U.S. ex rel. Ridenour v. Kaiser-Hill Co., L.L.C., 97-WM-2191.

• Decision Date: 27 September 2001
• Docket Number: No. 97-WM-2191.,97-WM-2191.
• Citation: 174 F.Supp.2d 1147
• Parties: UNITED STATES of America, ex rel., David RIDENOUR, et al., Plaintiffs, v. KAISER-HILL COMPANY, L.L.C., et al., Defendants.
• Court: U.S. District Court — District of Colorado

174 F.Supp.2d 1147

UNITED STATES of America, ex rel., David RIDENOUR, et al., Plaintiffs, v. KAISER-HILL COMPANY, L.L.C., et al., Defendants.

No. 97-WM-2191.

United States District Court, D. Colorado.

September 27, 2001.

James R. Christoph, McCormick & Christoph, P.C., Boulder, CO, Stanley M. Chesley, Louise M. Roselle, Waite, Schneider, Bayless & Chesley Co., L.P.A., Cincinnati, OH, Jacqueline P. Taylor, Bruce Jean-Pierre Pederson, Pederson & Taylor, LLC, Lakewood, CO, Wilbert Benjamin Markovits, Markovits & Greiwe Co., L.P.A., Phyllis E. Brown, Copeland & Brown Co., L.P.A., Cincinnati, OH, for plaintiffs.

Colin Christopher Deihl, Morgan Anna Costello, Luis Michael Agosto, Faegre & Benson, United States District Court, Gail D. Zirkelbach, Michael D. Schag, McKenna & Cuneo, Denver, CO, Tom Heiden, G. Kellum Scott, Kaiser-Hill Company, LLC, Golden, CO, for defendants.

ORDER ON RECOMMENDATION OF MAGISTRATE JUDGE

MILLER, District Judge.

This matter is before me on the recommendation of Magistrate Judge Patricia A. Coan, issued August 7, 2001, that the United States's motion to dismiss be granted, that claims one and two of the second amended complaint be dismissed with prejudice, and that defendants be directed to file an answer or other response to claim three of the second amended complaint within twenty days of this order. Relators filed a timely objection to the recommendation. 28 U.S.C. § 636(b).

I have reviewed de novo the pertinent portions of the record in this case, including the government's motion, the parties' briefs thereon, the recommendation, relators' objections, and the government's responses to those objections.¹ I have not read a transcript of the evidentiary hearing held by Magistrate Judge Coan, because relators failed to provide such a transcript. Fed.R.Civ.P. 72(b). I have, however, considered the parties' descriptions of the testimony and evidence presented at the hearing. Based upon this review, I conclude the recommendation should be accepted.

In my January 17, 2001 order, I agreed with Magistrate Judge Coan, over relators' objection, that the standard for dismissal by the government of this qui tam action is whether that dismissal is rationally related to a legitimate government purpose. United States ex rel. Sequoia Orange Co. v. Baird-Neece Packing Corp., 151 F.3d 1139, 1145 (9th Cir.1998), cert. denied, 525 U.S. 1067, 119 S.Ct. 794, 142 L.Ed.2d 657 (1999). The recommendation properly follows the two-step analysis of the Sequoia case, addressing first whether the government identified a legitimate governmental purpose and second whether it demonstrated a rational relationship between dismissal and the accomplishment of that purpose. After concluding the government had met its burden (that dismissal was rationally related to protection of national security interests and also to protection against delay in the closing of the Rocky Flats Environmental Technology Site (Rocky Flats)), Magistrate Judge Coan considered whether the relators had carried their burden of showing that the dismissal was fraudulent, arbitrary and capricious, or illegal. 151 F.3d at 1145.

Relators concede two parts of the government's case: that the protection of national security is a legitimate governmental interest, and that (in the abstract) the timely closure of Rocky Flats is a legitimate governmental interest. They contend, however, that the government failed to prove dismissal of the complaint is rationally related to these interests. Further, they argue the recommendation improperly shifted the burden to them to prove their case without using classified material and to prove they could prevail without delaying the scheduled closure of Rocky Flats. They point to alleged weaknesses in Magistrate Judge Coan's conclusions as evidence that the government did not prove its case.²

Relators incorrectly interpret the rational relation standard of review. "[T]he government's power to dismiss or settle [a qui tam] action is broad." Sequoia, 151 F.3d at 1144. The Sequoia standard merely requires that the government justify its motion to dismiss by identifying a valid government purpose and showing a rational relation between dismissal and that purpose. Id. at 1145. There is no requirement that the government prove conclusively that, absent dismissal, the identified government interests will be adversely affected. See id. at 1146-47 (evidence that problems with lemon marketing were "potentially as pervasive" as those in orange industry was sufficient to extend dismissal to lemon industry action) (emphasis added).

The Sequoia standard is similar to the rational basis review of administrative action or statutory classification. See, e.g., Romer v. Evans, 517 U.S. 620, 116 S.Ct. 1620, 1627, 134 L.Ed.2d 855 (1996) ("if a law neither burdens a fundamental right nor targets a suspect class, we will uphold the legislative classification so long as it bears a rational relation to some legitimate end"). In the context of review of county-imposed limitations on land use, the Tenth Circuit has held that a constitutional challenge to such limitations can prevail "only if the alleged purpose behind the state action has no conceivable rational relationship to the [state's asserted interest or power]." Crider v. Board of County Comm'rs of Boulder County, 246 F.3d 1285, 1289 (10th Cir.2001) (emphasis added), petition for cert. filed (July 17, 2001). The actual purpose of the state action at the time of the action is irrelevant for rational basis analysis. Id. at 1289-90. See also Federal Communications Comm'n v. Beach Communications, Inc., 508 U.S. 307, 113 S.Ct. 2096, 2101, 124 L.Ed.2d 211 (1993) (statutory classification that does not infringe fundamental constitutional rights or follow suspect lines survives equal protection challenge "if there is any reasonably conceivable state of facts that could provide a rational basis for the classification").

As these cases demonstrate, the government here met its burden under the rational relationship standard when it identified legitimate government interests and showed that there was a rational (even if not certain) relationship between accomplishment of those purposes and dismissal. Accordingly, relators' objections on this issue are overruled.

Relators also argue Magistrate Judge Coan erroneously found they had not met their burden of proof that the government's motion to dismiss was fraudulent, arbitrary and capricious, or illegal. Sequoia, 151 F.3d at 1145. I agree with the recommendation on this issue. Relators failed to negate every conceivable basis that could support the government's decision to dismiss, Beach Communications, 113 S.Ct. at 2101, or to show that fraudulent or illegal purposes were the true motivations behind that decision.

Relators' remaining objections are without merit.

Accordingly, it is ordered:

1. The recommendation issued by Magistrate Judge Coan on August 7, 2001, is accepted.

2. The motion to dismiss filed by the United States on August 21, 2000, is granted.

3. Claims one and two of the second amended complaint (alleging violations of 31 U.S.C. § 3729(a)(1), (a)(2), and (a)(3)) are dismissed with prejudice.

4. Defendants shall file an answer or other response to claim three of the second amended complaint (alleging constructive discharge) within twenty days of this order.

RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

COAN, United States Magistrate Judge.

This is a qui tam action under the False Claims Act. The matter before the court is the United States' Motion to Dismiss [filed August 21, 2000]. An Order of Reference under 28 U.S.C. § 636(b)(1)(A) and (B) referred this case to the undersigned magistrate judge on April 6, 2000 to issue recommendations on dispositive motions.

I.

The False Claims Act ("FCA" or "Act"), 31 U.S.C. § 3729 and § 3730, as amended by the False Claims Amendments Act, Pub.L. 99-562, 100 Stat. 3153 (1986), empowers the United States ("Government") or a private person to bring a civil action against a person or company who knowingly presents a false claim to the Government for payment, in violation of 31 U.S.C. § 3729(a). 31 U.S.C. § 3730(a) and (b)(1). The private citizen who brings an action under § 3730(b)(1), the "relator," sues on behalf of himself and the United States in what is known as a qui tam action.¹ The Act authorizes the Government to recover treble damages plus a statutory penalty of $5,000 to $10,000 for each false claim. 31 U.S.C. § 3729(a). The relator is entitled to receive up to thirty percent of the proceeds realized from the action or settlement, depending on the relator's role in prosecuting the litigation, plus his attorney's fees and costs. 31 U.S.C. § 3730(d).

The instant qui tam action is brought by relators David Ridenour, who was a director of safeguards and security at Rocky Flats in 1997, Jeffrey Peters, who was employed by defendant Wackenhut and held various management positions related to security at Rocky Flats from 1990 to 1996, and Mark Graf, who was hired by defendant Wackenhut in 1990 and is currently a lieutenant in the protective force. The relators filed their original qui tam complaint under seal on October 8, 1997. The Government declined to intervene in the action on December 6, 1999, after conducting a two-year investigation into the allegations of the complaint. The complaint was unsealed on December 14, 1999.² The operative pleading is the Second Amended Complaint, filed on May 22, 2000. Defendants have not filed an Answer and the proceedings have been stayed pending determination of the United States' Motion to Dismiss.

The allegations of the Second Amended Complaint are summarized as follows: In 1995, the Department of Energy ("DOE") awarded Kaiser-Hill Co., LLC ("Kaiser-Hill") the contract for environmental clean up at the Rocky Flats Environmental Technology Site ("Rocky Flats"), a former nuclear weapons component manufacturing facility. Since 1995,...