Landis v. Tailwind Sports Corporation
Civil Action No. 2010-0976
| D.D.C. | Aug 22, 2018Background
- From 1996–2004 USPS paid about $32 million to sponsor a professional cycling team owned by Tailwind Sports Corp.; Johan (Johann) Bruyneel was the team manager; Floyd Landis and Lance Armstrong were riders.
- The 2000 USPS sponsorship agreement required compliance with anti-doping rules and permitted termination for doping or related negative publicity.
- Landis filed a qui tam False Claims Act (FCA) suit in 2010 alleging the team used performance-enhancing drugs (PEDs) and concealed that misconduct; the United States intervened in 2013.
- Many defendants later settled (including Armstrong); only Tailwind and Bruyneel remained and stopped participating after their 2014 motions to dismiss were denied; the Clerk entered default in 2016.
- The United States moved for default judgment on FCA Counts (presentment and false statements) against Tailwind and Bruyneel and unjust enrichment against Bruyneel; Landis separately sought FCA damages.
- The court found liability on the FCA claims, imposed civil penalties totaling $369,000 (41 claims × $9,000) against Tailwind and Bruyneel, entered restitution of $1,228,700 against Bruyneel on unjust enrichment, and denied Landis’s FCA damages motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether default appropriate | Government/Landis: defendants failed to answer after denial of motions to dismiss and did not appear for years | Tailwind/Bruyneel: (no response after 2014) | Default entry proper; defendants unresponsive |
| FCA presentment liability (false claims submitted) | USPS paid claims submitted by Tailwind; Bruyneel caused/prompted submission by facilitating and concealing doping | Defendants did not contest (default); previously moved to dismiss | Liability established for 41 claims under implied-certification theory; knowledge imputed to Tailwind from Bruyneel |
| FCA false-statement liability (fraudulent inducement) | Tailwind and Bruyneel made material false denials before 2000 agreement inducing USPS to enter sponsorship | Defendants did not contest (default) | Liability established for claims under fraudulent inducement theory |
| Monetary relief: penalties, damages, unjust enrichment | U.S./Landis seek max penalties ($11k × 41) and restitution/damages (full contract amounts) | Defendants did not contest (default); Landis sought full payments as damages without proving net loss | Court awarded civil penalties of $9,000 per claim ($369,000 total); denied Landis’s FCA damages for lack of proof; awarded unjust enrichment restitution $1,228,700 to U.S. from Bruyneel |
Key Cases Cited
- Bricklayers & Trowel Trades Int’l Pension Fund v. KAFKA Constr., 273 F. Supp. 3d 177 (D.D.C. 2017) (default-judgment two-step procedure and standard)
- Boland v. Elite Terrazzo Flooring, Inc., 763 F. Supp. 2d 64 (D.D.C. 2011) (default establishes liability for well-pled allegations; plaintiff still must prove damages)
- Landis v. Tailwind Sports Corp., 51 F. Supp. 3d 9 (D.D.C. 2014) (prior ruling on service, sufficiency of implied-certification allegations)
- United States ex rel. Landis v. Tailwind Sports Corp., 234 F. Supp. 3d 180 (D.D.C. 2017) (summary-judgment discussion of implied certification and fraudulent-inducement theories)
- United States v. Toyobo Co., 811 F. Supp. 2d 37 (D.D.C. 2011) (substantial-factor causation and false-statement elements)
- Grand Union Co. v. United States, 696 F.2d 888 (11th Cir. 1983) (imputation of agent/employee knowledge to principal)
- Miller v. Holzmann, 563 F. Supp. 2d 54 (D.D.C. 2008) (imputation of knowledge in FCA context)
- United States ex rel. Hagood v. Sonoma County Water Agency, 929 F.2d 1416 (9th Cir. 1991) (civil penalties recoverable without proof of actual damages)
- United States ex rel. Miller v. Bill Harbert Int’l Constr., 501 F. Supp. 2d 51 (D.D.C. 2007) (example of awarding maximum penalties where elaborate cover-up and complex fraud present)