United States District Court, District of Columbia
March 27, 2001
UNITED STATES, EX REL EDWARD L. TOTTEN, PLAINTIFF,
BOMBARDIER CORPORATION, AND ENVIROVAC INC., DEFENDANTS.
The opinion of the court was delivered by: Joyce Hens Green, United States District Judge.
On March 16, 1998, Edward L. Totten ("Totten") brought a qui tam action
the False Claims Act ("FCA" or "Act"), 31 U.S.C. § 3729 et.
seq., against Bombardier Corporation ("Bombardier") and Envirovac, Inc.
("Envirovac"). On December 15, 1999, the government declined to
intervene in the case. Currently pending are motions to dismiss by both
of the defendants, in which they argue that this Court lacks subject
matter jurisdiction, that Totten has failed to state a claim, that Totten
has failed to plead fraud with the required particularity, and that some
of Totten' s claims are barred by the statute of limitations. For the
reasons set forth below, the Court finds that Totten has failed to state
a claim, and the complaint is dismissed in its entirety.
In considering a motion to dismiss, the Court must accept the factual
allegations contained in the complaint as true, and draw all reasonable
inferences in favor of the plaintiff. The complaint may be dismissed
only if the plaintiff can prove no set of facts consistent with his
allegations which would entitle him to relief. See, e.g., Hishon v. King
& Spalding, 467 U.S. 69, 73 (1984); Scheuer v. Rhodes, 416 U.S. 232, 236
Totten was formerly employed by the National Railroad Passenger
Corporation ("Amtrak"). Bombardier has contracted with Amtrak to
manufacture passenger rail cars. Envirovac manufactures toilet systems,
and contracts with both Amtrak and Bombardier to provide toilet systems
for passenger rail cars. Amtrak has delineated requirements for its
toilet waste systems, which are contained in Specification 598. These
specifications are incorporated into Amtrak's contracts with Bombardier
Totten states that Envirovac and Bombardier supplied Amtrak with toilet
systems that did not meet the requirements of Specification 598, and
eventually had to be repaired or upgraded. Totten further alleges that
the defendants were aware of the defects in their products, and that
they made false statements to Amtrak that the products met all
requirements and specifications.
The False Claims Act creates liability for any person who knowingly
presents to the government a false or fraudulent claim for payment.
31 U.S.C. § 3729 (a)(1). In 1986 Congress amended the Act by expanding
the definition of "claim" to include requests "made to a contractor,
grantee, or other recipient if the United States Government provides any
portion of the money or property which is requested or demanded, or if
the Government will reimburse such contractor, grantee, or other
recipient for any portion of the money or property which is requested or
demanded." 31 U.S.C. § 3729 (c). Private individuals may bring a qui
tam civil action for a violation of section 3729, on behalf of
themselves and the government. 31 U.S.C. § 2930 (b). The instant
complaint alleges that the defendants knowingly made false claims against
Amtrak, and that both Amtrak and the United States Government were
damaged as a result. The complaint does not articulate any theory as to
why a false claim against Amtrak would constitute a false claim against
The defendants correctly assert that Amtrak is not part of the
government. Amtrak "is not a department, agency, or instrumentality of
the United States Government." 49 U.S.C. § 24301 (a)(3); see also
Lebron v. Nat'l Railroad Passenger Corp., 513 U.S. 374 (1995) (holding
that Congress does not have the authority to determine Amtrak's status
for Constitutional purposes, but noting that a statutory declaration of
Amtrak's status would be dispositive as to matters within
Congress' control). An assertion that the defendants presented false
claims to Amtrak is therefore not, by itself, a sufficient allegation
of a false claim under the Act.
A. 31 U.S.C. § 3729(c)
In his opposition, Totten responds that a false claim need not be
presented directly to the government, and cites to the expanded
definition of "claim" found in section 3729(c), which includes requests
made to grantees or other recipients of federal funds. The Complaint
does not include any allegations regarding Amtrak's status as a
contractor or grantee, nor does it specifically allege that the
government either provided Amtrak with, or reimbursed Amtrak for, any
funds connected with the alleged false claims. As such, the complaint
fails to state a claim. Ordinarily the Court might permit Totten to
amend the complaint, because it is possible that a heavily government
funded entity, such as Amtrak, might qualify as a grantee under Section
3729(c). See United States ex rel. Yesudian v. Howard University,
153 F.3d 731 (D.C. Cir. 1998).*fn1 However, the defendants have raised a
threshold issue which obviates the need to determine whether Amtrak's
government funding could bring it within the scope of section 3729(c).
B. 49 U.S.C. § 24301(a)(3)
The same provision in Amtrak's authorizing statute which establishes
that Amtrak "is not a department, agency, or instrumentality of the
United States Government" declares that Amtrak "shall not be subject to
title 31." 49 U.S.C. § 24301 (a). The defendants argue that as a
result, the False Claims Act, which is part of title 31, simply does not
apply to Amtrak. As a result, the Act's definition of "claim" could not
apply to requests made to Amtrak, and the Court would not be permitted to
consider whether or not Amtrak's government funding makes it a
"contractor, grantee, or other recipient." Totten counters that his
complaint does not "subject" Amtrak to anything at all, including title
Title 31 occupies two volumes of the United States Code, and includes
chapters which, among other things, establish
the organization and
procedures of the Department of the Treasury, General Accounting Office
and Office of Management and Budget, and establish procedures and
requirements for appropriations, the financial management of the federal
government, the monetary system, government contracts and grants, and
government corporations, including mixed-ownership corporations.
31 U.S.C. § 1-9702. Title 31 is primarily concerned with government
entities, however, portions of it regulate private recipients of
government funding. See, e.g., 31 U.S.C. § 1352 (restrictions and
reporting requirements on lobbying by recipients of federal contracts,
grants, or loans). Interpretation of a statute begins with its plain
meaning, despite the fact that removing Amtrak from the reach of title
31 could have potentially sweeping consequences. See Connecticut Nat'l
Bank v. Germain, 503 U.S. 249, 253-54 (1992); ITT World Comm., Inc. v.
FCC, 725 F.2d 732, 743 (D.C. Cir. 1984). However, the words "subject to"
leave some room for interpretation. A close examination of the language
at issue and an exploration of the circumstances, context, and history of
the enactment of the provision in question is in order.
i. "Subject to"
Black's Law Dictionary defines "subject to" as "liable, subordinate,
subservient, inferior, obedient to; governed or affected by; provided
that; provided; answerable for." Black's Law Dictionary 1278 (5th ed.
1979). For this case, the most pertinent of these definitions is
"governed or affected by." In order for Totten to effectively state a
claim, would the Court be compelled to interpret the False Claims Act in
a manner which would cause that Act to "govern or affect" Amtrak?
The False Claims Act protects the government by safeguarding government
funds from fraud. Section 3729(c) amends the FCA so that government
funds which have passed through to a recipient remain protected against
a third party's fraud against that recipient. The FCA thus confers a
benefit on those recipients. The protection that the FCA provides might
also be seen as a burden, although perhaps indirectly. In this case,
Totten's action under the FCA would subject Amtrak's business
transactions to the restrictions of the FCA, and Amtrak's business
partners to the penalties which ensure compliance with those
restrictions. If Amtrak is not "subject to" the FCA, the plaintiff may
not bring a claim which relies on Amtrak's receipt of the benefits and
burdens imposed by the FCA.
ii. Legislative History of the Amtrak Reform and Accountability Act
An examination of the legislative history does not shed any more light
on the meaning of the words "subject to," but does suggest that
preventing the treatment of Amtrak as a grantee or recipient under the
ECA would be in keeping with Congress' overall intent.
Congress amended Amtrak's authorizing statute with the Amtrak Reform
and Accountability Act of 1997 ("Reform Act"). Pub. L. No. 105-134, 111
Stat. 2570. The overarching purpose of the Reform Act was to authorize
appropriations for Amtrak while overhauling its authorizing statute,
reducing costs, reducing federal involvement, and, ultimately,
eliminating Amtrak's reliance on federal assistance. See id. at 13, 15;
S. Rep. 105-85 at 1 (1997). The Reform Act was designed to allow Amtrak
to "operate as much like a private business as possible." S. Rep. 105-85
at 1. For example, the Reform Act reduced statutory restrictions
regarding labor and Amtrak's ability to contract work out, increased
Amtrak's authority to design and manage its route system,
on tort liability from passenger train accidents, privatized Amtrak's
stock structure, and relinquished the Department of Transportation's
note and mortgage on the Northeast Corridor.
The Reform Act provided strong financial assistance to Amtrak, while
simultaneously reducing the effects of federal involvement. In addition
to decreasing the government's control over Amtrak's functioning, the
Reform Act attempted to negate the normal repercussions of government
funding. An example of this is found in the same section of the Reform
Act as the provision at issue in this case. The section on "employee
stock ownership plans" removes Amtrak from the list of government-owned
and funded corporations, without actually withdrawing government
funding. This allows Amtrak to escape the regulations that would
normally apply to a corporation which is partly government owned and
financed. Another repercussion of government funding is that it can
bring private entities within the scope of the FCA's protections.
The overarching objective of permitting Amtrak to function like a
private business illuminates Congress' intent regarding title 31. The
vast majority of title 31 applies not to ordinary persons but to
governmental and quasi-governmental entities. Congress' purpose in
reforming Amtrak's authorizing legislation suggests that Amtrak was being
screened off from title 31's controls on governmental entities. Whether
or not Amtrak remains subject to title 31 in the same way that a
privately funded, privately run entity would be,*fn2 Amtrak cannot
become subject to title 31 by standing in place of the government
— which is essentially what section 3729(c) of the False Claims
The ordinary meaning of the words which render Amtrak "not subject to"
title 31 bar Amtrak from being treated as subject to statutes contained
within that title, regardless of whether a suit is brought against
Amtrak. The context and legislative history of the Reform Act do not
provide any clear indication that Congress meant to remove Amtrak from
the reach of only certain portions of title 31.*fn4 The Court's best
guide is Congress' intent that,
to the extent possible, Amtrak should be
treated as a privately run, privately funded corporation. In the absence
of section 24301(a)(3), the government's funding of and involvement in
Amtrak would ordinarily subject Amtrak to portions of title 31,
including, potentially, the protections of the FCA. By sheltering Amtrak
from the effects of title 31, Congress has prevented Amtrak's receipt of
government funds from bringing Amtrak, and its business dealings, within
the reach of the False Claims Act. As a result, Totten is not able to
state a claim against the defendants for their alleged false claims
against Amtrak. It is therefore
ORDERED that the motion to dismiss brought by Bombardier is granted;
and it is
FURTHER ORDERED that the motion to dismiss brought by Envirovac, Inc. is
IT IS SO ORDERED.
In accordance with the Memorandum Opinion and Order issued on March
27, 2001, and Fed. R. Civ. P. 58, judgment is hereby entered in favor of
defendants Bombardier Corporation and Envirovac, Inc., and against
plaintiff United States, ex rel Edward L. Totten.
IT IS SO ORDERED.