Thomas Berg v. Honeywell International, Inc.

FILED
NOT FOR PUBLICATION DEC 19 2012
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
THOMAS A. BERG; et al., No. 11-35001
Plaintiffs - Appellants, D.C. No. 3:07-cv-00215-JWS
v.
MEMORANDUM *
HONEYWELL INTERNATIONAL, INC.
and HONEYWELL, INC.,
Defendants - Appellees.
Appeal from the United States District Court
for the District of Alaska
John W. Sedwick, District Judge, Presiding
Argued and Submitted August 28, 2012
Anchorage, Alaska
Before: HAWKINS, McKEOWN, and BEA, Circuit Judges.
Thomas Berg, Ryne Linehan, Nayer Mahmoud, Stanley Smith, and Thomas
Berg (collectively, “Relators”) appeal the dismissal of their qui tam action against
Honeywell International, Inc. and Honeywell, Inc. (collectively, “Honeywell”),
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
under the False Claims Act (“FCA”), 31 U.S.C. § 3729–3733. The facts are well
known to the parties and we do not repeat them here.
The district court held that it lacked jurisdiction over Relators’ action under
the FCA because the Army Audit Agency (“AAA”) reports and the Government
Accountability Office (“GAO”) report were “public disclosures” under 31 U.S.C.
§ 3730(e)(4)(A) and Relators did not qualify as “original sources” under
§ 3730(e)(4)(B). We review de novo a district court’s determination that it lacks
subject matter jurisdiction under § 3730(e)(4)(A). United States ex rel. Meyer v.
Horizon Health Corp., 565 F.3d 1195, 1198 (9th Cir. 2009).
The “public disclosure bar” of the FCA provides that
No court shall have jurisdiction over an action under this section
based upon the public disclosure of allegations or transactions in a
criminal, civil, or administrative hearing, in a congressional,
administrative, or Government Accounting Office report, hearing,
audit, or investigation, or from the news media, unless the . . . person
bringing the action is an original source.
31 U.S.C. § 3730(e)(4)(A) 1. For the bar to prevent a court from exercising
jurisdiction, there must have been (1) a “public disclosure” (2) of “allegations or
1
In 2010, Congress amended § 3730(e)(4) and did not address retroactivity.
Accordingly, we apply the previous version of § 3730(e)(4), which was in effect at
the time of the filing of this action. See Graham Cnty. Soil and Water
Conservation Dist. v. United States ex rel. Wilson, 130 S. Ct. 1396, 1400 n.1
(2010).
2
transactions” (3) in one of the three fora articulated in the statute (4) and the
relator’s action must be based upon that public disclosure. United States ex rel.
Lindenthal v. Gen. Dynamics Corp., 61 F.3d 1402, 1409 (9th Cir. 1995).
Initially, we must determine whether the AAA reports were publicly
disclosed because they were potentially available to the public through a Freedom
of Information Act (“FOIA”) request. “In the FOIA context, information can not
be deemed disclosed until a member of the public requests the information and
receives it from the government. Only then is the information actually, rather than
theoretically or potentially, available to the public.” United States ex rel. Schumer
v. Hughes Aircraft Co., 63 F.3d 1512, 1520 (9th Cir. 1995), vacated on other
grounds, 520 U.S. 939 (1997) (emphasis in original). Here, no member of the
public requested the AAA reports or received them from the government prior to
the date Relators filed their action. Thus, the reports were “theoretically or
potentially available” to the public prior to Relators’ suit, but they were not
“actually” available and were not publicly disclosed under the FCA. See Meyer,
565 F.3d at 1201 (“[E]ven when the government has the information, it is not
publicly disclosed under the Act until it is actually disclosed to the public.”).
Further, the AAA reports were not publicly disclosed when the government
provided them to EMP2, a private company hired by the government to audit the
3
energy performance savings contract (“ESPC”). In Schumer, the court
distinguished public disclosures from “the release of information within a private
sphere,” stating that under a “practical, commonsense interpretation, . . .
information that was disclosed in private has not been publicly disclosed.” 63 F.3d
at 1518 (internal quotation marks omitted); see also Meyer, 565 F.3d at 1200(recognizing that information disclosed in private is not a public disclosure under
the FCA). In Seal 1 v. Seal A, 255 F.3d 1154, 1161-62 (9th Cir. 2001), the court
employed Schumer’s reasoning to hold that information was publicly disclosed
because the government disclosed it to an “outsider to the [] investigation” with a
“significant incentive (and no disincentive) to use the allegations” to his own
advantage. Here, unlike the relator in Seal 1, EMP2 was not an “outsider” to the
investigation, but rather was acting on behalf of the government and had an
incentive to keep confidential the information learned during its audit. Thus, the
government did not publicly disclose the AAA reports by providing them to
EMP2.2 Accordingly, we conclude the AAA reports did not constitute a “public
disclosure” under § 3730(e)(4)(A).
2
Additionally, the Inspector General Report’s brief mention of the final
AAA report does not trigger the public disclosure bar because the Report did not
contain any of the “allegations or transactions” upon which Relators’ action is
based. See United States ex rel. Found. Aiding the Elderly v. Horizon West, Inc.,
265 F.3d 1011, 1015 (9th Cir. 2001).
4
Finally, we consider whether the GAO report was a “public disclosure”
under § 3730(e)(4)(A). The GAO report disclosed generally that some contractors
performing the 254 ESPCs granted between 1999 and 2003 had engaged in the
activity Relators allege is fraudulent, but the report did not disclose the names of
any contractors or specify any locations where an ESPC may have involved fraud.
Because of the large number of ESPCs granted and the GAO report’s lack of
specificity, the report did not contain sufficient information to enable the
government to pursue an investigation against Honeywell. Accordingly, the GAO
report was not a “public disclosure” under § 3730(e)(4)(A). See United States v.
Alcan Elec. and Eng’g, Inc., 197 F.3d 1014, 1019 (9th Cir. 1999) (holding that the
disclosure is a “public disclosure” within the meaning of the FCA if the “the prior
public disclosure[] contained enough information to enable the government to
pursue an investigation against [the defendant]”).
Because neither the AAA reports nor the GAO report constituted “public
disclosures” under § 3730(e)(4)(A), we reverse the judgment dismissing for lack of
jurisdiction and remand for further proceedings.
REVERSED and REMANDED.
5