Page 1
Not Reported in F.Supp.2d, 1999 WL 504906 (S.D.N.Y.)
(Cite as: 1999 WL 504906 (S.D.N.Y.))
Only the Westlaw citation is currently available.
United States District Court, S.D. New York.
UNITED STATES OF AMERICA, Plaintiff,
v.
John PIMENTEL, Duroyd Manufacturing Co., Inc.,
and Jerico Precision Mfg. Corp., a/k/a JP Mfg.
Corp, Defendants.
No. 86 Civ. 2113(WK).
July 15, 1999.
Amy Benjamin, U.S. Attorney's Office, New York,
NY, for Plaintiff.
John Pimentel, New Rochelle, NY, for Defendants,
pro se.
MEMORANDUM & ORDER
KNAPP, Senior J.
*1 At a pretrial conference on February 1, 1999, we
denied a motion by defendant to reopen our de-
cision of July 27, 1993, which dealt with the pre-
clusive effect of defendant's criminal conviction on
the case at bar. We read our ruling onto the record
at that date, but it has come to our attention that it
had never been formally adopted. We hereby form-
ally adopt that ruling, which is reproduced below:
Defendants seek to re-open our decision of July 27,
1993. We deny that application. Of course, by mak-
ing that application and filing a document entitled
“Appeal to Reverse Opinion and Order,” defendant
has clarified his right to have the Court of Appeals
consider the propriety of that order on any appeal
he might take from the final judgment in this case.
In this connection, we note that in our July 1993
Opinion and Order, we ruled:
Defendant's Criminal conviction will have a pre-
© 2010 Thomson Reuters. No Claim to Orig. US Gov. Works.
clusive effect in the instant civil litigation if we
find that in reaching the guilty verdict the jury ne-
cessarily and specifically decided the elements that
constitute a civil False Claims Act violation.
*
1993 WL 287991, at 5.
Magistrate Judge Fox's Report of September 24,
1997 recommended that we grant plaintiff's motion
for partial summary judgment as to liability for the
shipment payments. Our adoption of that report,
combined with our finding of liability for the pro-
gress payments in 1993, left only the issue of actual
damages open for resolution at trial.
Thus, the combination of our 1993 opinion and our
adoption of the magistrate judge's report indicate
that we have found that the criminal conviction col-
laterally estops defendants on the major issues of
this case. Defendant, pointing out that this is
“offensive” use of collateral estoppel, refers to an
opinion by Judge Brieant which, citing Parklane
Hosiery v. Shore (1979) 439 U.S. 322, observed
that we have discretion not to apply such affirmat-
ive use. However, we believe that the Parklane
opinion clearly indicates that we should not use
such discretion in this case. Speaking of the rather
complicated set of facts in the case before it, the
Parklane court observed (at pp. 331-32):
In the present case, however, none of the circum-
stances that might justify reluctance to allow the of-
fensive use of collateral estoppel is present. The ap-
plication of offensive collateral estoppel will not
here reward a private plaintiff who could have
joined in the previous action, since the respondent
probably could not have joined in the injunctive ac-
tion brought by the SEC even had he so desired.
Similarly, there is no unfairness in this case. First,
in light of the serious allegations made in the SEC's
complaint against the petitioners, as well as the
foreseeability of subsequent private suits that typic-
ally follow a successful Government judgment, the
petitioners had every inventive to litigate the SEC

Not Reported in F.Supp.2d, 1999 WL 504906 (S.D.N.Y.)
(Cite as: 1999 WL 504906 (S.D.N.Y.))
lawsuit fully and vigorously. Second, the judgment
in the SEC action was not inconsistent with any
previous decision. Finally, there will in the re-
spondent's action be no procedural opportunities
available to the petitioners that were unavailable in
the first action of a kind that might be likely to
cause a different result.
*2 It seems to me that all the considerations men-
tioned by the Court are here present.
As for the positions stated in the defendants' “Table
of Contents,” the foregoing disposes of points (3)
and (4). With regard to point (7), “Motion to Ex-
clude ‘Certificate of Current Cost or Pricing Data,”
’ the defendants' argument in support of that posi-
tion boils down to the assertion that it was error for
the criminal trial court to have receive in evidence
that certificate. That argument has been disposed of
by our ruling as to collateral estoppel.
Defendant's point (9) refers to a demand for a jury
trial. Defendant concedes that the demand was
made six days late, in violation of Fed.R.Civ.P.
38(b); we find that he has stated no plausible ex-
cuse for such violation. That request is denied.
The remaining points raise the same questions as
those presented by the plaintiff's motion, which we
shall now consider. Plaintiff's proposed calculation
of damages is as follows: The cost the government
would have paid had the contract been honestly bid
by defendant is to be subtracted from the govern-
ment's actual cost of entering into the contract with
the fraudulent costs included. While the legislative
history of the False Claims Act suggests that we
have considerable discretion in fashioning a mech-
anism for determining actual damages, the Second
Circuit gives us little guidance on the subject.
Looking outside the Circuit, we find two cases
which employed the method outlined above in cir-
cumstances analogous to the case at bar. See United
States ex rel. Taxpayers Against Fraud v. Singer
th
Co. (4 Cir.1989) 889 F.2d 1327 and In re Bi-
coastal Corporation (Bankr.M.D.Fla.1991) 124
B.R. 598. We find the damages calculation used in
© 2010 Thomson Reuters. No Claim to Orig. US Gov. Works.
Page 2
those cases to be an appropriate remedy for the in-
stant case.
Having chosen that method, we find defendant's ac-
tual cost experience to be irrelevant. As a result, at
trial defendant will not be permitted to introduce
any evidence relating to: (1) whether or not he lost
money on these contracts; (2) whether he did or did
not use heat treatment; (3) or whether he in fact
bought aluminum from the supplier indicated on his
cost estimates. Similarly, defendant will not be per-
mitted to introduce evidence regarding his so-called
“set-off” claims.
Turning then to the elements of proof left for trial,
we have three categories of damages at issue: (1)
heat treatment; (2) wheelabration; and (3) alumin-
um. With regard to heat treatment and aluminum
pricing, the government need only demonstrate
what it actually paid for such elements as well as
what it would have paid in the absence of fraud.
This is because the jury at defendant's criminal trial
conclusively determined that the defendant inten-
tionally submitted false claims for heat treatment
and aluminum pricing. With regard to wheelabra-
tion, the government must prove that defendant in-
tentionally submitted false claims for wheelabrating
(i.e., liability) before we can move to the damages
inquiry. The government cannot take advantage of
offensive collateral estoppel on the wheelabration
claims because they were not included in the indict-
ment.
*3 SO ORDERED.
S.D.N.Y.,1999.
U.S. v. Pimentel
Not Reported in F.Supp.2d, 1999 WL 504906
(S.D.N.Y.)
END OF DOCUMENT