Fifth Circuit Affirms Dismissal of Attorney-Relator’s Qui Tam Suit For Violation of Ethical Obligations
Last year, we wrote about a district court decision disqualifying an attorney from serving as relator in a False Claims Act (“FCA”) action that he initiated against his client’s adversary in pending litigation (see here and here). The attorney and would-be-relator, Donald Holmes, was retained by an insurance company, Munich Re, in connection with arbitration against Northrop Grumman, who had submitted claims for damage to its shipyards allegedly resulting from Hurricane Katrina. Holmes, on behalf of the insurance company, filed a complaint in federal court to obtain certain documents from the Navy allegedly relevant to the arbitration. He eventually obtained the documents subject to a protective order that forbade their disclosure outside of the arbitration. However, Holmes promptly filed an FCA complaint against Northrop, alleging Northrop improperly used government funds allocated to compensate for Hurricane Katrina damage to instead cover cost overruns that occurred before the storm, based on the documents obtained from the Navy —in clear violation of the protective order.
Court Disqualifies Attorney Relator for Ethical Violations
Posted by Scott Stein and Emily Van Wyck
Whether and under what circumstances an attorney can act as a whistleblower is one of the most controversial subjects under the False Claims Act. We wrote previously about a Second Circuit case in which the court dismissed an FCA case brought against a company by its former general counsel on the ground that the attorney had violated his ethical obligations to his former client. See “Second Circuit Affirms Dismissal of False Claims Act Suit Brought By Clinical Laboratory Defendant’s Former General Counsel”. Now another district court has disqualified an attorney whistleblower who sued his client’s adversary, holding that, in doing so, the attorney had violated duties of confidentiality and loyalty to his own client. See United States ex rel. Holmes v. Northrup Grumman Corp., No. 1:13-cv-00085-HSO-RHW (S.D. Miss. June 3, 2015).
Limiting Discovery and Preventing Claim Smuggling in False Claims Act Cases
A. Brian Albritton at the False Claims Act and Qui Tam Law blog has an interesting post titled “Limiting Discovery and Preventing Claim Smuggling in False Claims Act Cases.” The post discusses a recent opinion in U.S. ex rel. Rigsby v. State Farm Fire and Casualty Co., Civil No. 1:06CV433-HSO-RHW (S.D. Miss. Feb. 21, 2014), in which relators who had succeeded at trial on their FCA claims sought post-verdict discovery to look for evidence of other false claims. As the post explains, “the court refused to permit the relators additional discovery in order to expand their claims into areas where they did not have knowledge and when it was unclear whether other claims really existed. . . .[T]he Court noted that satisfying Rule 9(b) with ‘sufficient detail’ and defeating a motion to dismiss permits a relator access to the discovery process, but discovery should be ‘targeted’ only to ‘the claims alleged, avoiding a search for new claims.'”