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Attorneys for the city of San Francisco celebrated Thursday after an appeal court handed them a double victory in a mammoth fraud suit. The ruling by the First District Court of Appeal affirmed judgments that total about $30 million against Old Republic Title Co., of which about $7.5 million goes to the city. The court also reinstated the city’s action under the state’s False Claims Act against Old Republic’s accounting firm, PricewaterhouseCoopers. “It’s a huge win,” San Francisco Deputy City Attorney Donald Margolis proclaimed. “It puts cities on a similar footing under the state act as states are under the federal act. It means the court has reaffirmed the power of the False Claims Act — the broad, remedial purposes of the act.” The litigation against Old Republic dates back many years to when San Francisco lawyers — essentially acting as whistle-blowers on behalf of the state — accused Old Republic of failing to pay the state dormant funds in escrow accounts. Old Republic appealed after then-Superior Court Judge Stuart Pollak — now on the First District — ordered the company to pay the state and private account holders about $30 million. In addition, the city in 2003 asked the appeal court to reverse the lower court’s summary judgment for PricewaterhouseCoopers — also known as PwC — on the False Claims Act. The company had responded by arguing that the city is not a “person” under the act and, therefore, lacked standing to bring a qui tam action. The First District said the company’s position had no merit. “Depriving public entities standing would disserve the remedial purposes of the act,” Justice Timothy Reardon wrote in an 83-page ruling. “A liberal construction of the term ‘person’ encourages competent prosecution of false claims by public qui tam plaintiffs for the public good.” Justices Laurence Kay and Patricia Sepulveda concurred. The court also upheld the city’s decision to accuse PwC and Old Republic of unfair business practices under Business & Professions Code � 17200. The city alleged that PwC issued a clean audit for Old Republic despite knowing it had been sweeping millions of dollars into company coffers. Thursday’s ruling, Deputy City Attorney Margolis said, “reaffirms the importance of outside accounting auditors taking their responsibilities seriously and playing it straight with the state regulators.” PwC auditors, he continued, “submitted clean audit reports when they knew the company was not clean.” PwC’s lawyer, Gibson, Dunn & Crutcher San Francisco partner Joel Sanders, declined comment Thursday, saying he hadn’t had an opportunity to review the ruling or discuss it with his client. The decision is State of California ex rel. Harris v. PricewaterhouseCoopers LLP, A095918. The full text of the opinion will appear in Monday’s California Daily Opinion Service.

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