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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2003
- **Citation:** 538 U.S. 119

## Text

i SEP 9 2002
No. 01-1572

ORFICB OF THE CLERK

an .

IN THE
SUPREME COURT OF THE UNITED STATES

COOK COUNTY, ILLINOIS,

Petitioner,
-V.-

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

On 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, AND THE CITY OF
MILWAUKEE IN SUPPORT OF PETITIONER

MICHAEL A. CARDOZO,
Corporation Counsel
Attorney for Amicus Curiae

The City of New York
____100 Church Street
New York, NY 10007
(212) 788-0999
LEONARD J. KOERNER,*
GAIL RUBIN,
of Counsel. ti

*Counsel of Record
September 9, 2002

© --<

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

DENNIS J. HERRERA
City Attorney

Office of the City Attorney

A. SCOTT CHINN
Corporation Counsel of the
City of Indianapolis

1601 City/County Bldg.
200 E. Washington St.
Indianapolis, IN 46204
317-327-4055

GRANT F. LANGLEY
City Attorney

City of Milwaukee

200 E. Wells St. #800
Milwaukee, WI 53202
414-286-2601

City and County of San Francisco

1 Dr. Carlton B. Goodlett P1.
San Francisco, CA 94102

415-554-3853

TABLE OF CONTENTS

Page
TABLE OF AUTHORITIES .ocscccccccsccscsscssssssessssessssssveee ii
INTERESTS OF AMICI CURIAE vocossssesccssssscsssssssssssssseoe 1
SUMMARY OF ARGUMENT ..cccscssscessscsessssvesesseesessseven 4
ARGUMENT
POINT I
THE FCA’S PUNITIVE REMEDIES ARE
INCONSISTENT WITH THE
PRESUMPTION AGAINST IMPOSING
PUNITIVE DAMAGES ON
GOVERNMENTAL ENTITIES. -csscosescosescosesoossses 6
POINT II
THE TERM “PERSON” WAS NOT
PRESUMED TO INCLUDE LOCAL
GOVERNMENTS IN 1863 ccccscccesescosesssecsssssscsoeee 7
POINT III
THE HISTORICAL CONTEXT OF THE
FCA INDICATES THAT CONGRESS DID
NOT INTEND THE TERM “PERSON” TO
INCLUDE LOCAL GOVERNMENTS. ............ 13
a 16

TABLE OF AUTHORITIES

Cases Page
Bank of the United States v. Deveaux,

Pe GD ctreatnteennstenneiiniotinen 10
Board of Commissioners v. Aspinwall,

24 How. 376, 65 U.S. 376 (1861)...............cccccceeeeees 12
City of Newport v. Fact Concerts, Inc.,

453 U.S 247, 101 S.Ct. 2748 (1981)... 4,6
Cowles v. Mercer County,

7 Wall. 118, 74 U.S. 118 (1869) 00... 10, 12
Louisville R. Co. v. Letson,

ee ee ccihiinntintinenererinntnsemmisnaipentamsiaiiiaibts 10
Monell v. Dep't of Soc. Servs.,

436 U.S. 658, 98 S.Ct. 2018 (1978) ........ 5, 10, 11, 12
Paul v. Virginia,

8 Wall. 168, 75 U.S. 168 (1869) .....0.... cece 11
Pierson v. Ray,

386 U.S. 547, 87 S.Ct. 1213 (1967) 20.0.0... ceeeeeeeeeee 4
Quern v. Jordan,

440 U.S. 332, 99 S.Ct. 1139 (1979) ssvssssscesssesssesceee I]
United States v. Bornstein,

423 U.S. 303, 96 S.Ct. 523 (1976)...........cccccccceeeeeees 13

-ii-

United States ex rel. Chandler v. Cook County,
277 F.3d 969 (7th Cir. 2000),
cert. granted sub nom. Cook County
v. United States ex rel. Chandler,

8 Ee 1,5
United States ex rel. Marcus v. Hess,

SET UD. S37, GS SIL. S79 (IDES) ncccccccccccccecccccccsess 15
Vermont Agency of Naturai Resources v.

United States ex rel. Stevens,

529 U.S. 765, 120 S.Ct. 1858 (2000) ........ 4,7, 13,14
Will v. Michigan Dep't of State Police,

491 U.S. 58, 109 S.Ct. 2204 (1989)... 11
Constitutional Provisions
ne nee 11
ESE ENTE 10, 11, 12
Statutes.

Act of July 2, 1862, ch. 130, 12 Stat. 503.000.000.000... 15
Act of Mar. 2, 1863, ch. 67, 12 Stat. 696.................00000. 14
Act of Feb. 25, 1871, §2, 16 Stat. 431 00000. eee 11
Act of Mar. 2, 1887, 24 Stat. 440................::cccccccceeeeeeeees 15
Civil Rights Act of 1871, 42 U.S.C. §1983................. 6, 10

Legislative History

Cong. Globe, 37th Cong., 3d Sess. 952 (1863)............... 13
Cong. Globe, 42d Cong., 1* Sess. 752 (1871)..........00-++- 10
H.R. Rep. No. 2,

37" Cong., 2¢ Sess., pt. ii-a (1862) .........ce.c0000-. 13,14
H.R. Rep. No. 49,

37" Cong., 3d Sess. (Mar. 3, 1863) ........ccccesceceeseeees 13
T. Durant, Report to Joint Comm.

on Revision of Laws 2 (1873) .............ccccceccsseeeeeeeees 11
Other

George F. Break, Fiscal Federalism in theUnited
States: The First 200 Years, Evolution and
Outlook, in Advisory Comm. on Intergovern-
mental Relations, The Future of Federalism

Ge Be Oe ee crcsccsnnssseenssnnessersceseen 15
Roger W. Cooley, Handbook of the Law of

Municipal Corporations (1914) ..........c0cccsceeeeeeeeeees 8
John F. Dillon, A Treatise on the Law of Municipal

Corporations (5™ €d. 1911) ...ccccceccessessesseesseesessvee 8,9

Charles Fairman, History of the Supreme Court of the
EE Ee eee en 12

ee ty i OE CE ES CEI A ep

James B. Helmer, Jr. & Robert C. Neff, Jr.,
War Stories: A History of the Qui Tam
Provisions of the False Claims Act, the 1986
Amendments to the False Claims Act, and
Their Application in the United States ex rel.
Gravitt v. General Electric Co. Litigation,
18 Ohio N.U. L. Rev. 35 (1991)...........c.cccccsccereseees 13

Arnold M. Howitt, Managing Federalism: Studies in
Intergovernmental Relations (1984)...................000. 15

Joan C. Williams, The Invention of the Municipal
Corporation: A Case Study in Legal Change,
34 Am. U.L. Rev. 369 (1965S) ..........ccceccrccosssccscsseeeees 9

No. 01-1572

IN THE
SUPREME COURT OF THE UNITED STATES

COOK COUNTY, ILLINOIS,

Petitioner,
-V.-

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

On 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, AND
THE CITY OF MILWAUKEE IN SUPPORT OF
PETITIONER

INTERESTS 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 and the City of Milwaukee, respectfully
submit this brief as amici curiae in support of reversal of
the judgment of the United States Court of Appeals for the
Seventh Circuit in United States ex rel. Chandler v. Cook
County, 277 F.3d 969 (7 Cir. 2002), cert. granted sub
nom. Cook County v. United States ex rel. Chandler, 122
S.Ct. 2657 (2002).' The Seventh Circuit’s determination in

' Pursuant to Rule 37.6 of this Court, amici represent that
counsel for amici authored this brief in its entirety and that no

this case that local governments are amenable to suit 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 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
programs, 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
funds and monitor their expenditure.

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 of federal
funds either directly from the United States or through the
State for essential municipal services and programs.

person or entity other than amici and their representatives made
any monetary contribution to the preparation or submission of
this brief. The filing of this amici brief is accompanied by the
written consent of all parties.

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 Circuit, 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 the Seventh Circuit’s decision is not reversed, they
will be subject 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.

Amici are deeply interested in the outcome of this
case. Amici 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 burden local
taxpayers with treble damages, penalties and a windfall to
an individual whistleblower. Amici urge the Court to
reverse the Seventh Circuit’s determination that local
governments are “persons” subject to suit under the FCA.

SUMMARY OF ARGUMENT

This case involves battling presumptions governing
the interpretation of the word “person” in a gui tam suit
under the FCA. In concluding that a State is not a “person”
under the FCA, this Court held that the treble damages and
civil penalties imposed under the FCA were “punitive in
nature.” Vermont Agency of Natural Resources v. United
States ex rel. Stevens, 529 U.S. 765, 784-85, 120 S.Ct.
1858, 1869 (2000). Accordingly, the long-standing
“presumption against imposition of punitive damages on
governmental entities” counseled against imposing State
qui tam liability under the FCA. /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 against governmental entities punish
innocent taxpayers, not actual wrongdoers, and subject
those entities to undue fiscal constraints. City of Newport,
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.” Jd. at 263, 101 S.Ct. at 2758, citing Pierson v.
Ray, 386 U.S. 547, 555, 87 S.Ct. 1213, 1218 (1967).

Application of the presumption against the
imposition of punitive remedies on governmental entities
should lead to a similar conclusion in this case: local
governments are not “persons” under the FCA.? However,

? Amici address only whether a local governmental entity is a

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

_ relator. See Stevens, 529 U.S. at 787 n.18, 120 S. Ct. at 1871

~ n.18 (leaving open question of whether States can be “persons”

for purposes of commencing FCA qui tam action after finding

that States were not “persons” for purposes of gui tam liability).
4

ee nen pe IE,

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 the FCA’s
statutory scheme imposing punitive remedies. United
States ex rel. Chandler v. Cook County, 277 F.3d 969, 979
(7" Cir. 2002). The Seventh Circuit reached this result by
presuming that local governments were included within the
meaning of the word-“person” in 1863. Jd. at 974. The
court below sought to rely for this presumption on Monell
v. Dep't of Soc. Servs., 436 U.S. 658, 98 S.Ct. 2018 (1978),
where this 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. The

-court below implicitly reasoned that local governments

were corporations, and therefore presumed them to be
“persons” in accordance with the Circuit Court’s reading of
Monell.

The Seventh Circuit’s assumption that in 1863, the
word “person” in the FCA included local governments
because “corporations” presumptively included local
governments, is, however, erroneous. The evolving state of
the law regarding the corporate status of local governments
in 1863 indicates that Congress would not have presumed
that “corporations” included local governments. Moreover,
the historical context in which the FCA was enacted
demonstrates that Congress was concerned with fraud by
private contractors, not local governments. Thus,
consistent with Stevens, the presumption against the
imposition of punitive remedies on governmental entities,
combined with the fact that Congress did not envision Jocal
governments as “persons” in 1863, dictate that local
governments should not be subject to suit under the FCA.

5

ARGUMENT
I

THE FCA’S PUNITIVE REMEDIES
ARE INCONSISTENT WITH THE
PRESUMPTION AGAINST IMPOSING
PUNITIVE DAMAGES ON
GOVERNMENTAL ENTITIES.

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
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. Jd. 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.” Jd. 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.

een

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. Stevens, 529 U.S.
at 784-85, 120 S.Ct. at.1869-70. The Court specifically
rejected the argument 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.” Jd. 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.” Jd. at 784, 120
S.Ct. at 1869.

The presumption of governmental immunity from
such punitive remedies as appear in the FCA is rebutted
only if Congress explicitly so provides. Because there is no
such explicit congressional instruction here, the
presumption of governmental immunity mandates a finding
that local governments are not “persons” under the FCA.

Il

THE TERM “PERSON” WAS NOT
PRESUMED TO INCLUDE LOCAL
GOVERNMENTS IN 1863.

This Court in Stevens held that, because the term
“person” in the FCA “has remained in the statute
unchanged since 1863,” it is the intent of the 1863
Congress that should be analyzed, not the 1986
amendments to the statute. Stevens, 529 U.S. at 783 n.12,
120 S.Ct. at 1868 n.12. The Court in Stevens also noted
that corporations are presumptively covered by the term
“person.” Jd. at 782, 120 S.Ct. at 1868. Hence, the

7

pertinent question here is whether, in 1863, it was so clear
that the term “corporation” included local governments that
Congress would have presumed “person” as used in the
FCA to have included local governments.

An analysis of treatises on local government
establishes that local governments would not likely have
been presumptive “corporations” in 1863. While
“municipal corporations” “duly incorporated not
primarily to enforce state laws, but chiefly to regulate the
local affairs of the city, town or district incorporated by
proper legislation and administration” -- did exist, many
local governments were not “municipal corporations” in
1863. Roger W. Cooley, Handbook of the Law of
Municipal Corporations 15 (1914). A local government
might also take the form of a “quasi-corporation,” which
was not in fact a “corporation,” but “an almost
corporation.” /d. at 12-13. Depending on state law, quasi-
corporations included counties, townships, school districts,
road districts, public commissioners, boards of supervisors,
school trustees and the like. Jd. at 494-95. Quasi-
corporations were not only not real corporations, they were
exempt from the “general law of corporations.” Jd. at 496
(“Subject to statutory regulation, there are, of course,
certain peculiar qualities and attributes common to all quasi
corporations, which distinguish them from municipalities,
and exempt them from the general law of corporations.”).

There were significant differences between
“municipal corporations” and ‘“quasi-corporations.”
“Municipal corporations” were given corporate capacity at
the request of or with the consent of the inhabitants, while
“quasi-corporations” were mere subdivisions of the State.
1 John F. Dillon, A Treatise on the Law of Municipal
Corporations §10 p. 30-33 (1872). Depending on state

- ee er es C8 ED Oe |

law, “municipal corporations” would be liable for their
torts, but “quasi-corporations” would not be liable unless
made so by express legislative enactrrent. /d. at 33. A
local government that was a “municipal corporation” in one
State may have been a “quasi-corporation” in another State.

State law. governing the corporate nature of local
governments developed differently in different States in the
first half of the nineteenth century. In New York, for
example, which followed English law, only a chartered

borough could be a corporation -- so towns were not

corporations. Joan C. Williams, The Invention of the
Municipal Corporation: A Case Study in Legal Change, 34
Am. U.L. Rev. 369, 372, 392-93 (1985). Even towns and
villages which were incorporated by statute were
distinguished from chartered boroughs, which were the
“real” corporations. Jd. at 400, 392-410. Towns and
villages might be “quasi corporations” or they might be
“corporations for a particular purpose,” but they were not
“real” corporations. /d. at 403-10. By contrast, in
Massachusetts, courts early on held that New England
towns were a new type of “municipal” corporation. /d. at
410-14.

In 1863, there simply was no uniform national
consensus on the legal status of local governments as
“corporations,” as reflected by the variability of state laws
and the differing assumptions concerning local
governments, cities, towns, counties and other public
entities. The absence of a uniform understanding of the
status of local governments in 1863 makes it highly
unlikely that Congress simply presumed that the term
“corporation” would include local governments.

As support for its position that local governments
were presumed to be corporations and hence “persons”
under the FCA, the Seventh Circuit relied on this Court’s
statement in Monell that “by 1871, it was well understood
that corporations should be treated as natural persons... .”
436 U.S. at 687, 98 S.Ct. at 2034. However, the Seventh
Circuit failed to note the Court’s distinction between
private corporations and municipal corporations. /d. at
688, 98 S.Ct. at 2034. While it is true that the “Deveaux
doctrine,” denying that private corporations were “citizens”
as that term was used in Article III and the Judiciary Act of
1789, had been abandoned by 1844, id. at 687-88, 98 S.Ct.
at 2034, citing Louisville R. Co. v. Letson, 2 How. 495, 558
(1844) and Bank of the United States v. Deveaux, 5 Cranch
61, 86 (1809), no such understanding had been reached
with respect to municipal corporations. Indeed, this Court
in Monell was quite clear 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). This period of
uncertainty concerning the status of corporations was noted
in the debates over the Civil Rights Act of 1871. See Cong.
Globe, 42d Cong., 1* Sess. 752 (1871) (Rep. Shellabarger)
(“[Counties], cities, and corporations of all sorts, after
years of judicial conflict, have become thoroughly
established to be an individual or person or entity of the
personal existence, of which, as a citizen, individual or
inhabitant, the United States Constitution does take note
and endow with faculty to sue and be sued in the courts of
the United States”)(emphasis supplied), cited in Monell,
436 U.S. at 688 n.50, 98 S.Ct. at 2034 n.50.

10

Further, even this Court’s 1844 decision that private
corporations were “citizens” of a State within the meaning
of the jurisdictional provisions of Art. III did not mean that
corporations were to be treated as “persons” for all
purposes or were presumptive “persons” for purposes of
statutory construction. For example, in 1869, the Court
held that private corporations were not “citizens” within the
meaning of the Privileges and Immunities Clause, U.S.
Const. art. IV, § 2. Paul v. Virginia, 8 Wall. 168, 75 U.S.
168 (1869). Congress itself did not create a statutory
presumption that the word “person” included “bodies
politic and corporate” until the 1871 Dictionary Act, which
so presumed “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. Because the FCA was
enacted in 1863, eight years prior to the 1871 Dictionary
Act, the statutorily-created presumption could not have
applied to the FCA. See Quern v. Jordan, 440 U.S. 332,
341 n.11, 99 S.Ct. 1139, 1145 n.11 (1979) (Dictionary Act
presumption inapplicable to 1871 Civil Rights Act when it
came more than five years after passage of the Civil Rights
Act of 1866, which served as the model). Even this
congressional presumption was short-lived, as _ the
Dictionary Act was amended in 1874 to eliminate the
definition. 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)).

Nor is the enforcement by the federal courts of the
Contract Clause against municipal corporations in
municipal bond cases as early as 186! a sufficient basis
from which to conclude that Congress would have
presumed the term “person” in the FCA to include local
governments. See, e.g., Board of Commissioners v.

11

Aspinwall, 24 How. 376, 65 U.S. 376 (1861), cited in
Monell, 436 U.S. at 673 n.28, 98 S.Ct. at 2027 n.28. First,
even in Monell, this Court did not date the presumption that
municipal corporations were persons for Art. II] purposes
from the Aspinwall decision, but rather from the 1869
decision of Cowles v. Mercer County, 7 Wall. 118, 74 U.S.
118 (1869). See Monell, 436 U.S. at 688, 98 S.Ct. at 2034.
The Supreme Court in Cowles recognized that the question
“whether the board of supervisors of Mercer County can be
sued in the Circuit Court of the United States by citizens of
other States than Illinois” was the only question presented
by the case “which has not been heretofore fully considered
and repeatedly adjudicated.” Cowles, 74 U.S. at 121.
Thus, despite the Aspinwall line of cases, the Supreme
Court in 1869 believed that the Art. III question was not
then fully settled.

Second, in cases such as Aspinwall, the Supreme
Court declared a “special rule” involving a municipal
corporation’s obligation to honor bonds issued in support of
railroads, a rule which was subject to resistance in the
States and the state courts for many years. See VI Charles
Fairman, History of the Supreme Court of the United
States: Reconstruction and Reunion 1864-1888, ch. XVII,
at 947, and 918-1009 (1971). The wide-ranging defiance in
the States, id., makes it unlikely that Congress in 1863 used
these particular cases to presume anything about the
corporate status of local governments.

The Seventh Circuit was accordingly mistaken in
reading Monell as supporting a presumption that local
governments were considered “corporations” or “persons”
at the time of the enactment of the FCA in 1863. Given the
evolving state of the law at the time regarding local
governments, there simply was no such presumption.

12

st ee ee S

THE HISTORICAL CONTEXT OF THE
FCA INDICATES THAT CONGRESS
DID NOT INTEND THE TERM
“PERSON” TO INCLUDE LOCAL
GOVERNMENTS.

This Court has already observed that, “As the
historical context makes clear, and as we have often
observed, the FCA was enacted in 1863 with the principal
goal of ‘stopping the massive frauds perpetrated by large
[private] contractors during the Civil War.’” Stevens, 529
U.S. at 781, 120 S.Ct. at 1867, quoting United States v.
Bornstein, 423 U.S. 303, 309, 96 S.Ct. 523, 528 (1976). In
1863, the Congress of the United States was receiving
“alarming reports from the battlefield. These reports
concerned Union soldiers opening crates of muskets only to
find them filled with sawdust instead of arms. Reports of
the same horses and mules being sold to the United States
cavalry three and four times further demonstrated a serious
problem with war profiteers.” James B. Helmer, Jr. &
Robert Clark Neff, Jr., War Stories: A History of the Qui
Tam Provisions of the False Claims Act, the 1986
Amendments to the False Claims Act, and Their
Application in the United States ex rel. Gravitt v. General
Electric Co. Litigation, 18 Ohio N.U. L. Rev. 35 (1991)
(citations omitted). Abuses were being committed by
contractors, suppliers, railroads, sutlers and even military
officers in connection with the war effort. See generally
H.R. Rep. No. 2, 37" Cong., 2d Sess., pt. ii-a (1862) (“1862
House Rep.”); H.R. Rep. No. 49, 37" Cong., 3d Sess. (Mar.
3, 1863) (“1863 House Rep.”); Cong. Globe, 37" Cong. 3d
Sess. 952-58 (1863).

13

The legislative history gives no hint of abuses by
state or local governments. The 1862 House Report, which
was not prepared in connection with the 1863 FCA or in
connection with any proposed false claims legislation,
mentioned States only twice: once, as victims of fraud in
their role as purchasers of military supplies, 1862 House
Rep. at XXXVIII; see Stevens, 529 U.S. at 783 n.12, 120 S.
Ct. at 1868 n.12; and a second time, as market competitors
with the federal government for military supplies from
foreign suppliers. 1862 House Rep. at LXXVIII. Local
governments are not mentioned at all in any of the
legislative materials, either in connection with “abuses” or
with government contracts.

Nor is it likely that members of Congress in 1863
would presume that a statute addressing “any claim upon or
against the Government of the United States” for “payment
or approval” would apply to local governments. Act of
Mar. 2, 1863, ch. 67, 12 Stat. 696. First, by contrast to the
shoemakers, tent pole makers, blanket, and horse and mule
suppliers described by Congress as involved in war
profiteering, there is nothing in the historical record to
indicate that local governments served as suppliers or
contractors to the Government of the United States during
the Civil War. See 1862 House Rep. passim. Since there
was no custom or practice of federal-local contracting, it is
unlikely that Congress would have envisioned a local
government submitting a “claim for payment or approval”
to the Government of the United States.

Second, federal fiscal contributions even to the
States were extremely limited in the mid-nineteenth
century, and primarily took the form of land grants, which
were regarded as “‘gifts’ of the federal government and
subject to no legally binding constraints.” George F.

14

SOE Re ee te

a

Break, Fiscal Federalism in the United States: The First
200 Years, Evolution and Outlook, in Advisory
Commission on Intergovernmental Relations, The Future of
Federalism in the 1980s, at 41 (July 1981) (“Fiscal
Federalism”). See also Amold M. Howitt, Managing
Federalism: Studies in Intergovernmental Relations 4
(1984) (“Managing Federalism”). It was only in the
Mornll Act of 1862, supporting education in the
agricultural and mechanical arts, that Congress established
the first land grant program to the States that had any
accountability requirements. Act of July 2, 1862, ch. 130,
12 Stat. 503. Not until 1887, in the Hatch Act, did
Congress provide for annual cash grants to the States, in
support of agricultural experiment stations, and attach
compliance requirements. Act of Mar. 2, 1887, 24 Stat.
440; Fiscal Federalism at 43; Managing Federalism at 4.
See United States ex rel. Marcus v. Hess, 317 U.S. 537,
544, 63 S. Ct. 379, 384 (1943)(at the time of the passage of
the FCA, federal aid to States consisted primarily cf land

grants).

In 1863, Congress was just beginning to envision
the possibility of attaching conditions to state land grants.
As for local governments, there do not appear to have been
any conditional grants, or grants of any kind. Thus, there
was little chance that Congress had local governments in
mind when discussing “claims for payment or approval”
submitted to the federal government.

15

CONCLUSION

For all of the above reasons, the judgment of the
United States Court of Appeals for the Seventh Circuit

should be reversed.
Respectfully submitted,
~ MICHAEL A. CARDOZO
Corporation Counsel of the
City of New York
Attomey for Amicus Curiae
The City of New York
100 Church Street
New York, New York 10007
212-788-0995
LEONARD J. KOERNER*
GAIL P. RUBIN
*Counsel of Record
OTHER AMICI
MARA S. GEORGES A. SCOTT CHINN
Corporation Counsel Corporation Counsel of the
of the City of Chicago City of Indianapolis

121 N. LaSalle Street
Room 600

Chicago, IL 60601
312-744-7764

1601 City/County Bldg.
200 E. Washingtcn St.
Indianapolis, IN 46204
317-327-4055

16

a —

MERITA A. HOPKINS
Corporation Counsel
City of Boston

Law Department

Room 615/City Hall
Boston, MA 02201
617-635-4018

DENNIS J. HERRERA
City Attorney

Office of the City Attorney

GRANT F. LANGLEY
City Attorney

City of Milwaukee

200 E. Wells St. #800
Milwaukee, WI 53202
414-286-2601

City and County of San Francisco

1 Dr. Carlton B. Goodlett P1.
San Francisco, CA 94102

415-554-3853

17

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0564%3A15. Public record. Not legal advice.