Labor & Employment Law Daily Wrap Up, ATTORNEYS’ FEES—9th Cir.: District court, in FCA case, erred in awarding enhancement above lodestar calculation, (Apr 7, 2026)

By Kathleen Kapusta, J.D.

“This is not the ‘rare and exceptional’ case that overcomes the ‘strong presumption that the lodestar is sufficient.’”

Reversing a district court’s application of a 1.75 multiplier to a law firm’s merits work in an FCA case, the Ninth Circuit found the reasons the court provided—the “exceptional result” achieved by the firm in surviving a motion to dismiss “notwithstanding the Government’s attempts to extinguish [the case]” and the firm’s investigative work—were adequately subsumed in the lodestar calculation. Further, the appeals court held, even if an enhancement was appropriate, the district court failed to provide a sufficient reason for its seemingly arbitrary multiplier. Judge Smith concurred in part and dissented in part. In a separate but related case, the Ninth Circuit affirmed the district court’s order regarding post-judgment interest on attorney fees awarded following the confirmation of the settlement of the employee’s qui tam action, holding that the interest accrued from the entry of the order awarding fees, not the entry of an earlier order confirming the settlement (U.S. ex rel. Thrower v. Academy Mortgage Corp., No. 24-4103 (9th Cir. Apr. 6, 2026)).

In 2016, a former Academy Mortgage Corporation employee sued the company under the False Claims Act (FCA), alleging it falsely certified compliance with requirements of the Federal Housing Authority’s Direct Endorsement Program. Thomas & Solomon LLP (T&S) initially represented the employee on a contingency fee basis.

Investigation. After the government decided not to intervene in the qui tam action, T&S undertook a multi-week investigation of Academy’s lending practices that included, among other things, creating a hundreds-of-pages-long spreadsheet of the company’s former employees nationwide and then cold calling and interviewing them.

Academy and the government both moved to dismiss, with the government citing its own cost-benefit analysis of the litigation. The district court denied the motions and the Ninth Circuit, in a prior opinion, dismissed the appeal.

Settlement. Two years later, T&S and another firm helped negotiate the terms of a $38.5 million settlement between the employee and Academy, of which the employee received $11,511,000. Although the employee had agreed to provide T&S with 40 percent of her proceeds, or $4,604,600, its share of the award was reduced to $1,841,840 as a result of a subsequent agreement between the two law firms.

Attorney fees. The employee then sought attorney fees under the FCA, requesting a 2.0 multiplier based on T&S’s extraordinary victory. The district court found the requested rates were “on the high end” for the local legal market, adopted the rates requested by T&S attorneys in a previous Northern District of California case, and added 20 percent to account for inflation in legal market rates. It then arrived at a lodestar amount of $4,374,532 for T&S’s fees, determined that a 2.0 multiplier was not appropriate, and reduced it to 1.75 based on T&S’s reduced involvement in later stages of the litigation. After applying the multiplier, it awarded the employee $8,585.530 in attorney fees.

Exceptional result. Addressing on appeal the district court’s first reason for awarding the 1.75 multiplier—the exceptional result T&S achieved in surviving dismissal despite the government’s attempts to extinguish the case, the Ninth Circuit, agreeing with the district court, noted that the case was “unprecedented,” attracted media attention, and no court had ever permitted a qui tam action to proceed against the government’s wishes. But without more, said the appeals court, “this doesn’t amount to ‘specific evidence’ justifying a multiplier.”

While superior results can sometimes justify a fee enhancement, here, the district court made no finding that any circumstance left the lodestar calculation unreasonably low; did not find that T&S risked an extraordinary outlay of expenses, endured an exceptionally protracted litigation, or suffered an exceptional delay in payments; and did not believe that the lodestar calculation undervalued T&S’s “true market value.”

Nor did the district court find that T&S’s services exceeded the area’s prevailing market rate. Rather, it concluded that the firm’s requested rates were “on the high end of the scale for large firms in the area” and lowered its requested rates. And, the court observed, the district court did not, as the employee argued, indicate that it was intentionally lowering the hourly rate on the expectation that it would make up any shortfall on the back end through the multiplier.

Investigative work. As to the district court’s second reason for the multiplier—to account for T&S’s investigative work—the court explained that, while “these Herculean efforts clearly led to the denial of the government’s motion to dismiss and the eventual settlement of this case,” the lodestar calculations adequately accounted for this. Indeed, the court pointed out, the district court carefully looked through T&S’s time entries and granted it around 7,000 hours of billable work for its efforts. Further, the court continued, the skill reflected by T&S’s attorneys during this investigation was subsumed in the determination of the reasonable market rate.

Although the court acknowledged that district courts may apply an enhancement for an “exceptional result,” it found the district court here did not provide specific evidence for why the lodestar method could not reflect T&S’s true market rate. Rather, it resorted too quickly and without adequate explanation to the assignment of a multiplier, which, said the court, “breaks the back of the lodestar method.” Because the multiplier here was based on considerations already subsumed into the lodestar calculation, the court found the district court’s award was an abuse of discretion.

No reasoned basis. Even assuming the multiplier was appropriate, the court found the district court abused its discretion by failing to provide a reasoned basis for selecting a 1.75 multiplier. After concluding that an enhancement was warranted based on the exceptional result and the investigative work involved, the district court did not link the 1.75 multiplier to a shortfall in the lodestar calculation based on those factors. “Instead, as best we can tell, the district court just started with [the employee’s] requested 2.0 multiplier and then reduced it to 1.75 because T&S had a reduced role in later stages of the litigation, didn’t negotiate the settlement, and was already guaranteed a share of [her] portion of the settlement.”

This was not enough, said the court, as the district court needed to show how T&S’s superior performance justified a rate 1.75 times the lodestar rate. For these reasons, the court reversed the award of a multiplier and remanded.

Partial concurrence and dissent. Judge Smith, concurring in part and dissenting in part, disagreed that the district court abused its discretion by applying an enhancement above the lodestar calculation and would instead have found that it acted within its discretion when it determined that this is the “rare and exceptional” case justifying such enhancement. Because he agreed, however, that the district court abused its discretion by imposing a 1.75 multiplier without a “reasonably specific explanation,” he concurred in the majority’s decision to reverse the district court’s choice of multiplier and remand.

Post-judgment interest. In a separate but related decision entered the same day, the Ninth Circuit, addressing when post-judgment interest begins to accrue on attorney fees, held that interest accrued here on May 2024, the date the district court entered judgment awarding attorney fees to the employee and not on January 2023, the date it approved the settlement of her FCA case.

Because the FCA does not establish when post-judgement interest on attorney fees begins to accrue, the court turned to 28 U.S.C. § 1961, which governs post-judgment interest in all civil matters in federal courts and ties the accrual of post-judgment interest to the “date of the entry” of the “money judgment.”

Money judgment. To determine what constitutes a “money judgment,” the court reviewed the historical understanding of the term as well as a 1984 Third Circuit decision in concluding that two elements are required: “(1) an identification of the parties for and against whom judgment is being entered, and (2) a definite and certain designation of the amount which plaintiff is owed by defendant.” And here, said the court, only the May 2024 order both identified the parties and a “definite and certain designation of the amount” of attorney fees.

As to the January 2023 order approving the parties’ settlement, it expressly established that the employee’s claims for attorney fees would “remain pending” and be decided later, which did not provide a definite and certain amount of fees Academy owed to the employee. The May 2024 order, however, identified “the parties for and against whom judgment is being entered” and provided the exact amounts Academy owed the employee. Thus, said the appeals court, the district court properly concluded that the post-judgment interest on the employee’s attorney fees accrued starting from the May 2024 order.

Entitlement. For her part, the employee argued that interest should run from the judgment in which “the party’s unconditional entitlement to attorneys’ fees is secured.” In support, she cited the Ninth Circuit’s 1995 decision in Friend v. Kolodzieczak, which stated that “Interest runs from the date that entitlement to fees is secured, rather than from the date that the exact quantity of fees is set.” But that sentence, said the court here, was not from the court’s binding order but rather from an appendix attached to the order.

Though the court noted that several circuit courts have adopted this “entitlement” reading of post-judgment interest, it pointed out that they largely justify this reading of Section 1961 by appealing to policy or equitable concerns—such as fully compensating attorneys for their successful efforts—rather than the text of the law. Finding these policy considerations unfounded, the court pointed out that any “losses attorneys may suffer from a delay between a merits judgment and a judgment quantifying attorneys’ fees can be incorporated into the calculation of those fees.”

In declining to depart from the requirement of “a definite and certain designation of the amount which plaintiff is owed by defendant” before starting the accrual of post-judgment interest, the court noted that several of its sister circuits shared this same conclusion.

The cases are No. 24-4103 and No. 24-6247.

Judge: Bumatay, P.

Attorneys: Sanford Jay Rosen (Rosen Bien Galvan & Grunfeld) and J. Nelson Thomas (Thomas & Solomon) for Gwen Thrower. Joseph M. Katz (Weiner Brodsky Kider) and Thomas M. McInerney (Ogletree Deakins) for Academy Mortgage Corp.

Companies: Academy Mortgage Corporation

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