Federal judge mulls burden of proof in False Claims Act trial

LOS ANGELES -- In a rare suit brought under the False Claims Act by a relator representing the U.S. government, a judge took a pause Friday in deciding whether the relator should enjoy the same burden of proof as the government would if it had litigated the case itself.

The trial includes several unique elements. Not only is it a case under the False Claims Act rarely taken to trial, but since the U.S. government declined to pursue action, the relator or whistleblower, who was convicted of a felony in another matter, is litigating the case himself. Also, the named defendant invoked his Fifth Amendment protection 100 times last week, refusing to answer most questions put to him on the witness stand. Another witness also took the Fifth on several occasions.

U.S. District Judge Michael W. Fitzgerald was faced with an unusual discussion involving a relator's burden of proof in a False Claims Act case.

"The relator is meant to, and does step into the shoes of the government, and enjoys the same burden of proof, ... but let me hear the argument from the defendants as to why that isn't the case," Fitzgerald said to defense counsel Daniel N. Csillag of Murphy Rosen LLP.

"What did Congress mean when it said 'United States'? Did it mean just the United States as a party or did it mean the United States or the relator on the behalf of the United States?" Csillag replied. He pointed to different subsections of the False Claims Act which he argued indirectly supported his argument: that when the phrase "United States" is used in the context of the statute, it means the actual United States government and not a relator who was acting on its behalf.

He did admit no case law directly commented on the issue.

"I'm not going to give you a case that supports this but I'm not going to give a case that doesn't," Csillag said.

When the trial began this week, the jury was told the standard for the burden of proof would be set to the preponderance of the evidence as it has been in previous false claims act cases tried by the government. When Csillag argued it should be by the higher standard of clear and convincing evidence, plaintiff's counsel Molly Magnuson of the Law Offices of Michael Magnuson disagreed.

"Generally, as the court has noted, the relator stands in the shoes of the United States government, and I would think that absent a very explicit directive that the burden on the relator is higher for some reason or ought to be higher, that coming from Congress or other precedent we have not seen, it would be inappropriate to apply it here," Magnuson said to Fitzgerald.

Fitzgerald said he would take the matter under submission.

The relator in the case, David Ji, claims business owner Tony Hang and his company Unichem defrauded the U.S. government by intentionally mislabeling tons of the supplement and food additive glycine, before it passed through U.S. Customs from China in order to avoid paying millions in anti-dumping duties from 2009 to 2014.

Hang denies the claims and says Ji, his former employer, lacks proof of any wrongdoing. United States et al. v. Pacific Chemical International Inc. et al., 14-CV7203 (C.D. Cal., filed Sept. 15, 2014).