Opinion
13-cv-03835-JD 16-cv-01106-JD 16- cv-01107-JD 14- cv-01509-JD
06-28-2022
UNITED STATES ex rel. JAHR et al., Plaintiffs, v. TETRA TECH EC, INC. et al., Defendants. UNITED STATES ex rel. SMITH, Plaintiff, v. TETRA TECH EC, INC. et al., Defendants. UNITED STATES ex rel. WADSWORTH et al., Plaintiffs, v. TETRA TECH EC, INC. et al., Defendants. UNITED STATES ex rel. MCLAUGHLIN, Plaintiff, v. SHAW ENVIRONMENTAL & INFRASTRUCTURE, INC. et al., Defendants.
ORDER RE MOTIONS TO DISMISS RELATORS' COMPLAINTS
JAMES DONATO, United States District Judge.
INTRODUCTION
These qui tam cases under the False Claims Act (FCA), 31 U.S.C. §§ 3729-3733, are part of the sweeping litigation before the Court that challenges work by government contractors to remediate radiation contamination in the soil at the former Hunters Point Naval Shipyard in San Francisco. The Hunters Point cases are the functional equivalent of an intra-district MDL proceeding, in that the Court has related multiple complex lawsuits within the District to be managed much as an MDL case would be handled.
This order resolves motions to dismiss the relators' complaints. Dkt. Nos. 171, 176, 178, 200. The parties' familiarity with the record, including the Court's many prior orders on other aspects of the litigation, is assumed.
Unless otherwise noted, all docket number references are to the ECF docket in the Jahr action, Case No. 13-cv-03835-JD.
The rather convoluted procedural history of the FCA cases is our starting point. On August 19, 2013, relators Arthur R. Jahr, III, Elbert G. Bowers, Susan V. Andrews, and Archie R. Jackson (Jahr relators) filed the first FCA qui tam complaint under seal, naming as defendants Tetra Tech EC, Inc., Tetra Tech, Inc., New World Environmental, Inc. dba New World Technology, and Aleut World Solutions. Dkt. No. 1. On April 1, 2014, relator Kevin McLaughlin filed a complaint, naming Shaw Environmental & Infrastructure, Inc. and Chicago Bridge & Iron Company N.V. McLaughlin Dkt. No. 1. Relator Anthony Smith filed a complaint on March 4, 2016, against Tetra Tech EC, Inc., Radiological Survey & Remediation Services, LLC (RSRS), the Shaw Group, Shaw Environmental and Infrastructure, Inc., and Chicago Bridge & Iron, Inc. Smith Dkt. No. 1. Relators Donald K. Wadsworth and Robert McLean (Wadsworth relators) filed a complaint on the same day, naming Tetra Tech EC, Inc., RSRS, and IO Environmental & Infrastructure Incorporated (IO Environmental). Wadsworth Dkt. No. 1.
After several years of investigation, during which the complaints remained sealed and inactive, the United States filed on January 14, 2019, the same complaint-in-intervention in the three cases filed by the Jahr relators, Smith, and the Wadsworth relators. See Dkt. No. 28; Smith Dkt. No. 23; Wadsworth Dkt. No. 23. In McLaughlin, the government declined intervention, and the Court unsealed the case on July 1, 2019. McLaughlin Dkt. No. 30.
On July 15, 2019, the United States filed a first amended complaint alleging FCA claims against Tetra Tech EC, Inc. only. Dkt. No. 82. This is the operative complaint-in-intervention in Jahr, Smith, and Wadsworth. On February 27, 2020, the Jahr, Smith, and Wadsworth relators filed in Jahr a combined second amended complaint (CSAC), which is the operative complaint for these relators. Dkt. No. 148. The allegations and claims by the Jahr relators are the same as those made by the United States in the complaint-in-intervention. See id. ¶ 22. The Smith and Wadsworth relators made allegations that they say were not encompassed by the United States' complaint. See id. ¶¶ 23-97. On February 27, 2020, relator McLaughlin filed a third amended complaint (TAC), which is his operative complaint. McLaughlin Dkt. No. 61.
Defendants fired a cannonade of attacks on the relators' complaints. Defendants Tetra Tech EC, Inc., Tetra Tech, Inc., IO Environmental, RSRS, Daryl DeLong, and Brian Henderson jointly ask to dismiss all relators' complaints based on various statutory bars in the False Claims Act. Dkt. No. 171. The Shaw defendants (Shaw Environmental & Infrastructure, Chicago Bridge & Iron Co., Aptim Corp., Aptim Federal Services, and Aptim Environmental & Infrastructure) joined this motion. Dkt. No. 201. Defendants RSRS, DeLong, and Henderson ask to dismiss the Jahr CSAC and the TAC in McLaughlin. Dkt. No. 176. IO Environmental filed a motion to dismiss the McLaughlin TAC, and relator Wadsworth's allegations in the Jahr CSAC. Dkt. No. 178. The Shaw defendants also ask to dismiss McLaughlin's TAC, and relator Smith's allegations in the Jahr CSAC. Dkt. No. 200.
DISCUSSION
I. STATUTORY BACKGROUND
The Court has extensively analyzed the False Claims Act and its qui tam provisions in other cases. See Silbersher v. Valeant Pharmaceuticals Int'l, Inc., 445 F.Supp.3d 393, 400-02 (N.D. Cal. 2020). “The FCA, which Congress originally enacted in 1863, is the government's ‘primary litigative tool for combatting fraud' against the federal government.” United States ex rel. Kelly v. Boeing Co., 9 F.3d 743, 745 (9th Cir. 1993). The statute imposes civil liability on any person who “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval” by the United States government. 31 U.S.C. § 3729(a)(1)(A). The qui tam provisions of the FCA permit a private individual, as a “relator,” to bring an action alleging an FCA violation “in the name of the Government.” Kelly, 9 F.3d at 745-46 (quoting 31 U.S.C. § 3730(b)(1)).
“Qui tam is short for the Latin phrase qui tam pro domino rege quam pro se ipso in hac parte sequitur, which means ‘who pursues this action on our Lord the King's behalf as well as his own.'” Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765, 768 n.1 (2000).
Since its enactment over 150 years ago, the FCA has gone through a number of significant amendments. The three statutory bars at issue here -- (1) the first-to-file bar (31 U.S.C. § 3730(b)(5)); (2) the government action bar (31 U.S.C. § 3730(e)(3)); and (3) the public disclosure bar (31 U.S.C. § 3730(e)(4)(A)) -- were added by the 1986 amendments, which sought “to promote incentives for whistle-blowing insiders and prevent opportunistic successive plaintiffs.” United States ex rel. Lujan v. Hughes Aircraft Co., 243 F.3d 1181, 1187 (9th Cir. 2001); see also Silbersher, 445 F.Supp.3d at 401 (“the 1986 amendments were intended to encourage more private enforcement lawsuits,” and “[a]t the same time, Congress sought to ‘bar a subset of those suits that it deemed unmeritorious or downright harmful.'”) (citations omitted; emphasis in original). While there is no question that Congress added these bars “in an effort to strike a balance between encouraging private persons to root out fraud and stifling parasitic lawsuits,” courts have wrestled with the 1986 amendments because “Congress was never completely clear about what kind of ‘parasitic' suits it was attempting to avoid.” Graham County Soil and Water Conservation District v. United States ex rel. Wilson, 559 U.S. 280, 295 & 296 n.15 (2010) (quotations and citation omitted).
The public disclosure bar was amended again in 2010. See Silbersher, 445 F.Supp.3d at 40102. These cases were filed after those amendments, and there is no suggestion by any party that the pre-2010 version of the statute applies.
II. INTERVENTION AND THE FCA
Before determining how the statutory bars might apply here, there is a question of whether the relators in Jahr, Smith, and Wadsworth can proceed at all under the FCA. Defendants contend that “[o]nce the United States intervenes in an FCA case, nothing in the Act permits a relator to continue separately prosecuting an FCA claim in that same case.” Dkt. No. 171 at 16. In effect, defendants say that once the government takes the field, all other players are excluded.
The point is not well taken. Defendants do not cite an express provision of the FCA for their position, but suggest that it emanates as an abstract but perceptible principle from two indirect sources: (1) Section 3730(b)(4)(A), which states that if the United States elects to intervene, it “shall proceed with the action, in which case the action shall be conducted by the Government”; and (2) Section 3730(c)(1), which states that “[i]f the Government proceeds with the action, it shall have the primary responsibility for prosecuting the action, and shall not be bound by an act of the person bringing the action.” See Dkt. No. 171 at 16.
These portions of the FCA do not carry the load that defendants posit. Leaving aside the question of whether divining emanations is a sound approach to statutory construction, which is doubtful, nothing in the text of the provisions necessarily excludes a relator from a case after government intervention. The government may have “primary” responsibility for the litigation, but that does not mean “exclusive” responsibility. Defendants also overlook the fact that another provision in the FCA expressly contemplates that relators may litigate FCA claims in intervened cases. Section 3730(c)(1) plainly states that in cases where the government has elected to “proceed[] with the action,” the “person bringing the action . . . shall have the right to continue as a party to the action,” subject to certain limitations, such as the government's right to seek an order “limiting the participation by the [relator] in the litigation” upon a “showing . . . that unrestricted participation . . . by the person initiating the action would interfere with or unduly delay the Government's prosecution of the case, or would be repetitious, irrelevant, or for purposes of harassment.” 31 U.S.C. § 3730(c)(2)(C).
Overall, the plain language of the FCA closes the door to defendants' theory. For this reason, the Court concludes, as many other courts have concluded, that the FCA does not automatically bar relators from the litigation after the government intervenes. See, e.g., United States ex rel. Landis v. Tailwind Sports Corp., 51 F.Supp.3d 9, 28 (D.D.C. 2014) (“Nothing in the text of section 3730 indicates that a relator no longer has standing following intervention by the Attorney General.”); United States ex rel. Dresser v. Qualium Corp., No. 5:12-cv-01745-BLF, 2016 WL 3880763, at *10 (N.D. Cal. Jul. 18, 2016) (“Because the United States has partially intervened, its Amended Complaint is the operative complaint for the intervened claims,” and “[t]he allegations in the Second Amended Complaint are operative only as to the claims that Dresser is pursuing on her own”). The Supreme Court has also said as much in Rockwell International Corp. v. United States, 549 U.S. 457 (2007). The United States intervened, after which the “Government and [relator] filed a joint amended complaint,” and “both [the relator's] counsel and the Government's counsel” presented closing arguments to the jury at trial. Id. at 464-66. It also bears notice that the government here filed a statement expressing the view that “relators have the right to litigate those causes of action as to which the United States did not intervene.” Dkt. No. 245 at 10.
Consequently, dismissal is denied on the ground that “the Jahr, Smith, and Wadsworth Relators are required to cede prosecution of the entire action to the United States.” Dkt. No. 171 at 16. Because this conclusion does not involve a controlling question of law over which there is a substantial ground for a difference of judicial opinion, and an immediate appeal would unduly delay the fair and efficient management of this intra-district MDL, defendants' request to certify an interlocutory appeal is denied. See 28 U.S.C. § 1292(b); James v. Price Stern Sloan, Inc., 283 F.3d 1064, 1067 n.6 (9th Cir. 2002) (“Section 1292(b) is a departure from the normal rule that only final judgments are appealable, and therefore must be construed narrowly.”).
III. THE COURT'S JUNE 14, 2019 ORDER
Defendants' suggestion that the Jahr CSAC should be dismissed because it “defied this Court's June 14, 2019 order” is also denied. Dkt. No. 171 at 4. The Court's minute entry stated that “[t]he relators' amended complaint should focus on those allegations that are not related to Hunters Point as to which the relators wish to proceed. For the allegations related to Hunters Point, the United States will have the primary responsibility for prosecuting the action. 31 U.S.C. § 3730(c)(1).” Dkt. No. 75 at 2. The Court did not “order” the relators “to drop” any allegations relating to Hunters Point, Dkt. No. 171 at 4, and a request for dismissal with prejudice on the basis of this order is an overreach by defendants.
IV. GOVERNMENT ACTION BAR
The FCA states: “In no event may a person bring [a qui tam action under 31 U.S.C. § 3730(b)] which is based upon allegations or transactions which are the subject of a civil suit or an administrative civil money penalty proceeding in which the Government is already a party.” 31 U.S.C. § 3730(e)(3). Defendants say this “government action bar” forecloses the “claims regarding Hunters Point in the Jahr Combined Complaint,” and relator McLaughlin's “claims against defendants for FCA violations at Hunters Point,” because they are “based on the same allegations and transactions at issue in the U.S. Complaint.” Dkt. No. 171 at 4-7.
Case law on Section 3730(e)(3) is sparse, and the issue appears to be rarely disputed. The First Circuit has concluded that Section 3730(e)(3) is “ambiguous” and should be applied “with caution.” United States ex rel. S. Prawer and Co. v. Fleet Bank of Maine, 24 F.3d 320, 322, 328 (1st Cir. 1994). Defendants rely almost entirely on United States ex rel. Bennett v. Biotronik, Inc., 876 F.3d 1011 (9th Cir. 2017), see Dkt. No. 171 at 4-7, which is largely irrelevant, as will be shown shortly. Most helpful is our circuit's observation in United States ex rel. Kelly v. Boeing Co., 9 F.3d 743, 746 (9th Cir. 1993), which construed Section 3730(e)(3) to mean that, if “the government files an action to enforce the FCA, a would-be relator may not later bring any action based on the same underlying facts.” That was the same scenario presented by the handful of circuit cases that have addressed the bar, including Biotronik. See Biotronik, 876 F.3d at 1014-15 (considering applicability of the government action bar to a qui tam complaint filed by relator Bennett in October 2014, following the United States' May 2014 intervention in relator Sant's earlier-filed case); see also Costner v. URS Consultants, Inc., 153 F.3d 667, 672-73, 676 (8th Cir. 1998) (considering potential applicability of bar where relators filed qui tam action following “previous suits and administrative proceedings in which the government has participated”); S. Prawer and Co., 24 F.3d at 323-24 (concluding government action bar did not apply; qui tam action at issue was filed in June 1993, following Federal Deposit Insurance Corporation's commencement of an earlier action in November 1992). These decisions indicate that Section 3730(e)(3) operates to bar copycat lawsuits filed by relators after the government acts on a claim.
That is not the circumstance here. The Jahr, McLaughlin, Smith, and Wadsworth relators filed their qui tam complaints between August 2013 and March 2016. The United States did not become a party to any of these actions until January 2019. The relator actions pre-dated the claims asserted by the United States by years, and appear to have been the catalysts that motivated the government to act at all. Consequently, it cannot be said that the relators brought a claim “based upon allegations or transactions which are the subject of a civil suit . . . in which the Government is already a party.” 31 U.S.C. § 3730(e)(3). Defendants' view of the government action bar also suffers from relying on the same untenable theory about the preclusive effect of government intervention that the Court has rejected. See, e.g., Dkt. No. 171 at 6 (relators cannot go forward with their Hunters Point claims because the United States has already “intervened as to some, but not all, of the allegations at Hunters Point”). Dismissal under Section 3730(e)(3) is denied.
V. FIRST-TO-FILE BAR
The FCA states: “When a person brings an action under this subsection, no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.” 31 U.S.C. § 3730(b)(5). Defendants cite this “first-to-file bar” as another ostensible ground of dismissal. Dkt. No. 171 at 7-12.
Our circuit discussed the first-to-file question in United States ex rel. Lujan v. Hughes Aircraft Co., 243 F.3d 1181 (9th Cir. 2001), and in United States ex rel. Hartpence v. Kinetic Concepts, Inc., 792 F.3d 1121 (9th Cir. 2015) (en banc). In Lujan, the circuit held that “Section 3730(b)(5)'s plain language unambiguously establishes a first-to-file bar, preventing successive plaintiffs from bringing related actions based on the same underlying facts.” 243 F.3d at 1187. That a case might benefit the U.S. Treasury is no exception to the bar. Id. “The first-filed claim provides the government notice of the essential facts of an alleged fraud, while the first-to-file bar stops repetitive claims.” Id. The bar “precludes a subsequent relator's claim that alleges the defendant engaged in the same type of wrongdoing as that claimed in a prior action even if the allegations cover a different time period or location within a company”; it applies to “later-filed actions alleging the same material elements of fraud described in an earlier suit, regardless of whether the allegations incorporate somewhat different details.” Id. at 1188-89.
The circuit court, sitting en banc, subsequently determined in Hartpence that “related but distinct fraud claims” are not barred by the first-to-file bar. 792 F.3d at 1131. The decision underscored that the “two alleged frauds are materially different: the KX fraud allegations are based on government payment for devices which were used, but unnecessary for treatment, while the DWOs fraud allegations are based on the government paying for devices that were never used at all. The alleged frauds, in short, exist completely independent of one another.” Id. Because “Godecke's second and third claims [we]re based on different material facts than the claims contained in Hartpence's earlier-filed complaint,” they were “not precluded by the first-to-file bar.” Id. at 1132.
The question here is whether the claims in the relators' actions are similar enough to earlier-filed claims to be barred under Lujan, or distinct enough to go forward under Hartpence. For the answer, the Court will use the relators' allegations as presently stated, see Rockwell Int'l Corp. v. United States, 549 U.S. 457, 473 (2007), to determine if they are precluded because the government was previously notified “of the essential facts of [the] alleged fraud” by an earlier-filed complaint. Lujan, 243 F.3d at 1188.
In Rockwell, the Supreme Court asked the question, “Which of the relator's allegations are the relevant ones?” in the context of the public disclosure bar. 549 U.S. at 473 (emphasis in original). But the Rockwell court's reasoning for looking at the allegations “as amended” is equally applicable here. See id. This is so even though the first-to-file bar speaks of an “action” rather than of “allegations” as in the public disclosure bar. See Hartpence, 792 F.3d at 1131-32 (applying the first-to-file bar on a claim-by-claim basis). In any event, it makes little practical sense to ask whether allegations that have now been superseded by amendment might have been subject to preclusion under the first-to-file bar.
A. Relator Smith's Claims
Defendants jointly say that relator Smith's claims are barred because they are “premised on the same alleged material elements of fraud underlying the qui tam complaint in Jahr, which was filed two and a half years before Smith filed his qui tam complaint.” Dkt. No. 171 at 8 (citing Jahr Dkt. No. 1). This argument calls for a comparison of the pertinent allegations in the original Jahr complaint to Smith's claims in the Jahr CSAC to see if they essentially copied the original.
Defendants focus on (1) paragraphs 32 and 33 of the Jahr original complaint as alleging “that TtEC knowingly submitted false soil samples”; (2) paragraphs 47, 48, and 51 as alleging “that TtEC managers ordered fraudulent soil sampling”; and (3) paragraph 55 as alleging “that TtEC committed fraud in operating the portal monitor at Hunters Point.” Dkt. No. 171 at 9 & nn.17-19.
Paragraphs 32 and 33 are much too general to preclude Smith's allegations about soil sampling in the Jahr CSAC. Paragraph 33 of the Jahr original complaint says that “[d]efendant Tetra Tech EC, Inc. certified and implied certification [sic] that all soils and materials processed at Hunters Point were processed, evaluated, and correctly designated as having met the Remediation Goals, or had failed the Remediation Goals (RG) imposed by the contract with the United States Navy contract, rules, regulations, and protocols.” Dkt. No. 1 ¶ 33. There are no details about the “how” of the fraud, or any specifics about the allegedly false soil sampling. Such broad and nonspecific allegations would not have provided the government with notice of the material facts of the fraud alleged by Smith in the Jahr CSAC, see Lujan, 243 F.3d at 1187, which presents far more detailed statements like, “Radiation Control Technicians were ordered by their Tetra Tech EC supervisors to appear to take samples from spray painted marked sample spots, but to actually take samples from areas in the vicinity of the marked spots within the survey unit, usually within 25 feet or so.” Dkt. No. 148 ¶ 37.
Paragraphs 47, 48, and 51 of the Jahr original complaint have a heavy focus on Jane Taylor and Marie Winder, who are alleged to have been lacking in qualifications, among other facts. See, e.g., Dkt. No. 1 ¶ 13 (“Jane Taylor was hired by New World Environmental, Inc. to perform nuclear radiation RCT safety, remediation and oversight work for Tetra Tech on the United States Navy remediation project at Hunters Point Naval Shipyard despite [New World] being advised of [her] lack of qualifications”). Paragraph 51 alleged that “[s]upervisors and management of Tetra Tech EC, Inc. observed the failures of Jane Taylor, Marie Winder and the non-RTC laborers they supervised to test and sample the Survey Unit soil according to the terms and conditions required by the United States Navy, and were informed of the failures of Jane Taylor, Marie Winder and the non-RTC laborers they supervised. Supervisors and management of Tetra Tech EC, Inc. did not intercede and compel proper surveys and sampling of Survey Unit soils by Jane Taylor and Marie Winder....The failure of supervisors and management of Tetra Tech EC, Inc. to intercede and enforce proper surveys and sampling of Survey Unit soil was due in part to the protected status of Jane Taylor due to her sexual relationship with Tetra Tech EC, Inc. Construction Superintendent, Dennis McWade.” Dkt. No. 1 ¶ 51.
These allegations, and others of similar specificity, would plausibly have provided the government with notice of the material facts of similar claims by Smith about fraudulent soil sampling and surveying at Hunters Point with Jane Taylor's involvement. Paragraph 27 of the Jahr CSAC alleges, for example, that “Tetra Tech EC management . . . pressured New World Environment General Manager Mike Wilson to have the conveyer belt system alarm less frequently to save costs. Mike Wilson pressured his brother, Gary Wilson, and Jane Taylor, an HP who was in a sexual relationship with Gary Wilson at that time, to take steps so the conveyer belt system did not alarm properly in violation of the contractual terms with the Navy....Gary Wilson and Jane Taylor decreased the sensitivity and then later in late 2005 and early 2006 turned off the PCB Hot Spot alarm.” These allegations are dismissed under the first-to-file bar.
Paragraph 55 of the Jahr original complaint alleged that in December 2010, “[t]he portal monitor was shut down and packed away,” and two tankfuls of “chemical and liquid wastes from a Radiologically Controlled Area” were permitted out of Hunter Point without being “subjected to portal monitor screening, nor screening upon leaving the Hunters Point Shipyard by radiation remediation RCT specialists.” Dkt. No. 1 ¶ 55. Smith's claims in the Jahr CSAC similarly allege that radioactive waste was improperly removed from Hunters Point via manipulation of the portal monitor. See Dkt. No. 148 ¶ 30 (“Tetra Tech EC also took steps to obtain false portal monitor clearance of the PCB Hot Spot soil. Tetra Tech EC had Hubbard and Joe Lavelle harass HPs to give clearance to trucks processed through the portal monitor. Tetra Tech also falsely shut down the portal monitor under the guise of needs for repair when PCB Hot Spot soil shipments were planned to go through the portal monitor.”); ¶ 47 (“Pipe that was falsely given clearance as nonradioactive waste was loaded into large tractor trailers. At times, when a large number of trucks of falsely scanned and cleared pipes and debris were to be shipped off Hunters Point, TTEC would not permit the portal monitor to operate claiming it was not working properly”). These allegations are also dismissed.
Relator Smith's claims are not barred simply because other relators had alleged earlier than Smith “that the Tetra Tech Defendants violated the FCA at Hunters Point.” Dkt. No. 171 at 9. That is much too nondescript to have provided the government with notice of the material facts of the specific frauds alleged by Smith. Defendants did not identify any other portions of the Jahr original complaint or any other complaint, and so the Court declines to dismiss Smith's other claims under the first-to-file bar at this time.
The same is true of the Shaw defendants' argument that “McLaughlin precludes Smith under the first-to-file bar” because “both Relator Smith and Relator McLaughlin allege[d] supposed fraud at Treasure Island, and Relator McLaughlin filed his complaint first.” Dkt. No. 201 at 5.
B. Wadsworth Relators' Claims
For the Wadsworth relators' claims, defendants have pointed to paragraph 55 of the Jahr original complaint as alleging that “vehicles and loads were not properly scanned at the portal monitor.” Dkt. No. 171 at 9. The Wadsworth relators do not make any allegations about the portal monitor in the Jahr CSAC, see Dkt. No. 148, so there is no preclusion on this basis.
Defendants also pointed to paragraph 44 of the Jahr original complaint as making “allegations concerning IO Environmental.” Dkt. No. 171 at 9. The paragraph alleged that IO Environmental improperly hired Thorpe Miller, who was the son of a Navy RASO Radiological Site Manager, as well as his wife, Karisa Miller, on the basis of “nepotis[m]” and “without a competitive hiring process.” Dkt. No. 1 ¶ 44. The Wadsworth relators' claims in the Jahr CSAC contain the allegation that “Thorpe Miller knew that he did not have the education, training, skills, and experience . . . and that he was hired into the position in large part due to the request of his mother,” and that “Karisa Miller . . . was offered the position due to the involvement of TTEC General Manager Dougherty due to her in-law relationship with RASO manager Laurie Lowman.” Dkt. No. 148 ¶ 62. These claims are repetitive of the earlier-filed Jahr claims, and are dismissed.
Defendants' suggestion that “[b]ecause the Court deemed Wadsworth related to Jahr, as a matter of law, the later-filed Wadsworth case is barred,” Dkt. No. 171 at 10, is not well taken. Cases are related under our District's Civil Local Rule 3-12(a) when: “(1) The actions concern substantially the same parties, property, transaction, or event; and (2) It appears likely that there will be an unduly burdensome duplication of labor and expense or conflicting results if the cases are conducted before different Judges.” This is not at all the inquiry of “relatedness” for purposes of the first-to-file bar. See Lujan, 243 F.3d at 1189 (bar applies to “later-filed actions alleging the same material elements of fraud described in an earlier suit, regardless of whether the allegations incorporate somewhat different details”). Defendants also overlook the principle that the first-to-file bar does not preclude “related but distinct fraud claims.” Hartpence 792 F.3d at 1131.
C. Relator McLaughlin's Claims
Relator McLaughlin's claims are barred in their entirety. In response to defendants' motion, Wadsworth stated that he “does NOT contest for this motion that the essential elements of the Wadsworth 2016 complaint, if one ignores who the prime contractor was for Parcels D-1, IR-18, and IR-07, and ignores where the RAD fraud was conducted, are similar to McLaughlin's allegations at section K paragraphs 239-251 of his TAC.” Dkt. No. 180 at 12 (emphasis in original). McLaughlin forthrightly acknowledged that “[t]his concession could meet the first part of the Hartpence test for application of the first-to-fi[l]e bar.” Id.
McLaughlin says that the “second part of the test for the first-to-file bar, that McLaughlin's action be found to have ‘provided no additional benefit to the government' is not met.” Id. But the question of a government benefit is not a relevant consideration. Lujan turned away a similar argument by the relator to the effect that “§ 3730(b)(5) should not bar her case because her action could benefit the U.S. Treasury,” and concluded that “Section 3730(b)(5)'s plain language unambiguously establishes a first-to-file bar, preventing successive plaintiffs from bringing related actions based on the same underlying facts,” and “does not contain exceptions.” Lujan, 243 F.3d at 1187 (emphasis added); see also Hartpence, 792 F.3d at 1131. Consequently, to say that McLaughlin's claims may have “provided [an] additional benefit to the government” is of no moment.
So too for the fact that relator McLaughlin alleged the same kind of fraud for different parcels. See Lujan, 243 F.3d at 1188 (bar “precludes a subsequent relator's claim that alleges the defendant engaged in the same type of wrongdoing as that claimed in a prior action even if the allegations cover a different time period or location within a company”). Simply saying that the same fraud occurred on different parcels of the Hunters Point Shipyard does not make for two different frauds that “exist completely independent of one another.” Hartpence, 792 F.3d at 1131. It may be that a “Fact Sheet” put out by the Navy did not include the parcels identified by McLaughlin in “the geographic areas that [the Navy] investigated for fraud,” Dkt. No. 180 at 1213, but that does not establish that the government was not on “notice of the essential elements of [the] alleged fraud” as to those parcels as well. Lujan, 243 F.3d at 1187.
Overall, relator McLaughlin's claims are barred by the first-to-file bar. They are dismissed on that basis, and the Court need not take up defendants' other arguments directed to those claims. The McLaughlin case, No. 14-1509, will be closed.
VI. PUBLIC DISCLOSURE BAR
The public disclosure bar is set out in 31 U.S.C. § 3730(e)(4)(A), which provides:
The court shall dismiss an action or claim under this section, unless opposed by the Government, if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed -
(i) in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party;
(ii) in a congressional, Government Accountability Office, or other Federal report, hearing, audit, or investigation; or
(iii) 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.
In addition, under 31 U.S.C. § 3730(e)(4)(B), “original source” is defined as “an individual who either (i) prior to a public disclosure under subsection(e)(4)(a), has voluntarily disclosed to the Government the information on which allegations or transactions in a claim are based, or (2) who has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and who has voluntarily provided the information to the Government before filing an action under this section.”
For the substantial similarity required under this bar, our circuit has stated in United States ex rel. Mateski v. Raytheon Co., 816 F.3d 565 (9th Cir. 2016), that “whether [a relator's] complaint is substantially similar to prior public reports depends on the level of generality at which the comparison is made,” and in making this comparison, courts are not to “read[] qui tam complaints at only the ‘highest level of generality,'” thereby “wip[ing] out qui tam suits that rest on genuinely new and material information.” 816 F.3d at 575-78 (citations omitted). The bar does not apply where a relator's complaint “alleges fraud that is different in kind and in degree from the previously disclosed information.” Id. at 578. A relator's complaint may go forward where it contains “specific allegations” in contrast to prior public reports that “merely allege general problems” such as “mismanagement, technical difficulties, and noncompliance with contract and policy directives.” Id. at 579. The Court is to “allow relators who provide the Government with genuinely new and material information of fraud to move forward with their qui tam suits.” Id.
A relator's allegations are substantially similar to a prior disclosure, and are barred, where the allegations and disclosure are “similar in kind, even if slightly less so in degree.” United States ex rel. Solis v. Millennium Pharmaceuticals, Inc., 885 F.3d 623, 627 (9th Cir. 2018). “The prior disclosure ‘need not be identical with'” the relator's allegations to have a preclusive effect, and a relator's claims are “substantially similar to those in the prior public disclosures” when they are “close enough in kind and degree to have put the government on notice to investigate the alleged fraud before [the relator] filed his complaint.” Id. (citing Mateski, 816 F.3d at 574).
For relators Smith and Wadsworth, defendants proffer four “public disclosures”: three local media reports in 2014, and Tetra Tech EC, Inc.'s 2014 Investigation Report. Dkt. No. 171 at 13-14; Dkt. Nos. 172, Ex. 1-4. For the last of those items, defendants make a cursory argument that “[a] disclosure may . . . bar a relator's claim if it is made in a federal report, hearing, audit, or investigation made to a public official ‘whose duties extend to the claim in question in some significant way,' even if not widely disclosed to the general public.'” Dkt. No. 171 at 13-14 (citations omitted). This undeveloped comment is a weak rejoinder to the relators' observation that the report does not squarely fit any of the statutorily defined channels for the public disclosure bar. See Dkt. No. 180 at 14 n.8 (“Exhibit 4, the ‘Investigation Conclusion: Anomalous Soil Samples at Hunters Point Naval Shipyard' report . . . does not meet any of the subsection criteria as ‘publicly disclosed'”); see also 31 U.S.C. § 3730(e)(4)(A)(i), (ii), (iii). In light of the defendants' failure on this score, the Court declines to consider the Investigation Report as a possible public disclosure.
For the three 2014 local media reports, the relators do not deny that they qualify as “news media” under 31 U.S.C. § 3730(e)(4)(A)(iii) and can properly be considered by the Court. Dkt. No. 180 at 14-15 & n.8. The Court finds that these allegations were publicly disclosed by those news reports, and the relators are consequently barred from asserting them:
• Soil from Hunters Point was not “being screened for radiological contamination.” Dkt. No. 172-1.
• Dirt was removed from Hunters Point “without proper testing” for radiation or being “cleared for disposal. Id.; Dkt. No. 172-2.
• Soil “dug up near buildings contaminated with radiation [was] being shipped off site to ‘state facilities not . . . licensed to accept low-level radioactive waste.'” Dkt. No. 172-1.
• The “sensitivity of the portal monitors was decreased below the manufacturer's specifications.” Dkt. No. 172-2.
• Trucks “left the site with potentially radioactive material” without ever “pass[ing] through the portal monitor.” Id.
• Trucks that “failed the portal monitor” were “still ‘released to go off site.'” Id.
• “Unqualified personnel” were promoted to “senior, safety-sensitive roles.” Id.
Substantially similar allegations appear in the Smith and Wadsworth relators' claims, at a minimum at Dkt. No. 148 ¶¶ 30, 47, 62, and those claims are barred. The original source exception does not apply because the relators' allegations that they are original sources are conclusory and implausible. Id. ¶¶ 1, 6, 12; see Silbersher, 445 F.Supp.3d at 406-07. And the government has not opposed the dismissal of relators' claims pursuant to the public disclosure bar. See 31 U.S.C. § 3730(e)(4)(A).
The Shaw defendants have identified three other news articles from 2012 and 2014 that relate to Treasure Island. Dkt. No. 201 at 6-7; Dkt. No. 202, Exs. A-C. The relators “do not dispute that these three stories are ‘news media' under subsection (iii).” Dkt. No. 212 at 11. The Court agrees, and takes judicial notice of the three articles. The articles are fairly general, but they do specifically disclose that Shaw Environmental & Infrastructure Inc. received a notice of violation “for repeatedly digging, piling, spreading and transporting dirt from sites contaminated with toxic chemicals,” which materials Shaw “had not tested . . . for radioactivity,” Dkt. No. 202-1 at ECF p. 7; and Chicago Bridge and Iron directed a truck to “remov[e] radioactive and chemically contaminated soil from one known toxic site, then transport[] and dump[] it on a site being ‘cleaned,'” Dkt. No. 202-3 at ECF p. 6. Similar allegations in the relators' claims, see, e.g., Dkt. No. 148 ¶¶ 72-77, 80, are barred by the public disclosure bar and are dismissed.
VII. INDIVIDUAL MOTIONS TO DISMISS
The separate dismissal motions, Dkt. Nos. 176, 178, 200, are denied with one exception because they ask for too much with too little supporting authority. For example, defendants say that the relators did not specifically identify a false claim for payment by Tetra Tech. See Dkt. No. 176 at 7-9; Dkt. No. 178 at 11; Dkt. No. 200 at 19. This is not the fatal flaw defendants suggest. A qui tam plaintiff “may, but need not, provide representative examples to establish the payment element of the prima facie case. The Rule 9(b) standard may be satisfied by pleading with particularity a reasonable basis to infer that the government either paid money or forfeited moneys due.” Ebeid ex rel. United States v. Lungwitz, 616 F.3d 993, 999 n.4 (9th Cir. 2010).
The Shaw defendants make the much more persuasive point that Smith's complaint did not comply with Federal Rule of Civil Procedure 10(b), which requires a “practicable” organization of a complaint by numbered paragraphs and other measures to “promote clarity.” In the Court's experience, it is a rare day when Rule 10(b) comes into play. But as the Shaw defendants aptly note, “Smith ‘has not set forth separate claims in separate counts,' and ‘does not even identify a single cause of action.'” Dkt. No. 200 at 17 (citations omitted). The same goes for the Wadsworth relators' claims. See Dkt. No. 148. The Jahr CSAC is also striking in that it contains 97 substantive paragraphs, and it is impossible to tell how many claims relators intend to prosecute.
These shortcomings may not rise to a violation of Rule 8's requirement of a short and plain statement of a claim, but they made reading the relators' complaints, and evaluating their sufficiency under Rule 9(b) and Rule 12(b)(6), an unnecessary and burdensome struggle. As it stands presently, the combined complaint does not comply with Rule 10(b). The Jahr CSAC is dismissed in its entirety for this reason. This should be readily fixable in an amended complaint. Relators should use this opportunity to improve the overall focus and clarity of their claims. Claims dismissed in this order must be removed. Defendants may renew specific dismissal arguments, as warranted, in response to the relators' amended claims.
VIII. REQUESTS FOR JUDICIAL NOTICE OF DOCUMENTS FILED ON DOCKET
Defendants filed multiple requests for the Court to take judicial notice of complaints, briefs, and other filings on the ECF dockets of the very same action in which the RJN was filed, or a related action. See, e.g., Dkt. No. 172, Exs. 7-10; Dkt. No. 189, Exs. 1-2; Dkt. No. 177, Exs. 15; Dkt. No. 178 at 1 n.4. These requests are denied as inappropriate and highly inefficient. These ECF dockets are already voluminous enough, and there simply is no need for another request for court action. In the future, filed documents like these must be cited to by ECF case and docket number. All other requests for judicial notice are denied except as otherwise noted, and the Court made no use of any disputed facts in this order.
CONCLUSION
The Jahr CSAC and the McLaughlin TAC are dismissed. The Smith and Wadsworth relators may amend their claims, and are directed to file a combined third amended complaint in the Jahr action by July 28, 2022, consistent with this order. The relators may not add new claims or defendants without prior approval by the Court. The McLaughlin case will be closed.
IT IS SO ORDERED.