*Judge, U.S. Court of International Trade, sitting by

designation.

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

________________________________

No. 99-30550

________________________________

United States of America, ex rel. William Garibaldi

and Carlos Samuel,

Plaintiffs/Appellees/Cross-Appellants,

v.

Orleans Parish School Board,

Defendant/Appellant/Cross-Appellee.

________________________________

No. 99-30668

________________________________

United States of America, ex rel. William Garibaldi

and Carlos Samuel,

Plaintiffs/Appellees,

v.

Orleans Parish School Board,

Defendant/Appellant.

_____________________________________________

Appeal from the United States District Court

for the Eastern District of Louisiana

_____________________________________________

March 28, 2001

Before DAVIS and EMILIO M. GARZA, Circuit Judges, and POGUE*,

Judge.

W. EUGENE DAVIS, Circuit Judge:

William Garibaldi and Carlos Samuel (whom we sometimes refer

to jointly as the Relators) sued their employer, the Orleans Parish
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School Board on behalf of the United States for numerous violations

of the False Claims Act, 31 U.S.C. § 3729, et seq. After trial, a

jury found that the School Board had submitted more than 1500 false

claims to the federal government over the course of 11 years. The

district court subsequently entered a judgment on the verdict

against the School Board of almost $23 million. The School Board

and the Relators now challenge the district court’s judgment. The

United States has intervened in this appeal to defend its

interpretation of the False Claims Act. Because we find that a

local government such as the School Board is not subject to

liability under the False Claims Act, we vacate the judgment

entered by the district court and render judgment for the School

Board.

I.

In 1995, Garibaldi was Director of the Audit Department of the

School Board and Samuel was an Auditor working under Garibaldi’s

direction. In that year, Samuel began an audit of the Risk

Management Department of the School Board. During the audit,

Samuel discovered what he thought were substantial problems in two

of the programs administered by the Risk Management Department,

namely the School Board’s unemployment compensation insurance

program and its workers’ compensation insurance program.

Samuel’s audit of the Risk Management Department turned up

what he concluded were disproportionate allocations of the costs of

unemployment compensation insurance and workers’ compensation
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insurance to the portions of the School Board’s budget financed by

the federal government. In particular, Samuel discovered that the

School Board was charging substantially higher rates per payroll

dollar for unemployment insurance to the School Board’s programs

that were financed by the federal government. Samuel was unable to

find any justification for this disparity and also found that other

generally accepted methods of cost allocation would charge the

federal government substantially less. As for the School Board’s

workers’ compensation insurance program, Samuel discovered that the

School Board had unfairly allocated the savings it had achieved

from switching to self-insurance in the early 1990s. Samuel

discovered that federally financed programs paid about 25% of the

cost of the School Board’s workers’ compensation insurance before

it switched to a self-insurance program. However, the School Board

never reduced the contribution of the federal government to its

workers’ compensation insurance program to account for the large

savings it realized by switching to self-insurance.

Samuel took his findings to his supervisor Garibaldi. They

prepared a report which set forth their conclusions that the

allocation of premiums for the School Board’s unemployment

compensation and workers’ compensation insurance programs was

seriously flawed. They also alleged that these flaws constituted

a violation of applicable federal accounting principles and the

False Claims Act. The Relators sent their report to Morris Holmes,

then Superintendent of the school system. Concerned with the
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conclusions of the report, Holmes asked the chief financial officer

of the school system, James Henderson, to review the findings of

the Relators. Henderson refuted every finding of the Relators and

found that the accounting decisions made by the School Board were

fully justified and in line with applicable federal accounting

principles. Holmes then retained KPMG Peat Marwick, the School

Board’s longtime outside auditor, and another accounting firm,

Bruno & Tervalon, to settle the dispute between the Relators and

Henderson and to pass on the propriety of the School Board’s

accounting decisions. The two accounting firms sided with

Henderson and specifically found that the School Board had never

violated applicable federal accounting principles or the False

Claims Act.

As a result of this dispute and the conclusions reached by the

two accounting firms, the School Board fired Samuel, who was still

a probationary employee, and placed Garibaldi on paid suspension

pending a hearing that would allow the School Board to terminate

him.

II.

Less than thirty days after Samuel was fired and Garibaldi

suspended, the two Relators filed this lawsuit. Invoking the qui

tam provisions of the False Claims Act, 31 U.S.C. § 3730, they

alleged, on behalf of the United States, that the School Board had

submitted numerous false claims to the United States over the

course of eleven years as a result of the alleged accounting
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improprieties recounted above. They also alleged that they had

been retaliated against for bringing these improprieties to light,

in violation of the protections the False Claims Act gives to

whistleblowers. See 31 U.S.C. § 3730(h). The United States chose

not to exercise its right, granted by 31 U.S.C. § 3730(b)(4)(a), to

intervene in the action and take over its prosecution, and so the

Relators pressed forward on their own.

Following nine days of testimony, the jury returned its

verdict in favor of the Relators. The jury found that the School

Board had submitted 1570 false claims to the federal government

over the course of 11 years. It found that the federal government

had sustained actual damages as a result of these false claims of

$7.6 million, which was the sum of $4.6 million in damages from the

School Board’s unemployment compensation insurance program and $3

million from the workers’ compensation insurance program. The jury

also found that both Samuel and Garibaldi had suffered illegal

retaliation for bringing these allegations to light. It found that

each had suffered damages of $65,000 for pain and suffering

connected with the retaliation, and that Samuel had lost $103,000

in wages as a result of his termination.

The district court entered judgment on the basis of the

findings made by the jury. It ordered the School Board to pay

treble damages, per the requirements of 31 U.S.C. § 3729(a), of

$22.8 million and a civil penalty of $7.85 million, which was the

product of 1570 false claims and the statutory minimum penalty of
1The portion of the judgment that represents damages payable

directly to the Relators based on their retaliation claim has been

satisfied by the School Board. Only the judgment in favor of the

United States is at issue in this appeal.

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$5000 per false claim. See 31 U.S.C. § 3729(a). It also awarded

each of the Relators the $65,000 in damages for pain and suffering

and awarded Samuel $206,000 in back wages, which was twice the

actual amount of back wages per 31 U.S.C. § 3730(h).1 As their

bounty for successful prosecution of the action, the district court

awarded the Relators 25% of the damages and civil penalty payable

to the United States. Finally, the district court also awarded the

Relators attorney’s fees, expenses, and costs.

Following entry of judgment by the district court, the School

Board moved for judgment as a matter of law under Fed. R. Civ. P.

50(b). The Relators moved to amend the judgment, arguing that the

jury had improperly calculated the damages arising from the School

Board’s unemployment compensation insurance program. The Relators

also moved to have their share of the award payable to the United

States increased to the statutory maximum of 30%.

The district court denied all the motions. United States ex

rel. Garibaldi v. Orleans Parish Sch. Bd., 46 F.Supp.2d 546 (E.D.

La. 1999). However, the district court, acting sua sponte, did

alter the judgment in two respects. Finding that the jury had

miscalculated the amount of damages payable as a result of the

School Board’s workers’ compensation insurance program, the

district court reduced that portion of the damage award from $3
-7-

million to $2,699,952. This had the effect of reducing the treble

damages to $21,899,856. The district court, acting on the

authority of Peterson v. Weinberger, 508 F.2d 45 (5th Cir. 1975),

also reduced the civil penalty from $7.85 million to $100,000.

The School Board raises several issues in its appeal,

including that a local government such as it may not be held liable

under the False Claims Act. In their appeal, the Relators argue

that the district court erred in reducing the civil penalty to be

paid by the School Board and that it abused its discretion in not

awarding the Relators the statutory maximum share of the award

payable to the United States. The United States has intervened in

this appeal to assert its interpretation of the False Claims Act.

III.

We begin with the issue we find dispositive, namely whether a

local government such as the School Board may be held liable under

the False Claims Act. The answer to this question requires us to

interpret the language of a federal statute, a question of law

which we review de novo. United States v. Soape, 169 F.3d 257, 262

(5th Cir. 1999), cert. denied, 527 U.S. 1011, 119 S.Ct. 2353, 144

L.Ed.2d 249 (1999).

The issue before us can be simply stated. Does the School

Board qualify as, “Any person” under the False Claims Act? The

False Claims Act makes, “Any person” who, inter alia, knowingly

presents a false claim to the federal government for payment,

liable for treble damages and a civil penalty of between $5000 and
2The Orleans Parish School Board is a body corporate with the

power to sue and be sued, to make contracts, to purchase and hold

property and to sell property. La. Rev. Stat. Ann. §§ 17:51,

17:81, 17:83, 17:87.6 (West 2000). It has the power to levy taxes

on property within the City of New Orleans to support its

operations. La. Const., art. 8, § 13. It is not an arm of, and

has an identity separate and distinct from, the State of Louisiana.

Minton v. St. Bernard Parish Sch. Bd., 803 F.2d 129, 131-32 (5th

Cir. 1986).

3The Relators point to legislative history from the 1986

amendments to the False Claims Act that concludes, they argue, that

local governments are persons for purposes of the False Claims Act.

See S. REP. NO. 99-345, at 8, reprinted in 1986 U.S.C.C.A.N. 5266,

5273 (stating, on the basis of the holding in Monell v. Dept. of

Social Services of the City of New York, 436 U.S. 658, 98 S.Ct.

2018, 56 L.Ed.2d 611 (1978), that local governments are persons for

purposes of the False Claims Act). The problem with this

legislative history is twofold. First, it cites to a case

concerned with an entirely different federal statute, namely 42

U.S.C. § 1983. Second, the term person has been in the statute

since it was first enacted in 1863. This report is thus postenactment legislative history, and, “utterly irrelevant” to

determining the meaning of the term person in the liability

portions of the False Claims Act. Vermont Agency of Natural Res.

v. United States ex rel. Stevens, ___ U.S. ___, 120 S.Ct. 1858,

1868 n. 12, 146 L.Ed.2d 836 (2000).

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$10,000 per false claim. 31 U.S.C. § 3729(a). The School Board

argues that, as a local government, it is not a person under the

False Claims Act.2 The Relators, and the United States, argue that

the School Board is a person under the False Claims Act. The term

person in the liability provisions of the False Claims Act is not

defined in the statute.3 31 U.S.C. § 3729. The issue is one of

first impression for this court, and for the courts of appeal

generally. Those district courts that have considered the issue

are divided. See United States ex rel. Chandler v. Hektoen Inst.

for Med. Research, 118 F.Supp.2d 902 (N.D. Ill. 2000) (Cook County,
4Prior to the Supreme Court’s decision in Stevens, we have

located only two decisions (other than that by the district court

in this case), both from district courts, that decided whether

local governments are considered persons for purposes of the False

Claims Act. These two decisions reached opposite conclusions. See

United States ex rel. Chandler v. Hektoen Inst. for Med. Research,

35 F.Supp.2d 1078 (N.D. Ill. 1999), rev’d in part, 118 F.Supp.2d

902 (N.D. Ill. 2000) (Cook County, Illinois is a person under the

False Claims Act); United States ex rel. Graber v. City of New

York, 8 F.Supp.2d 343 (S.D.N.Y. 1998) (City of New York, New York

is not a person under the False Claims Act).

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Illinois not a person under the False Claims Act); United States ex

rel. Dunleavy v. County of Delaware, No. CIV. A. 94-7000, 2000 WL

1522854 (E.D. Pa. Oct. 12, 2000) (Delaware County, Pennsylvania not

a person under the False Claims Act); United States ex rel. Giles

v. Sardie, No. CV-96-2002 LGB (Rcx) (C.D. Cal. Aug. 1, 2000) (City

of Los Angeles, California is a person under the False Claims Act).

In considering the issue before us, we pause first to discuss

an important development in the law interpreting the False Claims

Act that occurred during the pendency of this appeal. In May of

2000 the Supreme Court decided Vermont Agency of Natural Res. v.

United States ex rel. Stevens, ___ U.S. ___, 120 S.Ct. 1858, 146

L.Ed.2d 836 (2000). In Stevens, the Supreme Court held that states

are not persons for purposes of the False Claims Act. Though

Stevens does not decide the question presented by this case, the

Court’s reasoning does shed some light on whether local governments

are persons for purposes of the False Claims Act.4

In Stevens, Jonathan Stevens sued his former employer, the

Vermont Agency of Natural Resources, under the False Claims Act for
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allegedly overstating the amount of time some of the Agency’s

employees had spent on certain federally funded environmental

projects. This resulted, he argued, in the federal government

paying the Agency more than it was due under the various projects.

The United States, as in this case, did not intervene in the

action. The Agency moved to dismiss on the grounds that a state

agency is not a person for purposes of the False Claims Act. The

district court denied the motion and the Second Circuit affirmed.

Id. at 1861.

The Supreme Court began its analysis in Stevens with the

interpretive presumption that the term person does not include the

sovereign. Id. at 1866-7; see also United States v. Cooper Corp.,

312 U.S. 600, 604, 61 S.Ct. 742, 85 L.Ed. 1071 (1941); United

States v. Mine Workers of America, 330 U.S. 258, 275, 67 S.Ct. 677,

91 L.Ed. 884 (1947). The Court then looked at the details of the

False Claims Act for language that tended to either undermine or

reinforce the presumption that states are not included in the term

person. The Court found that three features of the False Claims

Act served to reinforce the presumption that states are not persons

for purposes of the False Claims Act.

First, the Court noted that the civil investigative demand

provisions of the False Claims Act, 31 U.S.C. § 3733, contain a

definition of the term person that includes states. 31 U.S.C. §

3733(l)(4). The Court said that, “the presence of such a

definitional provision in § 3733, together with the absence of such
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a provision from the definitional provisions contained in §

3729,...suggests that States are not ‘persons’ for purposes of qui

tam liability under § 3729.” Stevens, 120 S.Ct. at 1868-69

(footnote omitted).

Second, the Court held that the treble damages provisions of

the False Claims Act were, “essentially punitive in nature” and so

inconsistent with the presumption against imposition of punitive

damages on governmental entities. Id. at 1869. The Court held

that while the double damages regime of the False Claims Act which

had been in place before 1986 might have been characterized as

remedial, the treble damages regime added in 1986 when Congress

amended the False Claims Act is truly punitive. Id. at 1869.

Third, the Court noted that the Program Fraud Civil Remedies

Act of 1986, which is an administrative scheme very similar to the

False Claims Act, contains a definition of person that does not

include states. 31 U.S.C. § 3801(a)(6). The Court held that it

would be anomalous to subject states to the harsh damages regime of

the False Claims Act while not subjecting them to the relatively

light penalties of the Program Fraud Civil Remedies Act of 1986.

Id. at 1870. Because of the presumption that the term person does

not include the sovereign, which was reinforced by the details of

the statutory scheme discussed above, the Court held that states

are not persons for purposes of the False Claims Act.

The holding in Stevens does not resolve the issue presented to

us in this case, nor is much of the reasoning in the opinion
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particularly instructive in resolving the issue presented to us in

this case. Local governments do not enjoy the same sovereign

status as states. For example, sovereign immunity under the

Eleventh Amendment does not extend to governmental entities which

are not an arm of a state. Alden v. Maine, 527 U.S. 706, 756, 119

S.Ct. 2240, 144 L.Ed.2d 636 (1999). Thus, we cannot apply to the

School Board the presumption that the term person does not include

the sovereign. Furthermore, other federal statutes that impose

liability on “persons” cover local governments but not states.

See, for example, Monell v. Dept. of Social Services of the City of

New York, 436 U.S. 658, 683-89, 98 S.Ct. 2018, 56 L.Ed.2d 611

(1978) (City of New York, New York is a person for the purposes of

42 U.S.C. § 1983); Will v. Michigan Dept. of State Police, 491 U.S.

58, 71, 109 S.Ct. 2304, 105 L.Ed.2d 45 (1989) (State of Michigan is

not a person for the purposes of 42 U.S.C. § 1983). Nor is the

Supreme Court’s reasoning in Stevens regarding either the civil

investigative demand provisions of the False Claims Act or the

Program Fraud Civil Remedies Act of 1986 helpful to us in resolving

the issue presented by this case given the School Board’s

organization as a body corporate.

However, one portion of the Supreme Court’s opinion in Stevens

does provide us with some guidance. The False Claims Act imposes
5Both the Relators and the United States argue that the damages

regime of the False Claims Act is not truly punitive. While

decisions prior to the Supreme Court’s decision in Stevens may have

supported such an argument, the Supreme Court’s decision in Stevens

is conclusive on this point. The treble damages imposed by the

False Claims Act are punitive damages. Stevens, 120 S.Ct. at 1869.

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punitive damages on those who violate it.5 This is contrary to the

well-settled presumption that governments, including local

governments, are not subject to punitive damages. Stevens, 120

S.Ct. at 1869; City of Newport v. Fact Concerts, Inc., 453 U.S.

247, 259-271, 101 S.Ct. 2748, 69 L.Ed.2d 616 (1981). As the

Supreme Court has held, imposing punitive damages on local

governments is ordinarily contrary to sound public policy. Id. at

263. Though a local government can properly be made to pay

compensation for the wrongful acts of its agents, punishing a local

government is pointless. The punishment, in the form of higher

taxes or reduced public services, is visited upon the blameless.

Neither the taxpayers nor the schoolchildren of Orleans Parish

played any role in the conduct giving rise to the School Board’s

liability. Extracting damages from them - damages that are far

more than is needed to compensate the federal government for

whatever losses it has suffered - is supported, as the Supreme

Court has said, by, “[n]either reason nor justice.” Id. at 267.

Imposing punitive damages on a local government in favor of

the federal government is especially problematic. Requiring such

a transfer payment would reflect a judgment by Congress that

denying the schoolchildren of Orleans Parish needed services, or
6The Court explained that the statute, which has since been

amended, provided that, “a qualifying person may ‘commenc[e],

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requiring the taxpayers of Orleans Parish to pay higher taxes, is

justified in light of the relatively minor benefit to the federal

treasury. Though Congress is free to make that determination if it

chooses, we will not find such a choice absent clear language in

the text of the False Claims Act.

The Relators and the United States argue that the definition

of person in 1 U.S.C. § 1 (often called the Dictionary Act), which

supplies definitions of certain terms when they are otherwise

undefined in the statute, requires us to define person in the

liability provisions of the False Claims Act as including local

governments. They argue that Monell, 436 U.S. at 688-9, holds

exactly that. The School Board argues, on the basis of Ngiraingas

v. Sanchez, 495 U.S. 182, 110 S.Ct. 1737, 109 L.Ed.2d 163 (1990)

and the legislative history quoted therein, that the definition of

person in the Dictionary Act does not include local governments.

We need not, and do not, choose between these two arguments

because, by its own terms, the definitions in the Dictionary Act do

not apply when the context of a statute indicates that Congress

intends another meaning.

In Rowland v. California Men’s Colony, Unit II Men’s Advisory

Council, 506 U.S. 194, 113 S.Ct. 716, 121 L.Ed.2d 656 (1993) the

Supreme Court held that an unincorporated association of prisoners

could not proceed in forma pauperis under 28 U.S.C. § 1915.6 The
prosecut[e], or defen[d]...any suit, action or proceeding, civil or

criminal, or appeal therein, without prepayment of fees and costs

or security therefor.’” Rowland, 506 U.S. at 198.

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prisoners’ association argued that it was a person under the in

forma pauperis statute because the statute did not define the term

person and the Dictionary Act encompasses associations in the term

person. Id. at 719-27. The Court pointed out that certain

features of the in forma pauperis statute suggested that Congress

did not intend to allow anyone except natural persons to proceed in

forma pauperis. The Court then considered the first sentence of

the Dictionary Act, which provides that its definitions apply,

“unless the context indicates otherwise.” 1 U.S.C. § 1. The Court

concluded that the context of the statute indicated that the word

person was intended to be used in a more limited sense than it was

used in the Dictionary Act. The Court said that,

[O]ne can say that ‘indicates’ certainly imposes less of

a burden than, say, ‘requires’ or ‘necessitates.’ One

can also say that this exception from the general rule

would be superfluous if the context ‘indicate[d]

otherwise’ only when use of the general definition would

be incongruous enough to invoke the common mandate of

statutory construction to avoid absurd results. In fine,

a contrary ‘indication’ may raise a specter short of

inanity, and with something less than syllogistic force.

Rowland, 506 U.S. at 200-01 (internal citations and footnote

omitted). Thus, even if we were certain that the definition of

person in the Dictionary Act includes local governments, we

conclude that the punitive damages regime of the False Claims Act

discussed above “indicates” a congressional intent that local
7The Relators’ bounty for successful prosecution of this action

is dependent on the total amount of damages payable by the School

Board. As such, they are not nearly as magnanimous as the United

States and do not argue that we can reduce the damages payable by

the School Board.

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governments not be subject to liability under the False Claims Act.

The United States has argued that we should vacate the

punitive damage award payable by the School Board but still subject

it to liability under the False Claims Act if we are troubled by

the punitive damages of the False Claims Act.7 This would require

us to rewrite the statute, something we will not do. The False

Claims Act already allows a reduction to double damages from treble

damages in those cases where the defendant provides information to

the federal government before any investigation is underway. 31

U.S.C. § 3729(a). Given that Congress has already provided for a

reduction in damages in certain cases, we will not read another

exception into the statute based on the identity of the defendant.

Any person liable under the False Claims Act is liable, save for

those exceptions enumerated in the statute, for treble damages.

See also Stevens, 120 S.Ct. at 1869 n. 16.

We are convinced that the punitive damages regime of the False

Claims Act discussed above reflects a congressional intent that the

term “person” in the liability provisions of the False Claims Act

not include local governments.

IV.

Both the Relators and the United States argue that the Supreme
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Court’s interpretation of 42 U.S.C. § 1983 and the antitrust laws

suggest the conclusion that local governments are persons for the

liability portions of the False Claims Act. See Monell v. Dept. of

Social Services of the City of New York, 436 U.S. 658, 98 S.Ct.

2018, 56 L.Ed.2d 611 (1978) (42 U.S.C. § 1983); City of Lafayette

v. Louisiana Power & Light Co., 435 U.S. 389, 98 S.Ct. 1123, 55

L.Ed.2d 364 (1978) (antitrust laws). However, our reading of these

cases does not change our conclusion that local governments are not

persons for purposes of the False Claims Act.

In Monell, the Supreme Court held that local governments are

persons for the purposes of 42 U.S.C. § 1983. Much of the opinion

is concerned with the errors in the Court’s decision in Monroe v.

Pape, 365 U.S. 167, 81 S.Ct. 473, 5 L.Ed.2d 492 (1961), which had

held that local governments are not persons for the purposes of 42

U.S.C. § 1983. That discussion is not relevant to the issue

presented by this case. After reviewing why Monroe was wrongly

decided, the Court went on to conclude that local governments are

persons for the purposes of 42 U.S.C. § 1983. The Court’s

conclusion was primarily based on the legislative history of 42

U.S.C. § 1983. Predicated on this legislative history, the Court

concluded that Congress intended to craft a very broad remedy,

available to all citizens whose civil rights had been violated by

those acting under the color of state law. That is, Congress

intended to create a broad remedial statute for violations by those

acting under the color of state law. Monell, 436 U.S. at 685-86.
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More importantly, the Court concluded that the framers of 42 U.S.C.

§ 1983 had been especially concerned with takings of private

property without just compensation by local governments. The Court

said,

Representative Bingham, for example, in discussing § 1 of

the bill, explained that he had drafted § 1 of the

Fourteenth Amendment with the case of Barron v. Mayor of

Baltimore, 7 Pet. 243, 8 L.Ed. 672 (1833), especially in

mind. ‘In [that] case the city had taken private

property for public use, without COMPENSATION...AND THERE

WAS NO REDRESS FOR THE wrong....” globe App. 84

(emphasis added). Bingham’s remarks clearly indicate his

view that such takings by cities, as had occurred in

Barron, would be redressable under § 1 of the bill.

Id. at 686-87. Because 42 U.S.C. § 1983 targeted entities that

acted under color of state law, the Court concluded that it would

have been nonsensical to conclude that local governments are not

persons for the purposes of 42 U.S.C. § 1983. Id. at 686-87.

The Court’s holding in Monell is premised upon specific

indications in the legislative history of 42 U.S.C. § 1983 that

Congress intended for local governments to be within the reach of

42 U.S.C. § 1983. We find no similar indications in the

legislative history of the False Claims Act. Indeed, the Supreme

Court has observed that, 

As the historical context makes clear, and as we have

often observed, the FCA was enacted in 1863 with the

principal goal of ‘stopping the massive frauds

perpetrated by large [private] contractors during the

Civil War.’...Its liability provision - the precursor to

today’s § 3729(a) - bore no indication that States were

subject to its penalties. 

Stevens, 120 S.Ct. at 1867 (quoting United States v. Bornstein, 423
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U.S. 303, 309, 96 S.Ct. 523, 46 L.Ed.2d 514 (1976) (bracketed

material in original)); see also United States ex rel. Graber v.

City of New York, 8 F.Supp.2d 343, 352 (S.D.N.Y. 1998). Neither

the United States nor the Relators have supplied us with any

authority that would show that the framers of the False Claims Act

contemplated liability for local governments. Furthermore, the

False Claims Act, unlike 42 U.S.C. § 1983, is not specifically

targeted at those who act under color of state law. Thus, it would

not be absurd, as it would be with 42 U.S.C. § 1983, to hold that

local governments are not liable under the False Claims Act. We

also note that the Supreme Court, relying on the presumption that

local governments are not liable for punitive damages, has held

that local governments are not liable for punitive damages under 42

U.S.C. § 1983. City of Newport, 453 U.S. at 271.

In City of Lafayette, the Court was faced with the question

whether it should read an implied exception into the antitrust laws

for commercial activity by local governments. The Court concluded

that it should not. The Court said, “The presumption against

repeal by implication reflects the understanding that the antitrust

laws establish overarching and fundamental policies, a principle

which argues with equal force against implied exclusions.” City of

Lafayette, 435 U.S. at 399. The Court also noted that, “‘Language

more comprehensive is difficult to conceive. On its face it shows

a carefully studied attempt to bring within the Act every person

engaged in business whose activities might restrain or monopolize
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commercial intercourse among the states.’” Id. at 398 (quoting

United States v. South-Eastern Underwriters Assn., 322 U.S. 533,

553, 64 S.Ct. 1162, 88 L.Ed. 1440 (1944)). Given the fact that the

antitrust laws establish such a fundamental and all-encompassing

regulatory regime for commercial activity, the Court decided that

it could not create an implied exclusion for local governments that

go out into the marketplace and engage in this type of activity.

The Court’s decision in City of Lafayette that local

governments were subject to the antitrust laws, including liability

for punitive damages, was premised on the notion that the antitrust

laws were drafted with the clear purpose to reach all the nation’s

commercial activity. Exceptions to the antitrust laws would defeat

those clear purposes. The False Claims Act and the antitrust laws

are not analogous in this regard. Neither the United States nor

the Relators have shown that the False Claims Act has the same

broad scope as the antitrust laws. From the Supreme Court’s

decision in Stevens we know that the False Claims Act does not

apply to states. The False Claims Act was enacted to reach fraud

by private government contractors. We agree with the D.C. Circuit,

which said, “Even if one assumes that states commit a good deal of

fraud against the federal government, it cannot seriously be argued

that the very purpose of the [False Claims] Act would be thwarted

if states were not liable under the [False Claims] Act.” United

States ex rel. Long v. SCS Business & Technical Inst., Inc., 173

F.3d 870, 875 (D.C. Cir. 1999), cert. denied, ___ U.S. ___, 120
8We also note that following the Supreme Court’s decision in

City of Lafayette, Congress exempted local governments from all

money damages payable under the antitrust laws. See The Local

Government Antitrust Act of 1984, 15 U.S.C. §§ 34-36.

-21-

S.Ct. 2194, 147 L.Ed.2d 231 (2000). This conclusion is as

applicable to local governments as it is to states. 

In sum, because of the differences in scope and purpose

between the False Claims Act and the antitrust laws, we are not

persuaded that the Supreme Court’s decision in City of Lafayette

augurs in favor of a conclusion that local governments are persons

for purposes of the False Claims Act.8

V.

The punitive damages regime of the False Claims Act shows a

congressional intent that the False Claims Act should not be

applied to local governments. There is no contrary expression of

legislative intent and no purpose behind the False Claims Act that

undermine that conclusion. For these reasons, we conclude that the

term person in the liability provisions of the False Claims Act

does not include local governments like the School Board.

Therefore, the judgment of the district court is VACATED and

judgment is RENDERED in favor of the Appellant, the Orleans Parish

School Board.

JUDGMENT VACATED AND JUDGMENT RENDERED.