Opinion ID: 177996
Heading Depth: 1
Heading Rank: 7

Heading: Instructional error at jurisdictional trial

Text: Bahrani next contends the district court improperly instructed the jury in the jurisdictional trial regarding the requirements for him to qualify as an original source under the FCA. Normally, [w]e review de novo whether the [district] court erroneously instructed the jury on the applicable law. Gonzales v. Duran, 590 F.3d 855, 859 (10th Cir.2009). If, however, a party did not preserve its challenge by timely objecting to an instruction in the district court, we review only for plain error. Therrien v. Target Corp., 617 F.3d 1242, 1253-54 (10th Cir.2010). To obtain reversal on plain-error review, the appellant must satisfy a four-prong test. Id. It must show (1) an error (2) that is plain, meaning clear or obvious under current law, and (3) affecting substantial rights. Id. (internal quotation marks omitted). If these elements are satisfied, we may exercise discretion to correct the error if it seriously affects the fairness, integrity, or public reputation of judicial proceedings. Id. (internal quotation marks omitted). Before turning to Bahrani's specific challenges to the district court's original source instructions, we find it useful to first review the requirements a relator must satisfy to establish himself as an original source under the FCA, the relevant original source rulings in Bahrani I, the district court's handling of the original source issue on remand, including its instructions to the jury in the jurisdictional trial, and Bahrani's apparent failure to object to the district court's handling of the original source issue. At all times relevant to this action, [t]he FCA define[d] an `original source' as `an individual who ha[d] direct and independent knowledge of the information on which the allegations [we]re based and ha[d] voluntarily provided the information to the Government before filing an action under this section which is based on the information.' [3] In re Natural Gas Royalties, 562 F.3d 1032, 1043 (10th Cir.2009) ( Natural Gas I ) (quoting 31 U.S.C. § 3730(e)(4)(B)). To establish original source status knowledge under this definition, a qui tam plaintiff [was required to] allege specific factsas opposed to mere conclusionsshowing exactly how and when he or she obtained direct and independent knowledge of the fraudulent acts alleged in the complaint and support those allegations with competent proof. Id. at 1045 (internal quotation marks omitted). Secondhand information, speculation, background information, or collateral research d[id] not satisfy a relator's burden of establishing the requisite knowledge. Id. Finally, the term `allegations,' as used in § 3730(e)(4)(B), were not limited to the allegations of the original complaint, and instead include[d] (at a minimum) the allegations in the original complaint as amended. Rockwell Int'l Corp. v. United States, 549 U.S. 457, 473, 127 S.Ct. 1397, 167 L.Ed.2d 190 (2007). Turning to Bahrani I, this court reached two related conclusions that significantly affected Bahrani's burden of establishing that he qualified as an original source. First, this court rejected Bahrani's assertion that the applicable regulatory framework required a new meat or hide certificate every time a correction was made. 465 F.3d at 1199. Instead, this court concluded, the evidence in the summary judgment record indicated that only a certain class of changes, i.e., major or significant changes, might require such certificates. Id. at 1200. Ultimately, this court concluded that Bahrani had submitted sufficient evidence, in particular an affidavit stating that he personally observed the alteration of export certificates while he worked for Con[A]gra and ... heard a supervisor authorizing such changes, id. at 1209, to survive summary judgment on the original source issue. On remand, the district court, as noted, bifurcated and held an initial trial on the issue of whether Bahrani qualified as an original source for purposes of his meat-certificate claims. Immediately prior to this initial trial, the district court issued a pretrial order that stated, in pertinent part: In assessing whether Bahrani is an original source of the information underlying his claims, the jury does not need to determine Bahrani had direct and independent knowledge that Con[A]gra employees were making major (as opposed to minor) changes to export certificates and not securing replacement certificates, only that employees were making changes to certificates under circumstances where it was reasonable to conclude they should obtain replacement certificates and did not do so. Stated otherwise, Bahrani cannot be deemed an original source of information underlying a False Claims Act claim based on personal knowledge of activities he had no reason to believe were fraudulent. We will frame this requirement for the jury in terms of Bahrani's being the original source of information and activities he reasonably believed constituted an avoidance, on the part of Con[A]gra, of an obligation to obtain and pay for replacement certificates. I am aware this articulates a new standard in the original source inquiry, but the nature of Relator's reverse false claim in this actionand the fact that only materially altered certificates even fall within the FCA's scope as potential reverse false claimsrequires the jury to be given some guidance in this area. At this stage of the proceedings, the jury is only making the threshold inquiry as to whether Bahrani is an original source of the information underlying his reverse false claim. That information as a threshold matter needs to be information that some wrong was being perpetrated to the detriment of the government. Bahrani's reasonable belief that some wrong was being committed is sufficient and Con[A]gra's request that the jury consider whether the changes he allegedly observed were major as opposed to minor changes is rejected. That said, however, Bahrani will not be able to establish he was an original source of information underlying his reverse false claims simply with evidence that he observed employees making changes to meat or hide export certificates. Aplt.App. at 370-72 (underlining added; italics in original). At the conclusion of all the evidence in the jurisdictional trial, the district court, consistent with its statements in the pretrial order, instructed the jury as follows: The information of which Mr. Bahrani must have had direct and independent knowledge to qualify as an original source of his meat certificate claims is information that Con[A]gra, through its employees, was defrauding the government out of fees it should have received for issuing replacement export certificates by making changes directly to those certificates rather than obtain corrected replacement certificates for a fee. For purposes of this trial, you do not need to decide whether Con[A]gra's actions did, in fact, constitute fraud, only that Mr. Bahrani is an original source of the information on which he bases his claim that it did or not. Accordingly, Mr. Bahrani's status as an original source is neither proven or disproven by the actual illegality of anything he observed. However, to be an original source of information that Con[A]gra employees were defrauding the government, Mr. Bahrani must have had direct and independent knowledge of facts he reasonably believed constituted fraud. A reasonable belief is one which a reasonable person in Mr. Bahrani's position would have believed to be true, under the circumstances. It is not enough, in other words, that Mr. Bahrani had direct and independent knowledge that Con[A]gra employees made changes to meat export certificates. Rather, he must have direct and independent knowledge that they were making those changes under circumstances where a reasonable person in Mr. Bahrani's position would have believed they were defrauding the government. Id. at 859-60 (Instruction 3.7). Although Bahrani now objects to this instruction on appeal, he does not identify in his opening appellate brief precisely where in the voluminous record on appeal he presented his objections to the district court. Having conducted our own review of that record, we note that prior to trial Bahrani submitted proposed original source instructions that differed from those ultimately given by the district court. However, we have found no instance in which Bahrani objected to the district court's proposed original source instructions during the jury instruction conferences. Indeed, it appears from our review of the jury instruction conferences that Bahrani expressly agreed with the district court's proposed original source instructions. Id. at 756-57. Consequently, we review his appellate objections only for plain error. [4] Turning to the merits of his arguments, Bahrani asserts that [t]his Court [in Bahrani I ] previously examined [his] affidavit wherein he reported [seeing] ConAgra employees altering export certificates and overheard a supervisor authorizing alterations, and held that such information established [him] as an original source even though [he] did not work in the meat[ ] [documentation] department or understand the significance of what he was seeing. Aplt. Br. at 25 (italics in original). However, Bahrani complains, [u]pon remand the district court impermissibly added a `new standard' to [his] `original source' burden of proof by instruct[ing] the jury that, to qualify as an `original source,' [he] must have understood the significance of what he was seeing and hearing as it related to each and every element of his [FCA] allegation. Id. In other words, Bahrani asserts, [t]he district court required, for the first time in FCA jurisprudence, that a relator must have held a subjective belief that the defendant was intentionally committing fraud on the government to meet the minimum jurisdictional threshold of an `original source.' Id. We agree with Bahrani on this point. Neither the FCA nor applicable case law indicated that a relator's subjective belief was a component or element of the original source test as it existed at the time of the remand proceedings in this case. Instead, as the language of the FCA made clear, the relator simply had to establish that he had direct and independent knowledge of the information on which [his FCA] allegations [we]re based.... 31 U.S.C. § 3730(e)(4)(B) (2008). As applied here, that means, given the rulings in Bahrani I, which are the law of the case, that the jury should have been asked to decide whether Bahrani had direct and independent knowledge that ConAgra employees were making major or significant changes to certificates (and not whether he reasonably believed that the changes he actually observed were fraudulent). See generally Rockwell, 549 U.S. at 473, 127 S.Ct. 1397 (emphasizing that qualification as an original source required the relator to have information upon which the relator's allegations, as ultimately amended, were based). In other words, Bahrani had to establish he was personally aware of at least one instance of [a] fraudulent certificate change (i.e., a major or significant certificate change). [5] Glaser v. Wound Care Consultants, Inc., 570 F.3d 907, 921 (7th Cir.2009). Assuming that Bahrani can satisfy the first two prongs of the plain error test, we conclude he cannot satisfy the third prong of that test, i.e., that the alleged error affected his substantial rights. The heart of Bahrani's original source evidence was his testimony that, although he worked exclusively in the hide documentation department and had never been trained to complete meat export certificates, he often visited employees he knew who worked in the nearby meat documentation department, and on more than one occasion observed employees in that department altering meat export certificates. Aplt. App. at 432. Specifically, Bahrani testified he saw the use of white-out, erasers being used, export certificates in the typewriters, id. at 433, and meat export certificates that had different typewritten face on them. Id. at 475. Bahrani also testified that on more than one occasion he heard Lotfollah Sabzevari, a supervisor in the meat documentation department, give a subordinate permission to change a USDA meat export certificate. Lastly, Bahrani testified that on one occasion a country that was to receive hides from ConAgra insisted upon getting a meat export certificate. Notably, Bahrani conceded on cross-examination that every time he changed a certificate, it was for the purposes of correcting erroneous information. Bahrani further conceded that it was impossible to tell just by looking at an export certificate, even if it had a piece of eraser tape on it or a change in typeface or anything else, what precisely had happened with it, and whether or not a replacement certificate may ultimately have been issued for it. In short, Bahrani's knowledge of what transpired in the meat export certificates department was far too limited to allow a jury to reasonably find that he was an original source for his meat export certificate claims. Thus, we conclude Bahrani's substantial rights were not adversely impacted by the district court's instructional error. [6]