Opposition Brief — Lockheed Missiles & Space Co. v. United States ex rel. Newsham

No. 99-1060

IN THE

Supreme Court of the United States

LOCKHEED MISSILES AND SPACE COMPANY, INC.,

Petitioner,

Vv.

UNITED STATES OF AMERICA ex rel. MARGARET A.

NEWSHAM and MARTIN OVERBEEK BLOEM,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES CourT OF APPEALS FOR THE NINTH CIRCUIT

eS

BRIEF IN OPPOSITION FOR RESPONDENTS

MARGARET A. NEWSHAM AND

MARTIN OVERBEEK BLOEM

SS. eaeaeaaaeooeeeeESeSEe

Guy T. SAPERSTEIN

Morris J. BALLER*

CHRISTOPHER J. KELLER

SAPERSTEIN, GOLDSTEIN,

DEMCHAK & BALLER

300 Lakeside Drive, Suite 1000

Oakland, California 94612

(510) 763-9800

Attorneys for Respondents

Margaret A. Newsham and

.

Counsel of Record Martin Overbeek Bloem

157672 @ Counsel Press LLC

(800) 274-3321 + (800) 359-6859

QUESTIONS PRESENTED

1. Whether the Ninth Circuit violated retroactivity

principles by applying the False Claims Acts’ 1986

Amendments to a contractor’s fraudulent conduct occurring

after the effective date of those Amendments? -

2. Whether the Ninth Circuit erred in noting that there

did not appear to be any public disclosure of the information

on which the action is based, although it did not have to

determine that issue with finality?

3. Whether the Ninth Circuit erred in making the factual

finding that Respondents were the original sources of the

information on which the action is based?

4. Whether the Ninth Circuit violated the Erie doctrine

by permitting the application of a California law providing

special defenses to counterclaims under state law which

deterred the exercise of constitutional rights, based on the

findings that the state law’s purpose was not coextensive

with that of the federal procedural rules and there was no

clear conflict between the state and federal rules?

ii

PARTIES TO THE PROCEEDING

Respondents Margaret A. Newsham and Martin

Overbeek Bloem were appellants in the court of appeals on

the issues presented in the Petition (and appellees on a cross-

appeal raising other issues not presented here), and qui tam

relators in the district court.

Petitioner Lockheed Missiles and Space Company was

appellee in the court of appeals on the issues presented here

(and appellant on the cross-appeal).

iti

TABLE OF CONTENTS

Page

Co er eee 1

rerces to the Procesding ..................... li

ae ee lil

Table of Cited Authorities .................... Vv

Counter-Statement of the Case ................. 1

Reasons for Denying the Writ ................. 3

I. The Court Of Appeals’ Decision Applying

The 1986 Amendments’ Standard To False

Claims Submitted By Petitioner After The

Effective Date Of The Amendments Raises

No Question Of Continuing Importance And

Does Not Conflict With Other Appellate

I gt a ee fe ee 5

II. The Opinion Below Is Not In Conflict With

Other Circuit Court Decisions Applying The

Two Elements Of The 1986 Amendments’

Jurisdictional Provision. ................ 10

III. The Application Of California’s Anti-SLAPP

Law To This Case As Ordered By The Ninth

Circuit Does Not Conflict With Decisions Of

This Court Or Other Courts Of Appeals.... 13

iv

Contents

Page

IV. The Court Should Decline To Hold This

Petition Pending Decision In Stevens On The

Constitutionality Of The FCA’s Qui Tam

WU, oo es hn bee ea cae de ce ces 16

Conclusion

POLE POEL Ee Poe Pe Pere re 17

Vv

TABLE OF CITED AUTHORITIES

Page

Cases:

Brotherhood of Locomotive Firemen vy. Bangor &

Aroostock R. Co., 389 U.S. 327 (1967) ........ 10, 14

Burlington Northern R. Co. v. Woods, 480 U.S. 1

eit erence PRU er ear ar ar eens 15

Davis v. United States, 417 U.S. 333 (1974) ..... 10

Erie R. Co. v. Tompkins, 304 U.S. 64 (1938) ..i, 14, 15, 16

Gasperini v. Center for Humanities, 518 U.S. 415

iS PEPPER TET Pee Feee rT rey etek s 15

Goodman v. Lukens Steel Co., 482 U.S. 656 (1987)

Pee rer is etree eee ey Pee yy Gea ey ct maa ie 13

Graver Tank & Mfg. Co. v. Linde Air Products Co.,

SOP WIM WER CEOD Os ohénekicds sect. 13

Hanna v. Plumer, 380 U.S. 460 (1965) ..... 5, 14, 15, 16

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

SHO AI MOP AEOWTD Cink do h5i nc cdc wkenne 4,7,8,9

Kaiser Aluminum & Chemical Corp. v. Bonjorno,

494 US. Get RAE gress 0k vawkw dna veaee aaa 7

Landgraf v. USI Film Products, 511 U.S. 244

SEE Sk aN ccs Re seeees SR Ba eee 3, 4, 6, 7,8

vi

Cited Authorities

Page

Mutuelles Unies v. Kroll & Linstrom, 957 F.2d 707

(9? Che. 1D0ED coves consonecdevigs it ueseeeee 17

Nghiem v. NEC Electronic, Inc., 25 F.3d 1437 (9*

Cir.), cert. denied, 513 U.S. 1044 (1994) ...... 9

United States v. Bornstein, 423 U.S. 303 (1976) .. 6

United States ex rel. Anderson v. Northern Telecom,

Inc., 52 F.3d 810 (9% Cir. 1995), cert. denied, 516

U.S. 2069 CURBS... onc 0 bu6 eas 8,9

United States ex rel. Anderson v. Northern Telecom,

Inc., 141 F.3d 1179, No. 96-36152, 1998

WL 141179 (9* Cir. March 27, 1998) ......... 9

United States ex rel. Cantekin v. University of

Pittsburgh, 192 F.3d 402 (3" Cir. 1999) ....... 8,9

United States ex rel. Dick v. Long Island Lighting

Co., 912 F.24 13 C2" Cir. HD cas cusisanes 13

United States ex rel. Doe v. John Doe Corp., 960

F.2d 315 (2 Cas. T9GED cv dvcnves inctaneeeeas 11

United States ex rel. Hafter v. Spectrum Emergency

Care, Inc., 190 F.3d 1156 (10 Cir. 1999) ..... 12, 13

United States ex rel. Kreindler & Kreindler v. United

Technologies Corp., 985 F.2d 1148 (2™ Cir.), cert.

denied, 508 U.S. 973 (1993) ..............4.. 11

vil

Cited Authorities

| Page

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

162 F.3d 1027 (9 Cir. 1998) ................ 9

United States ex rel. Mistick PBT v. Pittsburgh

Housing Authority, 186 F.3d 376 (3" Cir. 1999),

pet. for cert. filed, No. 99-969 (December 8,

SPOOD. hos cwkdeins ambiaetcdvcdacuasa. S 12, 13

United States ex rel. Plumbers & Steamfitters Local

Union No. 38 v. C.W. Roen Construction Co., 183

Foe tee ce Gt 199 6 12

United States ex rel Stinson, Lyons, Gerlin &

Bustamente, P.A. v. Prudential Ins. Co.,944 F.2d

SOW Ce es SOE odd ones Sess e 11, 12, 13

Vermont Agency of Natural Resources v. United

States ex rel. Stevens, O.T. 1999, No. 98-1828

$s RSCEASSEMACR CEOS 6 AO KRE AOA be 64SSE COR OI 16

Walker v. Armco Steel Corp., 446 U.S. 740 (1980) .. 15

Wang v. FMC Corp., 975 F.2d 1412 (9* Cir. 1992)

MP ey Pee FP ee eee PE OUP eT s ere pare 13

Statutes:

31 U.S.C. § 3730(e)(4)(A) ...............205. 1,4, 10

Cal. Code Civ. Proc. § 425.16 ................. 13

vill

Cited Authorities

Page

United States Constitution:

ee I i ios skeen oh aR ARERR 5, 14

Rules:

| Federal Rules of Civil Procedure 12(b)(6) ....... 15, 16

Federal Rules of Civil Procedure 56 ............ 15, 16

Ninth Circuit Rule 36-3 ............ 0 eee eee 9

Other Authority:

S. Rep. No. 345, 99" Cong. 2d Sess. 9 (1986),

reprinted in 1986 U.S. Code Cong. & Admin.

RR os iis An ce eines es 6, 12

1

Respondents, Margaret A. Newsham and Martin

Overbeek Bloem, respectfully request that this Court deny

the Petition for a Writ of Certiorari filed on December 21,

1999, seeking review of the court of appeals’ judgment in

this case. The court of appeals’ opinion is reported at 190

F.3d 963 (9" Cir. 1999) and reprinted in the Appendix

(“App.”) at la-21a. The court of appeals denied Petitioner’s

Petition for Rehearing and/or Rehearing En Banc on all of

the issues presented here, with no Judge of that court

requesting a vote on whether to hold an en banc rehearing.

(App. 23a).

COUNTER-STATEMENT OF THE CASE

This case was nine and one-half years old at the time it

was dismissed, on jurisdictional grounds, by the district

court; and eleven and one-half years old by the time the court

of appeals’ decision reinstated the case. The underlying facts

involve labor charging practices and invoices submitted to

the United States by Petitioner Lockheed Missiles and Space

Company (“LMSC”) both before and after October 27, 1986,

the effective date of the pertinent jurisdictional provision of

the 1986 Amendments to the False Claims Act, 31 U.S.C.

§ 3730(e)(4)(A). The first issue presented in the Petition,

one of “retroactivity”, turns on this unique and temporally

remote factual setting.

The court of appeals, in deciding the jurisdictional issues

presented to it, differentiated between the two periods. It -

found that the district court lacked jurisdiction over claims

based on invoices submitted before October 27, 1986, but

had jurisdiction over claims based on invoices submitted after

that date. The court of appeals’ decision finding no

jurisdiction over pre-1986 claims is not before this Court.

The Petition seeks review of the ruling upholding jurisdiction

over the post-1986 claims.

2

The “retroactivity” issue presented by the Petition arises

in the unusual factual context of pre-1986 activities that were

allegedly both: (i) known to the government and (ii) similar

to the post-1986 conduct on which the court of appeals

allowed the action to proceed. The Petition glosses over one

critical fact, which it fails to mention in its discussion of

“pre-1986 claims” and “post-1986 claims”. The “claims”

involved in this case are not just arbitrary categories based

on division of the time period covered by Respondents’ case

into pre-Amendments and post-Amendments portions (see

Pet. at 9n.7). Instead, Respondents’ action against Petitioner

is based on LMSC’s periodic submissions of numerous,

_ individual invoices for payment — each of which constitutes

a “claim” to the United States and each of which,

Respondents allege, was false. (ER 752-A, para. 39).!

Petitioner submitted some of those “claims” — those which

are not pertinent to issues before this Court — prior to the

effective date of the 1986 Amendments. It submitted others

after that date, and in those invoices sought payment for work

allegedly done by LMSC employees after the Amendments’

effective date. Those post-1986 claims are the only ones

involved in this case.

Several factual assertions in LMSC’s Statement of the

Case are misstated or erroneous. Respondent Newsham’s

1984 disclosures to the DCAA alleged that LMSC employees

who were supposed to be working on government contracts

were in fact idle or not working on contract matters; however,

the disclosures did not contain information about how the

LMSC employees had been instructed to bill their time or

~ had in fact billed their time. (ER 752-A, paras. 25-26). The

DCAA’s audit of these disclosures did not encompass any

analysis or determinations pertaining to LMSC’s billing

practices, in particular the contention that LMSC had falsely

| 1. Although Petitioner dismisses the Respondents’ First

Amended Complaint as “irrelevant,” (Pet. at 9 n.8), the court of

appeals correctly ordered it to be filed. (App. 15a).

3

charged the government on contract accounts for idle or non-

business activities of employees. (ER 746, Exs. 28-35;

ER 752-A, paras. 26, 29, 32). Petitioner’s factual assertions

to the contrary (Pet. at 3, 4) are unfounded. Likewise, the

Petition makes unsubstantiated assertions that the DCAA

audited “all of Newsham’s allegations,” and that in

concluding the government had “no claim against Lockheed”

the DCAA had reviewed and found meritless the allegation

of fraudulent charging (Pet. at 3, 4).?

REASONS FOR DENYING THE WRIT.

The Petition raises no issues that warrant review in this

Court.

(A) The factual setting in which Petitioner here urges

the existence of a conflict is itself unique, non-recurring,

and increasingly unimportant with the passage of time. This

Court has recently articulated clear principles to guide

decisions on retroactivity issues. In Landgraf v. USI Film

2. Petitioner’s only citation for these contentions is to an amicus

curiae brief of the United States (SER 41) which does not constitute

evidence and which itself cites no evidence for the propositions

advanced. In fact, the DCAA audits found extremely high levels of

non-productivity (see ER 752-A, paras. 27-28, 31), and invoked the

remedy of forward-looking cost adjustments which was DCAA’s

customary sanction for overbilling. (/d. at para. 32).

LMSC refers to another incorrect fact, and incorrectly suggests

that it has some basis, in citing to the district court’s observation

that “ ‘[t]he parties agree that under the pre-1986 [FCA], the portions

of the gui tam complaint based on plaintiff Newsham’s allegations

would have to be dismissed.’ ” (Pet. at 5). In fact, Respondents never

made any such concession, and neither the district court’s comment

in passing nor the statement in the United States’ amicus curiae

brief (SER 41 at 8), which Petitioner also cites (Pet. at 5), has any

value as evidence.

4

Products, 511 U.S. 244 (1994), the Court set out the pertinent

general principles; and in Hughes Aircraft Co. v. United

States ex rel. Schumer, 520 U.S. 939 (1997), the Court

explained how those principles apply to the jurisdictional

provision governing qui tam actions under the

1986 Amendments to the False Claims Act, 31 U.S.C.

§ 3730(e)(4)(A) (1986).

The court below correctly applied those principles in

determining that the application of the 1986 Amendments

provision to Petitioner’s post-Amendments conduct was not

a “retroactive” application of the Amendments. The decision

below does not conflict with either this Court’s retroactivity

decisions, or any other appellate decisions that remain viable

authority. The single earlier panel decision of the Ninth

Circuit which forms the basis of Petitioner’s claimed conflict

argument has been vitiated by Schumer and is no longer

followed by the Ninth Circuit itself.

(B) There is no reason to review the judgment below

on the jurisdictional issues framed by Section 3730(e)(4)(A),

as modified by the 1986 Amendments. The court below made

factual findings in determining that there was no evidence

of any public disclosure in this case, and in any event the

court had jurisdiction because Respondents were original

sources of the information on which the action is based. The

other appellate decisions in which Petitioner purports to find

conflicts with the decision below involve much different

factual settings and, for the most part, were exactly the type

of “parasitic” actions that the 1986 Amendments were

designed to bar.

(C) There is no reason to review the Ninth Circuit’s

proper application of California’s anti-SLAPP law in the

adjudication of the state law counterclaims in this case. The

question presented is a unique one that has never arisen before

5

and is likely to remain rare. No final judgment has been

entered on the anti-SLAPP motion in this case. The anti-

SLAPP law does not “directly collide” with the Federal Rules

of Civil Procedure, and the state law embodies substantive

policies protecting individuals from lawsuits designed to

restrict their exercise of First Amendment rights. The court

below correctly applied the Erie Doctrine and did not violate

the teaching of Hanna v. Plumer, 380 U.S. 460 (1965), when

it held that the state law applied in this case.

I.

THE COURT OF APPEALS’ DECISION APPLYING

THE 1986 AMENDMENTS’ STANDARD TO FALSE

CLAIMS SUBMITTED BY PETITIONER AFTER THE

EFFECTIVE DATE OF THE AMENDMENTS RAISES

NO QUESTION OF CONTINUING IMPORTANCE

AND DOES NOT CONFLICT WITH OTHER

APPELLATE DECISIONS.

The decision below found the 1986 FCA Amendments’

jurisdictional provisions applicable to Respondents’ claims

based on invoices submitted by LMSC after October 27, 1986

for work allegedly performed by LMSC employees after that

date. That decision raises no “retroactivity” issue worthy of

this Court’s review, and does not conflict with any decisions

of this Court or any other federal appellate court.

(1) The keystone contention underlying Petitioner’s

position is that the “allegedly false claims submitted after

1986 [were] merely a continuation of alleged improper

charging practices known to the Government prior to 1986”

(Pet. at 12) (emphasis added). This factually unfounded

contention is dependent on case-specific facts unlikely to be

found in many, if any, other cases at this time, 14 years after

enactment of the 1986 Amendments. Every invoice submitted

6

by LMSC which remains the subject of this action’ was based

on work allegedly performed after the effective date of the

1986 Amendments and was presented for payment after that

date. Each such invoice constitutes a separate “claim” for

False Claims Act purposes. See S. Rep. No. 345, 99" Cong.

2d Sess. 9 (1986), reprinted in 1986 U.S. Code Cong. &

Admin. News 5266, 5269 citing United States v. Bornstein,

423 U.S. 303 (1976). Such invoices were not a “mere

continuation” of prior claims, but were separate charges for

work performed during the later time period.

Petitioner’s argument is entirely dependent on its

contention, which is contradicted by the facts summarized

immediately above, that the practices challenged in this case

began before October 27, 1986 and continued in similar form

thereafter. At this point in time, the number of other cases

involving such practices (even if they existed here) is small

if not non-existent, and sure to diminish over time to none.

Review of this issue by this Court would probably affect no

case other than the case at bar.‘

(2) The court of appeals’ decision applying the 1986

Amendments’ provisions to post-Amendments claims is a

routine application of the principles established in Landgraf

v. USI Film Products, 511 U.S. 244 (1994), and in no way

conflicts with that decision. As required by Landgraf, the

court of appeals decision gives effect to the time-honored

3. In the portion of the opinion on which review is not sought

here, the court of appeals barred Respondents’ claims based on

invoices submitted prior to October 27, 1986. (App. 12a).

4. Petitioner cites no other currently pending cases which

present the same question in its unique factual setting, and

Respondents’ counsel are unaware of any such cases. It is scarcely

conceivable that any could be brought in the future due to statute of

limitations considerations.

7

“principle that the legal effect of conduct should ordinarily

be assessed under the law that existed when the conduct took

place,” Landgraf, 511 U.S. at 265 (quoting Kaiser Aluminum

& Chemical Corp. v. Bonjorno, 494 U.S. 827, 855 (1990)

(Scalia, J., concurring). In this case, where the law as enacted

in the 1986 Amendments was applied to conduct that took

place after those Amendments became effective, the

presumption against “retroactive legislation” never comes

into play because the 1986 Amendments provision is not

being applied to pre-Amendments conduct but only to

discrete post-Amendments conduct.

The decision below properly applies the holding of

Hughes Aircraft Co. v. United States ex rel. Schumer, 520

U.S. 939, 117 S. Ct. 1871 (1997), and does not conflict with

it. All of the conduct involved in Schumer occurred prior to

the 1986 Amendments, 520 U.S. at__, 117 S. Ct. at 1875.

Here, Petitioner submitted its false claims after the date of |

the Amendments. Schumer precludes application of the 1986

Amendments’ jurisdictional Provision only to pre-

Amendments conduct, id., 117 S. Ct. at 1878-1879.

If Landgraf and Schumer applied here in the way that

Petitioner contends, the effect of that application would be

to validate post-1986 Amendments fraudulent practices

Similar to conduct commenced before 1986 and known to

the government, Such an interpretation would turn the

retroactivity principles of Landraf and Schumer on their head,

and thwart the intent of Congress in enacting the 1986

Amendments. That purpose was to prohibit certain fraudulent

conduct prospectively — not to immunize it in perpetuity.

5. Likewise, the court of appeals’ decision gives effect to this

Court’s decision in Hughes Aircraft Co. v. United States ex rel.

Schumer, 520 U.S. 939, 117 S. Ct. 1871 (1997), by holding that the

court had no jurisdiction over pre-1986 Amendments claims.

(App. 12a).

8

Landgraf and Schumer establish clear retroactivity

principles applicable to the 1986 Amendments. There is no

need to revisit their holdings in this context. To apply those

holdings in the way urged by Petitioner would both confuse

and undermine these clearly established principles.

(3) The Petition’s attempt to fabricate a conflict at the

circuit court of appeals level, on the question of which

conduct is relevant for the retroactivity analysis — the

government contractor's submission of false claims or the

relator’s disclosure thereof — is also unsubstantiated.

Petitioner's assertion of a conflict rests entirely on a single

panel opinion of the Ninth Circuit, United States ex rel.

Anderson v. Northern Telecom, Inc., 52 F.3d 810 (9" Cir,

1995), cert. denied, 516 U.S. 1043 (1996) (“Anderson I’).

Anderson I is factually inapposite here® and has been

superseded as a statement of the Ninth Circuit’s view of the

law on this point.’ The Ninth Circuit itself has recognized

6. Anderson | involved only claims submitted before the date

of the 1986 Amendments, not, as here, claims that followed the

Amendments and allegedly “continued” pre-Amendments practices.

52 F.3d at 812, 814. In addition, in Anderson J, as in all other cases

on the point, the submission of the false claims preceded their

disclosure. /d.

The illogical quality of Petitioner's contention in this case —

that Respondent Newsham’s disclosure of LMSC’s post-1986

Amendments submissions preceded the submissions themselves —

both reflects and explains the uniqueness of the factual setting of

the question presented here.

7. Anderson | was decided prior to this Court’s decision in

Hughes Aircraft Co. v. United States ex rel. Schumer, 520 U.S. 939

(1997). As the Third Circuit pointed out in United States ex rel.

Cantekin v. University of Pittsburgh, 192 F.3d 402, 411 (3 Cir.

1999), the Schumer decision rejected the logical underpinning of

(Cont'd)

9

that the binding effect of prior panel decisions is removed

when, as here, a “Supreme Court decision .. . undermines

those decisions.” Nghiem v. NEC Electronic, Inc., 25 F.3d

1437, 1441 (9" Cir.), cert, denied, 513 U.S. 1044 ( 1994),

Anderson I therefore lacks continuing force as authority.®

The Ninth Circuit has twice demonstrated that it has

abandoned the holding of Anderson I which Petitioner

advances as the source of an inter-circuit conflict with United

States ex rel. Cantekin y, University of Pittsburgh, 192 F.3d

402 (3 Cir. 1999). ° There is thus no Current conflict on this

(Cont'd) :

Anderson I's holding — the erroneous belief that “the 1986

amendment did not change the legal consequences of [the

contractor's} conduct.” The court in Cantekin observed that the

Schumer decision's “reasoning would be in deep tension, if not

outright conflict, with using the date of disclosure instead of the

date of submission for determining retroactivity,” and found that

this Court's analysis [in Schumer] “strongly supports using the...

date the allegedly false claim was submitted” in determining whether

the Amendments were being retroactively applied. 192 F.3d at

409-410,

8. Nor does Petitioner's citation to the Ninth Circuit panel's

unpublished opinion in the Anderson I] decision, United States ex

rel. Anderson v. Northern Telecom, Inc., 141 F.3d 1179 (TABLE),

No. 96-36152, 1998 WL 141179 (9" Cir. March 27, 1998), add

anything to its argument. Under Ninth Circuit Rule 36-3, such an

unpublished decision is non-precedential and may not be cited in

the Ninth Circuit. Moreover, even though Anderson I's holding may

have been reiterated, it stil} lacks viability post-Schumer.

9. The first such decision was United States ex rel, Lujan v.,

Hughes Aircraft Co., 162 F.3d 1027, 1031 (9" Cir, 1998), in which

the court held that it is the government contractor's conduct, not the

relator’s, to which retroactivity analysis applies, The second is the

opinion below, reiterating that same holding. (App. 1 1a-12a),

10

retroactivity point between the law of the Ninth Circuit, as

confirmed in the opinion below, and the law of the Third

Circuit or any other court of appeals.'°

Il.

THE OPINION BELOW IS NOT IN CONFLICT WITH

OTHER CIRCUIT COURT DECISIONS APPLYING

THE TWO ELEMENTS OF THE 1986 AMENDMENTS’

JURISDICTIONAL PROVISION.

The second and third questions presented involve

determinations required by the two prongs of the 1986

Amendments’ jurisdictional test for qui tam actions,

31 U.S.C. § 3730(e)(4)(A): whether the action was based on

information “publicly disclosed” prior to its filing, and if so

whether the relator was “an original source” of the

information. Both of these issues are highly fact-dependent,

as Petitioner concedes (Pet. at 18), and in this posture do not

present broadly applicable questions of law.

(1) The question presented in the Petition regarding the

“public disclosure” test was not squarely decided by the court

below. The Ninth Circuit merely observed that there was “‘no

evidence suggesting” pre-lawsuit public disclosure here, and

that the court need not decide the public disclosure question

because Respondents met the “original source” test.

(App. 14a) This Court is properly reluctant to grant certiorari

in order to review questions not finally decided below.

See Brotherhood of Locomotive Firemen v. Bangor &

Aroostock R. Co., 389 U.S. 327, 328 (1967) (per curiam).

10. To the extent the Petition’s argument is based on an alleged

split of authority within the Ninth Circuit, that problem is both illusory

here for reasons explained in the text and not ordinarily a proper basis

for invoking this Court’s power of review. See Davis v. United States,

417 U.S. 333, 340 (1974).

1]

The decisions cited by Petitioner as in conflict with the

decision below on the “public disclosure” question involve

different facts and different issues. In United States ex rel. Doe

v. John Doe Corp., 960 F.2d 318 (2% Cir. 1992), 21 federal

agents executing a search warrant took over the government

contractor's premises during business hours and discussed the

alleged fraud with numerous “innocent” employees who

happened to be present, many of whom knew nothing about the

fraud allegations. 960 F.2d at 319-320, 322-23. The Second

Circuit held this constituted a “public disclosure” barring a qui

tam action brought by an attorney for one of the contractor’s

employees based on the same allegations of fraud. Jd. at 323.

The other cases advanced by Petitioner — United States ex rel

Stinson, Lyons, Gerlin & Bustamente, PA. v. Prudential Ins.

Co., 944 F.2d 1149 (3" Cir, 1991), and United States ex rel

Kreindler & Kreindler v, United Technologies Corp., 985 F.2d

1148 (2™ Cir.), cert. denied, 508 U.S. 973 (1993) — were, like

Doe, qui tam actions brought by lawyers who learned about the

alleged frauds only through their representation of clients in

litigation which produced discovery material containing

information about the fraud. Those decisions present paradigm

examples of the sort of Parasitic claims that the “public

disclosure” and “original source” requirements were specifically

designed to preclude.

The decision below does not conflict with Petitioner’s

attorney-relator trilogy of authorities. The degree of public

disclosure involved in civil litigation (the Stinson and K reindler

cases) or in discussions with all employees present in a

workplace (the Doe case) far exceeds that involved in private

communication of a non-public audit report to officials of the

audited company — especially where the company selects its

representatives, as LMSC did.

(2) The Petition’s effort to find a conflict between the

decision below and decisions of other appellate courts on the

question presented regarding the “original source” test is also

12

strained. As the Third Circuit succinctly observed in United

States ex rel. Stinson, Lyons, Gerlin & Bustamante, supra, 944

F.2d at 1161, “[t]he paradigmatic ‘original source’ is a

whistleblowing insider” who is a “close observer[] or otherwise

involved in the fraudulent activity,” citing legislative history, S.

Rep. No. 345, supra, at 4. See also United States ex rel. Plumbers

& Steamfitters Local Union No. 38 v. C.W. Roen Construction

Co., 183 F.3d 1088, 1092 (9 Cir. 1999) (similar language

describing the “archetypal” relator). Respondents fit this

description exactly.

As both courts below found, the DCAA audit report resulted

from Respondents’ disclosure of their “direct and independent”

knowledge of the fraud in Respondent Newsham’s 1984

complaint to the DCAA. (App. 29a, App. 8a-9a) Respondent's

knowledge of the relevant facts did not originate in the

governmental documents. These facts distinguish this case from

both of the decisions cited by Petitioner as embodying a conflict,

United States ex rel. Hafter v. Spectrum Emergency Care, Inc.,

190 F.3d 1156 (10" Cir. 1999), and United States ex rel. Mistick

PBT v. Pittsburgh Housing Authority, 186 F.3d 376 (3 Cir.

1999), pet. for cert. filed, No. 99-969 (December 8, 1999).!!

There is no inconsistency between the factual findings of both

courts below that Respondents were original sources in this case

(App. 30a, App. 14a), and the findings that the relators in Hafter

and Mistick were not “original sources.”!?

11. In Hafter, the relator failed to show any personal basis for

the knowledge of fraud. 190 F.3d at 1163. In Mistick, the relator’s

knowledge was not persona! but derived from documents obtained

from the Department of Housing and Urban Development through a

FOIA request, which as the court noted is a public source. 186 F.3d

at 388-89.

12. Petitioner’s attempt to secure review of the determination

by two courts below that Respondents were original sources runs -

counter to this Court's traditional reluctance to review findings of

fact made by the district court and concurred in by the court of

(Cont'd)

13

Petitioners’ authorities acknowledge that “‘it is not necessary

for a relator to have all the relevant information in order to

qualify as ‘independent’.” Stinson, 944 F.2d at 1160; see also

Mistick, 186 F.3d at 389: Hafter, 190 F.3d at 1163 (emphasis

supplied); and Wang v. FMC Corp., 975 F.2d 1412, 1418-19

(9" Cir. 1992) (to be an Original source, relator must have

“played a part” in the disclosures), citing United States ex rel.

Dick v. Long Island Lighting Co., 912 F.2d 13, 16-17 (2™ Cir.

1990) (relator must be “directly or indirectly” responsible for

disclosure). Since Respondents clearly possessed some of the

information, and caused the government auditors to uncover

additional information, there is no conflict between the decision

below finding Respondents “original sources” and the other

decisions cited in the Petition.”

Ill.

(1) The fourth question presented by the Petition,

relating to the application by the court below of California’s

anti-SLAPP"* law, Cal. Code Civ. Proc. § 425.16, has

apparently never before been addressed in any case

(Cont'd)

appeals. Goodman v. Lukens Steel Co., 482 U.S. 656, 665 (1987),

quoting Graver Tank & Mfg. Co. v. Linde Air Products Co., 336

U.S. 271, 275 (1949),

13. Insofar as the Petition relies on allegedly conflicting panel

opinions within the Ninth Circuit (Pet. at 23 n.23), this ground does

not support granting the Petition. See footnote 10 at p. 10, supra.

14. “SLAPP” stands for Strategic lawsuit against public

participation. “Public participation” connotes the exercise of First

Amendment freedoms. (App. 15a-16a).

14

(see App. 17a). This is not surprising, since that issue could

only arise where a federal court's supplemental jurisdiction

is invoked for a state law SLAPP claim brought against a

party exercising his First Amendment rights.

Petitioner cites no other states’ laws, nor any other

California law, whose applicability in federal court cases

might be affected by this Court’s review of the decision

below. To address such a question before it has been

entertained in more than one lower court, and in the absence

of any square conflict or indication of exceptional

importance, Would be an unusual exercise of this Court’s

discretionary certiorari power.

Moreover, the decision below did not finally resolve

Respondents’ anti-SLAPP claim. As the Ninth Circuit noted

(App. 20a), the district court did not rule on Respondents’

motion to strike or motion for fees. The district court merely

held the anti-SLAPP law inapplicable (App. 27a), and the

court below reversed. The court of appeals’ holding will not

be ripe for review until the district court enters, and the court

below reviews, a final order on the Respondents’ anti-SLAPP

motions. See Brotherhood of Locomotive Firemen v. Bangor

& Aroostock R. Co., supra, 389 U.S. 327.

(2) The decision of the court below on the anti-SLAPP

issue is in harmony, and not in conflict, with prior decisions

of this Court and other appellate courts on related questions.

In asserting the purported conflict, Petitioner relies primarily

on this Court’s decision in Hanna v. Plumer, 380 U.S. 460

(1965). Hanna was only this Court’s first discussion of the

particular standard for deciding whether a rule of state law

is impermissibly inconsistent with a federal rule of procedure,

and therefore warrants an exception from the rule of Erie R.

Co. v. Tompkins, 304 U.S. 64 (1938). This Court explained

and limited the Hanna exception to Erie in two following

15

cases — Walker v. Armco Steel Corp., 446 U.S. 740 (1980),

and Burlington Northern R. Co. v, Woods, 480 U.S. 1 (1987)

— whose directly applicable holdings Petitioner does not

mention.

Under Walker and Burlington Northern, the vague

standard invoked in the Petition - whether the “situation” at

issue is “covered by” the relevant federal rule — is a first

step in the analysis, not the ultimate test as Petitioner urges.

(Pet. at 26). Those authorities require, for the Hanna —

exception to come into play, that the purposes of the federal

and state rules must be not merely similar or related, as the

Petition suggests, but “co-extensive”: and that the State law

must be in “direct collision” with the federal rule, and the

resulting conflict must be “unavoidable.” Walker, 446 U.S.

at 749-50; Burlington Northern, 480 U.S. at 4-5. The decision

below follows those standards.

(3) Comparison of the Federal Rules of Civil Procedure

and the California anti-SLAPP law produces nothing

approaching the type of conflict that must be found under

Walker and Burlington Northern to justify failure to apply

the anti-SLAPP law consistent with Erie doctrine and the

goal of “sensitivity to important state interests and regulatory

policies,” Gasperini v. Center for Humanities, 518 U.S. 415,

426 n.7 (1996). As the court below properly found, see App.

15a-16a, the anti-SLAPP law addresses only a very limited

class of cases for which the California Legislature expressed

a very specific set of concerns. The procedural provisions

of the anti-SLAPP law address a special motion which is

not co-extensive with a motion to dismiss or a motion for

summary judgment under Rules 12(b)(6) or 56 of the Federal

Rules of Civil Procedure. Rather, the anti-SLAPP law

provides a supplemental means of adjudicating questions

relevant only to a limited class of California causes of action.

16

Nothing in the anti-SLAPP law prohibits, or is in direct

conflict with, the filing or determination of Rule 12(b)(6) or

56 motions under the Federal Rules.'* The anti-SLAPP law

merely provides an alternative or supplemental procedure

for protecting the rights of a particular set of parties (persons

exercising the constitutional rights of speech and petition)

from a particular type of abusive action (a SLAPP suit).

To hold the anti-SLAPP law unavailable in federal court

proceedings on state law causes of action, as the Petition

urges, would encourage forum-shopping as between federal

and state courts in violation.of one of the major aims of Erie.

See Hanna, 380 U.S. at 468.'°

IV.

THE COURT SHOULD DECLINE TO HOLD THIS

PETITION PENDING DECISION IN STEVENS

ON THE CONSTITUTIONALITY OF THE FCA’S

QUI TAM PROVISIONS.

The Court should decline to follow Petitioner’s

suggestion that, if the Petition is not granted, it should be

held pending a decision in Vermont Agency of Natural

Resources v. United States ex rel. Stevens, O.T. 1999,

15. Nor does the decision below require or contemplate

substitution of the anti-SLAPP procedures or standards for

adjudicating a motion for summary judgment or a motion to dismiss

in such an action. Since the court below did not require use of state

procedures on a federal Rules-based motion, there is no conflict

between its decision and the thrée Court of Appeals decisions cited

by Petitioner in the last paragraph of section III of the Petition

(Pet. at 28).

16. Contrary to the Petition’s assertion (Pet. at 26 n.26),

the opportunity for forum shopping is the same here, where the

District Court has federal question jurisdiction of the FCA

claim and supplemental jurisdiction of the state law claims, as in a

diversity case.

17

No. 98-1828. That procedure would inflict needless delay

on a case that has already been pending for over a decade at

the pre-trial stage.

The constitutionality issue taken up by the Court in the

Stevens case is jurisdictional in nature. If the Court were to

deny certiorari here and subsequently hold the qui tam

provisions of the False Claims Act unconstitutional in

Stevens, Petitioner could renew its motion to dismiss in the _

courts below without further delay. See Mutuelles Unies vy.

Kroll & Linstrom, 957 F.2d 707, 711 (9% Cir. 1992) (party

may challenge existence of jurisdiction at any time).

The Court should not, therefore, further delay the process of

re-starting an already-old case.

CONCLUSION

The Petition for a Writ of Certiorari should be denied.

Respectfully submitted,

Guy T. SAPERSTEIN

Morris J. BALLER*

CHRISTOPHER J. KELLER

SAPERSTEIN, GOLDSTEIN,

DEMCHAK & BALLER

300 Lakeside Drive, Suite 1000

Oakland, California 94612

(510) 763-9800

Attorneys for Respondents

Margaret A. Newsham and

Martin Overbeek Bloem

* Counsel of Record