LA Whistleblower lawsuit...

[oldguy00]

I see this is back in the news today.
They seem to be arguing about the statute of limitations...
But what about the fact that USPS may have profited from the sponsorship? Can they really be awarded their money back if they made money from the sponsorship?

[67-59]

I see this is back in the news today.
They seem to be arguing about the statute of limitations...
But what about the fact that USPS may have profited from the sponsorship? Can they really be awarded their money back if they made money from the sponsorship?

Hard to say, but it certainly is possible.

Here's an analogy: A hospital overbills Medicare by $1,000,000 for some services, and also underbills by $2,000,000 for others. In sum, the Medicare system actually benefitted from the hospital's errors, and you could certainly argue that the hospital should at least be able to avoid liability because Medicare overall did better than it should have.

Unfortunately, in some real life situations I've seen, the government doesn't care about its new windfall if it can show it was "cheated" in other cases. And it usually wins.

Bottom line: Even if USPS overall benefitted from the interaction with LA, they very well might be able to recoup some of the money it paid him.

[dumbod]

Not a lawyer (and I didn't stay at a Holiday Inn last night) but

1. I'm pretty sure that the suit is about breach of contract, not about specific damages.
2. One could argue that the USPS has suffered "immeasurable" harm from being associated with a "cheater".
3. How could you possibly prove that USPS "profited" from the association? Or calculate the amount of that profit?

[67-59]

How could you possibly prove that USPS "profited" from the association? Or calculate the amount of that profit?

USPS' experts vs LA's experts. Lots of uncertainty and wiggle room, but ultimately it'd come down to which experts do a better job of convincing the judge and/or jury.

For what it's worth, companies do cost/benefit analyses of sponsorship deals all the time (to decide whether they want to continue the sponsorship), so I suspect there is some sort of generally accepted methodology that the experts could use to support their opinions.

[Rueda Tropical]

The USPS may or not have benefited from the sponsorship. It's almost certain the contract did not guarantee any specific measurable monetary benefits.

Evidently the contract did however guarantee that Armstrong would race clean and that any victories would be according to the rules of the sport. No company is going to sponsor a doper or be associated with one or with any illegal activities. Armstrong was in breach of the contract big time on those counts.

[67-59]

The USPS may or not have benefited from the sponsorship. It's almost certain the contract did not guarantee any specific measurable monetary benefits.

Evidently the contract did however guarantee that Armstrong would race clean and that any victories would be according to the rules of the sport. No company is going to sponsor a doper or be associated with one or with any illegal activities. Armstrong was in breach of the contract big time on those counts.

True...but winning a breach of contract lawsuit without showing damages will net you $0 and a pat on the back.

[WickedWheels]

I agree with individuals suing Lance in cases where he went after them. Or that insurance company that had to pay Lance a bonus. Sponsors, though... They got what they paid for. Lots of people purchased USPS Treks and jerseys. They sold stamps with his image on them. It may not have been worth it, but the drugs didn't have anything to do with it. Trek certain saw a very nice bump because of Lance. So did Oakley, Giro, Nike, etc, etc... I think Bill Gates, Steve Jobs and Al Gore did much more to hurt the US Postal Service than Lance Armstrong. I can't remember the last time I actually mailed a letter.

In fact, if any damages are awarded to USPS the money should be court-ordered to go to sponsorships of other cycling teams or development teams.

[bikingshearer]

True...but winning a breach of contract lawsuit without showing damages will net you $0 and a pat on the back.

Normally, you'd be correct, and you may be here. But since this involves a government (or quasi-government) entity, there are likely specific statutes that trump normal contract law. I don't know because I haven't looked it up (mainly because I don't care enough) but most suits involving the federal government have their own set of unique rules.

As for the benefot to USPS, they sponsored Lance's team primarily in order to increase their visibilty in Europe, where they are trying to compete with Fed,Ex, DHL, and whatever indigenous equivalents there are. I have no idea how successful they were on that, but I do know that when Z sponsored a team for three years in late 1980s (inclduing Greg Lemond's 1990 TdF win), their brand awareness in France made huge, measurable gains. From what I recall reading, the Z management was ecstatic about their advertising investment (which is what sponsorship at that level is all about).

[Elefantino]

In the meantime, he settles out of court today with Acceptance in the fraud case, one day before he was to have gone under oath again.

I'm shocked.

http://caffeinatedthoughts.com/wp-content/uploads/2012/08/shockedshocked-300x225.jpg

[Shortsocks]

Not a lawyer (and I didn't stay at a Holiday Inn last night)

LOL! Oh man. That made me chuckle.

[67-59]

Normally, you'd be correct, and you may be here. But since this involves a government (or quasi-government) entity, there are likely specific statutes that trump normal contract law. I don't know because I haven't looked it up (mainly because I don't care enough) but most suits involving the federal government have their own set of unique rules.



Possibly. The government may be looking at some False Claims Act type of violation. However, this could require showing that Lance himself submitted the claims for payment, and he may very well have been smart enough not to do that. Ultimately, it usually ends up being the corporate entity (the team itself?) that bears the liability in those cases. As a result, it may go back to the sponsorship contract that LA had directly with USPS. Anyway, interesting to ponder the possibilities.

[Rueda Tropical]

True...but winning a breach of contract lawsuit without showing damages will net you $0 and a pat on the back.

Brand equity has a monetary value. When people watch "Armstrong's Lie" and read about the Armstrong scandal they will see images of Armstrong with the USPS logo emblazoned on his jersey. Despite the fact that they are no longert sponsoring him the USPS name will forever be associated with one of the biggest doping scandals in sport. Not what they paid for or contracted for.

Then... I'm not sure which will do more damage to the USPS brand -being the sponsor of a dope fueled team of cheats or having millions of Americans find out that the US Post Office spent millions sponsoring a professional cycling team in Europe:)

[MattTuck]

http://s.wsj.net/public/resources/images/NA-BP649A_POSTA_G_20120301180028.jpg

"Ladies and Gentlemen of the Jury, as you can see from this chart, Lance Armstrong's use of performance enhancing drugs during his Tour de France victories starting in 1999, was responsible for the destruction of the United State Postal System...."

[RFC]

http://s.wsj.net/public/resources/images/NA-BP649A_POSTA_G_20120301180028.jpg

"Ladies and Gentlemen of the Jury, as you can see from this chart, Lance Armstrong's use of performance enhancing drugs during his Tour de France victories starting in 1999, was responsible for the destruction of the United State Postal System...."


Very funny!

Actually, this would be an interesting litigation to put together. I use to work for a firm that represented USPS.

All of these comments are pretty astute, especially for nonlawyers.

Here are my thoughts without having any idea what is in the contractual documents.

Yes, the basis is contractual. Was there an expressed or implied term that the team would race clean? Maybe. It could be that the implied condition was that the team would race clean or not otherwise violate the rules that would cause it to be disqualifed, etc.

Damages is an issue, but could be handled. USPS was sponsoring in order to have the advantage of being connected with the brand. That value was lost as a result of the illegal activities.

False Claims Act. Bingo. From the upcoming second edition of my treatises. After all, how often do I get to quote myself on this forum. From first glance, I think the theory would be that, implicitly or expressly, the team claimed they were racing clean. That is an actionable false claim. It would be like claiming in a form as part of seeking a governmental contract that a company was in compliance with all environmental laws when it was not.

Also, note that the act provides for penalties of up to $10,000 per incident in addition to more traditional monetary damages. I'd argue that there should be a separate penalty for each time any member of the team raced while doping. That could add up.

1) False Claims and Whistleblowers

Congress passed the False Claims Act in 1863 to prohibit fraudulent or dishonest business dealings with the United States government during the Civil War and to punish those privateers who engaged in such activities. During modern history, the False Claims Act has been used to prosecute U.S. corporations for a variety of fraudulent dealings with the federal government, such as inflated billings on government contracts, false statements in government bids or forms and misapplication of federal grant money. Under the authority of the Act, private parties and the United States may sue individuals or corporations for such fraudulent behavior in what has become known as ”Qui Tam” lawsuits. If successful, the defendant may be ordered to pay a fine up to $10,000 per occurrence and treble damages based on the government’s losses attributable to the fraudulent dealings. In addition, the Act requires that the private parties who initiated the suit be paid a “bounty” of up to 30% of the amount recovered by the government.

The False Claims Act has been asserted against a number of biotech companies, such as TAP Pharmaceuticals, Inc. in Boston, for Medicare/Medicaid drug fraud. The TAP case involved alleged illegal kickbacks to doctors who prescribed the company’s products and resulted in a settlement by TAP of $875 million. Similarly, in 2013, Johnson & Johnson paid $1.273 billion to settle federal and state false claims actions relating to its off label marketing of a drug, including payments to doctors and nursing homes prescribing the drug.

The False Claims Act also provides protection for employees who bring, or participate in, Qui Tam lawsuits against their employers. Sarbanes-Oxley has further strengthened the whistleblower protections. The treatment by the National Labor Relations Board and courts of these provisions are still in flux, but the statute imposes a high burden on a company that wants to terminate a whistleblower, even for unrelated causes. In addition, a number of states have their own versions of whistleblower laws.

[67-59]

http://s.wsj.net/public/resources/images/NA-BP649A_POSTA_G_20120301180028.jpg

"Ladies and Gentlemen of the Jury, as you can see from this chart, Lance Armstrong's use of performance enhancing drugs during his Tour de France victories starting in 1999, was responsible for the destruction of the United State Postal System...."

That would actually be LA's Exhibit A to show that he didn't hurt the USPS' brand equity. It shows that the USPS was on a steady downhill slide long before Joe Public in the US had a clue about him doping. The key isn't when he started doping and winning -- it's when there was widespread knowledge of it. And most polls I've seen seem to indicate that most Americans believed until last year that Lance was riding clean.

You never know what a jury will do, but I think USPS would face a pretty stiff uphill battle on the contractual damages issue. Its best recourse would likely be via the False Claims Act route.

[Rueda Tropical]

That would actually be LA's Exhibit A to show that he didn't hurt the USPS' brand equity. It shows that the USPS was on a steady downhill slide long before Joe Public in the US had a clue about him doping. The key isn't when he started doping and winning -- it's when there was widespread knowledge of it. And most polls I've seen seem to indicate that most Americans believed until last year that Lance was riding clean.

You never know what a jury will do, but I think USPS would face a pretty stiff uphill battle on the contractual damages issue. Its best recourse would likely be via the False Claims Act route.


Right... now that the USPS is having image problems its the perfect time to have their name associated with spending millions to fund a doping and money laundering operation. Being joined at the hip with Lance right now should fix all there image problems. No damages at all.

[djg21]

Not a lawyer (and I didn't stay at a Holiday Inn last night) but

1. I'm pretty sure that the suit is about breach of contract, not about specific damages.
2. One could argue that the USPS has suffered "immeasurable" harm from being associated with a "cheater".
3. How could you possibly prove that USPS "profited" from the association? Or calculate the amount of that profit?

It's a false claims act case. The claim, at its essence, is that LA & Co fraudulently misrepresented that the Postal Team was not doping, and based on those fraudulent misrepresentations, the Gov't paid money to LA & Co. In other words, LA & Co submitted false claims for money to the U.S. Gov't.

Undoubtedly, the USPS would have terminated its sponsorship much earlier had LA & Co not been dishonest about their systematic doping, or if actual proof of the doping had been discovered earlier.

[djg21]

That would actually be LA's Exhibit A to show that he didn't hurt the USPS' brand equity. It shows that the USPS was on a steady downhill slide long before Joe Public in the US had a clue about him doping. The key isn't when he started doping and winning -- it's when there was widespread knowledge of it. And most polls I've seen seem to indicate that most Americans believed until last year that Lance was riding clean.

You never know what a jury will do, but I think USPS would face a pretty stiff uphill battle on the contractual damages issue. Its best recourse would likely be via the False Claims Act route.

This isn't a contract case, and USPS's unrelated business issues are irrelevant.

The key question here is how much the U.S. Gov't paid to LA & Co based on false claims for payment, i.e., claims for payment made on the basis of false and fraudulent representations that LA & Co were competing fairly and not doping. An anti-doping/morality clause undoubtedly was in the sponsorship agreement, and the agreement would have been terminated by USPS years earlier had LA & Co not concealed and denied their systematic doping. I would think the damages can be easily calculated, before they are trebled (x3).