Justia Corporate Compliance Opinion Summaries

Articles Posted in US Court of Appeals for the District of Columbia Circuit
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The United States sued Honeywell International Inc. for providing the material in allegedly defective bulletproof vests sold to or paid for by the government. Among other relief, the government sought treble damages for the cost of the vests. It has already settled with the other companies involved, and Honeywell seeks a pro tanto, dollar for dollar, credit against its common damages liability equal to those settlements. For its part, the government argues Honeywell should still have to pay its proportionate share of damages regardless of the amount of the settlements with other companies. The district court adopted the proportionate share rule but certified the question for interlocutory review under 28 U.S.C. Section 1292(b).   The DC Circuit reversed the district court’s ruling and held the pro tanto rule is the appropriate approach to calculating settlement credits under the False Claims Act. The court explained that in the False Claims Act, Congress created a vital mechanism for the federal government to protect itself against fraudulent claims. The FCA, however, provides no rule for allocating settlement credits among joint fraudsters. Because the FCA guards the federal government’s vital pecuniary interests, and because state courts widely diverge over the correct rule for settlement offsets, the court found it appropriate to establish a federal common law rule. The pro tanto rule best fits with the FCA and the joint and several liability applied to FCA claims. Thus, Honeywell is entitled to offset its common damages in the amount of the government’s settlements from the other parties. View "USA v. Honeywell International, Inc." on Justia Law

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Plaintiffs sought a declaratory judgment that they were not subject to federal recordkeeping laws dealing with the distribution of cigarettes. The DC Circuit held that neither the Contraband Cigarette Trafficking Act of 1978 nor the implementing regulations contain any language exempting tribal entities operating on Indian reservations from the federal recordkeeping requirements. The Act's recordkeeping requirements apply to any person; under federal law, "person" includes "corporations"; plaintiffs are "corporations"; and therefore plaintiffs are "persons" and the Act's recordkeeping requirement applied to them. Furthermore, the statutory context was another reason why the district court correctly held that Congress did not exempt the corporate plaintiffs from the Act's recordkeeping provision. View "Ho-Chunk, Inc. v. Sessions" on Justia Law