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UNITED STATES EX REL. COUGHLIN v. IBM

January 14, 1998

UNITED STATES OF AMERICA, ex rel. ROBERT COUGHLIN, et al., Plaintiffs,
v.
INTERNATIONAL BUSINESS MACHINES CORPORATION and SCI SYSTEMS, INC., et al., Defendants.



The opinion of the court was delivered by: MCAVOY

 Following settlement of the instant action brought under the False Claims Act, Plaintiffs now move for an order unsealing Relators' Memorandum in Opposition to the Proposed Settlement, an order pursuant to 31 U.S.C. § 3730(d)(1) awarding the Relators a twenty-five percent share of the settlement, and an order awarding costs and attorneys' fees.

 I. BACKGROUND

 Plaintiff-Relator Robert Coughlin is a former receiving inspector at what was IBM's manufacturing facility in Owego, New York. His original Complaint alleged that a prime government contractor, IBM Federal Systems Company (now Lockheed Martin Federal Systems), and one of its subcontractors, SCI Technologies, Inc., failed to test or properly inspect certain computer components manufactured for installation in computer systems for military aircraft and submarines. The Complaint also alleges that a number of the untested and improperly inspected components were defective and that IBM and SCI concealed these failures from the United States.

 Upon his retirement from IBM in January, 1992, Mr. Coughlin notified the Department of Defense of his allegations. The United States conducted an extensive investigation of Relators' claims, which confirmed only to a limited extent Relators' allegations. As a result, the United States intervened in this action and negotiated a settlement with IBM, Loral Federal Systems, and Lockheed Martin Federal Systems ("Lockheed"). The proposed settlement agreement provided that Lockheed would pay the United States $ 200,000 and perform certain warranty repair work, worth not more than $ 500,000, if such work become necessary before July 1, 1997.

 Contemporaneous with the United States' settlement offer, Relators' then counsel, Phillips & Cohen, petitioned the Court to withdraw as counsel. After an in camera review of counsel's motion to withdraw, the Court granted Phillips & Cohen's request. Thereafter, Relators retained Dangel, Donlan & Fine for purposes of opposing the settlement and proceeding with the action should the settlement not be approved by the Court.

 From October, 1996 through April, 1997, Relators' new counsel conducted additional discovery in this matter and ultimately filed a lengthy objection to the proposed settlement. On July 1, 1997, the Court approved the Settlement Agreement and dismissed the action as to defendants Loral Corporation, Loral Federal Systems Company, and IBM.

 II. DISCUSSION

 A. Unsealing of Relators' Opposition to the Proposed Settlement Agreement and Attached Documents

 Relators now seek to unseal the documents they filed in opposition to the proposed settlement agreement. In support of their request, they argue that the documents should be available to the public so that "inquires of the plaintiff and his counsel may be answered correctly and so that the public's right to information about its government's decisions, particularly court settlements, be preserved."

 Lockheed strongly opposes this request. It argues that the documents were produced under seal and are based on information provided to Relators pursuant to a confidentiality agreement.

 The filing and service requirements of the False Claims Act (the "Act"), 31 U.S.C. § 3730 (b)(2), were passed by Congress as part of substantial revisions to the False Claims Act in 1986. Legislative history reveals that the "overall intent in amending the qui tam section of the False Claims Act [was] to encourage more private enforcement suits." S.Rep. No. 345, 99th Cong., 2d Sess. 23-24, reprinted in 1986 U.S.C.C.A.N. 5266, 5288-89. However, the government was concerned that qui tam claims might overlap with or tip a defendant off to pending criminal investigations. Id. at 24, reprinted in 1986 U.S.C.C.A.N. at 5289. As the Second Circuit recently noted,

 
the sixty-day sealing period, in conjunction with the requirement that the government, but not the defendants, be served, was "intended to allow the Government an adequate opportunity to fully evaluate the private enforcement suit and determine both if that suit involves matters the Government is already investigating and whether it is in the Government's interest to intervene and take over the civil action." A secondary objective was to prevent defendants from having to answer complaints without knowing whether the government or relators would pursue the litigation.

 U.S. ex rel. Pilon v. Martin Marietta Corp., 60 F.3d 995, 999 (2d Cir. 1995) (quoting S.Rep. No. 345, 99th Cong., 2d Sess. 23-24, reprinted in 1986 U.S.C.C.A.N. 5266, 5288-89).

 These are not, however, the only interests protected by the service and sealing provisions in the Act. The Second ...


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