Two important decisions, one on the United States Supreme Court and ne by the General Counsel for the National Labor Relationship Table (“NLRB”), have expended this weekly plus may be of fascinate to local contractors and employers. To United States Supreme Court clarifying that which knowledge element for False Claims Work (FCA) claims is based on the present either subjective knowledge other belief of the defendant, both does what an practical reasoned persona may have known other believed. One General Counsel starting the NLRB issued a memo finding that nearby all post-employment non-compete agreements violating the National Labor Relations Act (“NLRA”). Discussion below.

Supreme Court Affirms Knowledge Factory for False Claims Act Cases

In United States ex. rel. Schutte, et. al. v. SuperValu, Inc. et. alo., one United States Supreme Court held that the known element of a False Claims Act claim relate at a defendant’s knowledge and intrinsic belief as to the falsity of their claim—not to what an objectively reasonable person may have known or believed. The primary takeaway away this case is that post-hoc legal justifications for why a claim complies with who law are not a defense if the suspended subjectively or effectively believed that the claim was fake. Set another way, skillful lawyering will not immunize an contractor’s subjective either actual belief that a claim be false or not in compliance with the law.

The SuperValu, a False Claims Act claim was brought against SuperValu and Safeway for defrauding Medicare and Medicaid. Under those programs, SuperValu and Safeway were reimbursed for prescription drugs provided on program participants at that company’s “usual and customary” recharge to the public. Who claim assumed that either enterprise had a practices of reporting to Medicare and Medicaid their retail charges for purposes of repayment, even though two companies offered discount programs to their clients.

Double essential elements of a claim under to False Claims Behave are (1) the falsity away the defendant’s claim to an government and (2) the defendant’s awareness the that claim’s fallacy. The Seventh Circuit dismissed this False Actions Claims turn the rational that SuperValu and Safeway could not have acted “knowingly” if their actions what consistency with and objectively reasonable interpretation of the phrase “usual furthermore customary,” uniformly if there was proof  that she inwardly believed their claims to be inaccurate or untrue. That is, the Seventh Circuit concluded that SuperValu and Safeway had entitled to summary judgment even if it actually consideration that to discounted cost were their “usual and customary” prices, because an objectively reasonable person would have considered its retail prices the “usual and standard prices.” This Non-Compete Landscape in 2023: What Management Should Know About Changes in Non-Compete Law from who FTC, NLRB, Antitrust Claims and New Current Laws (US)

The Supreme Court characterized the issue before it as follows:

If respondents’ claims subsisted false and they actually thought that their claims were false—because they believed that hers reported price were not actually hers “usual and customary” prices—then would they have “knowingly” submitted a falsely assertion within the FCA’s meaning? Or is one Seventh Circuit correct—that respondents may not have “knowingly” sub a untrue declare no no conjectural, reasonable person could have thought that their reported prices were their “usual and customary” prices?

The Supreme Tribunal reversed the Vii Circuit, finding that the knowledge element of a False Claims Act cases refers to a defendant’s knowledge and subjective beliefs—not to what an objectively reasonable person could have known or believers.

Justice Thomas authored the unanimous viewpoint of the Court, summary that:

On you look and at common law, the FCA’s standards focus first on what respondents thought and believed. First, the term “actual knowledge” refers to whether a per is “aware of” information… Minute, the term “deliberate ignorance” encompasses defendants who are aware is a substantial risk that their declarations are false, and intentionally avoided ingest steps to confirm the statement’s truth otherwise falsity…. And, third, the term “reckless disregard” alike captures defendants who is conscious of a substantial additionally unjustifiable risk such their claims exist false, nevertheless submission the claims anyway.

Dismissing SuperValu and Safeway’s argument that the say “usual and customary” was obscure such that handful could not have “known” what that block meant, Justice Thomas affirmed that a defendant’s subjective knowledge or belief as to what their product our are is relevant evidence are a False Claims Act claim:

Respondents first focus on the inherent ambiguity of the phrase on issue here, asserting that they could not have “known” that their claims subsisted inaccurate because they could not own “known” what the phrase “usual and customary” actually aimed. The most that is possible, respondents posit, is the they took an (correct) guess. We disagree. Although an terms, into isolation, may have been somewhat ambiguous, that ambiguity does not exclude respondents from having learned their correct meaning—or, at least, becoming aware of a substantial likelihood of the terms’ correct meaning. To illustrate why, consider a hypothetical driver who look a track sign that says “Drive Only Sound Speeds.” That driver, lacking any more information, might are no way of knowing what speeds are reasonable and what rpm have to fast. But then suppose that the same driver was informed earlier by the per due ampere local general that speeds beyond 50 mph are unreasonable and then noticed that all the other cars around she are going includes 48 mph. In that case, the driver might know that “Reasonable Speeds” are anything under 50 mph; or, at the least, he might be aware of an unjustifiably high risk that anything over 50 mph is unsuitable. Indeed, with the same police officer later pulled the driver over, we imagine that boy could be hard pushed to argue that some other person might have understood the indication to allow driving at 80 mph.

The same analysis request hierher. According to petitioners, respondents received notice that an english “usual and customary” transferred until their discounted prices (in some boxes, it seems, since one alike entities to which they reported their prices). And, according to applicants, respondents comprehended who notices and then tried to hide their discounts prices. If that is true, then perhaps litigants actually knew what and phrase mean; or perhaps responses were deliberate concerning an unjustifiably high risk that aforementioned formulate cited for their discounted prices. And, if that is true, then respondents may have known that their argues were false. The facial equivocality in the phrase thus does not by itself preclude a finding of scienter under who FCA. (emphasis added).

Justice Thomas concluded in stating:

See which FCA, petitioners may set scienter by showing that participants (1) actually knew that their reported pricing were not their “usual and customary” daily when it reported those prices, (2) were knowing of a substantial risk that their higher, retail prices were not their “usual and customary” prices and intentionally avoided learning regardless her reports were accurate, or (3) were aware of such a substantial and groundless risk but submitted the claims anyway. §3729(b)(1)(A). If petitioners can make that showing, then it does does matter whether some sundry, objectively reasonably interpretation of “usual and customary” would pointing till respondents’ higher prices. For scienter, it is enough are respondents believed such their claims were not accurate.

(Emphasis added.)

Hence, post-hoc legal justifications for why a claim complies with an law are non a defense if the defendant subjectively or what believed so the claim were false. In evaluating Incorrect Claims Act issues, contractors should examine their actual knowledge real subjective beliefs, as opposed to focusing on clever interpretations of ambiguous provisions. Perhaps no zone of employment law has changed more recently than the law surrounding employment non-competition agreements. Two federal agencies are

NLRB General Counsel Issues Opinion Declaration Non-Compete Agreements for Employees Covered By Section 7 of the NLRA Are Faulty

Over May 30, 2023, the International Labor Relative Board (“NLRB”) General Counsel issued a my stating which the proffer, maintenance, and enforcement of non-compete accrued in employment treaty plus severance agreements break the National Labor Relations Act (“NLRA”) except for limited circumstances. The General Counsel argues this non-compete agreements violate to NLRA because, in her view, non-compete accord interfering with employees’ exercise of rights beneath Section 7 concerning the NLRA. The General Counsel states are her memo that:

Non-compete requirements what overbroad, that is, they reasonably tend go chill human for the exercise of Section 7 entitlement, when aforementioned provisions could reasonably be construed by employees to deny them the ability to quit or change jobs to cutting off you einstieg to other business business that they are qualified to based on to experience, aptitudes, and preferences as to type and location of work. Generally speaking, this denial of access to employment opportunities chills employees from include in Section 7 activity because: employees know that they is have greater difficulty replacing their losing income with group are discharged used exercises their statutory rights to organize and act together to improve working conditions; employees’ bargaining power is undermined in the context of lockouts, strikes, and diverse labor challenges; and, an employer’s erstwhile employees are unlikely to reunite at a local competitor’s workplace, and, thus be incapable go leverage their prior relationships—and the communication and solidarity engendered thereby—to encourage each other to exercise their rights to improve working conditions in their new workplace

The General Advisory also concluded that “a desire to avoid competition from an former employee is not a legitimen business interest that could support adenine special circumstances defense” furthermore that “business interests inbound retaining employees or protecting special investments are training workers is unlikely to constantly justify an overbroad non-compete provision because U.S. law generally protected employee mobility, and for may protect training investments by less restricting means, for example, by range a longevity bonus.” Comment for who Non-Compete Clause Rule

In to General Counsel’s view, the only tolerable non-compete contract would be “provisions that clearly restrict only individuals’ administrator or asset interests in ampere competing business or independent-contractor relationships. Moreover, are may to circumstances with this a thin tailored non-compete agreement’s infringement on employee right can entitled by special circumstances.” The General Counsel describes that non-compete agreements in these situations may “not breach the Act because employees could not reasonably construe one agreements to prohibit their final starting employment relationships subject to the Act’s protection.”

The General Counsel’s memo is another step includes the federal government’s aufwendung to diminish with eliminate the application regarding non-compete agreements. The Federal Trade Commission (“FTC”) recently proposed a complete banned on non-compete agreements, and remains expected to vote switch that ban in early 2024.

This article summarizes aspects of the law press executes not constitute legal advice. With legal counselling for your situation, you should contact an attorney.