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United States v. Project On Gov't Oversight

December 3, 2007

UNITED STATES OF AMERICA, PLAINTIFF,
v.
PROJECT ON GOV'T OVERSIGHT, ET AL., DEFENDANTS.



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

MEMORANDUM OPINION

The Project on Government Oversight ("POGO") is a self-described "independent nonprofit that investigates and exposes corruption and other misconduct in order to achieve a more accountable federal government." See POGO -- About Us, http://www.pogo.org/p/x/aboutus.html. On November 2, 1998, POGO paid Robert Berman, a senior economist at the Department of the Interior ("DOI"), a sum of $383,600 in recognition of his dedicated "public service." That payment consisted of a portion of the proceeds that POGO had received in connection with settlement of a qui tam case involving oil royalty collection, in which POGO had been a relator. Sensing impropriety, the United States filed suit against both POGO and Berman, claiming that they had violated 18 U.S.C. § 209(a), which prohibits private parties from making, and government employees from receiving, payments that compensate civil servants for their government service. Currently before the Court are two motions for summary judgment. The first was filed by the United States and is opposed by both defendants. The second was filed by defendant Berman, and is opposed by the United States. For the reasons set forth below, the Court will deny both motions.

BACKGROUND

The facts of this case are set out in detail in both United States v. Project on Government Oversight, 454 F.3d 306 (D.C. Cir. 2006) ("POGO I"), and United States v. Project on Government Oversight, 484 F. Supp. 2d 56 (D.D.C. 2007), and briefly recounted here. Interestingly enough, although the parties bitterly dispute the proper factual characterization, the operative events of this case are not substantially in dispute. At all relevant times, Robert Berman was employed as a senior economist in the DOI. Pl.'s Stmt. of Material Facts ¶ 2. In particular, Berman was assigned to the Office of Policy Analysis within DOI. Id. ¶ 36. During the early 1990's, POGO began "investigating the oil industry's underpayment of royalties" to the federal government and certain American Indian tribes that are lawfully entitled to such payments under federal law when oil is removed from their land. Id. ¶ 17. DOI is the federal agency charged with collecting those royalty payments. Pl.'s Mot. for Summ. J. (hereinafter "Pl.'s Mot.") Ex. 27 at 2. It is the relationship that POGO forged with Berman during the course of that investigation that lies at the center of this lawsuit.

While studying royalty issues, Danielle Brian, POGO's Executive Director, came across her "first 'good document'" in June, 1994 -- a "memorandum prepared by Mr. Berman and leaked to her." Pl.'s Stmt. of Material Facts ¶ 25. For his part, Berman had been advocating the use of the New York Mercantile Exchange crude oil price -- as opposed to the allegedly less accurate spot industry posted prices -- for royalty valuations since as early as 1986. Id. ¶ 38. Berman's efforts, however, were "opposed by the MMS [the Mineral Management Services office within DOI] and . . . never adopted." Def. Berman's Opp'n at 9. Moreover, Berman maintains that "substantially before POGO filed its qui tam action" he was asked by his supervisor to cease his work on "royalty issues." Id. at 8. Berman's frustration aside, during the course of 1995 Brian had several conversations with Berman in which he explained to her the mechanics of the transactions employed by the oil industry. Pl.'s Stmt. of Material Facts ¶ 26. Those conversations, according to the United States, "later formed the basis for the qui tam litigation." Id.

POGO's efforts ultimately culminated in issuing four investigative reports and filing two qui tam lawsuits in 1997 in the United States District Court for the Eastern District of Texas. Id. ¶¶ 3, 17. Significantly, one of those investigative reports, entitled "Drilling for the Truth: More Information Surfaces on Unpaid Oil Royalties," is "carefully footnoted" and contains citations to memoranda written by Berman. Id. ¶ 18; Def. POGO's Stmt. of Material Facts ¶ 18. Before filing the qui tam actions, on December 9, 1996 Brian expressed to the POGO Board of Directors that if the organization prevailed in the putative litigation, she wanted a portion of the proceeds to go to Berman.*fn1 Pl.'s Stmt. of Material Facts ¶ 19. Around that same time, Berman participated in some capacity in a proposed rulemaking "governing valuation for oil royalty purposes." Id. ¶ 27. In that role, the United States maintains that Berman, as the "principal author . . . drafted a memorandum to the director of MMS" that made suggestions to "ensure that the pending qui tam litigation would not be jeopardized." Id. ¶¶ 28-29. In substance, the memorandum recommended that the rulemaking clarify that the existing regulations already permitted DOI to employ market-based royalty assessments.

POGO and Berman vigorously dispute the insidious characterization of Berman's role in drafting that document. Berman first insists that he drafted the memorandum in conjunction with Mr. Bettenberg, then the acting Director of the OPA, and that the two were "co-drafter[s]." Def. Berman's Opp'n at 4-5. In addition, Berman rejects the notion that he was motivated by a desire to preserve his interest in the qui tam litigation, but rather argues that he made the suggestions to reflect "the self-evident point . . . that DOI was already pursuing cases in which it was arguing that existing regulations entitled it to royalties based upon market values and not posted prices, and it was in the federal government's interest not to draft a document that could be used" by the oil companies to undermine DOI's current position. Id. at 5. Moreover, he also maintains that the same flaw in the original draft was "identified at the meeting" in which he received the assignment and thus he and Bettenberg "were simply executing their assignment in a manner that was consistent with their instructions." Id. Furthermore, Berman points out that the position he "clarified" in the draft was the very same position that he had been advocating since 1986, well before he had any conceivable monetary interest in any qui tam litigation. Id. at 5-6. Finally, he notes that the edits in question were made before POGO filed the relevant qui tam suits. Id. at 6. For its part, POGO adds that it was "actively pushing for the rule change" despite its potentially adverse impact on the outcome of its litigation. Def. POGO's Stmt. of Material Facts ¶ 32.

In any event, in accordance with the decision at the December 1996 Board meeting, POGO and Berman entered into a written agreement on January 5, 1998 that provided that Berman would receive a one-third share of any monetary award that POGO may secure pending the outcome of the litigation. Id. ¶ 13. On February 18, 1998, the United States intervened in the qui tam proceedings, and beginning in August of that year entered into a series of settlement agreements with the oil company defendants that ultimately resulted in a recovery of $440 million and "a relators' share of more than $67 million."*fn2 Id. ¶¶ 7-8. POGO received its first installment payment of its relator proceeds in October of 1998. Id. ¶ 15. After consulting with a "Constitutional attorney," POGO delivered a check in the amount of $383,600 to Berman; the accompanying cover letter indicated that it was an "award for public service" and the check itself identified the payment as a "Public Service Award." Id. ¶¶ 15-16.

Berman's receipt of that award set off a series of events involving these parties, including a congressional hearing and a criminal investigation, the ultimate result of which events is the instant litigation. Pl.'s Stmt. of Material Facts ¶ 24. In January 2003, the United States filed suit against POGO and Berman alleging that they had both violated 18 U.S.C. § 209(a) by making and receiving, respectively, the public service award. The United States moved for summary judgment, and the district court granted that motion, explaining in its brief order that the decision was based "'substantially [upon] the reasons set forth in Plaintiff's memorandum in support.'" POGO I, 454 F.3d at 308. The district court then certified the decision for immediate interlocutory appeal. Id.

POGO promptly appealed that decision and the D.C. Circuit ultimately ruled in its favor in POGO I. The court first explained that § 209(a) does not "'prohibit payment for services rendered exclusively to private persons or organizations . . . which have no connection with the services rendered to the Government.'" Id. at 309 (quoting United States v. Muntain, 610 F.2d 964, 970 n.5 (D.C. Cir. 1979)) (emphasis added). Instead, § 209(a) is only violated when there is an "'intentional, direct link between the outside compensation and the employee's government service.'" Id. (quoting Application of 18 U.S.C. § 209 to Employee-Inventors Who Receive Outside Royalty Payments, Op. Off. Legal Counsel, U.S. Dep't of Justice, 2000 WL 33952879 (Sept. 5, 2000)). Thus, as the court saw it, the crucial issue before it was not simply whether POGO paid Berman any sum of money (which it undeniably did), but whether the public service award was rendered to him in connection with his government service. Id. at 310.

The United States maintained that "POGO paid Mr. Berman because of the work he had done for Interior and for his assistance to POGO in connection with that work." Id. (internal citations omitted). POGO, on the other hand, characterized the payment "not as compensation for Berman's government work, but . . . [as] recognition of whistle-blowing that assertedly was outside the scope of that work." Id. (emphasis added). The government's case against Berman and POGO was "strong," the court reasoned, but not appropriate for summary disposition. Id. at 313. Specifically, POGO maintained that "it neither said nor meant . . . [to] compensate[] [Berman] for his government work." Id. at 312. Instead, according to POGO, "as referenced in the Board minutes, transmittal letter, and draft press release," the public service award was given to Berman for "work as an 'internal whistle-blower who went well beyond his official duties to defend the taxpayers' interests.'" Id. The D.C. Circuit held that because so "much of POGO's defense hinges on the credibility of Berman and Brian," the district court erred in granting summary judgment because a court cannot make such credibility determinations at the summary judgment stage. Id. at 313. Consequently, the court could not "say that 'no reasonable jury could return a verdict for POGO.'" Id. The case was therefore remanded for further proceedings.*fn3

By the time of the D.C. Circuit's opinion, the original district judge had retired and the case was consequently reassigned to the undersigned judge on remand. POGO then moved to dismiss on statute of limitations grounds, which this Court denied. See United States v. Project on Gov't Oversight, 484 F. Supp. 2d 56. A trial date was then set. Now, citing "new" evidence that allegedly eliminates the credibility issues that the D.C. Circuit identified, the United States has again moved for summary judgment against both defendants. Defendants oppose that motion, and POGO adds two affirmative defenses that, in its view, also preclude summary judgment. Berman, who did not join in POGO's appeal, has moved for summary judgment in his own right. Section 209(a), he argues, does not apply to lump-sum payments as a matter of law. Thus, despite any factual disputes that may exist, Berman maintains that he is nevertheless entitled to summary judgment on that basis. The Court will now address to each motion in turn.

STANDARD OF REVIEW

Summary judgment is appropriate when the pleadings and the evidence demonstrate that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The party seeking summary judgment bears the initial responsibility of demonstrating the absence of a genuine dispute of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The moving party may successfully support its motion by "informing the district court of the basis for its motion, and identifying those portions of 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Id. (quoting Fed. R. Civ. P. 56(c)).

In determining whether there exists a genuine issue of material fact sufficient to preclude summary judgment, the court must regard the non-movant's statements as true and accept all evidence and make all inferences in the non-movant's favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). A non-moving party, however, must establish more than the "mere existence of a scintilla of evidence" in support of its position. Id. at 252. By pointing to the absence of evidence proffered by the non-moving party, a moving party may succeed on summary judgment. Celotex, 477 U.S. at 322. "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson, 477 ...


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