Ninth Circuit Rejects Use of Lodestar Multiplier in Determining Reasonable Attorneys’ Fees Despite Counsel’s “Herculean Efforts”

Earlier this month, the Ninth Circuit in United States ex rel. Thrower v. Academy Mortgage Corporation determined that the district court had erred in applying a 1.75 multiplier to the lodestar amount in awarding $8.7 million in fees and costs to the relator. The case has an interesting procedural history that is worth a quick recap before we get to the fee dispute.

In 2016, Relator Gwen Thrower filed a qui tam complaint against her former employer, Academy Mortgage Corporation, alleging that it falsely certified compliance with the Federal Housing Administration’s Direct Endorsement Program, which permits mortgage lenders to underwrite and endorse residential mortgages for government insurance. The government investigated the allegations of the initial complaint while the case was under seal and declined to intervene.

At this point, Relator’s counsel conducted a multi-week investigation. The district court explained that through this additional investigation, Relator’s counsel filed an amended complaint “alleging a significantly more pervasive and systemic practice of fraudulent loan underwriting than the Government’s investigation portrayed.” The Ninth Circuit noted that the investigation “apparently uncovered other evidence of fraud relevant to [Relator’s] allegations.” Nevertheless, the government subsequently moved to dismiss the case based on its own cost-benefit analysis of the litigation pursuant to 31 U.S.C. § 3730(c)(2)(A). Although the district court recognized that it would be the only court to do so, it denied the government’s motion to dismiss in a “very rare” decision and permitted Thrower’s claim to proceed. Unfortunately for the defendant, this was in 2017, years before the Supreme Court in United States ex rel. Polansky v. Executive Health Res., Inc., held that the government should be afforded “significant deference” when it moves to dismiss a qui tam after its initial declination. Relator’s counsel also successfully defended a motion to dismiss by the defendant and eventually in late 2022, the parties settled the case for $38.5 million.

Which brings us to the fee dispute. Relator sought attorneys’ fees and asked the court to apply a 2.0 multiplier to the lodestar figure for her “extraordinary” victory of securing a settlement after the government tried to dismiss her claims. The Supreme Court has endorsed use of the lodestar method in calculating reasonable attorneys’ fees. Under this method, a court calculates the prevailing market rate in the relevant community and multiplies it by the number of hours reasonably worked on the case. This amount is the presumptively reasonable award, but the court then may consider whether an upward or downward modification of the award is appropriate. Here, the district court applied a 1.75 lodestar multiplier, citing Relator’s counsel’s: (1) “exceptional result” in surviving a motion to dismiss; and (2) investigatory work. In total, the district court awarded Thrower $8.59 million in attorneys’ fees (and nearly $90,000 in costs).

On appeal, the Ninth Circuit determined that the district court abused its discretion in applying the 1.75 lodestar multiplier. The Ninth Circuit heavily cited the Supreme Court’s 2010 decision in Perdue v. Kenny A. ex rel. Winn, where the court determined that there is a strong presumption that the lodestar figure is sufficient. The court explained that this presumption can only be overcome in “rare circumstances” and cannot include “factors [already] subsumed in the lodestar calculation.” The Ninth Circuit decided that there was no “exceptional result” in Relator’s case because the quality of representation, novelty, or complexity of issues, and results obtained were already subsumed in the lodestar analysis, even though counsel’s “Herculean efforts clearly led to the denial of the government’s motion to dismiss and the eventual settlement” of the case. Additionally, the Ninth Circuit determined that Relator’s attorneys’ internal investigative work was already subsumed in the number of hours attorneys billed in the case, so this also did not warrant any multiplier. The Ninth Circuit also held that even if a multiplier was appropriate, the district court failed to provide a reasoned basis for its selection of a 1.75 multiplier as required by Perdue, which served as an independent basis for reversal.

Absent further appellate review or the parties reaching a settlement, the case now returns to the district court to recalculate its fee award without use of the multiplier. Because the fee issues on appeal relate to only one of the firms that represented Relator, by our calculations, the fees will be reduced by approximately $2.2 million for a total fee award of approximately $6.39 million. While the unique pre-Polansky posture of this case is unlikely to be repeated, this case still serves as a reminder that a relator must point to truly “rare and exceptional” circumstances to merit an enhancement of the lodestar amount in a fee dispute. As always, we at Qui Notes will continue to monitor cases such as Thrower that may be of interest to our readers. 

© Arnold & Porter Kaye Scholer LLP 2026 All Rights Reserved. This Blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.