Violators of the FCA suffer liability to the government for a civil penalty
between $5,000 and $10,000 per claim and treble damages. 18 U.S.C. § 3729(a)(1). In
appropriate circumstances, the FCA entitles relators to a percentage of any recovery

from a settlement or judgment plus reasonable attorneys’ fees and costs. 31 U.S.C. §
3730(d).
As provided in the background, the Government intervened into this action to
assume its prosecution, id. at § 3730(c), and subsequently reached a settlement with

GBI. GBI agreed to pay the United States $273,495.67, and the Relators obtained an
approximate 12% share of the United States’ recovery. However, GBI argues the
Relators should not receive attorneys’ fees, or should receive a reduction in attorneys’

fees, for various reasons.
As an initial matter, the court must determine whether the Relators are prevailing
parties entitled to FCA attorneys’ fees. The FCA deems a party a “prevailing” or
6
successful relator entitled to attorneys’ fees and costs in the following applicable
circumstances:

If the Government proceeds with an action brought by a person under
subsection (b), such person shall, subject to the second sentence of this
paragraph, receive at least 15 percent but not more than 25 percent of the
proceeds of the action or settlement of the claim, depending upon the
extent to which the person substantially contributed to the prosecution of
the action. . . . Any payment to a person under the first or second
sentence of this paragraph shall be made from the proceeds. Any such
person shall also receive an amount for reasonable expenses which the court finds to have
been necessarily incurred, plus reasonable attorneys’ fees and costs. All such expenses,
fees, and costs shall be awarded against the defendant.

31 U.S.C.A. § 3730(d)(1) (emphasis added). The “starting point in discerning
congressional intent is the existing statutory text,” and “when the statute’s language is
plain, the sole function of the courts -- at least where the disposition required by the text
is not absurd -- is to enforce it according to its terms.” Lamie v. U.S. Tr., 540 U.S. 526,
534 (2004) (citations and internal quotation marks omitted); see also United States v.
AseraCare, Inc., -- F.3d --, 2019 WL 4251875, at *10 (11th Cir. Sept. 9, 2019) (“The
analysis begins with the language of the relevant statute and regulations.”) (citation
omitted).
Applying the foregoing prescription here, § 3730(d)(1) plainly illustrates the
circumstances in which a relator prevails and secures entitlement to attorneys’ fees.
The first sentence of § 3730(d)(1), which applies to the determination at bar, sets forth
the method for calculating a relator’s share of proceeds garnered by the United States in
7
an FCA action in which it has intervened. Then, § 3730(d)(1)’s third sentence states
that the United States shall award the relator’s share from the actual proceeds received

from the FCA defendant. Finally, § 3730(d)(1) declares “[a]ny such person shall also
receive” attorney’s fees, expenses, and costs “awarded against the defendant.” Id.
(emphasis added). As clearly set forth, a prevailing relator entitled to attorneys’ fees
and expenses includes any person who filed a qui tam action and received a share of the

proceeds obtained by the United States from an FCA defendant. See United States ex rel.
Hunt v. Cochise Consultancy, Inc., 887 F.3d 1081, 1087 (11th Cir.), aff’d sub nom. Cochise
Consultancy, Inc. v. U.S. ex rel. Hun, 139 S. Ct. 1507 (2019) (“In an intervened case, the
relator usually is entitled to . . . proceeds, as well as reasonable expenses, attorney’s fees, and

costs.”) (citing § 3730(d)(1)) (emphasis added); Shaw v. AAA Eng’g & Drafting, Inc., 213
F.3d 538, 544 (10th Cir. 2000) (“The only significant difference between the FCA and
the attorney’s fees provisions in the other statutes is that the FCA provisions are
mandatory on their face.”).

Prevailing rules of statutory construction buttress this conclusion. The “use of a
definite article preceded by an indefinite article can be persuasive evidence that
Congress intended to link two clauses.” Schroeder v. United States, 793 F.3d 1080,
1084-85 (9th Cir. 2015) (citing Gale v. First Franklin Loan Services, 701 F.3d 1240, 1246 (9th

Cir. 2012)); see also Am. Bus Ass’n v. Slater, 231 F.3d 1, 4–5 (D.C. Cir. 2000) (“Indeed, ‘[i]t
is a rule of law well established that the definite article ‘the’ particularizes the subject
8
which it precedes. It is a word of limitation as opposed to the indefinite or generalizing
force of ‘a’ or ‘an.’”) (quoting Brooks v. Zabka, 168 Colo. 265 (1969) (en banc); citing

Black’s Law Dictionary 1477 (6th ed. 1990) (“In construing [a] statute, [the] definite
article ‘the’ particularizes the subject which it precedes and is [a] word of limitation as
opposed to [the] indefinite or generalizing force ‘a’ or ‘an’.”)).
In § 3730(d)(1), “a person” garners a share of the proceeds obtained by the

United States from a defendant, and in the very next sentence “[a]ny such person”
secures a mandatory entitlement to attorneys’ fees, expenses, and costs. 31 §
3730(d)(1) (emphasis added); see also United States v. Pittman, 151 F.2d 851, 852 (5th Cir.
1945) (“We cannot throw away the word ‘such’ [in a statute]. It is descriptive and

limiting, referring always to a class just before pointed out.”); Black’s Law Dictionary
(11th ed. 2019) (defining “SUCH” as “That or those; having just been mentioned ”); c.f., Antonin Scalia & Bryan A. Garner, Reading Law: The

Interpretation of Legal Texts 146 (2012) (“A pronoun that is the subject of a sentence and
does not have an antecedent in that sentence ordinarily refers to the subject of the
preceding sentence. And it almost always does so when it is the word that begins the

sentence.”). Because the Relators at bar obtained a share of the proceeds recovered by
the Government, they secure an entitlement to attorneys’ fees, expenses, and costs.

9
A. Relators’ Alleged Involvement Does Not Preclude an Award of
Attorneys’ Fees and Costs

Notwithstanding the plain meaning of § 3730(d)(1), GBI contends that several
other provisions of the FCA preclude the Relators’ entitlement to attorneys’ fees.
First, GBI argues the Relators, not the individual Defendants, perpetrated the fraud
underlying the FCA action, and then revealed the fraud after they left GBI’s employ.
Due to the alleged perpetration of the fraud by the Relators, GBI argues the court
should not award them any attorneys’ fees.

First, as discussed, § 3730(d)(1) declares that attorneys’ fees are mandatory:
relators “shall . . . receive” such fees if they obtain a share of the proceeds recovered by
the government. See Claire M. Sylvia, The False Claims Act: Fraud Against the Government
§ 9:3 (“Following the Act’s reference to an award of part of the ‘proceeds of the action

or settlement,’ the Act provides that such a relator ‘shall also’ receive reasonable
attorneys’ fees. . . . A relator whose claim does not result in settlement or a judgment
is not entitled to fees.”) (emphasis in original) (footnotes omitted); id. at § 1.18 (“In
addition to a share of the proceeds, the relator is entitled to reasonable expenses,

attorneys’ fees, and costs, which are to be awarded against the defendant.”).
Therefore, GBI faces a tough hurdle to circumvent this clear statutory requirement.
This barrier manifests more concretely when examining the structure of the
FCA. See AseraCare, supra, 2019 WL 4251875, at *10 (“To determine the plain meaning

10
of a statute or regulation, we do not look at one word or term in isolation, but rather
look to the entire statutory or regulatory context.”) (citing Sec. & Exch. Comm’n v. Levin,

849 F.3d 995, 1003 (11th Cir. 2017)). The FCA actually contains a provision governing
relators who participated in the fraud underlying the claim:
Whether or not the Government proceeds with the action, if the court
finds that the action was brought by a person who planned and initiated
the violation of section 3729 upon which the action was brought, then the
court may, to the extent the court considers appropriate, reduce the share
of the proceeds of the action which the person would otherwise receive
under paragraph (1) or (2) of this subsection, taking into account the role
of that person in advancing the case to litigation and any relevant
circumstances pertaining to the violation. If the person bringing the
action is convicted of criminal conduct arising from his or her role in the
violation of section 3729, that person shall be dismissed from the civil
action and shall not receive any share of the proceeds of the action. Such
dismissal shall not prejudice the right of the United States to continue the
action, represented by the Department of Justice.

31 U.S.C. § 3730(d)(3).
As delineated, § 3730(d)(3) authorizes a court in its discretion to reduce a
relator’s share of the proceeds due to his role in planning or initiating an FCA violation,
and to outright deny a share of the proceeds if the relator is held criminally liable for the
FCA violation.3 However, § 3730(d)(3) says nothing about adjusting a relator’s

3 A defendant has no standing to challenge a relator’s share of the proceeds. See U.S. ex rel. Taxpayers
Against Fraud v. Gen. Elec. Co., 41 F.3d 1032, 1046 (6th Cir. 1994) (defendant had no legal standing or
right to participate in proceedings to determine relator’s share); Mortgages, Inc. v. U.S. Dist. Court for Dist.
of Nev. (Las Vegas), 934 F.2d 209, 213 (9th Cir. 1991) (“The FCA is in no way intended to ameliorate the
liability of wrongdoers by providing defendants with a remedy against a qui tam plaintiff with ‘unclean
hands.’”); U.S. ex rel. Mikes v. Straus, 931 F. Supp. 248, 261 (S.D. N.Y. 1996) (§ 3730(d)(3) “confers no
right upon defendants to assert a counterclaim against the relator for the relator’s alleged participation
11
entitlement to attorneys’ fees, expenses, and costs. Sections 3730(d)(1) and (2) govern
the relator’s entitlement to attorneys’ fees, expenses, and costs, and those paragraphs’

silence as to a reduction for wrongdoing, as compared to § 3730(d)(3)’s prescriptions,
portrays the court cannot countermand the requirement to award attorneys’ fees when
the Relators obtain a share of the United States’ recovery. See Barnhart v. Sigmon Coal
Co., 534 U.S. 438, 439-40 (2002) (“[W]hen one statutory section includes particular

language that is omitted in another section of the same Act, it is presumed that
Congress acted intentionally and purposely.” (citing Russello v. United States, 464 U.S. 16,
23 (1983) (same))); United States v. Spoor Tr. of Louise Paxton Gallagher Revocable Tr., 838
F.3d 1197, 1202-03 (11th Cir. 2016) (“’A familiar principle of statutory construction . . .

is that a negative inference may be drawn from the exclusion of language from one
statutory provision that is included in other provisions of the same statute.’” (quoting
Hamdan v. Rumsfeld, 548 U.S. 557, 578 (2006))).
Of course, if a court had adjudged the Relators criminally liable for an alleged

violation of the FCA, § 3730(d)(3) prohibits a share of the award, and by extrapolation,
such a finding removes the basis for an award of attorneys’ fees pursuant to §

in the submission of false claims in violation of the FCA. Nor can defendants rely on this section to
reduce their liability for violation of the FCA.”); U.S. ex rel. Gale v. Omnicare, Inc., No. 1:10-CV-127,
2013 WL 3822152, at *9 (N.D. Ohio July 23, 2013) (“The False Claims Act envisions a separate
proceeding, after judgment or settlement, to determine the relator’s share of any recovery. ‘[T]he
Relators’-Share Litigation d[oes] not directly involve the qui tam defendants. . . . [Defendants] ha[ve]
no legal standing or right to participate in the proceedings.’”) (quoting Taxpayers Against Fraud, 41 F.3d
1032, 1046 (6th Cir. 1994) and citing U.S. ex rel. Vainer v. Da Vita, Inc., 1:07–CV–2509–CAP, 2013 WL
1342431 (N.D. Ga. Feb.13, 2013)) (alteration in original).
12
3730(d)(1). Yet, a court has not criminally adjudged the Relators liable for the FCA
violations at issue, so this court has no recourse to reduce their attorneys’ fees award

due to their alleged wrongdoing.
Indeed, because the FCA does not entirely divest relators who perpetrated the
underlying violation from a share of proceeds, awarding such persons attorneys’ fees
should not be inherently offensive. As § 3730(d)(3) indicates, the FCA’s qui tam

structure “seeks to tap the self-interest of individuals with information about fraud
against the Government, including those who may have been involved in the fraud.”
Sylvia, supra, at § 1.1. “Although many . . . ‘relators’ who bring qui tam actions may be
motivated by public service or a sense of moral duty, Congress did not assume that all

relators would be so motivated.” Id. Therefore, contrary to GBI’s arguments that
attorneys’ fees incentivize relators to serve the public good only, the plain meaning and
structure of the statute indicate Congress did not intend withholding of the FCA’s
attorneys’ fee incentive from whistleblowers who perpetrated the violation (unless the

whistleblowers warrant criminal liability for the violation). See Joel M. Androphy,
Federal False Claims Act and Qui Tam Litigation § 2.06 n. 64 (“‘Subsection (d)(5) of
section 3730 provides that prevailing qui tam relators may be awarded reasonable

attorneys [sic] fees in addition to any other percentage of award recovered. . . .
Unavailability of attorneys [sic] fees inhibits and precludes many private individuals, as
well as their attorneys, from bringing civil fraud suits.’”) (quoting S. Rep. No. 99-345,
13
99th Cong., 2d Sess. 29 (July 28, 1986), reprinted in 1986 U.S. Code Cong. & Admin. News
5294).

Therefore, the court cannot heed GBI’s entreaty to deny Relators’ attorneys’ fees
due to their alleged wrongdoing. Ferreting out the veracity of GBI’s allegations about
the Relators vis-a-vis the Relators’ averments in the complaint about the dismissed
individual defendants would enmesh the court in protracted proceedings disfavored for

the adjudication of fee petitions. See Hensley v. Eckerhart, 461 U.S. 424, 437 (1983) (“A
request for attorney’s fees should not result in a second major litigation.”). Indeed, the
Relators’ share of the Government’s proceeds amounted to less than the 15% statutory
minimum, § 3730(d)(1), depicting that the Government may have already relied upon §

3730(d)(3) to reduce the Relator’s share based upon participation in the FCA violation.
That reduction represents the means to sanction the Relators for any alleged
wrongdoing contributing to the FCA violation, and their attorneys should not suffer
any detriment therewith in light of the statutory mandate for fees.

B. The Public Disclosure and Government Action Bars Do Not
Preclude Relators’ Attorneys’ Fees and Costs

In a further bid to deny attorneys’ fees, expenses, and costs to the Relators, GBI
contends the FCA’s government action and public disclosure bars prohibit the Relators
from obtaining recovery. The FCA’s government action bar requires dismissal of “an
action under subsection (b)” – that is, a qui tam action under 31 U.S.C. § 3730(b) –
14
“which is based upon allegations or transactions which are the subject of a civil suit or
an administrative civil money penalty proceeding in which the Government is already a

party.” 31 U.S.C.A. § 3730(e)(3). The FCA’s public disclosure bar requires dismissal
of a § 3730 action or claim – unless the government opposes – “if substantially the same
allegations or transactions as alleged in the action or claim were publicly disclosed” in
one of several enumerated fora. 31 U.S.C.A. § 3730(e)(4). As the following analyses

reveal, GBI cannot prevail on its contentions for several reasons.
First, the posture of this case at this juncture casts GBI’s reliance upon the § 3730
prohibitions as an anomaly. Section 3730(e)(3)’s government action bar clearly applies
to effect dismissal of § 3730(b) qui tam actions, yet the Relators’ request for attorneys’

fees, etc., arises under § 3730(d). Therefore, at first blush, § 3730(e)(3) may not even
warrant dismissal of Relators’ attorneys’ fees request. The public disclosure bar effects
dismissal of an “action or claim” advanced under § 3730, 31 U.S.C. § 3730(e)(4), and a
consistent evaluation with other provisions of § 3730 yields the interpretation that

“action or claim” references the underlying qui tam action or such a claim presented
within an action. See 31 U.S.C. § 3130(d)(2) (providing attorneys’ fees for a relator who
brings an action or settles a claim in which the government does not intervene); id. at §

3730(d)(4) (providing attorneys’ fees and expenses to a defendant for a relator’s claim
that “was clearly frivolous, clearly vexatious, or brought primarily for purposes of
harassment”).
15
Furthermore, a more fundamental anomaly may preclude GBI’s attempts to
dismiss the attorneys’ fees request pursuant to the pertinent § 3730(e) prohibitions.

The government action and public disclosure bars serve to facilitate dismissal of qui tam
actions and claims charging defendants with FCA violations. Yet, pursuant to a
settlement agreement consummated by all of the parties, the United States intervened
and moved for dismissal with prejudice of the Relators’ pertinent qui tam claims (the

boot-foot waders claim). (Docs. 22 & 24). The court granted the United States’
motion and dismissed the pertinent qui tam claims with prejudice. (Doc. 36).
Therefore, the government action and public disclosure bars serve no purpose at this
juncture because the court has already extinguished the Relators’ underlying qui tam

claims.
In this guise, the Relators’ qui tam claims merged into the court’s judgment
extinguishing the claims with prejudice, and as such, GBI’s defenses also dissipated.
C.f., Restatement (Second) of Judgments § 18 (1982) (“When the plaintiff recovers a

valid and final personal judgment, his original claim is extinguished and rights upon the
judgment are substituted for it. The plaintiff’s original claim is said to be ‘merged’ in the
judgment. . . . It is immaterial whether the judgment was rendered upon a verdict or

upon a motion to dismiss or other objection to the pleadings or upon consent,

16
confession, or default.”).4 Therefore, GBI “cannot avail [itself] of defenses [it] might
have interposed, or did interpose . . . .” Rstmt. (2nd) Jgmt. § 18; c.f., Key v. Wise, 629

F.2d 1049, 1063 (5th Cir. 1980) (“Once a lawsuit reaches a final judgment on the merits,
the doctrine of res judicata bars litigation in a second lawsuit on the same cause of
action ‘of all grounds for, or defenses to, recovery that were available to the parties (in
the first action), regardless of whether they were asserted or determined in the prior

proceeding.’”) (quoting Brown v. Felsen, 442 U.S. 127, 131 (1979)); Todd v. Daewon Am.,
Inc., No. 3:11CV1077-MHT, 2014 WL 2002855, at *2 (M.D. Ala. May 15, 2014) (“The
settlement resolved the case, and the company should not be able, after the settlement,
to continue its challenge as to whether a particular opt-in plaintiff’s claim has merit;

otherwise, the settlement would be meaningless. After the settlement, the merit of any
particular claim is no longer relevant.”).5

4 C.f., In re All. Res. Mgmt., LLC, No. 07-61934-JB, 2009 WL 6498529, at *1 (Bankr. N.D. Ga. Dec. 22,
2009) (“The concept of merger provides that when a plaintiff succeeds at litigation and receives a valid
and final judgment, the plaintiff’s claim merges into the judgment, and the original claim, and all
defenses to it, whether asserted or not, are extinguished. In other words, a rendered judgment is ‘the
full measure of relief to be accorded between the same parties on the same ‘claim’ or ‘cause of
action.’”) (quoting Gutherman v. 7-Eleven, Inc., 278 F. Supp. 2d 1374, 1377 (S.D. Fla. 2003) (quoting
Kaspar Wire Works, Inc. v. Leco Eng’g and Mach., Inc., 575 F.2d 530 (5th Cir. 1978)); (citing 18 James Wm.
Moore et. al., Moore’s Federal Practice ¶ 131.01 (3d ed. 2009); Black’s Law Dictionary 1425 (9 ed.
2009)).
5 C.f., Nasalok Coating Corp. v. Nylok Corp., 522 F.3d 1320, 1328 (Fed. Cir. 2008) (“When a former
defendant attempts to undermine a previous judgment by asserting in a subsequent action a claim or
defense that was or could have been asserted in the earlier case, the rules of defendant preclusion will
apply. . . . ‘The clearest need for these rules is shown by cases that have involved a variety of direct
attacks on the original judgment based on defenses or claims that could have been advanced in the first
action.’”) (citations omitted).
17
In sum, once the parties settled the pertinent qui tam claims, the court dismissed
the claims with prejudice, and the Relators obtained a share of the proceeds, the

Relators became prevailing parties pursuant to § 3730(d)(1), warranting entitlement to
attorneys’ fees, expenses, and costs. Thus, GBI’s effort to invoke the § 3730(e) bars
seeks to deny the Relators’ prevailing party status. That issue resolved when the parties
settled the covered qui tam claims, the court dismissed the claims with prejudice, and

the United States accorded Relators a share of the proceeds. Therefore, GBI cannot
deny Relators prevailing party status at this stage.
The decisions relied upon by GBI do not caution otherwise; the courts therein
dismissed the relators’ claims before resolution of the government’s FCA allegations,

or otherwise denied relators a share of the government’s proceeds, thus preventing
recognition of the relators as prevailing parties pursuant to § 3730(d)(1). In U.S. ex rel.
Merena v. SmithKline Beecham Corp., 205 F.3d 97 (3d Cir. 2000), as amended (Apr. 21, 2000),
the government intervened into a qui tam action, the parties settled the FCA claims, and

the government subsequently invoked the public disclosure bar to prevent the relators
from obtaining a share of the proceeds. Id. at 99-100. The district court rejected the
government’s invocation and granted the relators a share of the proceeds. The Third

Circuit determined the public disclosure bar prohibited the relator’s qui tam claims, and
thus, reversed the district court’s ruling granting relators a share of the proceeds, finding
that “a relator whose claim is subject to dismissal under section 3730(e)(4) may not
18
receive any share of the proceeds attributable to that claim.” Id. at 106. On its face,
Merena does not apply to the determination at bar because it does not concern an

entitlement to attorneys’ fees. Furthermore, in this action the United States accorded
Relators a share of the proceeds, thus entitling Relators to attorneys’ fees as prevailing
parties and further rendering Merena inapposite.
In Fed. Recovery Servs., Inc. v. United States, 72 F.3d 447 (5th Cir. 1995), the

government intervened in an FCA qui tam action, and subsequently the district court
dismissed the relator for lack of subject matter jurisdiction due to the public disclosure
bar.6 Id. at 449. Thereafter, the government settled the FCA action with the
defendant, and subsequently the relator moved to reconsider the jurisdictional dismissal

and its attorneys moved for attorneys’ fees. Id. The Fifth Circuit upheld the district
court’s dismissal of the relator and denial of attorneys’ fees, finding that the relator “was
not a proper party to the litigation” due to application of the public disclosure bar prior
to settlement; thus, the relator’s attorneys were not entitled to fees. Id. at 449, 455.

Here, of course, all of the parties settled the qui tam claims with prejudice, the United
States accorded Relators a share of the proceeds, and hence the Relators comprise
proper parties entitled to attorneys’ fees.

6 Prior to a 2010 amendment to the FCA, the government action and public disclosure prohibitions
constituted jurisdictional bars. See U.S. ex rel. Osheroff v. Humana Inc., 776 F.3d 805, 809-11 (11th Cir.
2015).
19
In U.S. ex rel. Taxpayers Against Fraud v. Gen. Elec. Co., 41 F.3d 1032 (6th Cir. 1994),
an individual joined with Taxpayers Against Fraud (“TAF”), a non-profit corporation,

as relators in a qui tam action. Id. at 1039. However, the individual relator’s attorneys
founded TAF, and 95% of TAF’s expenses in the qui tam litigation represented fees
owed to the same attorneys. Id. Based upon these circumstances, the Sixth Circuit
ordered the district court on remand to determine “whether TAF had standing to act”

as a relator and thus obtain attorneys’ fees. Id. at 1044. In particular, the court cited
another decision determining TAF did not have such standing because the organization
did not have any direct and independent knowledge of the fraud and ascertained the
FCA violations from the individual relator therein. Id. (citing United States v. Rockwell

Int’l Corp., 730 F. Supp. 1031, 1035 (D. Colo. 1990)). Clearly, those circumstances do
not arise in this case, as the Relators do not remotely constitute attorneys who
discovered FCA violations from other individuals.
In Miller v. Holzmann, 575 F. Supp. 2d 2 (D.D.C. 2008), amended in part, vacated in

part sub nom. U.S. ex rel. Miller v. Bill Harbert Int’l Const., Inc., 786 F. Supp. 2d 110 (D.D.C.
2011), the court dismissed relator’s qui tam claims against one of six defendants as
time-barred, and the government subsequently prevailed on an FCA claim against the

same defendant at trial. Id. at 5. Post-trial, the relator moved for attorneys’ fees
against the defendant. The court ruled that the relator could not recover attorneys’
fees from the defendant because his claims “were dismissed in their entirety,” thus
20
depicting the relator did not prevail against the defendant. Id. at 9. Contrastingly, in
this dispute the court dismissed the Relators’ qui tam claims with prejudice pursuant to

the parties’ settlement, and the United States subsequently shared its proceeds with the
Relators.
Based upon the foregoing analyses, GBI cannot prevail on the government
action and public disclosure bars because all of the parties settled one of the qui tam

claims with prejudice. The U.S. accorded Relators a share of the proceeds garnered by
the settlement, thus entitling Relators to attorneys’ fees.
Moreover, review of the § 3730 prohibitions portrays that GBI cannot sustain its
challenge on the merits of the provisions.

1. The Government Action Bar Does Not Apply Due to the Lack of a
Prior Civil Suit or Administrative Civil Money Proceeding

As referenced previously, the government action bar provides as follows: “In no
event may a person bring an action under subsection (b) which is based upon allegations
or transactions which are the subject of a civil suit or an administrative civil money
penalty proceeding in which the Government is already a party.” 31 U.S.C. §
3730(e)(3). GBI claims that a “prior disclosure” it filed with the U.S. Customs and
Border Protection’s Fines, Penalties and Forfeitures Office constitutes an
“administrative civil money proceeding” barring the Relators’ entitlement to attorneys’

21
fees. The ensuing analysis portrays that GBI errs in its characterization of its pertinent
prior disclosure.

Pursuant to 19 U.S.C. § 1592, which governs certain violations of U.S. duties and
tariffs, GBI filed three prior disclosures to remunerate underpayments to U.S. Customs.
A 2015 prior disclosure involved the Alaska Tuff Marine boots. (Doc. 42-9 at 9-18).
A 2018 prior disclosure involved the undervaluation of the boot-foot waders, which

comprises the Relators’ qui tam claim settled by the parties. (Doc. 42-9 at 34-39). Of
course, the 2018 prior disclosure cannot constitute a predicate for the government
action and public disclosure bars because it manifested after the Relators filed their qui
tam claims.

As for the pertinent activity at bar, on June 15, 2016, GBI filed a prior disclosure
with U.S. Customs disclosing a misclassification of its boot-foot waders -- the product
underlying the pertinent qui tam claim settled by the parties -- and therewith
remunerated unpaid duties of $656,813.21 and a $97,212.88 interest penalty. As noted

by GBI, the FPF office assigned this 2016 prior disclosure a case number. (Doc. 41 at
6). Based upon this 2016 prior disclosure, GBI contends the Government maintained
an administrative civil money proceeding regarding the qui tam claim, thus barring the

Relators’ claim pursuant to § 3730(e)(3)’s government action bar.
Pursuant to the applicable statute, regulations, and decisions relied upon GBI, it
cannot prevail on the government action bar. Although GBI’s 2016 prior disclosure
22
reported the transactions containing the boot-wader undervaluation, it does not satisfy
the government action bar because prior disclosures under the applicable statutory

regime do not constitute administrative civil money penalty proceedings.
In support of its position that prior disclosures in the customs context represent
administrative civil money penalty proceedings, GBI cites Schagrin v. LDR Indus., LLC,
No. 14 C 9125, 2018 WL 2332252, at *2 (N.D. Ill. May 23, 2018) (Schagrin I), adhered to on

reconsideration sub nom. United States ex rel. Schagrin v. LDR Indus., LLC, No. 14 C 9125, 2018
WL 6064699 (N.D. Ill. Nov. 20, 2018) (Schagrin II). In Schagrin I, the court ruled the
government action bar prohibited the relators’ claims because the government pursued
the alleged fraud in a prior administrative civil money penalty proceeding. Id. at **1-2.

In particular, pursuant to 19 U.S.C. § 1592, U.S. Customs had investigated the
defendant’s customs violation, imposed penalties against the defendant, and filed a
proof of claim in a bankruptcy action spurred by the penalties assessed against the
defendant. Id.

However, in Schagrin II, the court reversed its ruling and determined that the U.S.
Customs’ assessment of a penalty against the defendant did not constitute an
administrative civil money penalty proceeding. 2018 WL 6064699, at **3-4. As

explained by the court,
[I]n support of Relators’ motion to reconsider, the government has
submitted affidavits from U.S. Customs indicating that -- contrary to the
Court’s May 23 findings -- no penalty proceeding was ever initiated. . . .
23
The government contends that a penalty proceeding under 19 U.S.C. §
1592 can be initiated only by issuance of a pre-penalty notice pursuant to
19 U.S.C. § [1592], and no such notice was ever issued to [defendant]. . . .
The government contends further that U.S. Customs investigated
[defendant] in 2012 and assessed [defendant] for unpaid customs duties.
According to the government, the results of this investigation were the
basis for the “estimated” potential penalties described in the bankruptcy
proof of claim. . . . The government argues that the statements referencing
a penalty proceeding concerned “contingent or unmatured” claims that
U.S. Customs “might have” but never “actually assessed.” * * *

Defendants apparently do not dispute that U.S. Customs never issued a
pre-penalty notice to [defendant]. Defendants also do not contend that
investigation prior to the issuance of a pre-penalty notice could constitute
a penalty proceeding for purposes of the government action bar under 31
U.S.C. § 3730(e)(3). Absent argument to the contrary from Defendants,
the Court agrees with the government and Relators that issuance of a
pre-penalty notice pursuant to 19 U.S.C. § 1592 is necessary for a penalty
proceeding to be in progress such that the government action bar is
implicated. Therefore, since there is no dispute that a pre-penalty notice
was never issued, that fact is dispositive of the issue in this case at this
point in the proceedings, and the Court must reverse its dismissal of the
case based on the government action bar.

Schagrin II, 2018 WL 6064699, at *3-4. Therefore, Schagrin II extinguished Schagrin I’s
disposition on the government action bar because U.S. Customs had not initiated a §
1592 penalty proceeding, as evidenced by the lack of a pre-penalty notice. Based upon
the absence of a penalty proceeding, Schagrin II determined the government had not
prosecuted an administrative civil money proceeding.
In the case at bar, U.S. Custom’s FP&F office did not issue a pre-penalty notice
against GBI pursuant to 19 U.S.C. § 1592. Therefore, pursuant to the same rationale
expressed in Schagrin II, GBI’s 2016 prior disclosure does not incite the government
24
action bar because FP&F did not initiate an administrative civil money penalty
proceeding. Indeed, the pertinent statute and regulations command this conclusion.

As recounted previously, GBI tendered its prior disclosure pursuant to 19 U.S.C.
§ 1592. Title 19 U.S.C. § 1592(a) proscribes the introduction of merchandise in the
United States by way of materially false information. Section 1592(b) sets forth the
procedures for processing an alleged violation of § 1592(a). 19 U.S.C. § 1592(b). In

particular, § 1592(b)(1), entitled “Pre-penalty notice,” establishes that U.S. Customs
may issue “a written notice of its intention to issue a claim for a monetary penalty.” Id.
at § 1592(b)(1). Upon assessing the alleged violator’s response to the pre-penalty
notice, § 1592(b)(2), entitled “Penalty claim,” provides that U.S. Customs “shall issue a

written penalty claim” if it determines a violation occurred. Id. at § 1592(b)(2).7 At
that juncture, the alleged violator retains an opportunity to seek remission or mitigation
of the penalty. Id. “At the conclusion of any proceeding . . ., the Customs Service

7 See also U.S. Customs and Border Protection, Customs Administrative Enforcement Process: Fines,
Penalties, Forfeitures and Liquidated Damages, 25, 26 (2004), at
https://www.cbp.gov/sites/default/files/documents/icp052_3.pdf:

While the penalty process generally begins with the FPFO’s [Fines,
Penalties and Forfeiture Office] issuance of the Penalty Notice (CF 5955A) to
the alleged violator, some statutes require the issuance of a prepenalty notice and
opportunity for response before Customs makes its penalty claim ( i.e. ,
issues a penalty notice). * * *

Upon receipt of the alleged violator’s prepenalty response, the FPFO
either will proceed to issue a penalty claim if the violation is
substantiated or issue a written statement that Customs has chosen not to
assess a penalty.
25
shall provide to the person concerned a written statement which sets forth the final
determination and the findings of fact and conclusions of law on which such

determination is based.” Id. Barring resolution at the penalty claim phase, the United
States may seek recovery of the penalty in a proceeding initiated at the Court of
International Trade. 19 U.S.C. § 1592(e). Therefore, § 1592 establishes that a
“proceeding” does not commence until U.S. Customs issues a pre-penalty notice and

subsequently substantiates a claim.
In contrast to the prior statutory provisions detailing a process for adjudicating a
claim, the prior disclosure regime falls under the “Maximum penalties” section of the
statute. 19 U.S.C. 1592(c)(4). Section 1592(c) largely concerns the penalties

applicable to violations of § 1592(a). Section 1592(c)(4), the “Prior disclosure”
provision, fashions different penalties for a violator who discloses a § 1592(a) violation
“before, or without knowledge of, the commencement of a formal investigation of such
violation . . . .” Id. (emphasis added). Based upon the foregoing statutory provisions,

prior disclosures occur before, or outside the auspices of, a formal investigation. As
indicated in Schagrin II, a § 1592(b)(1) pre-penalty notice initiates a penalty proceeding, not
a § 1592(c)(4) prior disclosure.

The prior disclosure regulations buttress this conclusion. In particular, U.S.
Customs may withhold “prior disclosure treatment” for an entity filing a prior
disclosure; in that instance, U.S. Customs commences “a formal investigation of the
26
disclosed violation [and initiates] a penalty action against the disclosing party . . . .” 19
C.F.R. § 162.74(g). If such investigation and penalty action ensues, U.S. Customs shall

inform the disclosing entity by attaching a copy of a “‘writing’ evidencing the
commencement of a formal investigation of the disclosed violation” to the “required
prepenalty notice issued to the disclosing party pursuant to 19 U.S.C. 1592.” 19 C.F.R.
§ 162.74(g). As the regulations indicate, a formal investigation, penalty action, and

associated pre-penalty notice do not commence until U.S. Customs rejects a person’s
prior disclosure.
Therefore, pursuant to the statute and regulations, a prior disclosure does not
necessarily instigate an “administrative civil money proceeding” in which the

“government is a party.” 31 U.S.C. § 3130(e)(3). Rather, the government assumes
party status in § 1592 proceedings when U.S. Customs, at the least, commences a formal
investigation of a disclosing person and issues a pre-penalty notice, which evidences the
existence of a penalty action. Short of such measures, U.S. Customs does not occupy

an adversarial position, and thus, party status, vis-à-vis a prior disclosures.
In the case at bar, the record does not contain any evidence that U.S. Customs
responded to GBI’s 2016 prior disclosure by denying prior disclosure treatment,

commencing a formal investigation, initiating a penalty action, and issuing a pre-penalty
notice. FP&F’s assignment of a case number to the 2016 disclosure does not indicate
otherwise, as such designation may merely represent a matter-tracking mechanism. In
27
the absence of evidence that FP&F issued a pre-penalty notice establishing the
existence of a formal investigation and penalty action, the court does not deem GBI’s

2016 prior disclosure an administrative civil money penalty proceeding.
2. The Public Disclosure Bar Does Not Apply
GBI’s resort to the public disclosure bar suffers even more infirmities than its
reliance upon the government action bar. The public disclosure bar provides as

follows:
(A) The court shall dismiss an action or claim under this section,
unless opposed by the Government, if substantially the same allegations
or transactions as alleged in the action or claim were publicly disclosed--
(i) in a Federal criminal, civil, or administrative hearing in which the
Government or its agent is a party;
(ii) in a congressional, Government Accountability Office, or other
Federal report, hearing, audit, or investigation; or
(iii) from the news media,
unless the action is brought by the Attorney General or the person
bringing the action is an original source of the information.

(B) For purposes of this paragraph, “original source” means an
individual who either (i) prior to a public disclosure under subsection
(e)(4)(a), has voluntarily disclosed to the Government the information on
which allegations or transactions in a claim are based, or (2) who has
knowledge that is independent of and materially adds to the publicly
disclosed allegations or transactions, and who has voluntarily provided the
information to the Government before filing an action under this section.

31 U.S.C. § 3730(e)(4).
A three-part test governs the § 3130(e)(4) inquiry: (1) whether the plaintiff’s
allegations or transactions have been publicly disclosed; (2) if so, whether the allegations
28
in the complaint are “substantially the same” as the allegations or transactions contained
in the putative public disclosures; and (3) if yes, whether the plaintiff is an “original

source” of that information. U.S. ex rel. Osheroff v. Humana Inc., 776 F.3d 805, 812 (11th
Cir. 2015).
Applying the standard, the first barrier arises as to whether the 2016 prior
disclosure was publicly disclosed. Although information published or distributed by

an agency “may be considered publicly disclosed,” a transaction does not comprise a
“public disclosure when information is reported to a government agency and filed away
in a bureaucrat’s office.” 31 U.S.C.S. § 3730 Commentary 168 (LexisNexis 2006). In
this case, the record does not reveal any evidence that U.S. Customs publicly disclosed

GBI’s 2016 prior disclosure. The record essentially exhibits a letter and attachments
GBI sent to U.S. Customs FP&F, and a couple of forms, titled “Collection Receipt or
Informal Entry,” indicating the agency’s receipt of the letter and attendant checks.
(Doc. 42-9 at 20-33). This evidence does not constitute a public disclosure. See United

States ex rel. Ortiz v. Mount Sinai Hosp., 256 F. Supp. 3d 443, 454 (S.D.N.Y. 2017) (“‘[T]he
public disclosure bar applies only where there has been a disclosure outside of the
government.’ . . . Defendants’ submission of a letter (only), . . . in the circumstances

presented here, is insufficient to invoke the public disclosure bar.” (quoting U.S. ex rel.
Wood v. Allergan, Inc., 246 F. Supp. 3d 772, 789 (S.D.N.Y. 2017))) (emphasis in original).

29
GBI also fails the substantial sameness prong of the public disclosure bar, as the
Relators’ FCA allegations regarding the boot-foot waders differ from the allegations

lodged in the 2016 prior disclosure. As Osheroff elucidated, this element queries
whether there exists “significant overlap” between the qui tam allegations and the
putative, publicly disclosed information. 776 F.3d at 814. The Osheroff decision
discerned such overlap between media and internet sources – which revealed that

defendants’ “clinics provided [certain] services, including transportation, meals,
entertainment, and spa services, at no cost” to patients – and the relator’s qui tam
complaint, which alleged “the clinics provided a wealth of free services” in violation of
the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b).8 Id.

Other courts establish similar inquiries for the substantial sameness test. The
“First Circuit held that the substantial sameness test bars ‘a complaint that targets a
scheme previously revealed through public disclosures . . . even if it offers greater detail
about the underlying conduct.’” United States ex rel. Gilbert v. Virginia Coll., LLC, 305 F.

Supp. 3d 1315, 1321 (N.D. Ala. 2018) (quoting United States ex rel. Winkelman v. CVS
Caremark Corp., 827 F.3d 201, 210 (1st Cir. 2016)). The “Seventh Circuit uses several
factors to determine substantial sameness, asking whether the complaint 1) presents

genuinely new and material information beyond what has been publicly disclosed; 2)

8 The Anti–Kickback Statute (“AKS”), 42 U.S.C. § 1320a–7b(b), prohibits knowingly offering or
providing remuneration for the purpose of inducing the recipient to purchase a good or service for
which payment may be made under a federal health care program.
30
alleges a different kind of deceit; 3) requires independent investigation and analysis to
reveal any fraudulent behavior; 4) involves an entirely different time period than the

publicly disclosed allegations; and 5) supplies vital facts not in the public domain.” Id.
(citing Bellevue v. Universal Health Servs. of Hartgrove, Inc., 867 F.3d 712, 718–19 (7th Cir.
2017)).
Based upon the foregoing precedent and authority, GBI’s 2016 prior disclosure

did not reveal information substantially the same as the Relators’ revelation in their qui
tam complaint. GBI’s 2016 prior disclosure involved the misclassification of the
boot-foot waders for tariff purposes, as GBI should have classified the items pursuant
to a schedule warranting a higher tariff rather than the tariff originally levied. (See Doc.

41 at 6, 15; Doc. 42 at 11; ¶ 35; Doc. 42-5 at 12 ¶ 38; Doc. 42-10 at 7 ¶ 26; Doc. 42-13 at
14, ¶ 40; 15 ¶ 50.). The Relators’ claims in the qui tam complaint, however, involve the
undervaluation of the boot-foot waders, whereby GBI failed to disclose the full value of
the item for customs duty purposes. (Doc. 1 at 14-18). GBI readily admits the

misclassification issue at the center of the 2016 prior disclosure differs from the qui tam
complaint’s undervaluation issue settled by the parties. (Doc. 41 at 15; Doc. 42-13 at
14, ¶ 40; 15 ¶ 50).

Pursuant to the foregoing standards, this distinction between a tariff
misclassification and a duty undervaluation as to the boot-foot waders does not evince a
significant overlap between the issues, as the transgressions warranted different and
31
separate penalties. Furthermore, the distinction between misclassification and
undervaluation reveals the qui tam complaint and the 2016 prior disclosure did not

target the same scheme. Moreover, pursuant to the Seventh Circuit’s standard, the qui
tam complaint’s allegations as to the boot-foot wader undervaluation present genuinely
new and material information beyond the 2016 prior disclosure regarding
misclassification, and allege a different kind of “deceit” vis-à-vis the prior disclosure.

For all of the foregoing reasons, the 2016 prior disclosure regarding the boot-foot
wader’s misclassification did not involve substantially the same averments lodged in the
qui tam complaint.
Finally, the Relators qualify as original sources of the information provided in

their qui tam complaint on both definitions provided by the statute. As to the first
definition, an original source constitutes an individual who “prior to a public disclosure
under subsection (e)(4)(A), has voluntarily disclosed to the Government the
information on which allegations or transactions in a claim are based.” 31 U.S.C. §

3730(e)(4)(B). As countenanced previously, GBI’s 2016 prior disclosure did not
constitute a public disclosure pursuant to § 3730(e)(4), and it did not concern the
undervaluation of the boot-foot waders. Therefore, the Relators voluntary disclosed

the undervaluation information to the Government prior to any public disclosure.
As for the other definition, an original source constitutes an individual “who has
knowledge that is independent of and materially adds to the publicly disclosed
32
allegations or transactions, and who has voluntarily provided the information to the
Government before filing an action under this section.” Id. The Relators disclosed

the undervaluation issues to the Government before filing their qui tam complaint.
Moreover, that their information involves undervaluation – not misclassification – of
the boot-foot waders evinces independent knowledge that materially adds to the 2016
prior disclosure. Therefore, the Relators qualify as original sources, and for this

additional reason, GBI cannot prevail on the public disclosure bar.
C. The Relators’ Partial Success on One Claim Only Does Not
Warrant a Downward Departure in the Attorneys’ Fees Award

As a final matter, GBI contests several aspects of the Relators’ specific attorneys’
fees request. “The general rule in our legal system is that each party must pay its own
attorney’s fees and expenses.” Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 550 (2010).
As discussed previously, however, the FCA entitles a successful qui tam relator to
attorneys’ fees. 31 U.S.C. § 3730(d)(1).
Generally, determining reasonable attorneys’ fees requires calculation of a
“lodestar figure,” which is determined by multiplying the number of hours reasonably

expended on a case by a reasonable hourly rate. Hensley v. Eckerhart, 461 U.S. 424, 433
(1983). The “lodestar method yields a fee that is presumptively sufficient to achieve
[the] objective” of inducing capable attorneys to undertake representation of FCA
relators. Perdue, 559 U.S. at 552 (citations omitted). “‘[T]he lodestar figure includes

33
most, if not all, of the relevant factors constituting a ‘reasonable’ attorney’s fee.’” Id. at
553 (citation omitted). Thus, “the lodestar method produces an award that roughly

approximates the fee that the prevailing attorney would have received if he or she had
been representing a paying client who was billed by the hour in a comparable case.” Id.
at 551 (emphasis in original). “[T]he fee applicant bears the burden of establishing
entitlement to an award and documenting the appropriate hours expended and hourly

rates.” Hensley, 461 U.S. at 437.
Relators seek only the lodestar amount, without any request for upward
adjustment.9 (Doc. 27 at 18). Defendants do not challenge the reasonableness of the
hourly rates. (See Doc. 41). Indeed, they describe Realtors’ counsel as “exceptionally

capable and well-respected” and “due to be paid for their work.” (Doc. 41 at 2).
Furthermore, GBI does not dispute the reasonableness of the Relators’ standard costs
and expenses, $1,234.41, or the reasonableness of $4,237.50 expended for Relators’
expert witnesses regarding the fee petition. (Doc. 41 at 25). However, GBI

challenges some of the recorded attorney hours, and it seeks a fee reduction based on
the results obtained.
Specifically, GBI seeks a reduction for any redundant or duplicative time entries

expended by Relators’ attorneys, including an identical 8.6 hours reported by both

9 The law allows the court to award an upward adjustment to a fee in cases of exceptional success.
Blum v. Stenson, 465 U.S. 886, 897-98 (1984).
34
attorneys Robert Battle and Adam Plant on the same date. GBI essentially questions
the attorneys’ billing judgment, as “Counsel for the prevailing party should make a good

faith effort to exclude from a fee request hours that are excessive, redundant, or
otherwise unnecessary . . . .” Hensley, 461 U.S. at 434.
The contested entries represent the attorneys’ travel time and initial meeting with
the Relators.10 “An award for time spent by two or more attorneys is proper as long as

it reflects the distinct contribution of each lawyer to the case and the customary practice
of multiple-lawyer litigation.” Johnson v. Univ. Coll. of Univ. of Alabama in Birmingham, 706
F.2d 1205, 1208 (11th Cir. 1983), holding modified by Gaines v. Dougherty Cty. Bd. of Educ., 775
F.2d 1565 (11th Cir. 1985). In this case, Battle and Plant both contributed their

expertise in complex litigation, including FCA cases; thus, the court cannot fault the
attorneys for both meeting potential clients at an initial meeting. An initial meeting
with a client carries great import, and the court finds it was not unreasonable for both
attorneys to participate in this initial meeting. As for the rest of the time entries, the

court does not discern any other duplicative or redundant entries.
GBI further requests exclusion of 89 hours from Battle’s and Plant’s entries,
claiming this time arose in a period from May 10, 2017, to February 25, 2019, during

which GBI performed all of the discovery and negotiations resulting in the settlement
of this case. The records do not support GBI’s contention, as they portray Battle’s

10 The court has reviewed in camera unredacted copies of Battle’s and Plant’s time records.
35
and Plant’s engagement with this action by interacting with the Government and their
clients; reviewing, analyzing, and revising settlement agreement drafts provided by the

Government; and researching and discussing attorneys’ fee issues. These records do
not evince “ministerial” tasks, as argued by GBI, and therefore, the court will not excise
these hours from the fee application.
However, the Relators cannot obtain recompense for the time Plant and Battle

spent negotiating and processing the Relators’ share of the proceeds. See United States
ex rel. Poulton v. Anesthesia Assocs. of Burlington, Inc., 87 F. Supp. 2d 351, 358 (D. Vt. 2000);
United States ex rel. Thompson v. Walgreen Co., 621 F. Supp. 2d 710, 726 (D. Minn. 2009); see
also Taxpayers Against Fraud, 41 F.3d at 1044-46; Miller, 575 F. Supp. 2d at 26 (time spent

negotiating relator’s share non-compensable because defendant had no right to
participate in the process and nothing suggested defendant had prolonged the process
or could have hastened its conclusion). Plant expended 4.5 hours and Battle expended
.2 hours on Relators’ share matters, which the court will disallow as part of the claimed

fees. This reduces the fees by $2,197.50 (4.5 hours x $465 plus .2 hours x $525).
Most critically for the assessment at bar, a court may adjust the lodestar amount
“downward depending on the ‘results obtained,’” United States v. Everglades Coll., Inc., 855
F.3d 1279, 1292 (11th Cir. 2017) (quoting Hensley, 461 U.S. at 434), a factor “particularly

crucial where a plaintiff is deemed ‘prevailing’ even though [succeeding] on only some
of [the] claims for relief.” Hensley, 461 U.S. at 434. “In this situation two questions
36
must be addressed. First, did the plaintiff fail to prevail on claims that were unrelated
to the claims on which he succeeded? Second, did the plaintiff achieve a level of

success that makes the hours reasonably expended a satisfactory basis for making a fee
award?” Id.
As for the first question, “a plaintiff may present in one lawsuit distinctly
different claims for relief that are based on different facts and legal theories.” Id. “In

such a suit, . . . counsel’s work on one claim will be unrelated to his work on another
claim.” Id. at 435. “Accordingly, work on an unsuccessful claim cannot be deemed to
have been ‘expended in pursuit of the ultimate result achieved,’ . . . requir[ing] that these
unrelated claims be treated as if they had been raised in separate lawsuits, and therefore

no fee may be awarded for services on the unsuccessful claim.” Id. (citation omitted).
Regarding this first question, GBI contends the Relators only prevailed on one of
the two schemes it averred in the qui tam Complaint. As discerned, the issue regarding
the boot-foot waders involved an undervaluation, whereas the Alaska Tuff Marine

boots involved a misclassification. The settlement did not involve any claims
regarding the Alaskan Tuff Marine boots, and the subsequent dismissals in this case
occasioned no relief for Relators regarding the scheme.

Relatedly, GBI contends the Relators only prevailed on one of five, separate
claims alleged in the Complaint. The five claims comprise the following: the qui tam
Complaint’s Count I averred an FCA violation against GBI and the two individual
37
defendants regarding the undervaluation of the boot-foot waders and misclassification
of the Alaska Tuff Marine boots, and Count II averred an FCA conspiracy charge

against the two individual defendants regarding the undervaluation and
misclassification. (Doc. 1 at 25-27).
The Relators assert they have excised 9.5 hours from their fee request to reflect
the dismissal of the non-intervened, non-settled claims regarding the misclassification

of the Alaska Tuff Marine boots. Beyond this expungement, the Relators argue the
schemes share a common legal theory, and thus, they are interrelated and incapable of
separation. Therefore, they did not excise any attorney hours for the unsuccessful
claim vis-à-vis the drafting and editing of the Complaint; the preparation of the Relators

for their interviews and statements; and the preparation of the Civil Investigative
Demand, all of which presumably included review, authoring, and discussion of facts
regarding the unsuccessful claim. Of the 116 paragraphs in the Complaint, 13
correspond solely to factual averments regarding the unsuccessful claim, not including

an introductory section containing a paragraph devoted solely to the unsuccessful claim.
(Doc. 1 at 4 & ¶¶ 32, 39-41, 46-47, 62-68). Nevertheless, the hours recorded for the
afore-described activities do not delineate between time expended on the successful

claim and the non-intervened, non-settled claim, and thus, the court cannot separate
such time.
In any event, further separation is not warranted because the successful claim
38
regarding the boot-foot wader intertwines with the unsuccessful claim regarding the
Alaska Tuff Marine boot. Pursuant to Hensley, where the prevailing party’s “claims for

relief . . . involve a common core of facts or [are] based on related legal theories,” such
that “counsel’s time will be devoted generally to the litigation as a whole, making it
difficult to divide the hours expended on a claim-by-claim basis[,] . . . the district court
should focus on the significance of the overall relief obtained by the plaintiff in relation

to the hours reasonably expended on the litigation.” 461 U.S. at 435 (emphasis added);
see also Popham v. City of Kennesaw, 820 F.2d 1570, 1578 (11th Cir. 1987) (“If the claims on
which the plaintiff did not prevail and the claims on which he did prevail were ‘distinctly
different claims . . . based on different facts and legal theories,’ the court cannot award

any fee for services on the unsuccessful claims. . . . However, if the unsuccessful and
the successful claims ‘involve a common core of facts’ or are ‘based on related legal
theories,’ the court must compare the plaintiff’s overall relief with the number of hours
reasonably expended on the litigation.”) (quoting Hensley, 461 U.S. at 434-35) (emphasis

added).
In this case, the Relators’ claims involve related legal theories and a common core
of facts. As for the related legal theory, both claims involved violations of 19 U.S.C. §

1592, which proscribes the introduction of merchandise in the United States by way of
materially false information. Section 1592(c) sets forth the penalties applicable to §
1592 violations, and as recounted previously, GBI tendered prior disclosures regarding
39
the claims pursuant to § 1592(c)(4).
Furthermore, the very nature of the claims portrays the existence of related legal

theories and a common core of facts, and a concomitant difficulty with dividing the
hours expended on a claim-by-claim basis. The Relators advanced an FCA qui tam
action, which by its very nature requires allegations that a defendant knowingly
submitted false or fraudulent claims to the government for payment or approval. 31

U.S.C. § 3729(a)(1). Federal Rule of Civil Procedure 9(b) governs complaints alleging
violations of the FCA. Corsello v. Lincare, Inc., 428 F.3d 1008, 1012 (11th Cir. 2005)
(citation omitted). Pursuant to Rule 9(b), “a party must state with particularity the
circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). “To state a claim

under the False Claims Act with particularity, the complaint must allege facts as to time,
place, and substance of the defendant’s alleged fraud, and the details of the defendants’
allegedly fraudulent acts, when they occurred, and who engaged in them.” Corsello, 428
F.3d at 1012.

Therefore, the nature of fraud, and the requirements for pleading and proving
fraud, reveal the inter-relation of the boot-foot waders and Alaska Tuff Marine boots
claims. The Relators proceeded with the theory that the undervaluation of the

boot-foot waders and misclassification of the Alaska Tuff Marine boots comprised one
fraudulent scheme perpetrated by GBI. Furthermore, the Relators contended that the
dismissed, individual defendants perpetrated the inter-related scheme regarding the
40
boot-foot waders and the Alaska Tuff Marine boots, demonstrating that the court
cannot separate the claims factually. Although the allegations regarding the individual

defendants may very well be untrue, GBI settled the intervened, FCA claim regarding
the boot-foot waders. The court need not engage in a protracted proceeding
determining the true wrongdoers when the intervened claim conceptually encapsulates
the unsuccessful claim both legally and factually. That is, some coterie of GBI officers

falsely reported information to U.S. Customs regarding the boot-foot waders and the
Alaska Tuff Marine boots, and although GBI settled the former only, the Complaint
alleges the same wrongdoers perpetrated the activities underlying both claims.
Therefore, the court must proceed to the second Hensley question, that is, to

compare the Relators’ overall recovery with the number of attorney hours reasonably
expended on the litigation to assess whether the level of success warrants the requested
fee award. When “the prevailing party achieved only a ‘partial or limited success,’ the
lodestar figure ‘may be an excessive amount’ because ‘the most critical factor is the degree of

success obtained.’” Everglades College, 855 F.3d at 1292 (quoting Hensley, 461 U.S. at 436)
(emphasis in original). “Moreover, when the district court ‘reduces the award to
account for the limited success, the court necessarily has discretion in making this

equitable judgment.’” Id. (quoting Hensley, 461 at 436–37) (internal alterations
omitted).
Nevertheless, “the Supreme Court has frowned on a strictly mathematical
41
approach calculating attorney’s fees based on a ratio of total claims to successfully
litigated ones, explaining that ‘such a ratio provides little aid in determining what is a

reasonable fee in light of all the relevant factors.’” Yellow Pages Photos, Inc. v. Ziplocal, LP,
846 F.3d 1159, 1164 (11th Cir. 2017) (quoting Hensley, 461 U.S. at 435 n. 11) (internal
alterations omitted). Therefore, “while the amount of damages is relevant to assessing
the degree of success enjoyed by the plaintiff, the ‘court may not employ a cash register

approach in which setting a fee is merely an arithmetical function.’” Id (quoting Cullens v.
Georgia Dept. of Trans., 29 F.3d 1489, 1493 (11th Cir. 1994)). “‘The risk is too great that a
multiple-of-damages approach will subsume, or override, or erode other relevant
considerations, or place undue tensions upon them’ even if ‘the use of the multiplier is

explained and justified.’” Id. (quoting Cullens, 29 F.3d at 1494) (internal alterations
omitted).
Based upon the foregoing principles, GBI contends the Relators’ partial, limited
success on their claims warrants a 75% reduction in the lodestar, primarily due to

success on only one of five claims, and the recovery of only $273,495.67 when the qui
tam Complaint sought nearly $1 million in damages for the alleged claims. However,
as forewarned, the precedent forestalls “calculating attorney’s fees based on a ratio of

total claims to successfully litigated ones.” Yellow Pages, 846 F.3d at 1164. Heeding the
instructions in Everglades College to consider all applicable circumstances and policy
considerations, 855 F.3d at 1293, the court declines to adjust the Relators’ lodestar
42
downward.
As an initial matter, the Government and the Relators did not secure a mere

“technical” victory upon settlement of the qui tam claim. Id. at 1292. As provided in
Everglades College, technical victories comprise recoveries of nominal damages, or
statutory penalties as in the decision itself, rather than actual damages. Everglades
College, 855 F.3d at 1284, 1292 (statutory penalties amounted to $11,000 recovery for

Government)(citing Farrar v. Hobby, 506 U.S. 103, 114-15 (1992) (nominal damages do
not constitute actual damages)). In this case, the Government and the Relators
secured restitution in the amount of $151,942.04, and a near 100 percent multiplier in
the amount of $121,553.63, which together totaled $273,495.67. This sum represents

more than a technical victory for the Government and the Relators. Indeed, in
Everglades College itself, the Court upheld the relators’ downward-adjusted $60,000 fee
award for the $11,000 in statutory penalties secured by the relators at trial. Id. at
1292-93.11 Surely, the $273,495.67 recovery here represents a greater degree of

success, and the application for approximately $85,000 in attorneys’ fees constitutes a
substantially more modest request than the $1 million in fees sought in Everglades College.

11 To be sure, in Everglades College the government intervened after the district court fashioned it
attorneys’ fee award and secured a settlement with the defendant for $335,000. United States v.
Everglades Coll., Inc., 855 F.3d 1279, 1284-85 (11th Cir. 2017). Based upon this larger settlement, the
relators sought enhanced attorneys’ fees and costs, but the “district court denied that request on the
ground that Relators objected to the settlement at every stage of the proceedings and should not reap
the benefits of an outcome they so vigorously sought to prevent.” Id. at 1285. Those circumstances
do not arise in the case at bar, as the Relators were parties to, and approved, the Government’s
settlement with GBI.
43
More importantly, the Relators achieved a significant public benefit for the
United States. As the Eleventh Circuit declares, “public benefit . . . is an important

measure of success” in an action underlying an attorney’s fees petition. Villano v. City of
Boynton Beach, 254 F.3d 1302, 1307 (11th Cir. 2001) (citing Popham, 820 F.2d at 1580).
Successful litigation of an FCA qui tam claim certainly serves a public benefit. The
FCA prevents the United States Treasury from being drained of millions of dollars by

fraudulent billings or omissions by federal government contractors and commercial
entities. See S. Rep. No. 345, 99th Cong., 2d Sess. 3, reprinted in 1986 U.S. Code Cong. &
Admin. News 5266, 5268. In furtherance of that purpose, Congress strengthened the
FCA in 1986 by revamping its qui tam provisions to encourage private individuals to

bring suits on behalf of the government. See United States ex rel. McCoy v. California Medical
Review, Inc., 715 F. Supp. 967, 968 (N.D. Cal.1989) (“Congress’ objectives in amending
the Act [were] principally to expand the role of qui tam plaintiffs and to keep pressure
on the United States to prosecute the cases”) (citing S. Rep. No. 99–345, 99th Cong., 2d

Sess. 24, reprinted in 1986 U.S. Code Cong. & Admin. News 5266, 5289). Congress
noted that “much of the purpose of qui tam actions would be defeated unless the
private individual is able to advance the case to litigation.” S. Rep. No. 99–345, 99th

Cong., 2d Sess. 24, reprinted in 1986 U.S. Code Cong. & Admin. News 5266, 5289.
In this case, the Relators’ successful qui tam claim occasioned a significant public
benefit for the United States. As described previously, the United States obtained
44
restitution in the amount of $151,942.04, and a near 100 percent multiplier in the
amount of $121,553.63, totaling $273,495.67. More significantly, the nature of the

recovery indicates its significance. As recounted previously, GBI had issued prior
disclosures to U.S. Customs to pay duties and tariffs on the misclassified boot-foot
waders and the Alaska Tuff Marine boots. Laudable as this effort may be, the prior
disclosures still did not report the undervaluation of the boot-foot waders. Therefore,

even though GBI’s prior disclosures included the same boot-foot waders transactions
underlying the successful claim at bar, GBI failed to disclose to U.S. Customs the
undervaluation aspect of the transactions. The Relators’ qui tam claim revealed the
undervaluation, and its revelation amounted to a recovery of close to $273,495.67.

This recovery represents a significant public benefit given the failure of GBI’s prior
efforts at disclosure to reveal the undervaluation.
Considering the “‘policy considerations on all sides (including the
encouragement of whistle-blowers, . . . and considerations of judicial economy), and the

fact that the suit may have had a positive impact on [GBI’s] conduct,” Everglades College,
855 F.3d at 1293 -- particularly as it failed to disclose the boot-foot waders’
undervaluation even after disclosing another issue with the product -- the Relators’ fee

application does not warrant a downward departure.

45
Therefore, based upon the foregoing evaluation, the court will preliminarily
award the following attorneys’ fees to the Relators, subject to a subsequent application

for attorneys’ fees, expenses, and costs in litigating the instant application:
Attorney/Paralegal Hourly Rate Hours Lodestar
Robert E. Battle $525 39.6 $20,790.00
Adam P. Plant $465 133 $61,845.00
Amy L. Rodgers $200 3.7 $740.00
Mariah Hall $200 1.7 $340.00
178 $83,715.00

D. Motion to Strike
Because the court adjudicated GBI’s contention that the court should not award
Relators’ fees, costs, and expenses because they allegedly participated in the conduct
giving rise to this action, the court DENIES the Relators’ Motion to Strike as MOOT.
However, the court DIRECTS the Clerk to maintain Doc. 42 under seal.
CONCLUSION
Based on the foregoing analysis, the court GRANTS Relators’ Motion for
Reasonable Expenses, Attorneys’ Fees, and Costs. The court preliminarily AWARDS

attorneys’ fees against GBI in the amount of $83,715.00, costs and expenses against
GBI in the amount of $1,234.41, and expert witness fees against GBI in the amount of
$4,237.50.

46
Relators shall file their final petition seeking reimbursement for fees and costs
incurred after March 5, 2019, in litigation of the fee petition, within fourteen (14) days
from the entry date of this order. Defendants shall file any response within seven (7)
days thereafter.
DONE this 9" day of October, 2019.

4 N. mo IR.
UNITED STATES MAGISTRATE JUDGE

47

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9988985. Public record. Not legal advice.