United States Court of Appeals

For the Eighth Circuit

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Nos. 12-2984, 12-3894

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United States of America, ex rel Fredrick Newell

lllllllllllllllllllll Plaintiff - Appellant

v.

City of St. Paul, Minnesota

lllllllllllllllllllll Defendant - Appellee

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 Appeals from United States District Court 

for the District of Minnesota - St. Paul

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 Submitted: June 13, 2013

 Filed: August 28, 2013

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Before LOKEN, BRIGHT, and BYE, Circuit Judges.

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LOKEN, Circuit Judge.

Fredrick Newell brought this action under the False Claims Act, 31 U.S.C.

§§ 3729-3733 (“FCA”), on behalf of the United States against the City of St. Paul. 

Newell alleged that, from 2003 through 2009, the City obtained grants from the U.S.

Department of Housing and Urban Development (“HUD”) by falsely certifying

compliance with Section 3 of the Housing and Urban Development Act of 1968 and
its applicable regulations. See 12 U.S.C. § 1701u; 24 C.F.R. § 135 (collectively

“Section 3”). The government declined to intervene in Newell’s “qui tam” action. 1

The district court granted the City’s motion to dismiss, concluding the court lacked 2

subject matter jurisdiction because Newell was not an original source of fraud

allegations that were based on publicly disclosed information. The court later denied

Newell’s motion for relief from the judgment under Rule 60(b). Newell appealed

both orders. We consolidated the appeals and now affirm. 

I. Public Disclosure Bar

The qui tam provisions of the FCA, enacted in 1863 to combat fraud by Civil

War defense contractors, authorize private citizens (called relators) to sue on behalf

of the government and, as a bounty, share in any recovery. The public disclosure bar

was part of the 1986 FCA amendments “intended to encourage private enforcement

suits by legitimate whistleblowers while barring suits by opportunistic qui tam

plaintiffs who base their claims on matters that have been publicly disclosed by

others.” Hays v. Hoffman, 325 F.3d 982, 987 (8th Cir.), cert. denied, 540 U.S. 877

(2003). The statutory bar in effect in 2009, when Newell filed this action, provided: 

(A) 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, unlessthe action is brought by

the Attorney General or the person bringing the action is an original

source of the information.

See Vermont Agency of NaturalRes. v. United States ex rel. Stevens, 529 U.S. 1

765, 769 n.1 (2000). 

The Honorable Donovan W. Frank, United States District Judge for the

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District of Minnesota. 

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31 U.S.C. § 3730(e)(4)(A). When this bar applies, the district court lacks subject

matter jurisdiction to afford the relator FCA relief. Rockwell Int’l Corp. v. United

States, 549 U.S. 457, 467-70 (2007). 

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Newell is the owner of three construction companies that have unsuccessfully

attempted to secure work on HUD-funded projectsin the City. In April 2008, he filed

an administrative complaint with HUD alleging that the City was violating Section

3 and falsely certifying compliance to obtain HUD grants. In May 2009, with that

complaint pending, Newell brought this qui tam action under the FCA. The

complaint was sealed while the government investigated the allegations and decided

whether to intervene. See 31 U.S.C. § 3730(b)(2). In the meantime, HUD conducted

a Section 3 compliance audit and determined that the City had violated Section 3. 

In February 2010, HUD and the City entered into a Voluntary Compliance

Agreement that “fully and finally” resolved Newell’s administrative complaint but not

the City’s potential FCA liability. In February 2012, the government declined to

intervene in the qui tam action. Newell then filed an amended complaint, and the

City moved to dismiss under Rule 12(b)(1), contending that the public disclosure bar

stripped the court of jurisdiction to consider Newell’s fraud allegations. The district

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Section 3730(e)(4)(A) was amended in 2010. It now provides that, if the

3

public disclosure bar applies: “The court shall dismiss an action or claim under this

section, unless opposed by the Government.” The parties agree that this case is

governed by the statute in effect when the action was filed. See Graham Cnty. Soil

& Water Conserv. Dist. v. United States ex rel. Wilson, 130 S. Ct. 1396, 1400 n.1

(2010). 

TheCity also sought dismissal under Rule 12(b)(6), contending that its alleged

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non-compliance with Section 3 does not give rise to FCA liability as a matter of law. 

The district court did not consider this issue; because we agree the court lacked

subject matter jurisdiction, neither do we. See generally United States ex rel. Vigil

v. Nelnet, Inc., 639 F.3d 791, 795-96 (8th Cir. 2011).

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court granted the City’s motion to dismiss, concluding that Newell’s FCA claims

were based upon “allegations or transactions” that were publicly disclosed and he

does not qualify as an “original source of the information.” Newell appeals both

rulings. As the party invoking federal jurisdiction, he has the burden of establishing

the court’s FCA jurisdiction. See Hays, 325 F.3d at 987. 

A. Public Disclosure. Congress enacted Section 3 to “ensure that the

employment and other economic opportunities generated by Federal financial

assistance for housing and community development programs shall, to the greatest

extent feasible, be directed toward low- and very low-income persons, particularly

those who are recipients of government assistance for housing.” 12 U.S.C.

§ 1701u(b). To that end, HUD regulations require that Section 3 grant recipients

provide, “to the greatest extent feasible,” training and employment opportunities for

low-income persons and for businesses employing such persons in connection with

projects funded by HUD community development grants. See 24 C.F.R. §§ 135.1 -

135.92. Grant applicants must certify that they will comply with Section 3

requirements, see 24 C.F.R. § 135.9(a), and grantees must submit annual reports to

HUD documenting compliance, see 24 C.F.R. § 135.90. 

Newell’s FCA fraud claim is straightforward: From 2003 through 2009, he

alleges, the City received $62 million in HUD grants by certifying compliance with

Section 3 requirements; during those years, the City knowingly failed to comply with

those requirements; therefore, the City’s certifications were knowinglyfalse, entitling

the government to treble damages and Newell to his relator’s share. The

jurisdictional bar to an FCA claim arises “only when the essential elements

comprising the fraudulent transaction have been publicly disclosed so as to raise a

reasonable inference of fraud.” United States ex rel. Hixson v. Health Mgmt. Sys.,

Inc., 613 F.3d 1186, 1188 (8th Cir. 2010) (quotations omitted). Stated differently, to

raise the bar, public disclosures must reveal “both the true state of facts and that the

defendant represented the facts to be something other than what they were.” Minn.

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Ass’n of Nurse Anesthetists v. Allina Health Sys. Corp., 276 F.3d 1032, 1044 (8th

Cir.), cert. denied, 537 U.S. 944 (2002). Thus, the issue is whether both the true state

of facts (the City’s non-compliance) and the misrepresentation of facts (the City

certifying compliance to HUD) were publicly disclosed within the meaning of

§ 3730(e)(4) before Newell brought his qui tam action in May 2009. 

In 2005, Newell obtained an internal memorandum by Edward McDonald, a

former City employee, that included detailed allegations of the City’s noncompliance

with Section 3 requirements. Newell publicized the McDonald memorandum at a

City Council hearing in August 2005, reading the relevant Section 3 portions into the

record. Newell also joined a civil rights lawsuit against the City in 2006 during

which the entire McDonald memorandum was publicly filed. See Thomas v. City of

Saint Paul, D. Minn. Civ. No. 06-2860, Dkt. No. 33-1. In June 2006, Newell sued the

City in federal court, alleging numerous violations of Section 3 and seeking

compensatory and injunctive relief. He obtained documents relating to the City’s

Section 3 compliance from HUD by filing Freedom of Information Act (“FOIA”)

requests and submitted the FOIA requests as evidence of the City’s noncompliance

to support his motion for a preliminary injunction in that action. In February 2007,

the district court denied Newell’s motion and dismissed the suit for lack of standing

because he had not suffered injury traceable to the City. See Nails Const. Co. v. City

of Saint Paul, Civ. No. 06-2657, 2007 WL 423187, at *2-3 (D. Minn. Feb. 6, 2007). 

Newell’s allegations of chronic Section 3 noncompliance in the Nails complaint were

nearly identical to those in his 2009 qui tam complaint. We agree with the district

court that Newell’s allegations of Section 3 non-compliance were publicly disclosed

in the McDonald memorandum and the Nails litigation (among other public sources

of that information). 

Newell’s allegation that the City’s falsely certified Section 3 compliance in

applying for and obtaining HUD grants was publicly disclosed when he obtained the

City’s Section 3 compliance documents from HUD under FOIA. See Schindler

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Elevator Corp. v. United States ex rel. Kirk, 131 S. Ct. 1885, 1896 (2011) (agency

responses to FOIA requests by a relator are “reports within the meaning of the public

disclosure bar”). In addition, while publicizing the McDonald memorandum at a

public City Council hearing in 2005, Newell asserted that the Mayor of St. Paul

certified “that he would fulfill the requirements of the Section 3, yet Section 3 is

ignored.” Accordingly, both the true state of facts and the alleged misrepresentation

of facts were publicly disclosed before Newell filed his qui tam action. 

On appeal, Newell virtually concedes these public disclosures but argues that

his fraud allegations were not “based upon” these sources because he was aware of

theCity’s noncompliance before the McDonald memorandumwasreleased,theFOIA

responses “only furthered [his] existing independent knowledge of the City’s

violations,” and he did not assert a claim of fraud in the Nails litigation. These

arguments are without merit because they conflate distinct § 3730(e)(4)issues. A qui

tam action is “based upon” public disclosures when the allegations in the action and

those in the public disclosures are substantially similar, regardless of whether the

relator may have had independent knowledge of the fraud. See Nurse Anesthetists,

276 F.3d at 1045-47; Glaser v. Wound Care Consultants, Inc. 570 F.3d 907, 915 (7th

Cir. 2009) (joining the “majority view” of eight other circuits). Whether Newell

obtained the publicly disclosed information independent of the McDonald

memorandum and the FOIA responses goesto whether he was an originalsource, not

to whether his qui tam claims were based upon that information. 

B. Original Source. Newell argues the district court erred in concluding he

was not an original source of the information on which his fraud allegations were

based. An “original source” is “an individual who has direct and independent

knowledge of the information.” § 3730(e)(4)(B); see Hays, 325 F.3d at 990. That

means direct and independent knowledge of the information on which his fraud

allegations are based, not the information on which the publicly-disclosed allegations

were based. Rockwell, 549 U.S. at 470-71. “Independent knowledge” is “knowledge

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not derived from the public disclosure.” Nurse Anesthetists, 276 F.3d at 1048. 

“Direct knowledge” is first-hand knowledge; “a person who obtains secondhand

information from an individual who has direct knowledge of the alleged fraud does

not himself possess direct knowledge and therefore is not an originalsource under the

[FCA].” United States ex rel. Barth v. Ridgedale Elec., Inc., 44 F.3d 699, 703 (8th

Cir. 1995); see In re Natural Gas Royalties, 562 F.3d 1032, 1045 (10th Cir.), cert.

denied, 558 U.S. 880 (2009). 

We agree with the district court that Newell failed to establish he had direct and

independent knowledge of the information underlying his fraud allegations. Newell,

a private citizen, obviously had no direct or independent knowledge of the City’s

alleged “misrepresentation of facts” -- that is, the false certifications of Section 3

compliance and failures to file required Section 3 annual reports. Those allegations

were based on publicly-disclosed information, most likely HUD’s FOIA responses. 

A relator does not have to have personal knowledge of all elements of a false

claim cause of action. “If the relator has direct knowledge of the true state of the

facts, [he] can be an original source even though [his] knowledge of the

misrepresentation is not first-hand.” Nurse Anesthetists, 276 F.3d at 1050. But

Newell’s fraud allegations are nonetheless barred because he failed to establish direct

and independent knowledge of the “true state of the facts” -- that is, the City’s alleged

chronic noncompliance with Section 3 requirements. Newell’s declaration in

opposition to the City’s motion to dismiss demonstrated that his knowledge of the

City’s noncompliance, in particular its failure to collect and maintain Section 3 data,

was derived almost entirely from current and former City employees. Tyrone Terrill

and Tom Sanchez informed Newell that the City did not collect or maintain Section

3 compliance data. The McDonald memorandum lamented the City’s lack of Section

3 procedures and its failure to place “recruited employees” on projects funded by

Section 3-covered grants. 

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Newell points to his attendance at a June 2000 meeting concerning the City’s

HUD-funded lead-abatement projects as evidence that he witnessed the alleged

noncompliance first-hand. At that meeting, City representatives informed him that

the City “would not be adding additional contractors to their existing remodeling

contractor list” and that “the City would use HUD funds that it received to train the

City’s existing remodeling contractors.” But the City’s failure to add Newell to its

list of contractors in June 2000 does not establish even a single instance of

noncompliance with Section 3, much less the sort of chronic noncompliance that

would permit an inference that the City’s annual certifications that it would comply

were knowingly or recklessly false. Accord Vigil, 639 F.3d at 795. Only with the

information Newell later learned from City employees and from other publicly

disclosed sources could he credibly allege an actionable FCA violation. Newell’s

previous experience in attempting to secure Section 3-covered work and his interest

in the subject matter simply do not qualify him as an original source for purposes of

the public disclosure bar. See In re Natural Gas Royalties, 562 F.3d at 1045 (“The

fact that a relator has background information or unique expertise allowing him to

understand the significance of publicly disclosed allegations and transactions is also

insufficient.”); accord Hays, 325 F.3d at 990 (rejecting a catalyst theory). 

For the above stated reasons, we affirm the district court’s decision that it

lacked subject matter jurisdiction under 31 U.S.C. § 3730(e)(4).

II. The Rule 60(b) Issue 

More than two months after the district court issued its Memorandum Opinion

and Order dismissing the qui tam action for lack of jurisdiction, while that ruling was

pending on appeal, Newell filed a motion for Rule 60(b) relief from the final

judgment, alleging that the government had declined to intervene because of a secret

“global settlement” between the Department of Justice and the City in which his qui

tam action was used as a bargaining chip to induce the City not to take an action in

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an unrelated Fair Housing Act litigation that could jeopardize the government’s

recovery of $750 million in various unrelated lawsuits. The district court denied the

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motion without an evidentiary hearing. On appeal, abandoning other theories argued

to the district court, Newell argues the district court abused its discretion in denying

Rule 60(b) relief because the secret settlement, unlike a discretionary decision not to

intervene in a qui tam action, enabled the government to obtain an “alternate remedy”

that entitles him to a share of the settlement proceeds under § 3730(c)(5) of the FCA. 

See Jones v. Swanson, 512 F.3d 1045, 1049 (8th Cir. 2008) (standard of review). At

a minimum, he urges us to remand for discovery concerning the nature and extent of

the agreement between the government and the City.

We reject this novel contention because none of Newell’s allegations

concerning a secret agreement between the government and the City had anything to

do with the basis for the district court’s entry of its adverse final judgment -- that it

lacked subject matter jurisdiction over Newell’s qui tam action because of the public

disclosure bar. After the government declined to intervene, Newell continued to

litigate his qui tam claims. Had he prevailed, he would have been awarded a larger

percentage of the recovery than if the government had intervened. See 31 U.S.C.

§ 3730(d)(2); Roberts v. Accenture, LLP, 707 F.3d 1011, 1015-16 (8th Cir. 2013). 

A district court does not abuse its discretion in denying a Rule 60(b) motion when the

moving party fails to show that the alleged misrepresentations or newly discovered

evidence “would probably produce a different result.” McCormack v. Citibank, N.A.,

100 F.3d 532, 542 (8th Cir. 1996) (quotations omitted). 

We also reject Newell’s contention that Rule 60(b) relief is warranted because

the government obtained an “alternate remedy.” Section 3730(c)(5) provides: 

The motion did not specify the subpart(s) of Rule 60(b) on which Newell

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relied. On appeal, he cites Rule 60(b)(2), (3), and (6), which grant discretion to

relieve a party froma final judgment on grounds of newly discovered evidence, fraud

or misconduct by an opposing party, or “any other reason that justifies relief.”

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[T]he Government may elect to pursue its claim through any alternate

remedy available to the Government, including any administrative

proceeding to determine a civil money penalty. If any such alternate

remedy is pursued in another proceeding, the person initiating the action

shall have the same rights in such proceeding assuch person would have

had if the action had continued under this section.

In this case, the government did not “elect to pursue” the FCA claims Newell asserted

against the City in “another proceeding.” Newell’s Rule 60(b) contention is that the

government used the City’s potential treble damage exposure in his qui tam action as

leverage to persuade the City to take action that enabled the government to recover

far more in unrelated, non-FCA cases. As defined in § 3730(c)(5), the term “alternate

remedy” does not include the government’s settlement of unrelated claims against

unrelated parties in unrelated lawsuits. Accord United States ex rel. LaCorte v.

Wagner, 185 F.3d 188, 192 (4th Cir. 1999) (“To the extent these [settled] claims are

unrelated to [relators’] earlier action, they have no rights because they are not bona

fide relators with respect to those claims.”). 

Moreover, even if the government pursued and obtained an “alternate remedy,”

Newell would not be entitled to a share of that remedy because his FCA claims were

subject to dismissal under the public disclosure bar. As the plain language of

§ 3730(c)(5) makes clear, if the government pursues an alternate remedy in another

proceeding, the qui tam relator has the “same rights” in that proceeding as he would

have if the action had continued under the FCA. Here, as Newell’s FCA claim is

jurisdictionally barred, he “may not receive any share of the proceeds attributable to

that claim.” United States ex rel. Merena v. SmithKline BeechamCorp., 205 F.3d 97,

106 (3d Cir. 2000); see United States ex rel. Adrian v. Regents of Univ. of Cal., 337

Fed. App’x 379, 381 (5th Cir. 2009) (affirming the denial of Rule 60(b) relief for this

reason). Newell argues that Merena -- a case in which the government intervened and

settled the FCA claim-- is distinguishable because, here, the government obtained the

alleged alternate remedy before the district court dismissed his qui tam claims under

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the public disclosure bar. We conclude it is immaterial that the government obtained

an alternate remedy and declined to intervene before the City raised the public

disclosure bar. Newell assumes that if the government recovers anything, whether

after intervention or by alternate remedy, the relator gets a share. That is not

necessarily true, as in some cases the government settles and then sues the relator to

block his recovery. Cf. Rockwell, 549 U.S. at 478; United States ex rel. Poteet v.

Medtronic, Inc., 552 F.3d 503, 516-19 (6th Cir. 2009). Newell cites no case in which

a relatorsubject to the public disclosure bar was nonetheless entitled to a share of the

government’s “alternate remedy.” UnitedStates ex rel. Bledsoe v. CommunityHealth

Sys., Inc., 342 F.3d 634, 647-51 (6th Cir. 2003), on which Newell principally relies,

did not consider this issue.

For these reasons, we conclude the district court did not abuse its discretion in

denying Newell’s Rule 60(b) motion. We affirm the judgment of the district court

and its Memorandum Opinion and Order dated November 26, 2012. We deny

Newell’s motion to take judicial notice. 

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