Bloomberg News

Honeywell Loses Bid to Dismiss U.S. False Claims Lawsuit

July 08, 2011

(Updates with excerpt from ruling in third paragraph.)

July 8 (Bloomberg) -- Honeywell International Inc. failed to persuade a federal judge to dismiss a lawsuit by the U.S. claiming the company sold the government defective material for use in body armor.

U.S. District Judge Richard Roberts in Washington today rejected Honeywell’s arguments that the government’s False Claims Act case didn’t properly allege fraud in the 2008 complaint.

“The government sets out in detail the time, place, and content of the false representations and indentifies individuals allegedly involved in the fraud,” Roberts said in his ruling.

The Morris Township, New Jersey-based company “possessed a wealth of scientific data” showing that its Zylon Shield material degraded quickly over time, especially in hot and humid conditions, according to the lawsuit. Still, Honeywell failed to tell the government or the vests’ manufacturer about the problem, the U.S. said.

The vests were bought by federal, state and local law enforcement agencies, the Justice Department said in its complaint. The government paid more than $20 million for the vests, according to the judge’s ruling.

“We continue to believe there is no factual or legal basis for the Justice Department’s case and we will continue to vigorously defend against these claims,” Peter Dalpe, a Honeywell spokesman, said in an e-mailed statement.

Nana Efua Embil, a Justice Department spokeswoman, didn’t immediately return a telephone message seeking comment.

Armor Holdings Inc., which manufactured the Zylon vests, said in 2005 it would cease their production. BAE Systems Plc, Europe’s largest arms company, bought Armor Holdings in 2007 for $4.53 billion. In October 2008, Armor Holdings agreed to pay $30 million to resolve allegations involving the vests.

Safety concerns about the vests first arose in 2003.

The case is U.S. v. Honeywell International Inc., 08-cv- 00961, U.S. District Court, District of Columbia (Washington).

--With assistance from Robert Schmidt in Washington. Editors: Peter Blumberg, Michael Hytha

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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