Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-15-07049/USCOURTS-caDC-15-07049-0/pdf.json

Parties Involved:
Anthony Oliver
Appellant
Philip Morris USA Inc.
Appellee
United States

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 15, 2016 Decided June 21, 2016

No. 15-7049

UNITED STATES, EX REL. ANTHONY OLIVER,

AND

ANTHONY OLIVER,

APPELLANT

v.

PHILIP MORRIS USA INC., A VIRGINIA CORPORATION,

FORMERLY KNOWN AS PHILIP MORRIS INCORPORATED,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 1:08-cv-00034)

David S. Golub argued the cause for appellant. With him 

on the brief were Carl S. Kravitz and Jason M. Knott.

Elizabeth P. Papez argued the cause for appellee. With 

her on the brief were Andrew C. Nichols, Eric M. Goldstein, 

Eric T. Werlinger, and Thomas J. Frederick. Ilan Wurman

entered an appearance.

Before: ROGERS and WILKINS, Circuit Judges, and 

WILLIAMS, Senior Circuit Judge.

USCA Case #15-7049 Document #1620608 Filed: 06/21/2016 Page 1 of 24
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Opinion for the Court filed by Circuit Judge WILKINS.

WILKINS, Circuit Judge: Appellant and relator Anthony 

Oliver brings this qui tam action alleging that Appellee Philip 

Morris USA violated the False Claims Act (“FCA”), 31 

U.S.C. §§ 3729-3733 (2006),1 by charging the Navy 

Exchange Service Command (“NEXCOM”) and the Army 

and Air Force Exchange Service (“AAFES”) prices for 

cigarettes that violated the terms of their contracts. The 

District Court concluded that it lacked jurisdiction to hear the 

claim under the FCA’s public disclosure bar, 31 U.S.C. 

§ 3730(e)(4)(A). After reviewing the record, we affirm the 

judgment of the District Court. The transactions that Oliver 

contends create an inference of fraud were publicly disclosed 

through a statutorily enumerated channel, triggering the 

jurisdictional bar. Additionally, Oliver does not possess any 

direct information about the underlying transactions that 

would allow him to rescue his claim from the jurisdictional 

bar by qualifying as an original source.

I.

Oliver is the President and CEO of Medallion Brands 

International Company (“Medallion”), which sells tobacco 

products to civilian and military markets in the United States 

and abroad.2

 NEXCOM and AAFES (collectively “the 

 1 All citations are to the 2006 version of the statute unless otherwise 

noted. 2 The facts are taken from the second amended complaint 

(“Complaint” or “Compl.”) and Oliver’s supporting declaration. 

For purposes of a motion to dismiss, the facts alleged in the 

Complaint are taken to be true, and all inferences are drawn in 

Oliver’s favor. See U.S. ex rel. Davis v. District of Columbia, 679 

F.3d 832, 834-35 (D.C. Cir. 2012). We may also consider Oliver’s 

USCA Case #15-7049 Document #1620608 Filed: 06/21/2016 Page 2 of 24
3

Exchanges”) provide goods and services to customers in the 

military community. Each of the Exchanges’ contracts with 

its vendors includes “Most Favored Customer” provisions 

(the “MFC provisions”). These provisions ensure that “the 

prices paid by [the Exchanges] for the products they purchase 

are equal to or more favorable than the prices, including any 

customer discounts, at which the vendors sell like products to 

other non-governmental and government purchasers.” 

Compl. ¶ 9, J.A. 17. Philip Morris USA (“Philip Morris” or 

“PM USA”) has, since at least 2002, sold cigarette products to 

the Exchanges pursuant to contracts including the MFC 

provisions. Despite Philip Morris’s knowledge of the MFC 

provisions, Philip Morris sold the Exchanges at least 1.8 

million cartons of cigarettes at prices higher than the MFC 

provisions require. Specifically, Philip Morris sold cigarettes 

to Philip Morris Duty Free, Inc., (“PM DFI”) and Philip 

Morris International, Inc. (“PMI”), at prices lower than the 

prices sold to the Exchanges. One of these affiliates 

purchased Philip Morris cigarettes for resale on American 

Samoa at a cost of $13.83 per carton, while NEXCOM 

purchased cigarettes for the Navy on Guam at a cost of $27.77 

less a $4.00 rebate, for a price differential of $9.94. 

Oliver filed this action in 2008 alleging that these 

transactions violated the MFC provisions, and, as a result, the 

FCA. The FCA removes jurisdiction from the federal courts 

for certain actions brought under it. 31 U.S.C. § 3730(e).

3

Specifically, the statute provides:

 

declaration to determine whether we have jurisdiction. See Coal. 

for Underground Expansion v. Mineta, 333 F.3d 193, 198 (D.C. 

Cir. 2003).

3 This provision was amended by the Patient Protection and 

Affordable Care Act, Pub. L. 111-148, 124 Stat. 119 (2010). 

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No court shall have jurisdiction over an action 

under this section based upon the public 

disclosure of allegations or transactions in a 

criminal, civil, or administrative hearing, in a 

congressional, administrative, or Government 

Accounting Office report, hearing, audit or 

investigation, or from the news media, unless 

the action is brought by the Attorney General 

or the person bringing the action is an original 

source of the information.

Id. § 3730(e)(4)(A).

4

 The FCA further defines an original 

source as “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 under this section which 

is based on the information.” Id. § 3730(e)(4)(B).5

The District Court dismissed Oliver’s complaint in 2013, 

reasoning that Oliver’s action was subject to the FCA’s 

jurisdictional bar and that he did not qualify as an original 

source. U.S. ex rel. Oliver v. Philip Morris, 949 F. Supp. 2d 

238, 251 (D.D.C. 2013). Oliver appealed, and we vacated and 

remanded. U.S. ex rel. Oliver v. Philip Morris (Oliver I), 763 

F.3d 36, 44 (D.C. Cir. 2014). In Oliver I, we held that the 

FCA’s public disclosure bar was not triggered because “Philip 

Morris . . . made no attempt to show that its allegedly false 

certifications of compliance with [the MFC] provisions were 

in the public domain.” Id. at 41. We rejected Philip Morris’s

contention that Government awareness of the MFC provisions 

 4 This provision is also referred to as the “public disclosure bar.”

5 The current version of the statute defines an original source as “an 

individual who . . . has knowledge that is independent of and 

materially adds to the publicly disclosed allegations or 

transactions.” 31 U.S.C. § 3730(e)(4)(B) (2012).

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constituted public disclosure that triggers the FCA’s 

jurisdictional bar. Id. at 42. Additionally, we held that the 

Iceland Memo, a 1999 inter-office memorandum discussing 

concerns about cigarette pricing at a United States naval 

station in Iceland, did not publicly disclose the MFC 

provisions or Philip Morris’s obligation to charge the 

Exchanges its lowest price for cigarettes. Id. at 43. We also

rejected efforts by Philip Morris after oral argument to 

demonstrate that the MFC provisions were generally available 

so as to trigger the public disclosure bar because it had 

abandoned those arguments on appeal and submitted new 

evidence that we were unable to properly evaluate. Id. at 43-

44. Accordingly, we vacated the District Court’s decision and 

remanded the case for further proceedings. Id. at 44.

On remand, Philip Morris moved again to dismiss the 

complaint for lack of subject matter jurisdiction. This time, 

Philip Morris argued that the FCA’s public disclosure bar was 

triggered because the MFC provisions were published online 

prior to the filing of the complaint. The District Court 

concluded that, based on the archived webpages Philip Morris 

submitted in conjunction with its motion, the MFC provisions 

were publicly disclosed in an “administrative report” and in 

the “news media,” and that the allegations or transactions in 

the complaint were substantially similar to those in the public 

domain. U.S. ex rel. Oliver v. Philip Morris USA, Inc., 101 F. 

Supp. 3d 111, 123-27 (D.D.C. 2015). The District Court also 

concluded that Oliver did not qualify as an “original source”

under the statute and once more dismissed the Complaint. Id.

at 127-29. 

II.

We review de novo a dismissal for lack of subject matter 

jurisdiction. Oliver I, 763 F.3d at 40.

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A.

As we explained in Oliver I, “[t]he False Claims Act’s 

public disclosure bar states that a court lacks subject matter 

jurisdiction over an action ‘based upon the public disclosure 

of allegations or transactions.’” 763 F.3d at 40 (quoting 31 

U.S.C. § 3730(e)(4)(A)). “Transaction” in this sense “refers 

to two or more elements that, when considered together, give 

rise to an inference that fraud has taken place.” Id. at 40

(citing U.S. ex rel. Springfield Terminal Co. v Quinn, 14 F.3d 

645 (D.C. Cir. 1994)). Springfield Terminal provides the 

familiar equation we use in such cases:

[I]f X+Y=Z, Z represents the allegation of 

fraud and X and Y represent its essential 

elements. In order to disclose the fraudulent 

transaction publicly, the combination of X and 

Y must be revealed, from which readers or 

listeners may infer Z, i.e., the conclusion that 

fraud has been committed. The language 

employed in § 3730(e)(4)(A) suggests that 

Congress sought to prohibit qui tam actions 

only when either the allegation of fraud [Z] or

the critical elements of the fraudulent 

transaction themselves were in the public 

domain.

14 F.3d at 654 (final two emphases added). In other words, 

we lack subject matter jurisdiction if either of the following 

has been publicly disclosed: (1) the allegation of fraud itself, 

or (2) the transactions that give rise to an inference of fraud. 

Applied to this case, the transaction would be “the fact that 

Philip Morris was not providing the Exchanges with the best 

price for cigarettes (X) plus the fact that Philip Morris falsely 

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certified that it complied with the Most Favored Customer 

provisions (Y),” which “gives rise to the conclusion Philip 

Morris committed fraud (Z).” Oliver I, 763 F.3d at 41. 

Accordingly, we “lack[] jurisdiction over Oliver’s suit only if 

X and Y, i.e., both the pricing disparities and Philip Morris’s 

false certifications of compliance with the Most Favored 

Customer provisions, were in the public domain.” Id.

As a threshold matter, though not invoking the law of the 

case doctrine, Oliver appears to argue that we already held 

that the transactions were not publicly disclosed. See

Appellant Br. at 29. This is too broad a reading of Oliver I. 

In our earlier opinion, we concluded that “[t]he Iceland 

Memo, standing alone, does not communicate that there was 

anything legally impermissible about the prices Philip Morris 

was charging the Exchanges.” Oliver I, 763 F.3d at 43

(emphasis added). In evaluating only the Y term, we found 

that neither the MFC provisions nor Philip Morris’s 

fraudulent certifications that it complied with them was 

publicly disclosed. Id. at 41-43. We explicitly did not resolve 

the potential disclosure of the pricing disparities in the memo. 

Id. at 41. Oliver I thus never reached the X term and only 

reflects that the Iceland Memo does not provide the Y term. 

On remand, the District Court concluded that the Iceland 

Memo provided the X term and was publicly disclosed, and 

that Philip Morris provided evidence that the Y term was also 

publicly disclosed. Oliver, 101 F. Supp. 3d at 123-27. 

Accordingly, we must resolve whether the District Court was 

correct in holding that these X and Y terms constitute publicly 

disclosed transactions.

1.

We turn first to whether the Iceland Memo publicly 

discloses the price differential alleged in Oliver’s Complaint. 

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Oliver argues that the Iceland Memo does not publicly 

disclose that Philip Morris was not providing cigarettes at the 

best price to the Exchanges. Oliver concedes that “the 

Iceland Memo does reflect a differential between the prices 

charged to the military and to private parties.” Appellant Br.

at 34. However, he argues that the price differential revealed 

in the memo is not the same as what he alleges in his

complaint because the Iceland Memo involves different time 

periods, MFC provisions, and corporate sales.

“We have explained that a suit is ‘based upon’ publicly 

disclosed ‘allegations or transactions’ when the allegations in 

the complaint are ‘substantially similar’ to those in the public 

domain.” U.S. ex rel. Davis v. District of Columbia, 679 F.3d 

832, 836 (D.C. Cir. 2012) (quoting U.S. ex rel. Findley v. 

FPC-Boron Emps.’ Club, 105 F.3d 675, 682 (D.C. Cir. 1997), 

abrogated on other grounds by Rockwell Int’l Corp. v. United 

States, 549 U.S. 456 (2007)); see also Findley, 105 F.3d at

690 (“We have already decided that the public disclosure bar 

is triggered when a relator files an action that is substantially 

similar to ‘allegations or transactions’ already in the public 

domain.”). “This rule prevents suits by those other than an 

‘original source’ when the government already has enough 

information ‘to investigate the case and to make a decision 

whether to prosecute’ or where the information ‘could at least 

have alerted law-enforcement authorities to the likelihood of 

wrongdoing.’” Davis, 679 F.3d at 836 (quoting Springfield 

Terminal, 14 F.3d at 654). Merely providing “more specific 

details” about what happened does not negate substantial 

similarity. Id. Additionally, “a relator’s ability to reveal 

specific instances of fraud where the general practice has 

already been publicly disclosed is insufficient to prevent 

operation of the jurisdictional bar.” U.S. ex rel. Settlemire v. 

District of Columbia, 198 F.3d 913, 919 (D.C. Cir. 1999) 

(citing Findley, 105 F.3d at 687-88).

USCA Case #15-7049 Document #1620608 Filed: 06/21/2016 Page 8 of 24
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The price difference alleged in the Complaint is 

substantially similar to the price difference the Iceland Memo 

describes. According to the Complaint, Philip Morris sold 

identical cigarettes to PM DFI and PMI “at prices lower than 

the prices such cigarettes were sold to” the Exchanges. 

Compl. ¶ 25, J.A. 21. The Complaint further alleges that

over the period covered by this . . . Complaint, 

one or more of defendant’s affiliates purchased 

defendant’s cigarette products from defendant 

(at a price well below the price charged to 

NEXCOM) and re-sold such cigarettes to the 

civilian duty-free market on American Samoa.

Id. ¶ 26, J.A. 21. Also according to the Complaint, “[s]imilar 

price differentials have existed throughout th[is] period . . . 

for sales by defendant’s affiliates of defendant’s cigarettes to 

the duty-free and foreign markets comparably situated to 

AAFES overseas military exchanges.” Id. ¶ 27, J.A. 21.

The Iceland Memo, dated December 28, 1999, outlines 

Philip Morris’s general practice of selling Philip Morris 

products to the military at a price higher than that which 

Philip Morris sells cigarettes off its duty-free price list to 

other overseas Philip Morris customers. It states that “PMI 

Duty-Free list prices are lower than PM USA Military taxfree prices and we frequently receive inquiries from the 

Service Headquarters on why they can’t purchase tax-free 

product at these lower prices.” J.A. 74. The memo was 

generated as a result of a “letter written by the Director, 

Morale, Welfare & Recreation (MWR) Department at the 

U.S. Naval station in Keflavik, Iceland to a duty-free 

wholesaler in Norfolk, Virginia” because “the MWR facility 

. . . tried, unsuccessfully, to have a duty-free wholesaler . . . 

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supply them with Philip Morris products.” J.A. 74. The 

memo notes that “PM USA is responsible for U.S. Military 

markets worldwide and is the source for product to MWR 

facilities” which “are independent operations and not 

associated with [the Exchanges].” J.A. 74.6 The memo 

attributes the price differential to obligations to comply with 

Surgeon General warnings. Although Oliver provides more 

specific details about this general practice in his complaint, 

such as the $4.00 price differential between affiliate resale in 

American Samoa and NEXCOM resale in Guam, these

additional details do not mean the transaction was not already

publicly disclosed. Cf. Settlemire, 198 F.3d at 919.

Oliver’s attempts to distinguish the Iceland Memo are 

unpersuasive. Although the Iceland Memo predates the sale 

of cigarettes alleged in the complaint, we have found

“disclosures going back as far as forty years prior to the 

relator’s lawsuit . . . sufficient to disclose the practices which 

formed the basis of the relator’s suit.” Id. Accordingly, the 

time difference does not undermine the disclosure of Philip 

Morris’s general practice. Furthermore, Oliver’s remaining

objections amount to an argument that the Iceland Memo fails 

to establish that the sale of cigarettes breaches the specific 

MFC provisions of the Exchanges’ contracts. However, 

“[t]here is no requirement . . . that the relevant public 

disclosures irrefutably prove a case of fraud. It is sufficient 

that the ‘publicly disclosed transaction is sufficient to raise 

the inference of fraud.’” Id. (quoting Findley, 105 F.3d at

687-88). Here, the Iceland Memo must simply demonstrate

 6 The details of the Iceland MWR facility’s operations and its 

relationship with the Exchanges and Philip Morris are not clear 

from the record. This ambiguity does not impact our analysis, 

however, which relies only on the Iceland Memo’s disclosure that 

Philip Morris charged the Exchanges higher prices than PMI 

charged other overseas customers. See J.A. 74. 

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knowledge “that Philip Morris was not providing the 

Exchanges with the best price for cigarettes.” Oliver I, 763 

F.3d at 41. The Iceland Memo establishes that PM USA 

routinely sold cigarettes at prices lower than those at which 

the military could purchase cigarettes, providing “the 

government . . . [with] enough information ‘to investigate the 

case and to make a decision whether to prosecute’ or . . .

‘could at least have alerted law-enforcement authorities to the 

likelihood of wrongdoing.’” Davis, 679 F.3d at 836 (quoting 

Springfield Terminal, 14 F.3d at 654). The Iceland Memo

therefore publicly discloses the price differential, and the 

transaction alleged here was based upon this publicly 

disclosed information.

2.

Oliver also argues that Philip Morris did not publicly 

disclose that it falsely certified compliance with the MFC 

provisions. Oliver does not dispute that the contracts 

containing the MFC provisions were publicly disclosed. 

Instead, he contends that because nothing in the MFC 

provisions themselves specifically states that Philip Morris’s

compliance was false, the contracts containing the MFC 

provisions do not publicly disclose that Philip Morris falsely 

certified compliance. 

We agree with the District Court that because the MFC 

provisions were incorporated by reference into every contract, 

“a hypothetical government investigator aware of the price 

discrepancies and the MFC provisions would be ‘alerted . . . 

to the likelihood’ that the vendor was falsely certifying 

compliance with the relevant provisions.” 

Oliver, 101 F. Supp. at 126 (quoting Settlemire, 198 F.3d at 

918). Oliver’s allegation of fraud is itself based upon the 

MFC provisions’ incorporation by reference into each 

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contract with the Exchanges. The allegation “is not based on 

[his] direct knowledge of [Philip Morris’s] scienter or lack 

thereof. Rather, it is an inference drawn from the available 

facts . . . .” Cause of Action v. Chicago Transit Auth., 815 

F.3d 267, 281 (7th Cir. 2016). Because the MFC provisions 

are incorporated by reference into the Exchanges’ contracts, a 

price differential disadvantageous to the government, 

combined with a contract term certifying that Philip Morris

would sell cigarettes at the best possible price, would enable 

the government to adequately investigate the case and make a 

decision whether to prosecute. See Davis, 679 F.3d at 836; 

see also Cause of Action, 815 F.3d at 281 (relator’s 

allegations were based upon publicly disclosed information 

because, inter alia, “the Government was in an identical 

position to infer scienter from the publicly disclosed” 

documents). Accordingly, Oliver’s allegation of false 

compliance is based upon the publicly disclosed MFC 

provisions.

B.

Although we conclude that the transactions that give rise 

to an inference of fraud were publicly disclosed, the 

jurisdictional bar operates only if the public disclosure occurs 

through certain channels specified in the statute. The statute 

specifies that public disclosure must occur in, inter alia, “a 

criminal civil or administrative hearing, in a congressional, 

administrative, or Government Account Office report . . . or 

from the news media.” 31 U.S.C. § 3730(e)(4)(A). If the 

public disclosure did not occur through a statutorily 

enumerated channel, the jurisdictional bar does not operate. 

See id. Originally, the District Court concluded that the 

Iceland Memo was disclosed through two FCA channels: in a 

civil hearing, and in the news media. Oliver, 949 F. Supp. 2d 

at 245-47. When Philip Morris introduced the MFC 

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provisions on remand, the District Court also concluded that 

the MFC provisions were publicly disclosed through 

administrative reports and the news media. Oliver, 101 F. 

Supp. 3d at 124-25. After reviewing the record, we conclude 

that the Iceland Memo was disclosed in a civil hearing and the 

MFC provisions were disclosed in an administrative report.

1.

Oliver first argues that the Iceland Memo was not 

disclosed in a civil hearing. In Springfield Terminal, we held 

that “discovery material, when filed with the court (and not 

subject to protective order), is publicly disclosed in a civil 

hearing for purposes of § 3740(e)(4)(A)’s jurisdictional bar.” 

14 F.3d at 652. We further explained that “[i]t is clear from 

statutory context that the term ‘hearing’ was intended to apply 

in a broad context of legal proceedings under 

§ 3740(e)(4)(A),” and “that for purposes of § 3740(e)(4)(A), 

‘hearing’ is roughly synonymous with ‘proceeding.’” Id. We 

limited our interpretation to “discovery material . . . which is 

actually made public through filing, as opposed to discovery 

material which has not been filed with the court and is only 

theoretically available upon the public’s request.” Id. We 

read the statute to require actuality because “[i]f [discovery 

materials] are not yet in the public eye, no rational purpose is 

served—and no ‘parasitism’ deterred—by preventing a qui 

tam plaintiff from bringing suit based on their contents.” Id.

at 653.

Oliver argues that Springfield Terminal requires materials 

to be filed with the court to constitute the type of public 

disclosure contemplated by the statute. According to Oliver, 

the Iceland Memo was originally published online pursuant to 

a settlement agreement that required Philip Morris to include 

documents that were produced in litigation. Philip Morris 

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produced the Iceland Memo in subsequent litigation, and it 

was placed in this previously-established online database. 

When the subsequent litigation ended, “the district court, as 

part of its final judgment, ordered [Philip Morris], among 

others, to maintain an ‘Internet Document Website’ until 

September 1, 2016, which was to include, among other things, 

the documents previously placed in its [settlement] database.” 

Reply Br. at 25. Based on this timeline, and because the 

Iceland Memo was not filed with the court, Oliver contends it 

was not publicly disclosed in a civil hearing. 

Oliver reads the statute and Springfield Terminal too 

narrowly. We noted in Springfield Terminal that the FCA’s 

jurisdictional bar reflects “congressional efforts to walk a fine 

line between encouraging whistle-blowing and discouraging 

opportunistic behavior.” 14 F.3d at 651. Accordingly, we 

analyzed the jurisdictional bar “in the context of these twin 

goals of rejecting suits which the government is capable of 

pursuing itself, while promoting those which the government 

is not equipped to bring on its own.” Id. Furthermore, we 

explained that “[i]t is clear from statutory context that the 

term ‘hearing’ was intended to apply in a broad context of 

legal proceedings under § 3730(e)(4)(A).” Id. at 652. Given 

the goals of the statute and the “broad context” of a civil 

hearing, materials that a court order mandated be publicly 

accessible, and were in fact made publicly accessible as a 

result of that order, constitute materials disclosed in a civil 

hearing for purposes of the FCA’s jurisdictional bar.

Although Oliver acknowledges that the Iceland Memo 

was publicly accessible via the internet, he contends that the 

history of the Iceland Memo’s publication undermines the 

notion that it was “actually” publicly available. The database 

contains 4,480,485 documents from an additional 421 cases. 

Reply Br. at 26. Because Springfield Terminal distinguished 

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between “theoretically available” and “actually available,” 

Oliver contends that the breadth of the database shows that 

the Iceland Memo was only theoretically available. We 

disagree. Although Oliver couches his argument in terms of

whether the documents are “actually available,” he effectively 

argues that public disclosure should turn on whether the 

documents are reasonably likely to be discovered. This is not 

the standard. The Iceland Memo was in fact actually 

available on a court-ordered public website. Because they 

were made available on the website in a civil hearing, they 

were “actually” made available in accordance with 

Springfield Terminal’s rationale.7

2.

Oliver also argues that the MFC provisions were not 

publicly disclosed in an administrative report. Because the 

provisions did not “give information” but were the 

“information itself,” Oliver contends that the MFC provisions

could not constitute a report. Appellant Br. at 42-44. 

In Schindler Elevator Corp. v. United States ex rel. Kirk, 

the Supreme Court explained that the “ordinary meaning” of 

“report is something that gives information or a notification, 

or an official or formal statement of facts or proceedings.” 

563 U.S. 401, 407 (2011) (internal citation, quotation marks, 

and alterations omitted). The Court reasoned that “[t]his 

broad ordinary meaning of ‘report’ is consistent with the 

generally broad scope of the FCA’s public disclosure bar.” 

Id. In this case, the website provides information on how to 

contract with the Exchanges, and it attaches, via hyperlink, 

 7 Because we hold that the Iceland Memo was publicly disclosed in 

a civil hearing, we need not reach whether it was also disclosed 

from the news media.

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the terms and conditions of doing so. J.A. 349. The website 

and linked PDF file clearly “give[] information or a 

notification, or an official or formal statement of facts,” 

Schindler, 563 U.S. at 407 (internal citation, quotation marks, 

and alterations omitted). Considering Schindler’s broad 

definition of “report,” the website and the MFC provisions 

were disclosed in an administrative report, triggering the 

jurisdictional bar.8

 

C.

Although we conclude that the transactions Oliver alleges 

were publicly disclosed through statutorily prescribed 

channels, we would still have jurisdiction if Oliver qualifies 

as an “original source.” 31 U.S.C. § 3730(e)(4)(B). An 

original source must have “direct and independent knowledge 

of the information on which the allegations are based.” Id. 

“‘Direct’ signifies ‘marked by absence of an intervening 

agency.’” Springfield Terminal, 14 F.3d at 656 (quoting 

Houck v. Folding Carton Admin. Comm., 881 F.2d 494, 505 

(7th Cir. 1989)). In other words, “[i]n order to be ‘direct,’ the 

information must be first-hand knowledge.” Findley, 105 

F.3d at 690 (emphasis added). “‘Independent knowledge’ is 

knowledge that is not itself dependent on public disclosure.” 

Springfield Terminal, 14 F.3d at 656; see also Findley, 105 

F.3d at 690 (“[A] person who learns of fraud from a public 

disclosure can never be an ‘original source.’”). The relator 

must “possess direct and independent knowledge of the 

‘information’ underlying the allegation, rather than direct and 

independent knowledge of the ‘transaction’ itself.” 

Springfield Terminal, 14 F.3d at 656; see also Rockwell Int’l 

 8 Once again, because we conclude that the MFC provisions were 

publicly disclosed in an administrative report, we need not reach 

whether they were also disclosed from the news media.

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Corp., 549 U.S. at 473 (“[T]he phrase ‘information on which 

the allegations are based’ refers to the relator’s allegations 

and not the publicly disclosed allegations.”). Notably, this is 

distinct from the knowledge of the “combination of X and Y” 

and rather “refers to direct and independent knowledge of any

essential element of the underlying fraud transaction.” 

Springfield Terminal, 14 F.3d at 657. In other words, if 

Oliver has direct and independent knowledge of information 

underlying X or Y, he qualifies as an original source.9

Here, Oliver contends that he is an original source for 

information underlying the X term: the fact that Philip Morris 

was selling cigarettes to other purchasers at prices lower than 

that which it sold cigarettes to the Exchanges. On remand, 

Oliver submitted a sworn declaration outlining how he came 

to possess the information underlying his allegation of fraud. 

J.A. 448-57. Oliver explained that his company, Medallion, 

sold cigarettes to military exchanges located in the United 

States. Oliver spoke with Tim Maloney, the tobacco category 

buyer for NEXCOM, about overseas pricing. Maloney 

informed Oliver that the overseas price was the domestic 

price less the amount of federal excise taxes. Oliver informed 

Maloney that he “believed” two additional domestic 

surcharges would not apply to overseas pricing, which was 

based on his status as a market participant and his knowledge 

of the 1998 Master Settlement Agreement (“MSA”) between 

tobacco companies and attorneys general of 46 states. 

Maloney revealed that other overseas suppliers, including 

 9 Philip Morris argues that Oliver was required to plead original 

source allegations in his operative complaint, and having failed to 

do so, he cannot claim original source status now. We need not 

reach this issue because we conclude the statements in Oliver’s 

declaration viewed in conjunction with the allegations of the 

complaint do not establish that Oliver is an original source under 

the FCA.

USCA Case #15-7049 Document #1620608 Filed: 06/21/2016 Page 17 of 24
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Philip Morris, did not deduct these additional surcharges. 

Based on Maloney’s response, Oliver investigated whether 

the additional surcharges were not applicable overseas, 

contacting the National Association of Attorneys General’s 

(“NAAG”) Tobacco Control Group, which administered the 

settlement agreement imposing the additional surcharges. 

NAAG and additional “industry contacts, including duty-free 

operators and overseas distributors” confirmed that the 

surcharges did not apply overseas. Oliver Decl. ¶ 7, J.A. 451. 

One of his contacts was Kenny Hasegawa, a co-owner of a 

duty-free business in Samoa which was in a market served by 

the Exchanges, who confirmed that the cigarettes sold to the 

Exchanges were identical to those sold to other overseas 

outlets. As a result, Oliver argues that he possesses direct 

knowledge of two kinds of information underlying Philip 

Morris’s price differential: 1) his knowledge of the industry 

practice based on the terms of the MSA, and 2) the 

information he gained from his investigation into Philip 

Morris’s overseas sales practices. We disagree.

The allegations in Oliver’s complaint and the statements 

made in his declaration fail to demonstrate that Oliver 

qualifies as an original source. Oliver’s knowledge of the 

information underlying the allegation of fraud in the 

complaint is not “direct” because Oliver possessed no firsthand knowledge of Philip Morris’s unlawful price differential,

but rather gained all his knowledge second-hand. Oliver 

argues that “the fact that a relator undertakes investigatory 

efforts does not prevent the information derived from that 

investigation from being ‘direct.’” Appellant Br. at 57-58. 

However, it is not Oliver’s investigation but his lack of firsthand knowledge prompting his investigation that precludes 

his original source status. 

USCA Case #15-7049 Document #1620608 Filed: 06/21/2016 Page 18 of 24
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Our Circuit has found a relator who conducts an 

investigation to be an “original source,” but only where the 

relator possessed some direct knowledge of the conduct 

implicated by the fraud. For example, in Springfield 

Terminal, we held that a relator who conducted investigatory 

efforts was an “original source” under § 3730(e)(4)(B). 

14 F.3d at 657. There, the relator had participated in a prior

federal action related to an arbitration dispute under the 

Railway Labor Act. Id. at 647. In seeking to set aside the 

arbitration award, the relator obtained the arbitrators’ pay 

vouchers during discovery and realized that the arbitrators 

billed the government for “activities unrelated to the 

arbitration proceedings.” Id. The relator thereafter filed a qui 

tam complaint, alleging that the arbitrator had billed the 

government for days he had not worked on the proceeding. 

Id. at 648. The relator’s “suspicions first arose upon 

inspection of [the] pay vouchers” because, “[b]ased upon its 

own involvement in the arbitration,” the relator knew that the 

arbitrator had no work to perform on days he billed the 

government. Id. The relator “then conducted further 

investigation on its own” by calling numbers listed on the 

arbitrator’s telephone records, which revealed that the 

arbitrator had been out of the country for personal reasons for 

which he had billed the government. Id.

We held that it was “beyond question” that the relator 

was an original source. Id. at 657. “[T]he pay vouchers and 

phone records did not themselves suffice to indicate fraud.”

Id. As a result, the relator “bridged the gap by its own efforts 

and experience, which in th[at] case included personal 

knowledge of the arbitration proceedings and interviews with 

individuals and businesses identified in the telephone 

records.” Id. (emphasis added). The relator “started with 

innocuous public information; it completed the equation with 

information independent of any preexisting public 

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disclosure.” Id. The relator’s personal knowledge of the 

arbitration proceedings shows that “a relator need not have 

first-hand knowledge of all of the information supporting his 

allegations, but he must have at least some first-hand 

knowledge of that information.” U.S. ex rel. Antoon v. 

Cleveland Clinic Found., 788 F.3d 605, 621 (6th Cir. 2015) 

(Gibbons, J., concurring) (citation omitted). 

Springfield Terminal thus demonstrates that in order to 

have “direct” knowledge for purposes of the original source 

exception, a relator must have some first-hand knowledge that 

would lead him to believe that a fraud had been committed. 

Cases from other circuits confirm this approach. For 

example, in Minnesota Association of Nurse Anesthetists v. 

Allina Health Systems Corp., the Eighth Circuit held that the 

relator organization’s members had direct knowledge because 

they witnessed the fraudulent conduct of filling out billing 

forms with misleading information. 276 F.3d 1032, 1050 (8th 

Cir. 2002). The members also had direct knowledge of the 

“true state of facts” contradicting the fraud because they had 

witnessed the actual conduct that the fraud misrepresented. 

Id. Likewise, in Cooper v. Blue Cross & Blue Shield, the 

relator’s own insurance claims prompted him to conduct 

research that led to allegations of Medicare fraud against his 

insurance company. 19 F.3d 562, 564-65 (11th Cir. 1994) 

(per curiam). The Eleventh Circuit held that the jurisdictional 

bar did not apply because the relator had direct knowledge of 

the fraud through “years of his own claims processing, 

research, and correspondence with members of Congress and 

[the federal agency].” Id. at 568. Finally, in United States ex 

rel. Bahrani v. Conagra, Inc., the Tenth Circuit held that a 

relator’s affidavit “stating that he personally observed” the 

fraudulent conduct precluded summary judgment on whether 

he qualified as an original source. 465 F.3d 1189, 1209 (10th 

Cir. 2006); see also U.S. ex rel. Bahrani v. Conagra, Inc., 624 

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F.3d 1275, 1287-88 (10th Cir. 2010) (relator “had to establish 

he was ‘personally aware of at least one instance of [a] 

fraudulent’ certificate change” (quoting Glaser v. Wound 

Care Consultants, Inc., 570 F.3d 907, 921 (7th Cir. 2009))); 

U.S. ex rel. Lam v. Tenet Healthcare Corp., 287 F. App’x 

396, 400 (5th Cir. 2008) (“Relators found to have direct and 

independent knowledge are those who actually viewed source 

documents or viewed first hand the fraudulent activity that is 

the basis for their qui tam suit.”). But see Antoon, 788 F.3d at

618 (“[T]here is nothing in the statutory text that limits ‘direct 

knowledge’ to first-hand knowledge.”).

Similarly, our sister circuits have routinely held that 

relators do not qualify for the original source exemption 

where the relator learns of the fraudulent activity from a third 

party. In Glaser v. Wound Care Consultants, Inc., the relator 

alleged that a medical facility committed Medicaid fraud 

when it billed Medicaid for services performed by a doctor 

that were actually performed by a nurse practitioner or 

physician’s assistant, which would have resulted in a lower 

rate. 570 F.3d at 911-12. The Seventh Circuit concluded the 

relator was not an original source despite her knowledge that 

a nurse practitioner treated her because “the fraud alleged 

pertain[ed] to the billing, not the treatment,” and “she had no 

knowledge whatsoever of the fraudulent conduct before 

hearing from an attorney.” Id. at 921.

In United States ex rel. Ondis v. City of Woonsocket, in 

response to the mayor’s statements that he would do away 

with all section 8 housing, the relator investigated whether the 

city illegally received federal grants from the Department of 

Housing and Urban Development. 587 F.3d 49, 52 (1st Cir. 

2009). The relator alleged fraud based on “specific instances

. . . previously disclosed in daily newspapers of general 

circulation” or otherwise “unarguably . . . from the public 

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domain.” Id. The First Circuit concluded that the relator 

lacked direct knowledge because “[k]nowledge that is based 

on research into public records, review of publicly disclosed 

materials, or some combination of these techniques is not 

direct.” Id. at 59. 

Finally, the Fourth Circuit also found such mediated 

knowledge insufficient for original source status in United 

States ex rel. Grayson v. Advanced Management Technology, 

Inc., 221 F.3d 580 (4th Cir. 2000). In Grayson, the relators 

were lawyers who had represented a company in a dispute 

about the award of a government contract. Id. at 581. In the 

course of the representation, the relators learned that the 

company that had been awarded the contract misrepresented 

the makeup of the personnel who would perform the contract. 

Id. at 581-82. Relators filed a qui tam action, alleging that 

such misrepresentations violated the FCA. Id. at 582. The 

Fourth Circuit concluded that relators were not an original 

source because they “at best verified” the information 

contained in an administrative protest. Id. at 583.

With these principles in mind, we “look to the factual 

subtleties of the case before [us] and attempt to strike a 

balance between those individuals who, with no details 

regarding its whereabouts, simply stumble upon a seemingly 

lucrative nugget and those actually involved in the process of 

unearthing important information about a false or fraudulent 

claim.” U.S. ex rel. Laird v. Lockheed Martin Eng’g & Sci. 

Servs. Co., 336 F.3d 346, 356 (5th Cir. 2003), abrogated on 

other grounds by Rockwell Int’l Corp., 549 U.S. at 472. Here, 

Oliver possesses no direct knowledge of information that 

prompted his investigation into Philip Morris. Unlike the 

litigants in Springfield Terminal, who possessed first-hand

knowledge of the days on which the arbitrator conducted 

proceedings, Oliver does not allege any direct knowledge of 

USCA Case #15-7049 Document #1620608 Filed: 06/21/2016 Page 22 of 24
23

transactions involving Philip Morris. Oliver does not allege 

that he worked for Philip Morris, sold cigarettes overseas on 

behalf of Philip Morris, or purchased cigarettes overseas from 

Philip Morris. He learned of Philip Morris’s sales practices 

from Maloney, a third party. Maloney’s knowledge prompted 

Oliver to investigate whether the surcharges applied. Because 

Oliver stumbled upon Philip Morris’s overseas pricing when a 

third party revealed the pricing to him, he does not possess 

direct information underlying Philip Morris’s unlawful price 

differential.

Furthermore, neither Oliver’s background information 

nor the knowledge he gained through his investigation 

constitutes direct information sufficient to confer original 

source status. “Courts must be mindful of suits based only on 

‘secondhand information, speculation, background 

information or collateral research.’” U.S. ex rel. Atkinson v. 

PA. Shipbuilding Co., 473 F.3d 506, 523 (3d Cir. 2007) 

(quoting U.S. ex rel. Hafter D.O. v. Spectrum Emergency 

Care, Inc., 190 F.3d 1156, 1162-63 (10th Cir. 1999)). The 

FCA was intended to encourage “those ‘who are either close 

observers or otherwise involved in the fraudulent activity’ to 

come forward.” U.S. ex rel. Barth v. Ridgedale Elec., Inc., 44 

F.3d 699, 703-04 (8th Cir. 1995) (quoting S. Rep. No. 99-345, 

at 4 (1986), as reprinted in 1986 U.S.C.C.A.N. 5266, 5269). 

Recognizing Oliver’s background knowledge of the MSA and 

his contact with NAAG and Hasegawa as direct would 

undermine this intent, as Oliver was not a close observer of 

any of these facts. Cf. Atkinson, 473 F.3d at 523 (finding 

relator was not an original source because “[a]ny member of 

the public could have” checked the public records underlying 

the qui tam suit). Accordingly, because Oliver lacks any 

direct information about the price differential Philip Morris 

charged the Exchanges, he is not an original source.

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***

Because the transactions creating an inference of fraud 

were publicly disclosed and Oliver is not an original source, 

we affirm the judgment of the District Court.

So ordered.

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