           Case: 16-10849   Date Filed: 05/03/2017   Page: 1 of 30


                                                                     [PUBLISH]



             IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT
                      ________________________

                             No. 16-10849
                       ________________________

                      D.C. No. 0:12-cv-60185-WPD


UNITED STATES OF AMERICA,

                                                             Plaintiff-Appellee,

STATE OF FLORIDA, et al.,

                                                                       Plaintiffs,

MANUEL CHRISTIANSEN,
ex. Rel.,
BRIAN ASHTON,

                                                          Plaintiffs-Appellants,


                                  versus

EVERGLADES COLLEGE, INC.,
d.b.a. KEISER UNIVERSITY,

                                                           Defendant-Appellee.
               Case: 16-10849      Date Filed: 05/03/2017      Page: 2 of 30


                              ________________________

                                    No. 16-11839
                              ________________________

                             D.C. No. 0:12-cv-60185-WPD

UNITED STATES OF AMERICA, et al.,

                                                                                   Plaintiffs,

MANUEL CHRISTIANSEN,
ex. Rel.
BRIAN ASHTON,

                                                                     Plaintiffs-Appellants,

                                           versus


EVERGLADES COLLEGE, INC.,
d.b.a. KEISER UNIVERSITY,
                                                                      Defendant-Appellee.

                              ________________________

                     Appeals from the United States District Court
                         for the Southern District of Florida
                            ________________________
                                    (May 3, 2017)

Before, HULL, MARTIN, and EBEL, ∗ Circuit Judges.

EBEL, Circuit Judge:




∗
 The Honorable David M. Ebel, Senior United States Circuit Judge for the United States Court
of Appeals for the Tenth Circuit, sitting by designation.
                                              2
              Case: 16-10849    Date Filed: 05/03/2017   Page: 3 of 30


      Manuel Christiansen and Brian Ashton (Relators) brought a qui tam lawsuit

against Everglades College, Inc., d.b.a. Keiser University (Keiser University)

under the federal False Claims Act (FCA). They alleged that Keiser University, a

participant in federal student financial-aid programs, falsely certified compliance

with a federal law banning incentive payments to university admissions counselors.

When the United States initially declined to intervene and take over the case,

Relators pursued the action and won only a limited trial victory—no damages and

only $11,000 in penalties—so they appealed to this Court. During the pendency of

that appeal, however, the United States stepped in and settled the case with Keiser,

securing a much larger monetary recovery than Relators procured at trial.

      Confident that they could have prevailed on appeal, Relators believed the

rug had been pulled out from under them. They argued the United States had no

right to intervene so late in the proceedings, they challenged the underlying

fairness of the settlement, and they asked for an evidentiary hearing and discovery

into the government’s settlement deliberations in search of a nefarious motive.

The district court rejected these arguments and allowed the United States to

intervene, approved the settlement, and denied Relators’ requests for an

evidentiary hearing and discovery pertaining to the government’s decision to

intervene and settle the case. Relators now appeal those rulings. Appeal No. 16-

10849.


                                          3
              Case: 16-10849     Date Filed: 05/03/2017    Page: 4 of 30


       Relators also appeal from the district court’s subsequent award of reduced

attorneys’ fees and costs. Appeal No. 16-11839. In light of the paltry outcome

secured at trial and Relators’ opposition to the eventual settlement, which had

resulted in a significantly greater monetary recovery, the district court trimmed

Relators’ fees and costs to a small fraction of the requested award.

      Recognizing that the settlement and the attorneys’ fees are inextricably

linked, we consolidated these appeals. Exercising jurisdiction under 28 U.S.C.

§ 1291, we AFFIRM in both Appeals Nos. 16-10849 and 16-11839.



                                I.   BACKGROUND

   A. The Alleged FCA Violations

      Keiser University is a non-profit college offering undergraduate and

graduate programs across more than a dozen campuses. Many of Keiser’s students

receive federally sponsored financial aid under Title IV of the Higher Education

Act of 1965, 20 U.S.C. §§ 1070-1099d. In order to receive Title IV funds, schools

must enter into “program participation agreements” with the Department of

Education that condition eligibility for financial aid funds on the institution’s

compliance with various enumerated requirements. 20 U.S.C. § 1094(a). One of

those requirements is known as the Incentive Compensation Ban (ICB), which

prohibits a school from paying incentives to recruiters and admissions personnel


                                           4
               Case: 16-10849       Date Filed: 05/03/2017      Page: 5 of 30


based on the number of students they enroll. Id. § 1094(a)(20); see also 34

C.F.R. § 668.14(b)(22).

       Relators, two former employees who worked in Keiser’s admissions

department, alleged that Keiser submitted more than 230,000 claims for a total of

$1.2 billion in federal financial aid, all the while falsely certifying to the United

States that Keiser was complying with the ICB. According to Relators, Keiser

knew that its admissions personnel received incentive payments based on their

success in securing enrollments. Even with that knowledge, Keiser expressly

certified compliance with the ICB on multiple occasions and—more important to

Relators’ theory of the case—Keiser caused its students to submit claims for

financial aid to the government, all the while knowing that it was violating the

ICB. Relying on the “implied false certification” theory, 1 Relators asserted that

Keiser was liable not only for its own express certifications, but also for the

enormous volume of student-submitted claims.

    B. The District Court’s Merits Decision

       When Relators initially brought the FCA action, the United States declined

to take over the case, which is the government’s prerogative under 31 U.S.C.

§ 3730(b)(2). Relators thus exercised their statutory right to pursue the case on


1
  According to this theory of FCA liability, the submission of a claim for payment may
“impliedly certify” compliance with the government’s payment conditions. See Universal
Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989, 1999-2001 (2016).
                                              5
               Case: 16-10849       Date Filed: 05/03/2017       Page: 6 of 30


behalf of the United States. Id. § 3730(b)(4)(B). After a bench trial, the district

court handed Relators a victory that fell far short of their expectations. At the

outset, the court agreed that Keiser was in violation of the ICB during the relevant

period. But the court made three conclusions that severely limited Relators’

monetary victory.

       First, the court rejected Relators’ theory that each student-submitted

application for financial aid was an actionable FCA claim, reasoning that Keiser

could not control the content, number, and submission of student financial-aid

requests. Second, turning to the certifications that Keiser itself actually sent to the

government, the court found that Keiser’s top policymakers did not become aware

of the improper compensation scheme until November 20, 2009, after which it

knowingly submitted only two certifications of compliance to the government. 2

Keiser was thus liable for only those two false claims, for which the district court

awarded the minimum statutory penalty of $5,500 each—a total of $11,000. Third,

the court rejected Relators’ argument that the government’s damages were equal to

the value of all educational assistance paid to Keiser during the period covered by

the false certifications. It reasoned that the Department of Education would not

have demanded reimbursement for the already-paid Title IV funds even if Keiser


2
 On February 9, 2010, Keiser sent an “Electronic Certification” to the government that falsely
certified its compliance with Title IV funding conditions. And on March 5, 2010, Keiser
submitted a “Compliance Audit” that certified the same.
                                               6
              Case: 16-10849     Date Filed: 05/03/2017    Page: 7 of 30


had disclosed its ICB violations. Thus the government, according to the district

court, suffered no financial damages at all. Instead, the government was entitled

only to the nominal statutory penalties for the two express certifications sent by

Keiser.



   C. The United States Intervenes to Settle the Case

      Relators appealed the district court’s decision to our Court. The United

States, however, believed an appeal was risky because there was a chance the

Eleventh Circuit would affirm the district court’s narrow interpretation of FCA

liability, thereby impairing FCA enforcement efforts throughout the circuit. Thus,

after Relators’ opening brief was filed in this Court, but before the United States

moved to intervene in the qui tam action, the United States struck a tentative deal

with Keiser. The tentative settlement agreement provided that Keiser would pay

the United States $335,000—more than thirty times the amount recovered by

Relators at trial—and the United States would in turn release Keiser from any

further administrative or civil claims, and even more importantly, would also

refrain from suspending or terminating Keiser’s eligibility for future Title IV funds

based on Keiser’s challenged conduct in this case.

      Relators’ merits appeal was still pending on this Court’s docket at the time,

so the district court did not have jurisdiction to enter any orders. Thus, after


                                           7
              Case: 16-10849      Date Filed: 05/03/2017     Page: 8 of 30


reaching a tentative settlement with Keiser, the United States moved the district

court for an indicative ruling stating that, if the district court reacquired jurisdiction

on remand from this Court, the district court would permit the United States’

intervention and approve the proposed settlement as fair and reasonable. The

district court agreed and issued an indicative order to that effect, reasoning that the

United States could intervene as the real party in interest and that the settlement

was fair and reasonable because it resulted in a recovery far exceeding the amount

obtained by Relators at trial. In light of that indicative ruling, this Court then

remanded the case back to the district court, whereupon the district court granted

the government’s intervention motion.

      In that same order, the district court also affirmed a magistrate judge’s

determination that Relators were not entitled to discovery or a full-blown

evidentiary hearing to probe the settlement deliberations and the government’s

rationale for ending the case. Finally, the district court scheduled a statutorily

mandated hearing to confirm that the proposed settlement was fair and reasonable.

After the fairness hearing, the district court approved the settlement, and dismissed

the case with prejudice.



   D. Attorneys’ Fees and Costs




                                            8
              Case: 16-10849     Date Filed: 05/03/2017    Page: 9 of 30


      While these developments were unfolding, Relators also sought an award for

attorneys’ fees and costs. After the bench trial, but before the settlement, Relators

asked for over $1 million in attorneys’ fees and almost $76,000 in litigation costs.

In light of Relators’ limited success at trial, the district court reduced the fee award

to $60,000 for their efforts at trial, and trimmed the award of costs to $27,000.

After the eventual settlement, which Relators claimed was brought about by their

appeal, they sought enhanced fees and costs based on the larger settlement figure

that the United States had been able to procure with Keiser, as well as the

additional fees and costs they incurred for their efforts on appeal. 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.

      Relators now appeal all of these issues.

                                 II.   DISCUSSION

      We resolve four principal issues on appeal: (1) whether the government was

required to satisfy the FCA’s good-cause intervention requirement as set forth in

31 U.S.C. § 3730(c)(3) when it intervened for the sole purpose of settling the

dispute; (2) whether the proposed settlement was “fair, adequate, and reasonable”

under § 3730(c)(2)(B); (3) whether Relators were entitled to an evidentiary hearing

and discovery to probe the government’s reasons for settling the case; and (4)


                                           9
             Case: 16-10849     Date Filed: 05/03/2017    Page: 10 of 30


whether the district court abused its discretion in awarding substantially reduced

attorneys’ fees based on Relators’ limited success at trial and subsequent

opposition to the settlement. On all issues, we affirm the district court.



   A. The Good-Cause Intervention Requirement

      The United States originally declined to proceed with the qui tam action,

which authorized Relators to litigate the case on behalf of the government. 31

U.S.C. § 3730(c)(3) (“If the Government elects not to proceed with the action, the

person who initiated the action shall have the right to conduct the action.”).

Relators were unsatisfied with the trial outcome, however, so they appealed. But

the government was eager to avoid the risk that the Eleventh Circuit would affirm

the ruling below, so it then stepped in and, while the case was pending on appeal,

settled the case, thereby depriving Relators of their chance at reversal and a

subsequent greater recovery upon remand. Relators argue that the district court

erred in granting the government’s motion to intervene for the purpose of settling

the case.

      Relators rely on 31 U.S.C. § 3730(c)(3), which provides: “When a [relator]

proceeds with the action, the court, without limiting the status and rights of the

[relator], may nevertheless permit the Government to intervene at a later date upon

a showing of good cause.” 31 U.S.C. § 3730(c)(3) (emphasis added). Relators


                                          10
             Case: 16-10849     Date Filed: 05/03/2017    Page: 11 of 30


insist that the United States lacked “good cause” to intervene here. We reject this

contention. We hold that, in this case, the United States did not need to satisfy the

good-cause intervention requirement for qui tam actions under 31 U.S.C.

§ 3730(c)(3) because that subsection applies only when the government intervenes

for the purpose of actually proceeding with the litigation—not when it is stepping

in only for the purpose of settling and ending the case. Because intervention was

not required, we need not concern ourselves with whether the requirements of

§ 3730(c)(3), which addresses late intervention by the government for the purpose

of continuing the litigation, have been met. 3

      A straightforward reading of the text supports this conclusion. First,

subsection (b)(2) expressly links intervention to the government’s decision to

“proceed with the action.” § 3730(b)(2) (“The Government may elect to intervene

and proceed with the action . . . .” (emphasis added)). Second, in subsections

(c)(2)(A) and (B), the statute spells out the circumstances in which the government

may settle or dismiss a qui tam case, and neither subsection conditions the

government’s rights on formally intervening in the case. Instead, they provide in


3
  Intervention under § 3730(c)(3) requires a showing of good cause. According to the
United States, it moved for intervention “in an abundance of caution, and to remove any
potential procedural impediment to effecting the settlement and dismissing the case over
relators’ objections.” U.S. Br. at 35. However, the government’s primary argument, with
which we agree, is that it can settle this case without resorting to formal intervention
under § 3730(c)(3).

                                          11
             Case: 16-10849      Date Filed: 05/03/2017    Page: 12 of 30


unequivocal terms that “the Government may settle [or dismiss] the action with the

defendant notwithstanding the objections of the person initiating the action.”

§ 3730(c)(2)(A), (B) (emphasis added). In the context of dismissals, the court need

only “provide[] the [relator] with an opportunity for a hearing,” § 3730(c)(2)(A);

and with settlements, the court must “determine[], after a hearing, that the

proposed settlement is fair, adequate, and reasonable under all the circumstances,”

§ 3730(c)(2)(B). We decline to import the good-cause intervention requirement

from subsection (c)(3) into these provisions which specifically govern dismissals

and settlements.

      Our sibling circuits have reached the same conclusion. The D.C. Circuit

held in United States ex rel. Schweizer v. Oce N.V. (Schweizer) that the

government does not have to intervene before settling a qui tam action because

“intervention is necessary only if the government wishes to ‘proceed with the

action.’” 677 F.3d 1228, 1233 (D.C. Cir. 2012) (internal quotation marks omitted).

The Fifth Circuit also reasoned that, even when the government does not intervene,

it “may settle a case over a relator’s objections if the relator receives notice and [a]

hearing of the settlement.” Riley v. St. Luke’s Episcopal Hosp., 252 F.3d 749, 754

(5th Cir. 2001) (en banc).

      And in the closely related context of dismissals, other circuits have also

declined to require good cause or formal intervention. For instance, the Tenth


                                           12
                Case: 16-10849   Date Filed: 05/03/2017   Page: 13 of 30


Circuit in Ridenour v. Kaiser-Hill Co. focused on the plain statutory language,

noting that it could “identify nothing in the language of [the subsection on

dismissals] to suggest the authority of the Government to dismiss a qui tam action

is dependent upon prior intervention in the case.” 397 F.3d 925, 933 (10th Cir.

2005); see also Swift v. United States, 318 F.3d 250, 251-52 (D.C. Cir. 2003)

(finding intervention necessary “only if the government wishes to ‘proceed with

the action’” and “[e]nding the case by dismissing it is not proceeding with the

action”); Riley, 252 F.3d at 753 (5th Cir.) (noting that “the government retains the

unilateral power to dismiss an action ‘notwithstanding the objections of the

person’” (quoting Searcy v. Philips Elecs. N. Am. Corp., 117 F.3d 154, 160 (5th

Cir. 1997))).

      Thus, consistent with the holdings of other circuits, we hold that the United

States is not required to satisfy the good-cause intervention standard in

§ 3730(c)(3) when settling a qui tam action brought under the FCA.



   B. Whether the Proposed Settlement Was “fair, adequate, and reasonable”

      The United States “may settle the action with the defendant . . . if the court

determines, after a hearing, that the proposed settlement is fair, adequate, and

reasonable under all the circumstances.” 31 U.S.C. § 3730(c)(2)(B) (emphasis

added). The United States and Keiser struck a deal providing that Keiser would


                                          13
               Case: 16-10849        Date Filed: 05/03/2017        Page: 14 of 30


pay the government $335,000 and the government would release Keiser from any

further claims and preserve Keiser’s eligibility for future Title IV funds. The

district court, after a hearing, determined this proposed agreement was “fair,

adequate, and reasonable” under the statute. Relators argue that the settlement was

unreasonable because they were likely to win appellate reversal and thereafter

secure a potentially enormous monetary recovery. 4

       In evaluating the fairness and reasonableness of the settlement, we first

decide the proper standard for reviewing proposed settlements between the United

States and an FCA defendant. We then turn to the substance of this particular

agreement and conclude that it was “fair, adequate, and reasonable.”



           1. The proper standard for evaluating FCA settlements

       Relators ask us to review the proposed FCA settlement under the same

rubric used to evaluate proposed class settlement between private parties under

Fed. R. Civ. P. 23. Some district courts have done just that. See United States ex

rel. Schweizer v. Oce N. Am., Inc., 956 F. Supp. 2d 1, 10-11 (D.D.C. 2013);

United States ex rel. Resnick v. Weill Med. Coll. of Cornell Univ., No. 04 CIV.

4
  Relators believe Keiser is liable for the submission of more than 230,000 false claims, each
receiving a statutory penalty of up to $11,000. 31 U.S.C. § 3729(a)(1); 28 C.F.R. § 85.3(a)(9).
That results in a total of around $2.53 billion. Add to that $1.2 billion in damages allegedly
suffered by the government (according to Relators), which gets trebled under the FCA,
§ 3729(a)(1), for a total of $3.6 billion. All of that together amounts to about $6.13 billion. That
amount is significant by any standards, although Relators did suggest before settlement that they
would not ultimately seek that full amount of damages and penalties.
                                                14
             Case: 16-10849     Date Filed: 05/03/2017    Page: 15 of 30


3088 (WHP), 2009 WL 637137, at *2 (S.D.N.Y. Mar. 5, 2009) (unreported);

United States ex rel. Nudelman v. Int’l Rehab. Assocs., Inc., No. Civ.A. 00-1837,

2004 WL 1091032, at *1 n.1 (E.D. Pa. May 14, 2004) (unreported). Rule 23(e)(2)

uses almost the identical language found in 31 U.S.C. § 3730(c)(2)(B). It provides

that a class settlement must be “fair, reasonable, and adequate” to protect the

interests of absent class members. Fed. R. Civ. P. 23(e)(2). In reviewing the

fairness of class settlements in the Eleventh Circuit, a court considers the

likelihood of success at trial and the range of possible recovery, as well as the

complexity and expense of the litigation and the stage of the proceedings at which

the settlement is reached, among other factors. See, e.g., Day v. Persels & Assocs.,

LLC, 729 F.3d 1309, 1326 (11th Cir. 2013). In general, we analyze these factors

without deference to the parties settling the dispute because the purpose of our

judicial review is to protect absent class members from an unfair bargain. See

Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 623 (1997) (noting the review of

class settlements “protects unnamed class members ‘from unjust or unfair

settlements’ . . .” (quoting 7B Charles Alan Wright et al., Federal Practice and

Procedure § 1797 (2d ed. 1986))).

      But a qui tam FCA suit materially differs from class-action litigation

between private parties for two reasons. First, unlike members of a plaintiff class,

a qui tam relator has suffered no invasion of his own rights. See Vt. Agency of


                                          15
             Case: 16-10849      Date Filed: 05/03/2017    Page: 16 of 30


Nat. Res. v. United States ex rel. Stevens, 529 U.S. 765, 772-73 (2000) (analyzing

whether FCA relators have Article III standing when they have suffered no legally

cognizable injury themselves). The relator instead brings the qui tam claim as the

assignee of the United States’ claim, with the government being the real party in

interest to FCA actions. See id. at 773-74; see also United States ex rel. Eisenstein

v. City of New York, 556 U.S. 928, 934-35 (2009); Timson v. Sampson, 518 F.3d

870, 873 (11th Cir. 2008) (per curiam). So, unlike with class-action settlements,

when the government settles a qui tam case, it is agreeing to compromise with

respect to its own injuries only, not those of the relator or other absent parties.

      Second, also unlike with private plaintiffs, the government’s interests are not

confined to maximizing recovery against the defendant. The United States may

want to consider whether the maximum recovery is proportional to the seriousness

of the misconduct. It may also wish to consider public policy consequences or

political ramifications. Moreover, it could conclude that limited prosecutorial

resources are not worth spending on continued monitoring of the case, which it

often must do even when the relator is proceeding with the action. These

considerations are entirely absent when evaluating a proposed class settlement

between private parties. Thus, we conclude that the Rule 23 standard for class

settlements between private parties is not the proper framework for evaluating

FCA settlements between the government and the defendant.


                                           16
             Case: 16-10849     Date Filed: 05/03/2017   Page: 17 of 30


      Unlike reviewing class-action settlements, in the FCA context there must be

considerable deference to the settlement rationale offered by the government. The

need for deference arises out of the loose similarity between government-obtained

FCA settlements and decisions by the government not to prosecute or enforce an

administrative remedy, which are presumptively unreviewable. See, e.g., Heckler

v. Chaney, 470 U.S. 821, 832 (1985). For that reason, some circuits have said the

government may dismiss a relator’s claim so long as dismissal is rationally related

to a valid government purpose. See Ridenour v. Kaiser-Hill Co., 397 F.3d 925,

936 (10th Cir. 2005); United States ex rel. Sequoia Orange Co. v. Baird-Neece

Packing Corp., 151 F.3d 1139, 1145 (9th Cir. 1998).

      Relators are correct, however, to point out that settlement under the FCA is

treated differently than dismissal. When the government seeks to dismiss the FCA

action, the statute does not prescribe a judicial determination of reasonableness, see

31 U.S.C. § 3730(c)(2)(A); whereas when the government wants to settle a qui tam

claim, the court must find the settlement is “fair, adequate, and reasonable,”

§ 3730(c)(2)(B). See United States ex rel. Schweizer v. Oce N.V., 677 F.3d 1228,

1233-34 (D.C. Cir. 2012) (offering a thorough analysis of why FCA settlements

warrant more rigorous judicial review than dismissals). Because of this differential

statutory treatment, government-obtained FCA settlements do not receive the same

level of deference that applies to dismissals.


                                          17
              Case: 16-10849    Date Filed: 05/03/2017    Page: 18 of 30


        That being said, some limited deference is still warranted. The United

States’ decision to end a case through settlement is similar enough to a decision to

dismiss the case—a choice committed to the discretion of the Executive Branch—

that this Court must afford some degree of respect to the government’s settlement

rationale. At the same time, given the FCA’s mandate that we review settlements

for fairness, we cannot just rubber stamp the government’s justifications. In light

of these principles, our review of proposed settlements must account for the

reasonableness of the rationale offered by the government as well as the potentially

prejudicial effect on the relator. Thus, we ask whether the government has

advanced a reasonable basis for concluding the settlement is in the best interests of

the United States, and whether the settlement unfairly reduces the relator’s

potential qui tam recovery.

        With this in mind, we proceed to evaluate the proposed settlement in this

case.



           2. The proposed settlement is “fair, adequate, and reasonable”

        We conclude that the proposed settlement is “fair, adequate, and

reasonable.” It secures for the United States a recovery that is thirty times larger

than the district court’s award at trial—that means higher recovery for both the

United States and Relators. See 31 U.S.C. § 3730(d) (establishing a qui tam


                                          18
             Case: 16-10849     Date Filed: 05/03/2017    Page: 19 of 30


relator’s share as a variable percentage of the proceeds). From Relators’ point of

view, however, that is cold comfort. In their view, the potential recovery of

billions of dollars is so large that the “expected value”—potential recovery

multiplied by the odds of obtaining it—dwarfs the $335,000 settlement figure,

rendering the government’s settlement decision unreasonable.

       But unlike with private actors, the government’s decision to settle a case

does not turn solely on whether settlement is most likely to maximize the monetary

recovery. As discussed earlier, the government may conclude that settling the case

imposes liability reasonably proportionate to the gravity of the misconduct. Or it

might wish to avoid expending further resources in monitoring the case as it

proceeds through the appellate and (if remanded) trial process. And most

importantly for the United States here, the government must be wary of the

precedential impact of a potentially adverse appellate decision. If the Eleventh

Circuit affirmed the district court’s restrictive reading of the FCA here, the

government would be limited in its enforcement efforts all around the Circuit.

That enforcement burden would ultimately translate into lower recoveries across

the board.

      The government was not unreasonable in hedging its bets in this regard.

Much is made in the parties’ briefs about whether Relators would have succeeded

on appeal, and we offer no comment on the merits of that debate. But it is evident


                                          19
             Case: 16-10849      Date Filed: 05/03/2017    Page: 20 of 30


that, at the very least, Relators’ case hinged on a proposition that is not settled in

this Circuit: whether an educational institution that has falsely certified compliance

with federal payment conditions can be liable under the FCA for financial-aid

requests submitted by its students. Winning the bulk of Relators’ claimed penalties

and alleged damages relied crucially on being able to attribute the 230,000 student-

submitted claims to Keiser, even though Keiser did not control the content or

submission of those claims. But that is an open question in this Circuit, so the

United States did not act unreasonably in preferring the certainty of a settlement to

the uncertainty of an appeal.

      The United States has thus advanced a reasonable basis for concluding this

proposed settlement furthers its best interests without unfairly reducing Relators’

qui tam recovery (in fact, it guarantees a higher recovery for them). It is thus “fair,

adequate, and reasonable.” We therefore find the proposed settlement satisfies

§ 3730(c)(2)(B).



   C. Entitlement to an Evidentiary Hearing and Discovery

      The FCA entitles a qui tam relator to a fairness hearing as of right when the

United States proposes a settlement with an FCA defendant. 31 U.S.C.

§ 3730(c)(2)(B). That statutory entitlement, however, does not include the right to

unearth new evidence at the hearing to attack the proposed settlement. Instead, the


                                           20
             Case: 16-10849      Date Filed: 05/03/2017    Page: 21 of 30


statutory hearing provision “serves a more limited purpose of forcing the

government to provide some reasoning behind its decision to settle the case and

giving the plaintiff-relators an opportunity to direct the court’s attention to facts or

allegations that would suggest the settlement was” unreasonable. United States ex

rel. Schweizer v. Oce N. Am., Inc., 956 F. Supp. 2d 1, 11 (D.D.C. 2013). In other

words, the relator is afforded an opportunity to highlight existing evidence of

impropriety or unreasonableness.

      To conclude that the statute mandates the right to develop new evidence

would risk ballooning the FCA settlement hearing into a mini-trial on the merits.

The government would have to explain why it considered an appellate defeat

possible in light of the facts and law governing the case at hand, the relator would

then dispute that assessment, and a fight over the merits would ensue. But the

United States often settles a case precisely to avoid such a fight. That “would put

the cart before the horse, in essence making trial a precondition of settlement.” Id.

To avoid that result, we construe the statutory right to a hearing to include no more

than a right to highlight existing evidence and make arguments, based on that




                                           21
               Case: 16-10849       Date Filed: 05/03/2017      Page: 22 of 30


evidence, that the proposed settlement is unreasonable or improper.5 That is all the

statute compels.

       A court still retains, however, the inherent equitable power to give more than

the FCA minimally commands. A district court could give a qui tam relator the

opportunity to present and develop new evidence when he shows a substantial and

particularized need for such a hearing. A relator could, for example, potentially

make that showing by presenting a colorable and non-speculative claim that the

United States has neglected to investigate the allegations, or that its settlement

decision was motivated by improper considerations, such as collusion or bribery. 6

We stress that it is the relator’s burden to demonstrate this substantial and

particularized need—and absent such a showing the district court ordinarily will

not afford an evidentiary hearing.

       In this case, the district court denied Relators’ request for an evidentiary

hearing. We affirm that denial. Relators have not demonstrated a substantial or

particularized need to develop new evidence because there is no colorable and non-


5
  United States ex rel. McCoy v. Cal. Med. Review, Inc., 133 F.R.D. 143 (N.D. Cal. 1990) does
not hold to the contrary. The district court in McCoy questioned how a relator could challenge
an FCA settlement’s fairness without the opportunity to probe the government’s rationale. Id. at
149. But as we explain below, we do not foreclose every effort to present evidence at a
hearing—or even to obtain limited discovery. As we hereafter explain, a district court may order
such measures when the relator demonstrates a substantial and particularized need for them.
6
  A variant of this test was articulated by the Judiciary Committee of the U.S. Senate in its
committee report on the proposed 1986 amendments to the FCA, which included this fairness
hearing provision. See S. Rep. 99-345, at 26 (1986), reprinted in 1986 U.S.C.C.A.N. 5266,
5291.
                                              22
             Case: 16-10849     Date Filed: 05/03/2017    Page: 23 of 30


speculative claim that the United States failed to investigate the allegations or

acted with improper motives. Relators did offer several reasons why they have

met that burden, but we reject those arguments as insufficient.

      First, Relators repeat their contention that the government’s settlement

rationale was patently unreasonable. Therefore, in their view, the offered reason

for the settlement must be a pretext for some ulterior motive. But that cannot be

so. As we have already explained, the government’s rationale was reasonable. So

we decline to infer a nefarious motive from the facial reasonableness of the

government’s settlement rationale.

      Second, Relators take issue with their exclusion from the settlement

negotiations. Why would the United States have kept them in the dark about the

ongoing settlement talks, Relators argue, if it were not hiding something? This

allegation goes too far. The government explained that it excluded Relators from

its direct negotiations with Keiser because Relators’ confidence of appellate

reversal and adamant demand for billions of dollars would have impeded

productive settlement negotiations. In any event, the United States did invite

Relators’ counsel to meet and discuss the proposed settlement after a tentative deal

was reached with Keiser. Relators’ counsel accepted the invitation and explained

his objection to the notion of settling the case while on appeal. Nevertheless, the

United States decided to go forward with its settlement with Keiser. Relators were


                                          23
              Case: 16-10849       Date Filed: 05/03/2017     Page: 24 of 30


thus hardly kept in the dark such that we could plausibly infer improper motives by

the government.

       Third, Relators allege that the United States did not read their opening brief

on appeal before settling the case. Thus, in their view, the government could not

have been adequately informed about the likelihood of success on appeal. But the

United States had been monitoring the case closely while it proceeded through

trial—it knew the facts and made its own informed conclusion about the law. In

any event, before the government submitted the proposed settlement to the district

court, the government lawyer responsible for the final settlement decision did read

Relators’ opening appellate brief. It thus stretches credulity to believe that the

United States made so uninformed a decision that Relators are entitled to probe

further with an evidentiary hearing. 7

       In addition to the opportunity to develop evidence at a hearing, Relators

requested discovery into the government’s settlement rationale. They propounded

interrogatories inquiring about each demand and offer made during negotiation of

the proposed settlement, the government’s evaluation of Relators’ likelihood of

success on appeal, the reasons the United States filed Statements of Interest after

trial, and the identities of the government lawyers who participated in various



7
  Relators make additional arguments about why the government’s argument is pretextual and
the need for further evidence. We reject these as meritless.
                                             24
               Case: 16-10849       Date Filed: 05/03/2017      Page: 25 of 30


aspects of the case. The district court shielded the United States from these

requests, and we affirm that decision.

       The FCA does not expressly entitle the objecting qui tam relator to

discovery at all. See 31 U.S.C. § 3730(c)(2)(B). Further, much like an evidentiary

hearing, discovery into the government’s settlement rationale risks converting the

court’s evaluation of the settlement’s reasonableness into a mini-trial on the

merits. See Schweizer, 956 F. Supp. 2d at 11. That is generally antithetical to the

government’s prerogative to end a qui tam case brought in its own name.

       That being said, as with the evidentiary hearing, a district court has the

equitable power to compel discovery when the relator demonstrates a substantial

and particularized need for it. It is the relator’s burden to come forward with a

colorable and non-speculative claim that the government’s settlement rationale is

improper and that further disclosures are needed.8 But as earlier explained,

Relators have come forward with no colorable and non-speculative claim of

improper motive or inadequate investigation by the United States. Thus, the

district court did not err in declining to compel discovery in this case.



    D. Attorneys’ Fees and Costs


8
 When a relator meets that burden, he may be afforded limited discovery to “effectuate the goal
of allowing [him] meaningful participation in the fairness hearing without unduly burdening the
United States or the defendants or causing unnecessary delay.” McCoy, 133 F.R.D. at 149.
                                              25
               Case: 16-10849       Date Filed: 05/03/2017       Page: 26 of 30


       After trial, Relators sought over $1 million in attorneys’ fees and almost

$76,000 in litigation expenses. The district court determined, however, that

Relators’ limited trial victory warranted an across-the-board reduction in their total

fee award to $60,000. Relators now object to that reduction.9 Reviewing the

award for abuse of discretion, see Bivins v. Wrap It Up, Inc., 548 F.3d 1348, 1351

(11th Cir. 2008), we reject most of Relators’ arguments for reversal as meritless.

But one particular contention warrants further discussion. They argue that the

amount of recovery is not an appropriate consideration—or at least not a

significant consideration—in awarding attorneys’ fees for qui tam FCA cases. We

disagree.

       In Hensley v. Eckerhart, a civil-rights case involving attorneys’ fees

awarded under 42 U.S.C. § 1988, the Supreme Court held that the lodestar

amount—which is “[t]he product of reasonable hours times a reasonable rate”—

may be adjusted downward depending on the “results obtained.” 461 U.S. 424,

434, (1983) (internal quotation marks omitted). 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.” Id. at 436 (emphasis added). Moreover, when the district court



9
 The district court also reduced the litigation expenses to $27,000, which Relators challenge.
Finding no error in that regard, we also affirm the district court on that issue.
                                               26
              Case: 16-10849     Date Filed: 05/03/2017    Page: 27 of 30


“reduce[s] the award to account for the limited success[,] [t]he court necessarily

has discretion in making this equitable judgment.” Id. at 436-37.

      The Supreme Court then decided Farrar v. Hobby, which relied on Hensley

in holding that a court may reduce the lodestar amount when the plaintiff won only

nominal damages, i.e., when the plaintiff secured only a “technical” victory by

proving a legal violation but suffered no actual damages. 506 U.S. 103, 114

(1992). “In a civil rights suit for damages,” the court reasoned, “the awarding of

nominal damages also highlights the plaintiff’s failure to prove actual,

compensable injury.” Id. at 115. In light of this rationale, Farrar seems especially

applicable to Relators’ case here because Relators were not able to prove Keiser

caused any actual damages—instead they proved that Keiser knowingly submitted

two false claims, which entitled them to an award of only statutory penalties.

      In spite of this direction from the Supreme Court, Relators ask us to limit

Hensley and Farrar to claims for private damages—not FCA claims which involve

a suit to recover from fraud on the public fisc. See Hensley, 461 U.S. at 440

(“[P]laintiff’s success is a crucial factor in determining the proper amount of an

award of attorney’s fees under 42 U.S.C. § 1988.” (emphasis added)); Farrar, 506

U.S. at 114 (“Where recovery of private damages is the purpose of civil rights

litigation, a district court, in fixing fees, is obligated to give primary consideration

to the amount of damages awarded as compared to the amount sought.” (emphasis


                                           27
             Case: 16-10849     Date Filed: 05/03/2017    Page: 28 of 30


added) (internal quotation marks omitted)). And Relators say there is a good

public-policy reason not to extend the Hensley-Farrar principle to FCA cases

because that would deter potential whistleblowers and their attorneys from

bringing qui tam cases that might result in only nominal or a small amount of

damages. See S. Rep. 99-345, at 29 (1986), reprinted in 1986 U.S.C.C.A.N. 5266,

5294 (explaining the importance of attorneys’ fees in FCA qui tam actions).

      But Relators offer no authority that declines to apply Hensley and Farrar to

FCA claims. In fact, although we are not bound by it, we have already held that

the amount of recovery is relevant to the fee award in FCA cases. See United

States v. Patrol Servs., Inc., 202 F. App’x 357, 359 (11th Cir. 2006) (unpublished)

(“The district court may adjust the amount depending on a number of factors,

including the quality of the result and representation of the litigation.”). We reject

Relators’ plea to carve out an exception to the Hensley-Farrar principle for FCA

cases. Relators contend that qui tam FCA claims are different because such claims

serve a substantial public interest, but it is not clear why that makes them different

from civil-rights cases which also serve an important public need—or even why

that alleged difference should matter for the award of attorneys’ fees.

Accordingly, we affirm the district court’s reliance on the degree of success in

awarding attorneys’ fees in this case.




                                          28
             Case: 16-10849     Date Filed: 05/03/2017   Page: 29 of 30


      That brings us to one final issue. Relators contend that the district court

abused its discretion in reducing the lodestar amount by over ninety-five percent to

reach $60,000. That reduction, Relators insist, was outside the district court’s

admittedly broad range of discretion under our recent case, Yellow Pages Photos,

Inc. v. Ziplocal, LP (Yellow Pages), 846 F.3d 1159 (11th Cir. 2017) (per curiam).

In that case, we reversed a fee award when the district court reduced the lodestar

amount by more than ninety percent based on the plaintiff’s limited success at trial.

Id. at 1164. But we did so for a reason that does not apply in our case today.

      In Yellow Pages, the district court adopted a “strictly mathematical

approach” in arriving at its over ninety-percent reduction figure, which the

Supreme Court has disfavored. Id. (citing Hensley, 461 U.S. at 435 n.11; City of

Riverside v. Rivera, 477 U.S. 561, 574 (1986)). The district court there merely

divided the damages awarded at trial by the maximum damages sought, and then

mechanically applied that fraction to the lodestar amount. Id. at 1164-65. That did

not happen here. The district court expressly considered the “policy considerations

on all sides (including the encouragement of whistle-blowers, the costs incurred by

[Keiser] of defending the lawsuit and considerations of judicial economy), and the

fact that the suit may have had a positive impact on [Keiser’s] conduct.” This

approach was consistent with this Court’s opinion in Yellow Pages, which made

clear that a reduction from a rote application of an arithmetic formula is not


                                         29
               Case: 16-10849        Date Filed: 05/03/2017       Page: 30 of 30


permissible. The district court considered all of the circumstances, including the

public benefit Relators served. And under our precedent, a public benefit does not

“foreclose a reduction in the lodestar amount.” Popham v. City of Kennesaw, 820

F.2d 1579, 1580 (11th Cir. 1987). If it did, then “Hensley would be

incomprehensible because a reduction is attorney’s fees . . . would never be

warranted.” Id. On this record, we hold the district court did not abuse its

discretion in awarding fees and costs. 10



                                   III.    CONCLUSION

       We AFFIRM the district court on all issues.




10
  When Relators’ appeal of the merits decision prompted the government’s intervention and
settlement, Relators sought a renewed award that incorporated their additional fees and costs
incurred on appeal. But the district court declined, reasoning that Relators should not be able to
reap the benefit of an outcome (the settlement) they so vigorously opposed. Relators challenge
that denial, but based on our precedent we cannot say the district court abused its discretion in
reaching its conclusion. We therefore affirm on that issue.
                                                30
