U.S. v. Rockwell Intern. Corp., 96-1530

• Decision Date: 26 August 1997
• Docket Number: No. 96-1530,96-1530
• Citation: 124 F.3d 1194
• Parties: , 28 Envtl. L. Rep. 20,361, 97 CJ C.A.R. 1763 UNITED STATES of America, Plaintiff-Appellee, v. ROCKWELL INTERNATIONAL CORPORATION, Defendant--Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1194

124 F.3d 1194

45 ERC 1295, 28 Envtl. L. Rep. 20,361,

97 CJ C.A.R. 1763

UNITED STATES of America, Plaintiff-Appellee, v. ROCKWELL INTERNATIONAL CORPORATION, Defendant--Appellant.

No. 96-1530.

United States Court of Appeals, Tenth Circuit.

Aug. 26, 1997.

Rehearing Denied Oct. 15, 1997.

Harold A. Haddon (Rachel A. Bellis with him on the brief), Haddon, Morgan & Foreman, P.C., Denver, CO, for Defendant-Appellant.

Douglas N. Letter, Department of Justice, Washington, DC, for Plaintiff-Appellee.

Before BRISCOE, LOGAN and LUCERO, Circuit Judges.

LUCERO, Circuit Judge.

In 1992, Rockwell International Corporation entered into a plea agreement with the United States (the "government"), pleading guilty to various environmental crimes and agreeing to pay a fine of $18.5 million. In return, the government promised to refrain from further criminal and, to a lesser extent, civil proceedings. Rockwell appeals the district court's refusal to entertain its interpretation of that plea agreement, an interpretation that would forbid the government from intervening in a qui tam action against Rockwell. We conclude that the district court was correct to reject Rockwell's proposed reading of the plea agreement, and affirm.

I

Rockwell operated the U.S. Department of Energy's Rocky Flats Nuclear Weapons Plant just outside Denver, Colorado. In 1988, the criminal division of the Department of Justice, as well as other federal agencies, began investigating allegations that Rockwell had committed environmental crimes at Rocky Flats. After obtaining a federal warrant and conducting an extensive search of the facility in 1989, the government seized a very large volume of documents and a special grand jury was empaneled to investigate Rockwell's operation of Rocky Flats. Also in 1989, James Stone, as relator, filed a qui tam complaint against Rockwell in district court in Colorado, pursuant to 31 U.S.C. § 3730 (the "Stone Suit"). Stone's complaint alleged that Rockwell had violated the False Claims Act, 31 U.S.C. § 3729, by submitting improper reimbursement applications to the Department of Energy and committing other wrongful acts in its operation of Rocky Flats.

In compliance with 31 U.S.C. § 3730(b), the complaint in the Stone Suit was filed under seal and served on the United States but not on Rockwell. Because the government sought and was granted extensions to keep the complaint under seal, Rockwell was not given notice of the Stone Suit until November 1990. Even after the complaint was unsealed, the United States, acting through the civil division of the Justice Department, continued to delay the decision on whether to elect to prosecute the qui tam action. In the meantime, Rockwell filed a suit against the United States in the Court of Federal Claims (the "Claims Court Suit"), alleging that the Department of Energy had breached contractual obligations and had improperly withheld fees owing to Rockwell for operating Rocky Flats. During this time, proceedings before the grand jury continued.

In 1991, the government and Rockwell's counsel entered into substantial plea negotiations, discussing the possibility of a global resolution of all suits and investigations involving Rockwell's management of Rocky Flats. The negotiations culminated in a written plea agreement executed on March 26, 1992, an agreement that fell short of the full resolution sought by Rockwell. The five-page agreement specified that Rockwell would waive the necessity of indictment, plead guilty to ten environmental criminal charges and pay a fine of $18.5 million. In return, the government promised not to bring any further environmental criminal charges against the corporation or its officers, directors or employees stemming from Rockwell's management of Rocky Flats as then known by the government. The government also promised not to sue or take other administrative action against Rockwell based on violations of certain environmental statutes. Specifically, provision 5 of the agreement states:

In connection with this disposition, the United States agrees that, as to all environmental matters at Rocky Flats which are presently known to the Department of Justice or the Environmental Protection Agency ("EPA") on the date of this agreement, the United States covenants not to sue or take administrative action against Rockwell for civil damages, penalties or other monetary relief based upon alleged violations of RCRA, the CWA, § 103 of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. § 9603, the Clean Air Act, 42 U.S.C. §§ 7401 et seq., or the Toxic Substances Control Act, 15 U.S.C. §§ 2601 et seq.

Appellant's App. at 500.

However, provision 5 expressly excludes from the government's promise not to sue three areas of potential civil liability. Directly following the above-quoted language, the agreement states:

This covenant does not encompass (or preclude) (a) claims for recovery of response costs, natural resource damages or injunctive relief brought pursuant to RCRA, CERCLA or other authority, or for civil or administrative penalties arising in connection with such relief or a consent decree or administrative order mandating such relief; (b) the ongoing civil or administrative investigation of possible violations of 40 C.F.R. Part 761 concerning polychlorinated biphenyls ("PCBs") at Rocky Flats, including, without limitation, Building 707; or (c) the issues raised in United States of America, ex rel., and James S. Stone v. Rockwell International Corporation, Civil Action No. 89-C-1154 (D.Colo.) ("Stone "). After an independent review, the Department of Justice-Civil Division has determined to file a notice in Stone declining to intervene.

Id. at 500-01. The agreement contains an integration clause stating there are no other agreements, terms, or conditions, express or implied, and that entering the agreement, neither parties relies on any terms, promises, or conditions not expressed therein. Id. at 503. The plea agreement was accepted by the court in June 1992.

The same day Rockwell executed the plea agreement, the Department of Justice-Civil Division filed in the Stone Suit a notice of its election not to intervene in the qui tam action. The notice states: "The United States also reserves its rights under 31 U.S.C. § 3730(c)(3) to intervene at a later date upon a showing of good cause." Id. at 505.

In November 1995, citing information revealed in pending civil litigation with Rockwell, the government moved to amend its answer to Rockwell's complaint in the Claims Court Suit to interpose a fraud defense/counterclaim. In July 1996, the Court of Federal Claims allowed the government to file the amended answer. Also in November 1995, the government moved to intervene in the Stone Suit. Rockwell responded with this action. The company asserted that the attempt to intervene breached the 1992 plea bargain and requested the district court to enforce that agreement.

In separate orders, the district court denied Rockwell's motion to enforce the plea agreement and granted the government's motion to intervene in the Stone Suit. The court found the terms of the plea agreement clear with respect to the government's limitation on its promise not to pursue civil actions, and found no ambiguity in what it characterized as the "statement of fact" that the Department of Justice-Civil Division had previously determined to file a statement in the Stone Suit declining to intervene. Id. at 189. The court rejected Rockwell's attempt to introduce a large volume of material describing the history of the plea agreement negotiations. According to Rockwell, this evidence demonstrates that it understood the government's obligation to include a promise not to intervene at a later date unless new and significant information on the complexity or magnitude of the fraud was revealed. The court concluded that

Rockwell cannot credibly argue that it did not understand the government's consideration for its guilty pleas to encompass only a promise not to pursue civil or administrative remedies for violations of the RCRA, the CWA, § 103 of the CERCLA, the Clean Air Act, and the Toxic Substances Control Act. The plea agreement did not contain a covenant not to pursue civil remedies for any violation of the False Claims Act, and it expressly excluded any covenant with respect to the Stone case.

Id. at 192. It is in this posture the case comes before us.

II

On appeal, Rockwell raises two issues, both related to the district court's interpretation of the plea agreement. The first is that the district court improperly refused to consider Rockwell's interpretation of the plea agreement and enforce it according to those terms. The second is that the district court impermissibly refused to grant an evidentiary hearing to consider the evidence supporting Rockwell's interpretation of the agreement.

According to Rockwell, the language of the plea agreement reflects negotiations with the government in which it attempted to ensure no financial liability apart from the $18.5 million fine it agreed to pay as part of its guilty pleas. Rockwell tells us that in order to effectuate this goal, it attempted to get the United States Attorney for the District of Colorado and the Criminal Division of the Justice Department to commit the Justice Department-Civil Division to stay out of the Stone Suit. Rockwell alleges that Justice Department attorneys consistently indicated that the government did not intend to intervene in the Stone Suit, but that the Civil Division attorneys were unwilling to commit that assurance to writing. Recognizing its leverage, Rockwell alleges the government extracted $3 million more in fines than Rockwell had previously agreed to pay in return for declining to intervene. Rockwell suggests an understanding that the government might only later intervene if it obtained significant new information increasing the scope and...