U.S. ex rel. Williams v. NEC Corp.

• Decision Date: 29 May 1991
• Docket Number: No. 89-3973,89-3973
• Parties: , 37 Cont.Cas.Fed. (CCH) 76,114 UNITED STATES of America, Plaintiff-Appellee, ex rel. Arthur P. WILLIAMS, Qui Tam, Plaintiff-Appellant, v. NEC CORPORATION f/k/a Nippon Electric Co., NEC Overseas Marketing Ltd. f/k/a NEC Overseas Market Development Co. Ltd., Defendants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1493

931 F.2d 1493

59 USLW 2756, 37 Cont.Cas.Fed. (CCH) 76,114

UNITED STATES of America, Plaintiff-Appellee, ex rel. Arthur

P. WILLIAMS, Qui Tam, Plaintiff-Appellant, v. NEC CORPORATION f/k/a Nippon Electric Co., NEC Overseas

Marketing Ltd. f/k/a NEC Overseas Market

Development Co. Ltd., Defendants.

No. 89-3973.

United States Court of Appeals, Eleventh Circuit.

May 29, 1991.

John T. Murphy, Melbourne, Fla., Coralyn G. Goode, Arent, Fox, Kintner, Plotkin & Kahn, Edward S. Cowen, Gerald H. Werfel, Washington, D.C., for Williams.

Gregory O'Duden, Kerry L. Adams, Cary P. Sklar, David F. Klein, Washington, D.C., amicus: NTEU.

Kendell W. Wherry, Asst. U.S. Atty., Orlando, Fla., Joan E. Hartman, Commercial Litigation Branch, Civil Div., U.S. Dept. of Justice, Washington, D.C., for plaintiff-appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before FAY and EDMONDSON, Circuit Judges, and GARZA ^*, Senior Circuit Judge.

FAY, Circuit Judge:

This case presents the question of whether a government employee may file a qui tam action under the False Claims Act, 31 U.S.C. Secs. 3729-3733 (1988), based upon information acquired in the course of his government employment. Appellant Arthur P. Williams worked as an attorney for the United States Air Force. During the course of his employment with the government, Williams became aware of bidrigging on the part of a corporation seeking telecommunications contracts with the United States. When Williams filed a qui tam complaint, on behalf of the United States, against the corporation allegedly engaged in bidrigging, the United States moved to dismiss the complaint with prejudice to Williams. Maintaining that Williams acquired and developed the information that formed the basis of his complaint during the course of his employment with the Air Force, the United States argued that the False Claims Act jurisdictionally bars any suit by a government employee based upon information acquired in the course of his government employment. The district court granted the government's motion to dismiss for lack of subject matter jurisdiction. For the reasons that follow, we find that nothing in the False Claims Act prohibits a government employee from filing a qui tam action based upon information acquired while working for the government. Therefore, the dismissal of Williams's complaint by the district court was in error.

I. Procedural History

Appellant Arthur P. Williams filed a qui tam complaint on March 30, 1989, ¹ alleging that Appellee NEC Corporation and its wholly owned subsidiary ("NEC") violated the False Claims Act, 31 U.S.C. Secs. 3729-3733. More specifically, Williams's complaint alleged that NEC had engaged in bidrigging in order to obtain government contracts for telecommunications services at United States military bases in Japan. The government filed a Motion to Dismiss Williams's complaint ² for lack of subject matter jurisdiction on May 4, 1989, maintaining that the False Claims Act contained a jurisdictional bar against suits brought by government employees based upon information acquired in the course of their government employment. The district court granted the government's Motion to Dismiss on May 12, 1989. ³ Williams appealed the dismissal on August 24, 1989.

II. Factual Background

Arthur Williams worked as an attorney for the United States Air Force. ⁴ Williams was assigned as Chief of the Contracts Law Division, Fifth Air Force, with headquarters at Yokota Air Base, Japan. During the course of his employment with the government, Williams became aware of what his qui tam complaint alleged was bidrigging by NEC Corporation and its wholly owned subsidiary on telecommunications contracts submitted for bid by the United States Government. After investigating the bidding practices of NEC, Williams prepared a report analyzing bidding on telecommunications contracts and describing parallel bidding on those contracts. ⁵ He submitted a copy of the report to his supervising officer, Colonel William R. Elliott on December 12, 1988. ⁶

Williams filed his qui tam complaint on March 8, 1989. ⁷ Pursuant to section 3730(d) of the False Claims Act, which allows the qui tam relator to share in a percentage of any recovery obtained in the qui tam suit, Williams seeks a personal recovery of a percentage of any damages to the United States which resulted from the alleged bidrigging. ⁸

III. The False Claims Act

"The False Claims Act 'prohibits false or fraudulent claims to government payment.' " United States ex rel. Weinberger v. Florida, 615 F.2d 1370, 1370 (5th Cir.1980) (quoting United States ex rel. Weinberger v. Equifax, Inc., 557 F.2d 456, 460 (5th Cir.1977), cert. denied, 434 U.S. 1035, 98 S.Ct. 768, 54 L.Ed.2d 782 (1978)). ⁹ The Act was first passed by Congress in 1863, at the request of President Lincoln, in an effort to combat profiteering by Union Army suppliers during the Civil War. Erickson ex rel. United States v. American Inst. of Biological Sciences, 716 F.Supp. 908, 915 (E.D.Va.1989) (citing Act of March 2, 1863, c. 67 12 Stat. 696). The original version of the Act authorized District Attorneys (predecessors to United States Attorneys) to bring suit. Id. In addition, private persons ("relators") were empowered to bring suit under the Act, with the promise of a share of the damages recovered serving as incentive for such private enforcers. Id. "The purpose of the qui tam provision, then as now, was to aid in the effort to root out fraud against the government." Id. (footnote omitted). It has been noted that " '[t]he purpose of the qui tam provisions of the False Claims Act is to encourage private individuals who are aware of fraud being perpetrated against the Government to bring such information forward.' " United States ex rel. Dick v. Long Island Lighting Co., 912 F.2d 13, 18 (2nd Cir.1990) (quoting H.R.Rep. No. 660, 99th Cong., 2d Sess. 22 (1986)) (citing Senate Report at 14, 1986 U.S.Code Cong. & Admin.News 5279 (quoting testimony before Senate Judiciary Committee's Subcommittee on Administrative Practice and Procedure stating that the amended False Claims Act rewards those who "bring ... wrongdoing to light.")).

The language of the original False Claims Act permitted a private relator to initiate suit even though that private individual contributed nothing to the exposure of the fraud alleged. See United States ex rel. Stinson v. Provident Life & Accident Ins., 721 F.Supp. 1247, 1249 (S.D.Fla.1989). In the late 1930's, however, numerous "parasitical suits" were filed in which the relator sued upon information copied from government files and indictments. Id. (citation omitted). Following a ruling by the Supreme Court that the False Claims Act did not specifically prohibit suits brought by relators who obtained their information from government indictments and contributed nothing to the discovery of the fraud alleged, see United States ex rel. Marcus v. Hess, 317 U.S. 537, 545-48, 63 S.Ct. 379, 384-86, 87 L.Ed. 443 (1943), Congress amended the Act in 1943.

Following the Supreme Court's decision in Hess, "[t]he immediate concern of Congress was to do away with these so-called 'parasitical suits.' " Pettis ex rel. United States v. Morrisson-Knudsen Co., 577 F.2d 668, 671 (9th Cir.1978) (citing United States v. Pittman, 151 F.2d 851, 854 (5th Cir.1945), cert. denied, 328 U.S. 843, 66 S.Ct. 1022, 90 L.Ed. 1617 (1946); United States v. Rippetoe, 178 F.2d 735, 736 (4th Cir.1949)). As a result, the 1943 Act contained a broad jurisdictional bar against qui tam suits "whenever it shall be made to appear that such suit was based upon evidence or information in the possession of the United States, or any agency, officer or employee thereof, at the time such suit was brought." 31 U.S.C. Sec. 232(C) (Supp. III 1943), 57 Stat. 608 (1943). "Although Congress's immediate concern in enacting the 1943 amendment was to do away with the 'parasitical suits' allowed by Hess, the language and effect of the 1943 amendment in fact is much broader." United States ex rel. Wisconsin v. Dean, 729 F.2d 1100, 1104 (7th Cir.1984). After 1943, therefore, government employees were effectively prohibited from bringing suit under the False Claims Act. United States v. CAC-Ramsay, Inc., 744 F.Supp. 1158, 1161 (S.D.Fla.1990); Erickson, 716 F.Supp. at 916.

In 1986, Congress once again amended the False Claims Act. "[F]ollowing a decline in the use of qui tam suits as a weapon in fighting fraud against the government, the 1986 amendments sought to expand the qui tam provisions to 'encourage more private enforcement suits.' " CAC-Ramsay, Inc., 744 F.Supp. at 1161 (quoting S.Rep. at 23, U.S.Code Cong. & Admin.News 1986, at 5288); see also United States ex rel. LaValley v. First Nat'l Bank, 707 F.Supp. 1351, 1355 (D.Mass.1988) ("The legislative history in both houses of Congress reveals a sense that fraud against the Government was apparently so rampant and difficult to identify that the Government could use all the help it could get from private citizens with knowledge of fraud."). Eliminating the language of the 1943 Act prohibiting any suit based upon information in possession of the government at the time suit was brought, the 1986 amendments instead grant any private "person" the right to bring a civil action under the Act, subject to four specific exceptions. ¹⁰

IV. Discussion

It is the jurisdictional requirements of the False Claims Act that are at issue here. We must determine whether the district court was correct in dismissing for lack of subject matter jurisdiction the qui tam suit filed by Williams which was based upon information that he developed while employed as an attorney for the United States Air Force. In so doing, we must also decide the broader question of whether the False Claims Act prohibits government employees from filing qui tam suits based upon information acquired in the course of their government employment. Becaus...