Attorneys as Qui Tam Relators?: False Claims Act Doesn’t Preempt Ethics Laws and Cannons

ethicsGuest Commentary

by Tara Parker, a 2015 Judge K.K. Legett Fellow at the Washington Legal Foundation and a student at Texas Tech School of Law.

A federal district judge in the Southern District of Mississippi recently reaffirmed something that should be intuitively obvious to most attorneys:  the federal False Claims Act (FCA) does not relieve a lawyer who brings a qui tam action under the law of his ethical obligations. The court in United States ex rel. Holmes v. Northrop Grumman Corporation disqualified the attorney from serving as a relator because he had violated his duties of loyalty, candor, and confidentiality, as well as the duty to obey court orders. The case stands as not only a monument to unethical attorney behavior, but it also provides yet another example of how laws that delegate enforcement authority to individuals inspire abuses with the lure of financial profit.

The attorney in question, Donald Holmes, represented Munich Re (Munich), an insurance company, in arbitration proceedings with Northrop Grumman Corporation (Northrop), the insured, in April 2010. Northrop had contracted with the United States Navy to construct ships, some of which were damaged as a result of Hurricane Katrina in August 2005. Holmes, along with a co-counsel, sought to obtain documents from the Navy professedly for use in the arbitration. Holmes and his co-counsel turned around and used the information to file an FCA suit against Northrop. Continue reading

FDA Trans-Fat Order Sets the Table for More Food Product “Regulation by Litigation”

Partially hydrogenated oil  chemical structure

Partially hydrogenated oil
chemical structure

To no one’s surprise, the Food and Drug Administration (FDA) has confirmed its November 8, 2013 initial determination that the agency no longer considers the main source of trans fat in Americans’ diet, partially hydrogenated oils (PHOs), “generally recognized as safe” (GRAS). In its announcement, FDA emphasizes how the three-year window it has granted food companies to comply with the order would “allow for an orderly [transition] process.” Before anyone applauds FDA for being reasonable or magnanimous, however, consider what else the agency says, and doesn’t say, in its Declaratory Order (“Order”). FDA’s statements and omissions essentially set the table for an explosion of private lawsuits that could require PHO-containing products to be reformulated, or removed from the market, far earlier than June 2018.

What the Order Says. Under federal law, an FDA determination that a substance is no longer GRAS is not the equivalent of it being “unsafe.” It means that because some level of uncertainty has arisen from studies of the substance, food producers must seek approval for its use in specific products through a food additive petition. The Order, however, glosses over this inconvenient nuance, and instead consistently and repeatedly states that FDA has concluded PHOs are unsafe. The media has slavishly echoed FDA’s distorted conclusion to an American public that includes prospective judges and jurors for the lawsuits to come. Continue reading

“Handmade” Liquor: Federal Courts Offer Divergent Views in Two Similar Lawsuits

liquorGuest Commentary

by Tara Parker, a 2015 Judge K.K. Legett Fellow at the Washington Legal Foundation and a student at Texas Tech School of Law.

In recent decisions from opposite sides of the nation—Florida and California—two federal district judges issued contradictory decisions on the same question—whether a liquor manufacturer’s use of “handmade” on its product label is false or misleading to the average consumer. Defendants in mislabeling cases rarely claim total victory at the preliminary level because courts tend to defer the question of whether a label is false or misleading to a later stage in the litigation. The Florida judge’s willingness to dismiss a “handmade” claim shows that courts can beat this trend. If, on the other hand, judges follow the path of least resistance, as seen in the California case, mislabeling claims of questionable merit will continue to proliferate, undermining predictability in the law and raising prices for consumer product purchasers. Continue reading

Sixth Circuit Applies Sanctions Appropriately in Frivolous FCA Case

6th CircuitGuest Commentary

by Spencer Salmon, a 2015 Judge K.K. Legett Fellow at the Washington Legal Foundation and a student at Texas Tech School of Law.

On May 1, 2015, the U.S. Court of Appeals for the Sixth Circuit affirmed sanctions imposed by a lower court in a suit filed under the False Claims Act (FCA). The decision, United States ex rel. Jacobs v. Lambda Res., Inc., is an encouraging development given the ease with which the FCA can be abused and the federal judiciary’s general aversion to punishing frivolous plaintiffs and their lawyers. Continue reading

Supreme Court Agrees to Review Uninjured Plaintiffs’ Lawsuit

supreme courtThe U.S. Supreme Court this morning granted certiorari in Spokeo, Inc. v. Robbins, a case from the U.S. Court of Appeals for the Ninth Circuit involving an issue that the Court declined to address twice in the past several years: whether Congress can grant citizens the ability to file lawsuits in situations where those plaintiffs could not otherwise satisfy the “case or controversy” requirement of Article III of the U.S. Constitution.

On April 15, a WLF Legal Pulse commentary by WLF Chief Counsel Rich Samp, Supreme Court Has Opportunity to Halt Lawsuits by Uninjured Plaintiffs, explained why the Court should decline the recommendation of the Solicitor General of the U.S., which, at the Court’s invitation, had filed an amicus brief urging the justices to deny review.

Also, soon after the Court sought the views of the Solicitor General, WLF hosted a Web Seminar program on Spokeo and the issue of statutorily-created injury that featured Spokeo‘s Counsel of Record, Andrew Pincus of Mayer Brown LLP, and Meir Feder of Jones Day.

Rewind and Replay: The Ongoing Saga of Video Privacy Protection Act Suits

VHSIn the 1997 futuristic thriller “Gattaca,” character Vincent Freeman, played by actor Ethan Hawke, falls victim to genetic discrimination after the government begins to track and monitor human DNA strands via the Internet in a scheme to control and manipulate societal trends.

While the film’s plot seems nothing short of fantastical, the idea behind it—that the Internet has become an unguarded playground for identity thieves and major corporations to obtain unauthorized information in a quest to influence consumer behavior—echoes recent plaintiffs’ suits regarding the protection of personal privacy under the Video Privacy and Protection Act (VPPA) that have become increasingly popular in federal courts. Continue reading

FDA’s Next Gift to the Litigation Industry: A Veritable Ban on Partially Hydrogenated Oils?

sharkIn a recent post, we lampooned the “high trans fat intake consumer” the Food and Drug Administration (FDA) invented to advance its de facto ban of partially hydrogenated oils (PHOs) as being a cross between Augustus Gloop and Homer Simpson. The ramifications of such a PHO ban for many processed food makers and their customers, however, are no laughing matter. Among other things, FDA’s final determination could expose the food industry to an avalanche of lawsuits and potentially billions of dollars in liability costs.

The Current Litigation Environment. Plaintiffs’ lawyers have been working feverishly for the past decade to turn lawsuits against “Big Food” into the next big payday. As chronicled on this blog since its inception in 2011, a small but persistent segment of the Litigation Industry has filed hundreds of class-action lawsuits alleging that everything from a perceived excess of empty space in a bag of chips to the printing of “evaporated cane juice” on a label violates state consumer protection laws.

By Litigation Industry standards, this lawsuit product line has not yet met profit expectations. But the lawsuits have successfully established, especially in California, that private litigants can enforce federal food laws and regulations. Continue reading