United States v. Flaherty ( 2008 )

06-3081-cv
United States v. Flaherty
1 UNITED STATES COURT OF APPEALS
2 FOR THE SECOND CIRCUIT
3 August Term, 2007
4 (Argued: June 24, 2008 Decided: August 19, 2008)
5
6 Docket No. 06-3081-cv
7 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
8 UNITED STATES OF AMERICA, ex rel. MERGENT SERVICES and JOHN BAL,
9
10 Plaintiff-Appellants,
11
12 - v. -
13
14 MARIE FLAHERTY,
15
16 Defendant-Appellee.
17
18
19 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
20
21 B e f o r e: WINTER, MINER, and CABRANES, Circuit Judges.
22
23 Appeal from a dismissal of a complaint in the United States
24 District Court for the Southern District of New York (Harold
25 Baer, Jr., Judge). The pro se appellant brought a False Claims
26 Act qui tam action. Concluding that qui tam actions cannot be
27 brought pro se, the district court dismissed the complaint. We
28 affirm.
29
30
31 JOHN BAL, pro se.
32
33 Marie Flaherty, pro se.
34
1 WINTER, Circuit Judge:
2 John Bal appeals from Judge Baer’s dismissal of his
3 complaint. The principal issue is whether private persons
4 proceeding pro se may bring False Claims Act qui tam actions as
5 relators for the United States. Because False Claims Act causes
6 of action are not personal to relators, they are statutorily
7 barred from bringing such actions pro se. Accordingly, we
8 affirm.
9 BACKGROUND
10 We briefly summarize the relevant facts as they pertain to
11 this appeal. On May 23, 2005, Bal, proceeding pro se, filed this
12 action against Marie Flaherty on behalf of the United States,
13 himself, and his company, Mergent Services. The amended
14 complaint alleges that Flaherty failed to pay Bal for air
15 purifying equipment that he provided to her. Flaherty then
16 allegedly submitted a false receipt to New York State’s
17 Individual and Family Grant Program (Grant Program) in an effort
18 to be reimbursed for costs she never incurred. The Grant
19 Program, funded in part by the Federal Emergency Management
20 Agency (FEMA), assisted New York residents with disaster-related
21 needs following the attack on New York City on September 11,
22 2001. The complaint alleges that FEMA provided a $1,750
23 reimbursement to Flaherty as a result of her fraudulent scheme.
2
1 Alleging that Flaherty’s conduct defrauded the federal
2 government in violation of the False Claims Act, 31 U.S.C. § 37293 et seq., Bal brought this qui tam action as relator for the
4 United States.1 His complaint also asserts other claims,
5 including defamation, unlawful retaliation, and deceit. The
6 United States elected not to intervene. See 31 U.S.C. § 3730.
7 Flaherty filed a motion to dismiss all counts, which the
8 district court granted. With respect to Bal’s False Claims
9 count, the court concluded that because Bal “is not an attorney
10 . . . [he] is not qualified to represent the interests of the
11 United States.” Accordingly, the court dismissed Bal’s claim
12 without prejudice.
13 On appeal, Bal initially sought review of the dismissal of
14 all of the claims he asserted in the district court. He has
15 since consented to the dismissal of all claims except the one
16 asserted under False Claims Act. Thus, the propriety of the
17 dismissal of his qui tam claim is the sole issue on appeal.
18 DISCUSSION
1
The False Claims Act imposes civil liability upon “any
person” who, inter alia, “knowingly presents, or causes to be
presented, to an officer or employee of the United States
Government . . . a false or fraudulent claim for payment or
approval.” 31 U.S.C. § 3729 (a). A suit brought under the Act
may be commenced by either the federal government or by a private
person, or “relator,” who sues for the United States in a qui tam
action. 31 U.S.C. § 3730(a), (b)(1).
3
1 “We review a district court’s grant of a motion to dismiss
2 . . . de novo . . . .” Tindall v. Poultney High Sch. Dist., 414
3 F.3d 281, 283 (2d Cir. 2005) (reviewing dismissal of a claim for
4 failure to retain counsel); see Jones v. Niagara Frontier Transp.
5 Auth., 722 F.2d 20, 22 (2d Cir. 1983) (affording no deference to
6 the district court’s dismissal of an action for a litigant’s
7 failure to retain counsel).
8 Bal first argues that the district court erred because it
9 dismissed his complaint without the consent of the Attorney
10 General. Bal relies upon the provision of the False Claims Act
11 that provides that qui tam actions “may be dismissed only if the
12 court and the Attorney General give written consent to the
13 dismissal and their reasons for consenting.” 31 U.S.C. §
14 3730(b)(1). Similarly, Bal contends that the dismissal violated
15 a district court order that noted that the court would solicit
16 the consent of the United States before approving the dismissal,
17 settlement, or discontinuation of the case. Bal argues that by
18 dismissing the complaint, the district court “violated the United
19 States’ notice” of election not to intervene, which also
20 requested that the action be dismissed only with the approval of
21 the court and the Attorney General.
22 Bal’s arguments are without merit. While the False Claims
23 Act appears to bar dismissal of qui tam actions absent the
24 Attorney General’s consent, see 31 U.S.C. § 3730(b)(1), we have
25 previously construed this provision to apply “only in cases where
4
1 a plaintiff seeks voluntary dismissal of a claim or action
2 brought under the False Claims Act, and not where the court
3 orders dismissal.” Minotti v. Lensink, 895 F.2d 100, 103 (2d
4 Cir. 1990). Because the dismissal in this case came not as a
5 result of a settlement, the district court did not err by
6 neglecting to secure the Attorney General’s consent. See id. at
7 104.
8 As to the claimed violations of the district court’s June 22
9 order and the United States’ notice of election not to intervene,
10 Bal would have us read these literally as prohibiting any
11 dismissal without the Attorney General’s consent. To the
12 contrary, the district court and the United States were
13 contemplating the necessity of obtaining consent for a voluntary
14 dismissal executed as part of settlement, and not for a contested
15 dismissal. Even if the district court and the United States
16 intended to prohibit any dismissal in the absence of the Attorney
17 General’s consent, the district court was free to modify this
18 requirement because there is no such limitation required by law.
19 See id.20 Bal next argues that the district court erroneously
21 concluded that pro se litigants cannot bring False Claim Act qui
22 tam actions on behalf of the United States. Specifically, Bal
23 suggests that courts should consider on a case-by-case basis
24 whether a given layman is capable of pursuing a claim without
25 counsel, taking into account developments in legal research
26 technology that are now available to the general public.
5
1 Although the False Claims Act does not specifically address
2 whether private parties may bring qui tam actions pro se, see 31
3 U.S.C. §§ 3729-33, we have previously suggested that they cannot,
4 albeit in dicta. See Safir v. Blackwell, 579 F.2d 742, 745 n.4
5 (2d Cir. 1978) (positing that “a litigant cannot prosecute a qui
6 tam action under [the Act] pro se”). Nevertheless, the
7 proposition is a sound one. See also Phillips v. Tobin, 548 F.2d
8 408, 412 (2d Cir. 1976) (citing with approval cases in which
9 other courts of appeals have concluded that a pro se plaintiff
10 who is not a lawyer cannot bring a qui tam action under the Act).
11 The circumstances under which civil litigants may appear
12 without counsel are limited by statute. Specifically, 28 U.S.C.
13 § 1654 provides that in federal court, “parties may plead and
14 conduct their own cases personally or by counsel as, by the rules
15 of such courts, respectively, are permitted to manage and conduct
16 causes therein.” Because the statute permits parties only to
17 “plead and conduct their own cases personally,” id. (emphasis
18 added), we have held that “an individual who is not licensed as
19 an attorney ‘may not appear on another person’s behalf in the
20 other’s cause.’” Machadio v. Apfel, 276 F.3d 103, 106 (2d Cir.
21 2002) (quoting Iannaccone v. Law, 142 F.3d 553, 558 (2d Cir.
22 1998)). That is, in order to proceed pro se, “[a] person must be
23 litigating an interest personal to him.” Iannaccone, 142 F.3d at24 558 (citing Pridgen v. Andresen, 113 F.3d 391, 393 (2d Cir.
25 1997)).
6
1 Decisions adhering to this principle abound in our case law.
2 It is well established that a layman may not represent a
3 corporation even if the sole shareholder. See Nat’l Indep.
4 Theatre Exhibitors, Inc. v. Buena Vista Distribution Co., 748
5 F.2d 602, 609 (11th Cir. 1984); Cheung v. Youth Orchestra Found.
6 of Buffalo, Inc., 906 F.2d 59, 61 (2d Cir. 1990) (noting in dicta
7 that “[s]ole shareholders of corporations are not allowed to
8 represent such corporations pro se”). A non-lawyer general
9 partner may not represent the partnership, see Eagle Assocs. v.
10 Bank of Montreal, 926 F.2d 1305, 1310 (2d Cir. 1991), and a sole
11 member of a solely-owned limited liability company may not
12 represent it, see Lattanzio v. COMTA, 481 F.3d 137, 140 (2d Cir.
13 2007) (per curiam). Similarly, we have held that a litigant may
14 not appear pro se to pursue a claim that a corporation has
15 assigned to him, see Niagara Frontier Transp. Auth., 722 F.2d at16 23, or to bring a shareholder’s derivative suit, see Phillips v.
17 Tobin, 548 F.2d 408, 411-12 (2d Cir. 1976). Finally, we have
18 held that a layman may not appear pro se on behalf of his minor
19 child, see Cheung, 906 F.2d at 61.
20 These rulings not only are called for by the text of 28
21 U.S.C. § 1654, but also constitute good policy for both litigants
22 and the courts. As we have noted,
23 the conduct of litigation by a nonlawyer
24 creates unusual burdens not only for the
25 party he represents but as well for his
26 adversaries and the court. The lay litigant
27 frequently brings pleadings that are
7
1 awkwardly drafted, motions that are
2 inarticulately presented, proceedings that
3 are needlessly multiplicative. In addition to
4 lacking the professional skills of a lawyer,
5 the lay litigant lacks many of the attorney’s
6 ethical responsibilities, e.g., to avoid
7 litigating unfounded or vexatious claims.
8
9 Niagara Frontier Transp. Auth., 722 F.2d at 22.
10 Turning to the present case, “the threshold question” is
11 whether the False Claims Act action is Bal’s “own case or one
12 that belongs to another.” Iannaccone, 142 F.3d at 558 (citing
13 Phillips, 548 F.2d at 411 (“The basic question raised by [28
14 U.S.C. § 1654] is whether this stockholder’s derivative suit is
15 the plaintiff’s ‘own case’ or is a suit belonging to the
16 corporation.”)). An action brought under the False Claims Act
17 may be commenced in one of two ways. First, the federal
18 government itself may bring a civil action against a defendant.
19 31 U.S.C. § 3730(a). Second, as is the case here, a private
20 person, or “relator” may bring a qui tam action “for the person
21 and for the United States Government,” against the defendant, “in
22 the name of the Government.” Id. § 3730(b)(1). Under such
23 circumstances, the government may elect to intervene, and if it
24 recovers a judgment, the relator receives a percentage of the
25 award. See id. § 3730(d)(1). If the government declines to
26 intervene, the relator may pursue the action and may receive as
27 much as 30 percent of any judgment rendered. See id. §
28 3730(d)(2).
29
8
1 While relators indisputably have a stake in the outcome of
2 False Claims Act qui tam cases that they initiate, “the
3 Government remains the real party in interest in any such
4 action.” Minotti, 895 F.2d at 104; see United States ex rel.
5 Kreindler & Kreindler v. United Techs. Corp., 985 F.2d 1148, 1154
6 (2d Cir. 1993). As we have explained:
7 All of the acts that make a person liable
8 under [the False Claims Act] focus on the use
9 of fraud to secure payment from the
10 government. It is the government that has
11 been injured by the presentation of such
12 claims; it is in the government’s name that
13 the action must be brought; it is the
14 government’s injury that provides the measure
15 for the damages that are to be trebled; and
16 it is the government that must receive the
17 lion’s share –- at least 70% –- of any
18 recovery.
19
20 United States ex rel. Stevens v. Vt. Agency of Natural Res., 162
21 F.3d 195, 202 (2d Cir. 1998), rev’d on other grounds, 529 U.S.
22 765 (2000). In considering the issue of relator standing, the
23 Supreme Court determined that a relator’s interest in a qui tam
24 suit is one as the “partial assignee” of the claims of the United
25 States but observed that the injury, and therefore, the right to
26 bring the claim belongs to the United States. See Vermont Agency
27 of Natural Res. v. U.S. ex rel. Stevens, 529 U.S. 765, 774-75
28 (2000). In short, while the False Claims Act permits relators to
29 control the False Claims Act litigation, the claim itself belongs
30 to the United States. See id; cf. 31 U.S.C. § 3730(c)(5)
31 (providing that as an alternative to bringing a civil suit, “the
9
1 Government may elect to pursue its claim through any alternate
2 remedy available to the Government”) (emphasis added).
3 Accordingly, as the United States “remains the real party in
4 interest” in qui tam actions, Minotti, 895 F.2d at 104, the case,
5 albeit controlled and litigated by the relator, is not the
6 relator’s “own case” as required by 28 U.S.C. § 1654, nor one in
7 which he has “an interest personal to him.” Iannaccone, 142 F.3d
8 at 558. Because relators lack a personal interest in False
9 Claims Act qui tam actions, we conclude that they are not
10 entitled to proceed pro se. See id.; 28 U.S.C. § 1654.
11 Our holding is in accord with all of the circuits that have
12 considered the issue. See Timson v. Sampson, 518 F.3d 870, 873-
13 74 (11th Cir. 2008) (per curiam); Stoner v. Santa Clara County
14 Office of Educ., 502 F.3d 1116, 1126-28 (9th Cir. 2007); United
15 States ex rel. Lu v. Ou, 368 F.3d 773, 775-76 (7th Cir. 2004);
16 United States v. Onan, 190 F.2d 1, 6-7 (8th Cir. 1951).2 While
17 we reach this conclusion as a matter of statutory construction,
18 we are also sympathetic to some of the other concerns voiced by
19 these courts, in particular that the United States might become
2
The Supreme Court’s recent decision in Winkelman v. Parm
City School District, 127 S.Ct. 1994 (2007) (permitting parents
to bring suit pro se under the IDEA) is not to the contrary.
Winkelman reaffirmed the rights of parents, who have rights under
the IDEA distinct from those afforded their children, to assert
their own interest pro se. See Stoner, 502 F.3d at 1127(rejecting the application of Winkelman to the FCA’s qui tam
provision). As we noted above, Bal does not have a personal
interest in this suit.
10
1 bound by res judicata or collateral estoppel as a result of the
2 actions of a pro se in bringing and losing a qui tam action. See
3 Stoner, 502 F.3d at 1126-27. This concern serves only to bolster
4 our belief that “Congress could [not] have intended to authorize
5 a layman to carry on such suit as attorney for the United States
6 but must have had in mind that such a suit would be carried on in
7 accordance with the established procedure which requires that
8 only one licensed to practice law may conduct proceedings in
9 court for anyone other than himself.” Onan, 190 F.2d at 6.3
10 CONCLUSION
11 For the reasons discussed above, we affirm.
12
3
Bal also argues that because the Government failed to
object to Bal’s bringing this case and has explicitly stated that
it “is not a party” to this action, the United States has
constructively consented to Bal prosecuting this claim pro se.
We fail to see how either the United States’ consent or its
status as a non-party is material. The general rule of 28 U.S.C.
§ 1654 is that pro se litigants can only bring claims personal to
them. See Iannaccone, 142 F.3d at 558. The statute contains no
exception for instances in which a real party in interest either
consents to representation by a layman or fails to join an action
as a party. See 28 U.S.C. § 1654. Bal’s argument is therefore
without merit.
11