602 F. App'x 959
5th Cir.2015Background
- Relators (Little and Arnold), former MMS auditors, filed qui tam FCA suits alleging Shell improperly deducted gathering costs as transportation on 12 Gulf of Mexico leases (2001–2005), depriving the United States of royalties.
- Case transferred to the Southern District of Texas; district court initially granted summary judgment for Shell based on the FCA public-disclosure bar and on who may bring qui tam suits.
- Fifth Circuit (prior appeal) reversed the district court on the who-may-sue issue and vacated the public-disclosure ruling, instructing the district court to apply a narrower standard (citing McKesson) and to decide whether public disclosures (including administrative decisions and lawsuits) actually revealed the specific scheme alleged.
- On remand Shell renewed summary judgment; the district court again dismissed the relators under the public-disclosure bar in a short opinion.
- The Fifth Circuit panel reversed, concluding the district court ignored the prior mandate, misapplied the public-disclosure standard, found no public disclosure of the specific fraudulent scheme, and ordered reassignment to a different district judge.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether relators’ suit is barred by the FCA public-disclosure bar (31 U.S.C. § 3730(e)(4)) | Relators: their complaints identify Shell, specific leases, and details; the alleged scheme was not publicly disclosed and they are not relying on public sources | Shell: prior public materials (rulemaking comments, administrative IBLA decisions, prior lawsuits/settlements, FOIA disclosures) disclosed the scheme or its mechanics | Held: No public disclosure of the specific scheme; summary judgment for Shell was erroneous because district court misapplied the required narrow, fact-specific public-disclosure analysis |
| Whether the district court complied with the Fifth Circuit’s remand instructions | Relators: district court failed to follow the panel’s mandate and a detailed standard (e.g., compare scope/detail of disclosures to complaint) | District court: concluded public disclosures cumulatively sufficed and relied on them | Held: District court disregarded the mandate; opinion was conclusory and failed to apply required standards |
| Whether the cited administrative/agency materials (Auger, Mars, rulemaking) and FOIA items disclosed the alleged fraud | Relators: Auger and Mars concern different facts (transportation allowance for integral transport functions) and do not disclose reclassification of gathering as transportation at the custody-transfer point | Shell: those administrative decisions and correspondence put the public and government on notice of the characterization and Shell’s intent to take allowances | Held: Auger and Mars are factually distinguishable and do not disclose the specific fraudulent scheme alleged; public comment participation is not an allegation/transaction of fraud |
| Whether reassignment to a different district judge on remand is appropriate | Relators: district court’s repeated, cursory holdings and failure to follow mandate justify reassignment to preserve appearance of justice | Shell: implicit opposition (not detailed) | Held: Reassignment ordered under both reassignment tests used by this circuit (concern about judge’s ability to put aside prior views and appearance of impartiality); case remanded and reassigned |
Key Cases Cited
- McKesson Corp. v. U.S. ex rel. Jamison, 649 F.3d 322 (5th Cir. 2011) (standards for applying the FCA public-disclosure bar on summary judgment)
- United States ex rel. Maxwell v. Kerr-McGee Oil & Gas Corp., 540 F.3d 1180 (10th Cir. 2008) (prior lawsuit did not publicly disclose a distinct subsequent fraud allegation)
- In re DaimlerChrysler Corp., 294 F.3d 697 (5th Cir. 2002) (standards and precedent for reassignment on remand)
- Simon v. City of Clute, 825 F.2d 940 (5th Cir. 1987) (factors to consider when deciding reassignment to another judge)