U.S. v. Honeywell International Inc., case number 1:08-cv-00961, in the U.S. District Court for the District of Columbia.
Honeywell will pay $3.35 million to settle a long-running False Claims Act suit over allegedly faulty body armor sold to law enforcement, following a circuit court ruling that had significantly limited its potential liability, the U.S. Department of Justice announced Wednesday.
The deal resolves allegations that between 2000 and 2005, Honeywell International Inc. had sold “Z Shield” Zylon fiber material to a bulletproof vest manufacturer that Honeywell knew was not suitable for ballistic use due to its degrading quickly in hot and humid conditions, the DOJ said.
Honeywell is the last of 18 manufacturers and suppliers to settle after being accused of a role in selling defective Zylon fiber vests to federal agencies and to state, local and tribal law enforcement, finally ending a related investigation, according to the DOJ.
That long-running industrywide investigation and the related settlements, which had totaled more than $133 million before Honeywell reached its agreement, had demonstrated “the department’s resolve to hold accountable those businesses and individuals who supplied Zylon-containing bulletproof vests,” Brian Boynton, head of the DOJ’s Civil Division, said in a statement on Wednesday.
“The safety of law enforcement officers is of paramount importance, and we are committed to ensuring that taxpayer dollars go only to the high-quality ballistic protection our first responders deserve,” Boynton said.
Honeywell, in a statement to Law360 on Wednesday, said it was “pleased to announce” the resolution of the case, and viewed the “modest settlement amount as a reasonable way to settle this long-standing litigation.”
The company continued to deny any liability or that it made any false claims related to Z Shield, which it stopped selling in 2005, it said.
“Honeywell has long maintained that the Z Shield ballistic material at issue in the lawsuit was safe and effective,” the company said. “Ballistic vests containing Z Shield were sold to various … law enforcement agencies and have resulted in at least five confirmed saves of police officers shot in the line of duty. In both the investigation and the litigation, the U.S. Government did not identify a single instance where a vest containing Z Shield failed to perform as intended in the field.”
The DOJ had sued Honeywell in 2008 over the sale of Z Shield material to Armor Holdings, a manufacturer of bulletproof vests. As Honeywell’s case dragged on for more than a decade, the other 17 companies accused of selling defective vests or fiber, including Armor Holdings, all reached related settlements.
Following those settlements, Honeywell moved for a ruling in June 2019 that it should be allowed a pro tanto, or dollar-for-dollar, reduction in its potential damages due to the “common damages” addressed by the settlements. As its alleged liability, with the FCA’s trebled damages applied, was roughly $35 million, that would have effectively zeroed out any potential damages owed, leaving only potential civil penalties for each false claim.
U.S. District Judge Paul L. Friedman in the District of Columbia denied the company’s motion in November 2020, backing the government’s view that Honeywell should still be on the hook for a “proportionate share” of total damages, but in June 2021 he let the company appeal so the D.C. Circuit could weigh in.
Judge Friedman said that the issue involved an unresolved question of law that was the subject of an intra-circuit split, and that although he believed the proportionate share approach “would, on balance, produce a more equitable result,” there were also “not insubstantial” arguments in favor of the pro tanto approach, such as “concerns related to overcompensating the United States.”
The D.C. Circuit in August of this year backed the pro tanto approach to deciding damages when accounting for settlements already made by other defendants. U.S. Circuit Judge Neomi Rao wrote for the court that it “best fits with the FCA and the joint and several liability applied to FCA claims.”
There was no specific settlement offset rule or similar common law term included in the FCA for parties who cause the “same indivisible harm” to the government, Judge Rao said.
But using the proportionate share approach would clash with both U.S. Supreme Court precedent on joint and several liability in the FCA context and a long-held common law principle “that settlement with, or successful litigation against, one party reduces the damages owed by other parties who are jointly liable,” she said.
Source: Law360
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