Legal Document

423 U.S. 303 96 Supreme Court Reporter 523 46 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 514 UNITED STATES, Petitioner,v.Philip L. BORNSTEIN et al. Number 74-712. Argued Oct. 8, 1975. Decided Jan. 14, 1976. Syllabus A prime contractor (Model) had a contract with the Government to provide radio kits containing electron tubes meeting certain specifications. subcontractor (United), which was supply tubes, sent Model in three separately invoiced shipments that were not of required quality but falsely marked indicate they were. The turn shipped contained 397 these tubes. then 35 invoices for kits, each invoice including claims payment After discovered fraud, it recovered settlement from $40.72 per tube or total $16,165.84. Subsequently sued and two its owner-officers (respondents) under False Claims Act (Act), provides may recover person who presents false claim causes be presented forfeiture $2,000 plus an amount equal double damages sustains by reason claim. alleged liable forfeitures, one "caused" submit, also claimed $16,205.54, consisting replacement cost $40.82 District agreed there been ruled before Government's could doubled, reduced Model's Government, accordingly computed at only $79.40 (double 10-cent difference between already received Model). On cross-appeals, Appeals on double-damages issue, held since subcontract involved should forfeiture. Held: 1. correct application Act's language requires focus case upon specific conduct whom seeks collect Thus, here committed acts caused submit branded hence is forfeitures representing those shipments. Pp. 308-313. (a) number measured contracts involved, such automatic measurement, would almost always result single no matter how many fraudulent might have committed, contravene plain language, focuses contracts, defeat statutory purpose punishing preventing frauds. 310-311. (b) Nor this method fails distinguish United, critical distinction imposes liability presented. Thus statute does penalize what did penalizes did. 311-313. 2. In computing authorized Act, actual are doubled any subtractions made compensatory payments previously source. This computation best conforms reflects congressional judgment necessary compensate completely costs, delays, inconveniences occasioned claims; fixes defrauder's without reference adventitious actions other persons (such as here); forecloses avoiding provision tendering undoubled time judgment. 313-317. 504 Federal Reporter, 2nd 368, reversed remanded. Keith Atlantic Jones, Washington, D.C., petitioner. William Rossmoore, Newark, N.J., respondent Gerald Page. Jack Ballan, Fairlawn, Philip Bornstein. Mr. Justice STEWART delivered opinion Court. 1 claim.1 interpretative problems arise when sues ground has present claims: First, counted? Second, because subcontractor's effect recovery right subcontractor? 2 * 1962, entered into $2,100,000 Engineering & Manufacturing Corporation, Incorporated (Model), kits. Each kit contain met subcontracted National Labs (United) price $32 each. quality, least 21 boxes Model, included supplied United. retained 3 Subsequently, brought civil action against owner-officers, respondents Bornstein Page.2 complaint submit,3 trial court States. awarded $70,079.40. 361 F.Supp. 869 (NJ). cross-appeals concluded Accordingly, appellate $2,079.40. 368 (CA3). We granted petition certiorari consider questions 420 906, 95 823, 42 835. II Statutory Forfeitures 4 "who shall do commit prohibited by" Rev.Stat. § 5438 "shall forfeit pay sum thousand dollars . ." 3490. Section makes illegal cause "for approval knowing false, fictitious, fraudulent." It settled permits multiple gives Government. See ex rel. Marcus versus Hess, 317 537, 63 379, 87 L.Ed. 443. precise issue whether submitted identifiable itself committed.4 5 legislative history offers little guidance properly determine forfeitures. originally aimed principally stopping massive frauds perpetrated large contractors during Civil War.5 There indication Congress gave thought question determined cases involving fraud. But absence way modifies conventional judicial duty give faithful meaning adopted light evident enacting law question. 6 defend decision them reaching conclusion relied earlier Rohleder, 157 126 (CA3), where found 16 appropriate involved. Rohleder Court's supra. Hess several electrical collusively bid 56 Public Works Administration projects. imposed rejecting defendants' scheme. incidence fraud separate project clearly individualized. U.S., 552, 388. No party argued more than imposed, statement expressly limited imposable case. simply approved reached "in single, claim." 41 197, 216 (WDPa). 7 case, therefore, stands proposition inevitably Such measurement ignore statute, illustrates. engaged While true contractual relationship, entry relationship submission claims. Had By same token, file until claims, contracts. n. 4, That support chargeable 8 To equate forfeiture, committed. odds language; purpose.6 limitation would, brief, convert "the license fraud." 9 At extreme, urges assessed, accord position Court, "(United's fraudulent) thirty-five constituted violation justifying forfeiture." F.Supp., 879. difficulty United.7 one, commission 10 If act claim, If, filed still filing thus, again hand, causative acts, even if short, his own someone else. 11 accurate. particular fact chose instead some was, so far concerned, wholly irrelevant fortuitous beyond United's knowledge control. suggests assumed risk send Model. however, construction given is, satisfactory interpretation Appeals. 12 requires, rather, subit Government-the incorporated occasion When, dispatched shipment flasely incorporate later ask account States, thus Model.8 III Computation Double Damages 13 "(t)he established unit replace (falsely branded) $40.82." 875. Finding concluded, agreed, costs 14 argues both courts wrong, calculated doubling original loss deducting amount.9 agree deducted, most faithfully Act.10 15 Although nothing specifically bears calculate damages, past decisions reflected clear understanding intended play important role compensating defrauded. "We think chief (Act's penalties) restitution government money taken device chosen make sure whole." 551-552, S.Ct., 387-388, For different reasons, make-whole served deducted. comports claims.11 rule prior deductions defrauder persons. mean subcontractors similar damage subjected widely disparate penalties depending extent their paid them. Just likewise contractor's provision. Third, reasoning enable avoid possibility meaningless. Doubling deduction source mitigation result.12 17 reasons we hold that, source.13 computation, maximizes deterrent impact relative rights liabilities respective parties maximum precision, our view Act. 18 reversed, remanded further proceedings consistent opinion. 19 ordered. 20 Reversed STEVENS took part consideration 22 REHNQUIST, THE CHIEF JUSTICE WHITE join, concurring dissenting part. 23 N Dec. Immigration Nationality Decisions join respect Part III's treatment issue. narrow opinion, while repugnant face itself, means permissible language. Because construction, applied facts leads arbitrary providing windfall seek defraud construe somewhat differently Instead concentrating isolation "conduct forfeitures," does, believe inquiry terms proximate foreseeability, actually 24 Revised Statutes-at-Large 3490 nonmilitary any" provisions pay" "act" first clause 5438, here, "mak(ing) caus(ing) made, present(ing) presented, proscribed, then, causing falsity 25 Reading pertinent portion above impose "commission presented" (emphasis added), construes require trier "focus forfeitures." goes hold, apparently law, Model" "acts" attaches. As readily seen examination extremely produce purpose. 26 stipulated reveal complex altogether deliberate scheme palm off cheaper, surplus contractor, contracted build use Army. specifications component parts Army's understandable desire military equipment long lasting reliable. radios new 4X150G bearing markings pursuant underlying procurement specifications, showed manufactured plant whose quality-control standards up requirements "source" inspected inspector manufacturing.1 concerned (as opposed commercial buyers), Eimac manufacturer. Tubes designated plant, accompanied proper inspection stamped accordingly, ones qualified receive genuine affixations. These stringent Eimac's market $40 tube. 27 Respondents, full awareness contract, got themselves caught promise deliver 1,000 rejected 120 tubes; none requisite markings, nonconformity obvious. going profit ship appearance being JAN-type2 produced strictures process. end, bought hundred $17.50 each, distributor affixed, JAN stamp, "Manufacturer's Qualification Code"3 (Eimac's) "acceptance" date, all palpably designed deceive complete illusion, testing laboratory where, after inspection, packing lists (referencing serial numbers) prepared, stamped, falsely, facsimile inspector's "Eagle" stamp.4 combined shipments, certifying conformed contract. Duped accepting genuine, paid, course, invoices. 28 Applying multifaceted shell game, concludes "falsely branded" genuine. However, among host said "but for" 300-odd covering equally well respecting respondents.5 basis causation, justification really amounts to, whatever picking preference 21, either numbers marked. various can distinguished another, causation proximity 29 facts, allowing minimize potential shipping rotten eggs basket. 30 proscribed falsity. counts irrespective latter words "wholly fortuitous." foregoing shown focusing result. subcontractor, submitted. very protecting air" presentation notes turned false-payment demands Ante, 309, 4. utilized innocent agent agency, proceeded split invoices, mock suggest claiming he unable foresee agent's conduct. indeed cry "fortuity." 31 intent treat deceitful according mechanics Instead, verbal linkage "acts," "causes," "false claim" couched general pointing uniform construction: keyed submitted.6 traditional concepts causation. concepts, denominated "proximate cause" "legal" cause, frequently imposition negligent actor consequences absolutely acted, reasonably foreseen. W. Prosser, Law Torts §§ 42, 43 (4th ed. 1971); Restatement (Second) 435 (1965). remand assessment standard. 32 room inference record, additional record compiled remand, knew assemble forward finished products routine regular intervals. unforeseeable set circumstances regularly customary progress payments. am unwilling accept flat beyond" ability generated Evidence subcontract, experience business generally particularly, closeness working relevant inquiry. loses "control" over once tricked paying goods, cannot controlling significance foreseen order magnitude ultimately contractor. Given punishes intentional deception, deception abundantly out sharply restricted test determining liable. 1863. Mar. 2, 1863, chapter 67, 696. re-enacted 3490-3494, 5438. dealing prohibitions now codified Code KF62 231 seq. used Title differs respects revised Statutes. Since enacted positive official text appears Neifert-White Co., 390 228, 228-229, 1, 88 959, 1061; 539-540, 40, 498. follows: "Any naval forces militia called employed service section fifty-four thirty-eight, 'CRIMES,' dollars, and, addition, sustained doing committing act, together suit; suit." "Every approval, officer civil, military, department thereof, fraudulent, who, obtaining aiding obtain makes, uses, used, bill, receipt, voucher, roll, account, certificate, affidavit, deposition, fictitious entry, enters agreement, combination, conspiracy allowance having charge, possession, custody, control public property service, willfully conceal property, delivers delivered, authority same, less certificate every paper receipt arms, ammunition, provisions, clothing, truth stated therein, knowingly purchases receives pledge obligation indebtedness soldier, officer, sailor, equipments, clothes, stores, lawful sell offending matters forth imprisoned hard labor nor five years, fined dollars." repealed 1909. 1909, 321, 341, 1153. continued vitality insofar specifies giving rise criminal subsequently altered 287 1001. dismissed convenience, sometimes referred charges They pleaded guilty suspended sentences. second prohibits preparation documents press here. individual See, e. g., Woodbury, 359 370, 377-378 (CA9); Fleming 336 475, 480 (CA10); Wholesalers, 236 944, 950 Faulk 198 169, 171 (CA5); Grannis, 172 507, 515-516 (CA4); Collyer Insulated Wire 94 493, 496-498 (RI). Cf. Ueber, 299 310 (CA6). " 'the conception normally connotes demand transfer property.' McNinch, 356 595, 599, 78 950, 952, 1001, quoting Tieger, 234 589, 591 According sponsor, frauds." Cong.Globe, 37th Cong., 3d Sess., 952 (remarks Sen. Howard). id., 955 Wilson). 5, noted construing 'we statute. must carefully restricted, literal using terms, particularly broad susceptible numerous definitions.' McNich, 598, Rainwater 590, 592-593, 946, 948-949, 996. point litigation urged deducted all. abandoned position, perhaps assessed triple rule. speaks "damages" "net damages" "uncompensated damages." enacted, qui tam bring behalf 698. successful, one-half 6. Respondents provided half go private allow share proceeds suit cover damages. argue never needed whole. argument force enforcement mechanism action. envisioned sue behalf, exhorted attorneys enforce diligently. 5. Moreover, 1943 placed restrictions bringing person's quarter 23, 1943, 377, 57 608. adopting changes, adjustment provision, suggesting whole fraudulent-claim cases. Courts addressed opposing results. Compare Klein, 230 426, 443 (WD Pa.), aff'd curiam, 983 (CA3) (damages offsetting credits deducted), Globe Remodeling 196 652, 657 (Vt.) deducted). value specified quality. C. McCormick, Page 137 (1935). Cooperative Grain Supply 476 47, 61-65 (CA8); Foster Wheeler Corp., 447 100, 102 (CA2); F.2d, 379; Toepelman 263 697, 700 Ben Grunstein Sons 205 (NJ); American Packing 125 788, 791 cf. Aerodex, Inc., 469 1003, 1010-1011 (CA5). One marking "JAN" prefix, Joint Army Navy qualification brand, registered Patent Office, manufacturer passed place manufacture manufacturing 869, 872 (NJ 1973). following prefix Manufacturer's Code, assigned designation granted. Id., 871 Only manufacturers plants rigorous qualifying tests issued Code. sole maker "CIM," identified Eitel McCullough, (Eimac), California corporation. addition JAN-CIM brand tests, imprint four-figure indicating year week acceptance. 872. ibid. proof stamp represents imprints acceptance accompanying 369 (CA3 1974). Indeed, show stamping lists, 120-tube shipment, reject nonstamping nonconforming. contrast, third clauses bills, certificates, affidavits, etc., approval" quoted, ante, 306

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