US ex rel. Truong v. Northrop Corp., CV 88-967 MRP.

• Decision Date: 11 August 1989
• Docket Number: No. CV 88-967 MRP.,CV 88-967 MRP.
• Citation: 728 F. Supp. 615
• Parties: UNITED STATES, ex rel. Jean-Francois TRUONG, Curtis Dane, Plaintiffs, v. NORTHROP CORPORATION, a California corporation, Defendant.
• Court: U.S. District Court — Central District of California

728 F. Supp. 615

UNITED STATES, ex rel. Jean-Francois TRUONG, Curtis Dane, Plaintiffs, v. NORTHROP CORPORATION, a California corporation, Defendant.

No. CV 88-967 MRP.

United States District Court, C.D. California.

August 11, 1989.

PFAELZER, District Judge.

In this action, plaintiffs allege that the officers, employees and agents of Northrop Corporation's Advanced Systems Division conspired to obtain fraudulently, through the preparation of false records and statements and the collaborative omission and suppression of material facts, payments of false claims in connection with the design and manufacture of the "B-2" or "Stealth" bomber. The suit is brought under the False Claims Act ("the Act"), 31 U.S.C.A. §§ 3729 et seq. (West Supp.1988), by qui tam relators suing on behalf of the government. Northrop now moves to dismiss the action under F.R.Civ.P. 12(b)(1) on the ground that the qui tam provisions of the statute are unconstitutional under Article III, the separation of powers doctrine, and the Appointments Clause of Article II.

DISCUSSION

I. The Statute

The False Claims Act was originally enacted in 1863 and has been twice amended, first in 1943 and again in 1986. Under all versions of the Act, individuals have been authorized to "bring a civil action for a violation of the Act for the person and for the United States Government." 31 U.S. C.A. § 3730(b)(1) (West Supp.1988).

Briefly stated, the statute as now amended specifies the following procedure with respect to qui tam actions: The plaintiff must file his complaint in camera where it will remain under seal for at least 60 days to allow the government sufficient time to decide whether or not to enter the action. Id. § 3730(b)(2) (West Supp.1988). If the government decides not to join the action — as in the instant case — the action will nonetheless proceed in its behalf at the direction of the relator. Id. § 3730(b)(4)(B) (West Supp.1988). The government may, however, intervene at a later date upon a showing of "good cause". Id. § 3730(c)(3) (West Supp.1988).

If the government does intervene, it assumes primary responsibility for the prosecution, "and shall not be bound by an act of the person bringing the action." Id. § 3730(c)(1) (West Supp.1988). The relator continues, however, to be a party to the action and his participation may be limited only by order of the court. Id. §§ 3730(c)(2)(C)-(D), 3730(c)(4) (West Supp. 1988).

Whether or not the government joins in the suit, the qui tam plaintiff is entitled to a portion of the proceeds if the prosecution is successful. If the government does participate, the relator will receive no less than 15 and no more than 25 percent of the bounty. Id. § 3730(d)(1) (West Supp.1988). If the government does not join, recovery is set at 25 to 30 percent. Id. § 3730(d)(2) (West Supp.1988).

II. Standing

To have standing under Article III, a plaintiff must show actual or threatened injury that is likely to be redressed if the requested relief is granted. Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 99-100, 99 S.Ct. 1601, 1607-08, 60 L.Ed.2d 66 (1979). This injury must be concrete, Schlesinger v. Reservists Committee to Stop the War, 418 U.S. 208, 220, 94 S.Ct. 2925, 2932, 41 L.Ed.2d 706 (1974), to ensure that the litigant has a personal stake in the outcome of the litigation. Warth v. Seldin, 422 U.S. 490, 498-99, 95 S.Ct. 2197, 2204-05, 45 L.Ed.2d 343 (1975). The purpose of this requirement is to ensure "that concrete adverseness which sharpens the presentation of issues." Flast v. Cohen, 392 U.S. 83, 99, 88 S.Ct. 1942, 1952, 20 L.Ed.2d 947 (1968), citing Baker v. Carr, 369 U.S. 186, 204, 82 S.Ct. 691, 703, 7 L.Ed.2d 663 (1962). Vigorous litigation, however, "is the anticipated consequence of proceedings commenced by one who has been injured in fact; it is not a permissible substitute for the showing of injury itself." Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 486, 102 S.Ct. 752, 766, 70 L.Ed.2d 700 (1982) (emphasis added). To this end, while Congress may confer standing statutorily, it may not waive the constitutional minimum of injury in fact. Id. at 487-88 n. 24, 102 S.Ct. at 766-67 n. 24.¹

In accordance with this standard, the courts have refused to recognize the standing of private parties to seek review of the conduct of the executive branch where such individuals have failed to make a showing of personal injury. See, e.g., Allen v. Wright, 468 U.S. 737, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984) (claim that IRS regulations governing tax-exempt status of racially discriminatory schools were inadequate); Valley Forge, 454 U.S. 464, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982) (challenge to Department of Health, Education & Welfare's grant of federal land to religious entity); Schlesinger, 418 U.S. 208, 94 S.Ct. 2925, 41 L.Ed.2d 706 (1974) (challenge to status of Congress persons as officers in Armed Forces Reserve); Sierra Club v. Morton, 405 U.S. 727, 92 S.Ct. 1361, 31 L.Ed.2d 636 (1972) (challenge to Interior Secretary's approval of commercial skiing development); but see Natural Resources Defense Council, Inc., v. EPA, 507 F.2d 905, 910 (9th Cir.1974) (fact that citizen breathed the air was sufficient to give him standing to seek review of EPA approval of state implementation plan under Clean Air Act).

Underlying these decisions is the concern that the judicial branch refrain from issuing advisory opinions where the plaintiff has alleged only "abstract injury in nonobservance of the Constitution." Allen, 468 U.S. at 754, 104 S.Ct. at 3326 (quoting Schlesinger, 418 U.S. at 223 n. 13, 94 S.Ct. at 2933 n. 13). In the instant case, by contrast, the alleged injury is not abstract; the fraud which is alleged is fact specific and the damages owing to the government are readily calculable.² The court, moreover, is not called upon to interpret the Constitution. It simply must determine whether the statute has been violated, what damages the government has suffered, and the share of the award to which the relator is entitled.

The defendant does not dispute the existence of injury to the government, but contends that the absence of injury in fact to the qui tam plaintiffs denies them standing. Plaintiffs have proffered a number of arguments against the application of the injury-in-fact standard to the relator, the first of which is historical. They contend that since qui tam actions were authorized in a number of statutes enacted by the First Congress,³ it is axiomatic that the Framers did not perceive any Article III violation. Moreover, while the constitutionality of this and other qui tam statutes has never been squarely addressed by the Supreme Court, Justices Frankfurter and Harlan, who had a generally restrictive view of Article III, intimated that these statutes presented no problems of standing. See Flast v. Cohen, 392 U.S. at 120, 88 S.Ct. at 1963 (Harlan, J., dissenting); Priebe & Sons, Inc. v. United States, 332 U.S. 407, 418, 68 S.Ct. 123, 92 L.Ed. 32 (1947) (Frankfurter, J., dissenting). Additionally, various federal courts have indicated, either directly or impliedly, that the False Claims Act passes constitutional muster.⁴

The Court does not find this historical argument persuasive. With the exception of Bounty Hunters, the cases cited by Northrop were decided prior to the evolution of modern standing doctrine. Thus, they are of limited use here. More fundamentally, the fact that qui tam statutes date back to the time of the First Congress is not independent evidence of their constitutionality. Marbury v. Madison, 5 U.S. 137, 2 L.Ed. 60 (1803), for example, held § 13 of the Judiciary Act, a statute passed by the First Congress, to be unconstitutional. See also Wallace v. Jaffree, 472 U.S. 38, 100, 105 S.Ct. 2479, 2512, 86 L.Ed.2d 29 (1985) (Rehnquist, J., dissenting) (federal aid to sectarian schools viewed as unconstitutional despite fact that First Congress granted similar aid); Marsh v. Chambers, 463 U.S. 783, 814 n. 30, 103 S.Ct. 3330, 3347, 77 L.Ed.2d 1019 (1983) (Brennan, J., dissenting) (cautioning reliance on historical arguments and referring, by way of example, to First Congressional statute requiring public whipping of slaves, which is presumably unconstitutional today).

As an analogue to their historical argument, plaintiffs contend that today, as in 1863 when the False Claims Act was first enacted, the government has insufficient time and resources to prosecute fraud even when officials have been able to detect it. Thus, under these circumstances, Congress has determined that the best way to allocate its limited resources is to "deputize ready and able people who have knowledge of fraud against the government to play an active and constructive role through their counsel to bring to justice those contractors who overcharge the government." 132 Cong.Rec. H9388 (daily ed. Oct. 7, 1986) (Rep. Berman).

While the paucity of government resources is a legitimate justification for authorizing private enforcement of the False Claims Act as a policy matter, it is insufficient in and of itself to confer Article III standing on a private party. Otherwise, the government could enlist a veritable army of private deputies to enforce its rights under a variety of statutes pursuant solely to a declaration that it did not have the resources to do so itself. There is no authority under Article III for such action. The tenuousness of the historical and resource-based arguments is, however, of no practical consequence for Article III purposes in light of the very clear demonstration of injury to the government and of the relator's personal stake in the litigation.

Where, as here, the presence of injury to the government is not disputed, the application of the injury-in-fact standard to the qui tam plaintiff⁵ would be purely mechanical. Moreover, such an application would not be consistent with the underlying purpose of Article...