Ruling Reinstates Whistleblower Suit Against DHL

, New York Law Journal

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DHL Airbus
DHL Airbus

A federal notice provision requiring challenges in shipping-rate disputes to be brought within 180 days is trumped by the False Claims Act, the U.S. Court of Appeals for the Second held Wednesday.

Saying adherence to the notice provision would undermine the purpose of the act because any notice would tip off alleged violators, the Second Circuit reversed a lower court and reinstated the case of Grupp v. DHL Express (USA) Inc., 12-3829.

Kevin Grupp and Robert Moll, owners of a company that served as an independent contractor for DHL, filed a qui tam action under the act claiming that DHL, an international packaging company, billed the General Services Administration, the Department of Defense and the Department of Homeland Security for jet-fuel surcharges and diesel-fuel surcharges regardless of whether shipping was done by air or on the ground.

In their complaint as "relators" under the act, they alleged three specific instances where the jet-fuel surcharge was billed but the shipment was by ground, and they also claimed the jet-fuel surcharge was routinely billed regardless of the mode of delivery.

The fraudulent billing of government agencies alleged occurred from 2003 to 2008.

DHL moved to dismiss in November 2011, arguing the plaintiffs had failed to comply with 49 U.S.C. §13710(a)(3)(B), which requires shippers to contest bills before the Surface Transportation Board of the U.S. Department of Transportation within 180 days of the receipt of the bill.

Failure to comply with the notice requirement prevents any challenge to the shipping charge.

Western District Judge John Curtin granted the motion to dismiss and Grupp and Moll appealed to the circuit.

Judges Ralph Winter, Jose Cabranes and Debra Ann Livingston heard oral arguments on March 21.

The panel also received an amicus curiae brief from the federal government, which argued in favor of the supremacy of the False Claims Act over the 180-day notice requirement.

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