WASHINGTON (CN) – Though a federal judge Monday said he “generally adopts” Lance Armstrong’s claim that the U.S. Postal Service suffered zero actual damages from the nearly $33 million it spent to sponsor his cycling team, the question of damages must go to a jury, clearing the United States’ $100 million lawsuit for trial.
U.S. District Judge Christopher Cooper refused Armstrong’s motion to dismiss, because of the difficulty of quantifying the damages the Postal Service may have suffered. Armstrong claimed that “(t)he government’s actual damages are zero” because it received the benefit of his name and work while USPS sponsored his team from 1996 to 2004.
“The Court generally adopts Armstrong’s proposed ‘benefit-of-the-bargain’ approach to calculating damages in FCA [False Claims Act] cases, like this one, where the market value of goods or services supplied under a government contract are difficult to determine,” Cooper wrote.
He added, however: “This issue presents a closer question.”
Cooper agreed with evidence that the USPS “received substantial benefits as a direct result of the sponsorship,” citing internal USPS communications and valuation studies by third parties.
“Ultimately, however, the court concludes that the monetary amount of the benefits USPS received is not sufficiently quantified to keep any reasonable juror from finding that the agency suffered a net loss on the sponsorship, especially if one considers the adverse effect on the Postal Service’s revenues and brand value that may have resulted from the negative publicity surrounding the subsequent investigations of Armstrong’s doping and his widely publicized confession,” the 37-page opinion states.
Armstrong was the team’s lead rider, winning seven consecutive Tour de France titles – six while sponsored by USPS. Dogged by allegations of doping for years, Armstrong became a pariah when the U.S. Anti-Doping Agency concluded in 2012 that he had used banned substances from 1998 through his entire career, banned him from cycling for life and stripped him of his wins, including his seven Tour de France titles. He then admitted to doping in a televised interview with Oprah Winfrey.
The lawsuit began in 2010 when former teammate Floyd Landis sued Armstrong, former team manager Johan Bruyneel and Armstrong’s management company Tailwind Sports in Federal Court under the False Claims Act. The United States joined the lawsuit three years later, soon after Armstrong’s interview with Winfrey. Landis was stripped of his 2006 Tour de France victory for doping, as well.
If a federal jury rules for the plaintiffs, the defendants would be on the hook for treble damages – three times the $33 million in alleged damages. Landis stands to collect up to 30 percent of that money as a whistleblower.
Judge Cooper said that all the federal government needs to show is that a “contractor withheld information about its noncompliance with material contractual requirements,” citing Tailwind’s invoices that “did not represent anything about the nature” of the services provided.
“Because the government has offered evidence that Armstrong withheld information about the team’s doping and use of PEDs [performance-enhancing drugs] and that the anti-doping provisions of the sponsorship agreements were material to USPS’s decision to continue the sponsorship and make payments under the agreements, the court must deny Armstrong’s motion for summary judgment on this issue,” the opinion states.
Armstrong has steadfastly refused to settle the lawsuit, saying in December 2015 that he “is not in a position to cut any more checks” after settling two lawsuits over his Tour victory bonuses.
“That’s the only active case, so it gets a little trickier to talk about – just because I do not want to get crushed by lawyers – but we like our case,” Armstrong said on the “Joe Rogan Experience” podcast. “The Postal Service commissioned three separate studies to analyze the effect of the sponsorship on the team. We believe they made hundreds of millions of dollars and we know they were using the team as a sales vehicle during the Tour, bringing over potential clients.”
Armstrong settled a long-running dispute with Dallas-based insurer SCA Promotions for $7.5 million in 2015. SCA sued Armstrong after his doping admission, demanding the return of an earlier arbitration award after it refused to pay him his race bonus for winning the 2003 Tour due to its doping suspicions.
Armstrong settled a similar lawsuit with Acceptance Insurance in 2013, which paid him $3 million in Tour bonuses.
Federal prosecutors declined to comment on the ruling Monday evening.
Defense attorney Elliot R. Peters, with Keker & Van Nest in San Francisco, said the ruling shows there is no evidence of quantifiable financial harm to USPS.
“So the government may now proceed to a trial that, as a practical matter, it cannot win,” he said.
Landis’ attorney, Paul D. Scott, of San Francisco, said he was “delighted” with the ruling and that the finish line for Armstrong is “fast approaching.”