Little v. Shell Exploration & Production Co.

690 F.3d 282, 181 Oil & Gas Rep. 439, 2012 WL 3089777, 2012 U.S. App. LEXIS 15785
CourtCourt of Appeals for the Fifth Circuit
DecidedJuly 31, 2012
Docket11-20320
StatusPublished
Cited by34 cases

This text of 690 F.3d 282 (Little v. Shell Exploration & Production Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Little v. Shell Exploration & Production Co., 690 F.3d 282, 181 Oil & Gas Rep. 439, 2012 WL 3089777, 2012 U.S. App. LEXIS 15785 (5th Cir. 2012).

Opinions

LESLIE H. SOUTHWICK, Circuit Judge:

This case presents an issue of first impression for our court. Is a federal employee, even one whose job it is to investigate fraud, a “person” under the False Claims Act such that he may maintain a qui tam action? We disagree with the district court and conclude that there is no basis to except such an employee from personhood. A second question is whether the Act’s “public disclosure bar” is an impediment to this suit. The district court determined that this bar applied but used an overly broad conception of the bar. We REVERSE and REMAND for further proceedings consistent with this opinion.

FACTUAL AND PROCEDURAL HISTORY

In early 2006, relators Randall Little and Joel Arnold filed two qui tam suits against Shell in the Western District of Oklahoma. They alleged that Shell had defrauded the U.S. Department of the Interior of at least $19 million. Specifically, they charged that from October 2001 through 2005, Shell had deprived the United States of royalties by taking unauthorized deductions for expenses to gather and store oil on twelve of its offshore drilling platforms.

At the time their suits were filed, Little was a Senior Auditor and Arnold a Supervisory Auditor for the Minerals Management Service (MMS), an agency within the Department of the Interior that administered Shell’s leases.1 Part of MMS’s mission was to uncover theft or fraud in the royalty programs. Little reported the information he uncovered to Arnold, his immediate supervisor, and the two furnished it to their mutual superior, Lonnie Kim-ball. It is undisputed that the Shell allegations came to light during the course of their official duties and that reporting their findings to Kimball was a job requirement. It is also undisputed that this information was conveyed before the filings of the qui tam actions. To their knowledge, neither MMS nor any other federal agency has ever acted on this information.

Special procedures apply to qui tam suits under the False Claims Act. They are suits brought “for the person and for the United States Government.” 31 U.S.C. § 3730(b)(1). Before a defendant is served, the relator must provide the complaint and “substantially all material evidence and information” he has to the United States. § 3730(b)(2). The case remains under seal for 60 days. The government may intervene in the litigation and then prosecute the action itself, or move to have it dismissed. § 3730(c)(2)(A). The court may grant dismissal “notwithstanding the objections” of relators. Id. Should the government intervene and continue the suit, the relators receive between 10 and 25 percent of any judgment, whereas their share rises to between 25 and 30 percent if the United States declines participation. § 3730(d)(1), (2).

These procedures were followed. After the government notified the court it did not wish to intervene, the court ordered the case to be unsealed and the defendants to be served. The cases were transferred [285]*285from Oklahoma to the Southern District of Texas on March 2, 2007, and consolidated there by the parties’ joint request. See 28 U.S.C. § 1404(a); Fed.R.Civ.P. 42(a).

In April 2011, the district court granted summary judgment to Shell on the ground that two distinct False Claims Act provisions prohibited the suit: Section 3730(b)(1), describing who may bring suit, and the public disclosure bar contained in Section 3730(e)(4)(A), (B). Relators timely appeal. As amicus curiae, the United States urges us to construe the False Claims Act as barring suits by government employees who discover wrongdoing in the scope of their official duties.

DISCUSSION

1. Constitutional Standing

We first address the government’s claim that there is no Article III jurisdiction. Though raised for the first time on appeal, a legitimate question about jurisdiction must be answered no matter when it is first asked. Arena v. Graybar Elec. Co., 669 F.3d 214, 223 (5th Cir.2012).

A plaintiff ordinarily must show (1) an injury in fact, (2) that the injury is fairly traceable to the challenged conduct, and (3) that a victory in litigation will likely redress the injury. See Adar v. Smith, 639 F.3d 146, 150 (5th Cir.) (en banc), cert. denied, — U.S. -, 132 S.Ct. 400, 181 L.Ed.2d 257 (2011). It is settled that qui tarn relators who are not federal employees have constitutional standing. Vt. Agency of Natural Res. v. United States ex rel. Stevens, 529 U.S. 765, 773-74, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000). Standing exists because “a qui tarn relator is, in effect, suing as a partial assignee of the United States[’s]” claim for damages. Stevens, 529 U.S. at 773 n. 4, 120 S.Ct. 1858.

Article III grants judicial power over the “Cases” and “Controversies” that were the traditional concern of the courts in England. Id. at 774, 120 S.Ct. 1858. There was a “long tradition of qui tarn actions in England and the American Colonies.” Id. We have interpreted Stevens to hold “that the history of qui tarn was ‘well nigh conclusive’ with respect to resolving the question of whether qui tarn relators filing suit under the [False Claims Act] have Article III standing.” Riley v. St. Luke’s Episcopal Hosp., 252 F.3d 749, 752 (5th Cir.2001) (en banc).

The government distinguishes Stevens, which involved relators who were not federal employees, by arguing employee-relators might not be able to retain their litigation awards.2 It contends that the prospect of not retaining damages undercuts Stevens’s rationale. Even assuming a federal employee may not retain his award, a subsequent decision clarifies that there nonetheless would be standing. In that decision, the Supreme Court fully embraced the concept that an “assignee can sue based on his assignor’s injuries.” Sprint Commc’ns Co. v. APCC Servs., Inc., 554 U.S. 269, 286, 128 S.Ct. 2531, 171 L.Ed.2d 424 (2008). In rejecting the claim that not benefitting from litigation proceeds creates a redressability problem, the court held that the inquiry focuses “on whether the injury that a plaintiff alleges is likely to be redressed through the litigation — not on what the plaintiff ultimately intends to do with the money he recovers.” Id. at 287, 128 S.Ct. 2531.

[286]*286Thus, claims by federal-employee relators can create a case or controversy. We now must determine whether the False Claims Act allows such claims.

II. Who May Bring a False Claims Act Qui Tam Action?

The district court granted summary judgment, which is proper if there are no genuine disputes of material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). Our review is

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Bluebook (online)
690 F.3d 282, 181 Oil & Gas Rep. 439, 2012 WL 3089777, 2012 U.S. App. LEXIS 15785, Counsel Stack Legal Research, https://law.counselstack.com/opinion/little-v-shell-exploration-production-co-ca5-2012.