In the latest saga of what has become a long running dispute between plaintiff RBC Four Co. LLC ("RBC") and the Walt Disney Company ("Disney"), a federal district court judge dismissed RBC's reverse False Claims Act allegations and ordered RBC to reimburse the Walt Disney Company for its attorneys' fees incurred in defending what the court determined to be baseless claims. According to the RBC complaint, since at least 1991, Disney has engaged in the dumping of dangerous chemicals into the waters surrounding its Burbank, California studios. In 1991, U.S. EPA sent Disney an information request seeking information relating to contamination at a Superfund Site in the San Fernando Valley and Disney was alleged to have responded to this information request with misleading statements and/or documents concerning its dumping of dangerous chemicals. In support of its reverse False Claims Act action, RBC argued that Disney's misleading response to U.S. EPA's information request and other information it provided to regulators over the past decade constituted efforts by Disney to avoid payment of obligations owed to the Government pursuant to various environmental laws and regulations, including the Clean Water Act and CERCLA.

The court found RBC's complaint to be devoid of any facts showing a particular legal obligation that Disney avoided by making allegedly false representations to the Government. In support of its decision to dismiss RBC's complaint without leave to replead, the court noted that the type of "obligations" that might give rise to a reverse False Claims Act claim do not extend to potential liabilities under an environmental statute as alleged by plaintiffs.

In ruling on Disney's request for sanctions, the court found that RBC's claims were "legally baseless from an objective perspective and cannot have been the product of competent inquiry." The court further noted that this was the fourth qui tam action that RBC (or one of its affiliates) had brought against Disney and is one of 12 actions that had been filed against Disney since 2007. Each of these actions has arisen out of the same or similar facts and several of those claims had been dismissed with prejudice. Although the court declined to designate RBC as a "vexatious litigant" as requested by Disney, the court noted that the record reflected that RBC had engaged in a pattern of duplicative and excessive litigation against Disney, suggesting that such a designation might be appropriate if future claims were filed. The court also ordered RBC to pay Disney's attorneys' fees and costs in defending the litigation. Please click here to see a copy of the court's order.