Court Opinion

ID: 7009542
Source: CourtListenerOpinion
Date Created: 2022-07-24 04:01:37.173872+00
Date Added: 2024-06-11T16:10:10.184239
License: Public Domain

BRISCOE, Circuit Judge,
concurring and dissenting.
I agree with the majority’s resolution of every issue except for its conclusion that James Stone qualifies as an “original source” under 31 U.S.C. § 3730(e)(4)(B). In my view, Stone has established only that he had direct and independent knowledge of background information pertaining to Rockwell’s pondcrete operations, and thus fails to qualify as an “original source” under § 3730(e)(4)(B).
The False Claims Act defines the term “original source” as “an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government before filing an action under this section which is based on the information.” 31 U.S.C. § 3730(e)(4)(B). We have further defined both the type and kind of knowledge that an original source/relator must have. In United States ex rel. Hafter v. Spectrum Emergency Care, Inc., 190 F.3d 1156, 1162-63 (10th Cir.1999), we held that to satisfy the “direct and independent knowledge” requirement, a relator must offer more than “secondhand information, speculation, background information or collateral research.” Instead, we held, the relator “must allege specific facts ... showing *816exactly 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 1162 (emphasis added). We recently reaffirmed the type and kind of knowledge required of a relator in United States ex rel. King v. Hillcrest Health Ctr., Inc., 264 F.3d 1271 (10th Cir.2001), emphasizing that the phrase “information on which the allegations are based” refers to “any essential element of the [underlying] fraud transaction.” Id. at 1280 (internal quotations omitted).
Count One of the amended complaint, asserted jointly by the United States and Stone, alleged that Rockwell violated the FCA by “knowingly presenting or causing to be presented to the government false or fraudulent claims for money or property.” App. at 995. Count One focused on three separate environmental, safety and health violations which Rockwell allegedly concealed from the government. The jury ruled in favor of Stone and the government on one of the three claims in Count One. The jury concluded Rockwell had submitted false claims to the DOE in violation of the Act as regards its pondcrete and saltcrete operations and awarded damages.
The question before us is whether Stone qualifies as an “original source” with respect to the portion of the Count One FCA claims upon which he and the government prevailed at trial. Those prevailing claims focused on Rockwell’s submission to the DOE of false statements regarding its pondcrete and saltcrete operations between April 1, 1987 and September 30, 1988. As outlined above, Stone must demonstrate, in part, that he had direct and independent knowledge of one or more of the essential elements of those claims.1
It is undisputed that Stone possessed significant background information regarding Rockwell’s pondcrete operations. According to Stone, managers at the Rocky Flats facility began considering the idea of producing pondcrete, in order to dispose of sludge from the facility’s solar1 ponds, in the fall of 1982. At that time, Stone was assigned the task of studying “aspects of the design proposed by Rockwell management for making pondcrete.” App. at 298. “After careful study, [he] concluded that the suggested process would result in an unstable mixture that would later deteriorate and cause unwanted release of toxic wastes to the environment.” Id. Stone communicated his concerns to Rockwell management in a written memo. Id. at 298, 439 (“This design will not work, in my opinion.”). According to Stone, Rockwell management nevertheless “went forward with the project without making the changes necessary ... to eliminate the instability of the pondcrete blocks.” Id. at 299.
Notwithstanding Stone’s background knowledge, there is no evidence that he directly and independently knew about the actual problems that arose with the pond-crete after it was produced or Rockwell’s efforts to conceal those problems from the DOE. Indeed, Stone was terminated from his employment with Rockwell well before either event occurred. Thus, although Stone predicted that problems would occur *817with the production of pondcrete,2 and perhaps may have speculated that Rockwell would conceal any such problems from the government, it is apparent that he lacked the “direct and independent” knowledge required by the FCA’s “original source” provisions. Cf. United States ex rel. Aflatooni v. Kitsap Physicians Serv., 163 F.3d 516, 526 (9th Cir.1999) (concluding relator who offered only speculation and conjecture that defendant committed the alleged fraud did not qualify as an original source); United States ex rel. Kreindler & Kreindler v. United Tech. Corp., 985 F.2d 1148, 1159 (2d Cir.1993) (concluding that plaintiff, who performed collateral research and possessed background information which enabled him to understand the significance of publicly disclosed information, did not qualify as an original source). More specifically, Stone lacked direct and independent knowledge of any of the essential elements of the Count One claims, i.e., that Rockwell actually experienced problems in its production of pondcrete, that Rockwell failed to disclose those problems to the government and in fact represented to the government that there were no environmental problems at Rocky Flats, or that Rockwell knowingly concealed the true state of affairs in order to obtain benefits under its contract with the government. See United States v. Mackby, 261 F.3d 821, 826 (9th Cir.2001) (concluding that the government must prove three elements to establish a cause of action under the FCA: (1) a “false or fraudulent” claim, (2) which was presented, or caused to be presented, by the defendant to the United States for payment or approval, and (3) with knowledge that the claim was false). This conclusion is made clear when one considers that the direct and independent knowledge possessed by Stone could have been omitted entirely at trial without affecting the outcome of the Count One FCA claims.
Because I conclude that Stone cannot qualify as an “original source” with respect to the successful Count One FCA claims, I would reverse the judgment of the district court and remand the case with directions to dismiss Stone’s portion of the Count One FCA claims for lack of subject matter jurisdiction.

. I note the first claim in Stone's initial complaint, filed July 5, 1989, was much broader than Count One of the amended complaint upon which Stone and the government ultimately prevailed. Judge Carrigan's ruling that Stone was a relator under the FCA pertained to Stone's initial complaint. Our focus in this appeal is on Count One of the amended complaint and whether Stone is a relator as regards those claims. See United States ex rel. Hafter v. Spectrum Emergency Care, Inc., 190 F.3d 1156, 1164 n. 10 (10th Cir.1999).

. The majority suggests that, in light of the conclusions reached by Stone in 1982, Rockwell was “aware[ ] that it would be using a defective process for manufacturing pond-crete.” Maj. Op. at 802. I think this stretches the evidence too. far. Although Rockwell was clearly aware of Stone's opinions, it is entirely plausible that Rockwell ’management nevertheless believed the proposed pondcrete manufacturing process would work. In any event, it is not Rockwell's decision to go forward with the proposed manufacturing process that gave rise to the Count One FCA claims. Rather, the Count One FCA claims are based on Rockwell’s concealment of actual problems that arose after the manufacturing process began.