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How can the U.S. government sue a business?


In 2012, the U.S. Dept. of Justice sued the Bank of America (headquarters pictured here) for $1 billion over a scheme to sell the government toxic mortgage loans. Want to learn more? Check out these Corporation Pictures.
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The U.S. Department of Justice (DOJ) has a message for businesses that try to cheat the government or scam its citizens: Get yourself a good lawyer. In 2012, the DOJ joined a whistleblower in suing Bank of America for a scheme to sell the government toxic mortgage loans [source: Stempel]. Over the previous year, the government sued 18 other banks over lousy loans that had triggered the housing collapse.

When one party sues another party, that's called a civil lawsuit. In most civil lawsuits, a plaintiff sues a defendant for damages resulting from the defendant's allegedly unlawful or negligent behavior. The U.S. federal government, just like any American citizen, has the right to sue in civil court. If the government, or one of its regulatory agencies, believes that a business has broken a federal law or attempted to cheat a federal agency out of money, it can take that business to court.

The DOJ, established in 1870, is the government's "lawyer." As such, the DOJ is responsible for overseeing all of the government's legal actions in both civil and criminal cases. In a criminal case, the government prosecutes an individual -- and in rare cases an entire organization -- for breaking federal law [source: Thompson]. If the judge or jury finds a criminal defendant guilty beyond a reasonable doubt, the punishment includes fines and possible imprisonment.

In a civil lawsuit, however, the government sues to recover compensatory and/or punitive damages. In this case, the defendant doesn't have to be proven guilty beyond a reasonable doubt, but only by a "preponderance of the evidence" [source: Newkirk]. In some cases, particularly where there are no direct witnesses or a smoking gun of sorts, civil trials are easier to prosecute than criminal cases.

No one goes to jail in a civil trial, but defendants found guilty will have to pay up. Compensatory damages compensate the government for monetary loss or injury. An example could be a government contractor billing twice for the same service. Punitive damages are levied on top of compensatory damages in cases where the defendant acted in an especially harmful, negligent or malicious way [source: LII]. In some cases, the DOJ initiates both civil and criminal proceedings against a business or its individual employees.

The federal government files its lawsuits in federal court. The suits are often the result of years of investigation by the DOJ, Securities Exchange Commission (SEC), or other federal regulatory agencies. In many cases, the regulators and the DOJ attempt to resolve issues with businesses outside of court before resorting to a federal case.

Keep reading to learn about two of the most common reasons why the U.S. government sues businesses: breaches of antitrust law and the False Claims Act.


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