S.D Florida Holds Government’s Consent Not Needed for Settlement of Declined Qui Tam

In United States ex rel. Osheroff v. MCCI Grp. Holdings, LLC, 2013 U.S. Dist. LEXIS 108741 (Aug. 2, 2013), the Southern District of Florida held in a non-intervened case that a relator could enforce a settlement in principle with a defendant even though the settlement agreement had not yet been reduced to a writing approved by the United States.

 

Facts and Procedural History

After the relator and one of several defendants agreed during a mediation to the terms of a settlement of relator’s qui tam claims, they executed a Memorandum of Understanding and informed the court that they had reached a full settlement. The United States granted its preliminary approval to the terms, but requested that the final settlement include certain, additional, standard provisions. When the defendant received a draft agreement that included these provisions, however, it struck them out. Around the same time, the court dismissed the claims against the other defendants in the case; a few days later, the defendant attempted to withdraw from the settlement in principle, claiming that the parties could not agree on proper language for the final settlement. When the relator moved to enforce the settlement, a magistrate judge recommended that the motion be denied because the government’s approval (which was never received) was a condition precedent to forming an enforceable settlement. The relator promptly objected to the magistrate’s recommendation.

The Court’s Holding

Judge Scola declined to adopt the magistrate’s recommendation, holding that the government’s consent—while relevant to dismissal—was immaterial to settlement in a non-intervened case. 2013 U.S. Dist. LEXIS 108741, at *19. Having declined to intervene, the Government was not a party to the lawsuit: therefore, any terms it might require as conditions precedent to dismissal did not affect whether “the Relator and MCCI, as parties to the dispute, actually reached an agreement on all essential terms.” Id. Applying “plain vanilla” contract law principles, the court found that the relator and the defendant had reached a mutual understanding about the settlement’s essential terms during the mediation, and that the government’s additional terms were mere boilerplate. Id. at 20–21. Accordingly, the court found the settlement enforceable and ordered the parties to finalize the settlement, execute it, and present it to the government; in turn, the government would then decide whether to consent to dismissal. Id. at 22.