# Amicus Curiae Brief — Cook County v. United States Ex Rel. Chandler > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0564%3A16 ## Record - **Collection:** Supreme Court brief - **Document type:** Amicus Curiae Brief - **Published:** January 1, 2003 - **Citation:** 538 U.S. 119 ## Text NOV 4 rz No. 01-1572 In the cto Supreme Court of the United States CooK COUNTY, ILLINOIS, Petitioner, Vv. UNITED STATES EX REL. JANET CHANDLER, PhD.. Respondent. On Writ of Certiorari to the United States Court of Appeals for the Seventh Circuit BRIEF AMICUS CURIAE OF TAXPAYERS AGAINST FRAUD, THE FALSE CLAIMS ACT LEGAL CENTER IN SUPPORT OF RESPONDENT CHARLES J. COOPER Counsel of Record BR!tAN STUART KOUKOUTCHOS COOPER & KIRK, PLLC 1500 K Street, N.W., Suite 200 Washington, D.C. 79005 (202) 220-9600 JAMES MOORMAN TAXPAYERS AGAINST FRAUD, THE FALSE CLAIMS ACT LEGAL CENTER 1220 19" St., NW, Suite 501 Washington, D.C. 20036 (202) 295-4826 November 2902 EE ns —— ee BATEMAN & SLADE BOSTON. MASSACHUSETTS BEST AVAILABLE COPY TABLE OF CONTENTS Se Se OD 6 Sb 0b ccd wtnsoscencencnns ili INTEReos OF AMICI CURIA ....cccccccccccccceces ] SUMMARY OF ARGUMENT ..................0005- l SEE enh be nnn nndeded cencanalées isconndennte 3 I. COUNTIES ARE “PERSONS” SUBJECT TO LIABILITY UNDER THE FALSE CLAIMS ACT ..........0-00065 3 A. Stevens Reaffirmed That the FCA’s Reference to “Persons” Presumptively Ce a ae 3 B. Municipal Corporations, Like Other Corporations, Were Included Within the FCA’s Reference to “Persons” When the Statute Was Enacted in 1863. ............ 4 od As Stevens Held, Congress Did Not Narrow the Meaning of “Persons” When it Amended Other Language in the Peet Ns cevdcdnacesdenes 48e0u08) 8 Il. FCA TREBLE DAMAGES APPLY TO ALL “PERSONS” LIABLE UNDER THE STATUTE, INCLUDING COUNTIES 10 A. The Common-Law Presumption Against Imposing Punitive Damages On Cities Does Not Apply, Because Congress Designed the FCA’s Treble Damages Remedy To Be Compensatory Rather than Punitive, And That Congressional Judgment Is Entitled I rr re 12 B. ii Before Stevens, the FCA had always been understood by this Court as compensatory, and this Court has likewise characterized some treble damages regimes as compensatory rather than punitive ........ 12 The legislative analysis prescribed by Newport reveals that Congress imposed treble damages to ensure full compensation for the U.S. Treasury, rather than as a PUNITIVE MORSUTE 0.2... kee cece 14 Congress’s characterization of the FCA as non-punitive is entitled to judicial 0 EE 19 Congress Deliberately Imposed Treble Damages On All FCA Defendants, Including Counties, Thereby Overriding Any Common-Law Immunity The FCA’s Treble Damages Do Not Implicate The Policy Objections To Punitive Damages That Concerned This Court In Newport v. Fact Concerts ....... 25 EE EE oe ee 30 ill TABLE OF AUTHORITIES Cases Page Agency Holding Corp. v. Malley-Duff & Assoc., 483 U.S. 143 (1987) 2.0... ccc cece cece cere ee nnes 14 Alden v. Maine, 527 U.S. 706 (1999)... 6... cece eee eee 3 American Society of Mechanical Engineers v. Hydrolevel Corp., 456 U.S. 556 (1982)... 6. eee eee eee eee ees 14 Bank of the United States v. Deveaux, 9 U.S. , (5 Chanch) 61 (1809) .. 0.6... cece cece eee ee ees Bennis v. Michigan, 516 U.S. 442 (1996) .......66.0555 21 Brunswick Corp. v. Pueblo Bowl-O-Mat, 429 U.S. 477 , CIDTTD on ccccccccccccccccseccccccccesccsccccces l Carey v. Piphus, 435 U.S. 247 (1978) ... 60-2 seen 23 City of Newport v. Fact Concerts, 453 U.S. 247 (1981) passim City Council of Montgomery v. Gilmer & 1uylor, ; 33 Ala. 116(1858) ........ cece cece cree eee e eens Commisioners of Knox County v. Aspinwall, : 62 U.S. (21 How.) 539 (1859) 2... cece eee eee eens Cowles v. Mercer County, 74 U.S. (7 Wall.) 118 (1869) ... 8 Elliot v. Concord, 27 N.H. 204 (N.H. 1853) ............. 5 Hudson v. United States, 522 U.S. 93 (1997) ... 2, 13, 19, 21 iv Cases Page Inhabitants of Searsmont v. Farwell, 3 Me. 450 (1825) .... 6 Int'l Union of Operating Engineers v. Flair Builders, Gee SED niunddunweedunduenbnddeewhies 9 Louisville, Cincinnati and Charleston R.R.Co. v. Letson, 43 U.S. (2 How.) 497 (1844) .. 0.0.0. cee eee 7 Mayor, Aldermen, and Commonalty of the City of New York v. Ransom, 64 U.S. 487 (1860) ............. 6 M'Gary v. President & Council of the City of Lafayette 12 Rob. 668 (La. 1846) ............... orn Monell v. Dept. of Social Services, GP OEY sunk ciduncvenkddéubeceeens passim New York v. United States, 505 U.S. 144 (1992) ......... 28 Owen v. City of Independence, 445 U.S. 622 (1980) .. passim Paul v. School Dist. No. 2,28 Vt. 575 (1856) ............ 7 Pennzoil Co. v. Texaco, Inc., 481 U.S. 1 (1987) ......... 28 Pierson v. Ray, 386 U.S. 547 (1967) .... 00... e eee, 11, 23 Rex Trailer Co. v. United States, PP SPEED Scouse ncecadséuuccbsvkion 16, 17, 20 Tenney v. Brandhove, 341 U.S. 367, 376(1951) ..... 11, 25 Thayer v. City of Boston, 36 Mass. 511 (1837) .......... 5 Cases Page Town Council of Akron v. McComb, 18 Ohio 229 (1849) ... 3 United States v. Barnette, 10 F.3d 1553 (11th Cir.), cert. denied, 513 U.S. 816 (1994) ........ 6 cece eee 20 United States v. Bd. of Educ. of Union City, 1985 U.S.Dist. LEXIS 14917 (D.N.J. Oct. 15, 1985) ......... 8 United States v. Bornstein, 423 U.S. 303 (1976) ..... passim United States v. Brekke, 97 F.3d 1043 (8th Cir. 19996), cert. denied, 520 U.S. 1132 (1997) .... 2... - eee eeee 20 United States v. Gonzales, 520 U.S. 1 (1997) ..........-. 9 United States v. Griswold, 24 F. 361 (D.Ore. 1885) ...... 15 United States v. Halper, 490 U.S. 435 (1989), overruled on other grounds by Hudson v. United States, 522 U.S. 93 (1997) .... 2. cece eee e eens 13, 16, 17, 21 United States v. Peters, 110 F.3d 616 (8" Cir. 1997) ..... 20 United States v. Rosenwasser, 323 U.S. 360 (1945) ....... 9 United States v. Turkette, 452 U.S. 576 (1981) ..........-. Z) United States ex rel. Chandler v. Cook County, 277 F.3d 969 (7™ Cir. 2002)... ......--+505- 9, 20, 24, 26 United States ex rel. Marcus v. Hess, 317 U.S. 537 CTDED) 2 cc cccccccccccccccccccccscscccccess passim vi Cases Page Vermont Agency v. United States ex rel. Stevens 529 U.S. 765 (2000) .................... — Will v. Michigan, 491 U.S. 58 (1989) ............ 1,3, 4,5 Statutes and Constitutional Provisions PN xc bcvddcdubecdcsucdbecscadeccs 19, 20 Eleventh Amendment......................... 8, 10,14 FO Ws POM vo ccccccccccccccococcecese: passim FO Weis POD conv cecccevcccccccccceecennes 29 a 29 Ped cnoadueudhuude hide batieoass 29 dc acekenedibicddddtodsasc 29 IG wie 6 dnd kndd ~ re eg ee 27 will or the hope of gain. Prosecutions conducted by such means compare with the ordinary methods as the enterprising privateer does to the slow-going public vessel.” Hess, 317 US. at 541 n.5. Therefore, the relator’s share that generates successful FCA lawsuits cannot be considered an instance of waste or diversion of public funds, nor may federal courts disparage or act in derogation of the FCA on the basis of Congress’s endorsement of the gui tam mechanism. “Congress has power to choose this method to protect the government from burdens fraudulently imposed upon it; to nullify the . . . statute because of dislike of the independent informer sections would be to exercise a veto power which is not ours.” Hess, 317 U.S. at 541 n.5. The Newport Court was also concerned that punitive awards against cities under § 1983 could be unpredictable, given: (1) the “broad discretion traditionally accorded to juries in assessing the amount of punitive damages;” and (2) the fact that, because “evidence of a tortfeasor’s wealth is traditionally admissible as a measure of the amount of punitive damages that should be awarded, the unlimited taxing power of a municipality may have a prejudicial impact on the jury, in effect encouraging it to impose a sizable award.” 453 U.S. at 270. These concerns do not exist under the FCA. Neither judge nor jury has unbridled discretion to set punitive damages under the FCA because there are no separate punitive awards: damages are trebled by statutory mandate. No runaway juries are possible and there is no consideration of the defendant’s wealth or taxing power. An FCA judgment against a county could indeed be substantial — but only if the defendant county's fraud on the U.S Treasury were substantial. And in that event the damages visited upon the defendant would be proportionate to the totality of the injury inflicted on the Treasury by the defendant's fraud. 28 A defendant’s complaints about the size of an adverse judgment are entitled to no weight where the “exceptional magnitude of those consequences is the product” of “the immensity” of the underlying transaction and wrongdoing. Pennzoil Co. v. Texaco, Inc., 481 U.S. 1, 34 (1987) (Stevens, J., concurring). As demonstrated above, the FCA imposes treble damages to ensure that the U.S. Treasury is made whole (including interest, investigative and prosecutorial costs, and consequential damages). It is not a cause of action for unjust enrichment against counties and their constituents, and therefore mere disgorgement of improperly obtained federal funds is not the measure of damages. Petitioner and its amici voice concerns that counties forced to compensate the U.S. Treasury fully for their frauds might have to cut back on local services. Of course, the municipal services that Petitioner refers to are usually subsidized by federal funds. Indeed, Petitioner and its amici confirm the need for rigorous enforcement of the FCA by describing the wide range of local services — from airports to police — for which cities use federal dollars (and for which cities have been sued by the federal government for fraud). Enforcement is essential to ensure that those scarce federal dollars are not squandered through fraud. If cities choose to ask for federal money, they must take such funds on the terms Congress chooses — and one of those conditions is that cities not defraud the U.S. Treasury, and be subject to treble damages if they do. “As conventional notions of the proper objects of government spending have changed over the years, so has the ability of Congress to ‘fix the terms on which it shall disburse federal money to the States."” New York v. United States, 505 U.S. 144, 158 (1992). The taxpayers of a city or county found to have defrauded the federal government might well feel the pinch of an FCA judgment in terms of increased taxes or decreased services. But (contrary to the argument of Amicus Curiae Orange Cty. at 15) 29 a municipal corporation does not innocently and inadvertently stumble into fraud any more than a private corporation does. Liability under the FCA is not a trap for the unwary: liability is imposed not for mere mistakes, but only for acts of fraud that are knowing, intentional, and willful. 31 U.S.C. §§ 3729(a)(1), (a)(2), (a4), (a(S), (a6) & (a)(7). It may well be regrettable that taxpayers who had no direct part in the frauds of their county officials will suffer the indirect cost of remedying those frauds. But the same is true of innocent employees thrown out of work when their corporate employers are held liable for treble damages under the FCA. Moreover, if the county that commits fraud is not to be held liable for the full cost of the injury it has inflicted upon the Treasury, upon whom should that unavoidable cost be imposed? As Petitioner and its amici concede, the taxpayers of that county are the ones who, even if they were not active parties to their county’s fraud, nevertheless benefitted from that fraud insofar as their county reaped an undue and indeed fraudulent increase in federal tax support for the county's programs, an increase which redounded to those taxpayers in the form of lower county taxes and enhanced county services. Amicus Nat'l Ass’n of Public Hospitals at 19; Amicus 43 Local Gov’ts at 10; Amicus Orange Cty. at 11; Pet. Br. 35. When the choice as to who should bear the cost of that fraud is between the hapless taxpayers of the county that perpetrated and benefitted from the fraud, and the innocent and injured taxpayers of the United States, Congress's choice is clear. And it is Congress, not the judicial branch, that the Constitution empowers to make that choice. It cannot be overemphasized that the result urged by Petitioner and its amici would negate any FCA liability for cities and counties that commit intentional fraud on the U.S. Treasury. See Pet. Br. 25 (total “immunity from suit”); id. at 37 (“absolute governmental immunity”). This, despite the fact that Petitioner and its amici concede that “‘a local government can properly be 30 made to pay compensation for the wrongful acts of its agents.” Pet. Br. 35. See also Amicus Orange Cty. at 11. Petitioner hastens to reassure the Court that other legal mechanisms, including common law claims, exist under which the United States might seek the compensation that Petitioner would deny it under the FCA. Pet. Br. 37-38; Amicus Orange Cty. at 12. But Congress determined that such alternatives were inadequate and unreliable, and that is why it enacted the False Claims Act with its treble damages remedy and its qui tam provisions. See supra pages 26-27. Neither Petitioner nor this Court is empowered to second-guess that legislative judgment. If Petitioner and its amici think that the FCA is over-kill, let them make their case to Congress. CONCLUSION The federal government disburses hundreds of billions of tax dollars to local governments every year. That level of funding creates enormous opportunity — and enormous temptation — for fraud by cities and counties, and the FCA is the weapon Congress has forged to combat that fraud. The judgment below should therefore be affirmed. Respectfully submitted, CHARLES J. COOPER Counsel of Record BRIAN STUART KOUKOUTCHOS COOPER & KIRK, PLLC Suite 200 '£00 K Street, N.W. Washington, D.C. 20005 (202) 220-9600 November 2002 JAMES MOORMAN AMY WILKEN BRET BOYCE TAXPAYERS AGAINST FRAUD, THE FALSE CLAIMS ACT LEGAL CENTER 1220 19" St., NW, Suite 501 Washington, D.C. 20036 (202) 296-4826 Counsel for Amicus Curiae --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0564%3A16. Public record. Not legal advice.