Opinion
No. C-93-1912 MHP.
May 28, 1996
MEMORANDUM AND ORDER
On July 12, 1993, plaintiff Jack Clemes brought suit against defendants Del Norte County Unified School District ("the District"), Gene Edinger, Paul H. McCarthy, Debi Balzarini, Darlene Fosdick and Karen Marcum, alleging injuries arising from plaintiff's attempts to report and rectify certain improprieties that he witnessed on the part of the school district and its employees. Clemes sued under a host of statutes.
On September 21, 1995, this court granted defendants' motion for summary judgment on plaintiff's claim under section 1982; stayed the action with respect to the claims under sections 1981 and 1983, and Titles VI and IX; and denied defendants' motion for summary judgment on plaintiff's claim under the False Claims Act ("FCA"). Recognizing plaintiff's FCA claim as one brought under 31 U.S.C. § 3730(h), the court gave leave to plaintiff to file further submissions to support of this claim. The court now revisits defendants' motion for summary judgment on plaintiff's FCA claim in light of the supplemental briefing.
Having read and considered the arguments and submissions of the parties, and for the reasons set forth below, the court issues the following memorandum and order.
LEGAL STANDARD
Under Federal Rule of Civil Procedure 56, summary judgment shall be granted "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial . . . since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); see also T.W. Elec. Serv. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987) (the nonmoving party may not rely on the pleadings but must present significant probative evidence supporting the claim); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) (a dispute about a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.").
The court's function, however, is not to make credibility determinations, Anderson, 477 U.S. at 249, and the inferences to be drawn from the facts must be viewed in a light most favorable to the party opposing the motion. T.W. Elec. Serv., 809 F.2d at 631.
DISCUSSION
The facts relevant to this action are fully articulated in this court's prior memorandum and order filed on September 19, 1995, and need not be repeated here.
A. Stating a Claim Under Section 3730(h)
In denying defendants' motion for summary judgment on plaintiff's claim of retaliatory discharge under FCA, the court allowed Clemes to file further submissions in order to overcome the infirmities of his complaint. The court spelled out what plaintiff must establish in order to sustain a claim under section 3730(h), namely that: 1) plaintiff engaged in conduct protected under the statute, 2) defendants were aware of the conduct, and 3) plaintiff was terminated by the defendants in retaliation for his conduct. See Robertson v. Bell Helicopter Textron, Inc., 32 F.3d 948, 951 (5th Cir. 1994), cert. denied, 115 S.Ct. 1110 (1995); Memorandum and Order at 15. The court further found that the language of the statute requires that "the acts a plaintiff seeks to protect [must] be done in furtherance of an action `filed or to be filed' under the statute." Id.
The motion directed to the claim under 31 U.S.C. § 3730(h) purports to be brought by "defendants" and their papers refer to them in the plural. In fact, the only defendant named in the claim is the District and, as explained below, the District is the only defendant which could be named in a claim under section 3730(h).
The pivotal issue now before the court is whether Clemes' protected acts come within the "filed or to be filed" language of the statute. In analyzing the meaning of that very phrase, the Seventh Circuit found that "to be filed" covers situations in which a qui tam action "could be filed legitimately — that is, consistently with Fed.R.Civ.P. Rule 11." Neal v. Honeywell, 33 F.3d 860, 864 (7th Cir. 1994). In order for a qui tam action to have been brought, plaintiff must provide some evidence that 1) the defendant made a claim for payment from the government, and 2) that the claim was false or fraudulent."United States ex rel. Glass v. Medtronic, Inc., 957 F.2d 605, 608 (8th Cir. 1992).
Clemes, on the prior motion, failed to provide evidence that aqui tam action could legitimately have been filed as described by Neal. See Neal, 33 F.3d at 864. Therefore, this court specifically asked Clemes to furnish the required evidence.
In his submissions, Clemes outlines the District's misuse of federal money allocated for low income and Native American students. He claims that the District received approximately $1.8 million of federal funds under the Elementary and Secondary Education Act, Chapters 1 and 2, and the Indian Education Act. Clemes asserts that the students enrolled in the District's alternative education programs, including the Independent Studies Program ("ISP"), were among those students the federal funds were designed to help. Clemes further claims that Debi Balzarini, who was assigned to teach in the ISP, did not meet with or provide any services to the ISP students. Upon investigation, Clemes discovered that Balzarini was making false entries in student records and forging the signatures of students and parents on ISP documents. Clemes advised the District administrators that the District was not in compliance with federal and state law and that Balzarini was surreptitiously creating and submitting false documents to cover up the fact that she was not providing educational services to the ISP students. Clemes then provided this information to the Del Norte County Sheriff and the State Bureau of Investigation.
Although Clemes has not supplied documentary proof of these events, the court finds that based on his submissions a qui tam action could legitimately have been brought. This is evidenced by the fact that the information provided by Clemes was sufficient for the District Attorney for Del Norte County to pursue indictments from a Grand Jury and for an investigator to perform an audit of the program. Mindful that Clemes is not required to provide sufficient evidence to withstand a motion for summary judgment on this issue but need only show that a qui tam action would not have been improper or frivolous under Rule 11, this court holds that his acts were in furtherance of an action "filed or to be filed" under the statute and therefore sufficient for the purposes of section 3730(h). Having concluded that Clemes states a claim under section 3730(h), the court now turns to the motion for summary judgment.
B. Summary Judgment
The District raises two arguments in support of its motion for summary judgment. First, the District contends that Clemes' dismissal by order of the Commission on Professional Competence was mandated by law once there had been formal findings of his unfitness and incompetency. Thus, defendants argue, the relief sought by Clemes, reinstatement and lost wages, is not within the School District's power to grant.
This argument is both unsupported and wholly unpersuasive. First, the District does not need the authority to reinstate Clemes as this court has such authority. Second, if the District's contention were true, there would be nothing to prevent the Commission from making formal findings of incompetency for every employee who blows the whistle on the District. This would essentially undermine the purpose of section 3730(h) which is to discourage fraud against the government by protecting from retaliation those who come forward with knowledge of fraud. See Robertson, 32 F.3d at 951. Finally, the District's attempt to show a legitimate reason for Clemes' termination is seriously undermined by the fact that the District initiated its disciplinary proceedings against Clemes on the day he testified before the Grand Jury.
The District's second argument raises a more interesting and novel question. The District contends that Clemes' action is barred by the Eleventh Amendment. To support this contention defendants rely on U.S. ex rel. Moore v. University of Michigan, 860 F. Supp. 400 (E.D. Mich. 1994), in which a district court found that section 3730(h) did not abrogate the states' sovereign immunity as guaranteed by the Eleventh Amendment. The court concluded that section 3730(h) contains no express language indicating Congressional intent to overturn the constitutionally guaranteed immunity of the states. Id. at 404;see also Wilkens ex rel United States v. State of Ohio, 885 F. Supp. 1055, 1067 (S.D. Ohio 1995) (finding that the states' Eleventh Amendment immunity was not expressly abrogated by the language of section 3730(h)).
Section 3730(h) states in relevant part:
Any employee who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment by his or her employer because of lawful acts done by the employee on behalf of the employee or others in furtherance of an action under this section, including investigation for, initiation of, testimony for, or assistance in an action filed or to be filed under this section, shall be entitled to all relief necessary to make the employee whole.31 U.S.C. § 3730(h).
Clemes argues that, on the contrary, the language of the statute evinces Congressional intent to abrogate state immunity by resting jurisdiction in federal court. Clemes points to the fact that section 3730(h) allows "[a]n employee [to] bring an action in the appropriate district court of the United States for the relief provided in this subsection." Clemes relies on Hale v. State of Arizona, 993 F.2d 1387 (9th Cir.), cert. denied, 114 S.Ct. 386 (1993), to support this theory.
There are generally two ways to overcome the Eleventh Amendment bar of an action against a state. First, Congress can, by unequivocal language, abrogate state immunity. Second, immunity can be waived when a state expressly consents to be sued in federal court or where a state statute or constitution provides the consent. See Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 239-41 (1985) ("State will be deemed to have waived its immunity only where stated by the most express language or by such overwhelming implication from the text as [will] leave no room for any other reasonable construction.") (citations omitted); Pennhurst State School Hosp. v. Halderman, 465 U.S. 89, 99 (1984); BV Engineering v. Univ. of Cal., Los Angeles, 858 F.2d 1394, 1396 (9th Cir. 1988), cert. denied, 489 U.S. 1090 (1989).
In Hale inmates who worked for state prison industries programs brought a suit under the Fair Labor Standards Act ("FLSA") seeking to be paid the federal minimum wage. In holding that the Eleventh Amendment did not afford state immunity for violations of FLSA, the court concluded that Congress had made its intention to abrogate state immunity clear in the language of the statute. Hale, 993 F.2d at 1391. FLSA states that an action to enforce the statute "may be maintained against any employer (including a public agency) in any Federal or State court of competent jurisdiction." Id. (quoting 29 U.S.C. § 216(b)). A public agency is defined by the statute as including a state government or political subdivision. Id. (quoting 29 U.S.C. § 203(x)). The court concluded that this language unmistakably evinces Congress' intent to allow FLSA claims against states in federal court.
This court finds that the language of section 3730(h) is not nearly as unequivocal as that of FLSA. FLSA states, in no uncertain terms, that an action can be brought in federal court against any employer, including state agencies and political subdivisions. The language in section 3730(h) does not, by any stretch, evince the same explicit intent of Congress to abrogate state immunity. For example, it does not state, as does FLSA, that the action may be brought in federal court regardless of who the employer is. In fact, it makes no mention of the party against whom the action is brought, specifying only the parties who may bring an action. The language used in section 3730(h) and on which plaintiff relies is merely a general authorization of federal jurisdiction for actions brought under that section and not the unmistakable statutory language necessary to abrogate Eleventh Amendment immunity.
The Eleventh Amendment provides: "The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State."
Next, Clemes contends that the District waived its sovereign immunity when it failed to raise it as a defense and sought summary judgment on the merits of the claim. For support Clemes cites Fordyce v. City of Seattle, 55 F.3d 436 (9th Cir. 1995), in which the Ninth Circuit noted in dicta that the State of Washington could waive its immunity by voluntarily appearing and defending the case on the merits. Id. at 441 (citingAtascadero, 473 U.S. 234 (1985) and Clark v. Barnard, 108 U.S. 436 (1883)).
Clemes' argument is fundamentally flawed. First, the statement Clemes relies on in Fordyce is unelaborated dictum tangential to the issue decided — whether a declaratory judgment ruling on the constitutionality of a Washington statute was appropriate when the State of Washington was not given formal opportunity to intervene in the lawsuit. Moreover, the statement was made in the context of a voluntary appearance by a state which was a non-party, creating a stronger implication of state consent to federal jurisdiction. Second, Supreme Court doctrine suggests that something more than making a general appearance and defending on the merits is needed to waive Eleventh Amendment immunity. See Ford Motor Co. v. Dept. of Treasury, 323 U.S. 459, 468 (1945). In recognition of the vital role played by the doctrine of sovereign immunity in the federal system, the Supreme Court has repeatedly stated its reluctance to infer a State's waiver of its sovereign immunity. See e.g., Atascadero 473 U.S. at 241 ("The test for determining whether a State has waived its immunity from federal-court jurisdiction is a stringent one."); Pennhurst, 465 U.S. at 99. In the instant action the District has neither expressly nor unequivocally waived its sovereign immunity.
Likewise, the mere fact that the District failed to raise Eleventh Amendment immunity as a defense does not operate as a waiver of that immunity. It is well-established that an "Eleventh Amendment defense sufficiently partakes of the nature of a jurisdictional bar" and can therefore be raised at any point.Edelman v. Jordan, 415 U.S. 651, 678 (1974); see also Estate of Ritter v. University of Michigan, 851 F.2d 846, 851 (6th Cir. 1988) (citing Ford Motor Co., 323 U.S. at 466-67 (considering an Eleventh Amendment defense raised for the first time on appeal). Given the caselaw, it would be peculiar indeed to conclude that, although Eleventh Amendment immunity may be raised for the first time on appeal, immunity has been waived by the District in this case because it failed to raise the defense at an embryonic stage of the proceedings and sought instead a summary judgment motion on the merits. Accordingly, in the absence of an unmistakable and clear waiver this court declines to find that the district has waived its immunity.
Next, Clemes argues that because states do not enjoy Eleventh Amendment immunity in qui tam actions under the False Claims Act, neither do they have immunity in an action under section 3730(h). Plaintiff is correct that the Ninth Circuit has held that qui tam actions are not barred by the Eleventh Amendment because in such cases the federal government is the real party in interest. U.S. ex rel. Fine v. Chevron, U.S.A., Inc., 39 F.3d 957, 963 (9th Cir. 1994), vacated on other grounds, 72 F.3d 740 (9th Cir. 1995) (en banc), cert. filed (Mar. 11, 1996). Section 3730(h) actions, on the other hand, are brought on behalf of and for the benefit of the employee. The court is not insensitive to the fact that section 3730(h) actions provide a notable benefit to the government by encouraging employees to come forward with knowledge of fraud, and that state immunity with respect to retaliatory discharge could well dampen the willingness of employees to blow the whistle on state entities. That does not, however, change the fact that section 3730(h) actions are of a distinctly different character than qui tam actions and are brought on behalf of the employee.
In addition, every court to consider the question of whether the language of section 3730(h) abrogates the states' Eleventh Amendment immunity has concluded that it does not. Wilkins, 885 F. Supp. at 1067; Moore, 860 F. Supp. at 404; Daly v. Dept. of Energy, 741 F. Supp. 202 (Colo. 1990). While these decisions are not binding on this court, they are consistent with the conclusion reached above — the language of section 3730(h) is not the unequivocal expression of Congressional intent to override the Eleventh Amendment required by the Supreme Court. See Atascadero, 473 U.S. at 240.
Finally, plaintiff contends that state immunity has been abrogated as to all claims of discrimination on the part of recipients of federal funds by the terms of 42 U.S.C. section 2000d-7. This section states in pertinent part:
A state shall not be immune under the Eleventh Amendment of the Constitution of the United States from suit in Federal Court for a violation of section 504 of the Rehabilitation Act of 1973, Title IX of the Education Amendments of 1972, the Age Discrimination Act of 1975, Title VI of the Civil Rights Act of 1964, or the provisions of any other Federal statute prohibiting discrimination by recipients of Federal financial assistance.42 U.S.C. § 2000d-7(a)(1). Clemes argues that section 3730(h) actions are covered by this section.
Clemes is correct that section 2000d-7 encompasses statutes that prohibit discrimination by entities receiving federal funds. It is also true that section 3730(h) uses the term "discrimination". However, without more that does not bring it within the ambit of section 2000d-7. Section 2000d-7 was adopted as part of the Rehabilitation Act Amendments of 1986, Pub.L. No. 99-506, 100 Stat. 1845. These amendments addressed the treatment of and discrimination against the handicapped. The statutes enumerated in section 2000d-7(a)(1) are ones that specifically prohibit discrimination by entities receiving federal funds and deal with discrimination on the basis of handicap, sex, age, and race, color and national origin, respectively.
The False Claims Act, in contrast, addresses fraud and section 3730(h) is meant to protect those who assist in uncovering it.Neal, 33 F.3d at 861; see H.R. Rep. No. 660, 99th Cong., 2d Sess., 22 (1986). The purpose of section 3730(h) is not of a type with those set forth in section 2000d-7. Furthermore, the court reads the catch-all phrase of section 2000d-7(a)(1) in its entirety, meaning that the federal statute must contain a provision specifically "prohibiting discrimination by recipients of Federal financial assistance." Each of the specifically enumerated statutes provides that "no person" shall be discriminated against on the basis of the particular characteristic protected by the statute under "any program or activity receiving federal financial assistance." Reading the catch-all phrase consistently with the specified statutes, the court finds that section 3720(h) is not within the purview of the immunity exception of section 2000d-7.
Finally, there is nothing in either statute that suggests section 2000d-7 applies to section 3720(h) nor has the court been cited any authority to support such a reading. Indeed, the Supreme Court's reiteration of Atascadero commands the contrary. In Dellmuth v. Muth, 491 U.S. 223 (1989), the Court was called upon to determine whether Congress had abrogated the sovereign immunity of the states under the Education of the Handicapped Act ("EHA"). Among the statutory provisions considered by the Court was one adopted in 1986, the same year that sections 2000d-7 of the Rehabilitation Act and 3720(h) of the False Claims Act were adopted. That provision barred a reduction of attorney's fees under certain circumstances where a state or local educational agency had acted unreasonably or in violation of the statute. The EHA also contained provisions for bringing an action for judicial review in federal court. The Supreme Court conceded that the likely defendants in an action under the EHA are state and local agencies and that it was a "permissible inference" that Congress intended to make the states liable for damages. Nonetheless, said the Court, despite the "logical force" of this analysis, the statute did not contain the "unequivocal declaration" necessary to abrogate the states' immunity. Id. at 232. The Court held that the EHA lacked the explicit language necessary to meet the test of Atascadero. Reliance on inferences, abrogation by implication or even legislative history will not suffice; there must be a clear, unequivocal abrogation on the face of the statute. Putting further emphasis on its holding in Atascadero, the Court stressed that "if Congress' intention is `unmistakably clear in the language of the statute', recourse to legislative history will be unnecessary; if Congress' intention is not unmistakably clear, recourse to legislative history will be futile, because by definition the rule of Atascadero will not be met." Id. at 230.
In discussing 42 U.S.C. § 2000d-7, the Court did not suggest that it provides a basis for abridgement of sovereign immunity for the EHA. Section 2000d-7(a)(1) is used as an example of the kind of clear, unequivocal language the Court requires to demonstrate Congress' intent to accomplish abridgement. Thus, Dellmuth v. Muth provides no argument in support of plaintiff's contention here and, in fact, suggests that the Court does not consider subparagraph (a)(1) as supporting abrogation of Eleventh Amendment immunity under other statutes even where it is clear that the source of federal judicial authority is federal funding and the statute is adopted for the purpose of protecting a class of persons such as the handicapped, the EHA meeting both of these requirements. The absence of an explicit provision in the statute was decisive inDellmuth. It may be that the catch-all phrase of subparagraph (a)(1) will not meet the Supreme Court's test for any statutes other than those specifically enumerated in that provision absent at least a clear reference to section 2000d-7, if not an explicit declaration in the statute itself.
It is clear that the False Claims Act lacks the necessary unambiguous language to abridge Eleventh Amendment immunity. The FCA is far more equivocal than the EHA and does not even allow the "permissible inferences" of that statute. The instruction of the Supreme Court is, however, unequivocal. Therefore, this court finds no basis for holding that 31 U.S.C. § 3730(h) or any other provision of the False Claims Act amounts to an abridgement of the states' immunity under the Eleventh Amendment.
Accordingly, the court dismisses plaintiff's claim under section 3730(h) without leave to amend.6 CONCLUSION
For the foregoing reasons, defendants' motion for summary judgment as to plaintiff's cause of action under the False Claims Act is hereby GRANTED without leave to amend.
IT IS SO ORDERED.
(fn4) Even if the language of a particular statute unequivocally abrogates states' sovereign immunity, the Supreme Court requires a second level of inquiry — whether in seeking to abrogate that immunity Congress has acted pursuant to a valid exercise of power. Seminole Tribe of Florida v. Florida, ___ U.S. ___, 116 S.Ct. 1114, 1123 (1996). In Seminole the Court reaffirmed its decision in Fitzpatrick v. Bitzer, 427 U.S. 445 (1976), which held that Congress has the power to abrogate Eleventh Amendment immunity when it acts pursuant to the Fourteenth Amendment, id. at 1125, but then appeared to confine Congressional authority to abrogate state sovereign immunity to those instances alone by overruling Pennsylvania v. Union Gas Co., 491 U.S. 1 (1989), which it characterized as a lone exception in allowing Eleventh Amendment abrogation pursuant to the Interstate Commerce Clause.Id. at 1128 ("Never before the decision in Union Gas had we suggested that the bounds of Article III could be expanded by Congress operating pursuant to any constitutional provision other than the Fourteenth Amendment."). The Court concluded inSeminole that the Indian Commerce Clause likewise does not confer power on Congress to abrogate the states' sovereign immunity. Id. at 1131-32.
While this court's analysis need not proceed to this point, given this recent development in Eleventh Amendment doctrine, it seems unlikely that even with unequivocal language in section 3730(h) that abrogation of state sovereign immunity would be valid.