(CN) – Cyclist Floyd Landis needs Uncle Sam’s permission to settle claims against former teammate Lance Armstrong’s agent and business partner, a federal judge ruled.
The winner of the 2006 Tour de France, Landis was stripped of his victory and banned from cycling for two years after he tested positive for banned substances.
He brought a whistle-blower complaint in 2010 against Armstrong; agent Bill Stapleton; Armstrong’s business partner, Barton Knaggs; Stapleton and Knaggs’ company, Capital Sports and Entertainment; U.S. Postal Service Pro Cycling Team manager Johan Bruyneel; and Armstrong’s management company, Tailwind Sports.
Some months after Armstrong faced a lifetime ban from cycling for doping, the United States joined Landis’ lawsuit in April 2013.
As the sponsor of Tailwind’s cycling team from 1996 to 2004, when Armstrong was the lead team rider and won six consecutive Tour titles, the Postal Service paid $31 million in sponsorship fees between 2001 and 2004 alone.
Landis claims Bruyneel knew team members were using banned drugs and that Armstrong and Tailwind Sports, among others, knowingly flouted USPS sponsorship agreements signed in 1995 and 2000. Landis could receive up to 30 percent of any recovery as a whistle-blower.
Stapleton and Knaggs agreed in December to pay the federal government $500,000, while Landis’ attorney, Paul Scott in San Francisco, will take home $100,000 to settle the claims against them.
The federal government objected to the settlement and opposed Stapleton, Knaggs and CSE’s motion to approve the settlement.
Agreed with the federal government, U.S. District Judge Christopher Cooper tossed the settlement Thursday.
“While it might seem counterintuitive that the government can effectively veto a settlement of claims it has chosen not to join, the False Claims Act itself and the majority of circuits that have addressed the question say otherwise,” the five-page opinion states. “Until the United States, through the Attorney General, provides its written consent, the court may not approve the settlement or order the voluntary dismissal of the CSE defendants.”
The FCA explicitly states an “action may be dismissed only if the court and the Attorney General give written consent to the dismissal and their reasons for consenting,” Cooper wrote.
“This requirement is clear, with one wrinkle: in construing this provision, courts have recognized that it pertains only to voluntary dismissals so as to avoid the separation of powers concerns that would arise if the Attorney General held the power to reject a judicial decision,” the opinion states. “Despite the seemingly plain language of Section 3730(b)(1), the CSE Defendants ask the court to look beyond the literal text and approve the proposed settlement unless the government can articulate good reasons for withholding its consent. They complain that giving the government veto power over voluntary settlements infringes on relators’ ‘right to conduct’ nonintervened FCA actions and forces relators to press forward with litigation against their will.”
Cooper refused to rely on a 9th Circuit ruling from 1994 that says the FCA’s consent provision applies only during an initial 60-day period. The 5th and 6th Circuits have expressly rejected the conclusion and reasoning of the 9th Court’s ruling since, the court found.
“And while neither the Supreme Court nor the D.C. Circuit has tackled the question head on, both have indicated that the government’s consent is required for the voluntary dismissal of non-intervened claims,” Cooper wrote. CSE did not immediately respond to a request for comment Thursday afternoon.
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