Shaw v. AAA Engineering & Drafting Inc. , 138 F. App'x 62 ( 2005 )

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
June 8, 2005
FOR THE TENTH CIRCUIT
PATRICK FISHER
Clerk
DEBRA A. SHAW, sued as United
States ex rel.,
Plaintiff-Appellant -
Cross-Appellee, Nos. 03-6252 & 03-6286
(D.C. No. 95-CV-950-M
v. and No. 95-CV-951-M)
(W.D. Okla.)
AAA ENGINEERING & DRAFTING
INC., a Utah Corporation,
Defendant-Appellee -
Cross-Appellant,
and
WILBUR L. BRAKHAGE,
Supervisor; JANICE KEELIN,
Defendants-Appellees.
ORDER AND JUDGMENT *
Before TACHA , Chief Judge, HENRY , and O’BRIEN , Circuit Judges.
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination
of these appeals. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The cases
are therefore ordered submitted without oral argument.
This appeal involves post-judgment collection activities that have been
pursued by plaintiff-appellant Debra A. Shaw to recover attorneys’ fees and costs
that have been incurred in seeking to enforce a substantive judgment and related
judgments awarding costs and attorneys’ fees under the qui tam and wrongful
termination provisions of the False Claims Act (FCA). See 31 U.S.C.
§ 3730(d)(2) and (h). The background facts pertaining to the underlying FCA
claims and judgments are set forth in our prior decisions in Shaw v. AAA Eng’g &
Drafting, Inc. , 213 F.3d 519 (10th Cir. 2000) (affirming entry of qui tam and
wrongful termination judgment in favor of Shaw) and Shaw v. AAA Eng’g &
Drafting, Inc. , 213 F.3d 538 (10th Cir. 2000) (affirming entry of initial amended
judgment awarding costs and attorneys’ fees to Shaw and holding that “both [the
qui tam and the wrongful termination] FCA attorney fee provisions allow the
award of attorney’s fees for time spent in post-judgment collection activities”).
As set forth in Shaw’s notice of appeal, see Aplt. App., Vol. 4 at 1505-07,
Shaw is appealing the order and the related judgment that the district court
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entered on September 10, 2003 regarding her fourth application for costs and
attorneys’ fees. See R., Docs. 439, 440. Shaw is also appealing the following
orders that were entered by the district court on August 19 and 20, 2003: (1) the
order denying Shaw’s motion to join persons needed for just adjudication and to
amend judgments, id. , Doc. 424; (2) the order denying Shaw’s application for
appointment of receiver and preliminary injunction, id. , Doc. 421; (3) the order
denying Shaw’s motion for expedited injunctive relief and expedited hearing, id. ,
Doc. 420; (4) the order denying Shaw’s motion for sanctions for contempt of
court and motion to strike, id. , Doc. 422; (5) the order overruling Shaw’s
objection to the magistrate judge’s order regarding her objection to the entry of
appearance filed by William Bennett, id. , Doc. 419; (6) the order denying Shaw’s
motion for leave to file brief in reply to defendant’s response briefs, id. , Doc.
427; and (7) the order affirming the magistrate judge’s order granting the surety’s
motion to quash Shaw’s demand for production of attorney records, id. , Doc. 430.
In addition, defendant-appellee AAA Engineering & Drafting, Inc. (AAA)
is cross-appealing the portion of the order entered by the district court on
August 20, 2003 which struck AAA’s motion to quash Shaw’s demand for
production of attorney records. Id. Our jurisdiction is based on 28 U.S.C.
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§ 1291. We affirm the orders and the judgment that Shaw is appealing, and we
dismiss AAA’s cross-appeal for lack of jurisdiction due to the untimely filing of
its notice of appeal.
A. Shaw’s Motion to Join Persons Needed for Just Adjudication
and to Amend Judgments.
Shaw filed her qui tam and wrongful termination claims in separate district
court cases, but the district court consolidated the cases for trial. At the
conclusion of the trial on Shaw’s FCA claims, a judgment was entered in favor of
Shaw and against AAA and the two individual defendants, Wilbur L. Brakhage
and Janice Keelin, on Shaw’s substantive claims. See Aplt. App., Vol. 1 at 276-
78. Following the above-referenced appeals to this court, the district court
entered an amended substantive judgment against AAA, Brakhage, and Keelin.
Id. at 311-12. The amended judgment has apparently been satisfied in full, and it
is not at issue in this appeal.
The FCA’s qui tam and wrongful termination provisions provide for awards
of costs and reasonable attorneys’ fees to a successful plaintiff. See 31 U.S.C.
§ 3730(d)(2) and (h). In addition, as noted above, this court held in a prior appeal
in this case that “both FCA attorney fee provisions allow the award of attorney’s
fees for time spent in post-judgment collection activities.” Shaw , 213 F.3d at
545. In accordance with this statutory and case law authority, the district court
has entered several separate judgments awarding costs and attorneys’ fees to
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Shaw, and each of the judgments have been entered against AAA, Brakhage, and
Keelin. See Aplt. App., Vol. 1 at 285-88, 289-94, 306-07; Vol. 3 at 735; Vol. 4 at
1504.
In her motion to join persons and to amend judgments, Shaw sought to
expand the scope of the latter judgments by imposing personal liability for the
judgments on a number of additional individuals associated with AAA (the
additional individuals). 1
As a procedural matter, Shaw based her motion on Rules
19(a) and 60(a) and (b) of the Federal Rules of Civil Procedure. See Aplt. App.,
Vol. 3 at 1014, 1027-28, 1031. As a matter of substantive law, Shaw based her
motion on: (1) Okla. Stat. tit. 68, § 1212(c); (2) Oklahoma and Tenth Circuit
decisions applying corporate veil-piercing principles; and (3) the inherent power
of the federal courts to prevent fraud on the court. Id. at 1016-17, 1028-30, 1032-
36.
We conclude that Shaw’s motion was procedurally flawed. To begin with,
Rule 60(a) is clearly inapplicable, as it applies only to efforts to correct
“[c]lerical mistakes in judgments.” Fed. R. Civ. P. 60(a). Likewise, Rule 60(b)
does not provide a mechanism to amend a judgment in order to join additional
1
Specifically, Shaw requested that the district court “enter an order joining
persons needed for just adjudication as defendants and amending all judgments
taken against suspended ‘AAA’ to include individual persons, including but not
limited to officers, directors, shareholders, trustees/attorneys, and any other
person, entity or firm that should be joined.” Aplt. App., Vol. 3 at 1014.
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parties. Instead, under certain specified circumstances, Rule 60(b) allows a
district court to “ relieve a party . . . from a final judgment.” Fed. R. Civ. P. 60(b)
(emphasis added). Rule 19 is also inapplicable, because, while it provides for the
“Joinder of Persons Needed for Just Adjudication,” Fed. R. Civ. P. 19, it does not
provide a joinder mechanism for plaintiffs. 2
See Glancy v. Taubman Centers,
Inc. , 373 F.3d 656, 669 (6th Cir. 2004) (“Rule 19 is the tool of the defendant, as
the plaintiff has the power to choose which parties it wishes to sue and generally
has ample freedom to amend its complaint to add a party.”); see also Fed. R. Civ.
P. 12(b)(7)(referring to the “defense” of “failure to join a party under Rule 19”).
This does not mean that Shaw may not seek leave to amend a judgment to
add additional parties, however, as Fed. R. Civ. P. 21 expressly provides that
“[p]arties may be dropped or added by order of the court on motion of any party
. . . at any stage of the action .” (emphasis added). Accordingly, we will treat
Shaw’s motion to join additional parties and to amend judgments as a joinder
motion under Rule 21, and we review the district court’s order denying the motion
for an abuse of discretion. See K-B Trucking Co. v. Riss Int’l Corp. , 763 F.2d
1148, 1153 (10th Cir. 1985) (“The grant or denial of a motion to bring in or drop
a party lies in the discretion of the judge. . . . The trial court’s exercise of
2
Of course, “Rule 19 could . . . be used by the plaintiff when the defendant
files a counterclaim and raises an issue that the plaintiff then claims impacts an
absentee [party] who should be joined.” Glancy , 373 F.3d at 669 n.9.
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discretion will not be disturbed on appeal unless an abuse [of discretion] is
shown.”) (quoting 7 C. Wright & A. Miller, Federal Practice and Procedure
§ 1688, at 342 (1972)).
As noted above, in her motion to join additional parties and to amend
judgments, Shaw relied on Okla. Stat. tit. 68, § 1212(c), as one of the grounds for
the motion, arguing: (1) that AAA’s corporate status was suspended on
January 21, 1998 due to its failure to pay state franchise taxes; and (2) that, under
§ 1212(c), the individuals identified in her motion were personally liable for all of
the judgments that the district court had entered awarding costs and attorneys’
fees to Shaw, because each of the judgments had been entered after AAA’s
corporate status was suspended. 3
In its order denying Shaw’s motion, the district
court rejected Shaw’s argument under § 1212(c), concluding that “although the
Court has issued judgments [for costs and attorneys’ fees] during the time AAA
Engineering was suspended, all of the judgments relate back to the original [FCA
qui tam and wrongful termination] judgment entered on June 27, 1997.” Aplt.
App., Vol. 4 at 1477. The district court also found that “there is no evidence that
3
As construed by the Oklahoma Supreme Court, § 1212(c) provides that the
officers and directors of a corporation are personally liable for all business debts
incurred by the corporation with their knowledge, approval and consent during
any time period that the corporation is suspended for failure to pay franchise
taxes. See Bethlehem Steel Corp. v. Giese , 681 P.2d 769, 769-70 (Okla. 1984).
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AAA Engineering’s officers, directors, shareholders, or trustees/attorneys knew
of, approved, and consented to the judgments entered,” id. , as is required by
§ 1212(c).
The district court did not address Shaw’s corporate veil-piercing claims or
her fraud on the court theory. Both the parties and the district court have also
overlooked the critical threshold issue of whether the district court had subject
matter jurisdiction to join parties and extend the judgments to new individuals
based on Shaw’s theories of liability. 4
“Although neither party has challenged the
district court’s jurisdiction, insofar as subject matter jurisdiction is concerned, it
has long been recognized that a federal court must, sua sponte, satisfy itself of its
power to adjudicate in every case and at every stage of the proceeding.” State
Farm Mut. Auto. Ins. Co. v. Narvaez , 149 F.3d 1269, 1270-71 (10th Cir. 1998)
(quotation omitted); see also Steel Co. v. Citizens for a Better Env’t , 523 U.S. 83,
94-95 (1998) (holding that a federal court must always satisfy itself first that it
does in fact have subject matter jurisdiction before proceeding in any case, and
that there is no such thing as “hypothetical jurisdiction”); Gold v. Local 7 United
Food and Commercial Workers Union , 159 F.3d 1307, 1309-10 (10th Cir. 1998)
4
On May 6, 2005, we entered an order directing the parties to file
supplemental briefs addressing the jurisdictional issues that are raised by Shaw’s
joinder motion and AAA’s cross-appeal. Both sides subsequently filed
supplemental briefs.
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(“Steel requires that a federal court satisfy itself of subject matter jurisdiction
before proceeding to the merits of a claim–even when the question of the merits is
the easier one”), overruled on other grounds by Styskal v. Weld County Comm’rs ,
365 F.3d 855 (10th Cir. 2004). Further, “the burden of proving jurisdiction is on
the party asserting it, and we review the district court’s subject matter jurisdiction
. . . de novo.” Narvaez , 149 F.3d at 1271 (quotation omitted).
We recently summarized the jurisdictional issues presented by cases such as
this one where a plaintiff is seeking to expand the scope of a federal judgment as
follows:
In Sandlin v. Corporate Interiors Inc. , 972 F.2d 1212 (10th
Cir. 1992), this court relied on H.C. Cook Co. v. Beecher , 217 U.S.
497 . . . (1910), to hold that “when postjudgment proceedings seek to
hold nonparties liable for a judgment on a theory that requires proof
on facts and theories significantly different from those underlying the
judgment, an independent basis for federal jurisdiction must exist.”
Sandlin , 972 F.2d at 1217. We then applied that principle to deny
the existence of federal jurisdiction over various judgment-recovery
efforts including the assertion of an alter-ego claim. Id. at 1217-18.
Shortly thereafter, the Supreme Court reaffirmed H.C. Cook
Co. in an ERISA case, holding that a plaintiff who had obtained a
judgment against a corporate employer could not enforce the
judgment in a second suit asserting a veil-piercing theory against a
shareholder without an independent basis for federal subject matter
jurisdiction. Peacock v. Thomas , 516 U.S. 349, 357-60 . . . (1996).
The circuits had followed conflicting approaches to the question of
jurisdiction in judgment-enforcement actions, and the Court
specifically cited Sandlin as an example of the approach it upheld.
Peacock , 516 U.S. at 352 n. 2 . . . .
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Courts have recognized a number of analytical distinctions that
clarify and delimit Peacock’s reach. If an alter-ego claim is asserted
in conjunction with the underlying federal cause of action, the latter
may provide the basis for [supplemental] jurisdiction [under 28
U.S.C. § 1967] over the alter-ego claim, obviating Peacock concerns;
it is only when an alter-ego claim is asserted in a separate
judgment-enforcement proceeding that Peacock requires an
independent basis for federal jurisdiction. . . . Peacock also is not
implicated in actions to reach and collect assets of the judgment
debtor held by a third party; it is only when the plaintiff seeks to hold
the third party personally liable on the judgment that an independent
jurisdictional basis is required. . . . And, of course, in any
judgment-enforcement action otherwise governed by Peacock there
may in fact be an independent basis for federal jurisdiction. See,
e.g., C.F. Trust, Inc. v. First Flight Ltd. P’ship , 306 F.3d 126, 133
(4th Cir. 2002) (relying on diversity as independent jurisdictional
basis for purposes of Peacock ).
Ellis v. All Steel Const. Co. , 389 F.3d 1031, 1033-34 (10th Cir. 2004).
These enforcement proceedings derive from an FCA judgment, entered by
virtue of federal question jurisdiction under 28 U.S.C. § 1331. Consequently,
based on the Supreme Court’s decision in Peacock and this court’s decisions in
Sandlin and Ellis , to establish subject matter jurisdiction in the district court over
the claims asserted against the additional individuals, Shaw had three alternatives:
(1) show that the claims allege direct liability or are directly entangled with the
underlying FCA claims, see Ellis , 389 F.3d at 1034-36, such that the claims fell
within the district court’s original FCA federal question jurisdiction, id. at 1035(stating in ERISA case that “[n]o separate federal jurisdictional basis is needed
when ERISA liability is asserted directly against a second entity based upon that
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second entity’s direct role in the ERISA violation”); (2) show that complete
diversity of citizenship existed between the original parties to this case and the
additional individuals such that the district court had subject matter jurisdiction
under 28 U.S.C. § 1332(a); or (3) show that, even if there was no independent
basis for subject matter jurisdiction, the district court could exercise supplemental
jurisdiction over the claims against the additional individuals under 28 U.S.C.
§ 1367(a).
Leaving aside for the moment Shaw’s fraud on the court theory, which we
will address separately below, it is clear that Shaw is relying on state and federal
corporate veil-piercing rules, both statutory ( i.e. , Okla. Stat. tit. 68, § 1212(c))
and common law, as the mechanism to impose personal liability on the additional
individuals for the judgments awarding costs and attorneys’ fees. See Aplt. App.,
Vol. 3 at 1035-36. It is also clear that Shaw’s claims against the additional
individuals are based on conduct that allegedly occurred after the initial FCA
judgment was entered in June 1997. Specifically, in her joinder motion, Shaw
alleged that the additional individuals have engaged in various forms of post-
judgment misconduct in order to defeat her judgment-collection efforts. Id. at
1021-25, 1033-34. We therefore have no difficulty concluding that Shaw is
“seek[ing] to hold nonparties liable for [] judgment[s] on [] theor[ies] that
require[] proof on facts and theories significantly different from those underlying
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the [original FCA] judgment[s].” Ellis , 389 F.3d at 1033. As a result, “a separate
basis for federal jurisdiction must be established.” Id. at 1035. And, because
Shaw is not asserting liability for the underlying FCA judgment “ directly against
[the additional individuals] based upon [their] direct role in the [FCA]
violation[s],” id. , federal question jurisdiction cannot provide the separate basis. 5
There is also no basis for diversity jurisdiction. The two individual
defendants, Brakhage and Keelin, were citizens of Oklahoma at the time Shaw
filed her initial FCA complaints. See Aplt. App., Vol. 1 at 92-93, ¶ 4; 109, ¶ 3;
120, ¶ 4; 135-36, ¶ 4. Because Shaw is also a citizen of Oklahoma, there was no
complete diversity of citizenship as required under 28 U.S.C. § 1332(a). 6
See
5
As noted above, in addition to Oklahoma law, Shaw is relying on federal
common law to support her corporate veil-piercing claim. However, whether
based on state or federal law, a veil-piercing claim “cannot independently support
federal [question] jurisdiction.” Peacock , 516 U.S. at 353-54. Instead, as
explained by the Supreme Court in Peacock , “[p]iercing the corporate veil is not
itself an independent [federal] cause of action, but rather is a means of imposing
liability on an underlying cause of action.” Id. at 354 (quotation omitted). As a
result, “neither [the FCA’s] jurisdictional provision, [31 U.S.C. § 3732], nor 28
U.S.C. § 1331 supplied the District Court with jurisdiction over [the veil-piercing
claims].” Id. In addition, the two cases that Shaw relied on her joinder motion to
support her federal common law veil-piercing claim are inapposite, as the United
States (or an entity thereof) was the plaintiff in both cases, and there was thus an
independent basis for federal question jurisdiction based on the United States’
status as a plaintiff. See Aplt. App., Vol. 3 at 1035-36 (citing United States v.
Van Diviner , 822 F.2d 960 (10th Cir. 1987) (breach of contract action) and FDIC
v. Oldenburg , 34 F.3d 1529 (10th Cir. 1994) (action brought by FDIC to recover
for losses caused by officers and directors of failed savings and loan)).
6
In her initial complaint, Shaw alleged that defendant Keelin “reside[d] at
(continued...)
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Newman-Green, Inc. v. Alfonzo-Larrain , 490 U.S. 826, 829 (1989) (“When a
plaintiff sues more than one defendant in a diversity action, the plaintiff must
meet the requirements of the diversity statute for each defendant or face
dismissal.”); see also Freeport-McMoRan, Inc. v. K N Energy, Inc. , 498 U.S. 426,
428 (1991) (per curiam) (holding that a party’s citizenship, i.e. , his domicile,
must be determined as of the moment the plaintiff’s complaint is filed, and events
either before or after the filing of the complaint will not defeat citizenship).
We also conclude that it would have been an abuse of discretion for the
district court to have exercised supplemental jurisdiction under 28 U.C.S.
§ 1367(a) over the state-law claims that Shaw has asserted against the additional
individuals. As recognized by the Supreme Court in Peacock , Congress enacted
§ 1367 in order to “codif[y] much of the common-law doctrine of ancillary
jurisdiction as part of ‘supplemental jurisdiction.’” Peacock , 516 U.S. at 354 n.5.
In particular, § 1367(a) codified the principle that “[t]he federal courts’ original
jurisdiction over federal questions carries with it jurisdiction over state law
6
(...continued)
5304 Northwest 115, Oklahoma City, Oklahoma.” Aplt. App., Vol. 1 at 92-93,
¶ 4. In her answer to the initial complaint, defendant Keelin stated that the
Oklahoma address set forth in Shaw’s complaint was “incorrectly alleged.” Id. at
135-36, ¶ 4. Defendant Keelin did not dispute that she was in fact a resident of
Oklahoma, however. Further, even if she was not a resident of Oklahoma, there
was still no complete diversity of citizenship, because it is undisputed that
defendant Brakhage was a resident of Oklahoma at the time Shaw filed her initial
complaints.
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claims that derive from a common nucleus of operative fact, such that the
relationship between [the federal] claim and the state claim permits the
conclusion that the entire action before the court comprises just one constitutional
case.” 7 Gold , 159 F.3d at 1310. Section 1367(c) also authorizes the district
courts to decline supplemental jurisdiction in certain specified circumstances,
however, and one of the circumstances is where “the [state] claim substantially
predominates over the claim or claims over which the district court has
jurisdiction.” 28 U.S.C. § 1367(c)(2). “The exercise of supplemental jurisdiction
is therefore discretionary,” and “we review [a] district court’s decision to decline
supplemental jurisdiction for abuse of discretion only.” Gold , 159 F.3d at 1310.
Although the Supreme Court in Peacock did not specifically apply § 1367,
we nonetheless believe that Peacock provides the answer to the supplemental
jurisdiction issue in this case. In Peacock , the plaintiff filed a lawsuit in federal
court against an officer/shareholder of a corporation in an effort to collect a
ERISA judgment that the plaintiff had previously obtained against the corporation
in a separate federal case. See Peacock , 516 U.S. at 351-52. The district court
ultimately entered judgment in favor of the plaintiff based on a corporate
7
Section 1367(a) provides that “in any civil action of which the district
courts have original jurisdiction, the district courts shall have supplemental
jurisdiction over all other claims that are so related to claims in the action within
such original jurisdiction that they form part of the same case or controversy
under Article III of the United States Constitution.” 28 U.S.C. § 1367(a).
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veil- piercing theory, and the Fourth Circuit affirmed on appeal, “holding that the
District Court properly exercised ancillary jurisdiction over [the] suit.” Id. at
352. On appeal to the Supreme Court, the Supreme Court reversed the Fourth
Circuit, concluding that the district court could not exercise ancillary jurisdiction
for two reasons. First, because Peacock involved a subsequent lawsuit that was
filed after the original ERISA case had been concluded, the Court noted that there
was no “primary lawsuit” that could provide an independent basis for federal
jurisdiction. Id. at 355. As the court explained,
The court must have jurisdiction over a case or controversy before it
may assert jurisdiction over ancillary claims. In a subsequent lawsuit
involving claims with no independent basis for jurisdiction, a federal
court lacks the threshold jurisdictional power that exists when
ancillary claims are asserted in the same proceeding as the claims
conferring federal jurisdiction. Consequently, claims alleged to be
factually interdependent with and, hence, ancillary to claims brought
in an earlier federal lawsuit will not support federal jurisdiction over
a subsequent lawsuit.
Id. (citations omitted).
Second, as an alternative basis for rejecting ancillary jurisdiction, the Court
concluded that “[i]n any event, there is insufficient factual dependence between
the claims raised in [plaintiff’s] first and second suits to justify extension of
ancillary jurisdiction.” Id. The Court’s reasoning with regards to the factual
dependence issue was as follows:
[Plaintiff’s] factual allegations in this suit are independent from
those asserted in the [prior] ERISA suit, which involved Peacock’s
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and Tru-Tech’s status as plan fiduciaries and their alleged
wrongdoing in the administration of the plan. The facts relevant to
this complaint are limited to allegations that Peacock shielded
Tru-Tech’s assets from the ERISA judgment long after Tru-Tech’s
plan had been terminated. The claims in these cases have little or no
factual or logical interdependence, and, under these circumstances,
no greater efficiencies would be created by the exercise of federal
jurisdiction over them.
Id. at 355-56.
This case differs from Peacock in that Shaw has asserted her claims against
the additional individuals in her FCA case. Consequently, there is an existing
“primary lawsuit” that could provide an independent basis for federal jurisdiction.
Nonetheless, in light of the Supreme Court’s alternative holding in Peacock with
regards to the factual dependence issue, we believe the Court would have rejected
ancillary jurisdiction in Peacock even if the veil-piercing claim had been asserted
in the prior ERISA case. Because Congress intended to codify the doctrine of
ancillary jurisdiction as part of “supplemental jurisdiction” in § 1367, id. at 355
n.5, we also believe that Peacock requires us to conclude that the district court
would have abused its discretion if it had granted Shaw’s joinder motion and
exercised supplemental jurisdiction, as there is simply an “insufficient factual
dependence between [plaintiff’s state-law claims and the underlying FCA claims]
to justify the extension of [supplemental] jurisdiction.” Id. at 355. Accordingly,
we conclude, as a matter of law, that the district court would have abused its
discretion under § 1367 and Fed. R. Civ. P. 21 if it had granted Shaw’s joinder
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motion, and we therefore affirm the district court’s denial of the motion. Cf.
Ashby v. McKenna , 331 F.3d 1148, 1152 (10th Cir. 2003) (“[W]ith respect to a
matter committed to the district court’s discretion, we [can] invoke an alternative
basis to affirm [if] we can say as a matter of law that it would have been an abuse
of discretion for the court to rule otherwise”).
Finally, as noted above, Shaw is also appealing the order and the related
judgment that the district court entered on September 10, 2003 regarding her
fourth application for costs and attorneys’ fees. See R., Docs. 439, 440. Because
we have concluded that the district court acted properly in denying Shaw’s joinder
motion, we also reject Shaw’s claim that the district court erred by failing to enter
a judgment against the additional individuals for the amounts awarded to her in
response to her fourth application for costs and attorneys’ fees. We therefore
affirm the order and judgment entered by the district court regarding Shaw’s
fourth application for costs and attorneys’ fees. Likewise, we affirm: (1) the
order entered by the district court on August 19, 2003 denying Shaw’s application
for appointment of receiver and preliminary injunction, id. , Doc. 421; and (2) the
order entered by the district court on August 19, 2003 denying Shaw’s motion for
expedited injunctive relief and expedited hearing, id. , Doc. 420. These matters
were also tied to Shaw’s joinder motion, and our ruling with regards to the joinder
motion disposes of them as well.
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B. Fraud on the Court.
A federal district court has the “inherent power . . . to set aside its
judgment if procured by fraud upon the court.” United States v. Buck , 281 F.3d
1336, 1341 (10th Cir. 2002). We have emphasized, however, that fraud on the
court occurs only “where the impartial functions of the court have been directly
corrupted.” Id. at 1342 (quotation omitted). Thus,
[g]enerally speaking, only the most egregious misconduct, such as
bribery of a judge or members of a jury, or the fabrication of
evidence by a party in which an attorney is implicated will constitute
a fraud on the court. Less egregious misconduct, such as
nondisclosure to the court of facts allegedly pertinent to the matter
before it, will not ordinarily rise to the level of fraud on the court.
Id. (quotation omitted).
In her joinder motion, Shaw alleged that AAA and its counsel committed
fraud on the district court by failing to disclose “AAA’s loss of corporate status
and protection.” Aplt. App., Vol. 3 at 1032. According to Shaw, “AAA and its
individual representatives, by their silence, continued to engage in the
unconscionable scheme of purporting to hold corporate status with correlative
corporate protections in proceedings before the [district court] commencing in
1998 and continuing through the present.” Id. at 1033. Shaw further alleged that
the additional individuals “intentionally duped the Court . . . by their
unconscionable scheme calculated to interfere with the judicial system’s ability to
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adjudicate and to unfairly hamper [plaintiff’s] collection and the final resolution
of this case.” Id. at 1033-34.
Having thoroughly reviewed the record in this case, we conclude, as a
matter of law, that Shaw’s allegations fall short of establishing the type of
egregious misconduct that is necessary to establish fraud on the court. As a
result, it would have been an abuse of discretion for the district court to grant
Shaw any relief on her fraud on the court claim. See Buck , 281 F.3d at 1342-43(noting that this court reviews district court rulings regarding fraud on the court
claims under abuse-of-discretion standard).
C. Other Orders.
As set forth above, Shaw is also appealing several other post-judgment
orders that were entered by the district court. Because the orders resolved
important questions that arose after a final judgment was entered, we conclude
that appellate review is available to test the district court’s rulings. See In re
Farmers’ Loan & Trust Co. , 129 U.S. 206, 213 (1889); see also Wright, Miller &
Cooper, Federal Practice and Procedure : Jurisdiction 2d § 3916 at 351 (1992)
(stating that “once the original trial proceedings have been completed, final
judgment appeal should be available upon the conclusion of most post-judgment
proceedings,” and that a post-judgment “[a]ppeal should be available whenever
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the trial court has finally disposed of the question, and there are no pending
proceedings raising related questions”).
We affirm each of the post-judgment orders that Shaw is appealing. First,
AAA’s surety, American Manufacturers Mutual Insurance Company (American),
filed a motion to quash due to a post-judgment discovery dispute involving
subpoenas that Shaw had served on co-counsel for AAA and American, and
American sought to quash Shaw’s request for detailed attorney billing statements.
See Aplt. App., Vol. 3 at 988-89. The magistrate judge entered an order granting
American’s motion to quash, concluding: (1) that Shaw “ha[d] not clearly
articulated what claim or issue would be addressed by the requested documents”;
and (2) that Shaw “offer[ed] no explanation of how the production of detailed
attorney billing statements . . . would lead to the discovery of admissible
evidence.” Id. at 991. On appeal to the district court, the district court affirmed
the magistrate judge’s order. Id. , Vol. 4 at 1480-81. We conclude that the district
court did not abuse its discretion with regards to American’s motion to quash.
Second, Shaw moved for sanctions for contempt of court and to strike a
motion filed by AAA on the ground that AAA and its counsel had allegedly failed
to comply with a prior order of the district court requiring the parties to serve a
copy of all pleadings and motions on the United States. Id. , Vol. 3 at 993. Shaw
also alleged that AAA and its counsel had failed to comply with the service
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requirements under Fed. R. Civ. P. 5. Id. at 994. The magistrate judge entered an
order recommending that the district court deny Shaw’s motion, concluding that
she “ha[d] not met the burden of showing entitlement to an award of damages for
civil contempt or shown that other forms of requested relief are appropriate.” Id.
at 993-94. The district court adopted the magistrate judge’s recommendation, and
it denied Shaw’s motion for sanctions for contempt of court and to strike. Id. ,
Vol. 4 at 1472. We conclude that the district court did not abuse its discretion in
denying Shaw’s motion.
Third, the magistrate judge entered an order denying Shaw’s request that
attorney William Bennett be disqualified from representing AAA, concluding that
Shaw had failed to establish “good cause to disallow representation of AAA by
Mr. Bennet.” Id. , Vol. 3 at 987. On appeal to the district court, the court
overruled Shaw’s objection to the magistrate judge’s order. Id. , Vol. 4 at 1468.
We conclude that the district court did not abuse its discretion with regards to
Mr. Bennett’s entry of appearance.
Lastly, the district court entered an order denying Shaw’s motion for leave
to file a brief in reply to certain response briefs that had been filed by AAA.
Id. at 1479. We see no abuse of discretion by the district court in denying Shaw’s
motion.
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D. AAA’s Cross-Appeal.
“A court of appeals acquires jurisdiction of an appeal only upon the filing
of a timely notice of appeal; this requirement is mandatory and jurisdictional.”
United States v. Torres , 372 F.3d 1159, 1161 (10th Cir. 2004) (quotation
omitted). Because the timeliness of AAA’s cross-appeal is at issue, we “must
determine, as a threshold matter, whether [AAA’s] notice of appeal was timely.”
Trotter v. Regents of the Univ. of N.M. , 219 F.3d 1179, 1182 (10th Cir. 2000).
Shaw filed her notice of appeal on September 18, 2003. See Aplt. App.,
Vol. 4 at 1505. On October 17, 2003, AAA filed a notice of appeal “as to that
portion of the [order entered by the district court on August 20, 2003] which
vacate[d] the U.S. Magistrate Judge’s order and [struck] [AAA’s] motion to
quash, or in the alternative to limit production.” Aplee. App., Vol. 2 at 319.
According to Fed. R. App. P. 4(a)(3), “[i]f one party timely files a notice of
appeal, any other party may file a notice of appeal within 14 days after the date
when the first notice was filed, or within the time otherwise prescribed by this
Rule 4(a), whichever period ends later.” Here, AAA failed to file its notice of
appeal within 14 days after the date when Shaw filed her notice of appeal. As a
result, in order to be timely, AAA was required to file its notice of appeal within
the time prescribed by Fed. R. App. P. 4(a).
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According to Fed. R. App. P. 4(a)(1)(A), a party to a civil case must file a
notice of appeal in the district court “within 30 days after the judgment or order
appealed from is entered.” However, “[w]hen the United States . . . is a party, the
notice of appeal may be filed by any party within 60 days after the judgment or
order appealed from is entered.” Fed. R. App. P. 4(a)(1)(B).
AAA failed to file its notice of appeal within thirty days of the entry of the
district court’s August 20, 2003 order, but it filed its notice of appeal within sixty
days of the entry of that order. Thus, we must determine whether the United
States was a party to the consolidated district court cases (specifically, the qui
tam case, D.C. No. 95-CV-950-M) such that AAA could rely on the sixty-day
provision in Fed. R. App. P. 4(a)(1)(B). See In re Adams Apple, Inc. , 829 F.2d
1484, 1487 (9th Cir. 1987) (holding that where the United States was a party to
one case, the sixty-day rule applied to the other case if the cases were
consolidated); accord Perry Hollow Golf Club, Inc. v. Perry Hollow Mgmt. Co.,
(In re Perry Hollow Mgmt. Co.) , 297 F.3d 34, 39 (1st Cir. 2002); Cablevision Sys.
Dev. Co. v. Motion Picture Ass’n of America, Inc. , 808 F.2d 133, 136 (D.C. Cir.
1987).
The Fifth Circuit has explained the issues that qui tam FCA cases raise in
this context as follows:
In a qui tam case in which the United States intervenes, the
government is clearly a party and the sixty-day rule applies. The
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difficulty arises when the government chooses not to intervene.
When a False Claims Act suit is initiated by a private person--a qui
tam plaintiff or relator--the action is brought “for the person and for
the Government” and is “brought in the name of the Government.”
31 U.S.C. § 3730(b)(1). The government has sixty days after
receiving a complaint and evidentiary information from the relator to
decide whether to intervene in the suit. See id. § 3730(b)(2)-(4).
If the government decides not to intervene, the citizen may
conduct the action.
United States ex rel. Russell v. Epic Healthcare Mgmt. Group , 193 F.3d 304, 306
(5th Cir. 1999). In this case, the United States elected not to intervene in
Shaw’s qui tam case. See R., D.C. No. 95-CV-950-M, Doc. 17. We must
therefore determine whether the United States was nonetheless a party to the case
for purposes of Fed. R. App. P. 4(a)(1)(B).
In United States ex rel. Petrofsky v. Van Cott, Bagley, Cornwall, McCarthy ,
588 F.2d 1327 (10th Cir. 1978), this court addressed the thirty-versus-sixty-day
issue under a prior version of the FCA. Under the prior version of the FCA,
“[t]he statute require[d] the government [to] join or withdraw from the suit within
60 days. If the United States join[ed], it control[led] the litigation; if it
with[drew], the person bringing the action [could] proceed individually.” Id. at
1328 (citing 31 U.S.C. § 232(C)). In Petrofsky , “the United States specifically
declined to enter Petrofsky’s suit and the action was [subsequently] dismissed by
the [district court] . . . . Exactly 60 days later Petrofsky appealed that dismissal to
this Court.” Id. The issue in Petrofsky was thus whether “the United States . . .
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[was] a party to [the] action, thereby extending to 60 days the 30-day time limit
for filing appeals.” Id. A panel of this court, with one judge dissenting,
concluded that the thirty-day period applied:
The statute gives the government the option to prosecute the
case itself, or withdraw. Here the government withdrew. Petrofsky
knew this, and so did the defendant. It was clear at that time the
United States would not participate in the suit and that proceeding in
its name was merely a statutory formality. While this Court
recognizes the need for an open interpretation of Fed. R. App. P. 4(a)
to assure innocent parties not be prejudiced by too strict a reading,
the rule achieves no such purpose in this case. All parties were
aware the government disclaimed any participation in the suit and
there are no other circumstances which indicate a need for more than
the usual 30 days to make the appeal. For these reasons, we hold the
60-day provision inapplicable and dismiss the appeal for failure to
file within the 30-day requirement of Fed. R. App. P. 4(a).
Id. at 1329.
In cases arising under the current version of the FCA, other circuits have
disagreed with the reasoning and result in Petrofsky , but it does not appear that
the disagreement has resulted from any changes in the pertinent provisions of the
FCA. For example, in Russell , the Fifth Circuit explained that it disagreed with
this court’s approach in Petrofsky primarily out of a concern that qui tam
plaintiffs may be misled “into believing that the United States is a party.”
Russell , 193 F.3d at 308. The court therefore concluded that “Rule 4(a)(1) should
be construed to reduce uncertainty in the already difficult conceptual terrain of
qui tam suits,” and the court “[held] that when the United States has declined to
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intervene in a False Claims Act suit filed by a qui tam plaintiff, Rule 4(a)(1)
provides the remaining parties sixty days . . . to file notices of appeal.” Id. ;
accord United States ex rel. Lu v. Ou , 368 F.3d 773, 774-75 (7th Cir. 2004)
(rejecting Petrofsky ); United States ex rel. Haycock v. Hughes Aircraft Co. , 98
F.3d 1100, 1102 (9th Cir. 1996) (same).
We recognize that there are valid arguments in favor of applying the
sixty-day rule in qui tam cases such as this one. See Russell , 193 F.3d at 308(noting that “the government is ever present in qui tam suits in ways that promote
confusion”). That said, we do not see a clear-cut basis for distinguishing
Petrofsky and/or the prior version of the FCA that was at issue in Petrofsky .
Accordingly, we conclude that we are bound by our prior decision in Petrofsky .
See In re Smith , 10 F.3d 723, 724 (10th Cir. 1993) (per curiam) (“We cannot
overrule the judgment of another panel of this court. We are bound by the
precedent of prior appeals absent en banc reconsideration or a superseding
contrary decision by the Supreme Court.”); see also Tootle v. USDB Commandant ,
390 F.3d 1280, 1283 (10th Cir. 2004) (stating that panels of this court are “bound
to follow . . . the published decisions of this court”).
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CONCLUSION
We AFFIRM the following orders and judgments of the district court:
Doc. Nos. 419, 420, 421, 422, 424, 427, 430, 439, 440. We DISMISS AAA’s
cross-appeal for lack of jurisdiction.
With regards to the appellate motions filed by the parties, we GRANT
Shaw’s motion for permission to file a supplemental appendix to the third brief on
cross-appeal. In light of the disposition set forth herein, we DENY: (1) Shaw’s
request that the court take judicial notice of various matters; (2) AAA’s motion to
strike Shaw’s request for the court to take judicial notice; (3) Shaw’s motion to
strike the second and fourth briefs on cross-appeal; (4) Shaw’s motion to
temporarily stay the determination of this appeal; and (5) Shaw’s motion for a
temporary order granting leave to file documents under seal. Finally, we DENY
Shaw’s motion to companion this appeal with Tenth Circuit Case No. 05-6181
and the other “unassigned” appeal referenced in her motion.
Entered for the Court
Terrence L. O’Brien
Circuit Judge
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