Defense verdict by jury in FCA actions provides insight into how best to push back on specious whistleblower claims
This month, a federal jury found former defense contractor Armet Armored Vehicles, Inc. not liable in a False Claims Act (“FCA”) lawsuit that alleged the company overcharged the federal government for armored vehicles by shipping defective vehicles and failing to deliver all the vehicles ordered.
Eight jurors found that the company’s former president-turned-relator Frank Skinner failed to prove by a preponderance of the evidence that Armet and former CEO William R. Whyte submitted false claims to the government. Although it is impossible to determine the exact motivations of the eight jurors, the Memorandum of Law filed in Support of Defendants’ Motion for Summary Judgment may provide some insight. In that Memorandum, the Defendants argued that under the fraudulent inducement claim, the relator: (1) failed to produce evidence as to any false statements made by defendants; (2) failed to present any omissions or false disclosures that were material to the Government’s decision to award Armet the contracts; and (3) failed to establish that the Government was actually misled or induced into awarding the contracts at issue.
Other relevant facts presented by the Defendants that may have influenced the jury’s decision include:
- the Defendants immediately started to perform under the contract, that is, they began to construct the vehicles and did not have a clear intent to not perform;
- the contracts provided Armet discretion regarding vehicle design and the Government retained the right to conduct random inspections;
- the Relator never personally observed any defects in the vehicles and is not trained or qualified to identify any such defects;
- the Relator received monies from the FBI in association with his work, yet simultaneously continued his duties as president of Armet where he continued to certify under penalty of perjury that the vehicles did not violate any criminal laws in order to export them; and
- after the Relator resigned from Armet, he continued to send Defendants business and also offered Defendants an opportunity to enter into business with him at his new company, all while still working with the FBI.
Again, although it is impossible to determine exactly what motivated the eight jurors to release Armet, it does provide some insight into the underlying facts that may support a defense victory in FCA claims.