Court Opinion

ID: 46557
Source: CourtListenerOpinion
Date Created: 2010-04-25 23:01:19+00
Date Added: 2024-06-11T17:17:42.885807
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS

                         FOR THE FIFTH CIRCUIT

                           Summary Calendar
                             No. 06-30304

United States of America, ex rel, RONALD K BAIN

                      Plaintiff - Appellant

     v.

GEORGIA GULF CORPORATION

                      Defendant - Appellee

             Appeal from the United States District Court
          for the Middle District of Louisiana, Baton Rouge
                            No. 3:01-CV-562

Before KING, HIGGINBOTHAM and GARZA, Circuit Judges.

PER CURIAM:*

     Plaintiff-appellant Ronald K. Bain appeals the district

court’s order awarding attorneys’ fees to defendant-appellee

Georgia Gulf Corporation on the basis that Bain’s False Claims

Act suit was frivolous or vexatious.    Finding no abuse of

discretion, we AFFIRM.

                             I. BACKGROUND

     *
        Pursuant to 5TH CIR. R. 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.
     The facts underlying this litigation have previously been

set forth in a prior opinion of this court, see United States, ex

rel. Bain v. Georgia Gulf Corp., 386 F.3d 648 (5th Cir. 2004),

and will not be repeated here.   A discussion of the procedural

background, however, will provide the relevant context for the

question presented here.

     Pursuant to the False Claims Act (“FCA”), 31 U.S.C. § 3729

et seq., plaintiff-appellant Ronald K. Bain filed an original

complaint under seal on July 13, 2001 against his former

employer, Georgia Gulf Corporation (“Georgia Gulf”).   The

original complaint sought to establish a reverse false claim

under § 3729(a)(7) of the FCA.   When the United States declined

to intervene on November 8, 2001, the district court unsealed the

complaint, and it was served on Georgia Gulf.

     On April 22, 2002, Georgia Gulf moved to dismiss the

original complaint pursuant to FED. R. CIV. P. 12(b)(6).   Georgia

Gulf asserted that the complaint failed to state a cause of

action under FCA’s reverse-false-claims provision.   Before ruling

on the motion, the district court ordered that Bain first amend

his complaint to plead with particularity the allegations of

fraud underlying the FCA reverse false claim as required by Rule

9(b).   Bain then filed an amended complaint on July 10, 2002,

which both added allegations related to the § 3729(a)(7) reverse

false claim and added a new direct false claim against Georgia

Gulf.   On September 3, 2002, the district court denied Georgia

                                 2
Gulf’s April 22, 2002, Rule 12(b)(6) motion to dismiss, ruling

that Bain did state a reverse false claim under the FCA.       The

district court’s ruling did not address the new direct false

claim.

     On October 25, 2002, the district court stayed its

proceedings pending the outcome of an appeal before this court

addressing the same issue challenged by Georgia Gulf’s Rule

12(b)(6) motion for failure to state a reverse false claim.1         The

district court certified an interlocutory appeal on the Rule

12(b)(6) ruling and this court granted leave to appeal.

     We concluded that the amended complaint did not state a

reverse false claim under § 3729(a)(7) of the FCA and reversed

the district court’s ruling on the Rule 12(b)(6) motion to

dismiss.   Bain, 386 F.3d at 648.       Because Georgia Gulf filed its

motion to dismiss before Bain filed the amended complaint (with

its new direct claim) the motion to dismiss related only to the

reverse false claim asserted in the original complaint.

Accordingly, we remanded Bain’s new direct false claim to the

district court.   In doing so, we questioned whether in filing a

new direct claim Bain had complied with § 3730(b)(2), which

requires that the government be served with the complaint and

     1
        In United States, ex rel. John Doe v. Dow Chemical Co.,
343 F.3d 325 (5th Cir. 2003), we affirmed dismissal on another
ground and did not reach the question of whether the complaint
stated a reverse false claim under the FCA.

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written disclosure of all material evidence and information so

that it may choose whether to intervene.

     On remand, Georgia Gulf filed a motion for summary judgment

on the remaining new direct false claim, challenging subject

matter jurisdiction under the FCA and particularity of pleading

under Rule 9(b).   The district court granted summary judgment on

June 22, 2005, specifically determining:

          (1) The Direct False Claim Act claim is a new
          claim.

          (2) The plaintiff has failed to comply with
          the specific provisions of the Act which
          require the plaintiff to file the claim under
          seal and to serve a copy of the complaint to
          the United States for its review. It is clear
          that the amended complaint was not filed under
          seal and the United States was never given an
          opportunity to consider the claim before it
          was made public by the plaintiff in clear
          contravention of the statute.      It is also
          clear that the United States has not given the
          plaintiff permission to proceed with this
          suit.

          (3)   The     record  also    establishes    that
          plaintiff’s amended complaint is based at
          least    in    part   on    publicly   disclosed
          information and prior litigation. It is clear
          that the plaintiff has failed to prove that he
          was   an    “original   source”   and   that   he
          voluntarily provided this information to the
          government before he filed this amended
          complaint.

          (4) Plaintiff has also failed to properly
          amend his complaint to specifically set forth
          the allegations of fraud as required by the
          Federal Rules of Civil Procedure.

3 R. 377-78, Opinion of the District Court (citations omitted).

                                 4
     Bain appealed the district court’s ruling to this court.    We

dismissed the appeal as frivolous.    Before the appeal was

dismissed, Georgia Gulf filed a post-judgment motion with the

district court seeking attorneys’ fees under both 31 U.S.C.

§ 3730(d)(4) (the FCA fee-shifting provision) and 28 U.S.C.

§ 1927.   The district court denied the motion for attorneys’ fees

relating to the original complaint but granted the motion under §

3730(d)(4) as to the amended complaint.    In mediation, the

parties stipulated that $65,000 was reasonable and attributable

to the amended complaint.    Bain, however, reserved the right to

appeal Georgia Gulf’s entitlement to attorneys’ fees.    Bain now

timely appeals.

                        II. STANDARD OF REVIEW

     In our only previous review of a district court’s award of

attorneys’ fees under § 3730(d)(4) of the FCA, we applied an

abuse of discretion standard of review.     Martel v. Maxxam Inc.,

211 F.3d 584, 2000 WL 329354, at *1 (5th Cir. 2000) (per curiam)

(unpublished table opinion).    This standard of review is

consistent with that employed by our sister circuits having

occasion to consider an award of attorneys’ fees under

§ 3730(d)(4).     United States ex rel. Grynberg v. Praxair, Inc.,

389 F.3d 1038, 1058 (10th Cir. 2004); United States ex rel.,

Mikes v. Straus, 274 F.3d 687, 704 (2d Cir. 2001); see also

United States ex rel. Chandler v. Cook Co., Ill., 277 F.3d 969,

                                  5
976 (stating that the addition of § 3730(d)(4) to the FCA gives

courts more discretion to regulate qui tam suits).   The abuse of

discretion standard is also consistent with our review of

attorneys’ fees under analogous circumstances.   See, e.g.,

Skidmore Energy, Inc. v. KPMG, 455 F.3d 564, 566 (5th Cir. 2006)

(reviewing Rule 11 sanctions for legally or factually frivolous

filings under an abuse of discretion standard); Travelers Ins.

Co. v. St. Jude Hosp. of Kenner, Inc., 38 F.3d 1414, 1417 (5th

Cir. 1994) (applying abuse of discretion standard to award of

attorneys’ fees under 28 U.S.C. § 1927, which allows fees where

an attorney’s conduct unreasonably and vexatiously multiplies the

proceedings); Alizadeh v. Safeway Stores, Inc., 910 F.2d 234,

237-38 (5th Cir. 1990) (applying abuse of discretion standard

when reviewing award of attorneys’ fees under 42 U.S.C. § 1988,

which allows fees when plaintiff’s suit is frivolous and

unreasonable); EEOC v. First Ala. Bank, 595 F.2d 1050, 1056 (5th

Cir. 1979) (applying abuse of discretion standard when reviewing

award of attorneys’ fees pursuant to Title VII, which allows fees

when plaintiff’s action is frivolous, unreasonable, or without

foundation).   Accordingly, we will review the district court’s

award of attorneys’ fees to Georgia Gulf pursuant to § 3730(d)(4)

of the FCA for abuse of discretion.

     We are mindful that the district court is in the best

position to render an informed judgment on an award of attorneys’

fees as it is intimately involved with the case, the litigants,

                                 6
and the attorneys.     Skidmore Energy, 455 F.3d at 566.

Accordingly, our review is deferential.       Under the abuse of

discretion standard, a district court’s decision to award

attorneys’ fees will not be disturbed unless the award is based

on (1) an erroneous view of the law or (2) a clearly erroneous

assessment of the evidence.     Id. at 566.

                            III. DISCUSSION

     Section 3730(d)(4) provides reasonable attorneys’ fees to a

prevailing defendant in a qui tam action if the court “finds that

the claim of the person bringing the action was clearly

frivolous, clearly vexatious, or brought primarily for purposes

of harassment.”    31 U.S.C. § 3730(d)(4).     Bain does not challenge

that Georgia Gulf is a prevailing defendant, nor does he

challenge the amount of the fees awarded.       The sole issue before

us is Georgia Gulf’s entitlement to fees.

     In its ruling, the district court determined that the record

“clearly established” that the “plaintiff’s first amended

complaint was filed in a frivolous or vexatious manner.”       3 R.

487, Ruling of District Court.    The court further determined that

“it is probable that the amended complaint was also filed to

harass the defendant considering the number of other claims the

plaintiff has filed against the defendant as set forth in the

record.”   Id.    The court’s ruling adopted its earlier findings

from its opinion granting summary judgment to Georgia Gulf.        The

                                   7
ruling also separately summarized these findings, detailing that

summary judgment previously was granted because Bain had added an

“entirely new claim” in his amended complaint and had failed to

(1) comply with the FCA’s filing requirements, (2) establish that

he was an “original source” for the information alleged as

required by law, and (3) plead his allegations of fraud with

particularity as required by Rule 9(b).

     A claim is frivolous if it has no arguable support in

existing law or any reasonably based suggestion for its

extension.   See Farguson v. MBank Houston, N.A., 808 F.2d 358,

359 (5th Cir. 1986).    A claim is vexatious when the plaintiff

brings the action for an improper purpose, such as to annoy or

harass the defendant.     Pfingston v. Ronan Eng’g Co., 284 F.3d

999, 1006 (9th Cir. 2002).    Either of these grounds is

independently sufficient to support an award of attorneys’ fees

under § 3730(d)(4).     Mikes, 274 F.3d at 704-705.

     The district court did not abuse its discretion in ruling

that Bain’s suit was frivolous or vexatious.       When Bain filed his

amended complaint, adding a new direct false claim, he failed to

satisfy a number of jurisdictional and procedural prerequisites

under the FCA.   Under the proper circumstances, a single defect

may merit a ruling on frivolousness or vexatiousness.       Cf.

Martel, 2000 WL 329354, at *2-3 (upholding ruling that suit was

frivolous solely on basis that plaintiff knew he was not the

original source of information).       In this case, the district

                                   8
court concluded that it lacked subject matter jurisdiction

because Bain’s amended complaint was “based at least in part on

publicly disclosed information and prior litigation” and that

Bain “had failed to prove he was an ‘original source’” of the

information.   3 R. 488.   Our previous rulings make clear that a

FCA qui tam action is barred for lack of subject matter

jurisdiction even where it is partly based upon publicly

disclosed allegations or transactions.    Fed. Recovery Servs.,

Inc. v. Crescent City E.M.S., 72 F.3d 447, 450 (5th Cir. 1995).

     The district court also concluded that Bain’s new direct

claim failed to comply with heightened pleading requirements for

claims of fraud under the FCA as required by Rule 9(b).    Notably,

the court’s Rule 9(b) decision came after the court gave Bain

clear notice of the heightened pleading requirements for FCA

claims and allowed him the opportunity to amend his original

complaint to plead his reverse false claim with particularity.

In his amended complaint, Bain added an entirely new direct

claim, where he again failed to satisfy Rule 9(b).   Bain concedes

that Rule 9(b) governs claims brought under the FCA.   Bain

instead argues in vain that the court’s later Rule 9(b) decision

on summary judgment was a “hasty and unannounced” “complete

reversal” of its earlier decision.    As our previous opinion made

clear, however, the district court’s earlier decision on Georgia

Gulf’s 12(b)(6) motion related only to the reverse false claim in

                                  9
the original complaint and not the new direct false claim.   As

such, Bain’s protestations have no merit.

     Taken together, Bain’s overwhelming failure to establish

subject matter jurisdiction and satisfy pleading

requirements——even after the district court gave notice of

heightened pleading requirements before the amended complaint was

filed——leads us to conclude that the district court did not abuse

its discretion in determining that Bain’s suit was frivolous or

vexatious.   Based on these defects, the court did not err in

concluding that Bain’s suit was without foundation and had no

reasonable chance of success, or in the alternative, that the

suit was filed for an improper purpose.2

                          IV. CONCLUSION

     For the foregoing reasons, the ruling of the district court

is AFFIRMED.   Georgia Gulf’s pending motions are DENIED.   Bain is

cautioned, however, that any further filings in this court will

likely result in sanctions.

     2
        Because we decide that the district court did not abuse
its discretion in concluding that the suit was frivolous or
vexatious, we do not address the trial court’s conclusion that it
was probable that the suit was filed to harass the defendant.

                                10