Honeywell International Inc. will tell the D.C. Circuit on Wednesday that the time has come to end the Justice Department’s 13-year body armor fraud suit against it, because settlements with other companies have made the government whole.
The case could have major consequences for how multiple defendants must split big-dollar judgments in fraud cases and ultimately encourage big companies to drag their feet in settlement negotiations.
Honeywell says that under a dollar-for-dollar offset approach known as pro tanto, Honeywell owes the government $0, not $35 million, because the government has already recovered $36 million in other False Claims Act settlements. The $35 million figure comes from trebling the roughly $11.5 million in actual damages alleged.
A district court agreed with Honeywell in June 2021 that the U.S. Court of Appeals for the D.C. Circuit should address whether pro tanto is proper, or if a “proportionate share” damages approach is equitable. Proportionate share forces a bad actor to pay a fair amount of total damages relative to others if found liable.
Although it said the issue needs resolution, the district court ruled against Honeywell in November 2020 with its application of the “proportionate share” approach.
It “would be wholly inequitable to permit Honeywell to escape damages liability altogether,” the district court said.
The district court...
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