On June 18, 2021, the United States District Court for the District of Columbia certified an interlocutory appeal in favor of Honeywell in a case involving FCA common liability. The appeal will concern the question of whether the court properly calculated Honeywell’s common damages liability in the case; Honeywell argued that its liability should be calculated using the pro tanto method, while the United States argued that the proportionate share method applies. Because the Government has already obtained more in settlements from the other defendants than it could obtain from Honeywell, if the pro tanto method applies, Honeywell would owe $0 after offsets to its common damages. By contrast, under the proportionate share method, the court would calculate Honeywell’s comparative liability, which could amount to millions.
I. Comparative Liability, Factual Background, and Honeywell’s Motion
In cases involving multiple alleged tortfeasors, different methods for calculating each defendant’s common liability apply. Under the pro tanto method, a court will determine the total common damages owed to the plaintiff and offset the common liability of non-settling defendants based on the amounts settling defendants paid. By contrast, under the proportionate share method, the court determines each defendant’s share of the common damages alleged and, regardless of settlements by other parties, each non-settling defendant would be responsible for compensating its share of the common damages.
The government alleges that Honeywell made false statements and omissions regarding the sale of defective body armor containing a Honeywell product. It initiated an FCA action against Honeywell, joining other defendants in its FCA claims, as well as asserting a claim for unjust enrichment against Honeywell. The other defendants settled for over $36 million in common damages. Under the pro tanto approach, the Government is only entitled to approximately $35 million. Conceivably, Honeywell could be liable for FCA penalties and any liability assessed under the unjust enrichment theory, but those damages do not require an inquiry into Honeywell’s comparative liability because they are specific to Honeywell’s individual liability.
Honeywell therefore moved for summary judgment on the theory that, under the pro tanto method, the Government has received more from other settling defendants than the amount Honeywell would owe in common damages. The district judge denied Honeywell’s motion, holding that the proportionate share method applies in cases involving FCA liability. The current action concerned Honeywell’s subsequent motion for an interlocutory appeal over the appropriate method of calculating Honeywell’s common damages.
II. The Law on Interlocutory Appeals
Three elements are required to merit certification of an order for an interlocutory appeal. First, the order must involve a controlling question of law. Second, there must be substantial ground for a difference of opinion in how to dispose of the issue. Third, the moving party must show that reversal of the order would hasten or at least simplify the litigation in some material way. Even where all of these elements are satisfied, however, the moving party must also overcome the strong policy against piecemeal reviews by showing that the circumstances of the order merit immediate review.
III. Honeywell’s Motion for an Interlocutory Appeal
The district judge held that an interlocutory appeal was appropriate. First, the applicable method of calculating common damages in multi-tortfeasor FCA suits is a question of law, since that decision is not fact-dependent and primarily depends on existing case law.
Second, there is substantial ground for a difference of opinion over which method applies, since courts disagree on this issue and some have recognized the merits of the pro tanto approach. The district judge pointed to the intra-circuit split in the D.C. Circuit as supporting this element of the analysis. Similar splits of opinion exist outside the D.C. Circuit as well, and the Supreme Court has not given the proportionate share method an exclusive endorsement.
Third, an immediate appeal could advance the ultimate disposition of this case. As mentioned, if the appellate court decided that the pro tanto method applied, the issue of Honeywell’s common damages would be resolved; the court would not have to determine its comparative fault and its common damages would be reduced to $0. Honeywell’s remaining liability (i.e., FCA penalties and damages under the unjust enrichment theory) could be litigated apart from its comparative liability and would be unaffected by this analysis.
The district judge did not find Honeywell’s argument for the pro tanto method persuasive, suggesting that perhaps the proportionate share method is more likely to apply in the end. Nevertheless, Honeywell made a strong enough case for its interlocutory appeal that the judge granted its motion. The appeal in this case has a material impact on the determination of Honeywell’s potential liability for consequential damages; more importantly, it is a case that bears watching as an appellate decision could further clarify how such damages analyses may proceed in the future in multi-defendant FCA cases.
The authors thank McGuireWoods summer associate Bryan Frederick for assistance preparing this article. He is not licensed to practice law.