U.S. ex rel. Pilon v. Martin Marietta Corp.
| Decision Date | 25 July 1995 |
| Docket Number | D,No. 1636,1636 |
| Citation | 60 F.3d 995 |
| Parties | 10 IER Cases 1503, 40 Cont.Cas.Fed. (CCH) P 76,806 UNITED STATES of America, ex rel. James PILON and Jill Pilon, Plaintiffs-Appellees, v. MARTIN MARIETTA CORPORATION and General Electric Company, Defendants-Appellants. ocket 94-9232. |
| Court | U.S. Court of Appeals — Second Circuit |
Robert W. Ogren, Washington, DC (Barbara Rowland, Piper & Marbury, L.L.P., Washington, DC, Louis P. DiLorenzo, Peter A. Jones, Bond, Schoeneck & King, LLP, Syracuse, NY, of counsel), for defendants-appellants.
Douglas Robert Hawkins, Syracuse, NY, for plaintiffs-appellees.
Before: WINTER, MAHONEY, and JACOBS, Circuit Judges.
Defendants-appellants (collectively "Defendants") Martin Marietta Corporation ("Martin Marietta") and General Electric Company ("G.E.") appeal from a judgment entered November 7, 1994 in the United States District Court for the Northern District of New York, Frederick J. Scullin, Jr., Judge, that dismissed without prejudice the complaint of plaintiffs-appellees James Pilon and Jill Pilon brought primarily under the False Claims Act, 31 U.S.C. Secs. 3729-3733 (the "Act"). Defendants contend that the Pilons' complaint should have been dismissed with prejudice because of the Pilons' failure to comply with the filing and service requirements of the Act. See 31 U.S.C. Sec. 3730(b)(2). Because this failure incurably frustrated the statutory purposes underlying these requirements, we agree that the complaint should have been dismissed with prejudice as to two of the three claims for relief asserted therein. We modify the judgment of the district court accordingly, and affirm the judgment as modified.
Defendants manufacture and sell high technology defense equipment to military and commercial customers. James Pilon is a former employee of G.E. (whose successor in interest for purposes of this litigation is Martin Marietta), and Jill Pilon is his wife.
The Pilons' complaint in this action states three claims for relief. The first alleges that, as ascertained by James Pilon in the course of his employment, GE submitted false claims to the United States with respect to the production and delivery of radar systems, radar related equipment, and technical services pursuant to contracts between GE and the United States under which GE was to supply these products and services to the Arab Republic of Egypt (the "A.R.E."). The third claim asserts that, as independently ascertained by Jill Pilon, Defendants submitted false claims to the United States for non-military specified components (some unwittingly supplied to a GE employee by Jill Pilon) that were incorporated in both A.R.E. and other radar units.
The second claim for relief alleges that James Pilon's employment at G.E. was terminated, in violation of 31 U.S.C. Sec. 3730(h) and N.Y. Labor Law Sec. 740 (the New York "whistle blower" statute), in retaliation for his intracompany reports concerning, and refusal to cover up, the delinquencies addressed in the first claim for relief. Allegedly, this termination became effective August 11, 1992; James Pilon, subsequently realizing that Defendants were attempting to conceal the defects that he had reported, revealed them to the United States in September 1993; and Jill Pilon reported to the United States in September 1994 the wrongdoing that she had discovered. 1
The Pilons assert in their appeal brief that after informing the United States about the alleged fraud, they cooperated with the United States in its investigation of the matter over a period exceeding two years. At one point, moreover, the United States allegedly seized the Pilons' relevant records and served a gag order upon them. In addition, the Pilons claim that during this period, Martin Marietta requested a meeting with them ostensibly to discuss James Pilon's claim of wrongful termination, but actually to gather information (which the Pilons declined to disclose) about allegedly defective parts previously incorporated in radar installations. Martin Marietta subsequently claimed that the meeting was an effort by the Pilons to extort money from the corporation.
Immediately thereafter, according to the Pilons, the government "unilaterally and totally terminated communication with the plaintiffs." The Pilons thereupon filed their complaint in this action. The Pilons' first and third claims for relief are qui tam claims authorized by 31 U.S.C. Sec. 3730(b) and seek in behalf of the United States the statutory damages for the submission of false claims to the United States that are provided by 31 U.S.C. Sec. 3729. 2 When bringing such an action, private plaintiffs, known as relators, must comply with certain procedural requirements:
A copy of the complaint and written disclosure of substantially all material evidence and information the person possesses shall be served on the Government pursuant to Rule 4(d)(4) of the Federal Rules of Civil Procedure. The 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. The Government may elect to intervene and proceed with the action within 60 days after it receives both the complaint and the material evidence and information.
Sec. 3730(b)(2). Whether or not the United States intervenes, the relators receive a portion of any settlement or recovery, although the relator's share is somewhat greater if the government does not intervene. Sec. 3730(d)(1), (2).
When the Pilons filed their complaint, they did not file a notice of motion or otherwise arrange for the complaint to be filed in camera. In addition, the complaint itself did not indicate that it should be filed under seal, and was not submitted in a sealed envelope. Pilon's counsel assertedly informed the court clerk that "this was a qui tam action and [counsel] understood there to be certain sealing requirements that had to be met," but concedes that the clerk appeared to be confused, even after consulting with another clerk. Counsel did nothing further to assure that the complaint was properly filed, and it was filed on the open docket. In addition, the Pilons failed to serve the United States with a copy of the complaint and a written disclosure of the underlying evidence.
Several hours after the filing, a local reporter contacted the Pilons' counsel about the complaint, and counsel arranged an interview between the reporter and the Pilons. The resulting newspaper article, published two days later, revealed that in addition to relating the substance of the complaint and the fact of their prior discussions with government officials, the Pilons claimed that someone had drugged their dog and searched through their personal files pertaining to General Electric. The day following that publication, a copy of the complaint was faxed to Martin Marietta.
Defendants moved to dismiss the Pilons' complaint. Their motion contended that the first and third claims for relief should be dismissed with prejudice for lack of subject matter jurisdiction because of failure to comply with the procedural filing requirements of Sec. 3730(b)(2). Dismissal with prejudice was sought as to the second claim for relief on the basis that: (1) as to Sec. 3730(h), Pilon had "not alleged that he took actions in furtherance of ... filing a False Claims Act suit prior to his purported wrongful discharge;" 3 and (2) N.Y. Labor Law Sec. 740 was preempted by Sec. 3730(h) because "the asserted wrongful discharge is premised on allegations of false claims against the United States." Finally, several procedural derelictions were asserted as grounds for dismissal of the Pilons' complaint without prejudice.
The hearing on the Defendants' motion to dismiss was devoted exclusively to the Pilons' qui tam claims. In a ruling from the bench, the district court observed that the filing and service requirements "provide the government with an opportunity to decide whether to intervene and to prevent the alleged wrongdoer from being alerted of the investigation," and that "a party pursuing a statutory remedy must comply with all procedural mandates of the statute." The court concluded:
I believe these objectives have been impeded. While I find that I do lack subject matter jurisdiction because of the failure to comply with the statutory requirements, I do have to dismiss the claim. I do so without prejudice.
Finally, I will exercise my discretion not to review the pendent state law claim under New York Labor Law Section 740.
Accordingly, the defendants' motion to dismiss is granted and the complaint is dismissed without prejudice.
Defendants sought reconsideration of the dismissal without prejudice, contending that "dismissal with prejudice is the only remedy that properly preserves the congressional objectives embodied in the qui tam statutory scheme." Noting that the district court's decision "did not address its reasons for dismissing ... James Pilon's 31 U.S.C. Sec. 3730(h) claim," Defendants maintained that the Pilons had conceded, in a memorandum of law submitted to the district court, that they had failed to state a claim under Sec. 3730(h), and sought clarification from the court regarding its disposition of that claim. Defendants did not address the state law claims of retaliatory discharge in violation of N.Y. Labor Law Sec. 740.
The district court did not explicitly address or respond to Defendants' application, but subsequently entered judgment dismissing the complaint without prejudice. This appeal followed.
The Pilons do not dispute their failure to file the qui tam complaint under seal and to serve the United States, but they argue that their unsuccessful efforts to file under seal sufficed and their failure to serve the government is excusable because the government was already aware of their allegations. Defendants contend that failure to comply with the...
To continue reading
Request your trial
-
American Civil Liberties Union v. Holder
...could cause the case to be dismissed and thereby cost the relator his share of any FCA recovery, see United States ex rel. Pilon v. Martin Marietta, 60 F.3d 995, 997 (2d Cir.1995). But, unlike a typical gag order or prior restraint, the FCA does not provide for civil or criminal sanctions f......
-
In re Natural Gas Royalties Qui Tam Litigation
...finding no need to decide the issue, expressed hesitancy, to label § 3730(b)(2) jurisdictional. See United States ex rel. Pilon v. Martin Marietta Corp., 60 F.3d 995, 1000 n. 4 (2d Cir.1995). The Special Master concurs with the conclusion reached by these courts that a failure to comply wit......
-
U.S. ex rel. Foster v. Bristol-Myers Squibb Co.
...(under Section 36.102(a)) before the complaint was unsealed and his claim must be dismissed. See, e.g., United States ex rel Pilon v. Martin Marietta Corp., 60 F.3d 995 (2d Cir.1995) (holding that dismissal with prejudice is appropriate where the relator did not file complaint under seal an......
-
American Civil Liberties Union v. Holder
...in 1986 U.S.C.C.A.N. 5266, 5289–90; Under Seal v. Under Seal, 326 F.3d 479, 486 (4th Cir.2003); United States ex rel. Pilon v. Martin Marietta Corp., 60 F.3d 995, 998–99 (2d Cir.1995). Sometimes the United States is aware of the alleged fraud described in a qui tam complaint. Sometimes it i......
-
Dead Men Telling Tales: a Policy-based Proposal for Survivability of Qui Tam Actions Under Thecivil False Claims Act
...§3730 (b) (2000). 30. Id. § 3730(b)(2). 31. See id . § 3730(b)(2)-(3). 32. See United States ex rel . Pilon v. Martin Marietta Corp., 60 F.3d 995, 998-99 (2d Cir. 1995). 33. 31 U.S.C. §3730 (b)-(c). 34. Id. § 3730(d)(2). 35. Id. § 3730(d)(1). 36. 1 BOESE, supra note 3, § 1.01[A]. 37. Act of......
-
False Claims Act and Qui Tam Litigation the Government Giveth and the Government Taketh Away (and Then Some)
...v. Northrop Corp., 811 F. Supp. 333 (S.D. Ohio 1992). [FN197]. See United States ex rel. Pilon v. Martin Marietta and General Electric, 60 F.3d 995 (2d Cir. 1995); United States ex rel. Woodward v. Country View Care Center, 797 F.2d 888 (10th Cir. 1986); Erickson v. American Institute of Bi......