Ethics Related Legal Case

Supply Chain and Logistics Ethics Related Legal Case

On January 2012, a case was presented in a New York Court of Federal Claims (COFC). Railways Logistics International (RLI) was barred by the United States from fulfilling their contract regarding to the provision of rehabilitation goods to Iraqi Republic Railways (IRR). On the other hand, the US government tabled claims that the Logistics firm acted unethically, leading to a breach of the contract hence the need for an immediate termination. This paper shall outline a summary of the court case and decision reached. It shall also analyze reasons and implications of the decision.

Railways Logistics International Vs the US Government

RLI brought a lawsuit on US government with a basis on the abrupt termination of contract. The contract involved a long term supply of necessities for rehabilitation of Iraqi railways damaged by airstrikes at the height of the Iraqi War. According to the firm, the US actions were malicious and driven by ill motives as the government failed to provide solid support for its actions. As the case proceeded, the government filed counterclaims against RLI.

The US counterclaims were based on allegations of failure on the part of RLI to offer adequate performance under the contract. In addition, the US provided evidence that RLI grossly inflated its claim regarding equitable adjustment as the contract terminates. Given the unethical nature of the RLI activities, government lawyers sought damages as per the Contracts Disputes Act and the Fraudulent Claims Act. Besides, they launched a bid for a forfeiture of the firm’s breach claim.

RLI argument as a response to government’s claims was that COFC had no jurisdiction on hearing the counterclaims. There was a contention on the side of RLI for a trial before a jury because US government anchored its claims on fraud allegations. In their contention, RLI cited the Seventh Amendment.

The Courts Decision

The COFC ruling favored US government. The ruling held that the Seventh Amendment was ineffective in protection to plaintiffs exercising rights to sue the government, especially in an Article 1 court. A priority goes to the government if it launches countersuits in the same court (Gordon & Gross, 1983). COFC referred to1990 federal court decision in the case of The US Vs Seaboard lumber Company.  In turn, the US vs. Seaboard Lumber Company’s court decision was inspired by the 19^th century Supreme Court’s decision in the case of McElrath Vs United States. The case illustrates a way that forum selection wields an effect on the contractor pushing for claims against the US government.

The Reasoning Associated With Court’s Decision

From the decision, it is evident that a contractor’s election to litigate against US government prompts a rights waiver to a Jury trial with regards to counterclaims.  There is a close scrutiny of the appeals presented to COFC, especially when there is a remarkable potential for fraudulent counterclaims. This is because it is relatively easier for US government to launch counterclaim amid the pending litigation decision. Notably, a contract appeal requires the government to file a lawsuit in a different FCA forum.

In a case where there is a growing concern about fraud tainting the original claim, there is a need for a reversal of such claim. Besides, an immediate rectification is necessary to eliminate such taint prior to the reference of the case in future lawsuits. Thus, the counsel is tasked with a responsibility of ensuring that concrete evidence exists to support all claim aspects before its presentation to a contracting officer.

Reference

Gordon, N. A., & Gross, D. (1983). Justiciability of Federal Claims in State Court. Notre Dame L. Rev.,