United States v. TRW, Inc.

4 F.3d 417, 1993 WL 316039
CourtCourt of Appeals for the Sixth Circuit
DecidedAugust 23, 1993
DocketNos. 91-3784, 92-3066
StatusPublished
Cited by9 cases

This text of 4 F.3d 417 (United States v. TRW, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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United States v. TRW, Inc., 4 F.3d 417, 1993 WL 316039 (6th Cir. 1993).

Opinion

RYAN, Circuit Judge.

This appeal involves two consolidated cases filed under the qui tam1 provisions of the Federal False Claims Act (the Act), 31 U.S.C. §§ 3729 et seq. In Case No. 92-3066 (Eagleye I), the plaintiffs, Larry Eagleye, Alan Russ, and Charles Broome, appeal the district court’s order dismissing them from the action. The issues in this appeal are:

Whether the district court correctly ruled that the 1986 and 1988 amendments do not apply retroactively to the plaintiffs’ qui tam action; and
[419]*419Whether the district court correctly determined that the plaintiffs are not entitled to recover under the 1982 provisions of the Act.

In Case No. 91-3784, 947 F.2d 947, (Eagleye II), plaintiff Eagleye appeals the district court’s order dismissing the entire action, and the issue raised on appeal is:

Whether the district court properly dismissed Eagleye’s second qui tam action.

Because we find that the district court committed no error, we shall affirm.

I.

A. Background

In November 1984, counsel for defendant TRW met with representatives of the federal government to inform them of an internal investigation into the accounting practices of TRW’s Aircraft Components Group. On November 28, 1984, TRW provided the Department of Justice and the Department of Defense with a report that detailed the results of TRW’s internal investigation. According to the report, TRW uncovered government subcontract pricing irregularities, which occurred between 1978 and 1984, by a division of its Aircraft Components Group. Under these noncompetitive subcontracts, the Components division had manufactured parts for military jet engines for several government prime contractors. On February 28, 1985, TRW provided the government with a supplemental report disclosing the results of an audit of the materials purchased by the Components division for its government contracts. The November and February reports revealed irregularities in the Components division’s standard cost accounting system that resulted in overcharges to the government for labor and parts.

As a result of TRW’s voluntary disclosures, the government opened a criminal investigation in December 1984. The criminal investigation was concluded in August 1988 when TRW and five former division employees, including two of the qui tam plaintiffs in the case, pled guilty to various criminal charges. On April 19,1988, plaintiff Eagleye pled guilty to one count of conspiring to defraud the government, in violation of 18 U.S.C. § 371; on August 25,1988, TRW pled guilty to three counts of conspiring to defraud the government; and on August 31, 1988, plaintiff Broome pled guilty to one count of mail fraud, in violation of 18 U.S.C. § 1341.

B. The False Claims Act

Under the False Claims Act, a person who “knowingly presents ... a false or fraudulent claim for payment” to the government can be liable to the government for: 1) a penalty, between $5,000 and $10,000 under the present provisions, and $2,000 under the 1982 provisions; 2) three times the amount of damages sustained by the government, two times the amount under the 1982 version; and 3) costs of the civil action brought to recover the penalty or damages. 31 U.S.C. § 3729(a). The Act contains qui tam provisions under which an individual may bring a civil action on his own behalf and on behalf of the government against anyone who violates the Act. 31 U.S.C. § 3730(b)(1). Under the Act, if an individual files such a civil suit, the government may take over the action by entering an appearance within 60 days after being notified of the pendency of the lawsuit. 31 U.S.C. § 3730(b)(2). Under the 1982 version of the Act, “[i]f the Government proceeds with the action, the action is conducted only by the Government,” and “[t]he Government is not bound by an act of the person bringing the action.” 31 U.S.C. § 3730(b)(3). An individual who brings a qui tam action may receive a reasonable portion of the amount recovered even if the government takes over the action. 31 U.S.C. §§ 3730(b)(1) and (e) (1982). The 1982 Act also includes a provision that prohibits the district court from exercising jurisdiction over suits brought under the Act in eases where the government decides not to participate in the action and the qui tam plaintiffs claims are based on information already in the possession of the government. 31 U.S.C. § 3730(c)(1) (1982).

On October 27, 1986, Congress amended the Act. False Claims Amendment Act of 1986, Pub.L. 99-562, 100 Stat. 3153 (Oct. 27, 1986), now codified at 31 U.S.C. §§ 3729-3733 (1988). The amendments expand the [420]*420circumstances under which citizens may bring suit on behalf of the government, participate in the litigation, and recover a share of a judgment. The amendments change the Act’s jurisdictional bar to provide that qui tam actions based on information that was publicly disclosed prior to initiation of the action will be barred unless the plaintiff who brings the action is an “original source” of the information underlying the complaint. 31 U.S.C. § 3730(e)(4)(A). Congress further amended the Act in 1988 to provide for the dismissal of plaintiffs who are “convicted of criminal conduct arising from [their] role in the violation of [the Act].” Major Fraud Act of 1988, § 9, Public L. 100-700, 102 Stat. 4638 (Nov. 19, 1988), now codified at 31 U.S.C. § 3730(d)(3) (1988).

II. Eagleye I

A.

On April 4, 1986, before the 1986 amendments became effective, Eagleye, Russ, and Broome filed a qui tam action under the Act, 31 U.S.C. §§ 3729 et seq., against defendants TRW, General Electric Company, United Technologies, and Iscar Blade Ltd., an Israeli defense contractor (Eagleye I). The plaintiffs’ complaint alleged that GE, as contractor, and TRW, as subcontractor, engaged in several conspiracies that resulted in the presentation of false claims for payment to the United States on military jet engine contracts from 1979 through 1984.

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