Pat COSTNER, United States ex rel.; Sharon Golgan; Carolyn Lance; Debra Litchfield; Becky Summers; Kenny Brown; Edward Campbell; Don Daniel; Jeffrey Foot; Clifton Garry; David Hermanson; Michael Shelton; Arkansas Peace Center; Vietnam Veterans of America, Arkansas State Council, Inc., Plaintiffs/Appellees, v. URS CONSULTANTS, INC.; Morrison Knudsen Corporation, Defendants/Appellants, MRK Inclineration, Inc.; Defendant, Vertac Site Contractors, Defendants/Appellants.
No. 97-4310.
United States Court of Appeals, Eighth Circuit.
Decided Aug. 17, 1998.
Rehearing and Suggestion for Rehearing En Banc Denied Sept. 30, 1998.
153 F.3d 667 | 47 ERC 1129 | 28 Envtl. L. Rep. 21,493
Submitted June 12, 1998.
Charles Nestrud, Little Rock, AR, argued, for Vertac Site and Morrison Knudsen Corp.
Mick G. Harrison, Berea, KY, argued (Gregory Ferguson, Little Rock, AR, on the brief), for Pat Costner.
Before WOLLMAN and MURPHY, Circuit Judges, and DOTY,1 District Judge.
WOLLMAN, Circuit Judge.
1 This is a qui tam action brought on behalf of the United States by relators2 pursuant to the False Claims Act (FCA),
I.
2 From 1948 to 1987, the Vertac site was home to various chemical, herbicide, and pesticide production facilities.3 Throughout the years, chemical waste from such activity was deposited in landfills and stored in drums or barrels above ground with little or no attention to human health or environmental consequences. As a result, the site became extremely contaminated with dioxin and other highly toxic chemicals. The United States Environmental Protection Agency (EPA) has placed the site on the Superfund National Priorities List.
A.
3 In 1979, after the Centers for Disease Control concluded that the Vertac site constituted a significant risk to public health, Vertac Chemical and its predecessor, Hercules, entered into a compact with the EPA and the Arkansas Department of Pollution Control and Ecology (the state) to take certain remedial and preventative measures. Although Vertac Chemical substantially complied with these measures, dioxin levels continued to rise in the environment surrounding the site, particularly in the Rocky Branch and Bayou Meto tributaries. In 1980, a federal district court issued a preliminary injunction ordering the company to undertake further remedial actions to arrest leakage of toxic chemicals from its disposal sites. See United States v. Vertac Chem. Corp., 489 F.Supp. 870, 888-89 (E.D.Ark.1980) (Vertac I ). In 1982, Vertac Chemical entered into a consent decree with the EPA and the state. A negotiated remedial plan was subsequently approved and enforced by the district court. See United States v. Vertac Chem. Corp., 588 F.Supp. 1294 (E.D.Ark.1984) (Vertac II ); United States v. Vertac Chem. Corp., 671 F.Supp. 595, 610-13 (E.D.Ark.1987) (Vertac III ), vacated, 855 F.2d 856 (8th Cir.1988) (table).
5 Pursuant to the agreement, the state imposed various conditions regarding the operation of the incinerator constructed by the contractors, but certified that the contractors had demonstrated the ability to satisfy state and federal regulations. In 1991, the district court approved and entered an additional consent decree. See id. at 1219. The EPA remained involved in the cleanup by monitoring air quality, handling and transporting the drums of waste to be incinerated by the contractors, and disposing of incinerator ash.
6 In 1992, after it became clear that the trust fund would not be sufficient to complete the cleanup, the EPA assumed primary responsibility for the site and approved a federal removal action using federal funds.4 See Arkansas Peace III, 999 F.2d at 1214. When the trust fund was depleted, the state terminated its contract with Vertac Site Contractors.5 Soon after, the EPA assigned general oversight authority of the site to URS Consultants, Inc. URS then entered into a contract with Vertac Site Contractors to continue incineration activities. In 1995, the EPA transported the remaining drums of toxic waste to a site in Kansas for incineration. Although incineration at the Vertac site has thus ended, cleanup activities are ongoing, including remediation of the groundwater and soil. Litigation over costs of the cleanup has continued as well. See United States v. Vertac Chem. Corp., 966 F.Supp. 1491, 1495-96 (E.D.Ark.1997) (Vertac VII ).
B.
7 Throughout the years, outside parties have attempted to intervene in the Vertac site cleanup.6 In 1992, several environmental groups, including two of the current relators, filed suit in district court alleging violation of state and federal regulations and seeking to enjoin incineration at the site. Ultimately, the district court issued a preliminary injunction. See Arkansas Peace Ctr. v. Arkansas Dep‘t of Pollution Control & Ecology, 23 Envtl. L. Rep. 20807 (E.D.Ark. Mar.17, 1993) (Arkansas Peace I ). The court based its decision primarily on its finding that defendants had failed to establish that the incinerating process could achieve the required destruction and removal efficiency level on the dioxin contained in the chemical waste. See id.;
9 In 1994, a similar action, this time framed as a state nuisance suit, was filed in Arkansas state court. Defendants removed the case to federal court. The district court concluded that CERCLA conferred exclusive jurisdiction over plaintiffs’ claims. It then dismissed the claims with prejudice for lack of subject matter jurisdiction under
10 Relators filed the current action under the FCA, alleging eight counts of knowing submission of false claims for payment. The district court denied defendants’ motions to dismiss on various grounds. On appeal, defendants contend that: (1) the claims are barred under principles of res judicata; (2) the claims are barred by
II.
11 Defendants first contend that the claims in the complaint are barred under principles of res judicata and should therefore have been dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) of the Federal Rules of Civil Procedure. Under the doctrine of res judicata, also known as claim preclusion, “a final judgment on the merits bars further claims by parties or their privies based on the same cause of action.” United States v. Gurley, 43 F.3d 1188, 1195 (8th Cir.1994) (quoting Montana v. United States, 440 U.S. 147, 153 (1979)). A claim will be held to be precluded by a prior lawsuit when: (1) the first suit resulted in a final judgment on the merits; (2) the first suit was based on proper jurisdiction; (3) both suits involve the same parties (or those in privity with them); and (4) both suits are based upon the same claims or causes of action. See In re Anderberg-Lund Printing Co., 109 F.3d 1343, 1346 (8th Cir. 1997); Kulinski v. Medtronic Bio-Medicus, Inc., 112 F.3d 368, 372 (8th Cir.1997) (subsequent history omitted). “Furthermore, the party against whom res judicata is asserted must have had a full and fair opportunity to litigate the matter in the proceeding that is to be given preclusive effect.” In re Anderberg-Lund, 109 F.3d at 1346.
12 Regarding the “final judgment on the merits” element of claim preclusion, we have stated that a prior dismissal premised upon subject matter jurisdiction
13 should preclude relitigation of the same [jurisdiction] issue but not a second suit on the same claim even if arising out of the identical set of facts.... [W]here the second suit presents new theories of relief, admittedly based upon the same operative facts as alleged in the first action, it is not precluded because the first decision was not on the merits of the substantive claim.
14 Kulinski, 112 F.3d at 373 (quoting McCarney v. Ford Motor Co., 657 F.2d 230, 233-34 (8th Cir.1981)) (citations omitted). In Arkansas Peace III (the primary prior judgment upon which defendants rely for their claim preclusion argument), we reversed the judgment for lack of subject matter jurisdiction.
15 Regarding the “same claims or causes of action” element of claim preclusion, we have stated that whether a second lawsuit is precluded turns on whether its claims arise out of the “same nucleus of operative facts as the prior claim.” Gurley, 43 F.3d at 1195 (quoting Lane v. Peterson, 899 F.2d 737, 742 (8th Cir.1990)). In Gurley, we held that the EPA‘s CERCLA claim brought against an oil reclamation company was barred by its previous claim brought under the Clean Water Act. See id. at 1195-97. We recognized that in conducting a claim preclusion analysis, “[t]he legal theories of the two claims are relatively insignificant because ‘a litigant cannot attempt to relitigate the same claim under a different legal theory of recovery.’ ” Id. at 1195 (quoting Poe v. John Deere Co., 695 F.2d 1103, 1105 (8th Cir.1982)). And we concluded that ” ‘[i]n the final analysis the test would seem to be whether the wrong for which redress is sought is the same in both actions.’ ” Gurley, 43 F.3d at 1196 (quoting Roach v. Teamsters Local Union No. 688, 595 F.2d 446, 449 (8th Cir.1979)) (emphasis supplied in Gurley ).
16 The Arkansas Peace litigation was an effort to prevent perceived harm to the environment and public health by seeking enforcement of state and federal environmental regulations and an injunction against waste incineration activity at the Vertac site. In this case, the wrong for which relators seek redress is the alleged submission of false claims for the payment of funds, a claim based upon economic injury to the federal government. Although both claims have their genesis in the Vertac site cleanup, they are independent of each other and seek to redress different injuries resulting from distinct conduct. Thus, the FCA allegations are not, as defendants assert, simply a repackaging of prior claims, but constitute a new set of charges arising from a separate “nucleus of operative facts” upon which no final judgment has been previously rendered. Therefore, the claims are not precluded on grounds of res judicata and are sufficient to survive a motion to dismiss on jurisdictional grounds.
III.
17 Next, the contractors contend that the district court should have dismissed the complaint as barred under
18 In enacting
19
21 In Arkansas Peace III, we determined that plaintiffs’ claims, “although couched in terms of a RCRA violation,” constituted a challenge to the EPA removal action so as to invoke the section 113(h) bar. 999 F.2d at 1217. In that case, however, plaintiffs sought and had been granted a preliminary injunction against incineration activity at the Vertac site. See id. at 1213. Here, relators seek neither review of nor injunction against any remedial activity on the site. Instead, they allege fraud and seek civil penalties on behalf of the United States. Resolution of this suit in relators’ favor “would not involve altering the terms of the cleanup order,” but would result only in financial penalties for alleged fraud regarding payments sought and received for past completed work. Beck, 62 F.3d at 1243. Thus, the complaint does not seek to interfere with the remediation process ongoing at the site, see id., nor is the suit “directly related to the goals of the cleanup itself.” McClellan, 47 F.3d at 330. Accordingly, we hold that relators’ FCA suit does not constitute a section 113(h)-barred challenge to remedial action at the Vertac site. The district court therefore properly denied defendants’ motion to dismiss on this ground.
IV.
22 Under the qui tam provisions of the False Claims Act, private persons acting on behalf of the government may sue those who defraud the government and share in any proceeds ultimately recovered. “The Act‘s jurisdictional scheme is designed to promote private citizen involvement in exposing fraud against the government, while at the same time prevent parasitic suits by opportunistic late-comers who add nothing to the exposure of the fraud.” United States ex rel. Rabushka v. Crane Co., 40 F.3d 1509, 1511 (8th Cir.1994) (subsequent history omitted).
23 Defendants contend that the present claim is barred by
24 In no event may a person bring an action under subsection (b) which is based upon allegations or transactions which are the subject of a civil suit or an administrative civil money penalty proceeding in which the Government is already a party.
25
26 Defendants argue that
28 [T]he FDIC ... was not proceeding against the defendants to this action, for fraud or otherwise, in the Collection case. Therefore, because this case is seeking to remedy fraud that the government has not yet attempted to remedy, it is, as a threshold matter, wholly unlike the one the drafters of § 3730(e)(3) almost certainly had in mind and sought to preclude.
29 Id. at 328 (footnote omitted).
30 The present suit is based upon allegations of fraud involving the submission of false claims for payment for environmental remediation work completed at the Vertac site. Such allegations or transactions have never before been the subject of a FCA suit or any other suit or proceeding brought by the government or anyone else. As in Prawer, “because this case is seeking to remedy fraud that the government has not yet attempted to remedy, it is, as a threshold matter, wholly unlike” that which Congress sought to preclude by enacting section 3730(e)(3). Id. The district court therefore properly declined to dismiss the case on this ground.
V.
31 Last, defendants contend that many of the allegations in relators’ complaint are not properly the subject of a False Claims Act suit, as they do not involve claims made against the United States. Thus, they argue, the district court should have granted their motion to dismiss for failure to state a claim regarding those particular allegations.
32 Congress enacted the FCA to protect government funds and property from fraudulent claims. See Rainwater v. United States, 356 U.S. 590, 592 (1958). The Act imposes liability upon any person who, inter alia, “knowingly presents, or causes to be presented, to an officer or employee of the United States Government ... a false or fraudulent claim for payment or approval” or who “knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government.”
33 There are at least two sources of funds against which false claims are alleged to have been made by defendants: (1) the trust fund underwritten by Vertac Chemical; and (2) the federal Superfund under the supervision of the EPA. Relators contend that participation by the United States in negotiations that led to the stipulation by which Vertac Chemical “agreed to put up a $6.7 million trust fund, a $4 million letter of credit for environmental cleanup of the Vertac site, and a $3.15 million disbursement from the shareholders,” see Vertac IV, 756 F.Supp. at 1217, is sufficient to render any claims for payment made against that fund and approved by the state of Arkansas susceptible to challenge in their qui tam action.
34 We do not believe that the FCA has as elastic an application as relators suggest. As defined in the FCA, a “claim”
35 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 property which is requested or demanded.
36
38 None of the money in the private Vertac trust fund, long since depleted, was provided by the United States Government. No federal funds were ever intermingled with that fund. The United States had no access to the trust fund, nor did it have any control over its disbursement, which was overseen by the State of Arkansas. Moreover, no money disbursed from the private fund was ever reimbursed by the federal government. See, e.g., United States v. O‘Connell, 890 F.2d 563, 564-65 (1st Cir.1989) (finding FCA violation in fraudulent payment request submitted to state agency that disbursed federal development grants).
39 The FCA “attaches liability, not to the underlying fraudulent activity, but to the ‘claim for payment.’ ” United States ex rel. Hopper v. Anton, 91 F.3d 1261, 1266 (9th Cir.1996), cert. denied, 117 S.Ct. 958 (1997) (quoting Rivera, 55 F.3d at 709). Any allegedly false claims for payment made by defendants to the Vertac trust fund had no nexus to the United States. We conclude that the FCA has no application in such circumstances. The district court erred, therefore, in denying defendants’ Rule 12(b)(6) motions to dismiss relators’ complaint to the extent that it alleged the knowing submission of false claims for payment from the trust fund underwritten by Vertac Chemical. To the extent that relators alleged the knowing submission of false claims for payment to the EPA, however, the court did not err in denying defendants’ motions to dismiss for failure to state a claim upon which relief could be granted.
40 The judgment is affirmed in part, reversed in part, and remanded for proceedings consistent with this opinion.