LII Announce

On February 26, the Supreme Court hears arguments in Allison Engine Co. v. United States.

In 1985, the U.S. Navy contracted with two shipyards for the production of a new fleet of destroyers. Each destroyer required an electrical generator set to provide electricity. Several companies became involved in the project to build the generator sets. None of these companies billed the federal government, but rather billed the company directly above them in the chain of production. The company directly above them did not include these bills when submitting for payment from the government. This case began when two whistleblowers sued their former employer and other government subcontractors under the False Claims Act. The U.S. District Court for the Southern District of Ohio dismissed their claim after holding that no FCA violation could occur without evidence that the federal government actually relied on a fraudulent bill. On appeal, the U.S. Court of Appeals for the Sixth Circuit held that the case should continue because the False Claims Act does not categorically require proof that the fraudulent bill was actually presented to the federal government. The ultimate decision by the Supreme Court could have important economic consequences for taxpayers, government contractors, and any party who seeks to file suit under the False Claims Act. Continues…

On Thursday, February 27, the Supreme Court hears arguments in Exxon Shipping Co. v. Baker, a case at the intersection of maritime law, environmental regulation, and tort law.

In 1989 the oil tanker Exxon Valdez ran aground on Bligh Reef, off the Alaska coast, spilling millions of gallons of oil into Prince William Sound. In the years following the spill, Exxon would pay millions of dollars in private claims and over a billion dollars to settle government suits under environmental laws such as the Clean Water Act (“CWA”). An additional class action suit by private parties sought compensatory damages for economic harm, as well as punitive damages (a civil penalty for particularly egregious conduct). In the final suit, an Alaska district court awarded roughly $20 million in compensatory damages against Exxon—and $5 billion in punitive damages. The Ninth Circuit eventually reduced the punitive damages award to $2.5 billion but upheld the decision to award such damages. Exxon now asks the United States Supreme Court to strike down the award of punitive damages or reduce its amount. In addressing Exxon’s petition, the Court must set maritime law standards for punitive damage awards against a ship’s owner for acts of the ship’s master. The Court will also consider whether Congress meant penalties under the CWA to be the full punishment for a spill, excluding punitive damages under maritime law. Continues…