One hundred and eighty years ago, on August 15,1829, as the New England summer faded and a school year dawned, U.S. Supreme Court Justice Joseph Story spoke to a muster of colleagues and students in Cambridge, Massachusetts. They came to honor the Justice's inauguration as Dane Professor of Law at Harvard University. He told them about the "Value and Importance of Legal Studies". He said:
I will not say with Lord Hale, that "The Law will admit of no rival" . . . but I will say that it is a jealous mistress, and requires a long and constant courtship. It is not to be won by trifling favors, but by lavish homage.
Justice Story's words came back to Blawgletter today as we scanned a Ninth Circuit ruling from the day before. The opinion did one of the things we enjoy most about the law. It taught us something we didn't know.
We've paid a bunch of homage to her majesty, The Law, for that feeling. God help us.
The court held that a qui tam defendant may go after a third party for causing it (the defendant) to do stuff (filing bogus claims) that made it liable under the False Claims Act to the federal government. The case involved an upstart drug maker, Cell Therapeutics. CT had come up with a way to treat leukemia. It hired a firm, a predecessor to Lash Group, to advise it about Medicare reimbursement. The firm said, untruly, that CT could rightly get Medicare money for "off label" uses of the drug. An ensuing qui tam case against CT forced it (CT) to pay more than $10 million to the feds.
CT sued Lash for giving bum advice. The district court kicked the suit on the ground that the FCA doesn't allow claims for contribution and indemnity between qui tam guilty parties. The Ninth Circuit agreed with the rule but said it didn't apply. The FCA, it held, permits claims "independent" from recovery of CT's qui tam liability. CT alleged that Lash damaged it by preventing adoption of proper Medicare reimbursement requests, increasing CT's cost of capital, and hurting CT's reputation. That just might make the claims independent, the court concluded. It remanded the case so the trial court could rule on whether or not CT's claims somehow depended on its qui tam liability. Cell Therapeutics Inc. v. Lash Group Inc., No. 08-35619 (9th Cir. Nov. 18, 2009).