Seventh Circuit upholds denial of fees to two tribal employees who successfully defended False Claims Act case.

by Ben Vernia | January 3rd, 2012

On December 30, the Seventh Circuit Court of Appeals, in U.S. v. Pecore affirmed the district court’s denial of attorney’s fees under the Equal Access to Justice Act, and sanctions under the Federal Rules to the defendants. The two men were employees of a Wisconsin Indian tribe which submitted claims to the Bureau of Indian Affairs for work on mitigating the risk of forest fires on the tribe’s land. Tribal employees informed a Bureau employee of financial irregularities, and after an investigation and aborted settlement efforts, the government sued the men and the tribe (which was dismissed on sovereign immunity grounds before trial).

After prevailing at trial the men sought attorney’s fees under EAJA, and sanctions under Rule 37 for the government’s failure to admit certain facts as requested under Rule 36. The district court denied both requests, and the Seventh Circuit affirmed.

Addressing the EAJA issue first, the Court found that the government’s position in the case was “substantially justified.” The Court rejected the men’s argument that the government had violated Bureau policies prior to filing suit – the policies were not binding law, the Court reasoned, and the record belied the claim the defendants’ claim anyway. Similarly, the Court found unpersuasive the defendants’ argument that the government “misused” the False Claims Act by choosing to file under it instead of a breach of contract claim, because such an action does not foreclose one brought under the FCA. The Court also found that the government’s position in the case was reasonably based on the facts and that it had properly investigated the defendants’ evidence – some of which was brought to light only on the eve of trial.

The Seventh Circuit also denied the defendants’ request for sanctions, agreeing with the district court that in light of the requests, the government qualified for an “escape hatch” available to a party who had a reasonable ground to believe that it might prevail on the matter sought to be admitted.

Leave a Reply

Recent Posts

Recent Comments