United States v. A Advantage Forwarders, Inc.

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ILLINOIS

UNITED STATES OF AMERICA

ex rel. DONALD KLEIN,

Plaintiff/Relator,

Case No. 3:19-CV-563-NJR

v.

FILED UNDER SEAL

A ADVANTAGE FORWARDERS, INC.,

et al.,

Defendants.

SEALED ORDER

ROSENSTENGEL, Chief Judge:

Pending before the Court is Relator Donald Klein’s Amended Motion to

Voluntarily Dismiss without Prejudice and Maintain Seal for Three Years. (Doc. 89).

Relator asks the Court to dismiss the case without prejudice, but maintain the case under

seal for three years. The United States consents to the voluntary dismissal of this case

without prejudice, but opposes Relator’s motion to keep the case sealed for three years.

(Doc. 93). It further moves the Court to unseal the Complaint, Relator’s first motion to

dismiss, its response, and all subsequent filings in this action. (Id.). For the reasons set

forth below, the Court denies Relator’s motion to maintain the seal for three years, grants

Relator’s motion to voluntarily dismiss, and grants the Government’s motion to unseal.

BACKGROUND

This qui tam action was filed in February 2016 in the United States District Court

for the Eastern District of Virginia (Doc. 1); it was transferred to the Undersigned Chief

District Judge on May 28, 2019 (Doc. 54). Relator is the principal of international

transportation service provider (“TSP”) Allstates Worldwide Inc. (Doc. 87). The United

States Transportation Command (USTRANSCOM) contracts with TSPs like Allstates to

ship the household goods of U.S. armed services personnel and their families between

posts in the United States and overseas. (Docs. 87, 88). TSPs performing international

shipments must certify annually to USTRANSCOM whether they are under Common

Financial and/or Administrative Control (CFAC) with another TSP, i.e., whether they

control, or are subject to the control of, another TSP. A TSP that is in CFAC with another

TSP is only permitted to perform certain international shipments under restricted

circumstances. (Id.).

Relator’s Complaint, filed under the False Claims Act, 31 U.S.C. §§ 3729-3732, et

seq., alleges that the Defendant TSPs wrongfully obtained thousands of international

shipment contracts that they otherwise would have been prohibited from obtaining by

falsely representing they were not in CFAC with another TSP. (Doc. 1). As a result of the

Government’s investigation into Relator’s claims, the Government issued Civil

Investigative Demands to certain TSP Defendants, requiring them to provide tens of

thousands of documents. (Doc. 68). In May 2018, USTRANSCOM issued a notice to

Coleman World Group, LLC (“CWG”), the largest coordinated group of TSPs, that it

would convene a Transportation Service Provider Review Board (TRB) to determine

whether the Coleman Group TSPs were in CFAC. (Id.). After a hearing in November 2018,

the TRB issued a decision finding that the 11 CWG TSPs were in CFAC and should not

have been performing international shipment contracts. The TRB decision imposed a

two-year suspension on the Coleman TSPs. (Doc. 91).

On September 21, 2021, after a number of extensions of the intervention deadline,

counsel for the Government advised Relator’s counsel that the United States planned to

seek authority to decline intervention in this matter. (Doc. 88). Relator then filed a motion

to dismiss and permanently seal the action on October 1, 2021. (Doc. 86). He later

amended his motion to seek a three-year seal over the case. (Doc. 89)

In his motion, Relator states that he is a competitor of Defendants, including CWG.

He asserts that CWG has wide influence and power in the relocation services industry,

and he fears retaliation if the filings in this action are unsealed and his name is made

public. Accordingly, he asks the Court to maintain the case under seal for three years

from the date of dismissal to give him time to wind up his business affairs and retire from

the industry. Relator notes that he seeks to dismiss the action before any decision on the

merits has been reached, and that unsealing the action would hinder future qui tam claims

by individuals who fear retaliation by stepping forward—factors that favor keeping the

case sealed.

In response, the Government consents to the dismissal of the case and moves the

Court to unseal the Complaint, Relator’s initial motion to dismiss, and all subsequent

filings. It opposes a three-year seal on the entire matter, however, arguing that the False

Claims Act (FCA) does not provide for a continued seal over qui tam complaints once the

United States has made its intervention decision. In the absence of any authority in the

FCA for Relator to seek a temporary extension of the seal over his complaint, the

Government argues, Relator must overcome the strong presumption toward public

disclosure of court files by meeting his burden of showing good cause for keeping the

documents sealed. The Government contends that Relator has failed to meet his burden,

and his motion to keep the case sealed must be denied.

DISCUSSION

Both Relator and the Government agree that dismissal of this case is proper, and

Relator has not opposed the Government’s motion to keep certain documents, including

its motions for extension of the intervention deadline, sealed. Thus, the only question is

whether the entire case file should remain sealed for a term of three years.

Under the FCA, a whistleblower can file a civil action on behalf of the Government

against any person who knowingly presents false or fraudulent claims for payment or

approval to an officer or employee of the government, makes a false statement material

to a false claim, or conspires to do either. 31 U.S.C. § 3729(a)(1)(A)-(C). The complaint

shall be filed in camera, shall remain under seal for at least 60 days, and shall not be served

on the defendant until the court so orders. 31 U.S.C. § 3730(b)(2).

Once the Government is served with the complaint and material evidence, it has

60 days to decide whether it will intervene and proceed as the party responsible for

prosecuting the case. United States ex rel. Evans v. RehabCare Grp., Inc., No. 1:15CV80 RLW,

2016 WL 8234943, at *1 (E.D. Mo. Dec. 2, 2016) (citing 31 U.S.C. § 3730(b)(2), (3)). The

Government may move for an extension of time of the intervention deadline, during

which time the complaint remains under seal. Id. “[T]he primary purpose of the under-

seal requirement is to permit the Government sufficient time in which it may ascertain

the status quo and come to a decision as to whether it will intervene in the case filed by

the relator.” Id.

decides whether to intervene, “there is nothing in the FCA evincing a congressional intent

to impose a permanent seal over all qui tam suits where a relator seeks to voluntarily

dismiss the action after the Government declines to intervene.” Id. (quoting United States

ex rel. Herrera v. Bon Secours Cottage Health Servs., 665 F. Supp. 2d 782, 784 (E.D. Mich.

2008) (emphasis added)). Instead, the text of the FCA and the imposition of a 60-day time

period for sealing the complaint reflects legislative intent to have the seal lifted after the

Government decides whether to intervene. Id. at 785 (citing United States ex rel. Erickson

v. Univ. of Wash., 339 F.Supp.2d 1124, 1126 (W.D. Wa. 2004) (“The FCA clearly

contemplates the lifting of the seal on the relator’s complaint.”)).

If the FCA itself does not provide for a permanent seal, then a relator must

demonstrate a compelling need for secrecy that overcomes the presumption of public

access to judicial records in order to justify maintaining the case under seal. See id.;

Herrera, 665 F. Supp. 2d at 785. This is because the “[g]eneral rule is that the record of a

judicial proceeding is public.” Jessup v. Luther, 277 F.3d 926, 927 (7th Cir. 2002) (citing

Press–Enterprise Co. v. Superior Court, 464 U.S. 501, 509–10 (1984); United States v. Ladd, 218

F.3d 701, 704 (7th Cir. 2000)). This presumption in favor of open access allows the public

to know who is using the courts, to understand judicial opinions, and to monitor the

judiciary’s performance of its duties. Goesel v. Boley Int’l (H.K.) Ltd., 738 F.3d 831, 833 (7th

Cir. 2013). Still, that presumption can be overcome where there is a compelling need for

secrecy. Id. For example, when a case involves “trade secrets, the identity of informers,

and the privacy of children, portions and in extreme cases the entirety of a trial record

can be sealed.” Jessup, 277 F.3d at 928.

This Court has not found, and Relator has not cited, any FCA case where a relator’s

fear of retaliation, economic harm, or damage to his professional reputation or career has

overcome the presumption of access to court records. In Herrera, the relator—a nurse—

filed a qui tam case against her former employer. Herrera, 665 F. Supp. 2d at 784. When

the Government declined to intervene, the relator sought a permanent seal over the case

because she feared for her economic safety and career in the healthcare industry if she

were to be exposed as a whistleblower. Id. Finding nothing in the FCA suggesting that a

qui tam complaint can be permanently sealed, the court then analyzed whether the

relator’s request for a permanent seal overcame the strong presumption in favor of access

to judicial records. Id. The court noted that while public access to judicial records is not

absolute, the presumption in favor of public disclosure is not easily overcome—especially

where the filings involve matters of concern to the public, like allegations of fraud against

the government. Id. (citations omitted). While the relator asserted that her reputation and

career would be in jeopardy if the complaint were unsealed, the court found that concern

insufficient to overcome the presumption in favor of public access to court filings. Id. at

785-86. Accordingly, the relator’s motion for a permanent seal was denied. Id. at 786.

The relator’s motion to permanently seal the record likewise was denied in U.S. ex

rel. Durham v. Prospect Waterproofing, Inc., 818 F. Supp. 2d 64 (D.D.C. 2011). There, the

relator also cited potential retaliation from his employer in asking the court to

permanently seal the record. Id. at 66. In discussing the need for public access to court

proceedings, the court observed that FCA cases “receive special consideration because

they ‘inherently implicate the public interest.’” Id. at 67 (quoting United States ex rel.

Littlewood v. King Pharms., Inc., 806 F. Supp. 2d 833, 840 (D. Md. 2011)). “Taxpayers are

‘real parties in interest’ in FCA cases because they possess a strong interest in fraud

committed against the United States that results in monetary loss to the Government.” Id.

(quoting United States ex rel. Schweizer v. Oce, N.V., 577 F.Supp.2d 169, 171 (D.D.C. 2008));

see also U.S. ex rel. Permison v. Superlative Techs., Inc., 492 F. Supp. 2d 561, 564 (E.D. Va.

2007). Furthermore, the Durham court reasoned, a relator should expect that the pleadings

in an FCA case will eventually be unsealed. Id. When deciding to bring suit under the

FCA, the relator “concluded that these risks were worth taking if the Government would

intervene. Having assumed the risk that the Government might not intervene, relator

cannot cherry pick the portions of the FCA that suit [him].” Id. (quoting King Pharms.,

Inc., 806 F. Supp. 2d at 842).

Here, Relator asserts that he may face economic retaliation if the case is unsealed

and his identity becomes known to CWG, his competitor. He also asserts that he is an

“informer” and, therefore, requires protection. See Jessup, 277 F.3d at 928 (a case involving

the identity of informers may constitute a compelling need for secrecy). But while the

Court, like the Government, is sympathetic to Relator’s concerns, his fear of possible

retaliation by CWG is speculative and could be argued by any relator who decides to sue

under the FCA. And to the extent he claims he is an “informer,” any harm he would suffer

for being labeled an informer would be economic. That simply is not enough to overcome

the presumption of public access to court records and does not justify a semi-permanent

seal over the case. See U.S. ex rel. Eberhard v. Angiodynamics, Inc., No. 3:11-CV-556, 2013

WL 2155327, at *3 (E.D. Tenn. May 17, 2013) (“[T]he mere possibility, or even plausibility,

of some form of economic harm is inadequate to depart from the rule favoring public

access, particularly in the absence of any concerns involving national security, trade

secrets or personal safety.”). Accordingly, Relator’s motion to maintain the seal over this

case for three years is denied.

CONCLUSION

For the reasons stated above, Relator’s Donald Klein’s Amended Motion to

Voluntarily Dismiss without Prejudice and Maintain Seal for Three Years (Doc. 89) is

GRANTED in part and DENIED in part, and the Government’s motion to unseal certain

documents (Doc. 93) is GRANTED.

The Clerk of Court is DIRECTED to unseal the Complaint (Doc. 1), Relator’s first

Motion to Dismiss (Doc. 86), and all subsequent filings, including this Order. All other

filings shall remain under seal.

This action is DISMISSED without prejudice. The Clerk of Court is DIRECTED

to enter judgment accordingly and close this case.

IT IS SO ORDERED.

DATED: January 11, 2023 Teas (2 :

NANCY J. ROSENSTENGEL |

Chief U.S. District Judge

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