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United States ex rel. Purcell v. MWI Corp.

United States District Court, District of Columbia

February 10, 2014

UNITED STATES OF AMERICA, ex rel. ROBERT R. PURCELL, Plaintiffs,
v.
MWI CORPORATION, Defendant.

MEMORANDUM OPINION

Gladys Ressler, United States District Judge

This matter comes before the Court for ruling after a jury-trial. The jury found Defendant MWI Corporation ("Defendant" or "MWI") liable for violations of the False Claims Act ("FCA"), 31 U.S.C. § 3729(a)(1), (2).

The parties were ordered to submit supplemental briefs addressing the issue of damages. Plaintiff United States ("the Government") filed a Motion for Entry of Judgment ("U.S. Mot.") [Dkt. No. 458]. Defendant MWI Corporation ("Defendant" or "MWI") filed a Memorandum of Points and Authorities Regarding the Calculation of Damages ("MWI Mem.") [Dkt. No. 459]. Subsequently, the Government filed a Response to MWI's Memorandum ("U.S. Resp.") [Dkt. No. 463], Relator Robert R. Purcell ("Relator" or "Purcell") filed a Response to the Government and MWI's Calculation of Damages Regarding Entry of Judgment ("Relator Resp.") [Dkt. No. 464], and MWI filed a Response to United States' Submissions ("MWI Resp.") [Dkt. No. 465] . After consideration of those submissions, the representations of the parties at the damages hearing held December 19, 2 013, and the entire record herein, the Court will now address the issues raised and determine the amount of damages.

A. Factual Background

In 1992, MWI, a Florida corporation, arranged to sell irrigation pumps and other equipment to seven Nigerian states. The total sale price was $82.2 million dollars.

To finance these sales, MWI and the Federal Republic of Nigeria ("Nigeria") sought and received eight loans from the Export-Import Bank of the United States ("Ex-Im"), an agency of the United States that finances and facilitates transactions between U.S. exporters and international buyers. Ex-Im agreed to finance the deal and loan Nigeria $74.3 million dollars. Nigeria would pay back the $74.3 million dollars, as well as interest and fees, and the individual Nigerian states would pay the remainder of the $82.2 million dollar price.

Before Ex-Im would approve the loans to Nigeria, it required MWI to submit a "Letter of Credit Supplier's Certificate" for each of the eight loans. On each of those eight Letter of Credit Supplier's Certificates, MWI attested that it had only paid "regular commissions" in connection with the pump sales.

After Ex-Im approved the loans, but before it disbursed any funds, it required MWI to submit a "Disbursement Supplier's Certificate." MWI attested on fifty Disbursement Supplier's Certificates that it had paid only "regular commissions" in connection with the pump sales. Thus, MWI submitted eight Letter of Credit Supplier's Certificates and fifty Disbursement Supplier's Certificates to Ex-Im.[1]

In 1998, Relator Robert Purcell, a former employee of MWI, filed this action against MWI under the FCA [Dkt. No. 1] . He alleged that MWI paid commissions in excess of 3 0 percent of the contract prices for the irrigation pumps and equipment to its long-time Nigerian sales agent, Alhaji Mohammed Indimi. Id. ¶¶ 35-37. Purcell alleged that those commission payments were "irregular" and thus should have been disclosed on all of the Supplier's Certificates that MWI submitted to Ex-Im. Id.

In April of 2002, the United States decided to intervene, and filed a complaint which then governed the proceedings ("Complaint") [Dkt. No. 18]. Based in part on the amount of commissions paid to Indimi, which at the time was estimated to be approximately $28 million dollars, [2] the Complaint alleged two violations of the FCA (Counts I and II) and two common law claims for unjust enrichment and payment by mistake (Counts III and IV).

The case was litigated for several years before Judge Ricardo M. Urbina. After Judge Urbina's retirement, the case was reassigned to Judge Colleen Kollar-Kotelly, and then to this Court. After resolving many pre-trial motions, the case went to trial on November 6, 2013.

Counts I and II of the Complaint, the FCA violations, were to be decided by the jury. It was instructed that, if it found that MWI had violated the FCA, it was to identify the specific number of false claims and then "assess the amount of damages, if any, that the [G]overnment sustained because of MWI's acts." Closing Instructions, Trial Tr. Nov. 21, 2013 A.M. Session at 41:13:18 (quoting 31 U.S.C. § 3729(a)(1), which states that defendant is liable for "3 times the amount of damages which the Government sustains because of the act of that person").

In order to assess the appropriate amount of damages, the jury was instructed, under United States v. Science Applications Int'1 Corp., 626 F.3d 1257, 1278-79 (D.C. Cir. 2010), that damages were "the amount of money the government paid because of the false claims over and above what it would have paid had MWI not made the false claims, " and that it would need to "set an award that puts the [G] overnment in the same position as it would have been in if the defendant's claims had not been false." Closing Instructions, Trial Tr. Nov. 21, 2013 A.M. Session at 41:19-24.[3]

On November 25, 2 013, the jury returned a verdict for Plaintiffs on both Counts I and II. The Government then dismissed Counts III and IV of the Complaint, its common law claims, with prejudice. Trial Tr. Nov. 25, 2013, A.M. Session at 22:18-20.

B. Standard of Review

Under the FCA, "if [the jury] finds liability, its instruction is to return a verdict for actual damages, for which the court alone then determines any multiplier, just as the court alone sets any separate penalty." Cook Cty., Ill. v. United States ex rel. Chandler, 538 U.S. 119, 132 (2003) (citing 31 U.S.C. § 3 729(a)). Thus, it is now the Court's job to calculate the "civil penalty of not less than $5, 000 and not more than $10, 000, plus 3 times the amount of damages which the Government sustains because of" MWI's actions. See 31 U.S.C. § 3729(a).

The "chief purpose of the (Act's civil penalties) was to provide for restitution to the government of money taken from it by fraud, and that the device of [treble] damages plus a specific sum was chosen to make sure that the government would be made completely whole." United States v. Bornstein, 423 U.S. 303, 314 (1976) (citing United States ex rel. -Marcus v. Hess, 317 U.S. 537, 551-52 (1943)). In order to make the Government "whole, " the Supreme Court has instructed that "the Government's actual damages are to be [trebled] before any subtractions are made for compensatory payments previously received by the Government from any source." Bornstein, 423 U.S. at 316.

C. Actual Damages

First, the jury found that MWI knowingly presented 58 false or fraudulent claims for payment to the Government, in violation of 31 U.S.C. § 3729(a)(1). Verdict Form, at 1 [Dkt. No. 453]. Second, it found that the amount of damages the Government sustained because of those claims was $7, 500, 000. Id.

The jury also found that MWI knowingly made 58 false records and/or false statements that were material to the Government's decision to pay or approve false or fraudulent claims for payment, in violation of 31 U.S.C. § 3729(a)(2). Verdict Form, at 2. It found that the amount of damages the Government sustained because of those false records or statements was $7, 500, 000.

The Government concedes that the total amount of actual damages for both counts is $7, 500, 000. U.S. Mot. 3 at 1. The only party that disagrees is the Relator, who argues that the jury intended to award $7.5 million in damages for each count, for a total of $15 million. Relator Resp. at 2-3.

Relator's argument that the jury split the amount of damages between the two counts is nothing more than speculation. Relator ignores the important fact that the jury identified the same 58 Supplier's Certificates for both Counts. At trial, the Government argued that each of the 58 Supplier's Certificates constituted a false claim and/or a false statement. Pis.' Closing Arg., Trial Tr. Nov. 21, 2013, A.M. Session at 62:12-13 ("MWI's certifications on the 58 Supplier's Certificates that it submitted to Ex-Im were false."). Thus, it is clear that the jury determined that the same conduct, the submission of the 58 Supplier's Certificates, was a violation of both Count I and Count II. To aggregate the two sums would be to punish MWI twice for the same conduct, which would "amount to a double recovery." See Kakeh v. United Planning Org., Inc., 655 F.Supp.2d 107, 122 (D.D.C. 2009) ("It is well-settled that a plaintiff is not permitted to recover multiple awards for the same injury.") (citing supporting cases).

The jury found that the 58 false certifications damaged the Government by $7, 500, 000 and therefore that is the amount of actual damages.

D. Treble Damages

An entity found liable for a violation of the FCA is liable for "3 times the amount of damages which the Government sustains because of the act of that person." 31 U.S.C. § 3729(a). The parties agree that the first step in calculating treble damages is to treble the actual damages amount. See Bornstein, 423 ...


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