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Case 1:22-cv-00028-HYJ-PJG ECF No. 38-1, PageID.535 Filed 03/09/23 Page 1 of 12
EXHIBIT A
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SETTLEMENT AGREEMENT
This Settlement Agreement (“Agreement”) is entered into among the United
States of America, acting through the United States Department of Justice and on behalf
of the U.S. Small Business Administration (“SBA”) (collectively the “United States”);
the Michigan Education Association (“MEA”); and the Mackinac Center for Public
Policy (the “Relator”) (hereafter collectively with the United States and MEA referred to
as “the Parties”), through their authorized representatives.
RECITALS
A. MEA is a labor union and a non-profit 501(c)(5) corporation with its
principal place of business at 1216 Kendale Boulevard, East Lansing, Michigan 48823.
B. On January 11, 2022, the Relator filed a qui tam action in the United
States District Court for the Western District of Michigan captioned United States ex rel.
Mackinac Center for Public Policy v. The Michigan Education Association, et al., No.
1:22-cv-28, pursuant to the qui tam provisions of the False Claims Act, 31 U.S.C.
§ 3730(b) (the “Civil Action”). The Relator alleged, among other things, that MEA
submitted or caused the submission of false claims for payment in connection with the
federal Paycheck Protection Program (“PPP”), which was established pursuant to the
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.
C. The CARES Act, which was enacted in March 2020, was designed to
provide emergency financial assistance to millions of Americans suffering economic
effects caused by the COVID-19 pandemic. Section 1102(a)(2) of the CARES Act
amended Section 7(a) of the Small Business Act, 15 U.S.C. §§ 631-657u, and authorized
forgivable loans to eligible small businesses for job retention and certain other expenses,
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through the PPP. To obtain a PPP loan, a qualifying business must submit a PPP loan
application, which is signed by an authorized representative of the business. The loan
application requires the business to acknowledge the program rules and make certain
affirmative certifications to be eligible to obtain the PPP loan. A PPP loan application
must be processed by a participating lender. If a loan application is approved, the
participating lender funds the loan using its own money, which is 100% guaranteed by
the SBA. The SBA pays the lender a processing fee for each loan.
D. The United States contends that it has certain civil claims against the MEA
arising from its submission of a PPP loan application and receipt of PPP loan funds.
Specifically, the United States contends MEA was ineligible for a PPP loan at the time it
applied for and received the loan in 2020. As a result of the allegedly improper
application for, and receipt of, the loan, the United States contends that MEA caused the
SBA to pay the lender a processing fee. The conduct described in this Paragraph D is
referred to below as the “Covered Conduct.”
E. On December 24, 2020, MEA voluntarily returned the loan, plus interest
accrued to that date, to the lender.
F. This Settlement Agreement is neither an admission of liability by MEA
nor a concession by the United States that its claims are not well founded.
G. Relator claims entitlement under 31 U.S.C. § 3730(d) to a share of the
proceeds of this Settlement Agreement and to Relator’s reasonable expenses, attorneys’
fees and costs.
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To avoid the delay, uncertainty, inconvenience, and expense of protracted
litigation of the above claims, and in consideration of the mutual promises and
obligations of this Settlement Agreement, the Parties agree and covenant as follows:
TERMS AND CONDITIONS
1. MEA shall pay to the United States ONE HUNDRED FIFTEEN
THOUSAND, TWO HUNDRED SIXTY-FIVE DOLLARS ($115,265.00) (“Settlement
Amount”) by electronic funds transfer pursuant to written instructions to be provided by
the U.S. Attorney’s Office for the Western District of Michigan no later than fourteen
(14) days after the Effective Date of this Agreement.
2. Relator claims entitlement to reasonable expenses, attorney’s fees, and
costs pursuant to 31 U.S.C. § 3730(d)(1) against MEA. If Relator and MEA are unable to
reach agreement on reasonable expenses, attorney’s fees, and costs absent Court
intervention, Relator may submit a fee petition to the United States District Court for the
Western District of Michigan seeking payment of its claimed reasonable expenses,
attorney’s fees, and costs against MEA.
3. Subject to the exceptions in Paragraph 5 (concerning reserved claims)
below, and upon the United States’ receipt of the Settlement Amount, the United States
releases MEA from any civil or administrative monetary claim the United States has for
the Covered Conduct under the False Claims Act, 31 U.S.C. §§ 3729-3733; the Program
Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-3812; or the common law theories of
breach of contract, payment by mistake, unjust enrichment, and fraud.
4. Upon the United States’ receipt of the Settlement Payment described in
Paragraph 1 above, Relator, for itself and for its heirs, successors, attorneys, agents, and
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assigns, fully and finally releases MEA, along with its officers, directors, trustees, agents,
and employees, from any and all claims, known or unknown, that the Relator has, or
could have brought, in the Civil Action.
5. Notwithstanding the releases given in Paragraph 3 of this Agreement, or
any other term of this Agreement, the following claims and rights of the United States are
specifically reserved and are not released:
a. Any liability arising under Title 26, U.S. Code (Internal Revenue
Code);
b. Any criminal liability;
c. Except as explicitly stated in the Agreement, any administrative
liability or enforcement right, or any administrative remedy,
including the suspension and debarment rights of any federal
agency;
d. Any liability to the United States (or its agencies) for any conduct
other than the Covered Conduct;
e. Any liability based upon obligations created by this Agreement;
and
f. Any liability of individuals.
6. Relator and its heirs, successors, attorneys, agents, and assigns shall not
object to this Agreement but agree and confirm that this Agreement is fair, adequate, and
reasonable under all the circumstances, pursuant to 31 U.S.C. § 3730(c)(2)(B). In
connection with this Agreement and this Civil Action, Relator and its heirs, successors,
attorneys, agents, and assigns agree that neither this Agreement, any intervention by the
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United States in the Civil Action in order to dismiss the Civil Action, nor any dismissal
of the Civil Action, shall waive or otherwise affect the ability of the United States to
contend that provisions in the False Claims Act, including 31 U.S.C. §§ 3730(d)(3) and
3730(e), bar Relator from sharing in the proceeds of this Agreement. Moreover, the
United States and Relator and its heirs, successors, attorneys, agents, and assigns agree
that they each retain all of their rights pursuant to the False Claims Act on the issue of the
share percentage, if any, that Relator should receive of any proceeds of the settlement of
its claim(s). The Relator’s claim to a share of the proceeds of the settlement amount
described in Paragraph 1 is addressed by separate agreement.
7. Subject to Paragraph 2 above, Relator, for itself, and for its heirs,
successors, attorneys, agents, and assigns, releases MEA, and its officers, directors,
trustees, agents, and employees, from any liability to Relator arising from the filing of the
Civil Action.
8. MEA waives and shall not assert any defenses MEA may have to any
criminal prosecution or administrative action relating to the Covered Conduct that may be
based in whole or in part on a contention that this Agreement bars a remedy sought in
such criminal prosecution or administrative action, under the Double Jeopardy Clause in
the Fifth Amendment of the Constitution, or under the Excessive Fines Clause in the
Eighth Amendment of the Constitution.
9. MEA fully and finally releases the United States, its agencies, officers,
agents, employees, and servants, from any claims (including attorneys’ fees, costs, and
expenses of every kind and however denominated) that MEA has asserted, could have
asserted, or may assert in the future against the United States, its agencies, officers,
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agents, employees, and servants, related to the Covered Conduct or the United States’
investigation or prosecution thereof.
10. a. Unallowable Costs Defined: All costs (as defined in the Federal
Acquisition Regulation, 48 C.F.R. § 31.205-47) incurred by or on behalf of MEA, and its
present or former officers, directors, employees, shareholders, and agents in connection
with:
(1) the matters covered by this Agreement;
(2) the United States’ audit(s) and civil investigation(s) of the
matters covered by this Agreement;
(3) MEA’s investigation, defense, and corrective actions
undertaken in response to the United States’ audit(s) and
civil investigation(s) in connection with the matters
covered by this Agreement (including attorneys’ fees);
(4) the negotiation and performance of this Agreement;
(5) the payment MEA makes to the United States pursuant to
this Agreement and any payments that MEA may make to
Relator, including costs and attorneys fees,
are unallowable costs for government contracting purposes (hereinafter referred to as
“Unallowable Costs”).
b. Future Treatment of Unallowable Costs: Unallowable Costs will
be separately determined and accounted for by MEA, and MEA shall not charge such
Unallowable Costs directly or indirectly to any contract with the United States.
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c. Treatment of Unallowable Costs Previously Submitted for
Payment: Within 90 days of the Effective Date of this Agreement, MEA shall identify
and repay by adjustment to future claims for payment or otherwise any Unallowable
Costs included in payments previously sought by MEA or any of its subsidiaries or
affiliates from the United States. MEA agrees that the United States, at a minimum, shall
be entitled to recoup from MEA any overpayment plus applicable interest and penalties
as a result of the inclusion of such Unallowable Costs on previously-submitted requests
for payment. The United States, including the Department of Justice and/or the affected
agencies, reserves its rights to audit, examine, or re-examine MEA’s books and records
and to disagree with any calculations submitted by MEA or any of its subsidiaries or
affiliates regarding any Unallowable Costs included in payments previously sought by
MEA , or the effect of any such Unallowable Costs on the amount of such payments.
11. This Agreement is intended to be for the benefit of the Parties only.
12. Upon receipt of the payment described in Paragraph 1, above, the United
States and the Relator shall promptly sign and file in the Civil Action a Joint Stipulation
of Dismissal of the Civil Action as against MEA pursuant to Rule 41(a)(1), with
prejudice, except as provided in Paragraph 2 above.
13. Each Party shall bear its own legal and other costs incurred in connection
with this matter, including the preparation and performance of this Agreement, except as
provided in Paragraph 2 above.
14. Each Party and signatory to this Agreement represents that it freely and
voluntarily enters into this Agreement without any degree of duress or compulsion.
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15. This Agreement is governed by the laws of the United States. The
exclusive jurisdiction and venue for any dispute relating to this Agreement is the United
States District Court for the Western District of Michigan. For purposes of construing
this Agreement, this Agreement shall be deemed to have been drafted by all Parties to
this Agreement and shall not, therefore, be construed against any Party for that reason in
any subsequent dispute.
16. This Agreement constitutes the complete agreement between the Parties.
This Agreement may not be amended except by written consent of the Parties.
17. The undersigned counsel represent and warrant that they are fully
authorized to execute this Agreement on behalf of the persons and entities indicated
below.
18. This Agreement may be executed in counterparts, each of which
constitutes an original and all of which constitute one and the same Agreement.
19. This Agreement is binding on MEA ’s successors, transferees, heirs, and
assigns.
20. This Agreement is binding on Relator’s successors, transferees, heirs, and
assigns.
21. All parties consent to the United States’ disclosure of this Agreement, and
information about this Agreement, to the public.
22. This Agreement is effective on the date of signature of the last signatory to
the Agreement (“Effective Date of this Agreement”). Facsimiles of signatures shall
constitute acceptable, binding signatures for purposes of this Agreement.
[SIGNATURE PAGES BELOW]
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03/01/23
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MICHIGAN EDUCATION ASSOCIATION
7? ~/ / S.
DATED: 3/1/2023 BY: ~ .
Earl H. Wiman, Interim Executive Director
MICHIGAN EDUCATION ASSOCIATION
DATED: _______ BY: ______
MICHAEL E. CAVANAUGH
RYAN K. KAUFFMAN
Fraser Trebilcock
124W. Allegan Street, Ste. 1000
Lansing, MI 48933
Counselfor Michigan Education Association
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RELATOR - MACKINAC CENTER FOR PUBLIC POLICY
DATED: j
ACKJNAC CENTER FOR PUBLIC POLICY
DATED: 03.01.2023 BY:
JAMES R. PETERSON
Miller Johnson
45 Ottawa Ave. SW, Ste. 1100
Grand Rapids, MI 49503
Counselfor Relator Mackinac Centerfor Public
Policy
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