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FCA Qui Notes
May 8, 2024

VTel Relator Claps Back, Says DOJ’s Mid-Discovery (c)(2)(A) Motion Mischaracterizes and Omits Key Details

Qui Notes: Unlocking the False Claims Act

Coming awfully close to accusing the Department of Justice (DOJ) of acting in bad faith, the relator in U.S. ex rel. Vermont National Telephone Co. v. Northstar Wireless LLC recently filed a sealed response to DOJ’s mid-discovery (c)(2)(A) motion to dismiss the relator’s complaint. We at Qui Notes covered DOJ’s motion here. To quickly recap, relator VTel alleges that the defendants defrauded the government in connection with their bidding on exclusive wireless spectrum licenses auctioned by the Federal Communications Commission (FCC). It is not evident from the docket why the filing is sealed, though an order related to a separate sealed filing regarding relator’s share suggests that it may be sealed because of a dispute related to confidentiality designations. VTel did, however, file three declarations in support of its opposition publicly, which provide insight into VTel’s arguments.

One declaration signed by one of VTel’s lead lawyers accuses the government of misrepresenting and leaving out details regarding its investigation into VTel’s claims. He provides a detailed chronology of the investigation, including, as he describes them, VTel’s attempts to engage with DOJ, VTel’s attempts to respond to DOJ’s concerns, and, remarkably, DOJ’s attempts “to induce Relators’ counsel to accept a plainly unethical settlement as an alternative to the DOJ seeking dismissal of Relator’s claims.” According to the declaration, DOJ counsel told VTel “that, despite the government’s contention that it had suffered no ‘significant loss,’ and even though the DOJ typically would not authorize a settlement with a ‘nominal amount’ of damages and high attorney’s fees, he believed that he could get authorization for such a settlement here ‘as a courtesy’ because Relator’s attorneys ‘had done a good job.’”

The declaration also calls DOJ out for not issuing a single subpoena or CID during its investigation, reviewing documents “curated” by the defendants and ignoring hundreds of documents provided by VTel. VTel’s counsel also contends that DOJ collaborated with defense counsel in an “unusual” manner — including by insisting that relator amend its complaint when “it appears the DOJ was working with Defendants to limit Relator’s claims,” coordinating on a FCC declaration regarding damages, obstructing VTel’s efforts during that FCC declarant’s deposition, declining to engage with defendants over relators’ objections to defendants’ discovery requests to the government to lessen the burden on the government, and pushing relator to make a settlement offer while threatening to file a (c)(2)(A) motion if the parties could not reach an agreement. We note that one of DOJ’s (c)(2)(A) arguments for dismissal is that defendants are seeking overly broad discovery from the government.

VTel further contends that DOJ’s motion was timed to protect defendant Charles Ergen from sitting for deposition; Ergen, according to VTel’s attorney, has made significant political contributions, including to funds for the election of President Biden and President Obama, and made several White House visits in the last two years.

VTel’s counsel also states that its firm has incurred approximately US$13 million in legal expenses and costs in the nine years VTel has been litigating this case. The other declarations filed publicly in support of VTel’s opposition are signed by experts and discuss the government’s damages.

Despite VTel’s contentions that DOJ inadequately investigated its claims, interfered with discovery, collaborated with defendants, and potentially sought to protect a politically connected defendant from a deposition and further litigation, it faces a significant uphill battle to convince the court to deny the government’s (c)(2)(A) motion. As our readers know, in Polansky, the Supreme Court held that the court should apply Rule 41(a) in considering a (c)(2)(A) motion, which requires only a “proper terms” assessment. While such an assessment includes consideration of the relator’s interests, SCOTUS cautioned that “a district court should think several times over before denying a motion to dismiss. If the government offers a reasonable argument for why the burdens of continued litigation outweigh its benefits, the court should grant the motion. And that is so even if the relator presents a credible assessment to the contrary.”

As noted above, VTel also filed a sealed motion for share of alternate remedy in the event the court is inclined to grant DOJ’s (c)(2)(A) motion. But in a separate (and publicly accessible) motion, VTel asked the court to set a hearing on DOJ’s (c)(2)(A) motion, arguing that DOJ’s arguments are merely pretextual and the court should hold the hearing to assess whether DOJ is acting in “good faith.” VTel argues that the Second Circuit’s ruling in Brutus Trading that a hearing is not required for a (c)(2)(A) motion is distinguishable from the facts presented here. The court has directed DOJ to address VTel’s motion for a hearing when it responds to VTel’s motion for alternative remedy on or before June 6, 2024. We at Qui Notes will be watching the docket and will report back on any further progress in this case.

© Arnold & Porter Kaye Scholer LLP 2024 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.