*1 action motion the will which District Court have by the relief best illustrated tion is addition, Carney’s Mrs. issue. to reach the since a ordered class Court the District make Court did not case. The action determination involves the exercise individual Instead, it her benefits. and respects calculation of discretion several since Secretary’s review of judicial afforded its exercise authority is conferred and, 405(g) statutory interpretation § in the Rule on district court first for a rehear- remanded expressly provides, instance, we do not hold a class action level, the benefits where agency at only must be We entertained. hold either inter- Once redetermined. could be concluding District Court erred in that class Secretary’s or of the statute —the pretation proscribed by 405(g) relief and that § indi- accepted, the Alliance’s —was Liberty class certification must be reconsidered. made could be calculations vidual certainly But the record before us no calculations for such agency.. need appears why reason such certification re- relief barring class with no reason should be denied. will legal issue which spect to the common which these the formula under determine III. CONCLUSION generally be made. See will calculations remanding Carney’s The order Mrs. case Judge in Public Chayes, Role Health, Education, (1976). Secretary Litigation, 89 Harv.L.Rev. Law will be Welfare affirmed. order dis- con erred in the District Court Thus missing complaint remaining of the relief. proscribed class 405(g) cluding § plaintiffs and the motion for denying class should have the Court which The issues action certification will be vacated an (1) whether identifiable on are focused case the District remanded to Court for with had filed the Secre claimants class of with proceedings further consistent this legal a common presented which tary claims opinion. agency the administrative issue on (2) whether position taken a final judicial review is an ade seeking party class of blind quate representative Carney, case Mrs. In this
claimants. ade qualify as an
least, appear Moreover, there representative.
quate class why immediately apparent
is no interpreted, like 405(g) § should not § Act, to Procedure Administrative UNITED STATES of America Alli Liberty like organization an permit ag claimants ance, members are whose HIBBS, Appellant, Charles C. action, to seek Secretary’s grieved Company, Fairhill Inc. its of those of review on behalf judicial have been filed. for whom claims members No. 76-2639. Morton, See, 405 U.S. Club v. g., e. Sierra 727, 735, Appeals, 31 L.Ed.2d United States Court of S.Ct. urges that as Alliance also (1972). Liberty Third Circuit. .in fact injury it suffered organization an Argued 1977. Oct. by virtue of agency’s action
from Decided Dec. prior due to its credibility it suffered loss of meaning of about advice to members view as wheth 1611(h). express We
§ standing on an would confer injury
er such review judicial to seek Alliance
Liberty it 405(g), meaning of since
within the determining the class unlikely that in
seems *2 was a
Defendant Hibbs real estate broker who to the Federal submitted certifications Housing misrepresenting Administration certain proper- residential condition ties. then agency mortgages That insured *3 on required pay and was later to homes when defaults occurred. mortgages government judgment The recovered a in a bench statutory trial for the amount of forfeitures and double amount of dam- ages alleged. appeals The defendant from damages, the assessment of but does not Pa., Rutter, Philadelphia, for B. Thomas contest the forfeiture awards. appellant. dispute. in facts are In 1969 and Babcock, Gen., Asst. Atty. Allen Barbara and procured Hibbs filed certificates Marston, D.C., W. U. S. Washington, David stating plumbing, electrical and Pa., Glancz, R. Ronald Philadelphia, Atty., heating of six systems houses Philadel- in Hertz, Section, F. Appellate Michael Alex- phia pre- met the standards and conditions Section, Younger, ander Fraud Civil Divi- Housing scribed Develop- Urban sion, Justice, D.C., Dept, Washington, fact, ment In regulations. there were defi- appellee. ciencies would have required a total $3,485 approximately to repair. Being WEIS, Circuit GIBBONS Before facts, unaware of these the FHA insured MEANOR, Judge.* District and' Judges mortgages secured the six houses. In mortgagors time all six defaulted and THE COURT OPINION OF $59,904.21 FHA to to honor required was commitment.1 mortgage WEIS, Judge. Circuit insurance The district court found that the United once commented Justice Holmes a statutory States was entitled to forfeiture govern with those who do business $2,000 properties. for each of six ap square corners. This should turn ment addition, recovered double disregarded warn by one who peal is payments mortgagee for its to but how asks that ing covering as unpaid principal, such items in squarely an action required to treat him taxes, premiums, preservation insurance Though, False Act. such Claims expense, attorney’s fees maintenance incongruous to seem argument might an costs, amounting and other foreclosure to believe, to be some, Congress, we intended $119,808.42, making judg- thus the total dámages what the Unit determining in fair $131,808.42. ment may undér Act. We recover ed States that a connection must be judge causal district determined conclude mortga- and fraudulent conduct either between loss defaults were caused shown test ir- gors’ a for” is not financial circumstances or changed broad “but no causal We therefore and that there was responsibility, with the statute. compliance by a the false certifications judgment entered district connection between vacate Moreover, after and the defaults.2 court, contre coeur. [*] The Honorable H. Curtis sitting District Court for ments In a criminal 1010 and thirty-nine by designation. was FHA proceeding counts fined the District of New in violation $195,000. Meanor, Hibbs making was United States false state- 18 U.S.C. convicted Jersey, 2. Three trial. result of á gage payment moved into his house from his two brothers other after his One defaulted after he lost job increased. former weekly change relying on rental mortgagors to income decreased and his The third lighten monthly the financial his testified mortgagor job; income mort- as a an- insured, injunction ed, an was mortgages payment approval, were or . against paint the use of lead-based issued the United any claim or Philadelphia City-Wide residences. See Co- against the Government . . . know Against Philadelphia Paint v. alition Lead false, such fictitious, claim to be or (E.D. Housing Authority, F.Supp. fraudulent, who, or the purpose Pa.1973). in. the houses be- This resulted obtaining or aiding obtain the payment coming almost worthless on foreclosure and approval claim, or makes, uses, such or increasing was an additional factor used, causes to be made or any . paint prohibi- loss. The lead . certificate . . shall be tion related to certifica- . fined . ."4 tions which the defendant had submitted. here, To recover damages the United judge, feeling compelled by district States must show these elements: precedent, reluctantly reached his result *4 government 1. the paid has indeed,” as characterized it “harsh 2. claim based Hibbs, 1365, v. F.Supp. United States 420 3. a containing certificate false informa- (E.D.Pa.1976). 1373 tion The Act during False Claims was enacted 4. which has damages resulted in sus- principally the Civil War and was at aimed tained “by reason of” doing the or com- stopping perpetrated by the massive frauds mitting the act. goods supplying contractors and services for There is question no the first three the war effort. There is little in help the proved. elements have been legislative history there few of are to factor, As the first interpreting cases the statute’s broad lan- it has been held the guage. making The Act in certificate, is found Rev.Stat. of a false alone, standing pertinent part 34903 and in does not govern- § reads: entitle the ment to the statutory forfeiture. There person “Any . who do shall or must have been a payment. United States any of acts . prohibited commit the McNinch, v. 356 595, 78 950, U.S. S.Ct. 2 pay shall forfeit and to the United States (1958); L.Ed.2d 1001 v. Tieg- States dollars, and, the sum of two thousand in er, (3d 234 1956). F.2d 589 Cir. require- addition, damages double the amount of ments assessment of a forfeiture are may which United States have sus- less restrictive and it follows that there can doing tained reason of the or commit- be recovery either, unless ting such act . . . .” payment Here, has been govern- made. The acts are referred to contained in Rev. expenditures ment’s satisfy that prerequi- 5438, a lengthy pro- Stat. section which § site. pertinent vides in part: “Every person who makes or causes to be The existence of a “claim” has also made, or presents to present or causes be been established. This court has deter- burden, provisions but fifty-four both out moved after two months. of section hundred filing default, payment In its claim for thirty-eight, ‘Crimes’, after Title shall forfeit mortgagee listed the reason for default all United States the sum of two “improper regard obliga- six houses as dollars, and, addition, thousand in double the Hibbs, F.Supp. tions.” United v. States 420 amount of which the United States (E.D.Pa.1976). 1368-69 may doing have sustained reason of the or act, committing together such with the costs 3. The codification of this section 31 U.S.C. suit; and such forfeiture and law, positive 231 has § not been enacted into shall be sued for same suit. appears and the official text in the Revised publication Statutes: 4. In addition to its in the Revised Statutes, may Any person the full military text the statute be 3490. in the or Bornstein, States, found in United States v. naval 423 forces the United U.S. or n.1, actually employed militia to or S.Ct. called L.Ed.2d 514 (1976). service the United who shall do or any prohibited by any commit of the acts would nevertheless hold Hibbs liable be- payment mined or a cause failed to call its attention to guarantee he de- FHA of an terms under the plumbing. within the fects in the We cannot a “claim” conceive constitutes mortgage v. Ven- Congress inequitable intended such an the Act. meaning of 1959). The (3d Cir. result. eziale, F.2d ques- reserved expressly Court Supreme limitation, statutory “by McNinch, supra, 356
tion in United
act,
of the unlawful
of” the commission
n.6, 78
S.Ct.
at 599
U.S.
element of
compels consideration
addition,
found
trial court
be
requirement
That
should
causation.
lib
caused certifications
the defendant
provide
erally
so as
construed
supplied
to be
information
containing government restitution from those whose
hav
three elements
The first
to the FHA.
not,
loss. It should
how
fraud has caused
demonstrated,
centers on
the issue
ing been
ever,
as
disregarded completely so
damaged
been
has
whether
relationship
eliminate the
between
un
deter
act. In
doing
prohibited
ultimately
injury
lawful act and the
sus
was, we
“act”
proscribed
mining what the
tained.
Hibbs,
of defendant
to the actions
look
damage
actual
mortgagee, an
than those
rather
security
was the decrease in worth of
transmitted
simply
party
innocent
available,
being
meas
that was certified
the FHA. United
data to
the fraudulent
*5
in value between the
by
ured
difference
303, 313,
Bornstein,
96
423 U.S.
States v.
falsely represented,
they
as
and as
houses
(1976). The of
46 L.Ed.2d
S.Ct.
government
actually were. Since the
was
furnishing of false
is the
fending conduct
less
it
given security which was
than what
Next,
inquiry
Hibbs.
by
certificates
be,
represented
was
are
determination of
toward
be directed
must
sustained
essentially similar to those
when
sustained
damage the United States
what
purchased
is
in a fraudu
a defective article
false certifications.
of” Hibbs’
“by reason
instances,
In those
deci
lent transaction.
position is that had Hibbs
government’s
The
damages as the
sional law sets the
differ
certification,
it
the false
not furnished
ence in cost between
contracted for
mortgage and
insured the
not have
would
and that received.
been called
not have
therefore
ergo prop
Woodbury,
hoc
v.
359 F.2d
any payment post
In
to make
United
—
(9th
1966),the court found
Cir.
hoc.
ter
paid
be the amount
damages to
government’s
accept
argument
this
are unable to
We
of a false statement over and
by
out
ignores
restrictive
it
the statute’s
because
paid
what
if
above
it would have
the claims
“by reason of.”
language
discussing
had been truthful.
In
by
be-
the United States
were sustained
proof,
failure
government’s
the court
and to
by
mortgagors
cause of defaults
showing
said: “But
there is no
it
by the unex-
extent were increased
some
ultimately
out the
paid
would not
have
value caused
property
pected diminution
money,
or that
it would
same amount
injunction. Neither of
by
paint
the lead
security for
a more valuable
have received
by or related to the
events was caused
those
loan,
so, by
much.”
or if
how
Indeed,
precisely
false certifications.
&
Cooperative
v.
Grain
In
would have been suffered
United
same loss
(8th
Co.,
Cir.
F.2d
61-63
Supply
ac-
government had the certifications been
argued that it would
1973),
government
To further illustrate
and truthful.
curate
payments
any warehouse
government’s
which the
ar-
not have made
extreme to
grain
aof
part
aware that
mortgagors
lead—if the
had all had it been
gument would
comply
regu-
with federal
not
shipment
their houses
been
did
because
had
defaulted
rejected the contention
court
destroyed
a flood or some other unin-
lations.
required
government
held the
catastrophe,
theory
sured
grain
drop
of that
the value
storage
part
collateral had to be
requirements of the statute
which met the
borne
the defendants. The situation in
In Brown
under consideration.
Toepleman
distinguishable
is
in that
(1975),
F.2d
207 Ct.Cl.
representations
going
to ownership
—
measure
treated the
the court
of the cotton —were
to eligibility
critical
parties agree
simply
by stating
issue
“[t]he
a loan. The concealed defects there could
comput-
law for
applicable
rule of
remedied,
possible
not
as was
in the case
figure is the difference
damage
judice.
any event,
sub
we do not adopt
actu-
the amount
between
Toepleman’s rationale to the extent
that it
paid
on the false claims and
ally
in reliance
approach.
inconsistent with our
paid
would have
had there
the amount
it
contends that our deci
fair,
bidding.”
open
competitive
been
Veneziale,
sion
United States v.
supra,
likelihood of applicants meeting the mort- jority has misconstrued the False Claims gage payments, misrepresen- and thus the Act misapplied precedents and has binding tation had a causal connection with the doing. in so While sympathize I with the subsequent defaults. majority’s desire to ameliorate what other- Toepleman States, v. United 697 F.2d result, wise seems to unduly be an harsh I (4th Cir.), cert. denied sub nom. Cato Bros. do not path legiti- believe that the taken is v. United 359 U.S. 79 S.Ct. mately open. (1959), L.Ed.2d 978 analyze did not the causation issue. The Appeals virtually undisputed Court of facts are and the Fourth Circuit simply held are well Judge Luongo’s opinion that since stated in pledged cotton as security court, for notes came for the district United States v. government’s into the possession Hibbs, as a result (E.D.Pa.1976) 420 F.Supp. 1365 fraud, of defendant’s resulting a loss from a in the majority opinion. Hibbs, imposed arising is out of but that question can be There falsity of the of the claim. made cause question, in properties six to the
as concerning their condi- certifications false Here Hibbs did not make a false claim. on these FHA relied FHA. The to the tion Rather, certifications, because of his false insur- issuing mortgage its statements he caused a false claim to be made within false, not been the statements and had ance the interdiction of 5438. A rational argu not have issued re- would insurance FHA be ment can made the false claim It question. mortgages the six garding application caused was the Hibbs FHA mortgagors defaults clear that is mortgage is insurance. That result abso caused were not properties these six lutely foreclosed v. to the way related they any were nor McNinch, 78 S.Ct. U.S. subject of Hibbs’ that were conditions (1958) L.Ed.2d 1001 held squarely certifications. false application that an for credit insurance was meaning not a “claim” within the of the believe one would Normally, Act. False Claims when called damages, of following default its insurance FHA Following McNineh as question arose be- be the difference mortgagor, would a what, any, if action for paid required to be be- amount tween the given the False Claims Act was to the Unit- obligation mortgage insurance cause of when false in a ed States a statement credit plus property, the market value application of triggered grant FHA in- and sale. Here that foreclosure costs of That question surance. was answered in of the insur- the full amount Veneziale, difference (3d 268 F.2d properties, obligation because ance 1959) by holding Cir. that a state- default, were valueless. The time of application give ment in a credit would rise paint from a lead value resulted lack to an for double action sus- prohibition properties condition United States as a tained conse- The lead of it. their sale because against quence honoring its credit insurance obli- subject any not the condition paint gation. of value and the lack by Hibbs
certification
Thus, under
binding authority
in no
be said
can
properties
these
and Veneziale it
is clear that
McNineh
if,
I
suspect
responsibility.
Hibbs’
Hibbs:
course,
been the
normally have
made;
to be
1. caused six false claims
post-default sale
properties had
these
claims were the claims
those false
out-
the amount
approximating
value
FHA honor
credit
insurance
balances,
majority
mortgage
standing
*7
properties in
on each of the six
obligations
and the
straining precedent,
be
would not
question;
be different.
result
Hibbs, therefore,
obligat-
is
3. and
one,
simple
clearly
me,
the case is
For
damages arising out
ed
double
of the False
language
by
controlled
payment
obligations.
of these six
which bind us.
two cases
Act and
Claims
valueless, or
were
properties
Since
six
control
the two
It
be denied
cannot
so,
damages of the
virtually
part
pertinent
set
ling statutes
forth
these six insur-
payments
on the
Rev.Stat.
opinion,
§
the court’s
total
ance commitments are the
amounts
damages
sus
5438,*
double
assess
§
paid.
“by reason of”
by the United States
tained
It
Act awards double
claim.
should
The False Claims
of a false
presentation
by
damages
aris
sustained
is the
it
emphasized
be
It
of the false claim.
does
liability
for which
the false claim
ing out of
*
liability
4,
giving
rise
civil
repealed
the acts
of March
in 1909. Act
§
Bornstein,
303,
U.S.
1909,
321,
341,
U. S. v.
It has
3490.
§
1153.
§
35 Stat.
c.
(1976).
n.1,
specifies
award did, If it then the falsity the claim. damage of a award in
majority’s direction the diminution
an amount double government’s security would
value of the What the court has done quite proper. on the thesis that
is to award gone the other and held
McNinch the claim for credit insurance such as claim in context this. Dam-
false hence, to be those
ages, are said occasioned claim, and not cause brought about the false claim it-
those opinion
self. I am of the Since
modifying damage award the district
court, the majority has contravened both Veneziale, I
McNinch and dissent and vote
to affirm.
EQUAL EMPLOYMENT OPPORTUNI Fink, Vella Atty., Equal M. Employment COMMISSION, Appellant, TY Commission, Opportunity Washington, D. C. (Abner Sibal, Counsel, W. Gen. T. Joseph Eddins, COMPANY, POWER Associate Counsel, APPALACHIAN Gen. Beatrice INC., Rosenberg, Asst. and Local International Gen. Counsel and Marian Workers, Halley, Atty., Equal Employment Brotherhood of Electrical Opportu- AFL-CIO, Commission, nity Washington, C., International Brotherhood of D. on Workers, brief), AFL-CIO, Appel appellant. Electrical lees. Lawson, William B. Poff and Thomas T. Roanoke, (Richard Thomas, Woods, Va. M.
No. 76-2422. Muse, Rogers, Thornton, Walker & Roa- Appeals, United States Court noke, Va., Guy Farmer, Farmer, Shibley, Fourth Circuit. Flood, Roger McGuinn & Schnapp, H. New City, brief), York for appellees. Argued Dec. 1977. Decided Jan. FIELD, Before Judge, Senior Circuit *8 HALL,
WIDENER and Judges. Circuit PER CURIAM: charge Following Equal filed Employment Opportunity Commission (EEOC) and conciliation unsuccessful ef- forts, 10, 1976, on February the EEOC filed against civil suit Appalachian Power Company and Local International