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November 14, 1991


The opinion of the court was delivered by: McCURN, Chief Judge.


I. Introduction

The plaintiff, Kreindler & Kreindler, known as the "relator" in this type of qui tam proceeding, is a law firm which has filed fraud claims against the defendant, United Technologies Corp. ("UTC"), pursuant to the provisions of the False Claims Act, particularly 31 U.S.C. § 3729 and 3730. The relator claims that defendant UTC concealed a design defect in the rotors of helicopters it sold to the U.S. Army. The defendant has filed four separate motions — two motions to dismiss and two motions for summary judgment. The defendant moves to dismiss on the grounds that the portions of the False Claims Act which permit relator to sue on behalf of the United States government are unconstitutional inasmuch as they violate the separation of powers doctrine and the Appointments Clause of the U.S. Constitution, and because relator does not have standing to bring the claims. Defendant also moves to dismiss for lack of subject matter jurisdiction because the relator is not an "original source" of the information upon which its claims are based, as required by 31 U.S.C. § 3730(e)(4)(A). Defendant moves for summary judgment, contending that relator's claims are barred by the applicable statute of limitations, and that relator is prohibited from using most of the evidence on which it bases its claims by a settlement agreement and protective order involving the same two parties in a previous wrongful death action.

II. Background

The relator, Kreindler & Kreindler, represented Audrey Bryant, the wife of U.S. Army Warrant Officer Charles Edward Bryant, in a wrongful death action brought in this court as a result of Mr. Bryant's death on August 5, 1982, in the crash of an Army helicopter manufactured by the defendant UTC. That litigation was terminated by a settlement agreement entered into by Mrs. Bryant and Sikorsky Aircraft, a division of UTC, on July 21, 1987. The parties had also previously entered into a stipulation and protective order, dated November 21, 1984, which provided that "the documents, data, information and other materials provided by [UTC] in the defense of this action and/or pursuant to plaintiff's pretrial discovery requests . . . shall be used by plaintiff solely for the purposes of this action." The settlement agreement stated: "As a condition to this Agreement, Mrs. Bryant and her attorneys expressly agree to [return the documents and materials and] . . . to honor all other terms and conditions of the Stipulation and Protective Order." The settlement agreement stated further that it was "binding upon Mrs. Bryant and United Technologies Corporation and their respective . . . attorneys. . . ." The settlement agreement was signed by Mrs. Bryant, representatives from UTC, and Francis Fleming, an attorney for Kreindler & Kreindler.

As relator states in the complaint, its claims in the present action are based on information obtained from UTC in discovery in the previous action, Bryant v. United Technologies Corp. Complaint, para. 2, 5. The relator claims that UTC was awarded a contract by the United States government to provide the Army with several hundred UH-60A "Black Hawk" helicopters. One of the features required by the contract was the ability to fold the rotor blades of the helicopters so they could be transported in Army transport planes. Relator claims that in late 1977 or early 1978, UTC discovered that its design to incorporate this feature, in which "blade fold pins" were to be inserted into the "flight control assembly system" to eliminate pressure on the flight control system, was defective in that the prefabricated holes into which the pins were to be inserted did not line up. This aspect of the design proposal has never been corrected by UTC, relator asserts, although approximately 690 Black Hawk helicopters have been delivered by UTC to the Army. Relator alleges that UTC secretly revised its design rather than refabricate the affected components so that the pins could be inserted. Relator alleges that UTC made its design change, which consisted of changing the type of bearing used in the flight control assembly system, without advising the United States that the change was being made or obtaining required approval for the change. Relator also claims that UTC failed to advise the United States that a hazard had been created by the abandonment of the blade fold pin design, and that UTC knew of the hazard. Relator claims that UTC changed the procedure by which rotor blades could be folded, calling for pitch control rods to be disconnected, although this change in procedure would make it impossible for the blade folding process to be completed in the time limits specified in the Army production contract. UTC later informed the Army of an alternative process which entailed inserting a block of wood into the rotor assembly to relieve pressure on the rotor system during the blade folding process. These failures to meet the required specifications and failure to inform the United States about the safety hazard constitute a fraud on the government, relator asserts. In addition, the relator claims, the design defect resulted in the crash of five Black Hawk helicopters between the years of 1982 and 1987.

III. Discussion

The relator brings this qui tam*fn1 action on behalf of the United States pursuant to provisions of the False Claims Act, 31 U.S.C. § 3729 et seq.*fn2 The False Claims Act was originally enacted in 1863 during the Lincoln Administration, and has been amended twice, in 1943 and 1986. Under all versions of the Act, individuals have been authorized to "bring a civil action for a violation of [the Act] for the person and for the United States Government." 31 U.S.C. § 3730(b)(1).

Briefly, the statute as now amended specifies the following procedure with respect to qui tam actions: The relator must file his complaint in camera where it remains under seal for at least 60 days to allow the government sufficient time to decide whether to enter the action. 31 U.S.C. § 3730(b)(2). If the government decides not to join the action — as it did in the instant case — the action will proceed in its behalf at the direction of the relator. 31 U.S.C. § 3730(c)(3). The government may, however, intervene at a later date upon a showing of "good cause." 31 U.S.C. § 3730(c)(3).

If the government does intervene, it assumes primary responsibility for the prosecution of the case, "and shall not be bound by an act of the person bringing the action." 31 U.S.C. § 3730(c)(1). The relator remains as a party to the action, however, and his participation may be limited only by order of the court. 31 U.S.C. § 3730(c)(2)(C)-(D).

Whether or not the government joins the suit, the qui tam relator is entitled to a portion of the proceeds if the prosecution is successful. If the government participates, the relator will receive no less than 15 percent and no more than 25 percent of the recovery. 31 U.S.C. § 3730(d)(1). If the government does not join in the action, recovery is set at 25 percent to 30 percent. 31 U.S.C. § 3730(d)(2).

The question of the constitutionality of the qui tam provisions of the False Claims Act has been the subject of a number of recent cases in the federal courts, and of great interest to the defense contracting industry, the government, and the public. Several amicus curiae briefs were submitted to the court on the issue, and counsel representing the United States Senate and the House of Representatives presented oral argument to the court on the return date for these motions. Before reaching the question of the statute's constitutionality, however, the motions based on other grounds will be considered, since the court should not decide federal constitutional questions where a dispositive nonconstitutional ground is available. Hagans v. Lavine, 415 U.S. 528, 547, 94 S.Ct. 1372, 1384, 39 L.Ed.2d 577 (1974); United States v. Leon, 766 F.2d 77, 78 (2d Cir. 1985) ("a court should not reach constitutional issues when there are other, nonconstitutional grounds upon which it can resolve the case"). Of those, the jurisdictional issues — plaintiff's standing and the applicability of the statute of limitations — will be addressed first.


The defendant contends that the relator does not have standing to bring this suit, since it has not suffered "some actual or threatened injury as a result of the putatively illegal conduct of the defendant." Gladstone Realtors v. Bellwood, 441 U.S. 91, 99, 99 S.Ct. 1601, 1608, 60 L.Ed.2d 66 (1979). Defendant also argues that Congress cannot eliminate the Constitution's standing requirement by creating a financial incentive for a plaintiff that is not the result of an injury to the plaintiff itself.

Defendant argues that the relator lacks standing because it has no "`personal stake in the outcome of the controversy' . . . to ensure . . . an adversarial [proceeding] capable of judicial resolution." Sierra Club v. Morton, 405 U.S. 727, 732, 92 S.Ct. 1361, 1364, 31 L.Ed.2d 636 (1972) (quoting Baker v. Carr, 369 U.S. 186, 204, 82 S.Ct. 691, 703, 7 L.Ed.2d 663 (1962)). Of course, Article III of the Constitution limits federal court jurisdiction to the resolution of "cases" or "controversies," and federal courts thus lack the power to render advisory opinions, to resolve political questions, or to entertain friendly suits. See Sierra Club, 405 U.S. at 732 n. 3, 92 S.Ct. at 1365 n. 3.

The standing of a qui tam plaintiff in a False Claims Act action has been upheld in three cases cited to the court by the plaintiff. See United States ex rel. Truong v. Northrop Corp., 728 F. Supp. 615 (C.D.Cal. 1989); United States ex rel. Newsham v. Lockheed Missiles and Space Co., 722 F. Supp. 607 (N.D.Cal. 1989); United States ex rel. Stillwell v. Hughes Helicopters, Inc., 714 F. Supp. 1084 (C.D.Cal. 1989). As the court notes in Stillwell, Congress may create a legal interest and confer standing to assert that right. Stillwell, 714 F. Supp. at 1096 (citing Trafficante v. Metropolitan Life Insurance Co., 409 U.S. 205, 208-09, 93 S.Ct. 364, 366-67, 34 L.Ed.2d 415 (1972)). If Congress does create statutory standing, the normal requirements of standing — particularly the requirement that the plaintiff's injury be individualized and particularized — are not considered by the reviewing court. Stillwell, 714 F. Supp. at 1096 (citing Havens Realty Corp. v. Coleman, 455 U.S. 363, 372, 102 S.Ct. 1114, 1120, 71 L.Ed.2d 214 (1982)). Nevertheless, "Congress may not confer standing on a ...

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