Prather v. AT&T, Inc.

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
JOHN C. PRATHER, on behalf of No. 13-17489
himself and the United States of
America, and the several states of D.C. No.
California, Delaware, Florida, 3:09-cv-02457-
Illinois, Indiana, Massachusetts, CRB
Nevada, New Hampshire, New
Jersey, New Mexico, New York,
Rhode Island, Virginia, as well as OPINION
the District of Columbia,
Plaintiff-Appellant,
v.
AT&T, INC.; CELLCO PARTNERSHIP,
dba Verizon Communications;
QWEST COMMUNICATIONS
INTERNATIONAL, INC.; SPRINT
NEXTEL CORP.,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of California
Charles R. Breyer, District Judge, Presiding
Argued and Submitted September 14, 2016
San Francisco, California
Filed February 6, 2017
2 PRATHER V. AT&T
Before: Ronald M. Gould and Marsha S. Berzon, Circuit
Judges, and William K. Sessions III,* District Judge.
Opinion by Judge Sessions
SUMMARY**
False Claims Act
The panel affirmed the district court’s dismissal for lack
of subject matter jurisdiction of a qui tam action, under the
False Claims Act, brought by a longtime prosecutor, alleging
that the largest telecommunications companies in the United
States were fraudulently overcharging the federal government
for surveillance services.
The public disclosure bar of the False Claims Act
provides that once allegations of fraud have entered the
public domain, a person may not bring a quit tam action
unless he can prove that he was on original source of those
allegations.
The panel held that the district court properly determined
that the 2010 Amendments to the False Claims Act, which
transformed the public disclosure bar from a jurisdictional bar
to an affirmative defense, did not apply to the plaintiff’s
*
The Honorable William K. Sessions III, United States District Judge
for the District of Vermont, sitting by designation.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
PRATHER V. AT&T 3
action, brought in 2009, because the Amendments impacted
the substantive rights of parties and substantive changes are
not applied retroactively.
The panel held that plaintiff was not an “original source”
of the information. The panel agreed with the district court’s
conclusion that plaintiff did not have direct knowledge
of fraud sufficient to qualify as an “original source.” The
panel also held that plaintiff’s submissions to the Federal
Communications Commission were not “voluntarily
provided” as required by the statute, 31 U.S.C.
§ 3730(e)(4)(B).
The panel held that the district court properly concluded
it had no discretion to exercise supplemental jurisdiction over
plaintiff’s state law claims.
COUNSEL
John G. Balestriere (argued) and Jillian L. McNeil,
Balestriere Fariello, New York, New York, for Plaintiff-
Appellant.
Mark E. Haddad (argued), Collin Wedel (argued), and
Douglas A. Axel, Sidley Austin LLP, Los Angeles,
California, for Defendant-Appellee AT&T.
Laura K. Lin, Jonathan H. Blavin, and Jerome C. Roth,
Munger Tolles & Olson LLP, San Francisco, California, for
Defendant-Appellee Cellco Partnership.
Breena M. Roos, Kathleen M. Sullivan, and David F. Taylor,
Perkins Coie LLP, Seattle, Washington, for Defendants-
4 PRATHER V. AT&T
Appellees Sprint Nextel Corp. and Qwest Communications
International Inc.
Benjamin M. Stoll and Edward C. Barnidge, Williams &
Connolly LLP, Washington, D.C., for Defendant-Appellee
Sprint Nextel Corp.
OPINION
SESSIONS, District Judge:
OVERVIEW
John C. Prather, a longtime state prosecutor, brought a qui
tam action alleging that the largest telecommunications
(“telecom”) companies in the United States were fraudulently
overcharging the federal government for surveillance
services. The district court dismissed Prather’s action under
the False Claims Act’s (“FCA”) public disclosure bar, which
states that once allegations of fraud have entered the public
domain a person may not bring a qui tam action unless he can
prove that he was an original source of those allegations. See
31 U.S.C. § 3730(e)(4) (2006). For the reasons set forth
below, we agree that Prather did not qualify as an original
source and affirm.
FACTUAL BACKGROUND
Prather served as an attorney in state government for over
thirty years. He began his service as an Assistant Attorney
General in his native state of North Carolina, then moved to
New York and joined the office of the Manhattan District
Attorney. In 1989 he became the Deputy Chief of the Frauds
PRATHER V. AT&T 5
Bureau in that office, and in 1992 was appointed Senior
Investigative Counsel in the Rackets Bureau. He joined the
New York Office of the Attorney General (“NYOAG”) in
1999. From 2002 to 2008, Prather served as the Deputy
Attorney General in charge of the NYOAG’s Organized
Crime Task Force (“OCTF”). When he initiated this qui tam
action, he was serving as the Deputy Inspector General for
Investigation in the Metropolitan Transportation Authority,
Office of the Inspector General.
During his many years as a government attorney, Prather
supervised hundreds of wiretaps. The OCTF alone conducted
over 200 wiretaps per year. As head of the OCTF, Prather
was authorized to determine when it was necessary to seek
court permission to use wiretaps, and to personally apply for
eavesdropping warrants. He also reviewed telecom
companies’ rate sheets and developed surveillance budgets.
Until the mid-1990s, most wiretaps required the manual
“bugging” of a phone or phone line. To bug a phone line, law
enforcement would either physically attach a device to the
phone wire or place a bug inside the phone itself. The phone
company would then set up a separate line into which law
enforcement could dial and listen to the conversations taking
place over the bugged line. The separate line was essentially
the same as any other business or residential phone line
provided by the phone company.
With the emergence of cellular phones, this method of
bugging telephones was no longer effective. In 1994,
Congress passed the Communications Assistance to Law
Enforcement Agencies Act (“CALEA”), authorizing the
payment of $500 million to telecom companies for
investment in the hardware and software necessary to
6 PRATHER V. AT&T
maintain law enforcement’s ability to effectively eavesdrop
despite technological developments in telecommunications.
See 47 U.S.C. § 1001–1010. Prather alleges that as a result
of these upgrades, phone companies can now, “by a simple
flick of a switch,” duplicate and forward to law enforcement
both a call’s audio content and its associated information,
such as caller identification. ER 188.
By law, the government is required to pay the telecom
companies for their assistance with eavesdropping
procedures. The Omnibus Crime Control and Safe Streets
Act of 1968 (“OCCSSA”), as amended, requires phone
carriers to “furnish the applicant [requesting eavesdropping]
forthwith all information, facilities, and technical assistance
necessary to accomplish the interception unobtrusively and
with a minimum of interference with the services that such
provider . . . is according the person whose communications
are to be intercepted.” 18 U.S.C. § 2518(4). In turn, law
enforcement must compensate carriers for the “reasonable
expenses incurred in providing such facilities or assistance.”
Id.
The OCCSSA does not define “reasonable expenses.”
Nor does the more-recently enacted CALEA reference the
reimbursement provision in the OCCSSA. In 2002, the
Federal Communications Commission (“FCC”) issued an
Order and Final Rule stating that “carriers can recover at least
a portion of their CALEA software and hardware costs by
charging to [law enforcement agencies], for each electronic
surveillance order authorized by the CALEA, a fee that
includes recovery of capital costs, as well as recovery of the
specific costs associated with each order.” In re Commc’ns
Assistance for Law Enforcement Act, 17 FCC Rcd. 6896,
6917 ¶ 60 (2002).
PRATHER V. AT&T 7
Prather claims that the telecom companies have used
CALEA to overcharge law enforcement agencies for wiretaps
and related surveillance assistance. He asserts that although
the work involved in providing a wiretap has decreased since
the technological changes funded by CALEA, charges for
such services have generally increased tenfold since the law
was passed. Prather allegedly witnessed these price increases
himself through his work as a prosecutor, and as a result of
information he obtained from telecom company
representatives.
Prather claims that he spoke with his superiors at the
NYOAG about the suspected overcharges as early as 1999.
He reportedly raised similar concerns with the Manhattan
District Attorney’s Office. There is no allegation that he
spoke to or otherwise alerted the federal government prior to
2004, when the FCC requested input from law enforcement
agencies about their wiretap costs. The FCC inquiry was
spurred by a joint petition submitted by the DOJ, FBI, and
DEA seeking a review of those costs. Among the issues
identified by the petition was the need to “clarify the cost
methodology and financial responsibility associated with
intercept provisioning.” ER 232, 299–302. The petition also
asked the FCC to reverse its 2002 Order allowing carriers to
recover CALEA-related costs, including capital investments,
through intercept charges.
The FCC issued a formal request for comment on the joint
petition on March 12, 2004. New York Attorney General
Elliot Spitzer was among those who submitted comments.
Prather contends he had to convince the person who was
preparing the NYOAG’s comments, Susanna Zwerling, to
include allegations of overcharging. Zwerling eventually
requested that Prather submit affidavits as part of the
8 PRATHER V. AT&T
NYOAG’s official submission, the first of which was dated
April 12, 2004, and received by the FCC on April 14, 2004.
ER 24–32, 33–42; SER 49, 85–87, 137–72. While the
affidavits were generated during Prather’s work hours, on his
work computer, and submitted in his official capacity, SER
86–88, 90–91, Prather submits that nothing in his role as the
head of the OCTF compelled him to raise the issue of
overcharging with either the New York Attorney General or
the FCC.
Other law enforcement agencies also offered comments
in response to the FCC’s request. Some of those comments
were submitted before those of the NYOAG. SER 110–19.
Several comments expressed concerns about excessive
charges. Id. On April 27, 2004, the DOJ, FBI, and DEA
replied with their own concerns about intercept fees. On
August 9, 2004, the FCC issued a second request for
comments. In response, the NYOAG and Prather reiterated
their concerns.
Appellees submit that while Prather alleges overcharges,
his claims are speculative. In his work as a prosecutor,
Prather received rate sheets from telecom companies listing
pricing for surveillance-related services. Those rate sheets
did not include information about the companies’ internal
costs, and Prather conceded in his deposition that he did not
know what a carrier’s actual costs were for wiretapping. SER
76–77 (Q: “You don’t know what, in fact, [the] carriers’
actual costs that they do incur on wiretap provisional services
are; correct? A: I don’t.”). Appellees also submit that
Prather viewed only one invoice—a $200 charge for a long-
distance intercept—from a pre-CALEA wiretap. After
CALEA, he reportedly viewed, at most, five other invoices,
PRATHER V. AT&T 9
but does not recall the dates, carriers, amounts, or services
involved. SER 67–68.
On May 12, 2006, the FCC issued an order stating that
its prior statement regarding the ability of
carriers to recover a portion of their CALEA
capital costs through electronic surveillance
order charges imposed on [government
agencies] . . . was made without the benefit of
a complete and full record on the issue. . . .
We [now] conclude that, while carriers
possess the authority to recover through
intercept charges the costs associated with
carrying out an intercept that is accomplished
using a CALEA-based intercept solution, they
are prohibited by CALEA from recovering
through intercept charges the costs of making
modifications to equipment, facilities, or
services . . . [or] the costs of developing,
installing, and deploying CALEA-based
intercept solutions . . . .
SER 207–08; In re Commc’ns Assistance for Law
Enforcement Act & Broadband Access & Servs., 21 FCC Rcd.
5360, 5392–93 ¶ 71 (2006) (footnotes omitted). Prather
alleges that despite the FCC’s updated position with respect
to recoverable costs, telecom companies have continued to
overcharge.
10 PRATHER V. AT&T
PROCEDURAL HISTORY
Prather filed his initial complaint on June 3, 2009. The
complaint was unsealed on July 11, 2011, the same day the
United States submitted notice of its election not to intervene.
Appellee telecom companies filed a joint motion to
dismiss. Dist. Dkt. 63. The district court granted the motion
to dismiss with leave to amend, and allowed limited
discovery on Prather’s status as an original source of his fraud
allegations.
Prather filed an amended complaint on July 18, 2012.
After he was deposed, Appellees filed a joint motion to
dismiss the amended complaint. The district court granted
the motion to dismiss on November 5, 2013, concluding that
it lacked jurisdiction because (1) the 2010 Amendments to the
FCA did not apply to Prather’s action; (2) Prather did not
have direct knowledge of the alleged fraud; (3) his
disclosures were not voluntary in light of his duties as a state
prosecutor; and (4) he did not have a hand in commencing an
investigation. The district court also dismissed Prather’s state
law claims for lack of subject matter jurisdiction under
28 U.S.C. § 1367(c). Prather appealed.
STANDARD OF REVIEW
We review a dismissal for lack of subject matter
jurisdiction de novo. Schnabel v. Lui, 302 F.3d 1023, 1029
(9th Cir. 2002); Ma v. Reno, 114 F.3d 128, 130 (9th Cir.
1997). We must accept the district court’s factual findings
relevant to subject matter jurisdiction unless those findings
were clearly erroneous. Ass’n of Am. Med. Colls. v. United
States, 217 F.3d 770, 778 (9th Cir. 2000).
PRATHER V. AT&T 11
DISCUSSION
I. Application of the 2010 Amendments to the False
Claims Act
Prather brought his claims under the FCA in 2009. On
March 23, 2010, the Patient Protection and Affordable Care
Act amended the public disclosure bar of the FCA. Prior to
2010, the FCA stated:
No court shall have jurisdiction over an [FCA
qui tam] action . . . based upon the public
disclosure of allegations or transactions in a
criminal, civil, or administrative hearing, in a
congressional, administrative, or Government
Accounting Office report, hearing, audit or
investigation, or from the news media, unless
the action is brought by the Attorney General
or the person bringing the action is an original
source of the information.
31 U.S.C. § 3730(e)(4)(A) (2006). In 2010, amendments to
the FCA removed the reference to jurisdiction and adopted
the following language:
The Court shall dismiss an action or claim
under this section, unless opposed by the
Government, if substantially the same
allegations or transactions as alleged in the
action or claim were publicly disclosed –
(i) in a Federal criminal, civil, or
administrative hearing in which the
Government or its agent is a party;
12 PRATHER V. AT&T
(ii) in a congressional, Government
Accountability Office, or other Federal report,
hearing, audit, or investigation; or
(iii) from the news media, unless the action is
brought by the Attorney General or the person
bringing the action is an original source of the
information.
Pub. L. No. 111-148, § 10104(j)(2), 124 Stat. 119, 901–02
(2010 Amendments). Courts have held that these
amendments transformed the public disclosure bar from a
jurisdictional bar to an affirmative defense. See, e.g., United
States ex rel. Beauchamp v. Academi Training Ctr., 816 F.3d
37, 40 (4th Cir. 2016) (“Post-amendment, the public-
disclosure bar is a grounds for dismissal—effectively, an
affirmative defense—rather than a jurisdictional bar.”);
United States ex rel. Osheroff v. Humana, Inc., 776 F.3d 805,
810 (11th Cir. 2015) (“We conclude that the amended
§ 3730(e)(4) creates grounds for dismissal for failure to state
a claim rather than for lack of jurisdiction.”); see also
Rockwell Int’l Corp v. United States, 549 U.S. 457, 468
(2007) (“[T]he jurisdictional nature of the original-source
requirement [prior to the 2010 Amendments] is clear ex
visceribus verborum.”).
Prather submits that the changes to the public disclosure
bar were jurisdictional rather than substantive, and that the
usual presumption against statutory retroactivity does not
apply to jurisdictional changes. Accordingly, he contends
that the district court should have applied the amended statute
retroactively and placed the burden on Defendants to assert
public disclosure as an affirmative defense.
PRATHER V. AT&T 13
The Supreme Court has determined that the amendments
to 31 U.S.C. § 3730(e)(4) are not retroactive. Graham Cty.
Soil & Water Conservation Dist. v. United States ex rel.
Wilson, 559 U.S. 280, 283 n.1 (2010) (“The legislation makes
no mention of retroactivity, which would be necessary for its
application to pending cases given that it eliminates
petitioners’ claimed defense to a qui tam suit.”). In so
holding, the Supreme Court did not differentiate between
substantive and jurisdictional provisions. In Hughes Aircraft
Co. v. United States ex rel. Schumer, 520 U.S. 939 (1997),
however, the Court discussed jurisdictional amendments,
contrasting those that “affect only where a suit may be
brought” with amendments that impact “whether it may be
brought at all.” Id. at 951 (emphasis in original). An
amendment that “creates jurisdiction where none previously
existed . . . speaks not just to the power of a particular court
but to the substantive rights of the parties as well. Such a
statute, even though phrased in ‘jurisdictional’ terms, is as
much subject to our presumption against retroactivity as any
other.” Id. (emphasis in original).
Like the 1986 amendments to the FCA’s public disclosure
bar discussed in Hughes Aircraft, the 2010 Amendments said
nothing about where a suit must be brought, and instead
addressed the power of a district court to assert jurisdiction.
Specifically, prior to the 2010 Amendments, a district court
lacked jurisdiction to hear a case that was barred by the
public disclosure provision. After the 2010 Amendments, a
court could assert jurisdiction over the relator’s complaint
and entertain public disclosure as a defense. Under the
Hughes Aircraft analysis, the 2010 Amendments impact the
substantive rights of parties. As substantive changes are not
applied retroactively, the district court properly determined
that the 2010 Amendments do not apply.
14 PRATHER V. AT&T
II. Whether Prather is an “Original Source”
The FCA imposes civil penalties on any person who
defrauds the federal government. 31 U.S.C. § 3729(a)
(2006). The statute provides that, in addition to enforcement
actions brought by the Attorney General, a private person
may bring a qui tam action on behalf of the government and
himself as the “relator.” Id. § 3730. “If the relator prevails,
he receives a percentage of the recovery, with the remainder
being paid to the government.” United States ex. rel. Biddle
v. Bd. of Trs. of Leland Stanford, Jr. Univ., 161 F.3d 533, 535
(9th Cir. 1998).
As discussed above, a relator’s action brought under the
pre-2010 FCA is jurisdictionally barred if it is “based upon
the public disclosure of allegations or transactions . . . unless
. . . the person bringing the action is an original source of the
information.” 31 U.S.C. § 3730(e)(4)(A). Prather concedes
that his claims were publicized before he filed suit, and that
the public disclosure bar may therefore apply. He can avoid
application of the bar, however, if he qualifies as an “original
source” of the disclosed information. See id.
There is no dispute that the pre-2010 definition of an
“original source” applies to Prather’s claims. The 2010
Amendments substantively changed the “original source”
definition, and the new language does not apply retroactively
to actions brought prior to the amendment, see United States
ex rel. Hartpence v. Kinetic Concepts, Inc., 792 F.3d 1121,
1123 n.1 (9th Cir. 2015) (en banc). Prior to 2010, the statute
defined an “original source” as “an individual who [1] has
direct and independent knowledge of the information on
which the allegations are based and [2] has voluntarily
provided the information to the Government before filing an
PRATHER V. AT&T 15
action . . . based on the information.” Id. at 1128 (quoting
version of 31 U.S.C. § 3730(e)(4)(B) in effect prior to 2010).1
Prather fails to satisfy either of those requirements.
A. Direct and Independent Knowledge of Fraud
To have direct knowledge under the statute, a person’s
knowledge must be firsthand, obtained through his own labor,
and unmediated by anything else. United States ex rel. Meyer
v. Horizon Health Corp., 565 F.3d 1195, 1202 (9th Cir.
2009), overruled on other grounds by Hartpence, 792 F.3d at
1128 n.6. The person must also have “true ‘knowledge,’” as
opposed to guesswork or suspicion, since “the purposes of the
Act would not be served by allowing a relator to maintain a
qui tam suit based on pure speculation or conjecture.” United
States ex rel. Aflatooni v. Kitsap Physicians Servs., 163 F.3d
516, 525–26 (9th Cir. 1999); Malhotra v. Steinberg, 770 F.3d
853, 860 (9th Cir. 2014) (concluding that “generalized
suspicion” did not constitute “knowledge” of a kickback
scheme).
Prather contends that he had firsthand knowledge of fraud
based upon his review of invoices sent to the OCTF, his
knowledge of average post-CALEA wiretap charges, and his
experience setting investigation budgets. He claims to have
learned about wiretapping technologies, both pre- and post-
CALEA, in conversations with OCTF technology personnel
1
The district court, following the law of this Circuit at the time, cited
a third “original source” requirement: that the relator “had a hand in the
public disclosure of allegations that are part of . . . [the] suit.” United
States ex rel. Prather v. AT&T, Inc., 996 F. Supp. 2d 861, 867 (N.D. Cal.
2013). This Circuit has since found that this third requirement “has no
textual basis,” and has thus given “it a respectful burial.” Hartpence,
792 F.3d at 1127–28.
16 PRATHER V. AT&T
about the OCTF’s own systems, and through participation in
CALEA-related conferences. In concluding that the telecom
companies were overcharging, Prather compared the post-
CALEA charges to an invoice he saw for a 1988 landline
wiretap. ASER 53–54. Prather also recalls speaking with a
Sprint representative prior to May 2000, who allegedly stated
that “some” of Sprint’s charges were for “fees from
transaction attorneys who reviewed court rulings on
wiretaps.” ER 196; SER 80–81.
The district court disagreed, comparing Prather’s case to
Aflatooni, in which a doctor claimed that defendants were
committing Medicare fraud by making medically unnecessary
referrals. 163 F.3d at 525. On appeal, this Court affirmed the
district court’s conclusion that Dr. Aflatooni’s evidence did
not constitute “knowledge” under the FCA. We noted that
“Dr. Aflatooni could not recall the name of any [M]edicare
patient who was allegedly charged for unnecessary medical
services,” and that his evidence against the subcontractor
suggested only that it “was negligent in the handling of some
of its Medicare claims.” Id. at 526. Further, “Dr. Aflatooni
[did] not point to any other evidence in the record which
suggest[ed] that he ha[d] ‘information,’ as opposed to
speculation,” to support his claim of Medicare fraud. Id.
Prather contends that, unlike Dr. Aflatooni, he gathered
information over a period of years and was not merely
guessing when he filed his action. His fundamental premise
is that government-funded technological upgrades under
CALEA necessarily resulted in a reduction of the labor
required to provide discrete wiretap and surveillance services.
He contends that despite doing less work—and so presumably
incurring lower costs—the telecom companies have been
charging law enforcement agencies several times more than
PRATHER V. AT&T 17
the cost of pre-CALEA wiretaps. He argues he “connect[ed]
the dots” to conclude that OCTF and other law enforcement
agencies have been overcharged.
Prather concedes, however, that he does not know what
technologies are being used to provide for surveillance, what
labor is actually being performed, and what costs are
incurred. Based upon these facts, the district court concluded
that Prather’s allegations were largely conjectural. We agree
that Prather has filed suit on the basis of speculation, and
not—as required by the applicable law—true knowledge of
fraudulent misconduct. See id. at 525–26.
Nor are the telecom companies’ charges a fraud that
Prather viewed firsthand. The FCA was designed “to
encourage insiders to come forward with [information about
possible fraud] where they would otherwise have little
incentive to do so.” Biddle, 161 F.3d at 538; see also United
States ex rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v.
Prudential Ins. Co., 944 F.2d 1149, 1154 (3d Cir. 1991)
(noting legislative history of the 1986 amendments to the
FCA displayed Congress’s “intent to encourage persons with
first-hand knowledge of fraudulent misconduct” to come
forward); United States ex rel. Devlin v. State of Cal., 84 F.3d
358, 361 (9th Cir. 1996) (holding relator’s knowledge was
“secondhand” because it came from a defendant’s employee
“who had firsthand knowledge of the alleged fraud as a result
of his employment”). As is evident from his speculative
allegations, Prather did not have firsthand knowledge of the
true costs of the transactions underlying his FCA suit.
Indeed, Prather’s primary “firsthand” contribution is his
inference that the information available amounts to evidence
of FCA violations. That assertion, however, does not provide
18 PRATHER V. AT&T
relief from the public disclosure bar, as “[a] relator’s ability
to recognize the legal consequences of a publicly disclosed
fraudulent transaction does not alter the fact that the material
elements of the violation already have been publicly
disclosed.” A-1 Ambulance Serv., Inc. v. California, 202 F.3d
1238, 1245 (9th Cir. 2000) (quoting United States ex rel.
Findley v. FPC-Boron Emps’ Club, 105 F.3d 675, 688 (D.C.
Cir. 1997)) (internal quotation marks omitted); see also
United States v. Alcan Elec. and Engineering, Inc., 197 F.3d
1014, 1020–21 (9th Cir. 1999) (approving a district court’s
conclusion that relator did not have direct knowledge under
the FCA “because his investigation merely added a legal
name to describe the alleged circle of facts”). We therefore
agree with the district court’s conclusion that Prather did not
have direct knowledge of fraud sufficient to qualify as an
“original source.” See 31 U.S.C. § 3730(e)(4)(B).
B. Voluntary Disclosure
In addition to having direct and independent knowledge
of fraud, an “original source” under the pre-2010 FCA also
must have “voluntarily provided the information to the
Government before filing an action.” Id. Prather argues that
his disclosures to the FCC were voluntary, as they were not
a part of his usual job duties. He also contends that he had to
convince his office to include this theory of overcharges, and
that he had tried to alert other governmental agencies of such
overcharges in prior years.
The district court held that Prather’s disclosures were not
voluntary in light of his duties at the NYOAG and the facts
underlying his participation in the 2004 FCC inquiry. The
district court first considered the requirements of Prather’s
work for the State of New York, properly noting that it was
PRATHER V. AT&T 19
not Prather’s job to question the reasonableness of charges by
the telecom companies. Prather, 996 F. Supp. 2d at 869.
The district court then determined:
Even assuming that disclosing fraud was not
a part of Relator’s regular job description, his
disclosure was involuntary because it was
prompted by the FCC’s request for comment
and submitted in his capacity as Deputy
Attorney General in Charge of the Statewide
Organized Crime Task Force, in support [of]
the official comments of his superior, the
Attorney General. Although Relator asked
Zwerling whether “there was a way to
address” the issue of overcharging in the
comments, he did not attempt to include any
information himself and did so only after
Zwerling asked him to provide an affidavit.
Id. (citations omitted). The district court also found that prior
to 2004, Prather “apparently never even attempted to report
his concerns to anyone in the federal government. . . .
Instead, it was not until the FCC issued its requests for
comment and Zwerling asked him to support the Attorney
General’s response that [Prather] conveyed his suspicions to
the federal government.” Id. at 870.
The district court’s findings as to the affidavits submitted
to the FCC are supported by Prather’s deposition testimony.
Prather testified that when the FCC sought comments from
the NYOAG, Zwerling asked him to arrange for an affidavit
from the OCTF. At that time, Prather “raised again the
notion that [NYOAG was] being overcharged and wondered
if there was a way to address that in the filing also.” Prather
20 PRATHER V. AT&T
testified that Zwerling initially said “no . . . there was not a
place in the comments for [the overcharging issue].” SER 86.
Zwerling subsequently “changed her mind, and said [to
Prather,] ‘You know what? I think . . . maybe we will put an
affidavit in about that. Can you do an affidavit for us?’” Id.
86–87. Given this testimony, the district court did not clearly
err in concluding that Prather submitted his information to the
FCC after being requested to do so by his office.
Furthermore, this Circuit has long recognized that a
government attorney is not a quintessential qui tam relator.
See United States ex rel. Fine v. Chevron, U.S.A., Inc.,
72 F.3d 740, 742–43 (9th Cir. 1995) (en banc) (“[T]he
paradigm qui tam case is one in which an insider at a private
company brings an action against his own employer.”); Wang
v. FMC Corp., 975 F.2d 1412, 1419 (9th Cir. 1992) (“Qui tam
suits are meant to encourage insiders privy to a fraud on the
government to blow the whistle on the crime.”), overruled on
other grounds by Hartpence, 792 F.3d at 1129.2 In Fine, an
en banc panel of this Circuit considered whether a
government auditor could be considered an original source of
information he had provided to his government employer as
part of his job responsibilities. 72 F.3d at 741. The relator in
Fine was a former employee of the Office of the Inspector
General at the U.S. Department of Energy, whose job had
been to supervise audits conducted by others. Id. at 741–42.
“He left the job in 1992, apparently disgruntled because his
2
See also H.R.Rep. No. 99-660, at 23 (1986) (“The purpose of the qui
tam provisions of the False Claims Act is to encourage private individuals
who are aware of fraud being perpetrated against the Government to bring
such information forward.”); S.Rep. No. 99-345, at 14 (1986), reprinted
in 1986 U.S.C.C.A.N. 5266, 5279 (stating that the False Claims Act
“reward[s] those private individuals who take significant personal risks to
bring such wrongdoing to light”).
PRATHER V. AT&T 21
supervisors either could not or would not take action against
every perceived violation he brought to their attention.
During the year following his retirement, Fine filed a total of
seven qui tam actions under the False Claims Act.” Id. at
742.
The Fine court considered the legislative history and
purpose of the FCA, and contemplated whether a qui tam suit
brought by a government employee “involve[d] application
of a statute to a factual scenario Congress may never have
envisioned.” Id. at 743. Ultimately, the Court decided to rely
solely on the statute’s “unusually precise” requirement that
information be offered “voluntarily.” Id. (quoting United
States ex rel. Hagood v. Sonoma Cty. Water Agency, 929 F.2d
1416, 1419 (9th Cir. 1991) and 31 U.S.C. § 3730(e)(4)(B))
(internal quotation marks omitted). In doing so, the Court
questioned whether a salaried government auditor’s
disclosure of information learned on the job is truly
“voluntary,” citing the dictionary definition of the term:
“Acting, or done, of one’s own free will without valuable
consideration; acting or done without any present legal
obligation to do the thing done or any such obligation that can
accrue from the existing state of affairs.” Id. at 744 (quoting
Webster’s Third New International Dictionary 2564 (1981)
(definition 1(g)) (internal quotation marks omitted). The
Court concluded that, in contrast with this definition, Fine
“acted in exchange for valuable consideration—his
salary—and under an employment-related obligation to do
the very acts he claims were voluntary.” Id.
Unlike the relator in Fine, it was not Prather’s job to
discover and report fraud. Cf. id. at 743 (concluding that Fine
“was a salaried government employee, compelled to disclose
fraud by the very terms of his employment.”). Nonetheless,
22 PRATHER V. AT&T
the relevant disclosures were made in response to his
employer’s request, which in turn was triggered by a federal
inquiry. As the district court properly found, it was Zwerling,
as the person charged with coordinating the NYOAG’s
response, who asked Prather to provide an affidavit on behalf
of the Attorney General. For this task, which was
accomplished during work hours, on a work computer, and in
Prather’s official capacity, Prather was compensated by a
government salary.
Prather claims that although he ultimately submitted
affidavits to the FCC, he had to fight to have the Attorney
General accept his submissions. A similar scenario was
addressed in Biddle, which reasoned that
resistance by [Biddle’s] superiors [does not]
transform his unearthing of possible fraud into
a voluntary investigation. The purposes
underlying the FCA are to encourage
individuals to report potential fraudulent
activities being committed against the
government, and to reward them for doing so.
But where a government employee is paid to
perform this function, the employee should
not receive a windfall for merely doing his
job. . . Uncovering fraud is a formidable task,
especially when one’s supervisors may be
opposed, uninterested, or even involved in the
fraud.
161 F.3d at 542. Biddle further reasoned that, by accepting
a job that included fraud reporting, “Biddle assumed the risk
of encountering such a difficult situation,” and was therefore
not entitled to any windfall via the FCA. Id.
PRATHER V. AT&T 23
This case is admittedly different from both Fine and
Biddle in that no part of Prather’s formal job description
included a duty to report fraud against the government.
Prather’s job was to prosecute organized crime. The fact
remains, however, that he was asked to submit affidavits on
behalf of his employer. Although he had suspected fraud for
many years and raised those suspicions within the NYOAG,
he made no effort on his own to alert the FCC or any other
federal agencies of his theories prior to 2004. It was only
when Prather was assigned the task of assisting with his
employer’s response to the FCC’s request for comments that
he raised the matter, after asking if “there was a way to
address” the issue of overcharging in the state agency’s
response. SER 86. We therefore conclude, like the district
court, that Prather’s submissions to the FCC were not
“voluntarily provided” as required by the statute. See
31 U.S.C. § 3730(e)(4)(B).
III. State Law Claims
Without subject matter jurisdiction over Prather’s federal
claim, the district court properly concluded it had no
discretion to exercise supplemental jurisdiction over Prather’s
state law claims. See Herman Family Revocable Tr. v. Teddy
Bear, 254 F.3d 802, 806 (9th Cir. 2001).
CONCLUSION
Prather brought a qui tam action based upon his theory of
excessive overcharging by telecom companies. Because
Prather was not an “original source” of that information as
24 PRATHER V. AT&T
defined by the FCA, we affirm the district court’s dismissal
of Prather’s federal and state claims for lack of subject matter
jurisdiction.
AFFIRMED.