A federal appeals court has affirmed the dismissal of a False Claims Act lawsuit alleging Cooke Inc. and several related companies violated U.S. law when the Canadian seafood company acquired Omega Protein in 2017, leaving intact a lower court's ruling that dismissed the case in its entirety.

The decision, issued Aug. 5 by the U.S. Court of Appeals for the Second Circuit, marks the latest development in a lawsuit first filed in 2021 by private relators W. Benson Chiles and Chris Manthey on behalf of the U.S. government. As National Fisherman previously reported, the U.S. Department of Justice declined to intervene in the case, which alleged Cooke improperly controlled a fleet of U.S. fishing vessels through what the plaintiffs described as a "figurehead" ownership arrangement that violated the American Fisheries Act and the False Claims Act.

In January, a federal district court dismissed the lawsuit after determining that neither fishing licenses nor wild fish qualified as government "property" under the False Claims Act. The plaintiffs appealed that decision.

According to a statement released by Ocean Harvesters following the appellate ruling, the Second Circuit unanimously agreed with the district court's decision and affirmed dismissal of all four causes of action contained in the amended complaint.

The appeals court held that wild fish in public waters do not constitute government "property" for purposes of the False Claims Act, concluding that the absence of a government property interest in wild fish was "fatal" to the plaintiffs' primary legal theory.

The court also found that unassessed civil penalties under the American Fisheries Act do not create the type of established payment obligation necessary to support what is known as a reverse False Claims Act claim. According to the company, the court determined those penalties are not self-executing and instead remain subject to agency discretion.

Based on those conclusions, the appeals court affirmed dismissal of all claims against Cooke Inc., Omega Protein, Ocean Harvesters and the other defendants named in the lawsuit.

Ocean Harvesters spokesperson Ben Landry said the decision confirms the arguments the defendants have made throughout the litigation.

"We are pleased that the Second Circuit carefully considered the legal issues and unanimously affirmed the district court's dismissal of this case," Landry said in a statement. "This decision confirms what the defendants have maintained throughout this litigation: the claims asserted by the relators did not satisfy the requirements of the False Claims Act."

The company also noted that the appeals court upheld the district court's decision denying the plaintiffs' request to amend their complaint again. According to the ruling, the court concluded the relators had delayed raising an additional claim that could have been asserted earlier in the proceedings.

The lawsuit was pursued as a qui tam action under the False Claims Act after the federal government declined to intervene. Under that process, private individuals may bring claims on behalf of the United States and, in some cases, receive a portion of any recovery if the case is successful.

The original lawsuit named Cooke Inc., Omega Protein, Ocean Harvesters and several related entities, alleging the companies concealed Cooke's control of the fishing fleet after acquiring Omega Protein. The defendants consistently denied those allegations and argued the lawsuit misrepresented both the facts and the law.

With the Second Circuit's decision, the district court's dismissal remains in place, bringing another chapter of the years-long legal dispute to a close.