In a decisive legal victory for the commercial fishing industry, a federal appellate court has permanently shut down a major lawsuit that accused some of the nation’s largest seafood companies of defrauding the government. The case, which had been winding its way through the courts for years, centered on a complex web of fisheries law, government oversight, and the nature of wild fish swimming in public waters. On August 5, 2026, the United States Court of Appeals for the Second Circuit affirmed the dismissal of the lawsuit, bringing a definitive end to the litigation and upholding a lower court’s decision that the claims had no legal merit.
The lawsuit was initiated under the False Claims Act (FCA), a powerful federal statute originally enacted during the Civil War to combat fraud by government contractors. The law allows private citizens, known as “relators,” to file lawsuits on behalf of the government against individuals or companies that are allegedly defrauding federal programs. In this instance, the relators were W. Benson Chiles and Chris Manthey, who brought their allegations against a group of defendants that included Ocean Harvesters, Cooke Inc., and Omega Protein. These companies are key players in the menhaden fishing industry, a fishery that produces fish meal, oil, and solubles used in everything from animal feed to dietary supplements. The allegations were not about the quality of the fish or the safety of the products, but rather about how the companies obtained certain federal fishing endorsements under the American Fisheries Act (AFA), specifically concerning the applications for and issuance of these crucial permits. The relators alleged that the companies violated the FCA in how they secured these endorsements, potentially costing the government money or depriving it of property.
However, the legal saga has now concluded with a resounding affirmation of the defendants’ position. The Second Circuit, in a unanimous opinion, agreed with the lower court’s dismissal of the relators’ amended complaint. The appellate judges determined that the relators had failed to state a claim upon which relief could be granted under the False Claims Act. This decision was built upon two fundamental legal principles that the court carefully examined and ultimately rejected the plaintiffs’ arguments on. The first cornerstone of the court’s opinion was its rejection of the central theory that wild fish in public waters constitute government “property.” The relators had argued that because the fish are a public resource managed by the government, any unauthorized taking of them, or a scheme to secure the right to take them through fraudulent means, constitutes a violation of the FCA’s prohibition on obtaining government property through fraud. The Second Circuit dismissed this theory, stating plainly that the absence of a government property interest in wild fish was “fatal to any attempt to assert an FCA cause of action.” This means that, in the eyes of the law, the government does not “own” wild fish in the same way it owns a building or a piece of equipment, and therefore, the FCA’s fraud provisions related to property were not applicable.
The second major legal hurdle the relators could not clear involved the nature of potential civil penalties under the American Fisheries Act. The plaintiffs also attempted to assert a “reverse false claim,” which is a legal theory under the FCA that holds a person liable if they knowingly conceal or improperly avoid an obligation to pay money to the government. The relators suggested that the defendants owed unassessed civil penalties for certain violations and that failing to pay them constituted a reverse false claim. The Second Circuit, however, found this argument equally unpersuasive. The court held that unassessed civil penalties under the AFA do not create the type of “established payment obligation” that the FCA requires. In other words, the penalties in question are not automatic, self-executing debts. Instead, the court found it “abundantly clear from the statutory framework” that these penalties are subject to the discretion of a government agency. Because an agency must first assess the penalty and determine the amount, it is not a fixed, existing obligation that a company is legally required to pay, and thus cannot serve as the basis for a reverse false claim lawsuit.
From the very beginning, the defendants—Cooke Inc., Omega Protein, and Ocean Harvesters—maintained that the lawsuit was built on a flawed understanding of both the facts and the law. They argued that the relators’ complaint misstated key details and misconstrued federal fisheries regulations. This position was validated first by the United States District Court for the Southern District of New York, which dismissed the amended complaint in its entirety, and now by the Second Circuit. The appellate court’s decision not only affirmed the district court’s judgment but also addressed the relators’ request to file yet another amended complaint. The Second Circuit affirmed the lower court’s denial of this request as well, concluding that the relators had unduly delayed in bringing forward their proposed new claim. The court noted that the relators had ample opportunity to raise the issue earlier but only attempted to do so after the district court had explicitly warned that no further amendments would be permitted. This portion of the ruling reinforces the importance of timely and diligent prosecution in civil litigation.
The decision was met with satisfaction by the defendants and their legal teams, who saw it as a complete vindication of their position. Ben Landry, a spokesperson for Ocean Harvesters, issued a public statement expressing his approval of the ruling. “We are pleased that the Second Circuit carefully considered the legal issues and unanimously affirmed the district court’s dismissal of this case,” Landry said. “This decision confirms what the defendants have maintained throughout this litigation: the claims asserted by the relators did not satisfy the requirements of the False Claims Act.” He went on to highlight the key findings of the appellate court, emphasizing that the court had affirmed that wild fish in public waters are not government property under the FCA and that unassessed, discretionary civil penalties do not create an obligation to pay under the statute. The statement reflected a sense of relief that a long and costly legal battle had finally come to an end, with the law clearly on their side. The case, formally titled United States ex rel. Chiles v. Cooke Inc., saw the federal government decline to intervene, leaving the relators to pursue the action on their own, a path that ultimately proved unsuccessful.
For Ocean Harvesters, the conclusion of this case allows the company to move forward and focus on its core mission. The company operates a substantial fleet of more than 30 fishing vessels in the Atlantic Ocean and the Gulf of America, with a specific focus on the harvest of menhaden. This small, nutrient-dense fish is not typically eaten directly by people but plays a vital role in the marine ecosystem and the economy, serving as the primary source for fish meal, fish oil, and fish solubles. Ocean Harvesters prides itself on its commitment to sustainable and responsible fishing practices. Both its Atlantic and Gulf Menhaden fisheries hold the prestigious Marine Stewardship Council (MSC) certification, a globally recognized standard for sustainable fishing. This certification requires rigorous, independent assessment to ensure that the fishery is well-managed and that the fish stock is healthy. The company also highlights its deep historical roots in the industry, describing itself as proud to be “heir to a fishing legacy that extends nearly 150 years.” With the legal challenges behind them, Ocean Harvesters can now continue to focus on maintaining its commitment to providing a vital food source while upholding the highest standards of environmental stewardship and regulatory compliance. The unanimous appellate ruling provides not just a legal victory, but a sense of stability and certainty for the company and the broader industry it represents.