Satterlee Obtains Dismissal of False Claims Act Case Against Moody’s


Satterlee Stephens obtained, on behalf of credit rating agency Moody’s Investors Service, Inc. and its parent, Moody’s Corporation, a dismissal with prejudice of all claims brought by a former employee, Ilya Eric Kolchinsky in the Southern District of New York.  Judge William Pauley granted Moody’s motion to dismiss Kolchinsky’s second amended complaint under the federal False Claims Act (“FCA”) and denied leave to replead.  At the same time, Judge Pauley denied Kolchinsky’s request to share in a portion of an unrelated settlement that Moody’s had reached with the United States Department of Justice, holding that because Kolchinsky had not stated any valid claims against Moody’s, he had no entitlement to any settlement proceeds.

Kolchinsky originally filed his FCA suit under seal in February 2012.  Following the decision of the United States not to join his suit and the unsealing of the complaint in October 2014, Satterlee requested leave from Judge Pauley to file a motion to dismiss the complaint.  In response to this request, Kolchinsky revamped his theories and filed an amended complaint.  On motion of Moody’s, Judge Pauley dismissed this complaint for failure to state a claim in February 2016.  The court, however, allowed Kolchinsky leave to attempt to replead a narrow FCA claim based on Moody’s sale of electronic ratings services to the United States government.  In his March 2017 decision, Judge Pauley dismissed this third attempt by Kolchinsky to state an FCA claim and denied further leave to replead.

Representing Moody’s from Satterlee are James J. Coster, Joshua M. Rubins, Glenn C. Edwards, James I. Doty, James Regan, Michael Cabin, and Margaret O’Leary.