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

e. Supreme Court, U

{yf FILED

No. 01-1572 SP 9 U2

S.

OFFICE OF THE CLERK

IN THE

Supreme Court of the Gnited States

Cook COUNTY, ILLINOIS,

Petitioner,

v.

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

Respondent.

ON A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT.

AMICUS CURIAE BRIEF OF 43 LOCAL

GOVERNMENTAL AIRPORT PROPRIETORS

IN SUPPORT OF PETITIONER.

SCOTT P. LEWIS

Counsel for Amici Curiae

MITCHELL'C. BAILIN

PALMER & DODGE LLP

111 Huntington Avenue

Boston, Massachusetts 02199

(617) 239-0162

Dated: September 9, 2002

BATEMAN & SLADE, INC. BOSTON, MASSACHUSETTS

TABLE OF CONTENTS

INTEREST OF AMICI CURIAE

SUMMARY OF ARGUMENT

ARGUMENT

I.

LOCAL GOVERNMENTS ARE NOT

“PERSONS” UNDER § 3729(A)

BECAUSE CONGRESS HAS NOT

EXPRESSLY SUBJECTED THEM TO

PUNITIVE DAMAGES

A. Local Governmental Entities

Are Immune From Punitive

Damages Absent A Clear

Statement Of Congressional

Intent

The Presumption Of Local

Governmental Immunity Is Not

Limited To § 1983 Cases................. G

CONGRESS WAS AWARE OF THE

PRESUMPTION OF GOVERNMENTAL

IMMUNITY IN 1986, BUT DID NOT

DEFINE “PERSON” TO INCLUDE

LOCAL GOVERNMENTS

THE INTERPRETIVE PRESUMPTION

THAT LOCAL GOVERNMENTS ARE

“PERSONS” DOES NOT APPLY TO

— URE 13

IV.

CONCLUSION

ii

EXPOSING ANY LOCAL

GOVERNMENTAL ENTITY TO

PUNITIVE DAMAGES UNJUSTLY

WOULD PUNISH INNOCENT

COT EIEIEDUR. 0. sesceesepesnnsiasensinnnnaiaannn 16

ili

_ TABLE OF AUTHORITIES

CASES

American Soc’y of Mech. Eng’rs Iric.

v. Hydrolevel Corp., 456 U.S. 556

Sil iteahigeatupetencssesnneescsceoseccooeee 12

Barnes v. Gorman, 122 S. Ct. 2097

Si dsditditeeenneesanncesnnsoseeoreresescosceees 8

Monell v. Department of Social

Servs., 436 U.S. 658 (1978).. 13, 14, 15

Newport v. Fact Concerts, Inc.,

453 U.S. 247 (1981)..............06. passim

Shifa Services, Inc. v. Port Auth. of

N.Y. and N.J., 1997 U.S. Dist.

LEXIS 13611 (S.D.N.Y Sept. 5,

Si iiieliiieeainemegassenetnencsesercccococecee 17

Texas Indus., Inc. v. Radcliff

Materials, Inc., 451 U.S. 630

SI iihidiibcbdandenneineesssvesoerccsoseoceosoee 12

United States ex rel. Chandler v.

Cook County, 277 F.3d 969

GO A ere 6,9, 10,13

United States ex rel. Dunleavy v.

County of Delaware, 279 F.3d 219

(3d Cir, 2002)......ccccscccsessssesseseeees 6, 12

iv

United States ex rel. Garibaldi v.

Orleans Parish Sch. Board, 244

F.3d 486 (5th Cir. 2001), cert.

denied, 122 S. Ct. 808 (2002)........ 6,14

United States v. Wells, 519 U.S. 482

EET venastecetsundeunbendnasbnanainbepeibeniagua 11

Vermont Agency of Natural Res. v.

United States ex rel. Stevens,

529 U.S. 765 (2000) ..........cccceeee passim

STATUTES AND RULES

14 C.F.R. Pt. 13 (2002).......ccccccssecseeseeeeees 4

14 C.F.R. Pt. 16 (2002)........cccccceccseceeeeeees 4

31 U.S.C. § 3729 (a) ......eceeccceeeeceeeees passim

OD Cade Te De sccnscnsecesscvesescnnenesonces 13

GB BAG. 6 BOB icecccccccecccccsoreersnnes passim

GS UG. GF GB ccccccccccccccscccccceseccecs 13

INTEREST OF AMICI CURIAE

Forty-three local governmental entities from

across the "'nited States that own or operate

public airports have joined to file this brief as

amici curiae.!' These entities represent a wide

variety of forms of local government that all will

be affected by the Court’s decision in this case.

Twenty-six are cities or counties (or departments

of city or county government) that own or operate

public airports;? thirteen are special purpose local

airport authorities; and four are transportation

! Letters of consent for the filing of this brief as amici curiae have

been submitted to the Clerk in accordance with Rule 37.3 of the

Rules of this Court. This brief was not authored in whole or in

part by counsel for either party, and no person or entity other

than the 43 amici curiae listed in footnotes 2-4 infra made a

monetary contribution to the preparation or submission of this

brief.

2 The City of Albuquerque, New Mexico, City of Amarillo, Texas,

City of Austin, Texas, City of Bangor, Maine, City of Billings,

Montana, City of Boise, Idaho, City of Burlington, Vermont, City of

Charlotte, North Carolina, City of Cleveland, Ohio, City of Colorado

Springs, Colorado, Cities of Dallas and Fort Worth, Texas, City of

Dayton, Ohio, City and County of Denver, Colorado, City of Des

Moines, lowa, City of Houston, Texas, City of Kansas City,

Missouri, City of Oklahoma City, Oklahoma, City of Philadelphia,

Pennsylvania, City of St. Louis, Missouri, City of Salt Lake City,

Utah, City of Tulsa, Oklahoma, Town of Islip, New York, Kent

County, Michigan, Monroe County, New York, Wayne County,

Michigan and Westchester County, New York.

3 The Albany County Airport Authority, Allegheny County Airport

Authority, Bishop International Airport Authority, City of Fargo

Municipal Airport Authority, Columbus Airport Authority, Fort

Wayne/Allen County Airport Authority, Indianapolis Airport

Authority, Kenton County Airport Board, Memphis Shelby County

Airport Authority, Metropolitan Washington Airports Authority,

Regional Airport Authority of Louisville and Jefferson County,

(continued...)

2

authorities created under state law (or interstate

compact) to own and operate public airports.‘

Collectively, the amici own or operate many of the

nation’s largest public airports, serving hundreds

of millions of passengers each year.

The resolution of the question

before this Court - ae wn oan eel

governmental entity is a “person” subject to qui

tam liability under § 3729(a) of the False Claims

Act — potentially will dispose of an action pending

in the Northern District of Ohio in which all of

these entities have been named as defendants.

The relator in that action, captioned United States

ex rel. Pram Nguyen v. City of Cleveland, Ohio,

et al. (No. 1:00 CV 208), has alleged in his qui tam

complaint that each of these governmental

entities has made false assurances to the Federal

Aviation Administration (“FAA”) about compliance

with federal environmental laws in order to obtain

~—— of dollars in grants under the federal

improvement program (“AIP”).

Department of Justice has er ~¢

The 43 entities that submit this brief jointly have

moved to dismiss the action on a number of

grounds, including most prominently that they

(continued...)

Rickenbacker j

heathertiey. Port Authority, and Toledo-Lucas County Port

* The Port Authority of New York and New Jersey Ni i

, Niagara Frontier

Transportation Authority, Massachusetts Port Authority, and the

Minneapolis-St. Paul Metropolitan Airports Commission.

3

are immune from suit under § 3729(a) of the

False Claims Act because they are not “persons”

subject to qui tam liability. They have also moved

to dismiss on the basis of misjoinder and lack of

particularity.®

The outcome of Cook County’s appeal is of

vital interest to the millions of constituents of the

43 local governmental entities that submit this

brief. Across the country, these public airport

proprietors currently are undertaking, or are

planning to undertake, massive airport capital

improvement projects and, in the wake of the

events of September 11, 2001, to institute new

security programs. If they are required to pay a

punitive, treble damages judgment in the Nguyen

action that could run into the billions of dollars,

they would be forced to reduce, or even eliminate,

the financing of these essential public

infrastructure projects. Moreover, to cover the

costs of such a massive judgment, they would be

forced to turn to innocent travelers and taxpayers

to foot the bill. These airport proprietors would

have no choice but to reduce existing airport

services, increase airport charges affecting the

airlines and their passengers, and in many cases,

increase the tax burden on the public at large.

Further, an adverse decision in this case

could unjustly destroy the benefits that the

traveling public and the federal government, as

well as the amici, have reaped from the AIP. The

5 The motion to dismiss has been pending in the Northern District

of Ohio since March 15, 2002.

4

amici have used all of the billions of

dollars they have received precisely hy Br

intended: they have built and improved their

airport infrastructure to serve the traveling

public. The relator has made no allegation that

any of the 43 amici have misspent even a single

cent of the billions of d j

= mt ollars they have received in

a On behalf of their blameless constituents,

is diverse group of local governmental

organizations urges the Court to reverse the

as ghee Seventh Circuit, and hold that all

orms of local government are imm

liability under § 3729(a). waeclocsas

SUMMARY OF ARGUMENT

In its decision below, the Seventh Circui

held that local governmental entities So at

Cook County, Illinois, are “persons” subject to

punitive damages in qui tam actions brought

under § 3729(a) of the False Claims Act. Because

that decision runs contrary to established

Supreme Court precedent, the purpose of the

False Claims Act and sound public policy, this

Court should reverse the decision

jaa by the Court of

® The relator, Pram Nguyen, has never :

: , sought to

ae — by the FAA, which has b trigger any

investigate and prosecute any violations of Al

See 14 C.F.R. Parts 13, 16 (2002). OA» Gam eosuranese.

5

Section 3729(a) of the False Claims Act

subjects to treble damages any “person” who

submits a false claim to the federal government,

but it does not define what it means by “person.”

In the absence of such a definition, if the Court

has any doubt whether the term “person”

includes local governmental entities, it should

resort to the application of longstanding

presumptions governing the interpretation of

federal statutes. 7

This Court has held that absent express

Congressional intent, local governmental entities

cannot be subjected to punitive damages under a

federal statute. This Court also recently held that

the mandatory treble damages provided by

§ 3729(a) are punitive damages. Accordingly,

local governments cannot be subjected to liability

under the Act absent clear evidence that

Congress intended such a result.

There is no evidence that Congress

intended to subject any type of local governmental

entity to punitive damages under the False

Claims Act. When it inserted the mandatory

treble damages provision in 1986, Congress was

aware that the mandatory treble damages would

be treated as punitive damages and,

consequently, that local governmental defendants

presumptively would be immune from suit.

However, Congress did not define “person” in

1986 to include any form of governmental

defendants or otherwise express Congressional

intent to subject local governmental entities to

punitive damages.

6

A countervailing interpretive presumption

relied on by the Seventh Circuit in its decision

below — that the word “person” in a federal statute

includes local governments - must yield to the

longstanding presumption of local governmental

immunity from punitive damages.

Finally, public policy dictates that local

governmental entities are not “persons” subject to

liability under the False Claims Act. Neither of

the traditional functions of punitive damages -

retribution or deterrence - would be served by

imposing treble damages against governmental

entities. Indeed, innocent citizens typically will

bear the burden of a treble damages judgment

against a local governmental entity because the

entity will have no choice but to pass along the

cost of the judgment to blameless citizens in the

form of reduced or more expensive public

services, or higher taxes.

ARGUMENT

There is no doubt that since 1986, the

False Claims Act has imposed mandatory punitive

damages upon any “person” found to be liable in

a qui tam action under 31 U.S.C. § 3729(a). See

Vermont Agency of Natural Res. v. United States ex

rel. Stevens, 529 U.S. 765, 784-85 (2000) (the Act

now “imposes damages that are essentially

punitive in nature”); see also United States ex rel.

Dunleavy v. County of Delaware, 279 F.3d 219,

223 (3d Cir. 2002); United States ex rel. Chandler

v. Cook County, 277 F.3d 969, 977 (7th Cir.

2002); United States ex rel. Garibaldi v. Orleans

Parish Sch. Bd., 244 F.3d 486, 491 n.5 (5th ¢ ‘vy

2001), cert. denied, 122 S. Ct. 808 (2002).

7

The False Claims Act has never provided a

definition of “person” as that term is used in

§ 3729(a). See Stevens, 529 U.S. at 782-783 anc

n.12. The petitioner, Cook County, properly has

observed that, despite the absence of such a

definition, the plain language of the False Claims

Act, read in context, reveals that the term

“person” in the liability provisions of the Act has

never included local government. Brief of

Petitioner, Section 1.A. However, if the Court were

to determine that the plain language of the

statute does not resolve whether local

governments are subject to liability under

§ 3729(a), it then should assess whether any

common law interpretive presumptions may aid

the Court in interpreting the term “person” as it 1s

used in the current iteration of the statute. See

Stevens, 529 U.S. at 780 (recognizing that, in the

absence of a specific definition of “person” in the

statute, it was required to “apply cs OF

longstanding interpretive presumption that

‘person’ does not include the sovereign’ to

determine whether States are “persons” subject to

liability).

8

I, LOCAL GOVERNMENTS ARE NOT

“PERSONS” UNDER § 3729(a) BECAUSE

CONGRESS HAS NOT EXPRESSLY

SUBJECTED THEM TO PUNITIVE

DAMAGES.

A. Local Governmental Entities Are

Immune From Punitive Damages

Absent A Clear Statement Of

Congressional Intent.

When Congress amended the False Claims

Act in 1986 to provide for mandatory punitive

damages, it implicated the common law

presumption that punitive damages may not be

imposed against local governmental entities. See

Stevens, 529 U.S. at 784-785, citing Newport v.

Fact Concerts, Inc., 453 U.S. 247, 262-263

(1981)(holding that the imposition of the Act’s

mandatory punitive damages against state

governments “would be inconsistent with state qui

tam liability in light of the presumption against

imposition of punitive damages on governmental

entities”). In Newport, the Court addressed

whether a city could be held liable for punitive

damages under 42 U.S.C. § 1983. It held that

local governmental entities are immune from

punitive damages under a federal statute, so long

as (1) Congress has not expressed clearly in the

Statute its intent to subject local governments to

liability for such damages, and (2) the exemption

from liability comports with public policy.

Newport, 453 U.S. at 263-266; see also Barnes v.

Gorman, 122 S. Ct. 2097, 2103 (2002)(recognizing

the “traditional presumption against imposition of

punitive damages on government entities” under

federal statutes). “Damages awarded for punitive

9

purposes... are not sensibly assessed against [a]

governmental entity itself,” the Newport Court

reasoned, because the imposition of such

damages punishes only citizens who took no part

in the commission of the tort. Newport, 453 U.S.

at 267. Therefore, consistent with Newport, local

governmental entities such as Cook County and

the amici are not “persons” subject to the False

Claims Act’s mandatory punitive damages absent

a clear expression of Congressional intent to the

contrary.

B. The Presumption Of Local

Governmental Immunity Is Not

Limited To § 1983 Cases.

In its decision below, the Seventh Circuit

suggested, incorrectly, that the presumption of

governmental immunity from punitive damages

does not attach to local governments under the

False Claims Act because, in that court’s view,

there are important differences between the

§ 1983 damages regime at issue in Newport and

the damages provision of § 3729(a). Chandler,

277 F.3d at 978. The panel asserted the

untenable position that it is appropriate for

citizens to bear some of the burden of False

Claims Act damages imposed on _ local

governments because, in contrast to a § 1983

case, the local government’s constituents have

benefited from the ill-gotten gains. Id. The panel

also determined, without any basis, that the

burden shifted to taxpayers will be less onerous

under the False Claims Act than under § 1983

because the local government can satisfy a

portion of the judgment with the monies it

fraudulently obtained. Jd. Finally, the panel

10

mistakenly contended that the injury to the

public is minimized under the False Claims Act

because that statute caps a judge’s discretion by

limiting damages to three times the federal

government’s loss, while § 1983 affords a jury

unlimited discretion to determine the size of a

punitive damages award. Id. Because the

Seventh Circuit’s distinctions between the False

Claims Act and § 1983 are illusory, and because

its factual assertions are incorrect, its reasoning

should be rejected as inconsistent with this

Court’s decisions in Newport and Stevens.

Newport stands for the broad proposition

that local governmental entities are immune from

punitive damages under federal statutes absent

specific Congressional direction to the contrary,

because the entities’ constituents inevitebly

would be punished for the wrongdoing of others if

punitive damages were imposed. 453 U.S. at 267.

The Court pointedly noted that punitive damages

imposed on a municipality are “in effect a windfall

to a fully compensated plaintiff, and are likely

accompanied by an increase in taxes or a

reduction of public services for the citizens footing

the bill.” Id. Even if a local governmental entity

properly could be asked to repay what it

fraudulently received from the United States, on

the theory that its constituents should not benefit

from wrongful conduct, the imposition of the

mandatory treble damages under the False

Claims Act inevitably would punish taxpayers and

other beneficiaries of civic resources far beyond

any benefit those citizens received as a result of

the local government’s fraud.

11

Moreover, in many instances, the limitation

of a judgment against a local government to treble

damages will barely ease the burden inevitably to

be borne by the government's constituents. For

example, in the qui tam case pending in the

Northern District of Ohio against the 43 local

governmental entities that have submitted this

amicus brief, the relator has claimed that each of

the defendants defrauded the federal government

out of millions of dollars when they accepted

federal airport improvement grants and certified

their compliance with federal environmental laws.

A judgment for the relator in that case - which

could run into the billions of dollars, even before

trebling, without any suggestion that the federal

government believes there has been any

misconduct or wants its grant money back -

would result in a massive windfall for the relator

at the expense of the traveling public and

innocent taxpayers, who would be forced to bear

the burden of punitive damages. It is unlikely

that even an exceedingly generous jury would, or

lawfully could, award greater damages against

municipal defendants in any § 1983 action.

-II. CONGRESS WAS AWARE OF THE

PRESUMPTION OF GOVERNMENTAL

IMMUNITY IN 1986, BUT DID NOT

DEFINE “PERSON” TO INCLUDE LOCAL

GOVERNMENTS.

Whenever Congress enacts a statute, it

reasonably expects that the new law will be

interpreted in accordance with the Supreme

Court’s existing jurisprudence. United States v.

Wells, 519 U.S. 482, 495 (1997). Before Congress

amended the False Claims Act in 1986 to

12

mandate treble damages, the Court repeatedly

and unequivocally had recognized that treble

damages are inherently punitive. Stevens, 529

U.S. at 785-786, citing Texas Indus., Inc. v.

Radcliff Materials, Inc., 451 U.S. 630, 639 (1981).

See also American Soc’y of Mech. Eng’rs Inc. v.

Hydrolevel Corp., 456 U.S. 556, 575 (1982). The

Court therefore may presume that when Congress

provided for mandatory treble damages under

§ 3729(a) in 1986, it recognized that the statute

would be enforced as a punitive damages regime.

The Court also may presume that, in light

of its 1981 Newport decision, Congress was aware

when it inserted the punitive damages provision

in § 3729(a) that the common law would operate

to immunize all local governmental entities from

liability under that section unless Congress

explicitly said otherwise. Congress nevertheless

chose not to include a definition of “person” in

§ 3729(a), let alone define it to include local

governmental entities. The inception of a punitive

damages regime in the absence of a definition of

“person” that includes governmental entities thus

is itself “powerful evidence” that Congress did not

intend to subject local governmental entities to

punitive damages under § 3729(a). Dunleavy,

279 F.3d at 224.

The fact that Congress explicitly has

subjected local governmental entities to liability

under a number of other federal statutes that

impose punitive damages also supports the

conclusion that Congress, through its silence, has

exempted local governmental entities from the

mandatory treble damages of §3729(a). For

example, in the Clean Water Act (“CWA”) and the

13

Resource Conservation and Recovery Act (“RCRA”)

Congress expressly defined the universe of

“persons” subject to their penalties and damages

to include local governmental entities. See 33

U.S.C. § 1362(5) (defining “person” subject to

punitive damages under the CWA to include

municipalities and subdivisions of a State); 42

U.S.C. § 6903(15) (defining “person” subject to

RCRA damages to include municipalities and

subdivisions of a State). That is why an award of

punitive damages against municipalities is

permitted under both the CWA and RCRA, despite

the presumption of governmental immunity

articulated in Newport.

Ill. THE INTERPRETIVE PRESUMPTION

THAT LOCAL GOVERNMENTS ARE

“PERSONS” DOES NOT APPLY TO

§ 3729(a).

To support its holding that local

governmental entities such as Cook County

presumptively are “persons” subject to suit under

§ 3729(a), the Seventh Circuit erroneously relied

on the interpretive presumption, articulated in

Monell v. Department of Social Servs., 436 U.S.

658 (1978), that the term “person” in a federal

statute applies to local governmental entities.

Chandler, 279 F.3d at 980. In Monell, the Court

determined that local governments are “persons”

within the meaning of 42 U.S.C. § 1983, and

therefore subject to liability for compensatory

damages under that statute. In support of its

holding, the Court relied on extensive evidence in

the legislative history of the Civil Rights Act of

1871 — the precursor of § 1983 - that Congress

intended local governments to be subject to that

14

Statute’s requirements. 436 U.S. at 665-690.

The Court also relied in part on the interpretive

presumption, established in the Dictionary Act of

1871 (just months before the enactment of the

Civil Rights Act of 1871), that the word “person”

in a statute presumptively applies to “bodies

politic and corporate,” including _local

governments. Jd. at 688-689. The Seventh

Circuit’s reliance on Monell to subject Cook

County to liability under the False Claims Act is

completely misplaced.

The narrow holding in Monell - that a

municipal corporation is a “person” for purposes

of 42 U.S.C. § 1983 - is premised in part “on

specific indications in the legislative history of

§ 1983” that Congress intended that particular

Statute to reach governmental entities. Garibaldi,

244 F.3d at 494. Unlike the False Claims Act,

§ 1983 focuses liability on public defendants -

those who act “under the color of state law.” Id.,

citing Monell, 436 U.S. at 685-686. There are no

indications whatsoever in the legislative history of

the False Claims Act, however, that Congress

intended to punish fraud by state or local

governmental entities. Stevens, 529 U.S. at 781.

Further, the pertinent provision of The Dictionary

Act undergirding the Monell decision provides that

the term “person” may extend and be applied to

local governmental entities “unless the context

shows that [‘person’) [was] intended to be used in

a more limited sense.” Monell, 436 U.S. at 687-

688, citing Act of Feb.25, 1871, § 2, 16 Stat. 431

(emphasis supplied). In the case of the False

Claims Act, the context shows precisely that: the

legislative history of the Act reveals that it was

15

enacted “with the principal goal of ‘stopping the

massive frauds perpetrated by large [private]

contractors during the Civil War,” not to penalize

local governments. Stevens, 529 U.S. at 781,

quoting United States v. Bornstein, 423 U.S. 303,

309 (1976).

As Cook County’s brief elaborates, the

presumption that the term “person” includes local

government was not recognized until 1869, six

years after the original enactment of the False

Claims Act. Brief of Petitioner, Section 1.A.2.

However, even if the Court were to assume that

the term “person” in the liability provision of the

Act extended to local governmental entities from

the inception of the Act in 1863 until 1986, the

term “person” cannot be read to extend that far

after the 1986 amendments made awards of

punitive damages mandatory.

The Court made clear in Newport, a case

decided three years after Monell, that the

presumption that a municipality is a “person

does not apply when a statute imposes punitive

damages. See 453 U.S. at 271. It is precisely for

that reason that, in spite of Monell, the Court

found in Newport that municipal defendants are

not subject to punitive damages in § 1983 cases.

Id. Congress was well aware of the Newport

decision by 1986, yet did not take any affirmative

steps to abrogate local governmental immunity

from punitive damages under § 3729(a).

Consequently, local governmental entities cannot

i der

ro be found liable for treble damages un

neyo Because the Act’s punitive damages are

mandatory, it follows that local governmental

16

entities are not “persons” within the meaning of

§ 3729(a).

IV. EXPOSING ANY LOCAL GOVERNMENTAL

ENTITY TO PUNITIVE DAMAGES

UNJUSTLY WOULD PUNISH INNOCENT

CITIZENS.

. This Court recognized in Newport that the

imposition of punitive damages against a

governmental entity is only proper if imposing

them would be consistent with sound public

policy. See 453 U.S. at 258-259. Subjecting

cities, counties and various. other local

governmental entities around the country, such

as the 43 that have joined this brief, to massive

punitive damages under the False Claims Act,

however, would contravene both of the public

policies underlying awards of punitive damages:

the punishment of wrongdoers, and the

deterrence of future misconduct. Id. at 266-267.

If the relator and the federal government

were permitted to recover three times the total of

all the airport improvement program grants

received by the scores of governmental airport

proprietors that have been sued in the qui tam

action pending in the Northern District of Ohio,

hundreds of millions of innocent travelers and

taxpayers, but not a single alleged government

wrongdoer, would be punished. Even if the local

governmental entities could pay the federal

government’s actual damages out of the monies

they allegedly obtained unlawfully - a dubious

proposition, to be sure, given that they have

already spent those funds exactly as the FAA

wished — citizens with no knowledge of or control

17

over the submission of the allegedly fraudulent

grant assurances inevitably would be saddled

with the remaining punitive damages.

The governmental airport proprietors with

taxing authority would have no choice but to levy

taxes to pay for the windfall going to the relator

and the federal government (which has never

sought to recover any of the grant awards).

Moreover, the local governmental defendants

likely would be forced to increase fees for the use

of airport facilities or to reduce services to the

traveling public, to cover the cost of the judgment.

See Newport, 453 U.S. at 267; see also Shifa

Servs., Inc. v. Port Auth. of N.Y. and N.J., 1997

U.S. Dist. LEXIS 13611 at *15 (S.D.N.Y Sept. 5,

1997)(holding the Port Authority to be immune

from punitive damages under § 1983 because “an

award of punitive damages might result in

increased tolls, fares, and other expenses borne

by the public generally”). In short, if this Court

follows the Seventh Circuit in subjecting local

governments to False Claims Act liability, all

across the country the public will pay - and pay

dearly — for alleged misconduct in which it played

no part.

Similarly, the goal of deterring future

misconduct would not be served by subjecting

these local governmental entities to suit under

§ 3729(a). Travelers, taxpayers and other

beneficiaries of public airport services and

facilities - the individuals who would pay the

lion’s share of treble damages in the Nguyen case

- do not have the capacity to make or deter the

allegedly false grant assurances that have given

rise to that lawsuit. At the same time, the agents

18

of local government who are in fact responsible

for submitting the allegedly false claims for

airport improvement grants, and who have the

capacity to submit such claims in the future, will

not bear the burden of a treble damages

judgment, and thus will not be deterred from

submitting such claims again. See Newport, 453

U.S. at 268 (“[I]t is far from clear that municipal

officials, including those at the policymaking

level, would be deterred from wrongdoing by the

knowledge that large punitive awards could be

assessed based on the wealth of their

municipality”). A construction of the False

Claims Act that yields such dubious results is

“supported by neither reason nor justice.” Id.

CONCLUSION

For all of these reasons, the Court should

reverse the decision of the Court of Appeals for

the Seventh Circuit, and affirm that local

governmental entities are not “persons” within the

meaning of § 3729(a) of the False Claims Act.

Respectfully submitted,

Scott P. Lewis

Counsel for Amici Curiae

Mitchell C. Bailin

PALMER & DODGE LLP

111 Huntington Avenue

Boston, MA 02199

(617) 239-0162

September 9, 2002