United States Ex Rel. Long v. SCS Business & Technical Institute, Inc. , 173 F.3d 870 ( 1999 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued January 14, 1999 Decided April 2, 1999
No. 98-5133
United States of America, ex rel. Ronald E. Long,
Appellee/Cross-Appellant,
v.
SCS Business & Technical Institute, Inc., et al.,
Appellees
State of New York,
Appellant/Cross-Appellee
Attorney General of the United States,
Intervenor
Consolidated with
98-5149 & 98-5150
----------
Appeals from the United States District Court
for the District of Columbia
(92cv02092)
Howard L. Zwickel, Assistant Attorney General, State of
New York, argued the cause for appellant/cross-appellee.
With him on the briefs was Peter H. Schiff, Deputy Solicitor
General.
Ronald A. Shems, Assistant Attorney General, State of
Vermont, argued the cause for amici curiae State of Ver-
mont, et al. With him on the brief was William H. Sorrell,
Attorney General.
Douglas N. Letter, Appellate Litigation Counsel, United
States Department of Justice, argued the cause for United
States as intervenor. With him on the briefs were Frank W.
Hunger, Assistant Attorney General, and Wilma A. Lewis,
United States Attorney. Richard L. Cys entered an appear-
ance.
Stuart F. Pierson argued the cause and filed the briefs for
appellee/cross-appellant.
Jill A. Dunn was on the notice of joinder in brief for
appellant Joseph P. Frey.
Mark B. Rotenberg was on the brief for amicus curiae The
Regents of the University of Minnesota.
Before: Wald, Silberman, and Sentelle, Circuit Judges.
Opinion for the Court filed by Circuit Judge Silberman.
Silberman, Circuit Judge: The question presented in this
appeal is whether states are defendant persons under the
False Claims Act. Contrary to the decisions of the Second
and Eighth Circuits, see United States ex rel. Stevens v.
Vermont Agency of Natural Resources, 162 F.3d 195 (2d Cir.
1998); United States ex rel. Zissler v. Regents of the Univ. of
Minn., 154 F.3d 870 (8th Cir. 1998), we hold that they are
not.
I.
Ronald Long was the Coordinator of Investigations and
Audit for the Bureau of Proprietary School Supervision of the
New York State Department of Education, the state agency
that regulates proprietary schools. In 1989, he conducted an
investigation of SCS Business and Technical Institute, which
operates five business and technical schools in New York
City, and discovered that SCS allegedly had made false and
fraudulent claims to the federal government in return for
federal funding for students attending SCS schools under
tuition assistance programs. He also determined, according
to his complaint subsequently filed in district court, that
Joseph P. Frey, his supervisor at the Bureau, and other
officials in the State Department of Education, knew about
SCS' fraudulent claims and conspired with SCS to conceal the
fraud in order to secure further federal funding for SCS.
They did so because, after a 1990 change in New York State
law, the Bureau's funding depended in substantial part on
tuition assessments and fines that SCS paid to the Bureau.
Long's theory was that since the Bureau received a share of
the federal funds that SCS fraudulently obtained from the
United States, the Bureau had every incentive to see that
fraud continue. He claims that after he reported the results
of his investigation to state and federal authorities, Frey and
other state officials took actions to limit and subvert his
investigation.
Long was taken off the investigation and then fired in 1992,
shortly after SCS settled administrative charges brought
against one of SCS' schools by the state education depart-
ment. According to him, the settlement agreement, which
did not benefit the United States in any way and grossly
understated the extent of SCS' fraudulent practices, was a
sweetheart deal that was but another instance of the state's
conspiracy with SCS to conceal and perpetuate SCS' fraud--a
conspiracy that he alleges continued until SCS filed for
bankruptcy in 1995. He alleges that after the settlement,
New York ignored evidence of SCS' continuing fraud and
falsely represented to the United States that SCS' fraud had
ceased and that it was actively monitoring SCS.
Long filed a complaint in the district court against Frey,
other state officials, the State of New York, SCS, and various
SCS officials. He brought his case as a qui tam relator
under the False Claims Act, 31 U.S.C. ss 3729 et seq. (1994),
suing in the name of the United States for the benefit of the
United States and himself. He contended that the state
defendants violated the Act by conspiring with SCS to have
false claims submitted to the United States and by causing
false claims to be submitted. The state defendants were also
alleged to have violated the whistle-blower provision of the
Act by harassing and wrongfully discharging Long, and to
have been unjustly enriched under state common law. The
United States (the government) subsequently intervened in
the case against the SCS defendants, but declined to inter-
vene against the state defendants. The state defendants
moved to dismiss the complaint on the grounds that states
are not defendant persons under the Act and that, even if
they were, the Eleventh Amendment to the United States
Constitution would bar the suit. It was also asserted that
Long's suit against the state defendants was barred by the
Act because the allegations of fraud had been publicly dis-
closed and because Long was not an "original source" of the
information.
The district court denied in part the state defendants'
motion to dismiss, concluding that states are defendant per-
sons under the Act and that the Eleventh Amendment does
not bar the suit. See United States ex rel. Long v. SCS Bus.
& Technical Inst., 999 F. Supp. 78 (D.D.C. 1998).1 The state
defendants filed an interlocutory appeal challenging the dis-
trict court's rejection of their Eleventh Amendment defense,
over which we have jurisdiction under 28 U.S.C. s 1291 (1994)
and the collateral order doctrine. See Puerto Rico Aqueduct
__________
1 The district court granted the motion to dismiss Long's whistle-
blower and unjust enrichment claims, the former because the
Eleventh Amendment bars private suits brought against the state
(although it does not bar Long's claim for prospective relief against
Frey, a state official), and the latter because Long has no standing
to assert the government's claim of unjust enrichment under state
common law. See Long, 999 F. Supp. at 91-93.
& Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139, 144-45
(1993). We exercise pendent appellate jurisdiction over the
"inextricably intertwined" statutory question, Gilda Marx,
Inc. v. Wildwood Exercise, Inc., 85 F.3d 675, 679 (D.C. Cir.
1996) (quoting Swint v. Chambers County Comm'n, 514 U.S.
35, 51 (1995)), of whether states are defendant persons under
the Act.2 Thirty-six states join as amici curiae in support of
appellant New York's statutory and Eleventh Amendment
arguments, and appellee Long, the relator, is joined by the
government as intervenor defending the constitutionality of
the Act.
II.
To persuade us to uphold the decision below, appellees
Long and the government must demonstrate that the district
court correctly interpreted the term "person" (liable for
__________
2 The district court also concluded that Long's suit was not
barred by the public disclosure and original source provisions of the
Act. See Long, 999 F. Supp. at 87-89. Although the parties
challenge aspects of those rulings on appeal, we need not address
them further given our resolution of the case in favor of New York.
We also decline to exercise pendent appellate jurisdiction over the
statutory whistle-blower and constitutional claims against appellant
Frey in his individual capacity. Although these claims are not
foreclosed by anything in our opinion, they are not in any way
related to the Eleventh Amendment and statutory construction
questions that we decide today. And although an inextricable
relation between claims is not a necessary condition for pendent
appellate jurisdiction, see Jungquist v. Sheikh Sultan Bin Khalifa
Al Nahyan, 115 F.3d 1020, 1027 (D.C. Cir. 1997), and efficiency
interests might counsel in favor of resolving these claims now, we
could not possibly terminate the entire case against Frey--even if
we agreed with him--because Long also asserted s 1983 claims
against him that the district court did not dismiss and from which
Frey does not now seek to appeal. That, coupled with the other-
wise unappealable nature of the order as to Frey, a separate
appellant, see Gilda Marx, 85 F.3d at 678, and the presence of
factual disputes in the briefs on the "original source" and "public
disclosure" questions, see id. at 679, leads us to reject Frey's
request that we resolve these claims now.
making a false claim) in s 3729(a) of the False Claims Act to
include states.3 In that respect, they have no little burden
because the statute does not define the term "person" and, as
the Supreme Court has remarked before, "in common usage,
the term 'person' does not include the sovereign, [and] stat-
utes employing the [word] are ordinarily construed to exclude
it." Will v. Michigan Dep't of State Police, 491 U.S. 58, 64
(1989) (quoting Wilson v. Omaha Indian Tribe, 442 U.S. 653,
667 (1979) (quoting United States v. Cooper Corp., 312 U.S.
600, 604 (1941))) (alteration in original); see also, e.g., Georgia
v. Evans, 316 U.S. 159, 161-62 (1942).4
This "often-expressed understanding," Will, 491 U.S. at 64,
is not a "hard and fast rule of exclusion," Wilson, 442 U.S. at
667 (quoting Cooper, 312 U.S. at 604-05), and depends in
important part on the "context, the subject matter, legislative
history, and executive interpretation," id.--which sounds like
rather garden variety statutory interpretation. But if the
Will-Wilson rule has any meaning at all, it must create at
minimum a default rule; states are excluded from the term
person absent an affirmative contrary showing. See Interna-
__________
3 The statute provides, in relevant part:
(a) Liability for certain acts. Any person who--
...
(2) knowingly makes, uses, or causes to be made or used, a
false record or statement to get a false or fraudulent claim paid
or approved by the Government;
(3) conspires to defraud the Government by getting a false
claim allowed or paid ...
is liable to the United States Government....
31 U.S.C. s 3729 (1994).
4 As appellees observe, the Eighth Circuit rejected application of
this rule in interpreting the False Claims Act on the ground that
the presumption of sovereign exclusion applies only to the enacting
sovereign. See Zissler, 154 F.3d at 874. However, the Court in
Will applied this rule even though the enacting sovereign (the
United States) was different from the state sovereigns excluded
from the term person, see Will, 491 U.S. at 64, implicitly rejecting
the Eighth Circuit's position as it was then articulated in Justice
Brennan's dissent, see id. at 73 (Brennan, J., dissenting).
tional Primate Protection League v. Administrators of Tu-
lane Educ. Fund, 500 U.S. 72, 83 (1991) (noting that the
"conventional reading" of person to exclude states may be
"disregarded" if there is an affirmative showing of Congress'
intent to include them). This interpretive principle, the Su-
preme Court tells us, is "particularly applicable" where, as
here, "it is claimed that Congress has subjected the states to
liability to which they had not been subject before." Will, 491
U.S. at 64; see also Wilson, 442 U.S. at 667. We think,
therefore, that the district court had it backwards when it
concluded that it found "no indication that Congress sought to
create an exception for state actors to perpetrate fraud upon
the federal government." Long, 999 F. Supp. at 85.5
Our review of the "legislative environment," Evans, 316
U.S. at 161, leads us to doubt appellees have met their
burden. As we noted, neither the Act as currently written
nor as originally passed in 1863 defines the term person.
Indeed, the original Act distinguished for punishment pur-
poses between fraudulent acts committed by "any person in
the land or naval forces of the United States," Act of March 2,
1863, 37th Cong., 3d Sess., ch. 67, s 1, 12 Stat. 696, and "any
person not in the military or naval forces of the United
States," id. at s 3, 12 Stat. 698. Since states would not have
been thought to fall within either classification, that Act can
hardly be said to supply facially the requisite affirmative
showing that the Will-Wilson default rule requires.6
__________
5 In reaching this conclusion, the district court was guided by its
assumption that the "clear statement" rule of Will, 491 U.S. at 65,
did not apply--an issue which we take up below. But the district
court incorrectly equated Will's "clear statement" rule with the
traditional rule presuming that the term person does not include
states. Compare Will, 491 U.S. at 65 (clear statement rule), with
id. at 64 (default rule that person does not include states). Even if
the former rule were not implicated here, the latter rule--which all
parties concede applies-dictates a presumption opposite to the one
the district court applied.
6 The Second Circuit explained this problem away by reasoning
that the Congress' undeniable intent to include military contractors
in the Act refuted any attempt to read "persons not in the military"
Appellees nevertheless invoke the broad purposes and leg-
islative history of the Civil War statute. We think that is not
helpful because, as the Supreme Court has said, Congress'
primary concern at the time--admittedly not its exclusive
one--was to put an end to "frauds perpetrated by large
[military] contractors during the Civil War." United States v.
Bornstein, 423 U.S. 303, 309 (1976); see United States ex rel.
Graber v. City of New York, 8 F. Supp. 2d 343, 352 (S.D.N.Y.
1998).7 Appellees point to the Supreme Court's statement
that Congress sought to "reach all types of fraud, without
qualification, that might result in financial loss to the Govern-
ment." United States v. Neifert-White Co., 390 U.S. 228, 232
(1968) (holding that the term "claim" was not limited to claims
submitted for payments due and owing from the government,
but included claims for favorable action by the government
upon applications for loans). But we think that description is
too general--it was also made in an entirely different con-
text--to answer the serious question whether states were
made potential defendants under the Act. (According to
appellees' reasoning, foreign governments that entered into
commercial dealings with the United States would also be
potential defendants.) Similarly unpersuasive is the policy
proposition put forward by the Eighth Circuit, see Zissler,
154 F.3d at 874, that a truly effective anti-fraud statute would
subject states to liability since states receive substantial
amounts of money from the federal government. See also
John T. Boese, Civil False Claims and Qui Tam Actions, at 2-
__________
as impliedly referring only to natural, as opposed to corporate,
persons. See Stevens, 162 F.3d at 205-06. The default rule of
statutory construction governing corporations as "persons," howev-
er, is precisely the opposite of the default rule that we must apply
in this case. See Wilson, 442 U.S. at 666 (stating that the "word
'person' for purposes of statutory construction, unless the context
indicates to the contrary, is normally construed to include" corpora-
tions). Since we must look for an affirmative intent to include
states, that contractors, under the default rule for corporations,
could have been thought to be "person[s] not in the military" is
hardly supportive of appellees' case.
7 Of course, Stevens, not Graber, is Second Circuit law.
91 (1993) (stating that states can be defendant persons be-
cause they are "major recipients of federal funds"). A court
looks to legislative purpose under the default rule in order to
locate a congressional intent "to bring state or nation within
the scope of the law," Cooper, 312 U.S. at 605, not to "engraft
on a statute additions which [the court] think[s] the legisla-
ture logically might or should have made," id. Even if one
assumes that states commit a good deal of fraud against the
federal government, it cannot seriously be argued that the
very purpose of the Act would be thwarted if states were not
liable under the Act. Compare California v. United States,
320 U.S. 577, 585 (1944).8
That takes us to the legislative history. Appellees point us
first to an 1862 House Committee Report that, in discussing
various frauds committed during the Civil War, referred to
certain state officials that had used war contracts for personal
profit. See H.R. Rep. No. 2, 37th Cong., 2d Sess., at xxxviii-
xxxix (1862). But the report specifically stated that these
examples of fraud were not committed against the United
States government. See id. at xxxviii. So the prior report is
a rather tenuous link to the Act Congress passed one year
later. But see Stevens, 162 F.3d at 206 (concluding that "it is
difficult to suppose" that Congress "had forgotten the results
of this extensive investigation" when it passed the False
Claims Act) (emphasis added). Even if there were a stronger
tie, the Supreme Court has held that legislative history
__________
8 In Zissler, 154 F.3d at 874, the Eighth Circuit relied on United
States v. California, 297 U.S. 175, 186 (1936), for the proposition
that it would be a mistake to exclude the states from an "act of
Congress, all-embracing in scope and national in its purpose, which
is as capable of being obstructed by state as by individual action,"
id. But the Supreme Court made that statement only after it had
"fairly ... inferred" that the purpose of the Federal Safety Appli-
ance Act, albeit implicit, was to subject state-run railroads to
liability. See id. If the mere use of the term person in a broad
statute with national purposes, which states were equally capable of
violating, were sufficient to bring the states within the statute's
scope, the interpretive rule presuming the opposite would be largely
ineffectual, if not wholly eviscerated.
indicating an intent to impose liability on state officials is not
evidence of an intent to subject the states themselves to
liability. See Will, 491 U.S. at 68-69. The bottom line is that
appellees have not pointed to anything in the legislative
history of the 1863 Act, or in the events leading up to it,
indicating that Congress actually contemplated imposing lia-
bility on the states.
Because the enacting Congress' intent is, to be charitable,
rather opaque, appellees turn our attention to the 1986
amendments to the False Claims Act and to a related statute
also passed in 1986. The provision of the 1986 amendments
that changed 31 U.S.C. s 3729(a) from imposing liability on
"[a] person not a member of an armed force of the United
States" to "[a]ny person" did not, however, substantively
expand the meaning of defendant persons under the Act. See
Stevens, 162 F.3d at 206-07 (holding that states are persons
but conceding that this change was not "envisioned as broad-
ening the class of persons who could be held liable under the
Act"); Graber, 8 F. Supp. 2d at 354-55. It is true that the
amendment expanded the types of individuals subject to the
Act to include those in the military. Still, that change tells
one nothing about the basic meaning of the term person, or
more specifically, whether Congress intended to include
states within that term. The legislative history accompany-
ing the amendment reveals Congress' extremely limited ob-
jective. See S. Rep. No. 345, 99th Cong., 2d Sess., at 17-18
(1986), reprinted in U.S.C.C.A.N. 5266, 5282-83 (explaining
that the alteration of s 3729(a) was intended to provide for
monetary recovery against persons in the military and that,
prior to 1986, a court martial was the only available remedy).9
It is understandable, therefore, why appellees do not actually
claim that states were made defendant persons by virtue of
__________
9 The Eighth Circuit thought that this amendment more broadly
"evidenced consideration of whom to hold liable" under the amend-
ed Act. Zissler, 154 F.3d at 874. But there is nothing in the text
of the statute or in any of the legislative history indicating that
Congress' consideration of "whom to hold liable" extended beyond
its intent, expressed in the statute, to bring military persons within
the scope of the Act.
the 1986 amendment to s 3729(a). Instead, their argument is
that states have been defendant persons all along; various
provisions added by the 1986 Congress--which we discuss
below--simply make that clear. In other words, appellees,
by relying on these recent amendments, seek to illuminate
the 1863 Congress' "original intent." We are rather dubious
about such an approach. As the Supreme Court has ob-
served, such subsequent provisions are really "beside the
point" because they do not "reflect any direct focus by
Congress upon the meaning of the earlier enacted provi-
sions." Almendarez-Torres v. United States, 118 S. Ct. 1219,
1227 (1998); Atkinson v. Inter-American Dev. Bank, 156
F.3d 1335, 1342 (D.C. Cir. 1998).
Be that as it may, we are not persuaded that these added
provisions can bear the weight appellees would place on them.
Appellees argue that Congress' decision to define "person" to
include states in the Civil Investigative Demand section of the
Act, see 31 U.S.C. s 3733(1)(4) (1994), indicates (some) Con-
gress' intent to include states as persons throughout the
whole Act,10 even though this provision applies only to the
Civil Investigative Demand section. See 31 U.S.C. s 3733(l )
(For purposes of this section ...) (emphasis added). Appel-
lees question why Congress would create a discovery tool to
be used to gain information possessed by states if the Act did
not already authorize false claims actions against them. See
also Stevens, 162 F.3d at 207. It seems rather obvious,
however, that states could provide useful evidence to establish
that private contractors, for example, made false claims. Nor
do appellees gain very much by pointing to the Program
Fraud Civil Remedies Act, 31 U.S.C. s 3801 et seq. (1994),
which Congress also passed in 1986 to create an alternative
administrative remedy to lawsuits under the False Claims
Act. Unlike the False Claims Act, this Act expressly defined
the persons subjected to administrative liability yet omitted
__________
10 The CID section permits the government to conduct discovery
of persons who "may be in possession, custody, or control of any
documentary material or information relevant to a false claims
investigation." 31 U.S.C. s 3733(a)(1).
states from the definition. See id. at s 3801(a)(6). Appellees
suggest that the exclusion of states from s 3801(a)(6) compels
an inference that s 3729(a) includes states. We do not agree
because the two provisions are not part of the same legisla-
tive enactment (not even the same century). See Halverson
v. Slater, 129 F.3d 180, 186 (D.C. Cir. 1997) (citing Russello v.
United States, 464 U.S. 16, 23 (1983)). We share appellant's
view, moreover, that, since both acts proscribe essentially the
same conduct, compare 31 U.S.C. s 3802(a)(1)-(2) with 31
U.S.C. s 3729(a), it would have been quite bizarre for Con-
gress to exempt states from administrative liability if it had
thought that states already were subject to the more onerous
False Claims Act liability of treble damages and penalties.
In sum, we are inclined to view the omission of states from
the definition of person in the administrative act, to the
extent it is relevant at all, as more supportive of New York's
argument.
Indeed, appellant and its amici, turning the blade, point
out that the 1986 amendments, which increased liability from
double to treble damages and increased the civil penalty, see
31 U.S.C. s 3729(a), created a form of punitive damages that
would be palpably inconsistent with state liability. Congress
is not thought to impose punitive damages on public entities
lightly. Imposition of such a penalty has been held to be
inconsistent with public policy since it gives the plaintiff a
windfall at the expense of the blameless or unknowing tax-
payers who must foot the bill for the government's transgres-
sions. See City of Newport v. Fact Concerts, Inc., 453 U.S.
247, 258-71 (1981). It is true that the Supreme Court has
already analyzed the Act in a related context and concluded
that the statute is remedial in nature, see, e.g., Bornstein, 423
U.S. at 314-15, but as appellant rightly points out, it did so
when the statute provided for double damages of which the
government received a one-half share, so that the statute at
that time truly did no more than make the government whole,
see Graber, 8 F. Supp. 2d at 349 n.3. Even assuming that it
is possible to characterize the increased liability imposed by
the 1986 amendments as remedial, that would only indicate at
best that in this respect the 1986 Congress legislated in such
a way that would have been consistent with state liability.
The 1863 Congress, by contrast, made clear as day that it
intended criminal, and a fortiori punitive, sanctions: the
original statute provided for criminal penalties, including
imprisonment for one to five years, for non-military persons
(the class of persons said to include states) convicted under
the Act, as well as fines. See s 3, 12 Stat. at 698. Those
provisions are surely inconsistent with the concept of state
liability.
Appellees' last sortie into the background of the 1986
amendments uncovered a piece of legislative history that they
regard as the "smoking gun." They point to a Senate Report
issued at the time Congress amended certain provisions of
the Act that includes a section entitled "History of the False
Claims Act and Court Interpretations." See S. Rep. No. 345,
99th Cong., 2d Sess., at 8 (1986), reprinted in U.S.C.C.A.N.
5266, 5273. As part of what purported to be purely descrip-
tive history, see id. ("In its present form, the False Claims
Act.... "), the Report states:
The False Claims Act reaches all parties who may submit
false claims. The term "person" is used in its broad
sense to include partnerships, associations, and corpora-
tions ... as well as States and political subdivisions
thereof. Cf. Ohio v. Helvering, 292 U.S. 360, 370 (1934);
Georgia v. Evans, 316 U.S. 153, 161 (1942); Monell v.
Department of Social Services of the City of New York,
436 U.S. 658 (1978).
Id. (emphasis added) (footnote omitted).
According to appellees, the Report confirms that the Con-
gress of 1863, over a hundred years before, intended to
include states as defendant persons--an argument that two of
our sister circuits and the district court below accepted. See
Stevens, 162 F.3d at 206-07; Zissler, 154 F.3d at 874-75;
Long, 999 F. Supp. at 84-85. This portion of the Report, it
should be understood, is not linked with any of the substan-
tive amendments made by the 1986 Congress. It is instead a
legislative observation about what s 3729(a), enacted by an
earlier Congress, means. Courts sensibly accord such "post-
enactment legislative history," arguably an outright "contra-
diction in terms," Sullivan v. Finklestein, 496 U.S. 617, 631
(1990) (Scalia, J., concurring), only marginal, if any, value, see
Wright v. West, 505 U.S. 277, 295 n.9 (1992) ("[T]he views of a
subsequent Congress form a hazardous basis for inferring the
intent of an earlier one.") (quoting Consumer Product Safety
Comm'n v, GTE Sylvania, Inc., 447 U.S. 102, 117 (1980)
(quoting United States v. Price, 361 U.S. 304, 313 (1960))).11
Post-enactment legislative history--perhaps better referred
to as "legislative future"--becomes of absolutely no signifi-
cance when the subsequent Congress (or more precisely, a
committee of one House) takes on the role of a court and in
its reports asserts the meaning of a prior statute. See Pierce
v. Underwood, 487 U.S. 552, 566 (1988); In re North, 50 F.3d
42, 45-46 (D.C. Cir. 1995). The Senate Report actually was
more modest; it appeared only to describe the way in which
the Supreme Court had interpreted the Act. Still, its author
either did not read the cited cases very carefully, or perhaps
more likely, made an unforgivably misleading use of the "cf."
signal. None of the cases interpreted the term "person"
under the False Claims Act, and all three stand for the
unremarkable proposition that governmental entities can be
included in the term person when Congress so intends.12 In
__________
11 It is unclear what appellees think they add by pointing to a
1981 General Accounting Office Report that documented recent
instances of state officials defrauding the United States govern-
ment--of which the Senate apparently was aware when amending
the statute in 1986. See S. Rep. No. 345, 99th Cong., 2d Sess., at 2
& n.1 (1986) (citing GAO Report to Congress, Fraud in Government
Programs: How Extensive Is It? How Can It Be Controlled?
(1981)). Not only is evidence of an intent to impose liability on
state officials (which itself would be a tenuous inference from this
report) distinct from an intent to impose liability on the states
themselves, see Will, 491 U.S. at 68-69, but a report documenting
contemporary instances of state fraud could hardly be thought to
illuminate the intent of the enacting Congress in 1863.
12 The Report's resort to these inapposite cases is unsurprising
since, at the time of the 1986 amendments, only one decision
involved a qui tam suit against the state, and that decision held that
short, the Report is of no legal significance. Accord United
States ex rel Graber, 8 F. Supp.2d at 354-55.13
Nevertheless, appellees contend that we have asked the
wrong question in searching the legislative materials for
affirmative indications that Congress intended to include
states as defendant persons in s 3729(a). Instead, they
would have us start with the presumption that states are
defendant persons and look only for some indication that
Congress intended to exclude states. They justify this ap-
proach by arguing that states can be plaintiffs under
s 3730(b)(1) (providing that "[a] person may bring a civil
action for a violation of section 3729 for the person and for
the United States Government"), and that the same statutory
term, person, is used to describe the eligible class of plain-
tiffs.14 The word person is presumed to have the same
meaning in different sections of the same statute. See, e.g.,
Commissioner v. Lundy, 516 U.S. 235, 250 (1996). Appellees,
then, would use the canon of consistent meaning (following
the Second and Eighth Circuits) to trump the Will-Wilson
__________
states were not persons under the Act. See United States ex rel.
Weinberger v. Florida, 615 F.2d 1370, 1371 (5th Cir. 1980) (describ-
ing district court's decision to that effect and vacating on the
ground that, under an older and since modified version of the
present 31 U.S.C. s 3730, the district court lacked subject matter
jurisdiction because the federal government had knowledge of the
facts underlying the relator's suit).
13 The Eighth Circuit thought that 1986 amendments to s 3729(a)
warranted giving the 1986 Report greater interpretive weight, even
on the assumption that the Report's understanding of the pre-1986
caselaw was incorrect. See Zissler, 154 F.3d at 874. Again, the
change to s 3729(a) had nothing to do with the meaning of the term
person. The portion of the Report in question, moreover, makes no
reference whatsoever to the slight alteration actually made to
s 3729(a). It is merely a commentary on the past.
14 Although New York seemed insistent that it can have it both
ways--that it can be a plaintiff but not a defendant--the states,
appearing as amici, seemed quite prepared to abandon any claim
that they could sue as plaintiffs; the threat of being a qui tam
defendant apparently "concentrated their minds."
default rule. See Stevens, 162 F.3d at 205; Zissler, 154 F.3d
at 875; see also Boese, supra, at 2-92 (reasoning that states
are defendant persons under the Act because they are proper
qui tam plaintiffs).
The consistent meaning canon is brandished as if the
question whether states could be qui tam relators were a
statutory given. But it is not. We recognize that other
courts have assumed that states can be qui tam relators, see,
e.g., United States ex rel. Woodard v. Country View Care
Ctr., Inc, 797 F.2d 888 (10th Cir. 1986); United States ex rel.
Wisconsin v. Dean, 729 F.2d 1100 (7th Cir. 1984), even
though the term person under s 3730(b)(1) is no more clearly
defined than it is under s 3729(a). The argument that states
are plaintiffs is based on a provision passed in 1986 conferring
jurisdiction on the district courts "over any action brought
under the laws of any State for the recovery of funds paid by
a State or local government if the action arises from the same
transaction or occurrences as [a qui tam suit] brought under
Section 3730." 31 U.S.C. s 3732(b). If states are the only
parties who could bring a state law suit to recover state
funds, the argument goes, and if a state is forbidden by
s 3730(b)(5) from intervening in another party's qui tam suit,
see id. at s 3730(b)(5) (providing that "[w]hen a person brings
an action under this subsection no person other than the
Government may intervene or bring a related action based on
the facts underlying the pending action"), it seems to follow
that the Congress which enacted s 3732(b) intended states to
be qui tam relators under the Act. Otherwise, it is argued,
the provision conferring jurisdiction over the state's claim
under state law has little meaning. The legislative history
lends some support to this reasoning. See S. Rep. No. 345,
99th Cong., 2d Sess., at 16 (1986), reprinted in 1986
U.S.C.C.A.N. 5266, 5281 (explaining that the provision was
enacted in response to comments from the National Associa-
tion of Attorneys General and was intended to allow "State
and local governments to join State law actions with False
Claims Act actions brought in Federal district court if such
actions grow out of the same transaction or occurrence"); see
also id. at 12-13, reprinted in 1986 U.S.C.C.A.N. at 5277-78
(disapproving of Dean decision on unrelated jurisdictional
grounds but not questioning the State of Wisconsin's ability
to be a qui tam plaintiff); Stevens, 162 F.3d at 204-05(discussing Senate Report).
The more obvious reading of s 3732(b), however, is that it
authorizes permissive intervention by states for recovery of
state funds (creating what is in effect an exception to
s 3730(b)(5)'s apparent general bar on intervention by all
other parties except for the United States). See Boese,
supra, at 4-13 (explaining that s 3732(b) "does not require
the state to be a relator for jurisdiction to exist," noting the
possibility that it permits intervention by states, but making
no reference to s 3730(b)(5)). Or Congress might even have
meant s 3732(b) to provide supplemental jurisdiction for a
non-state relator to join a federal false claim action with an
action to recover state funds under a state qui tam statute,
which several states have enacted. See, e.g., Cal. Gov't Code
s 12650 et seq. (West 1998); Fla. Stat Ann. s 68.081-092
(West 1998).
In any event, the argument that states are relators under
s 3730(b)(1) is rather strained. To the extent it relies on the
Senate Report author's knowledge of one suit by a state
relator, it is no more persuasive than the analogous argument
based on the Report's "recognition" of prior suits against
state defendants. The argument, moreover, depends on the
proposition that s 3730(b)(5) prevents all parties, except for
the United States, from intervening in another relator's qui
tam action. Yet it is not at all clear that this provision
precludes all forms of party joinder, which would effectively
limit qui tam actions to single relators. See United States ex
rel. Precision Co. v. Koch Indus., Inc., 31 F.3d 1015, 1017
(10th Cir. 1994) (holding that s 3730(b)(5) does not prohibit
all forms of joinder but only prevents permissive intervention
in a relator's suit by unrelated parties under Fed. R. Civ. P.
24(b)(2)). If states could join as co-plaintiffs with private
relators or the federal government, then s 3732(b) could be
given full meaning without reading s 3730(b)(1) to include
states as relators.
It should be apparent, then, that whether states can be qui
tam relators presents an extraordinarily difficult question of
statutory interpretation in its own right. Although appellees
do not acknowledge it, their argument would require us to
puzzle through that question--not squarely presented to us--
in order to resolve the actual question before us (itself no
easy one) in their favor. The consistent meaning canon does
not have much usefulness if in order to apply it a court has to
struggle that hard to determine the second meaning, against
which the first is to be compared. Given the uncertainty
governing the question whether states can be relators, we
think the proper course is to decide only the issue before us.15
__________
15 Even assuming arguendo that states can be relators, we doubt
that the consistent meaning canon is appropriately applied in this
case. The canon itself has an important exception "[w]here the
subject-matter to which the words refer is not the same in the
several places where they are used." Atlantic Cleaners & Dyers,
Inc. v. United States, 286 U.S. 427, 433 (1932). Imposing liability is
quite different from conferring a right to sue, and as we noted
above, the Will-Wilson default rule has added force when the
question is whether states are subject to liability as persons. See
Will, 491 U.S. at 64. The canon also encounters potentially insur-
mountable difficulties when the "meanings" are enacted by two
different Congresses--which is an obvious flaw in appellees' effort
to use the 1986 amendments' effect on the term person in
s 3730(b)(1) to give consistent meaning to the term person in
s 3729(a), which was enacted by the 1863 Congress.
It might be argued that the 1986 amendments merely clarified
that Congress has intended states to be relators since 1863, and
that the consistent meaning canon really applies to the 1863 Con-
gress alone. But this theory would require us, quite illogically, to
interpret the 1986 legislative action as a declaration of what a
Congress over a century earlier intended. The action of the 1986
Congress tells us, at most, what the 1986 Congress thought about
states as qui tam relators (and as we noted above, it does not tell us
very much); it does not purport to tell us, nor could it, what the
1863 Congress intended. See Rainwater v. United States, 356 U.S.
590, 593 (1958) (stating that 1918 amendment to the criminal
provisions of the False Claims Act was at most "merely an expres-
sion of how the 1918 Congress interpreted a statute passed by
III.
Appellees have not persuasively demonstrated a congres-
sional intent to include states as defendant persons under the
False Claims Act. That being so, the default rule would seem
to dictate that they are not. We hesitate in resting solely on
this ground, however, since the Supreme Court has never
explained just how much of a showing suffices to overcome
the presumption against interpreting persons to include
states, and indeed on occasion has employed the rule in a
somewhat diluted fashion. See, e.g., Sims v. United States,
359 U.S. 108, 111-12 (1959); United States v. California, 297
U.S. 175, 186 (1936); Ohio v. Helvering, 292 U.S. at 370-71.
We think there are additional considerations, however, that
resolve all doubts in New York's favor.
__________
another Congress more than a half century before" and had "very
little, if any, significance" in interpreting the original Act's civil
provisions). Although the Supreme Court occasionally says that
"[s]ubsequent legislation which declares the intent of an earlier law
is entitled to great weight in statutory construction," Loving v.
United States, 517 U.S. 748, 770 (1996) (quoting Consumer Product
Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 118 n.3 (1980)
(quoting Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 380-81
(1969))), the Supreme Court's application of that principle has been
rather inconsistent, see Paramount Health Sys., Inc. v. Wright, 138
F.3d 706, 709-11 (7th Cir. 1998) (comparing this rule with the
competing rule that the views of a subsequent Congress in legisla-
tive history form a hazardous basis for inferring the intent of an
earlier one). And we are unaware of any Supreme Court holding in
which a subsequent declaration has been used, not to discern the
current meaning of a statute post-declaration, see, e.g., Seatrain
Shipbuilding Corp. v. Shell Oil Co., 444 U.S. 572, 595-96 (1980);
Red Lion Broadcasting, 395 U.S. at 380-81, but instead to interpret
the meaning of a statute prior to the declaration. Appellees'
attempt to apply the consistent meaning canon to the 1863 Con-
gress depends on precisely such a "retroactive clarification."
A.
Were we to agree with appellees that states can be defen-
dants under the False Claims Act, we would be obliged to
decide whether, as appellant New York contends, the Elev-
enth Amendment bars a qui tam suit by a private relator
against a state in federal court. The Amendment states that
"[t]he Judicial Power of the United States shall not be
construed to extend to any suit in law or equity, commenced
or prosecuted against one of the United States by Citizens of
another State, or by Citizens or Subjects of any Foreign
State." U.S. Const. amend. XI. Although it has been read to
bar suits by plaintiffs not identified in the text of the amend-
ment itself, such as citizens of the state being sued, see Hans
v. Louisiana, 134 U.S. 1, 10-11 (1890), and foreign sover-
eigns, see Principality of Monaco v. Mississippi, 290 U.S.
313, 330-32 (1934), it is well settled that it poses no bar to a
suit by the United States against a state in federal court.
The states' consent to such suits is thought to be inherent in
the constitutional plan and necessary to the very permanence
of the Union. See, e.g., West Virginia v. United States, 479
U.S. 305, 311 (1987); Monaco, 292 U.S. at 329; United States
v. Texas, 143 U.S. 621, 641-46 (1892). Reasoning from this
unobjectionable proposition, three of our sister circuits have
held that, since a qui tam suit against a state is essentially a
suit by and for the United States, the Eleventh Amendment
does not preclude a qui tam suit in federal court. See
Stevens, 162 F.3d at 201-03; United States ex rel. Rodgers v.
Arkansas, 154 F.3d 865, 868 (8th Cir. 1998); United States ex
rel. Milam v. University of Texas M.D. Anderson Cancer
Ctr., 961 F.2d 46, 50 (4th Cir. 1992); see also United States ex
rel. Fine v. Chevron, U.S.A., Inc., 39 F.3d 957, 962-63 (9th
Cir. 1994), vacated on other grounds, 72 F.3d 740 (9th Cir.
1995) (en banc).
We think our sister circuits have paid insufficient attention
to the Supreme Court's decision in Blatchford v. Native
Village of Noatak, 501 U.S. 775 (1991). In Blatchford, the
Court held that a statute giving federal district courts original
jurisdiction of suits brought by an Indian tribe involving
federal law did not constitute a delegation to the tribes of the
United States' ability, free from the Eleventh Amendment
bar, to sue the states as the tribes' trustee. See id. at 785-86.
Although the Court held that Congress intended no delega-
tion in the jurisdictional statute, the Court was dubious that
such a delegation would have been constitutionally permissi-
ble:
We doubt ... that that sovereign exemption can be
delegated-even if one limits the permissibility of delega-
tion ... to persons on whose behalf the United States
itself might sue. The consent, "inherent in the conven-
tion," to suit by the United States--at the instance and
under the control of responsible federal officers--is not
consent to suit by anyone whom the United States might
select; and even consent to suit by the United States for
a particular persons's benefit is not consent to suit by
that person himself.
Id. at 785 (emphasis added).
It seems to us that permitting a qui tam relator to sue a
state in federal court based on the government's exemption
from the Eleventh Amendment bar involves just the kind of
delegation that Blatchford so plainly questioned. See Rodg-
ers, 154 F.3d at 869 (Panner, J., dissenting). Nor are we
persuaded by the argument that the Court in Blatchford was
concerned about a possible delegation of the United States'
Eleventh Amendment exemption just because the injury to be
remedied was the tribe's and not the United States'. See
Stevens, 162 F.3d at 203. The problems inherent in expand-
ing the states' consent to suit by the United States to suits
"by anyone whom the United States might select," Blatch-
ford, 501 U.S. at 785, are no less troublesome where, as here,
the injury on which the suit is premised is a pecuniary injury
to the United States. One should bear in mind that the
United States' ability to sue is broad; it is not limited to suits
to protect the federal fisc. See, e.g., In re Debs, 158 U.S. 564,
584 (1895), disapproved of on other grounds Bloom v. Illinois,
391 U.S. 194, 208 (1968). Indeed, the United States' very
ability to sue as the tribes' trustee, which was unquestioned in
Blatchford, depended on an injury to the United States as
sovereign when injury was inflicted on the tribes. See United
States v. Minnesota, 270 U.S. 181, 194 (1926). It does not
seem reasonable, therefore, to distinguish Blatchford as an
anti-delegation principle applicable only where the "injury" is
an injury to someone other than the United States. The
problem in either case is whether, consistent with the consti-
tutional plan, the United States can delegate its own exemp-
tion from the Eleventh Amendment bar to another party.
Whatever the ultimate resolution of the question, we think
it presents a serious constitutional issue. It is quite a stretch
to claim that such a delegation was part of the inherent
constitutional design, or that the permanence of the union
somehow depends on giving the United States broad latitude
to permit private parties to sue the states in the federal
courts on the United States' behalf. Compare United States
v. Texas, 143 U.S. at 644-45. To assume that the United
States possesses plenary power to do what it will with its
Eleventh Amendment exemption is to acknowledge that Con-
gress can make an end-run around the limits that that
Amendment imposes on its legislative choices. Imagine that
Congress is contemplating a new statute, to be enacted
pursuant to its Article I powers, which would create a private
cause of action against the states in federal court. Since the
Court's decision in Seminole Tribe of Florida v. Florida, 517
U.S. 44 (1996), Congress would not be able to enact such a
statute, irrespective of its clarity in imposing liability against
the states, because Congress is without constitutional power
to abrogate the states' Eleventh Amendment immunity under
its Article I powers. See id. at 57-73. Yet if Congress is
permitted to use the qui tam device to create a private cause
of action against the states brought on behalf and in the name
of the United States, it can reach precisely the same end
without constitutional impediment. See Jonathan R. Siegel,
The Hidden Source of Congress's Power to Abrogate State
Sovereign Immunity, 73 Tex. L. Rev. 539, 556-64 (1995)
(approving of this outcome); see also Blatchford, 501 U.S. at
785-86 (noting that the tribe's "delegation theory" was de-
signed to avoid the constraints on congressional abrogation of
the states' Eleventh Amendment immunity). Admittedly,
Congress could have imposed liability against the states if it
chose to put enforcement of the statute "at the instance and
under the control of responsible federal officers." Blatchford,
501 U.S. at 785; see also Seminole Tribe, 517 U.S. at 71 n.14.
But the quite different legislative choice of authorizing pri-
vate parties to haul sovereign states into federal court against
their will, ordinarily foreclosed unless Congress successfully
abrogates the states' immunity, suddenly becomes an all too
easy legislative option.
Long and the government would avoid the Blatchford
delegation difficulty by asserting that in qui tam suits the
United States is the real party in interest; a qui tam suit is
therefore essentially a suit by and for the United States.
See, e.g., Stevens, 162 F.3d at 202; Milam, 961 F.2d at 49(concluding that the United States is the real party in interest
because of "the structure of the qui tam procedure, the
extensive benefit flowing to the government from any recov-
ery, and the extensive power the government has to control
the litigation"). This argument appears to us merely to
sidestep the core problem because it ignores the relator's
undisputed role as a party with a cause of action under the
Act. The "real party in interest" rule ordinarily requires that
the suit be brought by the "person who, according to the
governing substantive law, is entitled to enforce the right."
6A Charles Alan Wright et al., Federal Practice & Proce-
dure s 1543, at 334 (2d ed. 1990); see Fed R. Civ. P. 17(a)
(stating that "every action shall be prosecuted in the name of
the real party in interest"). There is no question that the
False Claims Act gives such a right to the relator, see 31
U.S.C. s 3730(b) ("A person may bring a civil action for a
violation of section 3729 for the person and for the United
States Government.") (emphasis added), and the statutory
right to bring suit is sufficient to satisfy the real party in
interest requirement, even if the suit is brought for the
benefit of some other party, see Fed. R. Civ. P. 17(a) (second
sentence); Wright et al., s 1550, at 384. In any event,
contrary to the suggestion of the district court, see Long, 999
F. Supp. at 83-84, a qui tam action is brought for the benefit
of both the relator and the United States, not for the benefit
of the United States alone. See 31 U.S.C. s 3730(b) (autho-
rizing qui tam suit "for the person and for the United States
Government"). Nor does it make any difference that the
False Claims Act requires the relator to sue "in the name of
the Government," 31 U.S.C. s 3730(b), because the procedur-
al question of in whose name the suit must be brought is
distinct from the substantive legal question whether the
plaintiff has a cause of action. See Wright Et Al. s 1544, at
340.16
Accordingly, we do not think the relator's technical status
as a "real party in interest" is inconsistent with the conclusion
of our sister circuits that the United States is a "real party in
interest" as well. See, e.g., Stevens, 162 F.3d at 202; Rodg-
ers, 154 F.3d at 868; United States ex rel. Hyatt v. Northrop
Corp., 91 F.3d 1211, 1217 n.8 (9th Cir. 1996); Milam, 961
F.2d at 49. It is, after all, not unheard of for there to be two
real parties in interest to a cause of action. See Wright et al.,
s 1545, at 351-53 (in cases of partial assignments, the assign-
or and assignee are both real parties in interest); id. s 1546,
at 360 (same for partial subrogation). More important, al-
though we are aware of a variant of the doctrine used in a
related Eleventh Amendment context, see, e.g., Ford Motor
Co. v. Department of Treasury, 323 U.S. 459, 464 (1945)
(analyzing whether a state defendant is the "real party in
interest" such that a suit against a state entity, though not
nominally against the state, would be barred by the Eleventh
Amendment), we do not see how the doctrine can be used to
convert a party with a statutory cause of action into a
"nonparty-party."17 In short, we think the real party in
__________
16 The district court concluded that Long's claim under the whis-
tle-blower provision of the False Claims Act, 31 U.S.C. s 3730(h),
was barred by the Eleventh Amendment because, unlike a qui tam
suit under s 3730(b) brought in the name of the United States, a
claim under s 3730(h) is a true "private right of action." Long, 999
F. Supp. at 92. We disagree; a qui tam suit under s 3730(b) is no
less a cause of action, and the relator is no less a party prosecuting
that action, because the action is brought in the name of the United
States.
17 One of the principal concerns motivating the Eleventh Amend-
ment inquiry into whether the state is the "real party in interest"
interest doctrine is plainly irrelevant to the Eleventh Amend-
ment question presented in this case. See Rodgers, 154 F.3d
at 869 (Panner, J., dissenting).
Nor do we think, as appellees suggest, that the govern-
ment's control over a relator's suit alters the result. We
acknowledge that the government takes the greater share of
any recovery, see 31 U.S.C. s 3730(d)(1),(2), and that the
statute gives the United States considerable control over the
relator's suit, see, e.g., id. at s 3730(b)(2)(providing that the
government can intervene in the suit as of right within sixty
days after receiving the relator's complaint, evidence, and
information); id. at s 3730(b)(1) (relator cannot dismiss his
own suit without written consent of the court and the Attor-
ney General); id. at s 3730(c)(3)-(4) (even if the government
does not intervene, it may monitor the proceedings and stay
discovery in certain situations); id. at 3730(c)(3) (government
can intervene at any time upon a showing of good cause); id.
s at 3730(c)(2)(A) (government may dismiss the suit after
notice to the relator and a hearing); id. at s 3730(c)(2)(B)
(government may settle the suit with the defendant over the
relator's objection if the court approves after a hearing).18
Still, we simply do not see how the government's potential
exercise of its power renders the relator any less a party.
Whatever the degree of control the United States exercises,
we think it is telling that, although there are some intimations
to that effect, no court has actually held that the relator is not
a party to the qui tam suit merely because of the United
States' potential ability to control the prosecution of the suit.
__________
defendant (or in other words that the actual defendant is an "arm of
the state") is that an individual plaintiff's recovery will be paid out
of the state treasury. See Regents of the University of California
v. Doe, 117 S. Ct. 900, 904 (1997). That is the precise concern
presented by a private relator recovering against a state defendant
in a qui tam suit.
18 There are, however, substantial restrictions on the United
States' power incorporated within these provisions. See Stevens,
162 F.3d at 223-24 (Weinstein, J., dissenting).
The relator appears to remain a party whether or not the
United States intervenes. In either situation, the relator's
rights must be protected under the statute. See 31 U.S.C.
s 3730(c)(3) (providing that the court may permit the United
States to intervene for good cause but must not "limit[ ] the
status and rights of the person initiating the action"); id. at
s 3730(c)(1) (providing that the relator "shall have the right
to continue as a party to the action," subject to certain
limitations, even after the United States intervenes). This is
important because the Eleventh Amendment must be satis-
fied for every claim in the suit, see Pennhurst State Sch. &
Hosp. v. Halderman, 465 U.S. 89, 121 (1984), and the pres-
ence of the United States as a co-plaintiff does not ordinarily
remove the Eleventh Amendment bar for claims by other
plaintiffs, see id. at 103 n.12; but see Rodgers, 154 F.3d at 870(Panner, J., dissenting) (distinguishing for Eleventh Amend-
ment purposes between cases in which the United States
intervenes from those in which it does not). But assuming
arguendo that the Eleventh Amendment would not pose a
problem in cases in which the United States actually inter-
venes in a suit against a state, the government did not do so
in the present case. That fact, coupled with the government's
intervention limited to the claim against the private defen-
dants, suggests that the government does not lightly take on
the task of probing into the internal operations of the sover-
eign states, and may well think it better to leave such
politically unpalatable tasks for the qui tam relators of the
world. Yet, the government wishes the option to sit back
while the relator brings an action against a state, thus
removing itself from direct accountability and from the subtle
political pressures that might have precluded the lawsuit in
the first place had the United States been more actively
involved from the start. See Stevens, 162 F.3d at 225-29(Weinstein, J., dissenting). That seems quite at odds with the
obvious purpose of the Eleventh Amendment since such a suit
is emphatically not one brought "at the instance and under
the control of responsible federal officers." Blatchford, 501
U.S. at 785. We seriously doubt that the government, under
the Eleventh Amendment, is entitled to transfer all of the
benefits that accrue to it as a plaintiff in the federal courts
when it chooses to watch from the sidelines. That could be
described as allowing the government to have its constitution-
al cake and eat it too.
It has also been contended that, despite the clear statutory
language giving relators a cause of action and treating them
as parties vested with rights and protections, relators should
be seen instead as self-appointed government counsel. See
Stevens, 162 F.3d at 202; Milam, 961 F.2d at 49 ("Congress
has let loose a posse of ad hoc deputies to uncover and
prosecute frauds against the government."); Siegel, supra, 73
Tex. L. Rev. at 556-57; Evan Caminker, The Constitutionali-
ty of Qui Tam Actions, 99 Yale L. J. 341, 353 (1989). It has
even been suggested that the relator's economic interest in
the lawsuit makes him more like a contingency fee lawyer
than a party. See Stevens, 162 F.3d at 202 (acknowledging
that the qui tam plaintiff has an interest in the action's
outcome, but stating that "his interest is less like that of a
party than that of an attorney working for a contingent fee"
and citing cases noting that relators' primary motivation is a
monetary reward and not the public good). We simply do not
understand the analogy; typically both the client and the
attorney have an economic interest in litigation. In this
sense, a relator looks no different to us than, let us say, an
applicant for a broadcast license. It is therefore not possible
to contend that the False Claims Act is an open-ended letter
of engagement from the government as client to a posse of
prospective attorneys. See United States ex rel. Farrell v.
SKF, USA, Inc., 32 F. Supp. 2d 617, 617-18 (W.D.N.Y. 1999)
(rejecting contention by qui tam defendant that, since the
relator is only the United States' lawyer and the United
States always remains a party litigant, the defendant was
entitled to discovery from the United States even though the
United States had not intervened in the suit). To accept the
"private Attorneys General" characterization as anything
more than an inapt convention would run headlong into the
problems of how a party with a statutory right to sue on his
own behalf can be thought to be acting in a representational
capacity, see 31 U.S.C. s 3730(b), why the client would need
the court's permission to intervene in his own suit, see id. at
s 3730(c)(3), or to dismiss the lawyer's "suit," see id. at
s 3730(c)(2)(A), and why the lawyer's "status and rights"
would be worthy of statutory protection in the event the
client chooses to intervene in the lawyer's action, see id. at
s 3730(c)(3).19
B.
Although, as we have indicated, we have profound doubts
that the Eleventh Amendment permits this lawsuit against
New York even if Congress implicitly authorized relators to
bring suits against the states, we do not rest our decision on
an interpretation of the Constitution. Instead, bearing in
mind that we must decide this difficult constitutional issue
only if the term person in the Act is interpreted as including
states, and that it seems quite dubious that Congress intend-
ed that result, the appropriate course seems to us to interpret
"person" as not including states.
The venerable doctrine of construing statutes in such a way
as to avoid serious constitutional questions has two important
prerequisites. First, the "statute must be genuinely suscepti-
ble to two constructions," and this determination must be
made "after, and not before, [the statute's] complexities are
unraveled." Almendarez-Torres, 118 S. Ct. at 1228; see also
United States v. Espy, 145 F.3d 1369, 1372 (D.C. Cir. 1998);
Association of Am. Physicians & Surgeons, Inc. v. Clinton,
997 F.2d 898, 906, 910-11 (D.C. Cir. 1993). Furthermore, the
constitutional question must be one that presents a "serious
likelihood that the statute will be held unconstitutional."
Almendarez-Torres, 118 S.Ct. at 1228; see also Association of
Am. Physicians & Surgeons, 997 F.2d at 906 (constitutional
question must be a "grave" one); Espy, 145 F.3d at 1372.
__________
19 Of course, if the government actually hired a lawyer to bring its
own cause of action, the Blatchford delegation problem would not
arise. But as we have explained at length, that is not what the
False Claims Act does.
It is obvious from what we have said already that these
requirements are satisfied in this case. As we have just
explained at length, the Eleventh Amendment question is, at
bare minimum, a serious one. It could not be suggested,
moreover, that we are distorting the language of the statute
in order to avoid a constitutional question. The more obvious
reading is to exclude states from "person." The more diffi-
cult task is to demonstrate that the inclusion of states as
defendant persons is a fair reading of the statute. There can
be no objection to avoiding a constitutional question that is
implicated only by a rather strained reading of the statute.
We think it relevant--if not decisive--to observe that the
avoidance canon coincides in this case with two additional
related canons of construction that impose upon Congress an
obligation of specificity. When "Congress intends to alter the
'usual constitutional balance between the States and the
Federal Government,' " federal courts insist that Congress
"make its intention to do so 'unmistakably clear in the
language of the statute.' " Will, 491 U.S. at 65 (quoting
Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 242 (1985));
see also Gregory v. Ashcroft, 501 U.S. 452, 464 (1991) (linking
clear statement rule with constitutional avoidance canon).
The Court in Will derived this "clear statement" rule from
the Eleventh Amendment cases requiring an explicit textual
intent to abrogate a state's Eleventh Amendment immunity,
but noted its applicability in a range of contexts in which
Congress alters the federal-state balance of power. See Will,
491 U.S. at 65.20 In Gregory, the Court applied this "plain
statement" principle where Congress' imposition of liability
under the Age Discrimination in Employment Act would
"upset the usual constitutional balance" by interfering with
the states' fundamental role in defining the qualifications of
their state judges. Id. at 460-61; see id. at 464-67 (holding
that Congress did not make a sufficiently clear statement in
__________
20 Indeed, in Will itself the Eleventh Amendment was not a
concern because the question whether states were persons under
s 1983 arose in the context of a state court case, and the Eleventh
Amendment does not apply in state courts. See Will, 491 U.S. at
63-64.
the ADEA that state judges are within the Act's coverage).
It cannot seriously be disputed that if Congress were re-
quired to make its intentions "clear and manifest," Will, 491
U.S. at 65, in order to impose False Claims Act liability on
the states, it has failed to do so.
Appellees contend that there is no justification for applying
this clear statement rule of Will or Gregory because treating
states as defendant persons would not actually alter the
constitutional balance of powers between the federal and
state governments. Such an alteration occurs, for example,
when Congress seeks to remove the states' sovereign immuni-
ty in their own courts, as in Will, 491 U.S. at 67, or when
Congress attempts to interfere with an essential governmen-
tal function, as in Gregory, 501 U.S. at 460. Since this case
arose in federal court and because the fraudulent conduct
proscribed cannot be thought an essential governmental func-
tion, appellees argue that neither Will nor Gregory apply.
We are unpersuaded by various crabbed analyses of the
Court's "clear statement" jurisprudence that we have seen.
To characterize the relevant state function at issue, as the
Second Circuit did, as fraudulent conduct, see, e.g., Stevens,
162 F.3d at 204 ("The States have no right or authority,
traditional or otherwise, to engage in [fraudulent] conduct."),
is to assume the conclusion that the function is not an
essential one. Using that logic, the Court in Gregory would
have declined to apply a clear statement rule because it is not
essential for the state to discriminate against elderly judges.
Appellees, for their part, describe the governmental function
at issue in this case as the process by which a state receives
federal funding-which they argue cannot possibly be de-
scribed as an essential state function. The state, in other
words, is simply a supplicant coming to the federal sovereign.
That characterization, in our view, is still too narrow because
the Act's imposition of liability necessarily interferes with a
state's sovereign performance of a range of indisputably
essential functions, such as the administration of a state
education department involved in the present case. See
Ambach v. Norwick, 441 U.S. 68, 76 (1979) ("Public education,
like the police function, 'fulfills a most fundamental obligation
of government to its constituency.' ") (quoting Foley v. Conne-
lie, 435 U.S. 291, 297 (1978)); Brown v. Board of Educ., 347
U.S. 483, 493 (1954) ("[E]ducation is perhaps the most impor-
tant function of state and local governments."). That the
federal government funds in part that function does not
destroy its essentiality to the state. To accept that hypothe-
sis, given present tax and spending mechanisms, would go a
long way toward burying federalism.
The Supreme Court has applied Gregory as we do, focusing
on the state functions necessarily affected by operation of the
statute, and not exclusively on the actual conduct proscribed
by Congress. See Gregory, 501 U.S. at 463 (essential state
function with which ADEA liability would interfere was the
"authority of the people of the States to determine the
qualifications of their most important government officials" in
their state Constitutions); see also Pennsylvania Dep't of
Corrections v. Yeskey, 118 S. Ct. 1952, 1953-54 (1998) (assum-
ing that imposition of ADA liability against state prisons
would interfere with the essential state function of "exercising
ultimate control over the management of state prisons");
BFP v. Resolution Trust Corp., 511 U.S. 531, 544 & n.8 (1994)
(applying Gregory to Bankruptcy Code provisions governing
constructively fraudulent transfers, and explaining that the
state function was not general authority over debtor-creditor
law, but the "essential sovereign interest in the security and
stability of title to land" necessarily affected by application of
the Bankruptcy Code to foreclosure sales). We thus do not
think it is appropriate to look myopically only to the state's
formal submission of the claim to the government and to
ignore the underlying governmental functions to which the
claim relates.21
__________
21 It could be argued, we suppose, that because False Claims Act
liability is only triggered when the state requests money from the
federal government, it brings any interference with its essential
functions on itself. But we do not see any basis in Gregory for
eliminating the need for a clear statement simply because the
liability imposed is conditioned on a voluntary act by the state. The
clear statement rule of Pennhurst State School and Hospital v.
Halderman, 451 U.S. 1, 17 (1981)--which requires a clear statement
Appellees similarly give an overly restrictive reading of
Will. It is true that the Court in Will pointed to the states'
sovereign immunity in their own courts as a supporting
reason for concluding that Congress did not intend to make
states persons under 42 U.S.C. s 1983. See Will, 491 U.S. at
66-67. But the Court nowhere even suggested that abroga-
tion of state sovereign immunity was the only alteration of
the constitutional balance that justified use of the clear
statement rule, nor did it rely on the idea of essential state
functions implicit in the later decision in Gregory. Will could
be read to suggest--although we are uncertain of this--that it
was the very imposition of a new liability against the state
that would have altered the constitutional balance of powers.
Whether or not Will or Gregory can be taken as far as we
have suggested,22 there is a second related clear statement
__________
when Congress imposes conditions on grants of federal money--
seems flatly inconsistent with such an argument.
22 The government would have us instead limit the Court's clear
statement rules because of the significant reliance interests created
by Congress' and the federal agencies' assumption that states, to
whom they entrusted large sums of money, are covered by the Act.
For the proposition that reliance interests can trump clear state-
ment rules, the government relies on Hilton v. South Carolina
Public Railways Comm'n, 502 U.S. 197, 205-07 (1991) (holding that
Will is a rule of statutory construction, not of constitutional law,
and that the reliance interests created by the Court's prior decision
interpreting the Federal Employers' Liability Act to include state-
owned railroads warranted adherence to stare decisis rather than to
the clear statement rule). That the Court feels obliged to disregard
the clear statement rule because of reliance interests that it created
through its own precedent is of course quite different from the
government's contention. Any reliance interests in this case are
not the judiciary's doing, but rather stem from the legislature's and
the federal agencies' assumption, based on weak post-enactment
legislative history, that states were, or ought to be, covered by the
Act. Since Congress easily could have included states within the
definition of person if it so intended, the government can hardly be
heard to complain now (on behalf of Congress) that Congress, in
effect, wrote the states a blank check.
canon that bears on our case. In cases involving congression-
al abrogation of a state's Eleventh Amendment immunity, the
applicability of the clear statement rule is well-established
and the uncertainties in defining the scope of the Will and
Gregory versions of that rule disappear. See Dellmuth v.
Muth, 491 U.S. 223, 230 (1989). Appellees contend that that
rule does not apply, however, because they conclude that the
Eleventh Amendment is not a bar to a qui tam suit (and thus
that no abrogation is necessary). But it seems highly artifi-
cial to conclude that Congress labors under an obligation of
utmost textual specificity when it seeks to abrogate the
states' Eleventh Amendment immunity when that immunity is
otherwise certain, but that liability against the states--poten-
tially implicating the Eleventh Amendment--can be imposed
willy-nilly, using as imprecise a term as "person." We think
there is significant conceptual overlap--though admittedly
not an identity--between the abrogation inquiry and the
statutory construction question whether Congress intended to
include states as defendant persons. The Supreme Court's
conclusion that Congress has failed to abrogate with the
requisite specificity is often based on Congress' failure explic-
itly to provide for suits against the states in federal court--
the precise failing of the False Claims Act that raises the
question in this appeal. See, e.g., Dellmuth, 491 U.S. at 231-
32; Atascadero State Hosp., 473 U.S. at 245-46. So although
we recognize that the Eleventh Amendment's clear statement
rule has always been applied to an abrogation inquiry--rather
than to a threshold question as to whether the Eleventh
Amendment applies--we do not think it wholly irrelevant to
the latter.
Appellees' argument against using the Eleventh Amend-
ment's clear statement rule follows from their prior conclu-
sion that the Eleventh Amendment does not apply to this
case. Appellees therefore assume that states are persons for
the purpose of rejecting New York's Eleventh Amendment
defense, and then proceed to reject the Eleventh Amend-
ment's clear statement rule when actually interpreting the
statute previously assumed to include states--sort of a divide
and conquer strategy. The statutory construction issue is,
however, inextricably linked with the jurisdictional one, which
is precisely why we decline to assume that states are persons
in order to conduct an Eleventh Amendment inquiry that
could be avoided if the assumption were not made in the first
place. We think the correct resolution is to read the Act in
such a way that avoids the serious constitutional question
whether the Eleventh Amendment bars qui tam suits against
the state in federal court. In so doing, we rely on the
constitutional avoidance canon buttressed by the family of
"clear statement" rules applicable when Congress attempts to
legislate in the way that appellees contend it has legislated.23
* * * *
In the end it comes to this: if we must decide whether
states constitutionally can be defendants in federal court
under the Act, Congress must make its intent clear. The
decision of the district court is therefore reversed.
So ordered.
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23 New York would also have us apply the clear statement rule of
Pennhurst, 451 U.S. at 17, under which Congress must unambigu-
ously set forth conditions it imposes on the grant of federal money
when it exercises its spending power. Because we have enough--
more than enough--clear statement rules to resolve this case, we
need not decide whether False Claims Act liability can be seen as a
condition imposed on a grant of federal money.