United States ex rel. Simoneaux v. E.I. duPont De Nemours & Co., No. 16-30141

CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)
Writing for the CourtJERRY E. SMITH, Circuit Judge
Citation843 F.3d 1033
Parties United States of America, ex rel. Jeffrey M. Simoneaux, Relator–Appellee, v. E.I. duPont de Nemours & Company, Defendant–Appellant.
Docket NumberNo. 16-30141
Decision Date13 December 2016

843 F.3d 1033

United States of America, ex rel. Jeffrey M. Simoneaux, Relator–Appellee,
v.
E.I. duPont de Nemours & Company, Defendant–Appellant.

No. 16-30141

United States Court of Appeals, Fifth Circuit.

FILED December 13, 2016


Joseph Arthur Smith, III, Esq., Justin Murphy DeLaune, Esq., Smith Law Firm, Jane H. Barney, Esq., Baton Rouge, LA, for Plaintiff–Appellee.

Monique M. Weiner, Leigh Ann Schell, Sara C. Valentine, Esq., Lori Allen Waters, Kuchler, Polk, Schell, Weiner & Richeson, L.L.C., New Orleans, LA, for Defendant–Appellant.

Henry Charles Whitaker, U.S. Department of Justice, Washington, DC, for Amicus Curiae.

Before STEWART, Chief Judge, and SMITH and DENNIS, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

Jeffrey Simoneaux brought a qui tam action against his former employer, E.I. duPont de Nemours & Company ("duPont"), under the False Claims Act ("FCA"). He contended that duPont had violated the reverse-false-claims provision, 31 U.S.C. § 3729(a)(1)(G), by concealing an obligation to pay the United States a penalty arising from alleged violations of the Toxic Substances Control Act ("TSCA"). He also averred that duPont had retaliated against him in violation of the FCA, 31 U.S.C. § 3730(h). DuPont unsuccessfully moved for summary judgment on both claims, and we permitted this interlocutory appeal. Because duPont had no "obligation" to pay the United States, we reverse and remand the denial of summary judgment on the reverse false claim. With respect to the retaliation claim, we dismiss the appeal for want of appellate jurisdiction.

I.

In his qui tam suit,1 Simoneaux alleged that duPont violated the FCA's reverse-false-claims provision by failing to report leaks of sulfur dioxide and sulfur trioxide to the Environmental Protection Agency ("EPA") as required by Section 8(e) of the TSCA. The reverse-false-claims provision imposes liability on, inter alia , any person who "knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government." 31 U.S.C. § 3729(a)(1)(G). Simoneaux claimed that by failing to report under Section 8(e), duPont owed the United States a penalty and had avoided that obligation by failing to report the leaks. Simoneaux additionally proffered that duPont had wrongfully retaliated against him in violation of Section 3730(h).2

843 F.3d 1035

DuPont moved for summary judgment, asserting that even if it had violated Section 8(e), it had no "obligation" to pay the United States because the EPA had not assessed a penalty.3 DuPont principally relied on United States ex rel. Bain v. Georgia Gulf Corp. , 386 F.3d 648 (5th Cir. 2004), and United States ex rel. Marcy v. Rowan Cos. , 520 F.3d 384 (5th Cir. 2008), which held that "the reverse false claims act does not extend to the potential or contingent obligations to pay the government fines or penalties which have not been levied or assessed (and as to which no formal proceedings to do so have been instituted)...." Marcy , 520 F.3d at 391 (quoting Bain , 386 F.3d at 657 ). With respect to the retaliation claim, duPont contended that Simoneaux had failed to establish that he had engaged in any protected activity.

The district court denied summary judgment, concluding that the Fraud Enforcement and Recovery Act of 2009 ("FERA"), which amended the FCA, had abrogated the relevant holdings of Bain and Marcy . The court held that under the FCA, as amended, a person can be liable for a reverse false claim based on a violation of a statute that imposes monetary penalties. The district court denied duPont's request that it certify the order for interlocutory appeal.

The jury returned a verdict in favor of duPont on the reverse false claim and retaliation claim. Simoneaux moved for a new trial, based on allegations that duPont had failed to provide certain leak-calculation documents in discovery. The court ordered a new trial under Federal Rule of Civil Procedure 60(b)(3). DuPont again asked the court to certify its denial of summary judgment for interlocutory appeal, noting that since the court's refusal to certify, a different district court in Louisiana had relied on Marcy , and we had affirmed.4 The district court certified an interlocutory appeal under 28 U.S.C. § 1292(b), and we granted duPont leave to appeal.

II.

This court reviews certified orders de novo . Castellanos–Contreras v. Decatur Hotels, LLC , 622 F.3d 393, 397 (5th Cir. 2010) (en banc). Under Section § 1292(b), "a grant or denial of summary judgment is reviewed de novo, applying the same standard as the district court but review only extends to controlling questions of law." Id. (citation omitted). Our inquiry "is limited to the summary judgment record before the trial court." Id. (quoting Martco Ltd. P'ship v. Wellons, Inc. , 588 F.3d 864, 871 (5th Cir. 2009) ).

III.

The reverse-false-claim issue involves the interplay between the FCA and the TSCA. On the one hand, a person is liable under the reverse-FCA provision if he knowingly and improperly avoids an obligation to pay the United States. 31 U.S.C. § 3729(a)(1)(G). On the other hand, Section 8(e) of the TSCA requires chemical manufacturers to notify the EPA when they have "information which reasonably supports the conclusion that [a] substance or mixture presents a substantial risk of injury to health or the environment." 15 U.S.C. § 2607(e). The EPA can assess civil

843 F.3d 1036

penalties for violations of Section 8(e). Id. §§ 2614–15. Simoneaux's theory is that a violation gives rise to reverse-FCA liability because the unpaid civil penalty is an "obligation" to pay the United States.

In Bain and Marcy , we held that potential or contingent penalties are not obligations under the FCA. Bain , 386 F.3d at 657 ; Marcy , 520 F.3d at 391. Simoneaux offers two arguments for why Bain and Marcy do not control. First, he asserts that FERA's definition of "obligation" covers contingent penalties and thus abrogates Bain and Marcy 's holding. Second, he theorizes that Section 8(e) imposes liability "at the statutory level" such that assessment of a penalty is mandatory.

Both of these notions fail. Although FERA's new definition resolved uncertainty regarding whether the amount of an obligation needs to be fixed, it did not upset the widely accepted holding that contingent penalties are not obligations. And a plain reading of the TSCA shows that penalties are not mandatory. Thus, we reverse the denial of summary judgment on the reverse-FCA claim because, even if duPont violated Section 8(e), it had no obligation under the reverse-FCA provision.

A.

It was in Bain that we first addressed the interaction between the FCA and regulatory penalties. The qui tam relator urged that a potential penalty under the Clean Air Act constituted an "obligation" under the reverse-FCA provision. At the time, the FCA did not define "obligation." We held that

the reverse false claims act does not extend to the potential or contingent obligations to pay the government fines or penalties which have not been levied or assessed (and as to which no formal proceedings to do so have been instituted) and which do not arise out of an economic relationship between the government and the defendant (such as a lease or a contract or the like) under which the government provides some benefit to the defendant wholly or partially in exchange for an agreed or expected payment or transfer of property by (or on behalf of) the defendant to (or for the economic benefit of) the government.

Bain , 386 F.3d at 657. Because the EPA had not assessed a penalty, and the defendant had only a "purely regulatory" relationship with the government, the relator failed to state a reverse-FCA claim. Id. at 657–58.

In Marcy , a relator advanced a similar theory based on alleged violations of the Clean Water Act ("CWA"). We declared that " Bain contro[lled] [the] result." Marcy , 520 F.3d at 391. We acknowledged that under the CWA, a polluter is required immediately to report certain polluting discharges. Id. "However," we explained, "even when a statute requires immediate action from a violator, the government still must choose whether to impose a penalty." Id. Although the defendant had a contractual relationship with the government, "the relevant payment obligations did not arise out of the [contract]," so the relator had failed to state a reverse FCA claim. Id. at 391–92.

B.

FERA amended the FCA to define "obligation" as "an established duty, whether or not fixed, arising from an express or implied contractual, grantor-grantee, or licensor-licensee relationship, from a fee-based or similar relationship, from statute or regulation, or from the retention of any overpayment."5 Simoneaux maintains that

843 F.3d 1037

the definition is unambiguous and that unassessed regulatory penalties are included within its plain meaning. The district court agreed, emphasizing the phrase "whether or not fixed." On the other hand, duPont asserts that "established" is the key word.

The United States, as amicus curiae , agrees with duPont. It also notes that Congress did not change the overarching requirement that an obligation must be one "to pay or...

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    ...court and the parties presented it in their appellate briefs." See United States ex rel. Simoneaux v. E.I. duPont de Nemours & Co. , 843 F.3d 1033, 1042 (5th Cir. 2016). But "an issue was not fairly included when it was not raised in the district court." Id. So the fact that this is an inte......
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    ...the statute is that there must be an already "established duty to pay." United States ex rel. Simoneaux v. E.I. DuPont de Nemours & Co., 843 F.3d 1033, 1039 (5th Cir. 2016) (quoting § 3729(a)(1)(g)). Statutes that impose civil penalties are "mandatory on in the sense that 'once a violation ......
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    ...regulatory penalty, even under the more expansive post-FERA FCA. Accord United States ex rel. Simoneaux v. E.I. DuPont De Nemours & Co., 843 F.3d 1033, 1039 (5th Cir. 2016) ("[U]nassessed regulatory penalties are not obligations under the FCA. . . . [W]here, as in this case, a regulatory pe......
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30 cases
  • Consumer Fin. Prot. Bureau v. All Am. Check Cashing, Inc., 18-60302
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • May 2, 2022
    ...only review issues that the district court ruled on below. See, e.g., United States ex rel. Simoneaux v. E.I. duPont de Nemours & Co. , 843 F.3d 1033, 1041–42 (5th Cir. 2016) (no jurisdiction over claim not raised in the district court); United States ex rel. Bain v. Georgia Gulf Corp. , 38......
  • William Powell Co. v. Nat'l Indem. Co., 20-3737
    • United States
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    • November 18, 2021
    ...court and the parties presented it in their appellate briefs." See United States ex rel. Simoneaux v. E.I. duPont de Nemours & Co. , 843 F.3d 1033, 1042 (5th Cir. 2016). But "an issue was not fairly included when it was not raised in the district court." Id. So the fact that this is an inte......
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    • March 21, 2019
    ...the statute is that there must be an already "established duty to pay." United States ex rel. Simoneaux v. E.I. DuPont de Nemours & Co., 843 F.3d 1033, 1039 (5th Cir. 2016) (quoting § 3729(a)(1)(g)). Statutes that impose civil penalties are "mandatory on in the sense that 'once a violation ......
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    ...regulatory penalty, even under the more expansive post-FERA FCA. Accord United States ex rel. Simoneaux v. E.I. DuPont De Nemours & Co., 843 F.3d 1033, 1039 (5th Cir. 2016) ("[U]nassessed regulatory penalties are not obligations under the FCA. . . . [W]here, as in this case, a regulatory pe......
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