United States ex rel. Kraxberger v. Kan. City Power & Light Co.

• Decision Date: 27 June 2014
• Docket Number: No. 13–2759.,13–2759.
• Citation: 756 F.3d 1075
• Parties: UNITED STATES ex rel. James KRAXBERGER, Plaintiff–Appellant v. KANSAS CITY POWER AND LIGHT COMPANY, Defendant–Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

756 F.3d 1075

UNITED STATES ex rel. James KRAXBERGER, Plaintiff–Appellant

v.KANSAS CITY POWER AND LIGHT COMPANY, Defendant–Appellee.

No. 13–2759.

United States Court of Appeals,

Eighth Circuit.

Submitted: April 17, 2014.

Filed: June 27, 2014.

Anthony L. DeWitt, argued, Jefferson City, MO, for Appellant.

Edward D. Robertson, Jr., on the brief, Jefferson City, MO, for Appellant.

Todd Peterson Graves, argued, Kansas City, MO, for Appellee.

Edward Dean Greim, on the brief, Kansas City, MO, Clayton Callen, on the brief, Dallas, TX, for Appellee.

Before RILEY, Chief Judge, BENTON and KELLY, Circuit Judges.

BENTON, Circuit Judge.

James M. Kraxberger brought a False Claims Act (FCA) qui tam action against Kansas City Power and Light Company. KCP & L, Kraxberger claims, fraudulently induced the General Services Administration to install an all-electric heating-and-cooling system at the Richard Bolling Federal Building. The district court ¹ initially dismissed some of Kraxberger's claims based on the FCA's public disclosure bar. It granted KCP & L summary judgment on another claim. Kraxberger appeals. Having jurisdiction under 28 U.S.C. § 1291, this court affirms.

I.

The Bolling Building was historically heated with steam, and cooled with chilled water, provided by Trigen–Kansas City Energy Corporation. In 2005, GSA considered installing an all-electric heating-and-cooling system from KCP & L. KCP & L promised GSA a discounted all-electric rate. KCP & L's electricity rates are regulated by the Missouri Public Service Commission (PSC). As part of its proposal to GSA, KCP & L performed a building life cycle cost (BLCC) analysis. This analysis—delivered in February 2006—assumed a 7% increase in future rates, although PSC testimony from January 2006 showed that KCP & L had proposed an 11.5% increase. Wooing GSA, KCP & L gave Royals and Chiefs tickets to three GSA employees, provided benefits for some employees at a golf tournament, gave a $50 Target gift card to an employee as a wedding present, and paid some expenses on an employee's business trip.

Trigen responded. In an October 4, 2006 letter, it warned GSA that any discount KCP & L offered was subject to regulation. On October 26, Trigen's counsel submitted a Freedom of Information Act (FOIA) request to GSA for all documents about bids or proposals to provide services at the Bolling Building. GSA's response included Trigen's letter and a document showing estimated savings from switching to the KCP & L system.

Despite Trigen's warning, a committee of 15 GSA employees chose to install electric boilers and chillers in the Bolling Building. In 2007—at Trigen's urging—the PSC limited KCP & L's all-electric rate only to customers currently receiving the rate. The Bolling Building was excluded from the all-electric rate (the boilers were not completely installed). KCP & L protested. At a PSC hearing in 2008, a KCP & L manager testified that “GSA made financial decisions” based on the all-electric rate, and that the “life-cycle-cost-analysis performed as part of GSA's financial decision making process used the all-electric/space-heating rate.” Both the 2006 and 2008 PSC testimony are available on the PSC website. The Bolling Building never received the all-electric rate.

Though not a GSA employee himself, Kraxberger worked on the boilers at the Bolling Building. He discussed KCP & L with GSA employees and contractors. His father, a former GSA employee, gave him a copy of the Trigen letter. In 2011, Kraxberger sued KCP & L as a qui tam relator under 31 U.S.C. §§ 3729–30, claiming that KCP & L (1) used false projections in the BLCC analysis, (2) fraudulently promised GSA the all-electric rate, and (3) falsely filed a certification stating that no gratuities had been given. The district court dismissed the BLCC and false-rate claims as publicly disclosed by the FOIA request and PSC testimony. It granted KCP & L summary judgment on the gratuities claim, finding inapplicable the regulations Kraxberger cites. This court reviews both the dismissal and the grant of summary judgment de novo. See United States ex rel. Raynor v. National Rural Utils. Coop. Fin., Corp., 690 F.3d 951, 954 (8th Cir.2012); Wenzel v. Missouri–American Water Co., 404 F.3d 1038, 1039 (8th Cir.2005).

II.

The False Claims Act directs a court to “dismiss an action or claim under this section ... if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed.” 31 U.S.C. § 3730(e)(4)(A).² Public disclosure may be through a “Federal report, hearing, audit, or investigation.” Id. A “written agency response to a FOIA request falls within the ordinary meaning of ‘report.’ ” Schindler Elevator Corp. v. United States ex rel. Kirk, ––– U.S. ––––, 131 S.Ct. 1885, 1893, 179 L.Ed.2d 825 (2011). Kraxberger argues that Schindler should be limited to FOIA requests made by the relator himself or “disclosed in the media or otherwise.” In Schindler, the Supreme Court disagreed: “We also are not concerned that potential defendants will now insulate themselves from liability by making a FOIA request for incriminating documents. This argument assumes that the public disclosure of information in a written FOIA response forever taints that information for purposes of the public disclosure bar.... [I]t may be that a relator ... qualifies for the ‘original source’ exception.” Id. at 1895 (footnote omitted). The Trigen letter and other documents disclosed by GSA in response to counsel's FOIA request qualify as public disclosure under Schindler.

Public disclosure may also be through the “the news media.” 31 U.S.C. § 3730(e)(4)(A). “News media” is not defined in the FCA, though the Supreme Court has acknowledged the term has a “broad sweep.” See, e.g., Schindler, 131 S.Ct. at 1891 (“The other sources of public disclosure in § 3730(e)(4)(A), especially ‘news media,’ suggest that the public disclosure bar provides ‘a broa[d] sweep.’ ”), quoting Graham Cnty. Soil & Water Conservation Dist. v. United States ex rel. Wilson, 559 U.S. 280, 290, 130 S.Ct. 1396, 176 L.Ed.2d 225 (2010) (“The ‘news media’ referenced in [the public disclosure bar] plainly have a broa[d] sweep.”). Here, the PSC functions as a news organization for public utilities and consumers in Missouri. The PSC maintains a “media center” hosting press releases, webcasts of public meetings, and the “PSConnection Magazine” (reporting news and promotions related to public utilities). SeeSection 386.180 RSMo (“The publications commission shall also from time to time select and designate such other works, papers or studies of the public service commission relating to the field of public utilities regulation that may in the judgment of the publications commission be of interest to the public and cause same to be published in pamphlet, book, or electronic form.”). Cf.5 U.S.C. § 552 (defining “a representative of the news media” as “any person or entity that gathers information of potential interest to a segment of the public, uses its editorial skills to turn the raw materials into a distinct work, and distributes that work to an audience”). The 2006 and 2008 hearing testimony, publicly available on the website of the PSC, qualify as disclosure through the news media. See generally United States ex rel. Doe v. Staples, Inc., 932 F.Supp.2d 34, 40 (D.D.C.2013) ( “Courts ... have construed the term ‘news media’ to include readily accessible websites.”); United States ex rel. Osheroff v. HealthSpring, Inc., 938 F.Supp.2d 724, 732–33 (M.D.Tenn.2013) (noting that “many court[s] have held that information on readily accessible public websites constitutes public disclosure”).

The PSC testimony and the documents in GSA's response to counsel's FOIA request disclose “substantially the same” allegations as Kraxberger's BLCC and false-rate claims. See31 U.S.C. § 3730(e)(4)(A). The PSC testimony shows the 11.5% proposed rate increase, GSA's reliance on the discounted all-electric rate, and its use of the BLCC analysis. The documents in GSA's response to counsel's FOIA request show the 7% rate increase used in the BLCC analysis and warn that KCP & L's rates are subject to regulation. Since Kraxberger's allegations were publicly disclosed, Kraxberger's claim succeeds only if he is an “original source” who has “knowledge that is independent of and materially adds to the publicly disclosed allegations.” 31 U.S.C. § 3730(e)(4)(B). See Minnesota Ass'n of Nurse Anesthetists v. Allina Health Sys. Corp., 276 F.3d 1032, 1045 (8th Cir.2002) (following the majority view that “a qui tam suit is ‘based upon’ a public disclosure whenever the allegations in the suit and in the disclosure are the same, ‘regardless of where the relator obtained his information’ ”), quoting United States ex rel. Doe v. John Doe Corp., 960 F.2d 318, 324 (2d Cir.1992).

In his BLCC claim, Kraxberger alleges that KCP & L's analysis did not include the correct rate increase, and that GSA relied on the BLCC analysis. Both the proposed rate increase and GSA's reliance on the BLCC analysis were discussed in the PSC testimony. The rate actually used in the BLCC analysis was included in GSA's response to counsel's FOIA request. In his false-rate claim, Kraxberger identifies “core material misrepresentation regarding electric rates.” He says, “Trigen protested, in October of 2006, that KCP & L could not give the GSA ... the rate KCP & L was promising and explained they were regulated by the [PSC].” He notes that “Trigen's prophecy about the electric rates turned out to be correct.” Kraxberger's information about the false-rate claim is essentially the Trigen letter. Even assuming his knowledge is independent of the PSC testimony and GSA's response to the FOIA request, he does not materially add to what was publicly disclosed. See31 U.S.C. § 3730(e)(4)(B); United States ex rel. Rabushka v. Crane Co., 40 F.3d 1509, 1514 (8th Cir.1994) (applying the public disclosure bar “when the...