Zaretsky v. Johnson Controls , 457 F.3d 1009 ( 2006 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA; 
STATE OF CALIFORNIA, ex rel.
ROMAN ZARETSKY; ROBERT
YARDLEY,
Plaintiffs-Appellants, No. 04-55536
v.
JOHNSON CONTROLS, INC.; MICHAEL  D.C. No.
CV-03-00028-DOC
MATHES; RICHARD BEDDIE, OPINION
Defendants-Appellees,
and
MICHAEL PUTICH,
Defendant.

Appeal from the United States District Court
for the Central District of California
David O. Carter, District Judge, Presiding
Argued and Submitted
February 13, 2006—Pasadena, California
Filed August 9, 2006
Before: William C. Canby, Jr., John T. Noonan, and
Marsha S. Berzon, Circuit Judges.
Opinion by Judge Berzon
9129
9132 UNITED STATES v. JOHNSON CONTROLS, INC.
COUNSEL
Richard C. Goodman and Marc J. Schneider, Stradling Yocca
Carlson & Rauth, Newport Beach, California, for the
plaintiffs-appellants.
UNITED STATES v. JOHNSON CONTROLS, INC. 9133
Brian W. McGrath and David W. Simon, Foley & Lardner
LLP, Milwaukee, Wisconsin, and Susanne C. Washington,
Foley & Lardner LLP, San Diego, California, for the
defendants-appellees.
OPINION
BERZON, Circuit Judge:
This case requires us to interpret, once again, the statutory
provisions relating to the “public disclosure” bar and the
“original source” exception to that bar in the Federal False
Claims Act (FCA), 31 U.S.C. §§ 3729-3733, and the Califor-
nia False Claims Act (CFCA), CAL. GOV’T CODE §§ 12650-
12656. We hold that the federal and state statutes do not
require that an individual report relevant information to the
government prior to the “public disclosure” at issue to qualify
as an “original source.”
I.
Johnson Controls, Inc. (Johnson Controls, or the Company)
manufactures control systems that monitor and coordinate the
air environment in large buildings and building complexes.
The Company sells its control systems both directly to end-
users and through a network of independent distributors called
“Authorized Building Controls Specialists” (ABCSs).
Yardley-Zaretsky, Inc. and the George Yardley Co. (collec-
tively, the Yardley Companies) operate as an ABCS. Accord-
ing to Roman Zaretsky, President of Yardley-Zaretsky, Inc.,
Johnson Controls threatened the Yardley Companies with ter-
mination if they bid against Johnson Controls itself on certain
government jobs, including jobs at the Long Beach Veterans
Administration Hospital and the University of California, Riv-
erside.
9134 UNITED STATES v. JOHNSON CONTROLS, INC.
The Yardley Companies filed a civil complaint in Califor-
nia state court against Johnson Controls and several of its
employees alleging, inter alia, that Johnson Controls was
engaged in a bid-rigging scheme in violation of section 1 of
the Sherman Act, 15 U.S.C. § 1. Johnson Controls removed
the case to federal court. The Yardley Companies subse-
quently voluntarily dismissed the lawsuit and filed a demand
for arbitration with the American Arbitration Association,
asserting the same claims.1
Shortly thereafter Zaretsky and Robert Yardley, Vice-
President of Yardley-Zaretsky, Inc., sent letters to officials at
the Long Beach Veterans Administration Hospital, the United
States Attorney’s Office, the University of California, River-
side, and the Office of the California Attorney General, alleg-
ing that Johnson Controls violated the FCA and the CFCA.
The letters stated that Zaretsky and Yardley (Relators) would
file a qui tam complaint,2 a draft of which was included with
the letters, two weeks later, unless state or federal officials
contacted them in the meantime.
No governmental officials contacted Relators during the
two-week period. Shortly after the two-week period expired,
Relators filed under seal a qui tam complaint against Johnson
1
According to appellants’ letter submitted to us in accordance with Fed-
eral Rule of Appellate Procedure 28(j), the arbitration panel eventually
held that the defendants “committed a per se antitrust violation, tortious
interference, and breach of contract.”
2
Under 31 U.S.C. § 3730, a “qui tam plaintiff,” also known as a “rela-
tor,” may bring a civil action for a violation of the FCA for herself and
for the United States government, in the name of the government. See 31
U.S.C. § 3730(b)(1).
Under California Government Code section 12652, a “qui tam plaintiff”
may bring a civil action for a violation of the CFCA “for [herself] and
either for the State of California in the name of the state, if any state funds
are involved, or for a political subdivision in the name of the political sub-
division, if political subdivision funds are exclusively involved.” CAL.
GOV’T CODE § 12652(c)(1).
UNITED STATES v. JOHNSON CONTROLS, INC. 9135
Controls and several of its employees (collectively, JCI),
alleging that JCI violated the FCA and the CFCA by engaging
in bid-rigging on federal and state government jobs, including
jobs at the Long Beach Veterans Administration Hospital and
the University of California, Riverside.
After the federal and state governments declined to inter-
vene, the district court filed an order unsealing the complaint.3
Before Relators obtained discovery from JCI or third parties,
and well before the discovery cutoff dates set by the district
court, JCI moved for summary judgment on two grounds: (1)
that the district court lacked subject matter jurisdiction under
31 U.S.C. § 3730(e)(4) because the complaint was “based
upon [a] public disclosure,” but Relators were not an “original
source”; and (2) that Relators’ FCA and CFCA claims fail on
the merits because they are “based on an alleged Rule of Rea-
son antitrust violation, a subjective, fact-specific analysis that
cannot support False Claims Act liability.” Relators’ opposi-
tion to the motion for summary judgment contended that
Relators are an “original source” and that the motion should
be denied with respect to the second ground because Relators
had not been able to obtain discovery that might reveal perti-
nent facts.
The district court granted JCI’s motion on the ground that
there was no subject matter jurisdiction under 31 U.S.C.
§ 3730(e)(4). The court held that to qualify as an “original
source” under the FCA, a prospective relator must provide the
government with the pertinent information prior to the “public
3
Under 31 U.S.C. § 3730(b), an FCA qui tam complaint must be filed
under seal and served, initially, on the government only. 31 U.S.C.
§ 3730(b)(2). The qui tam complaint remains under seal for a period of
sixty days (or longer, if the government obtains an extension), during
which time the government must determine whether to intervene and pro-
ceed with the action. Id. § 3730(b)(2)-(4). If the government elects not to
proceed with the action, the person who initiated the action has the right
to conduct the action. Id. § 3730(c)(3). The CFCA includes similar
requirements. See CAL. GOV’T CODE § 12652(c)(2)-(8).
9136 UNITED STATES v. JOHNSON CONTROLS, INC.
disclosure” at issue if, but only if, the “public disclosure”
occurs through a private lawsuit brought by the prospective
relator. The district court’s order did not address JCI’s alter-
nate contention that Relators could not prove a substantive
violation of the FCA or the Relators’ assertion that decision
on that issue should be delayed to allow for development of
the record through discovery.
On appeal, Relators contend that the FCA and CFCA do
not require them to inform the government prior to public dis-
closure to qualify as “original sources.” JCI disagrees and also
argues, in the alternative, that we should affirm on the ground
that Relators have not stated a substantive FCA or CFCA vio-
lation.
II.
We review a district court’s grant of summary judgment de
novo. Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir.
1995). We must “determine whether the evidence, viewed in
a light most favorable to the nonmoving party, presents any
genuine issues of material fact and whether the district court
correctly applied the law.” Id.
A.
1.
Section 3730(e)(4) of Title 31 of the United States Code
provides, in full:
(4)(A) No court shall have jurisdiction over an
action under this section based upon the public dis-
closure 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
UNITED STATES v. JOHNSON CONTROLS, INC. 9137
Attorney General or the person bringing the action is
an original source of the information.
(B) For purposes of this paragraph, “original
source” means an individual who has direct and
independent knowledge of the information on which
the allegations are based and has voluntarily pro-
vided the information to the Government before fil-
ing an action under this section which is based on the
information.
31 U.S.C. § 3730(e)(4) (footnote omitted).
[1] The parties agree that the Yardley Companies’ civil
complaint in state court alleging, inter alia, antitrust violations
was a “public disclosure” of pertinent allegations or transac-
tions, see United States v. Alcan Elec. & Eng’g, Inc., 197 F.3d
1014, 1018-21 (9th Cir. 1999), and that Relators’ qui tam
action is “based upon” that public disclosure because it con-
tains the same factual allegations, see United States ex rel.
Biddle v. Bd. of Trs. of the Leland Stanford, Jr. Univ., 161
F.3d 533, 536-40 (9th Cir. 1998). The district court thus had
jurisdiction under § 3730(e)(4) only if Relators are an “origi-
nal source” within the meaning of the statute.
[2] As we noted in Wang v. FMC Corp., § 3730(e)(4)(B)
dictates that to be an “original source” a plaintiff must fulfill
several requirements: He must “show that he has ‘direct and
independent knowledge of the information on which his alle-
gation is based’ . . . and . . . that he ‘has voluntarily provided
the information to the Government before filing’ his qui tam
action.” 975 F.2d 1412, 1417 (9th Cir. 1992) (emphasis omit-
ted) (quoting 31 U.S.C. § 3730(e)(4)(B)). These requirements
flow directly from the text of the statute. Wang went on to
hold that to be an “original source,” a prospective relator must
satisfy an additional requirement under § 3730(e)(4)(A) that
is not in the statute in haec verba but that Wang held inherent
in it: He must have “had a hand in the public disclosure of
9138 UNITED STATES v. JOHNSON CONTROLS, INC.
allegations that are a part of [his] suit.” Id. at 1418. Thus,
post-Wang, we have summarized the requirements as follows:
To qualify as an original source, a relator must
show that he or she has direct and independent
knowledge of the information on which the allega-
tions are based, voluntarily provided the information
to the government before filing his or her qui tam
action, and had a hand in the public disclosure of
allegations that are a part of . . . [the] suit.
United States ex rel. Lujan v. Hughes Aircraft Co., 162 F.3d
1027, 1033 (9th Cir. 1998) (internal quotation marks omitted).
[3] JCI does not contend that Relators fail to satisfy any of
the preceding criteria, so, for purposes of this opinion, we
treat them as established.4 Instead, JCI’s jurisdictional argu-
ment is that Relators fail to satisfy what they argue is an addi-
tional criterion under § 3730(e)(4): that prospective relators
provide the requisite information directly to the government
prior to the public disclosure at issue. It is undisputed that
Relators provided the federal government with no information
prior to the filing of the civil complaint in state court, the pub-
lic disclosure in the present case. Rather, the first time Rela-
tors directly provided the federal government with
information was when they sent letters to government offi-
cials indicating their intent to file a qui tam action, an event
which occurred after they filed their civil complaint in state
court.
4
JCI’s motion for summary judgment stated that “[f]or purposes of this
motion, JCI will assume that Relators have ‘direct and independent knowl-
edge’ of the circumstances underlying the so-called bid-rigging scheme
that forms the basis of their FCA claim.” JCI’s brief to this court states
that JCI has “accepted [the] assertion [that Relators had direct and inde-
pendent knowledge] for the purposes of this analysis, but do not concede
that it is true.”
UNITED STATES v. JOHNSON CONTROLS, INC. 9139
[4] The only dispute regarding the FCA claim is thus over
a single question of law: Does the FCA require — all of the
time or, as the district court held, under some circumstances
— that prospective relators provide relevant information to
the government prior to the public disclosure at issue? The
Eighth Circuit has held that the FCA does not so require, and
the Sixth and D.C. Circuits have held that it does. See Minn.
Ass’n of Nurse Anesthetists v. Allina Health Sys. Corp., 276
F.3d 1032, 1050-51 (8th Cir. 2002); United States ex rel.
McKenzie v. BellSouth Telecomms., Inc., 123 F.3d 935, 941-
43 (6th Cir. 1997); United States ex rel. Findley v. FPC-
Boron Employees’ Club, 105 F.3d 675, 690-91 (D.C. Cir.
1997). No other circuit court has directly addressed the issue,
although the Tenth Circuit has commented on it in dicta. See
United States ex rel. King v. Hillcrest Health Ctr., Inc., 264
F.3d 1271, 1281 n.3 (10th Cir. 2001) (stating that “the appel-
lees ask the court to read § 3730(e)(4)(B) as requiring a rela-
tor to make the voluntary disclosure to the government not
just ‘before filing’ the qui tam action but before the public
disclosure,” noting that “[t]he Tenth Circuit has discussed the
voluntary disclosure element as something to be accom-
plished ‘prior to filing suit,’ ” and then not deciding the ques-
tion). In concert with the Eighth Circuit and in light of our
related FCA case law — which differs from that in the cir-
cuits that have answered the prior disclosure question differ-
ently — we hold that there is no such requirement.
2.
[5] In determining whether there is a pre-disclosure notice
requirement, we must interpret the FCA “to give effect to the
intent of Congress.” United States v. Am. Trucking Ass’ns,
310 U.S. 534, 542 (1940). The starting point for doing so is,
of course, the language of the statute itself. Consumer Prod.
Safety Comm’n v. GTE Sylvania, Inc., 447 U.S. 102, 108
(1980). “ ‘If a legislative purpose is expressed in plain and
unambiguous language, . . . the . . . duty of the courts is to
give it effect according to its terms. Exceptions to clearly
9140 UNITED STATES v. JOHNSON CONTROLS, INC.
delineated statutes will be implied only where essential to pre-
vent absurd results or consequences obviously at variance
with the policy of the enactment as a whole.’ ” United States
ex rel. Lujan v. Hughes Aircraft Co., 243 F.3d 1181, 1187
(9th Cir. 2001) (omission in original) (quoting United States
v. Rutherford, 442 U.S. 544, 551-52 (1979)).
[6] Here, the language is plain and unambiguous with
respect to whether it will bear JCI’s interpretation. See Allina,
276 F.3d at 1050 (“This additional requirement has no textual
basis in the statute.”). Subsection (B) of § 3730(e)(4) explic-
itly provides a time frame for when individuals wanting to
take advantage of the “original source” exception to the “pub-
lic disclosure” bar must “voluntarily provide[ ] information to
the government,” stating in no uncertain terms that they must
do so “before filing an action under this section.”
§ 3730(e)(4)(B) (emphasis added). Because subsection (B)
expressly states a timing requirement different from the one
JCI proposes, that subsection is not susceptible to JCI’s inter-
pretation. Quite to the contrary, the language of subsection
(B) is not compatible with any requirement that the informa-
tion disclosure occur before some event other than the one
stated, the time of “filing an action.”
[7] Subsection (A) § 3730(e)(4) also cannot withstand JCI’s
interpretation. That subsection states that public disclosure is
not a jurisdictional bar if “the person bringing the action is an
original source of the information.” § 3730(e)(4)(A). This lan-
guage is ambiguous with respect to the question of whether
the prospective relator must be a source for the government
or for the entity responsible for the public disclosure, an
ambiguity resolved by Wang in favor of the latter interpreta-
tion. See Wang, 975 F.2d at 1418. This language is not ambig-
uous, however, with respect to the question whether the
statute requires that the government be notified prior to public
disclosure. In light of Wang, subsection (A) states an excep-
tion to the public disclosure bar if the person who brings the
action is an original source for the public disclosure, a con-
UNITED STATES v. JOHNSON CONTROLS, INC. 9141
cept then defined, in part, in subsection (B) by the require-
ment that information be provided to the government before
suit is filed, not before the public disclosure that triggered the
need for an exception in the first place.
In Findley, the D.C. Circuit noted that “the government
notice part of the ‘original source’ exception may appear
extraneous in light of the statute’s filing provisions, which
require cases to be filed under seal for a period of at least
sixty days and served only on the government.” 105 F.3d at
690 (referring to provisions in § 3730(e)(4)(B) and
3730(b)(2), respectively). The court went on to observe that
the government notification provision in § 3730(e)(4)(B) is
not superfluous if it is interpreted to require notice to the gov-
ernment prior to any public disclosure. See id. at 690-91. On
the basis of that and other considerations — but with no basis
in the language of the pertinent sections — the court held that
§ 3730(e)(4) requires that an individual notify the government
prior to any public disclosure to qualify as an original source.
Id.
We are far from sure that even the redundancy Findley sup-
poses would justify inserting an additional requirement at
odds with the plain language of § 3730(e)(4)(B). See Morton
v. United Parcel Serv., Inc., 272 F.3d 1249, 1257 n.8 (9th Cir.
2001) (concluding that, “[d]espite the general principle
against construing a statute so as to contain redundancies,”
two statutory provisions in the Americans with Disabilities
Act were “intended to encompass the same basic require-
ments”).
In any event, we disagree with Findley’s predicate assump-
tion that the government notice provision in § 3730(e)(4)(B)
is redundant with the filing and notice provisions in
§ 3730(b). The statutory provisions are different in a number
of respects, indicating that they serve different functions. Sec-
tion 3730(e)(4)(B)’s notice provisions apply only to qui tam
plaintiffs seeking to avoid the “public disclosure” bar by
9142 UNITED STATES v. JOHNSON CONTROLS, INC.
establishing that they are “original sources,” whereas
§ 3730(b)’s notice provisions apply to all qui tam plaintiffs.
Moreover, the provisions differ with respect to what must be
turned over to the government: Section 3730(e)(4)(B) requires
individuals to provide the government with “information”
only, while § 3730(b) requires individuals to provide the gov-
ernment with much more — “[a] copy of the complaint and
written disclosure of substantially all material evidence and
information the person possesses.” § 3730(b)(2). At the same
time, the provisions vary in that § 3730(e)(4)(B) incorporates
a requirement that information be provided to the government
“voluntarily,” a requirement wholly absent from § 3730(b).
See United States ex rel. Fine v. Chevron, U.S.A., Inc., 72
F.3d 740, 744 (9th Cir. 1995) (en banc) (holding that disclo-
sures of a government auditor who “was employed specifi-
cally to disclose fraud” were “nonvoluntary” and that the
auditor was thus not an “original source”). Finally, submis-
sions to the government at the same time the lawsuit is filed
under seal under § 3730(b) protect the relator’s right to a
bounty, see 31 U.S.C. § 3730(d), while there is no such
explicit protection in the statute for pre-filing submissions
under § 3730(e)(4)(B).
We therefore do not find the D.C. Circuit’s redundancy
point helpful in construing § 3730(e)(4)(B). The statutory lan-
guage is simply not ambiguous with respect to JCI’s proposed
requirement.
Even if we were to conclude otherwise and “look not only
to the particular statutory language, but to the design of the
statute as a whole and to its object and policy,” Crandon v.
United States, 494 U.S. 152, 158 (1990), JCI’s reading could
not be sustained. The proposed requirement does not advance
the object and policy of the statute as a whole, or of the public
disclosure provision in particular.
The purposes of the FCA as reflected in the Act’s history
UNITED STATES v. JOHNSON CONTROLS, INC. 9143
have been well documented elsewhere.5 See, e.g., Allina, 276
F.3d at 1041-42; McKenzie, 123 F.3d at 938; Findley, 105
F.3d at 679-81; Wang, 975 F.2d at 1418-19. Suffice it to say
that, in enacting the current version of the qui tam provisions
in 1986, Congress attempted to strike a delicate balance
between several competing objectives. First and foremost,
Congress meant “to encourage private individuals who are
aware of fraud being perpetrated against the Government to
bring such information forward.” H.R. Rep. No. 99-660, at 23
(1986). At the same time, Congress sought to discourage
“parasitic” suits brought by individuals with no information of
5
We summarize the key points in the history of the FCA: The original
FCA was enacted in 1863, Act of March 2, 1863, ch. 67, § 4, 12 Stat. 696,
698 (current version at 31 U.S.C. §§ 3729-3733), to combat fraud by Civil
War defense contractors. S. REP. NO. 99-345, at 8 (1986), as reprinted in
1986 U.S.C.C.A.N. 5266, 5273. The Act contained a qui tam provision
allowing any person to sue as a relator representing the government’s
interests. Id. at 10. In United States ex rel. Marcus v. Hess, the Supreme
Court held that even individuals who had done nothing more than copy
allegations from a criminal indictment could be qui tam relators. 317 U.S.
537, 545-46 (1943).
In response to Hess, Congress amended the Act in 1943, removing
jurisdiction over qui tam actions “whenever it shall be made to appear that
such suit was based upon evidence or information in the possession of the
United States, or any agency, officer or employee thereof, at the time such
suit was brought.” 31 U.S.C. § 232(C) (1946) (amended 1986). This provi-
sion was meant to “curtail parasitical suits in which the informer ‘rendered
no service’ to the government.” Allina, 276 F.3d at 1041 (quoting 89
CONG. REC. 10844, 10846 (1943)). Courts interpreted this jurisdictional
bar restrictively. For example, in 1984, the Seventh Circuit held that a
state that had disclosed Medicaid fraud to the government, as it was
required to do by statute, was jurisdictionally barred from being a qui tam
relator. See United States ex rel. Wisconsin v. Dean, 729 F.2d 1100, 1103-
07 (7th Cir. 1984).
In 1986, Congress again amended the False Claims Act, in part to “cor-
rect[ ] restrictive [court] interpretations” that “tend to thwart the effective-
ness of the statute,” S. REP. NO. 99-345, at 4, and to “encourage more
private enforcement suits,” id. at 23-24. The 1986 amendments included
the public disclosure and original source provisions that now appear at 31
U.S.C. § 3730(e)(4).
9144 UNITED STATES v. JOHNSON CONTROLS, INC.
their own to contribute to the suit. See Seal 1 v. Seal A, 255
F.3d 1154, 1158 (9th Cir. 2001). Congress also meant to add
to the corps of enforcers of the law — “to encourage more
private enforcement suits,” S. REP. NO. 99-345, at 23-24
(1986), as reprinted in 1986 U.S.C.C.A.N. 5266, 5288-89 —
while “ensuring that the United States’ rights are not preju-
diced by the relator’s conducting of the action,” United States
ex rel. Green v. Northrop Corp., 59 F.3d 953, 964 (9th Cir.
1995). JCI’s proposed requirement does not further these
carefully balanced congressional goals.
As to the first goal, encouraging citizens to come forward
with information concerning fraud on the federal government,
the Sixth Circuit contends that JCI’s proposed rule, requiring
notification to the government prior to any public disclosure
to qualify as an original source, “is most likely to bring
‘wrongdoing to light,’ ” because the proposed rule “discour-
ages persons with relevant information from remaining silent
and encourages them to report such information at the earliest
possible time.” McKenzie, 123 F.3d at 943 (internal quotation
marks omitted). This rationale is not persuasive in our circuit,
given our rulings.
Biddle held that a qui tam action is “based upon” a public
disclosure within the meaning of the statute if the allegations
or transactions of the complaint have been publicly disclosed
and the qui tam action follows, even if the qui tam action alle-
gations were not “derived from” the public disclosure. 161
F.3d at 540. Thus, under Biddle, an individual with informa-
tion about fraud against the government will be barred from
bringing suit if there has been a public disclosure of the alle-
gations or transactions in her complaint unless she is an “orig-
inal source,” even if she found out about the allegations in her
complaint not from the public disclosure but from another
source (such as an informant). Such an individual therefore
has the incentive to either (1) file a qui tam complaint before
the pertinent information is publicly disclosed, or (2) ensure
that she qualifies as an “original source.” Because Wang, in
UNITED STATES v. JOHNSON CONTROLS, INC. 9145
turn, holds that one must have had a hand in the public disclo-
sure to qualify as an “original source,” an individual with per-
tinent information can ensure she qualifies as an “original
source” under the statute only by playing a role in the public
disclosure at issue. Thus, Wang and Biddle operate together
to assure that individuals who have direct information about
fraud against the government have a strong incentive to come
forward with that information early, either by (1) filing a qui
tam complaint, or (2) playing a role in publicly disclosing the
information so as to ensure they are “original sources.” Either
way, Wang and Biddle provide potential relators with an
incentive to come forward with information rather than keep-
ing it secret until the last possible minute. JCI’s proposed
requirement does not create an incentive for individuals to
come forward with information earlier than do the Wang and
Biddle rules, taken together. That requirement therefore does
not serve the first goal of the statute.
As to the second goal, discouraging parasitic lawsuits, the
Sixth Circuit maintains that the requirement that the prospec-
tive relator report information to the government prior to the
public disclosure effectuates Congress’s goal of protecting
only the “true whistleblower,” not individuals bringing “para-
sitic qui tam actions.” McKenzie, 123 F.3d at 943 (internal
quotation marks omitted). It is true that in the Sixth and D.C.
Circuits, given those circuits’ surrounding law, the proposed
requirement may help to some degree to serve this goal.
Those circuits permit relators to be “original sources” even if
they had nothing to do with the public disclosures. See id. at
943; Findley, 105 F.3d at 690. On this view of the connection
between an original source and the public disclosure, a
“source” that provides information to the government pri-
vately only after there has been public disclosure by someone
else has performed little useful information-providing func-
tion, because the government could get the same information
from the public source. In contrast, we (along with the Second
Circuit, see United States ex rel. Dick v. Long Island Lighting
Co., 912 F.2d 13, 16 (2d Cir. 1990)), have interpreted the stat-
9146 UNITED STATES v. JOHNSON CONTROLS, INC.
ute to require that prospective relators play a role in the public
disclosure at issue if they are to partake of the original source
exception. Wang, 975 F.2d at 1418. Under our interpretation
of that exception, then, relators must provide a useful
information-providing role or they cannot file suit. JCI’s pro-
posed requirement therefore does nothing to further the pur-
pose of weeding out parasitic lawsuits, as Wang already
accomplishes that goal.
Finally, JCI’s proposed requirement also does not further
the third goal of the statute, encouraging more private
enforcement suits while ensuring that the government’s rights
are not prejudiced by the manner in which relators conduct
those suits. The proposed requirement discourages qui tam
suits, as it establishes yet another roadblock to obtaining juris-
diction for such suits. At the same time, it provides no protec-
tion of the government’s rights concerning qui tam suits not
already provided by (1) § 3730(e)(4)(B), which requires that
an individual provide information to the government prior to
filing a qui tam complaint to qualify as an “original source,”
and (2) § 3730(b), which provides that qui tam complaints
must be filed under seal and served solely on the government
so as to provide the government with an opportunity to deter-
mine whether to intervene and proceed with the action before
the defendant learns of the action, see § 3730(b)(2). In partic-
ular, the proposed requirement would not ensure against “tip
offs” by prospective qui tam plaintiffs to the targets of ongo-
ing government investigations. Cf. S. REP. NO. 99-345, at 24
(noting that § 3730(b) is motivated, in part, by a concern that
the filing of a qui tam action could “tip off” targets of ongoing
government criminal investigations). The proposed require-
ment provides no mechanism for requiring or inducing pro-
spective relators not to publicly disclose pertinent information
once they have provided information to the government, and
so does not preclude tip-offs to prospective defendants.
In short, given existing case law in our circuit, JCI’s pro-
posed requirement does nothing to further the purposes of the
UNITED STATES v. JOHNSON CONTROLS, INC. 9147
FCA. Instead, the requirement is contrary to those purposes,
as it precludes qui tam actions that are not parasitic in nature.
3.
The district court in this case attempted to respond to some
of these problems with the position advocated by JCI by
adopting a more limited approach. The district court held that
prospective relators must inform the government prior to pub-
lic disclosure if, but only if, the public disclosure is in the
form of a lawsuit filed by the prospective relators. This lim-
ited version of JCI’s proposed requirement exacerbates rather
than cures the problems with a non-literal interpretation of the
statute.
The district court maintained, first, that without such a
requirement, a prospective whistleblower could use the threat
of a qui tam action as leverage in private settlement negotia-
tions of a private lawsuit filed prior to giving information to
the federal government. The district court reasoned that if pro-
spective defendants were able to “buy” from prospective rela-
tors a promise not to bring a qui tam action, the government
would never learn about the fraud and thus may never recover
its losses. For other kinds of public disclosures — releases to
the media, for example — this consideration, suggested the
district court, does not obtain, so for those circumstances the
literal interpretation adopted by the Eighth Circuit is proper.
This reasoning in support of a special rule that applies only
when the “public disclosure” at issue occurs through the filing
of a lawsuit is flawed for several reasons. First and most
important, a special rule for disclosure through lawsuits has
absolutely no basis in the statutory language or structure. The
statute treats all forms of public disclosure equally. The spe-
cial problems the district court perceived with lawsuits as
opposed to other forms of public disclosure are related not to
the “disclosure” aspect of lawsuits — that a complaint is a
public document — but to their ultimate dispute-resolution
9148 UNITED STATES v. JOHNSON CONTROLS, INC.
function, a function that could be pursued through private
mediation or arbitration not giving rise to any public disclo-
sure.
Second, one of the premises underlying the district court’s
reasoning — that a prefiling agreement by a prospective rela-
tor not to bring a qui tam action, entered into without the gov-
ernment’s knowledge or consent, is enforceable — is false.
We so held in Green. See 59 F.3d at 969; see also United
States ex rel. Hall v. Teledyne Wah Chang Albany, 104 F.3d
230, 233 (9th Cir. 1997) (distinguishing Green and enforcing
such an agreement in a case in which the government was
aware of and had investigated the relevant allegations). Thus,
the district court’s approach does little to further the goal of
ensuring that prefiling releases do not squelch the flow of
information about fraud to the government, as Green and Hall
already serve this goal.
Third, the district court’s requirement does little to cure the
problem at which it is directed. Prospective relators could still
issue demand letters and settle prospective suits before filing
the suit that would constitute a public disclosure. Here, for
example, there is no reason Zaretsky or Yardley could not
have written to Johnson Controls threatening to bring the
original antitrust suit and pointing out that the suit, if filed,
could result in governmental knowledge and involvement. If
settlement ensued, the result would be greater secrecy, not
less, as the information underlying the suit would never have
seen the light of day. In contrast, once a predicate suit is filed,
the government could learn of the information on which it is
based — which is why it is considered a public disclosure.
[8] In sum, we agree with the Eighth Circuit’s conclusion
that it “would change the balance Congress struck if we were
to further restrict the class of those whose discoveries had
been made public but who were nevertheless permitted to pro-
ceed as relators.” Allina, 276 F.3d at 1051. We therefore hold
that the FCA does not require individuals to inform the gov-
UNITED STATES v. JOHNSON CONTROLS, INC. 9149
ernment prior to the public disclosure at issue to qualify as
“original sources.” We accordingly reverse the district court’s
grant of summary judgment to JCI on the FCA claim.
B.
[9] The California False Claims Act has a jurisdictional
public disclosure bar almost identical to the federal one,
except that it makes explicit the rule adopted by our circuit in
Wang.6 It states, in full:
(3)(A) No court shall have jurisdiction over an
action under this article based upon the public dis-
closure of allegations or transactions in a criminal,
civil, or administrative hearing, in an investigation,
report, hearing, or audit conducted by or at the
request of the Senate, Assembly, auditor, or govern-
ing body of a political subdivision, or by the news
media, unless the action is brought by the Attorney
General or the prosecuting authority of a political
subdivision, or the person bringing the action is an
original source of the information.
(B) For purposes of subparagraph (A), “original
source” means an individual who has direct and
independent knowledge of the information on which
the allegations are based, who voluntarily provided
the information to the state or political subdivision
before filing an action based on that information, and
whose information provided the basis or catalyst for
the investigation, hearing, audit, or report that led to
the public disclosure as described in subparagraph
(A).
6
The California adoption of the rule that the original source must be the
source of any public disclosure pre-dated Wang, as California adopted its
version of that rule in 1987. See Act of Sept. 30, 1987, ch. 1420, § 1, 1987
Cal. Stat. 5237, 5242 (codified at CAL. GOV’T CODE § 12652(d)(3)(B)).
9150 UNITED STATES v. JOHNSON CONTROLS, INC.
CAL. GOV’T CODE § 12652(d)(3).
JCI’s argument concerning why there is no jurisdiction
under the CFCA is identical to its parallel argument under the
FCA — that the CFCA requires that a prospective relator
inform relevant governmental authorities prior to public dis-
closure to qualify as an “original source.” Only one published
California case has had occasion to interpret the “public dis-
closure” bar of the CFCA,7 City of Hawthorne ex rel. Wohlner
v. H&C Disposal Co., 109 Cal. App. 4th 1668, 1676-86 (Ct.
App. 2003), while two California cases have interpreted a
similar “public disclosure” bar under section 1871.7(h)(2) of
the California Insurance Code,8 see People ex rel. Monterey
Mushrooms, Inc. v. Thompson, 136 Cal. App. 4th 24, 32-34
(Ct. App. 2006); People ex rel. Allstate Ins. Co. v. Weitzman,
107 Cal. App. 4th 534, 545-66 (Ct. App. 2003). None of these
cases addressed whether an individual must inform the gov-
ernment prior to “public disclosure” to qualify as an “original
source.”
7
A case currently pending before the California Supreme Court involves
the public disclosure bar but not the original source provision. See State
ex rel. Harris v. PricewaterhouseCoopers LLP, 23 Cal. Rptr. 3d 529, 547-
49 (Ct. App. 2005), review granted, 28 Cal. Rptr. 3d 646 (2005); see also
Cal. R. Ct. 976(d) (stating that unless otherwise ordered, lower court opin-
ions are depublished when the California Supreme Court grants review).
8
California Insurance Code section 1871.7(h)(2) provides:
(A) No court shall have jurisdiction over an action under this
section based upon the public disclosure of allegations or transac-
tions in a criminal, civil, or administrative hearing in a legislative
or administrative 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.
(B) For purposes of this paragraph, “original source” means
an individual who has direct and independent knowledge of the
information on which the allegations are based and has voluntar-
ily provided the information to the district attorney or commis-
sioner before filing an action under this section which is based on
the information.
UNITED STATES v. JOHNSON CONTROLS, INC. 9151
Where the wording and objectives of a California statute
are similar to the wording and objectives of a federal statute,
California courts look to interpretations of the federal statute
for guidance in interpreting the state statute. See Richards v.
CH2M Hill, Inc., 26 Cal. 4th 798, 812 (2001); Allstate, 107
Cal. App. 4th at 563 (applying this principle to California
Insurance Code section 1871.7(h)(2) and 31 U.S.C.
§ 3730(e)(4)). Applying this precept, California courts inter-
preting the CFCA generally rely on FCA cases. See City of
Pomona v. Superior Court, 89 Cal. App. 4th 793, 802 (Ct.
App. 2001) (“Given the lack of California authority and the
very close similarity of [the CFCA] to [the FCA], it is appro-
priate to turn to federal cases for guidance in interpreting the
act.”); Wohlner, 109 Cal. App. 4th at 1677-86 (looking to fed-
eral cases in interpreting the CFCA, including the public dis-
closure provisions). Where, however, “there are varying
circuit approaches to a federal statute,” California courts need
not follow any one of those circuit approaches and instead
may take a “flexible” approach to interpreting a statute, taking
into consideration a number of other factors. Allstate, 107 Cal.
App. 4th at 563.
Here, the relevant language in the CFCA and the FCA —
as interpreted by us in Wang and the Second Circuit in Dick
— is materially identical. All requirements in § 3730(e)(4) of
the FCA are also in section 12652(d)(3) of the CFCA, and the
only requirement in the CFCA not explicit in the text of the
FCA — the requirement that for an individual to qualify as an
“original source,” that individual’s “information [must have]
provided the basis or catalyst for the investigation, hearing,
audit, or report that led to the public disclosure as described
in subparagraph (A),” CAL. GOV’T CODE § 12652(d)(3)(B) —
has been held implicit in the FCA by our circuit and the Sec-
ond Circuit, see Wang, 975 F.2d at 1418; Dick, 912 F.2d at
16. Also, the purposes of the California and federal statutes —
and, in particular, the purposes of the public disclosure bar
provisions of those statutes — are similar. See Wohlner, 109
Cal. App. 4th at 1676 (“California’s False Claims Act was
9152 UNITED STATES v. JOHNSON CONTROLS, INC.
enacted in 1987 and is patterned largely on similar federal
legislation. (31 U.S.C. § 3729 et seq.).”); id. at 1683 (“The
public disclosure jurisdictional bar [in the CFCA] . . . is
designed to bar parasitic or opportunistic qui tam actions by
persons simply taking advantage of public information with-
out contributing to or assisting in the exposure of the fraud.”);
Allstate, 107 Cal. App. 4th at 566 (“Like the federal False
Claims Act, the [CFCA] was intended to limit the availability
of qui tam actions so as to protect against ‘opportunistic’ or
‘parasitic’ actions.”).
Because of the similarity between the relevant wording and
purposes of the CFCA and the FCA, as interpreted by our cir-
cuit and the Second Circuit, California courts would look to
pertinent federal precedent in the Second and Ninth Circuits
in interpreting the CFCA. Although there is a circuit split on
whether the federal statute requires that individuals inform the
government prior to making the “public disclosure” at issue,
there is not a circuit split on whether the federal statute so
requires in those circuits that recognize under the FCA the
requirement that the CFCA explicitly states — that individu-
als play a role in the “public disclosure” at issue to qualify as
“original sources.” The question whether these statutes
require notification to the government prior to public disclo-
sure is, as established earlier, closely linked to the question
whether these statutes require that individuals have a hand in
the public disclosure. Because the CFCA incorporates the lat-
ter requirement, we expect that California courts would look
to federal precedent from only those circuits recognizing that
requirement in determining whether the former requirement
obtains under the CFCA.
[10] In any case, the same reasons we cited to justify our
holding that the federal statute does not incorporate JCI’s pro-
posed requirement apply with at least equal force to the Cali-
fornia statute. Indeed, there are two respects in which the
reasons we cited earlier apply with greater cogency in the
context of interpreting the CFCA. First, the fact that all
UNITED STATES v. JOHNSON CONTROLS, INC. 9153
requirements under the CFCA heretofore recognized, includ-
ing the requirement that individuals must have had a hand in
the “public disclosure” at issue to qualify as “original
sources,” are explicit in the CFCA suggests that we should be
especially loath to read into the CFCA implicit requirements.
Second, California courts have stated that “the public disclo-
sure bar should be applied only as necessary to preclude para-
sitic or opportunistic actions, but not so broadly as to
undermine the Legislature’s intent that relators assist in the
prevention, identification, investigation, and prosecution of
false claims.” Wohlner, 109 Cal. App. 4th at 1683. Reading
JCI’s proposed requirement into the CFCA is not “necessary
to preclude parasitic or opportunistic actions,” suggesting that
California courts would not recognize such a requirement.
[11] For all of the foregoing reasons, we hold that there is
no requirement under the CFCA that individuals inform the
government prior to the “public disclosure” at issue to qualify
as “original sources.” We therefore reverse the district court’s
contrary holding.9
C.
JCI points out that, even though the district court’s grant of
summary judgment relied only on jurisdictional grounds, we
may affirm the district court’s grant of summary judgment on
any ground supported in the record. See Summers v. Teichert
& Son, Inc., 127 F.3d 1150, 1152 (9th Cir. 1997). JCI con-
tends that “[a] separate basis for affirming the district court’s
decision lies in the fact that Relators’ substantive allegations
cannot support a claim under the FCA” because they are
“based on an alleged Rule of Reason antitrust violation, a sub-
9
Because of our holding, we do not reach Relators’ argument that even
if the California statute encompasses JCI’s proposed requirement, they sat-
isfied that requirement by informing officials at the University of Califor-
nia, Riverside about Johnson Controls’ “bid rigging” prior to filing the
civil complaint in state court.
9154 UNITED STATES v. JOHNSON CONTROLS, INC.
jective, fact specific analysis that cannot support False Claims
Act liability.”
We decline JCI’s invitation to affirm on this alternate
ground. We have noted that while “we may affirm the district
court’s judgment on a different ground, we need not do so,”
and “we usually do not.” Broudo v. Dura Pharms., Inc., 339
F.3d 933, 941 (9th Cir. 2003) (emphasis added), rev’d on
other grounds, 544 U.S. 336 (2005).
The question of whether, and if so when, bid rigging
amounts to an FCA violation is complex, nuanced, and fact-
dependent. See Harrison v. Westinghouse Savannah River
Co., 176 F.3d 776, 787 & n.11, 788 (4th Cir. 1999) (observing
that FCA cases involving collusive bidding can be brought
under “false certification” or “fraud-in-the-inducement” theo-
ries and making clear through its description of these theories
that such claims are complex and fact-dependent). Here, the
summary judgment motion was brought well before the
scheduled close of discovery dates. The parties dispute
whether additional discovery is needed before the court can
rule on the summary judgment motion. Because of its holding
on the original source question, the district court has not had
an opportunity to rule on the discovery question.
[12] District courts have wide latitude in controlling dis-
covery, and decisions not to permit further discovery in
response to motions made pursuant to Federal Rule of Civil
Procedure 56(f)10 are reviewed for abuse of discretion. United
10
Federal Rule of Civil Procedure 56(f) provides:
Should it appear from the affidavits of a party opposing the
motion [for summary judgment] that the party cannot for reasons
stated present by affidavit facts essential to justify the party’s
opposition, the court may refuse the application for judgment or
may order a continuance to permit affidavits to be obtained or
depositions to be taken or discovery to be had or may make such
other order as is just.
UNITED STATES v. JOHNSON CONTROLS, INC. 9155
States ex rel. Aflatooni v. Kitsap Physicians Serv., 314 F.3d
995, 1000 (9th Cir. 2002). Because Relators’ FCA claims are
complex and fact-dependent and because the district court has
not ruled on Relators’ request for additional discovery and has
broad discretion to decide that issue, we decline to affirm the
district court’s decision on this alternate ground on the current
record.
[13] We therefore reverse the district court’s grant of sum-
mary judgment for JCI on both the FCA and CFCA claims
and remand for proceedings consistent with this opinion.
REVERSED and REMANDED.