Galvan v. Fed. Prison Indus.

• Decision Date: 21 December 1999
• Docket Number: No. 98-5472,98-5472
• Citation: 199 F.3d 461
• Parties: (D.C. Cir. 1999) Gilbert W. Galvan, Appellant v. Federal Prison Industries, Inc., Appellee
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 461

199 F.3d 461 (D.C. Cir. 1999)

Gilbert W. Galvan, Appellant v. Federal Prison Industries, Inc., Appellee

No. 98-5472

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 13, 1999

Decided December 21, 1999

Appeal from the United States District Court for the District of Columbia(No. 96cv01722)

Thomas G. Corcoran, Jr. argued the cause and was on the briefs for appellant.

Sally M. Rider, Assistant U.S. Attorney, argued the cause for appellee. With her on the brief were Wilma A. Lewis, U.S. Attorney, and R. Craig Lawrence, Assistant U.S. Attorney.

Before: Edwards, Chief Judge, Williams and Garland, Circuit Judges.

Opinion for the Court filed by Circuit Judge Williams.

Williams, Circuit Judge:

The False Claims Act encourages private parties to help fight fraud on the United States by giving them the power to bring civil actions in its name, and by providing both the government and the private party-known as the "relator"--a share of any financial recovery and reimbursement for their costs, including attorneys' fees. 31 U.S.C. §§ 3729-3730 (1994). Under the Act any person who knowingly presents false or fraudulent claims to an officer or employee of the United States may be liable. Id. 3729(a).Gilbert W. Galvan, an inmate at the Federal Correctional Institution in Oxford, Wisconsin, filed such an action--often called by its Latin shorthand, qui tam (an abbreviation of qui tam pro domino rege quam pro se ipso in hac parte sequitur)¹--against his employer, Federal Prison Industries, Inc. ("FPI"). He alleged that it had falsely certified that the communication cables and weapons parts that it produced for the Department of Defense had been adequately tested and met the requisite quality standards.

FPI is no ordinary employer; it is a "wholly owned government corporation," created to further the Bureau of Prison's goal of providing meaningful work for inmates confined in federal institutions. See id. 9101; 28 CFR 345.10 (1999).But the suit had been brought in the name of the government, 31 U.S.C. 3730(b)(1), and it is accordingly entitled to intervene, 31 U.S.C. 3730(b)(2), which it did here. This put the Department of Justice in place as counsel on both sides of the action. It then moved under 3730(c)(2)(A) for dismissal of the suit, arguing that the court lacked subject matter jurisdiction because Galvan's qui tam action pitted the United States executive branch against itself. Further, representing the FPI itself, the government moved to dismiss on grounds of sovereign immunity. The district court accepted the nonjusticiability argument, and never reached the issue of sovereign immunity. We agree with the government's sovereign immunity defense and affirm the dismissal on that ground, leaving for another day the question of justiciability.

Before addressing sovereign immunity we must be sure that we may properly do so before deciding whether the suit presents a case or controversy. Jurisdiction must be established before a federal court may proceed to any other question. Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 94-95 (1998). But later cases make clear what was implicit in Steel Co.: There is an array of non-merits questions that we may decide in any order. Thus in Ruhrgas A.G. v. Marathon Oil Co., 119 S. Ct. 1563 (1999), the Court held that it may be perfectly proper for a court to resolve personal jurisdiction, which is waivable, without having first determined subject matter jurisdiction. "[T]here is no unyielding jurisdictional hierarchy." Id. at 1567. And in In re Minister Papandreou, 139 F.3d 247, 255 (D.C. Cir. 1998), we considered an immunity defense despite considerable doubts about the plaintiffs' standing, saying that "a court that dismisses on other non-merits grounds ... makes no assumption of law declaring power that violates the separation of powers principles." Id. at 255.

Sovereign immunity questions clearly belong among the non-merits decisions that courts may address even where subject matter jurisdiction is uncertain. The Supreme Court has characterized the defense as jurisdictional, FDIC v. Meyer, 510 U.S. 471, 475 (1994), even while recognizing that it can be waived, id. See also Deaf Smith County Grain Processors, Inc. v. Glickman, 162 F.3d 1206 (D.C. Cir. 1998);First Va. Bank v. Randolph, 110 F.3d 75, 77 (D.C. Cir. 1997). And in Papandreou itself, we resolved the case on immunity grounds, despite the presence of a defense that we assumed arguen do was a matter of Article III standing. 139 F.3d at 255. Similarly, we here address sovereign immunity and do not reach justiciability.

* * *

Galvan argues that FPI is not entitled to sovereign immunity because it is not, in fact, part of the sovereign. He is mistaken. A suit is against the sovereign when "the judgment sought would expend itself on the public treasury or domain, or interfere with the public administration." Dugan v. Rank, 372 U.S. 609, 620 (1963) (quoting Land v. Dollar, 330 U.S. 731, 738 (1947)). FPI is a wholly owned Government corporation, see 31 U.S.C. 9101, and all money under FPI's control is held by the U.S. Treasury to the credit of FPI.See 18 U.S.C. 4126(a) (1994). Thus, any judgment in Galvan's favor would require FPI to pay damages directly from the public treasury. See generally Sprouse v. FPI, 480 F.2d 1, 3 (5th Cir. 1973) ("[T]hough the prisoners vehemently deny it, 'the conclusion is inescapable that the suit is essentially one designed to reach money which the government owns.' " (quoting Mine Safety Appliances Co. v. Forrestal, 326 U.S. 371, 375, (1945))).

Pointing to 18 U.S.C. 4126(b), which says that "[a]ll valid claims and obligations payable out of said fund [the FPI fund at Treasury] shall be assumed by the corporation," Galvan characterizes the corporation as "self-sufficient." This is quite immaterial. "Federal agencies or instrumentalities performing federal functions always fall on the 'sovereign' side of [the] fault line" between suits against the sovereign and suits against individuals, regardless of any independence of accounts. Auction Co. of America v. FDIC, 132 F.3d 746, 752 (D.C. Cir. 1997). "Diversion of resources from a private entity created to advance federal interests has effects similar to those of diversion of resources directly from the Treasury."Id. In fact, as a government corporation FPI is not only a federal instrumentality but is also an "executive agency," 5 U.S.C. 105, and on that account deserves sovereign immunity in the absence of congressional waiver. See FDIC v. Meyer, 510 U.S. 471, 475 (1994) ("Absent a waiver, sovereign immunity shields the Federal Government and its agencies from suit.").

Galvan argues that Congress waived FPI's immunity both in FPI's organic statute, 18 U.S.C. 4121, and in the False Claims Act, 31 U.S.C. 3729. We first note the rather steep incline that the Supreme Court has said a court must climb before finding a waiver of the federal government's sovereign immunity. Such waivers must be "unequivocally expressed in statutory text, and will not be implied." Lane v. PeNa, 518 U.S. 187, 192 (1996) (internal citations omitted). If ambiguous, statutes must be construed in favor of immunity. See United States v. Williams, 514 U.S. 527, 531 (1995). So long as a statute supposedly waiving immunity has a "plausible" non-waiver reading, a finding of waiver must be rejected. United States v. Nordic Village, Inc., 503 U.S. 30, 37 (1992) ("plausible" alternative reading is enough to establish that a "reading imposing monetary liability on the Government is not 'unambiguous' and therefore should not be adopted.").With this in mind we turn to Galvan's specific claims.

FPI's Organic Statute. Congress established FPI as "a government corporation of the District of Columbia." 18 U.S.C. 4121. Galvan would have us read this as manifesting a congressional intent to give FPI the legal characteristics of an ordinary corporation established under the general corporation law of the District of Columbia. That law states that such corporations are "capable of suing and being sued in any court of law or equity in the District," D.C. Code Ann. 29-203 (1999),² language which if applicable would constitute a waiver. See Meyer, 510 U.S. at 480; FHA v. Burr, 309 U.S. 242, 245 (1940).

On the surface (later we look below the surface) 4121 seems capable of the meaning Galvan proposes. But there are alternative meanings that seem plausible--namely readings of 4121 as intended to establish a different kind of link with the District of Columbia. Thus Congress may have intended to specify that the headquarters of FPI should be in the District (as it in fact is, see Federal Prison Industries 1996 Annual Report 82). Congress has so provided, more specifically to be sure, in other statutes. See, e.g., 22 U.S.C. 2199(a) ("The [Overseas Private Investment] Corporation shall have its principal office in the District of Columbia.");12 U.S.C. 4703(a)(1) ("The offices of the [Community Development Financial Institutions] Fund shall be in Washington, D.C."). Or Congress may have intended to locate FPI in the District specifically for purposes of venue, as it has for other government corporations. See 22 U.S.C. 2199(a) (Overseas Private Investment Corp. deemed to be a resident of the District of Columbia "for purposes of venue in civil actions");22 U.S.C. 3611(b) (Panama Canal Commission "is an inhabitant and resident of the District of Columbia"); cf. 7 U.S.C. 1506(d) ("Any suit against the [Federal Crop Insurance] Corporation shall be brought in the District of Columbia, or in the district wherein the plaintiff resides."). Because 28 U.S.C. 1391(e) provides venue for suits against "an agency of the United States" in any judicial district where the defendant "resides," a congressional purpose simply to establish the central administration in Washington would have the consequence of locating venue in the District for any case...