United States District Court, District of Columbia
UNITED STATES GOVERNMENT ex rel. DAVID CARROLL STEPHENSON et al., Plaintiffs,
JEROME H. POWELL et al., Defendants.
TIMOTHY J. KELLY UNITED STATES DISTRICT JUDGE.
April 16, 2018, David Carroll Stephenson and Steven Fishman
(“Relators”) filed this qui tam action
against Defendants, asserting claims brought as relators on
behalf of the United States under the False Claims Act (the
“FCA”), 31 U.S.C. § 3729 et seq.,
as well as claims brought as plaintiffs on their own behalf
for injunctive and declaratory relief and a writ of mandamus.
Defendants are members of the Board of Governors of the
Federal Reserve System (the “Board”) in their
official capacities; the presidents of the Federal Reserve
Banks in their capacities as such; and the Federal Reserve
Banks themselves. See ECF No. 1 at 10-15. The
gravamen of the complaint is that the issuance of Federal
Reserve Notes by Federal Reserve Banks constitutes a false
claim against the United States, on the theory that those
notes are an invalid form of currency under the U.S.
Constitution. See, e.g., id. at 251-63.
Upon review of the complaint and other filings, the Court
will sua sponte dismiss and unseal the action.
considerations independently require dismissal.
Relators are not barred lawyers and improperly seek to bring
their FCA claims pro se. It is well established that
pro se litigants may not bring qui tam
actions under the FCA, because qui tam relators
represent another party, the United States-something
nonlawyers cannot do. Idrogo v. Castro, 672
Fed.Appx. 27 (D.C. Cir. 2016). Courts may dismiss such
actions sua sponte. Deutsche Bank Nat'l Tr.
Co. v. Holyfield, 309 Fed.Appx. 331, 333 (11th Cir.
the Court lacks jurisdiction over Relators' FCA claims
against members of the Board in their official capacities.
The Board is a government body that enjoys sovereign
immunity. Albrecht v. Comm. on Emp. Benefits, 357
F.3d 62, 67 (D.C. Cir. 2004). Sovereign immunity bars FCA
suits against government officials in their official
capacities, because such suits are effectively against the
government itself. See Abou-Hussein v. Mabus, 953
F.Supp.2d 251, 263 (D.D.C. 2013).
the complaint merely rehashes theories that have been
litigated numerous times in federal court. Courts
“shall dismiss” any FCA action, “unless
opposed by the Government, if substantially the same
allegations or transactions . . . were publicly disclosed . .
. in a Federal criminal, civil, or administrative hearing in
which the Government or its agent is a party.” 31
U.S.C. § 3730(e)(4)(A)(i). The theories that Relators
advance in their complaint have been previously
considered-and rejected-by the government in federal
litigation. In fact, the government has prosecuted “tax
protestors” who advance such theories about the
invalidity of Federal Reserve Notes to excuse their failure
to pay federal income tax. See, e.g., United
States v. Schmitz, 542 F.2d 782, 785 (9th Cir. 1976).
all of Relators' claims-both the FCA claims and any
claims that Relators bring as plaintiffs on their own
behalf-must be dismissed because they are clearly frivolous.
A court may sua sponte dismiss a cause of action for
failure to state a claim where it is clear that the plaintiff
has no possibility of obtaining relief. See Simpkins v.
D.C. Gov't, 108 F.3d 366, 370 (D.C. Cir. 1997).
Legal theories based on the purported invalidity of Federal
Reserve Notes are meritless, as courts have explained time
and time again to “tax protesters” who advance
these theories. See, e.g., Schmitz, 542
F.2d at 785; In re Yuska, 571 B.R. 424, 427-29
(Bankr. N.D. Iowa 2017). “Federal Reserve Notes
constitute legal tender, and [Relators'] constitutional
argument has been summarily found by [courts] to be without
merit.” Schmitz, 542 F.2d at 785. These
frivolous theories fare no better in the FCA context. The
issuance of Federal Reserve Notes and their use as legal
tender are authorized by statute, see 12 U.S.C.
§ 411; 31 U.S.C. § 5103, and thus cannot constitute
a false claim against the United States. Nor can these
theories serve as the basis for any other cognizable claim
(except, of course, claims that may arise against individuals
who advance these meritless theories for their own gain).
Relators appear to lack standing to bring the claims they
have asserted as individual plaintiffs. The complaint does
not assert any particular harm suffered by Relators, but
rather raises generalized grievances concerning the operation
of the monetary system in this country. See, e.g.,
ECF No. 1 at 15-16. “A litigant ‘raising only a
generally available grievance about government-claiming only
harm to his and every citizen's interest in proper
application of the Constitution and laws, and seeking relief
that no more directly and tangibly benefits him than it does
the public at large-does not state an Article III case or
controversy.'” Hollingsworth v. Perry, 133
S.Ct. 2652, 2662 (2013) (quoting Lujan v. Defenders of
Wildlife, 504 U.S. 555, 573-74 (1992)). That aptly
describes Relators' individual claims here, providing
another reason why they must be dismissed.
addition to dismissing the case, the Court will also order it
unsealed. FCA complaints are required to be maintained under
seal for 60 days, which the Court may extend for good cause.
31 U.S.C. § 3730(b)(2)-(3). Well over 60 days have
passed since the complaint was filed under seal. Over 60 days
have also passed since June 7, 2018, the date by which the
Relators claim to have served the government pursuant to 31
U.S.C. § 3730(b)(2). See ECF No.
have filed two motions to extend the 60-day sealing window.
ECF Nos. 3, 5. As an initial matter, only the government-not
Relators-may seek an extension of the seal. See 31
U.S.C. § 3730(b)(3). Regardless, there is no good reason
to maintain this particular case under seal any longer.
“FCA cases are sealed to allow the United States time
to investigate the allegations . . . .” United
States ex rel. Grover v. Related Companies, LP, 4
F.Supp.3d 21, 27 (D.D.C. 2013). Given the nature of the
complaint, which does not contain any confidential
information about a fraud against the government, but instead
brings patently frivolous allegations against the government
itself, there is nothing for the government to investigate
and no justification for maintaining the action under seal.
Indeed, the case amounts to an abuse of the FCA's
procedures: this is not a bona fide qui tam action,
but merely a platform for Relators to advance their meritless
conspiracy theories about our country's monetary system.
Relators' motions to extend the seal (ECF Nos. 3 and 5)
will be denied, and the action dismissed and unsealed, in a
 The Court makes no finding regarding
whether service on the government was ...