A McGuireWoods litigation team secured a significant victory for Cooke Inc. and several other entities when the U.S. Court of Appeals for the Second Circuit affirmed the dismissal of an alleged $2 billion False Claims Act (FCA) suit accusing the companies of misleading the U.S. government to obtain commercial fishing licenses. Additionally, the appeals court upheld the district court’s refusal to grant the plaintiffs (relators) leave to amend their complaint.
The qui tam action alleged that Canadian-based Cooke Inc. and others purportedly violated the FCA in connection with an acquisition of Omega Protein — a leading U.S. processor of menhaden, which is used as fertilizer, animal feed and bait — and purportedly misrepresented citizenship compliance under the American Fisheries Act of 1998 (AFA) to harvest small forage fish from U.S. waters. The U.S. District Court for the Southern District of New York dismissed the lawsuit in 2025, and a three-judge Second Circuit panel unanimously affirmed the dismissal in an Aug. 5, 2026, ruling.
The Second Circuit rejected every theory the relators advanced. The court held that wild fish in public waters do not constitute government “property” for purposes of the FCA and that the absence of a government property interest in wild fish was “fatal to any attempt to assert an FCA cause of action.” The court also held that discretionary civil penalties do not constitute an established “obligation to pay” under the FCA.
The McGuireWoods team representing Cooke Inc., was led by David Pivnick, Jonathan Y. Ellis, Michael Podberesky, Grace Greene Simmons, V. Kathleen Dougherty, Aaron Jaroff, Cassandra Burns and Kelby Roth. Ellis, co-leader of the firm’s Appeals & Issues Practice Group, argued the case before the Second Circuit.
“This decision is a resounding win for our clients and sends a clear message about the limits of the False Claims Act,” Pivnick said. “The Second Circuit correctly recognized that the FCA is not an all-purpose antifraud statute and cannot be stretched to treat wild fish as government property or unassessed penalties as established obligations. We’re grateful to the court for its careful consideration of this matter.”
The case is United States ex rel. Chiles v. Cooke Inc., No. 25-155 (2d Cir. Aug. 5, 2026).