False Claims Counsel

In a June 15 opinion in United States v. Menominee Tribal Enterprises, E.D. Wis. Judge William Griesbach denied the petition for attorneys fees filed by two prevailing False Claims Act defendants under the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412(d)(1)(A). The defendants were employees of a tribal business which the government paid for road and fire control work, and won a jury verdict in the case, brought directly by the government.

The court noted that attorney’s fees under EAJA are not available if the government’s position was “substantially justified,” and that under Seventh Circuit case law, this required that the record relevant to the claim on which the defendant prevailed be viewed as a whole; “a few isolated missteps by the government – especially in a drawn-out imbroglio like this case – would not be enough to hang a fee award on,” Judge Griesbach wrote.

Applying that standard, the court rejected the defendants’ arguments and concluded that the government had met its burden of demonstrating that its position in the case was substantially justified:

• First, the court rejected the men’s claims that the government had failed to follow Bureau of Indian Affairs policies regarding dispute resolution, because these policies did not have the force of law or regulation;
• Second, Judge Griesbach disagreed that the government had failed to investigate its case before suit, noting that the billing practices of the defendants’ company were confusing, and that the defendants themselves had conducted on-site investigations only late in discovery (and their expert report was submitted after the close of discovery). “Any time the government loses a case,” he wrote, “the prevailing defendants can claim that the government failed to spend enough time and effort investigating.”
• Third, Judge Griesbach disagreed with the defendants that the government had failed to provide a motive for the allegedly false claims; a motive to defraud was not required, he wrote, and the defendants’ view of motive was too narrow, since they stood to benefit if their company did well;
• Finally, he disagreed that the case was merely a contract dispute, as the defendants had argued throughout; although some aspects of the case resembled a breach of contract action, that didn’t foreclose a False Claims Act case.

In determining that the government’s position was substantially justified, he noted that the prior denial of motions to dismiss and for summary judgment raised a presumption of justification which was not rebutted by any deficiencies revealed at trial.

Finally, Judge Griesbach denied the defendants’ fees demand under Federal Rule of Civil Procedure 37(c)(2), governing requests for admission. The defendants’ requests which the government had denied, he wrote, did not seek the admission of an undisputed fact, but a concession of the essence of the government’s case, and they were properly denied. Moreover, the subjects of the request were not specifically found by the jury, he noted.