US ex rel. Burch v. Piqua Engineering, Inc.

• Decision Date: 18 June 1992
• Docket Number: No. C-1-90-745.,C-1-90-745.
• Citation: 803 F. Supp. 115
• Parties: UNITED STATES, ex rel. Barbara BURCH, et al., Plaintiffs, v. PIQUA ENGINEERING, INC., Defendant.
• Court: U.S. District Court — Southern District of Ohio

803 F. Supp. 115

UNITED STATES, ex rel. Barbara BURCH, et al., Plaintiffs, v. PIQUA ENGINEERING, INC., Defendant.

No. C-1-90-745.

United States District Court, S.D. Ohio, W.D.

June 18, 1992.

Ann Louise Lugbill, James Burdette Helmer, Jr., Helmer, Lugbill & Whitman Co., Cincinnati, Ohio, for plaintiffs Barbara K. Burch, Joan R. Harmon and Lowell A. Kissinger.

John William Beatty, Dinsmore & Shohl, Cincinnati, Ohio, for defendant Piqua Engineering.

Michael Davidson, Senate Legal Counsel, Washington, D.C., for amicus curiae U.S. Senate.

ORDER DENYING DEFENDANTS' MOTION TO DISMISS

SPIEGEL, District Judge.

This matter is before the Court on the Defendant's motion to dismiss (doc. 19), the memorandum of amicus curiae United States Senate in support of the constitutionality of the False Claims Act (doc. 22), the Plaintiffs' response (doc. 23), and the Defendant's reply (doc. 25).¹

BACKGROUND

Plaintiffs Barbara K. Burch, Joan R. Harmon, and Bell A. Kissinger were employed by Defendant Piqua Engineering, Inc. ("Piqua" or the "Company") in Piqua, Ohio. Piqua is a government contractor which manufactures missile detonators. The Plaintiffs allege that Piqua was deviating from contractual requirements. Specifically, the Plaintiffs claim that Piqua did not use the contractually prescribed testing procedures and quality standards on detonators and detonator parts supplied to the government. Furthermore, the Plaintiffs allege that Piqua falsely certified that it had met the requisite testing and quality standards.

Upon learning of Piqua's alleged wrongdoing, the Plaintiffs contend that they alerted both the Company and the government. The Plaintiffs finally allege that as a result of notifying the government, Piqua discriminated against the Plaintiffs by firing Ms. Burch and Mr. Kissinger and laying off Ms. Harmon. The Defendant denies the Plaintiffs' allegations.

At this point, however, we need not become to deeply immersed in the facts. The sole issue before this Court is whether the False Claims Act, 31 U.S.C. ž 3729 et seq. (1992) (hereinafter "FCA" or "qui tam" provisions) is constitutional.

DISCUSSION

Overview

The laws of Congress are presumed to be constitutional. See e.g., United States ex rel. Givler v. Smith, 775 F.Supp. 172, 175 (E.D.Pa.1991) (citing Fullilove v. Klutznick, 448 U.S. 448, 472, 100 S.Ct. 2758, 2771, 65 L.Ed.2d 902 (1980)). Nevertheless, the will of the majority may not trump the rights established by the Constitution. Marbury v. Madison, 5 U.S. (1 Cranch) 137, 2 L.Ed. 60 (1803). The power of the federal courts to engage in judicial review is, for all practical purposes, unquestioned. See generally, Robert Bork, The Tempting of America (1990) (discussing the methods by which courts should engage in judicial review); Laurence H. Tribe, American Constitutional Law (2d ed. 1988) (surveying Constitutional law and discussing judicial review).

The focus of this Court's inquiry must be on whether the FCA violates any provision of the Constitution itself. The Plaintiffs make elaborate arguments concerning the age and historical importance of qui tam statutes. The longevity of a statute, however, is not determinative of its Constitutionality. See generally, United States ex rel. Truong v. Northrop, 728 F.Supp. 615, 618 (C.D.Cal.1989) (rejecting historical analysis in considering the constitutional adequacy of standing in qui tam actions).² Rather, it demonstrates that the will of the majority, exercised through Congress, has decided not to repeal such a law. Furthermore, the fact that the qui tam provisions may be successful in deterring fraud upon the government is also not at issue. See Immigration and Naturalization Service v. Chadha, 462 U.S. 919, 103 S.Ct. 2764, 77 L.Ed.2d 317 (1983) (the practical problems imposed by invalidating the legislative veto are not determinative in considering its constitutionality). Thus, this Court's analysis is not driven by its approval or disapproval of the FCA, but rather by the Constitution itself.

We note that numerous district courts have upheld the constitutionality of the FCA, but that no Circuit Court of Appeals has yet ruled on this issue. See e.g., United States ex rel. Kreindler & Kreindler v. United Technologies Corp., 777 F.Supp. 195 (N.D.N.Y.1991); Givler, 775 F.Supp. 172; Truong, 728 F.Supp. 615; United States ex rel. Newsham v. Lockheed Missiles & Space Co., 722 F.Supp. 607 (N.D.Cal.1989); United States ex rel. Stillwell v. Hughes Helicopters, Inc., 714 F.Supp. 1084 (C.D.Cal.1989). Despite this adverse precedent for their position,³ the Defendants make several arguments that the FCA is unconstitutional: (1) no case or controversy exists in FCA actions; (2) the qui tam provisions violate the Appointments Clause; (3) the FCA violates the separation of powers doctrine. We shall examine these contentions in turn, but first we will briefly examine the provisions of the FCA.

The False Claims Act

Under the FCA, any person who knowingly submits a false claim to the government is liable to the United States for a civil penalty and damages. 31 U.S.C. ž 3729.⁴ The Act provides that the Attorney General and Department of Justice may enforce the Act. The Act, however, also allows enforcement by private individuals on behalf of the United States. Id. at ž 3730(b)(1). Congress designed the FCA to "... encourage private citizens to help the executive branch deter and redress violations of federal law." Evan Caminker, The Constitutionality of Qui Tam Actions, 99 Yale L.J. 341, 344 (1989).

The Act mandates that complaints are filed in camera and remain under seal for at least 60 days. Id. at 3730(b)(2). During this time, the United States government must determine whether to intervene and take primary responsibility for the suit or to decline in its right to intervene, and thus allow a private litigant to continue in the suit. Id.

In the matter before the Court, the government declined to intervene and the matter was removed from seal. The qui tam Plaintiffs, Ms. Burch and others, have continued to prosecute the suit that is now before the Court.

Case or Controversy

The Defendants first contend that the FCA is unconstitutional because in qui tam actions, no case or controversy exists. The power of the federal courts is confined to the adjudication of actual "cases" and "controversies." U.S. Constitution, Art. III. In order to satisfy the case and controversy requirement of Article III, a plaintiff must have standing to sue. Allen v. Wright, 468 U.S. 737, 750, 104 S.Ct. 3315, 3324, 82 L.Ed.2d 556 (1984). The standing requirement properly limits the role of the federal courts. Id. To have standing under Article III, a plaintiff must show actual or threatened injury. Gladstone, Realtors v. Bellwood, 441 U.S. 91, 99, 99 S.Ct. 1601, 1607, 60 L.Ed.2d 66 (1979).

The Defendants argue that only the United States has suffered an actual or threatened injury according to the qui tam Plaintiffs' Complaint. Therefore, the Defendants argue that the qui tam Plaintiffs do not have standing because they do not possess any sort of real or threatened injury.

Several courts have addressed the issue of standing under the FCA. Standing has been found to exist because of the potential harm that may be suffered as a result of the relator's interest in the statutory bounty. Givler, 775 F.Supp. at 180; Stillwell, 714 F.Supp. at 1097-98. We, however, believe that this approach "puts the cart before the horse," so to speak. Any person bringing a suit at law has the hope of receiving money, either by settlement or by judgment. Thus, the Supreme Court has concluded that "... the essence of standing `is not a question of motivation but of possession of the requisite ... interest that is, or is threatened to be, injured by the ... allegedly illegal conduct'" of the defendant. Schlesinger v. Reservists Comm. to Stop the War, 418 U.S. 208, 225-226, 94 S.Ct. 2925, 2934-35, 41 L.Ed.2d 706 (1974) (quoting Doremus v. Board of Education, 342 U.S. 429, 435, 72 S.Ct. 394, 397, 96 L.Ed. 475 (1952)); but see Village of Bellwood v. Dwivedi, 895 F.2d 1521, 1526 (7th Cir.1990) (standing may be created by Congressional statutes creating bounty for the plaintiff). In sum, Congress may expand federal court jurisdiction by enacting statutes which create legal rights; however, Congressional action does not eliminate the Constitutional requirement that a case or controversy must exist. Warth v. Seldin, 422 U.S. 490, 500, 95 S.Ct. 2197, 2205, 45 L.Ed.2d 343 (1975); Gladstone, 441 U.S. at 100, 99 S.Ct. at 1608 (1979); Thomas R. Lee, Comment, Standing of Qui Tam Relators, 57 U.Chi.L.Rev. 543, 546 (1990) (a statute cannot abrogate Article III requirements, citing Gladstone, 441 U.S. at 100, 99 S.Ct. at 1608.)

Rather than basing its decision upon a theory of statutory bounty, this Court finds that the Plaintiffs have standing for another reason. The Plaintiffs in a qui tam action have standing based upon the potential ramifications to their employment status by initiating an action under the FCA. The case before the Court serves as an apt example. After bringing this qui tam action, the Plaintiffs aver that Piqua fired two of the Plaintiffs and laid off the third. Thus, the Plaintiffs allegedly have suffered an actual injury ÔÇö namely, the loss of their job. As a result, the Plaintiffs have standing. However, even if the Plaintiffs were still working at Piqua, standing would exist because of the risk of injury to the Plaintiffs in the future. Gladstone, 441 U.S. at 99, 99 S.Ct. at 1607 (plaintiff has standing if they can show threatened injury). Qui tam plaintiffs who have not been fired might lose their job after the conclusion of their suit or fail to be promoted because they had earlier initiated an action against their employer under the FCA.

The Stillwell court considered the same issues. In upholding the constitutionality of the FCA, the court noted that

public disclosure of the filing of the

...