Teaming agreements are regularly used for collaborative bids or proposals. A significant related issues has increasingly been the enforceability of the teaming agreement, and in particular whether it is merely an agreement to try and agree or whether it creates an obligatory requirement to contract if the team successfully obtains award. Judge Hughes of the Richmond Circuit Court recently considered related questions in the context of a suit by a scorned teaming subcontractor. As framed by Judge Hughes, the lead question for him on summary judgment was whether the teaming agreement was merely an agreement to agree.
Defendant's main contentions for the proposition were 1): no duration for the prospective subcontract was set in the teaming agreement; 2) the plaintiff subcontractor was not a Local Small Business or Local Small Business Enterprises as called for in the teaming agreement; and 3) the teaming agreement included a provision that provided: "Nothing herein shall be deemed to create a presumption that the parties have agreed to exclusively respond with the other." Noting the case was before him on summary judgment, Judge Hughes rejected all three arguments.
Regarding the first, he held that the subcontract duration could be implied; that is, duration would be tied to the nature of the teaming prime's contract with the owner - or, as he noted in his opinion, "In other words, the duration of the parties' sub-contractual undertaking will be determined by the length of defendant's general contract."
Regarding the second, he held that, based on the wording of the LSB / LSBE requirement in the teaming agreement (e.g., "throughout the term of the Contract"), the compliance requirement did not arise until when and if the parties themselves contracted, and so the LSB / LSBE requirement did not come into play until the underlying contract itself came into play; and so the team subcontractor's not meting those requirements for the teaming agreement was not fatal.
Finally, regarding the third, he held that the provision relied upon merely expressed the parties' agreement that the teaming agreement did not create any presumptions, and that nothing about the provision excluded the existence of a contractual relationship as alleged in the complaint; only that exclusivity existed between those parties relating to the project.
In ruling on the summary judgment motion, Judge Hughes noted that the enforceability of the teaming subcontract would be subject to later proof; however, he concluded the defendant's arguments were insufficient, as argued, for him to grant summary judgment and preclude the scorned subcontractor from presenting that proof. This is a helpful case for teaming agreement drafters, or litigators; although the outcome seems strongly tied - as are all of these cases - to the wording of the particular teaming agreement.
Monday, January 19, 2015
Wednesday, January 14, 2015
Last month the United States Court of Appeals for the Fourth Circuit (which has Federal Court appellate jurisdiction for Virginia, North Carolina, South Carolina, West Virginia, Maryland and the District of Columbia) clarified a number of aspects of Federal False Claim actions. The case is United States, et al. v. Triple Canopy, Inc., Nos. 13-2190 and 13-2191, decided January 8, 2015, and involves a whistleblower (“qui tam”) claim by an ex-employee of a security contractor, Triple Canopy, respecting Triple Canopy security service contracts with the Federal Government.
The whistleblower, a medic named Omar Badr, claimed that Triple Canopy had knowingly provided non-qualified guards, asked him to falsify related records, and then when he refused falsified them and invoiced for the non-conforming services. The Attorney General elected to intervene and proceed with the action after it was filed by Badr, and then filed an amended complaint alleging additional violations, and bringing several common law claims against Triple Canopy. The district court dismissed the False Claims Act claims and common law claims, as well as the whistleblower’s claims, and the appeal resulted.
Reviewing the district court’s decisions “de novo” (anew; the applicable review standard), the Fourth Circuit reversed several aspects of the district court’s decision, and in the process clarified the pleading (and proof) standards applicable to False Claims Act (“FCA”) actions. Particularly of note as being clarified by the court are the following:
- Implied Certifications: The Fourth Circuit clarified that false claims include falsehoods by silence, and that such “implied” certifications (as opposed to affirmative representations) arise when the contractor’s silence infers the contractor has met contractual prerequisites for the Government action being induced (in that case, the prerequisites for payment). The court clarified that the silence must go to a “material” (as opposed to minor) contractual requirement though; in that case the non-qualification of the guards being held as material by the court.
- Whistleblower as Plaintiff: The Fourth Circuit clarified that the whistleblower remains a proper party plaintiff claimant even after the Attorney General elects to intervene and proceed with the action. The district court had held that the whistleblower’s claims were superseded by the Government’s claims; but the Fourth Circuit reversed holding the whistleblower had the right to continue as a party in the action subject to the limitations in FCA Code Sec. 3730(c)(2); which the court noted the district court was free to consider on remand.
- False Records Claim Basis: The Fourth Circuit clarified that the Government was not required to have actually reviewed or relied upon the false record to support a false records claim. The district court had focused on the actual effect of the false statement rather than its potential effect, but the Fourth Circuit held that – in appropriate circumstances – a record is false if it has the potential to influence Government payment; even if the Government ultimately did not review the record. Additionally, the court expressly declined to adopt the view that such implied representations can only give rise to FCA claims when the condition is expressly designated as a condition for payment; but that not every part of the contract can be assumed as a condition of payment – leaving the question of materiality for case by case analysis.
As part of its analysis, the court noted the importance of construing the FCA as a “strong remedy” when one was needed to confront fraud upon the government. While noting that its decisions in Triple Canopy might be “prone to abuse” by efforts to turn minor contractual violations into FCA claims, the court noted the FCA purposes overrode that concern and further noted the available remedies for any such “abusive litigation.”
How the Fourth Circuit’s decision in Triple Canopy expands FCA claims, and whistleblower actions in particular, remains to be seen; but it clearly seems to widen the door of FCA action-ability, and should serve as a caution to any Federal contractor respecting both what is said, and not said, to the Government throughout contractual performance.
Tuesday, November 11, 2014
On this Veteran's Day 2014, Vandeventer Black LLP offers its thanks and gratitude to al of our veterans. Our lawyers have a solid history of military service, and we honor all how have and are serving in the different branches of service.
Wednesday, October 22, 2014
Below is a copy of a "cheat sheet" summary of important deadlines relating to Virginia mechanic's liens John Lockard and I prepared for a recent talk. Obviously not intended as a complete overview of mechanic's lien law, times or requirements; but a simple "keep in mind" overview.
Thursday, October 9, 2014
Make your reservations now for the 2014 Carter Gunn Memorial Stressbuster 8K fun fun. This year the Stressbuster 8K is November 22, 2014 at First Landing State Park, Virginia Beach, VA. Registration starts at 7:30am; the race starts at 9:00am.
This is a fun, cross country 8K race along historic, scenic and rolling trails in First Landing State Park. The race is Chronotrack B-tag Timed.
All proceeds go to the Carter T. Gunn Fund, which is part of the Vandeventer Black Foundation. The Carter T. Gunn Fund is dedicated to fighting depression and educating the public about mental health.
More information about the Stressbuster 8K, including for registration or being a sponsor, is available at the following web link:
DOL issued its final rule on October 7 implementing President Obama's Executive Order 13,658 and increasing the minimum wage for workers performing federal service and construction contracts to $10.10 per hour. The final rule also sets future increases to be based upon the Consumer Price Index. More information about the final rule is available at the following DOL media web link:
Vandeventer Black Labor & Employment Law Seminar: November 18, 2014, Sheraton Norfolk Waterside Hotel
The Labor & Employment group of our firm is pleased to announce its 29th annual Labor & Employment Law Review and Update! The seminar will be held on November 18, 2014 at the Sheraton Norfolk Waterside Hotel from
8:30 a.m. to 4:00 p.m. Topics Include: Recent Developments in Labor & Employment Law • Affordable Care Act Updates • Managing Employee Leave • Workers’ Compensation Tips • Hiring & Firing • New Requirements for Government Contractors. Please share the attached flyer with your clients.
Individuals can register online at www.vanblk.com/Events/LaborEmploymentSeminar by November 10, 2014. The cost for the seminar is $175 per person. This includes the course materials, breakfast, lunch, and valet parking. Additional attendees from the same organization may attend for $160 per person.
Vandeventer Black’s Labor & Employment team represents a wide variety of organizations and businesses in labor and employment law and litigation matters, including discrimination claims, union avoidance, NLRB charges, wrongful discharge, breach of contract suits, trade secret/unfair competition suits, wage and hour, employee benefits, workers’ compensation defense, immigration, and employee relations counseling and training.