Civil cases based on violations of the Foreign Corrupt Practices Act (FCPA) have proliferated in recent years. These cases have presented in a number of variations including lawsuits brought by foreign governments against FCPA violators, as shareholder derivative actions, and by business partners and competitors alleged to have been harmed by the underlying bribery. Private litigants have pursued their civil claims through various avenues including civil RICO claims, claims under federal and state antitrust laws, and through state unfair competition and business conspiracy statutes. Now, at least one case is seeking to upend the long-accepted idea that the FCPA itself does not confer a private right of action enforceable by civil litigants.
On June 27, 2008, the Republic of Iraq filed a case against ninety-one companies and two individual defendants in the Southern District of New York based on their allegedly improper activities in connection with the UN Oil-For-Food Program. Among its claims, the Republic of Iraq is seeking to recover damages directly under the FCPA. A motion to dismiss is currently pending, which among other things takes up the question of whether the court should infer a private right of action under the FCPA. The Republic of Iraq argues in its briefs that Lamb v. Phillip Morris, Inc., 915 F.2d 1024 (6th Cir. 1990), a long-standing precedent for the notion that the FCPA does not confer a private right of action, was decided in error, and all subsequent cases relying on Lamb are therefore flawed as well.
The Republic of Iraq has extended an interesting invitation to the court, which has yet to schedule a hearing on the motion to dismiss. Companies and their counsel on both sides of the issue will surely keep a close eye on this case, and its potential to solidify or second-guess Lamb and its progeny. Regardless of how the question is resolved, litigation is likely to continue under civil RICO, antitrust and many of the state law claims that currently serve as the basis for most FCPA-based civil litigation.