Source: https://law.justia.com/cases/federal/appellate-courts/F3/58/404/574581/
Timestamp: 2019-07-23 20:11:43
Document Index: 408990814

Matched Legal Cases: ['§ 3729', '§ 3730', '§ 3730', '§ 1291', '§ 519', '§ 510', '§ 553', '§ 301', '§ 553']

United States, Ex Rel., Plaintiff-appellee,andara B. Papazian, and Nabil D. Hanna, Plaintiffs-appellants, v. American Production Industries, Inc., Dba Paramount Citrusassociation, Fka Paramount Citrus Association;mohammed Ali Karbalai; Elvin Wood, Defendants, 58 F.3d 404 (9th Cir. 1995) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Ninth Circuit › 1995 › United States, Ex Rel., Plaintiff-appellee,andara B. Papazian, and Nabil D. Hanna, Plaintiffs-appell...
United States, Ex Rel., Plaintiff-appellee,andara B. Papazian, and Nabil D. Hanna, Plaintiffs-appellants, v. American Production Industries, Inc., Dba Paramount Citrusassociation, Fka Paramount Citrus Association;mohammed Ali Karbalai; Elvin Wood, Defendants, 58 F.3d 404 (9th Cir. 1995)
US Court of Appeals for the Ninth Circuit - 58 F.3d 404 (9th Cir. 1995)
Argued and Submitted May 1, 1995. Decided June 9, 1995
Ara Papazian and Nabil Hanna ("relators") appeal from the district court's dismissal of their qui tam complaint brought pursuant to the False Claims Act ("FCA"), 31 U.S.C. § 3729 et seq. On appeal the relators argue that the district court erred by finding that it lacked jurisdiction over the suit because a settlement had previously been agreed to by the Department of Justice ("DoJ") and certain of the defendants. Because the relators lack standing under the DoJ regulations to challenge the settlements, we affirm.FACTS AND PRIOR PROCEEDINGS
A prerequisite to awarding a qui tam relator a share of the proceeds of any settlement or claim is that the relator must bring a timely complaint under the FCA. See 31 U.S.C. §§ 3730(d) (1)-(2). This element was lacking here. Consequently, the Government suggested partial dismissal based on the prior settlement of most of the relators' claims.1 In response, the relators alleged that the Government had defrauded them by making false representations that it would not pursue a civil settlement and by breaching a promise to tell them when to file their qui tam action. After supplemental briefings, the district court found that the relators' claims of fraud were without basis. It concluded that the FCA does not require the Government to assist potential relators in filing their complaints, and found that the Government had made no false representations or promises. The district court then ordered a partial dismissal of the complaint.
Federal question jurisdiction in the district court was based on the FCA. 31 U.S.C. §§ 3730, 3732(a). The central issue before this court is whether settlement agreements between the United States and certain of the defendants deprived the district court of jurisdiction over the relators' claims based on the FCA. On February 18, 1993, the district court ordered partial dismissal of the complaint based on the preclusive effect of the settlement agreements. On November 22, 1993, based on a stipulation by the parties to dismiss the remaining claims, the district court entered final judgment on all claims. We have jurisdiction over the relators' timely appeal pursuant to 28 U.S.C. § 1291.
The decision of the district court involved mixed questions of law and fact, which are subject to de novo review. United States v. McConney, 728 F.2d 1195, 1202 (9th Cir.), cert. denied, 469 U.S. 824, 105 S. Ct. 101, 83 L. Ed. 2d 46 (1984). The district court's factual findings are reviewed for clear error. Id.
The Attorney General ("AG") has power to conduct all litigation on behalf of the United States, its agencies, and its officers, unless otherwise provided by law. See 28 U.S.C. § 519 (1988). The AG also has authority under 28 U.S.C. § 510 to promulgate regulations delegating her settlement authority to subordinate DoJ officials. The AG has exercised this authority by issuing regulations and directives which permit DoJ officials to compromise claims, subject to monetary limits. 28 C.F.R. Secs. 0.160-0.172 (1991). These regulations also provide notice to persons who contract with the Government, who bear the risk that government officials are acting within the scope of their authority. Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384, 68 S. Ct. 1, 3, 92 L. Ed. 10 (1947). The relators base their claim that the contracts are void on the DoJ's alleged failure to adhere to its own regulations concerning authority to settle claims.3
The DoJ regulations delegating the AG's authority to compromise claims do not create a right of action for relators to challenge the validity of settlement agreements. Only regulations having the "force and effect of law" can create a private right of action. Chrysler Corp. v. Brown, 441 U.S. 281, 295-303, 99 S. Ct. 1705, 1714-18, 60 L. Ed. 2d 208 (1979). In contrast, "rules of agency organization, procedure, or practice"--sometimes called "interpretive rules"--do not create enforceable rights. 5 U.S.C. §§ 553(b), 553(d); Chrysler, 441 U.S. at 315, 99 S. Ct. at 1724; see also Guadamuz v. Bowen, 859 F.2d 762, 771 (9th Cir. 1988) (" [I]nterpretive rules express an agency's ... internal house-keeping measures organizing Agency activities.").
The regulations at issue here fall into this latter category for a number of reasons. First, the statutory authority for the regulations, 5 U.S.C. § 301, has been deemed by the Supreme Court to be a "housekeeping statute." Chrysler, 441 U.S. at 310, 99 S. Ct. at 1721-22. Second, the title of Part O regulations--"Organization of the Department of Justice"--indicates that they are aimed at agency organization. Third, these DoJ regulations are not required to be promulgated under the Administrative Procedure Act's formal notice and comment procedures, as are substantive rules. See 5 U.S.C. § 553(b) (3) (A); Chrysler, 441 U.S. at 313, 99 S. Ct. at 1723; Guadamuz, 859 F.2d at 762. Finally, the descriptions of these rules in the Federal Register indicate that they are "interpretive" in nature. The delegation of compromise authority to Branch Directors is "related to agency organization and management." 56 Fed.Reg. 12666 (1991) (emphasis added).
There is a single exception to this general rule. Where a contracting party reasonably relies on an authorizing regulation, the Government may be estopped from voiding the contract. See, e.g., United States v. McInnes, 556 F.2d 436, 440-41 (9th Cir. 1977). However, this exception does not establish standing for the relators for two reasons. First and most obviously, the relators are not contracting parties; they are strangers to the contract. Second, the relators have not reasonably relied on the regulations to their detriment. Although the relators asserted before the district court that they relied to their detriment on misrepresentations by the Government concerning promises made to warn them when to file their qui tam suit, this is not the sort of reliance necessary to establish standing to challenge the validity of the settlement agreements. Most importantly, the relators' claims of misrepresentation were found to be without basis by the district court, and those findings are not challenged on appeal. Moreover, even if their claims of misrepresentation were sustainable before this court, the relators' reliance would have been on the Government's representations prior to its authorization of the settlement agreements and not on the DoJ's authorizing regulations, which underlie the claims here.
Although the district court did not reach this issue, resting its decision instead on the ground that the agreements were valid, we can affirm the district court on any basis supported by the record. United States v. Washington, 969 F.2d 752, 755 (9th Cir. 1992), cert. denied, --- U.S. ----, 113 S. Ct. 1945, 123 L. Ed. 2d 651 (1993)