Court Opinion

ID: 185031
Source: CourtListenerOpinion
Date Created: 2011-02-05 02:26:51+00
Date Added: 2024-06-11T17:26:12.769524
License: Public Domain

199 F.3d 461 (D.C. Cir. 1999)
Gilbert W. Galvan, Appellantv.Federal Prison Industries, Inc., Appellee
No. 98-5472
United States Court of AppealsFOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 13, 1999Decided December 21, 1999

Appeal from the United States District Court for the District of Columbia(No. 96cv01722)
Thomas G. Corcoran, Jr. argued the cause and was on the  briefs for appellant.
Sally M. Rider, Assistant U.S. Attorney, argued the cause  for appellee.  With her on the brief were Wilma A. Lewis,  U.S. Attorney, and R. Craig Lawrence, Assistant U.S. Attorney.
Before:  Edwards, Chief Judge, Williams and Garland,  Circuit Judges.
Opinion for the Court filed by Circuit Judge Williams.
Williams, Circuit Judge:

1
The False Claims Act encourages  private parties to help fight fraud on the United States by  giving them the power to bring civil actions in its name, and  by providing both the government and the private party-known as the "relator"--a share of any financial recovery and  reimbursement for their costs, including attorneys' fees.  31  U.S.C. §§ 3729-3730 (1994).  Under the Act any person who  knowingly presents false or fraudulent claims to an officer or  employee of the United States may be liable.  Id.  3729(a).Gilbert W. Galvan, an inmate at the Federal Correctional  Institution in Oxford, Wisconsin, filed such an action--often  called by its Latin shorthand, qui tam (an abbreviation of qui  tam pro domino rege quam pro se ipso in hac parte sequitur)1--against his employer, Federal Prison Industries, Inc.  ("FPI").  He alleged that it had falsely certified that the  communication cables and weapons parts that it produced for  the Department of Defense had been adequately tested and  met the requisite quality standards.

2
FPI is no ordinary employer;  it is a "wholly owned government corporation," created to further the Bureau of Prison's  goal of providing meaningful work for inmates confined in  federal institutions.  See id.  9101;  28 CFR  345.10 (1999).But the suit had been brought in the name of the government, 31 U.S.C.  3730(b)(1), and it is accordingly entitled to  intervene, 31 U.S.C.  3730(b)(2), which it did here.  This put  the Department of Justice in place as counsel on both sides of the action.  It then moved under  3730(c)(2)(A) for dismissal  of the suit, arguing that the court lacked subject matter  jurisdiction because Galvan's qui tam action pitted the United  States executive branch against itself.  Further, representing  the FPI itself, the government moved to dismiss on grounds  of sovereign immunity.  The district court accepted the nonjusticiability argument, and never reached the issue of sovereign immunity.  We agree with the government's sovereign  immunity defense and affirm the dismissal on that ground,  leaving for another day the question of justiciability.

3
Before addressing sovereign immunity we must be sure  that we may properly do so before deciding whether the suit  presents a case or controversy.  Jurisdiction must be established before a federal court may proceed to any other  question.  Steel Co. v. Citizens for a Better Environment, 523  U.S. 83, 94-95 (1998).  But later cases make clear what was  implicit in Steel Co.:  There is an array of non-merits questions that we may decide in any order.  Thus in Ruhrgas A.G.  v. Marathon Oil Co., 119 S. Ct. 1563 (1999), the Court held  that it may be perfectly proper for a court to resolve personal  jurisdiction, which is waivable, without having first determined subject matter jurisdiction.  "[T]here is no unyielding  jurisdictional hierarchy."  Id. at 1567.  And in In re Minister  Papandreou, 139 F.3d 247, 255 (D.C. Cir. 1998), we considered an immunity defense despite considerable doubts about  the plaintiffs' standing, saying that "a court that dismisses on  other non-merits grounds ... makes no assumption of law declaring power that violates the separation of powers principles."  Id. at 255.

4
Sovereign immunity questions clearly belong among the  non-merits decisions that courts may address even where  subject matter jurisdiction is uncertain.  The Supreme Court  has characterized the defense as jurisdictional, FDIC v. Meyer, 510 U.S. 471, 475 (1994), even while recognizing that it can  be waived, id.  See also Deaf Smith County Grain Processors, Inc. v. Glickman, 162 F.3d 1206 (D.C. Cir. 1998);First Va. Bank v. Randolph, 110 F.3d 75, 77 (D.C. Cir. 1997).  And in Papandreou itself, we resolved the case on immunity  grounds, despite the presence of a defense that we assumed  arguen do was a matter of Article III standing.  139 F.3d at  255.  Similarly, we here address sovereign immunity and do  not reach justiciability.

5
* * *

6
Galvan argues that FPI is not entitled to sovereign immunity because it is not, in fact, part of the sovereign.  He is  mistaken.  A suit is against the sovereign when "the judgment sought would expend itself on the public treasury or  domain, or interfere with the public administration."  Dugan  v. Rank, 372 U.S. 609, 620 (1963) (quoting Land v. Dollar, 330  U.S. 731, 738 (1947)).  FPI is a wholly owned Government  corporation, see 31 U.S.C.  9101, and all money under FPI's  control is held by the U.S. Treasury to the credit of FPI.See 18 U.S.C.  4126(a) (1994).  Thus, any judgment in  Galvan's favor would require FPI to pay damages directly  from the public treasury.  See generally Sprouse v. FPI, 480  F.2d 1, 3 (5th Cir. 1973) ("[T]hough the prisoners vehemently  deny it, 'the conclusion is inescapable that the suit is essentially one designed to reach money which the government  owns.' " (quoting Mine Safety Appliances Co. v. Forrestal,  326 U.S. 371, 375, (1945))).

7
Pointing to 18 U.S.C.  4126(b), which says that "[a]ll valid  claims and obligations payable out of said fund [the FPI fund  at Treasury] shall be assumed by the corporation," Galvan  characterizes the corporation as "self-sufficient."  This is  quite immaterial.  "Federal agencies or instrumentalities performing federal functions always fall on the 'sovereign' side of  [the] fault line" between suits against the sovereign and suits  against individuals, regardless of any independence of accounts.  Auction Co. of America v. FDIC, 132 F.3d 746, 752  (D.C. Cir. 1997).  "Diversion of resources from a private  entity created to advance federal interests has effects similar  to those of diversion of resources directly from the Treasury."Id.  In fact, as a government corporation FPI is not only a  federal instrumentality but is also an "executive agency," 5 U.S.C.  105, and on that account deserves sovereign immunity in the absence of congressional waiver. See FDIC v.  Meyer, 510 U.S. 471, 475 (1994) ("Absent a waiver, sovereign  immunity shields the Federal Government and its agencies  from suit.").

8
Galvan argues that Congress waived FPI's immunity both  in FPI's organic statute, 18 U.S.C.  4121, and in the False  Claims Act, 31 U.S.C.  3729.  We first note the rather steep  incline that the Supreme Court has said a court must climb  before finding a waiver of the federal government's sovereign  immunity.  Such waivers must be "unequivocally expressed in  statutory text, and will not be implied."  Lane v. PeNa, 518  U.S. 187, 192 (1996) (internal citations omitted).  If ambiguous, statutes must be construed in favor of immunity.  See  United States v. Williams, 514 U.S. 527, 531 (1995).  So long  as a statute supposedly waiving immunity has a "plausible"  non-waiver reading, a finding of waiver must be rejected. United States v. Nordic Village, Inc., 503 U.S. 30, 37 (1992)  ("plausible" alternative reading is enough to establish that a  "reading imposing monetary liability on the Government is  not 'unambiguous' and therefore should not be adopted.").With this in mind we turn to Galvan's specific claims.

9
FPI's Organic Statute.  Congress established FPI as "a  government corporation of the District of Columbia."  18  U.S.C.  4121.  Galvan would have us read this as manifesting a congressional intent to give FPI the legal characteristics of an ordinary corporation established under the general  corporation law of the District of Columbia.  That law states  that such corporations are "capable of suing and being sued  in any court of law or equity in the District," D.C. Code Ann.   29-203 (1999),2 language which if applicable would constitute a waiver.  See Meyer, 510 U.S. at 480;  FHA v. Burr, 309  U.S. 242, 245 (1940).

10
On the surface (later we look below the surface)  4121  seems capable of the meaning Galvan proposes.  But there  are alternative meanings that seem plausible--namely readings of  4121 as intended to establish a different kind of link with the District of Columbia.  Thus Congress may have  intended to specify that the headquarters of FPI should be in  the District (as it in fact is, see Federal Prison Industries  1996 Annual Report 82).  Congress has so provided, more  specifically to be sure, in other statutes.  See, e.g., 22 U.S.C.   2199(a) ("The [Overseas Private Investment] Corporation  shall have its principal office in the District of Columbia.");12 U.S.C.  4703(a)(1) ("The offices of the [Community Development Financial Institutions] Fund shall be in Washington,  D.C.").  Or Congress may have intended to locate FPI in the  District specifically for purposes of venue, as it has for other  government corporations.  See 22 U.S.C.  2199(a) (Overseas  Private Investment Corp. deemed to be a resident of the  District of Columbia "for purposes of venue in civil actions");22 U.S.C.  3611(b) (Panama Canal Commission "is an inhabitant and resident of the District of Columbia");  cf. 7 U.S.C.   1506(d) ("Any suit against the [Federal Crop Insurance]  Corporation shall be brought in the District of Columbia, or  in the district wherein the plaintiff resides.").  Because 28  U.S.C.  1391(e) provides venue for suits against "an agency  of the United States" in any judicial district where the  defendant "resides," a congressional purpose simply to establish the central administration in Washington would have the  consequence of locating venue in the District for any case  against FPI brought under general waivers of sovereign  immunity such as the Tucker Act, see id. §§ 1346, 1491.

11
In deciding on the plausibility of the above interpretations,  it is worth noting how precisely Congress has spoken in  instances where it sought to incorporate attributes established by D.C.'s general corporation law.  See 29 U.S.C.   1302(b) ("The [Pension Benefit Guaranty] corporation has  the powers conferred on a nonprofit corporation under the  District of Columbia Nonprofit Corporation Act.");  cf. 40  U.S.C.  875 (allowing Pennsylvania Avenue Development  Corporation to condemn property under the procedural provisions of a specific subchapter of the D.C. Code).  The same is  true of Section 11 of the Shipping Act of Sept. 7, 1916, 39  Stat. 728, 731, which allowed the United States Shipping  Board to "form under the laws of the District of Columbia one or more corporations."  In Sloan Shipyards Corp. v.  United States Shipping Board Emergency Fleet Corp., 258  U.S. 549 (1922), the Court found that this provision effected a  waiver.  Id. at 565-68.  Because of  11's much more specific  statutory language, however, Sloan affords Galvan no aid.3

12
Looking at the context of  4121, we find indicators militating against Galvan's view that Congress's reference to "a  government corporation of the District of Columbia" was  intended to incorporate the District's corporate law by reference.  Congress purposefully kept FPI out of the commercial  world and limited its exposure to the courts.  FPI cannot sell  its products to the public in competition with private enterprise, and even for its sales to the government must diversify  its operations to minimize competition with private industry  and to avoid capturing more than a reasonable share of the  government market for any specific product.  See 18 U.S.C.   4122(a)-(b).  Purchases of FPI products are considered  intra governmental transfers, see id.  4124(b), and FPI may  borrow money only from the Treasury itself, see id.  4129.When FPI's government customers challenge the "price,  quality, character, or suitability" of its products, their only  recourse is to binding arbitration before the Attorney General, the Administrator of General Services, and the President,  or their representatives.  See id.  4124(a)-(b).

13
Other aspects of FPI activity are removed from judicial  influence.  The Attorney General has authority to promulgate  rules and regulations governing inmates' compensation for injuries sustained and for work performed in connection with  FPI activities, see id.  4126(c)(4).  The Attorney General's  administrative scheme is the workers' exclusive remedy.  See  28 CFR  301.309 (1999);  United States v. Demko, 385 U.S.  149, 152 (1966).

14
Reading  4121 as literally making FPI a corporation  under the law of the District of Columbia creates still further  puzzles and contradictions.  First, the management structure  of FPI conflicts directly with the laws in place when the  current statutory language was adopted.4  The D.C. Code  requires annual elections for the corporation's "trustees" (the  District's analogue of a director, see D.C. Code §§ 29-202,  -204), see id.  29-205, but FPI'sboard of directors is  appointed by, and serves at the will of, the President.  See 18  U.S.C.  4121.  The District's laws also require that trustees  own stock in the company, see D.C. Code  29-204, whereas  FPI's operating capital is maintained exclusively by the Treasury of the United States.  See 18 U.S.C.  4126(a).  In  addition, in 1948 (the time of adoption of FPI's organic  statute in approximately its current form), a majority of a  corporation's trustees were required to be citizens of the  District, see D.C. Code  29-204 (1940), but it seems unlikely  that this rule has bound the President in his selection of  FPI's directors.

15
Second, Congress granted FPI considerably fewer powers  than an ordinary District corporation while simultaneously  imposing extra, particularly governmental, burdens.  For example, a District corporation has the specific power to mortgage its property, see  29-203, and thus implicit power to  borrow money;  but Congress authorized FPI to borrow  money only in 1988, and in so doing limited the source of funds to the U.S. Treasury, see Pub. L. No. 100-690, 102 Stat.  4411 (codified at 18 U.S.C.  4129 (1994)).  Similarly, in  employing its assets, FPI is required to meet the requirements of a government agency rather than a District corporation.  It can withdraw money from its accounts "only pursuant to accountable warrants or certificates of settlement  issued by the General Accounting Office," 18 U.S.C.   4126(a), and is required to act "in accordance with the laws  generally applicable to the expenditures of the several departments, agencies, and establishments of the Government," id.   4126(c).

16
Finally, the vast majority of the District's rules are either  indirectly superseded or have no relevance to FPI.  For  example, the District required that shareholders pay 10% of  the capital stock into the corporate treasury before the  corporation could transact any business.  See D.C. Code   29-209.  FPI has no such capitalization requirement.  The  other provisions of the D.C. Code concern the activities of  ordinary corporations.  See, e.g., id. §§ 29-209 to -212, -216  to -217, -230 to -235, -239 (capitalization and stock transactions);  id. §§ 29-218 to -219 (payment of dividends);  id.  §§ 29-205, -211, -220 to -222 (stockholder liability and voting  rights).  They have no apparent application to FPI.  The  dismal fit between FPI and the sort of private corporation  clearly contemplated by the D.C. Code makes it vanishingly  improbable that Congress meant to make FPI a corporation  governed by that code.5

17
Galvan attempts to save his waiver argument by arguing  that the typical presumption in favor of sovereign immunity  should not apply to government corporations, citing Keifer &  Keifer v. Reconstruction Fin. Corp., 306 U.S. 381 (1939).  There the Court found that in authorizing the Reconstruction  Finance Corporation ("RFC") to create up to twelve "regional  agricultural credit corporations" and to appoint their management, Congress had not endowed the regional corporations  with sovereign immunity.  Because the parent corporation,  the RFC, was subject to a "sue and be sued" clause, the  Court found that Congress "naturally assumed" that the  regional corporations would similarly lack immunity.  Id. at  392-93.  "Congress had a right to assume that the characteristic energies for corporate enterprise with which a few  months previously it had endowed [the RFC] would now  radiate through [the RFC] to [the regional corporations]."Id. at 393-94.  Because FPI is by no means the offspring of a  non-immune government entity, the grounds for the inference  drawn in Keifer are absent here.

18
Moreover, the Supreme Court seems to have abandoned  Keifer's fundamental premises.  The Keifer Court said that  "the government does not become the conduit of its immunity  in suits against its ... instrumentalities merely because they  do its work."  Id. at 388.  More recent cases have taken the  opposite view.  See FDIC v. Meyer, 510 U.S. at 475 ("Absent  a waiver, sovereign immunity shields the Federal Government and its agencies from suit.");  Auction Co. of America,  132 F.3d at 752 ("Federal agencies or instrumentalities performing federal functions always fall on the 'sovereign' side of  th[e] fault line.").  One treatise classifies Keifer as part of the  Supreme Court's "halting and irregular" pronouncements of  its doubts about sovereign immunity, standing in contrast to  the "regular reiterations ... of the conventional position,  which has been dominant in most recent Supreme Court  decisions."  Richard H. Fallon, Jr. et al., Hart & Wechsler's  The Federal Courts and the Federal System 1040 (4th ed.  1996).  Obviously we must apply the currently "conventional"  position.

19
In short, reading  4121 as an incorporation of the details  of the District's general corporation law (including its "sue  and be sued" clause) is not especially plausible.  That law has  a variety of specific features that are either irrelevant to FPI  or contradict provisions in its organic statute;  the organic statute contemplates intra-governmental resolution of conflicts with FPI's primary customers;  and the language of   4121 is nowhere near as specific as in the recognized  instances of such incorporation.  More limited readings than  Galvan's, simply locating FPI in the District, are at least as  plausible.  We find no waiver here.

20
The False Claims Act.  Nor can we find a waiver in the  False Claims Act.  The Act establishes liability for any  "person" who knowingly presents false or fraudulent claims.31 U.S.C.  3729.  The term "person," however, is not defined for the relevant sections of the statute.  Galvan contends that the term "person" should include government  corporations because 1 U.S.C.  1 provides that the word  "person" is to include "corporations" unless "the context  indicates otherwise."  The government responds by invoking  the counter canon that the term "person" does not ordinarily  include the sovereign.  See Will v. Michigan Dep't of State  Police, 491 U.S. 58, 64 (1989) (citing Wilson v. Omaha Indian  Tribe, 442 U.S. 653, 667 (1979)).

21
The parties also point to specific contextual elements.  Galvan urges that the language of 31 U.S.C.  3730(b)(5), saying  that "no person other than the Government may intervene,"  implies that the term "person" includes the government and  thus resolves any ambiguity.  He also argues that the exemption of certain officials from liability under  3730(e)(2)(A)  implies that all other government entities are suable, and that  therefore government corporations fall within the definition of  person in 1 U.S.C.  1.  The government points to   3730(d)(2), which makes the "defendant" liable for a prevailing relator's expenses, and  3730(f), which states that the  government cannot be found liable for the relator's expenses; taken together, these provisions arguably imply that "the  government" cannot be the defendant.

22
There are answers to each of these arguments.  That   3730(b)(5) uses the term "person" in excluding all possible intervenors other than "the Government" sheds little light on  the congressional view of proper defendants.  Section  3730(e)(2)(A)'s explicit but limited immunity for individuals holding specified offices is completely consistent with an  assumed immunity for government entities themselves;  recovery from fraudulent individuals would not involve two  branches of the federal government running up litigation  costs so that one can collect from another.  And the statutory  combination cited by the government,creating "defendant"  liability for attorneys' fees while protecting "the Government"  from such liability, can be explained by limiting the government's exemption to appearances in its capacity as intervenor. In the end, none of these contextual arguments seems to offer  any strong ground for interpretation of "person" one way or  the other.

23
We note that the circuits have split over whether "person"  under the False Claims Act includes states.  Compare United  States ex rel. Long v. SCS Business & Tech. Inst., 173 F.3d  870 (D.C. Cir. 1999) (finding that it does not), with United  States ex rel. Stevens v. Vermont Agency of Natural Resources, 162 F.3d 195 (2d Cir. 1998), cert. granted, 119 S. Ct.  2391 (June 24, 1999) (finding that it does), and United States  ex rel. Zissler v. Regents of the Univ. of Minn., 154 F.3d 870  (8th Cir. 1998) (same).6  The courts have necessarily resolved  this question under the presumption established in the Will  and Wilson cases;  that two circuits found the presumption  overcome in that context is a source of caution.  But for state  liability there was a stronger basis in the overall purpose and  legislative history for inclusion, see, e.g., Long, 173 F.3d at  875-81, and the analysis was not subject to any interpretive  guidance as strong as Nordic Village's instruction that the  presence of a "plausible" non-waiver interpretation compels  rejection of a waiver interpretation.  Because the reading of  "person" to exclude agencies of the federal government is at  least plausible, we find no waiver.

24
At oral argument, Galvan's counsel attempted to raise an  additional theory under which Galvan could recover pursuant  to the False Claims Act.  He argued that the Tucker Act, 28  U.S.C.  1491--and the Little Tucker Act, id.  1346(a)(2), to  the extent that the claim did not exceed $10,000--waived  sovereign immunity:   1491(a)(1) waives for a claim "founded  ... upon ... any Act of Congress," and the Supreme Court  has understood that to encompass any statute that "can fairly  be interpreted as mandating compensation by the Federal  Government for the damages sustained."  United States v.  Mitchell, 463 U.S. 206, 218 (1983).  The False Claims Act,  says Galvan, is such an act.  As the False Claims Act does  not specifically impose any obligation on a branch of the  United States, Galvan's argument seems quite a stretch of the  Mitchell principle.  But we shall not explore Galvan's argument because it was not raised before the district court or in  Galvan's submissions to this court.  We do not normally  "consider all the implications of a theory vaguely raised for  the first time at oral argument on appeal."  Tarpley v.  Greene, 684 F.2d 1, 7 n.17 (D.C. Cir. 1982).

25
Galvan's claim must be dismissed because the FPI enjoyed  an unwaived sovereignty immunity;  the judgment of the  district court is

26
Affirmed.

Notes:

1
 Black's Law Dictionary translates the phrase as "who as well  for the king as for himself sues in this matter."  Black's Law  Dictionary 1262 (7th ed. 1999).  There are other versions of the  complete Latin phrase, but none appears meaningfully different. See, e.g., United States ex rel. Kelly v. Boeing Co., 9 F.3d 743, 746  n.3 (9th Cir. 1993) ("qui tam pro domino rege quam pro se imposo  sequitur");  Miami Copper Co. v. State, 149 P. 758, 761 (Ariz. 1915)  ("qui tam pro domino rege, etc., quam pro se ipso in hac parte  sequitur").

2
 This provision was codified at Code D.C.  607 when FPI was  first established.

3
 The current text of FPI's organic statute was adopted as part  of the enactment of Title 18 of the United States Code.  See Act of  June 25, 1948, Pub. L. No. 80-772, 62 Stat. 683, 683.  The language  of the original act demonstrated even more clearly that Congress  did not intend to adopt the District's corporation laws.  The Act of  June 23, 1934 authorized the President to "create a body corporate  of the District of Columbia to be known as 'Federal Prison Industries', which shall be a governmental body."  Act of June 23, 1934,  Pub. L. No. 73-461, 48 Stat. 1211, 1211.  Its language reinforces  FPI's status as a governmental entity and suggests that its status  as a corporation is generic rather than specific to the District of  Columbia.

4
 The following citations refer to the current District of Columbia  and United States Codes, but each cited provision (with one exception) is identical in substance to the provision in effect when the  current version of FPI's organic statute was adopted:  18 U.S.C.  §§ 4121-4128 (1948), and D.C. Code  29-201 to -240 (1940).  The  exception is that D.C. Code  29-204 (1940) imposed a requirement  that "trustees" be citizens of the District, whereas the current  version does not.

5
 Section 11 of the Shipping Act of 1916, in contrast, anticipated  the questions of market capitalization, stock management, and the  exercise of voting rights.  39 Stat. at 731.  The Act also refrained  from placing governmental burdens on these corporations' spending  decisions.  There may be some incongruities between the management structure provisions of  11 and the D.C. Code, but evidently  none was brought to the attention of the Supreme Court in Sloan.

6
 Since granting certiorari in Stevens, the Supreme Court has  added the broader question of whether a private person can have  standing to bring a qui tam action in the absence of particularized  injury attributable to the defendant's actions.  See Stevens, ___ U.S. ___, 119 S.Ct. 2391, 144 L.Ed.2d 792 (1999) (adding standing question).