United States v. Sprint Commc'ns, Inc.

• Decision Date: 28 April 2017
• Docket Number: No. 14-17434,14-17434
• Citation: 855 F.3d 985
• Parties: UNITED STATES of America, Plaintiff-Appellee, John C. Prather, Applicant-in-Intervention- Appellant, v. SPRINT COMMUNICATIONS, INC., FKA Sprint Nextel Corporation; Sprint PCS, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

855 F.3d 985

UNITED STATES of America, Plaintiff-Appellee,John C. Prather, Applicant-in-Intervention- Appellant,

v.SPRINT COMMUNICATIONS, INC., FKA Sprint Nextel Corporation; Sprint PCS, Defendants-Appellees.

No. 14-17434

United States Court of Appeals, Ninth Circuit.

Argued and Submitted September 14, 2016 San Francisco, California

Filed April 28, 2017

John G. Balestriere (argued) and Jillian L. McNeil, Belstriere Fariello, New York, New York, for Applicant-in-Intervention-Appellant.

Kimberly Friday (argued) and Steven J. Saltiel, Assistant United States Attorneys; Alex G. Tse, Chief, Civil Division; United States Attorney's Office, San Francisco, California, for Plaintiff-Appellee.

Edward C. Barnidge (argued) and Benjamin M. Stoll, Williams & Connolly LLP, Washington, D.C.; David F. Taylor, Perkins Coie LLP, Seattle, Washington; for Defendants-Appellees.

Before: Ronald M. Gould and Marsha S. Berzon, Circuit Judges, and William K. Sessions III,^** District Judge.

OPINION

BERZON, Circuit Judge:

John C. Prather sought to intervene as of right in a False Claims Act ("FCA") suit brought by the United States ("Government") against Sprint Communications, Inc. ("Sprint"). Whether Prather had the significantly protectable interest required to support his motion to intervene depends on whether he would have been entitled to any recovery if the Government had intervened in his 2009 qui tam FCA action. See Fed. R. Civ. P. 24(a)(2) ; Prather v. AT&T , 847 F.3d 1097 (9th Cir. 2017) (" Prather I "). We conclude that Government intervention in Prather's qui tam action could not have secured him any right to a share of the proceeds from that action and therefore affirm the district court's order.

BACKGROUND

In 2009, Prather filed a qui tam FCA action against Sprint and four other telecommunications companies, alleging that the companies were defrauding federal and state governments by overcharging them for electronic surveillance services. The Government elected not to intervene in Prather's qui tam action. In November 2013, the district court concluded that Prather could not show he was an "original source" of publicly disclosed information regarding the telecommunications companies' allegedly fraudulent activities and dismissed Prather's qui tam suit for lack of jurisdiction. We recently affirmed the district court's dismissal of Prather's qui tam action. Prather I , 847 F.3d at 1108.

While Prather's appeal of Prather I was pending, the Government filed its own FCA suit against Sprint. That action was transferred to the same district judge who had dismissed Prather's case. Prather moved to intervene in the Government's FCA action, maintaining that (1) the Government was pursuing an "alternate remedy" to Prather's qui tam action by filing its own FCA action instead of intervening in his earlier FCA suit; (2) under the FCA, he had the "same rights" in the Government's "alternate remedy" proceeding as he would have had in his qui tam action; and (3) he therefore had a right to a share of the proceeds from any award or settlement in this litigation. See 31 U.S.C. § 3730(c)(5) (2006).¹

The district court denied Prather's motion to intervene on the basis of its dismissal of Prather's qui tam action. Because Prather could not bring a successful qui tam action on related claims, the district court concluded, he had no standing to intervene in the Government's action. Prather timely appealed the district court's order.

DISCUSSION

Under the FCA, private individuals with information about fraud against the Government may bring qui tam actions on behalf of the United States. The Government may elect to (1) intervene in such an action and take over its prosecution, 31 U.S.C. § 3730(b)(2) ; (2) "pursue its claim through any alternate remedy available to the Government," instead, id. § 3730(c)(5) ; or (3) decide not to take any action, allowing the private individual, known as the "relator," to pursue the claim to completion, id. § 3730(c)(3). In any of those scenarios, the relator who brought the qui tam action generally has a right to a share of any proceeds from the action. Id. § 3730(d). If the Government pursues an alternate remedy, the relator "shall have the same rights in such proceeding as [he] would have had if" the Government had intervened in the qui tam action. Id. § 3730(c)(5).

Prather asserts that the Government's own action against Sprint is an "alternate remedy" pursued in lieu of intervention in his earlier qui tam action. He maintains that he is therefore entitled to the same share of the Government's proceeds resulting from this action against Sprint as he would have obtained if his qui tam action had gone forward. See id. On that basis, he contends, he was entitled to intervene as of right. See Sw. Ctr. for Biological Diversity v. Berg , 268 F.3d 810, 817 (9th Cir. 2001) (" Southwest Center ") (setting out the four-prong test for Federal Rule of Civil Procedure Rule 24(a) intervention as of right).

After the district court's denial of Prather's motion to intervene, the Government and Sprint reached a settlement, and the district court accordingly dismissed the case. Before turning to the merits of Prather's appeal, we consider whether this appeal is now moot.

I

The parties have not raised the mootness issue. Nonetheless we address the issue sua sponte , because, if "events change such that the appellate court can no longer grant ‘any effectual relief whatever to the prevailing party,’ any resulting opinion would be merely advisory," and the court would lack subject matter jurisdiction. Shell Offshore Inc. v. Greenpeace, Inc. , 815 F.3d 623, 628 (9th Cir. 2016) (quoting City of Erie v. Pap's A.M. , 529 U.S. 277, 287, 120 S.Ct. 1382, 146 L.Ed.2d 265 (2000) ). Here, we consider the effect of the settlement and voluntary dismissal of the case in which Prather sought to intervene.

In some situations, the entry of final judgment in a case moots a putative-intervenor's appeal from the denial of his motion to intervene. West Coast Seafood Processors Ass'n v. NRDC , 643 F.3d 701 (9th Cir. 2011), for example, held that this court could not grant the appellant "any ‘effective relief’ by allowing it to intervene" "in a case that the district court ha[d] since decided, through [an] Order on Remedy and the subsequent final judgment, from which neither party ha[d] appealed." Id. at 704. In other circumstances, however, an intervention controversy can remain live even after final judgment is entered in the underlying case. DBSI/TRI IV Ltd. Partnership v. United States , 465 F.3d 1031 (9th Cir. 2006), for instance, concluded that the appeal in that case was not moot, "because, if it were concluded on appeal that the district court had erred in denying the intervention motion, and that the applicant was indeed entitled to intervene in the litigation, then the applicant would have standing to appeal the district court's judgment." Id. at 1037 (quoting Canatella v. California , 404 F.3d 1106, 1109 n.1 (9th Cir. 2005) ).

Outside of the special putative class action context, we have not specifically addressed whether the original parties' settlement after the denial of an intervention motion invariably moots the appeal of that denial. Cf. Alaska v. Suburban Propane Gas Corp. , 123 F.3d 1317, 1320 (9th Cir. 1997) (discussing the special intervention standard for motions to intervene to appeal denial of class certification). But at least three other circuits have considered the question, and all have held that the dismissal of an underlying case following settlement does not necessarily render moot a putative-intervenor's appeal. See CVLR Performance Horses, Inc. v. Wynne , 792 F.3d 469, 475–76 (4th Cir. 2015) (settlement in civil RICO action); Purcell v. BankAtl. Fin. Corp. , 85 F.3d 1508, 1511 n.3 (11th Cir. 1996) (class action settlement); FDIC v. Jennings , 816 F.2d 1488, 1491 (10th Cir. 1987) (settlement between agency and private persons). Most recently, after considering DBSI and West Coast Seafood along with more directly relevant cases from several other circuits, the Fourth Circuit concluded:

We find more persuasive the reasoning of those courts holding that dismissal of the underlying action does not automatically moot a preexisting appeal of the denial of a motion to intervene. This is so because in many cases, the resolution of an action between the original parties is not determinative of the defendant's liability with respect to other potential plaintiffs. In these circumstances, when the motion to intervene is made while the controversy is live and the subsequent disposition of the case does not provide the relief sought by the would-be intervenors (for example, money damages, as Appellants seek here), we can provide an effective remedy on appeal and therefore have jurisdiction.

CVLR Performance Horses , 792 F.3d at 475.

We agree with the Fourth Circuit, for the reasons it gave, that the parties' settlement and dismissal of a case after the denial of a motion to intervene does not as a rule moot a putative-intervenor's appeal. We note that to hold otherwise "might well provide incentives for settlement that would run contrary to the interests of justice." Id. at 474–75 (quoting FDIC , 816 F.2d at 1491 ).

Our question, then, is whether in the particular circumstances here, the settlement and dismissal of the underlying action "make[ ] it impossible for the court to grant ‘any effectual relief whatever’ " to the putative intervenor even if we were to determine that the district court erred in denying his intervention. Church of Scientology of Cal. v. United States , 506 U.S. 9, 12, 113 S.Ct. 447, 121 L.Ed.2d 313 (1992) (quoting Mills v. Green , 159 U.S. 651, 653, 16 S.Ct. 132, 40 L.Ed. 293 (1895) ). Our conclusion is that reversing the district court's order could afford Prather a possible avenue to some remedy, so the case is not moot.

Although we do not yet consider the merits, the FCA guides our preliminary consideration of whether Prather...