The 1995 Federal "whistleblower" suit charging Baker & Taylor with overcharging public institutions has come to a resolution-at least partially-after the book wholesaler announced that it had reached an agreement to pay the federal government $3 million to settle the case. The settlement releases B&T from all civil liability in the four-year-old suit. B&T d s not admit guilt and continues to deny the accusations.
The original suit was filed under the False Claims Act in 1995 by Robert Costa, a former librarian, and Ronald Thornburg, a former B&T sales representative, who claimed that B&T had overbilled public libraries, schools and universities by as much as $200 million between 1985 and 1995. Under a provision known as the whistleblower's law, the plaintiffs would receive a portion of the damages or settlement if the charges are found to be true. But Peter Chatfield of the Washington, D.C., law firm of Phillips and C n, attorney to Costa and Thornburg, told PW that his clients will not receive a portion of the settlement because a California federal court also dismissed the claims of his clients. He has asked the court to reconsider its ruling.
James Ulsamer, president of Baker & Taylor, told PW that B&T settled to avoid an expensive and protracted legal fight with the government. "We have spent more than the settlement on legal costs," he explained, "and without even starting our own process of discovery." Craig Richards, CEO of B&T, blamed the suit on the government's ignorance of "the complexities of the business and the many differences among the various book-buying constituencies." Both Ulsamer and Richards insisted that B&T would have been exonerated if the case had gone to trial.
Though the settlement ends all federal claims against B&T, similar claims by the state of California, which has its own "whistleblower" statute and was a party to the original suit, are still pending; it is unclear whether B&T (as well as its former parent company, W.R. Grace) will be subject to a variety of state actions. It is also unclear what will happen to a petition filed by 17 states to join California's case in order to pursue their own claims against B&T. In addition, there are suits filed by the city of Chicago and the state of Ohio that make the same claims, but are not affiliated with the FCA suit. Chatfield told PW that B&T's willingness to settle was an "indication that our charges are correct."
Richards said the settlement was "a small sum.... We hope this signals to these states that the charges are without merit. However, if these states continue to pursue legal action, we will continue to fight in the state courts."
