# Opposition Brief — United States ex rel. Totten v. Bombardier Corp.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 2005
- **Citation:** 544 U.S. 1032

## Text

No. 04-1199 ie
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In The PRB 205 |

FFICE OF THE CLE |
Seprome Court of the United Sales °°

.

UNITED STATES OF AMERICA, ex rel. EDWARD TOTTEN,

Petitioner,

BOMBARDIER CORPORATION and ENVIROVAC, INC.,

Respondents.
+

ON PETITION FOR WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS FOR
THE DISTRICT OF COLUMBIA CIRCUIT

+

JOINT BRIEF IN OPPOSITION TO
PETITION FOR WRIT OF CERTIORARI
WITH APPENDIX

¢

Philip Le B. Douglas Randall L. Mitchell
Counsel of Record Counsel of Record
Mark R. Hellerer ADDUCI, DORF, LEHNER,
Eric Fishman MITCHELL & BLACKENSHIP, P.C.
Lisa Fried 150 North Michigan Avenue
PILLSBURY WINTHROP Suite 2130

SHAW PITTMAN LLP Chicago, IL 60601
1540 Broadway (312) 781-2800
New York, NY 10036
(212) 858-1000
Counsel for Respondent Counsel for Respondent
Bombardier Corp. Envirovac, Inc.

THE LEX GROUPP€ @ 1750 K Street, NW @ Suite 475 @ Washington, DC 20006
(202) 955-0001 @ (800) 815-3791 @ Fax: (202) 955-0022 @ www.thelexgroupdc.com

ast

QUESTION PRESENTED

The question presented is whether the United
States Court of Appeals for the District of Columbia
Circuit erred in ruling that the False Claims Act, 31
U.S.C. § 3729 et seq., does not apply to allegedly false
claims for payment submitted by contractors to
Amtrak because they were never “presented to an
officer or employee of the United States for payment or
approval,” as required in the statute.

ii

CORPORATE DISCLOSURE STATEMENT

Respondents submit that the Corporate
Disclosure Statement included in the Petition should be
modified to reflect that Evac International Ltd (the
parent company of Envirovac Inc.) is a wholly-owned
subsidiary of Zodiac International SA, which, in turn,
is a wholly-owned subsidiary of Zodiac SA, a French
public limited company. Zodiac SA is listed on the
Paris Stock Exchange.

lil
TABLE OF CONTENTS
Page
CEPR IIE Br MEEIEIIENT B REEF wasnassoscsasncsnsrsnsnbsncseanensseseaesascnessses i
CORPORATE DISCLOSURE STATEMENT .................. ii
EE Enc hacanisasanssnncesiccosensntsonécvessednncannenss iii
IE SO PAG PORES REED cnsarceseneicacessssavevansccossesnsnusnencees Vv
OPPOSITION TO PETITION FOR A

saan ccciendacniésasnencescnnesennninemaconensies 1
OPINIONS BELOW .......... Sdetsva)endbstetinsnnneniensesiuhieisomosdass 1
a2 ca a Sensiassanhinnenanbaaiivespensasanaties 1
MUN EG BIRT PRES scence ccnnssccecveseransssncennscsnaece 2
REASONS FOR DENYING THE WRIT ........ eee +

1. There is No Conflict With Earlier

Decisions of This Court or Any
I te dsncahcanatcesansiaseRdlancpaceonsantbanesi +
2. Amtrak Is Not the Government................ 6

3. The Circuit Court Decision Merely
Applied The Plain Meaning of the
RIG Leica ciel Gdesdsascnsanspeinicienslaniiissnsduinniasate 8

iV

a. The Plain Language of
§3729 Requires Presentment ......... 8

b. Section 3729(a)(2) Also
Requires Presentment .................. 13

4. The Legislative History of the 1986
Amendments Does Not Address
the Presentment Requirement................. 17

Se OR eaieciccnconinndaaananetisncantianasseniedacppaienineiiaiaeic 19

APPENDIX

TABLE OF AUTHORITIES
Page(s)
CASES
Alaska Dept. of Envtl. Conservation v. Envtl. Protection
Agency,
PO? US. GGT CRG) csessisccastscrionndicasteama tae es 15

Duncan v. Walker,
DIS oh BOF CIE isiircidnthdcncsi ace 10,15

Fed. Energy Regulatory Comm’n v. Martin Exploratory
Memt. Co.,
SE US. TG CE ssicinitnscnininricesticctebitdeaanatataean S.

Lamie v. U.S. Trustee,
SO LESS. Bale CD ivincenssaciiametaates ame 11

Lebron v. Nat'l R.R. Passenger Corp.,
PES US. 55S (ie ccccccicolutheu ann oe 7

Murray & Sorrenson v. United States,
fat BAe 139 Gee Cie, TI iii 5

Rainwater 'v. United States,
Oe SR, Sd COE siciaintictceadescegutslcemie meen 7,8

Ratzlaf v. United States,
TRO US. TI0 C i ccncitceutaeeee 17

Stone v. Immigration and Naturalization Serv.,
788 OS, SG GI visti ccensseneeeeee 15

vi

TRW Inc. v. Andrews,
DIE US TF Cae? sssvicisccssscsestehistesnssiensashabelasameate 10

United States ex rel. Aakhus v. Dyncorp, Inc.,
136 F Sk GO CRT Ce, TBD csseuccosnsssicnsinvnsmsenoniah 16

United States ex rel. Harris v. Bernad,
2/3 F. Sapp. B81 (ODA, Bae vnncsenncscsnstintcnnen 16

United States ex rel. Koch v. Koch Indus., Inc.,
No. 91-CV-763-K, 1999 U.S. Dist. LEXIS 16632
(IN.D. Oude. Sept, BB, BGP) vccsicsonessessenresoninnvensconsen 16

Linited States ex rel. Marcus v. Hess,
S17 US. Sav CRG scsniecncemcanedainael 4,5

United States ex rel. Totten v. Bombardier Corp. and
Envirovac, Inc.,

206 F.3d S42 (D.C. Cit, ZUR) ccccacereconsssscsessene passim

United States ex rel. Totten v. Bombardier Corp. and
Envirovac, Inc.,

380 F.3d 488 (D.C. Cir. 2004) o...cccccccssesssseseee passim

United States v. Azzarelli Constr. Co.,
667 F.20 757 (FERGUS, Tae nccinecnanmnanad 17

United States v. Granderson,
DEL US. FP CEFR) civstisiacessenihabindcinsaeaaaneaa 11

United States v. Intrados/Int’l Mgmt. Group,
265 F. Supp. 20 1 (DD.D.C. FRR) .scsversscenscarsssessnnsne 16

Vii

United States v. Lagerbusch,

361 F.2d 449 (3d Cir. 1966)... cccceccccccccceeeeeeeec 5
STATUTES
EG TMI isc nsscseciacecstecosnincsseciceee os 1
31 U.S.C. § 3729 et PO secicnensistisasissiindbibiesnissiisibapsddghacemeammansencc i
ih 2 ORL EN AR Meta erie Bip os 8,18
i ACE ON aici chica alae ae 3
FE DB GTI sesivinsisio eesti passim
31 U.S.C. § 3729(a)(2) coeccccccccceeeeeeeeeecccc 13, 14, 15, 16
Pe Es I asctesnissstsmennnctnchoscn tube hn 9,10, 14
Oe en I I ictshdiniinnashecnitecteg a tno PRES 7
i |, RR ETRE Se ae 6
H.R. Rep. 97-651 (1982),
reprinted at 1982 U.S.C.C.A.N. 1895... 13
S. Rep. No. 99-345 (1986),
reprinted at 1986 U.S.C.C.A.N. 5266................ ROY © 4
RULE

I Me I cecscniniesicncrntainpeedeeied gidcdiclonn is 1

OPPOSITION TO PETITION
FOR A WRIT OF CERTIORARI

Respondents respectfully oppose the petition for a writ
of certiorari to review the judgment of the United States Court
of Appeals for the District of Columbia Circuit in this case.

OPINIONS BELOW

In addition to Petitioner’s statement of opinions below,
the Court's attention is also directed to the earlier decision in
this case by the United States Court of Appeals for the District
of Columbia Circuit, 286 F.3d 542 (D.C. Cir. 2002), reproduced
at App. A, in which the Circuit Court granted Petitioner leave
to replead. (“Totten I”).

JURISDICTION

Respondents do not contest this Court's jurisdiction to
review this petition under 28 U.S.C. § 1254(a). However,
Respondents assert that Petitioner has misstated the portion of
Supreme Court Rule 10(c) upon which he relies to seek a writ
of certiorari. Contrary to Petitioner’s statement, Supreme
Court Rule 10(c) says nothing about basing certiorari on an
alleged conflict with Congressional intent. Because, as set forth
below, the circuit court’s decision does not conflict with any
decisions of this Court or other circuits, a grant of certiorari is
not appropriate in this case.

STATEMENT OF THE CASE

This case is a gui tam action under the False Claims Act
arising out of two contracts between the National Railroad
Passenger Corporation (“Amtrak”) and Bombardier
Corporation (“Bombardier”) to purchase passenger rail cars.
Petitioner, a discharged employee of Amtrak, filed a complai.it
on March 18, 1998, alleging that Respondents Bombardier and
its subcontractor, Envirovac, Inc. (“Envirovac”), delivered
passenger train toilets that failed to meet contract specifications.
Essentially, Petitioner has alleged that Respondents violated
the False Claims Act (“FCA”) by falsely certifying to Amtrak
that the equipment complied with contract specifications.

This case has a lengthy history. The original complaint
was dismissed at the district court, but the circuit court
reversed and granted leave to replead. United States ex rel.
Totten v. Bombardier Corp. and Envirovac, Inc., 286 F.3d 542 (D.C.
Cir. 2002) (“Totten I”). The amended complaint was also
dismissed by the district court and the dismissal was affirmed
by the circuit court. United States ex rel. Totten v. Bombardier Corp.
and Envirovac, Inc., 380 F.3d 488 (D.C. Cir. 2004) (“Totten II”).
Subsequently, the circuit court denied en banc review. Id.
Although it has appeared in this case as an amicus, the
government has consistently declined to intervene as a party,
leaving the qui tam Petitioner to pursue the action on his own.

The issue in this case is whether liability under the FCA
can be established where no false or fraudulent claim for
payment or approval has knowingly been presented or caused

to be presented to an officer or employee of the United States
Government. 31 U.S.C. § 3729(a).

In all the years this case was pending below, Petitioner
never alleged that Respondents presented, or caused to be
presented, any false claims to any entity other than Amtrak,
much less to an officer or employee of the United States
Government. Instead, Petitioner has merely alleged that
Amtrak opted to use some federal funds to repay principal and
interest on loans obtained to finance purchase of the trains.
Totten Pet., at 3. Petitioner, nevertheless, asks this Court to
ignore the plain language of the FCA requiring federal
presentment, based on a contorted interpretation of the statute
and a misplaced reliance on legislative history.

The circuit court’s ruling refusing to write federal
presentment out of the FCA is fully consistent with the prior
decisions of this Court and of other circuit courts. Moreover, it
simply interprets the statute in accordance with its plain
meaning. Any suggestion that this ruling limits the
applicability of the FCA to federal grantees is unfounded. To
the ext:nt that a federal agency seeks to apply FCA coverage to
a grantee of federal funds, the agency need only incorporate
federal presentment requirements in the grant programs and
contracts.

REASONS FOR DENYING THE WRIT

i, There is No Conflict With Earlier Decisions of This
Court or Any Circuit Court

The District of Columbia Circuit Court’s decision does
not conflict with any precedents of this Court, or with those of
any other circuit court. Recognizing this flaw, Petitioner
instead tries to argue that such a conflict exists because a few
courts interpreted an “earlier version” of the FCA (prior to the
1986 amendments) “broadly to include claims presented to
grantees and intermediaries.” Totten Pet., at 3-9. He then
suggests that Congress must have adopted this construction in
enacting the 1986 amendments. But, in cobbling his argument,
Petitioner pointedly ignores the critical element present in each
of those earlier cases, namely, the claim made upon the grantee
was ultimately presented to the federal government for
payment, approval or reimbursement. Thus, his petition must
fail.

In United States ex rel. Marcus v. Hess, 317 U.S. 537, 543
(1943) (cited at Totten Pet., at 4-8), this Court addressed issues
related to payments by local governments to contractors on

—federal P.W.A. projects. The Marcus Court explicitly

recognized that federal presentment was involved when it
stated it was a prerequisite to payment that estimates be “filed,
transmitted to, and approved by, the P.W.A. authorities.” Id.
As the Marcus Court went on to note, “While payment itself, in
the sense of the direct transferring of checks, was done in the
name of local authorities, monthly estimates for payment were
submitted by the respondents to the local sponsors on [federal
government] forms which showed the government's

participation in the work and called attention to other federal
statutes prohibiting fraudulent claims.” Indeed, “[t]he
government's money would never have been placed in the joint
fund for payment to respondents had its agents known the bids
were collusive.” Id., 317 U.S. at 543.

Underscoring the distinction between Marcus and the
present case, the Totten IJ majority cited Marcus as an example
of how the government could have structured its alleged
funding to Amtrak, in order to place federally-funded
payments to Amtrak within the FCA’s reach. See Totten II, 380
F.3d at 502, n.9 (“[T]he Government is of course free to
structure its grants in such a way as to require presentment and
thereby trigger coverage under the False Claims Act, and often
does so.”) (citing Marcus, internal citation omitted).

Nor do the two Circuit Court decisions cited by
Petitioner conflict with the ruling below. See Murray &
Sorrenson v. United States, 207 F.2d 119, 121 (1st Cir. 1953)
(supplier’s inflated bids were, in turn, submitted by the
contractor “to an officer of the United States Navy” for
approval - and, upon the order being filled by the supplier,
“the Navy Department paid the contractor and the contractor
paid the supplier”); United States v. Lagerbusch, 361 F.2d 449, 449
(Sd Cir. 1966) (private contractor was ope-ating a United States
government installation on a cost plus contract under which
the government paid or reimbursed the contractor for all
operating costs, including the sums fraudulently obtained by
the defendant).

In short, the cited authorities are perfectly consistent
with the ruling below. In each, FCA liability was found where
the federal government paid, approved or reimbursed the
claim after presentment to an officer or employee of the federal
government.

To the extent that Congress should be viewed to have
adopted any court's pre-1986 construction of the FCA when it
passed the 1986 Amendments, Respondents should prevail:
nothing about pre-1986 interpretations of the FCA is
inconsistent with the ruling by the circuit court in this case.
Thus, no basis exists to grant the petition for review.

, a Amtrak Is Not the Government

Petitioner next contends that even if presentment is
required, making a false claim upon Amtrak is tantamount to
making a claim upon an officer or employee of the federal
government. Totten Pet., at 9-13. Petitioner states that before
December 1997, Amtrak was a mixed-ownership government
corporation and that, since that time, it has received substantial
federal subsidies. Therefore, he argues that any claim
presented to Amtrak should be considered a claim to the
United States.

This point has twice been rejected by the Circuit Court
below based on the very statute creating Amtrak. See 49 U.S.C.
§ 24301(a)(3). As stated in Totten I, “[s]ince its inception, the
statutes governing Amtrak have indicated that the railroad
is... not...a department, agency, or instrumentality of the
federal government.” 286 F.3d at 544 (citations and internal

4

quotes omitted). “This status continues to the present day.” Id.
(citing 49 U.S.C. § 24301(a)). Moreover, all the judges on Totten
I] agreed that Amtrak is not “the government” for FCA
purposes. See Totten II, 380 F.3d at 481 and 498 (“We are
apparently in agreement with the dissent thet Amtrak is not
‘the Government’ for False Claims Act purposes.”).

Petitioner’s argument is based on an erroneous reading
of Lebron v. Nat'l R.R. Passenger Corp., 513 U.S. 374 (1995).
Lebron held only that, for purposes of determining Amtrak’s
status with respect to the constitutional rights of citizens
affected by its actions, the courts may make a_ final
determination as to Amtrak’s status as a governmental entity.
Where, as here, no constitutional rights are implicated, Lebron’s
holding does not apply. In fact, Lebron actually confirms that
the statutes governing Amtrak - which provide that Amtrak is
not a department, agency or instrumentality of the federal
government - are dispositive of statutory claims: “Section 541
is assuredly dispositive of Amtrak’s status as a Government
entity for purposes of matters that are within Congress’s
control.” As Totten II held, Petitioner “offers no reason, and we
can think of none, why False Claims Act coverage is not a
matter “within Congress’s control’.” Totten II, 380 F.3d at 492.

Petitioner’s remaining significant authority, Rainwater v.
United States, 356 US. 590 (1958), is equally inapplicable.
Rainwater held that presentment of a claim to the Commodity
Credit Corporation (the “CCC”) was a claim against the United
States Government. But, the CCC was “an agency and
instrumentality of the United States, within the Department of
Agriculture, subject to the general supervision and direction of

the Secretary of Agriculture” (Id. at 591) (internal quotations
and citations omitted), dispositive facts that Petitioner fails to
mention. Moreover, “[a]ll of its officers and other personnel
[were] employees of the Department of Agriculture.” Id.
Accordingly, the unremarkable holding in Rainwater - that
presentment of a claim to a government agency, which is
comprised entirely of government employees, suffices under
the FCA - has no application here.

3. The Circuit Court Decision Merely Applied The Plain
Meaning of the Statute

a. The Plain Language of § 3729 Requires
Presentment

As this Court has repeatedly stated, “[t]he plain
meaning of [a] statute decides the issue presented.” Fed. Energy
Regulatory Comm'n v. Martin Exploratory Mgmt. Co., 486 U.S. 204,
209 (1988). Here, the relevant liability section of the FCA
requires that a person “knowingly present[], or cause[] to be
presented, to an officer or entployee of the United States
Government ...a false or fraudulent claim for payment or
approval.” 31 US. C. § 3729(a)(1) (emphasis added). Petitioner
nowhere alleges in his Amended Complaint that a claim was,
in fact, presented to “an officer or employee of the United
States Government.” Perforce, as the Circuit Court recognized,
he has failed to state a claim.

Instead, Petitioner contends that presentment to a
government officer or employee is not always required. He
premises this contention upon his interpretation of the

definition (rather than the liability) section of the Act, which
provides that a “claim” includes any demand for money made
to a grantee “if the United States Government provides any
portion of the money” or “if the Government will reimburse
such . . . grantee.” 31 U.S.C. § 3729(c) (2005). Since this
definition of the word “claim” “imposes no resubmission
requirement on recipients of federal funds”, he contends that
presentment is unnecessary when a false claim is made upon a
grantee.

This distorted interpretation would write the clear
language of Section 3729(a)(1), the liability section, entirely out of
the Act. Yet, that section’s presentment requirement is
unambiguous:

Liability for certain acts -- Any persin who
knowingly presents, or causes to be presented,
to an officer or employee of the United States
Government...a false or fraudulent claim for
payment...is liable to the United States
Government ....

31 U.S.C. § 3729(a)(1) (2005).

Moreover, the “claim” definition can be construed
harmoniously with the presentment requirement. Even if a
claim is in the first instance presented to a grantee, it is only
actionable if that claim is ultimately presented to a federal
official. This interpretation is fully in accord with the “cardinal
principle of statutory construction that a statute ought, upon
the whole, to be so construed that, if it can be prevented, no

10

clause, sentence, or word shall be superfluous, void or
insignificant.” TRW Inc. v. Andrews, 534 U.S. 19, 31 (2001)
(internal quotations and citations omitted). See also Duncan v.
Walker, 533 U.S. 167, 174 (2001).

The Totten II majority agreed:

It is quite easy to square the language of
Section 3729(c) - including both “if” clauses -
with the presentment requirement in Section
3729(a)(1).....Nothing about the language of
subsection (c) requires ignoring that of
subsection (a)(1) to make sense of the statute.
Indeed, Petitioner and the United States never
connect the dots in their argument based on
subsection (c). Whatever that argument may
show about what constitutes a “claim,” it does
not respond to the plain requirement of
subsection (a)(1) that, to be actionable under
the False Claims Act, any such claim must be
presented to an officer or employee of the
United States Government.

Totten II, 380 F.3d at 493 (footnote omitted). This reasoning
confirms that of Judge Randolph, who stated in his concurring
opinion in Totten I, “[i]t is true that § 3729(c) defines ‘claim’ to
include claims submitted to federal grantees. But it is equally
true that no matter how ‘claim’ is defined, subsection (a)(1)
requires the alleged false claimant to present it (or cause it to be
presented) to a federal officer or employee.” Totten I, 286 F.3d
at 553-554. Simply put, if Congress wanted to eliminate the

11

government presentment requirement, it could easily have
amended § 3729(a)(1) “to provide that claims be presented to
the Government or a grantee or recipient of Government funds.”
Totten II, 380 F.3d at 496 (emphasis in original). Congress did
not do so, and Petitioner’s tortured construction should thus be
rejected. |

Furthermore, any argument that only an unrestricted
reading of the “claim” definition in subsection (c) will protect
government funds from fraud, must be rejected. As this Court
has stated, “It is beyond our province to rescue Congress from
its drafting errors, and to provide for what we might think ... is
the preferred result.” Lamie v. U.S. Trustee, 540 U.S. 526, 542
(2004) (quoting United States v. Granderson, 511 U.S. 39, 68 (1994)
(Kennedy, J., concurring)) (ellipses in Lamie). The Totten II
majority stated that there are good reasons for this rule,
because a court's interpretation can often create new problems.
It then cited three complications that “could flow from the
proposed correction.” Totten II, 380 F.3d at 496.

First, as Judge Randolph had noted previously in Totten
I: “[E]xtending False Claims Act liability here seems to result
in quadruple liability for false claimants: a grantee could
presumably bring suit and obtain a recovery for itself, in
addition to the treble damages the Government and the relator
divvy up under the Act.” Totten II, 380 F.3d at 496.

Second, authorizing suit on behalf of any entity to which a
claim was not presented raises complicated questions in
applying the statute’s scienter requirement: if the claimant has
told the grantee pertinent facts that would, in the absence of

4

,

12

such disclosure, make a claim fraudulent, it seems that the
claimant has not “knowingly” presented a false claim to the
grantee. In such a case, it is unclear how to apply the
"knowingly presents" element when the government or a
relator brings suit for claims made to the grantee, if there is no
longer any requirement of presentment to the government. Id.
This would raise an additional set of issues for court analysis
and interpretation.

Third, a liberalized “effective” presentment approach
that did not require actual presentment would make the
potential reach of the Act almost boundless: for example,
liability could attach for any false claim made to any college or
university, so long as the institution has received federal grants,
as most of them do. Such an imprecise line of demarcation
could be a prescription for more collateral litigation under the
FCA. Id.

The FCA eliminates these potential complications
through the presentment requirement. When presentment
occurs, the government retains an ongoing interest in
controlling the use of the disbursed federal funds. In that case,
it is sensible to conclude that money in the hands of a grantee is
still government property for purposes of the FCA. By contrast,
where no government presentment occurs, the government's
interest in the disbursed funds is not sufficient to merit FCA
protection. Here, absent presentment to the government,
disputes between Amtrak and other private entities properly
should be addressed by ordinary contract and tort law, which
provides ample remedies for any alleged claims.

nil

13

It is not an exaggeration to say that, in the absence of a
presentment requirement, any person or entity involved in any
run-of-the-mill dispute with one of the millions of recipients of
federal funds could find itself facing the onerous damages and
penalties imposed by the FCA. If an FCA claim is viable in
such a circumstance - where there is no claim presentment and
where one need only allege that funds originated with the
federal government - qui tam relators will surely attempt to
capitalize on Petitioner's attempt to “federalize” ordinary
contract and tort disputes.

b. Section 3729(a)(2) Also Requires Presentment

Petitioner further tries to argue that his action can
proceed under § 3729(a)(2), which he interprets not to require
any claim presentation to a federal government. official. This
argument is based on the position adopted by the dissent in
Totten I]. Totten II, 380 F.3d at 504.

Prior to 1982, presentment to the government was
expressly required. In 1982, the statute was amended simply to
divide a single cumbersome sentence in two - §§ 3729(a)(1)
and (a)(2). The legislative history states that the purpose of the
1982 codification was only “to restate in comprehensive form,
without substantive change, certain general and permanent laws
related to money and finance and to enact those laws as Title 31,
United States Code.” H.R. Rep. 97-651 (1982), reprinted at 1982
U.S.C.C.A.N. 1895. Therefore, the separation of what are now
subsections (a)(1) and (a)(2) is of no consequence, and the
presentment requirement of (a)(1) must be read to apply with
equal force to (a)(2).

14

In the 1986 amendments to the statute, when Congress
added the definition of “claim” to subsection (c), it also inserted
the phrase “by the Government” to subsection (a)(2) so that it
read:

Any person who knowingly makes, uses, or
causes to be made or used, a false record or
statement to get a false or fraudulent claim
paid or approved by the Government...is
liable....

As the circuit court majority held, the addition of this
phrase confirms that (a)(2) also requires presentment.

The intended effect of adding “by the
Government” [to Section 3729(a)(2) in 1986] at
the same time as subsection (c) is fairly obvious:
Congress was referring back to the
presentment requirement of Section 3729(a)(1).
And in so doing, Congress was reinforcing -
rather than abandoning - the distinction
between the Government and its grantees that
might otherwise have been blurred by the
addition of Section 3729(c).

Totten II, 380 F.3d at 499. The Totten II majority reached this
decision after an exhaustive review of the provision’s evolution.
It began by noting that “[t]he parallel structure of (a)(1) and
(a)(2)” is “no accident,” since, prior to 1982, both provisions
“were contained in one unwieldy sentence that had survived,
with only minor modifications, since the Act’s enactment in

Se ee

ee eS ae ae. Sh

io

1863.” Id., at 499-500. After tracking Congress’ revisions of the
statute over the past 100 years, the Court concluded, “The
present Section 3729(a)(2), therefore, is the direct descendant of
a clause that could only be read in conjunction with what is
now Section 3729(a)(1).”. The majority added that “[t]he
proposition that subsection (a)(2) harkens back to (a)(1), and
that the latter requires presentment, is supported in scholarly
commentary on the False Claims Act.” It then observed, “[t]he
dissent’s contrary conclusion - that subsection (a)(2) does not
require any presentment that may be required under
subsection (a)(1) - has tellingly little support.” Id., at 501.

Words added to a statute must be presumed to have
meaning. Stone v. Immigration and Naturalization Serv., 514 US.
386, 397 (1995) Further, a Court must avoid any construction
that renders words in a statute meaningless. Duncan, 533 U.S.
at 174; Alaska Dept. of Envtl. Conservation v. Envtl. Protection
Agency, 540 U.S. 461, 489, n.13 (2004). Here, no construction
favoring removal of the presentment requirement can be
squared with the addition of the phrase “by the Government”
and would render that phrase superfluous.

Furthermore, Petitioner’s reading of subsection (a)(2) to
avoid the presentment requirement would render (a)(1) largely
meaningless. Allowing (a)(2) to swallow (a)(1) is problematic
because it seems clear that (a)(2) is designed to be
complementary to (a)(1) and to prevent those who only make
false records or statements from escaping liability solely on the
grounds that they did not themselves present the claim to the
government. Totten II, 380 F.3d at 501.

16

Courts have uniformly recognized that subsection (a)(2)
requires presentment. In United States ex rel. Aakhus v. Dyncorp,
Inc., 136 F.3d 676 (10th Cir. 1998), for instance, the Tenth Circuit
held that “[t]o establish a claim under (a)(2), a person must
demonstrate that (1) a ‘claim’ was presented to the government by
the defendant, or the defendant ‘caused’ a third party to submit
the ‘claim,’ (2) the claim was ‘false or fraudulent,’ (3) the
defendant presented the claim knowing it was ‘false or
fraudulent, and (4) the defendant made or used a false
statement which the defendant knew to be false, and which
was causally connected to the false claim.” Id. at 682 (emphasis

added).!

In short, as the evolution and language of the FCA
makes clear, the false record provision can only be triggered
where there is presentment of a false claim to the government
for payment or approval.

1 Similarly, district courts have consistently held that a claim under the
false record provision requires government presentment. See United
States ex rel. Harris v. Bernad, 275 F. Supp. 2d 1, 6 (D.D.C. 2003) (holding
that § 3729(a)(2) requires “that the defendant knowingly created a false
record, used this record to create a claim, then submitted the claim (not
the record) to the government”); United States v. Intrados/Int’l Mgmt. Group,
265 F. Supp. 2d 1, 8 (D.D.C. 2002) (holding that liability under (a)(2)
would attach if defendant used false salary information “in a calculation
and then incorporat[ed] [the resulting number] in an invoice, and
subsequently submitt[ed] the invoice to the government for
reimbursement”); See also United States ex rel. Koch v. Koch Indus., Inc., No.
91-CV-763-K, 1999 U.S. Dist. LEXIS 16632, at * 13 (N.D. Okla. Sept. 28,
1999) (quoting the (a)(2) elements set forth in the Aakhus decision).

ae

17

4. The Legislative History of the 1986 Amendments Does
Not Address the Presentment Requirement

Petitioner places great reliance on the legislative history
of the 1986 amendments to the FCA. As the Totten II majority
held, however, “resort to legislative history is not appropriate
in construing plain statutory language. When the statute’s
language is plain, the sole function of the courts - at least
where the disposition required by the text is not absurd - is to
enforce it according to its terms.” Totten II, 380 F.3d at 494
(citations omitted); Ratzlaf v. United States, 510 U.S. 135, 147-8
(1994) (courts should not “resort to legislative history to cloud a
statutory text that is clear”). As the Totten IJ majority held, the
statutory language in this case is plain and resort to the
legislative history unwarranted.

That said, the legislative history, in this instance, does
not significantly advance Petitioner’s cause. His reliance on the
stated legislative intent to “overrule Azzarelli and similar cases
which have limited the ability of the United States to use the act
to reach fraud perpetrated on federal grantees” (quoting S. Rep.
No. 99-345, at 22 (1986), reprinted at 1986 U.S.C.C.A.N. 5266,
9287) is misplaced. In United States v. Azzarelli Constr. Co., 647
F.2d 757 (7th Cir. 1981), the court held that because the federal
funds at issue were part of a “fixed and determined yearly
contribution” rather than an “open-ended federal expenditure
program,” the FCA did not apply. Id. at 761. In amending the
FCA to overrule that decision, Congress sought to ensure that
the fixed nature of a federal grant would be no bar to a
claimant's liability. Nothing about that stated intention is
inconsistent with the presentment requirement. In fact,
Azzarelli itself involved the presentment of false claims to the

18

federal government. The payment program at issue clearly
required the state to present to the government claims for
reimbursement after it paid the contractor’s fraudulent claims.
Totten II 380 F.3d at 495.

Perhaps the most important aspect of the legislative
history of the 1986 amendments, however, is what Congress
did not say. The liability provision of the Act is short and
contains only one basic requirement: presentment of a false
claim to an officer or employee of the federal government. If
Congress intended to rewrite that provision, surely it would
have expressly said so; it did not. The absence of any such
statement undermines the argument that Congress intended to
remove the presentment requirement in § 3729. Indeed,

if the overriding intent of Congress were in fact
to delete the requirement that claims be
presented to a Government officer or employee,
Congress could readily have done just that -
amend subsection (a)(1) to provide that claims
be presented to the Government or a grantee or
recipient of Government funds. But Congress did
not touch (a)(1) at all in 1986. Congress ~
proceeded quite elliptically if its intent were to
eliminate the requirement of presentment to
the Government in the case of claims against
grantees.

Totten II, 380 F.3d at 495-6 (emphasis in original). As noted
above, “the Government is of course free to structure its grants
in such a way as to require presentment and thereby trigger

19

coverage under the False Claims Act, and often does so.” Id., at
502, n.9.

CONCLUSION

For the foregoing reasons, Respondents ask this Court to
deny the Petition for A Writ of Certiorari.

Respectfully submitted,

/s/ Philip Le B. Douglas
Philip Le B. Douglas
Mark R. Hellerer
Eric Fishman
Lisa Fried
Pillsbury Winthrop
Shaw Pittman LLP
1540 Broadway
New York, New York 10036
Telephone: (212) 858-1000

Attorneys for Respondent Bombardier

/s/ Randall L. Mitchell

Randall L. Mitchell

Adduci, Dorf, Lehner,
Mitchell & Blackenship, P.C.

150 North Michigan Avenue

Suite 2130

Chicago, Illinois 60601

Telephone: (312) 781-2800

Attorneys for Respondent Envirovac

APPENDIX

TABLE OF CONTENTS
Appendix to Petition

Page

United States ex rel. Totten v. Bombardier Corp. and
Envirovac, Inc.,

286 F.3d 542 (D.C. Cir. 2002) ....ccccccsssssssssesssssseen Al

Al

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued March 4, 2002 Decided April 16, 2002
No. 01-7071

United States of America, ex rel. Edward L. Totten,
Appellant

V.

Bombardier Corporation and Envirovac, Inc.,
Appellees

Appeal from the United States District Court
for the District of Columbia
(No. 98cv00657)

H. Vincent McKnight Jr. argued the cause for
appellant. With him on the briefs was Peter J.
Vangsnes.

Thomas M. Bondy, Attorney, U.S. Department of
Justice, argued the cause as amicus curiae supporting
appellant. With him on the brief were Roscoe C.
Howard Jr., United States Attorney, Douglas N. Letter,
Litigation Counsel, United States Department of
Justice, and Colin C. Carriere, Counsel, National
Railroad Passenger Corporation.

A2

Mark R. Hellerer argued the cause and filed the brief
for appellee Bombardier Corporation. Donald A. Carr
entered an appearance.

Paul E. Lehner and Randall L. Mitchell were on the
brief for appellee Envirovac, Inc. Barbara Van Gelder
and Scott M. McCaleb entered appearances.

Before: Edwards and Randolph, Circuit Judges, and
Williams, Senior Circuit Judge.

Opinion for the court filed by Circuit Judge Edwards.
Concurring opinion filed by Circuit Judge Randolph.

Edwards, Circuit Judge: Suspecting that his
employer, the National Railroad Passenger
Corporation ("Amtrak") was being defrauded by two
companies with whom it had contract-ed to supply
new rail cars with improved toilet systems, Edward
Totten brought an action against these companies
under the False Claims Act ("FCA"), 31 U.S.C. §§ 3729-
3733 (1994). The District Court dismissed his suit,
holding that, pursuant to a recent amendment to
Amtrak's governing statute, the FCA could not be
invoked with respect to federal money invested in the
railroad. Totten now appeals this decision, and in so
doing presents us with an issue of first impression
regarding the extent to which doing business with
Amtrak immunizes contractors from FCA liability.

In 1997, Congress enacted legislation which stated,
in part, that Amtrak "shall not be subject to title 31."
See Amtrak Reform and Accountability Act of 1997,

ee ee ee ee ee

A3

Pub. L. No. 105-134, § 415(d), 111 Stat. 2570 (Dec. 2,
1997) ("the Reform Act"), codified at 49 US.C.A. §
24301(a)(3) (2001). Because the FCA is included in title
31 of the U.S. Code, the District Court concluded that a
suit by Totten against contractors doing business with
the railroad would impermissibly make Amtrak
"subject to" the FCA. We disagree. Instead, we hold
that the Reform Act erects no per se bar preventing
individuals from bringing FCA actions against those
who make false or fraudulent claims implicating the
federal funds invested in Amtrak. Neither the text nor
the legislative history of § 24301(a)(3) compels a
blanket liability exception for businesses serving
Amtrak.

Accordingly, we reverse the judgment of the District
Court and remand the case for further proceedings.
On remand, Totten may amend his complaint, which
presently is inadequate, in order to state a proper claim
for relief under the FCA. The District Court indicated
that it would have per-mitted such an amendment had
it not interpreted the Reform Act as posing an
insurmountable obstacle to Totten's suit. We agree that
an opportunity to amend is permissible and
appropriate.

In amending his complaint, Totten must state with
particularity the circumstances surrounding the
defendants' allegediy false claims, as required by Rule
9(b) of the Federal Rules of Civil Procedure. He must
also aver that the defendants actually submitted false
demands for payment, rather than merely non-
conforming goods. That said, we express no view on
the question left open by this court in United States ex

A4

rel. Yesudian v. Howard University, 153 F.3d 731, 737-39
(D.C. Cir. 1998), concerning the relationship between
subsections (a)(1) and (c) of 31 U.S.C. § 3729. instead,
we leave it to the District Court to determine, should
the issue arise on remand, whether an FCA plaintiff
may prevail against a defendant who submits a false
"claim" to Amtrak, as that term is defined in § 3729(c),
without evidence that the claim was ever submitted (or
resubmitted) to the federal government. We will not
venture to offer an answer to this difficult legal
question on the record currently before us.

I. BACKGROUND

Congress created Amtrak in 1971 in order to stave
off the threatened extinction of passenger rail service in
the United States. See Rail Passenger Service Act of
1970, Public Law No. 91-518, 84 Stat. 1327 (Oct. 30,
1970); Nat'l R.R. Passenger Corp. v. Atchison, Topeka &
Santa Fe Ry. Co., 470 U.S. 451, 453-55 (1985). Since its
inception, the statutes governing Amtrak have
indicated that the railroad is to be managed ‘as a for-
profit corporation, and not as a "department, agency, or
instrumentality" of the federal government. See
generally Lebron v. Nat'l R.R. Passenger Corp., 513 US.
374, 383-86 (1994). This status continues to the present
day. See 49 U.S.C.A. § 24301(a). As such, the railroad
is generally exempt from those "statutes that impose
obligations or confer powers upon Government
entities." Lebron, 513 U.S. at 392 (holding that Amtrak
is nevertheless subject to the constraints of the
Constitution).

AS

Until 1997, Amtrak was formally classified as a
"mixed-ownership Government corporation," 31 U.S.C.
§ 9101(2)(A) (1983), and was therefore bound by the
rules that federal law imposes on such entities. See
Government Corporation Control Act, 31 U.S.C. §§
9101-9109 ("GCCA"). That year, concerned that these
and other restrictions were jeopardizing Amtrak's
financial viability, Congress enacted the Reform Act in
order to increase the railroad's managerial flexibility
and improve its economic prospects. See S. Rep. No.
105-85, at 1 (1997) ("In order to achieve operating self-
sufficiency, the bill is designed to enable Amtrak to
increase efficiencies, reduce costs, and operate as much
like a private business as possible."). To these ends,
while Amtrak was provided with an influx of federal
dollars -- appropriations totaling $5.2 billion over the
1998-2002 period -- Congress simultaneously sought to
alter the railroad's legal status as a recipient of that
money.

It did so in two ways that are significant for the
present appeal. First, the Reform Act amended the
GCCA to remove Amtrak from the list of mixed-
ownership corporations. See Pub. L. No. 105-134, §
415(d)(2). This change freed the railroad from the
requirements that bind companies so designated, such
as the submission of budget reports to Congress, 31
U.S.C. § 9103, and annual government audits, 31 U.S.C.
§ 9105. Relatedly, the Act specifically amended 49
U.S.C. § 24301(a)(3) to provide that Amtrak "shall not
be subject to title 31." See Pub. L. No. 105-134, §
415(d)(1). These amendments do not figure
prominently in the legislative history of the Reform
Act. Indeed, the only specific reference to this section

A6é

of the bill notes tersely that it "removes Amtrak from
the Government Corporations Act." H.R. Rep. No. 105
251, at 34 (1997).

Certainly, neither the statutory text nor its history
makes any mention of the False Claims Act. Yet, along
with the rules regarding government corporations, that
statute is housed in title 31. And the present case calls
upon us to decide the extent to which this provision of
the Reform Act narrowed the reach of the FCA as it
relates to Amtrak. This is an issue of first impression.

The dispute giving rise to this case began when
Amtrak contracted with two private companies,
Bombardier Corporation and Envirovac, Inc. ("the
Contractors"), to supply rail cars with new toilet
systems for its trains. Bombardier makes the cars and
Envirovac makes the toilets. Specifications for the
toilet systems were incorporated into Amtrak's
contracts with the Contractors. On March 16, 1998,
Totten, a former Amtrak employee, filed a suit against
the Contractors under the FCA, alleging that they had
supplied unsuitable parts that did not meet the
contractual specifications. Totten's complaint asserted
that these noncompliant toilets were so defective that
they endangered the health of Amtrak's passengers
and employees. Totten further averred that the
Contractors knew of these defects, yet delivered the
cars anyway in order to obtain payment under their
contracts.

In order to advance its purpose of protecting federal
funds from fraud, the False Claims Act allows a private
individual such as Totten (known as the relator) to

—
a

A7

bring a qui tam action "in the name of the
Government," and by that means to share in the
ultimate recovery. See 31 U.S.C. § 3730(b); see generaily
Vermont Agency of Natural Res. v. United States ex rel.
Stevens, 529 U.S. 765, 768-70 (2000). The statute's qui
tam provision is a powerful tool that augments the
government's limited enforcement resources by
creating a strong financial incentive for private citizens
to guard against efforts to defraud the public fisc. See
Yesudian, 153 F.3d at 736. Indeed, an FCA plaintiff can
realize a substantial recovery, as the statute imposes
both treble damages and a civil penalty of up to $10,000
on any person who, inter alia, "knowingly presents, or
causes to be presented, to an officer or employee of the
United States Government ... a false or fraudulent claim
for payment or approval." 31 U.S.C. § 3729(a)(1).

The language of § 3729(a)(1) suggests that the
alleged false claim must have been presented to the
federal government itself. Section 3729(c), however,
defines "claim" quite broadly to include:

any request or demand, whether
under a contract or otherwise, for money
or property which is made to a
contractor, grantee, or other recipient if
the United States Government provides
any portion of the money or property
which is requested or demanded, or if the
Government will reimburse — such
contractor, grantee, or other recipient for
any portion of the money or property
which is requested or demanded.

A8

Neither this court nor the Supreme Court has
definitively explicated the complex relationship
between the definition clause in § 3729(c) and the
presentment clause in § 3729(a)(1). Instead, we have
noted, but declined to answer, the question of whether
an FCA plaintiff can prevail by proving only that a false
claim was submitted to a federal grantee (such as
Amtrak), as defined in subsection (c), without further
demonstrating that the claim was submitted (or
resubmitted) to the federal government, as suggested
by the text of (a)(1). See Yesudian, 153 F.3d at 737-39.

The District Court did not face this question.
Rather, the court relied on different grounds in
rejecting Totten's complaint. See United States ex rel.
Totten v. Bombardier Corp., 139 F. Supp.2d 50, 52 & n.1
(D.D.C. 2001). First, the District Court held that,
regardless of whether § 3729(a)(1) requires a showing
that claims were presented to the United States itself,
Totten's complaint failed because it did not allege that
the Contractors presented "any request or demand ...
for money or property" to Amtrak. Rather, the
complaint merely asserts that defendants delivered
goods to the railroad that did not meet the
specifications of its contracts. Second, the District
Court found that the complaint makes no
representations regarding Amtrak's status as a
recipient of federal money, either in general or in
connection with the specific projects at issue in this
case. Therefore, even if the Contractors had actually
presented demands for payment to Amtrak, the
complaint gives no indication as to how such demands
would be "claim[s]" under the terms of subsection (c). .
Third, the District Court pointed out that Totten's

AY

complaint does not state the time, place, and content of
defendants’ alleged false statements, as required by
Rule 9(b). See Fed. R. Civ. P. 9(b) ("the circumstances
constituting fraud or mistake shall be stated with
particularity").

The District Court noted that ordinarily it would
have allowed a plaintiff to cure such pleading flaws by
amendment, but concluded that such a remedy would
have been futile in Totten's case because his suit was
doomed as a matter of law. See Bombardier, 139 F.
Supp. 2d at 52 n.1. Specifically, the court held that
Amtrak's special legal status rendered its contractors
totally immune from liability under the FCA,
regardless of how the case was pleaded. According to
the District Court, the purpose of the Reform Act was
to "negate the normal repercussions of government
funding" as it related to Amtrak. Id. at 54. Among
these repercussions is potential FCA liability for those
entities receiving, through contracts with Amtrak, a
share of the federal money invested in the railroad.
The District Court thus held that the phrase "not
subject to title 31" in 49 U.S.C.A. § 24301(a)(3) was
intended to prevent "Amtrak's receipt of government
funds from bringing Amtrak, and its business dealings,
within the reach of the False Claims Act." Id. at 55.

Totten appeals from this decision. The United States
elected not to intervene in this litigation pursuant to 31
U.S.C. § 3730(b)(5). However, the United States has
now filed an amicus curiae brief on appellant's behalf
arguing against the District Court's expansive
construction of the Reform Act.

A10

II. DISCUSSION

The central issue in this appeal is whether the
Reform Act, in stating that Amtrak "shall not be subject
to title 31," exempts those who contract with Amtrak
from liability under the False Claims Act. We believe
that it does not. Rejecting the District Court's
construction of the Reform Act leads us to the question
of whether Totten should be allowed to amend his
complaint to correct its various shortcomings. We
believe that he should.

A. — The Meaning of "Subject To" in 49
U.S.C.A. § 24301(a)(3)

The argument that the Reform Act bars Totten's suit,
which the District Court accepted and which the
Contractors echo on appeal, runs as follows: The FCA
confers benefits and imposes burdens on entities who
receive government funding. The statute's stringent
penalties deter fraud but they also may make some
businesses reluctant to contract for fear of liability.
Accordingly, if demands for payment presented to
Amtrak can be considered "claims" within the meaning
of 31 U.S.C. § 3729(c), the FCA would both protect and
(indirectly) constrain Amtrak in_ its _ business
transactions. And this would leave the railroad
"subject to," in the sense of being "affected by," the
terms of the statute. Under this scenario, Totten's cause
of action is precluded by § 24301(a)(3).

We are not persuaded by this argument. We must
begin, of course, with the text of the statute. As the

All

District Court itself recognized, the words "subject to"
leave room for interpretation. See Bombardier, 139 F.
Supp. 2d at 53. It is true that in some contexts "subject
to" can mean "affected by," for example, "Boats in San
Francisco Bay are often subject to fierce winds."
However, when the phrase is used in situations more
analogous to the one here, it is typically given a
narrower cast: an entity is "subject to" a particular legal
regime when it is regulated by, or made answerable
under, that regime. See The Random House Thesaurus
696 (giving "bound by" as chief synonym for the phrase
in the sentence, "We are subject to the laws of the
country"); see also, e.g.,, Texaco, Inc. v. DuhE, 274 F.3d
911, 918-19 (5th Cir. 2001) (natural gas became "subject
to an existing contract" within the meaning of the
Natural Gas Policy Act when it was "governed by" the
terms of that contract).

In National Collegiate Athletic Association v. Smith, for
example, the Supreme Court considered whether "a
private organization that does not receive federal
financial assistance is subject to Title IX because it
receives payment from entities that do." 525 U.S. 459,
465 (1999) (emphasis added). In holding that the
NCAA was not subject to the statute, the Court did not
preclude all applications of Title IX that indirectly
affect the organization. Rather, the Smith decision
mandated merely that the NCAA itself could not be
sued under Title IX. See Id. at 470. The organization, in
other words, was not required to conform its own
conduct to the demands of the statute. That said, Title
IX suits against the colleges or universities that fund
the NCAA are plainly permitted after Smith, even
though the effect of such litigation might be to limit the

I

Al2

number of schools willing to field athletic teams and
thus to pay the Association's dues. Cf Pederson v.
Louisiana State. Univ., 213 F.3d 858 (5th Cir. 2000)
(holding that LSU was liable under Title IX for not
adequately accommodating the school's female
athletes). The fact that Title IX continues to have an
indirect effect on the NCAA's business does not, in
ordinary usage, render that organization "subject to"
that statute.

Other examples’ reinforce this common
understanding of the term. Thus, when the Supreme
Court noted that a defendant was "subject to Title VII ...
only if, at the time of the alleged retaliation, it met the
statutory definition of employer," it clearly meant that
the defendant could be held liable under Title VII only
if that condition was met. Walters v. Metro. Educ.
Enters., Inc., 519 U.S. 202, 205 (1997); see also, e.g., Nat'l
Cable and Telecomm. Ass'n, Inc. v. Gulf Power Co., 122 S.
Ct. 782, 797 (2002) ("[T]he Commission has not
determined whether Internet access via cable system
facilities should be classified as a 'cable service’ subject
to Title VI of the Act, or as a 'telecommunications' or
‘information service' subject to Title II.").

Moreover, this is how the phrase is used in the
context of the False Claims Act itself. In its recent
Vermont Agency decision, the Supreme Court used the i
phrase "subject to the false claims law" to describe the |
category of persons who can be sued under the FCA.
529 US. at 784 n.13; see also, e.g., United States ex rel.
Long v. SCS Bus. & Tech. Instit., Inc., 173 F.3d 870, 876
(D.C. Cir. 1999) (speaking of "individuals subject to the
Act" as those who could be made liable under it);

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United States ex rel. Zissler v. Regents of the Univ. of
Minnesota, 154 F.3d 870, 872 (8th Cir. 1998) (asking
whether States are "subject to the False Claims Act" in
the sense of whether they can be held legally
accountable for making false claims to the federal
government).

Accordingly, where, as here, a plaintiff brings a qui
tam action against a third party who has allegedly
defrauded a federal grantee, common usage would
suggest that the third party, and not the grantee, is
being made "subject to" the FCA. We think this to be
the more intuitive understanding of the Reform Act as
well. Construing § 24301(a)(3) in this light would read
it as preventing Amtrak from being directly regulated
by the various provisions in title 31, for example, by
being sued under the False Claims Act. In contrast, as
long as Amtrak is not made to conform its actions to
the terms imposed by such statutes, the railroad is not
made "subject to" those laws. And, if this is the
standard, it is clearly not met in the present case.

Here, Totten seeks to use the FCA not to regulate
Amtrak, but instead to recover for the purported fraud
of contractors hired to serve the railroad. Allowing the
United States (or its relator) to obtain damages from
those who contract with Amtrak imposes no direct
legal obligation on the railroad. Nor does it permit
Amtrak's conduct to be measured against the standards
set in the statute. Even if similar suits may have an
incidental effect on Amtrak's future business
relationships, Totten's litigation will not compel the
railroad to take any action in order to satisfy the
demands of the FCA.

Al4

His action therefore’ does not implicate the Reform
Act's "subject to" provision.

At any rate, this result flows from what we believe
to be the most natural and ordinary reading of the
phrase "subject to." Accordingly, we will accept that
conclusion, and allow Totten's suit to go forward,
unless we find evidence that Congress had a different
meaning in mind when it drafted § 24301(a)(3). See,
e.g., Williams v. Taylor, 529 U.S. 420, 431 (2000) ("We
give the words of a statute their ‘ordinary,
contemporary, common meaning;,' absent an indication
Congress intended them to bear some different
import.") (quoting Walters, 519 U.S. at 207). The
Contractors argue that such evidence is to be found in
the legislative history of the Reform Act. Once again,
we disagree.

If anything, the only specific reference that Congress
made to the "not be subject to title 31" language
suggests that this clause was intended to have a rather
limited effect. The amendment appeared in Section 501
of the House version of the bill that became the Reform
Act. That section, entitled "Financial Powers," was
concerned mostly with restructuring Amtrak's stock.
Subsection (e) contained both the clause removing
Amtrak from the list of mixed-ownership Government
corporations in 31 U.S.C. § 9101, and the clause adding
the "subject to" language in 49 U.S.C. § 24301(a)(3). In
its section-by-section analysis of the bill, the House
Committee on Transportation and _ Infrastructure
reported blandly that this subsection "removes Amtrak
from the Government Corporations Act." See H.R. Rep.
No. 105-251, at 34.

Al15

Insofar as this statement is useful, it clearly does not
help the Contractors' cause. It provides no indication
that Congress expected or intended that the phrase
"subject to" would take on a broader agenda than its
ordinary meaning connotes. To be sure, the language
of the amended § 24301(a)(3) plainly does more than to
remove Amtrak from the obligations of the GCCA, and
must be construed accordingly. | However, the
Committee's narrow understanding of this change
certainly reinforces our decision to reject the expansive
interpretation adopted by the District Court. If
anything, the legislative history's terse analysis
indicates that no one in Congress imagined that the
Reform Act would result in a repeal of the False Claims
Act as it applies to any private company doing
-business with Amtrak.

Such an outcome would indeed have been striking.
To accept it, we would have to believe that just as
Congress was committing itself to a significant
investment of federal money in Amtrak, it eliminated a
weapon for protecting that money against fraud. We
would have to believe that Congress placed a
significant obstacle in the way of uprooting the
unlawful depletion of that portion of the public fisc
used to develop and support the nation's passenger rail
system - the very system that the legislation in question
was aimed at protecting.

As suggested above, the words that Congress wrote
do not compel (and in their ordinary usage resist) this
conclusion. And the scant extrinsic evidence that exists
to cast light on the meaning of these words suggests
that such a dramatic result was far from the legislative

Al6

mind. We think it not unreasonable to suppose that
had such a broad rollback of the FCA in fact been the
goal of the Reform Act, some indication of that intent
would appear in the congressional record. Cf Am.
Hosp. Ass'n v. NLRB, 499 US. 606, 613-14 (1991). There
is none. And, without some affirmative indicator, we
are unwilling to place upon the text of that statute an
expansive gloss that would generate this surprising
result.

Recognizing the weakness of arguments from
specific legislative history, the District Court, and now
the Contractors, have focused on the broader purposes
of the Reform Act as a possible interpretive guide. This
effort falls flat as well. As described above, the District
Court concluded that the aim of the Reform Act was to
"negate the normal repercussions of government
funding." Totten, 139 F. Supp. 2d at 54. That is, while
Congress would continue (at least in the short-run) to
appropriate significant federal money for Amtrak, its
objective was to have the railroad treated as if it was
receiving no such funding. The statute, in other words,
legislated the pretense that Amtrak was self-sufficient.
And, as such, FCA liability would be inappropriate, as
that statute applies only where federal funds are at
stake.

The problem with this view is that there is no actual
basis for it in the legislative history. It is true that, in
passing the Reform Act, Congress sought to end
federal "micromanagement of Amtrak's operations,"
H.R. Rep. No. 105-251, at 13, in order to allow the
railroad to "operate as much like a private business as
possible," S. Rep. No. 105-85, at 1. However, even if we

Al7

accept these statements as relevant to determining the
meaning of "subject to," they do not necessarily support
the Contractors’ position. In fact, they are entirely
consistent with the position taken by Totten and the
United States: that both the goal and effect of the
Reform Act were to ensure that Amtrak would be
treated just like any other private company that
receives federal money. The Act, in other words,
sought to ensure that Amtrak would no longer be
subject to special restrictions that were not similarly
imposed on private-sector transportation firms.

On this view, allowing Amtrak's contractors to be
sued under the FCA makes perfect sense, as the
contractors of any private business would likewise be
subject to liability if they submitted false claims in
connection with a project to be reimbursed with federal
money. See, e.g., United States v. Lagerbusch, 361 F.2d
449 (3d Cir. 1966); Murray & Sorenson, Inc. v. United
States, 207 F.2d 119, 123 (1st Cir. 1953) ("The fact that
the claims in this case were not presented directly to
the government, but were made to it indirectly through
the contractors, does not prevent recovery under the
False Claims Statute."); cf United States v. Bornstein, 423
U.S. 303 (1976) (FCA used to sue a subcontractor whose
fraud caused a private company that had contracted
with the government to submit false invoices to the
United States). Thus, contrary to the Contractors’
contention, even the general goals expressed by the
drafters of the Reform Act appear to support Totten's
attempt to bring suit under the
FCA.

A18

In sum, the most natural reading of 49 US.C.A. §
24301(a)(3) would not withdraw FCA protection
against alleged false claims made by third parties on
the extensive sums of federal money invested in
Amtrak. Neither is this result mandated, or even
suggested, by the scant legislative history of that
provision, nor by the larger purposes and aims of the
Reform Act as a whole. We therefore reverse the
District Court's conclusion that § 24301(a)(3) erects a
per se barrier preventing Totten from imposing FCA
liability on the Contractors.

B. Allowing Totten to Amend his Complaint

1. Flaws In Totten's
Unamended Complaint

This legal conclusion does not, however, mean that
Totten's complaint, at least in its current form, actually
states a valid claim under the False Claims Act.
Indeed, as suggested above, there are several ways in
which his present complaint is deficient. First, Totten
has alleged merely that the Con-tractors "knowingly
presented or caused to be presented equipment to an
officer or employees of the National Railroad
Passenger Corporation, that was knowingly
substandard or noncompliant with engineering
specifications for the Superliner II Contract to obtain
payments from the National Railroad Passenger
Corporation ..." Complaint, at p 22; see also Id. at pp 27,
57. However, the bare assertion that defendants
delivered goods that did not conform to contractual
specifications is not enough to state a violation of the
FCA. Instead, in the sections relevant here, the statute

Al19

proscribes only false "claims" -- that is, actual demands
for money or property, see 31 U.S.C. §§ 3729(a)(1),
(a)(3); § 3729(c) -- and "false records or statements"
used to induce such claims, see § 3729(a)(2). The FCA,
in other words, "attaches liability, not to underlying
fraudulent activity, but to the 'claim for payment.' "
United States ex rel. Hopper v. Anton, 91 F.3d 1261, 1266
(9th Cir. 1996) (quoting United States v. Rivera, 55 F.3d
703, 709 (1st Cir. 1995)). And, to date, Totten has
simply made no allegation that the Contractors actually
made false demands or submitted false records,
whether to Amtrak or to anyone else.

The second problem with the present complaint is
that Totten has provided no basis for concluding that,
even if the defendants did present claims to Amtrak,
those would be "claims" within the meaning of §
3729(c). This provision defines claim to include a
request for payment made to:

a contractor, grantee, or other recipient if
the United States Government provides
any portion of the money or property
which is requested or demanded, or if the
Government will reimburse such
contractor, grantee, or other recipient for
any portion of the money or property
which is requested or demanded.

Thus, in order to satisfy Rule 12(b)(6), Totten would at
least have to plead that the federal government
provided some portion of the money requested by the
Contractors, or that the government reimbursed
Amtrak for what it paid out to improve the toilet

A20

systems on its trains. Though he has not yet done so, it
appears that Totten is aware of this requirement, and
that he informed the District Court that he was
prepared to amend his complaint to allege that federal
money was implicated in the specific projects at issue.
See Br. for the United States of America as Amicus
Curiae Supporting Appellant 14.

A third difficulty with the complaint as it stands is
that it does not appear to satisfy Rule 9(b) of the
Federal Rules of Civil Procedure. This rule requires
that "[iJn all averments of fraud or mistake, the
circumstances constituting fraud or mistake shall be
stated with particularity." Totten does not argue that
his complaint satisfies this standard, but instead that
the rule does not apply to him because he has not
alleged that defendants made "fraudulent" claims, but
merely "false" ones. He suggests that because false
claims are actionable under the FCA even without
"proof of specific intent to defraud," § 3729(b)(3), there
is no "averment of fraud" within the meaning of Rule
9(b). We disagree.

Every circuit to consider the issue has held that,
because the False Claims Act is self-evidently an anti-
fraud statute, complaints brought under it must
comply with Rule 9(b). See Bly-Magee v. California, 236
F.3d 1014, 1018 (9th Cir. 2001); United States ex rel.
Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d
899, 903 (5th Cir. 1997); Gold v. Morrison-Knudsen Co., 68
F.3d 1475, 1476-77 (2d Cir. 1995). Totten cites no
authority whatsoever for the hairsplitting distinction
he seeks to draw between fraudulent and false claims

0 nl a Nae Dobe

under 9(b). And we can see no reason to recognize
such a distinction.

The difference between the two categories of claims
is simply the degree of scienter involved. See United
States v. TDC Mgmt. Corp., 24 F.3d 292, 297 (D.C. Cir.
1994) (distinction turns on "whether the defendant
acted with an intent to deceive"). But this difference is
entirely insignificant in the context of Rule 9(b)'s
pleading requirements. Indeed, the rule specifically
allows allegations of "intent, knowledge, and other
condition of mind" to be averred generally. See Gold, 24
F.3d at 1477. In contrast, the "circumstances" that must
be pleaded with specificity are matters such as the
"time, place, and contents of the false representations,"
such representations being the element of fraud about
which the rule is chiefly concerned. See 5 Charles Alan
Wright & Arthur R. Miller, Federal Practice and
Procedure § 1297 (2d ed. 1990) (emphasis added).
Therefore, in order to satisfy Rule 9(b), Totten must set
forth an adequate factual basis for his allegations that
the Contractors submitted false claims (or false
statements in order to get false claims paid), including
a more detailed description of the specific falsehoods
that are the basis for his suit. See Bly-Magee, 236 F.3d at
1018-19; Columbia/HCA, 125 F.3d at 903.

y I Waiver of the Right to Amend

The Contractors argue that the flaws in the
complaint are fatal, because Totten waived his right to
amend his complaint by not seeking leave to do so
pursuant to Rule 15(a). Instead, they point out, Totten
merely indicated in his Opposition to defendants'

A22

motion to dismiss that he stood ready to amend his
complaint if the District Court identified any pleading
deficiencies. As authority for their position, the
Contractors cite Government of Guam v. American
President Lines, 28 F.3d 142, 149-51 (D.C. Cir. 1994), in
which we held that plaintiffs whose complaint had
been dismissed (for lack of subject matter jurisdiction)
had waived their right to amend by failing to make a
Rule 15(a) motion, either before or after the District
Court granted their opponent's dismissal motion.

The present case, however, is quite different. In
President Lines, we denied plaintiffs an opportunity to
amend only after upholding the trial court's decision to
dismiss the complaint. In other words, that litigation
was over unless we allowed the plaintiffs to reopen it,
and we found that their interest in doing so did not
outweigh the "general rules favoring the finality of
judgments and the expeditious resolution of litigation."
Id. at 151. Totten's situation presents no such
countervailing finality concerns, in light of our
conclusion that the District Court was wrong to
dismiss the complaint on the only ground it actually
gave for doing so. The waiver rule relied upon in
President Lines is therefore not similarly applicable
where the court of appeals reverses the trial court's
dismissal order. See The Dartmouth Review v. Dartmouth
College, 889 F.2d 13, 23 (1st Cir. 1989) (stating the
general rule that where "the pleader has stood upon his
pleading and appealed from a judgment of dismissal,
amendment will not ordinarily be permitted ... if the
order of dismissal is affirmed") (emphasis added)
(quoting Rivera-Gomez v. de Castro, 843 F.2d 631, 635-36
(1st Cir. 1988) (allowing amendment, even after

SSS Sasha 8 ae os SG Net aa

NE iy Ba

A23

affirming dismissal, where it is "in the interest of
justice")).

As for Totten's failure to seek leave to amend his
complaint after the Contractors' Motion to Dismiss was
granted, a factor on which President Lines relied in
finding a waiver, see 28 F.3d at 151, the District Court
made clear in the present case that such a request
would have been futile. See Bombardier, 139 F. Supp.2d
at 52 n.1 ("In other circumstances Totten would be
permitted an opportunity to amend his complaint, but,
as the remainder of this Opinion demonstrates, such an
opportunity is not warranted in this case."). Given that
the District Court expressly indicated that it would
have allowed Totten to amend had it not viewed the
Reform Act as posing an insurmountable obstacle to
his suit -- regardless of how that suit was packaged --
we see no reason, having reversed the court's legal
mistake, to forbid what would have been permitted in
the absence of that error. Therefore, we will remand
the case with instructions that Totten be granted leave
to amend his complaint.

In so doing, however, we express no opinion on the
question left open by this court's decision in Yesudian:
whether an FCA plaintiff may prevail against a
defendant who submits a false "claim" to a federal
grantee (such as Amtrak), without presenting evidence
that the claim was ever actually submitted to the US.
government. See 153 F.3d at 737-39. Depending on
how Totten crafts his amended complaint, this issue of
statutory interpretation may be avoided altogether.
We therefore leave it for another day.

A24

III. CONCLUSION
For the reasons given above, the judgment of the
District Court is reversed and the case is remanded for

further proceedings consistent with this opinion.

It is so ordered.

Randolph, Circuit Judge, concurring: I agree with
all the court has written in its thorough opinion, but I
believe a bit more is needed to highlight the problem
we leave to the district court - namely, "whether [a
False Claims Act] plaintiff can prevail by proving only
that a false claim was submitted to a federal grantee
(such as Amtrak), as defined in [31 U.S.C. § 3729(c)],
without further demonstrating that the claim was
submitted (or resubmitted) to the federal government,
as suggested by the text of [31 U.S.C. § 3729(a)(1)]."
Maj. op. at 6. Dicta in United States ex rel. Yesudian v.
Howard Univ., 153 F.3d 731, 737-39 (D.C. Cir. 1998),
intimates that presenting a claim to any federal grantee
is the equivalent to presenting a claim to the federal
government. If the reasons given in Yesudian are all
that can be said for this far-reaching conclusion, I
would have much difficulty in accepting it.

Those liable under the False Claims Act include any
person who "knowingly presents, or causes to be
presented" - and here is the key language - "to an
officer or employee of the United States government" a
false claim. 31 U.S.C. § 3729(a)(1). Without more, this
language would not seem to cover instances in which
the false claim is presented to a federal grantee, at least

ih nc A AIR i al iN hcl base lB ND SUAS en sitet

A25

in instances when the grantee did not turn over the
claim for reimbursement by the federal government.
That may describe the alleged situation here, although
we cannot be sure until the plaintiff amends his
complaint. It is true that § 3729(c) defines "claim" to
include claims submitted to federal grantees.’ But it is
equally true that no matter how "claim" is defined,
subsection (a)(1) requires the alleged false claimant to
present it (or cause it to be presented) to a federal
officer or employee.

Two points, neither of which Yesudian highlighted,
seem to me of critical importance in construing § 3729.
The Attorney General is authorized to sue under the
Statute in the first instance, or to take over suits
brought by private parties on behalf of the federal
government (qui tam actions), or to allow the private
party to prosecute the action on its own. See Vermont
Agency of Natural Resources v. United States ex rel.
Stevens, 529 U.S. 765, 769 (2000). If a judgment is
rendered against the defendant - and this is the first
point - the award of damages is paid to the federal
treasury (less a percentage if a private party initiated
the action). The second point is that the Act authorizes
treble damages plus a civil penalty. If the Act allows
suits on claims presented to federal grantees but not

* A "claim" includes any "request or demand ... for money ... made
to a contractor, grantee, or other recipient if the United States
Government provides any portion of the money or property
which is requested or demanded, or if the Government will
reimburse such contractor, grantee, or other recipient for any
portion of the money or property which is requested or

demanded." 31 U.S.C. § 3729(c).

A26

presented for payment to the federal government,
these two features of the Act lead to a glaring
incongruity. To illustrate, suppose the plaintiff in this
case prevailed. The recovery would go to the plaintiff
and the federal government. Amtrak would recover
nothing. Yet the theory of plaintiff's case, as far as we
can make out at the moment, is that Amtrak suffered
the loss. Presumably, Amtrak would therefore be able
to sue the defendants on its own and if its suit were as
meritorious as the relator's, it too would recover
damages. The effect would be a quadruple damage
award - Amtrak's recovery pius the treble damages
awarded under the False Claims Act.

This is the consequence of the construction
suggested in Yesudian and, at the moment, it seems to
me at odds with the structure of the Act. On the other
hand, requiring that the United States have suffered
losses by paying false claims presented to it by the
federal grantee avoids this interpretative difficulty,
remains faithful to the language of § 3729(a)(1) & (c)
and is entirely consistent with the provision in the Act
measuring damages not in terms of a grantee's losses,
but by "the amount of damages which the Government
sustains....". 31 U.S.C. § 3729(a). I hesitate to reach a
firm conclusion, however, because we have not had
sufficient briefing and argument on the issue and
because it may turn out not to be an issue in the case
when it is reformulated in the district court.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386007_0600%3A3. Public record. Not legal advice.