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Greensfelder team wins significant appellate victory in False Claims Act case

November 2016

A Greensfelder appellate team won a favorable ruling with potentially groundbreaking implications Nov. 15 for client Kurt Bunk, who filed a whistleblower claim on behalf of the United States against a Belgian shipping company and its alleged successor under the federal False Claims Act (FCA).

Greensfelder team wins significant appellate victory in False Claims Act caseJohn Petite, Richard Greenberg and David Niemeier formed the appellate team from Greensfelder. Read the opinion here and Law 360’s coverage of the opinion here.

The FCA was enacted to protect the government from being defrauded by federal contractors. This appellate decision marks a significant victory for creditors not just under the FCA, but in other federal statutory arenas as well. The opinion from the U.S. Court of Appeals for the Fourth Circuit reversed a district court’s grant of summary judgment and remanded the matter for a trial to determine whether Belgian company Government Logistics, N.V., was liable as a successor for a $24 million FCA judgment entered against another Belgian company, Gosselin Group N.V., and its chief executive, in 2015.

The opinion is particularly noteworthy because the court endorsed and set forth clear parameters for the fraud theory of successor liability in an FCA context, sending a clear message to government contractors that attempts to avoid, frustrate, hinder or delay FCA judgment creditors will not be tolerated.  The court also held that federal courts have subject matter jurisdiction over successor liability claims asserted in the same action in which the plaintiff asserts its direct liability claims and that Mr. Bunk’s allegations readily satisfied whatever federal pleading standard – Rule 8’s notice pleading standard or Rule 9(b)’s heightened test – applied to those allegations.

The matter originated more than 15 years ago, with a “bid-rigging scheme conjured up by shipping businesses to defraud the United States,” according to the Fourth Circuit opinion. The Gosselin Group took part in the scheme to increase the prices the U.S. Department of Defense paid for shipping military members’ belongings to and from Europe, according to the opinion, and Government Logistics was created as a successor company after the United States made Gosselin aware of the whistleblower claims against it. Greensfelder’s client, Mr. Bunk, is a relator in the FCA case, in which the United States did not intervene, such that he and the firm were responsible for litigating those non-intervened claims. The United States, which intervened on and prosecuted other claims against Gosselin and GovLog, filed an amicus brief in the appeal.

This is the second time the firm has prevailed in the Fourth Circuit in this matter. The firm represented Mr. Bunk at trial and secured a $24 million verdict in favor of the United States in 2011. The district court vacated the verdict and entered judgment in favor of Gosselin. Mr. Bunk appealed and the Court of Appeals reversed, instructing the district court to enter judgment in favor of Mr. Bunk for $24 million. On remand, the district court entered judgment in GovLog’s favor on Mr. Bunk’s successor liability claims. Mr. Bunk appealed from that judgment, which resulted in the Fourth Circuit’s recent decision.