Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_03-cv-00457/USCOURTS-caed-2_03-cv-00457-2/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 31:3729 False Claims Act

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28 1 All references to “Rules” are to the Federal Rules of Civil

Procedure.

1

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA ex rel. )

MARY HENDOW and JULIE ALBERTSON, )

) 2:03-cv-457-GEB-DAD

Plaintiffs, )

)

v. ) ORDER

)

UNIVERSITY OF PHOENIX, )

)

Defendant. )

)

Defendant University of Phoenix (“UOP”) moves for dismissal

of Plaintiffs’ (“Relators”) action under Federal Rule of Civil

Procedure 12(b)(1) for lack of subject matter jurisdiction, arguing

that UOP “is no longer a proper defendant in this False Claims Act

(“FCA”) case.”1 (Def.’s Mot. at 1:3-4.) The Relators oppose this

motion. In addition, the United States filed a statement of interest

opposing UOP’s motion. Oral argument on the motion was heard on June

25, 2007.

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DISCUSSION

I. Standard

Rule 12(b)(1) allows a party to seek dismissal of a claim

for lack of subject matter jurisdiction. “If [a] controversy is moot

. . . the trial . . . court[] lack[s] subject matter jurisdiction.” 

Felster Publ’g v. Burrell, 415 F.3d 994, 998 (9th Cir. 2005). A

complete settlement of the underlying claims renders an action moot. 

See Riverhead Sav. Bank v. Nat’l Mortg. Equity Corp., 893 F.2d 1109,

1112 (9th Cir. 1990). 

“[A] Rule 12(b)(1) motion can attack the substance of a

complaint’s jurisdictional allegations despite their formal

sufficiency, and in so doing rely on affidavits or any other evidence

properly before the court.” St. Clair v. Chico, 880 F.2d 199, 201

(9th Cir. 1989). “With a [Rule] 12(b)(1) motion, a court may weigh

the evidence to determine whether it has jurisdiction.” Autery v.

United States, 424 F.3d 944, 956 (9th Cir. 2005). “When subject

matter jurisdiction is challenged under [Rule] 12(b)(1), the plaintiff

has the burden of proving jurisdiction in order to survive the

motion.” Tosco Corp. v. Cmtys. for a Better Env’t, 236 F.3d 495, 499

(9th Cir. 2001). 

II. Analysis

UOP contends: 

While this case was on appeal from the Court’s

order dismissing Relators’ Second Amended

Complaint, the Government administratively pursued

and settled the allegations asserted in this qui

tam action against UOP for $9.8 million. The

Government therefore pursued an “alternate remedy”

to this action within the meaning of the FCA, 31

U.S.C. § 3730(c)(5). Consequently, the

Government’s claims against UOP are now barred as

moot, and Relators no longer have standing to

assert claims against UOP on the Government’s

behalf. All that remains is for a court to

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determine how much, if any, Relators are entitled

to of the $9.8 million that UOP has already paid

to the Government as a result of Relators’

allegations.

(Def.’s Mot. at 1:4-11.) The Relators, and the United States, counter

that the subject Settlement Agreement negotiated between UOP and the

Department of Education (“DOE”) in the Fall of 2004 does not moot this

action since the Settlement Agreement “explicitly stated that the

Settlement would not encompass or resolve UOP’s potential [FCA]

liability.” (Relators’ (“Rels.’”) Opp’n at 1:3-4; Gov.’s Statement at

1:9-12.) The Settlement Agreement stated:

[DOE] does not have the authority to, and this

Agreement does not, waive, compromise, restrict or

settle any past, present or future violations by

UOP, its trustees, officers or employees of the

criminal laws of the United States or any action

initiated against UOP, its trustees, officers or

employees for civil fraud against the United

States under 31 U.S.C. §§ 3729-33 [the FCA].

(Rels.’ Opp’n at 1:8-12.) The Relators and the United States further

contend the Settlement Agreement cannot constitute an election of an

alternate remedy within the meaning of the FCA because the FCA

“commits exclusive authority to settle claims . . . to the Attorney

General” and it was entered into “without the knowledge of the

Attorney General.” (Gov.’s Statement of Interest at 7:2-3; Rels.’

Opp’n at 13:28-14:3.) 

Since the Settlement Agreement did not constitute an

“election” of an “alternate remedy” by the “Government” within the 

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meaning of the FCA, the Relators’ action is not moot. Accordingly,

UOP’s motion is denied.

IT IS SO ORDERED.

Dated: August 17, 2007

 

GARLAND E. BURRELL, JR.

United States District Judge

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