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United States ex rel. Kammarayil v. Sterling Operations, Inc.

United States District Court, District of Columbia

December 31, 2018

STERLING OPERATIONS, INC., et al., Defendants.


          Beryl A. Howell, Chief Judge.

         The two relators, Gopalakrishna Pillai Ajeesh Kumar Kammarayil and Mohammed Azad Shabbir, waited three years, from October 2015 to November 2018, for the government to decide whether to intervene in this qui tam matter brought pursuant to the False Claims Act (“FCA”), 31 U.S.C. § 3730(b)(1). Despite the fact that the government's memoranda filed in support of the government's seven motions for extension of time to make the intervention decision (“the extension memoranda”) were filed ex parte and not shown to the relators, the relators consented to each extension over the three-year period based, at least in part, on the government's representations to the relators that intervention was likely.[1] Now, confronted by the government's final decision declining to intervene in what seems to the relators to be a clear-cut case under the FCA, as already “established in a civil action tried in the United States District Court for the Eastern District of Tennessee, ” see Rels.' Mem. Supp. Order that the Dep't of Justice Serve on Relators' Counsel, Under Seal, the Mem. of Law That Accompanied the Government's Seven Requests for Extensions to Consider Its Election to Intervene and Preserve Records (“Rels.' Mem.”) at 1, ECF No. 24 (describing Judgment, MAKS, Inc., et al. v. Sterling Operations, Inc., et al., 3:10-cv-00443-TAV-HBG (E.D. Tenn. Feb. 14, 2013), ECF No. 336 (“2013 Judgment”)), the relators seek limited unsealing to them of the government's extension memoranda, to ascertain whether material discrepancies exist between the government's representations to the Court and to the relators in private over the three-year period, as well as to inform the relators about any weaknesses in their claims that may have been uncovered by the government about which they should be aware in deciding how or whether to pursue this litigation, id. at 10-11.

         Notably, the relators do not request a full unsealing of the extension memoranda such that the memoranda would become available to the public. See Rels.' Mem. at 9 (noting that “the Court need not, yet, consider the merits of unsealing, for public view, the memoranda”). Instead, the relators seek a limited unsealing for the relators' (and their counsels') review only, requesting an order that the government serve the memoranda on relators' counsel, “under seal.” Rels.' Mot. for Order that the Dep't of Justice Serve on Relators' Counsel, Under Seal, the Mem. of Law That Accompanied the Government's Seven Requests for Extensions to Consider Its Election to Intervene and Preserve Records (“Rels.' Mot.”) at 1, ECF No. 24; Rels.' Reply Supp. Rels.' Mot. (“Rels.' Reply”) at 1, ECF No. 27. The government, unhelpfully, mischaracterizes the relators' motion as seeking a complete “unsealing, ” Gov't's Mem. Opp'n Rels.' Mot. (“Gov't's Opp'n”) at 2, ECF No. 26, without acknowledging the more limited request before the Court. For the reasons set forth below, the relators' motion for limited unsealing of the extension memoranda is granted.[2]

         I. BACKGROUND

         The relators claim that Sterling Operations, Inc., in performing on a contract with the United States Army Corps of Engineers (“USACE”) to supply “relocatable buildings (“RLBs”) to house U.S. service men and women at the Bagram Air Field (“BAF”) in Afghanistan, ” Rels.' Mem. at 2, conducted a “planned armed robbery, ” id. at 5, of its subcontractor, Kuwait-based MAKS Inc. General Trading and Contracting Co. (“MAKS”), on October 23, 2009. According to the relators, who were employed by MAKS and eyewitnesses to the alleged armed robbery, Compl. ¶¶ 27-28, ECF No. 1, “at approximately 5:30 a.m., Sterling personnel armed with assault/automatic weapons invaded the MAKS construction compound in Kabul, Afghanistan, ” Rels.' Mem. at 6, “[k]eeping the MAKS employees at bay with their automatic weapons for some six hours” while “Sterling personnel stole 90 [RLB] modules from MAKS before the Afghan Ministry of Interior Police arrived and halted further thefts, ” id. at 6. In a civil lawsuit brought by MAKS in the Eastern District of Tennessee, a jury found Sterling Operations liable to MAKS for breach of contract and for trespass. See 2013 Judgment. The relators, who, along with MAKS, were plaintiffs in the successful Eastern District of Tennessee case against the defendants, brought the instant FCA lawsuit in October 2015, claiming that, during the armed robbery, the defendants damaged the RLBs and subsequently made false claims to the U.S. Government for equitable adjustments to the contract price for damages caused by the defendants' own criminal acts. Compl. ¶¶ 32-44. According to the relators, “[h]ad the U.S. known of the falsity as to Sterling's fraudulent and criminal conduct with respect to MAKS, the government would not have made payments to Sterling.” Compl. ¶ 137. This qui tam lawsuit seeks $9, 000, 000 in damages. Civil Cover Sheet at 2, ECF No. 1-1. Three years later, the government declined to intervene. See Gov't's Notice of Election to Decline Intervention, ECF No. 23.


         “[T]he starting point in considering a motion to seal court records is a ‘strong presumption in favor of public access to judicial proceedings.'” E.E.O.C. v. Nat'l Children's Ctr., Inc., 98 F.3d 1406, 1409 (D.C. Cir. 1996) (quoting Johnson v. Greater Southeast Community Hosp. Corp., 951 F.2d 1268, 1277 (D.C. Cir. 1991)). The strong presumption of public access to judicial records is a “longstanding common-law right” that “‘antedates the Constitution.'” Metlife, Inc. v. Financial Stability Oversight Council, 865 F.3d 661, 674 (D.C. Cir. 2017) (quoting U.S. v. El-Sayegh, 131 F.3d 158, 161 (D.C. Cir. 1997)). The right of access to court documents is also grounded in the First Amendment. See El-Sayegh, 131 F.3d at 160 (“The First Amendment guarantees the press and the public access to aspects of court proceedings, including documents, ‘if such access has historically been available, and serves an important function of monitoring prosecutorial or judicial misconduct.'” (quoting Washington Post v. Robinson, 935 F.2d 282, 288 (D.C. Cir. 1991)).

         In determining whether judicial records should be sealed or made publicly accessible, all Circuits apply a balancing test that is “analytically similar, ” Metlife, Inc., 865 F.3d at 671, to the D.C. Circuit's balancing test articulated in United States v. Hubbard, 650 F.2d 293, 314 (D.C. Cir. 1980). The Hubbard test is intended to “ensure[] that [courts] fully account for the various public and private interests at stake.” Metlife, Inc., 865 F.3d at 666 (citing Hardaway v. District of Columbia Housing Authority, 843 F.3d 973, 980 (D.C. Cir. 2016); Primas v. District of Columbia, 719 F.3d 693, 698-99 (D.C. Cir. 2013); Nat'l Children's Ctr., Inc., 98 F.3d at 1409-11; Johnson, 951 F.2d at 1277 & n.14). To that end, the Hubbard test requires courts to consider six factors in particular: (1) the need for public access to the documents at issue; (2) the extent of previous public access to the documents; (3) the fact that someone has objected to disclosure, and the identity of that person; (4) the strength of any property and privacy interests asserted; (5) the possibility of prejudice to those opposing disclosure; and (6) the purposes for which the documents were introduced during the judicial proceedings. See Hubbard, 650 F.2d at 314.

         The Hubbard test is, however, inapplicable in at least two circumstances. First, the Hubbard test only applies to the sealing or unsealing of judicial records, and “‘not all documents filed with courts are judicial records.'” Metlife, Inc., 865 F.3d at 666 (quoting SEC v. Am. Int'l Grp., 712 F.3d 1, 3 (D.C. Cir. 2013)). “Rather, ‘whether something is a judicial record depends on the role it plays in the adjudicatory process.'” Id. (quoting Am. Int'l Grp., 712 F.3d at 3). A document filed with a court (1) that “can affect a court's decisionmaking process, ” (2) “which the parties hope to influence the court, ” and (3) “upon which the court must base its decision” is a judicial record. Metlife, Inc., 865 F.3d at 667. See also Matter of Leopold to Unseal Certain Elec. Surveillance Applications & Orders (“Leopold”), 300 F.Supp.3d 61, 92 (D.D.C. 2018). Thus, the Hubbard test is inapplicable where a court filing is nonetheless not a judicial record because of its “role” in the “adjudicatory process.” Metlife, Inc., 865 F.3d at 666.

         Second, because the Hubbard test is probative of a right of access under the common law, the test “must yield to a statute ‘when Congress has spoken directly to the issue at hand.'” Metlife, Inc., 865 F.3d at 669 (quoting Ctr. For Nat'l Sec. Studies v. U.S. Dep't of Justice, 331 F.3d 918, 937 (D.C. Cir. 2003)). Therefore, if a statute (e.g., the FCA) clearly dictates that a judicial filing should or should not be sealed, the Hubbard test is rendered “inapplicable.” Id.


         The government asserts essentially two arguments to maintain the ex parte seal on the seven extension memoranda. First, the government argues that the FCA “evinces the intent (and the requirement) that government applications for extensions of the seal and the time for making a decision to intervene should remain under seal.” Gov't's Opp'n at 6. Second, even if the FCA does not mandate sealing of the extension memoranda, according to the government, unsealing the memoranda would “reveal investigatory techniques, decision-making processes, and reasoning” that would prejudice the government's ability to conduct effective investigations in the future and “have a chilling effect on the future preparation of such briefs, ” because, knowing that they could be eventually disclosed, the government will become more “circumspect” about “revealing to the courts the course of its investigations” in support of extension motions. Id. at 7- 8. The government's arguments are addressed seriatum, before turning to analysis of the Hubbard factors, which surprisingly no party addressed.

         A. The FCA Does Not Require That Memoranda Supporting Government's Motions for Extension of Time Remain Under Seal

         The FCA provides that a plaintiff may bring a civil action “in the name of the Government, ” 31 U.S.C. § 3730(b)(1), and prescribes that the plaintiff must, in addition to filing its complaint under seal and in camera, serve its complaint and material evidence on the government, thereby triggering a 60-day countdown during which time the “Government may elect to intervene and proceed with the action, ” id. § 3730(b)(2). After the 60-day period lapses, the complaint may be unsealed, id., unless the government “for good cause shown” “move[s] the court for extensions of the time during which the complaint remains under seal, ” id. § 3730(b)(3). Any such government motion “may be supported by affidavits or other submissions in camera.” Id. Absent from the FCA's carefully prescribed schedule for unsealing the complaint is any indication as to whether government ...

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