United States of America, Ex Rel., Paul Biddle v. Board of Trustees of the Leland Stanford, Jr. University

rel., America, ex UNITED STATES BIDDLE, Plaintiff-

Paul

Appellant, LE- THE TRUSTEES OF

BOARD OF STANFORD, JR.

LAND UNIVER-

SITY, Defendant-Appellee.

No. 96-16911. Appeals,

United States Court

Ninth Circuit. Nov. 1997.

Argued and Submitted May

Decided 1998.

Amended Nov. Hart, LLP, Denver, CO, plain-

Holland & tiff-appellant. (argued), Fong L.

Debra Zumwalt Kevin Dunkley, Pillsbury and Patrick Madison & LLP, Alto, Palo Sutro California J. Ste- Lawrence, Jr., Porter, phen Arnold & Wash- D.C., ington, defendant-appellee. BOOCHEYER, Before: Senior Circuit KLEINFELD, Judge, Judge, Circuit WILSON, Judge.* District Opinion by WILSON; Judge District by Judge Dissent KLEINFELD. ORDER Slip Opinion May filed 1998 is Judge amended to include Kleinfeld’s dissent. OPINION WILSON, Judge: District Paul appeals the district court’s dismissal cause of action for lack of subject jurisdiction. matter tam lawsuit the Board of Trust- Stanford, University ees of the Leland Jr. (“Stanford”) pursuant to the False Claims (“FCA”), 3730, alleging Act 31 U.S.C. Stanford defrauded the United States Gov- ernment. Because district court lacks subject matter over Biddle’s law- suit, we affirm.

BACKGROUND government agencies regularly Federal en- agreements ter into with Stanford and other universities research and other activities performed by to be the universities. The agreements designed to reimburse the Benson, CA, costs, Phillip Orange, E. Brian J. universities for both direct and indirect Panish, Greene, Broillet, Taylor, Wheeler & well as staff benefits. Direct costs include Panish, CA, Monica, Timothy M. supplies particular project. Santa Ras- salaries and for a tello, Glenn, Marcy Walter H. Bithell and G. Indirect are a costs method to allow univer- * Wilson, nia, Stephen sitting by designation. The Honorable V. District Court for the Central District of Califor- reviews de novo the district of its This court also for a share sity reimbursed to be subject matter conclusion that it lacks court’s equip- overhead, buildings, as costs of Vacations, jurisdiction. Inc. H2O Houseboat ment, utilities, support. administrative Hernandez, 914, 916 Cir. (“ONR”) is Research of Naval The Office 1996). determination, making In the dis cost rates and setting indirect responsible for disputes factual based trict court resolve agreements benefits at Stanford. staff jurisdic presented where on the evidence calculating for ONR and Stanford between separable from the merits tional issue is of Un- called Memoranda costs are indirect States, v. United the case. Rosales derstanding. (9th Cir.1987). 799, court’s The district 1988, hired as Biddle was In October determination findings of fact relevant to its (“ACO”) Contracting Officer Administrative subject jurisdiction are reviewed matter at Representative ONR and Resident clear error. Id. thereafter, came to Biddle Soon Stanford. overcharging the that Stanford believe DISCUSSION After inform- government for indirect costs. Act, any person Under the False Claims avail, relayed supervisors to no Government who defrauds the United States congressional subcommittee concerns to a § 3729 penalties. civil 31 U.S.C. is liable for of Bid- As a result in the summer of 1990. (1994). Although requires the At- the FCA revelations, Accounting Of- the General dle’s viola- investigate possible torney General to Agency Defense Audit fice and the Contract 3730(a), tions, permits § the FCA also id. investigation of Stanford. began an by private persons, qui civil tam actions 3730(b). relators, qui § In a id. known as 1990, began the media September In action, on behalf of the tam the relator sues allegations reporting on Riddle’s If the relator government as well as himself. by numer- was interviewed Stanford. Biddle the re- prevails, percentage receives a fea- magazines, and was newspapers and ous being paid to the covery, the remainder program news tured on the ABC “20/20.” however, Congress, has limited government. 1991, rate was re- indirect cost Stanford’s jurisdiction ac- of courts over tam from 76% to 55.5%. duced tions: 9,1991, after more than one September On an have over No court shall coverage of year media Stan- of extensive this, upon the under section based action filed a alleged overcharges, Biddle ford’s allegations or transac- public disclosure of Act. Follow- suit under the False Claims civil, criminal, or administrative in a tions Department two-year investigation, the ing a administrative, hearing, congressional, in a in Biddle’s not to intervene of Justice decided report, Accounting Office or Government complaint was then served lawsuit. Biddle’s audit, investigation, or from hearing, 1995, 30, August on On Stanford. media, bring- person ... unless news complaint. Stanford his third amended filed original source ing the action is lack of complaint moved to dismiss information. 26, August subject jurisdiction. matter On 3730(e)(4)(A). “Original is de- Id. granted Stanford’s the district court direct and “an individual who has fined as court held Specifically, the district motion. on knowledge the information jurisdictionally that Biddle’s and has vol- allegations are based (1) upon public it was based barred because to the Gov- untarily provided the information (2) disclosures, qualify Biddle did filing an action under this ernment before pro- of the information source the information.” section which based 3730(e)(4)(B). to the vided Id. al- of Stanford’s I. the disclosures Were REVIEW OF

STANDARD leged “public under disclosures” the FCA? subject juris matter The existence of the district argues that reviewed de novo. Biddle first question of law diction is (9th Cir.1997). ruling that the disclosures Reno, 128, 130 erred in Ma v. through governmen published, plaintiffs filed their investigations reports and media tal consti action. This court held that because the “public newspaper publicly tuted disclosures” under the FCA. action was filed after the Biddle relies on United States ex rel. Bara disclosed the the district Cir.1993), jas Northrop Corp., subject jurisdiction, F.3d 407 court lacked matter un- plaintiffs rt. 511 U.S. less the S.Ct. were an source” of ce (1994), proposi for the 128 L.Ed.2d the information which the provides tion that if an individual information were based. governmen that causes a dispositive, We believe that Devlin is investigation, tal and evidence of fraud or Barajas. that Biddle Barajas, misreads

wrongdoing during gov made allegations against the defendant became investigation, allegations then ernment’s re public government because the an obtained garding publicly- the treated against indictment the defendant. The court disclosed under the FCA. that if allegations reasoned the in the indict- disclosed, publicly ment were deemed then Barajas, plaintiff brought qui In the a tam government potential the could “limit the against Northrop suit for fraudulent activi- recovery qui plaintiffs unfairly tam indictment, simply Northrop’s Following ties. the by initiating a investigation.” criminal Bara- plaintiff complaint, adding amended his an jas, contrast, 5 F.3d at 411. In Biddle him- allegation Northrop using was inade- responsible story reaching self was for the quate damping flight fluid in its data trans- public in the that he alleged disclosed the plaintiff mitters. The admitted that after he the example, fraud to media. For Biddle Northrop, damping left he learned of the “20/20,” appeared program on the news problem through newspaper fluid a article Thus, which aired March of 1991. the reported Northrop’s on indictment. The Devlin, present case is similar' to in that investigation leading up to the indictment in each personally relator case in- disclosed have been on based information that the formation to the media. The rationale plaintiff provided Barajas government that the should not a resulting held that “disclosure from a crim- plaintiffs qui able to stifle a tam suit investigation by inal based launching public investigation a ap- provided by does not plain- a ply where the relator himself was involved in tiff’ does not bar action under 3730(e)(4)(A). public allegations. disclosure of the Id. at 411-12. Biddle as- Therefore, we reports hold the media that all regarding serts of the disclosures alleged “public Stanford’s fraud were disclo- alleged gov- Stanford’s fraud resulted from a meaning sures” within the of the FCA. investigation, ernmental triggered was provided when Biddle upon” public II. Is Biddle’s action “based Thus, pertinent information. ar- disclosures? gues, “public the disclosures are not disclo- Barajas. sures” under though Even of Stan disclosed, publicly ford’s fraud were the dis Stanford contends that this court’s decision trict court would not be without California, United States ex rel. v. Devlin unless Biddle’s upon” action was “based — (9th Cir.1996), denied, 84 F.3d 358 cert. public those disclosures. Biddle contends -, U.S. S.Ct. 136 L.Ed.2d 252 upon” that “based means “derived from.” (1996), Devlin, controlling. govern Thus, argues that because he learned employee ment plaintiffs informed the of al first-hand of Stanford’s rather leged employee fraud in which par had through than reports, the media his action is ticipated by falsifying Shortly records. upon public not based disclosures. thereafter, plaintiffs one of the met a news paper reporter case, and told him al about the Biddle relies on a Fourth Circuit leged newspaper published fraud. The then United States ex rel. Siller v. Becton Dickin- Co., describing allegedly Cir.), article fraudulent son & 21 F.3d 1339 cert. days conduct. Five after the article was 513 U.S. 115 S.Ct. Siller, (1994). flourishing would result upon” “based relator L.Ed.2d 278 parasitic suits. employed by the defendant’s distributor. against the defen- filed suit The distributor yet explicitly has Although this circuit dant, wrongfully alleging that the defendant interpretation upon” of “based address distributorship because the terminated FCA, our version of the decisions current planned to inform distributor implicitly support interpretation. overcharging gov- defendant First, Corp., Wang 975 F.2d 1412 FMC Subsequently, relator filed a ernment. (9th Cir.1992), the relator Al- the defendant. tam suit employer, alleging suit his former had though overcharging employer’s performance of various publicly by the distributor’s been defense contracts was defective. Before argued that his action complaint, the complaint, newspaper arti- relator filed disclosures based cles nature of the described defective complaint was not derived from because his Although defense contracts. disclosures, rather, but from his own those court ruled that relator’s suit was barred personal experience. The Fourth Circuit because he was not upon” agreed, holding that means information, have had Id. at “derived from.” reach the source issue unless it already found that the relator’s claim was that the dic- The Fourth Circuit reasoned allega- upon public based disclosures of the tionary upon is “use definition based tions. stated: for,” synonymous which is with “de- a basis allegation It the Wang’s true that about Id. The Fourth Circuit further is rived from.” Bradley by a few as- supported factual this would still reasoned that construction disclosed; publicly preventing “parasitic” never before policy of sertions promote the qui “fairly allegation re- a tam but characterized” because it would disallow suits public already peats knows: that bringing lawsuit where the what plaintiff from a with publicly problems existed the Brad- allegations dis- serious were derived from ley’s The district court Id. transmission. closed information. allegation most Wang’s characterized contrast, -argues In Stanford “based a what of his information as rehash of by.” upon” “supported as” means “same already publicly had disclosed. been primary upon which One of the cases Stan- dispute this characteriza- Wang does ex rel. Doe v. ford relies is United States tion, support it the record. finds (2d Cir.1992). Doe 960 Corp., John F.2d 318 (citations omitted). lan- This Id. at 1417 Doe, being investigated corporation In a that a claim guage supports Stanford’s view by fraudulent public upon” disclosure is “based when practices. billing employee The that main- already repeats allegations that have claim govern- a tained false records became public. been disclosed assigned The ment informant. informant Chevron, qui rel. Fine v. attorney rights bring a tam States ex his his United (9th Cir.1995) (en banc), 72 cert. attorney qui 740 action. filed his When suit, 116 S.Ct. allegations already 517 U.S. of fraud (1996), supervised relator holding publicly that the L.Ed.2d been disclosed. performed employees audits attorney’s upon and edited claim based disclo- job, leaving sures, supervision. After alle- under his Circuit stated: “The the Second filed a tam suit Chev gations the same as relator in his alleging publicly prior been ron those that had disclosed He that he based his claims Public conceded filing to the of the tam suit. supervisors, the allegations reports he furnished to his divests district disclosure of suits, publicly of which were jurisdiction contents courts of over pursuant Act. The General regardless where relator obtained satisfied agreed information.” Id. 324. The Second Cir- upon public statutory definition of “based cuit reasoned that broader construction Although pretation upon” at 741. Fine did of “based remains valid un- disclosures.” der the directly public current statute. address is- sue,1 if it would have been different case We differ the Fourth inter- with Circuit’s upon” meant from.” The “derived First, pretation for it ren- several reasons. public from relator’s suit was derived large- ders the requirement rather, disclosures, from his first-hand but ly superfluous. Findley, See F.3d at knowledge. upon” Yet his suit was “based If upon public lawsuit relator’s is based public disclosures. disclosure, juris- then the district court lacks original diction unless the relator an Finally, in Pettis ex rel. States v. United source, original source. To be relator Co., F.2d 668 Morrison-Knudsen must have “direct and knowl- Cir.1978), interpreted court this U.S.C. edge allega- of the information on which the 3730(e)(4)(A), 232(C), predecessor § “voluntarily pro- tions are based” and must provided that the “shall which have no vide[ the information to the Government ] any proceed suit ... filing before an action.” 31 U.S.C. appear that such suit whenever shall 3730(e)(4)(B). based evidence or information If, however, permitted the relator is possession ... at assert he has “independent” knowl- brought.” time Id. at such suit was 670-71. that, edge therefore, engineer project was an on a upon” his action is. not “based After financed the United States. observ- disclosure, successfully then he can avoid fraudulent, practices thought to be requirement the second officials, relator informed which provision, namely, source voluntari- project. led to audits of the The relator two ly provide the information to the Govern- senator, also resulted in informed prior bringing ment an action. investigation Accounting the General Of- Salcido, Screening Unworthy Robert Out (“GAO”). fice Two after the weeks GAO Whistleblower Actions: An Historical Anal- report, released the filed his relator ysis Qui to Jurisdictional Bar Tam of upheld This court action. district Actions, 237, (1995), 24 Pub. Cont. L.J. 273 ruling court’s that the relator’s suit was Findley, cited in 105 F.3d at 683. other upon barred because it was based evidence words, say complaint to that a relator’s is not already to the known Id. at public say derived from is to disclosures Thus, although the relator did not de- the relator had direct and possession rive his suit from in the evidence Thus, knowledge of fraud. under the government, upon of the was based claim view, upon” language Siller the “based such evidence. 3730(e)(4)(A) § duplicates the “direct and in- dependent knowledge” language 1986, Congress When amended the FCA § 3730(e)(4)(B), allowing the to relator avoid jurisdictional changed bar from one requirement voluntariness precluding upon actions “based evidence or 3730(e)(4)(B). § possession information in the of the United Furthermore, precluding States” to one actions “based interpreta the Siller the public disclosure of tion policies underlying would not further the However, is no primary transactions.” there evidence purposes FCA. Two of the of the Congress change intended to the mean FCA early are to alert the as upon.” possible being See United States ex to fraud is committed Club, Findley Employees’ rel. encourage v. FPC-Boron it and to insiders to come 675, (D.C.Cir.1997), they 684-85 cert. forward with where such information — .-, 172, U.S 118 S.Ct. 139 would otherwise have little to do incentive so. (1997). Thus, (1986) (“The 99-660, L.Ed.2d the Pettis inter- See H.R.Rep. No. at 22 expressly holding 1. The court limited its to at 743. whether the relator was an source. mation, complaint was “derived provisions for his ta/m

purpose Assuming, disclosures. from” encourage private Act is to False Claims an obli- deciding, that Biddle had being without aware fraud are individuals who Stanford, his dis- gation to uncover fraud at bring against the Government perpetrated of the fraud would have been forward.”); closure S.Rep. No. 99- information such case, voluntary. such neither (1986), 345, reprinted at 14 provide govern- purposes two above (stating U.S.C.C.A.N. —to encourage new ment with information private those “reward[s] Claims Act False forward otherwise persons come who significant personal take who individuals by al- not do be furthered so—would light”); id. wrongdoing to bring such risks lowing bring tam lawsuit. 6, reprinted in 1986 U.S.C.C.A.N. (“The changes are believes Committee is with interpretation This consistent ‘conspiracy necessary to halt the so-called statutory Under structure FCA. has allowed fraud silence’ that 3730(e)(4)(A), if were not flourish.”); ex Government to public, rela disclosed to the previously Co., 912 Long Lighting Dick v. Island rel. complaint government, benefits tor’s Cir.1990) (2d (holding that into inquiring is without the relator rewarded “discourages per- limitation public disclosure relator the details how the obtained remain- information from sons relevant hand, If, the alle on the other information. encourages ing silent and them in the do not gations benefit possible information at earliest already government because the time”). accomplished purposes These 3730(e)(4)(A) them, bars knew about then incentive giving the relator a financial policy is fur jurisdiction unless the second However, where disclose evidence of thered, is, provided an insider informa in a purposes implicated of these neither government who under no tion case, so relator not be particular should so. to do rewarded. sup- interpretation of the is also This FCA brings Where the relator new by legislative history. ported regarding Before the relevant information regardless of how should rewarded publicly through various possession into of that informa- relator came hearings, reports investi- allegations The reason is the tion. specifically identified gations which are undisclosed, previously complaint, being the media, through news legislation the the remedying government in are valuable long any person may such an action as file it. being against the fraud that is committed government filed an filed the before hand, allegations of the where the On other upon the information. action based same already public knowledge, the fraud are Once informa- of relator confers no additional benefit methods through one tion occurs by subsequently repeating the above, only who person then referred allegations in The rela- complaint. fraud his “original source” qualifies as an only he was an rewarded if tor should be bring the action. Insiders original source of information. (1986) (statement of Cong. Rec. H9382 132 i.e., who duty have to disclose who no Berman) added). Further Rep. (emphasis voluntarily, encouraged to should be do so more, this is every court to circuit address bring “significant personal take risks to Siller, sue, except Fourth Circuit for the wrongdoing light,” and be reward- should ex rel. similarly. United States has held See doing ed for so. Telecommunications, v. BellSouth McKenzie (6th Cir.1997), Inc., 935, cert. 123 940 accept interpretation F.3d Siller’s If we were to — denied, -, 855, from,” 139 118 S.Ct. mean U.S. upon” “based “derived (1998); ex rel. United his L.Ed.2d 755 States permitted maintain Biddle would be Club, Employees’ 105 Findley v. being required to show FPC-Boron without ever lawsuit 675, (D.C.Cir.1997), cert. de- infor- F.3d 682 original source of the that he was the 540

—nied, -, 172, knowledge alleged 118 139 had such S.Ct. U.S. (1997); ex L.Ed.2d 114 rel. fraud and that he source of was the Co., 1538, MK-Ferguson 99 Fine v. F.3d government’s agree. information. We (10th Cir.1996); Recovery 1546 Federal Ser States, vices, Inc. v. United primary disagreement between (5th Cir.1995); Cooper v. Blue & Blue Cross is whether came forth (11th Florida, 19 F.3d Shield voluntarily, or was instead under a Cir.1994); ex v. John States rel. Doe United expose fraud. The court found (2d Cir.1992). Corp., Doe provide Biddle did not information to the government voluntarily. Although ques therefore, We, hold that if at the time tion volunteer of whether Biddle was a is one qui complaint, a relator the alle files a novo, of law to be reviewed de this court gations complaint or transactions of the have disclosed, accept findings allegations must district court’s publicly been then the supporting fact of involuntari publicly are infor conclusion upon” mation, they clearly relator must show that he is ness unless are erroneous. Ha and the original good County Agency, order Sonoma source information Water 1465, 1472 Cir.1996) for a (“HagoodII”), district court to have over F.3d — U.S.-, 175, 136 the lawsuit. cert. 117 S.Ct. (1996). L.Ed.2d 116 Biddle bears burden tam suit after the jurisdiction by establishing preponder allegations publicly of Stanford’s fraud were ance of the evidence. Id. Thus, disclosed. in Biddle’s upon” public disclo- were “based primary The two Ninth Circuit cases to They sures. not aid the did address issue of are Fine voluntariness already aware of the Fine, II. In Hagood the relator was an Accordingly, Biddle should auditor for Office of General. potential percentage not be with a rewarded job required supervise His him to audits that recovery in a tam suit he is the unless conducted, employees other had and edit au- i.e., information, source of reports dit that others had written. After independent knowledge direct job, leaving filed a provided fraud and volun- alleging suit Chevron tarily.2 question. turn to that now This court held that voluntarily relator did disclose the fraud “original III. Is Biddle an source” under “[h]e salaried em- the FCA? ployee, compelled disclose An is “an who individual very employment.” terms of his has direct knowledge the F.3d at 743. information on II, the relator was assistant provided

based and infor- has Army Corps Engi- district counsel to the of filing mation to the Government before assigned represent He was action section neers. to under this which is based on 3730(e)(4)(B). in handling renegotiation § district counsel information.” 31 U.S.C. of a Regarding the “direct and certain contract. The relator disclosed found, knowledge” prong, comply the district the fact the contract court did not with and the not dispute, Supply do that Biddle Act. court Water This held that argue 2. One is public could this outcome harsh over tam suit. The because, although only requirement inquiry Biddle’s not re- did is the initial to deter- veal new information to the mine in the whether relator’s responsible publicly disclosing complaint provided any was for with place. already fraud in the first It be re- must valuable information of which it was not however, membered, voluntarily, to Biddle’s failure sat- aware. who Insiders come forth and so, isfy require- doing to disclosure” who deserve be rewarded for will inquiry. merely complaints ment is end of not the If Biddle not be their barred because any previously were deemed an source of the informa- do not reveal undisclosed infor- tion, court district could assert mation. authority “[e]ontracting to officers have to en- information into, administer, ter or terminate distinguishing contracts and make related determinations and find- court statfed: 1.602-l(a). § ings.” “No 48 C.F.R. contract by our recent This case is not controlled contracting shall entered into unless the [Fine], in which we held that an decision law, requirements ensures that all officer of job government auditor whose was internal orders, regulations, and all executive other “voluntarily” pro- expose to fraud did applicable procedures, including clearances qualify- purpose vide for the of § approvals, and have been met.” Id. 1.602- Hagood’s job original source. as an 1(b). Moreover, “[cjontracting are officers expose was to but to draft con- ensuring responsible performance of all perform legal other services for tracts and necessary contracting, actions for effective Corps. compliance ensuring with the terms of the II, But see id. 81 F.3d at n. 19. contract, safeguarding the interests of (Kleinfeld, J., concurring) (believing at 1480 in its contractual relation- relator did not come forth voluntari- ” added). ships. § (emphasis Id. 1.602-2 ly lawyer working “a transac- agent disclose to his tion has a as provides: FAR “If the Another section of relevant to matters principal ‘information any support part contractor is unable province and of which he should within his is the claim and there evidence that know’”) principal know want inability misrepresentation is attributable Seavey, Agency (quoting A. Law Warren con- part of fact or to fraud on the (1964)). § 143 tractor, contracting officer shall refer The present case involves responsible agency matter official ” arising types out two of contracts: (em- § investigating 33.209 negotiated employed, those while Biddle added); Navy phasis Acquisition see also negotiated before Biddle was those (“NAPS”) Supplement Procedures 33.209 hired. (directing report Navy In- ACO General); spector 48 C.F.R. 52.215-5 Negotiated A. While Biddle Contracts (permitting to examine and audit con- ACO Employed Was records under certain circum- tractor’s stances).3 above, stated Resi As Representative dent Administrative Con Finally, supported district court (“ACO”) tracting Officer for the Office by referring report by the conclusion to a Naval Research The district at Stanford. Naval Chief of Research. stated: that Biddle was not an auditor noted key functions “paramount [Biddle’s] like the relator in Fine whose Some perform analyses of the universities’ indi- responsibility” to disclose fraud. Rath finding er, proposals, fact auditing the Defense rect cost conduct performed (“DCAA”). negotiate indirect Agency Audit Howev reviews DCAA Contract addition, er, job responsible costs. the court found that Biddle’s duties agreements, negotiating well as aspects of work.” In advance as “included some conclusion, conducting university’s pro- court re reviews reaching its curement, job property and other business part responsibilities lied in on Biddle’s sys- systems to whether these Acquisition Regula determine defined in the Federal (“FAR”). 1.602-1, comply applicable principles § cost tions FAR tems Under certain, money adjustment argues in a sum or inter 3. the district court’s reliance Biddle terms, pretation misplaced of or other relief aris § contract 33.209 of FAR relating ing 48 C.F.R. applies only underpayment gov- under or to the contract.” to for of claims 33.201; (1987 47). & (Open. see also U.S.C. Brief at Howev- ernment contracts. er, Supp.1997). be in "claim” does not have to as "a written demand or A "claim” defined liability Braughler D.L. request dispute as to or amount. [other written assertion than a routine West, (Fed.Cir. contracting n. 8 by payment] Co. v. one 1997). payment right, seeking, a of as matter regula- procurement against and Government and to reward them doing government so. a But where em- tions/directives. function, ployee paid perform this (Zumwalt (1-19-91 “Report Decl. Ex. D employee should receive a windfall University Inquiry into Stanford Overhead merely doing, job. gov- a his Biddle earned 11). Research) by Rates” Chief of Naval tasks, salary perform ernment various one argues that the district court erred suspected of which was to report fraud to his he is no from the different relator Thus, superiors. govern- was a he “salaried Despite regulatory II. Hagood descrip- employee, compelled ment to disclose fraud duties, his tions of Biddle contends that when very Fine, by employment.” terms of his brought his concerns to the attention of Fine, at 743. This was true in even supervisors, his told: he was “Remember though superiors Fine’s “could not or would now, you’re you’re not a bean counter Paul — every perceived not take action viola- If DCAA of us ACO. does advise tion he to their attention.” Id. at problems things, with these it’s us to not for task, Uncovering fraud is a formidable (Biddle go problems in and find with them.” especially supervisors may when one’s ¶ 11; 50). Thus, Opening Decl. Brief at Bid- uninterested, opposed, or even involved job dle contends his duties did entail accepting position But in as argues detection of fraud. He further ACO, Biddle assumed risk of encounter- alleged his fraud was neces- ing a Why such difficult situation. should he sarily involuntary in light opposition possible now a simply receive windfall for by superiors. disagree. exhibited his doing required that which he was do First, Biddle’s duties as an are de- ACO paid to do? applicable regulations fined and other Furthermore, the Fine recog- as court position, official his documentation of as well nized, by allowing potentially to recov- supervisors. as the oral statements his er money a substantial amount supervisors may per- Biddle’s direct him to action, we be creating “perverse tasks, specific form certain but in order similarly-situated incentives” for responsibilities determine his broader as an employees. See id. at 745. Rather than ACO, Biddle must examine the pertinent perform jobs they them gov- are required, regulations, such as FAR and His NAPS. obligated employees ernment to disclose sus- job responsibilities documented it clear make pected inappropriately hide fraud position that his simply entailed more than supervisors from their while preparing their drafting contracts like the relator filing. Moreover, by tam actions for Id. II; duty Biddle had a anas ACO to disclose racing the to the courthouse in above, fraud. As discussed FAR and NAPS personal gain, order secure financial obligated Biddle legitimacy to ensure the may prematurely target alert the be- and to possible contracts refer fraud to the fully fore the has sufficient time appropriate argu- If authorities. Biddle’s investigate thereby frus- extreme, logical ment were taken to its trating future target. ease relator in who was auditor for the policy These concerns further our bolster General, have could maintained provide view that Biddle did not duty he had no if to uncover fraud his through complaint. his superiors had ability con- obstructed duct certain audits. The re- documented In determining whether Biddle came forth sponsibilities government employee of a can- voluntarily, the court examined the easily ignored. not be so pertinent regulations and other official docu- responsibilities mentation of Biddle’s as an

Nor does the fact that Biddle met resis- ACO. The then concluded: superiors tance transform his unearth- possible voluntary officer, into investi- a contracting plaintiff clearly As gation. purposes underlying the FCA had a to ensure that those claims he reviewed, encourage are to poten- individuals proposals the indirect cost tial being analyzed, fraudulent activities committed [and] the indirect cost rates and merit, argument if Biddle’s has there negotiated he Even agreements ...

advance Moreover, apart it from this memo supported. was sufficient evidence adequately were duty duty suspected fraudulent to find that Biddle had disclose to refer was his First, investigatory relating any au- under fraud contract. appropriate claims above, NAPS, thority. FAR as discussed Biddle and required safeguard was the interests of by upon relied Upon reviewing the evidence the United States and fraud to court, that the court’s we believe district Navy Inspector require- These General. clearly findings erroneous. are above appear to limit Biddle’s duties ments do not findings, that Biddle on those we hold Based negotiated was while he em- to contracts voluntarily alleged fraud disclose the did not Furthermore, ployed an ACO. the district as negotiated were regarding the contracts that analyzing that in cost court found employed was as an ACO. while he rates, negotiating evaluating and proposals, Negotiated Biddle Before B. Contracts ACO, during compliance his term Biddle Hired Was previous had to consider overhead rates in years. main Bid- was as ACO October One Biddle hired however, fraud that was claim- complaint, alleges dle’s Stanford His 1988. dating ing obtaining by in contracts excess reimbursement committed Stanford negotiated if he on contracts argues Biddle that even indirect costs based back to 1981. duty regarding con- was hired. These contracts before Biddle disclose effect, being negotiated allegedly still that while he were tracts were ACO, Stanford, throughout no Biddle’s ten- employed as an he had abused discovering possible fraud with negotiated Upon before ure. to contracts respect contracts, Although respect on-going court these hired. the district obligation it.4 “closer presented that this issue was under an disclose stated ultimately rejected ar- question,” it Biddle’s Upon reviewing the evidence relied gument. court, hold by the we that the court’s part clearly findings The court relied on June erroneous. Based “current we findings, memo Biddle that stated those hold Biddle did alleged regard- and assis- taskings” included coordination disclose the negotiated DCAA in the audits that were before tance to conduct the contracts years Accordingly, costs and staff benefits Biddle was not indirect he was hired. argues tasks that his of the information 1981-1991. expanded after he and the dis- were disclosed Stanford’s he disclosed to Therefore, subject that the alleged fraud. he asserts court lacked matter trict tam action. docu- not have considered this court should over ment, any defining his other document AFFIRMED. initially dis- that was issued after duties argues He closed KLEINFELD, dissenting: Judge, Circuit could stifle otherwise respectfully I dissent. job tarn suits by merely enlarging a relator’s Biddle’s disclo- question further The whether after initial so that duties disclosure difficult, it voluntary and were involuntary. sure was is is ques up by Genera!. Nor was Office of issue An additional 12,674, alleged by the effect of Executive Order No. II. The fraud tion answered part: “Employees provides, pertinent shall prior occurred the relator in case fraud, abuse, waste, corruption to disclose year Order effective. the Executive became 15,159, Fed.Reg. appropriate authorities.” Hagood v. Sonoma Coun States ex rel. See United 101(k) (1989). question whether Cir.1991) ty Agency, F.2d 1416 Water being employee prevents a federal from order ”). regu ("Hagood we hold that II Because This issue was raised in source. job responsibilities defining ren Biddle’s lations declined to address 72 F.3d at but involuntary, we need not dered his disclosure specific it that the relator had a found question. reach this job duty fraud as an auditor for disclose County contract, Hagood “safeguard- not v. Sonoma Water ance for with terms of (9th Cir.1996), Agency, ing I 81 F.3d 1465 the interests of the United States.” 48 1.602-l(a). petition C.F.R. I do rehearing not dissent. But the not see how this regulation persuades Hagood away me cannot took properly voluntariness of report distinguished Congress be our in Biddle’s to of Stanford Uni- from decision versity’s wrongdoing, when in case at a bar. Corps Engineers lawyer’s duty to tell the Hagood, attorney we held that an em- United States as his client that- the cost ployed Corps Army Engineers was in a drawing up allocation contract he was source, original despite fiduciary an his re- was fraudulent did not. sponsibility attorney as an to disclose to his government Does Biddle mean that no em- superiors thought required. what he the law ployee can a recover in tam case? We distinguished Hagood, we noted in Fine that an Chevron, executive order obli- ex rel. Fine v. F.3d gates government employees all Cir.1995), “disclose “Hagood’s job on ground waste, fraud, abuse, corruption appro- and expose was not to but draft con- priate Fine, 744; authorities.” at F.3d perform legal tracts and other services for 12, 674, see Executive Fed.Reg. Order No agree, Corps.” my I did not 15,159, 101(k) (1989). §at That executive lawyer scrivener, view a cannot be a mere considerably order is clearer in obligating employment lawyer and as a reason his employees regula- fraud than the fiduciary has responsibility give his rely bar, tion on in we the case at so if the client opinion, his honest and not know- regulation in the case bar eliminates vol- ingly in committing a Hagood, assist untariness, it would seem follow (Kleinfeld, J., at 1479 concurring). fortiori that the executive order cited in Fine elimi- majority’s mine, But in Hagood, view not government nates voluntariness for all em- is the law. ployees. thought spending Stanford’s lavish Fine, regulation did not rest on the on what considered overhead violated its petition rehearing in the case at duly contract terms. He reported what he points bar out significance to our Fine thought specifica- were violations of contract decision the fact “paramount” that Fine’s superiors. they tions to his But did not act responsibility ferreting Also, out fraud. reports. they his Instead told him Judge Kozinski noted his Fine concur- now, you’re “You’re not a bean counter rence, employees General have meant, context, ACO.” That his special protection chain from of command view, superiors’ reports further of what he pressures. 72 F.3d at 746-47. regarded as contract violations were his job. Up to where told that further something There is said in favor of a reports job, agree his were not I with very “voluntary restrictive construction of majority voluntary Biddle made no employees. disclosure” It disclosure, just doing job he was will government employees not do to have getting paid for. up they save fraud information discover us- their power to enrich their But then Biddle something did that was retirements. But it hard to conclude that job. He continued to do the audits he employee’s duty voluntary job, told been were told a com- appropriate disclosure to authorities includes found, Congress mittee of what he had going over his to Congressional boss’s head triggered an investigation. investigation The committee, and it is hard to reconcile so fruit, bore fruit. Biddle wants his slice of the prece- restrictive a construction our own under I tam act. think he dents, particularly Hagood. Congress, made the so is enti- tled to be treated as source for

purposes of the statute. regulation majority which the says compli-

relies was to ensure

Case Details

Case Name: United States of America, Ex Rel., Paul Biddle v. Board of Trustees of the Leland Stanford, Jr. University

Court Name: Court of Appeals for the Ninth Circuit

Date Published: Nov 3, 1998

Citation: 161 F.3d 533

Docket Number: 96-16911

Court Abbreviation: 9th Cir.