U.S. v. Texas Instruments Corp.

• Decision Date: 13 December 1996
• Docket Number: No. 95-56660,95-56660
• Citation: 104 F.3d 276
• Parties: 41 Cont.Cas.Fed. (CCH) P 77,027, 97 Cal. Daily Op. Serv. 65, 97 Daily Journal D.A.R. 147 UNITED STATES of America, ex rel., Appellee, Roland Gibeault; Inge Maudal; Greg K. Hafif, Plaintiffs-Appellants, v. TEXAS INSTRUMENTS CORP.; Gould, Inc.; PSI Tronix, Inc.; Aerospatiale Helicopter Corp., Defendants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 276

104 F.3d 276

41 Cont.Cas.Fed. (CCH) P 77,027, 97 Cal. Daily

Op. Serv. 65,

97 Daily Journal D.A.R. 147

UNITED STATES of America, ex rel., Appellee Roland Gibeault; Inge Maudal; Greg K. Hafif, Plaintiffs-Appellants, v. TEXAS INSTRUMENTS CORP.; Gould, Inc.; PSI Tronix, Inc. Aerospatiale Helicopter Corp., Defendants.

No. 95-56660.

United States Court of Appeals Ninth Circuit.

Submitted Dec. 13, 1996. ^*

Decided Jan. 3, 1997.

Lucy Eldridge, Douglas N. Letter, United States Department of Justice, Washington, DC, for plaintiff-appellee United States of America.

Roland Gibeault, Costa Mesa, CA, plaintiff-appellant pro se.

Inge Maudal, Simi Valley, CA, plaintiff-appellant pro se.

Greg K. Hafif, Law Offices of Herbert Hafif, Claremont, CA, plaintiff-appellant pro se.

William McD Miller, Musick, Peeler & Garrett, Los Angeles, CA, for defendants-appellees Texas Instruments Corp., Gould, Inc., PSI Tronix, Inc. and Aerospatiale Helicopter Corp.

Appeal from the United States District Court for the Central District of California, James M. Ideman, District Judge, Presiding. D.C. No. CV-89-06238-JMI.

Before: CYNTHIA HOLCOMB HALL, KOZINSKI and HAWKINS, Circuit Judges.

KOZINSKI, Circuit Judge.

The False Claims Act, 31 U.S.C. § 3729 et. seq., authorizes a private suit against a party that has defrauded the United States. If the suit is successful, the government and the plaintiff (or "relator," in the language of the Act) divide the proceeds. 31 U.S.C. § 3730(d). Such suits are known as qui tam actions, from the Latin qui tam pro domino rege quam pro se imposo sequitur, meaning "he who brings the action for the king as well as for himself."

In United States ex rel. Killingsworth v. Northrop Corp., 25 F.3d 715 (9th Cir.1994), we held that when a False Claims suit is settled rather than adjudicated, the district court is empowered to act "to ensure that the government [receives] its proper share of the settlement." Id. at 724. We noted that the language of the Act "authoriz[es] the district court to bar a qui tam plaintiff and defendant from artificially structuring a settlement to deny the government its proper share of the settlement proceeds." Id. This is so even when the relator conducts the action; "while the government may not obstruct the settlement and force a qui tam plaintiff to continue litigation, [it] nevertheless may question the settlement ... with or without formal intervention." Id. (citing 31 U.S.C. § 3730(d))(emphasis added).

Here, relators brought a qui tam action against Texas Instruments (TI); the government declined to intervene. ¹ Ultimately TI agreed to settle for $300,000--an amount labeled legal fees by the parties and paid to the relators' lawyers. The lawyers then turned over $124,500 to the relators. The district court found that the $124,500 represented proceeds of the qui tam action, not legal fees. The court therefore held the relators and the attorneys liable for the government's portion. The district court was not clearly erroneous in finding that the funds turned over by the lawyers to the clients were in fact proceeds. As Killingsworth made clear, the court had the power to restructure the settlement to secure the government's share.

The law firm that represented the relators challenges the district court's authority to hold it jointly and severally liable with the relators for the government's share....