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Sixth Circuit Rejects DOJ's "Fairyland" Damages Calculation and Awards Actual Damages Based on Benefit of the Bargain

February 12, 2016

In U.S. ex rel. Wall v. Circle C Constr., LLC, (Feb. 4, 2016), the Sixth Circuit rejected the government's "creative" accounting in an FCA case based on violations of the Davis-Bacon Act, vacating a treble damages award of $763,000 where the defendant's subcontractor underpaid its employees for electrical work at numerous Army warehouses by a total of $9,900, and remanding with instructions to award only $14,748 (after applying a settlement payment by the subcontractor). "Actual damages by definition are damages grounded in reality," the court reasoned in rejecting the notion that all of the subcontractor's electrical work was "tainted" or rendered worthless by the underpayments, particularly where the harm was easily calculated and there was no dispute as to the work performed given that "the government turns on the lights every day."

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