# Amicus Curiae Brief — Rockwell Intern. Corp. v. United States

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0250%3A06

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2007
- **Citation:** 549 U.S. 457

## Text

(2) 7...
Ls JUL 14 2006

No. 05-1272 OFFICE OF THE CLERK

IN THE

Supreme Court of the United States

ROCKWELL INTERNATIONAL CORP. AND BOEING NORTH
AMERICAN, INC.,

Petitioners,
V.
UNITED STATES OF AMERICA AND UNITED STATES OF
AMERICA EX REL. JAMES S. STONE,
Respondents.

On Petition For A Writ of Certiorari
To The United States Court of Appeals
For The Tenth Circuit

BRIEF OF AMICUS CURIAE CHAMBER OF
COMMERCE OF THE UNITED STATES OF
AMERICA IN SUPPORT OF PETITIONERS

Of Counsel: HERBERT L. FENSTER
ROBIN S. CONRAD Counsel of Record
AMAR D. SARWAL LAWRENCE S. EBNER
NATIONAL CHAMBER CORINNE A. FALENCKI
LITIGATION CENTER, INC. MCKENNA LONG &
1615 H Street, N.W. ALDRIDGE LLP
Washington, D.C. 20062 1900 K Screet, N.W.
(202) 463-5337 Washington, D.C. 20006

(202) 496-7500
Attorneys for Amicus Curiae
Chamber of Commerce of the
United States of America

——————— | Snes meee
WiLSON-EPES PRINTING CO., INC. — (202) 789-0096 — WASHINGTON, D.C. 20001

j
TABLE OF CONTENTS
Page
INTEREST OF THE AMICUS CURIAE............. RETA l
SUMMARY OF ARGUMENT ooccccccccsccccsccccccccccececeecscece 3
ee NE ee RS aR Se AE Pre IER 4
J. THE CONSTITUTIONALITY OF THE QUI
TAM PROVISIONS UNDER ARTICLE II
REMAINS AN OPEN QUESTION ooccccccccccssssecssesees 4
I. THE QUI TAM PROVISIONS PRESENT
SUBSTANTIAL ARTICLE II ISSUES
WORTHY OF THIS COURT'S REVIEW ............. a

TIED siineisinbessntisiiaedaniccbaicaasiontehinenpiddinnudssnniaeenei 20

TABLE OF AUTHORITIES

CASES
Page
Aufmordt v. Hedden, 137 U.S. 310 (1890) .cccccscccccssessssecese 16
Buckley v. Valeo, 424 U.S. 1 (1976)........000000... 14, 15, 16, 17
Clinton v. City of New York, 524 U.S. 417 (1998)... l |
Edmund v. United States, 520 U.S. 651 (1997)............. 14,15
Freytag v. Comm 'r of IRS, 501 U.S. 868 (1991)..0.......000002. 15
GPM Gas Corp. v. Grynberg, 277 F.3d 1373 (Sth
Cir. 2001), cert. denied, 535 U.S. 1017 (2002)............. 12
Hughes Aircraft Co. v. United States ex rel. Schumer,
ee id ccccsiniediceniiiibindicsisiiiindiviaaaplinacnicnin 18, 19
Mistretta v. United States, 488 U.S. 361 (1989) ...0...000000.. 3,4
Morrison v. Olson, 487 U.S. 654 (1988) .....00..... 4, 15, 17, 20
Printz v. United States, 521 U.S. 898 (1997) o.oo. 3
Riley v. St. Luke's Episcopal Hosp., 196 F.3d 514
MESES RENN ray ee ee nim 6
Riley v. St. Luke's Episcopal Hosp., 252 F.3d 749
Se eth, PE II PIII oc: ccascisoisiinincsecnicandtansnensies passim

Ryder v. United States, 515 U.S. 177 (1995) .......... cece 14

United States ex rel: Kelly v. Boeing Co., 9 F.3d 743
(9th Cir. 1993), cert. denied, 510 U.S. 1140

pe iaidisciiddves shcieitenseiasieaianinodlnbbiiesietiagltll 7, 8, 12-
United States ex rel. Lindenthal v. General Dynamics

Corp., 61 F.3d 1402 (9th Cir. 1995) ooo. 19
United States ex rel. Taxpayers Against Fraud v.

General Elec. Co., 41 F.3d 1032 (6th Cir. 1994) ........ 7,8
United States v. Germaine, 99 U.S. 508 (879) ...cccccccceseeee. 16

Vermont Agency of Natural Resources v. United
States ex rel. Stevens, 529 U.S. 765 (2000)............ passim

STATUTES AND REGULATIONS

False Claims Act, 31 U.S.C. § 3730

1) -& > GIRENS OaDRene Neer Memre
MUS Sr. a Pate 15, 18
Ea ae 18
ee 16
I a a 16
SO BE on 18
ee i 18
ne te loa 16, 18
Sr ei l
MISCELLANEOUS

Richard A. Bales, A Constitutional Defense of Qui
Tam, 2001 Wis. L. Rev. 381 (2001) ..0...... cece cceeeeeeeee 8

IV

James T. Blanch, The Constitutionality of the False
Claims Act's Qui Tam Provision, 16 Harv. J.L. &
US RE FO CP i invsscsninieicneececacmnicdsibiaiamabiaeanieias. 9

John T. Boese, Civil False Claims and Qui Tam
Aateeen § 4.12 (SE OB. FOGG) ove. scseccsecsccccveciscssecdvccsssceses y

Evan Caminker, Comment, The Constitutionality of
Qui Tam Actions, 99 Yale L.J. 341 (1989)... cece, 9

Robert E. Johnston, Note, /00/ Attorneys General:
Executive-Employee Qui Tam Suits and the
Constitution, 62 Geo. Wash. L. Rev. 609 (1994) ............ S)

William E. Kovacic, The Civil False Claims Act As A
Deterrent To Participation In Government
Procurement Markets, 6 Sup. Ct. Econ. Rev.
re GHEE vindsincntiniitcnatdiainidaiaseeintinddaneane 12, 19, 20

Ara Lovitt, Note, Fight for Your Right to Litigate:
Qui Tam, Article Il, and the President, 49 Stan.
Hh, ERIE: UOT Bie cancciesincuniscidenaledantosacanaacmeh tienen Y

Memorandum Opinion For The Attorney General,
Constitutionality of the Qui Tam Provisions of
the False Claims Act, 13 U.S. Op. Off. Legal
Counsel 207 (1989), 1989 WL
PO incinliininsiciscsoniniinasacientasiiinniiidiiieiataaias mma passim

Memorandum Opinion For The General Counsels Of
The Federal Government, 7he Constitutional
Separation of Powers Between the President and
Congress, 20 U.S. Op. Off. Legal Counsel 124
CODD, SI We te PIE cinisisissssncnticciciciciaacesaedamelibniin 10

-

Vv

Statement of Stuart M. Gerson, Assistant Attorney
General, Before the Subcomm. on Civil and
Constitutional Rights of the House Comm. on the
Judiciary, 102d Cong. 20 (1992) 0000.00 cceecceceeeeeeeeeees 19

U.S. Gov. Accountability Office, /nformation on
False Claims Act Litigation (2006).................ccc000- 11,12

INTEREST OF THE AMICUS CURIAE

The Chamber of Commerce of the United States of
America (“the Chamber’) is the world’s !argest federation of
business organizations.’ lt represents an underlying
membership of more than three million businesses of every
size, im every business sector, and frora every geographic
region of the country. One of the Chamber's primary
Missions 1s to represent the interests of its members by filing
amicus curiae bricfs in cases involving issues of national
importance to American business.

This 1s such a case because the gui tam provisions of
the 1986 False Claims Act (“FCA”) threaten every federal
government contractor, health care provider, and grant
recipient in the United States. The Court should review this
appeal for two reasons:

First, the circuits are split on how to interpret the
“original source” jurisdictional requirement for gui tam suits,
31 U.S.C. § 3730(e)(4). The original source rule affords an
important protection against the filing of unmeritorious or
vexatious gui fam suits by relators who do not genuinely
possess otherwise unknown factual information directly
relating to submission of false claims against the
Government.

Second, and even more fundamentally, the Court
should grant review to resolve, at last, the constitutional

' Pursuant to Sup. Ct. R. 37.6, the Chamber states that no counsel

for a party has written this brief in whole or in part and that no
person or entity, other than amicus curiae, its members, or its
counsel, has made a monetary contribution to the preparation or
submission of this brief.

Pursuant to Sup. Ct. R. 37.2, written consent to the filing of
this brief has been obtained from counsel for Petitioners and
Respondents, and the documents reflecting consent have been
filed with the Clerk's office.

i]

question that the Court explicitly reserved in Vermont
Agency of Natural Resources v. United States ex rel. Stevens,
529 U.S. 765 (2000): Whether the gui tam provisions, which
vest self-appointed private relators with sweeping powers to
initiate and conduct civil false claims litigation on behalf of
the United States, violate the Appointments and Take Care
Clauses of Article Il of the Constitution. Because this is a
threshold question underlying the entire gui tam scheme, the
Chamber’s amicus brief focuses on that issue and the reasons
why the Court should grant certiorari to address it.

The gui tam provisions present a separation of
powers question that directly implicates congressional
encroachment of Executive Branch constitutional duties. It
is a clearly defined, long debated, and fully mature issue
which has been smoldering just below the surface of the
more than 5,000 gui tam actions that have been filed since
the current provisions were enacted two decades ago.
During this period many Chamber members, especially those
involved in defense procurement and the nation’s health care
system, have been subjected to a continuing barrage of gui
tam suits brought by officious bounty hunters. In the vast
majority of cases, the Department of Justice, following
investigation, has declined to support the relators’ fraud
claims, which gui tam defendants nevertheless are forced to
litigate or settle at substantial cost.

The Chamber has consistently contended, including
in amicus briefs filed with this Court in Stevens and the Fifth
Circuit in Riley v. St. Luke's Episcopal Hosp., 252 F.3d 749
(5th Cir. 2001), that the 1986 gui tam provisions are a blatant
example of unconstitutional congressional interference with
performance of Executive Branch responsibilities. The
instant gui tam appeal, where the Department of Justice
clearly exercised its prosecutorial discretion, initially
declining to intervene and subsequently deciding to support
only some of the relator’s claims, presents an ideal vehicle

for resolving the Article II issue. Accordingly, the Chamber
is submitting this brief to urge the Court to grant review.

SUMMARY OF ARGUMENT

“This Court consistently has given voice to, and has
reaffirmed, the central judgment of the Framers of the
Constitution that, within our political scheme, the separation
of governmental powers into three coordinate Branches is
essential to the preservation of liberty.” Mistretta v. United
States, 488 U.S. 361, 380 (1989). The FCA’s qui tam
provisions, 31 U.S.C. § 3730(b), represent a serious breach
of the separation of powers. “The Constitution does not
leave to speculation who is to administer the laws enacted by
Congress; the President, it says, ‘shall take Care that the
Laws be faithfully executed,’ Art. Il, § 3, personally and
through officers whom he appoints (save for such inferior
officers as Congress may authorize to be appointed by the
‘Courts of Law’ or by ‘the Heads of Departments’ who are
themselves Presidential appointees), Art. [[, § 2.” Printz v.
United States, 52\ U.S. 898, 922 (1997). By enacting the
qui tam provisions, however, Congress has invaded Article II
territory. It has impermissibly (i) seized, reassigned, and
diffused the Executive Branch’s Appointments power by
allowing private relators essentially to appoint themselves as
“Officers of the United States,” and (ii) empowered such
financially motivated gui tam relators (including disgruntled
former employees proceeding in their own self interest) to
obstruct or impair the Executive Branch’s ability to “take
Care” by vesting them with significant authority to
prosecute, at their sole discretion, alleged false claims for,
and in the name of, the United States, against any
government contractors, health care providers, or grant
recipients that they choose to target.

This Court has “not hesitated to strike down
provisions Of law . . . that undermine the authority and
independence of one or another coordinate Branch,”

Mistretta, 488 U.S. at 382, especially where a federal statute
“prevents the Executive Branch from accomplishing its
constitutionally assigned functions,” id. at 383 (internal
quotation marks omitted). That is the case here. The gui
fam provisions flout the Appointments Clause and
undermine the Executive Branch prosecutorial discretion
embodied in the Take Care Clause. The constitutionality of
the qui tam provisions under Article Il remains an important
and unresolved question worthy of this Court’s review, even
under the lenient “sufficient control” criterion set forth in
Morrison v. Olson, 487 U.S. 654 (1988) (upholding the now-
~ expired independent counsel provisions of the Ethics in
Government Act of 1978). Indeed, in 2000 the Court raised
the qui tam Article Il issue in Vermont Agency of Natural
Resources v. United States ex rel. Stevens, 529 U.S at 778
n.8, but expressed no view on it, other than to rebuke the
dissent’s unsupported assertion that historical evidence of
various types of qui fam actions in England and America
somehow establishes that the substantially different 1986
FCA qui tam provisions can be reconciled with the
Appointments and Take Care Clauses.

ARGUMENT

1. THE CONSTITUTIONALITY OF THE QUI
TAM PROVISIONS UNDER ARTICLE II
REMAINS AN OPEN QUESTION

This Court should resolve, once and for all, the
enduring but fundamental question of whether the FCA’s gui
fam provisions, 31 U.S.C. § 3730(b), violate Article Il of the
Constitution, specifically the Appointments and Take Care
Clauses. Six years ago, in Stevens, the Court explicitly
reserved the Article II issue for consideration in an
appropriate case. The gui fam provisions, and the voracious
litigation industry that they have engendered, continue to
present a real-world separation of powers issue that calls into

question Congress’ ability to undermine Article IT Executive
Branch responsibilities however it deems expedient. As long
as this Court allows to remain unchecked the FCA’s brazen
reassignment and = diffusion of Executive Branch
prosecutorial discretion to private, self-appointed,
unsupervised, financially motivated gui tam relators, an
emboldened Congress will continue to act as if Article |
enables it to abrogate or alter the Executive Branch’s clearly
delineated Article Il powers, duties, and prerogatives.

In Stevens the Court held, based in part on “the long
tradition of gui tam actions in England and the American
Colonies . . . history [that] is particularly relevant to the
constitutional standing inquiry,” 529 U.S. at 774, that gui
tam relators have Article Ul standing under the FCA.
Writing for the majority, however, Justice Scalia not only
acknowledged the separate Article II question, but also
specifically saved it for another day. /c. at 778 n.8 (“In so
concluding, we express no view on the question of whether
qui tam suits violate Article Il, in particular the
Appointments Clause of § 2 and the ‘take Care’ Clause of
§ 3.”). He noted that in Stevens, in which the qui tam relator
alleged submission of false claims by a state agency to a
federal agency (a type of gui tam suit which the Court held
cannot be maintained under the statute), “Petitioner does not
challenge the qui tam mechanism under either of those
[Article II] provisions, nor is the validity of gui tam suits
under those provisions a jurisdictional issue that we must
resolve here.” /bid.

To make it very clear that the Article II question
remained open, the Stevens Court, ibid., chided the dissent
for “proceed{ing] to volunteer an answer,” see id at 801
(Stevens, J., dissenting) (asserting that “{t}he historical
evidence summarized by the Court . . . together with the
evidence that private prosecutions were commonplace in the
19th century . . . is also sufficient to resolve the Article II
question”). See Riley v. St. Luke's Episcopal Hosp., 252

F.3d 749, 770 (Sth Cir. 2001) (en banc) (Smith, J.,
dissenting) (the “majority in Stevens expressly disclaimed
any view with regard to Article Il challenges . . . the fact that
the majority in Stevens took pains to point out that it was not
deciding the constitutionality of gui tam suits under Article LU
suggests strongly that the Court did not think this issue is
easily decided by history.”); Pet. App. 24a (“The Stevens
Court . . . was careful to specify that it was expressing no
opinion concerning other constitutional challenges to gui tam
actions, namely whether they violate the Take Care and
Appointments Clauses of Article IL”).

Neither of the post-Stevens court of appeals opinions
that address the Article II issue illuminate the subject in a
way that mitigates the continuing need for this Court to
decide the question. In Riley, a qui tam action against health
care providers, a divided Fifth Circuit panel originally held
that the gui tam provisions do violate the Take Care Clause
and the separation of powers doctrine. See 196 F.3d 514,
530 (Sth Cir. 1999). But on rehearing, a divided en banc
court of appeals, despite the Stevens majority’s admonition,
repeatedly relied upon the conclusory dictum in the Stevens
dissent in holding that the gui fam provisions do not violate
Article Il. See Riley, 252 F.3d at 752-53. (“[T]he dissent in
Stevens noted that history alone resolves the question of
whether the qui tam provisions in the FCA violate Article
Il.”); id. at 758 n.13 (“The dissent in Stevens plainly stated
that the FCA’s qui tam provisions do not violate the
Appointments Clause.”).

In holding that the qui tam provisions do not
represent an “unconstitutional intrusion” of “the
constitutional separation of powers doctrine under the Take
Care and Appointments Clauses of Article II,” id. at 751, the

> The panel did not reach the Appointments Clause question. See
Rilev, 196 F.3d at 531.

en bane majority in Riley asserted “it is logically inescapable
that the same history that was conclusive on the Article III
question in Stevens with respect to qui tam lawsuits initiated
under the FCA 1s similarly conclusive with respect to the
Article II question concerning this statute.” /d at 752.
Judge Smith (joined by Judge DeMoss) wrote a
comprehensive dissent to the en banc opinion. He explained
that “[t}he Article IL issues raised by the FCA, however,
were not so easily disposed of by history, and thus the
majority did not address them in Stevens.” /d. at 772.
“(T]he nature of the standing inquiry dictates that special
attention be paid to historical practice. Such extreme
deference need not be given, by contrast, within the context
of Article II challenges.” /bid.”

The other post-Stevens court of appeals decision on
Article Il is the Tenth Circuit’s opinion below. The court
relied upon Riley, and also the two pre-Stevens court of
appeals decisions which found no Article II violation. See
Pet. App. 26a, 28-29a (discussing Riley; United States ex rel.
Taxpavers Against Fraud v. General Elec. Co., 41 F.3d
1032, 1041 (6th Cir. 1994); United States ex rel. Kelly v.
Boeing Co., 9 F.3d 743, 759 (9th Cir. 1993)). But this
Court’s doctrinal-based rationale in Stevens for holding that
qui tam relators have Article III] standing—that “[t]he FCA
can reasonably be regarded as effecting a partial assignment
of the Government’s damages claims,” 529 U.S. at 773
(emphasis added)—casts substantial doubt upon the Article
1] analyses in Taxpayers Against Fraud and Kelly. Those

* Judge Smith observed, based on a Supreme Court case “which
was decided just four months before Stevens,” that “Justice Scalia.
the author of the majority opinion in Stevens, and Justice Thomas
and perhaps Justice Kennedy, seem to have reservations as to the
constitutionality of gui tam actions under Article Il.” Riley, 252
F.3d at 770 (Smith, J., dissenting).

analyses are predicated upon the notion, subsequently
rejected in Stevens, that the qui tam provisions do not vest
relators with governmental power. See Taxpavers Against
Fraud, 41 F.3d at 1041 (“Although a relator may sue in the
government's name, the relator is not vested with
governmental power.”); Ke/ly, 9 F.3d at 758 (“The fact that
relators sue in the name of the government docs not vest
them with any governmental powers. .. .”). Judge Smith's
dissenting opinion in Ri/ey elaborates upon this conflict with
Stevens:

[T]here can be no mistake that, in the wake of
Stevens, a relator is litigating on behalf of the
government, because Stevens explicitly states that a
relator is only a partial assignee, and accordingly, the
part of the claim the relator is not litigating for
himself he is litigating for the government.
[E]ven though the government signs over to the
relator sufficient partial interest in the litigation to
qualify for Article III standing, the majority interest
that is not signed over--and therefore still owned by
the government--must be prosecuted by an officer of
the United States under the Appointments Clause,
and must be faithfully managed by the Executive
under the Take Care Clause.

Riley, 252 F.3d at 772 (Smith, J., dissenting).

Thus, the court of appeals decisions rejecting Article
It challenges to the FCA’s qui tam provisions, both before
and after the Stevens majority carmarked the issue for future
consideration by this Court, do not comprise a coherent or
cogent body of precedent, but instead actually reflect a
longstanding debate among lower court jurists.’ Indeed, the

* Legal scholars and commentators also continue to debate the
Article ll issue. See, e.g., Richard A. Bales, A Constitutional
Defense of Qui Tam, 2001 Wis. L. Rev. 381, 384 (2001) (“Despite

(footnote continued on next page)

question of whether the 1986 gui tam provisions violate
Article Il has been percolating at least since July 1989, when
the Department of Justice’s Office of Legal Counsel
prepared a formal Memorandum Opinion for the Attorney
General which argued—in remarkably emphatic terms—that
the gui tam provisions are unconstitutional. Assistant
Attorney General William P. Barr’s Memorandum stated.
for example, as follows:

[Q]ui tam suits pose a devastating threat to the
Executive's constitutional authority and to the
doctrine of separation of powers. \f qui tam suits are

(footnote continued from previous page)

the FCA’s long history, its constitutionality is still open to
question.”); James T. Blanch, The Constitutionality of the False
Claims Act's Qui Tam Provision, 16 Harv. J.L. & Pub. Pol’y 701
(1993) (scrutinizing the various arguments relied upon by district
courts and academics to uphold the constitutionality of the qui tam
provisions and concluding that none of these arguments
adequately address the constitutional problems that the provision
presents); Evan Caminker, Comment, The Constitutionality of Qui
Tam Actions, 99 Yale L.J. 341, 348 (1989) (identifying “the
constitutional values potentially threatened by the qui tam device”
and “analyzing the validity and persuasive force of the arguments
they inspire”); Robert E. Johnston, Note, /00/ Attorneys General:
Executive-Employee Qui Tam Suits and the Constitution, 62 Geo.
Wash. L. Rev. 609 (1994) (arguing that even qui tam suits brought
by executive-branch employees are unconstitutional); Ara Lovitt,
Note, Fight for Your Right to Litigate: Qui Tam, Article II, and the
President, 49 Stan. L. Rev. 853, 853 (1997) (“[T]he qui tam
provisions of the False Claims Act, which allow private citizens to
litigate on behalf of the United States, violate the separation of
powers by interfering with the Executive Branch’s authority to
‘take Care that the Laws be faithfully Exccuted.’”); see also 1
John T. Boese, Civil False Claims and Qui Tam Actions § 4.12 (3d
ed. 2006) (“Constitutionality Of The Relator’s Role”).

LO

upheld, it would mean Congress will have carte
blanche to divest the executive branch of its
constitutional authority to enforce the laws and vest
that authority in its own corps of private bounty
hunters.
* * *

The Office of Legal Counsel believes that the qui tam
provisions of the False Claims Act are patently
unconstitutional. In our view, this is not even a close
question.

Constitutionality of the Qui Tam Provisions of the False
Claims Act (“Barr Mem.”), 13 U.S. Op. Off. Legal Counsel
207, 208-209 (1989), 1989 WL 595854. Although Assistant
Attorney General Barr unequivocally opined, only three
years after enactment of the 1986 Amendments, “that qui
tam suits brought by private parties to enforce the claims of
the United States plainly violate the Appointments Clause of
the Constitution,” id. at 221, one of his successors in the
Office of Legal Counsel, Assistant Attorney General Walter
Dellinger, in a 1996 Memorandum Opinion for the Gencral
Counsels of the Federal Government, “disapprove[d] the
Appointments Clause analysis and conclusion of an earlier
opinion of this Office.” The Constitutional Sevaration of
Powers Between the President and Congress, 20 U.S. Op.
Off. Legal Counsel 124, 146 n.65 (1996), 1996 WL 876050.
The Department of Justice, by opposing Supreme
Court review and defending the constitutionality of the gui
fam provisions under Article II, is in the odd position of
supporting the unabated crosion of its own constitutionally
based prosecutorial discretion. This is far more troublesome
than mere advocacy of a bizarre litigation position; it
represents an attempt by the Executive Branch to condone
-Congress’ breach of the separation of powers, namely
congressional tampering with the Executive Branch’s Article
If duties under the Appointments and Take Care Clauses. By
arguing that the gui tam provisions pass Article II muster, the

L]

Justice Department (i.e., Executive Branch) in effect is
attempting to cede its own prosecutorial duties to Congress,
which has simultaneously arrogated and reassigned those
duties to private, self-appointed, gui tam relators, whom the
statute affords virtually unfettered discretion to sue on behalf
of the United States. The Court should not permit such a
blatant violation of the separation of powers to persist any
longer. As Justice Kennedy explained,

[t]o say the political branches have a somewhat free
hand to reallocate their own authority would seem to
require acceptance of two premises: first, that the
public good demands it, and second, that liberty is not
at risk. The former premise is inadmissible. The
Constitution’s structure requires a stability -which
transcends the convenience of the moment. . . . The
latter premise, too, is flawed. Liberty is always at
stake when one or more of the branches seeks to
transgress the separation of powers.

Clinton v. City of New York, 524 U.S. 417, 449-50 (1998).
(Kennedy, J., concurring) (internal citations omitted).

If the 1986 qui tam provisions violate Article IL, then
20 years of unconstitutional litigation (primarily against
government contractors and health care providers) 1s enough.
Between Fiscal Years 1987 and 2005, more than 5,100 gui
tam cases were filed, and the number of gui tam cases has
continued to increase as a proportion of total FCA cases. See
U.S. Gov. Accountability Office, Information on False
Claims Act Litigation 25 (2006). But the Justice Department
has elected to pursue only a small percentage of gui tam
suits. /d at 29. Sums recovered in cases where the
Department declined to intervene represent less than 5% of
recoveries from all qui tam suits and less than 3% of total
FCA recoveries. /d. at 1, 5, 35. In his dissenting opinion in
Riley, Judge Smith, who analyzed gui tam statistics,
concluded that the “figures show that the cases in which thé

12

government declines to intervene are generally the meritless
cases.” Riley, 252 F.3d at 767 n.24 (Smith, J., dissenting).
Thus, any suggestion that a finding of unconstitutionality
“would result in the disablement of an effective law
enforcement tool is utterly without support.” /bid. The fact
that “[iJn many instances, the costs of defending against
unsuccessfuk qui tam suits are recoverable against the
government” under various contract clauses further
diminishes whatever economic benefit the Government
derives from the majority of gui fam suits. William E.
Kovacic, The Civil False Claims Act As A Deterrent To
Participation In Government Procurement Markets, 6 Sup.
Ct. Econ. Rev. 201, 201 (1998). Yet, the filing of gui tam
suits, including frivolous or otherwise unmeritorious suits
that defendants settle to avoid harassment, adverse publicity,
strained relations with the Government, and _ litigation
burdens and costs, remains a lucrative business: Between
1986 and 2005, more than $1.6 billion was awarded to qui
tam relators and their attorneys. GAO at 5.

The 20-year old Article II issue surely requires no
further percolation. This Court should grant review and use
this case, which squarely presents the Article II question, as
the vehicle for completing the gui tam constitutional analysis
that it began six years ago in Stevens. Unlike other qui tam
appeals, where the United States chose not to intervene at
all,” here the Government, following investigation, initially
declined to intervene, but then based on information ~
discovered in a separate case, elected to intervene only to
support certain of Respondent Stone’s claims. See Pet. at 3-
4. The carefully considered, selective exercise of

—

> See, e. g., United States ex rel. Kelly v. Boeing Co., 9 F.3d 743
(9th Cir. 1993), cert. denied, 510 U.S. 1140 (1994); GPM Gas

Corp. v. Grvnberg, 277 F.3d 1373 (Sth Cir. 2001), cert. denied,
535 U.S. 1017 (2002). ~

13

prosecutorial discretion embodied by the Government's
actions in this case only underscores the question of whether
Congress, through enactment of the gui ‘am provisions, has
impermissibly encroached upon Executive Branch duties and
prerogatives regarding conduct of litigation on behalf of the
United States.”

Il. THE QUI TAM’ PROVISIONS PRESENT
SUBSTANTIAL ARTICLE Il ISSUES WORTHY
OF THIS COURT’S REVIEW

In reserving the question of whether the FCA’s qui
fam provisions violate the Article Il Appointments and Take
Care Clauses, this Court’s Stevens majority was careful to
avoid even an implicit endorsement of the dissent’s facile
assertion that “historical evidence,” such as “evidence that
private prosecutions were commonplace in the [9th
century,” is “sufficient to resolve the Article II question.”
529 U.S. at 801 (Stevens, J., dissenting). As Justice Scalia
cautioned, “[i]t is only the dissent that proceeds to volunteer
an answer.” /d. at 778 n.8 (emphasis added).

In his Ri/ey dissent, Judge Smith discussed at length
why, unlike the issue of Article III standing addressed in
Stevens, where this Court focused on the historical meaning
of “Cases and Controversies,” 529 U.S. at 774, “history is

* The lower court was “not persuaded that in the circumstances of
this case, the separation of powers, as embodied in the Take Care
Clause, has been transgressed.” Pet. App. 27a. But the court’s
analysis is based on the erroneous premise that “the Government
was a full and active participant in the litigation as it jointly
prosecuted the case with Stone.” /bid. The court of appeals
skirted the question of whether there is an Article Ul violation
where, as actually happened here, a relator prosecutes at least
some of his claims without the Government's active participation
OT support.

\4

not controlling” on the separate Article II question. Riley,
252 F.3d at 772 (Smith, J., dissenting). For example, he
noted that “at the time the first gui fam acts were passed, the
executive was in its infancy .... Thus, the exigencies of a
weak Executive led Congress to pass a number of gui tam
acts.” Jd. at 774. “[{T}he encroachment on the Executive
was less than it 1s today, because the Executive now exists as
a robust branch that could prosecute the claims be[en] given
to relators by the FCA.” /d. at 775 n.38. See also Barr
Mem. at 232 (“History cannot save qui tam”); id. at 237
(“Congress's aggrandizing enactments should not serve as
conclusive precedent on the scope of Congress’s own
authority.”).

In its opinion below, the Tenth Circuit, although
relying upon Ri/ey, appears to have abandoned any attempt
at a history-based rationale for upholding the qui tam
provisions under Article II... Nevertheless, the lower court’s
Appointments Clause and Take Care Clause analyses are
circular and unconvincing, and they only underscore the
need for this Court’s review.

1. Appointments Clause, U.S. Const., Art. fl, § 2,
cl. 2. Writing for the Court in Edmund v. United States, 520
U.S. 651, 659 (1997), Justice Scalia emphasized that “the
Appointments Clause of Article Il is more than a matter of
‘etiquette or protocol’; it is among the significant structural
safeguards of the constitutional scheme.” “The Clause ts a
bulwark against one branch aggrandizing its power at the
expense of another branch, but it 1s more: it ‘preserves
another aspect of the Constitution’s structural integrity by
preventing the diffusion of the appointment power.” Ryder
v. United States, 515 U.S. 177, 182 (1995) (quoting Freytag
v. Comm 'r of IRS, 501 U.S. 868, 878 (1991)).

In Buckley v. Valeo, 424 U.S. 1, 125-26 (1976), the
Court explained “that the term ‘Officers of the United States’
as used in Art. II. . . is a term intended to have substantive
meaning” (emphasis added). “[I]ts fair import ts that any

15

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
by § 2, cl. 2 of that Article.” /d at 126 (emphasis added);
see also Edmund, 520 U.S. at 662 (“The exercise of
‘significant authority pursuant to the laws of the United
States’ marks . . . the line between officer and nonofficer”)
(quoting Buckley).

The Court held in Buckley that “primary
responsibility for conducting civil litigation in the courts of
the United States for vindicating public rights . . . may be
discharged only by persons who are ‘Officers of the United
States’ within the language” of the Appointments Clause.
424 U.S. at 140. The FCA’s gui tam provisions violate the
Appointments Clause because they empower private relators,
who have not been appointed by the Executive Branch (or
any other Branch), to function as “Officers of the United
States” by “exercising significant authority pursuant to the
laws of the United States,” id. at 126, specifically the

“primary responsibility” for conducting litigation on behalf
of the United States, id. at 140.’

The statute provides that “[a] person may bring a
civil action for a [FCA] violation . . . fo- the United States
Government,” and “[t}he action shall be brought in the name
of the Government.” 31 U.S.C. § 3730(b)(1) (“Actions by
private persons”). See also ray 529 U.S. at 774 n4
(noting that “a qui fam relator is, in effect, suing as a partial

” Self-appointed qui tam relators are not appointed by any branch
of the Government. Thus, the FCA does not provide for the type
of limited “interbranch appointments” which the Court
countenanced in Morrison v. Olson, 487 U.S. 654, 675 (1988).
Moreover, Appointments Clause violations are not predicated on
whether Congress has arrogated Executive Branch power to itself.
See Freytag v. Comm'r of IRS, 50\ U.S. at 878.

16

assignee of the United States”). Regardless of whether the
Government intervenes, the awesome power that the FCA
assigns to anv person who chooses to commence a gui tam
action “for” and “in the name of” the United States
represents, in and of itself, a serious violation of the
Appointments Clause (and the Take Care Clause too).
Further, “[i]f the Government elects not to proceed with the
action, the person who initiated the action shall have the
right to conduct the action.” 31 U.S.C. § 3730(c)(3). Even if
the Government intervenes as to some or all claims, the
relator continues to act as a party with significant nights. /d.
§ 3730(c)\(1), (2). Here, Respondent Stone effectively led
the litigation, not only during the six year period prior to the
Government’s intervention, but also after the Government
intervened to support some, but not all, of Stone’s claims.
See Pet. at 25. “There can be no doubt that qui tam relators
are exercising significant governmental power . . . to level
fraud charges against other private citizens and hail them
into court to answer to these alleged public offenses, with the
possibility of collecting not only damages but substantial
civil penalties.” Barr Mem. at 222.

The lower court’s circular holding that qui fam
relators are not ““officers’ for purposes of Article II” because
they “do not serve in any office of the United States” not
only begs the question of whether they are officers, but also
trivializes the Appointments Clause. Pet. App. 25a. Rather
than heeding this Court’s admonition to give the term
“Officers of the United States” its intended “substantive
meaning,” Buckley, 424 U.S. at 126, and not limit the term to
the ancient formalistic definition provided in United States v.
Germaine, 99 U.S. 508, 509-510 (1879), the court of
appeals, did precisely the latter. Relying upon Germaine and
Aufmordt v. Hedden, 137 U.S. 310 (1890), the court
elevated form over substance, focusing, for example, on the
fact that relators “are not entitled to the benefits of
officeholders, such as drawing a government salary.” Pet.

7

App. 25a. The Fifth Circuit’s opinion in Riley, 252 F.3d at
757-58, suffers from the same faulty logic.

“The Court has twice held . . . that persons litigating
on behalf of the United States are officers of the United
States.” Riley, 252 F.3d at 768 (citing Buckley, 424 U.S. at
113, 140; Morrison, 487 U.S. at 671 n.12). Because the
Statute vests qui fam relators with significant authority to
initiate, conduct, and settle civil FCA litigation on behalf of
the United States, they are “Officers of the United States”
within the Framers’ intended substantive meaning of that
term. As a result, the qui tam provisions violate the
Appointments Clause because they enable relators to appoint
themselves to act as Government officers with broad
prosecutorial authority. Further, as in Ri/ey, the lower court
here “ignores . . . the question that logically follows its
conclusion that relators are not officers: whether non-
officers may prosecute claims owned by the United States.”
Id. at 767 (Smith, J., dissenting). “Supreme Court precedent
makes it plain that the answer to this question is no.” /d. at
768.

2. Take Care Clause, U.S. Const., Art. II, § 3. The
exercise of prosecutorial discretion to enforce the laws of the
United States is an Executive Branch function inherent in the
Take Care Clause. See Buckley, 424 U.S. at 138 (“A lawsuit
is the ultimate remedy for a breach of the law, and it is to the
President, and not to the Congress, that the Constitution
entrusts the responsibility to ‘take Care that the Laws be
faithfully executed.’”). In Morrison v. Olson, 487 U.S. at
696, the Court held that in order to avoid violation of the
Take Care Clause, a statute divesting the Executive Branch
of some measure of prosecutorial discretion must “give the
Executive Branch sufficient control ... to ensure that the
President is able to perform his constitutionally assigned
duties.”

As Petitioners explain, none of the statutory
safeguards which the Morrison majority held gave the

18

Attorney General “sufficient control” over court-appointed
independent counsels, are present in the FCA qui tam relator
provisions. See Pet. at 29. “Qui tam is far more dangerous:
there is simply no way to cage this beast.” Barr Mem. at
211. One highly significant difference with the independent
counsel provisions considered in Morrison, 1s that qui tam
relators are private, self-appointed individuals, who function
as Officers of the United States even though their interests
do not necessarily coincide with those of the Government.
This Court has noted that “[a]s a class of plaintiffs, gui tam
relators are different in kind than the Government. They are
motivated primarily by prospects of monetary reward rather
than the public good.” Hughes Aircraft Co. v. United States
ex rel. Schumer, 520 U.S. 939, 949 (1997) (holding that 1986
FCA Amendments do not apply retroactively).

As a result, gu: tam relators frequently commence
litigation “for the United States Government,” and “in the
name of the Government,” 31 U.S.C. § 3730(b)(1), which
the Government itself, in exercising its Article I
prosecutorial discretion, either would not commence, or
continue to pursue, for any number of reasons, including of
course, lack of ment. Nevertheless, for reasons unrelated to
the “public good,” gui tam relators can vigorously pursue
their statutory “right to conduct the action,” id.
§§ 3730(b)(4)(B), 3730(c)(3), such as by exacting a
substantial monetary settlement from the defendant
(including a tempting 15%—30% bounty for the relator and
his attorney). And if the Government, following
investigation, imtervenes and then seeks dismissal or
settlement, gui tam relators can object, id. §§ 3730(c)(2)(A),
(B), and seek court approval to proceed with prosecution of
the action. See Barr Mem. at 216-220 (discussing the
statute’s adverse impact on the Government’s enforcement
role).

This private FCA enforcement scheme, which
Congress enacted to pressure the Executive Branch because

19

it was dissatisfied with that Branch’s pursuit of defense
contractor fraud during the 1980s, see Pet. at 29-30, has been
repeatedly abused by the very individuals to whom Congress
has entrusted and transferred the Executive Branch’s
prosecutorial discretion. The principal harm to. the
Government, industry, and the public is the pursuit of
frivolous or unmeritorious, and sometimes vexatious, qui
tam suits, especially after the Government (the Department
of Justice and/or Department of Defense or other supposedly
defrauded agency) determines that there has been no
misconduct. See, e.g., Hughes Aircraft Co., 520 U.S. at 943
n.| (noting that the Government ultimately reversed its
preliminary determination that it had been improperly
charged and concluded that the defense contractor defendant
“actually benefited” the Government financially); United
States ex rel. Lindenthal v. General Dynamics Corp., 61 F.3d
1402 (9th Cir. 1995) (affirming dismissal of qui tam suit
against defense contractor where, based in part on trial
testimony of numerous Air Force witnesses, the quality of
defendant’s drawings met its contractual obligations and the
A Force’s expectations). See generally Kovacic, supra at
232 (“That the purchasing agencies or the Department of
Justice regard sucli a suit as ill-conceived does not impede
the initiation and prosecution of such cases by relators.”).

To say the least, unmeritorious gui tam actions
“waste defendants’ and the courts’ resources,” as well as
those of the Justice Department. Statement of Stuart M.
Gerson, Assistant Attorney General, Before the Subcomm.
on Civil and Constitutional Rights of the House Comm. on
the Judiciary, 102d Cong. 20 (1992). Because “{rJelators
who have no interest in the smooth execution of the
Government’s work have a strong dollar stake in alleging
fraud whether or not it exists,’ Barr Mem. at 220.
unwarranted gui fam actions also can have a chilling effect
on the working relationships between Government agencies
and their contractors. See Kovacic, supra at 239 (qui tam

20

provisions are “a serious impediment’). The Tenth Circuit's
expansive interpretation of the statute’s “original source”
jurisdictional requirement only opens the floodgates wider.

Herc, because the Government eventually intervened,
the Tenth Circuit was unconvinced “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. In so concluding, the court
of appeals mistakenly assumed that once the Government
intervenes, the relator has no significant continuing role to
play in the litigation. That is neither true in general nor in
this case, especially since the Government, exercising its
prosecutorial discretion, declined to support certain of
Respondent Stone’s claims, which he continues to pursue on
his own. As indicated above, supra n.6, the lower court,
although purporting to address the circumstances of this
case, made no effort to defend the constitutionality of the qui
fam provisions under the Take Care Clause where the
Government exercises its discretion to support some but not
all of the relator’s claims. Stone’s right under the FCA qui
fam provisions to pursue the very claims which the
Government carefully considered and then declined to
support dramatically highlights the statute’s Article II
infirmities. The Article IL gui tam question is not “clad, so to
speak, in sheep’s clothing . . . this wolf comes as a wolf,”
Morrison, 487 U.S. at 699 (Scalia, J., dissenting), and it
continues to cry out for this Court’s review.

CONCLUSION

The petition for a writ of certiorari should be granted.

21

Respectfully submitted,

Of Counsel: HERBERT L. FENSTER
ROBIN S. CONRAD Counsel of Record
AMAR D. SARWAL LAWRENCE S. EBNER
NATIONAL CHAMBER CORINNE A. FALENCKI
LITIGATION CENTER, INC. MCKENNA LONG &
1615 H Street, N.W. ALDRIDGE LLP
Washington, D.C. 20062 1900 K Street, N.W.
(202) 463-5337 Washington, D.C. 20006

(202) 496-7500
Attorneys for Amicus Curiae
Chamber of Commerce of the
United States of America

July 2006

7 ‘

Feed Oe ey aT
Ay a Bor
TC ae
a ad
re

= m & 4 : 7 : aad ’ = 5 Vi

age ee oe L pa “ »' ae ; ee aE
™ a gpd ets Or OT PL are WW tse Le ater ey a Pe : +
ail) a i he NE gS ed ‘eel a a we :* vy ee Te eee

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0250%3A06. Public record. Not legal advice.