U.S. v. Hughes Aircraft Co.

• Decision Date: 11 December 1998
• Docket Number: No. 96-56228,96-56228
• Citation: 162 F.3d 1027
• Parties: 14 IER Cases 1109, 98 Cal. Daily Op. Serv. 9025, 98 Daily Journal D.A.R. 12,623 UNITED STATES of America, ex rel. Linda A. Lujan, Plaintiff-Appellant, v. HUGHES AIRCRAFT COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1027

162 F.3d 1027

14 IER Cases 1109, 98 Cal. Daily Op. Serv. 9025,

98 Daily Journal D.A.R. 12,623

UNITED STATES of America, ex rel. Linda A. Lujan, Plaintiff-Appellant, v. HUGHES AIRCRAFT COMPANY, Defendant-Appellee.

No. 96-56228.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Nov. 6, 1997.

Decided Dec. 11, 1998.

Daniel I. Davidson, Spiegel & McDarmid, Washington, D.C., for the plaintiff-appellant.

Mark R. Troy, Michael Rizzo, McKenna & Cuneo, L.L.P., Los Angeles, California, for the defendant-appellee.

Appeal from the United States District Court for the Central District of California James M. Ideman, District Judge, Presiding. D.C. No. CV-92-01282-JMI.

Before: William C. Canby, Jr. and David R. Thompson, Circuit Judges, and Donald W. Molloy, ^* District Judge.

MOLLOY, District Judge:

Relator Linda A. Lujan brought qui tam and retaliation claims under the False Claims Act, 31 U.S.C.A. §§ 3729-3733 (West 1984 & Supp.1998) ("FCA"), against her former employer, Hughes Aircraft Company ("Hughes"). The qui tam provision of the FCA permits, in certain circumstances, suits by private parties on behalf of the United States against anyone submitting a false claim to the government. Lujan alleges that Hughes submitted fraudulent claims to the government during its participation as a defense subcontractor in the B2 bomber and other projects between 1982 and 1989. The district court dismissed both the qui tam claims for lack of subject matter jurisdiction and the retaliation claims as time-barred by the statute of limitations. Lujan appeals. We affirm in part and reverse in part the dismissal of the qui tam claims and affirm the dismissal of the retaliation claims.

I BACKGROUND

A. Factual Background

After being awarded a defense contract from the Air Force to construct the B-2 bomber, the Northrup Corporation awarded Hughes a "cost-plus" subcontract to develop the B-2's radar system. Several months later, Hughes was awarded other "fixed-price" contracts for developing radar systems for other aircraft, including the F-15 fighter aircraft. Because these contracts overlapped significantly, Hughes adopted "commonality agreements" that allowed it to allocate costs between the various contracts that were using common components.

Appellant Lujan was employed in Hughes' Radar Systems Group from 1982 to 1989. In early 1988, Lujan alleges, she began noticing that Hughes was engaging in fraudulent contracting practices by shifting costs from the fixed-price programs to the cost-plus programs. She reported these practices to her superiors at Hughes in February 1988, eventually discussing her concerns with Department of Defense representatives in June 1988.

Lujan alleges that, in response to her complaints, Hughes segregated her from her co-workers, ostracized and intimidated her, discriminated against her, and caused her physical and mental distress. In June 1989, Hughes fired Lujan. In February 1992, Lujan filed her first complaint, alleging both qui tam claims for Hughes' alleged fraud and retaliation claims for her termination.

During Lujan's tenure at Hughes, in January 1989, another Hughes employee, William J. Schumer, commenced a qui tam action against Hughes, alleging that Hughes had mischarged the government for certain radar development costs that should have been allocated to its fixed-price contracts instead of to the cost-plus B-2 contract. Schumer's case eventually made its way to the Supreme Court, which held in 1997 that Schumer's qui tam claims were jurisdictionally barred. Hughes Aircraft Co. v. United States ex rel. Schumer, 520 U.S. 939, 117 S.Ct. 1871, 138 L.Ed.2d 135 (1997).

B. Procedural Background of Lujan

This is the second appeal in this case. In the first appeal, we decided the district court had erred in imposing the sanction of automatic dismissal for Lujan's violation of the FCA requirement that a qui tam claim remain under seal for at least 60 days. See United States ex rel. Lujan v. Hughes Aircraft Co., 67 F.3d 242, 243 (9th Cir.1995). We held that the sanction of dismissal was unwarranted under the circumstances and remanded the case to district court. Id. at 245-48.

We asked the district court on remand to consider the issue of jurisdiction pursuant to the 1986 version of 31 U.S.C. § 3730(e)(4)(A), which bars any qui tam action based on allegations already "publicly disclosed" unless the relator is the "original source" of the information. Id. at 248. We noted that Lujan's complaint resembled the earlier qui tam action brought in 1989 by Hughes employee William Schumer. Id. (referring to United States ex rel. Schumer v. Hughes Aircraft Co., 63 F.3d 1512 (9th Cir.1995)). ¹ We asked the district court as part of its jurisdictional determination to make factual findings on whether the allegations in Lujan's complaint were publicly disclosed by the civil proceedings in Schumer. 67 F.3d at 248.

Analyzing Lujan's allegations in her First Amended Complaint, the district court on remand determined that Lujan's allegations were "substantially similar" to Schumer's previous claims. Order, Mar. 19, 1996, at 5. The district court concluded that Lujan was trying "to create a meaningless distinction between her claims and Schumer's in order to establish jurisdiction" and that the difference between the Lujan and Schumer allegations was "microscopically fine." Id. at 5-6. Concluding that "[i]t is the harbinger, not the mimic, who is entitled to champion the government's interests," id., the court dismissed Lujan's qui tam claims.

In April 1996, Lujan moved for reconsideration in the district court, arguing that she was an original source of the public disclosures in this case. The district court denied the motion. In June 1996, the district court granted Hughes' motion to dismiss Lujan's remaining retaliation claims as time barred by the state's one-year statute of limitations.

II

A. Standard of Review

We review de novo a district court's dismissal for lack of subject matter jurisdiction. Ma v. Reno, 114 F.3d 128, 130 (9th Cir.1997); Evans v. Chater, 110 F.3d 1480, 1481 (9th Cir.1997). However, a district court's factual findings on all jurisdictional issues must be accepted unless clearly erroneous. Adler v. Federal Rep. of Nigeria, 107 F.3d 720, 729 (9th Cir.1997). We will not disturb a district court's findings of fact unless we are left with a definite and firm conviction that a mistake has been made. Committee for Idaho's High Desert, Inc. v. Yost, 92 F.3d 814, 819 (9th Cir.1996).

B. Pre-1986 Conduct

The first question we must decide is whether the 1986 amendments to the FCA apply retroactively to Hughes' pre-1986 misconduct. This question leads us to the Schumer case. Schumer is important to Lujan's case not only because Schumer was a Hughes employee whose prior claims directly affect the status of Lujan's claims factually but also because the Supreme Court's interpretation of the FCA in Schumer controls this case.

Similar to the issue in the instant case, the issue in Schumer was whether the 1986 amendments to the FCA apply retroactively to pre-1986 conduct. Schumer, 117 S.Ct. at 1875. The distinction between the 1982 and 1986 versions of the FCA is significant because, as we noted when Schumer was before us, "[w]hereas the pre-1986 Act barred cases brought by qui tam plaintiffs when their allegations were 'based on evidence or information the Government had when the action was brought,' the 1986 amendments narrowed this bar to the more limited class of cases based on information previously disclosed to the public." Schumer, 63 F.3d at 1517 (internal citations omitted).

Concluding that Congress did not intend to apply the 1986 amendments retroactively, the Supreme Court held that the 1982 version of the FCA should be applied to any conduct alleged by Schumer that occurred prior to the 1986 version's effective date. Schumer, 117 S.Ct. at 1876. Because the government knew about the alleged misconduct before Schumer filed his claim, the Court held that the 1982 version of the FCA required the dismissal of Schumer's qui tam claims. Id. at 1879.

The Supreme Court in Schumer found it unnecessary to decide whether the relevant conduct for purposes of non-retroactivity was the act of Hughes in presenting a false claim, or the public disclosure of that fact. See Schumer, 117 S.Ct. at 1876 n. 4. In our case, we must decide that issue because it appears that some of the allegedly actionable conduct occurred before 1986 but was disclosed after 1986. We conclude that the crucial event for purposes of non-retroactivity is the alleged presentation by Hughes of a false claim, and not the public disclosure of that conduct. The considerations of fairness underlying the presumption against retroactivity militate in favor of that conclusion. The act upon which liability is founded is the presentation of a false claim to the government. It is that conduct for which the 1986 amendment "essentially creates a new cause of action" by eliminating a defense. Schumer, 117 S.Ct. at 1878. The unfairness of retroactivity would be to render Hughes subject to a cause of action that did not exist at the time it engaged in the conduct later made actionable. Cf. Schumer, 117 S.Ct. at 1876-78. We conclude, therefore, that the 1986 amendment applies to the presentation of false claims after its effective date. Accordingly, we apply the 1982 version of the FCA to all false claims allegedly presented by Hughes before the effective date of the 1986 amendments.

The 1982 version of the FCA provides that "the court shall dismiss an action ... on discovering the action is based on evidence or information the Government had when the action was brought." 31 U.S.C.A. § 3730(b)(4) (West 1983). Here, Lujan freely admits that, because she was dissatisfied with Hughes' internal investigation of her complaints of serious mischarging to the B-2 bomber program, she "met with representatives of the department...