United States ex rel. Landis v. Tailwind Sports Corp., Case No. 1:10–cv–00976 CRC

• Decision Date: 09 April 2015
• Docket Number: Case No. 1:10–cv–00976 CRC
• Citation: 98 F.Supp.3d 8
• Parties: United States ex rel. Landis, Plaintiffs, v. Tailwind Sports Corp., et al., Defendants.
• Court: U.S. District Court — District of Columbia

98 F.Supp.3d 8

United States ex rel. Landis, Plaintiffs

v.Tailwind Sports Corp., et al., Defendants.

Case No. 1:10–cv–00976 CRC

United States District Court, District of Columbia.

Signed April 9, 2015

Corinthian Prentiss, Limon, CO, for Plaintiffs.

Matthew S. Holman, Colorado Attorney General's Office, Denver, CO, for Defendants.

MEMORANDUM OPINION AND ORDER

CHRISTOPHER R. COOPER, United States District Judge

Former professional cyclist Floyd Landis, the relator in this qui tam action, wishes to settle his claims against his ex-teammate Lance Armstrong's agents and their company, Capital Sports and Entertainment (“CSE Defendants”). The United States, which has intervened in Landis' claims against Armstrong but not his claims against the CSE Defendants, objects to the proposed settlement on its current terms. The question before the Court is whether Landis and the CSE Defendants may settle those claims over the Government's objection. While it might seem counterintuitive that the Government can effectively veto a settlement of claims it has chosen not to join, the False Claims Act itself and the majority of circuits that have addressed the question say otherwise. Until the United States, through the Attorney General, provides its written consent, the Court may not approve the settlement or order the voluntary dismissal of the CSE Defendants. The Court must therefore deny the CSE Defendants' motion to approve the settlement.

I. Background

The False Claims Act (“FCA”) permits private citizens to bring actions “in the name of the Government” to enforce its provisions and provides for these “relators” to receive a share of the proceeds of successful actions. 31 U.S.C. § 3730. In June 2010, relator Floyd Landis filed this FCA suit against Lance Armstrong, his former teammate on the U.S. Postal Service-sponsored professional cycling team, and a number of other individuals and entities associated with the team. The suit alleges that the defendants submitted claims for sponsorship payments of more than $40 million to the Postal Service while knowing that members of the team had used performance enhancing drugs in violation of their sponsorship agreement. The United States elected to intervene against Armstrong and certain other defendants in February 2013, but did not intervene against the CSE Defendants. United States' Notice of Election to Intervene in Part at 1. Landis and the CSE Defendants recently reached a settlement agreement. Joint Stipulation of Dismissal Ex. A. The Government, however, has notified the Court that it does not consent to the agreement as written. United States' Notice Regarding the Proposed Settlement Involving the CSE Defendants at 1. The CSE Defendants now move the Court to accept the settlement agreement notwithstanding the Government's objection and dismiss the action against them.

II. Analysis

The Supreme Court has repeatedly instructed that “the starting point in any case involving the meaning of a statute[ ] is the language of the statute itself.” Grp. Life & Health Ins. Co. v. Royal Drug Co., 440 U.S. 205, 210, 99 S.Ct. 1067, 59 L.Ed.2d 261 (1979) (citing St. Paul Fire & Marine Ins. Co. v. Barry, 438 U.S. 531, 541, 98 S.Ct. 2923, 57 L.Ed.2d 932 (1978) ). Courts should “assume that the ordinary meaning of the language that Congress employed ‘accurately expresses the legislative purpose.’ ” Mills Music, Inc. v. Snyder, 469 U.S. 153, 164, 105 S.Ct. 638, 83 L.Ed.2d 556 (1985) (citing Park ' N Fly Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189, 194, 105 S.Ct. 658, 83 L.Ed.2d 582 (1985) ). Section 3730(b)(1) of the FCA states that an FCA “action may be dismissed only if the court and the Attorney General give written consent to the dismissal and their reasons for consenting.” This requirement is clear, with one wrinkle: in construing this provision, courts have recognized that it pertains only to voluntary dismissals so as to avoid the separation of powers concerns that would arise if the Attorney General held the power to reject a judicial decision. See United States ex rel. Conteh v. IKON Office Solutions, Inc., 27 F.Supp.3d 80, 83 n. 3 (D.D.C.2014) (citing United States ex rel. Baggan v. DME Corp., No. 96–1983, 1997 WL 600569, at *3 n. 6 (D.D.C. Sept. 22, 1997) ); Minotti v. Lensink, 895 F.2d 100, 103–04 (2d Cir.1990) ; United States ex rel. Mergent Servs. v. Flaherty, 540 F.3d 89, 91 (2d Cir.2008) ).

Despite the seemingly plain language of Section 3730(b)(1), the CSE Defendants ask the Court to look beyond the literal text and approve the proposed settlement unless the Government can articulate good reasons for withholding its consent. They complain that giving the Government veto power over voluntary settlements infringes on relators' “right to conduct” non-intervened FCA actions and forces relators to press forward with litigation against their will. The CSE Defendants find support for their argument in United States ex rel. Killingsworth v. Northrop Corp., 25 F.3d 715 (9th Cir.1994), where the Ninth Circuit held that the consent provision in Section 3730(b)(1) applied only during the initial 60–day (or extended) period during which an FCA suit is sealed and that, thereafter, the district court could approve a settlement over the United States' objection after a hearing, id. at 722–23, 725.

Unfortunately for the CSE Defendants, Killingsworth has not fared well in the intervening years. Its conclusion and reasoning have been expressly rejected by both the Fifth and Sixth Circuits. Searcy v. Philips Elecs. N. Am. Corp., 117 F.3d 154, 159–160 (5th Cir.1997) (finding no reason in the text or structure of the FCA to ignore Congress's longstanding instruction “to let the government stand on the sidelines and veto a voluntary settlement”); United States v. Health Possibilities, P.S.C., 207 F.3d 335, 339 (6th Cir.2000) (“We now join the Fifth Circuit in rejecting the Ninth Circuit's analysis, and hold that a relator may not seek voluntary dismissal of any qui tam action without the Attorney General's consent.”). And while neither the Supreme Court nor the D.C. Circuit has tackled the question head on, both have indicated that the Government's consent is required for the voluntary dismissal of non-intervened claims. U.S. ex rel. Eisenstein v. City of New York, New York, 556 U.S. 928, 932, 129 S.Ct. 2230, 173 L.Ed.2d 1255 (2009) (noting that if the United States decides not to intervene in an FCA case, its rights in the proceeding still include “vetoing a...