In a False Claims Act whistleblower case against Academy Mortgage Corporation, the Ninth Circuit panel held that only 'rare and exceptional' cases justify fee enhancements above the standard lodestar calculation. The case arose when former Academy employee Gwen Thrower sued her employer in 2016, alleging false certifications of compliance with Federal Housing Administration requirements.
The case faced significant hurdles when the government initially declined to intervene and later entered the case seeking dismissal based on its own cost-benefit analysis. Thrower's attorneys at Thomas & Solomon LLP conducted extensive investigations, including cold-calling former Academy employees nationwide and filing detailed supplemental briefings that ultimately convinced the district court to deny both dismissal motions.
After a $38.5 million settlement in 2022, the district court awarded attorney fees with a 1.75 multiplier above the $4.37 million lodestar amount, citing the 'exceptional result' of surviving dismissal motions from both the defendant and the government, as well as the attorneys' investigative work. The enhanced fee award totaled over $8.5 million.
Writing for the majority, Judge Bumatay concluded that these factors were already incorporated into the lodestar calculation and that the district court failed to provide adequate justification for the specific 1.75 multiplier figure. The court emphasized that fee enhancements require 'specific evidence' that the lodestar amount is unreasonably low.
Judge Milan Smith partially dissented, agreeing that the district court failed to adequately explain the 1.75 multiplier but disagreeing with the majority's conclusion that no enhancement was warranted. The case was remanded for recalculation of attorney fees under the proper lodestar standard.