Bruce Jacobs v. JP Morgan Chase Bank N.A.

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[PUBLISH]

In the

United States Court of Appeals

For the Eleventh Circuit

____________________

No. 22-10963

____________________

UNITED STATES OF AMERICA,

Ex Rel.,

Plaintiff,

BRUCE JACOBS,

Relator,

Plaintiff-Appellant,

versus

JP MORGAN CHASE BANK, N.A.,

Defendant-Appellee.

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2 Opinion of the Court 22-10963

____________________

Appeal from the United States District Court

for the Southern District of Florida

D.C. Docket No. 1:20-cv-20543-AMC

____________________

Before WILLIAM PRYOR, Chief Judge, and JILL PRYOR and BRASHER,

Circuit Judges.

BRASHER, Circuit Judge:

This appeal requires us to enforce the False Claims Act’s

public disclosure bar. The FCA’s public disclosure bar provides that

a “court shall dismiss an [FCA] action or claim . . . if substantially

the same allegations . . . as alleged in the action or claim were pub-

licly disclosed . . . from the news media.” 31 U.S.C. § 3730(e)(4)(A).

This prohibition does not apply if “the action is brought by the At-

torney General or the person bringing the action is an original

source of the information.” Id.

The district court dismissed Bruce Jacobs’s qui tam action

against JP Morgan Chase Bank, N.A., under Federal Rule of Civil

Procedure 12(b)(6). It did so for two reasons. First, it concluded

that his amended complaint did not plead fraud with particularity

as required by Federal Rule of Civil Procedure 9(b). Second, it con-

cluded that the gravamen of his fraud claims had already been dis-

closed on three blogs and that he was not an original source of that

information. We need not address Rule 9 because, even if Jacobs

pleaded fraud with sufficient particularity, we agree with the

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22-10963 Opinion of the Court 3

district court that the FCA’s public disclosure bar independently

forecloses this lawsuit. Therefore, we affirm the district court’s dis-

missal of Jacobs’s amended complaint.

I.

Bruce Jacobs, a Florida foreclosure attorney, brought this qui

tam action against JP Morgan Chase on behalf of the United States.

Jacobs alleges that JP Morgan Chase violated the False Claims Act

by forging mortgage loan promissory notes and submitting false

reimbursement claims to Fannie Mae and Freddie Mac, govern-

ment-sponsored enterprises, for loan servicing costs. JP Morgan

Chase acquired these promissory notes from Washington Mutual

in 2008 after it had collapsed and the FDIC had placed it into re-

ceivership. Washington Mutual had previously sold the loans it

originated to Fannie Mae and Freddie Mac, and JP Morgan Chase

became Washington Mutual’s successor-in-interest and the new

servicer of these loans.

Jacobs alleges that Washington Mutual forgot to endorse

every loan it originated, a violation of federal guidelines, which if

discovered would have required it and its successor-in-interest JP

Morgan Chase to repurchase the mortgages from Fannie and Fred-

die or to remit make-whole payments. The lack of proper endorse-

ment, Jacobs asserts, also would have prevented JP Morgan Chase

from conveying good and marketable title to Fannie and Freddie

in the event of foreclosure and from seeking reimbursement for

loan servicing costs. According to Jacobs, JP Morgan Chase con-

cocted a scheme to forge endorsements on millions of loans using

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4 Opinion of the Court 22-10963

signature stamps bearing the names of previous Washington Mu-

tual employees—like Cynthia Riley—years after Washington Mu-

tual’s collapse. Jacobs alleges that JP Morgan Chase, despite its

knowing and willful noncompliance with federal guidelines, sub-

mitted payment claims to the federal government totaling hun-

dreds of millions of dollars for loan servicing costs it incurred on

the Washington Mutual loans. He also alleges that JP Morgan

Chase covered up its scheme by coaching witnesses and suborning

perjury.

In February 2020, Jacobs sued JP Morgan Chase for violating

the False Claims Act. The district court dismissed that complaint

without prejudice under Federal Rule of Civil Procedure 12(b)(6),

concluding that Jacobs didn’t meet the heightened fraud pleading

requirements of Federal Rule of Civil Procedure 9(b). The district

court also flagged that Jacobs must properly plead that he was an

original source of the allegations under the FCA’s public disclosure

bar but didn’t rule on it. The district court gave Jacobs a final op-

portunity to amend his complaint.

In his amended complaint, Jacobs asserted three violations

of the False Claims Act by JP Morgan Chase: (1) express false certi-

fication under 31 U.S.C. § 3729(a)(1)(A)–(B); (2) implied false certi-

fication under 31 U.S.C. § 3729(a)(1)(A)–(B); and (3) reverse false

claim under 31 U.S.C. § 3729(a)(1)(G). His amended complaint de-

scribes federal guidelines for government-sponsored enterprises

and includes new exhibits of representative loans and payment

claims. Jacobs’s amended complaint alleges that JP Morgan Chase

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foreclosed on mortgages “secured by forged and falsely stamped

notes, while concealing the fact that the endorsements were affixed

by JPMC years after WaMu ceased to exist using rubber stamps of

Cynthia Riley’s signature[] and others[’] [signatures].”

This time, the district court dismissed the lawsuit with prej-

udice under Rule 12(b)(6) on two grounds. First, the district court

again concluded that Jacobs failed to state a claim because he failed

to allege JP Morgan Chase’s fraud with sufficient particularity un-

der Rule 9(b). Second, the district court concluded that the FCA’s

public disclosure provision independently bars Jacobs’s lawsuit be-

cause online blog articles from before the lawsuit allege that em-

ployees would use Cynthia Riley’s and other Washington Mutual

employees’ rubber stamps to fraudulently endorse the loan prom-

issory notes.

The district court took judicial notice of three specific online

blog articles. One blog article published on January 21, 2014, was

found on “[a] foreclosure information sharing site committed to

saving homes from foreclosure.” The other two articles appeared

in June 2015 and January 2020 on “MFI-Miami,” a website about

mortgage fraud investigations. All three blog articles mentioned JP

Morgan Chase’s alleged fraudulent stamping scheme and ques-

tioned the validity of the endorsements on the Washington Mutual

loans. The blog posts disclosed details related to Cynthia Riley—

giving details about how she had left her employment with Wash-

ington Mutual before a note was stamped, providing a photograph

of one of her stamps, and calling the note endorsement fraudulent.

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6 Opinion of the Court 22-10963

One of these blogs discussed how in 2012 during other litigation JP

Morgan Chase “miraculously found the missing endorsed note”

containing Cynthia Riley’s stamp even though Riley had left Wash-

ington Mutual’s employment before the example mortgage

closed—an allegation of fraud on the court. And before this lawsuit

was filed, another one of these blogs stated that JP Morgan Chase

was “stamping the[] Washington Mutual notes with the Cynthia

Riley endorsement stamp between 2012 and 2014” as part of its

foreclosure efforts.

Based on the blog articles, the district court concluded that

substantially the same information as the allegations in the com-

plaint had been publicly disclosed in the news media before Ja-

cobs’s lawsuit and concluded that Jacobs wasn’t an original source

of the information, requiring dismissal under the FCA’s public dis-

closure bar. Jacobs appealed.

II.

We review de novo a district court’s decision on a motion to

dismiss and any questions of statutory interpretation, including the

application of the FCA’s public disclosure bar. See United States ex

rel. Osheroff v. Humana, Inc., 776 F.3d 805, 809 (11th Cir. 2015).

III.

The district court decided this appeal on two alternative

grounds, but we need address only one. Even if Jacobs’s amended

complaint pleads fraud with particularity under Federal Rule of

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22-10963 Opinion of the Court 7

Civil Procedure 9(b), he cannot support an FCA claim because of

that act’s public disclosure bar.

“One of the FCA’s primary purposes is to encourage individ-

uals knowing of government-related fraud to come forward with

that information.” United States v. NEC Corp., 11 F.3d 136, 139 (11th

Cir. 1993), as amended (Jan. 12, 1994) (citation omitted). It follows

that a relator cannot bring an FCA claim with substantially the

same allegations as “allegations that are already publicly disclosed”

in the “news media” unless the relator is an original source of that

information. United States ex rel. Bibby v. Mortg. Invs. Corp., 987 F.3d

1340, 1353 (11th Cir. 2021) (citing 31 U.S.C. § 3730); see also 31

U.S.C. § 3730(e)(4)(A). Without this public disclosure bar, “oppor-

tunistic relators—with nothing new to contribute—could exploit

the FCA’s qui tam provisions for their personal benefit.” Bibby, 987

F.3d at 1353 (emphasis added) (citing United States ex rel. Springfield

Terminal Ry. Co. v. Quinn, 14 F.3d 645, 649 (D.C. Cir. 1994)).

To that end, the FCA provides that we “shall dismiss an

[FCA] action or claim . . . , unless opposed by the Government, if

substantially the same allegations or transactions as alleged in the

action or claim were publicly disclosed . . . from the news media.”

31 U.S.C. § 3730(e)(4)(A). This prohibition does not apply if “the

action is brought by the Attorney General or the person bringing

the action is an original source of the information.” Id. “For pur-

poses of this paragraph, ‘original source’ means an individual who”

was a whistleblower to the government of the information in the

allegations before the public disclosure or “who has knowledge

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8 Opinion of the Court 22-10963

that is independent of and materially adds to the publicly disclosed

allegations or transactions, and who has voluntarily provided the

information to the Government before filing an action under this

section.” Id. § 3730(e)(4)(B).

The district court took judicial notice of three online blog

articles that recount allegations about JP Morgan Chase’s deceptive

use of Washington Mutual signature stamps to forge mortgage en-

dorsements. Jacobs correctly does not contest the district court’s

decision to take judicial notice of these websites at the motion to

dismiss stage. See Osheroff, 776 F.3d at 811–16 (concluding that the

district court could take judicial notice of news articles during the

three-part public disclosure bar test at the motion to dismiss stage);

see also id. at 811 n.4 (“[C]ourts may take judicial notice of docu-

ments such as the newspaper articles at issue here for the limited

purpose of determining which statements the documents contain

(but not for determining the truth of those statements).”). He ar-

gues only that they do not warrant dismissing his amended com-

plaint under the public disclosure bar.

We use a three-part test to determine whether the FCA’s

public disclosure bar applies. See id. at 812 (citing Cooper v. Blue Cross

& Blue Shield of Fla., Inc., 19 F.3d 562, 565 n.4 (11th Cir. 1994)). We

begin by asking whether “the allegations made by the plaintiff

[have] been publicly disclosed.” Id. (quoting Cooper, 19 F.3d at 565

n.4). If the answer is “yes,” we ask whether “the allegations in the

complaint are ‘substantially the same’ as . . . allegations or transac-

tions contained in public disclosures.” Id. (quoting 31 U.S.C.

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22-10963 Opinion of the Court 9

§ 3730(e)(4)). If the answer to that question is also “yes,” we ask

whether “the plaintiff [is] an ‘original source’ of that information.”

Id. (quoting Cooper, 19 F.3d at 565 n.4).

We address each part of our test in turn.

A.

First, we must determine whether the three blogs “publicly

disclosed” allegations “from the news media” prior to this lawsuit.

31 U.S.C. § 3730(e)(4)(A); see also Osheroff, 776 F.3d at 812. There

are two issues here. The first issue is one of timing—whether these

blog posts were publicly disclosed before the suit. The second issue

is whether these blog posts count as “news media” under the stat-

ute.

The timing issue is easily resolved. One blog article was pub-

lished on January 21, 2014, on “[a] foreclosure information sharing

site committed to saving homes from foreclosure.” The other two

articles were published in June 2015 and January 2020 on “MFI-

Miami,” a website about mortgage fraud investigations. It is undis-

puted that all three articles were publicly available online before

Jacobs filed his initial complaint in February 2020.

The second issue is more complicated. Jacobs argues that

these articles do not qualify as “news media” under the plain and

ordinary meaning of that term. But Jacobs’s argument is incon-

sistent with our precedent. We have held that the term “news me-

dia” in section 3730(e)(4)(A) “has ‘a broad[] sweep.’” Osheroff, 776

F.3d at 813 (alteration in original) (quoting Graham Cnty. Soil &

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10 Opinion of the Court 22-10963

Water Conservation Dist. v. United States ex rel. Wilson, 559 U.S. 280,

290 (2010)) (citing Schindler Elevator Corp. v. United States ex rel. Kirk,

563 U.S. 401, 408 (2011)). And we have specifically concluded that

“publicly available websites . . . intended to disseminate infor-

mation . . . qualify as news media for purposes of the public disclo-

sure provision.” See id.

Jacobs argues that our statements in Osheroff about publicly

available websites are dicta. We disagree. In Osheroff, the plaintiff’s

complaint “allege[d] that [] [several health] clinics offered [] services

without regard for medical purpose or financial need and that the

value of the services is more than nominal”—an alleged violation

of federal law. Id. at 808. The defendants, including three health

clinics, submitted public pages of the clinics’ websites with infor-

mation about the clinics’ free programs to establish that the infor-

mation was publicly available in the “news media” before the suit.

See id. at 807–08, 813. We held that “publicly available websites . . .

intended to disseminate information” are “news media” under the

FCA. Id. at 813. This statement was not dicta because it was neces-

sary to our decision in Osheroff in step one of our test: we had to

decide whether the company website in Osheroff counted as “news

media,” and we answered that question in the affirmative.

Finally, Jacobs argues that the company websites in Osheroff

are distinguishable from the blogs in this case because these blogs

are merely individual-run accounts that broadcast the personal

views of their authors. Again, we disagree. To be sure, Jacobs is

correct that we did not hold in Osheroff that all websites are “news

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22-10963 Opinion of the Court 11

media.” But Jacobs’s argument still fails because we held in Osheroff

that “news media” under the FCA isn’t limited to traditional news

reporting methods—the key question is whether a website is “pub-

licly available” and “intended to disseminate information” to the

public. Id. Under that standard, the blogs at issue here are just as

clearly “news media” as the company websites we addressed in

Osheroff. These blogs—no matter their precise size or sweep—are

publicly available websites that bill themselves as disseminating

foreclosure-related and mortgage-related information to the pub-

lic. Because there is nothing private or personal about these blogs,

we need not address whether the term “news media” under the

FCA covers a private or personal social media page.

In short, we conclude that the blog articles “qualify as news

media” under the FCA’s public disclosure bar and had been “pub-

licly disclosed” before Jacobs’s suit. Id. at 813–14.

B.

Second, because we conclude that these blogs publicly dis-

closed their allegations in the news media, we next must ask

whether “the allegations in the complaint are ‘substantially the

same’ as . . . allegations or transactions contained in public disclo-

sures.” Id. at 812 (quoting 31 U.S.C. § 3730(e)(4)). This part of the

test is “a quick trigger to get to the more exacting original source

inquiry.” Id. at 814 (quoting Cooper, 19 F.3d at 568 n.10). “[S]ignifi-

cant overlap between [the plaintiff]’s allegations and the public dis-

closures is sufficient to show that the disclosed information forms

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12 Opinion of the Court 22-10963

the basis of th[e] lawsuit and is substantially similar to the allega-

tions in the complaint.” Id.

Jacobs contends that his allegations are not substantially the

same as the ones in the blog articles because they are not identical.

The argument is that because “substantially” means “the essentials

of something” and because “same” means “identical,” “substan-

tially the same” means “identical.” That argument fails as a matter

of logic and because it disregards the FCA’s plain text and our prec-

edent. We have explained that “substantially the same” does not

mean identical, as Jacobs argues, but “significant overlap.” Id. In this

Circuit, “[t]he language of our laws is the law.” CBS Inc. v. Prime-

Time 24 Joint Venture, 245 F.3d 1217, 1227 (11th Cir. 2001). If “sub-

stantially the same” meant “identical,” the statute would say

“same.” We must give effect to the actual words Congress used.

All three blog articles significantly overlap with the allega-

tions in Jacobs’s complaint. They all mention JP Morgan Chase’s

alleged fraudulent stamping scheme and question the validity of

the endorsements on the Washington Mutual loans. The blogs

even disclose details about a specific Washington Mutual employee

named in the complaint, Cynthia Riley. The blogs discuss how

Cynthia Riley left her employment with Washington Mutual be-

fore a note was stamped, include a photograph of one of her

stamps, and allege that the note endorsement was fraudulent. One

blog article questions whether the notes endorsed by Cynthia Riley

that JP Morgan Chase had produced in foreclosure cases were “fake

or a possible act of fraud.” Another blog article implies that JP

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Morgan Chase had something to do with this fraud by discussing

how in 2012, during other litigation, JP Morgan Chase “miracu-

lously found [a] missing endorsed note” containing Cynthia Riley’s

stamp even though Riley had left Washington Mutual’s employ-

ment before the mortgage closed and would not have had a note

to stamp. The third blog article goes further—explicitly alleging

that JP Morgan Chase was “stamping the[] Washington Mutual

notes with the Cynthia Riley endorsement stamp” as part of its

foreclosure efforts.

The content of these blog articles significantly overlaps with

Jacobs’s allegations. Like the blog articles, Jacobs’s amended com-

plaint alleges that JP Morgan Chase foreclosed on mortgages “se-

cured by forged and falsely stamped notes, while concealing the

fact that the endorsements were affixed by JPMC years after WaMu

ceased to exist using rubber stamps of Cynthia Riley’s signature[]

and others[’] [signatures].”

To be sure, these articles do not specifically allege False

Claims Act fraud. They are mostly about committing fraud on the

court in foreclosure proceedings. But Jacobs’s key allegations of

fraudulent activity have significant overlap with the three blog ar-

ticles. It is important in the Rule 9(b) context for an FCA complaint

to contain details about the submission of a false claim to the gov-

ernment. See Corsello v. Lincare, Inc., 428 F.3d 1008, 1013 (11th Cir.

2005). But under the “substantially the same” standard, those de-

tails don’t matter for purposes of the public disclosure bar. Our case

law requires significant overlap, not that a mirror image of the

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14 Opinion of the Court 22-10963

complaint’s allegations had been publicly disclosed. Therefore, the

information disclosed in the blog articles is substantially the same

as the allegations in Jacobs’s lawsuit.

C.

Third, because the complaint’s allegations are substantially

the same as the ones in the blog articles, the FCA’s public disclosure

bar prohibits Jacobs’s lawsuit unless he can establish that he is an

“original source” of that information. 31 U.S.C. § 3730(e)(4)(A); see

also Osheroff, 776 F.3d at 812 (quoting Cooper, 19 F.3d at 565 n.4). As

relevant here, an “original source” is an individual “who has

knowledge that is independent of and materially adds to the pub-

licly disclosed allegations or transactions” and provided that infor-

mation to the government before filing the suit. 31 U.S.C.

§ 3730(e)(4)(B).

Jacobs posits that he falls within the original source excep-

tion because his law practice gave him independent knowledge of

JP Morgan Chase’s fraud. Thus, the argument goes, the amended

complaint materially adds to the public disclosures from the blog

articles. We disagree.

If the public disclosures are “already sufficient to give rise to

an inference” of fraud, cumulative allegations do “not materially

add to the public disclosures.” Osheroff, 776 F.3d at 815 (citing

United States ex rel. Kraxberger v. Kan. City Power & Light Co., 756 F.3d

1075, 1079 (8th Cir. 2014)). “[B]ackground information [and details]

that help[] one understand or contextualize a public disclosure is

insufficient to grant original source status” under the FCA. Id. The

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22-10963 Opinion of the Court 15

original source doctrine “increase[s] private citizen involvement in

exposing fraud” but “prevent[s] opportunistic suits by private per-

sons who heard of fraud but played no part in exposing it.” Id. at

815–16 (quoting Cooper, 19 F.3d at 565).

No doubt, Jacobs’s experience from his law practice has shed

light on how JP Morgan Chase defends certain foreclosure actions

and allowed him to call into question the endorsements of some

specific Washington Mutual loans. But his litigation against JP Mor-

gan Chase has not provided him with independent information to

corroborate his stamping scheme theory or his allegation that JP

Morgan Chase submitted false claims to the government. Nor does

the amended complaint materially add to the core claims in the

blog articles—that JP Morgan Chase fraudulently endorsed Wash-

ington Mutual promissory notes to strengthen its legal position in

foreclosure proceedings.

Jacobs also argues that he alleges a broader fraud than the

blog articles because the amended complaint questions the validity

of every Washington Mutual loan acquired by JP Morgan Chase

and alleges a cover-up scheme. And he observes that the blog arti-

cles do not mention Fannie, Freddie, or false reimbursement claims

by JP Morgan Chase. In this way, Jacobs argues that he is an origi-

nal source of the FCA claims because in another lawsuit he deposed

a JP Morgan Chase representative who said that JP Morgan Chase

sold the loan to Fannie Mae. Again, we disagree.

The additional allegations about the government-services

enterprises and JP Morgan Chase’s potential FCA violations as well

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16 Opinion of the Court 22-10963

as the cover-up scheme merely supplement and contextualize the

core fraud hypothesis in the blog articles. As discussed above, the

blog articles don’t give just general information. They discuss de-

tails and explicitly allege fraud. The blog articles are “already suffi-

cient to give rise to an inference” of fraud, so the additional infor-

mation Jacobs claims to have provided does “not materially add to

the public disclosures.” Id. at 815 (citing Kraxberger, 756 F.3d at

1079). The publicly revealed information about the so-called

stamping scheme gives rise to the inference of FCA fraud because

we can infer from the blog articles’ details that there was general

fraud, which led to false submissions to the government—defeat-

ing Jacobs’s position that he is an original source of the infor-

mation. See id. (citing Kraxberger, 756 F.3d at 1079); see also id. at

808, 815 (holding that pre-suit news media allowed an inference

that the defendants violated other statutes like the Anti-Kickback

Statute and the Civil Monetary Penalties Law, which was sufficient

to make Osheroff not an original source for his implied certification

theory fraud claim allegations).

***

The blog articles publicly disclosed in the news media sub-

stantially the same allegations as those in Jacobs’s lawsuit before he

filed it, and he is not an original source of the information. There-

fore, the FCA’s public disclosure provision bars this lawsuit.

IV.

We AFFIRM the district court.