Opinion
Civil Action No. 1:16-cv-670 (AJT/IDD)
2019-06-12
UNITED STATES EX REL. Bernard HENNEBERGER, Relator, v. TICOM GEOMATICS, INC., Defendant.
Jason Daniel Wright, Wright Law Firm, New York, NY, Susan L. Burke, Burke PLLC, Washington, DC, Christine Nicole Roushdy, Gerard J. Mene, US Attorney's Office, Alexandria, VA, for United Stated ex rel. Bernard Henneberger, Relator. John F. O'Connor, Jr., Steptoe & Johnson LLP, Washington, DC, for Defendant.
Jason Daniel Wright, Wright Law Firm, New York, NY, Susan L. Burke, Burke PLLC, Washington, DC, Christine Nicole Roushdy, Gerard J. Mene, US Attorney's Office, Alexandria, VA, for United Stated ex rel. Bernard Henneberger, Relator.
John F. O'Connor, Jr., Steptoe & Johnson LLP, Washington, DC, for Defendant.
ORDER
Anthony J. Trenga, United States District Judge
The United States, which previously declined to intervene in this qui tam case brought pursuant to the False Claims Act, has filed the United States' Motion to Dismiss [Doc. 43] ("the Motion"), in which it seeks dismissal of this action pursuant to 31 U.S.C. § 3730(c)(2)(A) on the grounds that if allowed to continue, the action will likely place a "significant burden" on the Government by requiring it to monitor the status of the case and respond to a large number of discovery requests. See [Doc. 44 at 7–8]. The Relator objects to dismissal and the Court held a hearing on the Motion on June 7, 2019.
The crux of Relator's allegations in this action is that the Defendant, his former employer, knowingly misrepresented "the applicability and the accuracy of its geolocation technology" sold to the government, which resulted in unintended deaths. See [Doc. 1 at ¶¶ 9-12]. The United States represents that it investigated Plaintiff's claims and "determined that Relator lacks specific knowledge of exactly what representations were made, when they were made, to whom they were made, and precisely how they are false"; "is unable to identify which of these contracts, if any, are implicated by his allegations"; and that nearly all of the nineteen contracts spanning a period of fourteen years "were awarded after Relator left his employment at Ticom." [Doc. 44 at 1-2]. As a result, the Government contends that allowing this case to continue over its objection would impose "a significant burden" on the United States in a case that it has determined does not justify its intervention. Plaintiff, a relator, opposes dismissal and argues that dismissal is not warranted because (1) the parties have voluntarily agreed to stay discovery until the Court rules on Defendant Ticom Geomatics, Inc.'s motion to dismiss, and thus the Motion is "wholly premature, and should at the very least be denied without prejudice to renewal at some future point where the United States actually confronts a [discovery] request that requires expenditures of resources"; and (2) "as a practical matter, Relator will be able to prosecute this case without burdening the United States" because "Defendant, not the United States, will bear the burden of the discovery." [Doc. 51 at 5].
In light of these circumstances, the Government argues:
The prosecution of Relator's qui tam would place a significant burden on the Government not only in the continued monitoring of the litigation, but in responding to discovery requests, in the form of Touhy requests, from either party. Relator has identified at least nineteen Government contracts—from different Department of Defense contracting commands—with the United States Navy and the United States Special Operations Command. Inevitably, discovery will include requests for production of Government documents, which could include not simply the nineteen contracts themselves, but correspondence between Ticom and the Government, or communications internal to the Government regarding Ticom's performance or representations. Production of these documents would expend significant Government resources to search for, collect, review, and produce documents that may be requested by either Relator or Defendant. Further, given the FCA's requirement that any misrepresentation must be material to the Government, discovery will necessarily require oral testimony from Government witnesses, potentially calling upon witnesses from each of the nineteen contracts Relator has identified to simply determine whether a misrepresentation was made, and if so, what if any impact it had on the Government's decision making. This is a weighty burden on the Government, particularly in a case that it decided not to pursue on its own behalf after evaluating Relator's allegations in the pre-intervention phase, and given the absence of personal knowledge by the Relator regarding the nature of the contracts and the negotiations he alleges were obtained through false representations.
[Doc. 44 at 7–8 (footnotes omitted) ].
Section 3730(c)(2)(A) of the False Claims Act provides that "[t]he Government may dismiss the action notwithstanding the objections of the person initiating the action if the person has been notified by the Government of the filing of the motion and the court has provided the person with an opportunity for a hearing on the motion." The United States contends that absent some improper purpose or motive on its part, the Court has little, if any discretion, to deny the United States' request to dismiss a False Claims Act case filed by a Relator. The Relator contends that the Court does retain discretion, as evidenced by his right to a hearing, and that given the minimal burden imposed on the Government in this case, the action should proceed, notwithstanding the Government's request for dismissal, and the case should be decided on the merits.
Courts have reached somewhat different conclusions concerning whether and to what extent the statute confers discretion on a court to permit a False Claims Act instituted by a relator to proceed over the United States' objection. Compare Swift v. United States , 318 F.3d 250, 252-53 (D.C. Cir. 2003) (observing that "[n]othing in § 3730(c)(2)(A) purports to deprive the Executive Branch of its historical prerogative to decide which cases should go forward in the name of the United States" and accordingly holding that § 3730(c)(2)(A) confers on the Government "an unfettered right to dismiss a [qui tam ] action") with U.S. ex rel. Sequoia Orange Co. v. Baird-Neece Packing Corp. , 151 F.3d 1139, 1145 (9th Cir. 1998) (holding that the Government must show "identification of a valid government purpose" and "a rational relation between dismissal and accomplishment of the purpose" to obtain dismissal when a relator objects (internal quotation marks omitted)). Neither the Supreme Court nor the Fourth Circuit Court of Appeals has ruled on this issue.
The claims asserted by a relator are the claims of the United States; and the Court finds itself predominantly aligned with the views of the D.C. Circuit in Swift . The Government's entitlement to dismiss a False Claims Act case over the objection of a relator is clear and unambiguous; and the reference to a hearing must be construed consistently with that entitlement and not in a way that materially abrogates its right of control over the claim. See Swift , 318 F.3d at 253 (concluding, in light of § 3730(c)(2)(A)'s clear language, that "the function of a hearing when the relator requests one is simply to give the relator a formal opportunity to convince the government not to end the case"). The Ninth Circuit's position that a "rational relation" standard applies is not inconsistent with this construction since a court would always have the authority to prevent a perversion of the law through a fraudulent, corrupt, or improper purpose.
The potential cost to the Government in monitoring and responding to discovery requests, particularly when the Government believes that a relator's case is unlikely to succeed, is clearly a legitimate purpose for seeking dismissal, even where, as here, discovery has been voluntarily stayed. The False Claims Act places the burden on the Plaintiff to prove that the Defendant's alleged misrepresentation were material in light of the Government's intended use of the technology and that Government relied on Defendant's alleged false representations in deciding to pay the Defendant. See 31 U.S.C. § 3729 ; U.S. ex rel. Searle v. DRS Servs., Inc. , 2015 WL 6691973, at *7 (E.D. Va. Nov. 2, 2015), aff'd sub nom. , United States ex rel. Searle v. DRS C3 & Aviation Co. , 680 F. App'x 163 (4th Cir. 2017). It is unclear how Plaintiff would be able to make the required showings without substantial discovery from the agency officials involved in the nineteen contracts at issue. Even discovery sought exclusively from Defendant may well require Government involvement under applicable government regulations pertaining to the nature of the procurement at issue. Even if the Government would not incur any expenses related to discovery, it would surely devote resources in monitoring the case. See United States ex rel. Stovall v. Webster Univ. , 2018 WL 3756888, at *3 (D.S.C. Aug. 8, 2018) ("[The United States] asserts that dismissal will further its interest in preserving scarce resources by avoiding the time and expense necessary to monitor this action. Relator argues that the anticipated financial gain outweighs the anticipated time and money to be expended on this case; however, [the Govemment]'s interest in allocating its resources as it sees fit has been validated on several occasions."). For the above reasons, the Court concludes that the United States has properly moved for dismissal under Section 3730(c)(2)(A) of the False Claims Act and is entitled to have the action dismissed.
See, e.g., Sequoia Orange , 151 F.3d at 1146 (recognizing that "internal staff costs" is a legitimate consideration in deciding to seek dismissal of a qui tam action); United States ex rel. Davis v. Hennepin Cty. , 2019 WL 608848, at *7 (D. Minn. Feb. 13, 2019) ("The Government's proffered reason for dismissal is that this case is likely to cause "a great deal of burden and expense for the United States, with no resulting recovery." There is certainly precedent for this cost-benefit analysis being a legitimate governmental reason and that dismissal is rationally related to that objective." (citation omitted)); U.S. ex rel. Stovall v. Webster Univ. , 2018 WL 3756888, at *3 (D.S.C. Aug. 8, 2018) (acknowledging that the Government has a legitimate "interest in preserving scarce resources by avoiding the time and expense necessary to monitor this action" and rejecting relator's argument that "the anticipated financial gain outweighs the anticipated time and money to be expended on this case"); United States ex rel. Maldonado v. Ball Homes, LLC , 2018 WL 3213614, at *3 (E.D. Ky. June 29, 2018) (finding that "the government has an obvious interest in monitoring an action brought in its name"); Nasuti ex rel. United States v. Savage Farms, Inc. , 2014 WL 1327015, at * 11 (D. Mass. March 27, 2014) (same); U.S. ex rel. Nicholson v. Spigelman , 2011 WL 2683161, at *2 (N.D. Ill. July 8, 2011) (observing that the Government has a legitimate interest in minimizing the cost of responding to discovery requests and other associated costs and that dismissal of an action furthers that interest).
Accordingly, it is hereby
ORDERED that the United States' Motion to Dismiss [Doc. 43] be, and the same hereby is, GRANTED; and this action is DISMISSED pursuant to 31 U.S.C. § 3730(c)(2)(A).