USA. v. Alcan Electrical

• Decision Date: 07 October 1999
• Docket Number: REDI-ELECTRIC,No. 98-35194,98-35194
• Citation: 197 F.3d 1014
• Parties: (9th Cir. 1999) UNITED STATES OF AMERICA, Plaintiff, and RANDY HARSHMAN, Plaintiff-Appellant, v. ALCAN ELECTRICAL AND ENGINEERING, INC.; ARCTIC ELECTRIC, INC.; BARANOF ELECTRICAL CO., INC.; BRIGHT ELECTRIC; CITY ELECTRIC, INC.; COASTLINE ELECTRICAL; COCHRAN, INC.; DIAMOND ELECTRIC COMPANY, INC.; ED'S ELECTRIC, INC.; ELECTRIC, INC.; FULLFORD ELECTRIC, INC.; GRASLE AND ASSOCIATES, INC.; HOT WIRE ELECTRIC, INC.; INTERIOR ELECTRIC, INC.; ISLAND ELECTRIC, INC.; MARSHALL'S ELECTRIC; NORCON, INC.;; SIGNAL COMMUNICATIONS, INC.; SKYLINE ELECTRIC; STAR ELECTRIC, INC.; 3-WAY ELECTRIC OF ALASKA, INC., Defendants-Appellees
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1014

197 F.3d 1014 (9th Cir. 1999)

UNITED STATES OF AMERICA, Plaintiff, and RANDY HARSHMAN, Plaintiff-Appellant, v. ALCAN ELECTRICAL AND ENGINEERING, INC.; ARCTIC ELECTRIC, INC.; BARANOF ELECTRICAL CO., INC.; BRIGHT ELECTRIC; CITY ELECTRIC, INC.; COASTLINE ELECTRICAL; COCHRAN, INC.; DIAMOND ELECTRIC COMPANY, INC.; ED'S ELECTRIC, INC.; ELECTRIC, INC.; FULLFORD ELECTRIC, INC.; GRASLE AND ASSOCIATES, INC.; HOT WIRE ELECTRIC, INC.; INTERIOR ELECTRIC, INC.; ISLAND ELECTRIC, INC.; MARSHALL'S ELECTRIC; NORCON, INC.; REDI-ELECTRIC; SIGNAL COMMUNICATIONS, INC.; SKYLINE ELECTRIC; STAR ELECTRIC, INC.; 3-WAY ELECTRIC OF ALASKA, INC., Defendants-Appellees.

No. 98-35194

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted August 4, 1999

Filed October 7, 1999

[Copyrighted Material Omitted]

Charles S. Holden, San Francisco, California, for the plaintiff Appellant.

Kevin M. Morford, Jensen, Garretson, Verrett & Morford, Anchorage, Alaska, for defendants-appellees 3-Way Electric, Inc., Alcan Electrical & Engineering, Inc., Arctic Electric, Inc., Baranof Electrical Co., Inc., Bright Services (dba Bright Electric), City Electric, Inc., Cochran Electric, Inc., Diamond Electrical Company, Ed's Electric, Inc., Electric, Inc, Fullford Electric, Inc., Grasle & Associates, Inc., Hot Wire Electric, Inc., Signal Communications, Skyline Electric, Inc., Star Electric, Inc., and Redi Electric, Inc. Rosanne M. Jacobsen, Eide & Miller, Anchorage, Alaska, for defendant-appellee Norcon, Inc.

Appeal from the United States District Court for the District of Alaska

Before: Procter Hug, Jr., Chief Judge, Stephen S. Trott, and A. Wallace Tashima, Circuit Judges.

OPINION

TASHIMA, Circuit Judge:

The relator Randy Harshman appeals the district court's dismissal of his qui tam action against 22 electrical contractors doing business in Alaska ("Defendants"), alleging that they violated the False Claims Act ("FCA"), 31 U.S.C. SS 3729-33. The district court dismissed the action for lack of subject matter jurisdiction under the "public disclosure bar" of 31 U.S.C. S 3730(e)(4)(A), because Harshman had disclosed these allegations in a previously proposed complaint lodged with the district court. We have jurisdiction pursuant to 28 U.S.C. S 1291 and affirm.

I. Background

Harshman is a member of Local 1547 of the International Brotherhood of Electrical Workers ("IBEW") in Alaska. On March 12, 1996, Harshman filed an application with the district court for leave to file a suit against union officials for, inter alia, misusing union funds and retaliating against Harshman for exercising his free speech rights. He attached a proposed complaint ("Brooks complaint") to his application. That complaint alleged:

(8) Local 1547 has conspired with local contractors, through its Work Recovery Program, to deduct certain sums from the Union members' paychecks, (2.5% of gross wages), who were working on State and Federally funded projects, and then remit these funds back to the contractor in violation of Federal Law, specifically the Davis-Bacon Act and the Copeland Act, and in violation of AS 36.05.010. Plaintiff is informed and believes that there is no accounting of these funds. These illegal deductions from union members' paychecks, from 1988 to 1992 total, according to union documents, $1,700,273.00. Said Work Recovery Program is still in effect.

Brooks Complaint at 5-6. The complaint was lodged, but not filed, with the district court on March 12, 1996. It was not under seal. The district court found that the Brooks complaint was therefore available to the public upon request.

On April 2, 1996, Harshman filed this qui tam action under seal. He alleges that Defendants violated the FCA by submitting false statements to the United States that they were paying prevailing wage rates to their employees, when in actuality they were deducting 2.5 percent from gross wages. Defendants transferred these withheld funds to the IBEW. The IBEW then placed the money in a Work Recovery Fund, which it used to pay Defendants, thereby lowering Defendants' labor costs. Harshman claims that this scheme violates the Copeland Act, 18 U.S.C. S 874,¹ the Davis-Bacon Act, 40 U.S.C. SS 276a-276a-7,² and federal regulations. He contends that Defendants' certifications to the federal government that they had complied with these laws constituted false claims under 31 U.S.C. S 3729 because the payments for these jobs were derived in part from federal funds.³

Defendants allege that they withheld the funds for the "Electrical Quality Improvement Fund," which is required by a collective bargaining agreement. The collective bargaining agreement is an "Inside Agreement," which means that it generally applies only to electrical work done inside structures. Harshman did "outside" work and was not covered by this agreement. Defendants further assert that these sorts of job targeting programs are common throughout the United States.

Eighteen of the Defendants brought a motion to dismiss thecase for lack of subject matter jurisdiction, contending that Harshman had publicly disclosed the allegations of his FCA claim in the Brooks complaint and that Harshman was not an "original source" under 31 U.S.C. S 3730(e)(4)(A). The district court granted the motion to dismiss and subsequently entered a judgment of dismissal as to all Defendants.⁴ Harshman filed a timely notice of appeal.

II. Standards of Review

The district court's decision to dismiss Harshman's suit for lack of jurisdiction is reviewed de novo. See United States ex rel. Aflatooni v. Kitsap Physicians Servs., 163 F.3d 516, 520 (9th Cir. 1999). "The district court's findings of fact relevant to its determination of subject matter jurisdiction are reviewed for clear error." United States ex rel. Biddle v. Board of Trustees of the Leland Stanford, Jr. Univ., 161 F.3d 533, 535 (9th Cir. 1998), cert. denied, 119 S. Ct. 1457 (1999). The question of "[w]hether a particular document triggers the statutory bar" is a mixed question of law and fact reviewed de novo. United States ex rel. Lindenthal v. General Dynamics Corp. , 61 F.3d 1402, 1409 n.9 (9th Cir. 1995).

III. Discussion

Jurisdiction over qui tam actions is limited by the FCA:

[n]o court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation, or from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.

31 U.S.C. S 3730(e)(4)(A). An "original source" is defined as "an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government before filing an action under this section which is based on the information." 31 U.S.C. S 3730(e)(4)(B).

Harshman, as the qui tam plaintiff, bears the burden of establishing subject matter jurisdiction by a preponderance of the evidence. See Biddle, 161 F.3d at 540. The FCA sets up a two-part test. First, we must determine whether the district court correctly concluded that the Brooks complaint constituted a "public disclosure" of the "allegations or transactions" upon which Harshman's FCA suit is based. 31 U.S.C. S 3730(e)(4)(A). Only if the answer to the first question is in the affirmative will we proceed to the second inquiry, whether Harshman is an "original source" under S 3730(e)(4)(B).

A. The Public Disclosure Provision

Harshman raises several arguments as to why his inclusion of the allegations in the Brooks complaint did not constitute public disclosure. We address these arguments in turn.

1. The Fact that the Brooks Complaint Did Not Identify Defendants by Name

Harshman first argues that the allegations in the Brooks complaint do not constitute public disclosure because the complaint did not identify Defendants. The Brooks complaint states:

Local 1547 has conspired with local contractors, through its Work Recovery Program, to deduct certain sums from the Union members' paychecks, (2.5% of gross wages), who were working on State and Federally funded projects, and then remit these funds back to the contractor in violation of FederalLaw . . . .

Brooks Complaint at 5-6. Only one of the current Defendants, City Electric, Inc., was a defendant in the Brooks case. We find Harshman's argument unpersuasive.

In Aflatooni, we were faced with a similar issue. Aflatooni brought a qui tam action raising two different sets of allegations. See Aflatooni, 163 F.3d at 519 n.6. Before filing the action, Aflatooni disclosed some of his allegations against certain defendants ("NDI Defendants") to the news media, but he did not disclose any of the allegations against other defendants ("PAKC Defendants"). See id. at 521-22. The issue for this Court was "whether the disclosure of the allegations against the NDI Defendants should trigger the public disclosure bar with respect to the PAKC Defendants." Id. at 522. The PAKC Defendants argued that because Aflatooni alleged a large conspiracy in his complaint, the allegations he disclosed to the media rendered his claims publicly disclosed as to all of the defendants. See id. We rejected this argument because the allegations against the two groups of defendants were distinct. See id. at 522-23. Implicit in this analysis is the proposition that Aflatooni's disclosures could have constituted public disclosure with respect to all of the defendants despite the failure specifically to name the PAKC Defendants, if the disclosures had encompassed his allegations against them.

We also find other circuits' opinions, addressing facts similar to the case at bar, persuasive. In United States ex rel. Fine v. Sandia Corp., 70 F.3d 568 (10th Cir. 1995) ("Sandia"), Fine brought a qui...