# James M. HAGOOD, Plaintiff-Appellant, v. SONOMA COUNTY WATER AGENCY, Defendant-Appellee

> Court of Appeals for the Ninth Circuit · April 15, 1996 · 81 F.3d 1465

URL: https://www.frixlaw.com/law-library/cases/9489079

## Case

- **Full name:** 96 Cal. Daily Op. Serv. 2624, 96 Daily Journal D.A.R. 4345 James M. Hagood v. Sonoma County Water Agency
- **Court:** Court of Appeals for the Ninth Circuit
- **Decided:** April 15, 1996
- **Citations:** 81 F.3d 1465; 96 Daily Journal DAR 4345; 96 Cal. Daily Op. Serv. 2624; 1996 U.S. App. LEXIS 7717; 1996 WL 172834
- **Precedential status:** Published
- **Opinion:** Concurrence by Kleinfeld
- **Judges:** Hug, Sneed, Kleinfeld
- **Cited by:** 138 later opinions in the Frix Law Library

## Citator (automated)

- **Red flag:** Abrogated on other grounds by United States Ex Rel. Hartpence v. Kinetic Concepts, Inc., 792 F.3d 1121 (2015).
- Negative treatments: 1
- Distinguished by: 0
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9489079

## How later opinions describe it (automated extraction)

- finding that the defendant made an imprecise cost allocation and that the government agency involved did not have settled view on proper interpretation of relevant statute for which reason holding that the evidence at most revealed a disputed legal issue
- holding that signing a contract with an arguably false cost-allocation figure, based upon a “disputed legal issue” as to the requisite precision of this figure, does not amount to deliberate ignorance or reckless disregard
- holding that a district court properly revisited a matter decided on appeal because “new evidence warranted reconsideration of the question by the district court on remand”

## Opinion text

KLEINFELD, Circuit Judge,
concurring;
I concur in the result, and in the majority’s reason, that what Hagood revealed was not fraud.
We err, I think, in deciding that Hagood was an original source who voluntarily provided the information. He was a lawyer charged with the duty of drafting a contract and other documents for the transactions at issue. If he thought the transaction was fraudulent, he was “required to give an honest opinion” to his client, and “may not knowingly assist a client in criminal or fraudulent conduct.” Model Rules of Professional Conduct Rule 1.2 cmt. 6 (1995). See also Rules of Professional Conduct of the State Bar of Cal.Rule 3-210 (1995) (stating that “[a] member shall not advise the violation of any law ... unless the member believes in good faith that such law ... is invalid”). These professional obligations made disclosure to his agency of fraud mandatory, not voluntary. Therefore, United States ex rel. Fine v. Chevron, U.S.A., Inc., 72 F.3d 740, 741 (9th Cir.1995)(en banc), controls, and prevents qui tam recovery.
In Fine, we held that an internal government auditor whose job was to expose fraud did not “voluntarily” provide information. Id. at 743 — 14. The majority states that our decision is not controlled by Fine because we *1480 rejected Fine’s argument that since all federal employees labor under a duty to report fraud against the government, treating his disclosure as involuntary would “bar all federal employees from the-universe of potential original sources.” Id. at 744 . In Fine, we said that the question “whether federal employees might be excluded as a class from qualifying as original sources” remained “for another day.” Id. at 744 n. 5.
The issue here is distinct from whether a government lawyer who discovers a fraud in a matter unrelated to his own duties can recover in a qui tarn action. Had Hagood heard from a carpool acquaintance about a fraud in some other agency, then the question we left for another day in Fine would be before us. But a lawyer working on a transaction has a duty as an agent to disclose to his principal “information relevant to matters within his province and of which he should know the principal would want to know.” Warren A. Seavey, Law of Agency § 143 (1964). Because Hagood provided the information to his agency pursuant to his legal duty, he did not do so “voluntarily,” as 31 U.S.C. § 3730 (e)(4)(B) requires for qui tarn jurisdiction. Hagood “no more voluntarily provided information to the government than we, as federal judges, voluntarily hear arguments and draft dispositions.” Fine, 72 F.3d at 743-44 .

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9489079. Public record. Not legal advice.