D.C. Circuit Weighs in, Once Again, on Privileged Corporate Documents in “KBR” Case

829-Brower_GregjohnsonGuest Commentary

by Greg Brower and Brett W. Johnson, Snell & Wilmer LLP*

Government contractors won another round in a long-running battle over the discoverability of internal investigation documents. On August 11, the United States Court of Appeals for the D.C. Circuit found, for a second time in the same case, that the district court erred in ordering the production of documents, concluding that the district court’s decision was contrary to both the circuit’s own precedent and the United States Supreme Court’s holding in Upjohn v. United States.

Back in March of 2014, in United States of America ex rel. Harry Barko v. Halliburton Company, et al., defendant Halliburton’s subsidiary, Kellogg, Brown & Root (“KBR”) and other defendants filed a petition for writ of mandamus seeking to reverse a district court’s order that certain reports created as part of an internal investigation were not privileged and should be produced in discovery. A three-judge panel of the D.C. Circuit reversed the decision, but remanded the matter back to the district court to consider other potential arguments in favor of production. For more on this decision by the circuit court, see our June 30, 2014 WLF Legal Pulse commentary here. Continue reading

The Supreme Court’s NOT Top 10: Cases the Justices Wrongly Rejected Last Term

supreme courtThe usual spate of articles by Supreme Court scribes pronouncing the Roberts Court staunchly pro-business were noticeably sparser as the latest term ended. When journalists are reduced to using the Obamacare and same-sex marriage cases as their main exhibits to prove the Supreme Court’s supposed pro-business tilt, you know it wasn’t a banner year for business.

Of course there were a few notable losses (King v. Burwell itself, Oneok, and Texas Dept. of Housing come to mind). But the fact that free enterprise did not fare well this term had comparatively little to do with the decisions the Supreme Court issued. Rather, business civil liberties suffered more overall from the various state supreme court and federal courts of appeals cases that the high court left on the cutting-room floor.

The tally that follows comprises more than just the cases of a disappointed cert seeker. WLF did not participate in more than half of the examples discussed below. However, the cert petitions mentioned here are all cases where free enterprise, individual and business civil liberties, or rule of law interests were at stake. From the free-market vantage point, it once again appears that the Court did not make enough room on its docket for cases implicating significant liberty interests. By choosing a lighter load, the Court allows legal uncertainty to linger, lower-court disobedience to fester, adventuresome new legal theories to propagate, and injustices implicating millions, if not billions, of dollars to prevail.       Continue reading

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

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

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

WLF Media Briefing Program Focuses on Government’s Regulation of Information on “Off-Label” Drug Uses

Coleen Klasmeier, a partner with Sidley Austin LLP, Geoffrey M. Levitt, Senior Vice President and Associate General Counsel of Pfizer, Inc., and Jonathan L. Diesenhaus, a partner with Hogan Lovells US LLP discussed the impact of the Second Circuit’s December, 2013 Caronia decision on federal health product regulation and identify the latest developments and trends to follow in 2014 for public and private law enforcement targeted at off-label speech.

Court Ruling Recalls Injudicious Average Wholesale Price Litigation Crusade

Cross-posted by Forbes.com at WLF’s contributor site

A little over a decade ago, federal regulators and state attorneys general initiated a litigation campaign to alter how government health care programs reimbursed doctors for prescription drugs. Like most “regulation by litigation” efforts, this campaign seized upon laws of broad application such as the False Claims Act (FCA) and encouraged private lawsuits of questionable merit. Government enforcers have long since moved on to other crusades, but as a federal court decision last month reflects, some private suits still drag on, burdening American businesses with needless legal expenses.

AWP. In the early 2000s, the federal government reimbursed health care providers based in part on a drug’s average wholesale price, or “AWP.” Some likened AWP to the sticker price, or MSRP, of a new car: an inflated number which almost no one actually paid. Everyone involved in health care was aware of the illusory nature of AWP, and federal and state regulators urged legislative change, but Congress resisted reform. So unelected officials and their brethren in the plaintiffs’ bar sought to impose change. As this 2002 WLF Working Paper explains, they devised legal theories which branded AWP as an overcharging scheme, and accused drug makers, price publishers, and other entities such as pharmacy benefit managers (PBMs) of perpetrating a fraud. State attorneys general filed billion-dollar fraud actions and plaintiffs’ lawyers teamed up with “whistleblowers” to file qui tam suits under the FCA.

The ensuing litigation crusade provided moderate returns at best to the plaintiffs’ lawyers and state AGs who jumped on board. For instance, in 2009, the Alabama Supreme Court dashed the state’s (and its contingent-fee lawyers’) dreams of a huge payday, dismissing two AWP cases, finding no fraud existed. Continue reading

High Court Fails To Act On Major Business Case Cert Petitions

supreme courtCross-posted at Forbes.com’s WLF contributor page

Washington Legal Foundation, along with other organizations, business, and individuals with an interest in the Supreme Court and free enterprise cases before it, watched with great anticipation this morning as the justices issued their first new list of certiorari grants since the Court adjourned last June (the so-called Long Conference). We came away from the big cert grant morning, as likely did many other interested parties, wanting more.

The orders list is here. The grants include a tax case, United States v. Quality Stores  addressing whether severance payments made to employees whose employment was involuntarily terminated are taxable. Two other grants relate to the standard of review the U.S. Court of Appeals for the Federal Circuit uses when assessing a district court’s determination that a case is “exceptional” for purposes of imposing attorneys’ fees and other sanctions. Those cases are Octane Fitness v. Icon Health and Fitness and Highmark Inc. v. Allcare Management Systems Inc.

The final cert grant impacting free enterprise is Petrella v. MGM, which involves the movie Raging Bull and the defense of laches against claims of copyright infringement. Marcia Coyle at National Law Journal discussed the interesting facts of the case in a September 16 story.

The bigger story from the big cert grant morning was which petitions the Court did not act on. WLF filed amicus briefs in support of review in a number of the cases, which we’ll indicate below (all noted on SCOTUSblog’s “Petitions we Are Watching” page).

Failure to act on these and other petitions does not mean that the Court cannot reconsider them in a future “conference,” and it does not mean that they have been denied. The Court will be issuing an order list on First Monday, October 7, but that order traditionally has only contained cert denials.