TAF Quarterly Review Vol. 30 - April 2003, Page 42

U.S. ex rel. Purcell v. MWI Corp., 2003U.S. Dist. LEXIS 4410 (D.D.C. Mar. 25, 2003)

Government May Plead Alternative Theories of Liability

The court also rejected the defendants’ argument that it should dismiss the Government’s equitable claims because they were inconsistent with its FCA claims. The defendants observed that equitable relief is not available when the plaintiff has a complete and adequate remedy at law, and asserted that the FCA’s treble damages are more than adequate because they allow the Government both to recoup its losses and punish the defendants. To bolster their argument, the defendants relied on the Supreme Court’s statement in Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765, 784 (2000) that FCA damages are "essentially punitive in nature."

The court rejected this argument, observing that under Fed. R. Civ. P. 8(e)(2), a plaintiff may plead alternative theories of liability, regardless of whether such theories are consistent with one another, although a plaintiff may not recover damages on the basis of mutually inconsistent theories. Accordingly, dismissal of the equitable claims was not appropriate on a motion to dismiss.

Moreover, the court observed that recently in Cook County v. United States ex rel. Chandler, 123 S. Ct. 1239 (2003), supra page 1, the Supreme Court clarified that FCA treble damages have a compensatory side and may be necessary for full recovery. Accordingly, the court declined to determine at this stage of the proceedings whether FCA damages in this case constituted a complete and adequate remedy at law that barred equitable relief.

PRIMARY & SECONDARY "QUI TAM" PLAINTIFFS:

Definition - "Qui tam" is abbreviation of the Latin phrase "qui tarn pro domino rege quam pro si ipso in hac parte sequitur" meaning "Who sues on behalf of the King as well as for himself."

SUCCESSION OF QUI TAM AWARDS:

U.S. v. Florida-Vanderbilt Development Corp., D.C. Fla., 326 F.Supp. 289, 290. (It is an action brought by a relator, under a statute which establishes a penalty for the commission or omission of a certain act, and provides that the same shall be recoverable in a civil action, part of the penalty to go to any person who will bring such action and the remainder to the state or some other institution. It is called a "qui tam action" because the plaintiff states that he sues as well for the state as for himself.)

INDEMNITY & CONTRIBUTION:

Because partial settlement doesn't absolve defendant of all potential liability, he remains a liable defendant and is entitled to claim contribution from non-settling defendants. Vela v. Garza ...Sept. 14

DESTINATION OF PROCEEDS:
"...were in part proceeds of the action and due to the public treasury." U.S. ex. rel. Kelly v. Boeing Corp., 9 F.3d at 769 (All penalties and government recoveries from defense industries' fraud, under the qui tam statute, were originally intended to be deposited in the federal treasury's "general funds" account which is sometimes called the "miscellaneous receipts account".) U.S. ex rel. Gibeault v. Texas Instruments, 104 F.3d 276 (9th Cir. 1997) -

"The court noted that, even without intervention, the United States receives the majority of any amount recovered and retains significant rights over the litigation." U.S. ex rel. Jane Doe 1 et al. v. X, Inc. et al., 2000 WL 305742 (E.D. Va. March 23, 2000)

U.S. Attorney's Manual (DOJ):
"Flagrant frauds, justifying the initiation of suits for multiple damages and penalties under relevant statutes generally, should not be compromised for less than multiple damages and some forfeitures." U.S. Attorney's Manual (DOJ), § 4-4.110 - Civil Fraud Litigation, 4, Sentence 4 (Rev.06/98.)

FOIA - Get a copy! "The Fraud Section of the Commercial Litigation Branch has prepared a monograph on civil fraud litigation which has been distributed to all USAOs." U.S. Attorney's Manual (DOJ), § 4-4.110

FOIA - Where are these "qui tam" forfeitures formally reported? Where are the "qui tam proceeds" reported?

NO STATE "STATUTE OF LIMITATIONS" ON GOVERNMENT
Similarly, the United States is not bound by state statutes of limitation. United States v. Summerlin, 310 U.S. 414 (1940); United States v. Merrick Sponsor Corp., 421 F.2d 1076 (2d Cir. 1970).
Collections of Sums Owed The United States Government
A major responsibility of the Attorney General, the Civil Division, and the United States Attorneys is recovering sums owed the United States. "In particular, all referrals of money claims which come within the United States Attorneys' delegated authority up to $1,000,000 should be made through the National Central Intake Facility. Referrals beyond that amount should continue to be made directly to the Commercial Litigation Branch of the Civil Division." Reference: Department of Justice, US Attorney’s Manual, Title 4, 4-4.430 Collections

Immunity of Government Officers Sued as Individuals for Official Acts
The general rule at common law was that in order for a government official to be protected by absolute immunity for common law torts, not only did the official have to be acting within the outer perimeter of his/her official duties, but the conduct at issue also had to be discretionary in nature. Westfall v. Irwin, 484 U.S. 292, 297-298 (1988). In enacting the Federal Employees Liability Reform and Tort Compensation Act of 1988 (FELRTCA), Congress abrogated this common law rule and extended absolute immunity for common law torts to all federal employees regardless of whether the conduct at issue was discretionary. See United States v. Smith, 499 U.S. 160 (1991). FELRTCA confers such immunity by making the Federal Tort Claims Act the exclusive remedy for all common law torts committed by federal employees while acting within the scope of their office or employment. 28 U.S.C. § 2679(b)(1). However, the immunity conferred by FELRTCA does not extend or apply to suits against federal employees for violation of the Constitution or federal statutes. Thus, government officials sued for constitutional torts continue to be protected only by qualified immunity. 28 U.S.C. § 2679(b)(2). See Harlow v. Fitzgerald, 457 U.S. 800, 807 (1982); Butz v. Economou, 438 U.S. 478 (1978). Where applicable, qualified immunity protects an official from trial and the burdens of litigation. See Mitchell v. Forsyth, 472 U.S. 511, 526 (1985). Reference: Department of Justice, US Attorney’s Manual, Title 4, Civil Resource Manual, # 33.

Protest of Contract Awards
It is well settled that, when the government encourages a bidder to submit a bid upon a prospective government contract, there is an implied condition that the government will honestly consider that bid. Continental Business Enterprises, Inc. v. United States, 452 F.2d 1016, 1019 (Ct. Cl. 1971); Keco Industries, Inc. v. United States, 428 F.2d 1233, 1236 (Ct. Cl. 1970) (Keco I). The bidder has the option of pursuing either of two judicial avenues when a breach occurs. First, if relief is sought before the contract is awarded, the bidder may seek injunctive relief under 28 U.S.C. § 1491(a)(3) in the Court of Federal Claims. La Strada Inn, Inc. v. United States, 12 Cl. Ct. 110, 113 (1987). Second, if relief is sought after the contract is awarded, the bidder may seek injunctive relief in the district court. Scanwell Laboratories, Inc. v. Schaffer, 424 F.2d 859 (D.C. Cir. 1970).
To establish that the government breached its implied duty to treat all bids fairly and honestly, a plaintiff must show that the government's actions were arbitrary and capricious. Keco Industries, Inc. v. United States, 492 F.2d 1200 (Ct. Cl. 1974) (Keco II); Crux Computer v. United States, 24 Cl. Ct. 223, 225 (1991). This is a particularly difficult standard to meet because there is a strong presumption that government officials act properly and in good faith. Kalvar Corp. v. United States; 543 F.2d 1298 (Ct. Cl. 1976), cert. denied, 434 U.S. 830 (1977); Eagle Construction Corp. v. United States, 4 Cl. Ct. 470, 479 (1984).
Judicial review of the government's action in bid protest cases is not a de novo proceeding; rather, the scope of review is limited to the administrative record. The proper standard of review is whether the agency action was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law based on the administrative record. See, e.g., Prineville Sawmill Co., Inc. v. United States, 859 F.2d 905, 909 (Fed. Cir. 1988); Scanwell Laboratories v. Schaffer, 424 F.2d 859 (D.C. Cir. 1970). In such circumstances, a court should not substitute its judgment for that of the agency. Magnavox Electronic Systems Co. v. United States, 26 Cl. Ct. 1373, 1380 (1992), citing Motor Vehicle Manufacturers Assoc. of U.S. v. State Farm Mutual Auto. Ins. Co., 463 U.S. 29, 43 (1983); RADVA Corp. v. United States, 17 Cl. Ct. 812, 818 (1989), aff'd, 914 F.2d 271 (Fed. Cir. 1990).
This limited scope of review is in accord with the fundamental principle that judicial review of discretionary agency action is not de novo, but is limited to review of the administrative record. Florida Power & Light v. Lorion, 470 U.S. 729, 743 (1985); Camp v. Pitts, 411 U.S. 138, 142 (1973); Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 420 (1971). That record consists of the materials and files that were before the agency at the time the decision was made, not materials adduced through discovery by opponents of the agency's action or de novo proceedings in the court. Florida Power & Light, 470 U.S. at 743; Camp v. Pitts, 411 U.S. at 142; Overton Park, 401 U.S. at 420.
The only exceptions to this principle apply in the unusual case in which a court determines that the administrative record presented by the agency does not provide an adequate basis for judicial review. Camp v. Pitts, 411 U.S. at 143; Overton Park, 401 U.S. at 420. However, even in such a case, the remedy is to obtain from the agency, either through affidavits or testimony, such additional explanations of the reasons for the agency decision as may prove necessary, Camp v. Pitts, 411 U.S. at 142-43, or to remand to the agency for amplification. Courts routinely grant protective orders in record review cases precluding the taking of discovery. Saratoga Development Corp. v. United States, 21 F.3d 445, 457 (D.C. Cir. 1994).
The government may not be compelled to perform a contract specifically. Malone v. Bowdoin, 369 U.S. 643 (1962); Larson v. Domestic & Foreign Commerce Corp., 337 U.S. 682, 696-705 (1949); Sharp v. Weinberger, 798 F.2d 1521 (D.C. Cir. 1986). Consistent with this doctrine, the authority to grant injunctive relief to a disappointed bidder upon a government contract does not include authority to order the government to award a contract to the particular bidder. Scanwell Laboratories v. Schaeffer, 424 F.2d at 864; see Parcel 49C Ltd. Partnership v. United States, 31 F.3d 1147, 1153-54 (Fed. Cir. 1994) (government enjoined from canceling a solicitation for an improper reason).
If the implied duty to consider a bid fairly is breached, in addition to seeking injunctive relief, a bidder may seek damages because the claimant was put to needless expenses in preparing its bid. Heyer Products Co. v. United States, 135 Ct. Cl. 63, 69 (1956). In the district court, recovery of bid preparation costs would be limited to the $10,000 limit of the Little Tucker Act, 28 U.S.C. § 1346. Source: USDOJ, US Attorney’s Manual, Title 4, Civil Resource Manual 71, Protest of Contract Awards

Sample Jury Instruction -- Intent to Defraud or Mislead
Jury instructions in a Park misdemeanor case would include the same elements as in a felony case, except that the "intent to defraud or mislead" element of 21 U.S.C. § 333(a)(2) would be eliminated. In addition, an instruction of the following type would be required:

PERSON RESPONSIBLE
A defendant has introduced, delivered, or caused the introduction of a misbranded [or adulterated] food [or drug, device, etc.] into interstate commerce if the defendant, by reason of responsibility and authority of his position, introduced, delivered, or caused such introduction or delivery, of a misbranded food into interstate commerce.
Whether a defendant held a "position of responsibility or authority" at the time of the offense alleged in the indictment is for you, the jury, to determine. You may find that a defendant held a position of responsibility or authority if the government has proven beyond a reasonable doubt that the defendant had the responsibility or authority either to prevent any introduction or delivery of a misbranded food, or to correct any such introduction, and that the defendant failed to do so. United States v. Park, 421 U.S. 658 (1975); United States v. Dotterweich, 320 U.S. 277, 281 (1943); United States v. Cattle King Packing Co., Inc., 793 F.2d 232, 239-41 (10th Cir. 1986); 2 Devitt and Blackmar, Federal Jury Practice and Instructions .07 (1990) (modified). Source: USDOJ, US Attorney’s Manual, Title 4, Civil Resource Manual 106, November 1998 - Sample Jury Instruction -- Intent to Defraud or Mislead