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United States v. Project on Gov't Oversight

April 6, 2007


The opinion of the court was delivered by: John D. Bates United States District Judge


A federal statute prohibits private parties from making, and certain government employees from receiving, payments that compensate those employees for their government service. See 18 U.S.C. § 209(a); United States v. Project on Gov't Oversight, 454 F.3d 306, 309 (D.C. Cir. 2006) ("POGO I"). A companion provision prescribes criminal and civil penalties for violations of § 209(a). See 18 U.S.C. § 216. The question presented by the motion to dismiss now before the Court is which of two possible statutes of limitations applies to a suit in which the United States seeks to impose a civil penalty pursuant to 18 U.S.C. § 216(b). Is it, as the United States argues and the plain language suggests, the five-year limitations period that applies to suits in which the United States government seeks "enforcement of any civil fine, penalty, or forfeiture"? See 28 U.S.C. § 2462. Or is it, as defendant Project on Government Oversight ("POGO") contends, the three-year statute of limitations that governs "every action for money damages brought by the United States . . . which is founded upon a tort"? See 28 U.S.C. § 2415(b). For the reasons explained below, the Court concludes that the applicable statute of limitations is the five-year period set forth in 28 U.S.C. § 2462. This suit was therefore timely filed, and POGO's motion to dismiss will be denied.


This recitation of the relevant facts is drawn largely from the Complaint filed on January 21, 2003 and the D.C. Circuit's opinion in POGO I, 454 F.3d at 306. In the early 1990s, defendant POGO began investigating whether oil companies were fraudulently undervaluing the amount of oil that they extracted from federal and American Indian lands and, as a consequence, underpaying the royalties owed to the United States government. Id. at 306-07. The federal agency charged with managing the collection of oil royalties was and is the Department of the Interior. Compl. ¶ 7. Defendant Robert A. Berman started working as an economist in the Department's Office of Policy Analysis in 1987 and held that post throughout POGO's investigation. Id. ¶ 9. Berman had repeated contacts with POGO starting in 1994, and along with Department of Energy employee Robert A. Speir, became one of POGO's principal sources for royalty-related information. Id. ¶ 10; POGO I, 454 F.3d at 307.

The investigation culminated in POGO's filing two qui tam actions in the U.S. District Court for the Eastern District of Texas in 1997. Id. In its suits, which were two of four filed in that district, see Compl. ¶¶ 12-14, POGO alleged that the oil companies had violated the False Claims Act, 31 U.S.C. § 3729, by undervaluing the oil they extracted and by underpaying the royalties that they owed the United States. POGO I, 454 F.3d at 307. Although POGO had offered him the opportunity to join as a qui tam relator, Berman instead entered into an oral agreement, later memorialized in writing, under which he would receive one-third of the money that POGO recovered in the Texas litigation. Id.; Compl. ¶ 22. That litigation resulted in settlement agreements first with Mobil Oil Company and then with fifteen other oil companies. Id. ¶¶ 17, 19. Those companies agreed to pay the United States a total of $440 million, of which the qui tam relators' share was $67 million. Id. ¶ 19; POGO I, 454 F.3d at 307.

POGO collected its first settlement payment of $1.2 million in 1998. Compl. ¶ 23. Soon after receiving the money, POGO undertook efforts to distribute to Berman and to Speir their respective one-third shares. POGO informed an Assistant United States Attorney who had worked on the qui tam litigation of its intention to share the proceeds with Berman, who claims to have discussed the matter with, and received approval from, his government ethics officer. POGO I, 454 F.3d at 307. On November 2, 1998, POGO issued checks in the amount of $383,600 to Berman and to Speir. Id.; Comp. ¶ 26. Apparently acting on the advice of counsel, id. ¶¶ 24-25, POGO labeled the payment a "Public Service Award," and explained in an accompanying letter that it had awarded Berman the funds "for his 'decade-long public-spirited work to expose and stop the oil companies' underpayment of royalties for the production of crude oil on federal and Indian lands.'" POGO I, 454 F.3d at 307.

More than four years later, in January of 2003, the United States filed a five-count civil complaint against POGO and Berman. Count I of the Complaint alleged that POGO and Berman had violated one of the federal conflict-of-interest statutes, 18 U.S.C. § 209(a). POGO had done so, the Complaint asserted, by supplementing the salary of a government official, and Berman had committed a violation by accepting the supplemental payment. Compl. ¶¶ 36-41. Seeking relief for the statutory violation pursuant to 18 U.S.C. § 216(b), id. ¶ 41, the United States requested civil penalties of the greater of $50,000 per violation or "the amount of compensation received" by Berman. Id., Prayer for Relief. The United States also sought injunctive relief declaring "void and unenforceable" the agreement in which POGO promised to distribute a share of its qui tam recovery to Berman. Id. ¶¶ 41, 57.

POGO promptly filed a motion to dismiss, arguing, as it does in the present motion, that the suit was time barred because it had been filed outside of the three-year statute of limitations that POGO believes applicable. Dkt. #2. The district judge to whom the case was assigned denied the motion without prejudice in a brief order entered on April 16, 2003, and set a schedule for the filing of dispositive motions. Dkt. #6. Once those motions were filed, the judge indicated a reluctance to resolve the case at the summary judgment stage. See POGO I, 454 F.3d at 308. Just two weeks later, however, he shifted course, eventually granting the United States' motion for summary judgment in a brief order entered on August 31, 2004. Id.; Dkt. #31. The order also certified the case for an interlocutory appeal, which POGO, but not Berman, chose to pursue.

In an opinion filed on July 14, 2006, the D.C. Circuit reversed the grant of summary judgment against POGO. POGO I, 454 F.3d at 306. The court of appeals explained that summary judgment would have been proper only "if there is no genuine dispute that POGO paid Berman as compensation for his services as an Interior Department economist." Id. at 310. But because there was such a dispute regarding whether POGO issued the check as compensation for Berman's government service, rather than as recognition for whistleblowing activity outside the scope of his work, the court of appeals concluded that the grant of summary of judgment had been erroneous and remanded the case for further proceedings. Id. at 306, 313.

By the time of the D.C. Circuit's decision, the district judge had retired, and the case was reassigned to this Court. A status conference was held on October 11, 2006, at which time the Court set a deadline for both POGO and Berman to file any motion to dismiss. Dkt. #35. POGO promptly filed a motion renewing its argument that the portion of the government's action that seeks a "civil penalty" is untimely and must be dismissed for failure to state a claim upon which relief can be granted.*fn1 The government having filed its opposition and POGO a reply, the motion is now ripe for resolution.


A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure will not be granted unless "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957); see also Haynesworth v. Miller, 820 F.2d 1245, 1254 (D.C. Cir. 1987). All that the Federal Rules of Civil Procedure require of a complaint is that it contain "'a short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336, 346 (2005) (quoting Conley, 355 U.S. at 47). "Given the Federal Rules' simplified standard for pleading, '[a] court may dismiss a complaint only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.'" Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002) (citation omitted).

Under Rule 12(b)(6), the plaintiff's factual allegations must be presumed true and should be liberally construed in his or her favor. Leatherman v. Tarrant County Narcotics & Coordination Unit, 507 U.S. 163, 164 (1993); Phillips v. Bureau of Prisons, 591 F.2d 966, 968 (D.C. Cir. 1979). The plaintiff must be given every favorable inference that may be drawn from the allegations of fact. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000). But "the court need not accept inferences drawn by plaintiff if such inferences are unsupported by the facts set out in the complaint. Nor must the court accept legal conclusions cast in the form of factual allegations." Kowal ...

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