Petition for Writ of Certiorari — Graham County Soil & Water Conservation Dist. v. United States Ex Rel. Wilson

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Onin Court, U.S

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O4 169 JUL2 8 2004

No.

IN THE

Supreme Court of the United States

GRAHAM COUNTY SOIL & WATER CONSERVAT’ON DISTRICT;

CHEROKEE COUNTY SOIL & WATER CONSERVATION DISTRICT;

GERALD PHILLIPS; ALLEN DEHART; LLOYD MILLSAPS; BILL

TIrTON; C.B. NEWTON; EDDIE WOOD; GRAHAM COUNTY,

Petitioners,

Vv.

UNITED STATES OF AMERICA EX REL. KAREN T. WILSON,

Respondent.

On Petition for a Writ of Certiorari to the United

States Court of Appeals for the Fourth Circuit

PETITION FOR WRIT OF CERTIORARI

ROY COOPER Ben O. Bridgers

Attorney General of North Carolina BRIDGERS AND

Christopher G. Browning, Jr.* RIDENOUR

Solicitor General of North Carolina PO Box 248

Jill B. Hickey Sylva, N.C. 28779

Special Deputy Attorney General

North Carolina Department of

Justice

Post Office Box 629

Raleigh, N.C. 27602

Telephone: (919) 716-6900

July 28, 2004 *Counsel of Record

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QUESTION PRESENTED

WHETHER THE SIX YEAR LIMITATION

PERIOD SET OUT IN 31 U.S.C. § 3731(b)

SHOULD BE APPLIED TO

RETALIATORY DISCHARGE ACTIONS

UNDER THE FALSE CLAIMS ACT OR

WHETHER COURTS SHOULD APPLY

THE MOST CLOSELY ANALOGOUS

STATE LIMITATION PERIOD.

LIST OF PARTIES TO THE

PROCEEDINGS BELOW

The parties to the proceedings in the court of appeals

were as follows:

United States of America ex rel. Karen T. Wilson was the

plaintiff-appellant in the court of appeals.

Graham County Soil & Water Conservation District, Cherokee

County Soil & Water Conservation District, Gerald Phillips,

Allen DeHart, Lloyd Millsaps, Bill Tipton, C.B. Newton, and

Eddie Wood were defendant-appellees in the court of appeals

and are the parties petitioning for certiorari.

Raymond Williams, Dale Wiggins, Lynn Cody, Graham

County were defendant-appellees in the court of appeals and

are not petitioning for certiorari.

Richard Greene, William Timpson, Keith Orr, Jerry Williams,

Billy Brown, were listed in the caption of the court of appeals

as defendant-appellees, but did not file notice of appearance,

join the brief of the appellees or participate in the appeal and

are not petitioning for certiorari.

Graham County Board of County Commissioners, Cherokee

County Board of County Commissioners, Cherie Greene, Ricky

Stiles, Betty Jean Orr, Joyce Lane, Jimmy Orr, Eugene

Morrow, Charles Lane, Charles Laney, George Postell, Lloyd

Kissleburg, Ted Orr, Bernice Orr, John Doe, John Doe

Corporations, and defendant, Government Entities 1-99 were

OO ape ee ee an = . -

ili

defendants in the district court but did not participate in the

court of appeals proceeding-.

TABLE OF AUTHORITIES ................-.-.---. vii

OPINIONS BELOW ....... 20.0... -. cece cece eeeeee.

JURISDICTION ...... 2... 0.0cccecccccececeececeees

STATUTORY PROVISIONS INVOLVED ............. 2

STATEMENT OF THE CASE ................-.-.--. 2

REASONS FOR GRANTING THE PETITION ........... 4

L THE FOURTH CIRCUIT’S DECISION

DEEPENS AN EXISTING CONFLICT

AMONG THE CIRCUIT COURTS. ............. a

I. THE FOURTH CIRCUIT’S OPINION RAISES

AN IMPORTANT ISSUE OF FEDERAL LAW

Il THE FOURTH CIRCUIT ERRED IN

APPLYING A SIX YEAR LIMITATION

PERIOD TO RETALIATORY DISCHARGE

ACTIONS UNDER THE FALSE CLAIMS ACT

1. The Fourth Circuit’s construction of the

False Claims Act is contrary to the °

language of that act ........... ~saceen 16

2. The Fourth Circuit’s decision

misconstrues and ignores

congressional intent ................+.. 19

3. The Fourth Circuit’s decision is

illogical and creates an

unmanageable scheme for

; am en the lmnitati

EEE écccccccccccuceseess 25

GEE Cavconcccddccdececdcedcedecdsaceee 28

APPENDIX

vii

TABLE OF AUTHORITIES

CASES

Cada v. Baxter Healthcare Corp., 920 F.2d 446

St Ct idevtesccudupenesdeseesooees 21

Delaware State College v. Ricks, 449 U.S. 250 (1980) .. 21

Early v. Bankers Life & Casualty, 959 F.2d 75

GREG GUGED cecvcccccccccccecccccceseces 12

Grand ex rel. United States v. Northrop Corp.,

811 F. Supp. 333 (S.D. Ohio 1992) ............ 6

United States ex rel. Lujan v. Hughes Aircraft Co.,

162 F.3d 1027 (9th Cir. 1998) ....... 4,5,6,7,8,19

Neal v. Honeywell, Inc., 33 F.3d 860 (7th Cir. 1994) .. 4,8,9

Truitt v. County of Wayne, 148 F.3d 644 (6th Cir. 1998) . 21

United States of America ex rel. Wilson v. Graham

County Soil & Water Conservation District,

367 F.3d 245 (4th Cir. 2004) ............ passim

United States of America ex rel. Wilson v. Graham

County Soil & Water Conservation District,

224 F. Supp. 2d 1042 (W.D.N.C. 2002) ......... l

Vili

United States ex rel. Cantekin v. University of Pittsburgh,

1997 U.S. Dist. LEXIS 22868 (W.D. Pa. 1997) ... 9

United States ex rel. Malloy v. Telephonics Corp.,

68 Fed. Appx. 270 (3d Cir. 2003),

cert. denied, 158 L. Ed. 24 469 (2004) ....... 5,9

STATUTES

I i) dan is siticsiti ccccsdesin 2

31 U.S.C. § 3729 (2004) .........leceeeeeeeeeees 3,18

31 U.S.C. § 3730(a) (2004) . 2.22... cece cece cece euees 3

31 U.S.C. § 3730(b) (2004) 2.22. ce cece cece cece eee 3

31 U.S.C. § 3730(h) (2004) ...... 0... e cece eee. passim

31 U.S.C. § 3731(b) (2004) .......... 00000. 1,3,17,18,27

31 U.S.C. § 3731(b)(1) (2004)... eee eee cece eee 2,6

ee 2

Aviation Investment and Reform Act,

DUBE. COON cevcicciccccccccss itéveos 12

CERCLA, 42 U.S.C. § 9610 2.2.0... cece cece ee eee. 12

Clean Air Act, 42 U.S.C. § 7622 ..... 0... ce eee ee ees 12

Energy Reorganization Act,

SEED oSdeSeecdececcdeveveses 11,12

BRIBA, 29 U.S.C. G 114 2. nrccccccccccvcccccccces 12

False Claims Act, 31 U.S.C. §§ 3729-3733 ............. 2

Federal Deposit Insurance Act, 12 U.S.C. § 1831j ...... 11

Federal Mine Safety and Health Act,

PS EE Sb Seesevdcccccoesecces wages 12

Federal Surface Mining Act, 30 U.S.C. § 1293 ........ 11

Migrant and Seasonal Agricultural Workers

Protection Act, 29 U.S.C. § 1855 ............. 11

National Labor Relations Act,

SP PEED occcccccccccccccceeces 11

Se PE vo decccdccccvcccccceccecces 12

Safe Containers for International Cargo Act,

46 U.S.C. app. § 1506 2.0... eee eee ees 12

Safe Drinking Water Act,

PEE? oc cdevversceceseseeooeces 12

Sarbanes-Oxley, 18 U.S.C.§ 1514A ...........0005. 12

Solid Waste Disposal Act, 42 U.S.C. § 6971 .......... 12

Surface Transportation Assistance Act,

CP BOONE 60 ccdscaséacces 13. eeeties 10

Cs OP EEE © 6.0. cbc cede cneeatcccdenwas 12

TSCA (asbestos), 15 U.S.C. § 2651 ................. 12

Water Pollution Control Act,

So We § TSGT oc kscens Perea 12

132 Cong. Rec. 22,332 & 28,576 (1986) ............. 24

132 Cong. Rec. 22,337 (1986) jan cniddtewnadenin Jkt 24

Boe CS, TROD. SRDS CROP 6 okies cccvccccccesce 24

S. Rep. No. 99-345 (1986), reprinted in

1986 U.S.C.C.A.N. 5266 .....: ~. +++ 19,20,22,23,26

OTHER

Hearing on S. 1358 Before the Senate Gov’t

Affairs Comm., 108 Cong. (Nov. 12, 2003) ..... 10

J. Boese, Civil False Claims and Qui Tam Actions

§ 4.11[A] (Supp. 2000) ................. 6,19,26

Press Release, United States Department of Justice,

Justice Dept. Civil Fraud (Nov. 10, 2003) ....... 10

Graham County Soil & Water Conservation District,

Cherokee Soil & Water Conservation District, Bill Tipton, Eddie

Wood, C.B. Newton, Gerald Phillips, Allen DeHart and Lloyd

Millsaps respectfully petition for writ of certiorari to review the

judgment of the United States Court of Appeals for the Fourth

Circuit.

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1a-45a) is

reported at United States of America ex rel. Wilson v. Graham

County Soil & Water Conservation District, 367 F.3d 245 (4°

Cir. 2004). The order denying rehearing is unreported (Pet. App.

122a-123a). The district court’s opinion granting Defendants’

motion to dismiss is not reported (Pet. App. 46a-71a). The

district court’s denial of Plaintiff's motion for reconsideration

and the district court’s certification that the matter is ripe for

review pursuant to 28 U.S.C. § 1292(b) is reported at 224 F.

Supp. 2d 1042 (Pet. App. 72a-88a). The Memorandum and

Recommendation of the United States Magistrate Judge is

unreported (Pet. App. 89a-121a).

JURISDICTION

The Court of Appeals entered its judgment on April 29,

2004 (Pet. App. la-41a) and rehearing was denied on June 28,

2004 (Pet. App. 122a-123a). The jurisdiction of this Court is

invoked pursuant to 28 U.S.C. § 1254(1).

STATUTORY PROVISIONS INVOLVED

This case involves the False Claims Act, 31 U.S.C.

§§ 3729-3733. The False Claims Act is set out in Petitioners’

Appendix at 124a-158a.

STATEMENT OF THE CASE

On March 7, 1997, Plaintiff Karen T. Wilson (hereinafter

“Wilson”) resigned as a secretary at the Graham County Sail &

Water Conservation District. Over three years and ten months

later, Wilson filed the present action. Wilson alleges that she

was harassed by Petitioners for exposing various false claims for

reimbursement made to certain federally funded programs.

Specifically, she claims that Petitioners retaliated against her in

violation of 31 U.S.C. § 3730(h) of the False Claims Act. The

jurisdiction of the District Court was based upon 31 U.S.C. §

3732(a) and 28 U.S.C. § 1331.

Petitioners moved to dismiss Wilson’s retaliatory

discharge claim in that it was barred by the applicable limitation

period (three years under North Carolina law). The District

Court agreed that Wilson’s retaliatory discharge claim was time

barred and dismissed this claim. On April 29, 2004, a divided

panel of the Fourth Circuit reversed the District Court. The

panel concluded that claims under 31 U.S.C. § 3730(h) are

governed by the limitation period set out in 31 U.S.C.

§ 3731(b)(1) (a six-year period). The Fourth Circuit opinions

focuses upon the language of 31 U.S.C. § 3731(b) which

provides:

A civil action under section 3730 may not be brought - -

(1) more than 6 years after the date on which the

violation of 3729 is committed, or

(2) more than 3 years after the date when facts

material to the right of action are known or

reasonably should have been known by the

official of the United States charged with

responsibility to act in the circumstances, but in

no event more than 10 years after the date on

which the violation is committed,

whichever occurs last.

31 U.S.C. § 3731(b) (2004). The Fourth Circuit noted that

Section 3730, creates three separate causes of action. 367 F.3d

at 248 (Pet. App. 5a). Section 3730(a) creates a cause of action

that may be brought by the Attorney General when the

Government has been damaged by a false claim. Section

3730(b) provides for the filing of a qui tam action by an

individual. Section 3730(h) creates a cause of action for

retaliatory discharge when an empluyee has been discriminated

against for pursuing a false claim action. As the Fourth Circuit

noted, Section 3729 “creates and defines the parameters of

iiability for presenting a false claim to the Government.” 367

F.3d at 248 (Pet. App. 5a).

Relying upon the language of these sections, the Fourth

Circuit concluded that Congress intended to bar any retaliatory

discharge claim that is not brought within six years from the date

the false claim was submitted to the Government: “[T]he effect

of the language as written is to provide that an action under §

3730, which necessarily includes an action for retaliation under

§ 3730(h), may be brought no more than six years after the date

on which the underlying violation was committed.” 367 F.3d at

248 (Pet. App. 5a-6a). Recognizing that this issue has “divided

both our sister circuits and courts within this circuit,” the Fourth

Circuit rejected the rationale of the Ninth Circuit in United

States ex rel. Lujan v. Hughes Aircraft Co., 162 F.3d 1027 (9

Cir. 1998). 367 F.3d at 249 (Pet. App. 8a). In Lujan, the Ninth

Circuit concluded that 31 U.S.C. § 3731(b) does not provide a

limitation period for retaliatory discharge claims, because the

limitation period in this section only addresses violations of

Section 3729 and Section 3729 has no bearing upon retaliatory

discharge actions. In its decision, the Fourth Circuit expressly

rejected the Ninth Circuit’s decision and instead adopted the

rationale of the Seventh Circuit in Neal v. Honeywell, Inc., 33

F.3d 860 (7" Cir. 1994).

Noting that this issue was difficult and divisive, Judge

Wilkinson dissented. In his dissent, he reasoned that the Fourth

Circuit’s opinion cannot be squared with the literal language of

the False Claims Act and is not consistent with Congressional

intent. Moreover, he concluded that the majority’s decision

“introduces an unprecedented oddity into state and federal law

by disconnecting the statute of limitations for anti-retaliation

claims from the actual retaliatory acts themselves.” 367 F.3d at

257 (Wilkinson, J., dissenting) (Pet. App. 28a-29a).

REASONS FOR GRANTING THE PETITION

This petition provides the Court with an opportunity to

resolve a split among the circuit courts as to the appropriate

limitations period for retaliatory discharge actions under the

False Claims Act. In the absence of a ruling by this Court,

employers and employees will face uncertainty and inconsistent

outcomes as to what limitation period governs. Given the

breadth and magnitude of litigation arising under the False

Claims Act, the resolution of this issue is important to the

Government, Government contractors and employees throughout

the Country. The petition should be granted in order to resolve

this significant issue and to correct the erroneous decision of the

Fourth Circuit.

I. THE FOURTH CIRCUIT’S DECISION

DEEPENS AN EXISTING CONFLICT

AMONG THE CIRCUIT COURTS.

In holding that a six year limitation period applies to

retaliatory discharge actions under the False Claims Act, the

Fourth Circuit expressly disagreed with the decision of the Ninth

Circuit in Lujan v. Hughes Aircraft Co., 162 F.3d 1027 (9" Cir.

1998) (applying most closely analogous state limitation period).

In doing so, the Fourth Circuit has joined the Third and Seventh

Circuit on this issue. Thus, four separate circuit courts have now

addressed whether a six year statute of limitations or the most

analogous state statute of limitation should be applied to

retaliatory discharge actions under the False Claims Act. United

States of America ex rel. Wilson v. Graham County Soil & Water

Conservation District, 367 F.3d 245 (4" Cir. 2004); United

States ex rel. Malloy v. Telephonics Corp., 68 Fed. Appx. 270

(3d Cir. 2003), cert. denied, 158 L. Ed. 2d 469 (2004); Lujan v.

Hughes Aircraft Co., 162 F.3d 1027 (9" Cir. 1998); Neal v.

Honeywell, Inc., 33 F.3d 860 (7" Cir. 1994). The division that

exists among the circuit courts is unlikely to be resolved in the

absence of a ruling by this Court. As Judge Wilkinson noted in

his dissent, “This is not an easy case, and there exists a square

conflict between the [circuit courts].” 367 F.3d at 257 (Pet. App.

28a); Grand ex rel. United States v. Northrop Corp., 811 F.

Supp. 333, 336 (S.D. Ohio 1992) (noting that this is a “difficult

issue”). Numerous commentators have also recognized that

given the split among the circuits and the various arguments that

have been made on both sides, the ultimate resolution of this

issue is far from clear. See, e.g., J. Boese, Civil False Claims

and Qui Tam Actions § 4.11[A], at 4-204 (Supp. 2000).

On the one hand, the Ninth Circuit has held that vecause

the False Claims Act does not provide for a specific limitation

period with respect to retaliation claims, courts must apply the

most closely analogous statute of limitations under state law.

Lujan v. Hughes Aircraft Co., 162 F.3d 1027 (9 Cir. 1998). In

Lujan, the plaintiff relied upon the language of 31 U.S.C.

§ 3731(b)(1) which states that “a civil action under section

3730” may be brought within six years of the date “on which the

violation of section 3729 is committed.” The plaintiff argued

that because the retaliatory discharge provision is set out in 31

U.S.C. § 3730(h) and this subsection is within Section 3730, a

six year period must be applied to retaliation claims. The Ninth

Circuit rejected this reading of 31 U.S.C. § 3731(b)(1), noting

that “[t]he answer is not so simple.” 162 F.3d at 1034.

The Ninth Circuit concluded that the language and

legislative history of the False Claims Act demonstrates that

Congress did not intend for a six year limitation period to apply

to retaliation claims. The Ninth Circuit noted that prior to 1986,

when Congress first added a retaliatory discharge provision to

the False Claims Act, Section 3731(b) provided that a “‘civil

action under section 3730 of this title must be brought within 6

years from the date the violation is committed.’” 162 F.3d at

1034 (quoting 31 U.S.C.A. § 3731(b) (West 1983)). When the

retaliatory discharge provision was added in 1986, Section

3731(b) was changed so as to tie the six years to the date “the

violation of section 3729 is committed.”” Jd. (quoting 31

U.S.C.A. § 3731(b)(1) (West Supp. 1998)). Because Section

3729 relates solely to substantive violations of the False Claims

Act and does not address retaliation, the Ninth Circuit concluded

that Congress did not intend to apply a six year period to

retaliation claims:

If Congress had wanted to retain a six-

year statute for all actions under section 3730,

including retaliation claims, it would have left

the pre-1986 amendments to the [False Claims

Act]. Instead, Congress, while adding a

provision for retaliation claims under 3730(h),

narrowed the application of the six-year statute of

limitations to violations of section 3729. Section

3729 specifically and strictly addresses false

claims, not retaliation claims.

That Congress was specifically concerned

with false claims in its 1986 amendments to the

statute of lim‘*»tions is further illustrated by its

addition of section 3731(b)(2). This section

provides an alternative to the six-year statute of

limitations for false claims, namely a period of

no more than three years after material facts

should have been known by the relevant

government official, but never longer than ten

years after the violation was committed. 31

U.S.C. § 3731(b). The legislative history to this

sectic= indicates that this change was enacted to

“ensure the Government’s rights are not lost

through a wrongdoer’s successful deception,”

because “fraud is, by nature, deceptive .. . .”

S. Rep. No. 99-345, at 15 (1986), reprinted in

1986 U.S.C.C.A.N. 5266, £200.

The same rationale is inapposite to a

private claim for retaliation. There is nothing

covert or deceptive about retaliation — the victim

feels its sting immediately. In the absence of

some meaningful indication to the contrary, we

must therefore presume that, in amending section

3731(b) so that the limitation runs only from the

date of a violation of section 3729, Congress did

not intend that the statute apply to section

3730(h).

162 F.3d at 1034.

On the other hand, the Seventh Circuit has rejected this

rationale. In Neal v. Honeywell, Inc., 33 F.3d 860 (7 Cir.

1994), the Seventh Circuit concluded:

Section 3731(b)(1) allows six years to file suit

under § 3730 from “the date on which the

violation of § 3729 is committed.” Section 3729

deals with making false claims. Neal filed this

suit under § 3730 within six years of

Honeywell’s false claims. It is therefore timely.

Id. at 865. The Seventh Circuit proceeded to dismiss the

employer’s argument that such a statutory construction is

illogical because it could lead, in certain circumstances, to

The Seventh Circuit reasoned that this six year period was akin

to a statute of repose and therefore concluded that there was “no

absurdity in the statute.” Jd. :

In addition to the Seventh Circuit, the Third Circuit has

held that a six year limitation period is to be applied to

retaliatory discharge claims under the False Claims Act. United

States ex rel. Malloy v. Telephonics Corp., 68 Fed. Appx. 270

(3d Cir. 2003). In Malloy, however, the Third Circuit simply

applied a six year limitation period without discussion of the

issue. District courts in the Third Circuit have also applied a six

False Claims Act. See United States ex rel. Cantekin v.

University of Pittsburgh, 1997 U.S. Dist. LEXIS 22868 (W.D.

Pa. 1997). .

In the present action, the Fourth Circuit noted that the

“proper interpretation of these provisions [of the False Claims

circuit.” 367 F.3d at 249 (Pet. App. 8a). The Fourth Circuit

expressly rejected the rationale of the Ninth Circuit and adopted

that of the Seventh Circuit. The Fourth Circuit concluded: “we

find no ambiguity undermining the conclusion that Congress

intended the revised limitation period of § 3731(b) to apply to all

claims under § 3730, including retaliation claims under §

3730(h).” Jd. at 250-51 (Pet. App. 9a-10a). In his dissent, Judge

Wilkinson expressed his belief that the view of the Ninth

Circuit’s decision was the better reasoned approach: “In my

judgment, the Lujan court advances the better interpretation of

the False Claims Act, 31 U.S.C. §§ 3729-3733 (2000).” 367

F.3d at 257 (Wilkinson, J., dissenting) (Pet. App. 28a).

The Fourth Circuit’s decision therefore deepens an

existing split between the circuit courts. Review is warranted to

resolve this conflict.

IL. THE FOURTH CIRCUIT’S OPINION RAISES

AN IMPORTANT ISSUE OF FEDERAL LAW

Whether courts should apply a six year statute of

limitations to retaliatory discharge claims under the False Claims

Act or the most closely analogous state law limitation period is

an important question of federal law. Few, if any, statutes have

had a greater impact upon how our Government does business

with private contractors than the False Claims Act. During the

past year alone, the United States recouped $2.1 billion from

government contractors under the False Claims Act. Press

Release, United States Department of Justice, Justice Dept. Civil

Fraud (Nov. 10, 2003). This legislation has been appropriately

described as “the most effective single law in history for

individual whistleblowers to have an impact against corruption.”

Hearing on S. 1358 Before the Senate Gov’t Affairs Comm., 108 |

Cong. (Nov. 12, 2003). Whether congressional intent is

correctly applied by the courts with respect to the whistleblower

protections created by this legislation has far-reaching impact

upon the Government, private employers and employees who

report fraud against the Government.

The question as to what limitations period Congress

intended with respect to retaliatory discharge claims under the

False Claims Act is a recurring issue. As set out above, federal

courts have divided on the issue of whether a six year limitation

period or analogous state law limitation periods should be

applied to retaliatory discharge claims brought under the False

Claims Act. Although numerous courts have already ruled upon

this issue, this issue will continue to arise in qui tam

proceedings. Since 1986, when Congress adopted the retaliatory

discharge provisions of the False Claims Act, over 4,000 actions

have been filed by qui tam plaintiffs. Press Release, United

States Department of Justice, Justice Dept. Recovers Over

$1 Billion in FY 2002 (Dec. 16, 2002). The sheer number of qui

tam actions (and resulting retaliatory discharge claims) before

the federal courts ensures that this issue will be litigated and

argued in federal courts throughout the Country until definitively

resolved by this Court.

Moreover, this appeal has significant economic impact

upon employers throughout the Country. Under the Fourth

Circuit’s opinion, an employee who is discharged in violation of

31 U.S.C. § 3730(h) may sit on his or her rights and wait to file

a complaint until six years from the underlying Fa'se Claims Act

violation. Given the fact that 31 U.S.C. § 3730(h) provides for

double recovery of back pay, the effect of the Fourth Circuit’s

decision is to allow claimants to recover over twelve year’s

worth of salary by manipulating when a complaint is filed. In

sharp contrast to 31 U.S.C. § 3730(h), on the numerous other

Congress has generally restricted the limitation period to two

years or less.' When Congress has provided employees with a

! See Federal Deposit Insurance Act, 12 U.S.C. § 1831j (two year

limitation period); National Labor Relations Act, 29 U.S.C. §§ 158, 160 (six

months); Surface Transportation Assistance Act, 49 U.S.C. § 31105 (180

days); Migrant and Seasonal Agricultural Workers Protection Act, 29 U.S.C.

§ 1855 (180 days); Energy Reorganization Act, 42 U.S.C. § 5851 (180

remedy of reinstatement or back pay, Congress has consistently

kept the limitation period short in order to offset the mounting

back pay claims that employers and the Nation’s economy would

otherwise face. See, e.g., Early v. Bankers Life & Casualty, 959

F.2d 75, 80-81 (7th Cir. 1992) (“The short statutes of limitations

in employment cases have a purpose - - both backpay obligations

and the difficulty of reintegrating a terminated worker into the

workforce grow with each day that passes before an employment

dispute is resolved - - and it is ill served when the employer does

not receive prompt notice of the dispute.””). The Fourth Circuit’s

employers significant potential liability — far beyond the burden

Congress intended for American employers to bear.

The Fourth Circuit’s interpretation of 31 U.S.C.

§ 3730(h) also constitutes a significant departure from every

other whistleblower statute enacted by Congress in that it ties the

commencement of the limitation period to the underlying

statutory violation rather than the date of the discharge. As

Judge Wilkinson vehemently argued in his dissent:

days); TSCA (asbestos), 15 U.S.C. § 2651 (90 days); Sarbanes-Oxley, 18

U.S.C. § 1514A (90 days); Aviation Investment and Reform Act, 49 U.S.C.

§42121 (90 days); Safe Containers for International Cargo Act, 46 U.S.C.

app. § 1506 (60 days); Federal Mine Safety and Health Act, 30 U.S.C. § 815

(60 days); Federal Surface Mining Act, 30 U.S.C. § 1293 (30 days); Clean

Au Act, 42 U.S.C. § 7622 (30 days); Safe Drinking Water Act, 42 U.S.C.

§ 300}-9 (30 days); Solid Waste Disposal Act, 42 U.S.C. § 6971 (30 days):

Water Pollution Control Act, 33 U.S.C. § 1367 (30 days); CERCLA, 42

U.S.C. § 9610 (30 days); TSCA, 15 U.S.C. § 2622 (30 days); OSHA, 29

U.S.C. § 660 (30 days). On other occasions, Congress has declined to

specifically adopt a limitation period. See ERISA, 29 U.S.C. § 1140.

The majority’s interpretation is at odds

with all statutes of limitations for wrongful

discharge, which commence with the occurrence

of the retaliatory acts. By holding that the statute

of limitations for anti-retaliation actions is set in

motion by some independent event, rather than

by the retaliatory acts themselves, the majority

denies employees adequate notice of when they

can bring a claim. Indeed, the majority's

interpretation may fail to provide any notice at

all to employees as to when their claims may

commence or be foreclosed. There is a reason

that statutes of limitations for anti-retaliation

actions begin with the alleged retaliatory event.

Because the retaliation bears adversely on the

affected employee, it serves as the best possible

notice that the employee may henceforth seek

redress.

The same reason suggests why Congress

did not mandate a six-year statute of limitations

for section 3730(h) actions. Since false claims

themselves are acts of deception, it makes sense

for a longer statute of limitations to provide time

to uproot the deception. But this is simply not a

concern for employees under section 3730(h)

who will feel the sting of the retaliatory actions

at the moment they occur.

The matter seems almost second-nature.

Statutes of limitations for personal injury claims

begin to run on the date of the injury. Statutes of

limitations for wrongful discharge claims begin

to run on the date of the discharge. In an action

challenging a wrongful act, the limitations period

generally begins on the date of the act. In short,

I am unable to understand why my friends in the

majority go to such extraordinary lengths to resist

such a thoroughly ordinary principle.

367 F.3d at 260 (Pet. App. 35a-36a) (citations omitted). The

effect of the Fourth Circuit’s opinion is to replace a clear and

definite date for the commencement of the limitations period (the

employee’s date of discharge) with a commencement date that

is fraught with uncertainty. Although an employee will always

know his or her date of discharge, in many cases, the employee

will not know when the alleged fraud upon the Government

occurred. Because litigants can no longer look to the act of

discharge and calculate the applicable limitations period from

that date, both the employee and employer must conduct

discovery and litigate the underlying False Claims Act violation

before ever determining whether the retaliatory discharge claim

is stale. Accordingly, the decision has a significant impact upon

litigation costs (and judicial resources) in retaliatory discharge

actions.

Finally, the Fourth Circuit’s decision threatens to

undermine the limitations periods for every other whistleblower

statute enacted by Congress. The limitations periods for each of

these statutes is significantly less than six years; many of these

Statutes require the employee to act within 30 days of the

discharge. See supra p. 11 n.1. With the decisions of the Third,

Fourth and Seventh Circuits that a six year limitation period

applies to 31 U.S.C. § 3730(h), employees who miss the filing

deadlines under these other whistleblower statutes will simply

repackage their retaliation claim as one arising under the False

Claims Act. To do so, the employee must merely assert that the

alleged wrongdoing touches upon some aspect of Government

spending. Given the Government’s pervasive presence as a

purchaser of goods and services, virtually every whistleblower

claim from the Aviation Investment and Reform Act to the

Federal Deposit Insurance Act can be repackaged as a claim

under the False Claims Act. Thus, the Fourth Circuit’s

imposition of a six year statute of limitations has significant and

far reaching implications upon every whistleblower statute

enacted by Congress.

Here, the plaintiff is seeking back pay from March 7,

1997. Given the double damage provision of the False Claims

Act, she is effectively seeking to recover 15 years of salary.

Despite her delay in filing this action, the Fourth Circuit has

allowed her claim to go forward. Not only does that decision

force the defendants before the Court to defend a stale claim in

which back pay damages are mounting with each passing day,

the decision has far-reaching implications upon all employers

doing any form of business with the United States Government.

Il. THE FOURTH CIRCUIT ERRED IN

APPLYING A SIX YEAR LIMITATION

PERIOD TO RETALIATORY DISCHARGE

ACTIONS UNDER THE FALSE CLAIMS

ACT.

This Court should also grant certiorari in that the Fourth

Circuit clearly erred in applying a six year limitation period to

claims brought under 31 U.S.C. § 3730(h). The Fourth Circuit's

construction of this statute is contrary to the language of the

False Claims Act, misconstrues congressional intent, and

produces an illogical and unmanageable scheme for limiting

stale claims.

1. The Fourth Circuit’s construction of the False

Claims Act is contrary to the language of that

Act.

The retaliatory discharge provision of the False Claims

Act is found at 31 U.S.C. § 3730(h). This sub-section provides:

Any employee who is discharged, demoted,

suspended, threatened, harassed, or in any other

manner discriminated against in the terms and

conditions of employment by his or her employer

because of lawful acts done by the employee on

behalf of the employee or others in furtherance of

an action under this section, including

investigation for, initiation of, testimony for, or

assistance in an action filed or to be filed under

this section, shall be entitled to all relief

necessary to make the employee whole. Such

relief shall include reinstatement with the same

seniority status such employee would have had

but for the discrimination, 2 times the amount of

back pay, interest on the back pay, and

compensation for any special damages sustained

as a result of the discrimination, including

litigation costs and reasonable attorneys’ fees.

31 U.S.C. § 3730(h) (2004). Section 3729 of the False Claims

Act, 31 U.S.C. § 3729, sets out the conduct that constitutes the

submission of a false claim to the Government. Section 3729

speaks only to the underlying False Claims Act violation and

contains no reference to wrongful discharge or any act that

would constitute a violation of 31 U.S.C. § 3730(h).

Section 3731 of the False Claims Act provides as

follows:

(b) A civil action under section 3730 may not be

brought - -

(1) more than 6 years after the date on which the

violation of 3729 is committed, or

(2) more than 3 years after the date when facts

material to the right of action are known or

reasonably should have been known by the

official of the United States charged with

responsibility to act in the circumstances, but in

no event more than 10 years after the date on

which the violation is committed,

whichever occurs last.

31 U.S.C. § 3731(b) (2004). The Fourth Circuit concluded that

because the retaliatory discharge provision falls within Section

3730, the language of Section 3731 requires that a six-year

limitation period be applied to such claim. Section 3731,

however, only addresses the limitation period for an underlying

violation of the False Claims Act, not a retaliatory discharge

claim. As judge Wilkinson explained in his dissent:

The text of [31 U.S.C. § 3731(b)] could not be

more plain. The six-year period is tied to a

“violation of section 3729” and nothing else.

Because an anti-retaliation claim does not

involve a “violation of section 3729” but instead

a violation of section 3730(h), by its own terms

section 3731(b)(1) cannot apply. Section 3729

addresses only the submission of false claims to

the federal government. Section 3729 does not

address retaliatory actions by employers against

whistle-blowing employees. Indeed, an employer

may wrongfully retaliate against a whistle-

blowing employee even in the absence of section

3729 violations, which would leave the statute of

limitations without a starting point. Retaliation

by an employer may also occur more than six

years after the employer committed the false -

claims violations, which would leave the

employee without a cause of action. Therefore,

it seems incongruous to say the least that an

employee’s ability to bring retaliatory claims

should turn on when or whether the employer has

submitted false claims to the government in

violation of section 3729.

367 F.3d at 258 (Wilkinson, J., dissenting). The limitation

period in Section 3731(b) is directly tied to a “violation of

section 3729.” Section 3729, in turn, “strictly addresses false

claims, not retaliation claims.” Lujan v. Hughes Aircraft Co.,

162 F.3d at 1034. Thus, the language of the limitations period

set out in Section 3731(b) “clearly speaks only to the underlying

False Claims Act violation.” J. Boese, Civil False Claims and

Qui Tam Actions § 4.11[A], at 4-204 (Supp. 2000).

Accordingly, the structure and language of the False Claims Act

make clear that Congress did not provide for a specific statute of

limitations with respect to retaliatory discharge claims arising

under the Act.

2. The Fourth Circuit’s decision misconstrues

and ignores congressional intent.

As set out in the legislative history of the 1986

amendments to the False Claims Act, the Act’s whistleblower

provisions were modeled after eight other statutes that had been

previously enacted by Congress:

[T]he Committee seeks to halt companies and

individuals from using the threat of economic

retaliation to silence “whistleblowers,” as well as

assure those who may be considering exposing

fraud that they are legally protected from

retaliatory acts.

In forming these protections, the

Committee was guided by the whistleblower

protection provisions found in Federal safety and

environmental statutes including the Federal

Surface Mining Act, 30 U.S.C. 1293, Energy

Reorganization Act, 42 U.S.C. 5851, Clean Air

Act, 42 U.S.C. 7622, Safe Drinking Water Act

42 U.S.C. 300j-9, Solid Waste Disposal Act, 42.

U.S.C. 6971, Water Pollution Control Act, 33

U.S.C. 1367, Comprehensive Environmental

Response, Compensation and Liability Act, 42

U.S.C. 9610, and Toxic Substances Control Act,

15 U.S.C. 2622.

S. Rep. No. 99-345, at 34 (1986), reprinted in 1986

U.S.C.C.A.N. 5266, 5299. Like 31 U.S.C. § 3730(h), each of

these eight whistleblower statutes provides that an employee

who has suffered retaliation may be reinstated to his or her

position and recover back pay. These statutes further provide

that an employee loses his or her right to pursue a whistleblower

claim unless the claim is asserted within a relatively short time

period from the discharge. The longest period that any of these

eight statutes allows for the filing of a claim is180 days from the

discharge or discrimination. The vast majority of these statutes

provides that a claim must be asserted within 30 days of the

discharge.

In contrast to these eight statutes, the Fourth Circuit has

concluded that the time period for filing a retaliation claim under

the False Claims Act is six years and that this period runs from

the date of the underlying False Claims Act violation rather than

the date of the retaliatory act. No other whistleblower statute

enacted by Congress has ever had a limitations period even

remotely approaching six years. Moreover, every one of these

Statutes provides that the limitations period begins running upon

the act of discharge or discrimination. Had Congress truly

intended to make such a radical departure from other

whistleblower statutes, this intent would have undoubtedly been

discussed at length during congressional debate. No such debate

occurred. In fact, as set out below, infra pp. 21-25, the

discussion of the 1986 amendment during congressional debate

reflects that Congress believed that the six year limitation period

does not apply to retaliatory discharge claims under 31 U.S.C. §

3730(h).

Sound public policy reasons exist for Congress’ decision

to enact relatively short limitation periods with respect to

whistleblower statutes. When a statute provides for

reinstatement, the longer an employee delays in asserting his or

her rights, the more difficult it is for the employer to reinsert the

employee into the same position. Moreover, when Congress

provides for recovery of back pay, a lengthy limitation period

may result in economic waste in that it encourages an employee

to sit on his or her claim in order to recover the greatest possible

damages. See, e.g., Truitt v. County of Wayne, 148 F.3d 644,

648 (6th Cir. 1998) (Congress intended short limitation period

when “damages such as backpay may be mounting”); see also

Delaware State College v. Ricks, 449 U.S. 250, 256-57 (1980)

(limitation periods “protect employers from the burden of

defending claims arising from employment decisions that are

long past”). As Judge Posner has noted, “The statute of

limitations is short in . . . most employment cases because delay

in the bringing of suit runs up the employer's potential liability;

every day is one more day of backpay entitlements.” Cada v.

Baxter Healthcare Corp., 920 F.2d 446, 453 (7th Cir. 1990).

Although the Fourth Circuit purports to base its decision

on the legislative history of the 1986 Amendments to the False

Claims Act, the Fourth Circuit utterly ignores debate on the floor

of Congress that clearly shows that Congress never intended to

apply a six year statute of limitation to claims brought under 31

U.S.C.§ 3730(h). In its opinion, the Fourth Circuit notes that the

original drafts of the House and Senate bills to amend the False

Claims Act set out the retaliatory discharge provisions as a

separate section of the statute (to be codified at 31 U.S.C. §

3734). See 367 F.3d at 252 (Pet. App. 15a-16a). Thereafter,

Congress condensed the act by simply placing this proposed new

section as a sub-section within 31 U.S.C. § 3730. The majority

opinion concludes that this renumbering of the statute evidences

Congress’ intent that a six year statute of limitations be applied

to retaliatory discharges:

Had § 3730(h) been enacted as a separate section

as originally contemplated by the legislative

history to the 1986 amendments, a claim of

retaliation under the FCA would not constitute

“{a] civil action under § 3730,” and thus

Congress’s intent to have courts apply the most

analogous state statute of limitations would be

clear. Hence, Congress’s relocation of the

retaliation provision to § 3730 reinforces the

conclusion that Congress intended the six-year

limitations provision of § 3731(b)(1) to apply.

367 F.3d at 252 (Pet. App. 16a) (citations omitted). The Fourth

Circuit, however, ignores the fact that both before and after the

renumbering of the statute, Congress clearly understood and

believed that this six year limitation provision would only be

applied to violations of the False Claims Act brought on behalf

of the Government (as opposed to retaliatory discharge claims

brought by an employee for the sole benefit of the employee).

On December 12, 1985, the Senate Judiciary Committee

reported favorably on the proposed amendments to the False

Claims Act (Senate Report No. 99-345, reprinted in 1986

U.S.C.C.A.N. 5266). As of that date, the retaliatory discharge

provisions were to be set out as a separate section (31 U.S.C.

§ 3734) and had not yet been moved into 31 U.S.C. § 3730. In

addition to adding whistleblower protection to the False Claims

Act, the proposed amendments enlarged the limitations period

with respect to claims brought on behalf of the Government. In

its discussion of this change, the Senate Report makes clear that

the six year statute of limitations (as amended by the proposed

legislation) only relates to False Claims Act violations brought

for the benefit of the Government:

Seventh, the subcommittee added a modification

of the statute of limitations to permit the

Government to bring an action within 6 years of

when the false claim is submitted (current

standard) or within 3 years of when the

Government learned of a violation, whichever is

later. The subcommittee agreed that because

fraud is, by nature, deceptive, such tolling of the

statute of limitations is necessary to ensure the

Government’s rights are not lost through a

wrongdoer’s successful deception. _

S. Rep. No. 99-345, at 15 (1986), reprinted in 1986

U.S.C.C.A.N. 5266, 5280 (emphasis added). As reflected by

this Senate Report, the proposed amendments (as they existed as

of December 12, 1985) were not intended to create a six year

limitations period for retaliatory discharge claims. Rather, the

six year limitation period and the new tolling provision were

limited to claims brought on behalf of the Government to

“ensure the Government’s rights are not lost.”

In September 1986, Congress altered the bill as it had

been reported by the Senate and House Judiciary Committees.

As part of those changes, the retaliatory discharge provision

(proposed as a new section 31 U.S.C. § 3734) was moved into

31 U.S.C. § 3730. 132 Cong. Rec. 22,332 & 28,576 (1986).

Following the renumbering of the statute, however, Congress

continued to view the six year limitation period as being

applicable only to False Claims Act violations brought on behalf

of the Government. On September 9, 1986, Congressman Fish

of New York, in discussing the revised bill, stated in floor

debate:

Section 5 amends the statute of limitations to

permit the Government to bring an action within

6 years of when the false claim is submitted, the

current standard, or within 3 years after the

Government learns of the violations, whichever

is later.

132 Cong. Rec. 22,337 (1986). Thus, even after the

consolidation of the whistleblower provisions into Section 3730,

Congress believed that the six year limitation period was only

applicable to claims brought on behalf of the Government. The

six year limitations period was not intended to apply to

employees making a retaliation claim for their own personal

benefit. Rather than supporting the position taken by the Fourth

Circuit, the legislative history of the 1986 amendments to the

False Claims Act demonstrates that Congress did not intend to

apply a six year statute of limitations to retaliatory discharge

claims.

3. The Fourth Circuit’s decision is illogical and

creates an unmanageable scheme for

determining when the limitation period

commences.

Under the Fourth Circuit’s decision, the limitation period

for a retaliatory discharge claim under the False Claims Act

begins to run from the date of “the violation of Section 3729.”

Thus, the Fourth Circuit ties the limitation period not to the act

of retaliation, but to the date of the underlying False Claims Act

violation. In doing so, the Fourth Circuit produces a result that

is illogical and is contrary to every other whistle-blower statute

enacted by Congress.

First, the Fourth Circuit’s decision fails to provide

employers and employees with adequate notice as to when the

statute of limitations begins to run. Under every whistleblower

statute in this Country, the limitations period begins to run upon

the act of the discharge or retaliation. The reason is simple —

employees know immediately when they have been fired. The

injury resulting from the retaliatory act is open and obvious. In

contrast, in many cases an employee will not know with

specificity the date on which a violation of Section 3729 first

occurred.

Second, the Fourth Circuit’s interpretation of the False

Claims Act leads to the absurd result that the retaliatory

discharge claim of some whistleblowers will be time barred even

before the act of discharge. Under the Fourth Circuit’s decision,

the limitations period begins running six years from the time the

employer submits a false claim to the Government. If an

employee discovers a false claim years after the claim was

submitted and proceeds to blow the whistle, Section 3730(h) will

not protect the employee from retaliation. As courts and

commentators have noted, it would be a “bizarre result” if an

employee who brings a false claim action immediately prior to

the expiration of the six year period could be fired shortly

thereafter and yet the employee’s retaliatory discharge claim

would be time-barred. J. Boese, Civil False Claims and Qui

Tam Actions § 4.11[A], at 4-205 to -206 (Supp. 2000).

Third, the Fourth Circuit’s decision creates “an

unprecedented oddity” in that while some employees will see

their retaliation claim time barred even before the act of

discharge, for other employees, their claim will never be time-

barred. Graham County Soil & Water, 367 F.3d at 260

(Wilkinson, J., dissenting) (Pet. App. 35a). A retaliatory

discharge claim may occur even when there has been no

violation of Section 3729. S. Rep. No. 99-345, at 35 (1986),

reprinted in 1986 U.S.C.C.A.N. 5266, 5300. Thus, under the

rationale adopted by the Fourth Circuit, when an employee

incorrectly (but in good faith) blows the whistle on his or her

employer, any retaliatory discharge claim brought by that

employee will never be time barred. For such employees, the

stop watch upon the limitations period is never started because

there has been no “violation of Section 3729.”

The Fourth Circuit decision imposes upon the False

Claims Act a framework for determining whether a retaliatory

discharge claim is time barred that is both illogical and

inconsistent with congressional intent. Given the language of

the Section 3730, the legislative history of the 1986 amendments

and the bizarre outcomes that flow from tying the limitation

period to anything other than the date of the retaliatory act, it is

clear that Congress did not intend for a six year period set out in

31 U.S.C. § 3731(b) to apply to retaliatory discharge claims.

CONCLUSION

The petition for wnt of certiorari should be granted.

Respectfully submitted,

ROY COOPER

Attorney General of North Carolina

Christopher G. Browning, Jr.*

Solicitor General of North Carolina

jill B. Hickey

Special Deputy Attorney General

Counsel for Petitioners Cherokee County

Soil and Water Conservation District,

Bill Tipton, C.B. Newton and Eddie

Wood

Ben Oshel Bridgers

Bridgers & Ridenour, PLLC

Counsel for Petitioners Graham County

Soil and Water Conservation District,

_ Gerald Phillips, Allen DeHart and Lloyd

Millsaps

July 28, 2004 *Counsel of Record

APPENDIX

PUBLISHED OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

UNITED STATES OF AMERICA ex rel. KAREN T.

WILSON,

Plaintiff-Appellant,

GRAHAM COUNTY SOIL & WATER

CONSERVATION DISTRICT; CHEROKEE COUNTY

SOIL & WATER CONSERVATION DISTRICT;

RICHARD GREENE; WILLIAM TIMPSON; KEITH

ORR; RAYMOND WILLIAMS; DALE WIGGINS;

GERALD PHILLIPS; ALLEN DEHART; LLOYD

MILLSAPS; JERRY WILLIAMS; BILLY BROWN;

LYNN CODY; BILL TIPTON; C. B. NEWTON; EDDIE

WOOD; GRAHAM COUNTY,

Defendants-Appellees,

and

GRAHAM COUNTY BOARD OF COUNTY

COMMISSIONERS; CHEROKEE COUNTY BOARD

OF COUNTY COMMISSIONERS; CHERIE GREENE;

RICKY STILES; BETTY JEAN ORR; JOYCE LANE;

JIMMY ORR; EUGENE MORROW; CHARLES

LANE; CHARLES LANEY; GEORGE POSTELL;

LLOYD KISSLEBURG; TED ORR; BERNICE ORR;

JOHN DOE; JOHN DOE CORPORATIONS, and

defendant, GOVERNMENT ENTITIES 1-99,

Defendants.

No. 03-1122

PUBLISHED OPINION OF THE UNITED STATE

COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

UNITED STATES COURT OF APPEALS FOR THE

FOURTH CIRCUIT

367 F.3d 245; 2004 U.S. App. LEXIS 8477; 21 LE.R. Cas.

(BNA) 507

October 28, 2003, Argued

April 29, 2004, Decided

OPINION

[*247] DUNCAN, Circuit Judge:

Karen Wilson brought a qui tam action_under the Federal

False Claims Act, 31 U.S.C. §§ 3729-3733 (2000) ("the

FCA" or "the Act"), alleging that her coworkers had

submitted false claims to the federal government in violation

of the FCA and that she was constructively discharged in

retaliation for reporting these activities. Deciding that the

six-year limitations period of the FCA did [**2] not apply to

the retaliation claim, the district court applied North

Carolina's three-year limitations period for wrongful

discharge actions and dismissed Wilson's claim as untimely.

Because we conclude that the six-year limitations period of

the FCA does apply to retaliation claims under the Act, we

reverse the district court's dismissal and remand for further

proceedings. ;

Wilson is a former part-time secretary at the Graham

County Soil & Water Conservation District ("the

3a |

PUBLISHED OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

Conservation District"). On January 25, 2001, Wilson filed a

qui tam action pursuant to § 3730(b) of the FCA, alleging

that several of her former coworkers at the Conservation

District had intentionally submitted false claims for

reimbursement from three programs created or funded by the

federal government. Wilson's complaint further alleged that

after she reported her concerns in a letter to federal

authorities, her supervisors and coworkers initiated a pattern

of harassment that precipitated her resignation on March 7,

1997.

The Appellees moved to dismiss Wilson's claims under

Federal Rule of Civil Procedure 12(b)(6). The Appellees

argued that the FCA's statute [**3] of limitations did not

apply to retaliation, and thus the timeliness of Wilson's claim

should be controlled by North Carolina's three-year statute of

limitations for wrongful discharge. The district court

concluded that applying the FCA's limitations provision to

retaliation claims could lead to absurd results, and that the

timeliness of Wilson's claim should be controlled by North

Carolina law. Agreeing with the Appellees that the closest

analogous limitations period was the three-year period

applicable to claims of wrongful discharge, see N.C. Gen.

Stat. § 1-52(5) (1999), the district court concluded that the

retaliation claim in Wilson's complaint of January 25, 2001,

based on her constructive discharge of March 7, 1997, was

untimely.

Wilson filed a motion for reconsideration of the statute

of limitations issue. The district court denied Wilson's

PUBLISHED OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

request for reconsideration, but certified its order for

interlocutory appeal pursuant to 28 U.S.C. § 1292(b) (2000).

We granted Wilson's timely petition for authorization to

pursue this appeal.

We review de novo the district court's order granting the

Appellees’ Rule 12(b)(6) motion [**4] to dismiss, Franks v.

Ross, 313 F.3d 184, 192 (4th Cir. 2002), as well as its

statutory construction of the FCA, see United States v.

Jefferson-Pilot Life Ins. Co., 49 F.3d 1020, 1021 (4th Cir.

1995). It is axiomatic that when interpreting a statute, the

starting point is the language employed by Congress, Am.

Tobacco Co. v. Patterson, 456 U.S. 63, 68, 71 L. Ed. 2d 748,

102 S. Ct. 1534 (1982), and where "the statute's language is

plain, ‘the sole function of the courts is to enforce it

according to its terms," United States v. Ron Pair (*248}

Enters., 489 U.S. 235, 241, 103 L. Ed. 2d 290, 109 S. Ct.

1026 (1989) (quoting Caminetti v. United States, 242 U.S.

470, 485, 61 L. Ed. 442, 37 S. Ct. 192 (1917)). In

determining whether the language is plain, courts must look

to "the language itself, the specific context in which that

language is used, and the broader context of the statute as a

whole.” Robinson v. Shell Oil Co., 519 U.S. 337, 341, 136 L.

Ed. 2d 808, 117 S. Ct. 843 (1997). If the language of the

statute is ambiguous, in that it lends itself to more than one

reasonable interpretation, our obligation is "to find that

interpretation which can [**5] most fairly be said to be

imbedded in the statute, in the sense of being most

PUBLISHED OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

harmonious with its scheme and with the general purposes

that Congress manifested." Comm'r v. Engle, 464 U.S. 206,

217, 78 L. Ed. 2d 420, 104 S. Ct. 597 (1984) (internal

quotation omitted). A departure from the literal text of a

Statute is also appropriate if "a literal application would

frustrate the statute's purpose or lead to an absurd result.”

Nat'l Coalition for Students with Disabilities Educ. & Legal

Def. Fund v. Allen, 152 F.3d 283, 288 (4th Cir. 1998)

(quoting Robinson, 519 U.S. at 340).

Three sections of the FCA determine whether the

timeliness of Wilson's retaliation claim is governed by the

Act itself or state law. The FCA's limitations period,

§ 3731(b), provides that

[a] civil action under section 3730 may not be

brought -

(1) more than 6 years after the date on which the

violation of section 3729 is committed . . . .

§ 3731(b)(1). nl Section 3730 creates three causes of action

arising under the FCA: an action for compensation filed by

the Attorney General, see § 3730(a); a gui tam action filed

by an individual, see § 3730(b); and an action [**6] for

retaliatory conduct predicated on identified protected

activity, see § 3730(h). Section § 3729 creates and defines

the parameters of liability for presenting a false claim to the

Government. Hence, the effect of the language as written is

to provide that an action under § 3730, which necessarily

includes an action for retaliation under § 3730(h), may be

PUBLISHED OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

brought no more than six years after the date on which the

underlying violation was committed.

nl Section 3731(b)(2) states that, in the

alternative, a civil action under § 3730 may

not be filed "more than 3 years after the date

when facts material to the right of action are

known or reasonably should have been known

by the official of the United States charged

with responsibility to act in the

circumstances, but in no event more than 10 —

years after the date on which the violation is

committed." However, because neither party

advances this alternative limitations period as

controlling, and “there is no ‘official of the

United States charged with responsibility to

act in the circumstances’ that are presented in

a typical retaliation case," Storey v. Patient

First Corp., 207 F. Supp. 2d 431, 444 n.20

(E.D. Va. 2001), we limit our analysis to §

3731(b)(1).

[**7]Both the retaliation provision of § 3730(h) and the

limitations provision of § 3731(b)(1) are relatively recent

additions to the FCA. Prior to 1986, the FCA did not

specifically include a cause of action for retaliation. Section

§ 3731(b) stated simply that ‘a civil action under Section

3730 of this title must be brought within six years from the

date the violation is committed.” United States ex rel. Lujan

v. Hughes Aircraft Co., 162 F.3d 1027, 1034 (9th Cir. 1998)

PUBLISHED OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

(discussing the 1986 amendments). Congress's stated intent

in amending the FCA was “not only to provide the

Government's law enforcers with more effective tools, but to

encourage any individual knowing of Government fraud to

bring that information forward." S. Rep. [*249] No. 99-345,

at 1-2 (1986) (hereinafter "S. Rep."), reprinted in 1986

U.S.C.C.A.N. 5266, 5267. Toward that end, Congress also

added § 3730(h), n2 which provides a remedy for any

employee who "is discharged, demoted, suspended,

threatened, harassed, or in any other manner discriminated

against" as a result of lawful acts by the employee in

furtherance of an action under the FCA.

n2 In full, this subsection provides that:

"Any employee who is discharged,

demoted, suspended, threatened, harassed,

or in any other manner discriminated

against in the terms and conditions of

employment by his or her employer

because of lawful acts done by the

employee on behalf of the employee or

others in furtherance of an action under this

section, including investigation for,

initiation of, testimony for, or assistance in

an action filed or to be filed under this

section, shall be entitled to all relief

necessary to make the employee whole."§

3730(h).

PUBLISHED OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

[**8]The proper interpretation of these provisions has

divided both our sister circuits and courts within this circuit.

n3 In United States ex rel. Lujan v. Hughes Aircraft Co., the

Ninth Circuit held that § 3731(b)(1) did not apply to

retaliation claims under the FCA. 162 F.3d at 1034-36. The

Lujan court reasoned that the 1986 amendments, "while

adding a provision for retaliation claims under § 3730(h),

narrowed the application of the six-year statute of limitations

to violations of § 3729," such that the amendments "created

the retaliation claim but provided no specific statute of

limitations for such claims." Jd. In view of this perceived

absence of a congressionally prescribed statute of

limitations, the Ninth Circuit concluded that "the most

closely analogous statute of limitations under state law" must

fill the void. Jd. at 1035 (citing Reed v. United Transp.

Union, 488 U.S. 319, 323, 102 L. Ed. 2d 665, 109 S. Ct. 621

(1989)).

n3 Compare Storey, 207 F. Supp. 2d at 444

(applying § 3731(b)(1) to retaliation claims

under § 3730(h)), with United States ex rel.

Ackley v. IBM, 110 F. Supp. 2d 395, 401-05

(D. Md. 2000) (assuming, without deciding,

that § 3731(b)(1) did not apply to retaliation

claims under § 3730(h) for the reasons

described by the court below).

[**9]In contrast, in an earlier decision which the court in

Lujan failed to distinguish or cite, the Seventh Circuit found

no difficulty in applying § 3731(b)(1) to retaliation claims

PUBLISHED OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

under § 3730(h). See Neal v. Honeywell, Inc., 33 F.3d 860,

865-66 (7th Cir. 1994). n4 The employer in Nea/ made the

Same argument accepted by the district court (and

propounded by the dissent). Expressing a concern for the

rights of employees generally (although, similar to the

dissent here, not the employee who filed the complaint at

issue), the employer contended that § 3731(b)(1) could not

apply to retaliation claims, as a literal application of its terms

would lead to absurd results. The Neal court disagreed,

concluding that the revised language of § 3731(b)(1)

reflected Congress's decision to prioritize "simplicity of

administration," and that the employer had mischaracterized

the consequences of a literal reading of the statute. n5 /d. at

865. Against this backdrop, we consider Wilson's contention

that the district court erred in declining to apply § 3731(b)(1)

to her retaliation claim under § 3730(h).

n4 Like the court in Lujan on which so

much of its reasoning relies, the dissent does

not address Neal or its analysis. [**10]

nS The United States’ brief in Neal, filed as

an amicus curiae at the invitation of the court,

"concluded that the statute supports Neal

without a thumb on the scales of justice." 33

F.3d at 863.

Starting, as we must, with the text of the FCA, we find

no ambiguity undermining [*250] the conclusion that

Congress intended the revised limitations period of

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§ 3731(b)(1) to apply to all claims under § 3730, including

retaliation claims under § 3730(h). We are unpersuaded that

Congress's addition of language referring to "the date on

which the violation of section 3729 is committed" was

intended to exclude § 3730(h) from the ambit of

§ 3731(b)(1), and that the consequences of the resulting

statutory scheme are not absurd, but are in keeping with the

FCA's purpose.

The dissent, like the Appellees, argues that the text of

§ 3731(b)(1) "could not be more plain. The six-year period is

tied to a ‘violation of section 3729’ and nothing else.” Post at

20. As explored below, however, this assertion is

demonstrably inaccurate. Section 3731(b) could have

provided that a "civil [**11] action under section 3730(a) or

(b) may not be brought more than six years from the date the

violation of § 3729 is committed." This Congress did not do.

Despite its Herculean effort, the dissent cannot disguise the

fact that it is asking us to ignore what Congress expressly

says: that an action uader § 3730(h) protesting retaliation is

"{a] civil action under § 3730."

The threshold inquiry when interpreting the text of a

statute is whether the language at issue "has a plain and

unambiguous meaning with regard to the particular dispute

in the case," for if the language is unambiguous and the

"statutory scheme is coherent and consistent," no further

inquiry is required. Robinson, 519 U.S. at 340. Indeed, "there

is, of course, no more persuasive evidence of the purpose of

lla

PUBLISHED OPINION OF THE UNITED ST4“ES

COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

a statute than the words by which the legislature undertook

to give expression to its wishes." United States v. Am.

Trucking Assns., Inc., 310 U.S. 534, 543, 84 L. Ed. 1345, 60

S. Ct. 1059 (1940); see also Consumer Prod. Safety Comm'n

v. GTE Sylvania, Inc., 447 U.S. 102, 108, 64 L. Ed. 2d 766,

100 S. Ct. 2051 (1980) ("Absent a clearly expressed

legislative intention to the contrary, that [**12] language

must ordinarily be regarded as conclusive."). A term in a

section is ambiguous only if, when considered in the larger

context of the statute as a whole, it is amenable to more than

one reasonable interpretation. Engle, 464 U.S. at 217. n6

n6 The dissent draws on two additional

canons of statutory construction that we find

to be inapplicable to this situation. The first is

that "when Congress alters the wording of a

Statute, we must presume Congress intended a

change in the law." Post at 21 (quoting

Lackey v. Johnson, 116 F.3d 149, 152 (Sth

Cir. 1997). However, the authority cited by

Lackey, Brewster v. Gage, 280 U.S. 327, 337,

74 L. Ed. 457. 55 S. Ct. 115 (1930), makes

clear that this doctrine is relevant when

Cong:ess uses language "so differing from

that used in the earlier act" that it could not

but demonstrate Congress's intent to work a

change in the law. The dissent's reliance on

Lackey is circular, as the few newly added

words on which it is predicated are so

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equivocal that we must discern Congress's

intent from the remainder of the section and

its context, as we have attempted to below;

the simple fact of revision does not

demonstrate intent, the text does. See United

States v. Sepulveda, 115 F.3d 882, 885 n.5

(11th Cir. 1997) (finding the amended

language of a statute to be “inconclusive” as

to Congress's intent and analyzing the statute

based on its plain language and legislative

purpose).

The second is the canon "expressio unius est

exclusio alterius”; that the explicit inclusion

of one or more of an obvious set signals

Congress's intent to exclude the remainder of

that set. See, e. g., United States v. Vonn, 535

U.S. 55, 65, 152 L. Ed. 2d 90, 122 S. Ct. 1043

(2002). As the dissent acknowledges,

however, this canon is less a directive than a

guide, id., and in this instance the doctrine

appears to be of dubious use. Cf Chevron

U.S.A. Inc. v. Echazabal, 536 U.S. 73, 81-84,

153 L. Ed. 2d 82, 122 S. Ct. 2045 (2002)

(identifying "statutory language suggesting

exclusiveness" and an “established series

...from which Congress appears to have made

a deliberate choice" as two requirements that

must be met in order to justify application of

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the “expressio unius" doctrine, neither of

which are clearly present in the amended

FCA).

[*251] B.

Applying these principles to sections 3730(h) and

3731(b), we conclude that § 3731(b)(1) plainly applies to

retaliation claims under § 3730(h). As noted above, the text

of § 3731(b) does not exclude § 3730(h). Rather, the

language of § 3730(b) states broadly that it applies to "{a]

civil action under section 3730." § 3730(b). Because

Congress elected not to modify this language in 1986 while

adding a third cause of action to § 3730, we conclude that

Congress intended § 3731(b) to continue to apply to all

actions under § 3730, including the newly added cause of

action for retaliation.

| In contrast, we find the Appellees’ competing

interpretation of § 3731(b)(1) to be unpersuasive, and for

reasons in addition to the fact that it requires the eliding of a

provision to which the language would otherwise apply. The

Appellees point to the differences in the provisions of § 3730

to which the six year limitations period of § 3731(b)(1)

appears to apply. The Appellees argue that § 3730(a),

involving an action by the Attorney General, and § 3730(b),

authorizing actions by individuals, are based entirely on

violations of § 3729, whereas retaliation claims under

§ 3730(h) [**14] are not. They reason that because

§ 3731(b)(1) begins the limitations period on the "date on

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DECIDED APRIL 29, 2004

which the violation of § 3729 is committed," Congress

cannot have intended § 3731(b)(1) to include § 3730(h).

This interpretation of the FCA is artificial, however, as

§ 3730(h) subsumes a violation of § 3729, even if it does not

do so explicitly. By its terms, § 3730(h) protects any "lawful

acts done by the employee on behalf of the employee or

others in furtherance of an action under this section.” Id.

(emphasis added). Because an action under § 3730 will not

lie absent an alleged violation of § 3729, it is clear that

Congress has elected to identify a single, readily identifiable

point at which to begin the limitations periods for all actions

under § 3730. See Neal, 33 F.3d at 865 (noting the

"simplicity of administration" afforded by the approach

codified in § 3731(b)(1)). Indeed, as noted by Judge

Easterbrook, "it is easier to determine the date of a false

claim than to pin down the time of retaliatory acts; the claim

is a document, but arguments about retaliation depend on

oral exchanges and are subject to failure of memory as well

as the risk of prevarication. [**15] "Jd. Rather than signaling

by implication Congress's intent to exclude retaliation claims

from § 3731(b)(1), the amended text of § 3731(b)(1) simply

directs that the limitations period for retaliation claims under

the FCA begins when the violation of § 3729, to which such

violations of § 3730(h) must be tethered, n7 is found to have

occurred.

n7 Although we believe this fact to be self-

evident, the dissent contends that the filing of

a false claim in violation of § 3729 and a

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retaliatory discharge actionable under §

3730(h) are "independent" events, post at 18,

an assertion we find puzzling. If an

employee's termination is "independent" of a

violation of § 3729 and the employee's

decision to report it, at the very least, it would

not be retaliatory. Alternatively, if the

termination could fairly be described as

"retaliatory," but could not be tied to the

reporting of a violation of § 3729, it would be

actionable not under the FCA and § 3730(h)

but under Title VII or some other statute

prohibiting employment discrimination. The

events that trigger the statute of limitations

may precede the final event that gives rise to

an action for retaliation, post at 20, but that

fact does not render the events "independent"

of one another.

[**16] [*252] C.

Even if it were unclear whether Congress intended the

language of § 3731(b)(1) to apply to action: under § 3730(h),

the review of the legislative history required by that

ambiguity reinforces the conclusion that the section applies

to retaliation claims under the FCA. In discussing the

provisions created by the 1986 amendments, the legislative

history discusses "a new section 3734 under the False Claims

Act to provide ‘whistleblower’ protection.” S. Rep. at 34,

reprinted in 1986 U.S.C.C.A.N. at 5299. This new section

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was to "provide[] ‘make whole’ relief" for anyone discharged

for engaging in activity protected under the Act, including

anyone who is "discharged, demoted, suspended, threatened,

harassed, or in any other manner discriminated against." Jd.

However, no such completely new section was added.

Instead, Congress added this provision to § 3730 as

subparagraph (h). See False Claims Amendment Act of 1986,

Pub. L. No. 99-562, § 4, 100 Stat. 3153, 3157-58 (1986). n8

Had § 3730(h) been enacted as a separate section as

originally contemplated by the legislative history to the 1986

amendments, a claim of retaliation under the FCA would not

constitute "[a] [**17] civil action under § 3730," and thus

Congress's intent to have courts apply the most analogous

state statute of limitations would be clear. See Reed v. United

Transp. Union, 488 U.S. 319, 323-24, 102 L. Ed. 2d 665, 109

S. Ct. 621 (1989). Hence, Congress's relocation of the

retaliation provision to § 3730 reinforces the conclusion that

Congress intended the six-year limitations provision of

§ 3731(b)(1) to apply. Cf Russello v. United States, 464 U.S.

16, 23-24, 78 L. Ed. 2d 17, 104 S. Ct. 296 (1983) ("Where

Congress includes limiting language in an earlier version of a

bill but deletes it prior to enactment, it may be presumed that

the limitation was not intended."”). n9

n8 In the version of the amendments

proposed by the House of Representatives, the

retaliation provision was to be included as §

3730(g). See H.R. Rep. No. 99-660, at 12-14

(1986).

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n9 We note that Lujan did not consider

this legislative history in concluding that

"in the absence of some meaningful

indication to the contrary, we must

therefore presume that, in amending section

3731(b) ... Congress did not intend that the

statute apply to section 3730(h)." 162 F.3d

at 1035 (emphasis added).

[**18] IV.

As an alternative basis to facial ambiguity for exempting

Wilson's retaliation claim from the six-year limitations

period of the FCA, the Appellees press the district court's

conclusion that a literal application of the text of

§ 3731(b)(1) to retaliation claims under § 3730(h) would

lead to absurd results. The Appellees posit two variations on

this theme. The first arises from the fact that § 3731(b)(1)

effectively begins the limitations period for retaliation claims

before the act of retaliation occurs. The second arises from

the Appellees’ reading the term "violation" in § 3731(b)(1) to

require an actual and substantiated violation of § 3729. We

consider in turn whether either of these hypothetical

situations constitutes an absurd result. n10

n10 The dissent describes this discussion as

an attempt to advance "a number of policy

rationales to support [our] result." Post at 18.

The dissent neglects to point out that these

purported "policy rationales" are merely an

exploration of the consequences that flow

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DECIDED APRIL 29, 2004

directly from the text of the FCA itself, and

are offered to demonstrate only that the

statute means precisely what the statute says.

In contrast, the dissent offers a number of

policy rationales for its competing

construction of § 3731(b), which considers

only a part of the language added by Congress

in 1986. More importantly, the dissent's

dissertation fails to demonstrate that any of

the consequences identified here are absurd.

Certainly, the arrangement that follows from

the plain text of the § 3731(b) is a departure

from the limitations periods generally

applicable to claims of retaliation, and the

dissent points out the merit of the usual

scheme. Nevertheless, when Congress's intent

to endorse the benefits and consequences of

one statutory scheme over another is clear

from the text of the statute, as we conclude it

is here, "the wisdom of Congress’ action ...is

not within our province to second guess."

Eldred v. Ashcroft, 537 U.S. 186, 222, 154 L.

Ed. 2d 683, 123 S. Ct. 769 (2003).

To the extent the dissent cannot fathom why "the

majority goes to such extraordinary lengths” to resist his

views, post at 23, we can only proffer our obligation to apply

Congress's language as written. Congress has the discretion

to designate the starting point for the running of the statute of

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COURT OF APPEALS FOR THE FOURTH CIRCUIT,

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limitations period it imposes. When it does so, as it has here,

we do not feel it appropriate to substitute one we prefer.

Eldred, 537 U.S. at 222. [**19] [*253]}

In support of their argument that § 3731(b)(1) may, in

certain circumstances, foreclose a claim for retaliation before

it accrues, the Appellees offer two specific examples. First,

an employer may, if the whistle-blowing employee has

reported a false claim that the employer submitted several

years earlier, elect to wait-out the limitations period before

Or, an employee may report a § 3729 violation that is so old

reports the violation, effectively leaving the employee

unprotected. However, neither result is necessarily absurd.

As a threshold matter, we note that statutes of repose

have the same effect. Yet we find no absurdity in Congress's

prerogative to limit the rights it creates in this manner.

"Statutes of repose, increasingly common in tort cases, have

the potential to block litigation before the tort occurs." Neal,

33 F.3d at 865. Assuming that this is indeed "what Congress

had intended to accomplish by way of the limitation period

contained in the False Claims Act, ‘that would not condemn

[those provisions] as absurd. It would [**20] show only that

Congress had opted for simplicity of administration.” Storey

v. Patient First Corp., 207 F. Supp. 2d 431, 444 (E.D. Va.

2001) (alteration in original) (quoting Neal, 33 F.3d at 865).

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DECIDED APRIL 29, 2004

Second, courts have recognized that there is, as a

practical matter, a close temporal relationship between a

protected act and the retaliatory conduct based on it. See

_ Neal, 33 F.3d at 865-66; Storey, 207 F. Supp. 2d at 446

(citing Grand ex rel. United States v. Northrop Corp., 811 F.

Supp. 333, 336 (S.D. Ohio 1986)). As a result, there would

be few instances in which several years would pass between

Additionally, the length of the limitations period in §

3731(b)(1) lessens the likelihood that the purportedly absurd

consequences advanced by the Appellees would occur.

Moreover, the six years provided from the date of the

violation should be sufficient to encompass the protected act

and the retaliation, lest they both face challenges for

attenuation and staleness.

Even assuming the hypothetical circumstances described

by the Appellees occur, [**21] the doctrines of equitable

tolling or equitable estoppel may provide relief. Neal, 33

F.3d at 866. These doctrines are “based primarily on the view

that a defendant should not be permitted to escape liability

by engaging in misconduct that prevents the plaintiff from

filing his or her claim on time." English v. Pabst Brewing

Co., 828 F.2d 1047, 1049 (4th Cir. 1987). In those instances

where the employer has delayed a retaliatory termination

until the statute of limitations has run, the employee's failure

to file in timely fashion may fairly be [*254] described as

"the consequence ...of a deliberate design by the employer,"

such that the employer could be barred from raising the

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COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

limitations period as a defense under the doctrine of

equitable estoppel. /d. (internal quotation omitted). n11

Ultimately, the speculation that a plain-text application of the

FCA's amended language could yield an absurd result in a

limited category of hypothetical cases stands in stark contrast

to the decidedly unfavorable result that interpretation would

have on the retaliation claim at issue here. The result which

would flow from the interpretation advanced by the

Appellees (**22] and the dissent would comport with neither

Congress's stated intent in amending the FCA ". . . to

encourage any individual knowing of Government fraud to

bring that information forward," S. Rep. at 1-2, reprinted in

U.S.C.C.A.N. at 5267, nor with the liberal interpretation to

be accorded to remedial legislation, Neal, 33 F.3d at 862.

nll As an additional matter, we note that

none of the various potentially absurd

outcomes identified by the Appellees’ brief

would arise under the facts presented in this

case. This too counsels against adopting the

Appellees’ construction of the FCA here. This

court's function in interpreting a statute is "to

determine whether the language at issue has a

plain and unambiguous meaning with regard

to the particular dispute in the case.”

Robinson, 519 U.S. at 340 (emphasis added).

While we are not convinced that any of the

consequences advanced by the Appellees as a

result of applying § 3731(b)(1) to retaliation

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DECIDED APRIL 29, 2004

claims under the Act are absurd, the fact that

none of these consequences arise in the

context of Wilson's retaliation claim

reinforces our conclusion that *hese arguments

in favor of applying the North Carolina statute

should not be dispositive on appeal.

[**23] B.

Nor are we convinced by the Appellees’ contention that,

if courts must look to when "the violation of section 3729 is

committed," applying § 3731(b)(1) to a retaliation claim

under the Act would have the absurd result of withholding

retaliation protection until an action under § 3730(a) or (b)

proves that such a violation actually occurred. While

subparagraph 1 of § 3731(b), when read in isolation, is

susceptible to a reading that begins the limitations period

with a proven violation rather than an alleged violation, see

Ackley, 110 F. Supp. 2d at 402, we are not persuaded this

construction is appropriate, particularly when read in the

broader context of the FCA.

As a threshold matter, the Appellees’ construction of

“violation,” even when read in isolation, arguably reduces

§ 3731(b)(1) to surplusage. If the term "violation" in

§ 3731(b)(1) is read to require a judicially substantiated

violation of § 3729 as the Appellees contend, that provision

could not serve as the limitations period for the very actions

under § 3730(a) or § 3730(b) necessary to prove such a

violation. So read, § 3730(b)(1) would not apply to any

action under § 3730. Expanding the [**24] inquiry to include

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other provisions of the FCA reinforces the conclusion that

the Appellees’ reading of "violation" is inappropriate. In

Neal, the Seventh Circuit concluded that § 3730(h) applied to

retaliation claims even in the absence of a judicially

vindicated violation of § 3729. See 33 F.3d at 863-64. It did

so in light of the breadth of activities protected by § 3730(h),

which includes supplying "information during the

‘investigation’ of a suit ‘to be filed’ in the future." /d. (quoting

§ 3730(h)). More importantly, Neal also concluded based on

this language that it was inappropriate to read the term

"violation" as "a condition subsequent, necessary to perfect

the protection for activities that were sheltered at the moment

of their commission." /d. at 864. Rather, it should be

assessed "according to [*255] how things stood at the time of

the investigatory activity.” Jd.

We note too that the Appellees’ interpretation of

"violation" is equally incompatible with the fact that

retaliation provisions do not generally require the plaintiff to

engage in activity that is actually protected. An objectively

reasonable "good faith” belief [**25] that the activity is

protected is sufficient to satisfy the prima facie requirement

for retaliation claims. Cf Peters v. Jenney, 327 F.3d 307, 321

(4th Cir. 2003) (noting that in order to make out a prima

facie claim of retaliation under the Civil Rights Act of 1964,

a plaintiff need only demonstrate a subjective "good faith"

belief that the activity she engaged in was protected that is

objectively reasonable, rather than proving conclusively that

the activity was protected as a matter of law). In light of the

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COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

tension created by the Appellees’ narrow definition of

violation when considered in light of the other language in

§ 3731(b) and the FCA as a whole, we decline to apply that

construction, as “its invocation would result in a construction

of the statute which ...is at odds with the language of the

section in question and the pattern of the statute taken as a

whole." SEC v. Sloan, 436 U.S. 103, 121, 56 L. Ed. 2d 148,

98 S. Ct. 1702 (1978).

Finally, we are not convinced that applying § 3731(b)(1)

to Wilson's retaliation claim would yield a result that is at

odds with Congress's intent in amending the FCA. To the

contrary, we find the purposes of the FCA [**26] are well-

served by application of § 3731(b)({1) te retaliation actions

under § 3730(h), for three reasons. First, as the Supreme

Court recently noted, one of the intended effects of

Congress's 1986 amendments to the FCA was to "enhance[]

the incentives for relators to bring suit." Cook County v.

United States ex rel. Chandler, 538 U.S. 119, 133, 155 L. Ed.

2d 247, 123 S. Ct. 1239 (2003). Significantly, we note that

recourse to the generally shorter limitations periods provided

by state law inherently affords employees less protection

than the six-year limitations period of the FCA, as Karen

Wilson's experience attests. While North Carolina's statute of

limitations for wrongful discharge actions is. three years,

some state retaliation statutes provide for limitations periods

as short as 180 days. See e. g., Tex. Health & Safety Code

Ann. §§ 161.132, 161.134 (Vernon 2002) (imposing 180-day

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period in which to file action alleging retaliation against

health-care worker for reporting "conduct that is or might be

illegal, unprofessional, or unethical and that relates to the

operation of the facility"); Grand, 811 F. Supp. at 336 n. 2

[**27] (noting terminating employer's contention that Ohio's

180-day limitations period governs retaliation <:aims under

the FCA should § 3731(b)(1) not apply). Such an abbreviated

limitations period may be too short for an employee to

adequately marshal the evidence necessary to support a claim

that her termination was predicated on protected activity. Cf

Reed, 488 U.S. at 323 n. 2, 324, 326 (suggesting that a six- -

month limitations period provides insufficient time for an

aggrieved union member to "“identify[ the injury, decide in

the first place to bring suit against and thereby antagonize

union leadership, and find[{] an attorney"). Applying state law

in lieu of the FCA's limitations period would undermine the

very protection that Congress intended to confer by enacting

§ 3730(h). The dissent does not explain how the purposes of

the FCA are served by subjecting either the present or future

relators who seek to vindicate federal interests to the

vagaries of a patch-work of state limitations periods, some as

short as six months.

[*256]Second, the uncertainty inherent in the process of

identifying which of several potentially applicable statutes in

any given state is "most [**28] analogous" would further

undermine the protection afforded by § 3730(h). To make

this determination, courts must first “characterize the

essence" of the plaintiffs claim, then decide which state

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statute provides "the most appropriate limiting principle.”

Wilson v. Garcia, 471 U.S. 261, 268, 85 L. Ed. 2d 254, 105

S. Ct. 1938 (1985). While we do not doubt the ability of the

district courts to follow these considerations to their logical

conclusion, we note the frequency with which states have

enacted "multiple statutes of limitations for personal injury

actions," and the difficulties that can arise in selecting which

is most analogous. See Owens v. Okure, 488 U.S. 235, 241,

243-44, 102 L. Ed. 2d 594, 109 S. Ct. 573 & n.8, (1989)

(noting that in "States with multiple statutes of limitations for

personal injury actions," it may be difficult to ascertain

which is most analogous, and that courts of appeals had

devised two different approaches when resolving this issue in

§ 1983 actions). The collateral litigation necessary to resolve

this issue would exacerbate any uncertainty as to the time

available for filing a retaliation claim, and thereby reduce the

employee's incentive to report [**29] a violation of § 3729.

Cf. Reed, 488 U.S. at 326 ("Time-consuming litigation as to

the collateral question of the appropriate statute of

limitations for a § 101 claim ...creates uncertainty as to the

time available for filing, and it would not be surprising if the

prospect of perhaps prolonged litigation against the union

before ever the merits are reached were to have a deterrent

effect on would-be § 101(a)(2) plaintiffs.”).

Third, the Appellees overlook the additional uncertainty

that choice-of-law issues would create for employees in

deciding whether to report violations of § 3729. Reference to

state statutes of limitations may require district courts to

27a

PUBLISHED OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

address choice of law issues in determining which state's law

it must look to before selecting the appropriate state statute.

Cf. Ackley, 110 F. Supp. 2d at 402-03 & n. 7 (disagreeing

with defendant's argument that Maryland's /ex loci delicti

choice-of-law rule applied and required recourse to New

York's one-year limitations period, and collecting cases for

and against proposition that the most analogous statute is to

be identified from the forum state's code, rather than

following an application [**30] of the forum state's choice-

of-law rules). Forcing an employee to confront complicated

choice-of-law issues in deciding what protection, if any, the

FCA will provide should she disclose a violation of § 3729

further dilutes the incentive to report such violations that

Congress intended to create by adding § 3730(h). The

importance of this consideration is underscored by the

legislative history of the 1986 amendments, which note that

much of the fraud against the government is committed by

large contractors with a presence in several states. See S.

Rep. at 2-3, reprinted in 1986 U.S.C.C.A.N. at 5267. Hence,

recourse to a single, consistent statute of limitations would

be consonant with the purposes of the FCA.

VI.

For the foregoing reasons, we conclude that § 3731(b)(1)

provides the limitations period for retaliation actions under

§ 3730(h). Accordingly, we vacate the district court's orders

granting the Appellees’ motion to dismiss Wilson's retaliation

claim as time-barred as well as denying reconsideration of

28a

PUBLISHED OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

that dismissal, and remand for further proceedings consistent

with this opinion.

VACATED AND REMANDED

[*257] WILKINSON, Circuit Judge, dissenting: [**31]

I thank Judge Duncan for her fine opinion. This is not an

easy case, and there exists a square conflict between the

Ninth Circuit, United States ex rel. Lujan v. Hughes Aircraft

Co., 162 F.3d 1027, 1035 (9th Cir. 1998) (state statute of

limitations for wrongful discharge applies to anti-retaliation

claims under section 3730(h)), and the Seventh Circuit, Neal

v. Honeywell, Inc., 33 F.3d 860, 865 66 (7th Cir. 1994) (six-

year statute of limitations in section 3731(b) applies to

claims under section 3730(h)). In my judgment, the Lujan

court advances the better interpretation of the False Claims

Act, 31 U.S.C. §§ 3729-3733 (2000). The sole issue in this

interlocutory appeal is whether the district court correctly

held that North Carolina's three-year statute of limitations for

wrongful discharge applies to complaints of retaliatory

conduct brought under sectioa 3730(h) of the FCA. reasons

expressed by both Lujan and the district court, I agree that

the three-year limitations period applies.

My colleagues, by contrast, hold that under section

3731(b) an employer's submission of false claims

commences a six-year statute [**32] of limitations for the

independent event of retaliation against an employee. The

majority thus introduces an unprecedented oddity into state

and federal law by disconnecting the statute of limitations for

anti-retaliation claims from the actual retaliatory acts

. 29a

PUBLISHED OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

themselves. The majority offers a number of policy

rationales to support its result. But these rationales are found

nowhere in the text of the FCA and rest on scant support in

the legislative history.

The majority suggests its approach to the statute has this

or that advantage, but I do not think it acknowledges

adequately all the debits of its departure from the statutory

text. Its approach fails to give employees adequate notice

concerning when the statute of limitations begins. Worse

still, it may preclude challenges to retaliatory acts under

section 3730(h) before that cause of action has even accrued.

The majority also undermines the entire basis for a statute of

limitations by counseling judges to exercise equitable tolling

powers to recognize claims whenever the drawbacks of its

interpretation of the FCA become too apparent to ignore.

And, of course, six years is a long time. Deaths,

departures, and forgetfulness can [**33] occur in such a

period, and the relevant evidence has often faded. That is not

to say that Congress could not mandate such a period, only

that it has not chosen a time frame so far in excess of

analogous state provisions.

So I believe the majority is mistaken. In the absence of

an express federal statute of limitations, the district court

properly applied the statute of limitations for the most

closely analogous state actior of wrongful discharge. See

Reed v. United Transportation Union, 488 U.S. 319, 323-24,

102 L. Ed. 2d 665, 109 S. Ct. 621 (1989). North Carolina's

three-year statute of limitations for wrongful discharge

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PUBLISHED OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

affords a whistle-blowing employee both adequate notice and

a reasonable period of time to file anti-retaliation claims.

The starting point for our inquiry must be the text of the

statute. The FCA's sole statute of limitations provision states:

(b) A civil action under section 3730 may not

be brought -

(1) more than 6 years after the date on which

the violation of section 3729 is committed, or

[*258] (2) more than 3 years after the date when

facts material to the right of action are known or

reasonably should have been known by the

official of the United [**34] States charged with

responsibility to act in the circumstances, but in

no event more than 10 years after the date on

which the violation is committed,

whichever occurs last.

31 U.S.C. § 3731(b). Since anti-retaliation claims under

section 3730(h) are part of section 3730, my colleagues

contend a plain reading suggests that the statute of

limitations applies. But "the answer is not so simple.” Lujan,

162 F.3d at 1034.

Unfortunately, the majority's purported plain language

interpretation lops off half the statute. It overlooks the fact

that both prongs of the statute of limitations turn explicitly

on events independent from any alleged retaliatory actions.

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PUBLISHED OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

This fact alone suggests that the statute of limitations does

not apply to anti-retaliation claims.

The first statutory limitations period begins with the

occurrence of a section 3729 violation. 31 U.S.C.

§ 3731(b)(1). The text of this provision could not be more

plain. The six-year period is tied to a "violation of section

3729" and nothing else. Because an anti-retaliation claim

does not involve a "violation of section 3729" but instead a

violation of [**35] section 3730(h), by its own terms section

3731(b)(1) cannot apply. Section 3729 addresses only the

submission of false claims to the federal government.

Section 3729 does not address retaliatory actions by

employers against whistle-blowing employees. Indeed, an

employer may wrongfully retaliate against a whistle-blowing

employee even in the absence of section 3729 violations,

which would leave this statute of limitations without a

starting point. Retaliation by an employer may also occur

more than six years after the employer committed the false

claims violations, which would leave ‘he employee without a

cause of action. Therefore, it seems incongruous to say the

least that an employee's ability to bring retaliatory claims

should turn on when or whether the employer has submitted

false claims to the government in violation of section 3729.

See United States ex rel. Ackley v. International Business

Machines Corp., 110 F. Supp. 2d 395, 401-03 (D. Md. 2000).

The second statutory limitations provision also has nothing

to do with anti-retaliation claims under section 3730(h). See

31 U.S.C. § 3731(b)(2). This alternative statute of limitations

32a

PUBLISHED OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

[**36] commences on the date when federal officials

charged with responsibility to act under the FCA knew or

reasonably should have known material facts concerning the

section 3730 claim. But this is a logical impossibility in the

case of section 3730(h) claims. No United States official is

responsible for anti-retaliation claims under section 3730(h),

and no official can even file an anti-retaliation action on

behalf of an affected employee. A whistle-blowing employee

is the only individual empowered to bring challenges to

retaliatory actions under section 3730(h). Therefore, it would

seem impossible to link the statute of limitations for anti-

retaliation claims to this provision.

In sum, applying either of the section 3731(b) limitations

periods to section 3730(h) anti-retaliation actions is like

cramming squares in circles. In neither language nor logic do

they fit.

Prior to 1986, section 3731(b) stated that "[a] civil action

under section 3730 of this title must be brought within 6

years from the date the violation is committed." 31 U.S.C.

§ 3731(b) (1982). This pre-1986 [*259] provision clearly

established that a six-year statute of limitations applied to all

[**37] section 3730 claims.

If Congress had retained this language when it added anti-

retaliation actions to the FCA, then our job would be simple.

But Congress in 1986 chose to amend the FCA, and we must

"presume that language added by amendment was not mere

surplusage.” Salomon Forex, Inc. v. Tauber, 8 F.3d 966, 975

33a

PUBLISHED OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

(4th Cir. 1993). Congress introduced in 1986 a cause of

action for retaliatory acts under section 3730(h).

Simultaneously, Congress revised the statute of limitations

provision under section 3731(b) in two significant ways.

First, Congress narrowed the applicability of the statute of

limitations to "violations of section 3729." See 31 U.S.C. §

3731(b)(1). If Congress had intended that a six-year statute

of limitations apply to section 3730(h) anti-retaliation

actions, it would not have made an employer's false claims

Congress would not have added the alternative provision that

the statute of limitations for section 3730 runs three years

after an official knew or reasonably should have known of

facts material to the right of action. See 31 U.S.C. § 3731

[**38] (6)(2). Both of these changes mean that the statute of

limitations applies only to section 3730 claims that concern

the employer's false claims violations under section 3729 and

not to challenges to retaliatory acts brought by an employee

under section 3730(h). To decide otherwise suggests that this

Statutory change is meaningless and contravenes the well-

established rule that "when Congress alters the wording of a

statute, we must presume Congress intended a change in the

law." Lackey v. Johnson, 116 F.3d 149, 152 (Sth Cir. 1997).

The majority asserts that "§ 3730(h) subsumes a violation of

§ 3729, even if it does not do so explicitly." Maj. op. at 9.

This is an implicit argument, and we do not interpret cross-

references in statutes in this fashion. We must presume that

when Congress incorporates statutory cross-references, it is

34a

PUBLISHED OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

careful in laying out the provisions to which the references

occur. Here the references in section 3731(b) include section

3729, but do not include section 3730(h). When Congress

includes one provision, it is safe to assume that it excludes

others, absent evidence to the contrary. Russeilo v. United

States, 464 U.S. 16, 23, 78 L. Ed. 2d 17, 104 S. Ct. 296

(1983). [**39] While this principle may not serve as an

infallible guide to statutory interpretation, it surely applies

here.

My colleagues also point to a piece of legislative history,

which indicated the Senate's initial intent to place whistle-

blower protections under a separate section of the FCA. See

Maj. op. at 10-11. The majority claims that the ultimate

inclusion of challenges to retaliatory acts under section

3730(h) suggests that Congress somehow decided that

section 3731(b) would establish the statute of limitations for

these claims. This interpretation rests on a negative

inference, and nothing affirmatively suggests that Congress

added anti-retaliation claims to section 3730 with this

purpose in mind.

In an effort to explain its conclusion, the majority states that

Congress was, in effect, enacting a statute of repose. Maj. op.

at 12. But, of course, Congress was doing nothing of the sort.

Indeed, it is startling for the majority to suggest that

Congress was bent, in the FCA no less, on establishing

“repose” for employers who first defrauded the government

and then moved against the very persons who brought that

35a

PUBLISHED OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

fraud to light. Section 3731(b) is self-evidently a statute of

limitations. [**40]

The majority implies that when it picked the point to start the

limitations period, [*260] Congress either did not know the

difference between sections 3729 and 3730, or that it

inadvertently neglected to include a reference to an

immediately adjoining section of the statute. There is another

explanation, however - namely that Congress did not include

a reference to section 3730 because it did not wish to include

such a reference. The actual statutory changes that Congress

did enact underscore the point that Congress did not intend

for section 3731(b) to applyto section 3730(h) claims. As

the Lujan court held, "in the absence of some meaningful

indication to the contrary, we must therefore presume that, in

amending section 3731(b) so that the limitation runs only

from the date of a violation of section 3729, Congress did not

intend that the statute apply to section 3730(h).” Lujan, 162

F.3d at 1035.

The majority's interpretation is at odds with all statutes of

limitations for wrongful discharge, which commence with

the occurrence of the retaliatory acts. See, e. g., N.C. Gen.

Stat. § 1-52(5)(2003); Va. Code Ann. § 8.01-248 [**41]

(2003); W. Va. Code § 55-2-12 (2003). By holding that the

statute of limitations for anti-retaliation actions is set in

motion by some independent event, rather than by the

retaliatory acts themselves, the majority denies employees

adequate notice of when they can bring a claim. Indeed, the

36a

PUBLISHED OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

majority's interpretation may fail to provide any notice at all

to employees as to when their claims may commence or be

foreclosed. There is a reason that statutes of limitations for

anti-retaliation actions begin with the alleged retaliatory

event. Because the retaliation bears adversely on the affected

employee, it serves as the best possible notice that the

employee may henceforth seek redress.

This same reason suggests why Congress did not mandate a

six-year statute of limitations for section 3730(h) actions.

Since false claims themselves are acts of deception, it makes

sense for a longer statute of limitations to provide time to

uproot the deception. But this is simply not a concern for

employees under section 3730(h) who will feel the sting of

the retaliatory actions at the moment they occur.

The matter seems almost second-nature. Statutes of

limitations for [**42] personal injury claims begin to run on

the date of the injury. Statutes of limitations for wrongful

discharge claims begin to run on the date of the discharge. In

an action challenging a wrongful act, the limitations period

generally begins on the date of the act. In short, I am unable

to understand why my friends in the majority go to such

extraordinary lengths to resist such a thoroughly ordinary

principle.

The majority's interpretation also casts uncertainty over the

ability of affected employees to raise claims. For example,

under its interpretation a whistle-blowing employee could

report on his employer's submission of a false claim some

five years or more after the claims were submitted, yet be

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PUBLISHED OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

fired with apparent impunity just months later. The problem

is thus that the existence of an independent trigger for the

statute of limitations narrows the window of opportunity for

affected employees to make challenges to retaliatory actions

under section 3730(h). My colleagues summon judges to

exercise their equitable tolling powers in such instances to

override the limitatic’)s period in the interests of justice. But

the idea that a statute of limitations could expire even before

the [**43] cause of action comes into being is not one that

we should jump to conclude that Congress intended to

embrace. Reliance on equitable tolling in these

circumstances undermines the value of having a statute

[*261) of limitations in the first place and vests courts with

unpredictable discretion with regard to late claims. The

uncertainties of equitable tolling may make it more difficult

for discharged whistle-blowers to secure legal representation.

Lawyers may be reluctant to take on late challenges to

retaliatory actions if there is only a chance that judges will

exercise equitable tolling powers to recognize them.

The majority chides the dissent for manifesting a concern

about future employees and not the employee in this case.

But efforts to rescue a present plaintiff cannot justify

creating problems for future plaintiffs that Congress did not

intend. My colleagues respond to these problems with

various policy pronouncements. The majority posits that

Congress chose to have section 3731(b) apply to anti-

retaliation actions under section 3730(h) to further

“simplicity of administration.” Maj. op. at 9-10. Nowhere in

38a

PUBLISHED OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

the statute or legislative history is Congress’ desire for

simplicity of administration [**44] articulated. Simplicity of

administration is certainly not furthered by the majority's

exhortation for judges to use equitable tolling. Nor is

simplicity of administration advanced by the majority's

discussion of what actually constitutes a "violation" of

section 3729. Maj. op. at 14-15. In this connection, we are

told we need not await a judicially determined violation, but

what other than that might suffice to set the statute running is

left unclear. And to have all this in the course of a discussion

on administrative ease and convenience underscores the fact

that the majority's interpretation will present us with

anything but.

In support of its result, the majority claims there is generally

a close temporal relationship between protected acts and

retaliatory conduct, and that it is easier to know when fraud

against the government occurs than when retaliatory actions

occur. Maj. op. at 9. These arguments are speculative.

Whether false claims or retaliatory actions are easier to

identify will depend on which claim or which action one

happens to be talking about. And as for the "close temporal

relationship between a protected act and the retaliatory

conduct based on it," Maj. op. [**45] at 13, an employer, and

especially one aware of the majority's limitations rule, could

resolve not to "get mad,” but in the longer run "to get even."

The majority finally argues that "the length of the limitations

period in § 3731(b)(1) lessens the likelihood that the

purportedly absurd consequences advanced by the Appellees

39a

PUBLISHED OPINION OF THE UNITED ST

ATES

COURT OF APPEALS FOR THE FOURTH CUIT

DECIDED APRIL 29, 2004 oe

would occur." Maj. op. at 13. This too is hardly self-evident,

because the discovery of false claims, predicated on

deceptive practices, may not occur until late in the day. In all

events, these sorts of judgments are legislative, not judicial

in nature, and they afford no basis for ignoring the fact that

Congress pegged the six-year limitations period to violations

of section 3729, not section 3730(h), in the statute itself.

"Congress not infrequently fails to supply an express statute

of limitations when it creates a federal cause of action. When

that occurs, ‘we have generally concluded that Congress

intended that the courts apply the most closely analogous

statute of limitations under state law." Reed, 488 U.S. at 323

(quoting DelCostello v. International Brotherhood of

Teamsters, 462 U.S. 151, 158, 76 L. Ed. 2d 476, 103 S. Ct.

2281 (1983)). [**46] Since Congress enacted section

3730(h), but provided no statute of limitations, we must

apply state law where the retaliatory actions took place. The

North Carolina statute concerning wrongful discharge is the

most analogous provision for a retaliatory discharge under

the FCA. See Renegar v. [*262] R.J. Reynolds Tobacco Co.

145 N.C. App. 78, 549 S.E. 2d 227, 229 (N.C. Ct. pane

2001). The three-year statute of discharge should therefore

apply and begin at the time the discharge in this case took

place. See N.C. Gen. Stat. § 1-52(5) (2003). The challenge to

the retaliatory action here occurs almost four years after this

point and should thus be time-barred.

40a

PUBLISHED OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

In applying state law, "[i]t is the duty of the federal courts to

assure that the importation of state law will not frustrate or

interfere with the implementation of national polices." Reed,

488 U.S. at 324 (quoting Occidental Life Ins. Co. of

California v. EEOC, 432 U.S. 355, 367, 53 L. Ed. 2d 402, 97

S. Ct. 2447 (1977)). Application of the state statute of

limitations in this context would not "frustrate or interfere

with the implementation of national policies" or "be at

[**47] odds with the purpose or operation of federal

substantive law." North Star Steel Co. v. Thomas, 515 U.S.

29, 34, 132 L. Ed. 2d 27, 115 S. Ct. 1927 (1995) (internal

quotations and citations omitted). In fact, this standard would

make it easier for affected employees to challenge retaliatory

actions, because they would at least know when they could

do so. By contrast, the majority's interpretation leaves in the

dark plaintiffs who seek to bring the dealings of those who

defraud the government to light.

The majority points out that state statutes of limitations vary

in duration and that a few states, such as Ohio, have a statute

of limitations period for wrongful discharge as low as 180

days. But we are not thereby entitled to abandon the statutory

text whenever a federal court perceives that a state steps "out

of line." It is altogether plausible that Congress chose to

respect both the diverse views of states on the length of

limitations periods for wrongful discharge and the consensus

view of states that such periods, whatever their length,

should run from the date of the retaliatory acts themselves.

Of course, Congress could provide a uniform time-period for

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4la

PUBLISHED OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

these actions anytime [**48] it chooses to do so. But federal

uniformity has never been thought an indispensable feature

of federal law. See, e. g., Federal Tort Claims Act, 28 U.S.C.

§§ 1346, 2671-2680. Other federal statutes, such as the Civil

Rights Act of 1871, as amended, 42 U.S.C. § 1983, have

required courts to identify the most analogous state causes of

action and to apply state statutes of limitations to federal

claims. See Owens v. Okure, 488 U.S. 235, 239-40, 245-48,

102 L. Ed. 2d 594, 109 S. Ct. 573 (1989) (section 1983

actions are governed by state general or residual personal

injury statutes of limitations); see also Reed, 488 U.S. at

326-27 (claims under § 101(a)(2) of the Labor-Management

Reporting and Disclosure Act of 1959, 29 U.S.C. §

411(a)(2), prohibiting unions from interfering with members’

right to free speech as to union matters, are governed by state

general or residual personal injury statutes).

Any difficulties with applying state law suffer in comparison

to the difficulties which the majority has created. In some

cases, the majority's new rule may be clear, but in others it

will cause uncertainty, [**49] and in still others it will

discourage or prevent deserving whistle-blowers from having

their day in court. Congress may deem it necessary and

appropriate to extend the time frame fer anti-retaliation

claims well beyond those which individual states provide.

But until it does so, I would adhere to what I respectfully

believe is its presently expressed intent.

42a

PUBLISHED OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

UNITED STATES COURT OF APPEALS FOR THE

FOURTH CIRCUIT

No. 03-1122

(CA-01-19-2)

UNITED STATES OF AMERICA ex rel. KAREN T.

WILSON,

Plaintiff-Appellant,

GRAHAM COUNTY SOIL & WATER

CONSERVATION DISTRICT; CHEROKEE COUNTY

SOIL & WATER CONSERVATION DISTRICT;

RICHARD GREENE; WILLIAM TIMPSON; KEITH

ORR; RAYMOND WILLIAMS; DALE WIGGINS;

GERALD PHILLIPS; ALLEN DEHART; LLOYD

MILLSAPS; JERRY WILLIAMS; BILLY BROWN;

LYNN CODY; BILL TIPTON; C. B. NEWTON; EDDIE

WOOD; GRAHAM COUNTY,

Defendants-Appellees,

and

GRAHAM COUNTY BOARD OF COUNTY

COMMISSIONERS; CHEROKEE COUNTY BOARD

OF COUNTY COMMISSIONERS; CHERIE GREENE;

RICKY STILES; BETTY JEAN ORR; JOYCE LANE;

JIMMY ORR; EUGENE MORROW; CHARLES

LANE; CHARLES LANEY; GEORGE POSTELL;

LLOYD KISSLEBURG; TED ORR; BERNICE ORR;

43a

PUBLISHED OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT,

DECIDED APRIL 29, 2004

JOHN DOE; JOHN DOE CORPORATIONS, and

defendant; GOVERNMENT ENTITIES 1-99,

Defendants.

ORDER

The court amends its opinior filed April 29, 2004, as

follows:

On page 8, footnote 6, in line 1 of paragraph 1 and lines 1

and 5 of paragraph2: the word “canons” replaces “cannons.”

For the Court - By Direction,

Clerk

44a

ORDER (AMENDING PUBLISHED OPINION OF THE

UNITED STATES COURT OF APPEALS FOR THE

FOURTH CIRCUIT), DATED MAY 25, 2004

UNITED STATES COURT OF APPEALS FOR THE

FOURTH CIRCUIT

No. 03-1122

(CA-01-19-2)

UNITED STATES OF AMERICA ex rel. KAREN T.

WILSON,

Plaintiff-Appellant,

Vv.

GRAHAM COUNTY SOIL & WATER

CONSERVATION DISTRICT; CHEROKEE COUNTY

SOIL & WATER CONSERVATION DISTRICT;

RICHARD GREENE; WILLIAM TIMPSON; KEITH

ORR; RAYMOND WILLIAMS; DALE WIGGINS;

GERALD PHILLIPS; ALLEN DEHART; LLOYD >

MILLSAPS; JERRY WILLIAMS; BILLY BROWN;

LYNN CODY; BILL TIPTON; C. B. NEWTON; EDDIE

WOOD; GRAHAM COUNTY,

Defendants-Appellees,

and

GRAHAM COUNTY BOARD -OF COUNTY

COMMISSIONERS; CHEROKEE COUNTY BOARD

OF COUNTY COMMISSIONERS; CHERIE GREENE;

RICKY STILES; BETTY JEAN ORR; JOYCE LANE;

JIMMY ORR; EUGENE MORROW; CHARLES

LANE; CHARLES LANEY; GEORGE POSTELL;

LLOYD KISSLEBURG; TED ORR; BERNICE ORR;

45a

ORDER (AMENDING PUBLISHED OPINION OF THE

UNITED STATES COURT OF APPEALS FOR THE

FOURTPF CIRCUIT), DATED MAY 25, 2004

JOHN DOE; JOHN DOE CORPORATIONS, and

defends at; GOVERNMENT ENTITIES 1-99,

Defendants.

ORDER

The court further amends its opinion filed April 29,

2004, and amended May 10, 2904, as follows:

On page 11, footnote 10, line 2, “Post at 18.” is added

after the first sentence. On page 12, line 1 of the footnote,

“Certainly, arrangement that follows” is corrected to read

“Certainly, the arrangement that follows.”

For the Court - By Direction,

/s/ Patricia S. C

Clerk

46a : 47a

MEMORANDUM OF OPINION (COURT ALLOWING ‘ MEMORANDUM OF OPINION (COURT ALLOWING

DEFENDANTS’ MOTION TO DISMISS), DATED DEFENDANTS’ MOTION TO DISMISS), DATED

MAY 30, 2002 MAY 30, 2002

IN THE DISTRICT COURT OF THE UNITED

STATES

FOR THE WESTERN DISTRICT OF NORTH

CAROLINA

BRYSON CITY DIVISION

CIVIL NO. 2:01CV19

UNITED STATES EX REL., KAREN T. WILSON

Plaintiffs,

GRAHAM COUNTY SOIL & WATER

CONSERVATION DISTRICT; GRAHAM COUNTY

BOARD OF COUNTY COMMISSIONERS;

CHEROKEE COUNTY SOIL & WATER

CONSERVATION DISTRICT; CHEROKEE COUNTY

BOARD OF COUNTY COMMISSIONERS; RICHARD

GREENE; CHERIE GREENE; WILLIAM TIMPSON;

RICKY STILES; KEITH ORR; BETTY JEAN ORR;

RAYMOND WILLIAMS; DALE WIGGINS; JOYCE

LANE; GERALD PHILLIPS; ALLEN DEHART;

JIMMY ORR; LLOYD MILLSAPS; JERRY

WILLIAMS; BILLY BROWN; LYNN CODY; EUGENE

MORROW; CHARLES LANE; CHARLES LANEY;

GEORGE POSTELL; BILL TIPTON; LLOYD

KISSELBURG; Cl. B. NEWTON; EDDIE WOOD; TED

ORR; BERNICE ORR; JOHN DOE AND JOHN DOE

CORPORATIONS; and GOVERNMENTAL ENTITIES

1-99,

Defendants.

MEMORANDUM OF OPINION

THIS MATTER is before the Court on objections filed

by Relator Karen T. Wilson (Wilson) to the memorandum

and Recommendations of the United States Magistrate Judge

Max O. Cogburn, Jr. Defendants Graham County Board of

County Commissioners (the Graham County Board),

Raymond Williams (Williams), Dale Wiggins (Wiggins),

and Lynn Cody (Cody) (collectively “responding

Defendants”) have filed timely responses to Wilson’s

objections. Pursuant to standing orders of designation and

28 U.S.C. § 636, this Court referred the following motions to

the Magistrate Judge for a recommendation as to disposition:

(1) motion to dismiss filed by the Graham County Board,

Williams, Wiggins, and Cody; (2) motions to dismiss and for

a more definite statement filed b Defendants Cherokee

county Soil & Water Conservation District (the Cherokee

County District), Bill Tipton (Tipton), Eddie Wood (Wood),

and C. B. Newton (Newton); (3) motion to dismiss filed by

Defendants Cherokee County Board of County

Commissioners (the Cherokee County Board), Charles

Laney (Laney), Eugene Morrow (Morrow), and George

Postell (Postell); (4) motion to dismiss of Defendants

Graham County Soil & Water Conservation District (the

48a

MEMORANDUM OF OPINION (COURT ALLOWING

DEFENDANTS’ MOTION TO DISMISS), DATED

MAY 30, 2002

Graham County District), Gerald Phillips (Phillips), Allen

Dehart (Dehart), Jimmy Orr, and Lloyd Millsaps (Millsaps);

and (5) motion to amend the complaint filed by Wilson. The

Magistrate Judge filed a recommendation that the motions to

dismiss the action filed by the Cherokee County Board, the

Cherokee County District, the Graham County Board, the

Graham County District (collectively “the municipal

governmental entities” or “the municipal entities”), and

those individuals who serve on those municipal entities at

the relevant times be granted in part; the motions to dismiss

filed by the municipal entities and the individual Defendants,

in their official capacities, be allowed on the grounds of

municipal immunity from punitive damages. The Magistrate

Judge further recomincisied that the motions to dismiss the

Defendants in their individual capacities be denied.' The

Magistrate Judge recommended that Wilson’s motion to

amend her complaint to comply with the requirements of F.

R. Civ. P. 9(b) be granted.

The district court conducts a de novo review of those

portions of a Magistrate Judge’s Memorandum and

' The Magistrate Judge noted that the real parties in interest were

not the County Boards, but rather Graham County and Cherokee County.

If this Court determined that the municipal entities were not found to be

allowing Wilson to amend her complaint to insert the counties themselves

as Defendants in place of the Boards. The Magistrate Judge also

recommended that these amendments would relate back to the date the

49a

MEMORANDUM OF OPINION (COURT ALLOWING

DEFENDANTS’ MOTION TO DISMISS), DATED

MAY 30, 2002

Recommendation to which specific objections are filed. See

28 U.S.C. § 636(b). This Court will not address general

objections to the Magistrate Judge’s final Recommendation.

“A general objection...has the same effect as would a failure

to object. The district court’s attention is not focused on any

specific issues for review, thereby making the initial

reference to the magistrate useless.” Howard v Secretary of

HH, 932 F.2d 505, 509 (6 Cir. 1991). In this Circuit, de

novo review is unnecessary “when a party makes general and

conclusory objections that do not direct the court to a

specific error in the magistrate’s proposed findings and

recommendations.” Orpiano v. Johnson, 687 F.2d 44, 47

(4" Cir. 1982). Those parts of a Magistrate Judge’s

Memorandum and Recommendation to which no specific

objections are filed are given careful review. Id.

Wilson timely filed two specific objections to the

Magistrate Judge’s recommendations. First, Wilson objects

to the determination that the False Claims Act (FCA), 31

U.S.C § 3729, -t seq., did not abrogate municipal immunity

on the grounds that the Magistrate Judge failed to give the

proper deference to the position taken by the Department of

Justice as amicus curiae under Skidmore v. Swift & Co., 323

U.S. 134 (1944). She also objects to the Magistrate Judge’s

conclusion that the Fourth Circuit would not find a line of

cases in other Circuits — holding that F.R.Civ.P. 9(b)’s

pleading requirements are loosened in similar situations — to

be persuasive authority. For the reasons stated herein, the

motions to dismiss are granted in part and denied in part.

50a

MEMORANDUM OF OPINION (COURT ALLOWING

DEFENDANTS’ MOTION TO DISMISS), DATED

MAY 30, ? 02

I. FACTUAL AND PROCEDURAL HISTORY

The Plaintiff Wilson, a former employee of the Graham

County District, alleges that the Defendants, in various

combinations, submitted false claims to three different

programs, i.e., “EWP-216,” a federal Emergency Watershed

Protection program implemented in the wake of a 1995

storm and the federally funded North Carolina Cost Share

and Farm Services Agency programs. She claims some of

the Defendants submitted claims for work that was never

done, submitted claims for work that was improperly bid,

submitted claims for materials that were never used, or failed

to report proceeds of timber sales where the timber was

removed as a part of the program. She further alleges that

other Defendants assisted in procuring funds based on these

claims and in covering up the malfeasance. Wilson alleges

that she attempted to bring these charges to light, and her

employer and co-workers harassed her in retaliation,

resulting in her constructive discharge. As such, she asserts

two causes of action, a gui tam claim for violation of § 3279

and a claim of FCA retaliation und § 3730(h).

Wilson filed her sealed complaint on January 25, 2001.

Pursuant to 31 U.S.C. § 3720(a)(4), the United States filed

Notice of Election to Decline Intervention on July 23, 2001.

After service of process was had on Defendants, the last of

the instant motions was filed on January 22, 2002; after a

hearing held February 20, 2002, the Magistrate Judge filed

his Memorandum and Recommendation on March 25, 2002.

Sla

MEMORANDUM OF OPINION (COURT ALLOWING

DEFENDANTS’ MOTION TO DISMISS), DATED

MAY 30, 2002

Il. STANDARD OF REVIEW

In ruling on a motion to dismiss for failure to state a

claim, the Court must “accept the factual alk gations in the

plaintiffs’ complaint and must construe those facts in the

light most favorable to the plaintiffs...[Dismissal may occur]

only if it appears beyond doubt that the plaintiffs can prove n

set of acts in support of their claim that would entitle them to

relief.” Flood v. New Hanover County, 125 F.3d 249, 251

(4" Cir. 1997); Shepard’s, Motions in Federal Court,

§ .124, at 367 (2d ed. 1991). “To survive a motion under

Fed. R. Civ. P. 12(b)(6), a complain. ed only outline a

recognized legal or equitable claim which sufficiently

pinpoints the time, place, and circumstances of the alleged

occurrence and which, if proven, will justify some form of

relief.” Jd, § 5.123, at 366. If “relief could be granted

under any set of facts that could be proved consistent with

the allegations,” the motion must be denied. Hishon v. King

& Spalding, 467 U.S. 69, 73 (1984). Conversely, if “it is

clear that no relief could be granted under any set of facts

that could be proved consistent with the allegations. . .a

claim must be dismissed.” Neitzke v. Williams, 490 U.S.

319, 327 (1989) (citing Hishon, supra).

Ill. DISCUSSION

A. Municipal Immunity

Wilson’s objection regarding municipal immunity is that,

during the pendency of these motions, the Seventh Circuit

Court of Appeals ruled on the same question, crating a split

among the Circuits which have ruled on this issue to date.

52a

MEMORANDUM OF OPINION (COURT ALLOWING

DEFENDANTS’ MOTION TO DISMISS), DATED

MAY 30, 2002

See United States ex rel. Chandler v. Cook County, Illinois,

277 F.3d 969 (7 Cir. 2002) (finding no municipal

immunity), mandate sayed, 282 F.3d 448, petition for cert.

filed, 70 U.S.L.W. 3670 (Apr. 19, 2002); United States ex

rel. Garibaldi v. Orleans Parish School Bd., 244 F.3d 486

(5" Cir. 2001) (finding municipal imraunity), cert. denied,

122 S. Ct. 808 (Jan. 7, 2002); United States ex rel.

Dunleavy v. County of Delaware, 279 F.3d 219 (3 Cir.

2002) (finding no municipal immunity). She argues the

conflict among the Circuits provides this Court with a

“strong indication” that the FCA is ambiguous on this issue

and that the Court should defer to the interpretation of the

FCA as set forth by the Justice Department in it amicus

curiae brief. See Smiley v. Citibank (South Dakota) N.A.,

517 U.S. 735, 739 (1996).

In many instances of statutory ambiguity, courts are

required to afford a level of deference to the interpretation of

a statute by the relevant governmental agency. See, eg.,

United States v. Mead Corp., 533 U.S. 218 (2001); Chervon

U.S.A., Inc. v. Natural Resources Defense Council, Inc.,

467 U.S. 837 (1984); Skidmore, supra. The responding

Defendants are willing to concede that the Court should

apply Skidmore deference. Opposition of “Responding

Defendants” at 1 (“although Skidmore analysis is entirely

appropriate given the intra-circuit conflict .. .”.). The

Court, however, is not convinced that the Justice

Department’s position should be afforded deference in this

situation.

53a

MEMORANDUM OF OPINION (COURT ALLOWING

DEFENDANTS’ MOTION TO DISMISS), DATED

MAY 30, 2002

The level of deference courts afford to statutory

interpretations by agencies of the Executive Branch

attempting to resolve ambiguous language in a statue varies

with the degree to which Congress has delegated the

authority to implement a statute to an Executive agency. In

the modern, regulatory federal bureaucracy, this is frequently

an express of implied grant of authority to craft rules which

bear the force of law. In this situation, courts grant agency

determinations Chevron deference. See, Chevron, supra.

We accord deference to agencies under

Chevron, not because of a presumption that

they drafted the provisions in question, or

were present at the hearings, or spoke to the

principal sponsors; but rather because of a

presumption that Congress, when it left

ambiguity in a _ statute meant for

implementation by an agency, understood that

the ambiguity would be resolved, first and

ioremost, by the agency, and desire the

agency (rather than the courts) to possess

whatever degree of discretion the ambiguity

allows.

Smiley, 517 U.S. at 470-41 (emphasis added). The

Supreme Court has recently restated this rule.

We hold that administrative implementation

of a particular statutory provision qualifies for

Chevron deference when it appears that

Congress delegated authority to the agency

54a

MEMORANDUM OF OPINION (COURT ALLOWING

DEFENDANTS’ MOTION TO DISMISS), DATED

MAY 36, 2002

generally to make rules carrying the force of

law, and that the agency interpretation

claiming deference was promulgated in the

exercise of that authority. Delegation of such

authority may be shown in a variety of ways,

as by an agency’s power to engage in

adjudication or notice-and-comment

rulemaking, or by some other indication of a

comparable congressional intent.

Mead Corp., 533 U.S. at 226-27 (emphasis added).

Where Congress has not delegated such authority, courts

must still give agency interpretations of regulatory or

implementing statutes Skidmore deference.

There is room at least to raise a Skidmore

claim here, where the regulatory scheme is

~ highly detailed, and Customs can bring the

benefit to specialized experience to bear on

the subtle questions in this case. .. .

Id., at 235 (emphasis added).

The weight of such a judgment in a particular

case will depend upon the thoroughness

evident in its consideration, the validity of its

reasoning, its consistency with earlier and

later pronouncements, and all those factors

which give it power to persuade, if lacking

power to control.

Skidmore, 323 U.S. at 140. Even Skidmore deference,

however, is limited to the situation where an agency issues

55a

MEMORANDUM OF OPINION (COURT ALLOWING

DEFENDANTS’ MOTION TO DISMISS), DATED

MAY 30, 2002

“opinion letters . . .policy statements, agency manuals, [or]

enforcement guidelines” interpreting a statute which it was

created to help implement or which ‘as been especially

charged to that agency given its umique expertise.

Christensen v. Harris Co., 529 U.S. 576, 587 (2000).

But the [agency interpretation is] made in

pursuance of official duty, based upon more

specialized experience and broader

investigations and information that ts likely to

come to a judge in a particular case. [It]

determine(s] the policy which will guide

applications for enforcement by injunction on

behalf of the Government.

Skidmore, 323 U.S. at 139-40 (emphasis added).

“[D]eference is often appropriately give to an agency’s

interpretation of its governmental statute.” Federal Election

Comm’n v. Democratic Senatorial Campaign Comm., 454

U.S. 27, 37 (1981) (emphasis added). These cases

frequently involve agencies making determinations

involving procedural aspects of their enforcement or

regulatory duties. See, e¢.g., Christensen, supra; Meade

Corp., supra; Admas v. S.E.C., 287 F.3d 183, 188-89 (D.C.

Cir 2002) (giving Skidmore deference to the

Administrative Conference’s “Model Rules for

Implementation of the Equal Access to Justice Act,” 51

Fed.Reg. 16, 659 (May 6, 1986).

The FCA does not establish a “highly detailed”

“regulatory scheme.” Mead Corp. 533 U.S. at 235. While

56a

MEMORANDUM OF OPINION (COURT ALLOWING

DEFENDANTS’ MOTION TO DISMISS), DATED

MAY 30, 2002

the Justice Department is granted the power to enforce the

FCA, nothing about the Act, or the Justice Department,

indicates any specialized information in the hands of the

Justice Department which would give its interpretation of the

FCA more weight. The Justice Department’s power to

enforce the FCA is more analogous to it power to enforce

criminal statutes — such as the Controlled Substances Act, 21

U.S.C. § 80let seg. — than it is to the Equal Employment

Opportunity Commission’s power to establish procedures to

enforce the Fair Labor Standards Act or the Environmental

Protection Agency’s power to establish regulations under the

Clean Air Act. See, Christensen, supra; Chevron, supra.

In fact, the FCA originally provided for both criminal and

civil penalties until 1874 when the criminal provisions were

re-codified. See, U.S. REV. STAT. tit. 36, § 3490 (1875)

(civil); id. tit. 70, § 5438 (criminal); Untied States v.

Southland Mgmt. Corp., 288 F.3d 665, 2002 WL 538779,

*6 (5" Cir. 2002). Particularly in regards to the issue at bar,

there is not indication that the Justice Department possesses

any “specialized experience” or “broader investigation or

information” than is “likely to come to” this Court is this

case. Skidmore, supra. If the Justice Department

established guidelines for determining whether to proceed

with an action itself or to leave a case under the control of a

qui tam relator, those guidelines would certainly be entitled

to deference. See, 31 U.S.C. § 3730(b)(4). The

determination of whether the FCA has abrogated common

law municipal immunity from punitive damages awards,

57a

MEMORANDUM OF OPINION (COURT ALLOWING

DEFENDANTS’ MOTION TO DISMISS), DATED

MAY 30, 2002

however, is one particularly suited to the decision making

abilities of the federal courts. See, Chandler, supra;

Garibaldi, supra; Dunleavy, supra; see also, City of

Newport v. Fact Concerts, Inc., 453 U.S. 247 (1981);

Vermont Agency of Natural Resources v. United States ex

rel. Stevens, 529 U.S. 765 (2000). As such, the Court will

grant the amicus curiae brief submitted by the Government

no greater weight than the positions taken by the litigants.’

As such, the basis for Wilson’s objection is inapplicable.

Regardless, she has made a specific objection to the

Magistrate Judge’s conclusion regarding municipal

immunity and this Court will review that conclusion de novo.

The Recommendation provides an excellent overview of

the historical development of municipal immunity and the

current status of municipal immunity under federal law. The

Magistrate Judge concluded that “no punitive damages are

allowed [against municipal entities] unless expressly

authorized by statute.” City of Newport, 453 U.S. at 259

n.21; Stevens, 529 U.S. at 781 (holding States immune

from FCA liability). The issue is wether the FCA

= authorizes punitive damages against municipal

entitles.

? Itmay be, however, that this is all the weight Skidmore deference

requires. Under that decision, the Court affords ageucy opinions deference

“proportional to its ‘power to persuade."” Meade Corp., 533 U.S. 235

(quoting Skidmore, 323 U.S. at 140). The argument of any litigant is

consistently given respect proportional to its persuasive power, in light of

existing precedent.

58a

MEMORANDUM OF OPINION (COURT ALLOWING

DEFENDANTS’ MOTION TO DISMISS), DATED

MAY 30, 2002

Although it has undergone several amendments in the

last 20 years, the essential liability provision of the FCA has

been in place since 1863. Stevens, 529 U.S. at 782-83. The

FCA provides that “[aJny person” who, inter alia,

“knowingly presents. . .to an officer or employee of the

United States Government. . .a false or fraudulent claim for

payment. . .is liable to United States Government.” 31

U.S.C. § 3729(a); Stevens, supra, at 769. Congress

amended the damages provisions of the FCA in 1986

providing “for a civil penalty not less than $5,000 and not

more than $10,000, plus 3 times the amount of damages

which the Government sustains because of the act of that

person. ..”. Id.. Stevens, at 785. The previous version of

the damages provision called for double damages and a

$2,00 civil penalty, which the Supreme Court suggested

were remedial rather than punitive damages. Stevens, supra

(citing United States v. Bornstein, 423 U.S. 303, 315

(1976)). A successful gui tam relator under the FCA is

entitled to receive up to 25 percent of the “proceeds of the

action” if the Government does not intervene and up to 10

percent of those proceeds if the Government elects to

intervene. 31 U.S.C § 3730(c)(1-2.

The Magistrate Judge and the parties correctly agree that

the ultimate question in deciding this issue is whether the

term “person” in § 3729 includes municipal entitles. The

term “person” is presumed to include municipal entities.

See, Garibaldi, 244 F.3d at 491 (“we cannot apply [] the

presumption that the term person does not include the

;

59a

MEMORANDUM OF OPINION (COURT ALLOWING

DEFENDANTS’ MOTION TO DISMISS), DATED

MAY 30, 2002

sovereign,” because municipalities are distinct from

States). This is precisely opposite to the presumption from

which the Stevens court began in determining that the term

“person” in § 3729 does not include the States and that they

are, therefore, immune from liability under the FCA.

Stevens, 529 U.S. at 780 (“[wje must apply to this text our

longstanding interpretive presumption that ‘person’ does

not include the sovereign”). Under the Stevens decision,

“the term ‘person’ has remained in the statute unchanged

since 1863.” Id., at 783 n.12.

While the Stevens court found the legislative history of

the 1986 amendments indicating the FCA would apply to the

States was incorrect and therefore inapplicable in that

decision, that conclusion does not apply to the legislative

history as it regards municipalities. Jd. The amendment did

not alter the meaning of the term “person”. Jd The

determination that the legislative history is “erroneous and of

questionable value” relied on by the Magistrate Judge and

the-Third Circuit in Dunleavy is based on the conclusion that

the relevant portions of the legislative history had incorrectly

determined that “person” was presumed to include the

States. Id; Dunleavy, 279 F.3d at 225. As it relates to

whether the tem “person” includes municipalities, the

legislative history is correct and supports the conclusion that

Congress knew that “person” included municipalities when it

made the 196 amendments. Stevens, supra. Based on the

presumption that the term “person” includes municipal

entitles, and the Supreme Court’s finding that nothing in the

60a

MEMORANDUM OF OPINION (COURT ALLOWING

DEFENDANTS’ MOTION TO DISMISS), DATED

MAY 30, 2002

1986 amendments altered the meaning of that term, the

Court concludes that the term “person” as used in § 3729

includes municipalities. As such, the 1988 amendments to

the FCA expressly authorize punitive damages against

municipal entities, and they are not immune from suit for a

violation of § 3729. The motions to dismiss the complaint as

qui tam relator based on a n assertion or municipal immunity

must, therefore, be denied as to all Defendants.

B. Motion to Amend Complaint

1. Fraud Claims and Rule 9(b)

While the Magistrate Judge recommended Wilson’s

motion to amend complaint be granted, he did so based on

the motion for a more definite statement filed by Defendants

Cherokee County Board, Tipton, Wood, and Newton. These

arguments were also raise by Defendants Graham County,

Laney, Morrow, Wiggins, and Cody in their motions to

dismiss. These Defendants argued Wilson’s original

complaint failed to satisfy the requirement of Rule 9(b) that

“in all averments of fraud . . ., the circumstances constituting

fraud . . . shall be stated with particularly.” Fed. R. Civ. P.

%(b). Although the Magistrate Judge concluded that the

original complaint did not meet this requirement, he

recommended allowing Wilson the opportunity to amend the

complaint to bring it into compliance with the Rule. He also

recommended allowing Wilson to amend her Complaint to

name Cherokee County and Graham County as Defendants

rather than the County BoaSrds and that those amendments

would relate back to the date of filing of the original

6la

MEMORANDUM OF OPINION (COURT ALLOWING

DEFENDANTS’ MOTION TO DISMISS), DATED

MAY 30, 2002

complaint. Not Defendant has objected to this conclusion;

and upon carefu! review, the Court finds it to be appropriate.

Wilson objects to the Magistrate Judge’s conclusion that

her original complaint did not comply with Rule 9(b), citing

to a line of cases and noting that “if the alleged fraud

occurred over an extended period of time and consisted of

numerous acts, the specificity requirements are applied less

stringently.” United States ex rel. Butler v. Magellan

Health Servs., Inc., 74 F.Supp.2d 1201, 1215 (M.D. Fia.

1999). As the Magistrate Judge correctly noted, the Fourth

Circuit has not applied this relaxed standard to FCA cases.

Harrison v. Westinghouse Savannah River Co., 176 F.3d

776, 783-84 (4" Cir. 1999). Even under this less stringent

standard, “this exception must not be mistaken for license to

base claims of fraud on speculation and conclusory

allegations.” United States ex rel. Thompson vy.

Columbia/HCA Healthcare Corp., 125 F.3d 899, 903 (5"

Cir. 1997) (citations and quotations omitted).

Furthermore, “[aJllegations of fraud may be based on

information and belief when the facts in question are

peculiarly within the opposing party’s knowledge and the

complaint sets forth the factual basis for the plaintiff's

belief.” Koch v. Koch Indus., Inc., 203 F.3d 1202, 1237

(10" Cir. 2000) (citations and quotations omitted).

Likewise, even where the complaint alleges a widespread or

long-running fraud, “[{it) must still adduce specific facts

supporting a strong inference of fraud or it will not satisfy

62a

MEMORANDUM OF OPINION (COURT ALLOWING

DEFENDANTS’ MOTION TO DISMISS), DATED

MAY 30, 2002

even a relaxed pleading standard.” Butler, 71 F.Supp.2d at

1215 (citations and quotations omitted).

Even under the relaxed standard proposed by Wilson, not

only does the original complaint fail to set forth specific

facts supporting the allegations of fraud against many of the

Defendants sufficient to comply with Rule 9(b), but the

proposed First Amended Complaint fall short as well. The

complaint does set forth some of the alleged instances of

fraud with sufficient particularly, but it does not do so for all

Defendants. Nor does the complaint allege that the absence

of specificity is because certain information is in the hands

of some or all of the Defendants. “[T]he circumstances

required to be pled with particularly under Rule 9(b) are the

time, place, and contents of the false representations, as well

as the identity of the person making the misrepresentation

and what he obtained thereby.” Harrison, 176 F.3d at 783-

84 (citations and quotations omitted). At a minimum,

Wilson must allege which fraudulent statements were made

by whom, when they are made, what each Defendant gained

as a result of these claims, or that she is unable t plead that

information with particularity because it is in the control of

the Defendants.

2. Conspiracy Claims

The Cherokee County Board, the Graham County Board,

Laney, Morrow, Postell, Williams, Wiggins, and Cody also

assert that Wilson’s claim of conspiracy does not adequately

allege the elements of conspiracy and should be dismissed.

Conspiracy claims are not covered by Rule 9b). This

63a

MEMORANDUM OF OPINION (COURT ALLOWING

DEFENDANTS’ MOTION TO DISMISS), DATED

MAY 30, 2002

contention is a motion to dismiss pursuant to 12(b)(6) for

failure to state a claim. “To establish a civil conspiracy,

[Wilson] must [allege] that the Defendants acted jointly in

concert and that some overt act was done in furtherance of

the conspiracy.” United States ex rel. Phillips v. Pediatric

Servs. of America, Inc., 142 F.Supp.2d 717, 733

(W.D.N.C.. 2001). These Defendants assert that the

complaint merely alleges that they violated the FCA by

“perpetrating and participating in, and conspiring to

participate in,” fraudulent submissions. Complaint, ¢ 38.

Certainly, this allegation, standing alone, fails to state a

claim for civil conspiracy. Taken as a whole, the complaint

asserts that at least some of the Defendants did agree to

submit some false claims and committed some overt act in

furtherance of that agreement; however, none of the moving

Defendants appear to be implicated in this conspiracy.

Given the overall lack of clarity in the complaint, the large

number of Defendants named, and the generalizations made

about relevant conduct, the Court will allow Wilson an

opportunity to clarify the conspiracy charges as well as the

fraud allegations.

The Magistrate Judge admonished both Wilson and her

attorneys to consider the strictures of both Rules 9(b) and 11

in formulating their amended complaint. The Court

reiterates that admonition. All Defendants’ motions to

dismiss are denied as to the first cause of action as a gui tam

relator without prejudice to renewal. Wilson’s motion to

amend is allowed, but the proposed First Amended

64a

MEMORANDUM OF OPINION (COURT ALLOWING

DEFENDANTS’ MOTION TO DISMISS), DATED

MAY 30, 2002

Cou.plaint is rejected as inadequate. She will be allowed 20

days in which to file a Second Amended Complaint, bearing

in mind the points raised in the motions to dismiss and the

admonitions of the Magistrate Judge and this Court.

C. Statute of Limitations

The Court ..otes that the Cherokee County Board, the

Cherokee County District, Tipton, Wood, Newton, Laney,

Morrow, and Postell have moved to dismiss the claim for

retaliatory discharge on the grounds that Wilson was never

in their employ. The Cherokee County Board, Laney,

Morrow, and Postell also raised the statute of limitations as a

grounds for dismissal. The Magistrate Judge’s

Recommendation does not substantively address this issue,

stating that “an issue has arisen as tc whether the claims of

relator were filed within the period of limitations,” and that it

“may be revisited at an appropriate time.” Memorandum

and Recommendation, at 2, n.2.

A civil action under the FCA may not be brought

(1) more than 6 years after the date on which

the violation of section 3729 is committed, or

(2) more than three years after the date when

facts material to the right of action are known

or reasonably should have been known by the

official of the United States charged with

responsibility to act in the circumstances, but

in no event more than ten years after the date

on which the ~violation is committed,

whichever occurs last.

65a

MEMORANDUM OF OPINION (COURT ALLOWING

DEFENDANTS’ MOTION TO DISMISS), DATED

MAY 30, 2002

31 U.S.C. § 3731(b) (emphasis added). The phrase

“official of the United States charged with the responsibility

to act” means “pertinent Department of Justice officials.”

United States v. Tech Refrigeration, 143 F.Supp.2d 1006,

1009 (N.D. Ill. 2001). However, “there may be

circumstances in which the knowledge of government

agencies other than the Department of Justice might trigger

the running of the FCA statute of limitations.” Jd., at 1010.

This statute provides for aq six year statute of limitations,

but includes a tolling provision in the event that fraudulent

claims go undiscovered for a considerable period of time.

The statute of repose sets the outer limit for FCA claims at

ten years.

Currently there is a division among the federal courts as

to the correct application of this section to FCA claims made

by qui tam relators. United States ex rel. Colunga v.

Hercules, Inc., 1998 WL 310481 (D. Ut.) (Holding that the

tolling provision of § 37371(b)(2) does apply to qui tam

relators, but that the relevant knowledge for purposes of

calculating time is the knowledge of the “official of the

United States”); Unites States ex rel. Saaf v. Lehman

Bros., 123 F.3d 1307 (9" Cir. 1997); United States ex rel.

Hyatt v. Northrop Corp., 91 F.3d 1211 (9" Cir. 1996);

United States ex rel. Downy v. Corning, Inc., 118

F.Supp.2d 1160 (D.N.M. 2000) (all holding that the tolling

provision of § 3731(b)(2) does apply to relators, but that

the timing of the relator’s knowledge controls its

application to a qui tam action); United States ex rel.

66a

MEMORANDUM OF OPINION (COURT ALLOWING

DEFENDANTS’ MOTION TO DISMISS), DATED

MAY 30, 2002

Thistlethwiate v. Dowty Woodville Polymer, Lid., 6

F.Supp.2d 263 (S.D.N.Y. 1998); United Staies «=< rel. El-

Amin v. George Washington University, 26 F.Supp.2d 162

(D.D.C. 1998) (holding that the tolling provision of §

3731(b)(2) does not apply to gui tam actions at all, leaving

only the 6 year limitation of § 3731(b)(1)). The Court

adopts the Ninth Circuit’s approach to this question as

reflected in Hyatt and Saaf. As such, any claims alleged by

Wilson as a qui tam relator for conduct which occurred

before January 25, 1995, are time barred, unless she did not

know or reasonably should not have known of facts material

to the action before January 26, 1998. See, Downy, 118

F.Supp.2d at 1171 (“the limitations provisions of Section

3731 are referring to the relator’s initial act of filing the

civil action, not to the later date when the complaint is

unsealed”).

In reviewing the Complaint, several of Wilson’s

allegations appear to fall outside this period of limitation.

She alleges that Defendants Greene, Timpson, Orr, and

others submitted false claims to the Agricultural Cost Share

Program beginning in 1993. Complaint, ¢ 48. She also

does not specify when any false claims were submitted to the

Farm Services Agency Program. It is also worth noting that,

on the face of the Complaint, Wilson alleges that Greene and

Orr knew that she was contemplating “reporting them” on

November 6, 1995. Complaint, § 57. If Wilson was

contemplating reporting conduct relevant to some of her

FCA claims in November 1995, she was aware facts

67a

MEMORANDUM OF OPINION (COURT ALLOWING

DEFENDANTS’ MOTION TO DISMISS), DATED

MAY 30, 2002

“material” to those particular claims well more than 3 years

before her Complaint was filed. Any such claims are hereby

dismissed and need not be included in an Amended

Complaint.

Additionally, Defendants Cherokee County Board, the

Cherokee County District, Tipton, Wood, Newton, Laney,

Morrow, and Postell argue that § 3731(b) does not apply to

Wilson’s claim under § 3730(h) for retaliatory discharge,

citing United States ex rel. Lujan v. Hughes Aircraft Co., 162

F.3d 1027 (9" Cir. 1998). The Ninth Circuit in Lujan found

that Congress intended to exclude § 730(h) form the

provisions of § 3730(b), based on the language of the two

sub-sections, both of which were added to the FCA by the

1986 amendments. /d., at 1034-35. The 1986 amendments

changed the language of § 3731(b) to include the following

limitation, “6 years after the date on which the violation of

section 3729 is committed. . .”. Jd. (emphasis added).

Because a retaliation claim is not a violation of § 3729 but

rather a violation of § 3730(h), the Ninth Circuit reasoned

that § 3731(b) did not apply to the retaliation claims under §

3731 at all. Id., at 1035. As such, the Lujan court decided

to “apply the most closely analogous statute of limitations

under state law.” Jd. (citing Reed v. United Transport

Union, 488 U.S. 319, 323 (1989)). Application of § 3731(b)

to a retaliation claim would lead to some absurd or

incomprehensible outcomes. For example, an employee

raising FCA claims which later prove to be unfounded but

who was discharged for raising those allegations might be

68a

MEMORANDUM OF OPINION (COURT ALLOWING

DEFENDANTS’ MOT!ON TO DISMISS), DATED

MAY 30, 2002

precluded from false claims to the Agricultural Cost Share

Program beginning in 1993. Complaint, ¥ 48. She also

does not specify when any false claims were submitted to the

Farm Services Agency Program. It is also worth noting that,

on the face of the Complaint, Wilson alleges that Greene and

Orr knew that she was contemplating “reporting them” on

November 6, 1995. Complaint, § 57. If Wilson was

contemplating reporting conduct relevant to some of her

FCA claims in November 1995, she was aware facts

“material” to those particular claims well more than 3 years

before her Complaint was filed. Any such claims are hereby

dismissed and need not be included in an Amended

Complaint. -

Additionally, Defendants Cherokee County Board, the

Cherokee County District, Tipton, Wood, Newton, Laney,

Morrow, and Postell argue that § 3731(b) does not apply to

Wilson’s claim under § 3730(h) for retaliatory discharge,

citing United States ex rel. Lujan v. Hughes Aircraft Co., 162

F.3d 1027 (9" Cir. 1998). The Ninth Circuit in Lujan found

that Congress intended to exclude § 3730(h) from the

provisions of § 3730(b), based on the language of the two

sub-sections, both of which were added to the FCA by the

1986 amendments. IJd., at 1034-35. The 1986 amgpndments

changed the language of § 3731(b) to include the following

limitation, “6 years after the date on which the violation of

section 3729 is committed.” Jd (emphasis added).

Because a retaliation claim is not a violation of § 3729 but

rather a violation of § 3730(h), the Ninth Circuit reasoned

69a

MEMORANDUM OF OPINION (COURT ALLOWING

DEFENDANTS’ MOTION TO DISMISS), DATED

MAY 30, 2002

that § 3731(b) did not apply to retaliation claims under §

3731 at all. Id, at 1035. As such, the Lujan court decided

to “apply the most closely analogous statute of limitations

under state law.” Id. (citing Reed v. United Transport

Union, 488 U.S. 319, 323 (1989)). Application of § 3731(b)

to a retaliation claim would lead to some absurd or

incomprehensible outcomes. For example, an employee

raising FCA claims which later prove to be unfounded but

who was discharged for raising those allegations might be

precluded from bringing a § 3730(h) claim at all. An

employer would argue that no § 3729 violation occurred,

meaning that the statute of limitations never began to run,

crating the inference that no cause of action ever accrued tot

he employee for a violation of § 3730(h). See, United States

ex rel. Ackley v. IBM, Corp., 110 F.Supp.2d 395, 401-02

(d. Md. 2000) (noting this and other unusual results from

a literal application of § 3731(b) to a § 3730(h) claim and

applying Maryland law under the holding of Lujan.). As

such, this Court will apply the most closely analogous state

statute of limitations.

Under the North Carolina law, the statute of limitations

on a claim for wrongful discharge is three years from the

date of discharge. Renegar v. R. J. Reynolds Tobacco Co,

145 N.C. App. 78, 79, 549 S.E.2d 227, 229 (2001) (“It is

undisputed that the statute of limitations for a wrongful

discharge action under North Carolina law is three years

from the date of discharge.”) (citing N.C. Gen. Stat. § 1-

52(S) (1999)). As such, the time for Wilson to bring her

70a

MEMORANDUM OF OPINION (COURT ALLOWING

DEFENDANTS’ MOTION TO DISMISS), DATED

MAY 30, 2002

claim for retaliatory discharge under 3730(h) expired on

March 7, 2000, three years after the effective date of her

resignation. Wilson does not allege any facts which would

support an argument that the statute should be tolled for any

reason. Because Wilson did not file her Complaint until

January 25, 2001, her cause of action for retaliatory

discharge is time barred and is dismissed as to all

Defendants.’

IV. ORDER

IT IS, THEREFORE, ORDERED that the Defendants’

motions to dismiss the Plaintiff's first cause of action as a

qui tam relator under the False Claims Act are hereby

DENIED without prejudice to renewal after the filing of

Plaintiff's Second Amended Complaint.

IT IS FURTHER ORDERED that the Plaintiff's

motion to amend is ALLOWED, and the Court orders that

any amendment relate back to the Complaint’s original filing

date. Plaintiff shali file her Second Amended Complaint

within 20 days from entry of this Order.

IT IS FURTHER ORDERED that the Defendants’

motions to dismiss Plaintiff's second cause of action for

retaliatory discharge is hereby ALLOWED, and such claim

is hereby DISMISSED WITH PREJUDICE as to all

Defendants.

> Further more, the Complaint on its face alleges that Wilson was

employed by the Graham County District. As such, the cause of action

under § 3730(h) would otherwise be dismissed against all Defendants other

than the Graham County District.

7la

MEMORANDUM OF OPINION (COURT ALLOWING

DEFENDANTS’ MOTION TO DISMISS), DATED

MAY 30, 2002

THIS the 30" day of May, 2002.

/s/_ Lacy H. Thormburg

LACY H. THORNBURG

UNITED STATES DISTRICT COURT JUDGE

72a

MEMORANDUM OF OPINION AND CERTIFICATION

OF APPEAL, DATED SEPTEMBER 19, 2002

UNITED STATES EX REL., KAREN T. WILSON,

Plaintiffs,

Vs.

GRAHAM COUNTY SOIL & WATER

CONSERVATION DISTRICT; GRAHAM COUNTY;

CHEROKEE COUNTY SOIL & WATER

CONSERVATION DISTRICT; RICHARD GREENE;

WILLIAM TIMPSON; KEITH ORR; RAYMOND

WILLIAMS; DALE WIGGINS; GERALD PHILLIPS;

ALLEN DEHART; LLOYD MILLSAPS; JERRY

WILLIAMS; BILLY BROWN; LYNN CODY; BILL

TIPTON; C. B. NEWTON; and EDDIE WOOD,

Defendants.

CIVIL NO. 2:01CV19

UNITED STATES DISTRICT COURT FOR THE

WESTERN DISTRICT OF NORTH CAROLINA,

BRYSON CITY DIVISION

224 F. Supp. 2d 1042; 2002 U.S. Dist. LEXIS 17987

September 19, 2002, Decided

[*1045]MEMORANDUM OF OPINION AND

CERTIFICATION FOR APPEAL

THIS MATTER is before the Court on the following:

motion of Defendants Cherokee County Soil & Water

Conservation District (the Cherokee County District), Bill

Tipton, Eddie Wood, and C.B. Newton to dismiss, filed July

73a

MEMORANDUM OF OPINION AND CERTIFICATION

OF APPEAL, DATED SEPTEMBER 19, 2002

12, 2002; the motion of Defendants Graham County Soil &

Water Conservation District (the Graham County District),

Gerald Phillips, Allen Dehart, and Lloyd Millsaps to

dismiss, filed July 12, 2002; Defendant Jimmie On’s

[*1046] motion to dismiss, filed July 12, 2002; the motion

of Defendants Graham County, Raymond Williams, Dale

Wiggins, and Lynn Cody to dismiss, filed July 12, 2002;

and Relator Karen Wilson's motion for reconsideration of

the Court's dismissal of the retaliation claim or, in the

alternative, for certification of the Memorandum and Order

filed May 30, 2002, pursuant to 28 U.S.C. § 1292(b), [**4]

filed July 31, 2002. Responses have been filed and the

motions are ready for resolution.

I. PROCEDURAL HISTORY

On January 25, 20

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