District of Colorado: Costs and Fees Are Different: The Standard for the Determining the “Prevailing Party” for a Voluntary Dismissal of a False Claims Act Complaint Depends on the Provision

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In United States ex rel. Todd v. Fidelity National Financial, Inc. (D. Colo. March 12, 2014), the district court noted that the standards for determining “prevailing party” when a relator voluntarily dismisses a False Claims Act complaint change depending on whether costs or attorneys’ fees are at issue.

When determining prevailing-party status for purposes of assessing costs under Rule 54(d), a defendant is a prevailing party when a “‘plaintiff dismisses its case against the defendant, whether the dismissal is with or without prejudice.’” Id. (Cantrell v. Int’l Bhd. of Elec. Workers, AFL-CIO, Local 2021, 69 F.3d 456 (10th Cir. 1995).) As the district court recognized, “Rule 54 creates a presumption that the district court will award costs to the prevailing party.” Slip Op. While the relators argued that the court should exercise its discretion to deny costs under the circumstances, the court held that it could not assess that request under the existing record. The court ordered the defendants to submit a bill of costs for evaluation under the factors outlined in Cantrell.

The district court observed, however, that “the landscape for prevailing parties shifts dramatically when the issue is an award of attorney fees under [the] federal fee shifting statute” under the False Claims Act. Slip Op. The district court noted that the Tenth Circuit has held that to be a prevailing party under the fee-shifting statute, there must be a “judicially sanctioned change” in the relationship of the parties. In Lorillard Tobacco Co. v. Engida, 611 F.3d 1209 (10th Cir. 2010), the court held that a voluntary dismissal under Rule 41(a)(1)(A)(i) requires no court order—it is “self-effectuating.” As a result, a voluntary dismissal by the plaintiff does not make the defendant a “prevailing party” for the purposes of the fee shifting provision of the False Claims Act (31 U.S.C. § 3730(d)(4)).