Court Opinion

ID: 9426242
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:17:15.958896+00
Date Added: 2024-06-11T17:22:59.819319
License: Public Domain

Me. Justice Rehnquist,
with whom The Chief Justice and Me. Justice White join, concurring in part and-dissenting in part.
I join the opinion of the Court with respect to Part Ill’s treatment of the double-damages issue. But the narrow construction of the False Claims Act adopted by the Court in Part II of the opinion, while not repugnant to the face of the statute itself, is by no means the only permissible construction of that language. Because that construction, as applied to the facts of this case, leads to an arbitrary result providing a windfall for those who would seek to defraud the Government, I would construe the statute somewhat differently than does the Court. Instead of concentrating in isolation on the “conduct of the person from whom the Government seeks to collect the statutory *318forfeitures,” as the Court does, I believe that the statute requires inquiry as to the relationship, in terms of proximate cause and foreseeability, between the conduct of such person and the number of false claims actually presented to the Government.
Revised Stat. § 3490 provides that any nonmilitary person “who shall do or commit any of the acts prohibited by any” of the provisions of Rev. Stat. § 5438 “shall forfeit and pay” $2,000 to the United States. The “act” which is prohibited by the first clause of § 5438, at issue here, is the “mak[mg] or caus[ing] to be made, or present [ing] or caus[ing] to be presented, for payment . . . any claim . . . against the Government . . . knowing such claim to be false, fictitious, or fraudulent . . . .” That which is proscribed, then, is the causing to be presented a false claim against the Government with knowledge of the falsity of the claim.
Reading the pertinent portion of the above to impose liability only for the “commission of acts which cause false claims to be presented” (emphasis added), the Court construes this language to require the trier of fact to “focus in each case . . . upon the specific conduct of the person from whom the Government seeks to collect the statutory forfeitures.” It then goes on to hold, apparently as a matter of law, that “the three separately invoiced shipments to Model” were the causative “acts” to which forfeiture liability attaches. As may be more readily seen from an examination of the facts of this case, this extremely narrow construction and application produce a result which bears little relationship to the congressional purpose.
The stipulated facts reveal a complex and altogether deliberate scheme to palm off cheaper, surplus tubes to the prime contractor, Model. Model had contracted to build radio kits for use by the Army. The specifications *319for the component parts reflected the Army’s understandable desire that military equipment be long lasting and reliable. The radios were to contain new 4X150G electron tubes bearing markings that, pursuant to the .underlying military procurement specifications, showed they were manufactured in a plant whose quality-control standards measured up to certain Government requirements and were “source” inspected and approved by a Government inspector at the plant during manufacturing.1 As far as the military was concerned (as opposed to commercial buyers), Eimac was the only authorized manufacturer. Tubes made by Eimac at its designated plant, accompanied by the proper “source” inspection and stamped accordingly, were the only ones qualified to receive genuine affixations. These stringent requirements were reflected in Eimac’s market price of $40 per tube.
Respondents, however, with full awareness of what was required under Model’s contract, got themselves caught between that market price and their own promise to deliver some 1,000 tubes at $32 each. Model had al*320ready rejected United’s first shipment of 120 surplus tubes; with none of them bearing the requisite markings, nonconformity was obvious. The only way respondents were going to profit under their contract with Model was to ship electron tubes that had the appearance of being new and genuine JAN-type2 electron tubes, bearing markings as if they had been produced by Eimac under the strictures of the Government inspection process. To that end, they bought several hundred surplus tubes, at $17.50 each, from a distributor of Eimac and affixed, on each one, the JAN stamp, a “Manufacturer’s Qualification Code” 3 (Eimac’s) and an “acceptance” date, all of which markings were palpably false and designed to deceive Model. To complete the illusion, respondents sent the falsely stamped tubes to a testing laboratory where, after inspection, 21 packing lists (referencing the serial numbers) were prepared, each stamped, falsely, with a facsimile of a Government inspector’s “Eagle” stamp.4 The 21 boxes were then combined in three separate .shipments, respondents certifying with each shipment that the tubes conformed to the contract. Duped into accepting the tubes as genuine, Model paid each of the three invoices and incorporated the fraudulent tubes into the radio kits. Model was paid, of course, on 35 separate invoices.
Applying its construction of the statutory language to this multifaceted shell game, the Court concludes that the only “acts” which “caused” the submission of false claims were the three separately invoiced shipments, *321reasoning that but for the shipment of “falsely branded” tubes the radio kits, and in turn Model’s claims to the Government, would have been genuine. However, the three invoiced shipments were among a host of fraudulent acts, with respect to each of which it could be said that “but for” that act Model’s claims to the Government would have been genuine. Had respondents not falsely marked each of the 300-odd tubes which were actually shipped to Model, or had the 21 packing lists covering them not been falsely stamped, it could equally well be said that Model would have submitted no false claims to the Government respecting the tubes supplied by respondents.5 Thus, on the basis of “but for” causation, which is all the Court’s justification really amounts to, there is no support whatever for picking the number 3 in preference to the number 21, or for picking either of those numbers in preference to the total number of tubes each of which was falsely marked. The only way these various “acts” can be distinguished from one another, so far as causation is concerned, is their proximity in time to the submission of the false claims by Model.
The Court’s construction of the statute, as applied to these facts, leads to a result which is not only arbitrary but has the effect of allowing those who would defraud the Government to minimize their potential penalties by shipping all of their rotten eggs in one basket. I believe that a somewhat different construction is at least equally consistent with the language and would produce a result far more consistent with the congressional purpose to penalize those who would defraud the Government.
*322The “act” proscribed is causing a false claim to be presented to the Government with knowledge of its falsity. The Court simply counts the number of causative acts irrespective of the number of false claims actually submitted because the latter number is, in the words of the Court, “wholly fortuitous.” But the foregoing examination has shown that the Court’s preference for focusing on the “acts” of the subcontractor in isolation leads to an equally fortuitous result. I think that Congress intended the trier of fact in cases such as this to consider not only the “act” of the subcontractor, but also the number of false claims which the act or various acts of the subcontractor caused to be submitted. The first clause of § 5438 by its very terms focuses on protecting the Government not simply from fraud “in the air” but from the presentation for payment of fraudulent claims. The Court notes with approval cases involving prime contractors where the number of imposable forfeitures has turned on the number of false-payment demands made upon the Government. Ante, at 309 n. 4. If a prime contractor utilized an innocent agent to present a single false claim to a Government agency, but in fact the agent proceeded to split that claim up into multiple invoices, it would mock the statute to suggest that the prime contractor could avoid multiple forfeitures by claiming that he was unable to foresee his agent’s conduct. The Court’s construction does indeed suggest that in that case the prime contractor could cry “fortuity.”
There is nothing on the face of the statute, however, to indicate congressional intent to treat deceitful prime contractors and subcontractors according to the mechanics of the underlying fraud. Instead, the verbal linkage of “acts,” “causes,” and “false claim” is couched in general terms pointing to a uniform construction: the number of imposable forfeitures in each case under *323the first clause is keyed to the number of false claims submitted.6 The language further suggests an interpretation in terms of traditional concepts of causation. Such concepts, whether denominated “proximate cause” or “legal” cause, frequently result in the imposition of liability even upon a negligent actor for consequences of which he could not have been absolutely certain at the time he acted, so long as those consequences might reasonably have been foreseen. See W. Prosser, The Law of Torts §§ 42, 43 (4th ed. 1971); Restatement (Second) of Torts §435 (1965). I would remand this case to the District Court for assessment of forfeiture liability under this standard.
There may well be room for inference on the part of the trier of fact in this case, if not on the present record, on such additional record as could be compiled on remand, that respondent subcontractor knew or had reason to believe that the prime contractor would assemble and forward finished products to the Government at routine and regular intervals. Nor would it be unforeseeable under such a set of circumstances that the prime contractor would regularly invoice the Government for the customary progress payments. I am unwilling to accept the flat conclusion that it was “wholly beyond” the subcontractor’s ability to foresee that 35 false claims would be generated by his fraud. Evidence such as the terms of the prime contract, and the subcontract, the sub*324contractor’s experience in business generally and in Government procurement particularly, and the closeness of the working relationship between the subcontractor and the prime contractor could well be relevant to such an inquiry. But the fact that the subcontractor loses “control” over the actual number of false claims his actions have caused to be submitted to the Government, once the prime contractor has been tricked into paying for fraudulent goods, cannot be of controlling significance if he could have foreseen the number or even the order of magnitude of the claims which would be ultimately submitted by the prime contractor. Given a statute which punishes intentional deception, deception which is abundantly made out on this record, I cannot agree with the Court’s sharply restricted test for determining the number-of forfeitures for which these respondents are liable.

One such required marking is the “JAN” prefix, which stands for Joint Army Navy qualification standard. This brand, registered by the Patent Office, is to be used by the manufacturer only after the tubes have passed Government inspection at the place of manufacture during the manufacturing process. 361 F. Supp. 869, 872 n. 3 (NJ 1973). In addition, following the JAN prefix is the Manufacturer’s Qualification Code, which shall be used only by the manufacturer to whom it has been assigned and only as a part of the designation on tubes manufactured at the plant to which qualification approval was granted. Id., at 871 n. 2. Only manufacturers whose plants have passed rigorous qualifying tests are issued this Code. The Code for the sole authorized maker of these tubes was “CIM,” which identified Eitel McCullough, Inc. (Eimac), a California corporation. In addition to the JAN-CIM brand on tubes that passed all of the tests, Eimac would imprint a four-figure number indicating the year and week of acceptance. Id., at 872.

 See n. 1, supra.

 See ibid.

 As proof that the JAN stamp in fact represents the required Government “source” inspection, the Government inspector imprints his “Eagle” acceptance stamp on packing lists accompanying each shipment of tubes. 504 F. 2d 368, 369 (CA3 1974).

 Indeed, the facts show that without the false stamping and the false packing lists, no claims at all would have been presented by Model, because Model, as it did with respect to the first 120-tube shipment, would have continued to reject tubes whose nonstamping clearly showed them to be nonconforming.

 This is in contrast, however, with the second and third clauses of § 5438, which also go to nonmilitary persons. The number of imposable forfeitures in the second clause appears to turn on the number of false bills, certificates, affidavits, etc., made or used, or caused to be made or used, “for the purpose of obtaining . . . the payment or approval” of a false claim. The act prohibited by the third clause is the entry into a conspiracy to defraud the Government by obtaining the payment of a false claim. See text quoted, ante, at 306 n. 1.