United States Ex Rel. Totten v. Bombardier Corp.

286 F.3d 542, 351 U.S. App. D.C. 30, 2002 U.S. App. LEXIS 6992, 2002 WL 553841
CourtCourt of Appeals for the D.C. Circuit
DecidedApril 16, 2002
Docket01-7071
StatusPublished
Cited by160 cases

This text of 286 F.3d 542 (United States Ex Rel. Totten v. Bombardier Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States Ex Rel. Totten v. Bombardier Corp., 286 F.3d 542, 351 U.S. App. D.C. 30, 2002 U.S. App. LEXIS 6992, 2002 WL 553841 (D.C. Cir. 2002).

Opinions

Opinion for the court filed by Circuit Judge EDWARDS.

Concurring opinion filed by Circuit Judge RANDOLPH.

[544]*544EDWARDS, Circuit Judge:

Suspecting that his employer, the National Railroad Passenger Corporation (“Amtrak”) was being defrauded by two companies with whom it had contracted to supply new rail cars with improved toilet systems, Edward Totten brought an action against these companies under the False Claims Act (“FCA”), 31 U.S.C. §§ 3729-3733 (1994). The District Court dismissed his suit, holding that, pursuant to a recent amendment to Amtrak’s governing statute, the FCA could not be invoked with respect to federal money invested in the railroad. Totten now appeals this decision, and in so doing presents us with an issue of first impression regarding the extent to which doing business with Amtrak immunizes contractors from FCA liability.

In 1997, Congress enacted legislation which stated, in part, that Amtrak “shall not be subject to title 31.” See Amtrak Reform and Accountability Act of 1997, Pub.L. No. 105-134, § 415(d), 111 Stat. 2570 (Dec. 2, 1997) (“the Reform Act”), codified at 49 U.S.C.A. § 24301(a)(3) (2001). Because the FCA is included in title 31 of the U.S.Code, the District Court concluded that a suit by Totten against contractors doing business with the railroad would impermissibly make Amtrak “subject to” the FCA. We disagree. Instead, we hold that the Reform Act erects no per se bar preventing individuals from bringing FCA actions against those who make false or fraudulent claims implicating the federal funds invested in Amtrak. Neither the text nor the legislative history of § 24301(a)(3) compels a blanket liability exception for businesses serving Amtrak.

Accordingly, we reverse the judgment of the District Court and remand the case for further proceedings. On remand, Totten may amend his complaint, which presently is inadequate, in order to state a proper claim for relief under the FCA. The District Court indicated that it would have permitted such an amendment had it not interpreted the Reform Act as posing an insurmountable obstacle to Totten’s suit. We agree that an opportunity to amend is permissible and appropriate.

In amending his complaint, Totten must state with particularity the circumstances surrounding the defendants’ allegedly false claims, as required by Rule 9(b) of the Federal Rules of Civil Procedure. He must also aver that the defendants actually submitted false demands for payment, rather than merely non-conforming goods. That said, we express no view on the question left open by this court in United States ex rel. Yesudian v. Howard University, 153 F.3d 731, 737-39 (D.C.Cir.1998), concerning the relationship between subsections (a)(1) and (c) of 31 U.S.C. § 3729. Instead, we leave it to the District Court to determine, should the issue arise on remand, whether an FCA plaintiff may prevail against a defendant who submits a false “claim” to Amtrak, as that term is defined in § 3729(c), without evidence that the claim was ever submitted (or resubmitted) to the federal government. We will not venture to offer an answer to this difficult legal question on the record currently before us.

I. BACKGROUND

Congress created Amtrak in 1971 in order to stave off the threatened extinction of passenger rail service in the United States. See Rail Passenger Service Act of 1970, Public Law No. 91-518, 84 Stat. 1327 (Oct. 30, 1970); Nat’l R.R. Passenger Corp. v. Atchison, Topeka & Santa Fe Ry. Co., 470 U.S. 451, 453-55, 105 S.Ct. 1441, 1445-57, 84 L.Ed.2d 432 (1985). Since its inception, the statutes governing Amtrak have indicated that the railroad is to be managed as a for-profit corporation, and not as a “department, agency, or instrumentality” of the federal government. See [545]*545generally Lebron v. Nat’l R.R. Passenger Corp., 513 U.S. 374, 383-86, 115 S.Ct. 961, 966-68, 130 L.Ed.2d 902 (1994). This status continues to the present day. See 49 U.S.C.A. § 24301(a). As such, the railroad is generally exempt from those “statutes that impose obligations or confer powers upon Government entities.” Lebron, 513 U.S. at 392, 115 S.Ct. at 971 (holding that Amtrak is nevertheless subject to the constraints of the Constitution).

Until 1997, Amtrak was formally classified as a “mixed-ownership Government corporation,” 31 U.S.C. § 9101(2)(A) (1983), and was therefore bound by the rules that federal law imposes on such entities. See Government Corporation Control Act, 31 U.S.C. §§ 9101-9109 (“GCCA”). That year, concerned that these and other restrictions were jeopardizing Amtrak’s financial viability, Congress enacted the Reform Act in order to increase the railroad’s managerial flexibility and improve its economic prospects. See S.Rep. No. 105-85, at 1 (1997), U.S.Code Cong. & Admin.News 1997, 3055 (“In order to achieve operating self-sufficiency, the bill is designed to enable Amtrak to increase efficiencies, reduce costs, and operate as much like a private business as possible.”). To these ends, while Amtrak was provided with an influx of federal dollars — appropriations totaling $5.2 billion over the 1998-2002 period — Congress simultaneously sought to alter the railroad’s legal status as a recipient of that money.

It did so in two ways that are significant for the present appeal. First, the Reform Act amended the GCCA to remove Amtrak from the list of mixed-ownership corporations. See Pub.L. No. 105-134, § 415(d)(2). This change freed the railroad from the requirements that bind companies so designated, such as the submission of budget reports to Congress, 31 U.S.C. § 9103, and annual government audits, 31 U.S.C. § 9105. Relatedly, the Act specifically amended 49 U.S.C. § 24301(a)(3) to provide that Amtrak “shall not be subject to title 31.” See Pub.L. No. 105-134, § 415(d)(1). These amendments do not figure prominently in the legislative history of the Reform Act. Indeed, the only specific reference to this section of the bill notes tersely that it “removes Amtrak from the Government Corporations Act.” H.R.Rep. No. 105-251, at 34 (1997).

Certainly, neither the statutory text nor its history makes any mention of the False Claims Act. Yet, along with the rules regarding government corporations, that statute is housed in title 31.

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286 F.3d 542, 351 U.S. App. D.C. 30, 2002 U.S. App. LEXIS 6992, 2002 WL 553841, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-ex-rel-totten-v-bombardier-corp-cadc-2002.