U.S. ex rel. Thistlethwaite v. Dowty Woodville Polymer, Ltd., s. 280

• Decision Date: 16 January 1997
• Docket Number: D,Nos. 280,519,s. 280
• Citation: 110 F.3d 861
• Parties: 41 Cont.Cas.Fed. (CCH) P 77,090 UNITED STATES of America ex. rel. Jeffrey THISTLETHWAITE and Jeffrey Thistlethwaite, Plaintiffs-Appellants, v. DOWTY WOODVILLE POLYMER, LIMITED, Richard Walker, and Michael W. Thompson, Defendants-Appellees. ockets 96-6089(L), 96-6093.
• Court: U.S. Court of Appeals — Second Circuit

Page 861

110 F.3d 861

41 Cont.Cas.Fed. (CCH) P 77,090

UNITED STATES of America ex. rel. Jeffrey THISTLETHWAITE and Jeffrey Thistlethwaite, Plaintiffs-Appellants, v. DOWTY WOODVILLE POLYMER, LIMITED, Richard Walker, and Michael W. Thompson, Defendants-Appellees.

Nos. 280, 519, Dockets 96-6089(L), 96-6093.

United States Court of Appeals,Second Circuit.

Argued Oct. 2, 1996.

Decided Jan. 16, 1997.

Jonathan A. Willens, Assistant United States Attorney, New York City (Mary Jo White, United States Attorney, Gideon A. Schor, Steven M. Haber, Assistant United States Attorneys, New York City, on the brief), for Plaintiff-Appellant United States.

Thomas E. Engel, New York City (James G. McCarney, Engel & McCarney, New York City, on the brief), for Plaintiff-Appellant Thistlethwaite.

Donald B. Ayer, Washington, D.C. (Eric Grant, Jones, Day, Reavis & Pogue, Washington, D.C., Linda Imes, Richards Spears Kibbe & Orbe, New York City, on the brief), for Defendants-Appellees.

Before: KEARSE, LEVAL, and CABRANES, Circuit Judges.

KEARSE, Circuit Judge:

Plaintiffs United States of America, et al., appeal from a judgment of the United States District Court for the Southern District of New York, Louis L. Stanton, Judge, dismissing their amended complaint ("complaint") against defendants Dowty Woodville Polymer, Limited ("Dowty"), et al., for recovery principally under the False Claims Act, 31 U.S.C. §§ 3729-3733 (1994) ("FCA" or the "Act"). The district court ruled that, under § 3732(a), it lacked subject matter jurisdiction to entertain plaintiffs' FCA claims because none of the defendants resides, transacts business, or can be found in the Southern District of New York, and none of the alleged acts proscribed by the FCA occurred therein. On appeal, plaintiffs contend that the district court erred in viewing § 3732(a) as a subject matter jurisdiction provision, rather than as merely a venue or personal jurisdiction provision. We agree that § 3732(a) does not address subject matter jurisdiction, and we thus vacate the judgment and remand for further proceedings.

I. BACKGROUND

Dowty, an English company whose only places of business are in England, is a manufacturer of polymer products, including wing slot seals ("wing seals") used in variable geometry aircraft, sometimes called "swing wing" aircraft. Beginning in the early 1980s, Dowty entered into a series of 11 contracts to develop and supply, as subcontractor to Rockwell International Corp. ("Rockwell") in El Segundo, California, wing seals for B1-B aircraft, for which Rockwell was prime contractor to the United States Air Force ("Air Force"). Beginning in 1985, Dowty entered into a series of six contracts with the Air Force at McClellan Air Force Base in Sacramento, California, to retrofit the Air Force's F-111 aircraft with wing seals. Beginning in 1989, Dowty entered into a series of 12 contracts with the Air Force at Tinker Air Force Base in Oklahoma City, Oklahoma, to supply spare wing seals for the Air Force's B1-B aircraft. Plaintiffs estimate that from 1984 through 1994, pursuant to these wing seal contracts, "thousands of seals ... were provided by defendant Dowty Woodville at a cost to the United States Air Force in excess of $52 million." (Complaint p 13.)

Defendants Richard Walker and Michael Thompson, British subjects residing in the United Kingdom, are employees of Dowty. At the times complained of, Walker was a project manager or a director and general manager, and Thompson was a commercial manager or a financial director. Plaintiff Jeffrey Thistlethwaite was employed as a business manager at Dowty from August 1989 until April 1992.

In May 1994, Thistlethwaite commenced the present action on behalf of the United States government, under the qui tam provisions of the FCA, alleging that Dowty and others had conspired to defraud the United States, its departments, agencies, and contractors in connection with the sale of wing seals. In early 1995, the United States joined the action and filed the present complaint naming the present defendants. The FCA § 3732(a) provides in part that an action to enforce the FCA "may be brought in any judicial district in which the defendant or, in the case of multiple defendants, any one defendant can be found, resides, transacts business, or in which any act proscribed by section 3729 occurred." Defendants, pointing to this language and noting that Dowty operates its business only in England, that the individual defendants are residents of England, and that the situses of the contracts at issue here were California and Oklahoma, moved to dismiss the action on various grounds, including lack of personal and subject matter jurisdiction, and forum non conveniens. In opposition, plaintiffs did not contest defendants' factual premises but argued that § 3732(a) does not deal with subject matter jurisdiction.

complaint alleges that Thistlethwaite, as business manager of Dowty, learned that Dowty had improperly inflated the elements of various cost categories in its proposals to and contracts with the Air Force and Rockwell, resulting in unlawful overcharges to the government, believed to be in excess of $20 million. Plaintiffs asserted that the overcharges violated the FCA, 31 U.S.C. § 3729(a)(1)-(3), and the Truth in Negotiations Act, 10 U.S.C. § 2306a (1994), and they asserted additional claims of breach of contract, unjust enrichment, and payment made under mistake of fact.

In a Memorandum and Order dated January 15, 1996, reported at 911 F.Supp. 130, the district court granted defendants' motion to dismiss for lack of subject matter jurisdiction, stating that "section 3732 limits jurisdiction as well as venue. Indeed, it is the only grant of jurisdiction in the False Claims Act." 911 F.Supp. at 131. The court stated that

[t]he legislative history of the 1986 amendments to the False Claims Act confirms that the provision in section 3732(a) ... was intended to limit jurisdiction as well as venue.

In 1986, the House of Representatives and the Senate each passed separate bills amending various provisions of the False Claims Act, including its jurisdictional provision. H.R. 4827, which passed the House on September 6, 1986, contained the jurisdictional provision which was ultimately passed by both bodies and signed into law, and is now codified in section 3732. The House Report on H.R. 4827 stated that the provision which is now section 3732 limits jurisdiction:

This section provides that jurisdiction for an action brought pursuant to this Act will be brought in the judicial district where any defendant can be found, resides, transacts business, or in which any act alleged as a violation is alleged to have occurred.

H.Rep. No. 660, 99th Cong., 2d Sess. 33 (1986).

The Senate also intended to limit jurisdiction. The Senate Report, explaining its proposed version, described it as "basically a form of long-arm statute with many familiar counterparts in State law." S.Rep. No. 345, 99th Cong., 2d Sess. 32 (1986), reprinted in 1986 U.S.C.C.A.N. 5266, 5297.

Section 3732 is therefore not only a venue statute, but also a geographically-limited grant of subject-matter jurisdiction.

911 F.Supp. at 131-32 (footnote omitted).

Having concluded that it lacked subject matter jurisdiction over plaintiffs' FCA claims, the district court dismissed the action without addressing the other grounds of defendants' motion.

II. DISCUSSION

On appeal, plaintiffs contend that the district court erred in dismissing the action for lack of subject matter jurisdiction. They contend that the court had subject matter jurisdiction over their FCA claims under 28 U.S.C. § 1331 (1994), which vests in federal district courts subject matter jurisdiction to hear suits brought under federal law, and under 28 U.S.C. § 1345 (1994), which authorizes federal district courts to hear cases in which the United States is a plaintiff. They contend that § 3732(a) of the FCA governs only personal jurisdiction and venue. For the reasons that follow, we agree that § 3732(a) does not govern subject matter jurisdiction.

A. General Principles of Federal Court Jurisdiction

As a general matter in the federal judicial system, the concepts of subject matter jurisdiction, personal jurisdiction, and venue address different concerns limiting the authority of a court to entertain a given case. Subject matter jurisdiction is concerned with the kinds of cases the federal district courts are empowered to decide. See, e.g., United States v. Morton, 467 U.S. 822, 828, 104 S.Ct. 2769, 2773, 81 L.Ed.2d 680 (1984) ("Subject-matter jurisdiction defines the court's authority to hear a given type of case...."). Personal jurisdiction, in contrast, is concerned with the relationship of a given defendant to the particular geographic area in which a case is brought. See, e.g., id. (limitations on personal jurisdiction "protect[ ] the individual interest that is implicated when a nonresident defendant is haled into a distant and possibly inconvenient forum"). Venue is concerned with the relationship of the defendants and the events to the particular judicial district in which a case is brought. Like personal jurisdiction, venue relates to location and "concern[s] the place where judicial authority may be exercised." Lindahl v. Office of Personnel Management, 470 U.S. 768, 793 n. 30, 105 S.Ct. 1620, 1634 n. 30, 84 L.Ed.2d 674 (1985) (internal quotation marks omitted); see 4 C. Wright & A. Miller, Federal Practice and Procedure § 1063, at 224 (2d ed. 1987) (venue "relates to the place at which an action may properly be brought and determined").

For example, the subject matter jurisdiction provisions of Title 28 having broadest application are those granting the district courts power to entertain cases based on federal questions, see 28 U.S.C. § 1331, and to entertain cases between citizens of diverse states, see id. § 1332. Section 1331 provides that "[t]he district courts shall have original...