UNITED STATES, еx rel. Anthony OLIVER, and Anthony Oliver, Appellant v. PHILIP MORRIS USA INC., a Virginia Corporation, formerly known as Philip Morris Incorporated, Appellee.
No. 15-7049
United States Court of Appeals, District of Columbia Circuit.
Argued January 15, 2016. Decided June 21, 2016.
G/M and the Carpenters Union also assert that the Board‘s decision was not based on substantial evidence and the Board‘s remedy was improper. Because we hold that the Board did not adequately distinguish Cosmo and grant the petitions for review on that ground, we need not reach the remaining arguments.
III.
We grant the petitions for review, deny the Board‘s cross-application for enforcement, vacate the Board‘s orders, and remand.
Elizabeth P. Papez, Washington, DC, argued the cause for appellee. With her on
Before: ROGERS and WILKINS, Circuit Judges, and WILLIAMS, Senior Circuit Judge.
WILKINS, Circuit Judge:
Appellant and relator Anthony Oliver brings this qui tam action alleging that Appellee Philip Morris USA violated the False Claims Act (“FCA“),
I.
Oliver is the President and CEO of Medallion Brands International Company
Oliver filed this action in 2008 alleging that these transactions violated the MFC provisions, and, as a result, the FCA. The
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 news media, unless the action is brought by the Attorney General or the person bringing the aсtion is an original source of the information.
The District Court dismissed Oliver‘s complaint in 2013, reasoning that Oliver‘s action was subject to the FCA‘s jurisdictional bar and that he did not qualify as an original source. U.S. ex rel. Oliver v. Philip Morris, 949 F.Supp.2d 238, 251 (D.D.C. 2013). Oliver appealed, and we vacated and remanded. U.S. ex rel. Oliver v. Philip Morris (Oliver I), 763 F.3d 36, 44 (D.C. Cir. 2014). In Oliver I, we held that the FCA‘s public disclosure bar was not triggered because “Philip Morris ... made no attempt to show that its allegedly false certifications of compliance with [the MFC] provisions were in the public domain.” Id. at 41. We rejected Philip Morris‘s contention that Governmеnt awareness of the MFC provisions constituted public disclosure that triggers the FCA‘s jurisdictional bar. Id. at 42. Additionally, we held that the Iceland Memo, a 1999 inter-office memorandum discussing concerns about cigarette pricing at a United States naval station in Iceland, did not publicly disclose the MFC provisions or Philip Morris‘s obligation to charge the Exchanges its lowest price for cigarettes. Id. at 43. We also rejected efforts by Philip Morris after oral argument to demonstrate that the MFC provisions were generally available so as to trigger the public disclosure bar because it had abandoned those arguments on appeal and submitted new evidence that we were unable to properly evaluate. Id. at 43-44. Accordingly, we vacated the District Court‘s decision and remanded the case for further proceedings. Id. at 44.
On remand, Philip Morris moved again to dismiss the complaint for lack of subject matter jurisdiction. This time, Philip Morris argued that the FCA‘s public disclosure bar was triggered because the MFC provisions were published online prior to the filing of the complaint. The District Court concluded that, based on the archived webpages Philip Morris submitted in conjunction with its motion, the MFC provisions were publicly disclosed in an “administrative report” and in the “news media,” and that the allegations or transactions in the complaint were substantially similar to those in the public domain. U.S. ex rel. Oliver v. Philip Morris USA, Inc., 101 F.Supp.3d 111, 123-27 (D.D.C. 2015). The
II.
We review de novo a dismissal for lack of subject matter jurisdiction. Oliver I, 763 F.3d at 40.
A.
As we explained in Oliver I, “[t]he False Claims Act‘s public disclosure bar states that a court lacks subject matter jurisdiction over an action ‘based upon the public disclosure of allegations or transactions.‘” Id. at 40 (quoting
[I]f X + Y = Z, Z represents the allegation of fraud and X and Y represent its essential elements. In order to disclose the fraudulent transaction publicly, the combination of X and Y must be revealed, from which readers or listeners may infer Z, i.e., the conclusion that fraud has been committed. The language employed in
§ 3730(e)(4)(A) suggests that Congress sought to prohibit qui tam actions only when either the allegation of fraud [Z] or the critical elemеnts of the fraudulent transaction themselves were in the public domain.
14 F.3d at 654 (final two emphases added). In other words, we lack subject matter jurisdiction if either of the following has been publicly disclosed: (1) the allegation of fraud itself, or (2) the transactions that give rise to an inference of fraud. Applied to this case, the transaction would be “the fact that Philip Morris was not providing the Exchanges with the best price for cigarettes (X) plus the fact that Philip Morris falsely certified that it complied with the Most Favored Customer provisions (Y),” which “gives rise to the conclusion Philip Morris committed fraud (Z).” Oliver I, 763 F.3d at 41. Accordingly, we “lack[] jurisdiction over Oliver‘s suit only if X and Y, i.e., both the pricing disparities and Philip Morris‘s false certifications of compliance with the Most Favоred Customer provisions, were in the public domain.” Id.
As a threshold matter, though not invoking the law of the case doctrine, Oliver appears to argue that we already held that the transactions were not publicly disclosed. See Appellant Br. at 29. This is too broad a reading of Oliver I. In our earlier opinion, we concluded that “[t]he Iceland Memo, standing alone, does not communicate that there was anything legally impermissible about the prices Philip Morris was charging the Exchanges.” Oliver I, 763 F.3d at 43 (emphasis added). In evaluating only the Y term, we found that neither the MFC provisions nor Philip Morris‘s fraudulent certifications that it complied with them was publicly disclosed. Id. at 41-43. We explicitly did not resolve the potential disclosure of the pricing disparities in the memo. Id. at 41. Oliver I thus never reached the X term and only reflects that the Iceland Memo does not provide the Y term. On remand, the District Court concluded that the Iceland Memo provided the X term and was publicly disclosed, and that Philip Morris provided evidence that the Y term was also publicly disclosed. Oliver, 101 F.Supp.3d at 123-27. Accordingly, we must resolve whether the District Court was correct in holding that these X and Y terms constitute publicly disclosed transactions.
We turn first to whether the Iceland Memo publicly discloses the price differential alleged in Oliver‘s Complaint. Oliver argues that the Iceland Memo does not publicly disclose that Philip Morris was not providing cigarettes at the best price to the Exchanges. Oliver concedes that “the Iceland Memo does reflect a differential between the prices charged to the military and to private parties.” Appellant Br. at 34. However, he argues that the price differential revealed in the memo is not the same as what he alleges in his complaint because the Iceland Memo involves different time periods, MFC provisions, and corporate sales.
“We have explained that a suit is ‘based upon’ publicly disclosed ‘allegations or transactions’ when the allegations in the complaint are ‘substantially similar’ to those in the public domain.” U.S. ex rel. Davis v. District of Columbia, 679 F.3d 832, 836 (D.C. Cir. 2012) (quoting U.S. ex rel. Findley v. FPC-Boron Emps.’ Club, 105 F.3d 675, 682 (D.C. Cir. 1997), abrogated on other grounds by Rockwell Int‘l Corp. v. United States, 549 U.S. 457, 127 S.Ct. 1397, 167 L.Ed.2d 190 (2007)); see also Findley, 105 F.3d at 680 (“We have already decided that the public disclosure bar is triggered when a relator files an action that is substantially similar to ‘allegations or transactions’ already in the public domain.“). “This rule prevents suits by those other than an ‘original source’ when the government already has enough information ‘to investigate the case and to make a decision whether to prosecute’ or where the information ‘could at least have alerted law-enforcement authorities to the likelihood of wrongdoing.‘” Davis, 679 F.3d at 836 (quoting Springfield Terminal, 14 F.3d at 654). Merely providing “more specific details” about what happened does not negate substantial similarity. Id. Additionally, “a relator‘s ability to reveal specific instances of fraud where the general practice has already been publicly disclosed is insufficient to prevent operation of the jurisdictional bar.” U.S. ex rel. Settlemire v. District of Columbia, 198 F.3d 913, 919 (D.C. Cir. 1999) (citing Findley, 105 F.3d at 687-88).
The price difference alleged in the Complaint is substantially similar to the price difference the Iceland Memo describes. According to the Complaint, Philip Morris sold identical cigarettes to PM DFI and PMI “at prices lower than the prices such cigarettes were sold to” the Exchanges. Compl. ¶ 25, J.A. 21. The Complaint further alleges that
over the period covered by this Complaint, one or more of defendant‘s affiliates purchased defendant‘s cigarette products from defendant (at a price well below the price charged to NEXCOM) and re-sold such cigarettes to the civilian duty-free market on American Samoa.
The Iceland Memo, dated December 23, 1999, outlines Philip Morris‘s general practice of selling Philip Morris products to the military at a price higher than that which Philip Morris sells cigarettes off its duty-free price list to other overseas Philip Morris customers. It states that “PMI Duty-Free list prices are lower than PM USA Military tax-free prices and we frequently receive inquiries from the Service Headquarters on why they can‘t purchase tax-free product at these lower prices.” J.A. 74. The memo was generated as a
Oliver‘s attempts to distinguish the Iceland Memo are unpersuasive. Although the Iceland Memo predates the sale of cigarettes alleged in the complaint, we have found “disclosures going back as far as forty years prior to the relator‘s lawsuit ... sufficient to disclose the practices which formed the basis of the relator‘s suit.”
2.
Oliver also argues that Philip Morris did not publicly disclose that it falsely certified compliance with the MFC provisions. Oliver does not dispute that the contracts containing the MFC provisions were publicly disclosed. Instead, he contends that because nothing in the MFC provisions themselves specifically states that Philip Morris‘s compliance was false, the contracts containing the MFC provisions do not publicly disclose that Philip Morris falsely certified compliance.
We agree with the District Court that because the MFC provisions were incorporated by reference into every contract, “a hypothetical government investigator aware of the price discrepancies and the
B.
Although we conclude that the transactions that give rise to an inference of fraud were publicly disclosed, the jurisdictional bar operates only if the public disclosure occurs through certain channels specified in the statute. The statute specifies that public disclosure must occur in, inter alia, “a criminal civil or administrative hearing, in а congressional, administrative, or Government Account Office report ... or from the news media.”
1.
Oliver first argues that the Iceland Memo was not disclosed in a civil hearing. In Springfield Terminal, we held that “discovery material, when filed with the court (and not subject to protective order), is publicly disclosed in a civil hearing for purposes of
Oliver reads the statute and Springfield Terminal too narrowly. We noted in Springfield Terminal that the FCA‘s jurisdictional bar reflects “congressional efforts to walk a fine line between encouraging whistle blowing and discouraging opportunistic behavior.” 14 F.3d at 651. Accordingly, we analyzed the jurisdictional bar “in the context of these twin goals of rejecting suits which the government is capable of pursuing itself, while promoting those which the government is not equipped to bring on its own.”
Although Oliver acknowledges that the Iceland Memo was publicly accessible via the internet, he contends that the history of the Iceland Memo‘s publication undermines the notion that it was “actually” publicly available. The database contains 4,480,485 documents from an additional 421 cases. Reply Br. at 26. Because Springfield Terminal distinguished between “theoretically available” and “actually available,” Oliver contends that the breadth of the database shows that the Iceland Memo was only theoretically available. We disagree. Although Oliver couches his argument in terms of whether the documents are “actually available,” he effectively argues that public disclosure should turn on whether the documents are reasonably likely to be discovered. This is not the standard. The Iceland Memo was in fact actually available on a court-ordered public website. Because they were made available on the website in a civil hearing, they were “actually” made available in accordance with Springfield Terminal‘s rationale.7
2.
Oliver also argues that the MFC provisions were not publicly disclosed in an administrative report. Because the provisions did not “give information” but were the “information itself,” Oliver contends that the MFC provisions could not constitute a report. Appellant Br. at 42-44.
In Schindler Elevator Corp. v. United States ex rel. Kirk, 563 U.S. 401, 131 S.Ct. 1885, 179 L.Ed.2d 825 (2011), the Supreme Court explained that the “ordinary meaning” of
C.
Although wе conclude that the transactions Oliver alleges were publicly disclosed through statutorily prescribed channels, we would still have jurisdiction if Oliver qualifies as an “original source.”
Here, Oliver contends that he is an original source for information underlying the X term: the fact that Philip Morris was selling cigarettes to other purchasers at prices lower than that which it sold cigarettes to the Exchanges. On remand, Oliver submitted a sworn declaration outlining how he came to pоssess the information underlying his allegation of fraud. J.A. 448-57. Oliver explained that his company, Medallion, sold cigarettes to military
The allegations in Oliver‘s complaint and the statements made in his declaration fail to demonstrate that Oliver qualifies as an original source. Oliver‘s knowledge of the information underlying the allegation of fraud in the complaint is not “direct” because Oliver possessed no firsthand knowledge of Philip Morris‘s unlawful price differential, but rather gained all his knowledge seсondhand. Oliver argues that “the fact that a relator undertakes investigatory efforts does not prevent the information derived from that investigation from being ‘direct.‘” Appellant Br. at 57-58. However, it is not Oliver‘s investigation but his lack of firsthand knowledge prompting his investigation that precludes his original source status.
Our Circuit has found a relator who conducts an investigation to be an “original source,” but only where the relator possessed some direct knowledge of the conduct implicated by the fraud. For example, in Springfield Terminal, we held that a relator who conducted investigatory efforts was an “original source” under
We held that it was “beyond question” that the relator was an original source.
Springfield Terminal thus demonstrates that in order to have “direct” knowledge for purposes of the original source exception, a relator must have some first-hand knowledge that would lead him to believe that a fraud had been committed. Cases from other circuits confirm this approach. For example, in Minnesota Association of Nurse Anesthetists v. Allstate Health Sys. Corp., 276 F.3d 1032, 1050 (8th Cir. 2002), the Eighth Circuit held that the relator organization‘s members had direct knowledge because they witnessed the fraudulent conduct of filling out billing forms with misleading information. 276 F.3d at 1050. The members also had direct knowledge of the “true state of fаcts” contradicting the fraud because they had witnessed the actual conduct that the fraud misrepresented.
Similarly, our sister circuits have routinely held that relators do not qualify for the original source exception where the relator learns of the fraudulent activity from a third party. In Glaser v. Wound Care Consultants, Inc., 570 F.3d 907, 911-12 (7th Cir. 2009), the relator alleged that a medical facility committed Medicaid fraud when it billed Medicaid for services performed by a doctor that were actually performed by a nurse practitioner or phy-
In United States ex rel. Ondis v. City of Woonsocket, 587 F.3d 49, 52 (1st Cir. 2009), the relator investigated whether the city illegally received federal grants from the Department of Housing and Urban Development. The relator alleged fraud based on “specific instances ... previously disclosed in daily newspapers of general circulation” or otherwise “unarguably ... from the public domain.” Id. at 59. The First Circuit concluded that the relator lacked direct knowledge because “[k]nowledge that is based оn research into public records, review of publicly disclosed materials, or some combination of these techniques is not direct.” Id.
Finally, the Fourth Circuit also found such mediated knowledge insufficient for original source status in United States ex rel. Grayson v. Advanced Management Technology, Inc., 221 F.3d 580 (4th Cir. 2000). In Grayson, the relators were lawyers who had represented a company in a dispute about the award of a government contract. Id. at 581. In the course of the representation, the relators learned that the company that had been awarded the contract misrepresented the makeup of the personnel who would perform the contract. Id. at 581-82. Relators filed a qui tam action, alleging that such misrepresentations violated the FCA. Id. at 582. The Fourth Cirсuit concluded that relators were not an original source because they “at best verified” the information contained in an administrative protest. Id. at 583.
With these principles in mind, we “look to the factual subtleties of the case before [us] and attempt to strike a balance between those individuals who, with no details regarding its whereabouts, simply stumble upon a seemingly lucrative nugget and those actually involved in the process of unearthing important information about a false or fraudulent claim.” U.S. ex rel. Laird v. Lockheed Martin Eng‘g & Sci. Servs. Co., 336 F.3d 346, 356 (5th Cir. 2003), abrogated on other grounds by Rockwell, 549 U.S. at 472. Here, Oliver possesses no direct knowledge of information that prompted his investigation into Philip Morris. Unlike the litigants in Springfield Terminal, who possessed first-hand knowledge of the days on which the arbitrator conducted proceedings, Oliver does not allege any direct knowledge of transactions involving Philip Morris. Oliver does not allege that he worked for Philip Morris, sold cigarettes overseas on behalf of Philip Morris, or purchased cigarettes overseas from Philip Morris. He learned of Philip Morris‘s sales practices from Maloney, a third party. Maloney‘s knowledge prompted Oliver to investigate whether the surcharges applied. Because Oliver stumbled upon Philip Morris‘s overseas pricing when a third party revealed the pricing to him, he does not possess direct information underlying Philip Morris‘s unlawful price differential.
Furthermore, neither Oliver‘s background information nor the knowledge he gained through his investigation constitutes direct information sufficient to confer original source status. “Courts must be mindful of suits based only on ‘secondhand information, speculation, background information or collateral research.‘” U.S. ex rel. Atkinson v. Pa. Shipbuilding Co., 473 F.3d 506, 523 (3d Cir. 2007) (quoting U.S. ex rel. Hafter D.O. v. Spectrum Emergency Care, Inc., 190 F.3d 1156, 1162-63 (10th Cir. 1999)). The FCA was intended to encourage “those ‘who are either close observers or otherwise involved in the fraudulent activity’ to come forward.” U.S. ex rel. Barth v. Ridgedale Elec., Inc., 44 F.3d 699, 703-04 (8th Cir. 1995) (quoting S. Rep. No. 99-345, at 4 (1986), as reprinted in 1986 U.S.C.C.A.N. 5266, 5269). Recognizing Oliver‘s background knowledge of the MSA and his contact with NAAG and Hasegawa as direct would undermine this intent, as Oliver was not a close observer of any of these facts. Cf. Atkinson, 473 F.3d at 523 (finding relator was not an original source because “[a]ny member of the public could have” checked the public records underlying the qui tam suit). Accordingly, because Oliver lacks any direct information about the price differential Philip Morris charged the Exchanges, hе is not an original source.
Because the transactions creating an inference of fraud were publicly disclosed and Oliver is not an original source, we affirm the judgment of the District Court.
So ordered.
VERIZON NEW ENGLAND INC., Petitioner v. NATIONAL LABOR RELATIONS BOARD, Respondent, Local 2324, International Brotherhood of Electrical Workers, AFL-CIO, Intervenor.
No. 15-1062 Consolidated with 15-1087
United States Court of Appeals, District of Columbia Circuit.
Argued April 11, 2016. Decided June 21, 2016.