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In the Supreme Court of the United States No. 04-786 In the Supreme Court of the United States UNITED STATES OF AMERICA, PETITIONER v. GLENDALE FEDERAL BANK, FSB ON CROSS-PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT CONDITIONAL CROSS-PETITION FOR A WRIT OF CERTIORARI PAUL D. CLEMENT Acting Solicitor General Counsel of Record STUART E. SCHIFFER Acting Assistant Attorney General EDWIN S. KNEEDLER Deputy Solicitor General JAMES A. FELDMAN Assistant to the Solicitor General DAVID M. COHEN JEANNE E. DAVIDSON WILLIAM F. RYAN TAREK SAWI Attorneys Department of Justice Washington, D.C. 20530-0001 (202) 514-2217 QUESTIONS PRESENTED 1. Whether otherwise fraudulent conduct consisting of the submission at different times of inconsistent statements in support of a claim against the govern- ment under 28 U.S.C. 2514 is excused because the later, false set of statements were due to “hindsight.” 2. Whether Glendale Federal Bank (Glendale) was entitled to an award of $381 million in damages despite the findings of the courts below that Glendale had not proven a necessary predicate of its claim. 3. Whether Glendale was entitled to a reliance award, which is based on the costs Glendale incurred in reliance on the contract, without an offset for benefits that Glendale admittedly received from the contract. (I) TABLE OF CONTENTS Page Opinions below ............................................................................... 1 Jurisdiction ...................................................................................... 2 Statutory provisions involved ..................................................... 2 Statement ........................................................................................ 2 Reasons for granting the conditional cross-petition ............... 12 A. The courts below erred by reading a “hind- sight” defense into 28 U.S.C. 2514 ............................... 12 B. The lower courts erroneously relieved Glendale of the obligation to present affirmative evidence of it’s alleged “wounded bank” damages .................... 21 C. Any reliance damages should have been offset by the benefits Glendale admittedly received from the contract ...................................................................... 25 Conclusion ....................................................................................... 30 TABLE OF AUTHORITIES Cases: Bank United of Texas, FSB v. United States, 50 Fed. Cl. 645 (2001), aff’d in part and rev’d in part, 80 Fed. Appx. 663 (Fed. Cir. 2003), cert. denied, 125 S. Ct. 33 (2004) ................................................................ 4 Brown Constr. Trades, Inc. v. United States, 23 Cl. Ct. 214 (1991) ............................................................... 12 Bucklew v. Hawkins, Ash, Baptie & Co., 329 F.3d 923 (7th Cir. 2003) ................................................. 25 Columbia First Bank v. United States, 60 Fed. Cl. 97 (2004) ............................................................................. 5 Commercial Contractors, Inc. v. United States, 154 F.3d 1357 (Fed. Cir. 1998) ............................................. 19 DPJ Co. v. FDIC, 30 F.3d 247 (1st Cir. 1994) .................. 26 Freund v. Washington Sq. Press, Inc., 314 N.E.2d 419 (N.Y. 1974) .................................................. 26 (III) IV Cases—Continued: Page Globe Sav. Bank v. United States, 59 Fed. Cl. 86 (2003) ........................................................................................ 27 Globe Works v. United States, 45 Ct. Cl. 497 (1910) ......... 13 Grogan v. Garner, 498 U.S. 279 (1991) .............................. 19 Herman & MacLean v. Huddleston, 459 U.S. 375 (1983) ........................................................................................ 20 Hillside Enter. v. Carlisle Corp., 69 F.3d 1410 (8th Cir. 1995) ......................................................................... 25 Kamen Soap v. United States, 124 F. Supp. 608 (Ct. Cl. 1954) ........................................................................... 12 McCarthy v. United States, 670 F.2d 996 (Ct. Cl. 1982) ......................................................................................... 13 Miller v. Robertson, 266 U.S. 243 (1924) ........................... 26 O’Brien Gear & Mach. Co. v. United States, 591 F.2d 666 (Ct. Cl. 1979) ................................................... 12 Schiller & Schmidt, Inc. v. Nordisco Corp., 969 F.2d 410 (7th Cir. 1992) ................................................. 25 UMC Electronics Co. v. United States, 43 Fed. Cl. 776 (1999) ................................................................................. 13 United States v. Winstar Corp., 518 U.S. 839 (1996) .................................................................................... 2, 3, 4 Statutes: Financial Institution Reform, Recovery, and Enforce- ment Act of 1989, Pub. L. No. 101-73, 103 Stat. 183 ....... 3 28 U.S.C. 2514 ...................................................................... passim Miscellaneous: 5 Arthur Linton Corbin, Corbin on Contracts (1964) ........................................................................................ 26 3 Dan B. Dobbs, Law of Remedies (2d ed. 1993) ............. 26, 29 3 E. Allen Farnsworth, Farnsworth on Contracts (2d ed. 1998) ............................................................................ 26 Charles T. McCormick, Damages (1935) .......................... 26, 29 Restatement (Second) of Contracts: (1979) ........................................................................................ 26 (1981) ........................................................................................ 21 In the Supreme Court of the United States No. 04-786 UNITED STATES OF AMERICA, PETITIONER v. GLENDALE FEDERAL BANK, FSB ON CROSS-PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT CONDITIONAL CROSS-PETITION FOR A WRIT OF CERTIORARI The Acting Solicitor General, on behalf of the United States, respectfully conditionally cross-petitions for a writ of certiorari to review the judgment of the United States Court of Appeals for the Federal Circuit in this case. Although we respectfully suggest that the Court should deny the petition in Glendale Federal Bank, FSB v. United States, No. 04-626, if the Court grants that petition, it should also grant this cross-petition. If the Court denies that petition, it also should deny this cross-petition. OPINIONS BELOW The first opinion of the court of appeals on damages (04- 626 Pet. App. 22a-38a) is reported at 239 F.3d 1374. The second opinion of the court of appeals, reviewing the trial court’s remand decision on damages (04-626 Pet. App. 1a-9a), is reported at 378 F.3d 1308. The trial court’s first decision on damages (04-626 Pet. App. 39a-79a) is reported at 43 Fed. Cl. 390. The trial court’s decision on remand (04-626 Pet. App. 10a-21a) is reported at 54 Fed. Cl. 8. This case was previously before this Court in a consoli- dated appeal of three cases concerning liability. This Court’s (1) 2 decision is reported at 518 U.S. 839. The court of appeals’ previous decision concerning liability is reported at 64 F.3d 1531. The trial court’s previous liability decision is reported at 26 Cl. Ct. 904. JURISDICTION The judgment of the court of appeals was entered on August 9, 2004. The petition for a writ of certiorari in Glendale Federal Bank, FSB v. United States, No. 04-626, was placed on this Court’s docket on November 10, 2004. This conditional cross-petition is filed pursuant to Rule 12.5 of the Rules of the Court. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). STATUTORY PROVISION INVOLVED This case involves 28 U.S.C. 2514, which provides that “[a] claim against the United States shall be forfeited to the United States by any person who corruptly practices or attempts to practice any fraud against the United States in the proof, statement, establishment, or allowance thereof.” STATEMENT This is one of more than 40 Winstar-related cases (see United States v. Winstar Corp., 518 U.S. 839 (1996)) cur- rently pending in the Court of Federal Claims and the Federal Circuit. The petition in No. 04-626, filed by Glendale Federal Bank, FSB (Glendale), seeks review of the court of appeals’ rejection of Glendale’s claims for recovery of an additional $528 million in damages. This cross-petition seeks review of the court of appeals’ rejection of the government’s claims that Glendale was not entitled to the $381 million in damages that were awarded. 1. As a result of high interest rates and inflation in the late 1970s and early 1980s, a number of federally insured savings and loan associations found themselves holding long- term, fixed-rate mortgages with low interest rates, while they were forced to pay high rates to attract depositors. 3 Winstar, 518 U.S. at 845 (plurality opinion). One of the institutions in that situation was the First Federal Savings and Loan Association of Broward County, Florida (Bro- ward). By 1981, Broward had liabilities that exceeded its assets by more than $734 million. Cross-respondent Glen- dale, a federally insured thrift institution operating in Cali- fornia, submitted a proposal to the Federal Home Loan Bank Board, the thrift regulatory agency, to acquire Broward. The Board approved that proposal, and Glendale acquired Broward. Id. at 861. Federally insured thrifts had always been required to maintain minimum amounts of capital reserves, ordinarily expressed as a percentage of their
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