UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF NEW YORK
November 18, 1994
UNITED STATES OF AMERICA, ex rel, NORMAN I. GOLD, Plaintiff, against MORRISON-KNUDSEN COMPANY, INC., BLACK RIVER CONSTRUCTORS, FORT DRUM CONSTRUCTORS and NATIONAL STRUCTURES INC., d/b/a ENVIRODOME DOMICILE OPERATIONS, Defendants.
The opinion of the court was delivered by: CON. G. CHOLAKIS
CON. G. CHOLAKIS, D.J.
MEMORANDUM DECISION AND ORDER
Presently before the Court is defendants' motion (1) to dismiss plaintiff's amended complaint pursuant to Fed. R. Civ. P. 12(b) and/or grant defendants summary judgment pursuant to Fed. R. Civ. P. 56, and (2) for attorney's fees; and plaintiff's cross-motion for an extension of the discovery date deadline.
Previously, this court considered a motion to dismiss brought by defendants Morrison-Knudsen Company (MKC), Black River Constructors (BRC), Fort Drum Constructors (FDC), and National Structures Inc. (NSI), after which the Court permitted qui tam plaintiff Norman Gold to correct the deficiencies in his False Claims Act complaint
by alleging fraud with particularity as Fed. R. Civ. P. 9(b) requires. See Memorandum Decision and Order dated Dec. 3, 1993. Subsequently, Gold timely submitted an amended complaint and, thereafter, defendants' again moved to dismiss Gold's action for failure to plead fraud with particularity. As a result of that motion, this Court dismissed Gold's first claim with prejudice, but preserved his second and third claims. See Memorandum Decision and Order dated March 3, 1994.
In those two remaining claims, Gold: (1) alleges irregularities in FDC's original bid and subsequent attempts to increase that bid
("Count II"); and (2) contends that the MKC, through BRC, manipulated work progress schedules using the Network Analysis System (NAS) software in order to justify unnecessary government expenditures on overtime, interim progress payments in advance of actual progress in the construction, and ultimately, claims for damages resulting from contrived delays ("Count III"). In making his assertions, Gold relies heavily on documents that he incorporated into his original and amended complaints, and principally upon the memoranda of one Robert R. Oliver, a contracting engineer with the Army Corps of Engineers, who monitored the progress of the Fort Drum construction.
According to defendants: (1) Count II is based upon information disclosed in news articles appearing in the Engineering News Record and the Syracuse Herald Journal, and material the Corps sent to Gold -- including Lester Edelman's Final decision, which permitted FDC to correct the mistake in its bid; and (2) Count III is based upon an administrative report prepared by a Corps engineer. Thus, defendants contend that, because these remaining claims are based upon publicly disclosed material, these claims are barred under 31 U.S.C. § 3730(e).
Section 3730(e)(4) provides:
(A) No court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation, or from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.
(B) For purposes of this paragraph, "original source" means an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government before filing an action under this section which is based on the information.
"The satisfaction of ... § 3730(e)(4) is ... an issue of subject matter jurisdiction." United States ex rel. Kreindler & Kreindler v. United Technologies Corp., 985 F.2d 1148 (2d Cir. 1993) (quoting United States ex rel. Precision Co. v. Koch Indus., Inc., 971 F.2d 548, 551 (10th Cir.1992), cert. denied, 122 L. Ed. 2d 742, 113 S. Ct. 1364 (1993)). "Section 3730(e)(4) is intended to bar 'parasitic lawsuits' based upon publicly disclosed information in which would-be relators 'seek remuneration although they contributed nothing to the exposure of the fraud.'" Id. (quoting United States ex rel. John Doe v. John Doe Corp., 960 F.2d 318, 319 (2d Cir.1992))
Section 3730(e)(4) was "designed to preclude qui tam suits based on information that would have been equally available to strangers to the fraud transaction had they chosen to look for it as it was to the relator." United States ex rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v. Prudential Insurance Co., 944 F.2d 1149, 1155-56 (3d Cir.1991); see also United States ex rel. John Doe v. John Doe Corp., 960 F.2d 318, 322 ("Potential accessibility by those not a party to the fraud [is] the touchstone of public disclosure. (citing Stinson)).
Moreover, such an action is precluded if it is based -- in any part -- upon publicly disclosed allegations or transactions, and not only if it is based solely upon publicly disclosed information. Kreindler, 985 F.2d at 1158.
Here, Gold's remaining claims are primarily based -- and certainly at least in part -- upon publicly disclosed allegations and transactions. As a result, for Gold to avoid this statutory bar, he must satisfy the limited exception to that bar provided by § 3730(e)(4)(A) & (B) -- i.e., he must be an "original source of the information." "Original source" is expressly defined in § 3730(e)(4)(B) -- "a qui tam plaintiff must (1) have direct and independent knowledge of the information on which the allegations are based, and (2) have voluntarily provided such information to the government prior to filing suit." Kreindler, 985 F.2d at 1159. Furthermore, "there is an additional requirement that a qui tam plaintiff must meet in order to be considered an 'original source,' namely, a plaintiff also must have directly or indirectly been a source to the entity that publicly disclosed the allegations on which a suit is based[, and Gold] does not meet these requirements." Id.
As in Kreindler:
Gold "had no significant direct knowledge ... independent of the disclosures made to [him] and the news articles, and [he] certainly was not a source of that information. The fact that [he] conducted some collateral research and investigations ... as would be customary in such litigation, does not establish 'direct and independent knowledge of the information on which the allegations are based' within the meaning of s 3730(e)(4)(B) ... [rather, the public disclosure of the Government] was clearly the source of the core information. Nor does the fact that [Gold's] background knowledge enabled [him] to understand the significance of the information acquired ... make [his] knowledge independent of the publicly disclosed information. If that "were enough to qualify the relator as an 'original source,' then a cryptographer who translated a ciphered document in a public court record would be an 'original source,' an unlikely interpretation of the phrase."
Id. (quoting Stinson, 944 F.2d at 1160.
Thus, because Gold's qui tam action is based upon public disclosure of allegations or transactions within the meaning of s 3730(e)(4)(A), and because he is not an "original source" of the pertinent information within the meaning of § 3730(e)(4)(A) and (B), this Court does not have subject matter jurisdiction over the present action. Accordingly, plaintiff's amended complaint is hereby DISMISSED, with prejudice. As a result, defendants' further grounds for dismissal, and Gold's cross-motion for an extension of the discovery date deadline, need not be addressed.
Finally, given plaintiff's pro se status, and his apparent sincerity, defendants' request for attorneys fees is hereby DENIED.
IT IS SO ORDERED.
CON. G. CHOLAKIS, JUDGE
UNITED STATES DISTRICT COURT
DATED: Albany, New York
November 18, 1994