Ford Minority Contract Case Returns To Court

CINCINNATI (CN) - The 6th Circuit revived part of a lawsuit accusing Ford Motor Co. of exaggerating its dealings with small and minority-owned businesses in order to win government contracts.

To be eligible for federal contracts, Ford and other "prime contractors" must provide the "maximum practicable opportunity" for small and minority-owned subcontractors.

From 1991 to 1999, Ford allegedly inflated the extent of its subcontracts with these businesses by reporting money paid to Snapp Inc., a company controlled by Ford, as a subcontract with a small and minority-owned business.

Ford allegedly set up a sham partnership with Snapp, nominally controlled by an Indian businessman, and used the company to route payments to large, majority-owned businesses. Ford would then report the transactions as subcontracts with Snapp, the company claimed. Snapp said Ford nominated most of its board members and controlled the company.

The district court dismissed the case last year as untimely, a conclusion the appeals court affirmed. But the 6th Circuit remanded Snapp's second amended complaint, asking the district court to decide whether allowing it is "required in order to prevent an injustice."

Judge Clay said the court must strike a balance between protecting defendants from vague claims and allowing whistleblowers to far-reaching fraudulent schemes "without being subjected to onerous pleading requirements."

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