Case Information
*1 15-2449
United States v. Wells Fargo & Co.
UNITED STATES COURT OF APPEALS F OR THE S ECOND C IRCUIT
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August Term,
Argued: March 1, Final Submission: August 1, Decided: September Docket No.
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P AUL B ISHOP , R OBERT K RAUS , U NITED S TATES OF A MERICA , E X R EL P AUL B ISHOP , E X
R EL R OBERT K RAUS ,
Plaintiffs Appellants , S TATE OF N EW Y ORK , E X R EL P AUL B ISHOP , E X R EL R OBERT K RAUS , S TATE OF D ELAWARE , E X R EL P AUL B ISHOP , E X R EL R OBERT K RAUS , D ISTRICT OF C OLUMBIA , E X R EL P AUL B ISHOP , E X R EL R OBERT K RAUS , S TATE OF F LORIDA , E X R EL P AUL B ISHOP , E X R EL R OBERT K RAUS , S TATE OF H AWAII , E X R EL P AUL B ISHOP , E X R EL R OBERT K RAUS , S TATE OF C ALIFORNIA , E X R EL P AUL B ISHOP , E X R EL R OBERT K RAUS , S TATE OF I NDIANA , E X R EL P AUL B ISHOP , E X R EL R OBERT K RAUS , S TATE OF I LLINOIS , E X R EL P AUL B ISHOP , E X R EL R OBERT K RAUS , S TATE OF M INNESOTA , E X R EL P AUL B ISHOP , E X R EL R OBERT K RAUS , S TATE OF N EVADA , E X R EL P AUL B ISHOP , E X R EL R OBERT K RAUS , S TATE OF N EW H AMPSHIRE , E X R EL P AUL B ISHOP , E X R EL R OBERT K RAUS , C OMMONWEALTH OF M ASSACHUSETTS , E X R EL P AUL B ISHOP , E X R EL R OBERT K RAUS , S TATE OF N EW M EXICO , E X R EL P AUL B ISHOP , E X R EL R OBERT K RAUS , S TATE OF M ONTANA , E X R EL P AUL B ISHOP , E X R EL R OBERT K RAUS , S TATE OF N ORTH C AROLINA E X R EL P AUL B ISHOP E X R EL R OBERT K RAUS S TATE OF N EW J ERSEY , E X *2 R EL P AUL B ISHOP , E X R EL R OBERT K RAUS , S TATE OF O KLAHOMA , E X R EL P AUL B ISHOP , E X R EL R OBERT K RAUS , S TATE OF R HODE I SLAND , E X R EL P AUL B ISHOP , E X R EL R OBERT K RAUS , S TATE OF T ENNESSEE , E X R EL P AUL B ISHOP , E X R EL R OBERT K RAUS , C OMMONWEALTH OF V IRGINIA , E X R EL P AUL B ISHOP , E X R EL R OBERT K RAUS ,
Plaintiffs, —v.—
W ELLS F ARGO & C OMPANY , W ELLS F ARGO B ANK , N.A.,
Defendants Appellees
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B e f o r e: K ATZMANN Chief Judge , S ACK and L OHIER , Circuit Judges
_______________ vacated our prior decision in this False Claims Act
(“FCA”) case in light Universal Health Services, Inc. v. United States ex rel. Escobar (2016). Escobar abrogated two holdings Mikes Straus 2001), upon which this district court had relied our prior decisions present case. Specifically, abrogated express ‐ designation for implied false certification for express certification claims. In place these requirements, held misrepresentation be material government’s payment actionable FCA. Because this standard been applied present case, we district court determine first instance whether defendants’ alleged misrepresentations were material.
Accordingly, VACATE judgment district court REMAND further proceedings consistent opinion.
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Thomas C. Goldstein & Tejinder Singh, Goldstein & Russell, P.C., Bethesda, Maryland; Rachel Grier, Berg & Androphy, Houston, Texas, for Plaintiffs ‐ Appellants .
Amy Pritchard Williams & Sara S. Ash, Troutman Sanders LLP, Charlotte, North Carolina; Stephen G. Rinehart, Troutman Sanders LLP, New York, New York, for Defendants Appellees . Chad A. Readler, Acting Assistant Attorney General; Bridget M. Rohde, Acting United States Attorney; Michael S. Raab, Charles W. Scarborough, Benjamin M. Schultz, Attorneys; United States Department of Justice, Washington, DC, filed brief for Amicus Curiae United States, supporting Neither Party Kate Comerford Todd & Steven P. Lehotsky, United States Chamber Litigation Center, Inc., Washington, DC; John P. Elwood & Ralph C. Mayrell, Vinson & Elkins LLP, Washington, DC, filed brief Amici Curiae Chamber Commerce of United States America Clearing House Association, support Defendants Appellees
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P ER C URIAM :
This False Claims Act (“FCA”) case returns us United States Supreme Court. Supreme vacated remanded our earlier opinion, Bishop v. Wells Fargo & Co. 2016), light Court’s Universal Health Services, Inc. v. United States ex rel. (2016). Bishop Wells Fargo & Co. S. Ct. (2017). Because set out standard *4 been applied in the present case, we vacate and further proceedings consistent with opinion and
The present case began in when Robert Kraus and Paul Bishop (together, “the relators”) brought qui tam action on behalf United States against Wells Fargo & Company and Wells Fargo Bank, N.A. (together, “Wells Fargo”). The relators claimed Wells Fargo, along with Wachovia Bank World Savings Bank, which later merged into Wells Fargo, falsely certified their compliance banking laws order borrow money favorable rates Federal Reserve System. government declined intervene, district court (Cogan, J. ) dismissed relators’ complaint its entirety. United States ex rel. Kraus v. Wells Fargo & Co. F. Supp. 3d (E.D.N.Y. 2015). affirmed. Bishop F.3d
When evaluating relators’ claims, our district court relied on Straus 2001), two points particular. First, relied holding “implied certification is appropriately applied only when underlying statute regulation upon which plaintiff relies expressly states provider comply order paid.” *5 Mikes F.3d at We refer this as Mikes ’s express ‐ designation requirement. Second, relied Mikes ’s holding that “[a]n expressly false claim is . . a claim that falsely certifies compliance a particular statute, regulation contractual term, where compliance is a prerequisite payment.” Id. at (emphasis added). refer this as Mikes ’s particularity requirement.
These two Mikes requirements—the express ‐ designation requirement for implied false certification particularity express false certification claims—did survive First, Escobar directly abrogated Mikes express designation requirement, holding “[a] statement misleadingly omits critical facts is misrepresentation irrespective whether other party expressly signaled importance qualifying information.” 2001; see id. (citing as limiting implied false certification theory through an express designation requirement).
Second, although was an implied false certification case, it also abrogated express certification claims. Doscher Sea Port Grp. Sec., LLC 2016) (explaining panel may overrule precedent when “an intervening Court casts doubt on the prior ruling”). The Escobar Court indicated that limitations on liability FCA be grounded in the text of FCA, including “well settled meaning[s] of common ‐ law terms [the FCA] uses” but does not expressly define. Escobar 136 S. Ct. detect no textual support FCA Mikes ’s particularity requirement. See 31 U.S.C. §§ 3729–33. In addition, common law does not limit fraud way would support Mikes ’s particularity requirement. Restatement (Second) Torts § 525 cmt. b, p. 56 (1977) (defining “misrepresentation” include “not only words spoken or written but also any other conduct amounts an assertion accordance truth,” without any particularity requirement). Escobar also explained addresses concerns animating ’s particularity other ways: “Instead adopting circumscribed view what it means claim be or fraudulent, concerns about fair notice open ended liability can be effectively addressed through strict enforcement [FCA]’s materiality scienter requirements.” at (brackets internal quotation marks omitted). In light of these statements the Court, cannot stand.
In place of requirements, the set out “familiar rigorous” materiality standard. Id. at n.6. “[A] misrepresentation about compliance with statutory, regulatory, or contractual be material the Government’s payment order to be actionable [FCA].” Id. at 2002. In general, “materiality looks effect on the likely or actual behavior recipient alleged misrepresentation.” Id. (brackets internal quotation marks omitted). Specifically context,
proof can include, but is not necessarily limited to, evidence that defendant knows that Government consistently refuses pay mine run cases based noncompliance particular statutory, regulatory, or contractual requirement. Conversely, if Government pays particular claim full despite its actual knowledge that certain requirements were violated, is very strong evidence those requirements are material.
Id. 2003–04. admonished “[m]ateriality . cannot found where noncompliance is minor insubstantial.” Id. materiality standard set out been applied
present case. district court determine, first instance, whether relators have adequately alleged defendants’ alleged misrepresentations.
CONCLUSION
For foregoing reasons, VACATE district court’s dismissal relators’ complaint REMAND district court further proceedings consistent opinion.
[1] also cannot derived standard. As explained, “materiality cannot rest ‘a single fact occurrence as always determinative.’” (quoting Matrixx Initiatives, Inc. Siracusano U.S. (2011)).