Ray Pinkham, an associate in the Vorys Washington, D.C. office and member of the litigation group, authored an article for the ABA/BNA Lawyers’ Manual on Professional Conduct titled “Embrace Inevitable Change in Legal Services Profession, Conference Speakers Say.”
On Tuesday, August 11, 2015, the United States Court of Appeals for the District of Columbia Circuit released a decision upholding an assertion of privilege by Kellogg Brown and Root, Inc. (KBR) over internal investigation documents in a FCA suit alleging kickbacks and overbilling on Iraq war subcontracts.
A decision last week in an FCA case in Pennsylvania confirms that the FCA’s first-to-file bar has been weakened. See U.S. ex rel. Boise v. Cephalon, Inc., No. 08-CV-287 (E.D. Pa.). The court in the Cephalon case confirmed that the Supreme Court’s decision in Kellogg Brown & Root Servs., Inc. v. United States ex rel. Carter means that the first-to-file bar does not apply when a previously filed case is no longer pending.
The Ninth Circuit’s recent decision in U.S. ex rel. Hartpence v. Kinetic Concepts, Inc., 2015 U.S. App. Lexis 11643 (9th. Cir. July 7, 2015), overruled existing Ninth Circuit precedent regarding the requirements for meeting the public disclosure rule’s original source exception, weakening the public disclosure bar in the Ninth Circuit and opening the door for increased qui tam activity within that jurisdiction.
On July 1, 2015, the SEC issued proposed rules that would require listed issuers to:
• adopt and comply with a policy requiring the recovery of excess incentive-based compensation from the issuer’s executive officers in the event of material accounting restatements; and
• disclose the listed issuer’s clawback policy and certain information relating to the application of such clawback policy.
Today the Supreme Court issued its decision in Kellogg Brown & Root Servs., Inc. v. United States ex rel. Carter. On the first question presented, the Court held that the Wartime Suspension of Limitations Act (WSLA) applies only to criminal offenses and thus does not toll the False Claims Act’s (FCA) statute of limitations indefinitely while the United States is in armed conflict.
Last month, the Sixth Circuit reaffirmed the fair market value (FMV) standard as the primary measure of damages in False Claims Act (FCA) cases—and demonstrated the teeth of that requirement when evidence (including expert testimony) is not presented to support an FMV determination. United States v. United Technologies Corp., 2015 U.S. App. LEXIS 5476 (6th Cir. April 6, 2015), represented the culmination of a decades-long dispute between the government and United Technologies’ Pratt & Whitney unit over pricing for engines supplied to the Air Force for use in its F-15 and F-16 aircraft.
On April 29, 2015, the Securities and Exchange Commission (SEC) proposed rules to implement Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which directs the SEC to require additional “pay-versus-performance” disclosure in any proxy information statements in which executive compensation disclosure is required pursuant to Item 402 of Regulation S-K.
On February 9, 2015, the Securities and Exchange Commission (the SEC) proposed rules to implement Section 955 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which directs the SEC to require, by rule, each public company to disclose in any proxy or consent solicitation material for an annual meeting of the shareholders of the company whether any employee or director, or any designee of such employee or director, is permitted to hedge the company’s equity securities.
A recent Sixth Circuit opinion provides defendants a valuable roadmap for using government witness testimony to defeat False Claims Act (FCA) claims on materiality grounds at the summary judgment stage. In U.S. ex rel. American Systems Consulting, Inc. v. ManTech Advanced Systems Int’l Inc., Case No. 14-3269 (6th Cir.), the court rejected the relator’s argument that materiality decisions should be left to a jury. Instead, the court expressly held that “a judge may decide as a matter of law whether a misrepresentation was material under the FCA.”
On January 13, 2015, the United States Supreme Court ruled in favor of homeowners seeking to rescind their loans and mortgages with written notice to lenders within three years of completion of a real estate transaction, where lenders allegedly failed to comply with the federal Truth in Lending Act (TILA). Based on this decision in Jesinoski v. Countrywide Home Loans, Inc., it is not necessary that a homeowner actually file a court action within those three years.
On January 8, 2015, the United States Court of Appeals for the Fourth Circuit reinstated the government’s False Claims Act (FCA) claims in United States v. Triple Canopy, Inc., No. 13-2190. In reversing the district court’s dismissal of the government’s case, the Fourth Circuit highlighted, both explicitly and implicitly, the importance of the government’s decision to intervene in the case.
It is once again time for public companies to march into proxy season. While the SEC has not adopted any significant new rules or amendments effective for the 2015 proxy season, you should keep the following items in mind as you prepare.
Earlier this week, Judge Amy Totenberg of the United States District Court for the Northern District of Georgia imposed significant monetary sanctions against a pair of relators who blatantly and repeatedly violated the seal order in a pending qui tam action, United States ex rel. Bibby v. Wells Fargo Bank, N.A., Case No. 1:06-CV-0547-AT.
On December 15, 2014, the United States Supreme Court decided that a party seeking to remove a class action to federal court need not include evidence of the amount in controversy as part of its petition for removal. Instead, the party seeking removal need only plausibly state that the amount at stake exceeds $5 million. The case is Dart Cherokee Basin Operating Co. LLC v. Owens, 574 U.S. ---, 2014 U.S. LEXIS 8435 (2014).
According to a recent Department of Justice press release regarding annual False Claims Act (FCA) recoveries, FCA recoveries continue to skyrocket, in keeping with the trend in recent years. 2014 marks the third straight year in which the Department of Justice has announced a record-setting annual recovery.