U.S. ex rel. Dick v. Long Island Lighting Co.
| Decision Date | 14 August 1990 |
| Docket Number | D,438,Nos. 411,s. 411 |
| Citation | 912 F.2d 13 |
| Parties | , 36 Cont.Cas.Fed. (CCH) 75,930 UNITED STATES of America ex rel. W. Gordon DICK and John P. Daly, Jr., Plaintiffs-Appellants, Cross-Appellees, v. LONG ISLAND LIGHTING CO., Charles R. Pierce, Wilfred O. Uhl, Charles J. Davis, and Andrew W. Wofford, Defendants-Appellees, Cross-Appellants. ockets 89-7497, 89-7519. |
| Court | U.S. Court of Appeals — Second Circuit |
James D. Harmon, Jr. (Steven J. Ahmuty, Jr., Michael J. Eng, Aaron F. Fishbein, Bower & Gardner, New York City, of counsel), for plaintiffs-appellants.
Susan E. Silverman, Asst. Gen. Counsel, Hicksville, N.Y., for defendant-appellee Long Island Lighting Co.
Michael Lesch, New York City (John G. Nicolich, David S. Tannenbaum, Barry V. Sautman, Shea & Gould, New York City, of counsel), for defendants-appellees Charles R. Pierce, Wilfred O. Uhl, Charles J. Davis and Andrew W. Wofford.
Before VAN GRAAFEILAND, CARDAMONE, and PIERCE, Circuit Judges.
Herein, we examine the jurisdictional requirements of 31 U.S.C. Sec. 3730(e)(4) of the False Claims Act. We hold that the qui tam plaintiffs, W. Gordon Dick and John P. Daly, Jr., appellants, did not satisfy the statute's jurisdictional requirements. Accordingly, we conclude that this suit was properly dismissed by the district court.
This case arises out of the events discussed at length in County of Suffolk v. Long Island Lighting Co., 907 F.2d 1295 (2d Cir.1990). Familiarity with these events is assumed. We discuss herein only those additional aspects we believe to be necessary to an understanding of the issue presented on appeal.
From approximately 1979 to 1984, appellants W. Gordon Dick and John P. Daly, Jr., as employees of Stone & Webster Engineering Corp., worked as mid-level managers at the Shoreham Nuclear Power Station. By virtue of their positions, they were aware of the construction status of Shoreham. On July 1, 1988, they filed a complaint against the Long Island Lighting Co. ("LILCO"), certain of its executives (collectively, the "LILCO defendants"), and Stone & Webster Engineering Corp. under the False Claims Act, 31 U.S.C. Sec. 3729 et seq. (1988), on behalf of the United States. The basic theory of their qui tam suit was that LILCO had lied to the state's Public Service Commission about the construction status of Shoreham, thereby obtaining higher rates and defrauding the United States as a ratepayer.
Almost sixteen months earlier, on March 3, 1987, the County of Suffolk ("Suffolk") had commenced a putative class action against the LILCO defendants, alleging in its complaint violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. Sec. 1961 et seq. (1988) ("RICO") leading to the rate overcharges. See County of Suffolk, 907 F.2d at 1300 (discussing RICO allegations). This action by Suffolk was widely reported in the news media, especially in the Counties of Nassau and Suffolk. Although the appellants' later-filed complaint included some factual assertions not included in Suffolk's complaint against the LILCO defendants, taken as a whole, the qui tam complaint was fairly characterized by the district judge as a copy of Suffolk's earlier complaint. United States ex rel. Dick v. Long Island Lighting Co., 710 F.Supp. 1485, 1486 (E.D.N.Y.1989). The following comparison between a portion of Suffolk's original RICO complaint, filed March 3, 1987, and a portion of appellants' original complaint, filed July 1, 1988, illustrates appellants' dependence upon publicly known information. Material common to both complaints is unitalicized and unbracketed; material added by appellants is italicized; material deleted by appellants is bracketed:
From approximately 1974 to the present, the defendants, with others, have knowingly, willfully and purposely engaged in a concerted pattern of fraudulent acts by misrepresenting to, and concealing material facts from, the United States Government, ratepayers, the Public Service Commission of the State of New York, and others, and conspiring to do so, with respect, but not limited, to: (1) the projected completion dates of Shoreham and Jamesport; (2) the projected construction and financing costs of Shoreham; (3) the necessity for Shoreham and Jamesport to meet Long Island's energy requirements; and (4) the construction, licensing, and other problems with Shoreham. The purpose of the defendants' fraudulent activity was: (1) to obtain money from the United States Government and other ratepayers to pay for a substantial portion of the costs of Shoreham and Jamesport prior to the commencement of their operation; (2) to conceal construction and other problems at Shoreham so that the project would not be restricted, deferred or terminated; (3) to finance Shoreham through both stock and bond offerings, which would have been more costly to LILCO, if not impossible, were it not for the receipt of funds from the United States Government and from other ratepayers; and (4) to cover-up defendants' prior fraudulent activity. Defendants' campaign of misrepresentation and fraudulent concealments was largely carried out in the media, through false advertisements and direct publicity mailings to [the] ratepayers, and in false oral and written testimony, and statements made to the United States Government, to other ratepayers, their representative organizations and others in the course of proceedings before the Public Service Commission [of the State of New York] ("PSC") and other public forums. As a result thereof, the PSC approved [LILCO obtained approval for] the continued spending on, and financing of, construction of Shoreham. The enormous cost of Shoreham and preliminary cost of Jamesport, were charged substantially to the United States Government and other ratepayers.
Numerous examples of nearly identical passages appear throughout the two complaints.
It clearly appears that Suffolk's original RICO complaint was based on information derived from Suffolk's independent investigation of possible wrongdoing by LILCO and not upon information provided by Dick or Daly. Appellants concede that they "came forward [to Suffolk] after the original RICO complaint had been filed." (Emphasis added). Dick testified at his deposition that he became aware of Suffolk's RICO action from a newspaper article in The New York Times or The Wall Street Journal. Further, although the appellants provided some information to Suffolk after Suffolk's March 3, 1987 filing, which Suffolk incorporated into its amended RICO complaint, the information given to Suffolk by the appellants did not cause Suffolk to expand upon the fraud allegations of its original complaint; both Suffolk's original and amended RICO complaint assert the same theory of liability and seek identical amounts of damages.
Pursuant to 31 U.S.C. Sec. 3730(b)(2), appellants' complaint remained under seal for sixty days after it was filed on July 1, 1988. At the end of the sixty-day period, the United States filed a Notice of Declination of Appearance, 31 U.S.C. Sec. 3730(b)(4)(B), and, subsequently, on September 2, 1988, the complaint was unsealed. That same day, appellants filed an amended complaint; the sole change was to delete Stone & Webster Engineering Corp. as a defendant. On April 14, 1989, the district court dismissed with prejudice appellants' qui tam complaint on the ground of lack of jurisdiction.
The False Claims Act (the "Act"), 31 U.S.C. Sec. 3729 et seq., as amended in 1986, empowers the United States, or private citizens on behalf of the United States, to recover treble damages from those who knowingly make false claims for money or property upon the United States, or cause to be made, or who submit false information in support of such claims. Our focus here is upon those qui tam provisions of the Act, which, under certain conditions, allow a private citizen to bring a False Claims Act suit on behalf of the federal government. More specifically, we address whether appellants' suit is barred by Sec. 3730(e)(4) of the Act, which provides as follows:
(e) Certain actions barred.--
....
(4)(A) No court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation, or from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.
(B) For purposes of this paragraph, "original source" means an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government before filing an action under this section which is based on the information.
Section 3730(e)(4) does not operate to bar a qui tam action unless the action is based upon publicly disclosed "allegations or transactions." In this case, there is no dispute that appellants' suit is based upon publicly disclosed "allegations or transactions." Appellants assert, however, that since they were "original sources," their suit may be maintained notwithstanding the fact that it is based upon publicly disclosed allegations. Based upon our review of the evidence presented and our interpretation of the applicable statute, we do not agree.
In assessing the pertinent language of the statute, we note that "original source" is expressly defined in Sec. 3730(e)(4)(B). A straightforward reading of Sec. 3730(e)(4)(B) indicates that to be an "original source" a qui tam plaintiff must (1) have direct and independent knowledge of the information on which the allegations are based, and (2) have voluntarily provided such information to the government prior to filing suit. A close textual analysis combined with a review of the legislative...
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