Justia Government & Administrative Law Opinion Summaries

Articles Posted in Corporate Compliance
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Defendants, State Five Industrial Park and Jean Farricielli, appealed from a trial court judgment holding them liable, after invoking both reverse and traditional veil piercing principles, for a $3.8 million judgment rendered against Jean's husband, Joseph Farricielli, and five corporations that he owned and/or controlled, in an environmental enforcement action brought by Plaintiffs, the commissioner of environmental protection, the town of Hamden, and the town's zoning enforcement officer. The Supreme Court reversed the judgment, holding that the facts that were proven in this case did not warrant reverse veil piercing, and judgment on Plaintiffs' veil piercing claims should be rendered in favor of Defendants.

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Relators brought a qui tam action against defendant and its subsidiaries, alleging violations of the reverse false claim provision of the False Claims Act (FCA), 31 U.S.C. 3729(a)(7). Relators subsequently appealed the district court's dismissal, with prejudice, of their third amended complaint for failure to state a claim upon which relief could be granted. The district court held that relators failed to allege with particularity, as required by Rule 9(b), that defendants knowingly made false statements for the purpose of concealing or avoiding an obligation to pay money to the government. Count I alleged that the 2008 Certification of Compliance was false due to the failure to report or remit the million dollars in identified Overpayments, and that defendants made and used the Certification to conceal and avoid the obligation to remit Overpayments. Count II involved the same obligation to remit Overpayments within thirty days but was based on a separate scheme and separate false records. The court held that relators have sufficiently pled each element of a reverse false claim for the Certification of Compliance and the district court's dismissal of Count I was reversed. The court also held that relators have pled all the remaining elements for a reverse false claim for the Discovery Samples and thus, the district court's dismissal of Count II was reversed.

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Plaintiff sued the State to challenge a demand for payment made by the State under Delaware's escheat law, 12 Del. C. 1101, et seq. The State countersued, seeking a declaration that the sums demanded from plaintiff were proper and authorized under the Statute. Both parties moved for partial judgment on the pleadings. The court found that the rebates at issue fit comfortably within two of the "specifically enumerated" items of property listed in section 1198(11) and therefore granted the State's motion for partial judgment on the pleadings and denied plaintiff's cross-motion. Although the pleadings did not paint a clear picture of the form in which the rebates were issued by plaintiff to its customers, plaintiff's counsel conceded at oral argument that the rebates were issued as either negotiable "checks" or "credits." As such, the rebates consisted of specifically enumerated items of property under section 1198(11), and the State's claims could not be barred by any statute of limitations.

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Plaintiff, the commissioner of labor, applied to the superior court for a warrant to inspect the premises of Defendant, a fire company, to investigate whether the fire company was in compliance with the requirements of Connecticut's Occupational Safety and Health Act. The trial court dismissed for lack of subject matter jurisdiction the commissioner's warrant application, concluding that the fire company did not fall within the act's definition of a covered employer, which by statutory definition was "the state and any political subdivision thereof" because the fire company was an independent corporation. The Supreme Court affirmed, holding that the fire company did not fall within the core definition of a political subdivision of the state.

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This case arose when the FTC alleged deceptive advertising claims against defendants based on two purported weight loss products, a Chinese Diet Tea and a Bio-Slim Patch. On appeal, defendants challenged both the power of the district court to award monetary relief and the means by which the district court calculated the award. The court held that the district court had the power to award restitution pursuant to Section 13(b) of the Federal Trade Commission Act, 15 U.S.C. 53(b). The court also held that the district court did not err in ordering defendants to disgorge the full proceeds from its sale of the products in question. Accordingly, the court affirmed the judgment of the district court.

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The under seal appellant ("Company 1"), a foreign company, appealed the district court's denial of its motion to quash the government's grand-jury subpoenas served on the under seal intervenor ("Company 2") where the subpoenas sought documents that Company 1 delivered to Company 2 in response to discovery requests that arose during the course of civil litigation between the two companies in district court. The court affirmed the denial of Company 1's motion to quash the government's subpoenas and held that the district court did not abuse its discretion in determining that the subpoenas passed muster under Rule 17 of the Federal Rules of Criminal Procedure and Company 1 provided no basis for the court to craft a new procedural rule in support of its position. The court also held that there were no clearly erroneous rulings by the district court in resolving the factual issue regarding the nature of Company 2's interaction with the government and Company 1 failed to show that the issue merited any further investigation or an evidentiary hearing. The court rejected Company 1's remaining arguments and affirmed the district court's denial of Company 1's motion to quash.

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The Montana Department of Revenue ("Department") appealed a judgment reversing the State Tax Appeal Board's ("STAB") conclusion that the Department had applied a "commonly accepted" method to assess the value of PacificCorp's Montana properties. At issue was whether substantial evidence demonstrated common acceptance of the Department's direct capitalization method that derived earnings-to-price ratios from an industry-wide analysis. Also at issue was whether substantial evidence supported STAB's conclusion that additional obsolescence did not exist to warrant consideration of further adjustments to PacifiCorp's taxable value. The court held that substantial evidence supported the Department's use of earnings-to-price ratios in its direct capitalization approach; that additional depreciation deductions were not warranted; and that the Department did not overvalue PacifiCorp's property. The court also held that MCA 15-8-111(2)(b) did not require the Department to conduct a separate, additional obsolescence study when no evidence suggested that obsolescence existed that has not been accounted for in the taxpayer's Federal Energy Regulatory Commission ("FERC") Form 1 filing. The court further held that STAB correctly determined that the actual $9.4 billion sales price of PacifiCorp verified that the Department's $7.1 billion assessment had not overvalued PacifiCorp's properties.