|4-4.110||Civil Fraud Litigation|
|4-4.120||Civil Penalties And Civil Monetary Forfeitures|
|4-4.210||Court of Federal Claims|
|4-4.220||Court of International Trade|
|4-4.230||Federal Circuit and Appeals from the Merit Systems Protection Board|
|4-4.310||Intellectual Property—Copyright Suits|
|4-4.330||Suits Involving Trademarks, Trade Secrets, or Technical Data|
|4-4.410||Bankruptcy Proceedings; Claims in Bankruptcy|
|4-4.413||Plans of Reorganization as Compromises|
|4-4.414||Appellate Procedures in Bankruptcy|
|4-4.540||Defense of Foreclosure, Quiet Title, and Partition Actions—28 U.S.C. § 2410|
|4-4.541||Actions Not Within 28 U.S.C. § 2410|
|4-4.542||Screening New Actions Under 28 U.S.C. § 2410|
|4-4.543||Removal of Actions Brought in State Courts|
|4-4.550||Foreclosure of Government-Held Mortgages|
|4-4.600||Assistance on Questions of Foreign Law|
|4-4.630||Obtaining Testimony and Documents Abroad|
4-4.110 - Civil Fraud Litigation
The Department has various civil tools to pursue fraud. Civil statutory remedies for fraud against the government include the False Claims Act, as amended, 31 U.S.C. § 3729 et seq., the Anti-Kickback Enforcement Act, as amended, 41 U.S.C. §§ 51 to 58, 42 U.S.C. § 5157 (misapplication of disaster relief funds), 12 U.S.C. § 1715z-4a(a) to (e) (violation of HUD Multifamily regulatory Agreement), and section 5 of the Contract Disputes Act, 41 U.S.C. § 604. Common law actions for fraud, money paid under mistake, unjust enrichment, conversion, and/or breach of contract also may be available.
The Fraud Section of the Commercial Litigation Branch has expertise in civil fraud litigation and maintains internal guidance on the government’s use of civil fraud remedies. The USAOs’ authority with respect to issuing civil investigative demands and compromising or closing qui tam cases is set forth in 28 C.F.R. Part 0, Subpart Y and Appendix.
The False Claims Act allows private parties to file complaints on behalf of the United States. These are referred to as “qui tam” or “whistleblower” suits. The Act requires that the qui tam complaint be served on the Attorney General and the United States Attorney for the district in which the complaint has been filed. Immediately after a qui tam complaint is received, attorneys from the USAO and the Fraud Section should confer to ensure that both offices have received the complaint and to decide how the case will be handled. Attorneys from the USAO and the Fraud Section also should confer immediately about any appeal in a False Claims Act case, even where the United States has not intervened in the case.
The Department also has the authority to pursue civil remedies for fraud in the importation process, under 19 U.S.C. § 1592. That provision allows the United States to seek civil remedies in the Court of International Trade against anyone who fraudulently enters or attempts to enter merchandise into the commerce of the United States. The National Courts Section of the Commercial Litigation Branch has expertise in and responsibility for remedying fraud under this statute, and should be consulted with respect to any fraud matter that may involve international trade to determine whether this civil remedy is available.
Civil remedies against fraud should be vigorously enforced. Expeditious enforcement of civil remedies should be undertaken to make the government whole, if possible, and to provide a strong deterrent to fraudulent conduct in similar circumstances. Such enforcement is important to the promotion of the highest ethical standards among those who have dealings with the government or who are employed by it. Flagrant frauds, justifying the initiation of suits for multiple damages and penalties generally, should not be compromised for less than multiple damages. Criminal and civil fraud investigations by the FBI and other investigative agencies should be carried out concurrently, including investigations as to the extent of the government's damage. Criminal, civil, regulatory and administrative proceedings involving fraud should be coordinated to the fullest extent possible in accordance with USAM 1-12.000, with care taken to utilize grand jury materials only as permitted by law.
4-4.120 - Civil Penalties And Civil Monetary Forfeitures
Congress has provided by statute for a myriad of civil penalties and civil monetary forfeitures. Responsibility as to particular types of penalties and forfeitures is ordinarily assigned to one of the Department’s Divisions. See, e.g., 28 C.F.R. § 0.55(d) (listing civil penalty and forfeiture matters supervised by the Criminal Division), § 0.65 (matters supervised by the Environment and Natural Resources Division). If a particular type of civil penalty or civil forfeiture matter is not specially assigned to a particular division, it is generally assigned to the Civil Division’s Commercial Litigation Branch, although it alternatively may be assigned to the Federal Programs, Consumer Protection, or Torts Branches. Where there is doubt about which Division or Branch will handle or supervise the civil penalty or forfeiture matter, USAOs should consult with the Commercial Litigation Branch.
Care should be taken to examine the statute under which the penalty or forfeiture is assessed to ascertain whether enforcement requires a trial de novo and whether any other special conditions attach.
Courts may limit the imposition of statutory civil penalties as a violation of a defendant's constitutional rights, such as where the civil penalty violates the Excessive Fines Clause of the Eighth Amendment. In seeking civil monetary penalties or forfeitures, consideration should be given to potential constitutional challenges.
4-4.210 - Court of Federal Claims
The National Courts Section of the Commercial Litigation Branch has expertise in a range of cases that are properly brought in the Court of Federal Claims, including cases related to procurement, breach of contract, federal labor law, and illegal exactions.
The National Courts Section and the Environment and Natural Resources Division (ENRD) also litigate takings claims arising under the Fifth Amendment. Takings claims where the government does not intend to acquire private property and may dispute that it has done so, commonly referred to as inverse condemnation claims, are heard by the Court of Federal Claims. These claims are typically handled by ENRD attorneys where a real property interest is allegedly taken and by National Courts Section attorneys where the alleged taking concerns personal or intangible property. In contrast, federal district courts hear direct condemnation cases, where the federal government has indicated an intent to acquire private property for public use and the court is determining just compensation. Those cases are generally handled or monitored by the Environment and Natural Resources Division. USAOs that receive such claims should contact the National Courts Section or ENRD, as appropriate.
Commercial Litigation Branch attorneys handle most non-tax cases in the United States Court of Federal Claims. United States Attorneys should be vigilant in moving to dismiss or transfer cases brought in district court over which the Court of Federal Claims has exclusive jurisdiction. The Court of Federal Claims possesses exclusive jurisdiction for all cases, not sounding in tort, where money damages of more than $10,000 is sought from the federal government under any contract, executive order, statute, or regulatory provision that mandates compensation by the federal government. Concurrent jurisdiction lies with the district courts for claims seeking less than $10,000, except when the claim is raised under the Contract Disputes Act, because any claim raised under the Contract Disputes Act is within the exclusive jurisdiction of the Court of Federal Claims. Further, the Court of Federal Claims possesses exclusive jurisdiction to entertain challenges to contract awards, to include issuing injunctive relief. When moving to dismiss or transfer cases over which the Court of Federal Claims has exclusive jurisdiction, the USAO should refer to internal guidance maintained by the Civil Division and should contact the National Courts Section to ensure that that any positions taken do not conflict with positions National Courts Section attorneys routinely assert before the Court of Federal Claims.
Cases asserting implied warranties or indemnities arising out of contracts for government purchase of products made in conformity with Government specifications where those products' alleged toxicity caused personal injuries should be referred to the Environmental Torts staff of the Torts Branch. In addition, cases where government contractors seek to invoke indemnity provisions to be held harmless from environmental regulatory claims and tort claims should be referred to the same staff. See USAM 4-5.500.
4-4.220 -Court of International Trade
Commercial Litigation Branch attorneys handle virtually all cases in the United States Court of International Trade. The National Courts Section has expertise in the broad range of trade and customs cases that are brought in the Court of International Trade. These include cases related to the classification and valuation of, or duties levied upon, merchandise entered into the United States, as well as the anti-dumping and countervailing duty determinations of the United States Department of Commerce.
4-4.230 - Federal Circuit and Appeals from the Merit Systems Protection Board
Commercial Litigation Branch attorneys handle the majority of cases in the United States Court of Appeals for the Federal Circuit where the United States is a party. Commercial Litigation Branch attorneys also represent the United States and its agencies in appeals to the Federal Circuit from decisions of the boards of contract appeals, the Court of Federal Claims, the Merit Systems Protection Board, and the Court of International Trade.
National Courts Section attorneys are available to consult or directly handle appeals in other circuit courts from the Merit Systems Protection Board pursuant to the Whistleblower Protection Enhancement Act of 2012.
4-4.300 - Intellectual Property
The Commercial Litigation Branch’s Intellectual Property Staff has expertise in civil matters involving intellectual property.
4-4.310 - Intellectual Property—Copyright Suits
The exclusive remedy of the owner of material protected by statutory copyright (17 U.S.C. § 101, et seq.) against unauthorized use by the government or its contractors is by suit against the United States in the Court of Federal Claims. 28 U.S.C. § 1498(b). The use by the contractor must have been with the authorization or consent of the government.
Any suit for copyright infringement brought against the government in a district court should be brought to the attention of the Commercial Litigation Branch. Such a suit will be handled or monitored by that Branch. Suits for copyright infringement against the United States Postal Service may be brought in the district courts. See 39 U.S.C. § 409(a). Such suits are defended by the Department of Justice on behalf of the Postal Service. See 39 U.S.C. § 409(d).
A suit for infringement of an unregistered copyright may be brought against a private party provided the Register of Copyrights is also named as a party defendant. See 17 U.S.C. § 411(b). Any such complaint should be immediately brought to the attention of the Commercial Litigation Branch and the General Counsel, Copyright Office, Washington, D.C. 20540. If the Register of Copyrights decides to appear and defend such suit, the suit will be handled by the Commercial Litigation Branch or under its supervision.
4-4.320 - Patent Suits
The exclusive remedy of the owner of a patented invention used or manufactured by or for the government without the permission of the owner is by suit against the United States in the Court of Federal Claims. See 28 U.S.C. § 1498(a). Such use or manufacture by a contractor for the United States must be with the authorization and consent of the United States. An authorization and consent clause is usually included in contracts issued by Department of Defense agencies.
The district courts have concurrent jurisdiction with the Court of Federal Claims when the use or manufacture by or for the United States arises out of the furnishing of equipment to foreign governments in connection with mutual security agreements (22 U.S.C. § 2356) or as the result of the imposition of an order requiring the invention to be kept secret for national security reasons. See 35 U.S.C. § 183.
Any suit for patent infringement brought against the government in a district court should be brought to the attention of the Commercial Litigation Branch. Such a suit will be handled or monitored by that Branch. By 39 U.S.C. § 409(a), the district courts are given original but not exclusive jurisdiction over all suits involving the United States Postal Service. Suits for patent infringement against the Postal Service are defended by the Department of Justice. See 39 U.S.C. § 409(d).
4-4.330 - Suits Involving Trademarks, Trade Secrets, or Technical Data
Suits may be brought from time to time charging the government with infringement of a trademark or with misappropriation of trade secrets or technical data. There is no express jurisdictional statute for such suits, and they may be brought in the district courts as either contract or tort actions. The district courts have, under 39 U.S.C. § 409(a), original jurisdiction of such suits involving the United States Postal Service; the Department of Justice litigates these cases. See 39 U.S.C. § 409(d).
Any suit brought against the government, involving trademarks, trade secrets, or technical data, should be brought to the attention of the Commercial Litigation Branch. Such suits will be handled or monitored by that Branch.
4-4.410 - Bankruptcy Proceedings; Claims in Bankruptcy
The United States is frequently a creditor in bankruptcy proceedings. Because the Federal Rules of Bankruptcy Procedure provide short deadlines for certain actions to be taken and for appeals, Department attorneys and USAOs should take special care to see that no rights of the United States are lost by default in bankruptcy proceedings. The USAOs’ authority with respect to litigating, compromising, and closing bankruptcy cases is set forth in 28 C.F.R. Part 0, Subpart Y, and Appendix.
The Corporate/Financial Litigation Section of the Commercial Litigation Branch has expertise in bankruptcy litigation and maintains internal guidance.
4-4.413 - Plans of Reorganization as Compromises
The purpose of "chapter proceedings" is to work out a compromise or extension of indebtedness. Thus, a proposed plan under Chapters 11, 12, or 13 amounts to a compromise offer or request for extension, as the case may be. If the plan proposes payment of the government's claim over a longer period of time than was originally called for, but there will be no reduction in the amount of the government's claim, and no release of security is required, no compromise is deemed involved. In some instances, plans provide for a cash deposit to pay the government's claims in full. Such proposals do not require the Civil Division's approval as a compromise of the government's claims.
Proposed plans that call for the government to accept less than the full amount due it, or for the release or substitution of security, amount to compromise proposals, and should be processed as any other compromise offer. If the offeror insists on an answer before necessary financial data, proper recommendations, and clearances can be obtained, the United States Attorney should object to the plan. The amount that would be realized by the government in the event of liquidation is a relevant consideration in judging the adequacy of an offer of compromise by way of a plan. Plans that call for the government to accept stock in a debtor or successor corporation in payment or partial payment of its claims, or that call for the government to accept a percentage of net profits, should be avoided.
4-4.414 - Appellate Procedures in Bankruptcy
Appeals from all final judgments, orders and decrees of a bankruptcy court, as well as discretionary interlocutory appeals, are heard in the district court, 28 U.S.C. § 158(a), or before a bankruptcy appellate panel, 28 U.S.C. § 158(b), except for direct certified appeals, 28 U.S.C. Section 158(d)(2).
In bankruptcy cases delegated to USAOs, Solicitor General approval is not required for appeals to the district court or a bankruptcy appellate panel. The USAO has authority to appeal adverse decisions of the bankruptcy court in delegated cases to a district court or bankruptcy appellate panel where the issues are routine, subject to the limitations set forth in 28 C.F.R. Part 0, Subpart Y, Appendix (Civil Division §§ 1(c), 1(e), 4(a), & 6). The USAO should consult with the Commercial Litigation Branch’s Corporate/Financial Litigation Section whenever an appeal to the district court or a bankruptcy appellate panel raises significant issues or constitutional questions. Appeals of bankruptcy cases to circuit courts of appeals are subject to the notice and approval requirements set forth in Title 2 of this Manual.
Generally, in an appeal from the bankruptcy court, the district court sits as an appellate court. 28 U.S.C. § 1334(b). The district court may affirm, reverse, or modify the bankruptcy court's ruling or remand the case for further proceedings. Fed. R. Bankr. P. 8013.
4-4.420 - Contracts
Affirmative government claims arising out of a contract subject to the Contract Disputes Act of 1978 (CDA), 41 U.S.C. § 601 et seq., must be the subject of a contracting officer's decision. If no appeal of the contracting officer's decision is taken by the contractor either to an appropriate Board of Contract Appeals within 90 days, or to the United States Court of Federal Claims within one year, that decision is final and not subject to further review. In such circumstances, an affirmative CDA suit may be filed in a district court to reduce the decision to an enforceable judgment. The Commercial Litigation Branch’s Corporate/Financial Litigation Section should be contacted prior to a suit being filed, and internal guidance on such claims should be consulted. Defensive contract litigation is discussed at USAM 4-4.210. The USAO’s authority with respect to litigating, compromising, and closing contract cases is set forth in 28 C.F.R. Part 0, Subpart Y, and Appendix.
4-4.430 - Collections
A major responsibility of the Attorney General, the Civil Division, and the United States Attorneys is recovering sums owed the United States. Prompt action should be taken to collect such debts, including the filing of suits, obtaining judgments, and enforcing judgments. Prompt and effective action is necessary if debtors are to respect the government's ability and will to collect these debts and if the public is to have confidence in the institutions of government. Prompt and effective action is also important to avoid a statute of limitations barring a claim. See 28 C.F.R. § 0.171. It is important that agency referrals be screened to ensure compliance with the Federal Claims Collection Standards, the joint regulations promulgated to implement the Debt Collection Improvement Act. 31 U.S.C. §§ 3701 et seq., and the Federal Claims Collection Standards, 31 C.F.R. Parts 900-904. In particular, for money claims which come within the USAOs' delegated authority, see 28 C.F.R. Part 0, Subpart Y, Appendix, referrals of such claims should be made through the National Central Intake Facility. Referrals of other claims should be made to the Commercial Litigation Branch.
An appropriate supersedeas bond, or other action to protect the government’s interest, should be required in every appeal by a defendant in a collection case. In no case should there be an assignment of any interest of the government in any money judgment, lien, or chose in action involved in any case or matter within the general jurisdiction of the Civil Division, without express approval from the Civil Division. Appropriate action should be taken to perfect judgment liens and to renew such liens before their expiration.
The Commercial Litigation Branch should be consulted with respect to the collection of judgments against states and other governmental bodies. In such instance, pre-filing notice to the appropriate official is usually required as a matter of comity.
4-4.540 - Defense of Foreclosure, Quiet Title, and Partition Actions—28 U.S.C. § 2410
Section 2410 of Title 28 waives the government's immunity from suit in five types of action as to real and personal property on which the United States has a lien. The nature of the lien determines which unit of the Department may be looked to by the United States Attorney for support, coordination and supervision.
If the government's lien is for federal taxes, the Tax Division will supervise the case. If the government's lien is for a criminal fine or bond forfeiture, the Criminal Division supervises. If the government holds a non-tax, non-criminal lien, such as a mortgage, judgment lien, or other lien, the Civil Division’s Commercial Litigation Branch, Corporate/Financial Litigation Section supervises. The Environment and Natural Resources Division, Natural Resources Section, supervises the defense in any 2410 action involving eminent domain, partition, or property that the government owns or leases.
28 U.S.C. § 2410 requires that the interest of the United States be set forth in the complaint "with particularity." If the nature of the government's lien is not disclosed by the complaint, its nature should be ascertained by an informal inquiry to the plaintiff's attorney. If that fails, formal discovery should be used.
4-4.541 - Actions Not Within 28 U.S.C. § 2410
Section 2410 of title 28 does not apply if the plaintiff seeks an injunction or a money judgment. Such relief must be sought, if at all, under other statutes which waive the government's sovereign immunity. If the relief sought is foreclosure, 28 U.S.C. § 2410 requires that the plaintiff ask for a judicial sale. Such a sale is not required in the other four types of action permitted by 28 U.S.C. § 2410. If the interest of the United States is not a lien but rather a fee title or a leasehold, 28 U.S.C. § 2410 does not apply, but the plaintiff may be able to invoke 28 U.S.C. §§ 2409 or 2409a.
4-4.542 - Screening New Actions Under 28 U.S.C. § 2410
The following items should be checked before filing a responsive pleading in an action brought under 28 U.S.C. § 2410.
- Has the United States Attorney been served?
- Has the Attorney General been served by certified or registered mail?
- Does the summons allow 60 days to file a response?
- Does the complaint set forth the interest of the United States with particularity?
- If the action is a foreclosure, does the complaint seek a judicial sale?
All these are required by 28 U.S.C. § 2410. The United States Attorney should determine which agency’s interest is involved so that agency can be promptly contacted.
4-4.543 - Removal of Actions Brought in State Courts
Usually the Commercial Litigation Branch will leave the decision as to removal of actions brought under 28 U.S.C. § 2410 to the United States Attorney.
Removal of actions brought in state courts under 28 U.S.C. § 2410 is authorized by 28 U.S.C. § 1444. Removal should be accomplished within thirty days of receipt of a copy of the initial pleading, whether by service of process or otherwise.
4-4.544 - Responsive Pleadings
Informal requests to opposing counsel to correct deficiencies, such as those cited in USAM 4-4.542, will often obviate filing a preliminary motion. Answers should assert the interests of the United States and claim priority in accordance with the federal rule of "first in time, first in right." See USAM 4-4.545. If the government holds a first lien position and the client agency does not wish foreclosure of that lien, the answer should pray that the sale on plaintiff's lien foreclosure should be "subject to" the prior lien of the government. If the client agency desires a sale free and clear, the prayer in the answer should so state.
In some instances, the client agency may advise that it can find no identifiable interest in the property described in the complaint. Any disclaimer filed on this account should be carefully limited to the particular property and government agency described in the complaint. No disclaimer should be filed merely because the government's lien interest is subordinate to that of the plaintiff.
4-4.550 - Foreclosure of Government-Held Mortgages
Agencies that can safely foreclose security instruments nonjudicially under appropriate federal or state law, or pursuant to a power of sale in a deed of trust, should do so without referring such matters to the Department of Justice or the United States Attorneys for handling.
The Department of Housing and Urban Development (HUD) may also foreclose nonjudicially pursuant to the Multi-Family Foreclosure Act of 1981. See 12 U.S.C. § 3701 et seq.
If judicial foreclosure is required, suit should be brought in the name of the United States and filed in the United States district court, unless, for exceptional reasons, the Civil Division has authorized utilization of the state courts. An officer or agency of the United States should not be joined as a defendant. Rather, the respective claims and liens of the federal agencies affected should be set forth as claims of the United States. If difficulty is encountered in obtaining the prompt agreement of another agency to have its lien foreclosed in the same proceeding as that requested by the referring agency, contact the Commercial Litigation Branch’s Corporate/Financial Litigation Section.
Judicial foreclosure should be given priority attention. Client agencies face a substantial dollar loss for each month of delay in completing foreclosure through the delivery of the Marshal's deed. Suit should be filed immediately, without making further demand on the mortgagor, unless additional notice is otherwise required under the mortgage or applicable statute or regulation. If the agency desires an order placing it in possession of the mortgaged property as "mortgagee in possession," or the appointment of a receiver, prompt action should be taken. Motions for summary judgment should be utilized when appropriate to expedite the entry of foreclosure decrees. In HUD multi-family foreclosures no compromise should be entered into with the mortgagor prior to liquidation of the security property without the express approval of the Civil Division, and internal guidance should be consulted.
4-4.600 - Assistance on Questions of Foreign Law
The Civil Division’s Office of Foreign Litigation represents the United States in all matters (civil, criminal, affirmative, and defensive) arising in foreign courts. The Office of Foreign Litigation also is often able to provide advice concerning questions of international or foreign law that may arise in connection with the trial in this country of civil cases. Such assistance should be requested as far in advance of trial as possible.
4-4.620 - Extraterritorial Service
Guidance may be obtained from the Office of Foreign Litigation concerning the procedures to be followed in effecting service of judicial documents abroad, whether through a treaty or letters rogatory.
4-4.630 - Obtaining Testimony and Documents Abroad
Guidance in obtaining testimony and documents from abroad, whether through a treaty or letters rogatory, may be obtained from the Office of Foreign Litigation. The Office of Foreign Litigation also provides guidance to Department attorneys traveling abroad to take depositions.
The Office of Foreign Litigation may be able to enforce judgments abroad or provide collateral assistance to United States Attorneys by instituting suits in foreign courts to collect debts owed to the United States. If enforcement of a judgment abroad is contemplated, contact the Office of Foreign Litigation in advance.
[updated April 2018]