United States Ex Rel. Welch v. My Left Foot Children's Therapy, LLC , 871 F.3d 791 ( 2017 )


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  •                      FOR PUBLICATION
    UNITED STATES COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    UNITED STATES and STATE OF                         No. 16-16070
    NEVADA ex rel. MARY KAYE
    WELCH;                                               D.C. No.
    Plaintiff-Appellee,               2:14-cv-01786-
    MMD-GWF
    v.
    MY LEFT FOOT CHILDREN’S                              OPINION
    THERAPY, LLC; ANN MARIE
    GOTTLIEB; JONATHAN GOTTLIEB,
    Defendants-Appellants.
    Appeal from the United States District Court
    for the District of Nevada
    Miranda M. Du, District Judge, Presiding
    Argued and Submitted June 16, 2017
    San Francisco, California
    Filed September 11, 2017
    Before: Mary M. Schroeder, D. Michael Fisher, *
    and N. Randy Smith, Circuit Judges.
    Opinion by Judge Fisher
    *
    The Honorable D. Michael Fisher, United States Circuit Judge for
    the U.S. Court of Appeals for the Third Circuit, sitting by designation.
    2          UNITED STATES EX REL. WELCH V. MLF
    SUMMARY **
    False Claims Act
    The panel affirmed the district court’s denial of the
    defendants’ motion to compel arbitration on the alternate
    ground that relator Mary Kay Welch’s False Claims Act
    claims did not fall within the scope of the arbitration
    agreement with Welch’s former employer, defendant My
    Left Foot Children’s Therapy, LLC.
    Welch alleged that her former employer violated the
    federal and Nevada False Claims Acts by presenting
    fraudulent Medicaid claims. The United States and Nevada
    declined to intervene in the case and her employer moved to
    compel arbitration under the Federal Arbitration Act.
    The panel held that this lawsuit was not arbitrable
    because the plain text of Welch’s arbitration agreement that
    she signed when she applied for employment with My Left
    Foot did not encompass this False Claims Act case.
    COUNSEL
    Rex S. Heinke (argued) and Jessica M. Weisel, Akin Gump
    Strauss Hauer & Feld LLP, Los Angeles, California; Shawn
    Hanson and Kelli Ann Kiernan, Akin Gump Strauss Hauer
    & Feld LLP, San Francisco, California; for Defendants-
    Appellants.
    **
    This summary constitutes no part of the opinion of the court. It
    has been prepared by court staff for the convenience of the reader.
    UNITED STATES EX REL. WELCH V. MLF                 3
    Robert S. Oswald, David Scher, and Andrew M. Witko, The
    Employment Law Group P.C., Washington, D.C., for
    Plaintiff-Appellee.
    Lindsey Powell (argued) and Michael S. Raab, Assistant
    United States Attorneys, Appellate Staff; Civil Division,
    United States Department of Justice, Washington, D.C.; for
    Amicus Curiae United States.
    Mark J. Kreuger (argued), Senior Deputy Attorney General;
    Adam Paul Laxalt, Attorney General; Office of the Attorney
    General, Carson City, Nevada; for Amicus Curiae State of
    Nevada.
    OPINION
    FISHER, Circuit Judge:
    Originally enacted in 1863, the False Claims Act (FCA)
    establishes a scheme that permits either the Attorney
    General, 
    31 U.S.C. § 3730
    (a), or a private party, § 3730(b),
    to maintain a civil action against “any person” who
    “knowingly presents, or causes to be presented, a false or
    fraudulent claim for payment” to an employee of the United
    States government. § 3729(a). When brought by a private
    party, an “enforcement action under the FCA is called a qui
    tam action, with the private party referred to as the relator.”
    United States ex rel. Eisenstein v. City of New York, 
    556 U.S. 928
    , 932 (2009) (internal quotation marks omitted). And
    when a relator initiates a FCA action, the United States has
    60 days to review the complaint and decide whether it will
    intervene in the case. § 3730(b)(2), (4).
    4         UNITED STATES EX REL. WELCH V. MLF
    When the government intervenes, it assumes “the
    primary responsibility for prosecuting the action, and shall
    not be bound by an act of the [relator].” § 3730(c)(1). When
    it does not intervene, it is not a “party” to a FCA action for
    the purposes of certain procedural rules. See Eisenstein,
    
    556 U.S. at 931
    . Nonetheless, the United States maintains
    some minimal involvement in all FCA actions. For example,
    in every FCA case, it remains “a ‘real party in interest,’” 
    id. at 930
    , and retains specific statutory rights including rights
    to “intervene at a later date upon a showing of good cause,”
    § 3730(c)(3), request service of pleadings and deposition
    transcripts, § 3730(c)(3), and veto a relator’s decision to
    voluntarily dismiss the action, § 3730(b)(1).
    In this case, Mary Kaye Welch alleges that her former
    employer violated the federal FCA and Nevada FCA by
    presenting fraudulent Medicaid claims. The United States
    and Nevada declined to intervene in the case and her
    employer moved to compel arbitration under the Federal
    Arbitration Act (FAA), 
    9 U.S.C. § 1
     et seq. Holding that
    Welch had entered into a valid arbitration agreement that
    covers this FCA case, the District Court nonetheless
    declined to enforce that arbitration agreement. In its view,
    because FCA claims belong to the government and neither
    the United States nor Nevada agreed to arbitrate their claims,
    sending this dispute to arbitration would improperly bind
    them to an agreement they never signed. Though the
    question of the enforceability of a relator’s agreement to
    arbitrate FCA claims is interesting, our holding rests on a
    rather unremarkable textual analysis. Since we conclude that
    the plain text of Welch’s arbitration agreement does not
    encompass this FCA case, this lawsuit is not arbitrable, and
    we will affirm the District Court’s denial of the Defendants’
    motion to compel arbitration on that alternate ground.
    UNITED STATES EX REL. WELCH V. MLF                5
    I.
    In August 2013, Mary Kaye Welch applied for
    employment with My Left Foot Children’s Therapy, LLC
    (MLF), a small, family-owned company that provides
    functional therapy to children in the Las Vegas area. She was
    hired as a speech therapist that September and worked at
    MLF for just over a year. During the application process,
    Welch entered into a mutually binding arbitration agreement
    with MLF that provides:
    I agree and acknowledge that the Company
    and I will utilize binding arbitration to
    resolve all disputes that may arise out of the
    employment context. Both the Company and
    I agree that any claim, dispute, and/or
    controversy that either I may have against the
    Company . . . or the Company may have
    against me, arising from, related to, or having
    any relationship or connection whatsoever
    with my seeking employment by, or
    employment or other association with the
    Company shall be submitted to and
    determined       exclusively     by     binding
    arbitration under the Federal Arbitration Act
    . . . . To the extent permitted by applicable
    law, the arbitration procedures stated below
    shall constitute the sole and exclusive method
    for the resolution of any claim between the
    Company and Employee arising out of ‘or
    related to’ the employment relationship.
    ER 20 (underlining in original). The agreement then adds:
    Included within the scope of this agreement
    are all disputes, whether they be based on the
    6           UNITED STATES EX REL. WELCH V. MLF
    state employment statutes, Title VII of the
    Civil Rights Act of 1964, as amended, or any
    other state or federal law or regulation,
    equitable law, or otherwise, with exception of
    claims arising under the National Labor
    Relations Act which are brought before the
    National Labor Relations Board, claims
    brought pursuant to state workers
    compensation statutes, or as otherwise
    required by state or federal law.
    
    Id.
    Shortly before Welch left MLF, she filed a sealed
    complaint in federal court alleging that MLF and its co-
    owners—Ann Marie and Jonathan Gottlieb—violated both
    the federal FCA and the Nevada FCA 1 by presenting
    fraudulent claims to Medicaid and Tricare, a program that
    offers Medicaid-like benefits to service members. In 2015,
    the United States and Nevada declined to intervene and
    Welch amended her complaint. In that amended complaint,
    Welch alleges that MLF treated patients who could not
    benefit from therapy, provided and billed for unnecessary
    treatment, ordered therapists to draft inaccurate patient
    progress reports, and told therapists to use a single billing
    code for all services regardless of whether a more
    appropriate code would result in lower charges.
    On October 19, 2015, the Defendants moved to compel
    arbitration of Welch’s FCA claims pursuant to the FAA and
    1
    Because we resolve this case based on the text of Welch’s
    arbitration agreement, any distinctions between the federal FCA and
    Nevada FCA are immaterial to our holding. We will accordingly refer to
    both sets of claims collectively as “FCA claims.”
    UNITED STATES EX REL. WELCH V. MLF                7
    MLF’s arbitration agreement with Welch. Welch opposed
    that motion as did the United States and Nevada. On June
    13, 2016, the District Court denied the Defendants’ motion
    to compel arbitration on the ground that Welch’s arbitration
    agreement did not extend to the United States or Nevada, the
    parties which owned the underlying FCA claims. This timely
    appeal followed.
    II.
    The District Court had jurisdiction under 
    28 U.S.C. § 1331
     and 
    31 U.S.C. § 3732
    . We have jurisdiction under
    
    9 U.S.C. § 16
    (a)(1) and 
    28 U.S.C. § 1291
    . We review a
    district court’s decision to grant or deny a motion to compel
    arbitration de novo. Sakkab v. Luxottica Retail N. Am., Inc.,
    
    803 F.3d 425
    , 429 (9th Cir. 2015).
    III.
    On appeal, the Defendants argue that we should reverse
    the district court’s denial of their motion to compel
    arbitration. They maintain that MLF’s arbitration agreement
    with Welch encompasses this FCA lawsuit and that the
    government cannot prevent enforcement of an arbitration
    agreement covering FCA claims when, as here, it has
    declined to intervene in the underlying FCA suit. In
    addressing those arguments, we must first determine
    whether Welch’s arbitration agreement with MLF
    encompasses the FCA claims at issue in this case.
    A.
    Seeking “to reverse the longstanding judicial hostility to
    arbitration agreements” and place them “upon the same
    footing as other contracts,” Gilmer v. Interstate/Johnson
    Lane Corp., 
    500 U.S. 20
    , 25 (1991), Congress enacted the
    8         UNITED STATES EX REL. WELCH V. MLF
    FAA in 1925. Under the FAA, private agreements to
    arbitrate are “valid, irrevocable, and enforceable, save upon
    such grounds as exist at law or in equity for the revocation
    of any contract.” 
    9 U.S.C. § 2
    . Since the FAA “mandates . . .
    arbitration on issues as to which an arbitration agreement has
    been signed,” Dean Witter Reynolds, Inc. v. Byrd, 
    470 U.S. 213
    , 218 (1985), when, as here, an arbitration agreement
    involves “a contract evidencing a transaction involving
    commerce,” 
    9 U.S.C. § 2
    , our role is limited “to determining
    (1) whether a valid agreement to arbitrate exists and, if it
    does, (2) whether the agreement encompasses the dispute at
    issue.” Chiron Corp v. Ortho Diagnostic Sys., Inc., 
    207 F.3d 1126
    , 1130 (9th Cir. 2000).
    In this case, Welch does not argue that her arbitration
    agreement with MLF is invalid. Instead, she maintains that
    these FCA claims do not fall within its scope because,
    contrary to what the District Court held, none of them are
    related to, arose out of, or were connected with her
    employment or other association with MLF. This argument
    turns on interpretation of her arbitration agreement with
    MLF—“a matter of contract” that requires us “to honor
    parties’ expectations.” AT&T Mobility LLC v. Concepcion,
    
    563 U.S. 333
    , 351 (2011).
    Governing Law
    Before turning to the text of Welch’s arbitration
    agreement, we must first determine the governing law.
    Under the FAA, the “interpretation of an arbitration
    agreement is generally a matter of state law,” Stolt-Nielsen
    S.A. v. AnimalFeeds Int’l Corp., 
    559 U.S. 662
    , 681 (2010),
    and since the arbitration agreement in this case was signed
    in Nevada by a Nevada resident and a Nevada-based LLC,
    the parties agree that Nevada law would govern any contract
    dispute here. In applying Nevada law to interpret Welch’s
    UNITED STATES EX REL. WELCH V. MLF                 9
    arbitration agreement, however, “the FAA imposes certain
    rules of fundamental importance” that must also guide our
    interpretation “including the basic precept that arbitration is
    a matter of consent, not coercion,” 
    id.
     (internal quotation
    marks omitted), and the rule that “questions of arbitrability
    must be addressed with a healthy regard for the federal
    policy favoring arbitration.” Moses H. Cone Mem’l Hosp. v.
    Mercury Constr. Corp., 
    460 U.S. 1
    , 24 (1983).
    “Because the FAA is at bottom a policy guaranteeing the
    enforcement of private contractual arrangements,” EEOC v.
    Waffle House, Inc., 
    534 U.S. 279
    , 294 (2002) (internal
    quotation marks omitted), when examining the scope of an
    arbitration agreement, “[a]s with any other contract dispute,
    we first look to the express terms [of the parties’
    agreement].” Chiron, 
    207 F.3d at 1130
    . If the text is plain
    and unambiguous, that is the end of our analysis in this case
    because we “must rigorously enforce arbitration agreements
    according to their terms” under both the FAA and Nevada
    law. Am. Express Co. v. Italian Colors Rest., 
    133 S. Ct. 2304
    ,
    2309 (2013) (internal quotation marks omitted); see also
    Waffle House, 
    534 U.S. at 294
     (“While ambiguities in the
    language of the agreement should be resolved in favor of
    arbitration, . . . we do not override the clear intent of the
    parties, or reach a result inconsistent with the plain text of
    the contract, simply because the policy favoring arbitration
    is implicated.”); State ex rel Masto v. Second Judicial Dist.
    Ct. ex rel. Cty. of Washoe, 
    199 P.3d 828
    , 832 (Nev. 2009)
    (“In interpreting a contract, we construe a contract that is
    clear on its face from the written language, and it should be
    enforced as written.”).
    The Arbitration Agreement
    Turning now to the text, the arbitration agreement that
    Welch signed when she applied for employment with MLF
    10         UNITED STATES EX REL. WELCH V. MLF
    contains two key sections. The first section, which is titled
    “Agreement,” includes three separate iterations of an
    agreement to arbitrate. The second section, which is titled
    “Included Claims,” provides that minus limited exceptions
    not applicable here, the scope of the arbitration agreement
    includes “all disputes, whether they be based on the state
    employment statutes, Title VII of the Civil Rights Act of
    1964, as amended, or any other state or federal law or
    regulation.” ER 20.
    On appeal, the Defendants rely on the presumption in
    favor of arbitration, the breadth of the “Agreement” section,
    and the breadth of the “Included Claims” section to maintain
    that Welch’s arbitration agreement covers the FCA claims at
    issue in this case. In our view, however, it is solely the text
    of the “Agreement” section that dictates the scope of
    Welch’s arbitration agreement. Since the presumption of
    arbitrability is not in play if the text of the agreement is clear,
    that presumption plays no role unless the agreement is
    susceptible to an interpretation that covers this FCA case.
    And since it would violate several rules of textual
    interpretation to rely on the “Included Claims” section to
    define the breadth of the agreement, we believe that section
    is irrelevant to assessing the scope of Welch’s agreement
    unless the “Agreement” section first provides for arbitration.
    Certainly, as the Defendants point out, the “Included
    Claims” section is broad and encompasses FCA claims
    insofar as it provides that “all disputes,” including those
    based on “any . . . federal law,” fall within the scope of the
    arbitration agreement. ER 20. There are nonetheless two
    problems with relying on this section to assess whether this
    case is subject to arbitration. First, the “Included Claims”
    section contains no agreement to arbitrate any disputes—
    rather, the “Agreement” section defines when the parties
    UNITED STATES EX REL. WELCH V. MLF                 11
    have agreed to arbitration while the “Included Claims”
    section explains the types of disputes that arbitration extends
    to when the parties have elsewhere agreed to arbitration.
    Second, the breadth of the “Included Claims” section cannot
    be read in isolation from the rest of the arbitration
    agreement, and the “Agreement” section provides for
    arbitration in much narrower circumstances than the
    “Included Claims” section.
    This second point is particularly critical because had the
    parties wished to arbitrate every dispute encompassed in the
    “Included Claims” section it could have left the scope of the
    “Agreement” section at “any and all disputes whatsoever.”
    Instead, every provision in the “Agreement” section
    containing an agreement to arbitrate is followed by some
    plain language imposing a textual limitation that, to be
    arbitrable, the dispute must arise from, relate to, or be
    connected with Welch’s employment or association with
    MLF. Having chosen to include that language, we are bound
    to define the scope of this agreement by those limitations
    under two cardinal rules of textual interpretation. The first is
    the rule that the specific governs the general, or generalia
    specialibus non derogant, because the “Agreement” section
    is more specific than the “Included Claims” section. See,
    e.g., S. Cal. Gas Co. v. City of Santa Ana, 
    336 F.3d 885
    , 891
    (9th Cir. 2003) (“A standard rule of contract interpretation is
    that when provisions are inconsistent, specific terms control
    over general ones.”); Shelton v. Shelton, 
    78 P.3d 507
    , 510
    (Nev. 2003) (“[A] specific provision will qualify the
    meaning of a general provision.”). The second is the
    interpretative principle of verba cum effectu sunt
    accipienda—that if possible, every word and every
    provision is to be given effect—because if the language
    about arising out of and relating to employment did not limit
    the scope of the arbitration agreement to those situations, it
    12        UNITED STATES EX REL. WELCH V. MLF
    would have no purpose. See, e.g., United States v. Butler,
    
    297 U.S. 1
    , 65 (1936) (“These words cannot be meaningless,
    else they would not have been used.”); Sturges v.
    Crowinshield, 17 U.S. (4 Wheat.) 122, 202 (1819) (“It would
    be dangerous in the extreme, to infer from extrinsic
    circumstances, that a case for which the words of an
    instrument expressly provide, shall be exempted from its
    operation.”); Quirron v. Sherman, 
    846 P.2d 1051
    , 1053
    (Nev. 1993) (“It is a well established principle of contract
    law . . . that where two interpretations of a contract provision
    are possible, a court will prefer the interpretation which
    gives meaning to both provisions rather than an
    interpretation which renders one of the provisions
    meaningless.”).
    Having established that the scope of this arbitration
    agreement turns solely on the text of the “Agreement”
    section, we must now consider whether the text of the
    “Agreement” section is broad enough to encompass this
    lawsuit. As discussed above, the “Agreement” contains three
    different arbitration provisions. The first provision provides
    for arbitration of “all disputes that may arise out of the
    employment context.” ER 20. The second provision
    provides for arbitration of “any claim, dispute, and/or
    controversy that either I may have against the Company . . .
    or the Company may have against me arising from, related
    to, or having any relationship or connection whatsoever with
    my seeking employment by, or employment or other
    association with the Company.” 
    Id.
     The third provision
    provides for arbitration of “any claim between the Company
    and Employee arising out of ‘or related to’ the employment
    relationship.” 
    Id.
     (underlining in original).
    Like the “Included Claims” section, these provisions are
    broad and capable of expansive reach. But as this Court has
    UNITED STATES EX REL. WELCH V. MLF                 13
    noted, there is a difference between a clause being “broad”
    and “unlimited.” N. Cal. Newspaper Guild Local 52 v.
    Sacramento Union, 
    856 F.2d 1381
    , 1383 (9th Cir. 1988).
    The first arbitration provision is limited to disputes that
    “arise out of the employment context” while the third is
    limited to claims “arising out of or ‘related to’ the
    employment relationship.” ER 20. And for three reasons, we
    cannot hold that the text of the first or third provision is
    broad enough to encompass this case.
    First, contrary to Defendants’ position, the terms used in
    the limiting language of the first and third provisions are not
    boundless because both of the phrases, “arising out of” and
    “related to,” mark a boundary by indicating some direct
    relationship. As we have held, the words arising out of are
    “relatively narrow as arbitration clauses go,” Mediterranean
    Enters., Inc. v. Ssangyong Corp., 
    708 F.2d 1458
    , 1464 (9th
    Cir. 1983) (internal quotation marks omitted), and
    “understood to mean originating from[,] having its origin in,
    growing out of or flowing from.” Cont’l Cas. Co v. City of
    Richmond, 
    763 F.2d 1076
    , 1080 (9th Cir. 1985) (internal
    quotation marks omitted). And though we have recognized
    that the phrase “relate to” is broader than the phrases “arising
    out of” or “arising under,” we agree with the Eleventh
    Circuit that “‘related to’ marks a boundary by indicating
    some direct relationship; otherwise the term would stretch to
    the horizon” and “have no limiting purpose” in violation of
    the cannon of verba cum effectu sunt accipienda. Doe v.
    Princess Cruise Lines, Ltd., 
    657 F.3d 1204
    , 1218 (11th Cir.
    2011); see also N.Y. State Conference of Blue Cross & Blue
    Shield Plans v. Travelers Ins. Co., 
    514 U.S. 645
    , 655 (1995)
    (noting that if the phrase “relate to were taken to extend to
    the furthest stretch of its indeterminacy,” it would be
    meaninglessly empty because “relations stop nowhere”
    (internal quotation marks omitted)).
    14        UNITED STATES EX REL. WELCH V. MLF
    Second, we are persuaded by the reasoning of the Fifth
    and Eleventh Circuits, which have previously interpreted
    arbitration agreements covering disputes that “arise out of”
    or “relate to” a contractual or employment relationship.
    Though neither circuit decided this issue in the context of a
    FCA claim, we find their textual analysis compelling and
    instructive. In both cases, the courts found that a plaintiff’s
    sexual assault claims did not “arise out of” or “relate to” the
    plaintiff’s employment or workplace simply because the
    assault occurred at the plaintiff’s workplace or would not
    have occurred but for the plaintiff’s employment. As both
    circuits explained, the sexual assault did not “arise out of” or
    “relate to” the plaintiffs’ employment because there was no
    direct connection between their claims and employment
    where the defendant “could have engaged in” the same
    conduct “even in the absence of any contractual or
    employment relationship with [the plaintiff],” and a third
    party “could have brought the[] same claims . . . based on
    virtually the same alleged facts.” Doe, 
    657 F.3d at
    1219–20;
    see also Jones v. Halliburton Co., 
    583 F.3d 228
    , 240 (5th
    Cir. 2009). The same is true here—this FCA suit has no
    direct connection with Welch’s employment because even if
    Welch “had never been employed by defendants, assuming
    other conditions were met, she would still be able to bring a
    suit against them for presenting false claims to the
    government.” Mikes v. Strauss, 
    889 F. Supp. 746
    , 754
    (S.D.N.Y. 1995).
    Finally, the fact that Welch observed the fraud while
    employed is immaterial under the first and third arbitration
    provisions. Since, contrary to what the District Court held,
    neither clause applies to “claims aris[ing] from observations
    Welch made while employed by MLF,” United States v. My
    Left Food Children’s Therapy, LLC, No. 14-01786, 
    2016 WL 3381220
    , at *3 (D. Nev. June 13, 2016), to interpret this
    UNITED STATES EX REL. WELCH V. MLF               15
    clause to cover all disputes discovered while Welch worked
    at MLF would be “to read the arbitration provision so
    broadly as to encompass any claim related to [her] employer,
    or any incident that happened during her employment”
    whereas “that is not the language of the contract.” Jones,
    
    583 F.3d at 241
    . Indeed, because Welch could have just as
    easily discovered the factual predicate of her claims in a
    different capacity, because Defendants could have engaged
    in the same fraudulent conduct absent any relationship with
    Welch, and because the legal basis of this FCA case would
    exist regardless of where Welch worked or observed the
    fraud, it is MLF’s act of fraudulent billing—rather than
    Welch’s employment—that these FCA claims “arise out of”
    and “relate to.”
    Since neither the first nor third arbitration provision is
    broad enough to encompass this FCA case, the lawsuit is
    arbitrable only if it falls within the scope of the second
    arbitration provision. As Defendants note, this provision is
    clearly the broadest and may not require a direct relationship
    with Welch’s employment insofar as the phrase “any
    relationship or connection whatsoever with” is much broader
    than the phrases “arising out of” and “related to.” But we
    must again look carefully at the text of this provision, which
    indicates that it only covers a “claim, dispute, and/or
    controversy that either [Welch] may have against [MLF] . . .
    or [MLF] may have against [Welch].” ER 20.
    Contrary to Defendants’ arguments, this case does not
    meet that textual requirement. This case involves no claim
    that MLF has against Welch. Nor can it be said to be a claim,
    dispute, or controversy that Welch “may have against
    [MLF].” ER 20. Indeed, though the FCA grants the relator
    the right to bring a FCA claim on the government’s behalf,
    an interest in the outcome of the lawsuit, and the right to
    16          UNITED STATES EX REL. WELCH V. MLF
    conduct the action when the government declines to
    intervene, our precedent compels the conclusion that the
    underlying fraud claims asserted in a FCA case belong to the
    government and not to the relator. See, e.g., Vermont Agency
    of Nat. Res. v. United States ex rel. Stevens, 
    529 U.S. 765
    ,
    773 (2000) (Noting that the “FCA can reasonably be
    regarded as effecting a partial assignment of the
    Government’s damages claim.” (emphasis added)); Stoner v.
    Santa Clara Cty. Office of Educ., 
    502 F.3d 1116
    , 1126 (9th
    Cir. 2007) (“The FCA makes clear that notwithstanding the
    relator’s statutory right to the government’s share of the
    recovery, the underlying claim of fraud always belongs to
    the government.”); Cedars-Sinai Med. Ctr. v. Shalala,
    
    125 F.3d 765
    , 768 (9th Cir. 1997) (“[A] qui tam plaintiff by
    definition asserts not his own interests, but only those of
    United States.”). 2 The meaning of the verb “have” is “to hold
    in the hand or in control; own; possess.” Have, Webster’s
    New World College Dictionary (5th ed. 2014).
    Consequently, because FCA fraud claims always belong to
    2
    Stoner is particularly instructive here. In Stoner, we concluded that
    a relator cannot pursue a FCA claim pro se. 
    502 F.3d at
    1126–28. A pro
    se plaintiff can only “prosecute his own action in propria persona,” and
    “has no authority to prosecute an action in federal court on behalf of
    others.” 
    Id. at 1126
    . Because a FCA claim is the government’s claim—
    and not the relator’s claim—and because the FCA does not allow relators
    to pursue any interest they might have in the claim separately from the
    government, we concluded that a pro se plaintiff could not bring such a
    claim. 
    Id.
     at 1126–28. Thus, even where, as here, “the government
    chooses not to intervene, a relator bringing a qui tam action for a
    violation of [the FCA] is representing the interest of the government and
    prosecuting the action on its behalf.” 
    Id. at 1126
    . A relator only has “the
    right to bring suit on behalf of the government.” 
    Id.
     (quoting United
    States ex rel. Kelly v. Boeing Co., 
    9 F.3d 743
    , 743 (9th Cir. 1993)). We
    find no grounds upon which to distinguish our holding in Stoner from
    the contract language at issue here.
    UNITED STATES EX REL. WELCH V. MLF                       17
    the government, Welch cannot be said to own or possess
    them, and the FCA claims at issue in this case do not meet
    this arbitration clause’s requirement that the claim must be
    one that Welch “have against [MLF].” 3 E.R. 20. Since this
    second clause, like the other two, is not broad enough to
    encompass this FCA case, this suit does not fall within the
    scope of Welch’s arbitration agreement and is not arbitrable.
    IV.
    For the reasons set forth above, we affirm the District
    Court’s denial of the Defendants’ motion to compel
    arbitration on the alternate ground that Welch’s FCA claims
    do not fall within the scope of her arbitration agreement with
    MLF.
    AFFIRMED.
    3
    In so holding, we note that, once again, had the parties wished to
    agree to arbitrate FCA claims, they were free to draft a broader
    agreement that covers “any lawsuits brought or filed by the employee
    whatsoever” or “all cases Welch brings against MLF, including those
    brought on behalf of another party.” But having instead drafted a more
    limited clause that covers only those claims that Welch, rather than the
    government, has, Defendants cannot now argue that we should ignore
    this textual limitation.
    

Document Info

Docket Number: 16-16070

Citation Numbers: 871 F.3d 791, 42 I.E.R. Cas. (BNA) 364, 2017 U.S. App. LEXIS 17492

Judges: Schroeder, Fisher, Smith

Filed Date: 9/11/2017

Precedential Status: Precedential

Modified Date: 11/5/2024

Authorities (21)

United States ex rel. Eisenstein v. City of New York , 129 S. Ct. 2230 ( 2009 )

United States v. Butler , 56 S. Ct. 312 ( 1936 )

Stoner v. Santa Clara County Office of Education , 502 F.3d 1116 ( 2007 )

Continental Casualty Company v. City of Richmond, a ... , 763 F.2d 1076 ( 1985 )

Vermont Agency of Natural Resources v. United States Ex Rel.... , 120 S. Ct. 1858 ( 2000 )

American Express Co. v. Italian Colors Restaurant , 133 S. Ct. 2304 ( 2013 )

Chiron Corporation, a Delaware Corporation v. Ortho ... , 207 F.3d 1126 ( 2000 )

State Ex Rel. Masto v. SECOND JUDICIAL DIST. CT. , 199 P.3d 828 ( 2009 )

Doe v. Princess Cruise Lines, Ltd. , 657 F.3d 1204 ( 2011 )

Shelton v. Shelton , 119 Nev. 492 ( 2003 )

Northern California Newspaper Guild Local 52 v. The ... , 856 F.2d 1381 ( 1988 )

mediterranean-enterprises-inc-a-california-corporation-v-ssangyong , 708 F.2d 1458 ( 1983 )

Dean Witter Reynolds Inc. v. Byrd , 105 S. Ct. 1238 ( 1985 )

Mikes v. Strauss , 889 F. Supp. 746 ( 1995 )

Nos. 96-55358, 96-55892 , 125 F.3d 765 ( 1997 )

Jones v. Halliburton Co. , 583 F.3d 228 ( 2009 )

United States of America, Ex Rel. Kevin G. Kelly v. The ... , 9 F.3d 743 ( 1993 )

southern-california-gas-company-a-california-utility-corporation-v-city , 336 F.3d 885 ( 2003 )

New York State Conference of Blue Cross & Blue Shield Plans ... , 115 S. Ct. 1671 ( 1995 )

At&T Mobility LLC v. Concepcion , 131 S. Ct. 1740 ( 2011 )

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