Mr. Bobby Maxwell, a senior auditor for the United States Department of the Interior, brought this qui tam action against oil and gas producer Kerr-McGee Oil & Gas Corporation for defrauding the federal government by underpaying royalties for federal offshore oil leases. After the jury returned a $7.5 million verdict for Mr. Maxwell, the district court reversed its prior ruling on whether the court had subject matter jurisdiction to hear the case. The court determined that information underlying the suit had previously been disclosed to the public, thereby removing jurisdiction under the False Claims Act, 31 U.S.C. § 3730(e)(4). We now hold that the transfer of information between a federal employee and a state government auditor who is under a duty of confidentiality is not a public disclosure and therefore does not deprive the courts of jurisdiction.
I.
Mr. Maxwell was a senior government auditor for the Minerals Management Service (“MMS”), a division within the United States Department of the Interior. In 2002, the MMS began an investigation of royalty reporting by Kerr-McGee arising from crude oil produced from federal offshore leases and sold to Texon L.P. Mr. Maxwell was the senior auditor on the team assigned to the investigation, and in the course of that investigation “reached the conclusion that Kerr-McGee had substantially underpaid its federal oil royalties.” Am. Comp. ¶ 56. Kerr-McGee had reported the sales value of oil for royalty purposes without including the fair market value of marketing services provided by Texon as partial consideration, resulting in a royalties underpayment of around $10 million.
On November 15, 2002, Mr. Maxwell sent an audit issue letter to Kerr-McGee containing a preliminary determination that Kerr-McGee had underpaid royalties owed to the federal government on its leases. Kerr-McGee submitted a written response to MMS disputing the findings contained in the letter. Mr. Maxwell then drafted an order for payment of additional royalties, which he submitted to his senior manager. MMS did not issue the order of payment.
On June 14, 2004, Mr. Maxwell filed a
qui tam
action against Kerr-McGee under the False Claims Act (“FCA”). 31 U.S.C. § 3729. He alleged that, based on the information uncovered during his audit, “Kerr-McGee knowingly made false and/or fraudulent statements on the monthly royalty reports submitted to the MMS and ‘understated and underpaid’ its federal royalties.”
Maxwell v. Kerr-McGee Oil & Gas Corp.,
Before trial, Kerr-McGee filed a motion for summary judgment for lack of subject matter jurisdiction under the FCA. 31 U.S.C. § 3730(e)(4). The court denied the motion, concluding that (1) government auditors were not necessarily barred from acting as relators under the FCA, and (2) that Mr. Maxwell was a “direct and independent” source of the information on which his allegations were based and voluntarily provided the information to the government before filing the action.
United States ex rel. Maxwell v. Kerr-McGee Chemical Worldwide, LLC,
2006 WL
The court concluded that the information underlying the suit had been publicly disclosed in an e-mail exchange between David Darouse, an employee of the State of Louisiana, and Roman Geissel, an MMS agent, in early April 2003. An e-mail, sent by Mr. Darouse to Mr. Geissel dated April 1, 2003, requested a copy of the Kerr-McGee/Texon contract from August 1995 to December 2001. In that e-mail, Mr. Darouse stated: “We analyzed the prices being paid by Texon to Kerr and found them to be FAR below gravity adjusted market indices.” App. 2989. The following day, Mr. Geissel replied: “We have done a lot of work at Kerr and found numerous problems which will result in a significant underpayment.” App. 2989. The court found this exchange to be a public disclosure of the facts underlying Mr. Maxwell’s suit and that Mr. Maxwell did not fall within the original source exception, resulting in a lack of jurisdiction under the FCA. We disagree and hold that the limited disclosure of information to a government official under a duty of confidentiality is not a “public disclosure.”
II
The statutory language at issue in this case is primarily found in the 1986 amendments to the False Claims Act, which broadened the class of qui tam actions falling within the proper jurisdiction of the courts. The prior version of the Act removed jurisdiction over suits “whenever it shall be made to appear that such suit was based upon evidence or information in the possession of the United States, or any agency, officer or employee thereof, at the time such suit was brought.” 31 U.S.C. § 232(C) (1946). This language effectively prevented any federal employee from filing a qui tam action and thereby eliminated any incentive provided by the FCA for government employees to seek out fraudulent activity and bring it to light.
In response, Congress adopted the 1986 amendments “to enhance the Government’s ability to recover losses sustained as a result of fraud against the Government.” S.Rep. No. 99-345, at 1 (1986),
reprinted in
1986 U.S.C.C.A.N. 5266, 5266. The “overall intent” was “to encourage more private enforcement suits.”
Id.
at 23-24,
reprinted in
1986 U.S.C.C.A.N. at 5288-89. One feature of these amendments was to provide a more permissive jurisdictional limitation: “No court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions in a ... Government Accounting Office report, hearing, audit, or investigation.... ” 31 U.S.C. § 3730(e)(4). By focusing not on whether the underlying information was known to the United States, but rather whether the information was within the public domain, the amendment sought to further the dual goals of the FCA in “avoidance of parasitism and encouragement of legitimate citizen enforcement actions.”
United States ex rel. Springfield Terminal Ry. Co. v. Quinn,
Kerr-McGee contends that even under the more expansive scope of the FCA as amended, the court lacks jurisdiction to hear Mr. Maxwell’s suit. First, it argues that a governmental employee who acquires the information in the course of his official duties cannot serve as a relator for a suit based on that information. Kerr-McGee acknowledges that this argument may be foreclosed by our en banc decision in
United States ex rel. Holmes v. Consumer Ins. Group,
A. Government Employee as Relator
Section 3730(b)(1) provides, in pertinent part, that “[a] person may bring a civil action for a violation of section 3729 for the person and for the United States Government.” 31 U.S.C. § 3730(b)(1). We held in our en banc decision in
Holmes
that “a government employee who obtains information about fraud in the scope of his or her employment, and who is required to report that fraud” is a “person” under § 3730(b)(1) and is not otherwise prevented from acting as a relator.
Kerr-McGee attempts to distinguish
Holmes
on the basis that the relator in that case discovered the fraud during her lunch break, in an investigation not within her official duties. Our analysis in
Holmes,
however, did not turn on whether or not the fraud was discovered in the employee’s official capacity. The lack of limiting language on the broad term “person” as used in § 3730(b)(1) provides no basis for concluding that government employees, whether acting in their official capacity or not, are excluded from the scope of the statute. Prior to the 1986 amendments, federal employees were effectively barred from bringing qui tarn suits because of the jurisdictional exemption for suits based on information already known to the United States. 31 U.S.C. § 232(C) (1946). But the 1986 amendments allow suits based on such information as long as it is not publicly disclosed, and therefore do not prevent federal employees from acting as relators. In
Holmes,
we explicitly adopted the Supreme Court’s reasoning in
United, States ex rel. Marcus v. Hess,
B. Public Disclosure
The FCA as amended in 1986 removes jurisdiction over suits “based upon the public disclosure of allegations or transactions in a ... Government Accounting Office report, hearing, audit, or investigation. ...” 31 U.S.C. § 3730(e)(4). This case presents the question of whether the transfer of information to a state government employee who is under a duty of confidentiality with respect to that information is a “public disclosure” for purposes of § 3730(e)(4). We hold that insofar as the communication does not release the information into the public domain such that it is accessible to the general population, it is not. This reading of § 3730(e)(4) comports with the meaning most commonly attached to the term “public” and furthers “the golden mean between adequate incentives for whistle-blowing insiders with genuinely valuable information and discouragement of opportunistic plaintiffs who have no significant information to contribute of their own.”
The primary definition of the term “public,” as used in this context, is “open to general observation, sight, or cognizance; existing, done, or made in public; manifest; not concealed.” Oxford English Dictionary (2d ed.1989). See also Blacks Law Dictionary 1242 (7th ed.1999) (“open or available for all to use, share, or enjoy”). A communication to an individual who is under a duty to keep the information to himself is not publicly made because it remains concealed from the general population. Similarly, the term “disclosure” is defined as the release of information or knowledge into the open: “to open up to the knowledge of others; to make openly known;” “to open up;” “to unclose.” Oxford English Dictionan'y (2d ed.1989) (defining “disclose”). Therefore we interpret “public disclosure” to require release of information such that it is generally available and not subject to obligations of confidentiality. Communications made to individuals outside the federal government are not necessarily public disclosures; rather, there must be further investigation to determine whether the information entered the public domain by such communication. 1
This reading of § 3730(e)(4) is supported by our precedent. We and other circuits commonly speak of the jurisdictional limits on the FCA as excluding suits based on information in the public domain. “A public disclosure happens when the critical elements exposing the transaction as fraudulent are placed in the public domain.”
United States ex rel. Feingold v. AdminaStar Federal, Inc.,
Our prior holding that a public disclosure may occur by the transfer of information to a single individual does not conflict with this interpretation.
Kennard,
The e-mail exchange between Mr. Darouse and Mr. Geissel, in contrast to the above examples, was subject to confidentiality limitations because it was the product of an on-going government audit. Mr. Darouse stated in an affidavit that the “email was placed in an ongoing audit file of Kerr-McGee. Pursuant to the policies and procedures of the Louisiana Department of Natural Resources, the contents of an ongoing audit file are never made available to the public while the audit is ongoing. The contents of an ongoing audit file are maintained privileged and confidential.” App. 2479. Both Mr. Darouse and other members of the state audit team were under an obligation not to' disclose the information, at least while the audit was ongoing. Therefore, the information was not within the public domain and the e-mail exchange was not a “public disclosure” that would remove jurisdiction over Mr. Maxwell’s suit from the courts.
Interpreting the FCA to establish release of information into the public domain as the trigger to remove subject matter jurisdiction fits with the purposes of the Act and the 1986 amendments. “Section 3730 — civil actions for false claims, has two basic goals: 1) to encourage private citizens with first-hand knowledge to expose fraud; and 2) to avoid civil actions by opportunists attempting to capitalize on public information without seriously contributing to the disclosure of the fraud.”
United States ex rel. Precision Co. v. Koch Industries, Inc.,
C. The Johnson Litigation as a Public Disclosure
Kerr-McGee’s final argument is that the information upon which Mr. Maxwell’s suit was based was publicly disclosed
A suit is based upon a public disclosure if its “allegations are substantially similar” to the information revealed.
Kennard,
The publicly filed documents in
Johnson
make no mention of Texon or the oil-for-services exchange practices at issue here. App. 3362-63. Although the
Johnson
settlement did include some Texon contracts, those contracts were not publicly available. App. 2516-17. The general allegation that Kerr-McGee was involved in fraudulent underpayment of royalties for offshore oil leases is not sufficiently specific to constitute a public disclosure because it is not in itself “enough information to discover related frauds,” such as the fraud underlying Mr. Maxwell’s suit.
Boothe,
Ill
Because we hold that neither the e-mail exchange between Mr. Darouse and Mr. Geissel nor the Johnson litigation constituted a public disclosure for purposes of 31 U.S.C. § 3730(e)(4), and that Mr. Maxwell may properly act as a relator, we REVERSE the district court’s dismissal of the case for lack of subject matter jurisdiction and REMAND for further proceedings.
Notes
. This case involves disclosure to a state government employee. We need not consider in this case whether disclosure to a private citizen under a legal obligation of confidentiality would be a "public disclosure.”
. The contents of the e-mail exchange between Mr. Darouse and Mr. Geissel may also have been too vague to qualify as a public disclosure of an allegation or transaction with "substantial identity” to Mr. Maxwell’s detailed allegations of fraud. Because we find that the exchange did not constitute a public disclosure, however, we need not reach this issue.