September 14, 2015
On September 10, 2015, Weil secured a complete victory for Schindler Elevator Corp. when the U.S. District Court for the Southern District of New York granted Schindler’s motion for summary judgment in a qui tam False Claims Act (FCA) case. The Court’s opinion closes a 10-year-old litigation that had twice been appealed up to the Second Circuit and once to the U.S. Supreme Court, and reaffirms that the FCA, as the Court wrote, “is not a mechanism to police regulatory compliance….”
Plaintiff Daniel Kirk, a U.S. Army veteran and former Schindler employee, originally filed his complaint in 2005 alleging that Schindler violated the False Claims Act for failing to comply with the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA). VEVRAA, among other things, requires certain government contractors to provide annual reports (called “VETS-100” reports) to the U.S. Department of Labor (DOL) that detail the number of veterans employed by a contractor – based on voluntary self-disclosure of veteran status by a contractor’s employees. Kirk asserted that Schindler either failed to submit the VETS-100 reports and/or filed false or inaccurate reports over a period of eight years, based upon information he obtained from Freedom of Information Act (FOIA) requests answered by the DOL, and from his own personal experience with the Company.
In 2011, Weil won a significant intermediate victory in the case on appeal to the U.S. Supreme Court, which, in overturning a Second Circuit decision, held that the DOL’s responses to Kirk’s FOIA requests represented public disclosures, and thus any FCA claims based on them were precluded by the FCA’s public disclosure bar. Following this precedential decision, in 2012, the Second Circuit affirmed the dismissal of Kirk’s claims that Schindler failed to file VETS-100 reports, holding that these claims were based on his fulfilled FOIA requests.
Following extensive fact and expert discovery, on remand Schindler subsequently moved for summary judgment on Kirk’s remaining claims that the company filed false or inaccurate reports, arguing that Kirk had not presented sufficient evidence to support his claims under the FCA.
In September 2015, the Court granted Schindler’s motion in its entirety. The Court ruled in its Opinion and Order, based on extensive evidence and witness testimony proffered by Schindler, that “the record is uniform and overwhelming that Schindler did not knowingly submit false VETS-100 reports” to the DOL, an essential condition for a claim to succeed under the FCA. Indeed, the Court highlighted undisputed evidence that Schindler monitors its VETS-100 reporting process and proactively corrects errors, and even tasks an employee with this responsibility, to demonstrate Schindler’s commitment to accurate and compliant reporting under VEVRAA.
In its conclusion, the Court went on to note that Kirk “fundamentally misapprehends the very purpose of the FCA—the FCA is not a mechanism to police regulatory compliance with VEVRAA; it is a mechanism to hold liable contractors who defraud the federal government.”