Amicus Curiae Brief — Cook County v. United States Ex Rel. Chandler

4 Suprense Court Van

FILBD ry

No. 01-1572

| way 31 2002

IN THE

SUPREME COURT OF THE UNITED STATES» op 1 cue

COOK COUNTY, ILLINOIS,

Petitioner,

-against-

UNITED STATES ex rel. JANET CHANDLER, Ph.D.,

Respondent.

On Petition For A Writ Of Certiorari To The United

States Court Of Appeals For The Seventh Circuit

BRIEF OF AMICI CURIAE THE CITY OF NEW

YORK, THE CITY OF BOSTON, THE CITY AND

COUNTY OF SAN FRANCISCO, THE CITY OF

CHICAGO, THE CITY OF INDIANAPOLIS, THE

CITY OF MILWAUKEE, THE INTERNATIONAL

MUNICIPAL LAWYERS ASSOCIATION, THE

NATIONAL ASSOCIATION OF COUNTIES AND

THE NATIONAL LEAGUE OF CITIES IN SUPPORT

OF PETITIONER

MICHAEL A. CARDOZO

Corporation Counsel of the

City of New York

100 Church Street

New York, New York 10007

(212) 788-0995

Attorney for Amicus Curiae

The City of New York

LEONARD J. KOERNER,*

GAIL P. RUBIN,

of Counsel.

*Counsel of Record 2 c e)

(Additional Counsel Listed on Inside Cover)

MARA S. GEORGES

Corporation Counsel

of the City of Chicago

121 N. LaSalle Street

Room 600

Chicago, IL 60601

312-744-7764

MERITA A. HOPKINS

Corporation Counsel

City of Boston

Law Department

Room 615/City Hall

Boston, MA 02201

617-635-4018

GRANT F. LANGLEY

City Attorney

City of Milwaukee

200 E. Wells St. #800

Milwaukee, WI 53202

414-286-2601

ED FERGUSON

Deputy Executive Dir/

General Counsel

National Association

of Counties

440 First St. N.W.

Suite 800

A. SCOTT CHINN

Corporation Counsel of the

City of Indianapolis

1601 City/County Bidg.

200 E. Washington St.

Indianapolis, IN 46204

317-327-4055

JUAN OTERO

Principal Legislative Counsel

National League of Cities

1301 Pennsylvania Ave. N.W.

Washington, D.C. 20004

202-626-3020

DENNIS J. HERRERA

City Attomey

JOANNE HOEPER

Chief Trial Deputy

Office of the City Attorney

City and‘County of

San Francisco

1 Dr. Carlton B. Goodlett PI.

San Francisco, CA 94102

415-554-3853

HENRY W. UNDERHILL, JR.

General Counsel/

Executive Director

International Municipal

Lawyers Association

1110 Vermont Ave. N.W.

Suite 200

Washington, D.C. 20002 Washington, D.C. 20005

202-393-6226

202-466-5424

Se —_—_—————

TABLE OF CONTENTS

Page

_ | | fT eT TOTe ii

pl lc Bg en l

REASONS FOR GRANTING THE PETITION................. 7

I

II

Ill

RESOLUTION OF THE CIRCUITS’

CONFLICT OVER THE VIABILITY OF

THE PRESUMPTION OF LOCAL

GOVERNMENT IMMUNITY FROM

PUNITIVE REMEDIES IS CRITICAL TO

ASSESSING FCA LIABILITY................... 7

RESOLUTION OF THE CIRCUITS’

CONFLICT OVER CONGRESSIONAL

INTENT IS CRITICAL TO ASSESSING

FCA LIABILITY ................ secpeantemmensemecannte 10

ALLOWING LOCAL GOVERNMENT

_ LIABILITY UNDER THE PUNITIVE

SCHEME OF THE FCA THREATENS

DISRUPTION OF SERVICES AND

DIVERSION OF RESOURCES FROM

FEDERAL OBJECTIVES .........-.--00eeeeseess 14

CONCLUSION ...0:ccccscccssccssscsescscscccccscccssscsesssssossssssososcssees 16

TABLE OF AUTHORITIES

Cases Page

Bank of the United States v. Deveaux,

5 Cranch 61 (1809) .........:ccccccessseeeeseteseeesseesseneenes 11

Cowles v. Mercer County,

74 U.S. 118, 7 Wall. 118 (1869) ........-.::ccceeeeeeeeees 11

City of Newport v. Fact Concerts, Inc.,

453 U.S. 247, 101 S. Ct. 2748 (1981)..........+-. 5,7,8

Louisville R. Co. v. Letson,

2 How. 495 (1844) .......cccsscccsceeseeeesessserseesenssessennens 11

Monell v. Department of Social Servs.,

436 U.S. 658, 98 S. Ct. 2018 (1978)......-.--0-0-+ 10, 11

Pierson v. Ray,

386 U.S. 547, 87 S. Ct. 1213 (1967)......-cccceeeeeeeeeees 5

United States v. Bornstein,

423 U.S. 303, 96 S. Ct. 523 (1976)......-cccecceeceesernees 4

United States ex rel. Chandler v. Cook County,

277 F.3d 969 (7th Cir. 2002) ............. 6,9, 10,11, 12

United States ex rel. Dunleavy v. County of

Delaware, 279 F.3d 219 (3d Cir. 2002), rhg.

denied, No. 00-3691 (Feb. 22, 2002)......... 6, 8, 9, 13

United States ex rel. Garibaldi v. Orleans Parish

Sch. Bd., 244 F.3d 486 (Sth Cir. 2001),

cert. denied, 122 S. Ct. 808,

rhg. denied, 122 S. Ct. 1198 (2002).......+++ 6, 8, 9, 13

United States ex rel. Weinberger v. Florida,

615 F.2d 1370 (Sth Cir. 1980) ..........cccceeeseeenerenenenes 5

Vermont Agency of Natural Resources v. United

States ex rel. Stevens,

§29 U.S. 765, 120 S. Ct. 1858 (2000)............ passim

Will v. Michigan Dep't of State Police,

491 U.S. 58, 109 S. Ct. 2304 (1989).........ccccceeeeees 13

Statutes

Act of Feb. 25, 1871, §2, 16 Stat. 431 ........ccccccceceeesereeeeees 11

Civil Rights Act of 1871, 42 U.S.C. §1983 ............06 7,9, 11

Dictionary Act, 1 U.S.C. §1 .........sesssessessesnenenenenenenenenenes 11

31 U.S.C. §3729.......cccscscsseseseresesesssenenenenenenenseenensnensnenens 4,12

31 U.S.C. §3730............cccccccceceeesees iseaneiaenenennnermmmnemenend 4

31 U.S.C. §3733.......ceccccsssesesesessesesnsesnensnsnsnneesnensnenenenenenenes 12

Other Authorities

T. Durant, Report to Joint Comm. on Revision of

Laws 2 (1873) .........ssssseeseesesseenensenenenneesnsnennnennennnnnenens 13

~ No. 01-1572

IN THE

SUPREME COURT OF THE UNITED STATES

—————

COOK COUNTY, ILLINOIS,

Petitioner,

~against-

UNITED STATES ex rel. JANET CHANDLER, Ph.D.,

Respondent.

On Petition For A Writ Of Certiorari To The United

States Court Of Appeals For The Seventh Circuit

—_—_—_—_—_—_—_—_———————— eee OSS oo

BRIEF OF AMICI CURIAE THE CITY OF NEW

YORK, THE CITY OF BOSTON, THE CITY AND

COUNTY OF SAN FRANCISCO, THE CITY OF

CHICAGO, THE CITY OF INDIANAPOLIS, THE

CITY OF MILWAUKEE, THE INTERNATIONAL

MUNICIPAL LAWYERS ASSOCIATION, THE

NATIONAL ASSOCIATION OF COUNTIES AND

THE NATIONAL LEAGUE OF CITIES IN SUPPORT

OF PETITIONER

STATEMENT OF INTEREST

The City of New York, the City of Boston,

the City and County of San Francisco, the City of Chicago,

the City of Indianapolis, the City of Milwaukee, the

International Municipal Lawyers Association, the National

Association of Counties and the National League of Cities

respectfully submit this brief as amici curiae supporting the

petition for certiorari of Cook County, Illinois. Amici urge

2

this Court to grant Cook County’s petition because the

Seventh Circuit’s decision in this case, which conflicts with

other Circuits in allowing a local government to be sued

under the federal False Claims Act (“FCA”), involves a

vitally important issue for local governments around the

country facing potentially overwhelming liability exposure

under the Seventh Circuit’s decision.’ Allowing this

decision to stand without review will subject local

governments to the FCA’s massive punitive remedies of

treble damages plus penalties and will undermine this

Court’s long-standing presumption that local governments

are immune from punitive remedies in the absence of

explicit statutory authorization.

The City of New York is a political

subdivision of the State of New York that annually receives

billions of dollars in federal funds either directly from the

United States or through the State for numerous essential

municipal services and programs. In some instances, the

City of New York is responsible for providing these

essential services to its citizens and for implementing these

and in other instances, the City is responsible for

determining eligibility for these programs. Generally, the

federal government and the State of New York disburse the

The City of Boston is a political subdivision

of the Commonwealth of Massachusetts. The City and

County of San Francisco is a political subdivision of the

State of California. The City of Boston and the City and

County of San Francisco annually receive significant sums

| The filing of this amici curiae brief is accompanied by the

written consent of all parties.

Pursuant to Rule 37.6, counsel for amici are the sole

authors of this brief and no one other than amici or their

counsel made a monetary contribution to the preparation

or submission of the brief.

3

of federal funds either directly from the United States or

through the State for essential munitipal services and

programs. Subjecting the City of Boston and the City and

County of San Francisco to treble damage liability under

the FCA would harm local taxpayers who would be called

upon to pay those damages, and would also harm the

beneficiaries of essential local services, who would face the

reduction or elimination of those services to pay those

damages.

The City of Chicago is the largest

municipality in the Seventh Cir¢uit, which rendered the

erroneous decision below. The City of Indianapolis is the

largest city in Indiana and is located within the Seventh

Circuit. The City of Chicago and the City of Indianapolis

are very concerned that if certiorari is not granted in this

case and the decision set aside, that decision will

improperly subject them to treble damages and attorney's

fees under the FCA.

The City of Milwaukee is a_ political

subdivision of the State of Wisconsin. In fiscal 2001, the

City of Milwaukee received approximately $50.6 million in

federal dollars to either spend or administer primarily for

Community Development Block Grants and for public

health and law enforcement purposes.

The International Municipal Lawyers

Association (“IMLA”) is a nonprofit, nonpartisan

professional organization consisting of more than 1,400

members. The membership is comprised of local

government entities, including cities and counties, and

subdivisions thereof, as represented by their chief legal

officers; state municipal leagues; and individual attorneys

who represent municipalities, counties, and other local

government entities. IMLA, previously known as the

National Institute of Municipal Law Officers, has provided

4

services and educational programs to local governments

and their attorneys since 1935. IMLA is the oldest and

largest association of attorneys representing United States

municipalities, counties, and special districts.

The National Association of Counties is an

organization whose members include county governments

and officials from throughout the United States. The

organization has a compelling interest in legal issues that

affect local governments.

The National League of Cities (“NLC”) is

the oldest and largest organization representing municipal

governments throughout the United States. NLC serves as

a national resource and advocate on behalf of over 1,800

cities and 49 state municipal leagues, whose membership

totals more than 18,000 cities, towns and villages.

The False Claims Act was enacted in 1863

with “the principal goal of ‘stopping the massive frauds

perpetrated by large [private] contractors during the Civil

War.’” Vermont Agency of Natural Resources v. United

States ex rel. Stevens, 529 U.S. 765, 781, 120 S. Ct. 1858,

1867 (2000), citing United States v. Bornstein, 423 U.S.

303, 309, 96 S. Ct. 523, 528 (1976). Over the years,

Congress amended the FCA many times, making the most

significant amendments in 1986 by, inter alia, increasing

the statute’s mandatory civil remedies from double to treble

damages and from a $2,000 penalty to a $5,000-$10,000

penalty for each violation. 31 U.S.C. §3729(a); Stevens,

529 US. at 785, 120 S. Ct. at 1869. Under the statute as

amended in 1986, a whistleblower, known as the “relator,”

may bring a qui tam civil action “for the person and for the

United States Government.” 31 U.S.C. §3730(b)(1). The

relator is generally entitled to receive between 15 and 30

percent of the total recovery. 31 U.S.C. §§3730 (d\(1),

(d)(2).

5

Prior to the 1986 amendments, it appears

that the Statute was not invoked against local governments,

and with one exception, it appears that the statute was not

invoked against states. See United States ex rel.

Weinberger v. Florida, 615 F.2d 1370, 1371 (Sth Cir. 1980)

(court vacated district court decision that states were not

“persons,” holding instead that the district court had lacked

subject matter jurisdiction over the case). Subsequent to

1986, however, there have been an increasing number of

cases brought against governmental entities, thereby

subjecting localities to the statute’s severe punitive

structure and allowing private individuals to collect a

windfall at taxpayers’ expense.

In Vermont Agency of Natural Resources v.

United States ex rel. Stevens, 5298. 765, 120 8. Ct. 1858

(2000), this Court examined the question of whether a State

is a “person” for purposes of the FCA. In concluding that a

State is not a “person” under the FCA, the Court held that

the treble damages and civil penalties imposed under the

FCA were “punitive in nature,” id. at 784-85, 120 S. Ct. at

1869, and that the imaposition of such punitive damages

would be inconsistent with state qui tam liability in light of

the long-standing “presumption against imposition of

punitive damages on governmental entities.” /d., citing City

of Newport v. Fact Concerts, Inc., 453 U.S. 247, 101 S. Ct.

2748 (1981). The rationale for this common law protection

is that punitive sanctions punish innocent taxpayers, not

actual wrongdoers, and subject governmental entities to

undue fiscal constraints. City of Newport v. Fact Concerts,

Inc., 453 U.S. at 259-64, 101 S. Ct. at 2756-58. In City of

Newport, this Court stated the general rule that, in light of

the presumption of municipal immunity, “Congress would

have specifically so provided had it wished to abolish the

doctrine.” /d. at 263, 101 S. Ct. at 2758, citing Pierson v.

Ray, 386 U.S. 547, 555, 87 S. Ct. 1213, 1218 (1967).

6

In holding Cook County amenable to suit

under the FCA, the Seventh Circuit rejected this

interpretive rule, holding just the opposite: that Congress

must specifically indicate its intent to exempt local

governments from a statutory scheme imposing punitive

remedies. United States ex rel. Chandler v. Cook County,

277 F.3d 969, 979 (7" Cir. 2002). The Seventh Circuit's

holding is in direct conflict with the Third Circuit and the

Fifth Circuit, which applied the “well-settled presumption”

that local governments are immune from punitive remedies,

in holding that local governments are not amenable to suit

under the FCA. United States ex rel. Dunleavy v. County of

Delaware, 279 F.3d 219 (3d Cir. 2002), rhg. denied, No.

00-3691 (Feb. 22, 2002); United States ex rel. Garibaldi v.

Orleans Parish Sch. Bd., 244 F.3d 486 (5" Cir. 2001), cert.

denied, 122 S. Ct. 808, rhg. denied, 122 S. Ct. 1198 (2002).

The Seventh Circuit’s holding that local

governments are subject to the punitive sanctions of the

FCA has profound implications for innocent local

taxpayers. As a result of the Seventh Circuit's decision to

allow the assessment of punitive treble damages and

penalties against local governments, funding for local

government services may decrease significantly. Local

government liability under the FCA will adversely affect

localities’ ability to serve their residents. It is local

governments that actually administer many federal

programs, providing services such as education, health,

child welfare and environmental protection, and it is the

localities’ ability to provide these critical services that is

jeopardized by the treble damages and up to $10,000 per

claim penalty imposed by the FCA.

Amici therefore are vitally interested in the

outcome of this suit. They submit that, in seeking to

combat private military profiteering during the Civil War

by enacting the FCA, and in subsequently amending the

-

Statute to augment punitive remedies, Congress never

intended to disrupt the administration of federal programs

at the local level. But that is exactly the result of

permitting FCA liability, since it allows recoveries of treble

damages, penalties, and a windfall to an individual

whistleblower, all at the expense of local taxpayers. Amici

urge the Court to grant Cook County’s petition and reverse

the Seventh Circuit’s determination that local governments

are “persons” subject to suit under the FC “*..’

REASONS FOR GRANTING THE PETITION

I

RESOLUTION OF THE CIRCUITS’ CONFLICT

OVER THE VIABILITY OF THE PRESUMPTION

OF LOCAL GOVERNMENT IMMUNITY FROM

PUNITIVE REMEDIES IS CRITICAL TO

ASSESSING FCA LIABILITY.

In City of Newport v. Fact Concerts, Inc.

453 U.S. 247, 101 S. Ct. 2748 (1981), this Court held that

municipalities were immune from punitive damages under

the Civil Rights Act of 1871, 42 U.S.C. §1983. In so

holding, the Court reviewed the long history of municipal

immunity, and reiterated that “(t]he general rule today is

that no punitive damages are allowed unless expressly

authorized by statute.” /d. at 260 n.21, 101 S. Ct. at 2756

> Amici address only whether a local governmental entity is

a proper qui tam defendant, not whether it is a proper gui

tam relator. See Stevens, 529 U.S. at 787 n.18, 120 S. Ct. at

, 871 n.1 8 (leaving open question of whether States can be

‘persons” for purposes of commencing FCA gui tam action

after finding that States were not “persons” for

qui tam liability). purposes of

8

n.21. The rationale for this common law immunity from

punitive remedies is simple: punishment should be

imposed only against actual wrongdoers and not against the

taxpaying citizens of the community. /d. at 261-63, 101 S.

Ct. at 2756-58. The presumption against punitive remedies

protects “the public from unjust punishment, and the

municipalities from undue fiscal constraints.” /d. at 263,

101 S. Ct. at 2757-58. The Court recognized the serious

fiscal consequences of imposing punitive remedies on local

governments, stating that the “windfall” to the plaintiff is

“likely accompanied by an increase in taxes or a reduction

of public services for the citizens footing the bill. Neither

reason nor justice suggests that such retribution should be

visited upon the shoulders of blameless or unknowing

taxpayers.” Jd. at 267, 101 S. Ct. at 2760.

In Stevens, this Court reiterated the

presumption against the imposition of punitive remedies on

governmental entities in holding that States are not

“persons” subject to suit under the FCA. Vermont Agency

of Natural Resources v. United States ex rel. Stevens, 529

US. at 784-85, 120 S. Ct. at 1869-70. The Court

specifically rejected the argumenit that City of Newport was

inapplicable in the context of the FCA, reading City of

Newport to mean that the Court was “concerned with

imposing punitive damages on taxpayers under any

circumstances.” /d. at 785 n.15, 120 S. Ct. at 1869 n.15.

Further, this Court explicitly found that the FCA remedy of

treble damages plus civil penalties is, in fact, “punitive in

nature.” /d. at 784, 120 S. Ct. at 1869.

In light of Stevens, both the Third Circuit

and the Fifth Circuit relied on the “well-settled

presumption” that local governmental entities -- a county in

the Third Circuit, and a school board in the Fifth Circuit --

are not subject to punitive damages. United States ex rel.

Dunleavy v. County of Delaware, 279 F.3d at 222; United

9

States ex rel. Garibaldi v. Orleans Parish Sch. Bd. 244

F.3d at 491-92. The Fifth Circuit found it unlikely that

Congress had made a judgment that “denying the

schoolchildren of Orleans Parish needed services, or

requinng the taxpayers of Orleans Parish to pay higher

taxes, is justified in light of the relatively minor benefit to

the federal treasury,” and declined to find the school board

amenable to suit under the FCA in the absence of explicit

language in the text of the statute. Garibaldi, 244 F.3d at

492. The Third Circuit similarly found that the “lack of

clarity in the text of the Act is insufficient indicia of

congressional intent to abrogate local governmental

immunity from punitive damages under the FCA.”

Dunleavy, 279 F.3d at 224.

| Although this Court in Stevens had already

applied the traditional governmental immunity analysis to

the punitive remedies in the FCA, the Seventh Circuit

rejected that analysis here and declined to apply such a

presumption. First, the Seventh Circuit found that the

FCA’s punitive remedy scheme differed from the punitive

remedy scheme under 42 U.S.C. §1983, since under the

FCA “at least a portion of the recovery will come from the

monies taken by the municipality through its false claims,

whereas under §1983 both the compensatory and punitive

damages come directly from the tax base.” United States

ex rel. Chandler v. Cook County, 277 F.3d at 978.

ee Second, contrary to the Third and Fifth

Circuits, which required an explicit statement of

congressional intent to abrogate governmental immunity in

the face of a punitive statute, the Seventh Circuit required

an explicit Statement of congressional intent to exempt

municipalities from the FCA’s punitive remedies. /d. at

979. The Seventh Circuit thus reversed the presumption of

municipal immunity from punitive remedies utilized by this

10

Court in Stevens in analyzing whether a State was subject

to suit under the FCA.

Thus, the Circuits are split on whether the

presumption of local government immunity from punitive

remedies applies in the case of the FCA, and on how to

overcome that presumption. The resolution of these

differing interpretations is critical for the thousands of local

governmental units that may be subject to enormous

punitive remedies under the Circuits’ disparate

interpretation of the FCA.

II

RESOLUTION OF THE CIRCUITS’ CONFLICT

OVER CONGRESSIONAL INTENT IS CRITICAL

TO ASSESSING FCA LIABILITY.

Where a statute is found to be punitive, local

governments are immune from liability unless Congress

clearly intended to authorize such liability. In analyzing

the language and legislative history of the FCA, the

Circuits have reached differing conclusions as to

congressional intent.

The Seventh Circuit’s conclusion that local

governments are “persons” subject to FCA liability was

based primarily on its belief that at the time of the FCA’s

enactment in 1863, municipa! corporations were

presumptively included in the definition of “person.”

Chandler, 277 F.3d at 974, 979, 980. The Seventh Circuit

relied for this proposition on Monell v. Dep't of Soc. Servs.,

436 U.S. 658, 685-89, 98 S. Ct. 2018, 2033-35 (1978),

citing it three times. Chandler, 277 F.3d at 974 (“The

Supreme Court has noted that, by 1844, both private and

municipal corporations were presumptively included within

the meaning of ‘person’”), 979, 980. But in Monell, the

Court was considering the meaning of the word “person” in

ll

42 U.S.C. §1983, originally enacted in 1871; the FCA was

enacted eight years earlier, in 1863. The Monell Court

found that it was clear by 1871 that “corporations should be

treated as natural persons for virtually all purposes of

constitutional and statutory analysis,” Monell, 436 U.S. at

687, 98 S. Ct. at 2034, and that the “Deveaux doctrine”

stating otherwise had been abandoned by 1844. /d., citing

Louisville R. Co. v. Letson, 2 How. 495, 558 (1844) and

Bank of the United States v. Deveaux, 5 Cranch 61, 86

(1809).

However, the Court did not find that

municipal corporations were presumptively included within

the meaning of “person” by 1844. Rather, the Court found

that the principle of treating corporations as persons was

not “automatically without discussion extended to

municipal corporations” until 1869, six years after the FCA

was enacted. Monell, 436 U.S. at 688, 98 S. Ct. at 2034,

citing Cowles v. Mercer County, 7 Wall. 118, 121, 74 U.S.

118 (1869). For purposes of analyzing the meaning of

“person” in the Civil Rights Act of 1871, the Court in

Monell also looked to the 1871 Dictionary Act, passed

shortly before the Civil Rights Act, which provided “‘in all

acts hereafter passed . . . the word ‘person’ may extend and

be applied to bodies politic and corporate . . . unless the

context shows that such words were intended to be used in

a more limited sense.” Act of Feb. 25, 1871, §2, 16 Stat.

431; Monell, 436 U.S. at 688-89, 98 S. Ct. at 2034-35. The

Dictionary Act, of course, could not have applied to an

interpretation of the word “person” in the FCA, since the

FCA was enacted six years earlier.

Despite this legislative history, the Seventh

Circuit concluded that local governments were included in

the FCA’s definition of “person” in 1863, and further found

that the 1986 amendments to the FCA did not change the

meaning of “person” or explicitly exempt municipalities.

12

Chandler, 277 F.3d at 974. First, the Seventh Circuit

considered 31 U.S.C. §3733, which enables the Attorney

General to issue civil investigative demands to “any

person” possessing “information relevant to a false claims

law investigation.” 31 U.S.C. §3733(a)(1). Section

3733(1X4) defines “person” as “any natural person,

partnership, corporation, association, or other legal entity,

including any State or political subdivision of a State.”

This Court in Stevens, citing to the Dictionary Act, |

U.S.C. §1 and relying on the presumption that States are

not covered by the term “person,” found that the existence

of a definitional provision of “person” that explicitly

included States in §3733, together with the absence of such

a provision in §3729, “suggests that States are not ‘persons’

for purposes of gui tam liability under §3729.” Stevens,

§29 U.S. at 784 & n.14, 120 S. Ct. at 2748 & n.14. The

Seventh Circuit, however, relying on its mistaken belief

that local governments were presumptively included in the

definition of “person,” viewed the civil investigative

demands provision, as well as several other provisions

added by the 1986 amendments, as insufficient to “support

an inference that Congress intended [municipalities] to be

exempt.” Chandler, 277 F.3d at 975.

Second, the Seventh Circuit relied on the

congressional failure in 1986 specifically to exempt

municipalities from the FCA definition of “person” as

evidence of intent, because, according to the Seventh

Circuit, Congress was “aware of the presumption that

municipalities are included within the meaning of the term

‘person.”” Jd. at 979. However, the Monell presumption

that municipalities are included in the meaning of the term

“person” was limited to the Civil Rights Act of 1871, and

there is no reason for Congress to have assumed that the

definition of “person” also applied to the FCA. In addition,

the Dictionary Act, which in 1871 had originally included

13

“bodies political and corporate” in the presumptive

definition of “person,” was amended in 1874 to eliminate

that phrase. See Will v. Michigan Dep't of State Police,

491 U.S. 58, 81, 109 S. Ct. 2304, 2318 (1989) (Brennan, J.

dissenting\(citing T. Durant, Report to Joint Comm. on

Revision of Laws 2 (1873)).

In contrast, the Third and Fifth Circuits

found no authority to indicate that local governments were

intended to be included as “persons” either in 1863 or in

1986. Dunleavy, 279 F.3d at 224; Garibaldi, 244 F.3d at

494. The Fifth Circuit viewed this Court’s determination in

Monell that local governments are “persons” under § 1983

“as premised on specific indications in the legislative

history” of that statute that do no‘ appear in the legislative

history of the FCA. Garibaldi, 244 F.3d at 494. The Third

Circuit found that the legislative history of the 1986

amendments “cannot pass muster in light of the Stevens

Court’s express rejection of the pertinent 1986 legislative

history as erroneous and of questionable value.” Dunleavy,

279 F.3d at 225. Both Circuits further found that not only

was there an absence of evidence of congressional intent to

abrogate local government immunity, but that “Congress’

imposition of treble damages is powerful evidence that

Congress did not intend to subject local governments to

punitive damages under the FCA.” /d. at 225; Garibaldi,

244 F.3d at 493 (“We are convinced that the punitive

damages regime of the False Claims Act discussed above

reflects a congressional intent that the term ‘person in the

liability provisions of the False Claims Act not include

local governments”).

Thus the views of the Seventh Circuit on the

one hand, and the Third and Fifth Circuits on the other

hand, evidence a serious disagreement as to the meaning of

the language and legislative history of the FCA. The

question of congressional intent to subject thousands of

14

local governments to liability under the FCA presents a

staggering fiscal issue that should be settled by this Court,

rather than allowing such liability to depend on the fortuity

of geographic location.

Ill

ALLOWING LOCAL GOVERNMENT LIABILITY

UNDER THE PUNITIVE SCHEME OF THE FCA

THREATENS DISRUPTION OF SERVICES AND

DIVERSION OF RESOURCES FROM FEDERAL

OBJECTIVES.

Resolution of the issue presented in this case

is critical to local governments. Rather than pursuing

federal monies for profit, local governments apply for and

utilize federal funds for the benefit of their residents. They

do so in cooperation with states and the federal

government, sharing both legal and financial responsibility

for implementing a wide variety of government programs

that are promoted by the federal government through

federal funding. While the federal government and states

monitor and fund many government programs, it is the

unique role of local governments to implement those

programs and provide direct services.

Because of the range of services provided by

local governments with federal financial support, however,

all of these services are targets under the FCA. In recent

years, there has been a dramatic increase in the number of

FCA suits against local governments, exposing those

governments and their taxpayers to significant litigation

costs, the msk of enormous punitive remedies and the

threatened disruption of government services. Yet, it

would appear to be glaringly inconsistent to find that the

legislators who provided federal funds to localities to

achieve various programmatic objectives would want to

(eee

15

expose these localities to draconian punitive remedies that

might well interfere with their ability to implement those

objectives. The threat that FCA liability would disrupt

services and divert resources from federal objectives

mandates that liability for local governments be based on

an explicit congressional directive rather than on inference

or presumption.

Further, localities, unlike private

corporations, are partners with the states and the federal

government in implementing federal programs. Exposing

localities to punitive treble damages and civil penalties

through FCA litigation can interfere with statutory

procedures for administration of federal programs designed

to ensure both compliance with federal requirements and

the provision of government services. These statutory and

regulatory procedures -- such as reporting requirements,

monitoring, audits, reauthorizations, withholding of

selected payments or cutting off funds altogether -- give

federal officials ample means to ensure local government

compliance with federal standards while enabling the

provision of services to continue. By contrast, the sheer

magnitude of FCA treb!. damage exposure for local

governments, given the width.and breadth of federal

funding programs, will undermine the cooperative

mechanisms established by Congress to ensure the delivery

of services in accordance with federal objectives.

a a i Ni

16 17

CONCLUSION

GRANT F.LANGLEY DENNIS J. HERRERA

City Attorney City Attorney

City of Milwaukee JOANNE HOEPER

200 E. Wells St. #800 Chief Trial Deputy

Milwaukee, WI 53202 Offfice of the City Attorney

414-286-2601 City and County of

The petition of Cook County, Illinois for a

writ of certiorari should be granted.

MICHAEL A. CARDOZO

Corporation Counsel of the

City of New York San Francisco

Attorney for Amicus Curiae 1 Dr. Carlton B. Goodlett PI.

City of New York San Francisco, CA 94102

100 Church Street 415-554-3853

New York, New York 10007

212-788-0995 ED FERGUSON HENRY W. UNDERHILL, JR.

Deputy Executive Dir/ General Counsel/

General Counsel Executive Director

LEONARD J. KOERNER,° National Association International Municipal

GAIL P. RUBIN, ; a

°F aeash af fasent of Counties Lawyers Association

440 First St. N.W. 1110 Vermont Ave. N.W.

Suite 800 Suite 200

OTHER AMICI Washington, D.C. 20002 Washington, D.C. 20005

202-393-6226 202-466-5424

MARA S.GEORGES A. SCOTT CHINN

Corporation Counsel Corporation Counsel of the

of the City of Chicago City of Indianapolis

121 N. LaSalle Street 1601 City/County Bldg.

Room 600 200 E. Washington St.

Chicago, IL 60601 Indianapolis, IN 46204

312-744-7764 317-327-4055

MERITA A. HOPKINS JUAN OTERO

Corporation Counse! Principal Legislative Counsel

City of Boston National League of Cities

Law Department 1301 Pennsylvania Ave. N.W.

Room 615/City Hall Washington, D.C. 20004

Boston, MA 02201 202-626-3020

617-635-4018