Respondents Brief — Jing Shu Zheng, Petitioner v. Christina Ellis, et vir

No. 20-210

IN THE

Supreme Court of the United States

d

JING SHU ZHENG ,

Petitioner,

—v.—

CHRISTINA ELLIS and JONATHAN ELLIS ,

Relators; ex rel. United States of America,

Respondents.

ON PETITON FOR A WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE NINTH CIRCUIT

BRIEF IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

DAVID OLSHAN , ESQ .

Counsel of Record

DAWN JENSEN , ESQ .

NEVADA LEGAL SERVICES , INC .

701 E. Bridger Avenue,

Suite 701

Las Vegas, Nevada 89101

(702) 386-0404

dolshan@nlslaw.net

Attorneys for Christina and

Jonathan Ellis

i

TABLE OF CONTENTS

PAGE

TABLE OF AUTHORITIES ........................................ ii

ARGUMENT ................................................................ 1

Circuit Courts Assess Civil Penalties Based

on the Number of Payments ............................. 1

Circuit Courts and the Department of Justice

Base Damages Under False Claims Act on

Total Amount Paid by Government ................. 3

The Ninth Circuit Did Not Rule On Due Process

and the Damages Assessed in this Case Do

Not Violate Due Process of Law ....................... 4

CONCLUSION ............................................................ 6

ii

TABLE OF AUTHORITIES

PAGE(S)

Cases

State Farm v. Campbell,

538 U.S. 408, 123 S.Ct. 1513 (2003) ...................... 4

United States v. Bornstein,

423 U.S. 303, 96 S.Ct. 523 (1976) ..................... 2, 3

United States ex rel. Drakeford v. Tuomey,

792 F.3d 364 (4th Cir. 2015) .................................. 5

United States ex rel. Feldman v. van Gorp,

697 F.3d 78 (2nd Cir. 2012).................................... 3

United States ex rel. Mikes v. Straus,

274 F.3d 687 (2nd Cir. 2001).................................. 2

United States ex rel. Siewick v.

Jamieson Science & Eng’g, Inc.,

214 F.3d 1372 (D.C. Cir. 2000) .............................. 3

Statutes/Rules

24 C.F.R. § 982.507(a) ................................................. 1

24 C.F.R. § 982.515 ...................................................... 0

Miscellaneous

Housing Choice Voucher Guidebook,

7420.10G ............................................................. 2, 3

1

INTRODUCTION

The petition for writ of certiorari filed by Petitioner

implicates none of the factors set out in Supreme

Court Rule 10. The Ninth Circuit affirmed the

decision of the district court and the elements of the

Ninth Circuit’s decision are supported by federal

statutory or case law that does not implicate any

unsettled area or area of conflict.

This Court

determines whether the issues raised by Petitioner

are important questions of federal law, but each issue

raised by Petitioner finds support in a statute or

court of appeals decision and any conflict raised by

Petitioner is inapposite or the conflict exists between

a district court and another district court.

ARGUMENT

Circuit Courts Assess Civil Penalties

Based on the Number of Payments

The Section 8 Housing Choice Voucher Assistance

Payments contract [“HAP”] between the housing

authority and Petitioner forms the basis for the False

Claims Act violations in this case. In the HAP, the

housing authority determines the total rent that the

Petitioner may charge Respondents. 24 C.F.R. §

982.507(a). The housing authority also sets how

much rent Respondents and the housing authority

pay Petitioner. 24 C.F.R. § 982.515. The HAP

prohibits the landlord from demanding or accepting

payments from the Respondents that exceed the

amount set forth in the HAP. Appendix 3 at 2. Any

amount that exceeds the HAP is a “side-payment”

that violates the HAP and provides a claim under the

False Claims Act. If the housing authority discovers

the side-payment, it must cease payments and

2

demand that Petitioner pay Respondents back the

full amount the Petitioner illegally collected.

Housing Choice Voucher Guidebook, 7420.10G at 2215; see also Appendix 3 at 2 (where HAP prohibits

Petitioner from receiving any rent subsidy).

In executing the HAP, Petitioner promised not to

accept side-payments and Petitioner’s promise

carried forward with each rental payment under the

implied certification theory of the False Claims Act.

With any implied certification theory, the Second,

Fourth, Fifth, Ninth, and D.C. Circuits, assess civil

penalties based on the number of payments. United

States ex rel. Mikes v. Straus, 274 F.3d 687, 697(2nd

Cir. 2001).

No other Circuit Court supports

Petitioner’s argument that civil penalties should be

based on the number of false statements.

Petitioner claims “the Ninth Circuit's

methodology conflicts with that set forth in United

States v. Bornstein, 423 U.S. 303, 313 (1976).”

Petition for Writ of Certiorari at 14. Bornstein differs

markedly in that Petitioner here is not a

subcontractor and the issue before the Bornstein

Court was “whether the subcontractor should be

liable for each claim submitted by its prime

contractor or whether it should be liable only for

certain identifiable acts that it itself committed.”

Bornstein, 423 U.S. at 309, 96 S.Ct. 523, 528 (1976).

With multiple payments, this Court held that the

False Claims Act standard is not based on the

number of contracts because this will almost always

result

in but a single forfeiture, no matter how

many fraudulent acts the subcontractor

might have committed. This result would not

only be at odds with the statutory language;

3

it would also defeat the statutory purpose.

Such a limitation would, in the language of

the Government’s brief, convert ‘the Act’s

forfeiture provision into little more than a

$2,000 license for subcontractor fraud.’1

With any implied certification False Claims Act

case, damages accrue with each payment if violation

of the HAP would cause the housing authority to

cancel the contract. United States ex rel. Siewick v.

Jamieson Science & Eng’g, Inc., 214F.3d 1372, 1376

(D.C. Cir. 2000). Here, the HAP required payment

each month while Petitioner collected fraudulent

side-payments. Each payment is a separate violation

of the False Claims Act under the implied

certification theory and Bornstein does not apply.

Circuit Courts and the Department of Justice

Base Damages Under False Claims Act

on Total Amount Paid by Government

Because Petitioner was not eligible for payments

under the HAP if she collected side-payments,2 the

measure of damages is the total amount paid by the

government. The Department of Justice, the Second,

Fifth, Seventh, Ninth, and D.C. Circuits agree that

under these facts, damages are based on the total

amount paid by the government. United States ex rel.

Feldman v. van Gorp, 697 F.3d 78, 88 (2nd Cir. 2012).

No other circuit court supports Petitioner’s argument

that damages are measured by the overpayment.

Petition for Writ of Certiorari at 19.

1 Bornstein, 423 U.S. at 311, 96 S.Ct at 529.

2 Housing Choice Voucher Guidebook, 7420.10G at 22-15.

4

Petitioner cites to Mackby II to support her

argument (id.) without realizing the Petitioner’s right

to payment was conditioned upon her not accepting

side-payments. Had the housing authority known of

the side-payments, it was obligated to cease

payments and request a return of the prior payments

from Petitioner. Supra at 2.

The Ninth Circuit Did Not Rule On Due Process

and the Damages Assessed in this Case

Do Not Violate Due Process of Law

The Ninth Circuit has not ruled on this due process

argument in its memorandum decision and it was not

raised by Petitioner in her Opening Brief below. See

Appendix F. Petitioner did raise an Excessive Fines

argument in the Ninth Circuit. The Ninth Circuit ruled

that “the severity of [Petitioner’s] crime, as adjudged by

Congress, the harm to the government, and the

difference between the fine imposed and the penalties

authorized,” did not violate the Eighth Amendment’s

prohibition on excessive fines. Appendix F at 25.

Even if the due process issue had been properly

raised, the punitive damages awarded in the district

court’s decision, when properly calculated, totaled

only 5.5 times the compensatory damages and this

single digit generally does not violate due process.

See State Farm v. Campbell, 538 U.S. 408, 425, 123

S.Ct. 1513, 1524 (2003)(where single digit ratios

between compensatory damages and punitive

damages do not violate due process of law).

Petitioner claimed the district court awarded

compensatory damages of $6,600 and punitive

damages of $170,716. Petition for Writ of Certiorari

at 22. These figures misstate what the district court

determined (Appendix A at 10) and how courts

5

calculate punitive damages in a False Claims Act

case. The total amount of government payments

illegal received by Petitioner was $18,722 and the

district court tripled this amount to $56,316.

Appendix A at 10. The penalty assessed against the

Petitioner was $121,000. Id. There is no basis in the

record for the Petitioner’s figure of $6,600 in

compensatory damages.

Because Respondents are entitled to at least 25% of

the damages awarded under 31 U.S.C. § 3730(d)(2),

the Fourth Circuit determined that the private party

share (25%) renders 25% of the $56,316

compensatory damages or $14,079. U.S. ex rel.

Drakeford v. Tuomey, 792 F.3d 364, 389 (4th Cir.

2015).

So, $14,079 and $18,722 equal $32,801. Thus,

$32,801 is compensatory and $144,515 is punitive

($177.316 total award minus compensatory damages

of $32,801). Compensatory damages of $32,801 are

5.5 times the punitive damages of $144,515 and do

not violate due process.

6

CONCLUSION

For the reasons stated above, the Ellises

respectfully request that this Court deny the Petition

for Writ of Certiorari.

DATED this 21st day of September, 2020.

NEVADA LEGAL SERVICES, INC.

David Olshan, Esq.

Counsel of Record

Nevada Bar No. 4126

Dawn Jensen, Esq.

Nevada Bar No. 10933

701 E. Bridger Avenue, Suite 701

Las Vegas, Nevada 89101

Telephone (702) 657-6000

Facsimile (702) 657-0065

dolshan@nlslaw.net

Attorneys for Christina and Jonathan Ellis