Opposition Brief — Rockwell Intern. Corp. v. United States

Aurea, we wee

FILED

No. 05-1272 JUL 14 2006

in the

Supreme Court of the Guited States

ROCKWELL INTERNATIONAL CORP.

AND BOEING NORTH AMERICAN, INC.

Petitioners.

v.

UNITED STATES OF AMERICA

AND

UNITED STATES EX REL. JAMES S. STONE ©

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

TENTH CIRCUIT

RESPONDENT JAMES S. STONE’S :

BRIEF IN OPPOSITION

Maria T. Vullo

Counsel of Record

Evan Norris

PAUL, WEISS, RIFKIND,

WHARTON & GARRISON LLP

1285 Avenue of the Americas

New York, New York 10019-6064

(212) 373-3000

Hartley David Alley

LAW OFFICES OF HARTLEY

D. ALLEY

12499 W. Colfax Ave.

P.O. Box 280868

Lakewood, CO $0228-O0868

(303) 431-8660

Attorneys for Respondent

James S. Stone

,

i

QUESTIONS PRESENTED

Whether the Court should review the Tenth Circuit's

factbound determination, affirming the decisions of two district

court judges in this 17 year-old case, that the gui tam plaintiff

qualifies as an “original source” under the False Claims Act, 31

U.S.C. § 3730(e)(4), under the particular facts of this case.

Whether the Court should review petitioners’

constitutional challenges, pursuant to the Appointments and

Take Care Clauses of Article II, to the gui tam provisions of the

False Claims Act, 31 U.S.C. §§ 3729-33, in the absence of a

conflict of authority or indeed any relevant case law support at

all.

“*

TABLE OF CONTENTS

SFRFREee CRIED COUN WED ence covsccccccocnccenssecesnssnoscosessodczenen i

NE I FUE CT acccccinssncesnscesnnsiinspptnisittitiniiaanbaniemens IV

POEIUEE ER PEUUINEIIIOD cscensticsnccssrsenneressnibamesestuereess |

COUNTERSTATEMENT OF THE CASE ...............00000eeee0e- 2

A.” Mr. Stone’s Direct and Independent

Knowledge Leads to a Criminal Investigation

OE Pee I cinttinieininiaiintaisciouieiniteidiincsinaniadiaseiante 2

B. Rockwell's Criminal Guilty Plea ...........000000000.... 5

C. Relevant Proceedings Below ..................cc000cc000 6

1. Rockwell's Motion to Dismiss ............... 6

2. The Government’s Intervention.............. 7

3. The Amended Complaint ....................... 8

4. The Trial and Jury Verdict................000... 9

ESE EEE Y

i iceriatseiinsdinictstesstbianseiatiniis 10

7. Limited Remand and Affirmance ......... |2

REASONS FOR DENYING THE PETITION .................... 13

PETITIONERS’ FACTBOUND ORIGINAL

SOURCE ARGUMENT DOES NOT MERIT

Pe victicsniciitemsenipitiandatinisesiiansiinpatedalibasdinnmmncnndianisl 13

A. The Tenth Circuit Correctly Applied Settled

Principles of Law to the Particular Facts of

EE vntossintinsntinsencieniiiiintiiaipemneceiniienl 15

ili

B. Theere be No Circetlt Cm bict ...<.cccocecccccccscccccceess 17

C. Review By This Court Would Not Affect the

Outcome of This Case .............. sessssenesarensssssenese ld

I. PETITIONERS’ CONSTITUTLONAL

ARGUMENTS ARE NOT SUPPORTED BY

ANY COURT DECISION AND DO NOT

EET GEC UEETT cicivtncnncceseerecsevens sdcisbiesenibipeibiintiiaaing 27

eA ekiinie rnccinnionietienehiiliininninnsinpin sisieuiiebiiminmanionen 30)

iV

TABLE OF AUTHORITIES

CASES

Buckley v. Valeo, 424 U.S. 1 (1976)...........ccceccossccosssssooeseee 28

Comstock Resources, Inc. v. Kennard,

Bae GR rr et ee 14

Cooper v. Blue Cross & Blue Shield of Florida Inc.,

SD FS SEZ COB Cie. BID nccncccvecoccsecccocesessses 19, 20

Edmond v. United States, 520 U.S. 651 (1997)... cccccccccceeee 28

Kennard v. Comstock Res., Inc., 363 F.3d 1039

(10th Cir. 2004), cert. denied.

Se ws GR. Ae CH cect ae 14

Layne & Bowler Corp. v. Western Well Works, Inc..

BOE USB. FOF GIES? vsevisccvinscetinilisieibighaaetinaa 18, 27

Minnesota Association of Nurse Anesthetists v. Allina

Health System Corp., 276 F.3d 1032 (8th Cir.

2000), cert. denied, 537 U.S. 944 (2002) ....000... 17, 20

Morrison v. Olson, 487 U.S. 654 (1988) oo... 28, 29

Rice v. Sioux City Memorial Park Cemetery, Inc.,

I OIE. FC TRG axccprivonsieninvitatanidiniglicmialaaaaiae 26

Riley v. St. Luke's Episcopal Hospital,

SIe Ve FO ESIC, BOOP seviscscissnsnsnetiienaains 28

Saudi Arabia v. Nelson, 507 U.S. 349 (1993) .o..ccccccccccceeees 24

Seal ] v. Seal A, 255 F.3d 1154 (9th Cir. 2001).

cert. denied. 535 U.S. 1OV7 (2002)... cece 23

Vv

United States ex rel. Aflatooni v. Kitsap Physicians

Services, 163 F.3d 516 (9th Cir. 1999)..00000000.... 18, 22

United States ex rel. Barth vy. Ridgedale Electric, Inc.,

I ns elisnertincapeenainnonse 18

United States ex rel. Cosens v. Yale-New Haven

Hosp., 233 F. Supp. 2d 319 (D. Conn. 2002) .......... 26

United States ex rel. Fine v. Advanced Sciences, Inc.,

99 F.3d 1000 (10th Cir. 1996)............................... 15

United States ex rel. Hafter v. Spectrum

Emergency Care, Inc., 190 F.3d 1156

IE, Ei ndatrinidasntsinhinstrentensoneasstcedestes 11, 15,17

United States ex. rel. Kelly v. Boeing Co.,

IE) IP UIID ccncenectsctensescnestesconssecovesess 28

United States ex rel. King v. Hillcrest Health Center,

Inc., 264 F.3d 1271 (10th Cir, 2001),

cert. denied, 510 U.S. 1140 (1994) ooo ee tee OF

United States ex rel. Laird v. Lockheed Martin

Engineering & Science Services Co.., .

I 2!

United States ex rel. Marcus v. Hess,

EE a 26

United States ex rel. Merena v. SmithKline Beecham

Corp., 205 F.3d 97 (3d Cir. 2000)..............ccccceeeeeee 26

United States ex rel. Mistick PBT v. Housing Authority

of Pittsburgh, 186 F.3d 376 (3d Cir. 1999),

cert. denied, 529 U.S. 1018 (2000) .............. 18, 23, 25

vi

United States ex rel. Springfield Terminal Railway Co.

v. Quinn, 14 F.3d 645

eI CUPID enscnensicsitdiernesertnensesiinnaiiaicapiniinil 17, 20, 26

United States ex rel. Stinson, Lyons, Gerlin &

Bustamante, P. A. v. Prudential Insurance

Co., 944 F.2d 1149 (3d Cir. 1991) 000. 18

United States ex rel. Taxpayers Against Fraud v.

General Electric Corp., 41 F.3d 1032

St WHEE icesicnichbpsiadpcidiancaclieimandeeniaesiinhasitabeebintasiateatiee 28

United States v. MK-Ferguson Co.,

Fe Fe Ce CE le Fi ceccccncccnentctcccccszesctnnecs 15

Vermont Agency of National Resources v. United

States ex rel. Stevens, 529 U.S. 765 (2000)............. 27

Watson v. Blankinship,

20 F.3d 383, 387 (10th Cir. 1994). 000000... 16

Wisconsin Electric Co. v. Dumore Co..

I ae ae ET ae a 13

CONSTITUTIONAL PROVISIONS

i Oe ea 27

FR. EE 5 Nee na emmene Daven oer 28

STATUTES

Fe es Ue I icirsitiecideinsbditctininatacdiindadicllie bana isadetieciiieealiah ediniacaeal |

Cf | A FREEDICT AME Sone Om eae ea ere Fs passim

Vil

OTHER MATERIALS

I 13

Briet for the United States as Amicus Curiae,

Comstock Resources, Inc. v. Kennard,

125 S. Ct. 2957 (2005) (No. 04-165).

a i 14, 18

S. Rep. No. 99-345 (1986) (Conf. Rep.) ........::-:sse+s0e: 17, 26

RESPONDENT JAMES S. STONE’S

BRIEF IN OPPOSITION

PRELIMINARY STATEMENT

Rockwell's petition boils down not to a circuit conflict,

as Rockwell tries to create, but rather simply to a dispute about

the particular facts of this 17-year-old case, which Rockwell lost

before a jury in 1999. James S. Stone, an 81-year-old retired

Rockwell engineer, has proven his status as a proper gui fam

relator time and time again since filing this lawsuit in 1989, by

presenting evidence that he had direct and independent

knowledge of the facts underlying his claim that Rockwell

violated the False Claims Act, 31 U.S.C. §§ 3729-33 (“FCA”).

The Government consistently has maintained that Mr. Stone tsa

proper FCA plaintiff, and the court of appeals and district court

have so held based on the parties’ evidentiary submissions and a

full pretrial and trial record. Factbound determinations such as

this do not merit the Court's review.

Nor are Rockwell's constitutional arguments based ona

discernible conflict of authority. Indeed, Rockwell has not cited

a single FCA case holding that the gui tam provisions violate the

Appointments and Take Care Clauses. Not only is there no

conflict of authority, but there is no authority to suppor’

Rockwell's constitutional claims at all.

Finally, review by this Court would not change the

outcome of this case, as Rockwell is liable to the Government

for the full amount of the $4.2 million judgment, regardless of

Mr. Stone's relator status. Mr. Stone’s share of the judgment is

a matter between him and the Government, and does not affect

Rockwell's interest. For this reason too, review should be

denied.

2

COUNTERSTATEMENT OF THE CASE!

Mr. Stone, an 81-year old retired engineer, commenced

this action in July 1989 under the gui tam provisions of the

FCA, alleging that Rockwell had made false statements to the

Government in connection with its environmental, safety and

health (“ES&H”) activities at the Rocky Flats nuclear weapons

facility outside Denver, Colorado (“Rocky Flats” or “the

Plant”). (Pet. App. 4-Sa.)° Based in part On submissions by

Mr. Stone. the United States intervened in the action in 1996.

(Jd. 8a, CA App. 905.) In 1999, Mr. Stone and the Government

jointly tried the case to a twelve-member jury in a six-week

trial. On April 1, 1999, the jury returned a verdict for plaintiffs

under the FCA, and the district court (Matsch, C.J.) entered fina!

judgment in favor of Mr. Stone and the Government in the

amount of $4,172,327. (Pet. App. 9-10a, 68a.)

Rockwell's petition itself demonstrates the facthound

nature of this case. And those facts establish — as the court of

appeals and district court have held — Mr. Stone’s proper status

as a gui tam plaintiff in this fully-litigated case. Specifically:

A. Mr. Stone’s Direct and Independent

Knowledge Leads to a Criminal

Investigation and This Lawsuit

Following 30 years of engineering experience and

several patented inventions, Mr. Stone was employed by

Mr. Stone disagrees with petitioners’ statement of the facts.

Citations to the petition and appendix are denoted as “Pet.” and “Pet.

App.” Citations to Mr. Stone's appendix are denoted as “Resp. App.”

The Appellant's Appendix before the Tenth Circuit is denoted as “CA

App.” and references to the trial transcripts found therein in Volumes

VII through IX are to the transcript pages and are denoted as “Tr.”

Appellee/Cross-Appellant James S. Stone's Supplemental Appendix

before the Tenth Circuit is denoted as “SA.”

Rockwell at Rocky Flats from November 1980 through March

1986 as Principal Engineer in Rockwell's Facilities,

Engineering, and Construction Division and, later, as Lead

Principal Engineer in the Utility Design Department. (Pet. App.

3a, 17a; Resp. App. 2a.) Given his broad and lengthy

experience, Mr. Stone’s job for Rockwell! consisted of plant-

wide “troubleshooting” to identify and devise solutions to

engineering problems, including those arising in Rockwell's

ES&H operations. (Pet. App. 17-18a; Resp. App. 2a.) Projects

to which Mr. Stone was assigned at Rocky Flats included waste

treatment through a cementation process used to remove and

solidify pond sludge and salt wastes to produce “ponderete” and

“saltcrete,” sewage treatment plant operations, the spray

irrigation wastewater disposal system, and plutonium processing

and beryllium machining operations. (Pet. App. 18a; Resp.

App.3-lla.) While working on these projects, Mr. Stone

observed serious ES&H problems associated with each of these

arcas. (Pet. App. 18a: Resp. App. 6-8a, 19a, 25a

(pondcrete/saltcrete ); id. 3-4a (sewage treatment plant); id. 4-6a,

17-18a (spray wrigation); id. 8-10a (plutonium); id. |la,

(beryllium); id. 14a (observations made firsthand). )

Mr. Stone also knew that Rockwell was being paid under

its contract based on false claims. As the evidence below

showed, Mr. Stone knew that Rockwell's profits fer its

operation of the Plant consisted principally of award fce

bonuses, and during his employment Mr. Stone reviewed

documents describing the manner by which those bonuses were

determined. (Resp. App. | 2a, 20-23a.) Mr. Stone specifically

knew that Rockwell's award fee bonuses were based in part on

its satisfactory performance in various ES&H areas, including

“Environmental Protection” and “Waste Management,” and that

Rockwell was required to report ES&H problems to the

Department of Energy (“DOE”). (/d. 12a.)

Although Mr. Stone reported ES&H problems he

observed to Rockwell management, he and. other Rockwell

4

employees were specifically instructed not to discuss those

problems with DOE personnel. (Resp. App. 12-13.) Nor did

Rockwell's management take actions to address those problems.

(/d. 6-lla.) At the same time, Mr. Stone observed that

Rockwell continued to receive award fee evaluations and

lucrative bonuses that did not reflect the existence of the ES&H

problems he had reported to Rockwell management. (/d. 12a.)

In the three years following the termination of his

employment by Rockwell, and before any of the ES&H

problems at Rocky Flats had been made public, Mr. Stone

voluntarily met and spoke on multiple occasions with the

Federal Bureau of Investigation (“FBI”) and the Environmental

Protection Agency (“EPA”) (CA App. 457-71; Resp. App. 13-

I4a), a fact Rockwell conveniently ignores in its petition. In

those mectings, Mr. Stone reported the ES&H problems he had

observed at Rocky Flats, including problems with pondcrete and

spray irrigation; turned over 2,300 pages of related documents

from the Plant; identified other present and former Rockwell

employees with knowledge of these problems; and advised the

Government regarding sources of additional documents. (Resp.

App. I3a.) Among the documents Mr. Stone provided to the

Government was an October 13, 1982 Engineering Order in

which he stated, with respect to the manufacturing process for

pondcrete: “This design will not work in my opinion. I suggest

that a pilot operation be designed to simplify and optimize each

phase of the operation... .” (Pet. App. 5la; Resp. App. 19a.)

As the court of appeals would later find, this Engineering Order

“was explicit in articulating his belief that the proposed design

for making ponderete was flawed . . . . Despite this warning,

Rockwell went forward and manufactured pondcrete using the

allegedly deficient procedure.” (Pet. App. 18a.) It is undisputed

that Rockwell produced pondcretethat was unstable and caused

hazardous wastes to leach into the environment. (CA App.

1869-70.)

Following these meetings, in June 1989, the FBI and

EPA executed a search warrant at the Plant.’ (Pet. App. 4a.)

The search warrant was based on an affidavit signed by the

same FBI agent with whom Mr. Stone had met. (CA App. 778.)

The Justice Department's Criminal Division convened a grand

jury to proceed with the investigation. (/d. 909.)

Almost simultaneously, but after first providing his

information to the Government, Mr. Stone commenced this

action in July 1989 under the gui fam provisions of the FCA

alleging that Rockwell had misrepresented the status of its

ES&H performance to the Government in order to induce

payments under its DOE contract. (CA App. 81, 89-93.) As

required by the FCA, Mr. Stone’s complaint was filed under

seal and thus was not served on Rockwell at that time, and Mr.

Stone provided his complaint and a lengthy disclosure statement

to the Government outlining additional information underlying

his allegations, including information specifically relating to

pondcrete and spray irrigation. (/d. 491-561; Resp. App. 15a,

24-26a.)

—

B. Rockwell’s Criminal Guilty Plea

On March 26, 1992, after several years of investigation,

Rockwell entered into a-plea agreement with the Justice

Department's Criminal Division under which it pleaded guilty

to ten environmental crimes arising from Rockwell's pondcrete,

saltcrete and spray irrigation operations at Rocky Flats — matters

already addressed by Mr. Stone and alleged in his FCA —

Petitioners, relying on inadmissible hearsay statements from alleged

Justice Department sources made at the time of the criminal case against

Rockwell, argue that the Government did not view Mr. Stone as a

Whistleblower. (Pet. 10-11.) These statements do not negate Mr.

Stone's direct and independent knowledge. Furthermore. the

Government has consistently stated in this case that it views Mr. Stone

as an original source. (SA 26.)

6

complaint and disclosure statement — and agreed to pay $18.5

million in criminal fines. (CA App. 1861-92; Pet. App. 7a.)

Significantly, the plea agreement specifically excluded

Rockwell's liability in Mr. Stone’s FCA action. (CA App.

1889.)

C. Relevant Proceedings Below

d.. Rockwell's Motion to Dismiss

In late 1992, Rockwell moved to dismiss Mr. Stone's

action under the direct and independent knowledge prong of the

original source rule, arguing that Mr. Stone did not identify the

specific documents containing the false claims or statements and

the persons who submitted them. (CA App. 116-36.) Rockwell

did not contest that Mr.Stone voluntarily provided his

information to the Government prior to his filing suit. (/d.)

—_

In response, Mr. Stone submitted a lengthy sworn

affidavit with attachments explaining his role as a principal

enginccr for Rockwell and his knowledge gained in that role of

ES&H problems at the Plant, including those relating to

pondcrete, spray irrigation, sewage treatment, plutonium and

beryllium operations, which he reported to Rockwell

management (Resp. App. 2-I1la): and that Rockwell's

compensation consisted primarily of award fee bonuses the

amount of which was determined by its performance in various

areas, including ES&H matters (id. 12a, 20-23a). Mr. Stone

further explained that he provided this information, as well as

documents from the Plant, to the FBI and EPA over a three-year

period and continued to work with these investigative

authorities through 1989 before he filed this FCA suit. (/d. 13-

15a; CA App. 457-71.)

Significantly, in submissions to the district) court,

Rockwell acknowledged Mr. Stone’s direct and independent

knowledge in these areas:

At best. Stone had first-hand knowledge (for

cxample) that Rockwell's use of spray

irrigation likely caused surface and ground

water contamination, that the pondcrete

Rockwell was manufacturing would eventual!y

deteriorate and release toxins into” tne

environment; that plutonium “gloveboxes”

were leaking and lacked necessary filters; and

that the beryllium machine shop was

contaminated with hazardous levels of

beryllium.

(CA App. 578 (citations omitted, emphasis added); id. 567

(“Stone's assertion that he told the FBI/EPA about ES&H

‘problems’ at Rocky Flats is, on the other hand, accurate.”).)

On February 2, 1994, the district Court (Carrigan, J.)

denied Rockwell's motion to dismiss. The court found, based

on the factual record submitted, that Mr. Stone had firsthand

knowledge of ES&H problems acquired through his role as

plant troubleshooter, that Mr. Stone knew that Rockwell's

compensation was based on its compliance with ES&H

standards and that Rockwell's compensation would be adversely

affected if it did not perform appropriately in these areas, and

that Mr. Stone was instructed by Rockwell management not to

divulge ES&H problems to DOE. (Pet. App. 61a.) Thus, the

court concluded, “Mr. Stone had direct and independent

knowledge that Rockwell's compensation was linked to its

compliance with environmental, health and safety regulations

and that it allegedly concealed its deficient performance so that

it would continue to receive payments.” (/d.)

2. The Government's intervention

In 1995, the Government moved to intervene in Mr.

Stone’s action, explaining that it had obtained information

8

through “a separate proceeding” as well as material submitted to

the Government by Mr. Stone” confirming Mr. Stone’s FCA

allegations and, in particular, those concerning Rockwell's

misrepresentations as to the solidification of wastes through the

pondcrete/saltcrete process and its improper spray irrigation

practices. (CA App. 900, 905.) Finding good cause, the district

court (Matsch, C.J.) granted the motion, and that ruling is not

challenged here. (Pet. App. 8a; CA App. 964-71.)

3. The Amended Complaint

Mr. Stone and the Government jointly filed an Amended

Complaint on December 20, 1996, alleging, in Count One, FCA

violations in connection with Rockwell's pondcrete, saltcrete.

and spray irrigation waste treatment operations. (CA App. 979-

91.) The Government alleged additional common law claims,

and Mr. Stone separately alleged an FCA claim relating to

Rockwell's plutonium operations.” (/d. 996-1004.)

Specifically, plaintiffs alleged that, due to defective

design and manufacturing, a substantial number of the pondcrete

and saltcrete blocks Rockwell manufactured and stored outdoors

were unstable and, as a result, hazardous materials leached onto

the pads under the blocks and the surrounding area. (CA App.

982. 984.) With respect to spray irrigation, plaintiffs alleged

that Rockwell improperly disposed of wastewater from

plutonium operations and the sewage treatment plant by

After Rockwell was dismissed as contractor at Rocky Flats, Rock well

sued the Government in the Court of Federal Claims for amounts

allegedly due under its contract. The Government has defended the case

on the ground, among others, that Rockwell committed fraud as

contractor at the Plant. (CA App. 903-904. )

Mr. Stone's plutonium claim, which the Government did not adopt, was

severed by the district court and has never been tried. (Pet App. 8-9a.)

Thus, following trial, the district court entered judgment pursuant to Fed.

R. Civ. P. 5S4(b). (Pet. App. 68a)

9

spraying it on the fields surrounding Rocky Flats, which

wastewater ran into and polluted Woman Creek and other

nearby water supplies. (/d. 988-89.) Plaintiffs contended that

Rockwell failed to report these environmerital conditions to the

Government, resulting in the fraudulent receipt of award fees

under Rockwell's DOE contract. (CA App. 989-991.) These

claims were further detailed in the extensive discovery

proceedings, and summarized in the final pre-trial order. (CA

App. 1076-95.)

4. The Trial and Jury Verdict

Plaintiffs’ pondcrete, saltcrete and spray irrigation

Claims were presented jointly by Mr. Stone and the United

States to a twelve-member jury during a six-week trial. On

April 1, 1999, the jury returned a verdict finding that Rockwell

made false statements in violation of the FCA for the three

award fee periods from April |, 1987 through September 30,

1988. (CA App. 1119-20.) The jury awarded damages in the

amount of $1,390,775.80, which, under the treble damage

provision of the FCA, resulted in a final judgment of

$4.172,327.40. (Pet. App. 10a, 68a.)°

5. Post-Trial Motions

After the jury verdict, Rockwell argued that the district

court should not enter judgment in favor of Mr. Stone because

he was not an original source. (CA App. 1135-54.) On May 5,

1999, Rockwell also, for the first time, asked for a ruling on the

constitutionality of the gui tam provisioas. (Jd. 1459.) In

response, the Government agreed with Mr. Stone that the district

court's 1994 original source ruling was correct and should not

The jury did not find liability for other award fee periods. and found for

Rock well on the Government's common law claims. The district court,

in accordance with the FCA, also assessed civil penalties in the amount

of $15,000.00. (Pet. App. 10a. 68a.)

10

be revisited. (SA 23-26: CA App. 1408.) As the court of

uppeals later noted, “the United States did not contend in the

district court that Mr. Stone had failed to make the necessary

disclosures to the Government.” (Pet. App. Sla, n.5.) To the

contrary, the Government stated that “the question of whether a

particular relator is or is not an ‘original source’ is one which

alfects the government's interests,” and that the Government did

not question Mr. Stone's proper status as a gui tam plaintiff in

this case. (SA 26.)

The district court denied Rockwell's renewed motion to

dismiss On original source grounds and also rejected Rockwell's

constitutional arguments, and entered final judgment in favor of

both plaintiffs on May 13, 1999. (Pet. App. 66-68a.) The court

correctly noted that Rockwell had no stake in the amount of

recovery to which Mr. Stone is entitled, because Rockwell must

pay the full verdict to the Government in any event. (SA 124.)

The district court also denied plaintiffs’ motion for a new trial

on damages (SA 75) and entered an amended final judgment in

favor of both plaintiffs on June 10, 1999,!

6. Appeals

Rockwell appealed on various grounds, including the

“original source” issue, and cross-appeals were filed by Mr.

Stone and the Government on the damages issue. The

Government also appealed from the dismissal of its common

law claims. Significantly, with respect to the original source

issuc, Rockwell did not contest the facts in the record showing

Respondents sought a new trial on damages based on the district court's

admission of prejudicial testimony of Rockwell's “expert” regarding

environmental damages at other DOE plants. (SA 29-45.) In addition to

award fees, plaintiffs had sought as damages the millions of dollars in

costs expended by the Government to clean up the environmental

damage resulting from Rockwell-produced ponderete and saltcrete.

(CA App. 1065.)

that Mr. Stone had provided documents and information to the

Government regarding pondcrete and spray trigation prior to

filing this suit. ,

On September 24, 2001, in an opinion authored by Judge

Holloway, a Tenth Circuit panel majority affirmed the district

court's rulings in their entirety and dismisscd all cross-appeals.

The court of appeals held that the district court had correctly

determined that Mr. Stone was an original source, because he

had direct and independent knowledge of the facts underlying

his claims. The court specifically held that Mr. Stone's

prediction in his 1982 Engineering Order that the pondcrete

process would not work, among other record cvidence,

constituted direct and independent knowledge of the pondcrete

claim as to which Rockwell was found liable. (Pet App. 17-

20a.)

Judge Briscoe dissented. The dissent did not take issue

with the panel majority’s articulation of the direct and

independent knowledge requirement, but rather with the

majority's application of the law to the facts of this case. (Pet.

App. 44-48a.)

On November 2, 2001, Rockwell filed a petition for

rehearing and rehearing en banc on the question whether

Mr. Stone had satisfied the two prongs of the original source

rule. Tellingly, Rockwell sought to justify rehearing and

rehearing en banc by arguing that the decision of the court of

appeals below created an intra-circuit split with two other Tenth

Circuit decisions, United States ex rel. Hafter v. Spectrum

Emergency Care, Inc., 190 F.3d 1156 (10th Cir. 1999), and

United States ex rel. King v. Hillcrest Health Center, Inc., 264

F.3d 1271 (10th Cir. 2001), cert denied, 535 U.S. 905 (2002).

concerning the direct and independent knowledge and pre-filing

disclosure prongs, respectively.

On March 4, 2002, the Tenth Circuit rejected Rockwell's

intra-circuit split argument and reaffirmed its ruling that, in line

12

with Hajter, Mr. Stone had direct and independent knowledge of

the information on which his allegations were based. (Pet. App.

15-22a.) The panel, however, issued an amended opinion and

directed a limited remand on the factual issue of whether

Mr. Stone had satisfied the second prong, i.¢., whether he

voluntarily provided his information to the Government before

filing this FCA action. (/d. 22-23a, 43-44a.) The count of

uppeals affirmed all of the remaining rulings in their entirety,

including the ruling that the FCA does not violate Article II of

the Constitution. (/d. 43-44a.) The suggestion for rehearing en

bane was denied. (/d. 1a.)

7. Limited Remand and Affirmance

On limited remand, the district court received

submissions from the parties concerning the information Mr.

Stone provided to the Government prior to the filing of this

action. (Pet. App. 50a.) On December 17, 2002. the district

court issued an order making certain findings of fact, but no

conclusions of law. (/d. 50a. 75a.) In its order, the district court

specifically found that Mr. Stone provided to the Government

documents relevant to the ES&H matters at issue, including his

Engineering Order related to pondcrete, prior to bringing this

suit. (Pet. App. 73a.)°

Following the remand proceedings and after further

briefing, on March 5, 2004, the Tenth Circuit reaffirmed the

judgment of the district court in all respects as set forth in its

The district court declined to consider additional affidavits submitted by

Mr. Stone and his counsel regarding Mr. Stone's meetings with the FBL.

Mr. Stone appealed trom that.order. Following the Tenth Circuit's

decision on the main appeal, the Tenth Circuit denied as moot Mr.

Stone’s motion to supplement the record to include the affidavits and the

second appeal was held in abeyance. (Pet. App. 53a.) Were this case to

be reviewed by the Court, the matter of these additional affidavits may

need to be addressed by the courts below.

13

previous opinion. (Pet. App. 52-53a.) Judge Briscoe again

dissented, for the same reasons as in her prior dissent.”

On April 16, 2004, Rockwell filed another petition for

rehearing and rehearing en banc, contending, once again, that

the Tenth Circuit’s decision presented an intra-circuit conflict

with King as to the pre-filing disclosure issuc. On January 4,

2006, the Tenth Circuit denied Rockwell's second petition.

(Pet. App. 57a.) On April 4, 2006, Rockwell filed its petition

for a writ of certiorart.

REASONS FOR DENYING THE PETITION

I. PETITIONERS’ FACTBOUND ORIGINAL

SOURCE ARGUMENT DOES NOT MERIT

REVIEW

At bottom, Rockwell's petition challenging Mr. Stone's

original source status takes issue only with the application of a

properly stated rule of law to the particular facts of this case,

which is not a basis for this Court's review. See S. Ct. R. 10

(“A petition for a writ of certiorari is rarely granted when the

asserted error consists of . . . the misapplication of a properly

stated rule of law.”). In an attempt to overcome this obvious

shortcoming, Rockwell tries to conjure a conflict of authority —

about what amount of “direct” knowledge a qui fam relator must

have under 31 U.S.C. 3730(e)(4)(B), but. significantly. no court

of appeals has recognized such a conflict, and there ts none. See

Wisconsin Elec. Co. v. Dumore Co., 282 U.S. 813, 813 (1931)

(“It appearing that the asserted conflict in decisions arises from

differences in states of fact, and not in the application of a

principle of law, the writ of certiorari is dismissed as

improvidently granted.) (citation omitted).

Judge Politz. sitting by designation from the Fifth Circuit, passed away

before the Tenth Circuit's second decision following remand. and was

replaced by Judge Hartz.

14

The FCA statute clearly defines an “original source” as

“an individual who has direct and independent knoWledge of the

information on which the allegations are based and has

voluntarily provided the information to the Government before

filing an action under this section which is based on the

information.” 31 U.S.C. § 3730(e)(4)(B). As the Tenth Circuit

did in this case, all circuits apply a fact-intensive analysis to

determine whether a particular qui tam plaintiff is an original

source under the plain language of the statute. See Brief for the

United States as Amicus Curiae, Comstock Res., Inc. v.

Kennard, 125 S. Ct. 2957 (2005) (No. 04-165), 2005 WL

1254202, at *13,. (“A sensible application of the ‘original

source’ requirement in Section 3730(e)(4)(B) must take into

account [many] considerations. No single brightline test will be

adequate to resolve all cases in light of the widely varying

fraudulent schemes that may give rise to gui tam actions.”).'”

Below, both the district court and the court of appeals

performed the analysis required by the FCA and concluded that

Mr. Stone was an original source based on the facts of this case.

Rockwell's petition is simply a disagreement with the result of

that factbound analysis, which is not a basis for this Court's

review.

'’ Rockwell argues that the Court's denial of certiorari Jast year in

Comstock Resources, Inc. v. Kennard, 125 §. Ct. 2957 (2005), another

FCA case from the Tenth Circuit, does not indicate that the Court should

deny its petition because “|t|his case goes further.” (Pet. 23.) In fact,

however, this case is less certworthy than Comstock. First, the relators

in Comstock were not employees, like Mr. Stone. involved in the very

issues that formed the basis for the action. See Kennard v. Comstock

Res., Inc., 363 F.3d 1039, 1040-41 (10th Cir. 2004). Second. the

Government did not intervene in Comstock and thus was unable to

protect its interests in the way it has been able to do here. And third.

review of this case would not affect Rockwell's liability, as it is hable to

the Government in any event for the full amount of the judgment. In

short, nothing about Rock well’s petition presents a more persuasive case

for review than Comstock did.

15

A. The Tenth Circuit Correctly Applied

Settled Principles of Law to the Particular

Facts of This Case

After considering Rockwell's arguments on appeal — and

again in Rockwell's petitions for rehearing — the Tenth Circun

twice has affirmed the district court's ruling that Mr. Stone’s

knowledge of Rockwell's environmental frauds was direct and

independent, as required by the FCA. (Pet. App. la, 17a.)

Significantly, in none of its decisions did the court of appeals

acknowledge any conflict of authority. Because there is none.

In the decision below, the court of appeals began by

setting forth the relevant legal standard, which Rockwell does

not (and cannot) contest.

We have explained that for purposes of

determining whether a relator qualifies as an

original source, the FCA’s direct and

independent knowledge requirement is properly

construed to mean that the knowledge possessed

by the relator must be “marked by the absence of

an intervening agency . . . [and] unmediated by

anything but the relator’s own labor.” United

States ex rel. Hafter v. Spectrum Emergency

Care, 190 F.3d 1156, 1162 (10th Cir. 1999)

(quoting United States v. MK-Ferguson Co., 99

F.3d 1538, 1547 (10th Cir. 1996)) (alterations in

original). In other words, “direct knowledge is

knowledge gained by the relator’s own efforts

and not acquired from the labors of others,”

while independent knowledge means that “the

relator’s knowledge must not be derivative of the

information of others, even if those others may

qualify as original sources.” United States ex

rel. Fine v. Advanced Sciences, Inc., 99 F.3d

1000, 1006-07 (10th Cir. 1996) (citation

omitted).

*.

16

(Pet. App. 1Sa.)''

The court of appeals then reviewed the evidence,

including Mr. Stone's affidavit describing his trouble-shooting

duties at Rocky Flats, his concerns about the manufacturing of

pondcrete, and the documents- Mr. Stone provided to the

Government before he filed this suit. (Pet. App. 17-19a.) The

court also reviewed Mr. Stone’s confidential disclosure

statement to the Government and, specifically, the information

concerning pondcrete and Rockwell's concealment of

environmental problems at Rocky Flats. (/d. 18-20a.) The court

held that this factual evidence of direct and independent

knowledge was sufficiently specific to satisfy the PCA’s

requirements under settled case law. (/d. 20a.)'°

The court of appeals was “not persuaded by Rockwell's

arguments to the contrary, which are permeated by a flawed

understanding of the FCA’s definition of direct and independent

knowledge.” (Pet. App. 20a.) Specifically, the court of appeals

rejected Rockwell's contention that a gui tam relator “must have

direct and independent knowledge of the actual fraudulent ~

submission to the government.” (/d. (emphasis in original).)

The court correctly held that the “plain text of the FCA .. .

The court of appeals properly rejected Rockwell's after-the-fact

argument that Mr. Stone was not a proper gui tam relator because he

was no longer employed by Rockwell during the award fee periods for

which Rock well was found liable. (Pet. App. 21-22a.) Indeed, it would

be inappropriate for the jury's verdict in an FCA case retroactively to

impact an issue of subject matter jurisdiction. For example, a jury's

small monetary verdict cannot retroactively divest a federal court of

diversity jurisdiction. Sve Watson v. Blankinship, 20 F.3d 383, 387 ~

(10th Cir. 1994). So, too, here with respect to the original source rule.

Contrary to petitioners” contention, the court of appeals did not hold that

mere “background information ‘underlying or supporting” |the relator’ s|

supposition that a defendant might have engaged in fraud” is sufficient

to qualify as a proper qui tam relator. (Pet. 15.)

17

belics this interpretation; the FCA 1s clear that for a relator to be

an original source he need only possess ‘direct and independent

knowledge of the information on which the allegations are

based.” (Id. (emphasis in original).)'* In doing so, the court of

appeals followed both the plain language of the statute and the

court's prior decision, United States ex rel. Hafter v. Spectrum

Emergency Care, Inc., 190 F.3d 1156 (10th Cir. 1999), on

which Rockwell itself had relied. (Pet. App. 20-21a (citations

omitted).). A review of the record “convinc[ed] [the court of

appeals} that Stone ha[dJ been specific and detailed in showing

how he obtained, through his own efforts and not through the

labors of others, direct and independent knowledge that

Rockwell's designs for manufacturing pondcrete blocks would

result in the release of toxic waste.” (/d. 17a.) Rockwell's

disagreement with the result of the court of appeals’

straightforward application of law to facts is not a basis for

review.

B. There Is No Circuit Conflict

Rockwell's claim that the Tenth Circuit's original source

ruling merits the Court’s review because it “deepens an existing

circuit split” (Pet. 13) is unfounded.

Indeed, none of the cases on which Rockwell relies,

from the Third, Eighth, Ninth, Eleventh, and D.C. Circuits, even

i . . es ° .

Consistently with the decisions of other courts of appeals. the courts

below recognized that a relator need not have knowledge of every detail

of every element of an FCA claim (Pet. App. 20-2 1a); sce Minn. Assoc.

of Nurse Anesthetists v. Allina Health Sys. Corp., 276 F.3d 1032, 1050

(8th Cir. 2000), and, indeed, such a requirement would eviscerate the

goul of the FCA to encourage shop floor employees to bring fraud to the

attention of the Government. See United States ex rel. Springfield

Terminal Ry. Co. v. Quinn, 14 F.3d 645, 650-51 (D.C. Cir. 1994).

(stating that the “expressed intention” of the 1986 amendments to the

FCA was to “encourage more private enforcement suits”) (quoting, S.

Rep. No. 99-345, at 23-24 (1986) (Conf. Rep.)).

Is

acknowledges a split (much less a “deepen[ing]* one) as to what

constitutes direct and independent knowledge under §

3730(e) 4B) of the FCA, The Tenth Circuit does not

acknowledge such a split. And neither does the United States.

See Brief for the United States as Amicus Curiae, Comstock

Res., Inc. v. Kennard, supra, 2005 WL 1254202 at *9 (“The

Tenth Circuit’s construction of the term ‘original source’ is

substantially similar to the approaches taken by other courts of

appeals.”).

As the Court has stated, “it is very important that we be

consisicnt in not granting the writ of ccruiorari except m cases

involving principles the settlement of which is of importance to

the public, as distinguished from that of the partics, and in cases

where there is a reahand embarrassing conflict of opinion and

authority between the Circuit Courts of Appeals.” Layne &

Bowler Corp. v. Western Well Works, Inc., 261 U.S. 387, 393

(1923) (dismissing writ as improvidently granted). This hardly

is such a case.

Tellingly, Rockwell itself did not assert any circuit

conflict in the courts below. Indeed, in its first petition for

rehearing in the Tenth Circuit, Rockwell cited some of the very

cases il now says demonstrate a split, and argued that those very

cases were in line with the Tenth Circuit’s 1999 decision in

Hafter — and that the court of appeals in this case had erred in

deviating from the law in the Tenth Circuit as enunciated in

Hafter. As Rockwell must concede, this Court should not

review any contention as to an intra-circuit split.

' Rockwell cited the following cases: United States ex rel. Stinson, Lyons,

Gerlin & Bustamante, P. A. v. Prudential Ins. Co., 944 F.2d 1149 (3d

Cir. 1991); United States ex rel. Mistick PBT v. Housing Authority of

Pittsburgh, 186 F.3d 376 (3d Cir. 1999), United States ex rel. Barth v.

Ridvedale Elec., Inc., 44 F.3d 699 (8th Cir. 1995), United States ex rel.

Aflatooni v. Kitsap Physicians Services, 163 F.3d 516 (9th Cir. 1999).

19

In response to Rockwell's then intra-circuit split

argument, the court of appeals emphasized that its decision

involved an application of law to facts that was in line with the

approach taken by the same court of appeals in Hafier. (Pet.

App. 15-22a; see also id. 17a (“Notwithstanding Rockwell's +

claim that Stone’s evidence of his direct and independent

knowledge is inadequate to satisfy the specificity we required in

Hafter, we believe that Stone has adduced sufficient competent

proof to establish that he had direct and independent knowledge

of the information on which his FCA claim was based.”).)

Now, however, Rockwell contends that six decisions,

reflecting six applications of the same law to six different sets of

facts, make a circuit split. Not so. Although courts have

reached different outcomes in cases presenting different sets of

facts, that does not represent any conflict of authority on the

legal standard. Tellingly, no court of appeals has recognized °

any such conflict. Rockwell's argument ts simply a selective

reading of applications of the same law to different sets of facts.

It does not merit review.

Indeed, a review of the Eighth, Eleventh, and D.C.

Circuit decisions Rockwell cites, which all find the relator to be

un original source, demonstrates how alone Rockwell is in its

view of a circuit split, and that Mr. Stone mects even

Rockwell's articulation of the supposedly different standards.

In Cooper v. Blue Cross & Blue Shield of Florida, Inc.

(Pet. 16-18), the Eleventh Circuit found that the relator’s

knowledge of alleged fraud by a Medicare secondary payor was

“direct” because he had developed his knowledge through

“three years of his own claims processing, research and

correspondence with members of Congress and [the Health Care

Financing Administration}.” 19 F.3d 562, 568 (1 1th Cir. 1994).

_ Ina footnote, the court rejected the defendants’ contention that

Cooper, who, unlike Mr. Stone, was not an employee of the

defendant, did not provide substantive information that

20

“seriously contribute[d] to the disclosure of fraud,” explaining

that as the “purpose of the FCA was to enlist the public’ s help in

uncovering specifically each and every perpetrator of fraud{,]

Cooper's information is potentially specific, direct evidence of

fraudulent activity by [Blue Cross].” /d. at 568 n.12 (citations

omitted). Mr. Stone’s detailed, firsthand knowledge of ES&H

violations at Rockwell, gained in his role as a Rockwell

engineer working on these very matters, is even stronger than

the relator’s was in Cooper and, thus, casily meets Cooper's

articulation of the requirements of § 3730(e)(4)(B).

The Eighth Circuit’s decision in Minnesota Association

of Nurse Anesthetists v. Allina Health System Corp., 276 F.3d

1032, 1050 (8th Cir. 2000), cert. denied, 537 U.S. 944 (2002),

also is fully consistent with the Tenth Circuit's decision below.

There, after reviewing the factual record, the court concluded

that the relators, nurse anesthetists, were proper plaintiffs, where

they had personal knowledge that anesthesiologists regularly

submitted fraudulent bills to Medicare for anesthesia procedures

by virtue of their participation in the procedures and observation

of the anesthesiologists’ billing practices. /d. Like Mr. Stone’s

knowledge, the nurse anesthetists’ knowledge was gained from

their own efforts. Even more so than the relators in Nurse

Anesthetists, Mr. Stone’s activities as Plant trouble-shooter and

his observation of serious ES&H problems with Rockwell's

pondcrete manufacturing process gave him direct and

independent knowledge of the true state of facts. Thus, Nurse

Anesthetists does not help Rockwell cither.

Nurse Anesthetists cites one case in its discussion,

Springfield, the D.C. Circuit case Rockwell cites as evidencing a

supposed split. (Pet. 19-22.) Springfield, too, supports Mr.

Stone's position, not Rockwell's. The relator, Springfield

Terminal Railway, alleged that Quinn, an arbitrator appointed to

arbitrate a dispute between the railroad company and its union,

falsified his payment records to the Government by charging for

days on which he was not working. United States ex rel.

2]

Springfield Terminal Ry. Co. v. Quinn, 14 F.3d 645, 647-648

(D.C. Cir. 1994). The court observed that “‘direct and

independent knowledge of information on which the allegations

are based’ refers to direct and independent knowledge of any

essential element of the underlying fraud transaction.” /d. at

657. The court held that because

the pay vouchers and phone records did not

themselves suffice to indicate fraud, Springfield

had to have bridged the gap by its own efforts

and experience. . . . Springfield started with

innocuous public information; it completed the

equation with information independent of any

preexisting public disclosure. As such,

Springfield is an original source.

Id. Again, Mr. Stone’s direct and independent knowledge of

ES&H violations and Rockwell's award fee bonuses easily

meets this standard.

Rockwell's contention that these cases represent

different legal standards is unfounded. Indeed, the Fifth Circun,

in surveying decisions of its sister circuits on what constitutes

“direct” knowledge under § 3730(e)(4)(B). cited the decisions in

Stone, Nurse Anesthetists and Cooper as examples of three cases

in which courts

look to the factual subtleties of the case before it

and attempt to strike a balance between those

individuals who, with no details regarding its

whereabouts, simply stumble upon a seemingly

lucrative nugget and those actually involved in

the process of unearthing important information

about a false or fraudulent claim.

United States ex rel. Laird v. Lockheed Martin Eng’¢ & Sci.

Servs. Co., 336 F.3d 346, 355-56 (Sth Cir. 2003). Thus.

Rockwell's claim that the Tenth Circuit's decision in the instant

22

case “ireconcilably conflicts with” Springfield, Nurse

Anesthetists, and Cooper (Pet. 16, 20) rings utterly hollow.

The two other decisions on which Rockwell relies, in

which the relator was held not to be an original source, likewise

do not demonstrate any conflict of authority nor any different

standard that would result in a different outcome in this case.

In United States ex rel. Aflatooni v. Kitsap Physicians

Services (Pet. 18-19), the relator, a physician, accused his

employers of submitting false Medicare bills to the Government.

163 F.3d 516, 519-520 (9th Cir. 1999). The relator, however.

“could not recall the name of any [MJedicare patient who was

allegedly charged for unnecessary medical services.” /d. at 526.

Moreover, the relator’s knowledge about his employers’ billing

practices was “speculfative}.” /d.'> Accordingly, the court held

that the relator did not have “firsthand knowledge . . . obtained .

.. through his ‘own labor unmediated by anything else.” Jd. at

525. By stark contrast here, Mr. Stone, as a principal engineer

for Rockwell at the Plant, was required to — and did — identify

problems in the Plant's ES&H operations, and also reviewed

documents describing Rockwell's compensation. (Resp. App.

2-3a, 12a.) Mr. Stone’s disclosures led to a criminal

investigation resulting in a guilty plea, and a jury verdict under

the FCA as to the same fraudulent environmental practices. Mr.

14

The Tenth Circuit properly rejected Rockwell's argument that Mr.

Stone's knowledge of pondcrete manufacturing was speculative because

he had already left Rocky Flats when production of pondcrete began. As

the court held, the fact that Mr. Stone did not personally witness the May

1988 spill was “immaterial to the relevant question, which ts whether he

had direct and independent knowledge of the information underlying his

claim, in this case Rockwell's awareness that it would be using a

defective process for manufacturing pondcrete.~ (Pet. App. 21a.) Mr.

Stone predicted this very problem and knew Rock well withheld that fact

from DOE while it received lucrative bonuses. That clearly qualifies

him as an original source and not a “parasitic” relator secking to benefit

from the labors of others.

NN

Ww

Stone’s first-hand knowledge is simply not comparable to the

speculative observations offered by the relator in Aflatooni.’°

Finally, United States ex rel. Mistick PBT v. Housing

Authority, 186 F.3d 376 (3d Cir. 1999) (Alito, J.), cert. denied,

529 U.S. 1018 (2000). likewise does not represent any conflict

of authority but rather a different factual situation where the

relator, unlike Mr. Stone, lacked direct and independent

knowledge. Mistick, a construction contractor, alleged that

defendants, an architectural firm and the Pittsburgh Housing

Authority, defrauded the U.S. Department of Housing and

Urban Development by making false claims for the cost of lead

based paint abatement work in Pittsburgh public housing. /d. at

379. Unlike here, the relator in Mistick learned of the alleged

misrepresentations from a FOIA request, and from civil

discovery in a state court action. /d. at 381, 383.'’ The

‘© Rockwell also argues that there is a Ninth Circuit “exception” in whicha

“relator’s status as an original source . . . is governed by proximate cause

concepts.” (Pet. 18-19.) In Seal / v. Seal A, 255 F.3d 1154 (9th Cir.

2001), cert. denied, 535 U.S. 1017 (2002), the court held that a gui tam

relator could qualify as an original source if his disclosures to the

Government “triggered” the investigation that led to the publicly

disclosed information,” even if the relator did r ot have prior knowledge

of that information. /d. at 1162 (citation omitted). Mr. Stone’s three

years Of meetings with the FBI and EPA, in which he reported the

ES&H problems he had observed, turned over 2.300 pages of related

documents from the Plant, identified other present and former Rockwell

employees with knowledge of these problems, and advised the agents

regarding sources of additional documents (Resp. App. 13-15a),

following which a criminal investigation was launched, among other

things, plainly would satisfy Seal 1.

Though, as Rockwell notes (Pet. 15), the relator in Mistick was present

tor meetings with the defendants. those meetin zs occurred long after the

defendants had agreed upon the original specifications for the lead paint

abatement work and several months after Mistick had begun

encapsulating the lead paint. Mistick. 186 F.3d at 379. Here. Mr.

Stone's knowledge existed before the pondcrete blocks leached as he

had predicted and before the facts became public.

24

relator’s knowledge in Mistick contrasts starkly with Mr.

Stone's direct, firsthand knowledge of Rockwell’s ES&H

violations and the award fee process, gained from Mr. Stone’s

employment with Rockwell and his independent efforts. Also

unlike the relator in Mistick, Mr. Stone had several meetings

with the FBI and EPA about these matters before there was any

public disclosure. The cases simply are not comparable on their

facts.

The foregoing demonstrates that the Tenth Circuit

requires a qui tam relator to have as much knowledge of the

facts on which his or her allegations are based as other courts of

appeal. Rockwell's contrary argument is based on selective

quotation from differing articulations of the same standard; a

misleading presentation of Mr. Stone’s extensive knowledge of

Rockwell's fraud, including his knowledge that there were

environmental problems at Rocky Flats, that those problems

were not disclosed to the Government and that Rockwell

nonetheless -continued to receive award bonuses; and on

ignoring the fact that neither the FCA nor the case law requires

that all the evidence presented at trial be part of the relator’s

knowledge.

In sum, cach of the decisions cited by Rockwell presents

nothing other than the application of a clear statutory standard

to a particular set of facts. None presents a conflict of authority

concerning the legal meaning of the direct and independent

knowledge requirement. Although the facts and outcomes of

cases may differ, that is not a basis for the Court’s review.'*

1s

Rockwell's argument — made for the first time in its Petition — that the

Tenth Circuit's decision below somehow “conflicts with this Court's

reading of similar statutory language” in Saudi Arabia v. Nelson, 507

U.S. 349, 351 (1993) (Pet. 13), a decision construing the Federal

Sovereign Immunities Act, is untenable. Rockwell provides no support

lor the proposition that an interpretation of a provision in one statute can

constitute a decision of “an important federal question in a way that

25

Cc. Review By This Court Would Not

Affect the Outcome of This Case

Rockwell's petition should be denied for the additional

reason that it raises no issue that would impact the outcome of

this case. As shown above, Mr. Stone would mect even

Rockwell's articulation of the standard in other circuits. But

even putting this aside, review of Mr. Stone’s relator status

would not affect the outcome of this case because Rockwell is

liable for the full amount of the judgment in any event.

The FCA statute makes clear that, where, as here, the

Government has intervened in an action, the district court's

jurisdiction is established. 31 U.S.C. § 3730 (ey4)(A) (“No

court shall have jurisdiction over an action under this section

based upon the public disclosure of allegations or Wansactions

. .. unless the action is brought by the Attorney General or the

person bringing the action is an original source of the

information.”) (emphasis added). Rockwell ignores that the

relator’s right to share in any recovery obtained by the

Government subsequent to intervention is controlled by a

separate subsection of the Act, which focuses on the “extent to

which the [relator] substantially contributed to the prosecution

of the action.” 31 U.S.C. § 3730(d). Rockwell has no stake in

the decision as to what portion of the judgment will constitute

Mr. Stone’s share. In shor, any decision concerning

conflicts with relevant decistons of this Court” as to another provision in

ua different statute. Certainly Nelson has never been relied on in any

FCA case — though the dissent in one of the cases Rockwell cites

discussed Ne/von in the context of a provision in § 3730(e)4) not at

issue here. See Mistick, 186 F.3d at 395-96 (Recker, CJ., dissenting).

Regardless, even if it were ever appropriate to consider conflicts

between different statutes, this case would not be a suitable vehicle for

the Court to consider the issue Rock well presents. This is the first time

Rock well has ever raised Nelyon or the Foreign Sovereign Immunities

Act, and thus the Court does not have the benefit of lower court review

of Rockwell's new argument. ;

26

Mr. Stone’s status as a relator — which is the crux of Rockwell's

petition — will have po impact on Rockwell's liability for the full

umount of the judgment in this case. See United States ex rel.

Cosens v. Yale-New Haven Hosp., 233 F. Supp. 2d 319, 326 (D.

Conn, 2002). "”

The Court should not review a case where the outcome

could not be affected and where only ‘he litigants’ private

concerns are implicated. See Rice v. Sioux City Memorial Park

Cemetery, Inc., 349 U.S. 70, 74 (1955) (TT his Court does not

sit to satisfy a scholarly interest in such issues. Nor does it sit

Rockwell argues that the outcome here could “foreclose” Mr. Stone's

claim for statutory attorney's fees under 31 U.S.C. § 3730(d). (Pet 4,

n.5.) The matter of attorney's fees is not before this Court. In any

event, Rockwell has no proper interest in invoking the original source

provision to prevent a recovery designed to compensate relators and

their counsel who provide a public service by aiding the Government in

its enforcement of the FCA. See, e.g.. United States ex rel. Merena vy.

SmithKline Beecham Corp. 205 F.3d 97 (3d Cir. 2000) (resolving

dispute between gui tam relators and Government concerning relator’ s

percentage share of the Government's recovery in case in which

relator ’s claims were dismissed prior to settlement). Any contrary view

is flatly contradicted by the goal of the FCA, which has always been to

harness the energy of the citizenry in the service of the Government.

United States ex rel. Marcus v. Hess, 3\7 U.S. 537, 541-2 0.5 (1943),

(“|The FCA] was passed upon the theory . . . that one of the least

expensive and most effective means of preventing frauds on the

Treasury is to make the perpetrators of them liable to actions by private

persons. .. .”), superseded by statute as recognized in Springfield, 14

F.3d at 650. The legislative history of the 1986 amendments to the FCA

makes it even more apparent that monetary incentives are specifically

intended to encourage “any individual knowing of Government fraud to

bring that information forward.” S. Rep. No, 99-345, at 2 (1986) (Conf,

Rep.) See Springfield. 14 F.3d at 650 ("|Ojnly a coordinated effort of

both the Government and the citizenry will decrease this wave of

defrauding public funds. |Accordingly, the Senate bill] increases

incentives, financial and otherwise, for private individuals to bring suits

on behalf of the Government.) (quoting S. Rep. No. 99-345, at 1-2

(1986) (Conf. Rep.)).

27

for the benefit of the particular litigants. ”); Layne & Bowler

Corp., 261 U.S. at 393. For this additional reason, review ts

wholly unwarranted here.

Il. PETITIONERS’ CONSTITUTIONAL

ARGUMENTS ARE NOT SUPPORTED BY ANY

COURT DECISION AND DO NOT MERIT

REVIEW

Rockwell's contention that the FCA’s qui tam provisions

violate the Appointments Clause and the Take Care Clause of

Article II of the U.S. Constitution was casily rejected by the

court of appeals and plainly does not merit review. Not only is

there no conflict of authority, but Rockwell does not (and

cannot) cite a single FCA holding in support of its argument.”

Nor would this case be a suitable vehicle for review of this

issue, as the Government has prosecuted this case along with

Mr. Stone to verdict.

Nevertheless, Rockwell contends that the FCA’s gui tam

provisions violate the Appointments Clause (Art. II, § 2, Cl. 2),

which provides the mechanism for appoint ment of “Officers of

the United States.” (Pet. 24-27.) Rockwell's argument — made

for the first time after trial — is that because gui tam relators

°° Rockwell's contention that the Court in Vermont Agency of National

Resources vy. United States ex rel. Stevens, 529 U.S. 765 (2000).

“reserved” the issue of the constitutionality of the FCA’s qui tam

provisions under Article I (Pet. 24) is incorrect. The issue was not even

raised in that case. In a footnote explaining its holding that “a gui tam

relator under the FCA has Article II] standing,” the Court stated that,

“{i}n so concluding, we express no view on the question whether gui tam

suits violate Article I. in particular the Appointments Clause of § 2 and

the “take Care’ Clause of § 3. Petitioner does not challenge the gui tam

mechanism under either of those two provisions.” 529 U.S. at 778 & 0.8

(emphasis added). This footnote cannot possibly form the basis for

review of this case, where no court of appeals has ever adopted

Rockwell's argument.

28

operate as Government officers, Mr. Stone’s conduct of this

litigation somehow violates Article I]. As the coun of appeals

held, Rockwell's argument is fundamentally flawed because

“qui tam relators do not serve in any office of the United

States.” (Pet. App. 25a.) The court of appeals thus easily

dismissed this argument as lacking any support. (Pet. App. 26a

(“| W]e, like the other circuits that have considered the question,

hold that the FCA’s qui tam provisions do not contravene the

Appointments Clause.) (citing Riley v. St. Luke’s Episcopal

Hosp., 252 F.3d 749, 757-58 (Sth Cir. 2001) (en banc): United

Stafes ex rel. Taxpayers Against Fraud v. General Elec. Corp..,

41 F.3d 1032, 1044 (6th Cir. 1994); United States ex. rel. Kelly

v. Boeing Co.,9 F. 3d 743, 199 (SaCe. 1993). cert. denied. 510

U.S. 1140 (1994)).)"'

Finally, Rockwell contends that the gui tam mechanism

impermissibly undermines the President’s exercise of his

constitutional responsibility to “take Care that the Laws be

faithfully executed” (Art. II, § 3), thereby violating separation of

powers principles. (Pet. 27-30.) Significantly, Rockwell cites

no FCA case in support of its novel argument — only dissents

from the decisions of courts of appeals rejecting it.°> (Jd. 27-

7}

Rock well’s suggestion that the Court should grant review to “resolve the

conflict with” Buckley v. Valeo, 424 U.S. 1 (1976). and Edmond v.

United States 520 U.S. 651 (1997) (Pet. 27), also has no basis. Buckle iy

held that “any appointee exercising significant authority pursuant to the

laws of the United States is an “Officer of the United States.” and must,

therefore, be appointed in the manner prescribed in § 2. cl.2 of that

Article.” 424. U.S. at 126. As the court of appeals held, gui tam relators

“do not meet the|| requirements” of an Officer enunciated in Buckley

and prior Court precedents. (Pet. App. 25-26a.) Edmond simply

elaborated the bifurcated system of appointments established by Article

II, which has nothing to do with this case. (/d. 24a.)

** Rockwell's suggestion that Morrison v. Olson, 487 U.S. 654 (1988),

conflicts with the decision below (Pet. 30) has no merit either. Morrison

_held that congressional enactments must leave the Executive with

enough control over litigation such that “the President is able to perform

29

28.) Indeed, Rockwell's argument wholly misconstrues the

nature of the Executive's constitutional power and of the qui

fam mechanism, as well as the facts of this case. Here, the

Government intervened in the case and has fully protected its

interests. All the FCA claims tried to the jury were jointly

asserted by the Government and Mr. Stone, and at no time did

the Government seek dismissal of any of Mr. Stone's claims, his

removal from the case, or any limitation of his participation.

The Tenth Circuit, again in harmony with the Fifth, Sixth and

Ninth Circuits, correctly rejected Rockwell’ s argument below.

(Pet. App. 28-29a (collecting cases). yr?

Like its original source argument, Rockwell's

constitutional arguments present no basis for review.

his constitutionally assigned duties.” 487 U.S. at 696. Here. as the court

of appeals held.

the Government was a full and active participant in the litigation

as it jointly prosecuted the case with Stone... . |Wle remain

unconvinced by Rock well’s contention that the presence of a qui

tam relator in the litigation so hindered the Government's

prosecutorial discretion as to deprive the Government of its

ability to perform its constitutionally assigned responsibilities.

(Pet. App. 27a (citing Morrison, 487 U.S. at 695-96).)

~ In the face of the unanimous view of the courts of appeals against

Rock well’s position and the absence of any controlling Supreme Court

decision. Rockwell offers only a 1989 opinien Tom an assistant attorney

general in the Office of Legal Counsel that was never adopted by the

Attorney General or Solicitor General. (Pet. 25-30.) Moreover, the

opinion was superseded by the Office of Legal Counsel in 1996. (/d. 25)

No court has ever adopied this position. It cannot possibly create a

conflict of authority which does not exist in the courts of appeals.

30

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted,

Maria T. Vullo

Counsel of Record

Evan Norris

PAUL, WEISS, RIFKIND,

WHARTON & GARRISON LLP

1285 Avenue of the Americas

New York, New York 10019-6064

(212) 373-3000

Hartley David Alley

LAW OFFICES OF HARTLEY

D. ALLEY |

12499 W. Colfax Ave.

P.O. Box 280868

Lakewood, CO 80228-0868

(303) 431-8660

Attorneys for Respondent

James S. Stone

APPENDIX

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

Civil Action No. 89-C-1154-

UNITED STATES OF AMERICA ex rel.,

JAMES S. STONE,

Plaintiff,

VS.

ROCKWELL INTERNATIONAL CORPORATION,

Defendant. a

[ENTERED]

[U.S. DISTRICT COURT]

{March 8, 1993}

AFFIDAVIT OF JAMES S. STONE IN OPPOSITION

TO DEFENDANT'S MOTION TO DISMISS THE

COMPLAINT FOR LACK OF SUBJECT MATTER

JURISDICTION

STATE OF COLORADO __ )

SS.:

COUNTY OF JEFFERSON )

JAMES S. STONE, being sworn, states:

I, 1 am the gui tam plaintiff in this action. I

am informed that defendant, Rockwell International Corporation

(“Rockwell”), has filed a motion with the Court to dismiss my

complaint on the ground that | allegedly am not an “original

source” of the information on which my action is based. |

further understand that, to be an “original source” under the

False Claims Act, I must have direct and independent

knowledge of information on which the allegations in this

2a

lawsuit are based. Because | have such knowledge and am an

original source of the claims here, | submit this affidavit in

opposition to Rockwell's motion.

Background

2. | ama registc red professional engineer in

several states including Colorado-and had over 30 years

engineering experience when I commenced my employment

with Rockwell on November 10, 1980, as a Principal Engineer

in Rockwell's Facilities, Engineering and Construction Division

at the Rocky Flats Plant located in Golden, Colorado (“Rocky

Flats”). In January of 1982, 1 was promoted to Lead Principal

Engineer at Rocky Flats in the Uulity Design Department.

Facilities Engineering Division. | continued in that position

until March 17, 1986, when my employment with Rockwell was

terminated.

3. My duties during my six years at Rocky

Flats included plant-wide “troubleshooting” and the review of

designs and existing operations for safety and cost effectiveness.

One of my main responsibilities was to identify plant

engincering problems and recommend solutions to management.

As a result, during my six-year tenure at Rocky Flats, | was

assigned to numerous projects that required me to learn about,

and recommend solutions for, various environmental, health and

safety issues at the plant. Each project that I worked on was

identified by a project number and involved a variety of tasks. |

attach as Exhibit A a copy of the daily records that | personally

kept during my employment at Rocky Flats. These records

show the variety of tasks I performed at Rocky Flats. Each task

is identified bythe overall project number, and a short

description of the specific task. As my daily time records show,

and as | explain in greater detail below. many of my assigned

tasks related to the claims at issue in this case, as organized and

set forth in my Consolidated Answers to Discovery, dated

October 27. 1992. and attached as Exhibit B, #¢., claims

involving surface and ground water contamination and waste

3a

treatment, storage and disposal; plutonium contamination; and

beryllium health and safety issues.' In the discussion that

follows, I have cross-referenced, where appropriate. the

pertinent responses set forth in my Consolidated Answers.

Ground and Surface Water Contamination and

Waste Treatment, Storage and Disposal

4. During my employment at Rocky Flats, I

obtained direct and independent knowledge of a number of

different ground and surface water pollution problems and

problems related to waste treatment, storage and disposal. The

problems I discuss below in this general area can be divided into

the following three general categories: (1) sewage treatment

system problems related to toxic waste disposal; (2) spray

irrigation; and (3) pondcrete/saltcrete.

5. One of my first projects at Rocky Flats

was to review the design of the sewage treatment plant. The

sewage treatment plant at Rocky Flats was intended to process

only routine biological wastes. Nevertheless, as part of this

assignment, | learned that the flows to the sewage treatment

plant contained materials which indicaied the presence of

For example, among others, project numbers 708201, 315300, 315332,

325040, 325041, 329670, 338616, 345242, 345244, 365550, 379200,

420129, 420906, 430139, 430211. 430555, 430576, 430707. 440227,

440414, 460014, 460912, 460913 and 470247 include tasks involving

ground water contamination, sewage treatment, solar ponds and related

waste treatment, storage and disposal issues: project numbers 325063,

328957, 335614. 338601. 338611, 345252, 348342, 360456, 370373.

378029, 388611. 398017, 398138. 400204. 410109. 410300, 410301,

420205, 420219. 420305, 430527, 430601. 430642. 430900, 438 139.

440219, 470214, 470304, 490006 and 550499 include tasks relating to

cloveboxes, dump valves and plutonium in the air duct exhaust system,

and project numbers 310072, 318109, 325056, 328955, 365634, 450003,

450010, 450125. 450917, 450918 and 460552 include tasks involving

health and safety issues affecting workers at the beryllium shop.

4a

industrial wastes as well as biological wastes. The industrial

wastes at Rocky Flats are very toxic. They are hazardous or

radioactive, or a mixture of both, and may be in liquid or solid

form. These wastes are generated as part of the Rocky Flats

production of nuclear bomb triggers and processing of nuclear

materials. I learned of the presence of toxic wastes in the

sewage treatment system when I reviewed certain records which

reflected a low rate of biological process at the treatment plant

and the presence of certain chemicals and metals, both of which

indicated the presence of toxic waste. (See Exhibit B,

Attachment |, Items 7 & 17)

6. I concluded from this that the toxic

wastes that should not have been present in the flows to the

sewage treatment plant were killing the bacteria needed to

process the biological waste at the sewage treatment plant. |

also learned that many of the process buildings at Rocky Flats

had laboratory sinks and floor drains that were connected to the

drainage system to the sewage treatment plant. In my view,

‘there also may have been broken lines and cross-connections

between the toxic and biological waste disposal systems, and

infiltration of contaminated ground water. Based on this, |

concluded that the flows to the sewage treatment plant included

toxic wastes from throughout the plant. (See Exhibit B,

Attachment |, Items 7 & 17; see also id., ems 8, 9, 10 & 16)

We The second genera] area of ground and

surface water problems that | worked on at Rocky Flats had to

do with the storage, treatment and disposal of both liquid

industrial wastes from Rockwell's plutonium operations and the

liquid wastes from the sewage treatment plant. At Rocky Flats,

these wastes were sent to “holding” and/or “evaporation” ponds

for storage, treatment, and disposal. The holding ponds

primarily received the outflow from the sewage treatment plant;

the evaporation ponds directly received the toxic industrial

wastes from plutonium operations. When the ponds could no

longer hold the full amount of these liquid wastes, Rockwell

disposed of the wastes by a method called “spray mrigation.”

Sa

~

Spray irrigation involves the transfer of wastes from the ponds

to the grounds of Rocky Flats.

8. The use of spray urigation to dispose of

wastes from the evaporation ponds resulted in the disposal of

highly toxic wastes directly on the ground. The use of spray

irrigation to dispose of treated biological wastes, by contrast,

would not ordinarily be a problem. At Rocky Flats, however,

the use of spray urigation from the holding ponds also was

problematic because the wastes being spray irrigated were not

solely biological wastes, but contained toxic materials. As

stated earlier, the outflows from the sewage treatment plant

contained toxic as well as biological wastes. Thus, Rockwell

used spray irrigation to dispose of toxic wastes as well as

biological wastes. (See Exhibit B, Attachment |, Items 15 &

16)

9. Rockwell's improper use of. spray

irrigation also likely led to ground water contamination. Soil

absorption and evaporation can only eliminate a certain quantity

of liquid. If that quantity is exceeded, the liquid will enter and

contaminate the ground water. The spray irrigated wastes also

increased the ground water flow at Rocky Flats, specifically

through former hazardous waste burial sites. This likely

increased the rate of migration of these highly toxic wastes.

(See Exhibit B, Attachment |, Items 11, 15 & 16)

10. In addition, the method of spray irrigation

employed by Rockwell at Rocky Flats caused the runoff of the

wastcs into the crecks that serviced the Great Western Reservoir

and the towns surrounding Rocky Flats. Rockwell spray

irrigated tremendous quantities of liquid on very limited areas

regardless of temperature, precipitation or other climate factors.

Because of this, the ground was unable to absorb all of the

liquid and, thus, runoff of the wastes into the neighboring creeks

likely occurred. This was evidenced by the erosion of the slopes

at Rocky Flats which I personally observed. For example, spray

irrigation of wastes onto eroded or frozen ground often causes

6a

the wastes to run into the surface streams which flowed into

lakes that supplicd drinking water to reskients of the towns

surrounding Rocky Flats. (See Exhibit B, Auachment |, Items

11 & 16)

I}. | explained to Rockwell management that

spray irrigation from the holding and evaporation ponds was

resulting in toxic wastes being sprayed on the ground, which

could contaminate the ground water and surface streams at

Rocky Flats. 1 told management that | thought there was a

better way to dispose of the waste products that Rockwell was

then sprays irrigating. On December |, 1980, I put some of my

recommendations for an alternative irrigation method in writing.

That document is attached as Exhibit C.

12. Rockwell management did not accept my

recommendations and instead continued to spray irrigate and, in

my view, contaminate the surface and ground water. |

continued to voice my concerns about spray urigation. It was

my opinion that, sooner or later, the toxic wastes would find

themselves in the ground water and the reservoirs downstream

of Rocky Flats. I continued to be concerned with the ground

water problems at Rocky Flats. Several years after my initial

recommendation, on March 20, 1984, in connection with my

suggestion that Rockwell retain me as a full-time engineering

consultant, I stated that the ground water problems at Rocky

Flats were “a latent time bomb.” I attach a copy of that

document as Exhibit D. My recommendations were not heeded;

Rockwell continued to spray irrigate as before.

13. During the course of my work, I also

learned about a third major problem which I thought affected

the surface and ground water at Rocky Flats and the surrounding

towns. As noted earlier. toxic industrial wastes were sent to

evaporation ponds at Rocky Flats. Some of the liquid portion of

these wastes either evaporated or was disposed of by spray

irrigation. The remaining liquid and some solid wastes, or

“sludge.” remained in the ponds.

7a

14. This sludge and remaining liquid needed

to be disposed of in a non-hazardous manner. In or about

October 1982, I was assigned to a project addressing the proper

manufacturing process for “pondcrete’. Pondcrete its a mixture

of cement with the sludge and liquid trom the evaporation ponds

to form large blocks. The biocks can be stored at Rocky Flats or

shipped to other sites for disposal. In forming these blocks, it ts

necessary that the mixture be such that the blocks are stable and

do not fall apart and contaminate the surrounding environment.

As assigned, | studied aspects of the design proposed by

Rockwell management for making pondcrete. After careful

study, | concluded that the suggested process would result in an

unstable mixture that would later deteriorate and cause

unwanted release of toxic wastes to the environment. | also

noted, based on my knowledge of the chemical processes at

Rocky Flats, that the sludge and liquid present in the

evaporation ponds contained some of the most toxic and

radioactive substances at Rocky Flats, which made the unstable

nature of the pondcrete particularly hazardous. (See Exhibit B,

Attachment |, Items 2 & 3)

15. | communicated my concerns about

pondcrete to Rockwell management. On October 13, 1982, I

told my supcriors that the suggested design would not work. A

copy of that communication is attached as Exhibit E. As is

noted at the bottom of that document, my superior, Bob Jensen,

concurred in my opinion. Despite its knowledge that the

pondcrete would not be stable and that dangerous toxins would

be released into the environment, Rockwell went forward with

the project without making the changes necessary (some of

which | proposed) to eliminate the instability of the pondcrete

blocks.

16. Rockwell also decided to use a waste

mixing process similar to that proposed for pondecrete for

forming “saltcrete.” Saltcrete is a mixture of cement, salts and

salt brine from liquid industrial waste treat ment processes that is

formed into large blocks. | knew from my general knowledge

Sa

of the process that, like the solid wastes being stored as

pondcrete, the saltcrete blocks also would have problems with

deterioration. The saltcrete and other wastes were treated and

stored at several sites at Rocky Flats in anticipation of being

shipped off-site. (See Exhibit B, Attachment |, Items | & 4; see

also id., Wems 5, 6, 12, 13 & 14)

Plutonium

17. Inor about 1982, | was asked to design a

new exhaust “plenum” for a building at Rocky Flats which

Rockwell intended to convert {rom a process building into an

office building. A “plenum” is a duct or large chamber that

collects air from the exhaust system before it leaves the

building. A primary purpose of the plenum is to filter the air

before it is released into the atmosphere. As part of my analysis

of the proposed design for the exhaust system for this proposed

new office building, | reviewed the designs and exhaust systems

of other buildings at Rocky Flats.

18. While working on this project, I realized

that some of the ductwork connected to the plenum was

contaminated with radioactive wastes. | knew that the ductwork

was over thitty years old, and deduced from that fact that

numerous substances from different operations might have

accumulated in the ducts. The presence of numerous toxins

over the years, in my view, necessitated that the ducts be

removed or cleaned. (Exhibiu B, Attachment 2, Items 7, 8,9, &

10)

19. | explained this problem to the project

engineer. (Exhibit F) | also reviewed the records of the health

und physics department, which confirmed my findings. (Exhibit

G) 1 learned, however, that only the plenum, and not the

ductwork, was to be cleaned. I recommended that Rockwell

clean the ductwork as well. I suggested that Rockwell use new

air filtration technologies, rather than replace the plenum, and

use the saved moncy to clean the ductwork. (Exhibt H) My

9a

suggestions were not followed. The building was designated a

“clean” building and occupied for office ind laboratory space,

even with the contaminated ductwork.

20. —_L also discovered that in some buildings

that were used for plutonium operations, “gloveboxes” used by

employees working on plutonium and related safety features

were not working properly. Plutonium is radioactive and one of

the most highly toxic substances known to mankind. A

“glovebox” is an enclosure into which workers place their hands

to work on the processes using plutonium in the manufacture of

nuclear bomb triggers. It is intended to prevent spontancous

combustion and unnecessary exposure to plutonium particles.

The gloveboxes are connected through a filtered exhaust system

to the ductwork which in turn is connected to the exhaust

plenum. A properly functioning glovebcx will, among other

things, prevent oOver-pressurization and therefore prevent

plutonium particles from entering the workplace. Gloveboxes

are used at Rocky Flats because plutonium is extremely

dangerous and radioactive. It is crucial to worker safety, and

potentially to public safety, that the glovedoxes work properly

and have adequate filters and other safety features.

21. I learned during my tenure at Rocky Flats

that many of the gloveboxes being used by the workers were

leaking. When this occurs, the plutonium particles enter the air

and workers are unnecessarily exposed to the dangerous

matcrial. In addition, when the particles are airborne, additional

plutonium may enter the exhaust ductwork that leads to the

exhaust plenum. | also learned that the gloveboxes lacked

necessary filters or the filters were punctured by workers trying

to protect themselves because the filters were clogged from

overuse and lack of maintenance. (See Exhibit B, Attachment 2,

Items 1, 3, 5, 6, 8, 9 & 10)

22. In addition, the “dump” valves that were

supposed to protect workers by maintaining the proper pressure

in the gloveboxes were malfunctioning or not functioning at all.

10a

“Dump” valves are safety devices that protect workers from

exposure to plutonium particles in the event the gloveboxes

malfunction. The dump valve is supposed to open when there is

too much pressure in the gloveboxes. When the dump valves do

not work, plutonium particles can leak into the workplace and

create unnecessary hazards for Workers. The malfunctioning of

the dump valves also may lead to an accumulation of plutonium

in the ductwork. (See Exhibit B, Attachment 2, Items 2, 8,9 &

10) While at Rocky Flats, I recommended a way to prevent

damage due to over-pressurization from the dump valves.

(Exhibit [)

23. When | became aware of the failure of the

dump valves to work properly, | reported that fact to my

superior, Anthony Eden. At Mr. Eden’s suggestion, we tested

the dump valves. The test results confirmed that the valves

were not working properly and had not been working properly

for some time. (Exhibit J)

24. Perhaps most importantly, as part of my

assigned projects at Rocky Flats, | concluded that the build-up

of plutonium in the exhaust ducts created a danger to occupants

of the building as well as to persons outside of the building. As

stated earlier, | learned from my work in the various buildings

that the gloveboxes, filters and dump valves were not working

properly and that the equipment being used by workers was not

cleaned or changed often cnough. These discoverics, in my

view, proved that the malfunctioning equipment and ineffective

safety devices in the buildings at Rocky Flats created scrious

hazards. | realized that plutonium particles had likely

accumulated throughout the ductwork of other Rocky Flat

process buildings. (See Exhibit B. Items 1, 8.9 & 10; see also

id.. tem 4) Despite my findings, Rockwell did not, to my

knowledge. undertake the necessary actions to abate these very

significant hazards.

lla

Beryllium

25. Beryllium is a unique material used in the

manufacture of nuclear triggers for nuclear bombs. It ts an

extremely toxic metal, although it is not itself radioactive.

Workers who are exposed to dangerous levels of airborne

beryllium can contract the deadly lung disease berylliosis.

26. During my tenure at Rocky Flats, | was

assigned to a Rockwell project team to study the health and

safety conditions in the beryllium machine shop and propose

solutions. 1 was given this assignment after an employee

contracted berylliosis. As part of this assigned project, |

cxamined the environment of the beryllium machine shop and

reviewed Rockwell's compliance there with health and safety

requirements. Attached as Exhibit K is a document that |

prepared outlining the criteria for the design of the air handling

system of the beryllium machine shop.

27. _ As part of this work, | learned that the

workplace environment of the machine shop was contaminated

with hazardous levels of beryllium both in the air and on

workplace surfaces. I also learned that the systems in the shop

for distributing air and for monitoring the level of beryllium

exposure were not installed or functioning properly and that,

therefore, Rockwell's records did not accurately reflect the

excessive levels of beryllium particles in the shop. In addition,

excessive levels of beryllium particles were accumulating in the

wrong places in the dust collection system servicing the

beryllium shops. I suggested to management that the

monitoring system be corrected and that a different method of

machining be employed at the shop to prevent excessive

beryllium particles from entering the air. Again, my suggestions

were not heeded. (See Exhibit B, Attachment 3, Items 1-5)

I2a

Rockwell's Contract with the

United States

28. As a Rockwell employee, I was aware

that Rockwell was operating Rocky Flats under a lucrative

contract with the United States. | understood then that, under its

contract with the United States, Rockwell could -- and did --

earn substantial “bonuses” every six months for its operations of

the plant. Indeed, periodically during my employment at Rocky

Flats, | received copies of documents describing the award fee

determination process under which Rockwell could earn these

bonuses. I attach as Exhibit L one of the documents that |

received while employed at Rocky Flats which explains part of

the process.

29. I also learned during my employment at

Rocky Flats that, under its contract with the United States,

Rockwell was required to operate Rocky Flats in accordance

with federal, state and local environmental, health and safety

laws. In addition, | learned that Rockwell’ s compensation under

its contract was based in part on Rockwell's satisfactory

performance in various subject matter areas, including

“Environmental Protection” and “Waste Management.” In fact,

page 2 of Exhibit L lists those performance areas that Rockwell

had to satisfy in order to receive an award fee under the contract

for the period in question. I understood, based on documents

like Exhibit L. that Rockwell would not even be considered for

an award fee if it did not perform at least at a satisfactory level

in cach of the applicable performance areas.

| Voluntarily Provided Information

to the Government on Matters

at Issue in This Case

30. While employed at Rocky Flats, I was

told by my superiors that ] should not discuss the environmental,

health and safety problems that 1 was discovering with

l3a

representatives of the Department of Energy or any other agency

of the government. | followed these instructions.

31. Soon after the termination of my

employment with Rockwell in March 19386, | approached the

Federal Bureau of Investigation (“FBI”) about some of the

environmental, health and safety problems described above as

well as a number of other problems at Rocky Flats. I was

introduced to FBI Special Agent Jon S. Lipsky by an

acquaintance of mine, named Bonnie Exnor. | first met with

Mr. Lipsky at Ms. Exnor’s office in the summer or fall of 1986.

At that initial meeting, | described some of the matters outlined

above in addition to other matters concerning Rocky Flats that

are not at issue in this case. I subsequently met on at least three

other occasions with Mr. Lipsky and representatives of the

Environmental Protection Agency (“EPA”), and on one

occasion with an Assistant United States Attorney. | also spoke

“by telephone on several other occasions with Mr. Lipsky. In°

addition, | provided the FBI with over 2,300 pages of

documents. Further, | provided the FB] with the names of

individuals with likely knowledge of Rockwell's environmental,

health and = safety compliance activities as well as

recommendations as to where at Rocky Flats the FBI might best

locate additional relevant documents and other evidence.

32. Tomy knowledge, the FBI recorded some

of our discussions. | had other discussions with the FBI that, to

my knowledge, were not recorded, including my initial meeting

in Ms. Exnor’s office and some of my telephone conversations

with Mr. Lipsky.

33. The FBI reports that | have of my

discussions with representatives of the government document

some, but not all, of the matters that | reported to them. | attach

us Exhibit M a report by FBI Special Agent Jon S. Lipsky

summarizing aspects of my June 25, 1987 meeting with Mr.

Lipsky and EPA Agent William F. Smith. As that report

indicates, during the June 1987 meeting | voluntarily provided

Ida

information to the government concerning a number of matters

on which this lawsuit is based. including maticrs involving

ground water contamination, waste treatment and beryllium

exposure.

34. I attach as Exhibit N an FBI report of my

February 17, 1988 discussion with FB] Special Agent Lipsky.

EPA Agent Smith and Assistant United States Attorney Ken

Fimberg. Among other things, at that meeting | discussed my

safety concerns about the Rocky Flats beryllium shop and the

contaminated ducts. In addition, | attach as Exhibit O further

documeniation by the FBI recording certain of our telephone

conversations and written communications concerning matters

al issue in this lawsuit.

35. All of the information that | provided to

the FBI and other government representatives was based upon

my direct and independent knowiedge, gained while | was an

engineer at Rocky Flats working on matters that are now at issue

in this lawsuit. | did not obtain the information outlined in this

affidavit from news reports or reports of outside government

investigations. Rather, | obtained the information outlined

above by personal observation and in connection with my

assigned projects at Rocky Flats to analyze these problems and

propose solutions. The information I possess on the matters

described in this affidavit is direct and independent of any

public documents or news reports.

36. In August 1986, after the termination of

my employment at Rockwell, I filed a civil complaint against

Rockwell for breach of contract in state court in Jefferson

County, Colorado. In that complaint, which | attach as Exhibit

P, | included, among other things, some of the allegations

concerning Rockwell's environmeatal violations involving

wastewater, beryllium and plutonium (pp. 6, 9) that are

presently at issue in this lawsuit (see Exhibit B).

15a

37. Finally, simultaneously with the filing of

this lawsuit, | submitted to the government a detailed Disclosure

Statement. I attach as Exhibit Q a copy of my Confidential

Disclosure Statement of Material Evidence and Information. As

I state in that document (pp. 9-17, 19-20, 23-30), I voluntarily

provided the government with information about which | had

direct and independent knowledge on the surface and ground

water, plutonium and beryllium allegations in this case. As the

Disclosure Statement also states (pp. 24-30), | simultaneously

provided the United States with four boxes of documents about

matters at issue in this case about which I have direct and

independem’ knowledge. | continued to supplement my

Disclosure Statement by providing additional documentation to

ihe government subsequent to its filing, and prior to the

unscaling of this lawsuit.

38. In my Consolidated Answers to

Discovery (Exhibit B), 1 summarized the factual bases of my

Claims in this action. Based on my work history at Rockwell, as

described in part above, | have direct, independent and personal

knowledge of the facts underlying each of the environmental,

health and safety problems set forth in my Consolidated

Answers. The material outlined in this affidavit, however, is not

all-inclusive of the matters about which I have direct,

independent and personal knowledge from my employment at

Rocky Flats.

16a

Conclusion

39. For the foregoing reasons, | respectfully

request that Rockwell's motion to dismiss my complaint be

denied.

/s/ James S. Stone

James S. Stone

Swora to before me this

27" day of February, 1993.

/s/ Cynthia M. Annett

Notary Public

Notary Public

Cynthia M. Annett

State of Colorado

17a

[Exhibit C to the Affidavit of James S. Stone in Opposition to

Defendant’s Motion to Dismiss the Complaint for Lack of

Subject Matter Jurisdiction, Excerpt]

ENGINEERING CALCULATION SHEET REF 12-2-0

PROJECT NITRATE WASTE PROJECT NO.

IRRIGATION 315332

BY JIM STONE

To: AL. KRIZNAR w/COPY TO DATE 12-1-80

BOB JENSON

CALCULATION: SHEET 1] OF 3

Comments On Design Criteria:

1. The Irrigation System Should Be Located In The Area North

I

3.

Of The 207 Ponds & The Psz For The Following Reasons:

a) Less energy & cost due to shorter distance between

source of wastewater & disposal area.

b) The area should be cultivated in order to utilize the

cxisting nitrogen trapped in the subsoil & to stabilize the

Slopes against erosion.

c) The area is down-grade from the ponds & can be served

by gravity with a siphon system.

d) The area is down-wind from the Rocky Flats facility.

e) The area is not suitable for other purposes, such as

future expansion of the Rocky Flats facility.

The Irrigation System Should Be A Gravity Fed Dispersal

Trench System For The Following Reasons:

a) The geological formation & the soil texture ts suitable for

a shallow trench system to disperse the wastewater into

the root zone uniformly.

b) The system can be operated year-around & is more

dependable than a mechanical sprinkler system

c) The system has less owning & operating costs.

d) The system is more adaptable to the unique wind

conditions at Rocky Flats.

e) The system meets the criteria established by the

environmental & safeguards/security divisions.

References:

Sa

a) Drawing — “Nitrate Waste Irrigation #Sk-315332-De-1"

b) “A Supplementary Report To An Engineering Study For

Water Control & Recycle Concerning The Recovery Of

Nitrate Laden Groundwater” By Engineering Science, Inc.

c) “Soil Investigation (Psz)” By CTL/Thompson, Inc.

d) “20" Wind Rose Rocky Flats” By AEC

e) “Freeze Index-Use Of Climatic Data In Design Of Soils

Treatment Systems, Boulder, Co.” By NO & AA.

f) “Design Manual — Land Treatment” By EPA 625/1-77-

008 |

g) “Calculations —- Area Req'd” By J. Stone (SHTS. 2 & 3).

BEST AVAILABLE COPY

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20a

{Exhibit L to the Affidavit of James S. Stone in Opposition to

Defendant’s Motion to Dismiss the Complaint for Lack of

Subject Matter Jurisdiction]

Preliminary 3-month CPAF Rating

page 2

What’s the purpose of the 3-month report”

According to Ron Smith, director, Management Systems

& Audit, “We use the 3-month report as a corrective tool so that

we can take appropriate corrective action before the official

6-month CPAF evaluation.”

Does Rockwell have any say in the 3-month grading?

Rockwell reviews the draft preliminary report with

DOE/RFAO before it is finalized. “We have the opportunity to

discuss grades we don’t think reflect the actual performance of

the plant,” Smith said. “For example, we may believe that a

‘significant achievement’ which DOE left out should be added.

We also have not only the opportunity, but also an obligation, to

clarify any situation which could be assessed as deficient, for

two reasons: if the assessment is not accurate, to present the

facts for proper recognition, or if the assessment is correct, to

learn from it and fix it.”

How does the 3-month report_affect our official 6-month

evaluation?

There is some influence, but DOE does not use the

3-month report as an absolute baseline. “We like to think we

have the opportunity to work off any deficiencies RFAO

perceives in the preliminary 3-month report before the official

6-month CPAF evaluation is performed,” Smith said. “Some

deficiencies may carry over, but we trust we’ ve corrected all the

ones that we can.”

Pla

How does CPAF affect our operating budget?

CPAF grades do not affect the amount of funding we

receive from DOE to operate the plant. However, within our

operating budget, DOE gives us the opportunity to earn an

award fee. The award fee is based on superior performance in

the group of key Functional Performance Areas (FPAs) that

DOE identifies for each 6-month CPAF evaluation period. A

higher CPAF grade average can increase the award fee for

‘Rockwell.

Is an award fee automatically given?

No. DOE will not even consider an award fee if we do

not perform at least at a satisfactory level in all 37 FPAs (see

attached list). If we do perform at least satisfactory overall, then

the CPAF award fee is based on an evaluation of the key FPAs.

How is the CPAF award fee allocated?

Award fee dollars go to Rockwell Corporate just like

operating profits from other company divisions. Award fee

dollars are not allocated in any manner back to the Rocky Flats

Plant, except as indirect benefits from Rockwell Corporate.

Naturally, superior performance on our part also enhances our

working relationship with our customer, DOE.

NN

ii

=

FUNCTIONAL PERFORMANCE AREAS

ROCKY FLATS PLANT

8/26/85

GENERAL MANAGEMENT *

TECHNICAL/PROGRAM OPERATIONS

Delivery Performance *

Production Support *

Chemical Operations *

Technical Support

Quality Control *

Development Work

Nuclear Materials Management

Waste Management *

Nonweapons programs

OPERATIONAL SUPPORT

Transportation Safeguards

Security *

Nuclear Safeguards *

Facilities Enginecring &

Construction Management

Facilities Maintenance, Utilities

and Energy Conservation Management *

Industrial Safety

Fire Protection

Health Protection

Environmental Protection

Emergency Preparedness

Nuclear Criticality

Facilities Safety

23a

ADMINISTRATIVE SUPPORT

Operating and Capital Resources

Management

Financial Management

Legal

Internal Auditing

Automatic Data Processing *

Telecommunications & Data

Communications

Records Management

Property Management

Procurement Management

Industria] Relations

Equal Employment Opportunity

Administrative Services

Public Affairs

Classification

Technical Information

° One of the group of FPAs on which CPAF award fees

will be based for the 6-month period ending

September 30, 1985.

24a

{Exhibit Q to the Affidavit of James S. Stone in Opposition to

Defendant's Motion to Dismiss the Complaint for Lack of

Subject Matter Jurisdiction, Excerpt]

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

Civil Action No. 89-C-1 154

UNITED STATES OF AMERICA ex rel.

JAMES S. STONE,

Plaintiffs,

v.

ROCKWELL INTERNATIONAL CORPORATION,

a corporation,

Defendant.

PLAINTIFF'S CONFIDENTIAL DISCLOSURE

STATEMENT OF MATERIAL EVIDENCE AND

INFORMATION

Plaintiff James S. Stone herein submits to the United States

Government, pursuant 31 U.S.C. §3730(2), his written

disclosure of material evidence and information. Served

concurrently herewith ts a copy of Mr. Stone’s Complaint Under

False Claims Act, which document is being filed in camera and

under seal with the United States District Court for the District

of Colorado. This disclosure statement is confidential.

xk kk

tO

nN

o

14. Analysis of pond crete method for drainage of

solar evaporation ponds. Solar evaporation ponds have. for

some time, been used to treat RCRA hazardous wastes.

Mr. Stone reviewed a design for the process and mechanical

system intended to be used for removing sludge from these

ponds. The system was proposed by a Mr. Leon Fong. Based

on Mr. Stone’s years of experience in the handling of sewage

and sludge, he immediately recognized that the design could not

work and would lead to serious problems. For example, the

system was designed to remove sludge trom the pond and mix

that sludge with cement in order to create blocks of “pond crete”

for disposal use. Mr. Stone foresaw that the piping system

would not properly remove the sludge and would lead to an

inadequate mixture of sludge/waste and cement such that the

“pond crete” blocks would rapidly disintegrate thus creating

addition | contamination problems.

Mr. Stone’s advice, which involved alternatives, was

rejected and the system was built as improperly designed. As

shown by the FBI's search warrant application, at page 89, this

system failed on at least one occasion during 1988 when Pond

207A was being drained for mixing, in Building 778, to form

“pond crete” blocks. Mr. Stone’s information also led to the

FBI's broader investigation of Solar Evaporation Ponds and

their misuse by Rockwell.

26a

VI. CONCLUSION

To the extent possible, the foregoing represents a

statement of substantially all evidence and material information

possessed by Mr. Stone As noted in various portions of the

document, some evidence ts either classified, too technical, too

voluminous, or otherwise not susceptible to inclusion at this

time. However, Mr. Stone is ready and willing to revise and

supplement his submittal of information in accordance with the

Government's necds in pursuing and evaluating this matter. All

communications regarding this matter should be directed

through the undersigned or representatives of his law firm.

DATED: July Sth, 1989

LEEVAN & ALLEY

By /s/ Hartley David Alley

HARTLEY DAVID ALLEY

(Colo. Reg. No. 15389)

4251 Kipling Street, Suite 130

Wheat Ridge, Colorado 80033

(303) 431-8060

3345 Wilshire Blvd., Suite 1107

Los Angeles, California 90010

(213) 384-9192

Attorneys for Qui Tam and Individual

Plaintitf JAMES S. STONE

Plaintiff's Address:

158 Huntington Drive

Vicentown, NJ O8088