Calculating and predicting damages in a False Claims Act (“FCA”) case can be a daunting task for the most seasoned FCA practitioners. In fact, even judges presiding over years of litigation and weeks of trial can get it wrong by tens of millions of dollars.
Last week, the United States District Court for the District of Columbia issued an Order and corresponding Memorandum Opinion granting in part and denying in part a motion from the United States to amend and supplement the court’s findings of facts and conclusions of law following a bench trial that concluded in March 2022. United States ex rel. Morsell v. Gen Digital (f/k/a Symantec Corporation), Case No. 1:12-cv-00800 (Jan. 16, 2024) (Dkt. Nos. 374-75).
The court published its initial findings in January 2023, entering a partial judgment in favor of the United States in the amount of $1,229,950 in damages and penalties. In that initial ruling, the court noted that Symantec had knowingly violated the FCA by failing to inform the General Services Administration (“GSA”) about transactions that should have triggered a price reduction clause in the governing contract. Although clear on liability, the court acknowledged its inability to discern damages with any degree of certainty and that any damages assessment would be as reliable as “pulling a number out of thin air.” Id. at 5. Given the lack of clarity, the court “adopted a ballpark (and indeed exceptionally conservative) estimate to serve as a baseline” for damages and awarded the United States $1,068,950.16 in treble damages along with penalties totaling $231,000. Id. at 6-7.
In its amended filings, the court reiterated its initial position on liability; but acknowledged that it had erred in its calculations of both damages and penalties. Id. at 10. After accepting the analysis offered by the United States in post-trial briefing, the court increased the damages finding to $16,121,696.04 and its assessment of civil penalties to $36,872,000. Id. at 29. To put this in perspective, the court’s revised calculations resulted in a number that was more than 40 times larger than its initial assessment.
This ruling demonstrates how difficult it can be to assess damages in an FCA case. Counsel must read more than tea leaves to predict damages in an FCA case. They must: (1) understand the expert analyses from the respective parties; (2) articulate a comprehensive, comprehensible, and compelling approach to calculating damages; and (3) pivot to alternative approaches when it becomes clear that the fact finder is not buying the initial pitch.
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