Opinion
Civil Action No. 3:98-CV-2143-D
March 5, 2003
MEMORANDUM OPINION AND ORDER
In this action alleging claims under the False Claims Act, 31 U.S.C. § 3729-3732 ("FCA") and state-law claims for common law fraud and breach of contract, the court addresses defendant Northrop Grumman Corporation's ("Northrop's") November 22, 2002 motion to strike relator's second amended complaint, Northrop's November 25, 2002 motion to dismiss second amended complaint, and plaintiff Stephen G. Coppock's ("Coppock's") December 12, 2002 motion to stay Northrop's motion to dismiss and for appropriate discovery. For the reasons that follow, the court denies Northrop's motion to strike, defers a ruling on Northrop's motion to dismiss and directs the parties to complete the briefing of the motion, and denies Coppock's motion to stay and for additional discovery.
Also pending for decision are Coppock's January 31, 2003 second motion to compel and Northrop's February 20, 2003 motion to stay consideration of second motion to compel. The court denies Northrop's motion to stay consideration of second motion to compel. Because in Northrop's motion to stay it has included its substantive response to the motion, the court directs Coppock to file his reply brief in support of his motion to compel no later than March 21, 2003.
In due course, the court will decide the motion or refer it, in whole or in part, to the magistrate judge for determination.
I
The relevant background facts and procedural history of this case are set out in the court's memorandum opinion and order addressing Northrop's motion to dismiss to Coppock's first amended complaint, see United States ex. rel. Coppock v. Northrop Grumman Corp., 2002 WL 1796979, at *1-*5 (N.D. Tex. Aug. 1, 2002) (Fitzwater, J.) (" Coppock I"), and need not be repeated except as necessary to understand the court's present decision. In Coppock I the court granted in part and denied in part Northrop's motion to dismiss Coppock's first amended complaint and afforded Coppock an opportunity to replead. On September 3, 2002 Coppock filed a second amended complaint, which he substituted, without objection, on October 24, 2002. His substituted second amended complaint ("amended complaint") is the subject of Northrop's motions to strike and to dismiss.Northrop maintains that four FCA counts in Coppock's amended complaint should be stricken because they exceed the scope of the leave the court gave Coppock when in Coppock I it permitted him to amend. Northrop separately moves to dismiss the amended complaint for lack of jurisdiction under Fed.R.Civ.P. 12(b)(1) and for failure to state a claim and to plead fraud with particularity under Rules 12(b)(6) and 9(b). Coppock moves to stay consideration of the motion to dismiss so that discovery can be conducted. He also moves to compel Northrop to make certain discovery, and Northrop moves to stay consideration of the motion to compel.
II
Northrop argues in its motion to strike that the FCA claims alleged in counts I, II, IV, and V of the amended complaint exceed the scope of the leave to amend that the court gave Coppock in Coppock I. It cites the parts of Coppock I in which "the court direct[ed] Coppock to replead in order to comply with Rule 9(b) with respect to the spill component of his FCA claim," Coppock I, 2002 WL 1796979, at *10, and ordered that "Coppock shall have 30 days from the date this memorandum opinion and order is filed to file an amended complaint that cures the deficiencies identified," Id. at *15 (footnote omitted). See D. Br. (Mot. Strike) at 3. Northrop maintains that counts I, II, IV, and V of the amended complaint contain new or previously dismissed claims that Coppock did not seek or obtain leave to assert, despite several prior opportunities to plead FCA causes of action. It seeks to constrict Coppock's FCA cause of action to one that is based solely on the July 31, 1997 spill.
When Coppock Iis read in its entirety, Northrop's argument fails. There the court considered the adequacy vel non of Coppock's first amended complaint, which asserted under the rubric of a single count an FCA claim that consisted of several components. See id. at *5 n. 4. ("Throughout this memorandum opinion, the court refers to Coppock's FCA claim in the singular — despite the fact that he relies on three separate types of claims (§ 3729(a)(1), (a)(2), and (a)(7)) and on several factual predicates to establish these claims — because he asserts the claim as a single count in his amended complaint, see Compl. ¶¶ 113-117."). The court parsed the constituent elements of the claim when it analyzed it under Rules 12(b)(1), 9(b), and 12(b)(6). The court held first "that Coppock ha[d] failed to plead subject matter jurisdiction under the FCA except to the extent that he predicate[d] this cause of action on the July 31, 1997 spill." Id. at *7, It then turned to Northrop's challenge to the first amended complaint based on Rule 9(b). "Because the court [had] conclude[d] that Coppock's FCA claim invoke[d] this court's subject jurisdiction only with respect to the July 31, 1997 spill, it [limited] its decision to the question whether this component of the claim satisfie[d] Rule 9(b)." Id. The court held that some parts of the FCA claim based on the July 31, 1997 spill complied with Rule 9(b) and others did not. Id. at *9-*10. The court "direct[ed] Coppock to replead in order to comply with Rule 9(b) with respect to the spill component of his FCA claim." Id. at *10.
The court next analyzed Northrop's contention under Rule 12(b)(6) that the first amended complaint failed to state a claim on which relief could be granted. As with its Rule 9(b) analysis, the court limited its consideration of this motion to "only the components of Coppock's FCA claim that are based on the July 31, 1997 spill." Id. (footnote omitted). The court concluded that Coppock had failed to state an FCA claim based on the July 31, 1997 spill because (1) he had not adequately pleaded that the government had conditioned acceptance of a rent payment, or conditioned its decision not to seek to hold Northrop liable for violations of the lease or of statutory or regulatory obligations made applicable through the lease, based on Northrop's certification of compliance with a specific statute, regulation, or contractual provision, and (2) he had not adequately pleaded materiality concerning Northrop's conduct or claims related to the July 31, 1997 spill. Id.at *11-*12.
Because Coppock had not properly invoked this court's subject matter jurisdiction as to any FCA claim except the one based on the July 31, 1997 spill, the court had no occasion to address the substance of the other components of his FCA claim, including whether they had been pleaded adequately under Rule 9(b) or had stated a claim on which relief could be granted. Certainly, when the court gave Coppock the opportunity to amend for the purpose of curing "the deficiencies identified," the court meant those that related directly to the July 31, 1997 spill, but it also intended to include the other deficiencies found. The court thus allowed Coppock to correct all deficiencies identified, not merely the ones related to the spill. Its earlier directive that Coppock replead the spill component of his FCA claim to comply with Rule 9(b) should not be read as a limitation on its subsequent instruction to cure "the deficiencies identified." The court did not indicate that Coppock was foreclosed from attempting to plead adequately the components of his FCA claim that had been deemed deficient, jurisdictionally or otherwise. If anything, the court's opinion in Coppock I evinces its intention to decide only issues that pertain to FCA matters within its jurisdiction and to give Coppock a fair opportunity to plead an FCA cause of action:
Northrop argues that the court should not permit Coppock to replead. In view of the consequences of dismissal on the pleadings and the pull to decide cases on the merits rather than on the sufficiency of pleadings, this and other courts typically give a plaintiff at least one opportunity to cure pleading defects that the court has identified before dismissing the case, unless it is clear that the defect is incurable or the plaintiff advises the court that he is unwilling or unable to amend in a manner that will avoid dismissal. Moreover, although the court has held Coppock's ECA claim to be defective, he has asserted fraud and contract claims that survive Northrop's motion. Where the court, in ruling on a motion under Rules 9(b) and 12(b)(6), has not dismissed a suit in its entirety, it discerns no reason to deny plaintiff leave to amend.Id.at *15 n. 29.
Accordingly, because counts I, II, IV, and V do not exceed the scope of the leave to amend granted in Coppock I, the court denies Northrop's motion to strike these counts of his amended complaint.
III
The court now turns to Northrop's motion to dismiss and Coppock's motion to stay the motion to dismiss and for appropriate discovery.
Northrop moves to dismiss Coppock's amended complaint under Rule 12(b)(1) for lack of subject matter jurisdiction, under Rule 9(b) for failure to plead fraud with particularity, and under Rule 12(b)(6) for failure to state a claim on which relief can be granted. Northrop seeks dismissal of the FCA claims (counts I-V) on the ground that Coppock has not complied with the jurisdictional requirements of the FCA.
Section 3730(e)(4) provides:
No court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions . . . unless the action is brought by the Attorney General or the person bringing the action is an original source of the information. . . . "[O]riginal source" means 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 . . . which is based on the information.
A court has jurisdiction over FCA qui tam actions when the information that serves as the basis for the claim has not been disclosed or where the plaintiff is an original source of the information.
Northrop argues that the information on which Coppock bases each FCA claim was publicly disclosed. To support this contention, Northrop relies on affidavits and other documents that it maintains show that the information had already been publicly disclosed. See D. Br. (Mot. Dis.) at 7-16. Northrop posits that Coppock is not an original source of the information underlying each FCA claim. In support, it cites only Coppock's deposition testimony, which it contends shows he was not an original source, and the pleadings.
Northrop does not rely on evidence to support its Rule 12(b)(6) and 9(b) arguments.
The court explained in Coppock Ithe difference between a factual and a facial Rule 12(b)(1) jurisdictional challenge. See Coppock I, 2002 WL 1796979, at *5, In Coppock Ithe court held that Northrop presented only a facial challenge because it had adduced no evidence to support its assertions. Id. ("Because Northrop has presented no evidence to support its assertions concerning the subject matter allegations of Coppock's complaint, the court holds that Northrop has presented only a facial challenge under Rule 12(b)(1)."). In the instant motion to dismiss, however, Northrop has offered evidence, and the motion therefore presents a factual attack that requires Coppock to defeat the motion by a preponderance of the evidence.
If a defendant makes a "factual attack" upon the court's subject matter jurisdiction over the lawsuit, the defendant submits affidavits, testimony, or other evidentiary materials. In the latter case a plaintiff is also required to submit facts through some evidentiary method and has the burden of proving by a preponderance of the evidence that the trial court does have subject matter jurisdiction.Paterson v. Weinberger, 644 F.2d 521, 523 (5th Cir. May 1981).
Because Coppock has the burden of proof, it would generally make sense to grant his motion for a stay and allow him to conduct discovery sufficient to enable him, if he can, to establish that this court has subject matter jurisdiction. Here, however, the grounds for the factual attack, and the arguments on which Coppock relies to establish subject matter jurisdiction, suggest that discovery may be unnecessary. In count III, Coppock alleges jurisdiction only on the basis that he was an original source. For counts I, II, IV, and V, although Coppock asserts that the information was not publicly disclosed, he also maintains that, even if it was, he was an original source. It is possible for Coppock to withstand a factual attack on this court's FCA subject matter jurisdiction, and to meet his burden of proving jurisdiction by a preponderance of the evidence, by demonstrating that he is an original source. See § 373O(e)(4). This would not require discovery from anyone because Coppock can submit proof within his exclusive custody and control, without the need to conduct additional discovery from individuals under Northrop's control. Coppock admits as much:
[It is] agree[d] that the questioning during. . . depositions [of the requested additional discovery] should concern the facts going to whether the allegations of fraud in the [amended complaint] have been publicly disclosed and [should] not go to "original source." . . . [T]he formulation in the Court's order should be that the depositions will concern "facts showing or refuting that the allegations of Count I-V have been publicly disclosed."
P. Rep. Br. (Mot. to Stay) at 16 n. 13.
The court therefore discerns no reason to grant a stay so that additional discovery can be conducted. Briefing on the Rule 12(b)(6) and 9(b) components of Northrop's motion to dismiss is appropriate now, without additional discovery, because Northrop advances legal challenges to the adequacy of the amended complaint that do not require factual determinations. Concerning Northrop's Rule 12(b)(1) motion, all the information necessary for Coppock to demonstrate original source jurisdiction is available to him and can be presented on the basis of his personal knowledge. Briefing can take place concerning all jurisdictional issues related to count III because Coppock asserts only original source jurisdiction, which does not require a stay for discovery. Jurisdictional issues related to counts I, II, IV, and V can be addressed on the basis of original source jurisdiction. If the court determines that original source jurisdiction does not exist with respect to those counts, a stay can be granted and additional, tailored discovery can be conducted so that Coppock can present evidence on the public disclosure issue. If Coppock establishes original source jurisdiction as to all counts, a stay will be unnecessary.
The court recognizes that the regimen it has adopted potentially builds in additional delay for discovery on the issue of public disclosure. This is problematic in a case that is already old due to delay attributable to the government in deciding whether to intervene and to Coppock in waiting to effect service after the government disclosed its decision. The court considers this approach preferable, however, to allowing potentially wide-ranging discovery from persons whose testimony may be unnecessary and to forcing the parties to incur the certain costs and delay associated with conducting discovery that will not be needed if the FCA jurisdiction question can be resolved based on Coppock as an original source.
IV
Accordingly, the court denies Nothrop's November 22, 2002 motion to strike Coppock's second amended complaint and Coppock's December 12, 2002 motion to stay and for additional discovery. The court directs Coppock to file his responsive brief and appendix in opposition to the motion to dismiss no later than March 26, 2003. Northrop's reply brief and appendix must be filed no later than April 10, 2003. If the court concludes that Coppock cannot demonstrate original source jurisdiction for counts I, II, IV, and V, the court will direct further briefing on that issue after Coppock has been given time to conduct limited discovery. The terms of such discovery and a briefing schedule will be set out, if necessary, in the court's decision regarding the motion to dismiss.
Because Coppock has the burden of proof, Northrop will be unable to present refutation evidence until its reply brief Accordingly, although in other contexts the court has held that reply briefs cannot be supported by evidentiary appendixes, see, e.g., Dethrow v. Parkland Health Hospital System, 204 F.R.D. 102, 104 (N.D. Tex. 2001) (Fitzwater, J.) (holding that party may not file summary judgment reply appendix without first obtaining leave of court), it concludes that Northrop should be allowed to present evidence, if necessary. And because Coppock has the burden of proof, the court may, if requested, allow him to file a surreply that is limited to the Rule 12(b)(1) issues and addresses any such evidence because the party with the burden on a motion should normally have the right to open and close the briefing. See Springs Indus., Inc. v. American Motorists Ins. Co., 137 F.R.D. 238, 239 (N.D. Tex. 1991) (Fitzwater, J.).
Northrop's February 20, 2003 motion to stay consideration of second motion to compel is denied. The court directs Coppock to file his reply brief in support of his motion to compel no later than March 21, 2003.
SO ORDERED.