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UNITED STATES EX REL. THOMPSON v. HAYS

October 26, 1976

UNITED STATES ex rel. Edward THOMPSON, Plaintiffs,
v.
Wayne HAYS et al., Defendants. UNITED STATES ex rel. Anthony D. CENNAMO et al., Plaintiffs, v. Elizabeth L. RAY et al., Defendants. UNITED STATES ex rel. Anthony R. MARTIN-TRIGONA et al., Plaintiffs, v. Wayne L. HAYS et al., Defendants



The opinion of the court was delivered by: FLANNERY

 FLANNERY, District Judge.

 The False Claims Act creates civil liability in persons making claims against the government knowing such claims to be "false, fictitious, or fraudulent." 31 U.S.C. § 231. The controversy in this action arises from the so-called qui tam provision of the Act, which allows suits against such persons to be "brought and carried on by any person, as well for himself as for the United States . . . in the name of the United States." Id. § 232(B). Whenever such suit is initiated by a private citizen, the plaintiff must serve the Attorney General of the United States with a copy of the complaint and "a disclosure in writing of substantially all evidence and information in his possession material to the effective prosecution of such suit." Id. § 232(C). Subsequent to receiving this information, the United States has sixty days in which to decide whether it will carry on the suit. If it declines to do so, the private plaintiff may proceed to litigate the action. The United States bases its motion to dismiss on the provision of § 232(C) that "[the] court shall have no jurisdiction to proceed with any such suit brought under clause (B) of this section or pending suit brought under this section whenever it shall be made to appear that such suit was based upon evidence or information in the possession of the United States, or any agency, officer, or employee thereof, at the time such suit was brought." Thus, the sole question faced by the court on this motion is whether the United States was in possession of the information or evidence upon which the suits are based prior to their initiation by the relators.

 In support of its motion to dismiss, the United States has submitted the sworn affidavit of Robert Ashbaugh, an attorney in the Frauds Section of the Civil Division of the Justice Department. Mr. Ashbaugh has been assigned responsibility for the civil consequences and liabilities arising from the Hays-Ray relationship and related matters and is, therefore, qualified to comment upon the Justice Department's activities in this area. According to his affidavit, the official records of the Justice Department reveal that the Department first obtained information regarding the claims made in this action on May 23, 1976, as a result of the Washington Post article. Within twenty-four hours, the Federal Bureau of Investigation had begun an investigation at the direction of the Justice Department. By May 27, 1976, a federal grand jury, sitting in the District of Columbia, had been convened and had issued a subpoena to the Clerk of the House of Representatives for the production of payroll records for certain congressional employees, including Elizabeth Ray. Newspaper articles reporting alleged irregularities involving the employment of defendant Gosny by defendant Hays and defendant Ray by defendant Gray appeared prior to the initiation of suit by these plaintiffs. Presumably the Justice Department also included these persons in the scope of its investigation.

 In accordance with the terms of the Act, the Justice Department requested that the relators disclose in writing "substantially all evidence and information" in their possession which was relevant to the effective prosecution of the action. Responding to this inquiry, relator Thompson indicated that his information was based on conversations with persons whose names he either could not remember or could not disclose and on "various reports in the newspapers and television." He added that "[much] of my information and allegations are based on information and belief, as I have not done, and am not in a position to do, an intensive investigation of these allegations on my own." Relators Cennamo and Douglas purported to include with the complaint which was served upon the Attorney General "a disclosure in writing of substantially all evidence and information in our possession that is material to the effective prosecution of the suit," but the only materials enclosed were a photocopy of the cover of The Washington Fringe Benefit2 and an article from Time magazine entitled "Sex Scandal Shakes Up Washington." Relator Martin-Trigona, through his attorney, responded to the Justice Department inquiry by disclosing that all the evidence and information in his possession was obtained from three sources: "1) the Report of the Clerk of the House of Representatives of the United States, July 1-December 31, 1975, House Document Number 94-384; 2) newspaper sources including the Washington Post and the New York Times; and 3) conversations with individuals who are unwilling to have their identities disclosed." This correspondence between the relators and the Justice Department is appended to the United States' motion. In his affidavit, Mr. Ashbaugh states, "To the extent that it is specific or reasonably identifiable, the information provided by the relators in their statements of material evidence was known to me and other Department officials prior to receipt of the transmittal letters and prior to the filing of the three qui tam actions here relevant."

 It thus appears beyond dispute that the evidence and information upon which relators' suits were based was in the possession of the United States prior to the initiation of the suits. All of the evidentiary material which relators are able to identify specifically seems to have been gleaned from sources in the news media which received widespread public attention. The record is clear that the Justice Department was not only in possession of the same information but had in fact acted upon it prior to the filing of complaints by relators. The fact that the Justice Department had already initiated its investigation is reflected in the undisputed assertions by Mr. Ashbaugh that both the F.B.I. and a federal grand jury began to investigate the matter in May, well before the first complaint was filed by relator Thompson on June 16. Relators do not attempt to refute any of the assertions of Mr. Ashbaugh to the effect that their evidence was possessed by the United States prior to filing of their suits. In such circumstances, it is clear that this court is deprived of jurisdiction to proceed with the actions and that they must be dismissed. See United States v. Aster, 176 F. Supp. 208 (E.D.Pa.1959), aff'd, 275 F.2d 281 (3d Cir. 1960); United States ex rel. McCans v. Armour and Co., 146 F. Supp. 546 (D.D.C.1956), aff'd, 254 F.2d 90, 102 U.S.App.D.C. 391 (1958) (per curiam). *fn3"

 Relator Thompson questions whether the United States can make a "special appearance" only for the purpose of moving to dismiss the action. He argues that the False Claims Act envisions that the United States will either take over the prosecution of the case or allow the relator to proceed with its prosecution. While the statute speaks only of the United States' making an "appearance" and does not expressly provide for a "special appearance," such a special appearance does not seem inconsistent with the purposes of the Act, at least in the circumstances now before the court. By making a special appearance, the United States can raise the issue of jurisdiction without committing itself to prosecution of the case at this time while the criminal investigation is still underway. As the United States has cogently argued, the determination of whether the court has jurisdiction cannot be readily made without its participation because that determination requires a comparison of what the relator knew about the case and what was already known by the United States. Even if the United States were not entitled to enter a special appearance for the purpose of moving for dismissal, such a motion would still be before the court since defendants Hays, Ray, Gray and Gosny have all moved to dismiss, based on the absence of subject matter jurisdiction. Furthermore, even if none of the parties had moved to dismiss on jurisdictional grounds it is the obligation of the court to raise the issue sua sponte whenever it appears that subject matter jurisdiction may be lacking. See Rule 12(h)(3), Federal Rules of Civil Procedure.

 Relator Thompson further alleges that the action of the Justice Department in moving to dismiss his complaint, a complaint brought by a black man against a white member of Congress, smacks of racial discrimination in that the Department did not so move in another recent case brought under the Act, United States ex rel. Hollander v. Clay, 420 F. Supp. 853 (D.D.C., filed March 26, 1976). The defendant in that action is a black Congressman, and the relator is a white law student. This contention provides no defense to a motion to dismiss in the face of the plain command of the Act that "[the] court shall have no jurisdiction to proceed with any such suit . . . whenever it shall be made to appear that such suit was based upon evidence or information in the possession of the United States or any agency, officer or employee thereof, at the time such suit was brought." 31 U.S.C. § 232(C). If relator Thompson can establish that the Justice Department acted on the basis of some impermissible motive such as racial discrimination, he may be able to obtain appropriate relief in another lawsuit, but his claim of racial discrimination is not sufficient to confer subject matter jurisdiction upon the court in this case when the terms of the Act itself clearly state that the court "shall have no jurisdiction" in the circumstances here presented.

 Finally, relator Martin-Trigona objects to dismissal of the entire action on jurisdictional grounds since only one of the six counts in his complaint is predicated on the False Claims Act. He contends that, even if the motions to dismiss made by the United States and by defendants are granted, the other counts, based on alleged violation of various federal statutes, should survive. Defendants, however, have also moved to dismiss these remaining counts on the ground that relator Martin-Trigona lacks standing to pursue them. The only assertion made by relator Martin-Trigona regarding his standing to bring such claims is that he is a federal taxpayer. The Supreme Court had announced a two-pronged standing test for plaintiffs suing in their capacity as federal taxpayers: (1) The suit must challenge an enactment under the taxing and spending clause of Art. 1, § 8, of the Constitution; and (2) it must claim that the challenged enactment exceeds specific constitutional limitations imposed on the taxing and spending power. United States v. Richardson, 418 U.S. 166, 173, 94 S. Ct. 2940, 41 L. Ed. 2d 678 (1974); Flast v. Cohen, 392 U.S. 83, 102-03, 88 S. Ct. 1942, 20 L. Ed. 2d 947 (1968). Relator Martin-Trigona's remaining five counts fail to satisfy this test; they have nothing to do with legislation passed pursuant to the taxing and spending power of the Congress, but only with the misuse of government funds by a single member of Congress. Those counts must, therefore, be dismissed along with the action under the False Claims Act for failure of relator Martin-Trigona to establish standing as a federal taxpayer. It is well settled that federal courts do not provide a forum for the sort of "generalized grievances about the conduct of government" which are embodied in those counts. Flast v. Cohen, supra, 392 U.S. at 106, 88 S. Ct. at 1956.

 In making the motion to dismiss, the United States contends that it is merely deferring a decision as to whether or not defendants should be sued for the false claims which they allegedly made against the government. The United States claims that prosecution for civil liability at this time is premature and could interfere with any criminal investigation of defendants' activities. Furthermore, the United States fears that litigation by the relators, with the evidence and information which they currently possess, could result in an adverse decision collaterally estopping the Justice Department in any future litigation against defendants. These are compelling arguments based on sound principles of the administration of justice, and there is nothing in the record to suggest that the United States has any ulterior motive in moving for dismissal at this time. In any event, the court is bound by the plain language of the statute depriving the court of subject matter jurisdiction where, as here, the information and evidence upon which the suits were based was already in the possession of the United States prior to the suits' initiation.

 An appropriate order accompanies this ...


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