American Civil Liberties Union v. Holder

Decision Date21 August 2009
Docket NumberCivil Action No. 1:09-cv-042.
Citation652 F.Supp.2d 654
PartiesAMERICAN CIVIL LIBERTIES UNION et al., Plaintiffs, v. Eric HOLDER, et al., Defendants.
CourtU.S. District Court — Eastern District of Virginia

Rebecca Kim Glenberg, ACLU of Virginia, Richmond, VA, Christopher Hansen, Benjamin Sahl and Benjamin Wizner, ACLU Foundation, New York, NY, for Plaintiffs.

Richard W. Sponseller, United States Attorney's Office, Alexandria, VA, Sanjay M. Bhambhani, United States Department

of Justice, Fraud Section, Civil Division, Washington, D.C., for Defendants.

Zachary Alan Kitts, Cook & Kitts, PLLC, Fairfax, VA, served as counsel for amicus curiae Taxpayers Against Fraud Education Fund, as were J. Marc Vezina, Vezina & Gattuso, LLC, Gretna, LA, and Cleveland Lawrence III, Taxpayers Against Fraud Education Fund, Washington D.C.


LIAM O'GRADY, District Judge.

Before the Court is Defendants' Motion to Dismiss Pursuant to Rule 12(b)(1) and Rule 12(b)(6) (Dkt. No. 19). On July 10, 2009, the Court heard oral argument on this motion and took the matter under advisement. For the reasons explained below, the Court hereby grants Defendants' Motion and dismisses the complaint.

I. Background.

This case is a tripartite attack on the constitutionality of the seal provisions of the False Claims Act ("FCA"), 31 U.S.C. § 3729, et seq., brought by Plaintiff American Civil Liberties Union (ACLU), Plaintiff OMB Watch (OMB Watch), and Plaintiff Government Accountability Project (GAP), collectively ("plaintiffs"). Plaintiff ACLU is a "nationwide, non-profit, non-partisan organization ... dedicated to the constitutional principles of liberty and equality." The ACLU brings suit "on its own behalf and on behalf of its members." Plaintiff OMB Watch states that its "mission is to increase government transparency and accountability; to ensure sound, equitable regulatory and budgetary processes and policies; and to protect and promote active citizen participation in democracy." Plaintiff Government Accountability Project (GAP) is a "30 year old nonprofit public interest group that promotes government and corporate accountability by advancing occupational free speech, defending whistle blowers, and empowering citizen activists." Defendants are United States Attorney General Eric Holder, in his official capacity, and Fernando Galindo, Clerk of Court for the Eastern District of Virginia, in his official capacity.

The FCA is one of the government's litigative tools in combating fraud in government programs. Congress originally enacted the FCA in 1863 in response to rampant fraud in contracts awarded during the Civil War, and amended it substantially in 1986. The FCA imposes liability on "any person" who "knowingly presents, or causes to be presented" to the government "a false or fraudulent claim for payment or approval." 31 U.S.C. § 3729(a). The government may bring a civil FCA action, or a private person — known as a "relator" — may bring a civil FCA action under the qui tam provisions of the Act. 31 U.S.C. § 3730(b)(1). If the relator initiates the action, the complaint must be filed in camera and under seal. Section 3730(b)(2) of the FCA provides that a "complaint shall be filed in camera, shall remain under seal for at least 60 days, and shall not be served on the defendant until the court so orders." Furthermore, the relator must serve "[a] copy of the complaint and written disclosure of substantially all material evidence and information the person possesses" on the government. Id. During those sixty days the government investigates the case and determines whether to intervene in the action. U.S. ex rel. Health Outcomes Technologies v. Hallmark Health System, Inc., 349 F.Supp.2d 170, 173 (D.Mass. 2004). Before the conclusion of this sixty-day period, the government must either inform the court whether it is intervening, or "for good cause shown, move the court for extensions of the time during which the complaint remains under seal." 31 U.S.C § 3730(b)(3). Such motions may be supported by affidavits or other submissions in camera. Id.

Together, Sections 3730(b)(2) and (b)(3) are known as the "seal provisions." The filing and service requirements contained in these provisions are mandatory, and during the initial sixty-day period the public has no knowledge that a civil action has been filed. After completion of the government's investigation and notice of its intervention decision, the seal is lifted and the qui tam complaint becomes public.

Plaintiffs bring three distinct challenges to the seal provisions, 31 U.S.C. §§ 3730(b)(2) and (b)(3). First, they argue that the provisions are facially unconstitutional because they "deny access to information of paramount public interest" and thus violate the public's First Amendment right of access to information. Second, plaintiffs argue that the provisions are "content-based" restrictions that gag the relator from speaking about the case, in violation of the relator's First Amendment rights. Finally, they argue that the seal provisions "infringe[] on a court's inherent authority to decide on a case-by-case basis whether a particular FCA action should be hidden from public scrutiny and thus violate[] the separation of powers." Plaintiffs seek declaratory relief under the Declaratory Judgment Act, 28 U.S.C. § 2201, et seq., as well as injunctive relief.

II. Discussion.
A. Right of access.
1. Plaintiffs are entitled to bring a facial constitutional challenge to the FCA.

A threshold issue is whether plaintiffs may bring a facial constitutional challenge to the FCA's seal provisions. The government argues that to maintain a facial challenge, plaintiffs must show that the statute is unconstitutional in every application. See National Endowment for the Arts v. Finley, 524 U.S. 569, 580, 118 S.Ct. 2168, 141 L.Ed.2d 500 (1998); see also Rust v. Sullivan, 500 U.S. 173, 183, 111 S.Ct. 1759, 114 L.Ed.2d 233 (1991) ("A facial challenge to a legislative Act is, of course, the most difficult challenge to mount successfully, since the challenger must establish that no set of circumstances exists under which the Act would be valid."). Plaintiffs' argument, in part, is that because the sixty-day mandatory seal is imposed in every FCA case — without exception — the seal provisions are unconstitutional in every application. In other words, there are "no set of circumstances ... under which the [seal provision] would be valid" and a facial challenge is appropriate. Rust, 500 U.S. at 183, 111 S.Ct. 1759. The Court agrees with plaintiffs, but bears in mind that facial invalidation is "manifestly strong medicine," to be employed only as "a last resort." Finley, 524 U.S. at 580, 118 S.Ct. 2168.

The government argues that the Supreme Court's opinion in Los Angeles Police Department v. United Reporting precludes a facial attack based upon a claimed right of access to information in the possession of the government. 528 U.S. 32, 120 S.Ct. 483, 145 L.Ed.2d 451 (1999). In United Reporting, a California statute required a person seeking access to a database containing addresses of arrestees to certify that the addresses would not be used to sell products or services. A private publishing company brought suit, contending that the statute burdened commercial speech in violation of the First Amendment. Id. at 34-37, 120 S.Ct. 483. The Supreme Court rejected this contention, holding that the statute was not subject to a facial challenge because it did not "prohibit a speaker from conveying information that the speaker already possesses." Id. at 40, 120 S.Ct. 483.

Similarly, in Fisher v. King the Fourth Circuit applied United Reporting and rejected a facial challenge to the Virginia Freedom of Information Act (VFOIA), under which a prisoner had been denied access to an original tape recording of a 911 call played at his trial. Fisher, 232 F.3d 391 (4th Cir.2000). The prisoner argued that the VFOIA's Prisoner Exclusion Provision violated the First Amendment by restricting prisoner access to information to which the general public had access. Id. at 398. The Fourth Circuit held that the "VFOIA is an access statute, and therefore, Fisher cannot maintain a facial challenge under the First Amendment." Id. at 395.

Under United Reporting and Fisher, it appears that a facial constitutional challenge may not be sustained against an "access statute," i.e., a statute regulating access to information in the government's possession. However, the FCA is fundamentally not an "access statute." The California statute in United Reporting was "simply a law regulating access to information in the hands of the police department." 528 U.S. at 40, 120 S.Ct. 483. The FCA's seal provisions, by contrast, do not regulate access to information in the hands of any law enforcement agency. Rather, they temporarily limit public access to a complaint, which is a court pleading. Indeed, the qui tam complaint and the information it contains is not possessed by any branch of the government until the relator files the complaint in camera with a court. As such, the FCA does not grant access to government information; it restricts access to a court filing for a limited duration. Plaintiffs' challenge therefore is essentially a constitutional claim for a public "right of access" to court documents under the First Amendment. This implicates a separate line of cases addressing the right of access, which supplies the proper legal framework here.

2. There is no First Amendment "right of access" to a sealed qui tam complaint.

The core issue then is whether the First Amendment grants a "right of access" to sealed qui tam complaints. "The first question in any case involving a denial of public access to judicial proceedings or materials is whether the First Amendment right of access extends to the type of proceeding or materials to which access is sought." In re Washington...

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