U.S. ex rel. Lamers v. City of Green Bay

• Decision Date: 13 March 1998
• Docket Number: No. 95-C-684.,95-C-684.
• Parties: U.S. ex rel. Allen LAMERS, Plaintiff, v. CITY OF GREEN BAY, Defendant.
• Court: U.S. District Court — Eastern District of Wisconsin

998 F.Supp. 971

U.S. ex rel. Allen LAMERS, Plaintiff, v. CITY OF GREEN BAY, Defendant.

No. 95-C-684.

United States District Court, E.D. Wisconsin.

March 13, 1998.

COPYRIGHT MATERIAL OMITTED

Robert Parent, Roels, Keidatz & Parent, DePere, WI, Steven D. Gordon, Leslie S. Spitalney, Holland & Knight, Steven A. Diaz, Dykema Gossett, Washington, DC, for Plaintiff Lamers.

Jerry H. Hanson, Green Bay City Law Dept., Green Bay, WI, Edward J. Gill, Willis A. Siegfried, Ross A. Keene, Eckert, Seamans, Cherin & Mellott, Washington, DC, for Defendant.

William J. Lipscomb, U.S. Department of Justice, Milwaukee, WI, Benjamin J. Vernia, Michael F. Hertz, Stephen D. Altman, U.S. Department of Justice, Washington, DC, for U.S.

DECISION AND ORDER

ADELMAN, District Judge.

Relator Allen Lamers, an officer of Lamers Bus Lines, Inc. ("Lamers"), brings this action on behalf of the United States pursuant to the qui tam provision of the False Claims Act, 31 U.S.C. § 3730(b). Lamers alleges that the City of Green Bay ("City"), which owns and operates Green Bay Transit ("GBT"), made false statements and representations to the Federal Transit Administration ("FTA") in order to obtain annual FTA grant funds and to avoid repayment of improperly received grant funds in violation of 31 U.S.C. § 3729(a)(2) and (7). According to Lamers, GBT and City officials falsely represented the nature of the City's provision of bus service to local school children and the extent of GBT's compliance with applicable FTA regulations.

Count I of this action, brought under 31 U.S.C. § 3729(a)(2), alleges that the City intentionally conceived and instituted a plan to bus Green Bay school children which did not comport with federal requirements, all the while falsely maintaining to FTA officials that GBT was in complete or substantial regulatory compliance. On the basis of these false assurances, Lamers argues, the FTA erroneously forwarded grant money to the City in 1993, 1994, and 1995 to subsidize GBT operations. Count II of this action alleges that the same false assurances were also made to guard against the possibility of having to refund this fraudulently obtained money thus constituting a set of distinct "reverse false claims" under 31 U.S.C. § 3729(a)(7).

The United States has declined to exercise its option to intervene in this action pursuant to 31 U.S.C. § 3730(b)(4)(B). Allen Lamers continues to litigate these claims as the Relator, as is his right under the qui tam framework of the False Claims Act. Presently before the Court are two motions: the City moves to dismiss for lack of subject matter jurisdiction and for summary judgment on the merits.

I. FACTUAL BACKGROUND

In September, 1992, the Green Bay Area Public School District ("District") contacted GBT about the possibility of transporting children to and from school on the City's public transit system. Prior to that, school bus transportation in the Green Bay area had been primarily the province of private operators such as Lamers Bus Lines. Lamers itself claims to have bused Green Bay school kids since 1959 under successive, uninterrupted contracts with the District. Information submitted by both parties suggests that the District's chief motivation in exploring public transit for its busing needs was financial: one internal District memorandum comparing private and public carriers projected an annual savings of approximately $33,000 from using the city transit system. (Pl.'s App. Ex. 11 at 4.) By February, 1993, GBT had submitted its initial proposal for public student transport to the District, calling it a "pilot program."

On March 22, 1993, the City submitted an application for transit operating assistance to the FTA, as it would again in the spring of 1994 and 1995. As part of the annual application process, the City must submit certifications and assurances to the FTA indicating GBT's compliance with various federal statutes and regulations connected to the federal assistance programs. FTA grant procedure provides for the one-time submission of basic project assurances by all applicants for transit funding. In this scheme, assurances required under various federal transportation programs are consolidated into a single, comprehensive standard assurance which can be submitted once and referred to in all future applications for transit assistance. The City had executed its original "Standard Assurances" in 1989 under the Urban Mass Transportation Act of 1964, the predecessor to the current federal mass transportation statute, 49 U.S.C. Chapter 53. The 1989 Assurances, signed by then-mayor Samuel Halloin, stated generally that the City "will comply with all Federal statutes, regulations, Executive orders and administrative requirements applicable to [federal transit funding]." (Def.App.Ex. 3.) Following agency procedure, the City submitted along with its 1993 application for transit assistance a "Statement of Continued Validity of One-time Submissions," certifying that the City's 1989 Standard Assurances remained valid and accurate. This general promise of regulatory compliance, renewed and incorporated by reference in 1993, 1994, and 1995, constitutes a significant part of what Lamers alleges are the City's false statements and claims.

Like other eligible public entities, the City receives mass transit funding from the FTA pursuant to 49 U.S.C. Chapter 53. Specifically at issue here, 49 U.S.C. § 5323(f) permits federal financial assistance for the use of mass transit equipment to provide school bus service, but requires that "the applicant agrees not to provide schoolbus transportation that exclusively transports students and school personnel in competition with a private schoolbus operator." The Department of Transportation's implementing regulations are found at 49 C.F.R. Part 605—School Bus Operations. Most pertinent, 49 C.F.R. § 605.3 defines the bounds of permissible "tripper service," which is the type of schoolbus service GBT purports to have provided at all times relevant to this action.

While GBT's 1993 application for transit assistance was still pending, Lamers' School Operations Manager Byron Kruschke lodged an informal complaint with the FTA about GBT's proposed pilot program. In a letter dated June 10, 1993, Kruschke questioned GBT's right under applicable regulations to provide what he characterized as "direct service to and from the schools." (Def.'s App. Ex. 22.) Kruschke noted that GBT's proposed routes were not consistent with current bus routes but appeared to be separate, newly designed routes. According to Kruschke, this was a violation of 49 C.F.R., Part 605. (Id.) The FTA forwarded Kruschke's complaint to GBT Transit Director Gary Gretzinger, who responded by letter of June 30, 1993. Gretzinger characterized the proposed service as "an extension of regular routes and utilizing an extra bus, if ridership demands, to avoid overloading." (Def.App.Ex. 25.) Gretzinger also stated that "[a]ll proposed service will be advertised, open to the public and stop at all designated Green Bay Transit bus stops." (Id.)

FTA Regional Administrator Joel Ettinger provided the agency's official response to Lamers' informal complaint by letter to Kruschke dated August 24, 1993. Ettinger clearly stated the FTA's belief that GBT's proposed service was properly considered "tripper service" and was therefore in compliance with FTA regulations:

Both the FTA Act, and the FTA's school bus regulations as set forth at 49 C.F.R. Part 605, permit recipients of FTA assistance to accommodate the needs of school students together with the general public as part of its mass transportation service. FTA has designated this type of service to be "tripper service" as distinguished from "school bus operations."

(Def.'s App. Ex. 26.) Ettinger then included the complete definition of "tripper service," which remains central to our discussion today:

Tripper service means regularly scheduled mass transportation service which is open to the public, and which is designed or modified to accommodate the needs of school students and personnel, using various fare collection or subsidy systems. Buses used in tripper service must be clearly marked as open to the public and may not carry designations such as "school bus" or "school special". These buses may stop only at grantee or operator's regular service stop. All routes traveled by tripper buses must be within a grantee's or operator's regular route service as indicated in their published route schedules.

49 C.F.R. § 605.3(b). The tripper service definition, then, says nothing that would require public transit providers receiving FTA funds to design school bus routes only as extensions of existing routes.

With Ettinger's letter, the FTA closed its file on Lamers' 1993 complaint. Meanwhile, the FTA had approved the City's 1993 application for federal transit assistance and offered the City a standard FTA grant agreement on June 24, 1993, before Gretzinger made his initial response to Lamers' informal complaint. GBT commenced its pilot school bus service for the District in the latter half of August, 1993. The following March 25, 1994, the City submitted its 1994 application for federal transit assistance, which was approved on June 9, 1994.

On July 15, 1994, Lamers filed another, this-time-official administrative complaint with the FTA regarding GBT's pilot program service, which had just completed its first school year. The complaint alleged, in relevant part, that GBT was conducting prohibited school bus operations not permissible "tripper service," and that the City's continuing assertions to the contrary were erroneous and inaccurate. Once again, on August 12, 1994, Gretzinger wrote to the FTA responding to Lamers' complaint. He maintained that GBT's school bus service remained well within the bounds of permissible tripper service and denied all allegations as to violations of 49 C.F.R. Part 605. Over the next six months, Lamers...