Petition for Writ of Certiorari — United States ex rel. Lujan v. Hughes Aircraft Co.

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In The

Supreme Court of the United States

UNITED STATES OF AMERICA

ex rel. LINDA A. LUJAN,

Petitioners,

HUGHES AIRCRAFT COMPANY,

Respondent.

o _

On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Ninth Circuit

PETITION FOR WRIT OF CERTIORARI

JosepH W. CotcHett Danie I. Davipson*

Niatt P. McCartuy Peter J. Hopkins

MattHew S. GABE Sprece. & McDiarmip

- CorcHett Pitre & SIMON 1350 New York Ave., N.W.

840 Malcolm Road, Suite 1100

Suite 200 Washington, DC

Burlingame, CA 94101-1413 20005-4798

(650) 697-6000 (202) 879-4000

Attorneys for Petitioner Attorneys for Petitioner

*Counsel of Record

ARTHUR C. LEAHY Kevin P. Roppy

MivserG Weiss BeRSHAD Hacens BerMAN LLP

Hynes & LeracH LLP 611 West Sixth Street,

660 West Broadway, 16th Floor

18th Floor Los Angeles, CA

San Diego, CA 92101-3375 90017-3101

(619) 231-1058 (213) 861-7454

Attorneys for Petitioner Attorneys for Petitioner

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTIONS PRESENTED FOR REVIEW

In Christianson v. Colt Industries Operating Corp., 486

U.S. 800 (1988) this Court determined that a decision by a

Court of Appeals to transfer to another court necessarily

decided that the transferee court had jurisdiction and this

determination constituted the law of the case.

‘i

Il.

The questions presented here are:

WHETHER A DECISION BY A COURT OF APPEALS

TO REMAND TO A DISTRICT COURT CONSTI-

TUTES LAW OF THE CASE IMPLICITLY REJECTING

A JURISDICTIONAL CHALLENGE THAT WAS

URGED BEFORE THE COURT OF APPEALS BUT

NOT DISCUSSED IN ITS OPINION.

WHETHER A COURT OF APPEALS MUST RESPOND

TO A SUBSTANTIAL, STRONGLY PRESENTED

ARGUMENT THAT A DECISION OF THIS COURT IS

CONTROLLING OR DOES IT PROPERLY PERFORM

ITS ROLE AS A SUBORDINATE FEDERAL COURT

BY IGNORING, WITHOUT ANY RECOGNITION OF

ITS EXISTENCE, THE DECISION OF THIS COURT

URGED UPON IT.

LIST OF PARTIES

United States of America

Linda A. Lujan

Hughes Aircraft Company

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED FOR REVIEW ........... i

SE PY OUND occ ccescccssvctnccasscceccsacenes il

Cy ME PUW cee cs ceecsccsccneasssseccveswews 1

PETITION FOR WRIT OF CERTIORARI............ ]

JURISDICTIONAL STATEMENT................+.-- 1

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

I. STATEMENT OF THE CASE.................. 2

Il. REASONS FOR GRANTING THE WRIT ...... 6

A. THE COURT OF APPEALS FOR THE

NINTH CIRCUIT’S HOLDING DISRE-

GARDING LAW OF THE CASE DOCTRINE

CONFLICTS WITH A CONTROLLING

DECISION OF THIS COURT, IGNORES A

CONFLICT AMONG THE CIRCUITS, AND

DOES NOT SHOW PROPER ATTENTION

TO A DECISION OF THIS COURT URGED

Pee 7) 8 BO | Cree 6

B. TREATING THE SCHUMER CASE AS A

NULLITY IS NOT CLEAR ERROR AND

WORKS NO MANIFEST INJUSTICE....... )

1. Lujan II's Implicit Rejection of Hughes’

First-To-File Challenge Is Not Clearly

NPIGEE Svc cccceccecccncctsevcccicene 1]

Lujan II's Implicit Rejection of Hughes’

First-to-File Argument Works No Mani-

fest Injustice Against Hughes.......... 15

et OL, 24.0 pc 6k bes doen diesen sdacucsaees 17

TABLE OF AUT! iORITIES

Page

Feperat CAsEs

Christianson v. Colt Industries Operating or 486

as Se Re bc dake ae dose daewsten oer »& 7.89,

Drake v. Cheney, No. 91-1553, 1992 U.S.App. LEXIS

Fa Oe a. PS 6 5 0405 bad oe ba ood eae Rae es 13, 14

Ex Parte McCardle, 74 U.S. 506 (1869) ............... 12

Ferreira v. Borja, 93 F.3d 671 (9th Cir. 1996).......... 15

Helvering v. Gowran, 302 U.S. 238 (1937)........... 7, 33

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

— Bit Be Fs: ee 10, 11, 12, 13, 16

LaShawn A. v. Barry, 87 F.3d 1389 (D.C. Cir. 1996) ...7, 8

Morongo Band of Indians v. California State Board of

Equalization, 858 F.2d 1376 (9th Cir. 1988)......... 12

Noble v. Union River Logging R.R., 147 U.S. 165

en ETS TO NAT ea ANNE PL Re oe 12

Public Interest Research Group of New Jersey, Inc. v.

Magnesium Elektron, Inc., 123 F.3d 111 (3rd Cir.

og OPES EET LOPE OTe e eT TT Eee Tee PPC TT Ot ree 8

Southwest Marine Inc. v. Danzig, 217 F.3d 1128 (9th

Le Soke dedwadigeb even eaceaueeessaeee seues 6, 10

Steel Co. v. Citizens for-a Better Environment, 523

Rose SE cc eokn hasuledan tpacsenneeceunneaaWe 11

United States ex rel. Lujan v. Hughes Aircraft Co., 67

Pe ee CE es Boks odere deta cdandebencead Le

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

pe mk Bi ie, Yu ae | | eres 1, 3, 5, 6

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

S62 Fie WGE7 GOR Cie. ORB ccc eee a

TABLE OF AUTHORITIES - Continued

Page

United States ex rel. Pentagen Technologies Interna-

tional, Ltd. v. CACI International, Inc., 172 F.3d 39

(2d Cir. 1999) ...... cece cece eee renee ene een renes 14

United States v. Crescent City E.M.S., Inc., 946

F.Supp. 447 (E.D. 1996) ......... eee eee erent ees 14

Vermont Agency of Natural Resources v. United States

ex rel. Stevens, 529 U.S. 765 (2000) ........-.-+-- 9, 12

Watts v. Pickey, 752 F.2d 406 (9th a, | eee. 13

FEDERAL STATUTES

31 UG.C. © STOOD) nc ccc ctsnedesuesasesssseses passim

SO LISC. 6 STINE) onic adeacvccransennuaeneves 5, 4,3

28 USC. § 1254.2... 2 ccrcscerdeccnsenensrensesessass 2

GIR on BY.) eee rer Ter a

31 U.S.C. §§ 3729-3733. .....6: cece eee eee e eter eeees 2

OPINIONS BELOW

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

243 F.3d 1181 (9th Cir. 2001), reprinted in the appendix.

App. 1.

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

162 F.3d 1027 (9th Cir. 1998), reprinted in the appendix.

App. 18.

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

67 F.3d 342 (9th Cir. 1995), reprinted in the appendix.

App. 36.

PETITION FOR WRIT OF CERTIORARI

Petitioner, the United States of America ex rel. Linda

A. Lujan, respectfully prays that a Writ of Certiorari

issues to review the judgment and opinion of the United

States Court of Appeals for the Ninth Circuit entered on

March 22, 2001, in the above-entitled proceeding. Peti-

tioners’ petition for rehearing and the petition for rehear-

ing en banc were denied by the United States Court of

Appeals for the Ninth Circuit on June 5, 2001. App. 50.

JURISDICTIONAL STATEMENT

The judgment of the court of appeals was entered on

March 22, 2001. The petition for rehearing and the peti-

tion for rehearing en banc were denied on June 5, 2001.

The jurisdiction of this Court is invoked under 28 U.S.C.

§ 1254(1).

STATUTORY PROVISIONS INVOLVED

False Claims Act, 31 U.S.C. §§ 3729-3733. App. 51.

1. STATEMENT OF THE CASE

This appeal involves a qui tam action which was

initially filed in 1992 by relator Linda A. Lujan pursuant

to the False Claims Act (“FCA”), 31 U.S.C. §§ 3729-3733,

against her former employer, Hughes Aircraft Company

(“Hughes”). Her First Amended Complaint (“Com-

plaint”) was filed on August 3, 1992. Lujan’s Complaint

alleged that Hughes mischarged costs among various

contracts associated with the B-2 radar systems; mis-

charged the government by failing to follow “Common-

ality Agreements” for sharing of costs among various

government radar programs; made unapproved engineer-

ing design changes to the B-2 radar systems; mischarged

to the B-2 radar systems overhead and various other costs

incurred for other government radar programs; submit-

ted fraudulent historical cost and pricing data during

negotiation of B-2 contracts; and substituted noncontorm-

ing, substandard, and unauthorized materials and parts

in the production of the B-2 radar systems.

Lujan’s qui tam action has been dismissed three times

by the United States District Court for the Central District

of California. Lujan appealed each of these dismissals to

the Court of Appeals for the Ninth Circuit. The Court of

ee ee

Appeals for the Ninth Circuit had jurisdiction over each

matter pursuant to 28 U.S.C. § 1291.

The first dismissal by the district court, on the

ground that Lujan had violated the seal placed on her

complaint pursuant to 31 U.S.C. § 3730(b)(2), was

reversed by the Court of Appeals for the Ninth Circuit in

United States ex rel. Lujan v. Hughes Aircraft Co., 67 F.3d

242 (9th Cir. 1995) (“Lujan I”). App. 36.

The second dismissal by the district court, on the

ground that the allegations were “publicly disclosed” by

Schumer’s 1989 qui tam action, and therefore precluded

by 31 U.S.C. § 3730(e)(4), was also reversed by the Court

of Appeals for the Ninth Circuit in United States ex rel.

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

(“Lujan II”). App. 18. In Lujan II, the Court of Appeals for

the Ninth Circuit reversed the district’s court’s dismissal

for want of subject matter jurisdiction and held that Lujan

was entitled to prosecute her qui tam claims because she

was the “original source” of her allegations against

Hughes within the meaning of the False Claim Act.

In Lujan II, Hughes first raised the statutory first-to-

file bar that served as the basis for the decision in Lujan

IIL, which is the subject of this Writ. In addition to argu-

ing that the district court was correct in dismissing

Lujan’s case pursuant to the public disclosure bar,

Hughes argued in its brief and on oral argument that

Lujan’s case must be dismissed pursuant to 31 VS.

§ 3730(b)(5), which provides:

When a person brings an action under this sub-

section, no person other than the Government

Pets.

may intervene or bring a related action based on

the facts underlying the pending action.

As mentioned above, the Court of Appeals for the

Ninth Circuit reversed the district court’s dismissal of

Lujan’s qui tam claims because it found, after extensive

consideration, that Lujan was an “original source” of the-

allegations within the meaning of 31 U.S.C.

§ 3730(e)(4)(A), and therefore, that there was subject mat-

ter jurisdiction. Lujan II, 162 F.3d 1027. The Court pointed

out that “Lujan disclosed her allegations to the govern-

ment before similar allegations were publicly disclosed

by Schumer’s lawsuit,” and that Lujan “also acted

promptly to remedy the perceived wrongdoing.” Id. at

1034.

Hughes again raised its § 3730(b)(5) argument in its

unsuccessful Petition for Rehearing and/or Rehearing En

Banc. Hughes reiterated that it was raising the

§ 3730(b)(5) argument as “an assertion of lack of subject

matter jurisdiction” (emphasis supplied). The Court of

Appeals for the Ninth Circuit denied Hughes’ petition for

rehearing and remanded Lujan’s qui tam claims to the

district court. Lujan II, 162 F.3d at 1035. The Court of

Appeals expressly held that “the district court has subject

matter jurisdiction . . . [over] Lujan’s post-1986 gui tam

claims.” Lujan II, 162 F.3d at 1034.

Following that remand, Hughes renewed, in the form

of a motion to dismiss directed to the district court, the

§ 3730(b)(5) arguments it had previously made to the

Ninth Circuit. The district court for a third time dis-

missed Lujan’s qui tam action. Lujan appealed this dis-

missal to the Court of Appeals for the Ninth Circuit

pursuant to 28 U.S.C. § 1291. Lujan strongly urged in her

brief and on oral argument that this Court’s decision in

Christianson v. Colt Industries Operating Corp., 486 U.S. 800

(1988), was controlling and thus required a reversal.

This time, however, the Court of Appeals for the

Ninth Circuit affirmed the dismissal in United States ex

rel. Lujan v. Hughes Aircraft Co., 243 F.3d 1181 (9th Cir.

2001) (“Lujan III”), entered March 22, 2001. App. 1. In

Lujan III the Court of Appeals affirmed the district court's

dismissal on first-to-file grounds arguments. Thus, the

Lujan III decision rejected “Lujan’s content[ion] that the

law of the case doctrine precluded the district court's

consideration of Hughes’ § 3730(b)(5) jurisdictional chal-

lenge.” Lujan III, 243 F.3d at 1186. The decision acknowl-

edged that “[t]he doctrine applies to the appellate court's

‘explicit decisions as well as those issues decided by

necessary implication.” Id. at 1186-87 (quoting Eichman v.

Fotomat Corp., 880 F.2d 149, 157 (9th Cir. 1989)). Without

explanation, Lujan III further found that the Court of

Appeals did not implicitly decide the first-to-file chal-

lenge in Lujan II, notwithstanding the fact that Hughes

argued the point on three separate occasions and that the

Lujan II court remanded the case finding proper subject

matter jurisdiction over Lujan’s qui tam claims. The Court

stated Lujan II was not controlling:

In Lujan II, we reversed the district court’s dis-

missal of Lujan’s post-1986 claims for lack of

subject matter jurisdiction under § 3730(e)(4).

While Hughes argued § 3730(b)(5) jurisdictional

challenge to this court, we did not explicitly or

implicitly decide that issue. Therefore, the law

of the case did not foreclose consideration of the

§ 3730(b)(5) jurisdiction issue. Even if we had

decided the § 3730(b)(5) jurisdictional question

in Lujan’s favor, we can correct that decision to

prevent manifest injustice. See Southwest Marine

v. Danzig, 217 F.3d 1128, 1136 (9th Cir. 2000)

(“prior decision should be followed un-

less... the decision is clearly erroneous and its

enforcement would work a manifest injustice”)

(internal quotations omitted).

Lujan III, 243 F.3d at 1187.

Il. REASONS FOR GRANTING THE WRIT

A. THE COURT OF APPEALS FOR THE NINTH

CIRCUIT’S HOLDING DISREGARDING LAW

OF THE CASE DOCTRINE CONFLICTS WITH A

CONTROLLING DECISION OF THIS COURT,

IGNORES A CONFLICT AMONG THE CIR-

CUITS, AND DOES NOT SHOW PROPER

ATTENTION TO A DECISION OF THIS COURT

URGED AS CONTROLLING.

There are three compelling reasons for granting the

writ. First, the issue of the scope of Christianson as to sub.

silento jurisdictional holdings should be resolved in order

to lighten the burden of unnecessary multiple appeals

upon the courts and litigants. Second, there is a clear and

acknowledged split among the circuits on whether Chris-

tianson is confined solely to instances in which the court

of appeals orders a transfer or whether its scope is

broader. Third, in the exercise of its supervisory jurisdic-

tion over subordinate courts this Court should remind

the lower courts that when a decision of this court is

urged, with substantial logic, as a controlling precedent

the lower court is not free to ignore that decision and

should either distinguish it, however, briefly or follow it.

This Court’s holding in Christianson v. Colt Industries

Operating Corp., 486 U.S. 800 (1988) is controlling and

dispositive authority that in remanding Lujan’s qui tam

claims to the district court in 1998, Lujan II had implicitly

decided and rejected Hughes’ § 3730(b)(5) jurisdictional

challenge and that that decision constituted law of the

case. Christianson teaches that a decision by a court to

transfer (or remand) a case to another court necessarily

involves a decision that the recipient court has jurisdic-

tion. In Christianson, after full briefing and argument, the

Court of Appeals for the Federal Circuit had issued an

order transferring the case to the Court of Appeals for the

Seventh Circuit. Although the order did not discuss the

issue, this Court held that the order decided the jurisdic-

tional issue and constituted the law of the case:

That the Federal Circuit did not explicate its

rationale is irrelevant, for the law of the case

turns on whether a court previously ‘decide[d]

upon a rule of law’ - which the Federal Circuit

necessarily did - not on whether, or how well, it

explained the decision.

486 U.S. at 817.

That Christianson involved a case transfer, and not a

remand, is of no concern. The Lujan I] Court’s remand to

the district court was equivalent to the transfer at issue in

Christianson. In LaShawn A. v. Barry, 87 F.3d 1389 (D.C.

Cir. 1996), the Court of Appeals for the District of Colum-

bia expressly applied the holding in Christianson to a

remand to the district court. The dissent argued that

applying law of the case should turn on the explicitness

of the court’s prior mandate. The D.C. Circuit held:

The Supreme Court’s holding in Christianson

“renders the dissent’s complaint irrelevant.”

The law-of-the-case doctrine, the Supreme Court

said, turns “on whether a court previously

decide[d] upon a rule of law . . . not whether, or

how well, it explained the decision.”

LaShawn, 87 F.3d at 1394 (en banc).

There is a split of authority in the federal circuits

regarding the law of the case doctrine. In Public Interest

Research Group of New Jersey, Inc. v. Magnesium Elektron,

Inc., the Court of Appeals for the Third Circuit held that

the Court of Appeals affirmance of the district court’s

ruling that a public interest group had standing to sue

permittee under the Clean Water Act did not preclude the

Court of Appeals, under the “law of the case doctrine,”

from reexamining that holding on subsequent appeal.

Public Interest Research Group of New Jersey, Inc. v. Magne-

sium Elektron, Inc., 123 F.3d 111, 118 (3rd Cir. 1997). The

Court explained, “Thus, we read Christianson’s discussion

of the law of the case, as it relates to jurisdiction, to apply

only to transfer cases and not to cases that raise serious

jurisdictional concerns, such as plaintiff’s standing to

sue.” Id. The Court, however, acknowledged that, “In

doing so, we recognize that two sister circuits have held

that the law of the case doctrine applies to subject matter

jurisdiction.” Id. Therefore, there is a clear and acknowl-

edged split among the circuits regarding the scope of

Christianson.

Turning to the case at hand, in 1998, the Court of

Appeals for the Ninth Circuit reversed the district court’s

holding that it was without subject matter jurisdiction

over Lujan’s qui tam action and remanded Lujan’s

post-1986 qui tam claims to the district court. Lujan II, 162

F.3d 1027. The Lujan II court remanded, and explicitly

held that the district court had jurisdiction over Lujan’s

qui tam claims after Hughes had thrice raised its

§ 3730(b)(5) challenge. At that time, the Lujan IJ court was

duty bound to consider this jurisdictional challenge.

“IQjuestions of jurisdiction, of course, should be given

priority — since if there is no jurisdiction there is no

authority to sit in judgment of anything else.” Vermont

Agency of Natural Resources v. United States ex rel. Stevens,

529 U.S. 765 at 778 (2000). “[T]he rule is settled that if the

decision below is correct, it must be affirmed although

the lower court relied on a wrong ground or gave a

wrong reason.” Helvering v. Gowran, 302 U.S. 238, 245

(1937). In these circumstances, Christianson must be con-

trolling.

It is extremely important to note that Lujan argued

that Christianson was controlling authority in her initial

and reply briefs to the Court of Appeals for the Ninth

Circuit. Yet, Lujan III does not even mention Christianson,

let alone attempt to explain why Christianson does not

dispose of Hughes’ attempt to relitigate its § 3730(b)(5)

argument.

B. TREATING THE SCHUMER CASE AS A NUL-

LITY IS NOT CLEAR ERROR AND WORKS

NO MANIFEST INJUSTICE

It appears that Lujan III finds that the law of the case

“should be followed unless . . . the decision is clearly

erroneous and its enforcement would work a manifest

injustice.” Lujan III, 243 F.3d at 1187 (emphasis supplied)

(quoting Southwest Marine Inc. v. Danzig, 217 F.3d 1128,

1135 (9th Cir. 2000). Neither of the two prongs were

satisfied here. There was no clear error in declining to

dismiss Lujan’s claims based on a purportedly “pending”

action that was a legal nullity. Cf. Drake v. Cheney, No.

91-1553, 1992 U.S. App. LEXIS 7294 * 8 (4th Cir. Apr. 15,

1992) (“civil action was not ‘pending’ in federal court”

where the district court “at no time had subject-matter-

. . . jurisdiction”). There was also no manifest injustice.

“The existence of exceptional circumstances is required

before finding a manifest injustice... . Ata minimum, the

challenged decision should involve a significant inequity

or the extinguishment of a right before being charac-

terized as manifestly unjust.” Jeffries v. Wood, 114 F.3d

1484, 1492 (9th Cir. 1997) (en banc).

Lujan III strongly suggests that it would be “clearly

erroneous” and a “manifest injustice” if Lujan II “had

decided the § 3730(b)(5) jurisdictional question in Lujan’s

favor... . ” Lujan II, 243 F.3d at 1187. This apparent

holding is error and its result works a manifest injustice.

As background, William Schumer’s qui tam complaint

against Hughes alleged mischarging on the B-2 radar

program. In 1997, this Court dismissed that complaint for

lack of subject matter jurisdiction, after Hughes sought

review of the Court of Appeals for the Ninth Circuit's

finding that the 1986 amendments to the False Claims Act

were retrospective. Hughes Aircraft Co. v. United States ex

rel. Schumer, 520 U.S. 939 (1997). In Schumer, this Court

held that “the District Court was obliged to dismiss this

action because it was ‘based on evidence or information

the Government had when the action was brought.’ 31

U.S.C. § 3730(b)(4) (1982 ed.).” Id. at 952.

In Lujan II the Court of Appeals for the Ninth Circuit

correctly held that Lujan was the “original source” prop-

erly entitled to litigate and seek restitution on behalf of

the government for Hughes’ False Claims violations. In

Lujan III, however, the Court vitiated its prior ruling and

found that Hughes is now immunized from suit as a

result of an earlier filed suit, Hughes Aircraft Co. v. United

States ex rel. Schumer, that as mentioned above, this Court

has previously held to be jurisdictionally invalid and

therefore a legal nullity from its inception.

1. Lujan II's Implicit Rejection of Hughes’

First-To-File Challenge Is Not Clearly Erro-

neous

The Lujan II panel knew that Schumer’s case was a

legal nullity when it remanded Lujan’s qui tam claims to

the district court. Lujan II, 162 F.3d at 1030. It found

jurisdiction and remanded her qui tam claims notwith-

standing its legal duty to consider Hughes’ first-to-file

challenge and affirm the dismissal of Lujan’s claims if

Hughes was right. Helvering v. Gowran, 302 U.S. at 245.

Indeed, “the first and fundamental question” that the

Court had to decide was “that of jurisdiction, first of the

[Court itself] and then of the court from which the record

comes. ...” Steel Co. v. Citizens for a Better Env't, 523 U.S.

83, 94 (1998). Given these considerations it was in no way

“clearly erroneous” for Lujan II to find jurisdiction over

Lujan’s qui tam claims and remand the action. Section

3730(b)(5) provides:

When a person brings an action under this sub-

section, no person other than the Government

may intervene or bring a related action based on

the facts underlying the pending action.

The statute is clear that if there is no “pending

action” the provision is not applicable. Because

Schumer’s action should have been dismissed at the out-

set by the district court, it was a nullity from the outset. It

could not at any time have been a “pending action.”

Congress never intended that a suit that should not have

been filed, and which when filed should have been dis-

missed immediately for want of jurisdiction, should bar a

subsequent plaintiff who is the very type of relator-plain-

tiff whose suit Congress sought to encourage.

Because there was no federal jurisdiction, the

Schumer action was a legal nullity. “Jurisdiction is power

to declare the law, and when it ceases te exist, the only

function remaining to the court is that of announcing the

fact and dismissing the cause.” Vermont Agency, 529 U.S.

at 778-79 (quoting Ex Parte McCardle, 74 U.S. 506 (1869)).

Without jurisdiction, the action “is not voidable merely

but void. ... The proceeding is a nullity.” Noble v. Union

River Logging R.R., 147 U.S. 165, 173 (1893). “[W]hen

subject matter jurisdiction is lacking the district court

‘ha[s] no power to do anything, other than to dismiss the

action,’ and any order other than to dismiss is a nullity.”

Morongo Band of Indians v. California State Bd. of Equaliza-

tion, 858 F.2d 1376, 1380 (9th Cir. 1988) (quoting United

States v. Boe, 543 F.2d 151, 159 (C.C.P.A. 1976). “A void

judgment is a legal nullity.” Watts v. Pickey, 752 F.2d 406,

409 (9th Cir. 1985).

If Schumer’s complaint had been dismissed imme-

diately, as it should have been (see Hughes, 520 U.S. at

941-42), there would have been no pending action when

Lujan’s suit was filed, and therefore, § 3730(b)(5) could

not even arguably have barred her action. Congress only

precluded suit while another suit based on the same facts

was pending. Congress could not have intended that the

courts’ delay in applying correctly the jurisdictional bar

to dismiss the Schumer case was intended to preclude a

suit from being brought by the very individual whose

action the Congress sought to encourage - a suit by an

original source that was not parasitic in any way. Lujan II,

163 F.3d at 1034.

In Drake v. Cheney, the Court of Appeals for the

Fourth Circuit was faced with a similar situation. There

the Equal Employment Opportunity Commission was

required to cancel any complaint “that is the basis of a

pending civil action in a United States District Court.”

1992 U.S. App. LEXIS, at *5 (quoting 29 C.F.R.

§ 1613.215(a)(3) (1987)). Drake complained to the agency

that he had been subject to unlawful discrimination.

Drake then filed a civil complaint in federal court, alleg-

ing the same facts. Id. at *3. The agency held that an

action then pending before a district court required it to

cancel the administrative complaint. Subsequently, the

district court action was dismissed for want of subject

matter jurisdiction. Id. at *6.

The court of appeals held that because the district

court “at no time had subject-matter . . . jurisdiction” “in

effect [his] suit against his employer was a nullity.” Id. at

*s. It concluded “that, at the time the agency canceled

[the] complaint, a civil action wa, not ‘pending’ in federal

court within the meaning of the regulations.” Id. at *8.

That reasoning is equally applicable here: Schumer’s

action, over which the court lacked subject matter juris-

diction, was not “pending” within the meaning of the

statute.

In Lujan Ill, the Ninth Circuit attempted to distin-

guish Drake as “involving a different statute and actions

filed by the same person.” Lujan III, 243 F.3d at 1188 n.11.

However, the issue was the same, i.e., the meaning of

“pending.” Lujan III instead relied upon the Court of

Appeals for the Second Circuit's “unpublished opinion”

in United States ex rel. Pentagen Technologies International,

Ltd. v. CACI International Inc., 172 F.3d 39 (2d Cir. 1999)

and United States v. Crescent City E.M.S., Inc., 946 F. Supp.

447, 450 (E.D. La. 1996). Pentagen is an unpublished “sum-

mary order” and pursuant to Second Circuit Local Rule

§ 0.23 “shall not be cited or otherwise used in unrelated

cases before this or any other court.” Pentagen was not

intended to have precedential value. The dicta in Crescent

City is patently wrong. Crescent City states that a dismissed

suit can serve as a bar under § 3730(b)(5). To the contrary,

§ 3730(b)(5) is limited to “pending” suits, not suits that

were once “pending” (or never pending, because they

were legal nullities, such as Schumer’s). In sum, Lujan Ill

fails to show, and cannot show that Lujan II's implicit

rejection of Hughes’ first-to-file challenge was “clearly

erroneous’.

2. Lujan II’s Implicit Rejection of Hughes’

First-to-File Argument Works No Manifest

Injustice Against Hughes

Lujan II's implicit rejection of Hughes’ § 3730(b)(5)

argument in no way works a “significant inequity” upon

Hughes or “extinguish[es]” Hughes’ rights. Hughes had

no right to perpetually reargue its first-to-file challenge.

“{A] court that has decided that it has jurisdiction is not

duty bound to entertain . . . a series of repetitive motions

_ to dismiss for lack of jurisdiction.” Ferreira v. Borja, 93

F.3d 671, 674 (9th Cir. 1996). “Perpetual litigation of any

issue — jurisdictional or nonjurisdictional - delays, and

therefore threatens to deny, justice.” Christianson, 486 U.S.

at 816 n.5. Nor is Hughes in any way prejudiced in

having to defend against Lujan’s qui tam claims, claims

brought by the true “original source.”

To the contrary, the equities are exclusively in favor

of Lujan, and her representation of the United States’

interest. Lujan III was wrong to find that Congress

intended that a suit that is a nullity should have the

result of precluding a proper relator from bringing an

action that can benefit the United States Treasury. Lujan

III, 243 F.3d at 1188. Congress certainly did not intend

that relators should have no bite at the apple. Lujan II]

was also wrong to find and emphasize that “Schumer’s

action promptly alerted the government to the essential

facts of a fraudulent scheme... . ” Id. at 1187 n.10. Prior

to the 1986 amendments to the False Claims Act a qui tam

suit was barred by prior government knowledge. Con-

gress removed that bar. See S.Rep.No. 99-345 at 12 (1986),

reprinted in 1986 U.S.C.C.A.N. 5277. Lujan III, 243 F.3d

1188 n.10, erroneously restores the bar by blocking Lujan

the original \source because “[t]he government knew

of . . . Schumer’s allegations.”

Contrary to Lujan III, barring Lujan, the “original

source” — the true statutory whistleblower from going

forward thwarts legislative intent. It is immaterial that

the government has declined to intervene; the statute is

intended to permit suits by relators in order to provide

the government additional helping hands. The Senate

Report to the 1986 amendments explains:

An additional problem noted by hearing wit-

nesses, exists when large, profitable corpora-

tions are the subject of a fraud investigation and

able to devote many times the manpower and

resources available to the Government. This

resource mismatch was recognized by DOD

Inspector General Joseph Sherick who said that

in far too many instances the Government’s

enforcement team is overmatched by the legal

teams major contractors retain.

The Committee believes that the amendments in

S. 1562 which allow and encourage assistance

from the private citizenry can make a significant

impact on bolstering the Government’s fraud

enforcement effort.

S. Rep.No. 99-345 at 8 (1986), reprinted in 1986

U.S.C.C.A.N. 5266, 5273. Contrary to Lujan III, nothing

supports the perverse contention that Congress intended

that a suit that is a nullity should preclude a proper

relator from bringing an action that can benefit the pub-

lic. But for purposes of the case all that is necessary is the

proper determination that treating Schumer as a legal

nullity not barring Lujan’s suit is neither clear error nor

manifest injustice.

Ne eT eT

Ill. CONCLUSION

Petitioner, the United States of America ex rel. Linda

A. Lujan, respectfully requests that, for the reasons stated

above, the Petition for a Writ of Certiorari be granted.

Respectfully submitted,

DanieEL I. Davipson*

Peter J. Hopkins

SpreEGEL & McDIArRmMIpD

1350 New York Ave., N.W.

Suite 1100

Washington, DC 20005-4798

(202) 879-4000

Attorneys for Petitioner

*Counsel of Record

JosepH W. CoTcHETT Kevin P. Roppy

Niatt P. McCartHy Hacens BERMAN LLP

MatTHEw S. GABE 611 West Sixth Street,

CortrcHett Pitre & SIMON 16th Floor

840 Malcolm Road, Los Angeles, CA

Suite 200 90017-3101

Burlingame, CA 94101-1413 (213) 861-7454

(650) 697-6000

Attorneys for Petitioner

ArTHUR C. LEAHY

MicsBerc Weiss BERSHAD

Hynes & LeracH LLP

660 West Broadway,

18th Floor

San Diego, CA 92101-3375

(619) 231-1058

Attorneys for Petitioner

App. 1

United States Court of Appeals,

Ninth Circuit.

UNITED STATES of America, ex rel. Linda A. LUJAN,

Plaintiffs-Appellants,

HUGHES AIRCARFT COMPANY, Defendant-Appellee.

No. 00-55328.

Argued and Submitted Feb. 7, 2001

Filed March 22, 2001

Daniel I. Davidson, Spiegel & McDarmid, Washington,

D.C., for the plaintiff-appellant. .

Mark R. Troy, James J. Gallagher, Michael R. Rizzo and Kevin

J. Slattum, McKenna & Cuneo, L.L.P., Los Angeles, Cali-

fornia, for the defendant-appellee.

Appeal from the United States District Court for the

Central District of California; Stephen V. Wilson, District

Judge, Presiding. D.C. No. CV-92-01282-SVW.

Before: LEAVY, TROTT, and SILVERMAN, Circuit Judges.

SILVERMAN, Circuit Judge:

The False Claims Act (FCA) permits, in certain cir-

cumstances, suits by private parties on behalf of the

United States against anyone submitting a false claim to

the government. In 1986, Congress amended the FCA to

include § 3730(b)(5), which provides that “[w]Jhen a per-

son brings a [qui tam action], no person other than the

Government may intervene or bring a related action

based on the facts underlying the pending action.” This

appeal requires us to interpret § 3730(b)(5) for the first

time. We hold that § 3730(b)(5) establishes an exception-

free, first-to-file bar. We further hold that subsequently

dismissed cases constitute pending actions under

§ 3730(b)(5). Finally, we hold that a “material facts,” not

App. 2

“identical facts,” test should be used to determine if a

“related action [is] based on the facts underlying the

pending action.” § 3730(b)(5). We affirm the district

court’s dismissal of Lujan’s qui tam action for lack of

subject matter jurisdiction under § 3730(b)(5).

I. Background and Proceedings

Linda Lujan and William Schumer, former Hughes

Aircraft Company employees, brought separate qui tam

claims alleging that Hughes fraudulently used “common-

ality agreements”.! Determining whether § 3730(b)(5)

bars Lujan’s action necessarily involves reviewing

Schumer’s action.

A. United States ex rel. Schumer v. Hughes Aircraft

Company

In 1989, former Hughes manager William Schumer

filed a qui tam action against Hughes asserting that

Hughes defrauded the United States government by

entering into unauthorized and illegal commonality

agreements allocating project costs over more than one

1 The Air Force awarded a defense contract for constructing

the B-2 bomber to Northrup Corporation, which then in 1982

awarded Hughes a “cost-plus” subcontract to develop the

bomber’s radar system. Hughes was subsequently awarded

“fixed-price” contracts for developing other aircrafts’ radar

systems. Due to the contracts’ significant overlap, Hughes

adopted “commonality agreements” allocating costs between

various contracts using common components.

App. 3

subcontract. The government declined to intervene.2 In

May 1992, the district court found the commonality

agreements proper, and granted summary judgment in

favor of Hughes.

Schumer appealed and Hughes cross-appealed, argu-

ing “that because government auditors had alleged the

same mischarging prior to Schumer’s filing, the action

was barred under the ‘government knowledge’ defense,

31 U.S.C. § 3730(b)(4) (1982).” While acknowledging that

the 1986 amendments eliminated the government knowl-

edge defense,* Hughes argued that the 1986 amendments

2 Government auditors scrutinized costs subject to Hughes’

commonality agreements and, in 1986, initially concluded that

Hughes had misallocated costs. Subsequent audits between

1986 and 1988 concluded that Hughes had not adequately

disclosed its commonality accounting practices. Therefore, the

Government ordered Northrop to withhold contract payment to

Hughes. After conducting additional audits in 1990 and 1991,

the Government reversed its preliminary determination,

concluded that the commonality agreements benefitted the

Government, and ordered Northrop to pay Hughes. See Hughes

Aircraft Co. v. United States ex rel. Schumer, 520 U.S. 939, 942-43 n.

1, 117 S.Ct. 1871, 138 L.Ed.2d 135 (1997).

~ 3 Before 1986, the FCA barred cases brought by qui tam

plaintiffs whose allegations were “based on evidence or

information the Government had when the action was

brought.” 31 U.S.C. § 3730(b)(4) (1982). The 1986 amendments

eliminate the government knowledge defense. Incorporating

the 1986 amendments, § 3730(e)(4) provides:

(A) No court shall have jurisdiction over an action

under this section based upon the public disclosure of

allegations or transactions in a criminal, civil, or

administrative hearing, in a congressional,

administrative, or Government Accounting Office

report, hearing, audit, or investigation, or from. the

App. 4

could not be applied retroactively to Hughes pre-1986

conduct. We held that the 1986 amendments applied ret-

roactively to Hughes’ pre-1986 conduct, affirmed the

majority of the district court’s findings, and remanded

two factual issues regarding pre-1986 conduct. See United

States ex rel. Schumer v. Hughes Aircraft Co., 63 F.3d 1512,

1528 (9th Cir.1995).

The Supreme Court granted certiorari# and reversed,

holding that the 1986 amendments could not be applied

retroactively to pre-1986 conduct. The Court declined to

review the remaining issues and held that the claims

should have been dismissed, because the district court

did not have jurisdiction over the pre-1986 conduct due

to-the government knowledge exception.° See Hughes

news media, unless the action is brought by the

Attorney General or the person bringing the action is

an original source of the information.

(B) For purposes of this paragraph, “original

source” means an individual who has direct and

independent knowledge of the information on which

the allegations are based and has voluntarily

provided the information to the Government before

filing an action under this section which is based on

the information.

4 The Supreme Court granted certiorari as to (1) whether

the 1986 amendments retroactively applied to pre-1986 conduct,

(2) whether Schumer’s claims were jurisdictionally barred by

the FCA public disclosure provisions, and (3) whether the two

factual issues remanded by the Ninth Circuit could give rise toa

FCA claim given the government's determination that it had not

suffered any financial harm.

5 Schumer’s post-1986 conduct claims were decided

against Schumer on the merits, and affirmed by the Ninth

Circuit. Therefore, while the Supreme Court ordered the case

BORA AR hae can vies he Sekt ah

App. 5

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

952, 117 S.Ct. 1871, 138 L.Ed.2d 135 (1997).

B. United States ex rel. Lujan v. Hughes Aircraft

Company

This is the third appeal in this case.

In February 1992, Lujan filed qui tam claims against

Hughes for alleged fraud and retaliation claims for her

employment termination.® Lujan alleged that Hughes was

engaging in fraudulent contracting practices by shifting

costs from fixed-price programs to cost-plus programs.

Pursuant to 31 U.S.C. § 3730(b)(2), Lujan filed her claim

in camera and served it on the Government. While the

qui tam claim was still under seal and before Hughes had

been served with the complaint, the Los Angeles Times

ran two articles reporting Lujan’s qui tam claim filing.

The district court held that Lujan’s public disclosure of

the existence and substance of her qui tam complaint

violated the FCA’s statutory seal provision, § 3730(b)(2),

and dismissed the action.

We reversed the district court. See Lujan v. Hughes

Aircraft Co. (Lujan I), 67 F.3d 242, 248 (9th Cir.1995). We

held that the use of dismissal as a sanction was not

necessarily the appropriate remedy for Lujan’s violation.

See id. at 247-48. In addition, we held sua sponte that

before the district court could reach the merits of Lujan’s

dismissed, the district court should have differentiated between

the pre and post-1986 conduct and claims.

6 Lujan’s retaliation claim, which the district court and this

court held to be time-barred, is not at issue in this appeal.

App. 6

claim, it would have to determine if it had jurisdiction

under § 3730(e)(4)(A), which “bars suits brought after the

allegations in the complaint have been publicly disclosed,

unless the relator is the ‘original source’ of the informa-

tion.” Id. at 248. We noted the similarities between

Lujan’s complaint and the earlier filed Schumer com-

plaint.

In March 1996, the district court found that Lujan’s

allegations were “substantially similar” and therefore

“based upon” those publicly disclosed in Schumer:

Lujan’s qui tam allegations are substantially

similar to Schumer’s previous claims. Lujan

attempts to distinguish her allegations by stat-

ing that they involve mischarging within the B-2

program, while Schumer addressed cost shifting

among the B-2 program and other aircrafts

[F-14D, F-15 MSIP, and F-18]. However, upon

reviewing the allegations previously brought by

Schumer, the Court finds that Lujan’s allega-

tions are simply a variation on Schumer’s.

Schumer’s claims, like Lujan’s involve the

B-2 bomber system, which was a massive, bil-

Jion dollar contract. With such large stakes at

hand, the government necessarily performed a

thorough review of Schumer’s claims as evi-

denced by the Schumer record and proceedings.

Lujan now seeks to create a meaningless distinc-

tion between her claims and Schumer’s in order

to further the government’s, and her, interests.

To give credence to Lujan’s microscopically

fine distinctions between her allegations and

those of Schumer would do injustice to the pur-

poses underlying the False Claims Act. It is the

App. 7

harbinger, not the mimic, who is entitled to

champion the government's interests.

Therefore, the district court dismissed Lujan’s qui tam

claims, holding that the district court did not have juris-

diction to hear the case under § 3730(e)(4).

On appeal, we split Lujan’s qui tam claims into two

groups: pre and post-1986 conduct. See United States ex

rel. Lujan v. Hughes Aircraft Co. (Lujan II), 162 F.3d 1027,

1031 (9th Cir.1998). Following Schumer, we affirmed the

district court’s dismissal of Lujan’s qui tam pre-1986 con-

duct claims, because the government already had knowl-

edge of her claims.” See id. We reviewed the post-1986

conduct claims to determine if there was subject matter

jurisdiction under 31 U.S.C. § 3730(e)(4). We affirmed the

district court’s finding that Lujan and Schumer’s allega-

tions were substantially similar and therefore constituted

“public disclosure” of Lujan’s qui tam claims, stating:

The subject matter of Schumer’s action was four

defense contracts between Hughes and the

United States - the F-14D Program contract

(“F14 contract”), the F-15 Radar Multistage

Improvement Program Contract (“F15 con-

tract”), the F-18 Radar Upgrade Program Con-

tract (“F18 contract”), and the B-2 Special

Programs Contract (“B-2 contract”). The B2 con-

tract involved the design of an advanced radar

system for that airplane. Hughes managed each

of these contracts under “commonality agree-

ments,” which permit each program using a

” Lujan admits that she met with Department of Defense

representatives in 1988, three years before she filed her qui tam

complaint. See Lujan II, 162 F.3d at 1031.

App. 8

common component to share in some portion of

its development and production costs.

Schumer alleged that Hughes used these

commonality agreements to misbid, misallocate,

and mischarge costs among the four contracts.

For example, Schumer alleged that Hughes

charged the development of a radar signal pro-

cessor to the F15 contract but then also charged

these developments costs to the F14, F18, and B2

contracts.

Lujan’s allegations also concern the contract to

develop the B2 radar system. Lujan alleges that,

between 1982 and at least 1989, Hughes rou-

tinely mischarged costs associated with the

design and development of various B2 radar

system contracts. She also alleges that Hughes

mischarged costs on contracts involving the F14,

F15, and F18 by means of the commonality

agreements governing cost allocations among

the various radar system programs.

The Schumer and Lujan allegations both

involve cost-sharing transactions among and

within the radar system programs on four air-

craft. The two claims involve the same common-

ality agreements and the same radar program

contracts.

Lujan II, 162 F.3d at 1032-33. We then found that Lujan

was an original source because she brought her allega-

tions to the government before Schumer’s allegations

were publicly disclosed. Therefore, we reversed the dis-

trict court’s dismissal of Lujan’s post-1986 claims, holding

that the district court had subject matter jurisdiction

under § 3730(e)(4)(A)’s “original source” exception.

vs ——

App. 9

On remand, Hughes moved to dismiss Lujan’s qui

tam action under the 31 U.S.C. § 3730(b)(5) first-to-file

jurisdictional bar. The district court determined that

Lujan II had not decided the § 3730(b)(5) issue, and then

found that § 3730(b)(5) applied because Schumer was

pending when Lujan filed her action. The district court

reviewed (1) the prior district court findings that the

allegations were substantially similar and “based upon”

those publicly disclosed in Schumer’s lawsuit and (2) our

Lujan II upholding of that finding. The district court

found that Lujan’s claims were “based on” the same

essential facts and raised the same issues as Schumer’s

claims, regardless of whether the two claims incorporated

somewhat different details, and held that § 3730(b)(5)

barred Lujan’s case. Lujan appealed, contending that the

district court improperly considered, interpreted, and

applied § 3730(b)(5).

II. Jurisdiction and Standard of Review

We have jurisdiction under 28 U.S.C. § 1291. We

review de novo a district court’s legal determinations. See

United States v. Marbella, 73 F.3d 1508, 1515 (9th Cir.1996). Bi

Dismissal for lack of subject matter jurisdiction is

reviewed de novo, and the district court’s relevant find-

ings of fact are reviewed for clear error. See United States

ex rel. Aflatooni v. Kitsap Physicians Servs., 163 F.3d 516,

520-21 (9th Cir.1999).

III. Analysis

We first determine whether the district court had the

power to decide the § 3730(b)(5) jurisdictional challenge.

App. 10

Finding that the district court properly considered the

issue, we then determine (1) the proper interpretation of

§ 3730(b)(5) and (2) if the district court properly applied

§ 3730(b)(5).

A. Law of the Case

Lujan contends that the law of the case doctrine

precluded the district court’s consideration of Hughes’

§ 3730(b)(5) jurisdictional challenge. We reject this con-

tention.

The law of the case doctrine requires a district court

to follow the appellate court’s resolution of an issue of

law in all subsequent proceedings in the same case. See

United States v. Cote, 51 F.3d 178, 181 (9th Cir.1995). The

doctrine does not apply to issues not addressed by the

appellate court. See id. (quoting Luckey v. Miller, 929 F.2d

618, 621 (11th Cir.1991)). The doctrine applies to the

appellate court’s “explicit decisions as well as those

issues decided by necessary implication.” Id. (quoting

Eiehman v. Fotomat Corp., 880 F.2d 149, 157 (9th Cir.1989)).

In Lujan II, we reversed the district court’s dismissal

of Lujan’s post-1986 claims for lack of subject matter

jurisdiction under § 3730(e)(4). While Hughes argued a

§ 3730(b)(5) jurisdictional challenge to this court, we did

not explicitly or implicitly decide that issue. Therefore,

the law of the case did not foreclose consideration of the

§ 3730(b)(5) jurisdiction issue. Even if we had decided the

§ 3730(b)(5) jurisdictional question in Lujan’s favor, we

can correct that decision to prevent manifest injustice. See

Southwest Marine Inc. v. Danzig, 217 F.3d 1128, 1136 (9th

Cir.2000) (“prior decision should be followed

unless . . . the decision is clearly erroneous and its

App. 11

enforcement would work a manifest injustice”) (internal

quotations omitted).

B. First-to-File Bar

Lujan next contends that § 3730(b)(5) should not bar

her case because (1) her action could benefit the U.S.

Treasury, (2) she was an original source, (3) she had

personal knowledge of specific mischarging, and (4) she

informed the government of her allegations and facts

before the Schumer action. We reject each contention,

holding that § 3730(b)(5) does not provide for such excep-

tions.

Section 3730(b)(5) provides that “[w]hen a person

brings a [qui tam action], no person other than the Gov-

ernment may intervene or bring a related action based on

the facts underiying the pending action.” In interpreting

this provision, we “look first to the plain language of the

statute, construing the provisions of the entire law,

including its object and policy, to ascertain the intent of

Congress.” United States v. Hockings, 129 F.3d 1069, 1071

(9th Cir.1997) (quoting Northwest Forest Res. Council v.

Glickman, 82 F.3d 825, 830 (9th Cir.1996)) (internal quota-

tions omitted). If the statute is ambiguous, we consider

the legislative history. See id. “If a legislative purpose 1s

expressed in plain and unambiguous lan-

guage,... the... duty of the courts is to give it effect

according to its terms. Exceptions to clearly delineated

statutes will be implied only where essential to prevent

absurd results or consequences obviously at variance

with the policy of the enactment as a whole.” United

App. 12

States v. Rutherford, 442 U.S. 544, 551-52, 99 S.Ct. 2470, 61

L.Ed.2d 68 (1979) (quotations and citations omitted).

Section 3730(b)(5)’s plain language unambiguously

establishes a first-to-file bar, preventing successive plain-

tiffs from bringing related actions based on the same

underlying facts.8 Unlike § 3730(e)(4) (the public dis-

closure jurisdictional bar),9 § 3730(b)(5)’s plain language

does not contain exceptions. Moreover, an exception-free,

first-to-file bar conforms with the dual purposes of the

1986 amendments: to promote incentives for whistle-

blowing insiders and prevent opportunistic successive

plaintiffs. See, e.g., United States ex rel. LaCorte v.

SmithKline Beecham Clinical Lab., Inc., 149 F.3d 227, 233-34

(3d Cir.1998) (discussing legislative history). The first-

filed claim provides the government notice of the essen-

tial facts of an alleged fraud, while the first-to-file bar

stops repetitive claims. We reject Lujan’s contentions

because they would require this court to read exceptions

into the statute’s plain language.'°

8 See, e.g., United States ex rel. Merena v. SmithKline Beecham

Clinical Lab., Inc., 205 F.3d 97, 102 (3d Cir.2000) (“first-to-file rule

of section 3730(b)(5)”); United States ex rel. Taxpayers Against

Fraud v. Gen. Elec. Co., 41 F.3d 1032, 1035 (6th Cir.1994)

(“Similarly, the relator must be a true ‘whistleblower’; therefore,

he is precluded from collecting a bounty . . . if someone else has

filed the claim first.”); Erickson ex rel. United States v. Am. Inst. of

Biological Sci., 716 F.Supp. 908, 918 (E.D.Va.1989) (“provision

establishes a first in time rule”).

9 See Lujan II for a discussion of § 3730(e)(4). 162 F.3d at

1031-35.

10 Even assuming that we were to read a “benefit to the

Treasury” exception into the statute, Lujan’s argument remains

without merit. The government knew of Lujan’s and Schumer’s

App. 13

C. Pending Action

Lujan argues that because Schumer’s action was dis-

missed it cannot be a “pending” action under

§ 3730(b)(5).1! Following § 3730(b)(5)’s plain language,

Lujan’s action is barred if she brought the claim while

Schumer was pending. Schumer brought his action in

1989; Lujan brought her action in 1992. Even assuming

that Schumer’s whole action was dismissed in 1997, five

years after Lujan filed her complaint, Schumer’s action

allegations, and conducted numerous audits between 1985 and

1991. The government declined to intervene in both suits, and

concluded that it had benefitted from Hughes’ use of the

commonality agreements.

11 Other circuits have not directly held whether a

subsequently dismissed action remains a “pending” action

under § 3730(b)(5). The Second Circuit addressed this issue in

an unpublished opinion, United States ex rel. Pentagen

Technologies International, Ltd. v. CACI International Inc., 1999 WL

55259 (2d Cir.1999) (“Because [a person’s] action, when filed,

was based on the same facts underlying the then-pending

Pentagen V, no federal district court had jurisdiction to entertain

his claims.”). A district court addressed the issue in dicta,

United States v. Crescent City E.M.S., Inc., 946 F.Supp. 447, 450

(E.D.La.1996) (Section 3730(b)(5) “served to bar [a person] from

intervening against the defendants in the pending qui tam

litigation, as well as from refiling against the defendants once

[the case] was dismissed for lack of subject matter

jurisdiction.”).

Lujan cites Drake v. Cheney, 1992 WL 75018 (4th Cir.1992)

(unpublished disposition) to support her contention that

Schumer cannot be considered a pending case. Drake is not

relevant for purposes of our inquiry. Drake is distinguishable,

involving a different statute and actions filed by the same

person.

App. 14

should still be considered a “pending” action for pur-

_ poses of § 3730(b)(5) because Schumer’s action was pend-

ing when Lujan brought her claim. To hold that a later

dismissed action was not a then-pending action would be

contrary to the plain language of the statute and the

legislative intent. See Rutherford, 442 U.S. at 551-52, 99

S.Ct. 2470. Dismissed or not, Schumer’s action promptly

alerted the government to the essential facts of a fraudu-

lent scheme - thereby fulfilling a goal behind the first-to-

file rule. Accordingly, we reject Lujan’s argument and

hold that Schumer was a “pending action” under

§ 3730(b)(5).

D. Material Facts Test

We must determine if Lujan is a “related action based

on the facts underlying the pending action [Schumer].”

§ 3730(b)(5). Relying on a single sentence from the Senate

Judiciary Report,!2 Lujan contends that we should use an

identical, not material facts, test. We reject this conten-

tion.

Most of the few courts that have addressed

§ 3730(b)(5) have rejected an identical facts test. The

12 “Subsection (b)(5) of section 3730 further clarifies that

only the Government may intervene in a qui tam action. While

there are few known instances of multiple parties intervening in

past qui tam cases, United States v. Baker-Lockwood Manufacturing

Co., 138 F.2d 48 (8th Cir.1943), the Committee wishes to clarify in

the statute that private enforcement under the civil False Claims

Act is not meant to produce class actions or multiple separate

suits based on identical facts and circumstances.” S.Rep. No.

345, at 25 (1986) reprinted in 1986 U.S.C.C.A.N. 5266, 5290.

App. 15

cases’ common principle is that “section 3730(b)(5) pre-

cludes a subsequent relator’s claim that alleges the defen-

dant engaged in the same type of wrongdoing as that

claimed in a prior action even if the allegations cover a

different time period or location within a company.”

United States ex rel. Capella v. United Technologies Corp.,

1999 WL 464536, at *9 (D.Conn. June 3, 1999) (summariz-

ing the tests used by other courts).!% The Third Circuit,

the only appellate court to discuss and apply § 3730(b)(5),

rejected an identical facts test. See LaCorte, 149 F.3d at

233-34. We find the Third Circuit’s reasoning persuasive.

Section 3730(b)(5)’s plain language refers to “related”

not “identical” actions. Therefore, we need not review the

legislative history. See Hockings, 129 F.3d at 1071. Even if

13 See, e.g., Cooper, United States ex rel. v. Blue Cross & Blue

Shield, 19 F.3d 562, 567 (11th Cir.1994) (Once a qui tam “suit has

been filed by a relator or by the government, all other suits

against the same defendant based on the same type of conduct

would be barred.”); Capella, 1999 WL 464536, at *9 (“[S]Jection

3730(b)(5) bars a later claim unless: (1) it alleges a different type

of wrongdoing, based on different material facts than those

alleged in the earlier suit; and (2) it gives rise to a separate

recovery of actual damages by the government.”); Hyatt v.

Northrop Corp., 883 F.Supp. 484, 485 n. 3 (C.D.Cal.1995) (“31

U.S.C. § 3730(b)(5) bars qui tam actions based on facts already

the subject of earlier filed actions.”); Erickson, 716 F.Supp. at 918

(“A subsequently filed qui tam suit may continue only to the

extent that it is (a) based on facts different from those alleged in

the prior suit and (b) gives rise to separate and distinct recovery

by the government.”).

In United States ex rel. Dorsey v. Warren E. Smith Community

Hea!th/Mental Retardation & Substance Abuse Centers, 1997 WL

381761 (E.D.Pa.1997), the district court applied an identical facts

test. LaCorte implicitly overruled Dorsey when it applied an

essential facts test.

App. 16

the language were considered ambiguous, the single sen-

tence from the legislative history does not compel a dif-

ferent result. Furthermore, an identical facts test would

defeat the congressional objectives for the 1986 amend-

ments: “adequate incentives for whistle-blowing insiders

with genuinely valuable information and discouragement

of opportunistic plaintiffs who have no significant infor-

mation to contribute of their own.” United States ex rel.

Springfield Terminal Ry. v. Quinn, 14 F.3d 645, 649

(D.C.Cir.1994). Limiting § 3730(b)(5) to only bar actions

with identical facts would be contrary to the plain lan-

guage and legislative intent: (1) using a narrow jurisdic-

tional bar, such as an identical facts test, would decrease

incentives to promptly bring qui tam actions; (2) multiple

relators would expect a recovery for the same conduct,

thereby decreasing the total amount each relator would

potentially receive and incentives to bring the suit; and

(3) a narrow identical facts bar would encourage pig-

gyback claims, which would have no additional benefit

for the government, “since once the government knows

the essential facts of a fraudulent scheme, it has enough

information to discover related frauds.” LaCorte, 149 F.3d

at 234.

Therefore, we hold that § 3730(b)(5) bars later-filed

actions alleging the same material elements of fraud

described in an earlier suit, regardless of whether the

allegations incorporate somewhat different details.

E. Related Action Based on the Facts Underlying

the Pending Action

Finally, Lujan contends that the district court erred in

relying on our prior § 3730(e)(4) factual determination

App. 17

that Lujan was “substantially similar” to and “based

upon” Schumer to dismiss Lujan’s action under

§ 3730(b)(5). We reject this contention.

While the factual determinations under § 3730(e)(4)

(substantially similar) may be different than those under

§ 3730(b)(5) (same material facts), the district court was

bound by the prior factual determinations to the extent

that it could not contradict them. See, e.g., United States v.

Houser, 804 F.2d 565, 567-68 (9th Cir.1986) (for the law of

the case doctrine to apply the issue in question must have

been decided in the previous disposition). The district

court reviewed the prior factual analyses and determined

that the analyses demonstrated that Lujan’s claim encom-

passed the same material facts as Schumer’s.

Lujan also contends that the district court imper-

missibly equated facts with allegations, and that

§ 3730(b)(5) requires an analysis of Lujan and Schumer’s

facts, not their allegations. We reject this contention. In

motions to dismiss for lack of subject matter jurisdiction

under Rule 12(b)(1), the reviewing court must accept as

true the allegations of the complaint. See Miranda v. Reno,

238 F.3d 1156, 1157 n. 1 (9th Cir.2001). For purposes of

this inquiry, there is no difference between allegations

and the underlying facts.

Given the prior factual determinations and conclu-

sions, the district court did not clearly err in determining

that Lujan’s claim was “based on” the same material facts

as Schumer’s.

AFFIRMED.

App. 18 -

United States Court of Appeals,

Ninth Circuit.

UNITED STATES of America, ex rel.

Linda A. Lujan, Plaintif-Appellant,

HUGES AIRCRAFT COMPANY, Defendant-Appellee.

No. 96-56228.

Argued and Submitted Nov. 6, 1997.

Decided Dec. 11, 1998.

Daniel I. Davidson, Spiegel & McDarmid, Washington,

D.C., for the plaintiff-appellant.

Mark R. Troy, Michael Rizzo, McKenna & Cuneo, L.L.P.,

Los Angeles, California, for the defendant-appellee.

Appeal from the United States District Court for the

Central District of California James M. Ideman, District

Judge, Presiding. D.C. No. CV-92-01282- JMI.

Before: William C. Canby, Jr. and David R. Thompson, Cir-

cuit Judges, and Donald W. Molloy,* District Judge.

MOLLOY, District Judge:

Relator Linda A. Lujan brought qui tam and retalia-

tion claims under the False Claims Act, 31 U.S.C.A.

§§ 3729-3733 (West 1984 & Supp.1998) ( “FCA”), against

her former employer, Hughes Aircraft Company

(“Hughes”). The qui tam provision of the FCA permits, in

certain circumstances, suits by private parties on behalf

of the United States against anyone submitting a false

claim to the government. Lujan alleges that Hughes sub-

mitted fraudulent claims to the government during its

* The Honorable Donald W. Molloy, United States District

Judge for the District of Montana, sitting by designation.

Be th

App. 19

participation as a defense subcontractor in the B2 bomber

and other projects between 1982 and 1989. The district

court dismissed both the qui tam claims for lack of subject

matter jurisdiction and the retaliation claims as time-

barred by the statute of limitations. Lujan appeals. We

affirm in part and reverse in part the dismissal of the qui

tam claims and affirm the dismissal of the retaliation

claims.

BACKGROUND

A. Factual Background

After being awarded a defense contract from the Air

Force to construct the B-2 bomber, the Northrup Corpora-

tion awarded Hughes a “cost-plus” subcontract to

develop the B-2’s radar system. Several months later,

Hughes was awarded other “fixed-price” contracts for

developing radar systems for other aircraft, including the

F-15 fighter aircraft. Because these contracts overlapped

significantly, Hughes adopted “commonality agreements”

that allowed it to allocate costs between the various con-

tracts that were using common components.

Appellant Lujan was employed in Hughes’ Radar

Systems Group from 1982 to 1989. In early 1988, Lujan

alleges, she began noticing that Hughes was engaging in

fraudulent contracting practices by shifting costs from the

fixed-price programs to the cost-plus programs. She

reported these practices to her superiors at Hughes in

February 1988, eventually discussing her concerns with

Department of Defense representatives in June 1988.

App. 20

Lujan alleges that, in response to her complaints,

Hughes segregated her from her co-workers, ostracized

and intimidated her, discriminated against her, and

caused her physical and mental distress. In June 1989,

Hughes fired Lujan. In February 1992, Lujan filed her first

complaint, alleging both qui tam claims for Hughes’

alleged fraud and retaliation claims for her termination.

During Lujan’s tenure at Hughes, in January 1989,

another Hughes employee, William J. Schumer, com-

menced a qui tam action against Hughes, alleging that

Hughes had mischarged the government for certain radar

development costs that should have been allocated to its

fixed-price contracts instead of to the cost-plus B-2 con-

tract. Schumer’s case eventually made its way to the

Supreme Court, which held in 1997 that Schumer’s qui

tam claims were jurisdictionally barred. Hughes Aircraft

Co. v. United States ex rel. Schumer, 520 U.S. 939, 117 S.Ct.

1871, 138 L.Ed.2d 135 (1997).

B. Procedural Background of Lujan

This is the second appeal in this case. In the first

appeal, we decided the district court had erred in impos-

ing the sanction of automatic dismissal for Lujan’s viola-

tion of the FCA requirement that a qui tam claim remain

under seal for at least 60 days. See United States ex rel.

Lujan v. Hughes Aircraft Co., 67 F.3d 242, 243 (9th

Cir.1995). We held that the sanction of dismissal was

unwarranted under the circumstances and remanded the

case to district court. Id. at 245-48.

We asked the district court on remand to consider the

issue of jurisdiction pursuant to the 1986 version of 31

App. 21

U.S.C. § 3730(e)(4)(A), which bars any qui tam action

based on allegations already “publicly disclosed” unless

the relator is the “original source” of the information. Id.

at 248. We noted that Lujan’s complaint resembled the

earlier qui tam action brought in 1989 by Hughes

employee William Schumer. Id. (referring to United States

ex rel. Schumer v. Hughes Aircraft Co., 63 F.3d 1512 (9th

Cir.1995)).! We asked the district court as part ofits

jurisdictional determination to make factual findings on

whether the allegations in Lujan’s complaint were pub-

licly disclosed by the civil proceedings in Schumer. 67 F.3d

at 248.

Analyzing Lujan’s allegations in her First Amended

Complaint, the district court on remand determined that

Lujan’s allegations were “substantially similar” to

Schumer’s previous claims. Order, Mar. 19, 1996, at 5. The

district court concluded that Lujan was trying “to create a

meaningless distinction between her claims and

Schumer’s in order to establish jurisdiction” and that the

difference between the Lujan and Schumer allegations

was “microscopically fine.” Id. at 5-6. Concluding that

“li]t is the harbinger, not the mimic, who is entitled to

champion the government's interests,” id., the court dis-

missed Lujan’s gui tam claims.

1 As discussed above, the Supreme Court reviewed

Schumer and held that the 1982 version of the FCA governed

Schumer’s claimis and that Schumer’s qui tam claims should

have been dismissed. Hughes Aircraft Co. v. United States ex rel.

Schumer, 520 U.S. 939, 117 S.Ct. 1871, 1879, 138 L.Ed.2d 135

(1997).

- App. 22

In April 1996, Lujan moved for reconsideration in the

district court, arguing that she was an original source of

the public disclosures in this case. The district court

denied the motion. In June 1996, the district court granted

Hughes’ motion to dismiss Lujan’s remaining retaliation

claims as time barred by the state’s one-year statute of

limitations.

A. Standard of Review

We review de novo a district court’s dismissal for

lack of subject matter jurisdiction. Ma v. Reno, 114 F.3d

128, 130 (9th Cir.1997); Evans v. Chater, 110 F.3d 1480, 1481

(9th Cir.1997). However, a district court’s factual findings

on all jurisdictional issues must be accepted unless

clearly erroneous. Adler v. Federal Rep. of Nigeria, 107 F.3d

720, 729 (9th Cir.1997). We will not disturb a district

court’s findings of fact unless we are left with a definite

and firm conviction that a mistake has been made. Com-

mittee for Idaho's High Desert, Inc. v. Yost, 92 F.3d 814, 819

(9th Cir.1996).

B. Pre-1986 Conduct

The first question we must decide is whether the

1986 amendments to the FCA apply retroactively to

Hughes’ pre-1986 misconduct. This question leads us to

the Schumer case. Schumer is important to Lujan’s case not

only because Schumer was a Hughes employee whose

prior claims directly affect the status of Lujan’s claims

App. 23

factually but also because the Supreme Court's inter-

pretation of the FCA in Schumer controls this case.

Similar to the issue in the instant case, the issue in

Schumer was whether the 1986 amendments to the FCA

apply retroactively to pre-1986 conduct. Schumer, 117

S.Ct. at 1875. The distinction between the 1982 and 1986

versions of the FCA is significant because, as we noted

when Schumer was before us, “[w]hereas the pre-1986 Act

barred cases brought by qui tam plaintiffs when their

allegations were ‘based on evidence or information the

Government had when the action was brought,’ the 1986

amendments narrowed this bar to the more limited class

of cases based on information previously disclosed to the

public.” Schumer, 63 F.3d at 1517 (internal citations omit-

ted).

Concluding that Congress did not intend to apply the

1986 amendments retroactively, the Supreme Court held

that the 1982 version of the FCA should be applied to any

conduct alleged by Schumer that occurred prior to the

1986 version’s effective date. Schumer, 117 S.Ct. at 1876.

Because the government knew about the alleged miscon-

duct before Schumer filed his claim, the Court held that

the 1982 version of the FCA required the dismissal of

Schumer’s qui tam claims. Id. at 1879.

The Supreme Court in Schumer found it unnecessary

to decide whether the relevant conduct for purposes of

non-retroactivity was the act of Hughes in presenting a

false claim, or the public disclosure of that fact. See

Schumer, 117 S.Ct. at 1876 n. 4. In our case, we must

decide that issue because it appears that some of the

allegedly actionable conduct occurred before 1986 but

App. 24

was disclosed after 1986. We conclude that the crucial

event for purposes of non-retroactivity is the alleged

presentation by Hughes of a false claim, and not the

public disclosure of that conduct. The considerations of

fairness underlying the presumption against retroactivity

militate in favor of that conclusion. The act upon which

liability is founded is the presentation of a false claim to

the government. It is that conduct for which the 1986 ©

amendment “essentially creates a new cause of action” by

eliminating a defense. Schumer, 117 S.Ct. at 1878. The

unfairness of retroactivity would be to render Hughes

subject to a cause of action that did not exist at the time it

engaged in the conduct later made actionable. Cf.

Schumer, 117 S.Ct. at 1876-78. We conclude, therefore, that

the 1986 amendment applies to the presentation of false

claims after its effective date. Accordingly, we apply the

1982 version of the FCA to all false claims allegedly

presented by Hughes before the effective date of the 1986

amendments.

The 1982 version of the FCA provides that “the court

shall dismiss an action . . - On discovering the action is

based on evidence or information the Government had

when the action was brought.” 31 U.S.C.A. § 3730(b)(4)

(West 1983). Here, Lujan freely admits that, because she

was dissatisfied with Hughes’ internal investigation of

her complaints of serious mischarging to the B-2 bomber

program, she “met with representatives of the depart-

ment of Defense [in June of 1988] to inform them of [her]

charges.” Lujan Affidavit at 2. Lujan did not file her qui

tam complaint until February 28, 1992, almost three years

after her initial disclosures.

App. 25

Thus, in considering Lujan’s pre-1986 claims, we

need not determine whether the government gained its

information from Schumer’s earlier allegations. Lujan’s

own admissions show that the government possessed the

information that Lujan alleged in her complaint before

she filed that complaint. Applying the 1982 version of the

FCA, we therefore affirm the district court’s dismissal of

Lujan’s qui tam claims that are based on Hughes’ pre-1986

conduct.

C. Post-1986 Conduct

1. The 1986 False Claims Act Standard

The next issue we must address is whether a different

standard applies to the analysis of Hughes’ post-1986

conduct. The Supreme Court in Schumer specifically

stated that the false claims alleged by Schumer were

submitted to the government between 1982 and 1984,

Schumer, 117 S.Ct. at 1875, and that Hughes’ alleged false

charges occurred before 1986. Id. at 1876 n. 4. By contrast,

Lujan alleges that Hughes mischarged the government

from 1982 through 1989. Because the district court in

Lujan’s case did not make specific findings as to the

individual dates of the alleged presentation of false

claims, we must assume that some of the alleged presen-

tation of false claims occurred after 1986. Accordingly, we

must determine whether Lujan’s post-1986 allegations are

jurisdictionally barred by the 1986 version of the FCA,

which provides:

No court shall have jurisdiction over an action

under this section based upon the public dis-

closure of allegations or transactions in a crimi-

nal, civil, or administrative hearing, in a

App. 26

congressional, administrative, or Government

Accounting Office report, hearing, audit, or

investigation, or from the news media, unless

the action is brought by the Attorney General or

the person bringing the action is an original

source of the information.

31 U.S.C.A. § 3730(e)(4)(A) (West Supp.1998).?

In subsection (B), the statute next defines “original

source” as “an individual who has direct and indepen-

dent knowledge of the information on which the allega-

tions are based and has voluntarily provided the

information to the Government before filing an action

under this section which is based on the information.” 31

U.S.C.A. § 3730(e)(4)(B) (West Supp.1998). Thus, as the

Supreme Court noted in Schumer, the 1986 amendments

‘

allow “qui tam suits based on information in the Govern-

ment’s possession, except where the suit was based on

information that had been publicly disclosed and was not

brought by an original source of the information.”

Schumer, 117 S.Ct. at 1876.

2 Although section 3730(e)(4)(A) refers to “an action under

this section based upon the public disclosure,” a common sense

reading has been accorded to these words. The action is based -

not on the disclosure, but on the underlying “intormation that

had been publicly disclosed.” Schumer, 117 S.Ct. at 1876; see

United States ex rel. Biddle v. Board of Trustees of Stanford Untiv.,

147 F.3d 821, 826 (9th Cir.1998) (“[A] claim is ‘based upon’

public disclosure when the claim repeats allegations that have

already been disclosed to the public”).

Ss Sa ile

LAR IAS he an a ek

1d oe eNO”

App. 27

2. Public Disclosure by Schumer’s Allegations

The first issue we must resolve in analyzing the

jurisdictional status of Lujan’s post-1986 allegations is

whether Schumer’s earlier allegations constituted “public

disclosure” of the misconduct underlying Lujan’s com-

plaint. In other words, if Lujan’s allegations are substan-

tially similar to Schumer’s, then the wrongdoing was

publicly disclosed and Lujan’s qui tam claims must be

dismissed unless Lujan is an original source of the infor-

mation. As set forth above, we review the district court’s

factual findings for clear error. Adler, 107 F.3d at 729.

However, even if we were to review the district court's

comparison of Lujan’s and Schumer’s complaints de novo

(the district court conducted no factual inquiry beyond an

examination of the complaints and the record), we would

affirm the district court’s determination that the allega-

tions are substantially similar.

The record supports this conclusion. The subject mat-

ter of Schumer’s action was four defense contracts

between Hughes and the United States - the F-14D Pro-

gram contract (“F14 contract”), the F-15 Radar Multistage

Improvement Program Contract (“F15 contract”), the F-18

Radar Upgrade Program Contract (“F18 contract”), and

the B-2 Special Programs Contract (“B-2 contract”). The

B2 contract involved the design of an advanced radar

system for that airplane. Hughes managed each of these

contracts under “commonality agreements,” which per-

mit each program using a common component to share in

some portion of its development and production costs.

Schumer alleged that Hughes used these common-

ality agreements to misbid, misallocate, and mischarge

App. 28

costs among the four contracts. For example, Schumer

alleged that Hughes charged the development of a radar

signal processor to the F15 contract but then also charged

these developments costs to the F14, F18, and B2 con-

tracts.

Lujan’s allegations also concern the contract to

develop the B2 radar system. Lujan alleges that, between

1982 and at least 1989, Hughes routinely mischarged costs

associated with the design and development of various

B2 radar system contracts. She also alleges that Hughes

mischarged costs on contracts involving the F14, F15, and

F18 by means of the commonality agreements governing

cost allocations among the various radar system pro-

grams.

The Schumer and Lujan allegations both involve cost-

sharing transactions among and within the radar system

programs on four aircraft. The two claims involve the

same commonality agreements and the same radar pro-

gram contracts. In sum, we agree with the district court

that Lujan’s allegations are substantially similar to those

disclosed in the earlier Schumer action, thereby constitut-

ing “public disclosure” of Lujan’s qui tam claims within

the meaning of the 1986 version of the False Claims Act.

3. Lujan as an “Original Source”

However, even if Schumer’s allegations are suffi-

ciently similar to Lujan’s to constitute public disclosure of

Lujan’s allegations, jurisdiction over Lujan’s qui tam

claims is not necessarily destroyed. As set forth above,

public disclosure is fatal to jurisdiction only if Lujan is

NE ne

App. 29

not an original source of the allegations. 31 U.S.C.A.

§ 3730(e)(4)(A) (West Supp.1998).

To qualify as an original source, “a relator must show

that he or she has ‘direct and independent knowledge of

the information on which the allegations are based,’ ‘vol-

untarily provided the information to the government

before filing his or her qui tam action,’ and ‘had a hand in

the public disclosure of allegations that are a part

of ... [the] suit.’ “ United States ex rel. Devlin v. State of

California, 84 F.3d 358, 360 n. 3 (9th Cir.1996) (quoting

Wang v. FMC Corp., 975 F.2d 1412, 1418 (9th Cir.1992)).

We have already noted that Lujan voluntarily pro-

vided the information to the government before filing her

suit: She met and discussed her allegations with Depart-

ment of Defense personnel on June 6, 1998. As the district

court noted, the parties do not dispute that Lujan has

direct and independent knowledge of her allegations.

Order Dismissing Relator’s Qui Tam Counts, at 3 n. 2.

These two factors alone, however, do not establish origi-

nal source status.

In Wang, we held that, “to bring a qui tam suit based

on allegations already in the public domain . . . a plaintiff

[must] have played a part in disclosing those allega-

tions.” Wang, 975 F.2d at 1414. Wang had direct knowl-

edge in May 1983 of possible fraud by his employer, FMC

Corporation, involving a transmission problem on the

Bradley rocket launcher. FMC fired Wang in December

1986, and Wang filed his False Claims Act case in Decem-

ber 1987. Id. at 1417-18. However, before he filed suit,

various newspapers reported the Bradley’s transmission

problems.-Id. at 1417. We then observed that “Wang is

App. 30

now revealing what is already publicly known.” Id. at

1418. Wang had known of the Bradley problems since

1983, yet he “sat quietly in the shadows and breathed not

a word about them until he was fired,” id. at 1419-20,

while “some other conscientious or enterprising person

bravely brought the transmission problems to the atten-

tion of the media and Army,” id. at 1420. Because Wang

had merely republished an allegation that had already

been publicly disclosed, we concluded that Wang was not

an original source. Id. at 1419.

Paraphrasing Wang, the district court in Lujan’s case

concluded that Lujan had merely “echoed” Schumer’s

allegations and was, therefore, not an original source. We

disagree with the district court's application of Wang to

the facts of this case. Like Wang, Lujan has direct and

independent knowledge of the information underlying

her allegations. But, unlike Wang, she did not remain

silent and wait until after she was fired to take that

information to the government. Instead, she took her

allegations to the government in June 1988, before

Schumer filed his action in 1989 and well before Lujan

filed her original complaint in 1992.

In Wang, we noted that Congress’s intent in protect-

ing original sources was to “bring the wrongdoing to

light” at the earliest possible opportunity. Id. at 1419.

Crucial to the instant opinion, however, we stated the

following in Wang:

It is important to note that under the rule we

adopt today, all those who “directly or indi-

rectly” disclose an allegation might qualify as its

original source. Anyone who helped to report

the allegation to either the government or the

det OAR wah Aas 08 tion

App. 31

media would have “indirectly” helped to pub-

licly disclose it.

Id. at 1419 (quoting United States ex rel. Dick v. Long Island

Lighting Co., 912 F.2d 13, 18 (2d Cir.1990)).

Lujan disclosed her allegations to the government

before similar allegations were publicly disclosed by

Schumer’s lawsuit. Under the reasoning of Wang, Lujan

“indirectly” publicly disclosed her allegations of fraud.

She also acted promptly to remedy the perceived wrong-

doing. Because the district court has subject matter juris-

diction under the “original source” exception to the 1986

FCA, we reverse the district court’s dismissal of Lujan’s

post-1986 qui tam claims.

Ill

The Retaliation Claim

Lujan’s complaint also includes a retaliation claim

under another provision of the False Claims Act.* She

3 The retaliation provision of the FCA states:

(h) Any employee who is discharged, demoted,

suspended, threatened, harassed, or in any other

manner discriminated against in the terms and

conditions of employment by his or her employer

because of lawful acts done by the employee on

behalf of the employee or others in furtherance of an

action under this section, including investigation for,

initiation of, testimony for, or assistance in an action

filed or to be filed under this section, shall be entitled

to all relief necessary to make the employee whole.

Such relief shall include reinstatement with the same

seniority status such employee would have had but

App. 32

alleges Hughes ostracized, harassed, and intimidated her

because she reported her perceived discrepancies in

Hughes’ contracting and accounting procedures. The dis-

trict court dismissed these claims as time-barred by the

applicable one-year state statute of limitations. On

appeal, Lujan argues that the district court should have

applied the False Claim Act's six-year statute of limita-

tions to her retaliation claims. We review de novo the

district court’s determination of the applicable statute of

limitations, Naas v. Stolman, 130 F.3d 892 (9th Cir.1997),

and we affirm.

The relevant section of the False Claims Act provides:

“A civil action under section 3730 may not be

brought . .. more than 6 years after the date on which the

violation of section 3729 is committed... . ” 31 U.S.C.A.

§ 3731(b)(1) (West Supp.1998) (emphasis added). Lujan

urges us to read the statute plainly and to apply a six-

year statute of limitations to all actions under section

3730, including her retaliation claim even though

for the discrimination, 2 times the amount of back

pay, interest on the back pay, and compensation for

any special damages sustained as a result of the

discrimination, including litigation costs and

reasonable attorneys’ fees. An employee may bring

an action in the appropriate district court of the

United States for the relief provided in this

subsection.

31 U.S.C.A. § 3730(h) (West Supp. 1998).

App. 33

retaliation does not constitute a violation of section 3729.

The answer is-not so simple.*

The False Claims Amendment Act of 1986, Pub.L.

99-562, 100 Stat. 3153, added the retaliation claim provi-

sions at section 3730(h) and the statute of limitations for

false claims provision at section 3731(b). Before 1986,

section 3731(b) simply said that “[a] civil action under

section 3730 of this title must be brought within 6 years

from the date the violation is committed.” 31 U.S.C.A.

§ 3731(b) (West 1983). By implication, all claims had a six-

year window of opportunity under the old law.

If Congress had wanted to retain a six-year statute

for all actions under section 3730, including retaliation

claims, it would have left the pre-1986 language of sec-

tion 3731(b) intact when it enacted the 1986 amendments

to the FCA. Instead, Congress, while adding a provision

for retaliation claims under 3730(h), narrowed the appli-

cation of the six-year statute of limitations to violations of

section 3729. Section 3729 specifically and _ strictly

addresses false claims, not retaliation claims.

That Congress was specifically concerned with false

claims in its 1986 amendments to the statute of limita-

tions is further illustrated by its addition of section

3731(b)(2). This section provides an alternative to the six-

year statute of limitations for false claims, namely a

period of no more than three years after material facts

4+ In rejecting the applicability of the six-year statute to

retaliation claims, we disagree with the Seventh Circuit in Neal

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

year statute for violation of section 3729 to all claims under

section 3730).

App. 34

should have been known by the relevant government

official, but never longer than ten years after the violation

was committed. 31 U.S.C.A. 3731(b) (West Supp.1998).

The legislative history to this section indicates that this

change was enacted to “ensure the Government's rights

are not lost through a wrongdoer’s successful deception,”

because “fraud is, by nature, deceptive. ...” S.Rep. No.

99-345, at 15 (1986), reprinted in 1986 U.S.C.C.A.N. 5266,

5280.

The same rationale is inapposite to a private claim for

retaliation. There is nothing covert or deceptive about

retaliation-the victim feels its sting immediately. In the

absence of some meaningful indication to the contrary,

we must therefore presume that, in amending section

3731(b) so that the limitation runs only from the date of a

violation of section 3729, Congress did not intend that the

statute apply to section 3730(h).

Congress created the retaliation claim but provided

no specific statute of limitations for such claims. The

Supreme Court has held that when Congress does not

supply an express statute of limitations governing a fed-

eral cause of action, then “Congress intended that the

courts apply the most closely analogous statute of limita-

tions under state law.” Reed v. United Transport Union, 488

U.S. 319, 323, 109 S.Ct. 621, 102 L.Ed.2d 665, (1989).

We agree with the district court that the most

analogous statute of limitations under California law is

the one-year statute applicable to wrongful termination

in violation of California public policy. See

App. 35

Cal.Civ.Proc.Code § 340(3) (West Supp.1998). Accord-

ingly, we affirm the district court’s dismissal of Lujan’s

retaliation claim as time-barred.

AFFIRMED IN PART, REVERSED IN PART, AND

REMANDED FOR FURTHER PROCEEDINGS CONSIS-

TENT WITH THIS OPINION.

App. 36

United States Court of Appeals,

Ninth Circuit.

UNITED STATES of America, ex rel., Plaintiff,

and

Linda A. LUJAN, Plaintiff-appellant,

HUGHES AIRCRAFT CO., Defendant-Appellee.

No. 94-55153.

Argued and Submitted May 1, 1995.

Decided Sept. 29, 1995.

Daniel I. Davidson, Spiegel & McDiarmid, Washington,

DC, for plaintiff-appellant.

Fred D. Heather, McKenna & Cuneo, Los Angeles, Califor-

nia, for defendant-appellee.

Appeal from the United States District Court for the

Central District of California.

Before: FLETCHER, BRUNETTI, and T.G. NELSON, Cir-

cuit Judges.

BRUNETTI, Circuit, Judge:

Linda Lujan appeals the dismissal of her qui tam and

retaliation claims brought pursuant to the False Claims

Act, 31 U.S.C. § 3729 et seq. (1983 & Supp.1994) (FCA),

against her former employer, Hughes Aircraft Company.

The district court dismissed Lujan’s complaint because

Lujan disclosed the nature and existence of her qui tam

claim to the Los Angeles Times while the complaint was

still under seal pursuant to § 3730(b)(2). We have jurisdic-

tion, see 28 U.S.C. § 1291, and reverse.

App. 37

On February 28, 1992, Lujan brought a qui tam action

against Hughes under the False Claims Act. Pursuant to

§ 3730(b)(2), Lujan filed her claim in camera, and served it

on the Government along with the requisite written dis-

closure of information. The complaint alleged that

Hughes had mischarged the Government for its work on

the B-2 radar systems. Lujan’s complaint also contained a

second cause of action alleging wrongful discrimination

and retaliatory termination under § 3730(h).

Prior to filing her qui tam claim, Lujan had made

similar allegations of improper conduct by Hughes in a

wrongful termination suit and in a workers’ compensa-

tion action. On December 16, 1991, over ten weeks before

the filing of her qui tam complaint, Lujan was deposed in

connection with her wrongful termination suit. During

Lujan’s deposition, Hughes’ attorney, Mr. Stockman,

questioned Lujan extensively about the basis of her forth-

coming qui tam claim and its relationship to the allega-

tions of her wrongful termination claim. For example,

Hughes’ attorney justified one question about her qui tam

claim by arguing that his question was relevant “because

it is reasonably calculated to lead to the discovery of

admissible evidence, in that she is basing her qui tam

action to a large extent upon the same facts that ‘she is

basing this action.”

On April 3, 1992, after she had filed her qui tam claim

and while it was still under seal, but before Hughes had

been served with the complaint, an article appeared in

the Los Angeles Times. The article reported that Lujan had

filed a qui tam claim and disclosed the existence and

App. 38

general nature of allegations contained in her complaint.

Specifically, the article stated that “Hughes allegedly

inflated its profits by billing costs on jet fighter radar

programs to the B-2 contract and shifting costs between

different phases of the program|.]”

A few weeks later, a companion story appeared in the

Times. The second article again recited the facts of Lujan’s

suit and quoted Mr. Tom Peirce, a former Hughes’ ethics

administrator who claimed to have investigated Lujan’s

allegations. The article noted that “[Hughes] officials are

aware of Lujan’s general allegations, because they resem-

ble those made in a 1989 suit filed by William Schumer,

the former Hughes director of contracts for the B-2.”

Following the appearance of the second newspaper

article, Hughes filed under seal a motion to dismiss the

complaint for failure to comply with the seal provision.

The court continued the hearing until after service of the

complaint on Hughes.

Lujan then filed under seal a First Amended

Complaint. Pursuant to 31 U.S.C. § 3730(b)(3) & (4) the

1 Section 3730(b) provides in pertinent part:

(3) The Government may, for good cause shown,

move the court for extensions of the time during

which the complaint remains under seal[.] . - .

(4) Before the expiration of the 60-day period or any

extensions obtained under paragraph (3), the

Government shall -

(A) proceed with the action, in which case the action

shall be conducted by the Government; or

(B) notify the court that it declines to take over the

action, in which case the person bringing the action

shall have the right to conduct the action.

App. 39

Government obtained extensions of the seal beyond the

date originally set by the court. Upon completion of its

investigation of Lujan’s qui tam claims, the Government

notified the court that it would not intervene. On April

23, 1993, the district court ordered that the seal be lifted

and the complaint be served on Hughes. Subsequently,

Hughes filed a second notice of hearing in connection

with its previously filed motion to dismiss. The district

court granted Hughes’ motion, and Lujan timely appeals.

Il.

Lujan clearly violated the seal provision of 31 U.S.C.

§ 3730(b)(2)2 by making statements to the Los Angeles

Times about the existence and nature of her qui tam suit.

Any suggestion that her disclosure to a major newspaper

is not a violation of the seal provision cannot be taken

seriously. The critical issue we must consider is whether

dismissal of Lujan’s qui tam action is the appropriate

remedy for that violation.

2 Section 3730(b)(2) provides:

A copy of the complaint and written disclosure of

substantially all material evidence and information

the person possesses shall be served on the

Government pursuant to Rule 4(d)(4) of the Federal

Rules of Civil Procedure. The complaint shall be filed

in camera, shall remain under seal for at least 60 days,

and shall not be served on the defendant until the

court so orders. The Government may elect to

intervene and proceed with the action within 60 days

after it receives both the complaint and the material

evidence and information.

App. 40

The district court did not explain on what authority it

rested its decision to dismiss. There are only two possible

sources for authority on which the district court could

have relied: the False Claims Act, or the district court’s

inherent power to dismiss as a sanction. We address these

issues in turn.

A. Statutory Basis for Dismissal

We review the district court's interpretation of the

FCA de novo. See Stephens v. City of Vista, 994 F.2d 650, 655

(9th Cir.1993).

No provision of the False Claims Act explicitly

authorizes dismissal as a sanction for disclosures in viola-

tion of the seal requirement. Hughes contends, and the

district court seems to have decided, that the authoriza-

tion for dismissal of complaints is implicit in the purpose

of the seal requirement. We find that the district court's

analysis of the purpose of the seal was erroneous. Conse-

quently, its dismissal of Lujan’s complaint cannot be justi-

fied by reliance on the FCA.

By providing for the seal provision, Congress

intended to strike a balance between “the purposes of qui

tam actions [and]. . . law enforcement needs [.]” S.Rep.

No. 345, 99th Cong., 2d Sess. 24, reprinted in 1986

U.S.C.C.A.N. 5266, 5289. The purpose of qui tam actions is

to encourage more private false claims litigation. See id.,

reprinted in 1986 U.S.C.C.A.N. at 5288. The other side of

the balance recognizes the need to allow the Government

an adequate opportunity to fully evaluate the private

enforcement suit and determine both if that suit involves

matters the Government is already investigating and

App. 41

whether it is in the Government’s interest to intervene

and take over the civil action.

Id., reprinted in 1986 U.S.C.C.A.N. at 5289. The seal provi-

sion provides an appropriate alance between these two

purposes by allowing the qui tam relator to start the

judicial wheels in motion and protect his litigative rights,

while allowing the government the opportunity to study

and evaluate the relator’s information for possible inter-

vention in the qui tam action or in relation to an overlap-

ping criminal investigation. Id.

When the seal provisions are violated, this balance

cannot be disregarded. The requirements of § 3730(b)(2)

are not jurisdictional, and violation of those requirements

does not per se require dismissal of the qui tam complaint.

See United States ex rel. Pilon v. Martin Marietta Corp., 60

F.3d 995, 1000 (2d Cir.1995) (expressing reluctance to rule

that the requirements of § 3730(b)(2) are jurisdictional).

Rather, the district court must keep in mind 4oth sides of

the balance when constructing a sanction for a violation

of the seal provision. In this case, when the district court

sanctioned Lujan for violating the seal provision, it failed

to consider this balance and instead concluded ipso facto

that once a violation was found, dismissal was appropri-

ate. Several factors should have given the district court

reason to pause before deciding dismissal was appropri-

ate.

First, the district court failed to consider whether the

Government was actually harmed by Lujan’s disclosure.

Courts that have previously addressed this issue and

found dismissal appropriate have relied, at least in part,

on the irreparable harm to the government caused by the

App. 42

complete failure to abide by any of the seal provisions,

including failure to serve the government with a copy of

the complaint. In Pilon, the court found that the violation

“incurably frustrated the statutory purposes underlying

[the seal] requirements|.}” Id. at 996. Similarly, in Erickson

ex rel. United States v. American Inst. of Bio. Sciences, 716

F.Supp. 908 (E.D.Va.1989), the court rested its holding on

its finding that -“Erickson’s failure to comply with the

filing and service provisions irreversibly frustrates the con-

gressional goals underlying those provisions.” Id. at 912 .

(emphasis added).

The mere possibility that the Government might have

been harmed by disclosure is not alone enough reason to

justify dismissal of the entire action. The district court

should have assessed whether and to what extent the

government was harmed before sanctioning Lujan with

dismissal.

We have reason to doubt whether the Government

actually suffered any harm in this case. Both parties refer

in their briefs to Hughes’ deposition of Lujan in her state

court proceedings; the dep: sition took place before her

qui tam case was filed and before any seal existed. The

deposition transcript excerpts presented by Lujan indi-

cate Hughes was aware of Lujan’s intent to file a qui tam

action and of the nature of her allegations. In light of the

fact that Lujan’s disclosure to the Times gave only general

descriptions of her claims in contrast to the very detailed

answers Lujan gave Hughes’ attorney during her deposi-

tion, there is a strong inference that Hughes did not learn

anything from the Times articles that it did not already

know. If Hughes learned nothing from the Times articles,

then the articles alone could not have prompted any

App. 43

action by Hughes, and the Government's investigation

could not have been hampered by the articles. But see

Pilon, 60 F.3d at 999 (“That the government and Defen-

dants may have been aware of the substance of the

Pilons’ allegations does not diminish the consequences of

the Pilons’ failure to comply with the statutory require-

ments.”).

Although we are inclined to think that the articles

did not harm the Government’s investigation, we are not

in a position to draw any final conclusion from this

record. The district court will have to make the final

determination on remand.

In making its determination, the district court will

have to consider the Statement of the United States

Regarding Defendant’s Motion to Dismiss the Complaint,

which stated:

[WJhile the United States has not claimed in this

case that it was prejudiced by the public dis-

closure of the qui tam allegations prior to the

lifting of the seal, it is not in a position to state[,]

as a factual matter, that it was not prejudiced by

such disclosure. It is difficult, if not impossible,

to determine what actions may have been taken

by the defendant based upon its knowledge of

the investigation.

As this Statement indicates, it would be impossible to

determine what actions Hughes might have taken when it

originally learned of Lujan’s qui tam action. However, if

Hughes’ knowledge of the investigation pre-dated

Lujan’s breach of the seal, and was in no way enhanced

by Lujan’s disclosure to the Times, then it would be

illogical to assume that Hughes took any actions based on

App. 44

the Times articles. The district court will have to evaluate

the Government’s Statement in light of Hughes’ pre-filing

knowledge of the claim.

A second factor the district court must weigh against

congressional intent to promote litigation through qui tam

claims is the nature of the violation. Lujan violated

§ 3730(b)(2) by disclosing the existence and nature of her

qui tam complaint in very general terms to the Los Angeles

Times. Lujan complied with all the other requirements of

§ 3730(b)(2) by filing her complaint in camera and serving

st on the Government along with a written disclosure of

information. The violation of the seal provision in this

case is qualitatively different than the violations in cases

that have found dismissal was an appropriate sanction.

For example, in Erickson, the relator completely failed to

comply with any of the requirements of § 3730(b)(2).

Erickson, 716 F.Supp. at 911. Similarly, in Pilon, counsel

failed to file the complaint in camera, failed to serve the

United States with a copy of the complaint and a written

disclosure of the underlying evidence, and, several hours

after filing, arranged for an extensive interview with a

reporter. Pilon, 60 F.3d at 997. When evaluating the appro-

priate sanctions, the district court cannot disregard the

relative severity of the violation.

A third factor to be weighed in determining whether

dismissal is appropriate is the presence or absence of bad

faith or willfulness. In this case there is no finding that

Lujan’s disclosure was made in bad faith. In fact, nothing

in the record indicates whether the disclosures occurred.

The only evidence we find are the articles themselves,

which merely indicate Lujan and her attorney “said”

certain things. It may be logical in this case to infer that

App. 45

Lujan willfully breached the seal provisions, especially in

the absence of any representation to the contrary. How-

ever, in other cases, when the presence or absence of bad

faith or willfulness cannot be inferred, district courts

must inquire into those matters in order to make an

informed determination of whether dismissal is war-

ranted, or whether some lesser sanction is sufficient. See

Pilon, 60 F.3d at 999 (“The record reveals . . . a consider-

able lack of good faith.”).

Before concluding, we address one factor relied on by

the district court that is not one of the statutory purposes

of the seal provision, and therefore is not relevant in

determining whether a particular seal violation warrants

dismissal under the FCA. The district court based its

decision in part on its inference that Congress enacted the

seal provision to “protect[ ] defendants from damaging

attacks to which they are unable to respond.” This anal-

ysis is erroneous.

The Committee’s only documented concern regard-

ing defendants’ interests was that it avoid the pre-amend-

ment possibility that defendants might be required to

answer a complaint two days after service, without

knowing whether its opponent would be the Government

or a private litigant.> S.Rep. No. 345, 99th Cong., 2d Sess.

24, reprinted in 1986 U.S.C.C.A.N. 5266, 5289. This was the

only interest to which the Committee referred when it

commented that “sealing the initial private civil false

3 As amended, § 3730(b)(3) provides that “[t]he defendant

shall not be required to respond to any complaint filed under

this section u itil 20 days after the complaint is unsealed and

served upon the defendant... . ”

App. 46

claims complaint protects both the Government and the

‘defendant’s interests without harming those of the pri-

vate relator.” Id. Never did the Committee discuss, let

alone imply that it sought to protect, the types of poten-

tial unfairness relied on by Hughes and the district court.

To the contrary, the Committee explicitly stated that “Ibly

providing for sealed complaints, the Committee does not

intend to affect defendants’ rights in any way.” Id. For

these reasons, protecting the rights of defendants is not

an appropriate consideration when evaluating the appro-

priate sanction for a violation of the seal provision.*

Our holding today will require district courts to

explore the facts underlying violations of the seal require-

ments before concluding that the extreme sanction of

dismissal is warranted. However, the findings we require

district courts to make are no more onerous than those

required when district courts dismiss under their inher-

ent powers. More importantly, those findings are neces-

sary to give full effect to the balance Congress sought to

strike when it enacted the seal provisions.

4 We do not mean to imply that harm to the defendant is

never a relevant consideration when district courts are

assessing possible sanctions for failure to comply with seal

requirements. As discussed below, harm to the defendant is an

appropriate consideration when the district court dismisses

under its inherent powers. See infra 11.B. We simply find that

there is no support either in the text or the legislative history to

find that it was one of the interests Congress sought to protect.

Accord Pilon, 60 F.3d at 999 (suggesting that “other interests not

addressed by [the] legislative history” include “a defendant’s

reputation|.]”).

App. 47

B. Dismissal as an Exercise of Inherent Powers

We now consider whether the district court’s dis-

missal of Lujan’s complaint can be justified as a proper

exercise of its inherent power to sanction. See Halaco

Engineering Co. v. Costle, 843 F.2d 376, 380 (9th Cir.1988).

Imposition of dismissal as a sanction is reviewed for

abuse of discretion. Id. at 379. Factual findings upon

which the district court relied are reviewed for clear

error. Id.

Although district courts have the inherent power to

dismiss an action as a sanction, in so doing the court

must consider the following:

(1) the existence of certain extraordinary circum-

stances, (2) the presence of willfulness, bad

faith, or fault by the offending party, (3) the

efficacy of lesser sanctions, (4) the relationship

or nexus between the misconduct drawing the

dismissal sanction and the matters in contro-

versy in the case, and finally, as optional consid-

erations where appropriate, (5) the prejudice to

the party victim of the misconduct, and (6) the

government interests at stake.

Id. at 380. We need not address all of these factors,

because the district court failed to explicitly consider the

possibility of lesser sanctions. To satisfy this requirement,

the district court had to provide a reasonable explanation

of possible and meaningful alternatives. See id. at 381.

Failure to explicitiy consider less drastic sanctions is a fatal

flaw in the district court’s decision to dismiss as a sanc-

tion, and consequently, its decision cannot be viewed as a

App. 48

proper exercise of its inherent power to dismiss as a

sanction.> See id.

III.

On remand, before it can reach the merits of Lujan’s

claims, the district court will also have to consider

whether it has jurisdiction. See Wang v. FMC Corp., 975

F.2d 1412, 1415 (9th Cir.1992).

Section 3730(e)(4)(A) of the False Claims Act circum-

scribes district courts’ jurisdiction in gui tam actions by

barring suits brought after the allégations in the com-

plaint have been publicly disclosed, unless the relator is

the “original source” of the information.® In other words,

5 Since wé hold that dismissal of Lujan’s entire complaint

was inappropriate, we need not address Lujan’s separate

contention that dismissal of her personal claim pursuant to

§ 3730(h) was inappropriate.

6 31 U.S.C. § 3730(e)(4) specifically provides:

(A) No court shall have jurisdiction over an

action . . . based upon the public disclosure of

allegations or transactions in a criminal, civil, or

administrative hearing, in a congressional,

administrative, or Government Accounting Office

report, hearing, audit, or investigation, or from the

news media, unless .. . the person bringing the action

is an original source of the information.

(B) For purposes of this paragraph, “original

source” means an individual who has direct and

independent knowledge of the information on which

the allegations are based and has voluntarily

provided the information to the Government before

filing an action under this section which is based on

the information.

App. 49

“{t]o bring a qui tam suit, one must have had a hand in

the public disclosure of allegations that are a part of one’s

suit.” Wang, 975 F.2d at 1418.

On appeal, it came to the attention of this court that

the allegations in Lujan’s complaint resemble ‘the subject

of an earlier qui tam brought in 1989 by William Schumer,

the former Hughes director of contracts for the B-2. See

United States ex rel. Schumer v. Hughes Aircraft Co., 63 F.3d

1512 (9th Cir.1995). Whether the information in Lujan’s

complaint had already been publicly disclosed through

Schumer’s action depends on factual findings “that must

be made by the district court in the first instance[.]”

United States v. Northrop Corp., 5 F.3d 407, 409 (9th

Cir.1993), cert. denied, 511 U.S. 1033, 114 S.Ct. 1543, 128

L.Ed.2d 195 (1994). On remand, therefore, the district

court must make the appropriate factual inquiry to deter-

mine whether the allegations in Lujan’s complaint were

publicly disclosed by Schumer.

—

IV.

The district court’s dismissal of Lujan’s complaint is

REVERSED and the case is REMANDED for further pro-

ceeding in accord with this opinion.

App. 50

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

COMPANY,

Defendant-Appellee.

)

UNITED STATES OF en ee

AMERICA, ex rel. LINDA ) D.C. No.

A. LUJAN, ) CV-92-01282-SVW

Plaintiffs-Appellants, ) ORDER

Vv. (Filed

HUGHES AIRCRAFT orn

)

Before: LEAVY, TROTT, and SILVERMAN, Circuit

Judges.

The panel has voted to deny appellants’ petition for

rehearing. Judges Trott and Silverman have voted to

reject the petition for rehearing en banc and Judge Leavy

so recommends.

The full court has been advised of the petition for

rehearing en banc and no active judge has requested a

vote on whether to rehear the matter en banc Fed. R.

App. P. 35.

The petition for rehearing and the petition for rehear-

ing en banc are denied.

App. 51

APPENDIX FALSE CLAIM ACT STATUTES

31 U.S.C.A. §§ 3729

UNITED STATES CODE ANNOTATED

TITLE 31. MONEY AND FINANCE

SUBTITLE III - FINANCIAL MANAGEMENT

CHAPTER 37 - CLAIMS

SUBCHAPTER III - CLAIMS AGAINST THE UNITED

STATES GOVERNMENT

Current through P.L. 107-11, approved 5-28-01

§§ 3729. False claims

(a) Liability for certain acts. - Any person who -

(1) knowingly presents, or causes to be presented, to an

officer or employee of the United States Government or a

member of the Armed Forces of the United States a false

or fraudulent claim for payment or approval;

(2). knowingly makes, uses, or causes to be made or

used, a false record or statement to get a false or fraudu-

lent claim paid or approved by the Government;

(3) conspires to defraud the Government by getting a

false or fraudulent claim allowed or paid;

(4) has possession, custody, or control of property or

money used, or to be used, by the Government and,

intending to defraud the Government or willfully to con-

ceal the property, delivers, or causes to be delivered, less

property than the amount for which the person receives a

certificate or receipt;

—

App. 52

(5) authorized to make or deliver a document certifying

receipt of property used, or to be used, by the Govern-

ment and, intending to defraud the Government, makes

or delivers the receipt without completely knowing that

the information on the receipt is true;

(6) knowingly buys, or receives as a pledge of an obliga-

tion or debt, public property from an officer or employee

of the Government, or a member of the Armed Forces,

who lawfully may not sell or pledge the property; or

(7) knowingly makes, uses, or causes to be made or

used, a false record or statement to conceal, avoid, or

decrease an obligation to pay or transmit money or prop-

erty to the Government, is liable to the United States

Government for a civil penalty of not less than $5,000 and

not more than $10,000, plus 3 times the amount of dam-

ages which the Government sustains because of the act of

that person, except that if the court finds that -

(A) the person committing the violation of this subsec-

tion furnished officials of the United States responsible

for investigating false claims violations with all informa-

tion known to such person about the violation within 30

days after the date on which the defendant first obtained

the information;

(B) such person fully cooperated with any Government

investigation of such violation; and

with the information about the violation, no criminal

prosecution, civil action, or administrative action had

commenced under this title with respect to such viola-

tion, and the person did not have actual knowledge of the

App. 53

existence of an investigation into such violation; the court

may assess not less than 2 times the amount of damages

which the Government sustains because of the act of the

person. A person violating this subsection shall also be

liable to the United States Government for the costs of a

civil action brought to recover any such penalty or dam-

ages.

(b) “Knowing and knowingly defined. - For purposes of

this section, the terms “knowing” and “knowingly” mean

that a person, with respect to information -

(1) has actual knowledge of the information;

(2) acts in deliberate ignorance of the truth or falsity of

the information; or

(3) acts in reckless disregard of the truth or falsity of the

information, and no proof of specific intent to defraud is

required.

- “claim” includes 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 prop-

erty which is requested or demanded.

(d) Exemption from disclosure. - Any information fur-

nished pursuant to subparagraphs (A) through (C) of

subsection (a) shall be exempt from disclosttre—under

section 552 of title 5.

App. 54

(e) Exclusion. - This section does not apply to claims,

records, or statements made under the Internal Revenue

Code of 1986.

31 US.C.A. §§ 3730

UNITED STATES CODE ANNOTATED

TITLE 31. MONEY AND FINANCE

SUBTITLE II] - FINANCIAL MANAGEMENT

CHAPTER 37 - CLAIMS

SUBCHAPTER III - CLAIMS AGAINST THE UNITED

STATES GOVERNMENT

Current through P.L. 107-11, approved 5-28-01

§§ 3730. Civil actions for false claims

(a) Responsibilities of the Attorney General. - The

Attorney General diligently shall investigate a violation

under section 3729. If the Attorney General finds that a

person has violated or is violating section 3729, the Attor-

ney General may bring a civil action under this section

against the person.

(b) Actions by private persons. - (1) A person may bring

a civil action for a violation of section 3729 for the person

and for the United States Government. The action shall be

brought in the name of the Government. The action may

be dismissed only if the court and the Attorney General

give written consent to the dismissal and their reasons for

consenting.

App. 55

(2) A copy of the complaint and written disclosure of

substantially all material evidence and information the

person possesses shall be served on the Government pur-

suant to Rule 4(d)(4) of the Federal Rules of Civil Pro-

cedure. [FN1] The complaint shall be filed in camera,

shall remain under seal for at least 60 days, and shall not

be served on the defendant until the court so orders. The

Government may elect to intervene and proceed with the

action within 60 days after it receives both the complaint

and the material evidence and information.

(3) The Government may, for good cause shown, move

the court for extensions of the time during which the

complaint remains under seal under paragraph (2). Any

such motions may be supported by affidavits or other

submissions in camera. The defendant shall not be

required to respond to any complaint filed under this

section until 20 days after the complaint is unsealed and

served upon the defendant pursuant to Rule 4 of the

Federal Rules of Civil Procedure.

(4) Before the expiration of the 60-day period or any

extensions obtained under paragraph (3), the Govern-

ment shall -

(A) proceed with the action, in which case the action

shall be conducted by the Government; or

(B) notify the court that it declines to take over the

action, in which case the person bringing the action shall

have the right to conduct the action.

(5) When a person brings an action under this subsec-

tion, no person other than the Government may intervene

App. 56

or bring a related action based on the facts underlying the

pending action.

Government proceeds with the action, it shall have the

primary responsibility for prosecuting the action, and

shall not be bound by an act of the person bringing the

action. Such person shall have the right to continue as a

party to the action, subject to the limitations set forth in

paragraph (2).

(2)(A) The Government may dismiss the action notwith-

standing the objections of the person initiating the action

if the person has been notified by the Government of the

filing of the motion and the court has provided the per-

son with an opportunity for a hearing on the motion.

(B) The Government may settle the action with the

defendant notwithstanding the objections of the person

initiating the action if the court determines, after a hear-

ing, that the proposed settlement is fair, adequate, and

reasonable under all the circumstances. Upon a showing

of good cause, such hearing may be held in camera.

stricted participation during the course of the litigation

by the person initiating the action would interfere with or

unduly delay the Government’s prosecution of the case,

or would be repetitious, irrelevant, or for purposes of

harassment, the court may, in its discretion, impose lim-

itations on the person’s participation, such as —

(i) limiting the number of witnesses the person may call;

(ii) limiting the length of the testimony of such wit-

nesses;

App. 57

(iii) limiting the person’s cross-examination of wit-

nesses; or

(iv) otherwise limiting the participation by the person in

the litigation.

(D) Upon a showing by the defendant that unrestricted

participation during the course of the litigation by the

person initiating the action would be for purposes of

harassment or would cause the defendant undue burden

or unnecessary expense, the court may limit the partici-

pation by the person in the litigation.

(3) If the Government elects not to proceed with the

action, the person who initiated the action shall have the

right to conduct the action. If the Government so

requests, it shall be served with copies of all pleadings

filed in the action and shall be supplied with copies of all

deposition transcripts (at the Government’s expense).

When a person proceeds with the action, the court, with-

out limiting the status and rights of the person initiating

the action, may nevertheless permit the Government to

intervene at a later date upon a showing of good cause.

(4) Whether or not the Government proceeds with the

action, upon a showing by the Government that certain

actions of discovery by the person initiating the action

would interfere with the Government's investigation or

prosecution of a criminal or civil matter arising out of the

same facts, the court may stay such discovery for a period

of not more than 60 days. Such a showing shall be con-

ducted in camera. the Court may extend the 60-day

period upon a further showing in camera that the Gov-

ernment has pursued the criminal or civil investigation or

proceedings with reasonable diligence and any proposed

App. 58

discovery in the civil action will interfere with the ongo-

ing criminal or civil investigation or proceedings.

(5) Notwithstanding subsection (b), the Government

may elect to pursue its claim through any alternate rem-

edy available to the Government, including any adminis-

trative proceeding to determine a civil money penalty. If

any such alternate remedy is pursued in another proceed-

ing, the person initiating the action shall have the same

rights in such proceeding as such person would have had

if the action had continued under this section. Any find-

ing of fact or conclusion of law made in such other

proceeding that has become final shall be conclusive on

all parties to an action under this section. For purposes of

the preceding sentence, a finding or conclusion is final if

it has been finally determined on appeal to the appropri-

ate court of the United States, if all time for filing such an

appeal with respect to the finding or conclusion has

expired, or if the finding or conclusion is not subject to

judicial review.

(d) Award to qui tam plaintiff. - (1) If the Government

proceeds with an action brought by a person under sub-

section (b), such person shall, subject to the second sen-

tence of this paragraph, receive at least 15 percent but not

more than 25 percent of the proceeds of the action or

settlement of the claim, depending upon the extent to

which the person substantially contributed to the pros-

ecution of the action. Where the action is one which the

court finds to be based primarily on disclosures of speci-

fic information (other than information provided by the

person bringing the action) relating to allegations or

transactions in a criminal, civil, or administrative hear-

ing, in a congressional, administrative, or Government

App. 59

Accounting Office report, hearing, audit, or investigation,

or from the news media, the court may award such sums

as it considers appropriate, but in no case more than 10

percent of the proceeds, taking into account the signifi-

cance of the information and the role of the person bring-

ing the action in advancing the case to litigation. Any

payment to a person under the first or second sentence of

this paragraph shall be made from the proceeds. Any

such person shall also receive an amount for reasonable

expenses which the court finds to have been necessarily

incurred, plus reasonable attorneys’ fees and costs. All

such expenses, fees, and costs shall be awarded against

the defendant.

(2) If the Government does not proceed with an action

under this section, the person bringing the action or

settling the claim shall receive an amount which the court

decides is reasonable for collecting the civil penalty and

damages. The amount shall be not less than 25 percent

and not more than 30 percent of the proceeds of the

action or settlement and shall be paid out of such pro-

ceeds. Such person shall also receive an amount for rea-

sonable expenses which the court finds to have been

necessarily incurred, plus reasonable attorneys’ fees and

costs. All such expenses, fees, and costs shall be awarded

against the defendant.

(3) Whether or not the Government proceeds with the

action, if the court finds that the action was brought by a

person who planned and initiated the violation of section

3729 upon which the action was brought, then the court

may, to the extent the court considers appropriate, reduce

the share of the proceeds of the action which the person

would otherwise receive under paragraph (1) or (2) of

App. 60

this subsection, taking into account the role of that person

in advancing the case to litigation and any relevant cir-

cumstances pertaining to the violation. If the person

bringing the action is convicted of criminal conduct aris-

ing from his or her role in the violation of section 3729,

that person shall be dismissed from the civil action and

shall not receive any share of the proceeds of the action.

Such dismissal shall not prejudice the right of the United

States to continue the action, represented by the Depart-

ment of Justice.

(4) If the Government does not proceed with the action

and the person bringing the action conducts the action,

the court may award to the defendant its reasonable

attorneys’ fees and expenses if the defendant prevails in

the action and the court finds that the claim of the person

bringing the action was clearly frivolous, clearly vex-

atious, or brought primarily for purposes of harassment.

(e) Certain actions barred. - (1) No court shall have

jurisdiction over an action brought by a former or present

member of the armed forces under subsection (b) of this

section against a member of the armed forces arising out

of such person’s service in the armed forces.

(2)(A) No court shall have jurisdiction over an action

brought under subsection (b) against a Member of Con-

gress, a member of the judiciary, or a senior executive

branch official if the action is based on evidence or infor-

mation known to the Government when the action was

brought.

(B) For purposes of this paragraph, “senior executive

branch official” means any officer or employee listed in

| |

App. 61

paragraphs (1) through (8) of section 101(f) of the Ethics

in Government Act of 1978 (5 U.S.C.App.).

(3) In no event may a person bring an action under

subsection (b) which is based upon allegations or transac-

tions which are the subject of a civil suit or an administra-

tive civil money penalty proceeding in which the

Government is already a party.

(4)(A) No court shall have jurisdiction over an action

under this section based upon the public disclosure of

allegations or transactions in a criminal, civil, or adminis-

trative hearing, in a congressional, administrative, or

Government Accounting Office report, hearing, audit, or

investigation, or from the news media, unless the action

is brought by the Attorney General or the person bring-

ing the action is an original source of the information.

(B) For purposes of this paragraph, “original source”

means an individual who has direct and independent

knowledge of the information on which the allegations

are based and has voluntarily provided the information

to the Government before filing an action under this

section which is based on the information.

(f) Government not liable for certain expenses. — The

Government is not liable for expenses which a person

incurs in bringing an action under this section.

(g) Fees and expenses to prevailing defendant. - In civil

actions brought under this section by the United States,

the provisions of section 2412(d) of title 28 shall apply.

(h) Any employee who is discharged, demoted, sus-

pended, threatened, harassed, or in any other manner

discriminated against in the terms and conditions of

App. 62

employment by his or her employer because of lawful

acts done by the employee on behalf of the employee or

others in furtherance of an action under this section,

including investigation for, initiation of, testimony for, or

assistance in an action filed or to be filed under this

section, shall be entitled to all relief‘necessary to make

the employee whole. Such relief shall include reinstate-

ment with the same seniority status such employee

would have had but for the discrimination, 2 times the

amount of back pay, interest on the back pay, and com-

pensation for any special damages sustained as a result of

the discrimination, including litigation costs and reason-

able attorneys’ fees. An employee may bring an action in

the appropriate district court of the United States for the

relief provided in this subsection.

31 U.S.C.A. §§ 3731

UNITED STATES CODE ANNOTATED

TITLE 31. MONEY AND FINANCE

SUBTITLE III - FINANCIAL MANAGEMENT

CHAPTER 37 - CLAIMS

SUBCHAPTER III - CLAIMS AGAINST

THE UNITED STATES GOVERNMENT

Current through P.L. 107-11, approved 5-28-01

§§ 3731. False claims procedure

(a) A subpena [sic] requiring the attendance of a witness

at a trial or hearing conducted under section 3730 of this

title may be served at any place in the United States.

App. 63

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

brought —

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

tion of section 3729 is committed, or

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

to the right of action are known or reasonably should

have been known by the official of the United States

charged with responsibility to act in the circumstances,

but in no event more than 10 years after the date on

which the violation is committed, whichever occurs last.

States shall be required to prove all essential elements of

the cause of action, including damages, by a prepon-

derance of the evidence.

(d) Notwithstanding any other provision of law, the

Federal Rules of Criminal Procedure, or the Federal Rules

of Evidence, a final judgment rendered in favor of the

United States in any criminal proceeding charging fraud

or false statements, whether upon a verdict after trial or

upon a plea of guilty or nolo contendere, shall estop the

defendant from denying the essential elements of the

offense in any action which involves the same transaction

as in the criminal proceeding and which is brought under

subsection (a) or (b) of section 3730. )

App. 64

31 U.S.C.A. §§ 3732

UNITED STATES CODE ANNOTATED

TITLE 31. MONEY AND FINANCE

SUBTITLE iii - FINANCIAL MANAGEMENT

CHAPTER 37 - CLAIMS

. SUBCHAPTER III - CLAIMS AGAINST

THE UNITED STATES GOVERNMENT

Current through P.L. 107-11, approved 5-28-01

§§ 3732. False claims jurisdiction

(a) Actions under section 3730. —- Any action under sec-

tion 3730 may be brought in any judicial district in which

the defendant or, in the case of multiple defendants, any

one defendant can be found, resides, transacts business,

or in which any act proscribed by section 3729 occurred.

A summons as required by the Federal Rules of Civil

Procedure shall be issued by the appropriate district

court and served at any place within or outside. the

United States.

(b) Claims under state law. - The district courts shall

have jurisdiction over any action brought under the laws

of any State for the recovery of funds paid by a State or

local government if the action arises from the same trans-

action or occurrence as an action brought under section

3730.

App. 65

31 U.S.C.A. §§ 3733

UNITED STATES CODE ANNOTATED

TITLE 31. MONEY AND FINANCE

SUBTITLE II] - FINANCIAL MANAGEMENT

CHAPTER 37 - CLAIMS

SUBCHAPTER III - CLAIMS AGAINST

THE UNITED STATES GOVERNMENT

Current through P.L. 107-11, approved 5-28-01

§§ 3733. Civil investigative demands

(a) In general. -

(1) Issuance and service. - Whenever the Attorney Gen-

eral has reason to believe that any person may be in --

possession, custody, or control of any documentary mate-

rial or information relevant to a false claims law investi-

gation, the Attorney General may, before commencing a

civil proceeding under section 3730 or other false claims

law, issue in writing and cause to be served upon such

person, a civil investigative demand requiring such per-

son —

(A) to produce such documentary material for inspec-

tion and copying,

(B) to answer in writing written interrogatories with

respect to such documentary material or information, -

material or information, or

(D) to furnish any combination of such material,

answers, or testimony.

App. 66

The Attorney General may not delegate the authority to

issue civil investigative demands under this subsection.

Whenever a civil investigative demand is an express

demand for any product of discovery, the Attorney Gen-

eral, the Deputy Attorney General, or an Assistant Attor-

ney General shall cause to be served, in any manner

authorized by this section, a copy of such demand upon

the person from whom the discovery was obtained and

shall notify the person to whom such demand is issued of

the date on which such copy was served.

(2) Contents and deadlines -

(A) Each civil investigative demand issued under para-

graph (1) shall state the nature of the conduct constitut-

ing the alleged violation of a false claims law which is

under investigation, and the applicable provision of law

alleged to be violated.

(B) If such demand is for the production of documen-

tary material, the demand shall - :

(i) describe each class of documentary material to be

produced with such definiteness and certainty as to per-

mit such material to be fairly identified;

(ii) prescribe a return date for each such class which will

provide a reasonable period of time within which the

material so demanded may be assembled and made avail-

able for inspection and copying; and

(iii) identify the false claims law investigator to whom

such material shall be made available.

tories, the demand shall -

—S

App. 67

(i) set forth with specificity the written interrogatories

to be answered;

(ii) prescribe dates at which time answers to written

interrogatories shall be submitted; and

(iii) identify the false claims law investigator to whom

such answers shall be submitted.

(D) If such demand is for the giving of oral testimony,

the demand shall -

(i) prescribe a date, time, and place at which oral testi-

mony shall be commenced;

(ii) identify a false claims law investigator who shall

conduct the examination and the custodian to whom the

transcript of such examination shall be submitted:

(iii) specify that such attendance and testimony are nec-

essary to the conduct of the investigation;

(iv) notify the person receiving the demand of the right

to be accompanied by an attorney and any other repre-

sentative; and

(v) describe the general purpose for which the demand

is being issued and the general nature of the testimony,

including the primary areas of inquiry, which will be

taken pursuant to the demand.

(E) Any civil investigative demand issued under this

section which is an express demand for any product of

discovery shall not be returned or returnable until 20

days after a copy of such demand has been served upon

the person from-whom the discovery was obtained.

App. 68

(F) The date prescribed for the commencement of oral

testimony pursuant to a civil investigative demand issued

under this section shall be a date which is not less than

seven days after the date on which demand is received,

unless the Attorney General or an Assistant Attorney

General designated by the Attorney General determines

that exceptional circumstances are present which warrant

the commencement of such testimony within a lesser

period of time.

(G) The Attorney General shall not authorize the issu-

ance under this section of more than one civil investiga-

tive demand for oral testimony by the same person unless

the person requests otherwise or unless the Attorney

General, after investigation, notifies that person in writ-

ing that an additional demand for oral testimony is neces-

sary. The Attorney General may not, notwithstanding

section 510 of title 28, authorize the performance, by any

other officer, employee, or agency, of any function vested

in the Attorney General under this subparagraph.

(b) Protected material or information -

(1) In general. - A civil investigative demand issued

under subsection (a) may not require the production of

any documentary material, the submission of any

answers to written interrogatories, or the giving of any

oral testimony if such material, answers, or testimony

would be protected from disclosure under. -

(A) the standards applicable to subpoenas or subpoenas

duces tecum issued by a court of the United States to aid

in a grand jury investigation; or

App. 69 ~

(B) the standards applicable to discovery requests under

the Federal Rules of Civil Procedure, to the extent that

the application of such standards to any such demand is

appropriate and consistent with the provisions and pur-

poses of this section.

(2) Effect on other orders, rules, and laws. — Any such

demand which is an express demand for any product of

discovery supersedes any inconsistent order, rule, or pro-

vision of law (other than this section) preventing or

restraining disclosure of such product of discovery to any

person. Disclosure of any product of discovery pursuant

to any such express demand does not constitute a waiver

of any right or privilege which the person making such

disclosure may be entitled to invoke to resist discovery of

trial preparation materials.

(1) By whom served. - Any civil investigative demand

issued under subsection (a) may be served by a false

claims law investigator, or by a United States marshal or

a deputy marshal, at any place within the territorial juris-

diction of any court of the United States.

(2) Service in foreign countries. -— Any such demand or

any petition filed under subsection (j) may be served

upon any person who is not found within the territorial

jurisdiction of any court of the United States in such

manner as the Federal Rules of Civil Procedure prescribe

for service in a foreign country. To the extent that the

courts of the United States can assert jurisdiction over

any such person consistent with due process, the United

States District Court for the District of Columbia shall

have the same jurisdiction to take any action respecting

App. 70

compliance with the section by any such person that such

court would have if such person were personally within

the jurisdiction of such court.

(d) Service upon legal entities and natural persons. —

(1) Legal entities. - Service of any civil investigative

demand issued under subsection (a) or of any petition

filed under subsection (j) may be made upon a partner-

ship, corporation, association, or other legal entity by —

(A) delivering an executed copy of such demand or

petition to any partner, executive officer, managing agent,

or general agent of the partnership, corporation, associa-

tion, or entity, or to any agent authorized by appointment

or by law to receive service of process on behalf of such

partnership, corporation, association, or entity;

(B) delivering an executed copy of such demand or peti-

tion to the principal office or place of business of the

partnership, corporation, association, or entity; or

petition in the United States mails by registered or certi-

fied mail, with a return receipt requested, addressed to

such partnership, corporation, association, or entity at its

principal office or place of business.

(2) Natural persons. - Service of any such demand or

petition may be made upon any natural person by -

(A) delivering an executed copy of such demand or

petition to the person; or

(B) depositing an executed copy of such demand or

petition in the United States mails by registered or certi-

fied mail, with a return receipt requested, addressed to

App. 71

the person at the person’s residence or principal office or

place of business.

(e) Proof of service. — A verified return by the individ-

ual serving any civil investigative demand issued under

subsection (a) or any petition filed under subsection (j)

setting forth the manner of such service shall be proof of

such service. In the case of service by registered or certi-

fied mail, such return shall be accompanied by the return

post office receipt of delivery of such demand.

(f) Documentary material. —

(1) Sworn certificates. — The production of documentary

material in response to a civil investigative demand

served under this section shall be made under a sworn

certificate, in such form as the demand designates, by -

(A) in the case of a natural person, the person to whom

the demand is directed, or

(B) in the case of a person other than a natural person, a

person having knowledge of the facts and circumstances

relating to such production and authorized to act on

behalf of such person.

The certificate shall state that all of the documentary

material required by the demand and in the POssession,

custody, or control of the person to whom the demand is

directed has been produced and made available to the

false claims law investigator identified in the demand.

(2) Production of materials. — Any person upon whom

any civil investigative demand for the production of doc-

umentary material has been served under this section

Shall make such material available for inspection and

copying to the false claims law investigator identified in

App. 72

such demand at the principal place of business of such

person, or at such other place as the false claims law

investigator and the person thereafter may agree and

prescribe in writing, or as the court may direct under

subsection (j)(1). Such material shall be made so available

on the return date specified in such demand, or on such

later date as the false claims law investigator may pre-

scribe in writing. Such person may, upon written agree-

ment between the person and the false claims law

investigator, substitute copies for originals of all or any

part of such material.

(g) Interrogatories. - Each interrogatory in a civil inves-

tigative demand served under this section shall be

answered separately and fully in writing under oath and

shall be submitted under a sworn certificate, in such form

as the demand designates, by -

(1) in the case of a natural person, the person to whom

the demand is directed, or

(2) in the case of a person other than a natural person,

the person or persons responsible for answering each

interrogatory.

If any interrogatory is objected to, the reasons for the

objection shall be stated in the certificate instead of an

answer. The certificate shall state that all information

required by the demand and in the possession, custody,

control, or knowledge of the person to whom the demand

is directed has been submitted. To the extent that any

information is not furnished, the information shall be

identified and reasons set forth with particularity regard-

ing the reasons why the information was not furnished.

App. 73

(h) Oral examinations. —-

(1) Procedures. - The examination of any person pur-

suant to a civil investigative demand for oral testimony

served under this section shall be taken before an officer

authorized to administer oaths and affirmations by the

laws of the United States or of the place where the

examination is held. The officer before whom the testi-

mony is to be taken shall put the witness on oath or

affirmation and shall, personally or by someone acting

under the direction of the officer and in the officer’s

presence, record the testimony of the witness. The testi-

mony shall be taken stenographically and shall be tran-

scribed. When the testimony is fully transcribed, the

officer before whom the testimony is taken shall

promptly transmit a copy of the transcript of the testi-

mony to the custodian. This subsection shall not preclude

the taking of testimony by any means authorized by, and

in a manner consistent with, the Federal Rules of Civil

Procedure.

(2) Persons present. - The false claims law investigator

conducting the examination shall exclude from the place

where the examination is held all persons except the

person giving the testimony, the attorney for and any

other representative of the person giving the testimony,

the attorney for the Government, any person who may be

agreed upon by the attorney for the Government and the

person giving the testimony, the officer before whom the

testimony is to be taken, and any stenographer taking

such testimony.

(3) Where testimony taken. - The oral testimony of any

person taken pursuant to a civil investigative demand

App. 74

served under this section shall be taken in the judicial

district of the United States within which such person

resides, is found, or transacts business, or in such other

place as may be agreed upon by the false claims law

investigator conducting the examination and such per-

son.

(4) Transcript of testimony. - When the testimony is

fully transcribed, the false claims law investigator or the

officer before whom the testimony is taken shall afford

the witness, who may be accompanied by counsel, a

reasonable opportunity to examine and read the tran-

script, unless such examination and reading are waived

by the witness. Any changes in form or substance which

the witness desires to make shall be entered and identi-

fied upon the transcript by the officer or the false claims

law investigator, with a statement of the reasons given by

the witness for making such changes. The transcript shall

then be signed by the witness, unless the witness in

writing waives the signing, is ill, cannot be found, or

refuses to sign. If the transcript is not signed by the

witness within 30 days after being afforded a reasonable

opportunity to examine it, the officer or the false claims

law investigator shall sign it and state on the record the

fact of the waiver, illness, absence of the witness, or the

refusal to sign, together with the reasons, if any, given

therefor.

(5) Certification and delivery to custodian. — The officer

betore whom the testimony is taken shall certify on the

transcript that the witness was sworn by the officer and

that the transcript is a true record of the testimony given

App. 75

by the witness, and the officer or false claims law investi-

gator shall promptly deliver the transcript,.orsend_the

transcript by registered or certified mail, to the custodian.

(6) Furnishing or inspection of transcript by witness. -

Upon payment of reasonable charges therefor, the false

claims law investigator shall furnish a copy of the tran-

script to the witness only, except that the Attorney Gen-

eral, the Deputy Attorney General, or an Assistant

Attorney General may, for good cause, limit such witness

to inspection of the official transcript of the witness’

testimony.

(7) Conduct of oral testimony. - (A) Any person com-

pelled to appear for oral testimony under a civil investi-

gative demand issued under subsection (a) may be

accompanied, represented, and advised by counsel.

Counsel may advise such person, in confidence, with

respect to any question asked of such person. Such per-

son or counsel may object on the record to any question,

in whole or in part, and shall briefly state for the record

the reason for the objection. An objection may be made,

received, and entered upon the record when it is claimed

that such person is entitled to refuse to answer the ques-

tion on the grounds of any constitutional or other legal

right or privilege, including the privilege against selt-

incrimination. Such person may not otherwise object to or

refuse to answer any questions, and may not directly or

through counsel otherwise interrupt the oral examina-

tion. If such person refuses to answer. any question, a

petition may be filed in the district court of the United

States under subsection (j)(1) for an order compelling

such person to answer such question.

a a et i ee — — ————-_- . sd a ——_

App. 76

(B) If such person refuses to answer any question on the

grounds of the privilege against self-incrimination, the

testimony of such person may be compelled in accor-

dance with the provisions of part V of title 18.

(8) Witness fees and allowances. — Any person appear-

ing for oral testimony under a civil investigative demand

issued under subsection (a) shall be entitled to the same

fees and allowances which are paid to witnesses in the

district courts of the United States.

(i) Custodians of documents, answers, and transcripts. -

(1) Designation. - The Attorney General shall designate

a false claims law investigator to serve as custodian of

documentary material, answers to interrogatories, and

transcripts of oral testimony received under this section,

and shall designate such additional false claims law

investigators as the Attorney General determines from

time to time to be necessary to serve as deputies to the

custodian.

(2) Responsibility for materials; disclosure. - (A) A

false claims law investigator who receives any documen-

tary material, answers to interrogatories, or transcripts of

oral testimony under this section shall transmit them to

the custodian. The custodian shall take physical posses-

sion of such material, answers, or transcripts and shall be

responsible for the use made of them and for the return

of documentary material under paragraph (4).

(B) The custodian may cauSe the preparation of such

copies of such documentary material, answers to inter-

rogatories, or transcripts of oral testimony as may be

a Se

App. 77

required for official use by any false claims law investiga-

tor, or other officer or employee of the Department of

Justice, who is authorized for such use under regulations

which the Attorney General shall issue. Such material,

answers, and transcripts may be used by any such autho-

rized false claims law investigator or other officer or

employee in connection with the taking of oral testimony

under this section.

documentary material, answers to interrogatories, or

transcripts of oral testimony, or copies thereof, while in

the possession of the custodian, shall be available for

examination by any individual other than a false claims

law investigator or other officer or employee of the

Department of Justice authorized under subparagraph

(B). The prohibition in the preceding sentence on the

availability of material, answers, or transcripts shall not

apply if consent is given by the person who produced

such material, answers, or transcripts, or, in the case of

any product of discovery produced pursuant to an

express demand for such material, consent if given by the

person from whom the discovery was obtained. Nothing

in this subparagraph is intended to prevent disclosure to

the Congress, including any committee or subcommittee

of the Congress, or to any other agency of the United

States for use by such agency in furtherance of its statu-

tory responsibilities. Disclosure of information to any

such other agency shall be allowed only upon applica-

tion, made by the Attorney General to a United States

district court, showing substantial need for the use of the

information by such agency in furtherance of its statutory

responsibilities.

App. 78

(D) While in the possession of the custodian and under

such reasonable terms and conditions as the Attorney

General shall prescribe -

(i) documentary material and answers to interrogatories

shall be available for examination by the person who

produced such material or answers, or by a representa-

tive of that person authorized by that person to examine

such material and answers; and

(ii) transcripts of oral testimony shall be available for

examination by the person who produced such testimony,

or by a representative of that person authorized by that

person to examine such transcripts.

(3) Use of material, answers, or transcripts in other pro-

ceedings. - Whenever any attorney of the Department of

Justice has been designated to appear before any court,

grand jury, or Federal agency in any case or proceeding, |

the custodian of any documentary material, answers to

interrogatories, or transcripts of oral testimony received

under this section may deliver to such attorney such

material, answers, or transcripts for official use in con-

nection with any such case or proceeding as such attor-

ney determines to be required. Upon the completion of

any such case or proceeding, such attorney shall return to

the custodian any such material, answers, or transcripts

so delivered which have not passed into the control of

such court, grand jury, or agency through introduction

into the record of such case or proceeding.

(4) Conditions for return of material. - If any documen-

tary material has been produced by any person in the

course of any false claims law investigation pursuant to a

civil investigative demand under this section, and - -

App. 79

(A) any case or proceeding before the court or grand

jury arising out of such investigation, or any proceeding

before any Federal agency involving such material, has

been completed, or

(B) no case or proceeding in which such material may

be used has been commenced within a reasonable time

after completion of the examination and analysis of all

documentary material and other information assembled

in the course of such investigation, the custodian shall,

upon written request of the person who produced such

material, return to such person any such material (other

than copies furnished to the false claims law investigator

under subsection (f)(2) or made for the Department of

Justice under paragraph (2)(B)) which has not passed into

the control of any court, grand jury, or agency through

introduction into the record of such case or proceeding.

(5) Appointment of successor custodians. — In the event

of the death, disability, or separation from service in the

Department of Justice of the custodian of any documen-

tary material, answers to interrogatories, or transcripts of

oral testimony produced pursuant to a civil investigative

demand under this section, or in the event of the official

relief of such custodian from responsibility for the cus-

tody and control of such material, answers, or transcripts,

the Attorney General shall promptly -

(A) designate another false claims law investigator to

serve as custodian of such material, answers, or tran-

scripts, and

(B) transmit in writing to the person who produced

such material, answers, or testimony notice of the iden-

tity and address of the successor so designated.

App. 80

Any person who is designated to be a successor under

this paragraph shall have, with regard to such material,

answers, or transcripts, the same duties and respon-

sibilities as were imposed by this section upon that per-

son’s predecessor in office, except that the successor shall

not be held responsible for any default or dereliction

which occurred before that designation.

(j) Judicial proceedings. -

(1) Petition for enforcement. - Whenever any person

fails to comply with any civil investigative demand

issued under subsection (a), or whenever satisfactory

copying or reproduction of any material requested in

such demand cannot be done and such person refuses to

surrender such material, the Attorney General may file,

in the district court of the United States for any judicial

district in which such person resides, is found, or trans-

acts business, and serve upon such person a petition for

an order of such court for the enforcement of the civil

investigative demand.

(2) Petition to modify or set aside demand. - (A) Any

person who has received a civil investigative demand

issued under subsection (a) may file, in the district court

of the United States for the judicial district within which

such person resides, is found, or transacts business, and

serve upon the false claims law investigator identified in

such demand a petition for an order of the court to

modify or set aside such demand. In the case of a petition

addressed to an express demand for any product of dis-

covery, a petition to modify or set aside such demand

may be brought only in the district court of the United

States for the judicial district in which the proceeding in

App. 81

which such discovery was obtained is or was last pend-

ing. Any petition under this subparagraph must be filed -

(i) within 20 days after the date of service of the civil

investigative demand, or at any time before the return

date specified in the demand, whichever date is earlier, or

(ii) within such longer period as may be prescribed in

writing by any false claims law investigator identified in

the demand.

(B) The petition shall specify each ground upon which

the petitioner relies in seeking relief under subparagraph

(A), and may be based upon any failure of the demand to

comply with the provisions of this section or upon any

constitutional or other legal right or privilege of such

person. During the pendency of the petition in the court,

the court may stay, as it deems proper, the running of the

time allowed for compliance with the demand, in whole

or in part, except that the person filing the petition shall

comply with any portions of the demand not sought to be

modified or set aside.

(3) Petition to modify or set aside demand for product

of discovery. — (A) In the case of any civil investigative

demand issued under subsection (a) which is an express

demand for any product of discovery, the person from

whom such discovery was obtained may file, in the dis-

trict court of the United States for the judicial district in

which the proceeding in which such discovery was

obtained is or was last pending, and serve upon any false

claims law investigator identified in the demand and

upon the recipient of the demand, a petition for an order

of such court to modify or set aside those portions of the

demand requiring production of any such product of

App. 82

discovery. Any petition under this subparagraph must be

filed -

(i) within 20 days after the date of service of the civil

investigative demand, or at any time before the return

date specified in the demand, whichever date is earlier, or

(ii) within such longer period as may be prescribed in

writing by any false claims law investigator identified in

the demand.

(B) The petition shall specify each ground upon which

the petitioner relies in seeking relief under subparagraph

(A), and may be based upon any failure of the portions of

the demand from which relief is sought to comply with

the provisions of this section, or upon any constitutional

or other legal right or privilege of the petitioner. During

the pendency of the petition, the court may stay, as it

deems proper, compliance with the demand and the run-

ning of the time allowed for compliance with the

demand.

(4) Petition to require performance by custodian of

duties. - At any time during which any custodian is in

custody or control of any documentary material or

answers to interrogatories produced, or transcripts of

oral testimony given, by any person in compliance with

any civil investigative demand issued under subsection

(a), such person, and in the case of an express demand for

any product of discovery, the person from whom such

discovery was obtained, may file, in the district court of

the United States for the judicial district within which the

office of such custodian is situated, and serve upon such

custodian,

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