Mistick PBT v. Housing Auth Cty Pgh ( 1999 )

Opinions of the United
1999 Decisions States Court of Appeals
for the Third Circuit
7-30-1999
Mistick PBT v. Housing Auth Cty Pgh
Precedential or Non-Precedential:
Docket 97-3248
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Filed July 30, 1999
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 97-3248
UNITED STATES OF AMERICA ex rel.
MISTICK PBT and MISTICK PBT,
v.
HOUSING AUTHORITY OF THE CITY OF PITTSBURGH;
L.D. ASTORINO & ASSOCIATES, LTD. (formerly known as
L.D. ASTORINO ARCHITECTS, INC.); ASTORINO BRANCH
ENVIRONMENTAL INC.; ASTORINO BRANCH ENGINEERS;
ERNEST E. MILLER, individually; DAVID B.
WASHINGTON, individually; LOUIS D. ASTORINO,
individually; DENNIS L. ASTORINO, individually; PATRICK
I. BRANCH, individually;
BERNARD J. QUINN, individually
Mistick PBT,
Appellant
ON APPEAL FROM THE
UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
(D.C. No. 95-cv-01876)
(District Judge: Hon. Alan N. Bloch)
Argued June 9, 1998
Before: BECKER, Chief Judge, ALITO and ALDISERT,
Circuit Judges
(Opinion Filed: July 30, 1999)
David J. Hickton, Esq. (Argued)
James P. Thomas, Esq.
Burns, White & Hickton
2400 Fifth Avenue Place
120 Fifth Avenue
Pittsburgh, PA 15222
Attorneys for Appellees,
L.D. Astorino, Astorino Branch Env.,
Astorino Branch Eng., Louis D.
Astorino, Dennis L. Astorino, Patrick
I. Branch and Bernard J. Quinn
Arnd N. von Waldow, Esq.
Reed, Smith, Shaw & McClay
435 Sixth Avenue
Pittsburgh, PA 15219,
Attorney for Appellees,
Housing Authority of the City of
Pittsburgh, Ernest Miller and David
Washington
John E. Beard, III, Esq. (argued)
Peter N. Flocos, Esq.
Kirkpatrick & Lockhart LLP
1500 Oliver Building
Pittsburgh, PA 15222
Attorneys for Appellant
OPINION OF THE COURT
ALITO, Circuit Judge:
This appeal arises from a qui tam action based on the
False Claims Act, 31 U.S.C. SS 3729 et seq. (1994). The
District Court dismissed the complaint for lack of subject
matter jurisdiction under 31 U.S.C. S 3730(e)(4)(A), which
provides that no court has jurisdiction over a False Claims
Act qui tam action that is based on certain public
disclosures unless the action is brought by an "original
source." We agree with the District Court that subject
matter jurisdiction was lacking, and we therefore affirm.
2
I.
A. The qui tam action at issue here was filed by Mistick
PBT, a Pittsburgh area construction company. Named as
defendants were the Housing Authority of the City of
Pittsburgh ("HACP") and L.D. Astorino & Associates, Ltd. an
architectural firm, as well as individual employees of the
HACP and Astorino & Associates. The complaint asserted
that the defendants made false claims to the United States
Department of Housing and Urban Development (HUD) for
the cost of lead-based paint abatement work at the HACP's
Bedford and Addison housing projects. Astorino was the
architectural firm that developed the specifications for the
lead-based paint abatement work, as well as the larger
renovation projects of which this work formed a part, and
Mistick was the general contractor for all of this work.
Since August 1986, HUD regulations have required lead-
based paint abatement work to be performed at HUD-
associated housing. See 24 C.F.R. SS 35.20 - 35.24 (1998).
Such abatement may be achieved either by removing the
paint or covering it with an "encapsulant" that covers and
prevents exposure of the lead-based paint. See 24 C.F.R.
S 35.24.
Astorino's original specifications for the lead abatement
work at issue were submitted in approximately April or
June of 1989 and provided for encapsulation using a
product called "Glid Wall" that was manufactured by the
Glidden Paint Company. According to Mistick's complaint,
Mistick bid and later performed its work at the two projects
on the basis of Astorino's specifications, including the Glid
Wall specification. Mistick submitted its bids in June and
July of 1989, and after those bids were accepted and
contracts were executed, Mistick began work on the
Addison project by December 1989 and on the Bedford
project by January 1990.
Although Astorino's specifications called for the use of
"Glid Wall" as an encapsulant, Glidden had begun
recommending against the use of this product for this
purpose some time earlier. A Glidden Product Updates
Bulletin dated April 1988 stated:
3
[GLIDDEN] WILL NOT RECOMMEND OR SELL ANY
PAINT PRODUCT OR SHEET MATERIAL, SUCH AS
GLID-WALL SYSTEM OR VINYL WALL COVERING,
FOR USE OVER LEAD CONTAINING MATERIALS
WHERE THE PURPOSE OF THE APPLICATION IS TO
SEAL OR OTHERWISE RENDER THE AFFECTED
AREA NON-HAZARDOUS.
JA 79.1
In June 1988, a firm of "protective coatings (paint)
consultants" wrote to an Astorino employee that"Glidden
Company has no desire to warrant [the Glid-Wall System]
as a lead abatement product, and therein lay their
admonition regarding its use for that purpose." JA 82.
According to the affidavit of D. Thomas Mistick, a principal
of Mistick PBT, representatives of Astorino, the HACP, and
Mistick attended a meeting on January 5, 1990, at which
a Glidden representative reiterated the warning contained
in the April 1988 Products Update Bulletin. JA 547. In
addition, it appears that, on January 23, 1990, Glidden
sent Astorino a letter advising that "the Glidwall System
can not be consider (sic) a method for lead abatement." JA
450.
In May 1990, Astorino revised its specifications for the
Bedford and Addison projects and provided for the use of a
lead encapsulant called Zomat instead of Glid-Wall. This
change was preceded by a series of letters from Astorino to
the HACP. On February 14, 1990, Dennis Astorino, a vice-
president of the architectural firm, wrote to Ernest Miller,
the HACP's director of development, and attached a letter
from Astorino's certified industrial hygienist stating that his
company was "still of the opinion that the Glidwall System
is the most cost effective method of physical compliance
with the HUD criteria," although "an increased element of
risk would be associated with the use of the Glid-Wall
System since the manufacturer, Glidden, indicates the
Glid-Wall System is not to be considered as a method for
lead abatement." JA 449. Dennis Astorino's cover letter
requested a prompt decision by the HACP regarding the
method of abatement it wished to use -- either
_________________________________________________________________
1. "JA" refers to the Joint Appendix.
4
encapsulation using Glid-Wall or some other product or the
removal of the lead paint. Id.
On April 23, Dennis Astorino again wrote to Miller and
summarized the events that had resulted in the original
specification of Glid-Wall. Among other things, the letter
stated that Astorino's consultants had advised thefirm that
"Glid-Wall was the encapsulating system of choice" but that
Glidden "no longer recommend[ed] their product as a lead
base paint encapsulate and, in fact, [was] actively advising
against it's (sic) use." JA 435. The letter added: "We
understand this was do (sic) to potential corporate liability
concerns." Id. The letter concluded by stating that the field
of alternative encapsulants had been narrowed to Zomat.
JA 436.
On April 24, Dennis Astorino wrote another letter to
Miller in which he again stated that Glidden "no longer
guarantees [Glid-Wall] for use as a lead base paint
encapsulate" and again expressed the view that Zomat was
then "the best solution to the problem of encapsulization."
JA 434. After observing that Zomat could not have been
called for in the original specifications because it had only
recently been marketed as an encapsulant, the letter
requested additional funding of approximately $750,000 for
the Bedford project alone. Id.
Seeking to have HUD fund these cost increases, the
HACP sent several letters to HUD in 1990 and 1992. On
April 27, 1990, David Washington, the HACP's executive
director, wrote to John Pisano, the manager of HUD's
Pittsburgh office, and stated that the HACP needed
additional funding for the Bedford project because Glidden
"no longer recommends" Glid-Wall as a lead encapsulant.
This letter had several attachments, including the February
14, April 23, and April 27 letters from Astorino to the
Authority. JA 418-19.
On January 1, 1992, Miller wrote to Paul LaMarca,
Acting Director of the Public Housing Division of HUD's
Pittsburgh office, and requested additional funding from
HUD for the Bedford project. Miller cited the fact that
Glidden no longer recommended Glid-Wall as an
encapsulant and that new regulations required "additional
worker protection methods." JA 457.
5
On July 1, 1992, in response to LaMarca's request for
more information, Washington wrote to LaMarca and stated
that "Glidwall became unacceptable as a LBP [lead-based
paint] encapsulant because the Company informed the
Architect by letter (1/23/90) that `the Glidwall System can
not be consider (sic) a method for lead abatement,' in spite
of the fact that the system met HUD requirements in effect
at the time and that the Baltimore Housing Authority was
using it for this purpose." JA 464-65. Apparently referring
to the situation at the time of the original specifications, the
letter added:
To our knowledge, there was no information available
to suggest that the Glidwall System was not approved
by Glidden for its intended use as a LBP encapsulant.
JA 465.
On July 24, 1992, HUD informed the HACP that it was
approving $253,622.11 in additional funds for lead
encapsulation on the Bedford project. JA 469.2
B. Meanwhile, in July 1991, Mistick had filed su it
against the HACP in the Court of Common Pleas of
Allegheny County, claiming that the HACP was liable to
Mistick under their contract for delay damages resulting
from the change in the lead-abatement specifications for
the Bedford and Addison projects. The HACP thenfiled a
third-party complaint for indemnification and contribution
against Astorino, and Mistick subsequently moved to
amend its complaint to add a direct claim of fraud against
Astorino. In this proposed amended complaint, Mistick
alleged that (1) Astorino knew at the time it developed the
original specifications for the Bedford and Addison projects
that Glidden did not recommend Glid-Wall as a lead-based
paint encapsulant, (2) Astorino nonetheless specified Glid-
Wall for lead abatement, (3) Astorino knew or should have
known that this specification would delay and increase the
cost of the renovation work, and (4) the Bedford and
Addison projects were both delayed and Mistick suffered
damages as a result. JA 226-27. In the alternative, Mistick
_________________________________________________________________
2. Mistick alleges that the HACP received additional funds for the
Bedford and Addison projects through HUD's annual budget process.
6
alleged that the HACP knew that Glid-Wall was unsuitable
for use a lead-based paint encapsulant but that it directed
Astorino to specify this product anyway, knowing that this
would cause delay and increased expense. JA 227. The
Court of Common Pleas denied Mistick's motion to amend
its complaint because, among other things, the statute of
limitations had run on Mistick's claim against Astorino,
and the Court dismissed Astorino as a third-party
defendant.
Dennis Astorino gave a deposition in the state court
action in which he acknowledged that the Astorinofirm
knew, prior to the submission of the original Bedford and
Addison specifications, that Glidden did not recommend the
use of Glid-Wall as an encapsulant. JA 99-100. Louis
Astorino, another principal of the firm, likewise stated in a
deposition that the firm was aware that Glid-Wall had
"never" been warranted as a lead-based paint encapsulant,
but that he looked at Glid-Wall "as a product approved by
HUD for this situation" and that "HUD never asked for a
warranty for lead based paint abatement." JA 85-87.
Mistick's suit against the HACP was eventually settled in
May 1996.
C. While its suit against the HACP was pending in state
court, Mistick began what it terms "an investigation . . .
undertaken . . . for the purpose of gathering information on
the HACP's relationship with HUD, which investigation was
entirely separate and distinct from and independent of the
[suit in state court]." Appellant's Br. at 11. This
investigation was supposedly prompted by "a series of
serious administrative problems and construction disputes
Mistick and other contractors were experiencing, with both
the HACP and Astorino, on various HUD-associated public
housing project construction jobs in the Pittsburgh area."
JA 539.
As part of this investigation, Mistick's attorney, David M.
Priselac, Esq., filed a Freedom of Information Act ("FOIA")
request with HUD in September 1993, and in response,
HUD released several files for Pittsburgh-area HUD-funded
projects, including the Bedford and Addison projects. These
files included the Authority's letters to HUD, dated April 27,
1990, January 1, 1992, and July 1, 1992, as well as the
7
letters from Astorino to the HACP that were attached to the
April 27 letter. Mistick viewed the letters submitted to HUD
as containing false claims regarding the Glid-Wall matter.
D. In November 1995, Mistick filed under seal this qui
tam action in its own name and on behalf of the United
States. Mistick's complaint alleged that two false claims
had been presented to the government. The first claim
involved the original specifications, which called for the use
of Glid-Wall as an encapsulant even though certain
defendants allegedly knew that it was not suited for that
purpose. The second claim concerned the HACP's request
for additional funding to pay for part of the cost of
switching to Zomat as the encapsulant and the allegedly
false statements made regarding the reasons for the switch.
Based on each of these two claims, the complaint asserted
three separate causes of action: for presentation of a false
claim, in violation of 31 U.S.C. S 3729(a)(1); for making or
using a false record or statement, in violation of 31 U.S.C.
S 3729(a)(2); and for conspiring to defraud the government,
in violation of 31 U.S.C. S 3729 (a)(3).
In July 1996, the District Court granted the
Government's motion to decline intervention and ordered
that Mistick's complaint be unsealed and served on the
HACP and Astorino. The HACP and Astorino filed separate
motions to dismiss, in which they asserted lack of subject
matter jurisdiction. In March 1997, the District Court
dismissed for lack of subject matter jurisdiction under 31
U.S.C. S 3730(e)(4)(A), which, as noted, provides that no
court has jurisdiction over a False Claims Act qui tam suit
that is based on certain specified types of public
disclosures unless the action is brought by an "original
source." The District Court held that this jurisdictional bar
applied because Mistick's action was based on information
obtained by Mistick pursuant to a FOIA request and
discovery in the state court proceeding and because Mistick
did not qualify under the Act's "original source" exception.
Mistick then took this appeal.
II.
The background of the False Claims Act's qui tam
provision has been discussed in detail in prior opinions.
8
See United States ex rel. Dunleavy, 123 F.3d 734, 738 (3d
Cir. 1997); United States ex rel. Stinson, 944 F.3d 1149,
1152-54 (3d Cir. 1991); id. at 1162-68 (Scirica, J.,
dissenting). In brief, the qui tam provision "permits, in
certain circumstances, suits by private parties on behalf of
the United States against anyone submitting a false claim
to the Government. Prior to 1986, such suits were barred
if the information on which they were based was already in
the Government's possession." Hughes Aircraft Co. v. United
States ex rel. Schumer, 520 U.S. 939, 941 (1997). In 1986,
Congress sought "[t]o revitalize the qui tam provisions,"
Stinson, 944 F.2d at 1154. After considering several
alternatives, see Stinson, 944 F.2d at 1163-68 (Scirica, J.,
dissenting), Congress enacted 31 U.S.C. S 3730(e)(4)(A),
which provides:
No court shall have jurisdiction over an action under
this section based upon the public disclosure of
allegations or transactions in a criminal, civil, or
administrative hearing, in a congressional,
administrative, or Government Accounting Office (sic)
report, hearing, audit, or investigation, or from the
news media, unless the action is brought by the
Attorney General or the person bringing the action is
an original source of the information.
As previously noted, the District Court held that this
provision bars Mistick's suit. Mistick argues that the
District Court's decision rests on three erroneous legal
determinations. First, Mistick contends that the disclosure
of information in response to the Priselac FOIA request was
not one of the kinds of public disclosure that trigger the
jurisdictional bar set out in 31 U.S.C. S 3730(e)(4)(A).
Second, Mistick maintains that its state-court suit did not
involve the same "allegations" or "transactions" as its later
qui tam action. Third, Mistick argues that it fell within the
"original source" exception.
A. The FOIA response. As noted, the qui tam provision
refers to "the public disclosure of allegations or
transactions in a criminal, civil, or administrative, or
Government Accounting Office (sic) report, hearing, audit,
or investigation, or from the news media." 31 U.S.C.
S 3730(e)(4)(A). Thus, in order to fall within this language,
9
a disclosure (1) must be "public" and (2) must occur in one
of the specified contexts. HUD's response to the Priselac
FOIA request satisfies both of these requirements.
First, the disclosure of information in response to a FOIA
request is a "public disclosure." The Freedom of Information
Act states that "[e]ach agency shall make available to the
public" certain specified categories of information. 5 U.S.C.
S 552(a)(emphasis added). The Act's "central purpose" is to
ensure that government activities are "opened to the sharp
eye of public scrutiny." United States Dep't of Justice v.
Reporter's Comm., 489 U.S. 749, 774 (1989)(emphasis
added). In Consumer Product Safety Commission v. GTE
Sylvania, Inc., 447 U.S. 102 (1980), the Supreme Court
held that the disclosure of information pursuant to the
FOIA constitutes a "public disclosure" within the meaning
of the Consumer Product Safety Act, 15 U.S.C. S 2055(b)(1),
and the Court observed:
[A]s a matter of common usage the term "public" is
properly understood as including persons who are FOIA
requesters. A disclosure pursuant to the FOIA would
thus seem to be most accurately characterized as a
"public disclosure" within the plain meaning of [the
Consumer Product Safety Act].
447 U.S. at 108-09 (emphasis added). We see no sound
basis for construing the term "public disclosure" any more
narrowly here than the Supreme Court did in GTE
Sylvania. We therefore conclude that HUD's response to the
Priselac FOIA request was a "public disclosure."3
_________________________________________________________________
3. The dissent argues that information produced pursuant to a FOIA
request is not publicly disclosed because it is provided only to the
requester, who is not obligated to turn it over to others. Dissent at
28-29. The dissent therefore contends that the information is not
"publicly accessible," id. at 28, and thus seems to suggest that "public
disclosure" means making information accessible.
We disagree with the dissent that information available under FOIA is
not "publicly accessible"; on the contrary, such information is readily
accessible to any member of the public who makes a request. More
important, however, the dissent's argument confuses the statutory
concept of "public disclosure" with the different concept of "public
10
Second, this disclosure occurred within one or more of
the contexts specified in 31 U.S.C. S 3730(e)(4)(A). To begin,
we believe that HUD's response constituted an
"administrative . . . report." Id. In Dunleavy, 123 F.3d at
745, we concluded that the term " `administrative' when
read with the word `report' refers only to those
administrative reports that originate with the federal
government." HUD's response to the FOIA request
originated with a department of the federal government and
constituted official federal government action, and therefore
this response plainly satisfied Dunleavy's definition of
"administrative."
The response also fell within the ordinary meaning of the
term "report." A "report" is defined as, among other things,
"something that gives information" or a "notification,"
Webster's Third New International Dictionary 1925 (1971),
and an "official or formal statement of facts or proceeding."
Black's Law Dictionary 1300 (6th ed. 1990). A response to
a FOIA request falls within these definitions. Such a
response provides information and notification regarding
the results of the agency's search for the requested
documents and constitutes an official and formal statement
concerning those results. Although Mistick ridicules the
argument that a response to a FOIA request is an
"administrative report," see Reply Br. at 6-7, it is telling
that Mistick does not offer a definition of this term.4 We
_________________________________________________________________
accessibility." Information may be publicly disclosed -- for example, it
may appear buried in an exhibit that is filed in court without fanfare in
an obscure case -- and yet not be readily accessible to the general
public. And information may be easily accessible to the public -- it may
be available under FOIA to anyone who simply files a request -- but
unless there is a request and the information is actually produced, it is
not publicly disclosed. Dunleavy, 123 F.3d at 746.
4. The dissent argues that a FOIA response is not a report, but the
dissent -- which elsewhere adheres strictly to the dictionary definition
of
the statutory phrase "based upon" (see Dissent at 32) -- does not come
to grips with the fact that a FOIA response falls easily within accepted
definitions of the term "report." The dissent seems to have in mind a
particular type of government report, with "analysis," a "summary,"
and/or a "conclusion," see id. at 29, but the ordinary understanding of
the term "report" is broader.
11
thus hold that HUD's response to the Priselac FOIA request
was an "administrative . . . report" and that the documents
that HUD provided were publicly disclosed "in" that "report."5
We also believe that this response occurred "in a[n] . . .
administrative . . . investigation." 31 U.S.C.S 3730(e)(4)(A).
For the reasons already explained, HUD's search for the
documents sought under the FOIA and its decision to
disclose them clearly satisfied our court's interpretation of
the term "administrative," and we believe that these
processes should be viewed as constituting an
"investigation" within the meaning of 31 U.S.C.
S 3730(e)(4)(A). Accepted definitions of the term
"investigation" include "a detailed examination," Webster's
Third New International Dictionary 1189 (1971), and the
"making of a search." 1 The Compact Edition of the Oxford
English Dictionary 457 (1971). When an agency receives a
FOIA request, it is obligated to conduct a search that is
reasonably calculated to uncover all relevant documents.6
See also, e.g., Miller v. United States Department of Justice,
779 F.2d 1378, 1383 (D.C. Cir. 1983); Weisberg v. United
States Department of Justice, 705 F.2d 1344, 1351 (D.C.
Cir. 1983). Such a search falls within the common
understanding of the term "investigation." 7 See also 5
_________________________________________________________________
5. This holding is entirely consistent with our holding in Dunleavy that
a report prepared at the behest of a county was not itself an
"administrative report" because it did not"originate with the federal
government." 123 F.3d at 744-46. In Dunleavy, the report was not
produced under the FOIA. Here, we do not hold that the documents at
issue would have fallen within S 3730(e)(4)(A) had they not been
produced pursuant to the FOIA. Rather, we hold that HUD's FOIA
response was an "administrative report" and the documents were
publicly disclosed "in" that report, just as if they had been reproduced
as an appendix to a printed report.
6. As with the term "report" (see footnote 4, supra), the dissent insists
on
an interpretation of the term "investigation" that is narrower than its
meaning in ordinary usage. According to the dissent, the term
"investigation" seems to be limited to a criminal investigation or a like
investigation of "wrongdoing." Dissent at 29. But in ordinary usage, the
term is used more broadly.
7. Because we hold that the disclosure at issue occurred in an
"administrative . . . report" and an "administrative . . . investigation,"
we
need not and do not reach the defendants' argument that the disclosure
also occurred in an "administrative . . . hearing."
12
U.S.C. S 552(a)(3)(D) ("For purposes of this paragraph, the
term `search' means to review, manually or by automated
means, agency records for the purpose of locating those
records which are responsive to a request.')
Most of the decisions of other courts support our holding
that the disclosure of documents under the FOIA triggers
the jurisdictional bar of 31 U.S.C. S 3730(e)(4)(A). In United
States ex rel. Schumer v. Hughes Aircraft Co., 63 F.3d 1512,
1520 (9th Cir. 1995), vacated on other grounds, 520 U.S.
939 (1997), the Ninth Circuit stated that documents
actually produced in response to FOIA requests are publicly
disclosed for purposes of the qui tam statute. See also
United States ex rel. Lamers v. City of Green Bay, 998 F.
Supp. 971, 979 (E.D. Wis. 1998), aff'd, 168 F.3d 1038 (7th
Cir. 1999); United States of America ex rel. Burns v. A.D.
Roe Co., Inc., 919 F. Supp. 255, 257 (W.D. Ky. 1996);
United States ex rel. Herbert v. National Academy of
Sciences, 1992 WL 247587, at *6 (D.D.C. Sept. 15, 1992)
("Just as civil discovery is public, it must be the case that
information obtained pursuant to an FOIA request has
been made public through the administrative process and
cannot form the basis of a qui tam action. If that were not
the case then, like court records, public agency records
would be flooded with citizens requesting information in
order to bring qui tam suits. Congress did not intend the
qui tam provision to transform FOIA from sunshine
legislation into a search for the pot of gold at the end of the
rainbow."). But see United States ex rel. Pentagen
Technologies Int'l Ltd. v. CACI Int'l Inc., 1996 WL 11299, at
*9 (S.D.N.Y. Jan. 4, 1996)
B. The Mistick State Court Action. Mistick argues that
even if HUD's FOIA response was a covered disclosure
under 31 U.S.C. S 3730(e)(4)(A), its qui tam action was still
not jurisdictionally barred. We have held that the public
disclosure of a "transaction[ ]" within that provision
requires the disclosure of "the elements of the underlying
fraudulent transaction." Dunleavy, 123 F.3d at 740. This
means that the disclosure must reveal both the
misrepresented state of facts and the true state of facts so
that the inference of fraud may be drawn. Id. at 741.
Mistick acknowledges that "[t]he misrepresented facts . . .
13
were discovered by Mistick in October 1993, pursuant to
the Priselac [FOIA] Request." Appellant's Br. at 31. Thus,
our holding that this disclosure falls within the coverage of
31 U.S.C. S 3730(e)(4)(A) requires Mistick to fall back on the
argument that the jurisdictional bar is not triggered
"because the other essential element, the true state of facts,
was not publicly disclosed within the meaning of that
provision." Id. at 33.
We reject Mistick's fall-back argument because "the true
state of facts" was disclosed in civil discovery in the Mistick
state court action, and we held in Stinson, 944 F.2d at
1160, that civil discovery constitutes "a public disclosure
. . . in a civil hearing" within the meaning of 31 U.S.C.
S 3730(e)(4)(A). According to Mistick, the true facts were (1)
that the Glidden policy of not recommending Glid-Wall as a
lead-based encapsulant was in effect before Astorino
submitted the specifications and (2) that Astorino and the
Authority were aware of the policy but knowingly
represented otherwise to HUD. As previously noted, both
Dennis and Louis Astorino acknowledged these facts in
their depositions, and Mistick concedes that all of these
facts were revealed in civil discovery in the state court
action. At oral argument, the following exchange occurred:
THE COURT: . . . [D]o I understand your answer to be
that all of the essential elements were publicly
disclosed in the civil litigation but you knew all of those
essential elements previously from other sources,
including the FOIA request?
MR. BEARD: That is correct.
Oral Arg. Tr. at 10.
Mistick contends, however, that although all of the
essential elements were revealed in either the FOIA
response or in civil discovery, its qui tam action was not
"based on" those public disclosures. This argument
requires us to consider conflicting decisions from several
other circuits regarding the meaning of the phrase "based
upon" in 31 U.S.C. S 3730(e)(4)(A).
In United States ex rel. Siller v. Becton Dickinson & Co.,
21 F.3d 1339, 1348 (4th Cir.), cert. denied, 513 U.S. 928
14
(1994), the Fourth Circuit held that "based upon" means
actually derived from. The court explained:
Section 3730(e)(4)(A)'s use of the phrase "based upon"
is, we believe, susceptible of a straightforward textual
exegesis. To "base upon" means to "use as a basis for."
Webster's Third New International Dictionary 180
(1986) (definition no. 2 of verb "base"). Rather plainly,
therefore, a relator's action is "based upon" a public
disclosure of allegations only where the relator has
actually derived from that disclosure the allegations
upon which his qui tam action is based. Such an
understanding of the term "based upon," apart from
giving effect to the language chosen by Congress, is
fully consistent with section 3730(e)(4)'s indisputed
objective of preventing "parasitic" actions see, e.g.,
Stinson, supra, at 1154, for it is self-evident that a suit
that includes allegations that happen to be similar
(even identical) to those already publicly disclosed, but
were not actually derived from those public
disclosures, simply is not, in any sense, parasitic.
Id.
All of the other circuits that have reached this question
have disagreed with the Fourth Circuit and have held that
"based upon" means "supported by" or "substantially
similar to," so that the relator's independent knowledge of
the information is irrelevant. See United States ex rel.
Biddle v. Board of Trustees of the Leland Stanford, Jr. Univ.,
147 F.3d 821, 828 (9th Cir. 1998), cert. denied, ___ S. Ct.
___, 1999 WL 66673 (U.S. Apr. 19, 1999); United States ex
rel. Findley v. FPC-Boron Employees' Club, 105 F.3d 675,
682-84 (D.C. Cir.), cert. denied, 118 S. Ct. 172 (1997);
United States ex rel. Precision Co. v. Koch Indus., Inc., 971
F.2d 548, 552 (10th Cir. 1992), cert. denied, 507 U.S. 951
(1993); United States ex rel. Doe v. John Doe Corp., 960
F.2d 318, 324 (2d Cir. 1992).
In reaching this conclusion, the Tenth Circuit observed
that "[a]s a matter of common usage, the phrase `based
upon' is properly understood to mean `supported by.' "
Precision Co., 971 F.2d at 552. The District of Columbia
Circuit, while not expressly embracing the Tenth Circuit's
15
view that "based upon" may mean "supported by" in
common usage, found the statutory language to be
ambiguous, and then rejected the Fourth Circuit's
approach "because it renders the `original source' exception
to the public disclosure bar largely superfluous." Findley,
105 F.3d at 683. After observing that the False Claims Act
"requires that a relator have `direct and independent'
knowledge of the alleged fraud or some of its components,
and have voluntarily provided the information to the
government, in order to benefit from the `original source'
exception to the jurisdictional bar," the court continued:
Why, one may ask, assuming the Fourth Circuit test of
"based upon" as meaning "derived from," would
Congress provide an exception in the case of a relator
who has actually derived his complaint from public
information, that allows him to demonstrate that he
already provided his independently obtained knowledge
to the government before he filed suit? . . .[U]nder the
Fourth Circuit's interpretation, the primary "based
upon" test swallows the original source exception
whole. Using "based upon" as a proxy for whether the
relator's complaint merely parrots what is already in
the public domain, on the other hand, leads logically to
a subsidiary inquiry into whether, the relator had
obtained the information in his complaint
independently prior to the disclosure and so is an
"original source."
Id.
We see merit in both the Fourth and District of Columbia
Circuits' arguments. We agree with the Fourth Circuit that
in ordinary usage the phrase "based upon" is not generally
used to mean "supported by." On the other hand, we agree
with the District of Columbia Circuit that the Fourth
Circuit's interpretation is suspect because it would render
the "original source" exception largely superfluous. The
dissent strives to show that the Fourth Circuit's
interpretation might not render the original source
exception entirely superfluous, but we are not persuaded.
The dissent first argues that it may be possible for the
allegations or transactions set forth in an individual's claim
16
to be derived from a public disclosure, see 31 U.S.C.
S 3730(e)(4)(A), and yet for that individual to have had
direct and independent prior knowledge of "the information
on which the allegations are based." 31 U.S.C.
S 3730(e)(4)(B). The dissent writes that "a relator who is
barred because he has derived some of his fraud
information from a public disclosure may still bring the
claim as an original source if he has direct and
independent knowledge of some other essential element of
the claim." Dissenting Op. at 39-40. However, the dissent
makes no effort to explain how this interpretation can be
made to fit the language of 31 U.S.C. SS 3730(e)(4)(A) and
31 U.S.C. S 3730(e)(4)(b) (the "original source" exception).
Indeed, the dissent does not even commit itself to this
interpretation but merely raises it as a possibility. See
Dissenting Op. at 40. Thus, the dissent relies on the
possibility that the apparent superfluity of the"original
source" exception (under its interpretation of"based upon")
may be avoided pursuant to a scheme of interpretation that
it declines to explicate or embrace. We find this
unconvincing.
The dissent's second argument, as we understand it, is
that, even if its interpretation of "based upon" makes the
"original source" exception substantively superfluous,
Congress might have adopted that exception in order to
provide a different procedural avenue for a qui tam relator
to use in showing that his action was not derived from a
public disclosure. The dissent writes that "it may be easier
for the relator to establish himself as an `original source' of
the information than to successfully disprove a caused link
between the public disclosures and his qui tam claim."
Dissent at 40. However, even if there were no "original
source" exception as such, an individual could still prove
that his information was not derived from a public
disclosure by showing that he was an original source of the
information. Thus, this argument fails to explain why
Congress would have adopted the "original source"
exception if the phrase "based upon" in 31 U.S.C.
S 3730(e)(4)(A) meant "derived from." As a result, we agree
with the District of Columbia Circuit that the Fourth
Circuit's interpretation of "based upon" makes the "original
source" exception largely superfluous.
17
We are thus confronted with a clash between two textual
arguments concerning the meaning of 31 U.S.C.
S 3730(e)(4)(A): one based on the ordinary meaning of the
phrase "based upon" and one based on the precept that a
statute should be construed if possible so as not to render
any of its terms superfluous. See, e.g ., United States v.
Nordic Village, Inc., 503 U.S. 30, 36 (1992); Astoria Federal
Savings & Loan Assn. v. Solimino, 501 U.S. 104, 112
(1991); First Bank Nat. Ass'n v. FDIC, 79 F.3d 362, 367 (3d
Cir. 1996); United Steelworkers of America v. North Star
Steel Co., 5 F.3d 39, 42 (3d Cir. 1993), cert. denied, 510
U.S. 1114 (1994). In the end, we are persuaded to follow
the majority approach.
Section 3730(e)(4)(A) does not reflect careful drafting or a
precise use of language. To begin with a small example, this
section refers to the General Accounting Office as the
"Government Accounting Office" and thus misnames an
instrumentality that Congress has consistently viewed as
its own. See Bowsher v. Synar, 478 U.S. 714, 731 (1986).
The section refers awkwardly to "the public disclosure . . .
from the news media." Id. (emphasis added). The section
refers to criminal and civil "hearing[s]," when it surely
means, not just those proceedings that are generally
labeled "hearings," but also full-blown criminal and civil
trials, and other court proceedings that are not described
as "hearings" in standard usage. See Stinson, 944 F.2d at
1154-58. The section refers to jurisdiction over"an action"
that is based on a public disclosure, and thus the drafters
seem to have overlooked the elementary point that a qui
tam "action" may contain multiple claims, only some of
which may be "based upon" a public disclosure, however
that phrase is defined. In addition, whether the phrase
"based upon" means "derived from" or"supported by," a
careful drafter would have realized the need to specify the
degree to which the "action" must be "based upon" the
public disclosure in order to fall within the jurisdictional bar.8
Section 3730(e)(4)(A) refers to the disclosure of"allegations
or transactions," but S 3730(e)(4)(B), in referring to
independent knowledge "of the information on which the
allegations are based," inexplicably fails to mention
_________________________________________________________________
8. We were required to decide this point in Dunleavy, 123 F.3d at 746.
18
"transactions." (Are "transactions" irrelevant under this
latter provision? Are they subsumed within the concept of
"allegations"?) The inescapable conclusion is that the qui
tam provision does not reflect careful drafting.
In light of this apparent lack of precision, we are hesitant
to attach too much significance to a fine parsing of the
syntax of S 3730(e)(4)(A). We find Section 3730(e)(4)(A) to be
syntactically ambiguous because we are uncertain that the
drafters of that provision focused on the difference in
precise usage between, on the one hand, a suit based upon
a public disclosure of an allegation or transaction and, on
the other, a suit based upon an allegation or transaction
and that has been publicly disclosed.9 Under these
circumstances, we think that it is best to follow the
majority interpretation, which is much more consistent
with the rest of the qui tam provision. We thus hold that a
qui tam action is "based upon" a qualifying disclosure if the
disclosure sets out either the allegations advanced in the
_________________________________________________________________
9. Although we do not rely on the legislative history of the qui tam
provision in reaching this conclusion, see Stinson, 944 F.2d at 1154, it
is interesting that sponsors of the 1986 False Claim Act Amendments
described it as having a meaning consistent with our holding. Senator
Grassley, one of original Senate sponsors, in speaking of the technical
and clarifying amendments that introduced the present language in
S 3730(e)(4)(A), stated:
[J]urisdiction for qui tam actions based on information that has
been publicly disclosed will be limited to those people who were
"original sources" of the information . . . .
132 Cong. Rec. S11238-04 (Aug. 11, 1986) (emphasis added). Similarly,
Representative Berman, one of the sponsors of the House bill, submitted
"legislative history" that stated in relevant part:
Before the relevant information regarding fraud is publicly
disclosed
through various government hearings, reports and investigations
which are specifically identified in the legislation or through the
news media, any person may file such an action as long as it is
filed
before the government filed an action based upon the same
information. Once, the public disclosure of the information occurs
through one of the methods referred to above, then only a person
who
qualifies as an "original source" may bring the action.
132 Cong. Rec. H9382-03 (Oct. 7, 1986) (emphasis added).
19
qui tam action or all of the essential elements of the qui
tam action's claims. Because the latter condition is satisfied
here, the qui tam action at issue was "based upon"
qualifying disclosures and is consequently subject to the
jurisdictional bar of S 3730(e)(4)(A) unless it is saved by the
"original source" exception, to which we next turn.
C. "Original source" exception. Section 3730(e)(4)(A)'s
jurisdictional bar does not apply if "the person bringing the
action is an original source of the information." Section
3730(e)(4)(B) (emphasis added) defines an "original source"
as
an individual who has direct and independent
knowledge of the information on which the allegations
are based and has voluntarily provided the information
to the Government before filing an action under this
section which is based on the information.
Here, Mistick is not an "original source" because it did
not have "direct and independent knowledge" of the most
critical element of its claims, viz., that the Authority had
made the alleged misrepresentations to HUD regarding its
knowledge about Glid-Wall's unsuitability as a lead-based
paint encapsulant at the time of the original specifications.
"[A] relator who would not have learned of the information
absent public disclosure [does] not have `independent'
information within the statutory definition of`original
source.' " Stinson, 944 F.2d at 1160. As previously noted,
Mistick acknowledges that "[t]he misrepresented facts were
discovered by Mistick in October 1993, pursuant to the
Priselac FOIA Request." Appellant's Br. at 31. Since HUD's
FOIA response was a qualifying public disclosure under
S 3730(e)(4)(A), Mistick was not an original source of that
information. While "it is not necessary for a relator to have
all the relevant information in order to qualify as
`independent,' " Stinson, 944 F.2d at 1160, a relator cannot
be said to have "direct and independent knowledge of the
information on which [its fraud] allegations are based," 31
U.S.C. S 3730(e)(4)(B), if the relator has no direct and
independent knowledge of the allegedly fraudulent
statements. Thus, Mistick's "original source" argument
fails.
20
III.
In summary, we hold that Mistick's qui tam action was
barred by 31 U.S.C. S 3730(e)(4)(A) because it was "based
upon the public disclosure" of the relevant transactions in
an "administrative . . . report" and "investigation" (HUD's
search for the documents sought in the FOIA request and
its response to that request) and in a "civil . .. hearing"
(discovery in Mistick's state-court action) and because
Mistick does not qualify as an "original source."10 We
therefore affirm the decision of the District Court.
_________________________________________________________________
10. In light of our disposition of these issues, we find it unnecessary to
address the other grounds for affirmance that the defendants have
advanced.
21
BECKER, Chief Judge, dissenting:
Judge Alito's majority opinion cuts through this
enormously complicated area of the law in a candid and
straightforward manner. While the result it reaches is not
unreasonable, it is, I respectfully submit, incorrect. On the
critical "based upon" issue, Judge Alito follows the majority
view of other circuits. As I will explain, I would follow the
minority view, primarily because it alone is faithful to the
plain language of the governing statute. More particularly,
I do not believe that the phrase "based upon," especially in
the context in which it is found in the False Claims Act
("FCA"), can properly be read to mean, as the majority here
concludes, "supported by." Rather, it means"derived from"
or "used as a basis for." I take issue with the majority's
contention that we may avoid this plain reading of"based
upon" because Congress was sloppy in its drafting of the
jurisdictional bar. I also follow the minority view because I
believe that it better reflects the policy that Congress had in
mind in its most recent amendments to the FCA. Finally, I
believe that the present majority is incorrect in asserting
that a plain reading of "based upon" would render the
"original source" exception superfluous.
On the "public disclosure" issue, the majority feels bound
by our prior caselaw, particularly United States ex rel.
Stinson, Lyons, Gerlin & Bustamante, P.A. v. Prudential
Insurance Co., 944 F.2d 1149 (3d Cir. 1991). While we are
constrained to follow our binding precedent, I disagree with
the majority's broad reading of Stinson, which arose in a
very different context--civil litigation--than that involved
here. More specifically, I believe that materials obtained
through a FOIA request do not constitute a "public
disclosure" under the FCA, even given our holding in
Stinson, because a government agency's act of locating and
duplicating records for a single FOIA requester is
fundamentally different from the disclosure of discovery
material in civil litigation, which includes a "presumption
. . . of public access." Stinson, 944 F.2d at 1159.
These readings of the statute compel the conclusion that
the jurisdictional bar does not apply in this case. First, if,
as I believe, the FOIA material does not constitute a public
disclosure, Mistick would not be barred from bringing its
22
qui tam action, given our prior caselaw. Second, under my
interpretation of "based upon," Mistick's qui tam action
would not be barred if it obtained the information
underlying its claim from a source other than a public
disclosure. It has so alleged, and this may in fact be the
case. Therefore, even if the FOIA material is deemed a
public disclosure, I would still reverse the District Court's
decision dismissing Mistick's qui tam claim and remand for
a determination by that court whether the claim is"based
upon," i.e., derived from, information in any public
disclosures. Because I would reverse the District Court's
determination that Mistick's claim is "based upon" public
disclosures, I would not reach the question whether Mistick
is an original source of the information in any public
disclosures.
So that it is fresh in our minds as we weave our way
through this statutory maze, I rescribe the relevant
jurisdictional bar:
No court shall have jurisdiction over an action under
this section based upon the public disclosure of
allegations or transactions in a criminal, civil, or
administrative hearing, in a congressional,
administrative, or Government Accounting Office
report, hearing, audit, or investigation, or from the
news media, unless the action is brought by the
Attorney General or the person bringing the action is
an original source of the information.
31 U.S.C. S 3730(e)(4)(A) (1994). As it will make for a more
orderly discussion, I will first address the public disclosure
issue. In the course of that discussion, the tenor of which
is adumbrated above, I will explain why I believe Stinson to
have been wrongly decided and hence a candidate, at some
point in time, for en banc consideration.
I. Public Disclosures
The majority concludes that both the information in the
state-court discovery and the product of Mistick's FOIA
request constituted public disclosures. I am constrained to
agree with the first of these holdings, as this was the
precise issue decided in Stinson. However, I dissent from
23
the second, as I do not believe that Stinson--even if it were
correctly decided--inexorably leads to the conclusion that
information obtained through a FOIA request by a single
individual is necessarily a "public disclosure." Explication
of my position on the FOIA issue will be informed by
explaining at the outset my problems with Stinson's
definition of public disclosure, under which discovery
material given to a single person in litigation between two
private parties, and not even filed with a court, constitutes
a "public disclosure."
In Stinson, the panel majority reasoned that"section
3730(e)(4) [is] designed to preclude qui tam suits based on
information that would have been equally available to
strangers to the fraud transaction had they chosen to look
for it as it was to the relator." Stinson, 944 F.2d at 1155-56.
It specifically held that "[i]nformation gleaned in litigation
and on file in the clerk's office falls in this category," even
if the information is actually known only to the small group
of private litigants involved in the action in which the
information was presented through discovery. Id. at 1156;
see also id. at 1158 ("[D]isclosure of discovery material to a
party who is not under any court imposed limitation as to
its use is a public disclosure under the FCA.").
The holding in Stinson was based in part on the fact that
"the Local Rules of some district courts provide that the
court may order the filing of discovery materials at the
request of any person who has an interest in reviewing the
materials." Id. at 1158-59. Although the panel may have
been technically correct, this statement obscures the actual
situation in most federal courts. In this circuit, every U.S.
district court proscribes by local rule the filing of discovery
material.1 The assumption that the right to seek access to
such unfiled materials by requesting their filing, see infra
note 2, will be availed of in any but a handful of cases
seems blithe. First, the procedure is costly and
cumbersome. Second, individuals unconnected with the
_________________________________________________________________
1. See D. Del. R. Civ. P. 5.4(a) (providing that discovery materials
"shall
not be filed with the Court"); D.N.J. R. Civ. P. 26.1(c)(1) (same); E.D.
Pa.
R. Civ. P. 26.1(a) (same); M.D. Pa. R. Civ. P. 5.4(b) (same); W.D. Pa. R.
Civ. P. 5.3(A) (same).
24
litigation, other than the media, will generally not know of
it or will be unmotivated to bear the cost and burden of
pursuing the filing of such material.
More importantly, Stinson's definition appears to me to
encompass a much broader category of "disclosures" than
what Congress intended to include within that term. Cf.
United States v. Bank of Farmington, 166 F.3d 853, 861-62
(7th Cir. 1999) ("[W]e reject the construction . . . according
to which there is public disclosure if the allegations are
disclosed to any single member of the public not previously
informed thereof." (internal quotations and brackets
omitted)); Stinson, 944 F.2d at 1169 (Scirica, J., dissenting)
("I do not believe Congress intended to bar relators who
obtain non-public information simply because that
information might become public at a later time.").
Congress's primary intent in enacting the 1986 FCA
amendments was "to enhance the Government's ability to
recover losses sustained as a result of fraud against the
Government." S. Rep. No. 99-345, at 1 (1986), reprinted in
1986 U.S.C.C.A.N. 5266, 5266. As for the qui tam
provisions of the FCA amendments, Congress's "overall
intent" was "to encourage more private enforcement suits."
Id. at 23-24, reprinted in 1986 U.S.C.C.A.N. at 5288-89.
While avoiding parasitic lawsuits was clearly an additional
goal, there is no indication that Congress sought to
preclude the disclosure and prosecution of fraud when a
prior, purely technical disclosure had been made. Rather,
like Judge Scirica, "I can discern no reason why Congress
would be concerned about information that has not yet
been disclosed to the general public." Stinson, 944 F.2d at
1170 (Scirica, J., dissenting).
By precluding suits "based upon the public disclosure of
allegations or transactions in" specific judicial, legislative,
or administrative sources, or through the news media,
Congress sought to ensure that no qui tam relator could
profit from information that had become part of the public
domain. Interpreting "public disclosure" to encompass
information passed from one private litigant to another in
the context of some obscure litigation may simplify our task
of weeding out legitimate qui tam cases from parasitic ones
(by effectively avoiding this sometimes difficult factual
25
question), but it fails to serve Congress's primary goals of
encouraging disclosure and aiding prosecution of fraud on
the government. There is no assurance that information
about a fraud on the government, contained in privately
disclosed discovery material (which will always constitute a
"public disclosure" under Stinson), will either come to the
government's attention or will lead to a private qui tam
action. I agree with Judge Scirica's observation that
"Congress drew the line at the point of actual public
disclosure because it felt that this rule would bring the
most fraud to light without engendering unnecessary suits."
Id. at 1171 (Scirica, J., dissenting).
Although I think Stinson's reading of "public disclosure"
is likely too broad and should be reconsidered by this court
en banc, I also believe that materials obtained through a
FOIA request are easily distinguishable from the discovery
material deemed a public disclosure in Stinson. In contrast
with Stinson, we recently held that a county government
report filed with the federal government is not a public
disclosure. See United States ex rel. Dunleavy v. County of
Del., 123 F.3d 734, 745-46 (3d Cir. 1997). Distinguishing
our holding in Stinson, we noted the danger of extending
"Stinson's `potential availability' standard . . . to the
context" of administrative reports. Id. at 746 n.14. I think
that the reasoning behind Stinson and our decision in
Dunleavy lead to the conclusion that the FOIA material at
issue here is not a public disclosure.
First, it is clear that under Dunleavy, the simple fact that
information subject to a FOIA request is potentially
available to interested parties is insufficient to render it a
"public disclosure." If this were the case, the information in
Dunleavy, which the defendant had provided to a federal
government agency, would have constituted a "public
disclosure." More importantly, there is a clear distinction
between discovery materials, which carry a "presumption
. . . of public access," and the information contained in a
FOIA request, which is provided to a single requester who
is under no obligation to disclose this material to any other
members of the public. This distinction can be seen by
comparing the rules governing discovery with the statutory
and regulatory provisions governing Mistick's FOIA request.
26
Local court rules often provide that while discovery
material should not be filed with the court, see supra note
1, such material may under certain circumstances befiled.
In this circuit, each U.S. district court also has rules
governing filing and access to discovery materials.2 In
Stinson, the qui tam claimant argued that discovery
material was not a "public disclosure" precisely because it
need not be filed with the court. See Stinson, 944 F.2d at
1158. As noted above, however, the panel rejected this
argument, responding:
We do not think that it is significant, for purposes of
interpreting the "public disclosure" provision of the
FCA, whether the discovery has in fact been filed. Due
to the large volume of discovery materials, many
district courts have adopted local rules which provide
that discovery materials should not be filed with the
court except by order of the court. Such local rules do
not generally preclude access by interested persons to
nonfiled material. In fact, the Local Rules of some
district courts provide that the court may order the
filing of discovery materials at the request of any
person who has an interest in reviewing the materials.
Id. at 1158-59 (emphasis added) (footnote omitted). The
panel reiterated this point in its conclusion: "To
recapitulate, the presumption under Rule 5(d) of public
access to civil discovery that is not subject to a protective
order leads us to conclude that information received as a
result of such discovery should be deemed based on a
`public disclosure' for purposes of the FCA jurisdictional
bar." Id. at 1159-60.
_________________________________________________________________
2. See D. Del. R. Civ. P. 5.4(c)-(e) (providing for filing when necessary
for
use before, during, or after trial, or on motion of the court or any
party,
or "on application by a non-party"); D.N.J. R. Civ. P. 26.1(c)(1)
(providing
for filing of discovery materials "when needed in a particular pretrial
proceeding or upon order of the Court"); E.D. Pa. R. Civ. P. 26.1(e)
(providing for filing of discovery materials on motion of the court or of
any party, "or on application by a non-party"); M.D. Pa. R. Civ. P.
5.4(c)-
(e) (providing for filing of materials under certain circumstances); W.D.
Pa. R. Civ. P. 5.3(E) (providing for filing of discovery materials "in the
usual course in any case where any person shall file an affidavit with the
clerk that he has a genuine interest in reading the material").
27
While I have taken issue with the conclusion that the
Stinson majority drew from this potential availability of
discovery materials, see supra at 24-25, it is clear that
such material is far more publicly accessible than is the
material obtained under a FOIA request. FOIA expressly
provides that records furnished in response to a FOIA
request are to be made "available for public inspection and
copying" only when the relevant agency determines that,
"because of the nature of their subject matter, .. . [the
records] have become or are likely to become the subject of
subsequent requests for substantially the same records." 5
U.S.C. S 552(a)(2)(D) (1994 & Supp. II 1996). Otherwise,
such records are provided only to the individual FOIA
requester. Further, nothing in FOIA would require the FOIA
recipient to share the fruits of his request with other
members of the public.
Although S 552(a)(2)(D) was added in 1996, 3 after Mistick
made its FOIA request, nothing in FOIA at the time of
Mistick's request would have required HUD (or Mistick) to
make the materials provided through the request available
to other members of the public. Additionally, in enacting
the 1996 amendment, Congress did not intend to make
most materials disclosed through a FOIA request
presumptively accessible to the general public, but was
only ensuring broad access to "previously-released records
on a popular topic, such as the assassinations of public
figures." H.R. Rep. No. 104-795, at 21 (1996), reprinted in
1996 U.S.C.C.A.N. 3448, 3464. In fact, since enactment of
S 552(a)(2)(D), HUD has not amended its own regulations
governing FOIA requests, as it apparently does not
anticipate fulfilling very many FOIA requests that are likely
to become the subject of subsequent, substantially similar
requests. See 24 C.F.R. S 15.12(a)(1)-(3) (1998) (providing
that HUD will make available for public inspection and
copying three of the four categories of material included in
5 U.S.C. S 552(a)(2), failing to include material listed in
S 552(a)(2)(D)).
Therefore, unlike most discovery material, no member of
_________________________________________________________________
3. See Electronic Freedom of Information Act Amendments of 1996, Pub.
L. No. 104-231, S 4(5), 110 Stat. 3048, 3049.
28
the public has a right of access to information that another
person obtained through a FOIA request--nor can anyone
seek an order compelling a FOIA recipient himself to
"publicly disclose" material obtained through his FOIA
request. Of course, other members of the public may
themselves file a FOIA request seeking the same
information, but this does not depend on, nor change the
nature of, the material released through the prior FOIA
request by a single citizen. And of course the information
remains in the government's files, but under Dunleavy, this
is insufficient to turn these records into a "public
disclosure." See Dunleavy, 123 F.3d at 746.
In Dunleavy, we held that the list of enumerated sources
in S 3730(e)(4)(A) "constitutes an exhaustive rendition of the
possible sources" of a public disclosure. Id. at 744. The
only enumerated sources that could be apposite here are
an "administrative . . . report" or an "administrative . . .
investigation." The majority concludes that an agency's act
of fulfilling a FOIA request satisfies this source
requirement, as both an administrative report and an
administrative investigation. I think that this conclusion
also is incorrect. FOIA requires federal agencies to search
their records "for the purpose of locating those records
which are responsive to a request." 5 U.S.C.S 552(a)(3)(D)
(1994 & Supp. II 1996). It does not compel an agency to
"investigate" a request, in the sense that an agency of the
federal government normally investigates such things as
allegations of fraud, crimes, or other wrongdoing. Rather,
the Act simply forces agencies to "make [their] records
promptly available," upon request. Id. S 552(a)(3)(A); see
also 24 C.F.R. S 15.14(g)(2) (1998) (under HUD regulation
governing costs of FOIA requests, "search" is defined as
"time spent looking for material that is responsive to a
request"). The Act is essentially a mechanism for
duplicating records that are in the possession of the federal
government and that are not otherwise excludable from
members of the public. Thus, there is no "administrative
. . . investigation."
Further, the duplication can hardly be described as an
"administrative . . . report." There is no analysis, summary,
conclusion, or other content to "report" to the FOIA
29
requester. Rather, the actual records themselves, with
possible redactions, are merely duplicated and provided to
the FOIA requester. See 5 U.S.C. S 552(a)(4)(A) (1994); see
also 24 C.F.R. S 15.14(a) (1998) (listing fees for HUD's
fulfilling of FOIA requests through the "reproduction or
duplication of documents"). Again, I believe that the
majority strains to read the phrases "investigation" and
"report" to encompass a government agency's rudimentary
act of locating and duplicating requested records. Under
this analysis, the methodological requirements for
establishing the jurisdictional bar are not met.
We held in Dunleavy that public disclosures bar a qui
tam action only if the disclosures include both the
misrepresented state of facts and the true state of facts. See
Dunleavy, 123 F.3d at 741. The majority concludes that the
misrepresented state of facts (i.e., that the defendants did
not know of the problem with Glid Wall until 1990) was
disclosed in the FOIA material and that the true state of
facts (i.e., that the defendants knew of the Glid Wall
problem as early as 1987) was revealed in the state-court
action, meeting the requirements for a public disclosure.
Although I am constrained to agree with the majority's
conclusion that (under our holding in Stinson) the discovery
material in this case constitutes a public disclosure,
because I would find that the FOIA material--the source of
the misrepresented facts--is not a public disclosure, I
would hold that Mistick's claim is not jurisdictionally
barred.
II. "Based Upon"
Although my view of the FOIA materials would, in and of
itself, require reversal of the District Court's dismissal of
Mistick's claim, I address the "based upon" issue, as it is a
critical issue, and one on which I believe the majority has
reached a manifestly incorrect conclusion. Courts have
differed on the proper interpretation of this phrase.
Compare, e.g., United States ex rel. Findley v. FPC-Boron
Employees' Club, 105 F.3d 675, 682-85 (D.C. Cir.) (holding
that a qui tam action is based upon public disclosures if it
relies on the same allegations or transactions as those in
the public disclosure), cert. denied, 118 S. Ct. 172 (1997),
30
with United States ex rel. Siller v. Becton Dickinson & Co.,
21 F.3d 1339, 1347-49 (4th Cir. 1994) (holding that a qui
tam action is based upon public disclosures only if it
"actually derived [its] allegations" from the public
disclosures). So have commentators. ARTICLES
FOOTNOTECompare Robert Salcido, Screening Out
Unworthy Whistleblower Actions, 24 Pub. Cont. L.J. 237,
272-79 (1995) (advocating broad view of "based upon"),
with Gary W. Thompson, A Critical Analysis of Restrictive
Interpretations Under the False Claim Act's Public Disclosure
Bar, 27 Pub. Cont. L.J. 669, 697-705 (1998) (advocating
plain reading of "based upon"), and Robert L. Vogel, The
Public Disclosure Bar Against Qui Tam Suits, 24 Pub. Cont.
L.J. 477, 499-501 (1995) (same).
In view of this literature, I will not describe the debate at
length here. I will, however, explain why I find more
persuasive the view that a qui tam plaintiff is barred from
bringing his claim only when he has derived his
information regarding the allegations or transactions
underlying his cause of action from public disclosures.
A. The Contending Views of "Based Upon"
The first court of appeals to adopt a plain reading of
"based upon" was the Fourth Circuit, in an opinion by
Judge Luttig. The court noted that the "reading of `based
upon' as meaning `derived from' is the only fair
construction of the statutory phrase." Siller, 21 F.3d at
1348. It therefore held that "a relator's action is `based
upon' a public disclosure of allegations only where the
relator has actually derived from that disclosure the
allegations upon which his qui tam action is based." Id. The
court also noted that its reading was not only the most
logical reading of the statute's plain text, but also
effectuated Congress's goal of precluding "parasitic" suits
by non-whistleblowers attempting to take advantage of
public disclosures: "[I]t is self-evident that a suit that
includes allegations that happen to be similar (even
identical) to those already publicly disclosed, but[that]
were not actually derived from those public disclosures,
simply is not, in any sense, parasitic." Id.
31
The contrasting view is explicated in Judge Wald's
decision for the D.C. Circuit in Findley. In addition to
claiming that the Fourth Circuit's interpretation of"based
upon" rendered the "original source" exception superfluous,
the court in Findley considered the legislative history of the
FCA. See Findley, 105 F.3d at 683-84. It expressed its
belief that Congress, in the 1986 amendments, "changed
the focus of the jurisdictional bar from evidence of fraud
inside the government's overcrowded file cabinets to fraud
already exposed in the public domain." Id. at 684.
The majority today agrees with Findley's reading of
"based upon" and rejects Siller's plain reading of the
jurisdictional bar. It cites two justifications for doing so: (1)
because Congress was sloppy in choosing the language of
the jurisdictional bar, we should not give this text its plain
meaning, and (2) the plain reading of "based upon" renders
the "original source" exception superfluous. See Maj. Op. at
15-16. I take up each of these contentions below, after a
discussion of the Act's plain meaning. I conclude by
considering whether the plain reading of the text
adequately fulfills Congress's goals in the 1986
amendments.
B. The Plain Meaning of "Based Upon"
The Supreme Court has repeatedly explained that
recourse to legislative history or underlying legislative
intent is unnecessary when a statute's text is clear and
does not lead to an absurd result. See, e.g., Darby v.
Cisneros, 509 U.S. 137, 147 (1993) ("Recourse to the
legislative history of [a provision of the APA] is unnecessary
in light of the plain meaning of the statutory text."); see
also Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach,
523 U.S. 26, 37 (1998) ("The language is straightforward,
and with a straightforward application ready to hand,
statutory interpretation has no business getting
metaphysical."); Rubin v. United States, 449 U.S. 424, 429-
30 (1981) ("We begin by looking to the language of the Act.
. . . When we find the terms of a statute unambiguous,
judicial inquiry is complete, except in rare and exceptional
circumstances." (internal quotations omitted)). The Court
has instructed us to begin with a statute's text when
32
discerning its meaning, and to "assume that the legislative
purpose is expressed by the ordinary meaning of the words
used." United States v. James, 478 U.S. 597, 604 (1986)
(internal quotation omitted).
As the Fourth Circuit said in Siller, "Section
3730(e)(4)(A)'s use of the phrase `based upon' is. . .
susceptible of a straightforward textual exegesis. To `base
upon' means to `use as a basis for.' " 21 F.3d at 1348
(quoting Webster's Third New International Dictionary 180
(1986)). I agree with this plain reading of the phrase "based
upon" and further concur with Siller's conclusion that there
is no usage, "let alone a common one or a dictionary
definition, that suggests that `based upon' can mean
`supported by.' " Id. at 1349.
Other federal statutes and case law support my plain
reading of the phrase "based upon." For example, an
exception to the Foreign Sovereign Immunities Act of 1976
allows a plaintiff to bring suit against a foreign government
in any case "in which the action is based upon a
commercial activity carried on . . . by the foreign state." 28
U.S.C. S 1605(a)(2) (1994). In Saudi Arabia v. Nelson, 507
U.S. 349 (1993), the plaintiff had allegedly been tortured
and beaten by Saudi Arabian law enforcement officers in
retaliation for his complaints about safety problems at a
Saudi hospital at which he worked. See id. at 352-53. He
brought an action against the Saudi government,
contending that his claim was "based upon a commercial
activity" of that government because he was recruited to
work at its hospital, signed an employment contract with
the government to work at the hospital, and was actually
employed by the government to work there.
In determining whether the action was "based upon a
commercial activity," the Supreme Court first noted:
Although the Act contains no definition of the phrase
"based upon," and the relatively sparse legislative
history offers no assistance, guidance is hardly
necessary. In denoting conduct that forms the `basis,'
or `foundation,' for a claim, the phrase is read most
naturally to mean those elements of a claim that, if
proven, would entitle a plaintiff to relief under his
theory of the case.
33
Id. at 357 (citing Black's Law Dictionary, Random House
Dictionary, and Webster's Third New International
Dictionary). The Court then held that, "where a claim rests
entirely upon activities sovereign in character, . ..
jurisdiction will not exist under that clause regardless of
any connection the sovereign acts may have with
commercial activity." Id. at 358 n.4. Because the
recruitment, contract signing, and employment at the
hospital, all admittedly commercial in character,"[were] not
the basis for the Nelsons' suit," the action was not based
upon a commercial activity of the foreign government. Id. at
358; see also id. at 364 (White, J., concurring in judgment)
(agreeing with the majority that the recruiting and hiring of
the plaintiff was " `not the basis for the Nelsons' suit,' for it
is unrelated to the elements of [their] complaint" (citation
omitted)).
The commercial activities may have provided the
background for the complaint and have had a "connection"
to the sovereign acts that the claim was based upon, but
the action was not derived from these commercial activities;
rather, the action was derived from the tortious acts of
foreign government officials. Therefore, it was not "based
upon" commercial activities of the foreign government.
Similarly, in the FCA context, I believe that "guidance is
hardly necessary." While public disclosures will typically
have some connection to the allegations in a relator's
complaint, in the sense that the disclosures and the
allegations in the complaint are similar, the latter cannot
be said to be "based upon" the former when the complaint
"rests upon" allegations contained in some other (non-
publicly disclosed) source.
Judicial use of the words "based upon" also supports my
reading of this simple phrase. For example, in the context
of the "independent source" exception to the exclusionary
rule, evidence is not excluded if it is derived from some
source other than the tainted search or identification. The
Supreme Court has described the government's burden in
such a situation as proving that evidence introduced at trial
was "based upon" some source other than the illegal one, or
that "the evidence to which instant objection is made has
[not] been come at by exploitation of that illegality [but]
34
instead by means sufficiently distinguishable to be purged
of the primary taint." United States v. Wade , 388 U.S. 218,
241 (1967) (internal quotation omitted). The Court's use of
the phrase "based upon" in Wade, to mean "come at by
exploitation of," is consistent with my plain reading of
"based upon" in the FCA. If a qui tam action exists only by
exploitation of publicly disclosed allegations or
transactions, it falls within the jurisdictional bar. If, on the
other hand, knowledge of the allegations or transactions at
the heart of a qui tam claim was obtained through"means
sufficiently distinguishable to be purged of the primary
taint" of the public disclosures, the bar should not apply.4
In the present case, the majority finds that a qui tam
action that relies on information that is similar to that
which has been publicly disclosed is ineluctably"based
upon" the public disclosures, even though the qui tam
relator has not "come at [this information] by exploitation
of " the public disclosures, or "substantially copied" its
information from the public disclosures. I find that this
reading flies in the face of the plain meaning of"based
upon," as indicated by its usage in common parlance, in
other statutes, and in judicial opinions. It is noteworthy
that the majority does not take issue with this plain
meaning discussion. Indeed, it implicitly concedes its
efficacy, though not its overwhelming force. I now turn to
the majority's efforts to blunt the pellucid text of the FCA
by reference to Congress's sloppy drafting and the alleged
undermining of the "original source" exception by this plain
reading of the statute. I then examine the purpose and
policy undergirding the qui tam statute, which inform the
varying interpretations of "based upon." But on the basis of
the plain meaning alone, I would find that the jurisdictional
_________________________________________________________________
4. My plain reading of "based upon" finds support in still other fields.
For
example, under copyright law, a "derivative" work is defined as one that
is "based upon one or more preexisting works," 17 U.S.C. S 101 (1994),
a definition that has been read as requiring that the derivative work be
"substantially copied from a prior work." 1 Melville B. Nimmer & David
Nimmer, Nimmer on Copyright S 3.01, at 3-3 (1997) (emphasis omitted).
In other words, if the latter work is similar to the preexisting one, but
is
not copied substantially therefrom, it is not "based upon" that
preexisting work.
35
bar does not apply to a qui tam claim that is not derived
from public disclosures.
C. Congress's Sloppy Drafting
The majority claims that we may ignore the plain
meaning of S 3730(e)(4)(A) because it "does not reflect
careful drafting or a precise use of language." Maj. Op. at
18.5 The majority lists a number of minor drafting problems
in support of its argument. For example, it notes the
mistaken identification of the General Accounting Office (or
"GAO") as the "Government Accounting Office,"6 the use of
the phrase "hearing" when the broader concept of "trial"
was clearly intended, and the preclusion of jurisdiction over
qui tam "actions," when such actions may contain many
"claims," some of which are "based upon" public
disclosures and others which are not. The majority's
reliance on Congress's alleged sloppiness appears to be a
different way of saying that "the language of the statute is
ambiguous," thereby giving us license to "consider the
structure and context of the ambiguous language," Findley,
105 F.3d at 683, rather than giving it its plain meaning.
_________________________________________________________________
5. This is hardly a new phenomenon. Congress regularly lapses into
sloppy drafting, as has been frequently noted by courts. See, e.g., H.J.
Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 249 (1989) ("RICO may
be a poorly drafted statute; but rewriting it is a job for Congress, if it
is
so inclined, and not for this Court."); Lansford-Coaldale Joint Water
Auth.
v. Tonolli Corp., 4 F.3d 1209, 1221 (3d Cir. 1993) (noting that CERCLA
is "notorious for its lack of clarity and poor draftsmanship"); Cvikich v.
Railroad Retirement Bd., 860 F.2d 103, 104 (3d Cir. 1988) (giving a
provision of the Railroad Retirement Act its plain meaning, despite its
"poor draftsmanship"). Yet we interpret these poorly drafted statutes as
best we can, and "assume that in drafting legislation, Congress says
what it means." Sundance Assocs., Inc. v. Reno, 139 F.3d 804, 809 (10th
Cir. 1998).
6. The drafter who made this error was likely confused by the
appellations of the Government Printing Office, which publishes
government reports, and the General Accounting Office, which performs
government audits. I note that both reports and audits of the
"Government Accounting Office" are listed as public disclosures in
S 3730(e)(4)(A).
36
I find this argument unpersuasive because, whether or
not Congress was sloppy in its choice of certain words,
there is nothing ambiguous about the phrase "based upon,"
and its interpretation requires no "fine parsing of the
syntax of S 3730(e)(4)(A)." Maj. Op. at 19. As for the
majority's examples of Congress's sloppiness, it certainly
was reasonable for Congress to use the general phrase,
"criminal, civil, or administrative hearing," if it intended to
include under this aegis criminal or civil trials. Its choice of
words could easily reflect not imprecise drafting, but an
attempt to broadly encompass criminal, civil, or
administrative proceedings, without listing every possibility,
such as criminal pre-trial hearings, criminal trials,
sentencing hearings, civil discovery proceedings, civil trials,
appellate hearings, administrative hearings, etc.
The majority gives no indication of the origin of the GAO
mistake, and it is possible that it was simply a transcribing
problem or a mistake by a single staff person that escaped
detection. Courts have frequently referred to the General
Accounting Office as the Government Accounting Office, a
reasonable mistake on which I believe the majority places
more emphasis than it deserves. See, e.g., Adams v.
Hinchman, 154 F.3d 420, 421 (D.C. Cir. 1998) (referring to
the "Government Accounting Office" in a Fair Labor
Standards Act case brought by federal employees), cert.
denied, 119 S. Ct. 2046 (1999); Dunleavy, 123 F.3d at 745
("We take notice of the fact that Congress and the
Government Accounting Office are entities of our federal
government.").
In addition, Congress has previously made the same
mistake, and corrected it when its error was discovered.
Compare Resolution Trust Corporation Refinancing,
Restructuring, and Improvement Act of 1991, Pub. L. No.
102-233, S 106(d), 105 Stat. 1761, 1764 (adding new
subsection (k)(11)(B) to 12 U.S.C. S 1441a, requiring the
Resolution Trust Corporation to report to certain
congressional committees "[t]he total number of individuals
performing services for the Corporation as an employee of
. . . the Government Accounting Office"), with Housing and
Community Development Act of 1992, Pub. L. No. 102-550,
S 1611(d)(3)(B), 106 Stat. 3672, 4091 (amending
37
S 1441a(k)(11)(B), to replace "Government Accounting
Office" with "General Accounting Office").7 The majority
cannot be suggesting that courts should have ignored the
plain meaning of the entire Resolution Trust Corporation
Refinancing, Restructuring, and Improvement Act of 1991,
simply because of the misidentification of the GAO in one
part of that enactment.
Finally, as with its misnaming of the GAO, Congress's
use of a broad term such as "action" (or "case") when the
more limited "claim" might be more appropriate is far from
unprecedented. See, e.g., Wisconsin Dep't of Corrections v.
Schacht, 118 S. Ct. 2047, 2054 (1998) ("Conceivably, one
might also read [28 U.S.C. S 1447(c)'s] reference to `case,' to
include a claim within a case as well as the entire case.").
As noted supra note 5, however, our ultimate task is to
effectuate Congress's intent, as demonstrated first and
foremost by the language it has employed, even if that
language is less than precise.
Most importantly, as I discuss infra Part II.E, even if the
language of the FCA is imprecise or ambiguous, thereby
justifying resort to legislative intent, Congress's intent is
better effectuated by the narrow reading of "based upon."
Suffice it to say here that I find unavailing the majority's
attempt to avoid the plain meaning of this phrase on the
ground that Congress was being sloppy at the time it
codified the relevant statutory provision.
D. Does a Plain Reading of "Based Upon" Render the
"Original Source" Exception Meaningless?
The majority adopts the view of the D.C. Circuit that the
plain reading of "based upon" renders the"original source"
exception superfluous, a result we should try to avoid. See
_________________________________________________________________
7. Apparently, the leading newspapers in our nation's capital are also not
immune to the problem of misnaming the GAO. A search of the relevant
Westlaw databases produced 128 articles from the Washington Post over
the past fifteen years in which the GAO was mistakenly identified as the
"Government Accounting Office," and 48 articles from the Washington
Times over the past nine years in which the same mistake was made. On
the other hand, the papers correctly identified the GAO thousands of
times during these periods.
38
Maj. Op. at 15-16. In Findley, Judge Wald posited an
example of a relator who "independently" investigated a
fraud after reading about it in the Washington Post or
Washington Times in order to qualify as an original source
despite the fact that the hypothetical relator's claim was
derived from a public disclosure. See Findley, 105 F.3d at
683. It is clear, however, that the present relator, Mistick,
is nothing like the opportunistic and parasitic relator
conjured up by Judge Wald. Rather, Mistick plausibly
alleges (but has not had the opportunity to prove) that it
learned of defendants' fraud well before it was "publicly
disclosed" in state-court litigation (not in a widely
circulated newspaper). Thus, Judge Wald's bellwether
example is so extreme as to undermine her position.
Under the plain reading of "based upon," it is true that a
relator whose claim is derived entirely from public
disclosures cannot be an original source because the entire
claim is "dependent" on the public disclosures, and a
fortiori the relator does not have "independent" knowledge
of any elements of his claim. While it is entirely possible
that Congress, in enacting the complex and overlapping
amendments to the FCA in 1986, failed to foresee that its
new "based upon" language could render the"original
source" exception superfluous, this provides scant basis for
our failing to give effect to plain congressional language.
Ironically, the majority implies that the same Congress
whose sloppy drafting it invokes to justify ignoring the
FCA's plain meaning would have been careful (or
sufficiently astute) to avoid enacting an original source
exception that has subtle, and perhaps unintended,
interactions with the jurisdictional bar in S 3730(e)(4)(A).
But even under the plain reading of "based upon," I believe
that there are at least two situations in which the original
source exception will assist a relator whose claim is (or
appears to be) derived from public disclosures.
First, in Stinson, the majority observed that,
"[u]ndoubtedly, it is not necessary for a relator to have all
the relevant information in order to qualify as
`independent.' " Stinson, 944 F.2d at 1160; see also United
States ex rel. Springfield Terminal Ry. Co. v. Quinn, 14 F.3d
645, 657 (D.C. Cir. 1994) (holding that a relator, to be an
39
original source, need have "direct and independent
knowledge of any essential element of the underlying fraud
transaction"). Just as the Stinson majority assumed that an
original source need not have independent knowledge of all
elements of his claim, it is possible that a qui tam claim
need not be derived entirely from public disclosures to fall
under the "based upon" jurisdictional bar, as long as some
essential element of the qui tam claim is derived from
public disclosures. A number of courts have so held,
though I take no position here on this complex question.
See, e.g., Farmington, 166 F.3d at 863 (holding that a claim
is "based upon" a public disclosure "[i]f the public
disclosure from which the information is actually derived is
essential to a qui tam claim"); cf. United States ex rel.
Precision Co. v. Koch Indus., 971 F.2d 548, 552 (10th Cir.
1992) (holding that "an FCA qui tam action even partly
based upon publicly disclosed allegations or transactions is
nonetheless `based upon' such allegations or transactions").
Under this view, a relator who is barred because he has
derived some of his fraud information from a public
disclosure may still bring the claim as an original source if
he has direct and independent knowledge of some other
essential element of the claim.
Second, my view of "based upon" would admittedly
require a factual inquiry into the basis of a qui tam relator's
allegations. Whenever there were public disclosures
revealing both the true and the misrepresented facts, a
defendant would no doubt claim that the relator derived his
information from these disclosures. In response, it may be
easier for the relator to establish himself as an"original
source" of the information than to successfully disprove a
causal link between the public disclosures and his qui tam
claim. The original source exception would sometimes be
invoked by a relator with a claim that is not technically
derived from public disclosures, but that is difficult to
separate from those disclosures. This would be particularly
true in the case of widely publicized disclosures, such as
those in Judge Wald's example. If the relator in her
example had prior direct knowledge of the fraud allegations
revealed in the newspaper articles, but failed tofile suit
until after the articles appeared (a scenario quite similar to
Mistick's), it may well be easier for that relator to simply
40
identify its prior "original source" of the information than to
prove that its qui tam action is not causally linked with the
very public disclosures.
The majority has sought to discredit the foregoing
analysis. The majority's response inevitably has some force,
but that is so because minor, unintended consequences
may result from our effectuating the plain meaning and
evident intent of a complex federal statute. But only my
reading of the jurisdictional bar gives effect to (and fulfills
Congress's intent regarding) both the "based upon"
language and the "original source" exception, without
ignoring the plain meaning of either phrase. The intent of
the "original source" exception is to allow one who
contributes valuable, first-hand information regarding a
fraud on the government to bring a qui tam action whether
or not that information (or possibly other information
related to the fraud) was publicly disclosed, and whether or
not that relator can prove that his claim is not derived from
these disclosures. The "based upon" requirement is
intended to foreclose parasitic qui tam suits that derive
their claim from publicly disclosed information. Taken
together, these two requirements will bar actions by
relators who piggyback on public disclosures and cannot
demonstrate that they have contributed any useful (i.e.,
independent and direct) information regarding a fraud on
the government.
E. Purpose of Qui Tam Actions
1. Legislative Intent
Even if I were to ignore the plain meaning of the FCA and
to instead look to Congress's alleged intent in amending the
statute in 1986, I believe that my reading of "based upon"
more fully effectuates all of Congress's goals. Congress had
three primary aims in enacting the 1986 amendments: (1)
encouraging those with information regarding frauds on the
government to disclose this information; (2) discouraging
parasitic qui tam actions that simply take advantage of
information already in the public domain; and (3) assisting
--and prodding--the government to act upon information
41
that it had been (or is being) defrauded. See S. Rep. No. 99-
345, at 1-8, 23-24 (1986), reprinted in 1986 U.S.C.C.A.N.
5266, 5266-73, 5288-89; cf. Thompson, supra, at 693
("Congress not only wanted to expose fraud but also wanted
to encourage the use of nongovernmental resources to
activate and advance qui tam cases to prosecution."). My
interpretation of "based upon" effectuates all three of these
goals, while the view adopted by the majority in this case
will in many situations only advance the first goal.
Initially, I note that it is only the hair-trigger invocation
of the jurisdictional bar, created by our precedent in
Stinson, that renders the strained interpretation of "based
upon" even arguably necessary. Under Stinson , the phrase
"public disclosure" is something of a misnomer. While it
may conjure up images of a widely disseminated piece of
information or something divulged at a press conference, it
includes information revealed to a small number of
persons, such as evidence disclosed to a single litigant
through unfiled state-court discovery (or, under the
majority's holding today, information obtained from a single
FOIA request). See supra Part I. Therefore, a "public
disclosure" will exist in a great number of qui tam cases,
foreclosing all actions "based upon" these disclosures if not
brought by an original source.
In the paradigmatic whistleblower case, the varying
interpretations of "based upon" will usually lead to the
same result. When a public disclosure is widely
disseminated, such as through a filing in a highly
publicized legal case or in a press conference by a
whistleblower or the government agency involved, the
information regarding the fraud will have been brought
forth, anyone who is not an original source will almost
certainly be prevented from demonstrating that their claim
was not derived from the highly publicized public
disclosure, and the government will be hard pressed to sit
on the information that it was defrauded, given the
publicity.
However, in the case of a "public disclosure" in legal
construct only, the different interpretations of"based upon"
will lead to varying results, and, I contend, the plain
reading of "based upon" will most fully effectuate all of the
42
goals Congress sought to advance in the 1986
amendments. The argument that a broad reading of"based
upon" most fully effectuates Congress's intent to preclude
parasitic suits "ignores the reality that the term `public
disclosures' encompasses disclosures that receive all
different degrees of publicity, reaching audiences ranging
from one person to millions of people." Vogel, supra, at 513.
When allegations have been "publicly disclosed" under
Stinson's broad interpretation of this phrase, but have been
revealed to few people, rather than "millions of people," the
purpose of the FCA is best fulfilled by encouraging those
who discover the information through some other source to
bring suit. This can be seen from our decision in Stinson,
and in the majority's holding today that information
obtained through a FOIA request is a "public disclosure." In
both cases, if the narrow group of individuals (as few as
one) who are privy to these "disclosures" decide to keep
them secret, at least two purposes of the FCA--encouraging
the disclosure of fraud, and prodding and/or assisting the
government in prosecuting this fraud--will be furthered
only if another individual who discovers the fraud through
some other means is allowed to bring a qui tam action.
2. Legislative History
While disclaiming reliance on legislative history, see Maj.
Op. at 19 n.9, the majority cites two statements by FCA
sponsors in support of its argument. However, as this court
has previously noted, statements can easily be found
pointing in opposite directions when it comes to the FCA's
legislative history. See Stinson, 944 F.2d at 1154 ("The bill
that eventuated in the 1986 amendments underwent
substantial revisions during its legislative path. This
provides ample opportunity to search the legislative history
and find some support somewhere for almost any
construction of the many ambiguous terms in thefinal
version.").
The D.C. Circuit in Findley purported to rely more
extensively on legislative history, arguing that, in changing
the jurisdictional bar of the FCA from claims "based upon
evidence or information in the possession of the United
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States" to those "based upon the public disclosure of
allegations or transactions," Congress altered the focus of
the bar from information in the government's possession to
"fraud already exposed in the public domain." Findley, 105
F.3d at 684. More precisely, however, what Congress
intended was to change the focus from information in the
government's possession to information that is sufficiently
publicly disclosed to bring the fraud to the government's
attention and to spur it into acting upon the information.
If Congress had the intent claimed by the Findley court,
it could simply have substituted in the jurisdictional bar
the phrase "information that has been publicly disclosed"
for "information in the possession of the United States." The
statute would then have read, in relevant part,"No court
shall have jurisdiction over an action under this section
based upon evidence or information that has been publicly
disclosed in a criminal, civil, or administrative hearing,
[etc.] . . . ." Instead, Congress completely changed the focus
of the key phrase "based upon," eliminating a structure in
which the phrase referred to "evidence or information," and
creating one in which it referred to "public disclosure of
allegations or transactions." The actual statute now reads,
"No court shall have jurisdiction over an action under this
section based upon the public disclosure of allegations or
transactions in a criminal, civil, or administrative hearing,
[etc.] . . . ."
There is a fundamental difference between a claim that is
based upon certain information that has been publicly
disclosed, and a claim that is based upon certain
enumerated public disclosures. This difference evinces an
intent to focus not broadly on information in the public
domain, but narrowly on the specific public disclosures
that contain the information. The Findley court interpreted
"based upon" as if Congress chose to make the former
change--precluding suits based upon certain information--
rather than the change it actually made, in which"based
upon" refers to certain disclosures. While this change in
focus is not conclusive in and of itself, I believe the D.C.
Circuit's misreading of this substantial change undercuts
its argument regarding Congress's intent.
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F. Summary
In sum, I do not believe we can escape the plain meaning
of the phrase "based upon" in the FCA's jurisdictional bar.
There is no justification for giving this phrase a convoluted
reading that not only ignores its plain meaning, but that
also extends Stinson's error of interpreting the jurisdictional
bar so as to foreclose virtually all qui tam suits that do not
fit within the mold of the paradigmatic
insider/whistleblower case. The plain meaning most
effectively fulfills Congress's intent, and does so without
ignoring or rendering meaningless any portion of the 1986
amendments.
III. Disposition of Mistick's Qui Tam Suit
As I disagree with the majority's conclusion that the
material obtained through Mistick's FOIA request was a
public disclosure, I would find that the misrepresented
state of facts underlying its qui tam claim had not been
publicly disclosed. Therefore, under our holding in
Dunleavy that the jurisdictional bar does not apply unless
both the true and the misrepresented facts have been
publicly disclosed through one of the enumerated sources,
Mistick's qui tam claim is not jurisdictionally barred.
But even if the FOIA material were to constitute a public
disclosure, Mistick's qui tam action may not be"based
upon" public disclosures because it claims that it learned of
the true state of facts not through the public disclosure in
the state-court action, but earlier, through meetings with
the maker of Glid Wall, and through its own independent
investigations. Because it is ultimately a fact question
whether Mistick's information underlying its qui tam action
was derived from the public disclosures, and because the
District Court did not reach this issue, I would remand for
the District Court's determination of this issue in the first
instance. Cf. Siller, 21 F.3d at 1349 (remanding for the
district court to determine whether the allegations in a
relator's action were derived from a public disclosure);
Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884,
891 n.16 (3d Cir. 1977) ("[T]he district court is free to
determine facts relevant to its jurisdiction . . . .").
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IV. Conclusion
The policy consideration undergirding the restrictive view
of qui tam litigation (and the expansive view of the
jurisdictional bar) is that it is necessary to eliminate
opportunistic and parasitic lawsuits. I share the view that
such suits are an abomination. I believe, however, that
Stinson, Findley, and their progeny (including the majority
opinion here) cut such a broad swath that they eviscerate
bona fide suits, such as the one at bar, in a laudable but
misguided effort to halt a feared torrent of litigation.
In my view, the recent amendments to the False Claims
Act were intended to encourage qui tam suits that do not
derive their knowledge of an underlying fraud from truly
public disclosures, and to encourage those with information
about frauds on the government to inform the government
about the fraud, assist the government in bringing legal
action to bear against the defrauders, and, if necessary,
prod the government into action. I see the majority opinion
as inconsistent with this intent of Congress. More
importantly, it is inconsistent with the plain language of the
FCA. Because the majority's misreading affects the outcome
of this case, I respectfully dissent.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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