U.S. ex rel. Rosales v. San Fran. Housing Author.

Citation173 F.Supp.2d 987
Decision Date26 March 2001
Docket NumberNo. C-95-4509 CAL.,C-95-4509 CAL.
CourtUnited States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
PartiesUNITED STATES ex rel. Carmen T. ROSALES and Michael V. Meadows, Plaintiffs, v. SAN FRANCISCO HOUSING AUTHORITY, et al., Defendants.

Joann M. Swanson, Office of the U.S. Attorney, San Francisco, CA, Michael F. Hertz, U.S. Department of Justice Commercial Litigation Branch, Washington, DC, Tyree P. Jones Jr., Interactive Law Group, San Francisco, CA, for Plaintiffs.

Donald P. Margolis, Office of City Attorney, San Francisco, CA, for Defendants.

ORDER ON DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

LEGGE, District Judge.

                TABLE OF CONTENTS
                INTRODUCTION ...................................................................990
                
                I. THE COMPLAINT .............................................................991
                 II. SUMMARY JUDGMENT STANDARD .................................................991
                III. FALSE CLAIMS ..............................................................992
                     A. Jurisdictional Requirements ............................................992
                     B. HOPE VI and COMP Grants ................................................993
                        1. Public Disclosure ...................................................994
                        2. Original Source .....................................................997
                     C. YAP and ADPCT Grants ...................................................999
                     D. Section 8 Certificates .................................................999
                        1. Public Disclosure and Original Source ..............................1000
                        2. Sales of Housing Opportunities as False Claims .....................1001
                        3. Scienter ...........................................................1001
                        4. Does the FCA Authorize Private Suit Against a Local Governmental
                Entity Such as the SFHA? ..........................................1004
                        a. The Vermont Agency Decision ........................................1005
                        b. Contentions of the Parties .........................................1006
                        c. Application of Vermont Agency to This Case .........................1007
                            i. Cases Before Vermont Agency ....................................1007
                           ii. Cases Since Vermont Agency .....................................1008
                          iii. Analysis .......................................................1009
                               (a) The SFHA is not a sovereign ................................1009
                               (b) The SFHA is a statutory person .............................1010
                               (c) The FCA's Damages Provisions Do Not Preclude the
                SFHA from Being a Statutory Person ........................1012
                        5. Damages ............................................................1015
                           a. The Text, Structure and Legislative History of the FCA
                Demonstrate that a Complex Combination of Compensation
                Retribution and Deterrence Was Intended ........................1016
                           b. The FCA as Applied to the SFHA Does Not Violate the
                Policies Articulated in Newport ................................1022
                IV. RETALIATION FOR WHISTLEBLOWING ............................................1024
                CONCLUSION ....................................................................1026
                
INTRODUCTION

This matter comes before the Court on the motion for summary judgment or partial summary judgment of defendants the San Francisco Housing Authority ("SFHA"), the City and County of San Francisco ("San Francisco" or "the city"), and individual defendants Albert Nelson and David I. Gilmore (collectively "defendants").1

Although this case was filed in 1995, it did not progress significantly between 1995 and 1997, when the United States finally decided not to intervene. Discovery commenced in early 1998. An amended complaint was filed in 1999, and the case was set for trial in late 1999. But extensive criminal proceedings were initiated in November of 1999 and have only recently been concluded.

The court previously dismissed with prejudice the claims against the State of California. Defendants make the present motion for summary judgment or partial summary judgment on the first and third claims for relief of qui tam relators/plaintiffs Carmen T. Rosales and Michael V. Meadows ("plaintiffs"). The court heard oral argument of the motion, but later stayed all proceedings pending the U.S. Supreme Court's decision in Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000). After Vermont Agency was decided on May 22, 2000, the parties submitted supplemental briefing on the applicability of that decision to the present case. The court then heard further argument. Having considered the oral arguments and written submissions of counsel, the evidence of record, and the applicable law, the court now issues the following order.

I. THE COMPLAINT

Plaintiffs Carmen T. Rosales and Michael V. Meadows filed this action alleging, among other things, violations of the federal False Claims Act ("FCA"), 31 U.S.C. §§ 3729-3733, by their employer the SFHA, the City and County of San Francisco, and individual employees of the SFHA. In their fourth amended complaint ("complaint") plaintiffs allege that defendants made false and fraudulent statements to the Department of Housing and Urban Development ("HUD") in order to receive grant funds for which the SFHA was not qualified. Plaintiffs also contend that defendants issued so-called "Section 8" subsidized housing certificates to ineligible individuals, and that SFHA employees charged personal fees for this service. Finally, plaintiffs claim that their supervisors retaliated against them for complaining about these improprieties and for making the allegations public.

Plaintiffs' complaint states three claims for relief. First, plaintiffs allege that all of the defendants participated in submitting false claims for payment to the United States government in violation of the FCA, 31 U.S.C. § 3729. Second, plaintiffs allege that defendants Nelson, Davis and the SFHA retaliated against them for complaining about the SFHA's failure to comply with HUD regulations and guidelines. This retaliation allegedly consisted of derogatory remarks and epithets, unwarranted reprimands, exclusion from meetings, and office reorganizations eliminating plaintiffs' employment positions. Plaintiffs claim that this retaliatory conduct was performed in derogation of their rights under the First and Fourteenth Amendments in violation of 42 U.S.C. § 1983. Third, plaintiffs also claim that this retaliatory conduct by Nelson, Davis and the SFHA violated the FCA's anti-retaliation provision, 31 U.S.C. § 3730(h). Plaintiffs seek, inter alia, treble and punitive damages.

Defendants' present motion for summary judgment or partial summary judgment concerns only the first and third claims for relief.

II. SUMMARY JUDGMENT STANDARD

Summary judgment should be granted if "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no `genuine issue for trial.'" Matsushita Elec. Industrial Co. v. Zenith Radio, 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (citing First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 289, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968)). "At the summary judgment stage, the district court is not to weigh the evidence or determine the truth of the matter but should only decide whether there is a genuine issue for trial." Washington v. Garrett, 10 F.3d 1421, 1428 (9th Cir.1993) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).

The moving party bears the initial responsibility of "informing the district court of the basis for its motion, and identifying those portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (quoting from Fed.R.Civ.P. 56(c)).

When the nonmoving party will bear the burden of proof at trial on a dispositive issue, she must then "go beyond the pleadings and by her own affidavits, or by the `depositions, answers to interrogatories and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Id. at 324, 106 S.Ct. 2548 (quoting from Fed.R. Civ.P. 56(c) & (e)). The court views all facts and draws all inferences therefrom in the light most favorable to the nonmoving party. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962). If, however, the nonmoving party's evidence is "merely colorable" or "not significantly probative," summary judgment may be granted. Anderson, 477 U.S. at 249-50, 106 S.Ct. 2505 (citations omitted).

III. FALSE CLAIMS

Plaintiffs allege that defendants violated the False Claims Act ("FCA") by submitting false claims for payment to the federal government. The allegations concern various grant and subsidy programs administered by HUD.

To establish a violation of the FCA, plaintiffs must prove three elements: (1) a "false or fraudulent" claim; (2) which was presented, or caused to be presented, by defendants to the United States for payment or approval; (3) with knowledge that the claim was false. See United States v. Mackby, 243 F.3d 1159 (9th Cir.2001) (citing 31 U.S.C. § 3729(a)(1)).

Defendants argue that plaintiffs' first claim for relief for violation of the FCA is barred by the FCA's jurisdictional requirements. They further maintain that plaintiffs present no evidence that defendants' allegedly false submissions to HUD wrongly qualified the SFHA for federal grant money, or...

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