United States v. United Technologies Corp., 950 F. Supp. 2d 949

Remanded from the Sixth Circuit after finding liability under the FCA and addressing a statute of limitations issue; Pratt & Whitney allegedly fraudulently understated BAFO prices and misrepresented data in engine procurements.
Sixth Circuit upheld liability and FCA fraud findings, rejected preclusion of common law claims, and remanded for damages calculation using its guidance on three specific calculations.
Court adopted a FMV-based damages framework, removing fraud-impacted payments and adding offsets, rather than relying on historical costs or market prices.
Damages were computed year-by-year for FEC I–VI, with common law damages totaling $23,762,721 (FEC I) through $41,109,235 (FEC III) and smaller pre-March 3, 1989 amounts for FEC IV; FCA damages thereafter were trebled for post-1989 invoices.
Prejudgment interest was calculated using the Current Value of Funds Rate by year, with a final judgment date of July 1, 2013; treble damages and penalties under the FCA were awarded for post-1989 claims; the government was ordered to submit a draft judgment reflecting these calculations.
The court acknowledged potential higher fair market value if engines had been sold in an open market, but held the negotiated warranties’ value to be the arm’s-length price; offsets related to warranty reductions were not applied to reduce the treble damages.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Damages framework—how to compute FCA damages and offsets?	U.S. argued for fraud-based adjustments and offsets per the Sixth Circuit guidance.	UTC challenged the methodology and offsets; urged reliance on alternative price data.	Damages computed by removing fraud amounts and applying offsets; FMV-based calculation adopted.
Whether offsets for warranty reductions apply to the final damages?	Government contended reductions should be offset after trebling.	UTC argued for a different offset application.	Court found no offset for warranty reductions against the trebled FCA damages.
Application of prejudgment interest	Interest calculated to compensate the government for delayed payment.	UTC opposed prejudgment interest.	Prejudgment interest awarded at CVF rates by year, through July 1, 2013.
Whether damages should be based on fair market value or historical cost data?	FMV should reflect what government should have paid absent fraud.	Historical or alternative data could establish FMV.	FMV derived from arm’s-length negotiations and market context; costs tied to fraud were excluded.
Treble damages and penalties post-1989	FCA remedy applies to post-1989 damages, including penalties.	UTC challenged scope of treble damages.	Post-1989 damages trebled; penalties awarded; total FCA liability specified.

United States v. United Technologies Corp., 626 F.3d 313 (6th Cir.2010) (affirms liability and damages framework on remand; valuation guidance given by Sixth Circuit)
United States ex rel. Compton v. Midwest Specialties, Inc., 142 F.3d 296 (6th Cir.1998) (liberal damages principle to ensure complete indemnity for government injury)
United States v. Commodities Trading Corp., 339 U.S. 121 (1950) (regulated market value concept and value of government-regulated markets)
United States ex rel. Wall v. Circle C Constr., L.L.C., 697 F.3d 345 (6th Cir.2012) (damages methodology upholding full recovery under FCA context)
Northrop Corp. v. McDonnell Douglas Corp., 705 F.2d 1030 (9th Cir.1983) (two-seller market context; cautions on market-value evidence in this setting)