United States Ex Rel. Oliver v. Philip Morris USA Inc.
2016 U.S. App. LEXIS 11191
| D.C. Cir. | 2016Background
- Relator Anthony Oliver, CEO of Medallion Brands, sued Philip Morris USA under the False Claims Act (FCA), alleging Philip Morris sold cigarettes to military exchanges (NEXCOM/AAFES) at prices higher than to its affiliates and thus violated contract "Most Favored Customer" (MFC) provisions and falsely certified compliance.
- Complaint alleged at least 1.8 million cartons sold at disadvantageous prices (example: NEXCOM on Guam paid materially more than affiliate sales to American Samoa).
- District Court initially dismissed under the FCA public-disclosure bar; this Court vacated and remanded in Oliver I because the record then did not show the alleged false certifications were publicly disclosed.
- On remand Philip Morris produced archived web pages and the Iceland memorandum; District Court held those materials publicly disclosed the pricing disparities and the MFC terms through enumerated FCA channels, and that Oliver was not an "original source."
- On appeal the D.C. Circuit affirmed: (1) the Iceland memo publicly disclosed the pricing differential (the X element); (2) the MFC contract terms were publicly disclosed (the Y element) via an administrative report; and (3) Oliver lacked the first‑hand/direct knowledge required to be an original source, so the jurisdictional bar applied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the alleged fraudulent "transaction" (pricing disparity X + false certification Y) was publicly disclosed | Oliver: Iceland memo and other materials do not disclose the specific transactions alleged; prior holdings preclude finding public disclosure of the certifications | Philip Morris: Iceland memo and archived Exchange contract materials publicly disclosed the pricing disparities and MFC terms | Held: Yes; Iceland memo disclosed the pricing disparity (X) and MFC contract terms were publicly available (Y), together disclosing the transaction |
| Whether the public disclosure occurred through a statutorily enumerated channel | Oliver: Iceland memo was not "filed in a civil hearing" and the MFC terms are not an "administrative report" | Philip Morris: materials were published on a court‑ordered public website (civil proceeding) and the Exchange contracting website constituted an administrative report | Held: Yes; Iceland memo was effectively disclosed in a civil hearing via court‑ordered public website, and MFC terms were disclosed in an administrative report |
| Whether Oliver qualifies as an "original source" despite public disclosure | Oliver: He conducted independent investigation and has industry knowledge and contacts giving him direct knowledge of overseas pricing practices | Philip Morris: Oliver’s knowledge derived from third parties and public records, not first‑hand knowledge of PM USA transactions | Held: No; Oliver’s knowledge was second‑hand and investigatory rather than first‑hand/direct, so he is not an original source |
| Whether dismissal for lack of subject‑matter jurisdiction under the FCA public‑disclosure bar was proper | Oliver: Jurisdiction should remain because public disclosures were insufficient and he is an original source | Philip Morris: Jurisdiction is barred because the transactions were publicly disclosed through enumerated channels and Oliver is not an original source | Held: Affirmed dismissal for lack of jurisdiction under §3730(e)(4)(A); Oliver not an original source under §3730(e)(4)(B) |
Key Cases Cited
- Springfield Terminal Co. v. Quinn, 14 F.3d 645 (D.C. Cir.) (defines "transaction" and original‑source direct/independent knowledge framework)
- U.S. ex rel. Davis v. District of Columbia, 679 F.3d 832 (D.C. Cir.) (public‑disclosure substantial‑similarity standard)
- U.S. ex rel. Findley v. FPC–Boron Emps.’ Club, 105 F.3d 675 (D.C. Cir.) (public‑disclosure bar triggered by substantial similarity)
- Schindler Elevator Corp. v. United States ex rel. Kirk, 563 U.S. 401 (2011) (broad ordinary meaning of "report" under the FCA)
- Rockwell Int’l Corp. v. United States, 549 U.S. 457 (2007) (clarifies original‑source "information on which the allegations are based")
- U.S. ex rel. Settlemire v. District of Columbia, 198 F.3d 913 (D.C. Cir.) (public disclosure can alert government to investigate; specific instances insufficient to avoid bar)
- Cause of Action v. Chicago Transit Auth., 815 F.3d 267 (7th Cir.) (government in identical position to infer scienter from publicly disclosed documents)