What's in a claim? A lot if you are in the U.S. Court of Appeals for the Third Circuit, where a recent decision retroactively applied the federal False Claims Act ("FCA") to a union's lawsuit alleging that a construction company tried to skirt the "prevailing wage" provisions of the Davis-Bacon Act.1


The Davis-Bacon Act "protect[s] local wage standards by preventing contractors from basing their bids [for federally-funded construction projects] on wages lower than those prevailing in the area."2 Under it, contractors performing federally funded construction contracts must certify their compliance with the Davis-Bacon Act to the U.S. Department of Labor ("DOL") as a precondition for payment.3

According to the labor union that served as relator in this case, Farfield construction company falsely certified its compliance with Davis-Bacon despite misclassifying workers; the union claimed the company classified workers as "less skilled" though they performed tasks ordinarily performed by "higherskilled (and higher-paid) workers."4 A DOL auditor who investigated while the project was ongoing took no action, and the DOL later declined to take action when the district court referred the union's allegations to it. Nonetheless, the relator argued, this conduct violated the FCA.5

The primary issue was whether the FCA amendments contained in the Fraud Enforcement and Recovery Act of 2009 ("FERA")—which lowered the mens rea threshold, thereby making it easier to prove liability—applied retroactively to Farfield's scheme. This was key, because relators did not claim Farfield had intentionally misclassified workers, but only had "recklessly" done so by not inquiring into local labor practices.

FERA included a retroactivity provision which applied to "all claims under the False Claims Act" pending on or after June 7, 2008—two days before the U.S. Supreme Court decision in Allison Engine Co. v. U.S. ex rel. Sanders holding that the FCA required proof of specific intent to defraud the government. Because Farfield's alleged conduct ended in 2007, if a "claim" referred to the contractor's submission for payment, the amendment was inapplicable. But, on the other hand, if a "claim" referred to the resulting FCA lawsuit, the amendment applied because the relator's lawsuit was pending by the retroactivity date.


The U.S. Court of Appeals for the Third Circuit noted a circuit split over the meaning of "claim" under the amendment. The U.S. Courts of Appeals for the Fifth, Ninth, and Eleventh Circuits held that it refers to the underlying claim for payment. The U.S. Courts of Appeals for the Sixth and Seventh Circuits, on the other hand, held that it refers to the resulting lawsuit.6

The Third Circuit adopted the latter view. Although the FCA's very title uses "claims" to mean submissions for payment, and another FERA provision defined "claim" to mean "any request or demand . . . for money or property" presented to certain agents or officials, the Third Circuit noted that elsewhere, the FCA "uses 'claims' synonymously with 'cases.' " Also, Congress's use of an effective date just before Allison Engine suggested an "intent to undo the effect of" that decision.7

Farfield is noteworthy also for the novel approach that the court took towards the relator's burden of proof for damages. According to the court, where an FCA case is premised on a Davis-Bacon Act violation, a court should adopt the Fair Labor Standards Act's burden-shifting framework, under which a claimant's prima facie showing that employees have been improperly compensated shifts to the employer the burden of "com[ing] forward with evidence of the precise amount of work performed" and the propriety of the payments.8

Farfield is just the latest in a line of decisions allowing the Davis-Bacon Act to be enforced through the FCA, providing treble damages not available under labor law enforcement procedures. The decision underscores the importance of defendants arguing that their conduct was objectively reasonable, and thus not "false," where that defense is available. It also underscores the importance of vigorously contesting materiality. The fact that the DOL twice declined to act (once after knowing the union's allegations) suggests both that the company's classifications were reasonable and were not material, but the company did little in the briefing to emphasize the significance of the agency's inaction.


Despite the genuine circuit split on retroactivity, there is a good chance the Supreme Court will not resolve the issue. Because the FERA amendments are now more that 10 years old, the Court may well conclude that the retroactivity question is not cert-worthy because it affects a limited and declining number of cases. The Court has been increasingly selective, and in the two most recent terms, has taken fewer cases than any time since the Civil War. Thus, we may be stuck with the FERA's uneven application going forward.


1. See U.S. ex rel. Int'l Bhd. of Elec. Workers Loc. Union No. 98 v. Farfield Co., No. 20-1922 (3d Cir. July 13, 2021).

2. Id.

3. See id.

4. See id.

5. See id. 

6. See id. 

7. See id.

8. See id.

Originally published by Pratt's Government Contracting Law Report.

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