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Monday, September 19, 2011

Counting Down the Worst Decisions of the Corporate Court's 2010-11 Term

This was another very good year for corporate interests at the U.S. Supreme Court, and a very bad one for Americans seeking fairness and justice.

The Corporate Court under Chief Justice John Roberts is radically reshaping the law to insulate corporations from accountability for conduct that discriminates against, defrauds, or injures everyday Americans. In several cases, the five conservative justices were able to force those suffering from corporate malfeasance into arenas where they have to face powerful corporate opponents alone, while ensuring that big business doesn't have to face unified groups of those it has harmed.

Collectively, these decisions could be worth tens of billions of dollars to corporate bottom lines.

Over the next 10 days, AFJ will highlight 10 of the worst decisions of the Corporate Court's 2010-11 term.

#10: Schindler Elevator v. United States ex rel. Kirk

A 5-3 majority (Justice Kagan recused) protected companies that defraud the federal government by narrowing the types of lawsuits whistleblowers can bring to recoup corporate ill-gotten gains.

The case was brought by Daniel Kirk, a Vietnam veteran who suspected that his employer, Schindler Elevator Corp., had illegally accepted a large federal contract while lying about establishing a veteran-assistance program that the contract required. Kirk confirmed those suspicions after examining documents his wife received in response to a Freedom of Information Act request.

Whistleblowers like Kirk who uncover fraud against the federal government can sue under the False Claims Act on behalf of the United States and be awarded a portion of any recovery the government receives from the lawsuit. Indeed, of the nearly $30 billion in damages that have been recovered under the False Claims Act since 1987, 60 percent originated from suits initiated by private individuals. The Department of Justice regards these suits by individuals as "[o]ne of the powerful tools in the effort" to combat fraud. However, individuals cannot sue if the lawsuit is based upon information in a government "report" because, arguably, that information is already known by the government and does not depend on the wistleblower for its discovery.

This case turned on whether the loose documents produced in response to Kirk's FOIA request were a government "report." To find that they were, as the five conservative justices did, let Schindler Elevator's fraud off the hook. The opinion ignored what "report" meant in the context of the relevant statute -- as the results of an investigation -- and inexplicably looked to the dictionary instead. What logic is there in blocking whistleblower lawsuits when the government has no idea that corporate fraud is occurring?

Justice Ginsburg's dissent stated that the ruling "weakens the force of the [False Claims Act] as a weapon against fraud" and "severely limits whistleblowers' ability to substantiate their allegations."

Schindler Elevator v. United States ex rel. Kirk is number 10 on our list of Worst Decisions of the Corporate Court Term because it protects corporations who cheat American taxpayers.

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