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United States of America Ex Rel. v. Bill Harbert International Construction

August 29, 2011

UNITED STATES OF AMERICA EX REL.
RICHARD F. MILLER, PLAINTIFF,
v.
BILL HARBERT INTERNATIONAL CONSTRUCTION, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Royce C. Lamberth, Chief Judge

MEMORANDUM OPINION

I. INTRODUCTION

Four years ago, following a seven-week trial, a jury concluded that defendants Bill Harbert International Construction, Inc., Harbert International, Inc., and Harbert Corporation (collectively, the "defendants")*fn1 engaged with several others in a conspiracy to defraud the United States Agency for International Development ("USAID") by rigging the bidding process for several development contracts in Egypt, fleecing the U.S. government for more than $30 million. Based on the jury's findings, this Court entered judgment on behalf of the government in excess of $90 million under the False Claims Act, 31 U.S.C. §§ 3729 et seq. This past year, the D.C. Circuit affirmed the judgment against several entities, but found that the government prejudiced these defendants by introducing evidence that contradicted a stipulation concerning BHIC's formation and eliciting testimony concerning the wealth of HII and HC. Based on these concerns, the Circuit Court vacated judgment as to defendants and remanded the matter for a new trial. With retrial in sight, the government now argues that the Circuit Court's mandate and opinion, read together, require the Court to leave the first jury's conclusion that a conspiracy that cost the government more than $30 million undisturbed by limiting the scope of the upcoming proceedings to the sole question of whether defendants joined the conspiracy. Alternatively, the government asks the Court to exercise its discretion to place equivalent constraints on the retrial. Defendants counter that the Circuit Court's mandate and opinion voided all findings of liability and damages, insisting that the issues are so interrelated, and the prejudice caused by the errors identified by the Circuit Court are so pervasive, as to necessitate a full trial on the merits. The Court agrees, and will direct the parties to prepare for a trial on all issues.

II. BACKGROUND

The full history of this matter has been set forth many times, and is only briefly recounted where relevant. In 1995, Richard F. Miller, then-vice president of an international construction company, filed claims under the False Claim Act alleging that numerous entities had defrauded the government's USAID program by conspiring to rig the bids for construction contracts in Egypt awarded by USAID in return for that country's agreement to recognize Israel following the Camp David Accords of 1979. For the next seven years, the government kept the complaint under seal while undertaking an investigation that resulted in several criminal convictions. In 2002, the government unsealed the complaint and, after years of procedural maneuvering and a transfer of judges, this matter proceeded to trial in 2007. After a seven-week trial, the jury returned a verdict in favor of Mr. Miller and the government, finding that (1) an overarching conspiracy to defraud the government with respect to several USAID contracts in Egypt existed, Verdict Form 2, May 14, 2007 [858], (2) several entities-including defendants-took part in that conspiracy, id. at 2--8, and (3) the government had lost $29,920,000 on Contract 20A- which involved a sewer project in Cairo-$1,026,029.22 on Contract 07-which involved a sewer project in Alexandria-and $3,400,000 on Contract 29-which involved the construction of a wastewater treatment facility in Cairo. Id. at 9--12. Based on the jury's findings, the Court entered judgment against defendants and several others for approximately $90 million, Judgment, Aug. 10, 2007 [883], and subsequently denied defendants' motions to set aside the verdict. Miller v. Holzmann, 563 F. Supp. 54 (D.D.C. 2008) ("Miller I").

On appeal the D.C. Circuit reversed this Court on three matters. First, the Circuit Court found that the statute of limitations had run on all claims relating to Contracts 07 and 29, which were only added by the government after the complaint was unsealed in 2002. United States ex rel. Miller v. Bill Harbert Int'l Constr., Inc., 608 F.3d 871, 877--85 (D.C. Cir. 2010) ("Miller II"). Second, the Circuit Court held that the introduction of, and references to, a document implying that BHIC was formed in 1986 contradicted the parties' stipulation that the company did not exist before 1992, resulting in "substantial prejudice" to BHIC. Id. at 888--89. Third, the Circuit Court explained that testimony concerning the wealth of HII and HC was not "of consequence to the determination of the action" but did prejudice the jury. Aside from these three errors, the Circuit Court found that there was sufficient evidence to support (1) the existence of an overarching conspiracy, id. at 899--901, (2) other entities' participation in that conspiracy, id. at 901--904, and (3) the amount of damages awarded by the jury. Id. at 904--07. The Circuit Court then issued the following mandate:

[T]he judgment of the District Court . . . is hereby vacated, pursuant to the statute of limitations, with respect to the claims concerning Contracts 07 and 29; vacated as to defendants HII, HC, and BHIC and remanded for a new trial; and affirmed with respect to the claims concerning Contract 20A against the remaining defendants.

Mandate, Oct. 19, 2010 [1078]. The Miller II Court subsequently remanded this action for further proceedings concerning these defendants. Id.

Following resolution of a dispute concerning attorneys' fees, United States ex rel. Miller v. Bill Harbert Int'l Contr., No. 95 Civ. 1231, 2011 U.S. Dist. LEXIS 50788 (D.D.C. May 12, 2011), the Court held a status conference at which the government stated its belief that retrial must be limited to the question of whether BHIC, HII and HC joined the conspiracy. In accordance with the Court's invitation, the government subsequently moved to limit the scope of the new trial. Motion to Limit Further Proceedings, June 14, 2011 [1102] ("Gov. Mtn."). In support of its request, the government asserts that a limited retrial is required by the Circuit Court's mandate and necessary to prevent inconsistent verdicts, and argues that the Court should exercise its discretion to circumscribe future proceedings. Id. at 7--19. Defendants challenge this position, insisting that vacatur of the earlier judgment mandates a full retrial and arguing that the Circuit Court's opinion in Miller II is incompatible with the government's proposal. Opposition to Motion to Limit Further Proceedings, June 28, 2011 [1103] ("Ds' Opp."). Having reviewed the relevant background and applicable law, the Court turns now to the merits of the parties' contentions.

III. DISCUSSION

"It is well settled that [an appellate court] may . . . divide the issues and limit the scope of a new trial." Wash. Gas Light Co. v. Connolly, 214 F.2d 254, 256 (D.C. Cir. 1954). Thus, in reviewing the Circuit Court's mandate and opinion, the question for the Court is not whether it may limit the scope of the retrial, but whether it must or should circumscribe future proceedings. The government argues that a full retrial could undermine earlier findings-upheld by the Circuit Court-that an overarching conspiracy existed which cost the government nearly $30 million on Contract 20A, and, alternatively, that a partial retrial-even if not compelled by the disposition on appeal-is appropriate under the circumstances. The Court addresses each argument in turn.

A. The D.C. Circuit's Mandate

The government's primary argument is that "it is the duty of this Court to determine which issues relating to the remanded defendants were finally determined by the first trial and affirmed on appeal and which issues remain open to redetermination," Gov. Mtn. at 7, and that a limited retrial on the question of whether defendants joined the overarching conspiracy is compelled by the mandate rule in light of the Circuit Court's disposition of the appeal in Miller II. Id. at 13--19. When remanding an action for further proceedings, a federal circuit court generally includes, along with any written opinion, a mandate directing the district court to take certain action. See Black's Law Dictionary 980 (8th ed. 2004) (defining "mandate" as "[a]n order from an appellate court directing a lower court to take a specified action."). "No principle of law is better established than the rule that a District Court is bound 'by the decree of the Court of Appeals and must carry it into execution, according to the mandate.'" Consarc Corp. v. Dep't of Treasury, 71 F.3d 909, 915 (D.C. Cir. 1995) (quoting Mays v. Burgess, 152 F.2d 123, 124 (D.C. Cir. 1945)); Role Models Am., Inc. v. Geren, 514 F.3d 1308, 1311 (D.C. Cir. 2008) (holding that district court on remand has "no 'power or authority to deviate from the mandate'") (quoting Briggs v. Pa. R.R. Co., 334 U.S. 304, 306 (1948)). This general principle-known as the "mandate rule"-is "a 'more powerful version' of the law-of-the-case doctrine, which prevents courts from reconsidering issues that have already been decided in the same case." Indep. Petroleum Ass'n of Am. v. Babbitt, 235 F.3d 588, 597 (D.C. Cir. 2001). According to the government, the Circuit Court's mandate does not require a full retrial but-read in conjunction with the opinion in Miller II, which makes clear that the conspiracy and ...


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