Who's on first - do contracting officers decide the merits of employment discrimination cases filed against government contractors after Boeing v. Roche?

Army Lawyer, Oct, 2003 by Gregory R. Bockin

The CAFC then reviewed the FAR (74) and determined that the regulations "reflect a policy judgment that [when] the action is brought by a federal or state government entity and the costs would be disallowed in an unsuccessful suit, the defense costs should also be disallowed in a settlement situation, see FAR [section] 31.205-47(b)(4)." (75) This does not apply if the "U.S. government specifically agrees that they will be allowable." (76) The CAFC concluded that this FAR provision represented a policy judgment "based on the assumption that suits brought by government entities in most situations are likely to be meritorious, thus justifying a bright line rule that does not look behind the settlement." (77)

The court refused to extend this same assumption to private suits, however. Rather, the court opined that:

   [W]here a private suit is involved[,] an
   inquiry is necessary to determine whether the
   plaintiff was likely to prevail.... This
   approach is most clearly reflected in the FAR
   regulations' treatment of settlements of private
   suits brought under the False Claims Act
   where the government does not intervene.
   FAR [section] 31.205-47(c)(2)." (78)

The CAFC explained that under this new standard, "costs may be allowable if the contracting officer determines that there was 'very little likelihood that the third party [plaintiffs] would have been successful on the merits.'" (79) Applying this test to the facts in Boeing II, the CAFC held that for "the costs to be allowable in a settlement situation (where the costs of an unsuccessful defense would be disallowed), Boeing must show that the allegations in the Citron action had 'very little likelihood of success on the merits.'" (80)

John D. Inazu, an Associate General Counsel for the Department of the Air Force, has suggested that this new standard means that for legal fees to be allowable, the costs must be dissimilar to, but also unrelated to, costs disallowed under the FAR. (81) Focusing on the frivolous nature of some modern lawsuits, he argues that "while 'the costs of defending corporate directors against frivolous lawsuits are essential to any business operation,' if the lawsuits were not 'frivolous,' then the costs would not be 'related' to costs of defending against government charges of contractor wrongdoing." (82) Mr. Inazu concludes that the CAFC essentially "held that a proper determination of allowability depended on a showing by the contractor that the shareholder suits were frivolous." (83)

Applying the Boeing II Standard to the XYZ Scenario

To properly understand the current state of the law, it is helpful to apply this new CAFC standard to the hypothetical situation discussed earlier. These are the theoretical facts: (84) XYZ hired Ms. B. as a carpenter and she began working at a commercial construction project. At that job site, another carpenter, Mr. T, took an interest in Ms. B and asked her out for a date. At first, Ms. B made excuses why she could not go out with him. After he had asked her out for the second time, Ms. B told him that she was not interested. Following this incident, Mr. T began to make derisive comments to Ms. B at the job site in front of other workers. Ms. B said nothing at the time, having experienced the rough language of construction sites during her earner.