Opinion ID: 766928
Heading Depth: 3
Heading Rank: 1

Heading: The Public Disclosure Provision

Text: 13 Harshman raises several arguments as to why his inclusion of the allegations in the Brooks complaint did not constitute public disclosure. We address these arguments in turn. 14
15 Harshman first argues that the allegations in the Brooks complaint do not constitute public disclosure because the complaint did not identify Defendants. The Brooks complaint states: 16 Local 1547 has conspired with local contractors, through its Work Recovery Program, to deduct certain sums from the Union members' paychecks, (2.5% of gross wages), who were working on State and Federally funded projects, and then remit these funds back to the contractor in violation of FederalLaw . . . . 17 Brooks Complaint at 5-6. Only one of the current Defendants, City Electric, Inc., was a defendant in the Brooks case. We find Harshman's argument unpersuasive. 18 In Aflatooni, we were faced with a similar issue. Aflatooni brought a qui tam action raising two different sets of allegations. See Aflatooni, 163 F.3d at 519 n.6. Before filing the action, Aflatooni disclosed some of his allegations against certain defendants (NDI Defendants) to the news media, but he did not disclose any of the allegations against other defendants (PAKC Defendants). See id. at 521-22. The issue for this Court was whether the disclosure of the allegations against the NDI Defendants should trigger the public disclosure bar with respect to the PAKC Defendants. Id. at 522. The PAKC Defendants argued that because Aflatooni alleged a large conspiracy in his complaint, the allegations he disclosed to the media rendered his claims publicly disclosed as to all of the defendants. See id. We rejected this argument because the allegations against the two groups of defendants were distinct. See id. at 522-23. Implicit in this analysis is the proposition that Aflatooni's disclosures could have constituted public disclosure with respect to all of the defendants despite the failure specifically to name the PAKC Defendants, if the disclosures had encompassed his allegations against them. 19 We also find other circuits' opinions, addressing facts similar to the case at bar, persuasive. In United States ex rel. Fine v. Sandia Corp., 70 F.3d 568 (10th Cir. 1995) (Sandia), Fine brought a qui tam action against Sandia, which operates one of nine multi-program national laboratories owned by the United States and operated by private or university contractors under the Department of Education's (DOE) administrative oversight, for misappropriating nuclear waste funds in violation of federal law. See id. at 569. A General Accounting Office report and a congressionalhearing discussed this general practice by the national laboratories but did not mention Sandia specifically. See id. at 569-70. The court held that the jurisdictional bar was triggered: 20 [b]ecause these disclosures detailed the mechanics of the practice, revealed that at least two of Sandia's eight sister laboratories were engaged in it, and indicated the DOE's acquiescence, we conclude that they sufficiently alerted the government to the likelihood that Sandia would also `tax' nuclear waste funds in the future. 21 Id. at 571. In other words, the prior public disclosures contained enough information to enable the government to pursue an investigation against Sandia. See id. 22 The District of Columbia Circuit also addressed this issue in United States ex rel. Findley v. FPC-Boron Employees' Club, 105 F.3d 675 (D.C. Cir. 1996), cert. denied, 118 S. Ct. 172 (1997). Findley charged the defendant with retaining money earned in vending machines on federal property that was owed to the government. See id. at 678. The practice of government employees' clubs retaining this income had been disclosed in a Comptroller General Opinion, in the legislative history of a federal statute, and in a lawsuit litigated in the Federal Circuit. See id. at 679. What Findley added to these disclosures was the identity of one of these employees' clubs. See id. at 687. The court said, [l]ittle similarity exists between combing through the myriad of transactions performed [for example] by the various defense contractors in search of fraud and finding easily identifiable federal employee organizations that provide vending services on federal property. Id. at 687. The court concluded that because relator Findley's complaint merely echoes publicly disclosed, allegedly fraudulent transactions that already enable the government to adequately investigate the case and to make a decision whether to prosecute, the public disclosure bar applies. Id. at 688. 23 Here, the Brooks complaint alleged a narrow class of suspected wrongdoers -local electrical contractors who worked on federally funded projects over a four-year period. The electrical contractors in question were required by statute to file certified payrolls with the government on a weekly basis. 5 In this regard, the instant case is similar to Sandia, in that the government, as regulator and owner, presumably would have ready access to documents identifying those contractors. This ready access makes it highly likely that the government could easily identify the contractors at issue. Thus, the district court did not err in concluding that the allegations in the Brooks complaint were sufficient to constitute a public disclosure.
24 Harshman raises a number of other unpersuasive arguments as to why the Brooks complaint did not constitute public disclosure. First, he argues that the allegations in the complaint were insufficiently detailed to constitute public disclosure because the allegations did not mention the FCA and did not include details of the violations. 25 These arguments are without merit. An allegation need not include an express reference to the FCA to constitute a public disclosure. See Hagood v. Sonoma County Water Agency, 81 F.3d 1465, 1474 (9th Cir.), cert. denied, 519 U.S. 865 (1996); see also Sandia, 70 F.3d at 572. 26 In a similar vein, Harshman's argument that the allegations in the Brooks complaint did not constitute public disclosure because they did not plead facts alleging FCA liability also fails. Specifically, Harshman contends that the allegations did not mention any overcharging, false-invoicing, false certification, or any other specific fraud on the government. As notedabove, however, fraud need not be explicitly alleged to constitute public disclosure. See Hagood, 81 F.3d at 1473, 1474 n.14. Further, allegations divorced from the information upon which they are based can constitute public disclosure. See United States ex rel. Wang v. FMC Corp., 975 F.2d 1412, 1418 (9th Cir. 1992). 27 Harshman argues that even if the Brooks complaint constituted a public disclosure, his qui tam suit is not based upon the allegations in the Brooks complaint because his suit is based on his own information. We rejected this argument in Biddle when we held that a qui tam complaint filed after allegations have been publicly disclosed is, by definition, based upon the publicly disclosed information, even if the plaintiff made the disclosure. 161 F.3d at 540. Harshman tries to distinguish Biddle by arguing that, unlike Biddle, he is not a government auditor who aired his allegations on national television. That is, because the allegations in Harshman's case were buried in an unfiled complaint, presumably unknown to the government, his information was more valuable to the government than Biddle's well-publicized allegations. Harshman's attempt to distinguish Biddle fails because in that case we did not limit our analysis to information the government is likely to learn. 28 Harshman next contends that the Brooks complaint was not a hearing, as required by S 3730(e)(4)(A), because it was only a lodging of a proposed complaint. Harshman raises this argument on appeal for the first time in his reply brief; therefore, the issue is waived and we need not consider it. See Eberle v. City of Anaheim, 901 F.2d 814, 818 (9th Cir. 1990). 29 In any event, the argument is without merit. Disclosures made in the context of litigation may be publicly disclosed for purposes of S 3730(e)(4)(A), even if they are not the subject of a hearing. See United States ex rel. Stinson v. Prudential Ins. Co., 944 F.2d 1149, 1157, 1159-60 (3d Cir. 1991); see also United States ex rel. Barajas v. Northrop Corp. , 5 F.3d 407, 409 (9th Cir. 1993). 30 Therefore, because there has been a public disclosure and the Brooks complaint put the government on notice of the alleged FCA violation, Harshman must demonstrate that he is an original source. 31 U.S.C. 3730(e)(4)(A). 31