Qui Tam Actions — Sanctions

The issue in United States v. Atkinson, 2007 U.S. Dist. LEXIS 88435 (E.D. Pa. Dec. 3, 2007), was the appropriateness of sanctions under the statutory sanctions provision of the False Claims Act, 31 U.S.C. § 3730(d)(4). The prevailing defendants requested an award of attorneys' fees and expenses at the conclusion of 13 years of litigation. The language of § 3730(d)(4) echoes that of 28 U.S.C. § 1927 and Rule 11:

If the Government does not proceed with the action and the person bringing the action conducts the action, the court may award to the defendant its reasonable attorneys' fees and expenses if the defendant prevails in the action and the court finds that the claim of the person bringing the action was clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment.

Some of the holdings in Atkinson are of interest for their relationship to, and potential illumination of, other sanctions jurisprudence:

1. Jurisdiction to Sanction vs. Jurisdiction Over the Action. Based on Rule 11 jurisprudence — particularly, the Supreme Court’s decision in Willy v. Coastal Corp., 503 U.S. 131 (1992) — District Judge William H. Yohn Jr. held that “[t]he court retains jurisdiction over § 3730(d)(4) claims for attorney fees and expenses after dismissal for lack of jurisdiction under § 3730(e)(4).”

2. Definitions (Drawing on § 1988 Precedent). “A claim is clearly frivolous if it is utterly lacking in legal merit and evidentiary support. *** [T]he term meritless is to be understood as meaning groundless or without foundation, rather than simply that the plaintiff has ultimately lost his case. *** Vexatious and harassing claims are those instituted maliciously or without good cause. *** The existence of a relator's subjective intent distinguishes between vexatious and harassing litigation. While harassment suggests bad faith on the part of the losing party, the term vexatious in no way implies that the plaintiff's subjective bad faith is a necessary prerequisite to a fee award against him.” [Citations and internal quotations omitted.]

The Court denied sanctions, following a detailed analysis and with the empirical observation that “[c]ourts have historically awarded attorney fees and expenses when a plaintiff pursued speculative litigation based on personal belief without support in fact.”

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