Fed Evidence Response

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

UNITED STATES ex rel. FLOYD
LANDIS,

Plaintiffs,

v.

TAILWIND SPORTS CORPORATION,
et al.,

Defendants.
___________________________________
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No. 10-cv-00976 (CRC)

Oral Argument Requested

REPLY IN SUPPORT OF THE UNITED STATES AND RELATORS
JOINT MOTION TO STRIKE, OR IN THE ALTERNATIVE,
FOR PARTIAL JUDGMENT ON THE PLEADINGS,
AS TO CERTAIN AFFIRMATIVE DEFENSES
Case 1:10-cv-00976-CRC Document 233 Filed 10/17/14 Page 1 of 27
i

TABLE OF CONTENTS
I. INTRODUCTION .............................................................................................. 1
II. DEFENDANTS EXTRINSIC EVIDENCE SHOULD BE
DISREGARDED. ............................................................................................... 2
III. STANDARD OF REVIEW ............................................................................... 3
IV. ARGUMENT ...................................................................................................... 4
A. Defenses Raised by All Defendants ................................................................... 4
1. Defenses Attacking the Government's Damages ............................................... 4
2. Waiver, Consent/Ratification and Release ......................................................... 6
3. Estoppel ................................................................................................................. 8
4. Defenses based on Relator's wrongdoing ......................................................... 10
5. Public disclosure................................................................................................. 12
6. Government's failure to mitigate ...................................................................... 12
7. Failure to State a Claim/Failure to Plead Fraud with Particularity ............. 13
B. Affirmative Defenses Raised Only by Armstrong ......................................... 17
1. "Government's Lack of Diligence" ................................................................... 17
2. Recoupment/Setoff ............................................................................................. 18
3. Election of Remedies .......................................................................................... 19
4. Retroactivity ....................................................................................................... 21
C. Affirmative Defenses Raised Only by the CSE Defendants ......................... 21
1. Acts of Third Parties/No Vicarious Liability................................................... 21
2. Relators Bad Faith ........................................................................................ 22
VI. CONCLUSION ................................................................................................. 23

ii

TABLE OF AUTHORITIES
Cases
Armstrong v. Tygart, No. A-12-CA-606-SS (W.D. Tex. July 9, 2012) .............................. 2
Avante-Garde, LLC v. Mountain Spa Properties, LLC, No. CV 10-01499-PHX-NVW
(D. Ariz. Oct. 25, 2011) ................................................................................................ 16
Bancoult v. McNamara, 227 F.Supp.2d 144 (D.D.C. 2002)............................................. 20
Cambridge Plating Co., Inc. v. Napco, Inc., 85 F.3d 752 (1st Cir. 1996) ........................ 13
Chidester v. Camp Douglas Farmers Cooperative, Nos. 13-cv-520-bbc & 13-cv-521-bbc
(W.D. Wis. Dec. 9, 2013) ............................................................................................... 9
Chrysler Corp. v. General Motors Corp., 596 F. Supp. 416 (D.D.C. 1984) .................... 10
Cintron Beverage Grp., LLC v. Depersia, No. 07-3043, 2008 WL 1776430 (E.D. Pa. Apr.
15, 2008) ....................................................................................................................... 17
Dah Chong Hong, Ltd. v. Silk Greenhouse, Inc., 715 F. Supp. 1072 (M.D. Fl. 1989) ....... 2
Davsko v. Golden Harvest, Inc., 965 F. Supp. 1467 (D. Kan. 1997)................................ 15
FDIC v. Haines, 3 F.Supp.2d 155 (D. Conn. 1997) ..................................................... 5, 17
FDIC v. Modular Corp., 859 F. Supp. 117 (D.N.J. 1994) ................................................ 17
First Financial Sav. Bank, Inc. v. American Bankers Ins. Co., 783 F. Supp. 96 (E.D.N.C.
1991) ............................................................................................................................... 2
Gates v. D.C., 825 F. Supp. 2d 168 (D.D.C. 2011) .............................................. 17, 20, 21
Greiff v. T.I.C. Enters., LLC, 2004 WL 115553 (D. Del. Jan. 9, 2004).......................... 5, 6
Henneberry v. Sumitomo Corp., 415 F. Supp.2d 423 (S.D.N.Y. 2006) ........................... 15
Hispanic Indep. Television Sales, LLC v. Kaza Azteca Am. Inc., No. 10-CIV-932, 2012
WL 1079959 (S.D.N.Y. Mar. 30, 2012) ....................................................................... 18
HMBI v. Schwartz, No.: 1:06-CV-24-TS, 2009 WL 3390865 (N.D. Ind. Oct. 19, 2009) 15
Index Fund, Inc. v. Hagopian, 107 F.R.D. 95 (S.D.N.Y. 1985) ......................................... 2
Knit With v. Knitting Fever, Inc., Nos. 08-4221, 08-4775, 2009 WL 973492 (E.D. Pa.
Apr. 8, 2009) ................................................................................................................. 15
Lane v. Page, 272 F.R.D. 581 (D.N.M. 2011) ........................................................ 4, 20, 22
Makuch v. F. B.I., CIV.A. 99-1 094 RMU, 2000 WL 9 15767 (D.D.C. Jan. 7, 2000) ....... 3
Microsoft Corp. v. Computer Support Servs., 123 F. Supp.2d 945 (W.D.N.C. 2000) ....... 2
Mills Corp. v. Miller, No. 97-219, 1997 WL 280599 (D.D.C. May 27, 1997) .................. 8
Morris Communications Inc. v. FCC, 566 F.3d 184, 191 (D.C. Cir. 2009)) ...................... 8
Mortgages, Inc. v. U.S. District Court for the District of Nevada (Las Vegas), 934 F.2d
209 (9th Cir. 1990) ........................................................................................................ 11
Nashville Lodging Co. v. Resolution Trust Corp., 59 F.3d 236 (D.C. Cir. 1995) ............ 19
Nwachukwu v. Karl, 216 F.R.D. 176 (D.D.C. 2003) .......................................................... 3
Paleteria La Michoacan, Inc. v. Productos Lacteos Tocumbo S.A. De C.V., 905 F. Supp.
2d 189 (D.D.C. 2012) ................................................................................................... 10
Reiter v. Cooper, 507 U.S. 258 (1993) ............................................................................. 18
SEC v. Gulf & Western Indus. Inc., 502 F. Supp. 343 (D.D.C. 1980) ............................ 3, 8
Stabilisierungsfonds Fur Wein v. Kaiser Stuhl Wine Distribs. Pty. Ltd., 647 F.2d 200
(D.C. Cir. 1981) .............................................................................................................. 3
Sweeney v. Am. Registry of Pathology, 287 F. Supp. 2d 1 (D.D.C. 2003) ................... 3, 21
Telectronics Proprietary v. Medtronic, 687 F. Supp. 832 (S.D.N.Y. 1988) ...................... 2
Todaro v. Orbit Intl Travel, Ltd., 755 F. Supp. 1229 (S.D.N.Y. 1991) ........................... 15
iii

U.S. Bank Natl Assoc. v. Ables & Hall Bldrs., 696 F. Supp.2d 428 (S.D.N.Y. 2010) .... 13
U.S. Oil Co., Inc. v. Koch Refining Co., 518 F. Supp. 957 (E.D.Wis. 1981) ..................... 2
U.S. v. Intrados/Int'l Mgmt. Group, 277 F. Supp. 2d 55 (D.D.C. 2003) ...................... 8, 18
Ulyan v. Solis, 706 F. Supp. 2d 44 (D.D.C. 2010) .............................................................. 3
United National Records, Inc. v. MCA, Inc., 609 F. Supp. 33 (N.D.Ill. 1984) ................. 15
United States ex rel. Durham v. Prospect Waterproofing, Inc., 818 F. Supp. 2d 64
(D.D.C. 2011) ............................................................................................................... 12
United States ex rel. Garrison v. Crown Roofing Servs., Inc., No. H-07-1018, 2011 WL
4914971 (S.D. Tex. Oct. 14,2011) .................................................................................. 7
United States ex rel. Hagood v. Sonoma County Water Agency, 929 F.2d 1416 (9th Cir.
1991) ............................................................................................................................... 7
United States ex rel. Head v. Kane Co., 668 F. Supp. 2d 146, 150 (D.D.C. 2009) ........ 3, 4
United States ex rel. Jordan v. Northrop Gruman Corp ., No. CV 95-2985, 2002 U.S.
Dist. LEXIS 26622 (C.D. Cal. Aug. 5, 2002) ................................................................. 7
United States ex rel. Miller v. Bill Harbert Intl, 505 F. Supp. 2d 20 (D.D.C. 2007) 11, 20
United States ex rel. Monahan v. Robert Wood Johnson Hosp., No. 02-5702 (JAG),
2009 WL 4576097 (D.N.J. Dec. 1, 2009) ....................................................................... 4
United States ex rel. Robinson-Hill v. Nurses Registry and Home Health Corp., No.
5:08-145-KKC, 2013 WL 1187000 (E.D. Ky. Mar. 20, 2013)....................................... 9
United States ex rel. Roby v. Boeing Co., 100 F. Supp. 2d 619 (S.D. Ohio 2000) ............. 8
United States ex rel. Spay v. CVS Caremark Corp., No. 09-4672, 2013 WL 1755214
(E.D. Pa. Apr. 24, 2013) ..................................................................................... 6, 16, 17
United States v. 416.81 Acres of Land, 514 F.2d 627 (7
th
Cir. 1975) ................................. 2
United States v. Center for Diagnostic Imaging, Inc., No. Civ. A-05- 058, 2011 WL
6300174 (W.D. Wash. Dec. 16, 2011) ............................................................................ 8
United States v. Honeywell Intl, 841 F. Supp. 2d 112 (D.D.C. 2012) ...................... passim
United States v. Manhattan-Westchester Medical Services, P.C., No. 06-Civ-7905, 2008
WL 241079 (S.D.N.Y. Jan. 28, 2008) ............................................................................ 4
United States v. MWI Corp., Civil Action No.: 98-2088 (RMU), 824 F.Supp.2d 12
(D.D.C. Nov. 14, 2011)........................................................................................... 15, 20
United States v. Sci. Applications Intl Corp., 626 F.3d 1257 (D.C. Cir. 2010) ........ 13, 19
Statutes
31 U.S.C. 3730(d)(3) ............................................................................................... 10, 11
31 U.S.C. 3730(d)(4) ..................................................................................................... 22
Rules
Fed. R. Civ. P. 12(f) .......................................................................................................... 22
Other Authorities
James Wm. Moore et al., Moore's Federal Practice (3d ed.1997) ...................................... 5
JAMES WM. MOORE et al., MOORE'S FEDERAL PRACTICE (2009)) .................... 15
C. Wright and A. Miller, Federal Practice and Procedure (1990) ..................................... 2
Brent Schrotenboer, USA Today, April 24, 2013, Justice Says Lance Armstrong Was
Unjustly Enriched, ....................................................................................................... 5


IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

UNITED STATES ex rel. FLOYD
LANDIS,

Plaintiffs,

v.

TAILWIND SPORTS CORPORATION, et
al.,

Defendants.
____________________________________
)
)
)
)
)
)
)
)
)
)
)
)
)

No. 10-cv-00976 (CRC)

REPLY IN SUPPORT OF THE UNITED STATES AND RELATORS
JOINT MOTION TO STRIKE OR, IN THE ALTERNATIVE,
FOR PARTIAL JUDGMENT ON THE PLEADINGS,
AS TO CERTAIN AFFIRMATIVE DEFENSES

I. INTRODUCTION
In response to plaintiffs motion to strike, defendant Armstrong has withdrawn
twelve of his affirmative defenses and the CSE Defendants have withdrawn ten. See
ECF No. 225, Defendants Joint Opposition to United States and Relators Motion to
Strike Certain Affirmative Defenses (Opposition) at 1 n.1. The affirmative defenses
that remain at issue should be stricken as a matter of law.
With scant basis to oppose plaintiffs motion on its merits, defendants response
appears primarily intended to advance their strategy of attacking the plaintiffs and laying
out the theories of their case, with no less than twenty exhibits filed in support of their
response. It is hornbook law, however, that such extrinsic evidence is not to be
considered on a motion to strike, which looks only to the pleadings themselves.
Accordingly, plaintiffs have largely refrained from refuting the supposed factual
matters raised by defendants, as they are generally irrelevant to the motion and should be
disregarded. Plaintiffs reply to defendants legal arguments below.
2

II. DEFENDANTS EXTRINSIC EVIDENCE SHOULD BE DISREGARDED.
Defendants opposition includes a declaration by Armstrongs counsel with
twenty exhibits attachedprimarily news articles and documents produced by the United
States in discoverywhich defendants refer to in a four-page Factual Background
section and throughout their brief. Opposition at 2-6; and ECF Nos. 225-1 through 225-
21, Declaration & Exhibits.
1
These materials are plainly irrelevant and should be
disregarded.
Courts have long held that [t]he essence of a motion to strike . . . is the
consideration of the defense on its face without further facts or elaboration . . . . United
States v. 416.81 Acres of Land, 514 F.2d 627, 630 (7
th
Cir. 1975) (footnote omitted).
Thus, as with a Rule 12(b)(6) motion to dismiss, it is well-established that [w]hen a
court considers a motion to strike pursuant to Fed. R. Civ. P. 12(f), matters outside the
pleading are not to be considered. First Financial Sav. Bank, Inc. v. American Bankers
Ins. Co., 783 F. Supp. 963, 966 (E.D.N.C. 1991) (citing 5A C. Wright and A. Miller,
Federal Practice and Procedure, Sec. 1380 (1990)).
2
Accordingly, plaintiffs object to the
extrinsic evidence submitted by defendants and ask that the Court disregard it in ruling on

1
The opposition is in line with Armstrongs strategy of using court filings to
discuss extraneous matters. See Armstrong v. Tygart, No. A-12-CA-606-SS, 2012 U.S.
Dist. LEXIS 186474 at *3 (W.D. Tex. July 9, 2012) (striking Armstrong complaint
against Travis Tygart and USADA sua sponte on same day it was filed on the ground that
it was filled with allegations wholly irrelevant to Armstrong's claims--and which, the
Court must presume, were included solely to increase media coverage of this case, and to
incite public opinion against Defendants).

2
See also Microsoft Corp. v. Computer Support Servs., 123 F. Supp.2d 945, 950
(W.D.N.C. 2000); Dah Chong Hong, Ltd. v. Silk Greenhouse, Inc., 719 F. Supp. 1072,
1073 (M.D. Fl. 1989); Telectronics Proprietary v. Medtronic, 687 F. Supp. 832, 840 n.19
(S.D.N.Y. 1988) (In deciding a motion to strike, a court will not consider matters
outside the pleadings . . . .) (quoting Index Fund, Inc. v. Hagopian, 107 F.R.D. 95, 100
(S.D.N.Y. 1985)); U.S. Oil Co., Inc. v. Koch Refining Co., 518 F. Supp. 957, 959 (E.D.
Wis. 1981) (In evaluating a motion to strike, the Court . . . cannot consider matters
beyond the pleadings.) (citing 5 Wright & Miller Fed. Prac. & Pro. 1380).

3

the motion. See ECF No. 174, Memorandum Opinion on Motions to Dismiss, at 13-14
(holding that Court would disregard extrinsic evidence submitted by defendants on
motion to dismiss).
3

III. STANDARD OF REVIEW
Although defendants cite authority to the effect that motions to strike are
disfavored, most of the cases they cite do not involve striking affirmative defenses.
4

Of the few cases that did involve affirmative defenses, the courts confirmed the propriety
of striking such defenses when they are insufficient as a matter of law.
5
See also United
States v. Honeywell Intl, 841 F. Supp. 2d 112, 116 (D.D.C. 2012) (striking insufficient
affirmative defenses serves to avoid wasting unnecessary time and money litigating the
invalid defense and clarify the issues). In the context of the False Claims Act in
particular, courts have often granted Rule 12(f) motions in order to eliminate baseless
affirmative defenses. See, e.g., United States v. Honeywell Intl, 841 F. Supp. 2d at 116;

3
Plaintiffs also note that defendants have neither requested judicial notice of these
materials nor have they requested that the motion be converted to a motion for summary
judgment. See id.

4
See Stabilisierungsfonds Fur Wein v. Kaiser Stuhl Wine Distribs. Pty. Ltd., 647
F.2d 200, 201 (D.C. Cir. 1981) (motion to strike portions of an appellate brief); Uzlyan v.
Solis, 706 F. Supp. 2d 44, 51 (D.D.C. 2010) (motion to strike certain paragraphs of the
complaint as scandalous or impertinent); Nwachukwu v. Karl, 216 F.R.D. 176, 178
(D.D.C. 2003) (motion to strike defendants entire answer on ground that responses to
four individual paragraphs of amended complaint were inconsistent with previous
responses to original complaint); Makuch v. F.B.I., 99-cv-1094 RMU, 2000 WL 915767,
at *1 (D.D.C. Jan. 7, 2000) (motion to strike certain paragraphs of amended complaint as
immaterial and impertinent).

5
See United States ex rel. Monahan v. Robert Wood Johnson Hosp., No. 02-5702
(JAG), 2009 WL 4576097 at *7 (D.N.J. Dec. 1, 2009) (in FCA case, striking affirmative
defenses of failure to allege false statement, estoppel, failure to mitigate, and statute of
limitations); Sweeney v. Am. Registry of Pathology, 287 F. Supp. 2d 1, 5 (D.D.C. 2003)
(proper to strike irrelevant frivolous or insufficient affirmative defenses, but
affirmative defense at issue did not fall into any of those categories); SEC v. Gulf &
Western Indus. Inc., 502 F. Supp. 343 (D.D.C. 1980) (striking several affirmative
defenses including unclean hands, equitable estoppel, and laches).

4

United States ex rel. Head v. Kane Co., 668 F. Supp. 2d 146, 150 (D.D.C. 2009); United
States ex rel. Monahan v. Robert Wood Johnson Hosp., No. 02-5702 (JAG), 2009 WL
4576097 at *7 (D.N.J. Dec. 1, 2009); United States v. Manhattan-Westchester Medical
Services, P.C., No. 06-Civ-7905, 2008 WL 241079 at *34 (S.D.N.Y. Jan. 28, 2008).
6

IV. ARGUMENT
A. Defenses Raised by All Defendants
1. Defenses Attacking the Government's Damages
As explained in plaintiffs opening brief, actual damage to the United States is not
a necessary element of a False Claims Act cause of action. See ECF No. 213,
Memorandum of Points and Authorities in Support of the United States and Relators
Joint Motion to Strike, Or, In the Alternative, For Partial Judgment on the Pleadings, As
to Certain Affirmative Defenses (Opening Brief), at 16-17. Therefore, defendants
claim that no damages were suffered by the United States cannot, a fortiori, form the
basis for an affirmative defense to liability in this case. Defendants do not dispute this

6
The foregoing FCA cases also illustrate that defendants are incorrect in asserting
that a motion to strike is inappropriate where discovery is ongoing . . . . Opposition at
7. A motion to strike generally must be filed within 21 days after service of the pleading
containing the material to be stricken, Fed. R. Civ. P. 12(f)(2), and thus many motions to
strike affirmative defenses are filed at or near the outset of discovery (and often are filed
prior to the beginning of discovery). Contrary to defendants argument, one of the main
purposes of the motion is to avoid unnecessary discovery on legally insufficient defenses.
See, e.g., United States ex rel. Head v. Kane Co., 668 F. Supp. 2d at 150 (affirmative
defense should be stricken where its removal from the case would avoid wasting
unnecessary time and money litigating the invalid defense).
Regarding defendants citation to the effect that motions to strike waste
everyones time, Opposition at 8, the context of this comment was in explaining why
Twombly/Iqbals heightened pleading standard should not apply to affirmative defenses,
not to suggest that it is a waste of time to strike affirmative defense that are legally
insufficient. In fact, in the very case quoted (the citation to which defendants omitted
from their brief), the court granted a motion to strike. See Lane v. Page, 272 F.R.D. 581
(D.N.M. 2011) (striking eight affirmative defenses on the ground that they were merely
negating elements of plaintiffs case, as well as a ninth affirmative defense that merely
purported to reserve the right to assert additional affirmative defenses in the future).

5

argument and, accordingly, their damages-based affirmative defenses should be
stricken.
7

Defendants argue that, even if they are not affirmative defenses, their asserted
defenses based on the supposed absence of damages do not need to be stricken.
Opposition at 9. But in Greiff v. T.I.C. Enters., LLC, which defendants cite in support of
their harmless error approach, the court made clear this analysis does not apply to
misguided attempts to assert the negation of damages as an affirmative defense. Greiff,
2004 WL 115553, at *3 (D. Del. Jan. 9, 2004). Although it declined to strike several
other asserted failures of proof that had been expressed as affirmative defenses, the Greiff
court granted the motion to strike defenses that were based on the absence or limitation of
damages. In so doing, it stated:

The court finds that these averments do not constitute affirmative
defenses because they will not defeat defendants' counterclaims if
proven. In other words, these averments entirely overlook liability
and focus solely on potential relief. In contrast, [a]ffirmative
defenses, if accepted by the court, will defeat an otherwise
legitimate claim for relief. FDIC v. Haines, 3 F.Supp.2d 155, 166
(D. Conn. 1997) (quoting 2 James Wm. Moore et al., Moore's
Federal Practice 8.07[1] (3d ed.1997)). Moreover, it is clear that
the concept of damages serves a purpose far different from an
affirmative defensedamages are intended to redress injuries
incurred by a plaintiff after liability has been established, not as a
means to shield liability in the first instance.

7
Given their apparent indifference as to whether their putative defenses should be
regarded as formal affirmative defenses or some other type of factual showing, see
Opposition at 10, the defendants could have served the interests of efficiency and clarity
by simply conceding that these defenses are not viable. Instead, Armstrong
opportunistically injected into the public record the studies that are the cornerstone of
both his legal defense and his media strategy. Compare Brent Schrotenboer, USA Today,
April 24, 2013, Justice Says Lance Armstrong Was Unjustly Enriched, (Armstrong
attorney Elliot Peters said in a statement provided to USA TODAY Sports The U.S.
Postal Service benefited tremendously from its sponsorship of the cycling team. Its own
studies repeatedly and conclusively prove this.),
http://www.usatoday.com/story/sports/cycling/2013/04/23/ justice-says-armstrong-was-
unjustly-enriched/2108015/, with Opposition at 10, Exh. A through C. Plaintiffs will
address these arguments at the appropriate juncture.
6

Id. Thus, because the concept of damages serves a purpose far different from an
affirmative defense, the court struck each defense rooted in the alleged absence of
damages.
In addition, the defendants putative defenses do not serve the notice rationale
animating the cases upon which they rely. Id. (specific denials give defendants notice of
the particular issues to be litigated); United States ex rel. Spay v. CVS Caremark Corp.,
No. 09-4672, 2013 WL 1755214, at *16 (E.D. Pa. Apr. 24, 2013). That is, Armstrong
denied six times in his answer that the Government sustained damages, ECF No. 200 (
76, 79, 82, 85, 88, and 93), and his proposed defenses can do no more to elucidate his
position on damages. To the contrary, these alleged defenses which are made-up,
cryptically-worded, and unsupported by factual allegations are likely to create
confusion, and should be stricken. Id. (citing potential confusion as a basis for striking
denials of liability expressed as affirmative defenses).
2. Waiver, Consent/Ratification and Release
Defendants fail to contest plaintiffs argument that only a Department of Justice
official can waive a False Claims Act cause of action, and they do not purport to have any
basis to assert that DOJ waived the FCA claims at issue here. Accordingly, defendants
waiver-related defenses should be stricken. See Opening Brief at 15 (citing cases).
Defendants contend that further discovery would show that USPS employees
knew about the Teams doping and failed to take action. Opposition at 12-14.
8
While
evidence of government employees knowledge of might be relevant to certain elements

8
As noted above, plaintiffs object to defendants improper citation of extrinsic
evidence.

7

of plaintiffs FCA claims, government knowledge is not a defense to an FCA action.
9

Defendants also argue that officials outside the Department of Justice can waive
contractual provisions that later form the basis for an FCA claim. Opposition at 12. But
if defendants argument is that the provisions of the Sponsorship Agreements prohibiting
doping were waived, their argument amounts to no more than an attempt to negate proof
of the Governments claims. That is, they argue that, as a result of the supposed waiver,
no contractual requirement was violated and, therefore, no false claim was submitted.
See Honeywell Intl, 841 F. Supp. 2d at 115-116 (holding that a waiver defense is not a
proper affirmative defense if it merely negates an element of plaintiffs case and thus
should be stricken).
10

Defendants assertion that it would be pointless to strike these defenses because
discovery on the issue of government knowledge will still proceed is directly contrary to
the holding in Honeywell. In Honeywell, the court found that the defendants allegations
regarding the governments knowledge of their actions were insufficient to support an
affirmative defense of waiver or estoppel, but could still be relevant to defendants non-

9
In United States ex rel. Jordan v. Northrop Gruman Corp., No. CV 95-2985,
2002 U.S. Dist. LEXIS 26622 (C.D. Cal. Aug. 5, 2002), cited by defendants, the court
explained that defendants ratification and waiver defenses based on government
knowledge would be relevant in determining whether a defendant possessed the
requisite scienter to violate the FCA. Id. at 21-22; see also United States ex rel. Hagood
v. Sonoma County Water Agency, 929 F.2d 1416, 1420 (9th Cir. 1991) ("[T]he
knowledge possessed by officials of the United States . . . may show that defendant did
not submit its claim in deliberate ignorance or reckless disregard of the truth.").

10
The two cases cited by defendants -- Garrison and Jordan -- did not address this
issue. Moreover, contrary to defendants description of the Garrison case as allowing
defendants to assert waiver defense, Opposition at 12, the court actually struck the
defendants waiver defense, finding that it was insufficient for defendants to merely
list their affirmative defenses without any factual basis to put the Government on fair
notice of the defenses. United States ex rel. Garrison v. Crown Roofing Servs., Inc., No.
H-07-1018, 2011 WL 4914971, at *2 (S.D. Tex. Oct. 14, 2011). The court held that
defendants could replead their waiver defense with sufficient detail, if defendants could
do so consistent with Rule 11(b). Id.

8

affirmative defense regarding the scienter element. 841 F. Supp. 2d at 116. The court
nevertheless struck the waiver and estoppel defenses, holding that [r]emoving the
insufficient defense will avoid wasting unnecessary time and money litigating the
invalid defense and will clarify the issues. Id. (quoting SEC v. Gulf & Western Indus.,
Inc., 502 F. Supp. 343, 345 (D.D.C. 1980)). Similar to the present matter, discovery was
not yet complete in the case, yet the court specifically noted that [i]n striking the
defense, there is no prejudice to Honeywell's ability to marshal the factual allegations that
underlay the stricken defense in support of its argument that it did not knowingly cause
the submission of false claims. Id. Here, as in Honeywell, defendants may continue to
seek discovery to the extent relevant to the scienter or falsity elements, but cannot assert
waiver, consent/ratification, or release as affirmative defenses.
11

3. Estoppel
The party asserting equitable estoppel must show that (1) there was a definite
representation to the party claiming estoppel, (2) the party relied on its adversarys
conduct in such a manner as to change his position for the worse, (3) the partys reliance
was reasonable and (4) the government engaged in affirmative misconduct. Honeywell
Intl, 841 F. Supp. 2d at 114 (quoting Morris Communications Inc. v. FCC, 566 F.3d 184,
191 (D.C. Cir. 2009)).

11
The remaining cases cited by defendants are easily distinguishable. See Mills
Corp. v. Miller, No. 97-219, 1997 WL 280599, at *3 (D.D.C. May 20, 1997) (plaintiffs
argued that defendants had failed to plead their affirmative defense of material breach
with sufficient detail, as required by Rule 9(c) -- not that the defense was an improper
affirmative defense, as plaintiffs argue here); United States v. Center for Diagnostic
Imaging, Inc., No. Civ. A-05- 058, 2011 WL 6300174, at *3-4 (W.D. Wash. Dec. 16,
2011) (unlike here, defendants waiver defense was based on the litigation history of
[the] case including a previous settlement agreement with the United States, not just the
notion that the United States had knowledge of the fraud); United States ex rel. Roby v.
Boeing Co., 100 F. Supp. 2d 619, 646 (S.D. Ohio 2000) (case involved a motion for
summary judgment, not a motion to strike, and did not discuss whether the defense was
properly an affirmative defense or merely negated elements of plaintiffs claims; court
merely held that material issues of fact remained).
9

Defendants explain that the basis for their estoppel defense is the same as for their
waiver-related defenses, i.e., that the Government knew about the teams doping but
did not investigate or pursue a breach of contract remedy. Opposition at 13-15. But such
facts, even if proved, fail as a matter of law to satisfy the affirmative misconduct
element of an estoppel defense. See, e.g., United States ex rel. Robinson-Hill v. Nurses
Registry and Home Health Corp., No. 5:08-145-KKC, 2013 WL 1187000, at *2 (E.D.
Ky. Mar. 20, 2013) (in FCA case where defendants argued that Government failed to act
despite knowledge of misconduct, court struck affirmative defense of estoppel, holding
that When a party asserts estoppel against the government, the party also must
demonstrate affirmative misconduct by the government. In this case, there is no
affirmative conduct; Defendants argue the government did nothing); Honeywell Intl,
841 F. Supp. 2d at 115 (in FCA case, rejecting defendants argument that governments
inaction could be characterized as a direct representation or affirmative misconduct
and striking affirmative defense of estoppel on that basis).
Defendants further assert that they are entitled to additional discovery to
determine whether USPS employees condoned, concealed or participated in
defendants doping conduct. Opposition at 15. In addition to government misconduct,
however, an estoppel defense also requires proof of a definite representation to the party
claiming an estoppel and proof that the party relied upon and changed its behavior based
on such representation. Honeywell Intl, 841 F. Supp. 2d at 114. As noted in plaintiffs
opening brief, these are matters within defendants knowledge, which they do not need
discovery in order to ascertain. Notably, defendants did not respond to this argument.
Instead, defendants opposition makes clear that they have no basis to allege any definite
representation by the Government to them, nor any grounds for asserting that they relied
on and changed their positions based on the same. Cf. Chidester v. Camp Douglas
Farmers Cooperative, Nos. 13-cv-520-bbc & 13-cv-521-bbc, 2013 WL 6440510 at * 3
(W.D. Wis. Dec. 9, 2013) ([R]egardless whether Twombly and Iqbal apply to
affirmative defenses, Rule 11 prohibits a party from listing an affirmative defense
10

without any factual basis for doing so.); Paleteria La Michoacan, Inc. v. Productos
Lacteos, 905 F. Supp. 2d 189, 193 (D.D.C. 2012) (even absent application of Twombly or
Iqbal, challenging party is not left without a remedy because Rule 12(f) motion to
strike and Rule 11 serve as a curb on baseless affirmative defenses).
As the Honeywell Intl court emphasized in striking an affirmative defense of
estoppel, the defense cannot be invoked in any but the most extreme circumstances,
841 F. Supp. 2d at 114, which defendants have utterly failed to plead here. The Court
should strike this defense without delay. See Chrysler Corp. v. General Motors Corp.,
596 F. Supp. 416, 420 (D.D.C. 1984) (The Court declines to delay in striking the
defense . . . permitting discovery and the development of the case under the . . . [baseless
affirmative] defense would serve only to divert and protract [the] litigation, with
concomitant expense.) (citation omitted).
4. Defenses based on Relator's wrongdoing
Plaintiffs explained in detail in their opening brief how defendants lack standing
to argue for the dismissal of relator based on relators misconduct. Opening Brief at 19-
21. Defendants fail to cite any authority to the contrary. In fact, defendants have now
conceded that most of their affirmative defenses predicated on allegedly wrongful
conduct by relator are without merit.
12
But defendant Armstrong continues to argue,
without citation to any authority, that Defendants may have a defense premised on
3730(d)(3) or relators illegal conduct based on Landis deferred prosecution agreement
with the Government. Opposition at 15-16.

12
See Opposition at 1 n.1. Defendant Armstrong has conceded that his following
affirmative defenses to the U.S. Complaint related to relators wrongdoing should be
stricken: Seventh (Relators unclean hands) and Eighth (In pari delicto as applied to
Relator). He has also conceded the following affirmative defense to relators Second
Amended Complaint should be stricken: Sixth (Unclean Hands/In pari delicto). The
CSE Defendants have conceded that the following affirmative defenses should be
stricken: Eighth (Relators unclean hands), Eleventh (In pari delicto as applied to
Relator), and Twenty-second (unjust enrichment of Relator).
11

Armstrongs reliance on 3730(d)(3) is misplaced. The plain language of
3730(d)(3) provides for dismissal of the relator as its only remedy, and does not
provide any basis for a defendant to avoid liability. Armstrong cites no statutory
language or other authority in support of his position. Moreover, he distorts the notion
that the FCA qui tam provisions are based upon the idea of setting a rogue to catch a
rogue. Mortgages, Inc. v. U.S. District Court for the District of Nevada (Las Vegas),
934 F.2d 209, 213 (9th Cir. 1991)). Armstrongs argument that the conviction of one
rogue absolves another rogue turns this principle on its head, and finds no support in
the FCA. See United States ex rel. Miller v. Bill Harbert Intl, 505 F. Supp. 2d 20, 26
(D.D.C. 2007) (The FCA is in no way intended to ameliorate the liability of wrongdoers
by providing defendants with a remedy against a qui tam plaintiff with unclean
hands.)(quoting Mortgages, Inc., 934 F.2d at 213). Therefore, Armstrongs affirmative
defense under 3730(d)(3) should be dismissed.
More fundamentally, Armstrong concedes that the factual predicate for relators
dismissal under 3730(d)(3) does not exist. That is, Landis has not been convicted of
criminal conduct, as required by 3730(d)(3). See Opposition at 16 (noting only that
under Deferred Prosecution Agreement the United States may pursue charges against
Landis in the event of a breach, and conjecturing that such events might lead to a
conviction). Armstrongs insistence on asserting this non-existent defense, which he
knows lacks a factual basis, is no more than pretext for discovery into whether Landis is
subject to conviction. Opposition at 16. It is improper, and this Court should reject it.
The CSE Defendants join in Armstrongs argument based on their affirmative
defense that relator engaged in Illegal Activities. That defense reads as follows: On
information and belief, this lawsuit arose as a result of illegal activity engaged in by
Relator, which illegality bars Relator from recovering on any cause of action in the
Complaint. Thus, the CSE Defendants twenty-sixth affirmative defense does not even
reference section 3730(d)(3), nor does it allege facts that would provide a basis for
dismissal under that section. For these reasons, in addition to the CSE Defendants lack
12

of standing to assert this defense, the CSE Defendants twenty-sixth affirmative defense
lacks any legal or factual basis and should be stricken, just like their other affirmative
defenses focused on relators wrongdoing, which they have already acknowledged should
be stricken.
5. Public disclosure
Defendant Armstrong contends that he should be able to argue for dismissal of the
FCA case based on the fact that the existence of the qui tam action was leaked during the
seal period.
13
The Court has already ruled in this case that: The rationale behind
sealing FCA cases is to allow the United States ample time to investigate the allegations,
not to provide protection to defendants. ECF No. 227, Opinion & Order on Armstrong
Motion to Compel, at 14-15 (quoting United States ex rel. Durham v. Prospect
Waterproofing, Inc., 818 F. Supp. 2d 64, 67 (D.D.C. 2011)). There is thus no basis in
law for an affirmative defense in this case predicated on violations of the seal.
6. Government's failure to mitigate
Defendants further claim that the USPS failed to mitigate its damages by not
fully taking advantage of opportunities allegedly presented by the Sponsorship
Agreements. As explained in the plaintiffs opening brief, the United States has no duty
to mitigate damages in a fraud action, including a False Claims Act action. Opening
Brief at 25-26 (citing cases). In any event, Armstrongs argument misconstrues the duty
to mitigate. Where it applies, a duty to mitigate arises only after a known breach of
contract. See, e.g., U.S. Bank Natl Assoc. v. Ables & Hall Bldrs., 696 F. Supp.2d 428,

13
Armstrong argues that [l]ogic suggests that the leaking party can only be Landis
or government personnel, Opposition at 14, but he neglects to inform the Court that the
first public reports about the qui tam matter appeared only eleven days after the
Government informed Armstrong and other defendants about the existence of the qui tam
action. See ECF No. 205, United States Opposition to Tailwinds Motion to Dismiss at
11-12; and ECF Nos. 105-2 through 105-5, Exhibits 2-6 (August 23, 2010 letters from
United States to counsels for defendants informing defendants of the qui tam complaint
and the allegations).

13

441 (S.D.N.Y. 2010) (The duty to mitigate damages comes into play once there has been
a breach of a contract.) (emphasis original); Cambridge Plating Co., Inc. v. Napco, Inc.,
85 F.3d 752, 772 (1st Cir. 1996) (failure to mitigate calculated from date breach became
known to plaintiff). Here, defendants campaign of lies, intimidation and deception
prevented their doping from being discovered until long after the Sponsorship
Agreements ended. But even if defendants fraud had been discovered earlier, whether or
not the Postal Service maximized the benefit of its bargain under the Sponsorship
Agreements plainly has no bearing on whether it did or did not mitigate damages.
Defendants duty to mitigate affirmative defenses thus fail as a matter of law.
14

7. Failure to State a Claim/Failure to Plead Fraud with Particularity
Defendants have failed to refute plaintiffs argument that they have waived their
defense based on Rule 9(b). The Court already ruled that this defense was waived, and
even if the Court had not so ruled (as defendants contend), the defense has been waived
as a matter of law. Similarly, the Court has already ruled on defendants failure to state
a claim defense. Accordingly, these defenses may not be raised again as affirmative
defenses and should be stricken.
a. Defendants Have Waived Any Defense Under Rule 9(b).
Defendants initially attempt to argue that the Court did not rule that Defendants
waived their defense of failure to plead fraud with particularity. Opposition at 21-22.

14
In the course of their argument, defendants state that [t]he proper measure of
damages in an FCA case is a plaintiffs expectation damages. Opposition at 19 (citing
United States v. Sci. Applications Intl Corp., 626 F.3d 1257, 1278 (D.C. Cir. 2010)
(SAIC)). There is no reference to expectation damages, however, in SAIC. The
court in SAIC stated that the proper measure of damages is the difference between the
value of the goods or services actually provided by the contractor and the value the goods
or services would have had to the government had they been delivered as promised. 626
F.3d at 1278. The expectation damages cases cited by defendants, see Opposition at
19, involve breach of contract causes of action, not fraud or FCA causes of action in
which, as explained above, the duty to mitigate does not apply.

14

The record demonstrates otherwise. Both Armstrong and the CSE Defendants cited
Federal Rule of Civil Procedure 9(b) as a basis for their motions to dismiss the United
States and relators complaints, respectively.
15
However, in contrast to defendant
Weisel, who also raised Rule 9(b) and argued the defense extensively, Armstrong and the
CSE Defendants (as well as the Tailwind Defendants and Bruyneel) failed to develop
their Rule 9(b) arguments in their briefs. As plaintiffs pointed out in their opening brief
on the instant motion to strike, the Court therefore ruled that these defendants had waived
their Rule 9(b) defenses.
16

Despite this record, defendants assert that they did not already move to dismiss
based on failure to plead fraud with particularity or uncertainty, and thus are free to raise
the defense now. Opposition at 22. Whether the defendants raised Rule 9(b) but waived
it by failing to argue it, or whether they failed altogether to raise the defense, is a
distinction without a difference either way the defense has been waived. Consistent
with the Courts prior ruling, it is well-established that Rule 9(b) arguments are waived if

15
See ECF No. 93, Armstrong Motion to Dismiss US Complaint, Motion at 1
(Pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6), Defendant Lance
Armstrong hereby moves this Court to dismiss the United States Complaint because it
fails to state and plead with particularity a claim upon which relief may be granted);
ECF No. 94, CSE Defendants Motion to Dismiss Relators Second Amended Complaint,
Motion at 1-2 (Pursuant to Rule 9(b) and 12(b)(6) of the Federal Rules of Civil
Procedure, . . . [the CSE Defendants] hereby move this Court, . . . for an Order dismissing
Relator Floyd Landis Second Amended Complaint).

16
See Opening Brief at 26-27; ECF No. 174, Courts Memorandum Opinion on
Motions to Dismiss at 51-61, section III.B (addressing Rule 9(b) arguments regarding
presenting false claims, presenting false records or statements, and conspiracy to commit
FCA violations); id. at 52 n.31 (Defendant Armstrong did not make any Rule 9(b)
arguments in opposing the plaintiffs' FCA claims.), id. at 59 (In moving to dismiss the
plaintiffs' complaints, Defendant Bruyneel joined and incorporated Mr. Armstrong's
motions to dismiss the plaintiffs' complaints. . . . As stated previously, Armstrong did not
even raise a Rule 9(b) objection. Thus, Defendant Bruyneel has also waived this
argument.); id. at 59 n.33 (To the extent any of the other remaining non-intervened
defendants have also attempted to raise Rule 9(b) arguments without briefing them, these
arguments were also waived.).

15

not raised in the defendants first response to the complaint, i.e., either in the answer, or
in a motion to dismiss if filed in lieu of an answer. See United States v. MWI Corp., 824
F.Supp.2d 12, 25 (D.D.C. Nov. 14, 2011) (If a party fails to raise a Rule 9(b) objection
in the first responsive pleading or in an early motion . . . the issue will be deemed
waived) (citing, inter alia, 2 JAMES WM. MOORE et al., MOORE'S FEDERAL
PRACTICE 9.03[5] (2009)).
17

In support of their contrary position, defendants cite a single unpublished district
court case from outside this jurisdiction, Knit With v. Knitting Fever, Inc., Nos. 08-4221,
08-4775, 2009 WL 973492, at *7-8 (E.D. Pa. Apr. 8, 2009). The Knit With court,
however, ruled that a Rule 9(b) defense could be raised at any time up through trial and is
thus plainly inconsistent with the above-cited cases regarding waiver of Rule 9(b), none
of which were cited or distinguished by the Knit With court. The well-established
approach of requiring defendants to raise Rule 9(b) at the earliest opportunity or risk
waiver furthers the underlying policy that Rule 9(b)'s specificity requirements are
imposed to ensure that a defendant is apprised of the fraud claimed in a manner sufficient
to permit the framing of an adequate responsive pleading. Henneberry v. Sumitomo
Corp., 415 F. Supp.2d at 454 n.19; see also United National Records, Inc. v. MCA, Inc.,
609 F. Supp. 33, 38-39 (N.D. Ill. 1984) (The specificity requirements of Fed. R. Civ. P.
9(b) have been imposed to ensure that a defendant is apprised of the fraud claimed in a

17
See also Henneberry v. Sumitomo Corp., 415 F. Supp.2d 423, 454 n.19 (S.D.N.Y.
2006) (It is well-settled law that a defendant must raise [a Rule 9(b)] objection in its
answer, or in a motion to dismiss if filed in lieu of an answer.) (citations and internal
quotation marks omitted); Davsko v. Golden Harvest Prods., Inc., 965 F. Supp. 1467,
1474 (D. Kan. 1997) ([A] rule 9(b) objection is waived unless made as a separate
motion prior to or concurrent with the filing of a responsive pleading.) (citations
omitted); Todaro v. Orbit Intl Travel, Ltd., 755 F. Supp. 1229, 1234 (S.D.N.Y. 1991)
(A party who fails to raise a Rule 9(b) objection normally waives the requirement.)
(quoting United Natl Records v. MCA, Inc., 609 F. Supp. 33, 39 (N.D. Ill. 1984)); HMBI
v. Schwartz, No. 1:06-CV-24-TS, 2009 WL 3390865, at *6 (N.D. Ind. Oct. 19, 2009)
(defendant waived Rule 9(b) argument by failing to raise it by motion prior to filing
answer).
16

manner sufficient to permit the framing of an adequate responsive pleading. A party who
fails to raise a 9(b) objection normally waives the requirement.). The Knit Withs
courts approach, by contrast, ignores the difference between Rule 9(b) and other
potential bases for a failure to state a claim defense, and thus should not be followed.
Where, as here, defendants have already filed a motion to dismiss (without raising
Rule 9(b), they say), have answered the complaint, and have been actively engaging in
discovery for months, there is no justification to allow them to hold open the possibility
of raising a Rule 9(b) argument at some future, unspecified date. Cf. Avant-Garde, LLC
v. Mountain Spa Properties, LLC, No. CV 10-01499-PHX-NVW, 2011 WL 6223936 at *
1 (D. Ariz. Oct. 25, 2011) ([A] defendant may not . . . answer the complaint and go
forward with discovery, all the while holding a pleading objection in reserve in case the
going gets rough. Such late-game procedural dismissals are precisely what the Federal
Rules are designed to avoid.).
The Court should strike defendants Rule 9(b) affirmative defense on the ground
that it has been waived.

b. The Courts Prior Ruling Forecloses Defendants
Ability to Assert a Defense That Plaintiffs Failed To
State a Claim.
The Court should also strike the affirmative defense of failure to state a claim as
having been previously decided on the motion to dismiss. See United States ex rel. Spay
v. CVS Caremark Corp., 2013 WL 1755214 at *3 (Where . . . a court has previously
made a legal determination that a Plaintiffs complaint stated a claim for relief, a
subsequent affirmative defense claiming failure to state a claim or to properly plead
should be stricken.). Notably, defendants concede that they may not raise a failure to
state a claim defense as to plaintiffs reverse false claim counts, but they apparently
contend that they may raise it as to plaintiffs other claims. See Opposition at 22
(Because Defendants did not argue that Plaintiffs' complaints failed to state a claim in
their motions to dismiss (with the exception of the reverse false claim counts), they may
assert this defense now.) (emphasis added). At a minimum therefore, the Court should
17

strike the defense as applied to the reverse false claims counts. Cf. Gates v. District of
Columbia, 825 F. Supp. 2d 168, 170 (D.D.C. 2011) (To give fair notice of the defense, .
. . a party should identify the claim to which the defense applies.) (citation omitted).
Moreover, a fair reading of the Courts ruling denying defendants motion to dismiss the
United States Complaint makes clear that any argument challenging the viability of the
governments claim under 31 U.S.C. 3729(a)(1) would be futile. At the appropriate
time, the defendants can file a motion for summary judgment if they believe the factual
record fails to permit a reasonable factfinder to decide the case in the governments favor,
but there should be no question that the United States Complaint, viewed in the light
most favorable to the Government, adequately states a claim for relief under Section
3729(a)(1).
18

B. Affirmative Defenses Raised Only by Armstrong
1. "Government's Lack of Diligence"
Armstrong argues that the Governments alleged lack of diligence in intervening
in this case gives rise to an affirmative defense against the Governments claim for pre-

18
Plaintiffs also argued in the opening brief that defendants Rule 9(b) and failure to
state a claim affirmative defenses should be stricken because they are not proper
affirmative defenses. Opening Brief at 26-27 (citing cases). Defendants do not challenge
(or even mention) the cases cited by plaintiffs on this point, but instead cite several other
district court cases outside this jurisdiction. Opposition at 21. Notably, however, the
cases cited by defendants primarily relate to failure to state a claim generally and do not
hold that Rule 9(b) constitutes a proper affirmative defense. See Cintron Beverage Grp.,
LLC v. Depersia, No. 07-3043, 2008 WL 1776430, at *2 (E.D. Pa. Apr. 15, 2008) (court
ruled that defendant could assert failure to state a claim as an affirmative defense;
however, the case did not involve Rule 9(b)); United States ex rel. Spay v. CVS Caremark
Corp., 2013 WL 1755214 at **3-4 (court held that failure to state a claim could be raised
as an affirmative defense but did not specifically address whether Rule 9(b) is an
affirmative defense, instead finding that the court had already ruled on the defendants
Rule 9(b) arguments in its motion to dismiss). The ruling in FDIC v. Modular Corp., 859
F. Supp. 117, 122 (D.N.J. 1994), is entirely inapposite as it held only that failure to state a
claim is a defense that does not require administrative exhaustion under FIRREA in
order to be raised; the case did not involve Rule 9(b) and did not address whether failure
to state a claim is a proper affirmative defense.

18

judgment interest. Opposition at 23. This is not what he pled in his answer, however.
Rather, his answer seeks to bar all of the Governments claims, in whole or in part.
Moreover, Armstrongs answer is not supported by any allegations of fact relating to the
Governments supposed lack of diligence. And even if Armstrong is correct that the
Governments diligence is relevant to its ability to obtain an award of pre-judgment
interest, this does not give Armstrong an affirmative defense to liability, and Armstrong
does not cite any authority supporting his contention that it does. Armstrongs defenses
based on Government lack of diligence should therefore be dismissed.

2. Recoupment/Setoff
Armstrongs opposition confirms that his recoupment or setoff affirmative
defense fails as a matter of law. [R]ecoupment is [t]he right of a defendant to have the
plaintiff's claim reduced or eliminated because of the plaintiff's breach of contract or duty
in the same transaction. U.S. v. Intrados/Int'l Mgmt. Group, 277 F. Supp. 2d 55, 57 n. 1
(D.D.C. 2003) (quoting Blacks Law Dictionary (7
th
ed. 1999) and citing Reiter v.
Cooper, 507 U.S. 258, 264 (1993)) (emphasis added); see also Hispanic Indep.
Television Sales, LLC v. Kaza Azteca Am. Inc., No. 10-CIV-932, 2012 WL 1079959, at *
6 (S.D.N.Y. Mar. 30, 2012) (in order to assert the defense of recoupment, a party must
have a legally subsisting cause of action upon which it could maintain an independent
claim) (internal quotations and citation omitted). According to Armstrong, this
affirmative defense is based on his contention that the USPS received tangible economic
benefits three times in excess of what it paid under the sponsorship agreement--the same
contract that is the subject of the Government's complaint. Opposition at 24. Even if
such excess benefit was received, which plaintiffs dispute, Armstrong does not and
cannot contend that the USPS had any dutycontractual or otherwiseto pay any such
amounts to Armstrong.
19
Because Armstrong could not maintain an independent claim

19
Indeed, defendant Armstrong was not even a party to the Sponsorship
Agreements, which were between the USPS and the Tailwind defendants.

19

to recover these amounts, his recoupment defense fails as a matter of law.
20

Instead, Armstrongs contention regarding excess benefit is relevant, if at all, to
the measure of damages on plaintiffs False Claims Act causes of action, as he essentially
concedes. See Opposition at 24 (contending that Armstrong may be entitled to reduce
his liability by the amount that the Government received from the sponsorship and citing
measure of FCA damages as set forth in United States v. Sci. Applications Intl Corp.,
626 F.3d 1257 (D.C. Cir. 2010)). This defense is merely another attempt to negate the
element of damages. As an affirmative defense, it thus fails as a matter of law and
should be stricken.
21

3. Election of Remedies
In his Twenty-Fifth Affirmative Defense to the United States Complaint in
Intervention, and in his Twenty-Third Affirmative Defense to the Relators Second
Amended Complaint, defendant Armstrong asserts that the United States and Relators
claims are barred for failing to choose between inconsistent remedies based upon the
same set of alleged facts. Based upon Armstrongs defenses that the claims are barred by
law, the United States and Relator moved to strike the defense as baseless and spurious
because the Federal Rules liberal pleading policy and the case law allow the raising of
inconsistent claims. Opening Brief at 31-32.
In response, it appears that defendant Armstrong concedes that the affirmative
defense, as worded and raised in his Answer, is baseless. Opposition at 24. Instead of

20
Armstrong also makes no claim that he is entitled to any offset related to any
transaction other than the Sponsorship Agreements, and thus concedes that his setoff
defense is not viable. See Opening Brief at 30 (recoupment involves offsetting obligation
under same transaction while setoff involves different transactions) (citing Nashville
Lodging Co. v. Resolution Trust Corp., 59 F.3d 236, 246 (D.C. Cir. 1995)).

21
In addition, the defense also fails because: 1) the U.S. has not waived sovereign
immunity as to any such claims; 2) this Court lacks jurisdiction over any such claims and
Armstrong has not exhausted administrative remedies; and 3) such claims are barred to
the extent the amount sought exceeds plaintiffs claim for damages. Opening Brief at 30-
31 & n.6. Armstrong has not responded to these arguments.
20

amending or voluntarily deleting this meritless defense, however, Armstrong now argues
that he meant that damages are barred. Id. at 24-25. This Court should reject
Defendant Armstrongs attempt to recast his argument and should strike this affirmative
defense.
Because defendant Armstrong failed to address the United States and Relators
contentions regarding their ability to assert inconsistent or alternative claims, the Court
may treat the point as conceded. Gates v. District of Columbia, 825 F. Supp. 2d at 170
(defendants failure to respond to plaintiffs argument regarding misapplication of an
affirmative defense implicitly concede[s] that argument by their silence); see also
Bancoult v. McNamara, 227 F.Supp.2d 144, 149 (D.D.C. 2002) ([I]f the opposing party
files a responsive memorandum, but fails to address certain arguments made by the
moving party, the court may treat those arguments as conceded, even when the result is
dismissal of the entire case.). Defendants affirmative defenses alleging that
inconsistent claims are barred should therefore be struck on that ground alone.
Moreover, the recast defense raised by defendant Armstrong in his Opposition
is not an affirmative defense. As set forth by the United States and Relator in the initial
Joint Motion to Strike, an affirmative defense is a matter as to which the defendant
bears the burden of proof, and precludes liability even if all of the elements of the
plaintiffs claim are proven. Gates v. District of Columbia, 825 F. Supp. 2d at 171-72;
see also Lane v. Page, 272 F.R.D. 581, 598 (D.N.M. 2011) (same). Here, the fact that the
United States and Relator cannot recover twice for the conduct arising from FCA claims
and a common law claim based upon the same set of facts does not bar or preclude
liability. It is simply an axiomatic rule applied after trial in an FCA case, which no party
bears the burden of proving. U.S. ex rel. Miller v. Bill Harbert Intern. Const., Inc., 505 F.
Supp. 2d 20, 24 (D.D.C. 2007); see also U.S. ex rel. Purcell v. MWI Corp., 254 F. Supp.
2d 69, 79 (D.D.C. 2003) (although an FCA plaintiff may not recover damages from
theories of liability that are inconsistent because one theory precludes the other or the
theories are mutually exclusive, this rule does not bar inconsistent claims and cannot be
21

applied at the motion-to-dismiss stage). Armstrongs Twenty-Fifth Affirmative Defense
to the United States Complaint in Intervention and Twenty-Third Affirmative Defense to
Relators Second Amended Complaint therefore both fail and should be stricken.
4. Retroactivity
In their Opposition, defendants have clarified that this defense does not seek to re-
litigate the Courts ruling as to which version of the False Claims Act will apply to this
case, but only seeks to preserve Armstrongs right to argue that applying the FERA
amendments retroactively violates the Ex Post Facto Clause of the United States
Constitution. Opposition at 25. In light of defendants clarification, and subject to the
retroactivity defense being limited as clarified by Armstrong, plaintiffs will withdraw
their motion to strike this defense.
C. Affirmative Defenses Raised Only by the CSE Defendants
1. Acts of Third Parties/No Vicarious Liability
By their response, the CSE Defendants do not appear to contest that their
affirmative defenses relating to the acts of third parties are intended to negate the
causation element of relators case.
22
Their argument is simply that the issues are
relevant and necessitate discovery. Opposition at 26. The authority they cite in support
of their position holds, like Gates, 825 F. Supp. 2d at 170-171, that their affirmative
defenses should just be treated as denials. This would appear to be an immaterial
distinction but for the fact that having numerous redundant and immaterial affirmative
defenses in the pleadings in this case can only serve to confuse matters during the course
of discovery and litigating the case, without any redeeming benefit, especially in a case
that will be tried to a jury. Contrast Sweeney v. Am. Registry of Pathology, 287 F. Supp.
2d at 5 (in declining to strike defense court noted that "since any trial against the United
States will be a bench trial, the Court can consider and decide the merits of the United

22
The CSE Defendants Answer to Relators SAC includes the following
affirmative defenses: Seventeenth (Acts of third parties causation), Twentieth (Acts of
third parties no vicarious liability).
22

States' defense as a matter of law at the time of trial"). Armstrong has already agreed that
this affirmative defense should be stricken. Opposition at 1, n.1 (withdrawing
Armstrongs Vicarious Liability defenses to United States and relators complaints).
Plaintiffs thus request that the Court simply strike the same negative affirmative
defense raised by the CSE Defendants, without prejudice to their ability to make
whatever arguments they would otherwise have been entitled to make in this case
regarding causation. See Fed. R. Civ. P. 12(f) (The court may strike from a pleading . . .
any redundant . . . matter.).
2. Relators Bad Faith
The CSE Defendants Twenty-Fifth Affirmative Defense entitled Bad Faith
alleges On information and belief, this lawsuit was filed in bad faith, thereby barring
Relator from recovering on any cause of action in the Complaint, and entitling the CSE
Defendants to recover their costs of suit incurred herein, including reasonable attorneys
fees. Plaintiffs have already provided ample briefing for the Court demonstrating that
alleged wrongdoing by relator is not a proper predicate for an affirmative defense against
an FCA case. Opening Brief at 34-35.
In apparent recognition of this authority, the CSE Defendants attempt to convert
their affirmative defense of Bad Faith into a claim for attorneys fees under 31 U.S.C.
3730(d)(4). The problem with this argument, however, is that an affirmative defense is
supposed to be a defense to liability in a case. See, e.g., Lane v. Page, 272 F.R.D. at 598
(An affirmative defense, under the meaning of Fed. R. Civ. P. 8(c), is a defense that
does not negate the elements of the plaintiffs claim, but instead precludes liability even
if all of the elements of the plaintiffs claim are proven.). A claim for attorneys fees
under the False Claims Act is plainly not a defense to liability in any way shape or form.
Moreover, the CSE Defendants Twenty-Fifth affirmative defense does not refer to any
of the conduct that is specified in 3730(d)(4) as potential bases for the award of
attorneys fees to a defendant in an FCA case (or even to 3730(d)(4) itself). The
23

defense should thus be stricken and if defendants wish to move for an opportunity to
amend their answer properly, they can seek court relief to do so.
VI. CONCLUSION
Based on the foregoing, plaintiffs respectfully request that the defendants
affirmative defenses be stricken as described in plaintiffs motion.

Respectfully submitted,

JOYCE R. BRANDA
Acting Assistant Attorney General

RONALD C. MACHEN JR., D.C. Bar # 447889
United States Attorney

DANIEL F. VAN HORN, D.C. Bar # 924092
Assistant United States Attorney

/s/ Darrell C. Valdez
Darrell C. Valdez (D.C. Bar No. 420232)
U.S. ATTORNEYS OFFICE
Judiciary Center Building
555 Fourth Street, NW
Washington, DC 20530
(202) 252-2507
darrell.valdez@usdoj.gov

Michael D. Granston
Tracy L. Hilmer, D.C. Bar # 421219
Robert E. Chandler
David M. Finkelstein
UNITED STATES DEPARTMENT OF JUSTICE
Civil Division, Fraud Section
601 D Street, NW, Suite 900
Washington, DC 20530
(202) 514-4678 Telephone
(202) 514-0280 Facsimile
Robert.chandler@usdoj.gov

Attorneys for the United States of America
__________ /s/________________
Paul D. Scott
pdscott@lopds.com
California State Bar No. 145975
Admitted Pro Hac Vice

___________/s/________________
Lani Anne Remick
laremick@lopds.com
California State Bar No. 189889
U.S.D.C. No. PA0045
Jon L. Praed
U.S.D.C. No. 450764
D.C. Bar No. 51665
LAW OFFICES OF PAUL D.
SCOTT, P.C.
Pier 9, Suite 100
San Francisco, California 94111
Tel: (415) 981-1212
Fax: (415) 981-1215

Attorneys for Relator Floyd Landis


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