Lance Armstrong Must Face $100 Million Lawsuit

February 14, 2017
By David Lee

WASHINGTON (CN) – Though a federal judge Monday said he “generally adopts” Lance Armstrong’s claim that the U.S. Postal Service suffered zero actual damages from the nearly $33 million it spent to sponsor his cycling team, the question of damages must go to a jury, clearing the United States’ $100 million lawsuit for trial.

U.S. District Judge Christopher Cooper refused Armstrong’s motion to dismiss, because of the difficulty of quantifying the damages the USPS may have suffered. Armstrong claimed that “(t)he government’s actual damages are zero” because it received the benefit of his name and work while USPS sponsored his team from 1996 to 2004.

“The Court generally adopts Armstrong’s proposed ‘benefit-of-the-bargain’ approach to calculating damages in FCA [False Claims Act] cases, like this one, where the market value of goods or services supplied under a government contract are difficult to determine,” Cooper wrote.

He added, however: “This issue presents a closer question.”

Cooper agreed with evidence that the USPS “received substantial benefits as a direct result of the sponsorship,” citing internal USPS communications and valuation studies by third parties.

“Ultimately, however, the court concludes that the monetary amount of the benefits USPS received is not sufficiently quantified to keep any reasonable juror from finding that the agency suffered a net loss on the sponsorship, especially if one considers the adverse effect on the Postal Service’s revenues and brand value that may have resulted from the negative publicity surrounding the subsequent investigations of Armstrong’s doping and his widely publicized confession,” the 37-page opinion states.

Armstrong was the team’s lead rider, winning seven consecutive Tour de France titles – six while sponsored by USPS. Dogged by allegations of doping for years, Armstrong became a pariah when the U.S. Anti-Doping Agency concluded in 2012 that he had used banned substances from 1998 through his entire career, banned him from cycling for life and stripped him of his wins, including his seven Tour de France titles. He then admitted to doping in a televised interview with Oprah Winfrey.

The lawsuit began in 2010 when former teammate Floyd Landis sued Armstrong, former team manager Johan Bruyneel and Armstrong’s management company Tailwind Sports in Federal Court. The United States joined the lawsuit three years later, soon after Armstrong’s interview with Winfrey. Landis was stripped of his 2006 Tour de France victory for doping, as well.

If a federal jury rules for the plaintiffs, the defendants would be on the hook for treble damages – three times the $33 million in alleged damages. Landis stands to collect up to 30 percent of that money as a whistleblower.

Judge Cooper said that all the federal government needs to show is that a “contractor withheld information about its noncompliance with material contractual requirements,” citing Tailwind’s invoices that “did not represent anything about the nature” of the services provided.

“Because the government has offered evidence that Armstrong withheld information about the team’s doping and use of PEDs [performance-enhancing drugs] and that the anti-doping provisions of the sponsorship agreements were material to USPS’s decision to continue the sponsorship and make payments under the agreements, the court must deny Armstrong’s motion for summary judgment on this issue,” the opinion states.

Armstrong has steadfastly refused to settle the lawsuit, saying in December 2015 that he “is not in a position to cut any more checks” after settling two lawsuits over his Tour victory bonuses.

“That’s the only active case, so it gets a little trickier to talk about – just because I do not want to get crushed by lawyers – but we like our case,” Armstrong said on the “Joe Rogan Experience” podcast. “The Postal Service commissioned three separate studies to analyze the effect of the sponsorship on the team. We believe they made hundreds of millions of dollars and we know they were using the team as a sales vehicle during the Tour, bringing over potential clients.”

Armstrong settled a long-running dispute with Dallas-based insurer SCA Promotions for $7.5 million in 2015. SCA sued Armstrong after his doping admission, demanding the return of an earlier arbitration award after it refused to pay him his race bonus for winning the 2003 Tour due to its doping suspicions.

Armstrong settled a similar lawsuit with Acceptance Insurance in 2013, which paid him $3 million in Tour bonuses.

Federal prosecutors declined to comment on the ruling Monday evening.

Defense attorney Elliot R. Peters, with Keker & Van Nest in San Francisco, said the ruling shows there is no evidence of quantifiable financial harm to USPS.

“So the government may now proceed to a trial that, as a practical matter, it cannot win,” he said.

Landis’ attorney, Paul D. Scott, of San Francisco, said he was “delighted” with the ruling and that the finish line for Armstrong is “fast approaching.”

From Courthouse News.

Floyd Landis Dealt Setbacks in Whistleblower Case

June 20, 2016
By David Lee
WASHINGTON (CN) — A federal judge ruled disgraced cyclist and whistleblower Floyd Landis cannot reopen Lance Armstrong’s deposition about statements made in a documentary and cannot sue for false claims made more than 12 years ago.
Landis sued Armstrong, former U.S. Postal Service cycling team manager Johan Bruyneel and Armstrong’s management company Tailwind Sports in Federal Court in 2010. The United States joined the $100 million lawsuit three years later, after Armstrong admitted to Oprah Winfrey that he used steroids and blood doping to win his record seven consecutive Tour de France victories.
Armstrong gave the interview after he was banned from the sport for life and stripped of his victories. Landis too was stripped of his 2006 Tour de France victory for doping.
Landis claims Bruyneel knew the team was using banned drugs and that Armstrong and Tailwind Sports, among others, knowingly flouted USPS sponsorship agreements signed in 1995 and 2000. Landis could receive up to 30 percent of any recovery as whistleblower.
On Wednesday, U.S. District Judge Christopher R. Cooper rejected Landis’ motion to compel the reopening of Armstrong’s deposition about the authenticity of statements he made in the 2013 Sony-produced documentary “The Armstrong Lie.”
Armstrong had told the court the documentary footage “does not accurately reflect the questions asked of him and the answers he gave.” He said the content of the questions had been edited and that parts of questions were deleted.
Landis wanted to know what precise questions and answers in the video Armstrong disputes.
Cooper’s four-page order said the court “will not require Armstrong to supplement his interrogatory response or to sit for further deposition time.” The judge cited a 2004 opinion from an Ohio Federal Court that held videos in another case “fairly depict the actual events that took place” in spite of allegations of editing and deletions making it misleading.
The judge also refused to order Armstrong to identify alleged errors in his deposition transcript.
“[Landis] is equally able to identify discrepancies between the words actually uttered in the documentary and the text of a corresponding transcript,” the order states. “If [Landis] wishes to include relevant portions of the transcript in his trial exhibits, the court expects him to ensure their accuracy. If necessary, Armstrong may object to the accuracy of [Landis’] transcript designations in advance of trial.”
Cooper on Wednesday also denied Landis’ motion to reconsider his earlier ruling that Landis cannot sue for false claims allegedly made prior to June 10, 2004. The judge had earlier ruled that tolling provisions under the False Claims Act do not apply to Landis’ claims that the government has not intervened in.
“Because the government had not intervened…the court concluded that [Landis] could recover against them only for allegedly false claims submitted on or after June 10, 2004 — not on or after June 10, 2000, as the tolling provision would have allowed,” a seven-page order states.
Cooper rejected Landis’ citing of two U.S. Supreme Court rulings, concluding the first “is but a variation” of an earlier argument Cooper rejected, according to the order.
He ruled the second cited case is “equally unavailing” as it relies heavily on a previous case from his district with an approach that was “ultimately rejected.”
Attorneys for Landis did not immediately respond to an email message requesting comment Friday.
Armstrong has settled several civil lawsuits against him after his Winfrey interview, but said he must fight Landis’ lawsuit because he “is not in a position to cut any more checks.”
“That’s the only active case so it gets a little trickier to talk about – just because I do not want to get crushed by lawyers – but we like our case,” Armstrong said in December. “The Postal Service commissioned three separate studies to analyze the effect of the sponsorship on the team. We believe they made hundreds of millions of dollars and we know they were using the team as a sales vehicle during the Tour, bringing over potential clients.”

From Courthouse News.

Lance Armstrong Ducks Feds’ Clawback Effort

January 14, 2016
By David Lee
WASHINGTON (CN) – Whistleblower Floyd Landis and the United States cannot pursue a “reverse” false claims count against disgraced cyclist Lance Armstrong under a U.S. Postal Service sponsorship contract, a federal judge ruled.
U.S. District Judge Christopher R. Cooper entered summary judgment Tuesday dismissing the claim. He concluded the sponsorship agreement in place “created no legal obligation” for Armstrong “to repay USPS any sponsorship fees obtained as a result of materially false statements.”
Direct false claims cause the federal government to pay money directly to the claimants, while reverse false claims cause the improper withholding of money the federal government is owed.
Landis sued former teammate Armstrong, former U.S. Postal Service team manager Johan Bruyneel and Armstrong’s management company Tailwind Sports in Federal Court in 2010. The United States joined the lawsuit three years later, after Armstrong admitted to Oprah Winfrey that he used steroids and blood doping to win his record seven consecutive Tour de France victories.
Armstrong gave the interview after he was banned from the sport for life and stripped of his victories. Describing the interview as an “ass whooping,” Armstrong said last month he was forced to do it because he wanted to tell his story on his terms with a person of his choosing.
In the same interview, Armstrong said he could not settle with the government because he “is not in a position to cut any more checks” after enduring numerous other lawsuits.
Landis too was stripped of a Tour de France victory for doping, after an epic breakaway in the 2006 race. He claims Bruyneel knew the team was using banned drugs and that Armstrong and Tailwind Sports, among others, knowingly flouted USPS sponsorship agreements signed in 1995 and 2000. Landis could receive up to 30 percent of any recovery as whistleblower.
Cooper’s 31-page opinion agreed with the defendants that Tailwind’s “purported obligation to pay does not arise under the contract, but rather from an alleged right to recoup previous contractual payments.” Cooper said he could not find any other decision ruling that a breach of contract with the United States allows it to sue for reimbursement qualifying as an “obligation” under the False Claims Act.
He cited a 2014 ruling against the defendants that concluded a reverse false claims “obligation” is only triggered by a “total breach” of a “core, vital material term that defeats the purpose of the contract” and allows the injured party to ask for restitution.
“Upon considerable further review, the court is persuaded that Tailwind’s alleged breach of the sponsorship agreement did not create a statutory ‘obligation,'” he wrote.
Cooper also refused to dismiss four direct false claims counts against Armstrong’s business representatives – William Stapleton, Barton Knaggs and their company Capital Sports and Entertainment Holdings – finding a genuine issue of material fact exists as to whether false claims under the USPS sponsorship agreement were filed within act’s six-year statute of limitations.

From Courthouse News.

Lance Armstrong Says He’s Run Out of Money

December 16, 2015
By David Lee
DALLAS (CN) – Lance Armstrong says he will not settle the federal government’s $100 million False Claims Act lawsuit because he “is not in a position to cut any more checks” after enduring several other lawsuits.
Appearing on the “Joe Rogan Experience” podcast Tuesday, Armstrong said he likes his case because the U.S. Postal Service enjoyed a “significant increase in revenue” when it sponsored his racing team.
Former teammate Floyd Landis sued Armstrong, his former team manager Johan Bruyneel and Armstrong’s management company Tailwind Sports in Federal Court in 2010. The United States joined the lawsuit three years later, after Armstrong admitted to Oprah Winfrey that he used steroids and blood doping to win his record seven consecutive Tour de France victories.
Armstrong gave the interview after he was banned from the sport for life and stripped of his victories. Landis too was stripped of a Tour de France victory for drugging, after an epic breakaway in the 2006 race.
Landis claims Bruyneel knew the team was using banned drugs and that Armstrong and Tailwind Sports, among others, knowingly flouted USPS sponsorship agreements signed in 1995 and 2000. Landis could receive up to 30 percent of any recovery as whistleblower.
“That’s the only active case so it gets a little trickier to talk about – just because I do not want to get crushed by lawyers – but we like our case,” Armstrong said. “The Postal Service commissioned three separate studies to analyze the effect of the sponsorship on the team. We believe they made hundreds of millions of dollars and we know they were using the team as a sales vehicle during the Tour, bringing over potential clients.”
Armstrong told Rogan the “legal blowback” since the Winfrey interview has been “pretty nasty,” as civil lawsuits began piling up immediately.
“When all this goes down, all of these companies are coming back asking for their money,” Armstrong said. “And I said, ‘Who are you?'”
Calling it “the big one,” Armstrong confirmed that a decade-long Tour bonus dispute with Dallas-based SCA Promotions had been settled in September.
Armstrong and Tailwind sued SCA in 2004 in Dallas County Court when it refused to pay him a $5 million bonus for winning the 2003 race due to doping suspicions. The lawsuit went to arbitration and SCA paid Armstrong $7.5 million in 2006.
SCA sued Armstrong for its money back after the Winfrey interview, which featured clips of his depositions in the case in which he denied doping, under oath. An arbitration panel slapped Armstrong with $10 million in sanctions in February, concluding that “perjury must never be profitable” and condemning him for “almost certainly” carrying out “the most devious sustained deception ever perpetrated in world sporting history.”
Armstrong settled a similar lawsuit in November 2013 with Acceptance Insurance, which paid $3 million in Tour bonuses.
“There were many, many other [lawsuits], some were public and some were private,” Armstrong said. “They all had to get settled, so we navigated that landscape and now we’re just down to the Postal case.”
Armstrong said he thinks the federal whistleblower case will go to trial within a year.
“I have no choice but to fight it,” he said. “After the dozen previous lawsuits, I am not in a position to cut any more checks. I’m in a position where I have to fight this one out.”
Calling Winfrey’s interview an “ass whooping,” Armstrong said he was not emotionally ready for it. He said he went through with it because he wanted to tell his story on his terms with a person he chose.
“The feds and the other lawsuits, they forced my hand,” he said. “I knew I was going to be sitting with her … or I was going to be sitting with a government lawyer, being deposed and videoed and being leaked.”
Armstrong said his children were minimally affected by blowback from their classmates in school and on social media.
“For me, that was the biggest relief,” he said. “People can say shit about me all day long but if my kids were treated roughly, that would break your heart, wouldn’t it?”

From Courthouse News.

Lance Armstrong Settles Bonus Claims With Promoter

September 28, 2015
By David Lee
DALLAS (CN) – Lance Armstrong settled his decade-long Tour de France bonus dispute with a Dallas insurer and apologized for his “past misconduct.”
Litigation between Armstrong and SCA Promotions began in 2004 when Armstrong and his management company, Tailwind Sports, sued SCA in Dallas County Court for refusing to pay him a $5 million bonus for winning the Tour in 2003. SCA suspected he had doped.
The dispute went to arbitration in 2005 and Armstrong won. SCA paid Armstrong $7.5 million in 2006.
Six years later, SCA sued Armstrong, his agent William Stapleton and Tailwind, after the Union Cycliste International stripped Armstrong of his seven Tour de France victories and banned him from the sport for life, citing the U.S. Anti-Doping Agency’s “reasoned decision” accusing him of running the most sophisticated doping program in sports history.
Armstrong confirmed the accusations in January 2013 in a televised interview with Oprah Winfrey. The interview featured excerpts from sworn testimony Armstrong gave during his lawsuit against SCA, implying he had lied under oath.
A second arbitration panel in February slapped Armstrong with $10 million in sanctions in SCA’s lawsuit because “perjury must never be profitable,” and condemned him for “almost certainly” carrying out “the most devious sustained deception ever perpetrated in world sporting history.”
A hearing before Texas state Judge Tonya Parker was set and canceled several times this summer for SCA’s attempt to confirm the arbitration panel’s award.
SCA’s attorney Jeff Tillotson, with Lynn Tillotson in Dallas, said Sunday that the company had agreed to settle with Armstrong.
“While the terms of the settlement are confidential, SCA can say that the agreement was mutually acceptable to both parties,” Tillotson said in a statement. “SCA is pleased to have this matter finally resolved and beyond this statement, SCA has no further comment.”
Armstrong said the settlement is “mutually acceptable” to both parties.
“I am pleased to have this matter behind me, and I look forward to moving on,” Armstrong said in a statement. “I do wish to personally apologize to SCA and its CEO, Bob Hamman, for any past misconduct on my part in connection with our dispute and the resulting arbitration.”
The settlement comes two years after Armstrong settled a similar claim by Acceptance Insurance in Travis County Court. Acceptance had paid Armstrong $3 million in race bonuses.
Armstrong still faces a $100 million False Claims Act lawsuit filed by his former teammate Floyd Landis.
The United States joined the lawsuit in April 2013, months after Armstrong’s lifetime ban was handed down. The U.S. Postal Service sponsored Tailwind’s team from 1996 to 2004, during which Armstrong won six consecutive Tours. The Postal Service paid $31 million in sponsorship fees from 2001 to 2004.
Landis claims defendant and former U.S. Postal Service Pro Cycling Team manager Johan Bruyneel knew team members were using banned drugs and that Armstrong and defendant Tailwind Sports, among others, knowingly flouted USPS sponsorship agreements signed in 1995 and 2000. Landis could receive up to 30 percent of any recovery as a whistleblower.

From Courthouse News.

USA Wants Another Shot at Lance Armstrong Deposition

August 11, 2015
By David Lee
(CN) – Lance Armstrong admitted he used prohibited drugs 22 years ago, before his treatment for testicular cancer, according to newly released deposition testimony in a $100 million whistleblower lawsuit against him.
Citing testimony from Armstrong’s most recent deposition, the federal government last week asked for four more hours to continue deposing the cyclist.
During a seven-hour deposition in Denver in July, Armstrong said his use of the stimulant Synacthen in 1993 is the earliest use of a performance-enhancing drug he can remember. Synacthen stimulates the adrenal glands to release corticosteroids.
Former teammate Floyd Landis sued Armstrong, former U.S. Postal Service Pro Cycling Team manager Johan Bruyneel and Armstrong’s management company Tailwind Sports in 2010, under the False Claims Act. The United States joined the lawsuit three years later, after Armstrong admitted he used steroids and blood doping to win his record seven consecutive Tour de France victories. He was banned from the sport for life and stripped of his victories.
Landis claims Bruyneel knew the team was using banned drugs and that Armstrong and Tailwind Sports, among others, knowingly flouted USPS sponsorship agreements signed in 1995 and 2000. Landis could receive up to 30 percent of any recovery as a whistleblower.
Landis was stripped of his 2006 Tour win and banned from the sport for two years after he tested positive for banned substances.
The federal government asked District of Columbia Federal Court on Aug. 5 for permission to depose Armstrong for four more hours. It claims Armstrong’s attorneys “repeatedly and improperly” butted into the line of questioning.
“More than once during the first seven hours of his deposition [in July], Armstrong sought to minimize or explain away his most incriminating prior statements,” the motion for additional time states. “The transcript from the first seven hours of Armstrong’s deposition in this case will show that the government proceeded as expeditiously as possible to discover Armstrong’s explanations for his many relevant prior statements. However, the government was not able to discover Armstrong’s explanations for many additional relevant prior statements.”
The federal government wants to ask Armstrong about his most recent deposition in a lawsuit filed against him by Dallas-based insurer SCA Promotions. SCA refused to pay him bonuses in 2003 based on its suspicion that Armstrong cheated. Armstrong sued and won a $7.5 million settlement in arbitration in 2006. SCA sued Armstrong after he admitted to doping in 2013, and an arbitration panel then ordered him to pay $10 million in sanctions.
In the Aug. 5 memorandum of law and request for four more hours to depose Armstrong, the federal government also seeks information on his financial records and dealings with Michele Ferrari, an Italian doctor who was banned for cycling for life for doping violations.
“First, because this court had not ruled on Armstrong’s protective order motion at the time his deposition commenced, the government was not able to ask Armstrong about bank records showing payments to Michele Ferrari, and others,” the motion states. “The government also needs additional time to explore the current market value of his sponsorship services (viz., after the doping revelations), the circumstances of Armstrong’s separation from his former sponsors, his lawsuits against his accusers (including David Walsh), and his time outside the country between 2000 and 2010.”
Walsh, a sportswriter with the Sunday Times, was the journalist whose stories cracked open Armstrong’s doping system.
He revealed Armstrong’s association with Ferrari in a Sunday Times story in 2001, after a two-year investigation, then co-authored the 2003 book L.A. Confidentiel, after which many cycling insiders considered Armstrong’s fall inevitable.
Armstrong called him “the little troll.”
Walsh’s third book on Armstrong, “Seven Deadly Sins: My Pursuit of Lance Armstrong,” (2012) is being made into a movie, “The Program,” directed by Stephen Frears, due for release this fall.
Armstrong’s attorney Elliot R. Peters, with Keker Van Nest in San Francisco, instructed Armstrong not to answer questions about what the cyclist’s speaking fees in 2004 were “because you’re just harassing him at this point,” according to the deposition transcript.
Armstrong responded by asking: “Can’t we all just get along? I don’t know what it was. I don’t recall.”

From Courthouse News.

Armstrong Lobbies to Toss $10M Sanction

May 6, 2015
By David Lee
DALLAS (CN) – Lance Armstrong asked a Texas judge to vacate an arbitration panel’s ruling that he must pay back over $10 million in sanctions to a Dallas insurer over Tour de France win bonuses he was paid, arguing the panel exceeded its authority.
The arbitration was made public in February when SCA Promotions sued Armstrong and his management company, Tailwind Sports, in Dallas County court to confirm the award.
In a 2-1 split decision, the panel said Armstrong must pay the penalties because “perjury must never be profitable,” and condemned Armstrong for “almost certainly” carrying out “the most devious sustained deception ever perpetrated in world sporting history.”
The litigation began in 2004 when Armstrong and Tailwind first sued SCA for refusing to pay him a $5 million bonus for winning the Tour in 2003 because it suspected he had doped.
The dispute went to arbitration in 2005 and Armstrong won, resulting in SCA settling the matter in 2006 and paying Armstrong $7.5 million.
Six years later, SCA sued Armstrong, his agent William Stapleton and Tailwind after the Union Cycliste International stripped Armstrong of his seven Tour de France victories and banned him from the sport for life, citing the U.S. Anti-Doping Agency’s “reasoned decision” that accused Armstrong of running the most sophisticated doping program in sports history.
Armstrong confirmed the accusations in January 2013, in a televised interview with Oprah Winfrey. The interview featured excerpts from sworn testimony Armstrong gave during his lawsuit against SCA that implied he lied while under oath.
The arbitration panel’s $10 million sanctions award to SCA not only exceeds its authority, but is “beyond the scope of any agreement between the parties,” Armstrong contends.
“Moreover, the panel’s issuance of sanctions at this late juncture violates well-established Texas public policies, which favor settlements and arbitrations for efficient and final resolution of disputes, finality of judgments, and the right of corporations to wind up their businesses,” the 71-page motion filed on May 4 states. “This ‘sanctions’ order is unprecedented and insupportable under Texas law.”
Armstrong argues SCA had “sound reasons” to settle Armstrong’s lawsuit in 2006, claiming the confidentiality agreement protected the first arbitration panel’s “finding that SCA had engaged in the unauthorized business of insurance from disclosure” to the Texas Department of Insurance.
“That finding subjected SCA to potential liability of over $22 million, not to mention penalties associated with the many years of SCA’s legal violations,” the motion states. “Texas law provides that (1) an unlicensed insurer can have a retroactive penalty imposed up to $10,000 for each day of violation, and (2) an insurer may be enjoined from continuing the violation. The Texas Insurance Code makes it clear that SCA’s unauthorized practice of insurance is a third degree felony.”
Armstrong says SCA could not ask to vacate the 2006 settlement “it voluntarily agreed to” without exposing the alleged illegal conduct. By filing a new suit against Armstrong and Tailwind, SCA “invited a new problem.”
“The arbitration panel had no power to issue a sanctions award after the settlement and the final arbitration award (which was confirmed) because there was no agreement to arbitrate covering this claim, only a court can vacate a prior confirmed arbitration award, and the doctrine of functus officio ended the arbitration panel’s jurisdiction nearly a decade ago,” the motion states. “Thus, the award not only exceeded the panel’s authority, but was beyond the scope of any agreement between the parties.”
Armstrong argues the arbitration panel should not have imposed sanctions against Tailwind because it is not a party to the arbitration agreement and has since been dissolved.
“As the Texas Supreme Court has recognized, under the common law, ‘dissolution terminates the legal existence of a corporation,” the motions states. “Once dissolved, the corporation can neither sue nor be sued, and all legal proceedings in which it was a party are abated.”
SCA’s attorney, Jeff Tillotson with Lynn Tillotson in Dallas, said Armstrong and “his cadre of lawyers have made these same arguments over and over again.”
“They have been consistently rejected by the court and the arbitrators,” Tillotson said in an email on Tuesday. “It is time for Mr. Armstrong to get off the merry-go-round of denials and accept his punishment.”

From Courthouse News.