Gadsden Industrial Park, LLC v. United States
13-924
| Fed. Cl. | Jan 5, 2018Background
- Gadsden Industrial Park, LLC (GIP) owned about 25 miles of railroad track at a former Gulf States Steel site; some spur lines (HS-1, HS-2, HN-1) lay on an "excluded" parcel with slag piles that GIP did not own the underlying land for.
- EPA contractors removed/processed slag and Harsco separated ferrous material; some nonmarketable material covered or removed portions of the spur lines; GIP continued railcar-storage operations elsewhere on the property.
- GIP’s counsel sent letters to EPA asserting that roughly one mile of spur track had been "converted" by EPA CERCLA activity and that GIP used the spurs to store railcars; those letters contained inaccurate statements about present use stemming from a communication error between GIP manager Don Casey and long-time site manager Jerry Stephens.
- The United States amended its answer to assert False Claims Act counterclaims alleging GIP knowingly submitted false claims for payment; the court narrowed the government’s case to one false claim after motions in limine.
- At trial the court found the misstatements were not made with reckless disregard for the truth (no FCA liability), concluding the inaccuracy arose from a credible miscommunication and GIP’s reasonable belief about use and intended use of the track.
- GIP moved under the Equal Access to Justice Act (EAJA) for attorney’s fees; the court denied fees because the government’s position in pursuing the counterclaim was "substantially justified."
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether GIP is entitled to EAJA fees because the government’s position on the FCA counterclaim was not substantially justified | GIP argued the government’s counterclaim lacked substantial justification and fees should be shifted | Government argued its counterclaim was reasonably grounded given materially inaccurate, repeated statements in GIP’s letters and thus was substantially justified | Denied — government was substantially justified in asserting counterclaim; EAJA fees denied |
| Whether GIP acted with the scienter required for False Claims Act liability (reckless disregard or knowing falsity) | GIP contended the inaccurate statements resulted from a non-reckless miscommunication and lacked requisite scienter | Government contended the repeated, material inaccuracies supported an FCA counterclaim | Held for GIP — court found no reckless disregard; misstatements traced to credible miscommunication and desire to use track, so no FCA civil penalty imposed |
Key Cases Cited
None with official reporter citations were relied upon in the opinion (the decision analyzes statutes and the trial record rather than citing reported appellate or Supreme Court authorities).