12-3829-cv

United States of America v. DHL Express (USA), Inc.

1 UNITED STATES COURT OF APPEALS

2 FOR THE SECOND CIRCUIT

3 August Term, 2012

4 (Argued: March 21, 2013 Decided: February 5, 2014)

5 Docket No. 12-3829-cv

6 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 

7 THE UNITED STATES OF AMERICA ex rel.,

8 Plaintiff,

9

10 KEVIN GRUPP, ROBERT MOLL,

11 Plaintiffs-Appellants,

12

13 v.

14

15 DHL EXPRESS (USA), INC., DHL Worldwide Express, Inc., DHL

16 HOLDINGS (USA), INC., 

17 Defendants-Appellees. 

18

19 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

20

21 B e f o r e: WINTER, CABRANES, and LIVINGSTON, Circuit Judges.

22 Appeal from an order of the United States District Court for

23 the Western District of New York (John T. Curtin, Judge)

24 dismissing a qui tam action for failure to satisfy a statutory

25 notice requirement that applies to shipping-rate disputes. We

26 vacate and remand. 

27

28 JOHN L. SINATRA, JR. (Daniel C.

29 Oliverio, Reetuparna Dutta, on the

30 brief), Hodgson Russ, LLP, Buffalo,

31 NY, for Plaintiffs-Appellants.

1
1

2 LAWRENCE VILARDO (Terrence M.

3 Connors, James W. Grable, Jr., on

4 the brief), Connors & Vilardo, LLP,

5 Buffalo, NY, for Defendants6 Appellees.

7

8 MICHAEL S. RAAB (Joshura P. Waldman

9 on the brief), Appellate Staff of

10 the Civil Division, for Stuart F.

11 Delery, Principal Deputy Assistant

12 Attorney Genera, U.S. Department of

13 Justice, Washington D.C.; William

14 J. Hochul, Jr., U.S. Attorney for

15 the Western District of New York,

16 Buffalo, NY, for Amicus Curiae

17 United States of America.

18

19 WINTER, Circuit Judge: 

20 Kevin Grupp and Robert Moll appeal from Judge Curtin’s order

21 dismissing their qui tam action for failure to satisfy a

22 statutory notice requirement. Appellants commenced this action

23 against DHL Express, Inc. and its parent company DHL Holdings,

24 Inc. (collectively, “DHL”) under the False Claims Act, 31 U.S.C.

25 § 3729 et seq., alleging that DHL billed the United States jet26 fuel surcharges on shipments that were transported exclusively by

27 ground transportation. We vacate and remand.

28 BACKGROUND

29 We assume the facts as alleged in the complaint to be true. 

30 DHL is an international package delivery company. Appellants own

31 MVP Delivery Services and Logistics, a delivery company that

32 served as an independent contractor for DHL. From 2003 to 2008,

2
1 DHL provided delivery services to the General Services

2 Administration, the Department of Homeland Security, and the

3 Department of Defense. 

4 During this time, DHL offered three types of so-called “Air

5 Express Services” -- “Same Day”, “Next Day”, and “Second Day” –-

6 and a “Ground Delivery Service”, which provided delivery in one

7 to six business days. Customers who purchased one of the “Air

8 Express Services” were charged a jet-fuel surcharge and those who

9 purchased the “Ground Delivery Service” were charged a diesel10 fuel surcharge, without regard to the type of transportation

11 actually used in the delivery. The surcharges were calculated

12 using the monthly jet and diesel fuel price indexes published by

13 the U.S. Department of Energy. 

14 According to appellants, DHL was obligated by its contract

15 with the U.S. Government to charge only the cheaper diesel-fuel

16 surcharge for shipments transported solely by ground. In their

17 complaint, appellants set forth three specific deliveries for

18 which the government was charged the jet-fuel surcharge, even

19 though the shipment was transported exclusively by ground

20 transportation. They further allege that DHL included the jet21 fuel surcharge for “Air Express Services” as a matter of common

22 practice, regardless of the actual means of transport used, and

23 that these facts support a finding that DHL knowingly defrauded

24 the U.S. Government. 

3
1 On November 8, 2011, DHL moved to dismiss the complaint on

2 several grounds. The district court granted the motion, and this

3 appeal followed. 

4 DISCUSSION

5 We review dismissal pursuant to Rule 12(b)(6) de novo. 

6 Pension Benefit Guar. Corp. ex rel. St. Vincent Catholic Med.

7 Ctr’s Ret. Plan v. Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705,

8 730 (2d Cir. 2013). 

9 The district court dismissed the action on the ground that

10 appellants failed to satisfy the statutory notice requirement

11 imposed by 49 U.S.C. § 13710(a)(3)(B). Title 49 governs rates

12 and billing by motor carriers. Section 13710(a)(3)(B) states:

13 If a shipper seeks to contest the charges

14 originally billed or additional charges

15 subsequently billed, the shipper may request

16 that the [Surface Transportation] Board

17 determine whether charges billed must be

18 paid. A shipper must contest the original

19 bill or subsequent bill within 180 days of

20 receipt of the bill in order to have the

21 right to contest such charges.

22 

23 Id. The Surface Transportation Board (the “STB”) is an

24 adjudicatory body within the U.S. Department of Transportation

25 charged with resolving disputes concerning motor carriers’

26 shipping rates. “Section 13710(a)(3)(B) makes clear that such

27 disputes may be brought before the STB, but this provision is not

28 the exclusive provision for resolving such disputes where they

29 are a part of an otherwise valid legal claim for relief, e.g.,

4
1 under the False Claims Act (“FCA”), 31 U.S.C. § 3729, that may be

2 brought before a court.”

3 A failure to comply with the 180-day rule bars a challenge

4 to a shipping charge before the STB. At issue in this appeal is

5 whether a failure to comply also bars a shipping-rate challenge

6 before a federal court when brought pursuant to the FCA. The

7 district court concluded that it does and dismissed the action. 

8 Without deciding how the 180-day rule applies to other kinds of

9 suits brought in court, we vacate on the ground that the 180-day

10 rule cannot apply to a qui tam action under the FCA. 

11 The FCA prohibits any person from “knowingly present[ing],

12 or caus[ing] to be presented, [to the United States government] a

13 false or fraudulent claim for payment.” 31 U.S.C. §

14 3729(a)(1)(A). The Attorney General may institute an action

15 against a party who violates the FCA, id. § 3730(a), or a private

16 individual, known as a relator, may bring a civil qui tam action

17 on behalf of the government and share in the recovery therefrom,

18 id. § 3730(b)(1), (d). After filing a qui tam complaint, the

19 relator must serve a copy of the complaint on the government, and

20 the government may elect to intervene and litigate the action. 

21 Id. § 3730(b)(2), (4). If the government declines to intervene,

22 the relator shall have the right to proceed. Id. 

23

5
1 A relator’s complaint must be filed in camera, and remain

2 under seal for at least 60 days. Id. § 3730(b)(2). The

3 government may move to extend the seal period for good cause

4 shown. Id. § 3730(b)(3). The complaint is not served on the

5 defendant until the court so orders. Id. § 3730(b)(2). 

 The government, in an amicus brief,1 6 contends that

7 application of the 180-day rule to qui tam actions would

8 undermine both the FCA’s seal provisions and statute of

9 limitations. We agree. The purpose of the sealing provisions is

10 to allow the government time to investigate the alleged false

11 claim and to prevent qui tam plaintiffs from alerting a putative

12 defendant to possible investigations. U.S. ex rel Pilon v.

13 Martin Marietta Corp., 60 F.3d 995, 998-9 (2d Cir. 1995). The

14 relatively generous statute-of-limitations period –- within six

15 years of the violation or three years after the time at which

16 U.S. officials knew or should have known of the violation,

17 whichever occurs last –- serves a similar purpose, ensuring that

18 the government need not rush to file a complaint when such a

19 filing would alert a defendant to an ongoing criminal or civil

20 investigation. See 31 U.S.C. § 3731(b)(1)-(2). 

21

1

 The government declined to intervene in this matter, but it filed an

amicus brief in support of appellants in the proceedings before this court.

6
1 DHL maintains that § 13710(a)(3)(B) and the FCA can be

2 reconciled because the 180-day rule is a notice requirement, not

3 a statute of limitations; so long as relators provide notice to

4 the carrier within the 180-day period, they need not file suit

5 for up to six years. Thus, in DHL’s view, because the statutes

6 are not in direct conflict, both must be given effect. See

7 Morton v. Mancari, 417 U.S. 535, 551 (1974) (“[W]hen two statutes

8 are capable of co-existence, it is the duty of the courts, absent

9 a clearly expressed congressional intention to the contrary, to

10 regard each as effective.”). 

11 However, this argument ignores the purpose of the FCA’s

12 tolling provision. See 31 U.S.C. § 3731(b). In 1986, when

13 Congress amended FCA Section 3731(b) to include the tolling

14 provision –- which permits actions for up to three years after

15 the government’s discovery of the violation or the time at which

16 the government should have discovered the violation –- it

17 provided the following justification: “[F]raud is, by nature,

18 deceptive [and] such tolling . . . is necessary to ensure the

19 Government’s rights are not lost through a wrongdoer’s successful

20 deception.” S.Rep. No. 99-345, at 15 (1986), reprinted in 1986

21 U.S.C.C.A.N. 5266, 5280. Application of the 180-day rule would

7
completely nullify the tolling allowance2 1 inasmuch as the

2 Government is often unlikely to become aware of fraud immediately

following the violation.3 3 For similar reasons, the rule as

4 understood by DHL, would pose an even more substantial obstacle

5 to relators’ ability to bring qui tam actions. 

6 CONCLUSION

7 For the reasons stated herein, we vacate the judgment and

8 remand to the district court.

2 We identify this conflict between the 180-day rule and the tolling

provision but have no occasion to decide whether the tolling provision applies

in this particular case. Cf. United States ex rel. Sanders v. N. Am. Bus.

Indus., Inc., 546 F.3d 288, 293-96 (4th Cir. 2008) (holding that the tolling

provision does not apply to relators in cases where the government declined

intervention); United States ex rel. Ven-A-Care v. Actavis Mid Atl. LLC, 659

F. Supp. 2d 262, 273-74 (D. Mass. 2009) (holding that the tolling provision

applies to relators, but the limitations period begins to run when a

government official learns of the conduct). The conflict between the tolling

provision generally and the 180-day rule is sufficient to show that the 180-

rule does not bar suits under the FCA.” 

3

 DHL contends that if the 180-day rule and the FCA are in conflict,

then the former should trump the latter because it is more specific. See

Hinck v. U.S., 550 U.S. 501, 506 (2007) ("[I]n most contexts, a precisely

drawn, detailed statute pre-empts more general [statutes]." (internal

quotations omitted)). We reject the contention that Section 13710 is the more

precisely drawn of the two statutes. Although Section 13710 addresses

shipping-rate disputes specifically, it does not address fraudulent claims to

the government or qui tam actions. 

8