FILED
United States Court of Appeals
Tenth Circuit
March 17, 2009
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
In re: NATURAL GAS ROYALTIES
QUI TAM LITIGATION, Lead Case
Pursuant to Consolidation Order:
------------------------------ Case No. 06-8099
JACK J. GRYNBERG, ex rel. United
States,
Plaintiff - Appellant,
v.
PACIFIC GAS AND ELECTRIC
COMPANY; PACIFIC GAS Consolidated Appeals:
TRANSMISSION COMPANY, n/k/a Case Nos.
Gas Transmission Northwest 06-8101, 06-8102, 06-8103, 06-8104,
Corporation; KN ENERGY, INC.; 06-8105, 06-8106, 06-8107, 06-8108,
ROCKY MOUNTAIN NATURAL 06-8110, 06-8111, 06-8112, 06-8120,
GAS COMPANY; TCP GATHERING 06-8121, 06-8123, 06-8124, 06-8125,
CO.; KN INTERSTATE GAS 06-8127, 06-8129, 06-8130, 06-8131,
TRANSMISSION CO.; KN 06-8132, 06-8133, 06-8135, 06-8136,
NATURAL GAS, INC.; NORTHERN 06-8141, 06-8145, 06-8147, 06-8149,
GAS COMPANY; WESTAR 06-8151, 06-8157, 06-8159, 06-8160,
TRANSMISSION COMPANY; 06-8161, 06-8164, 06-8166, 06-8168,
WILDHORSE ENERGY PARTNERS, 06-8170, 06-8171, 06-8172, 06-8173,
L.L.C.; QUESTAR PIPELINE 06-8174, 06-8176, 06-8177, 06-8178
COMPANY; WEXPRO COMPANY;
QUESTAR GAS MANAGEMENT
CO.; QUESTAR CORP.; QUESTAR
GAS CO.; UNIVERSAL
RESOURCES CORPORATION;
COASTAL STATES GAS
TRANSMISSION COMPANY;
COLORADO INTERSTATE GAS
COMPANY; COASTAL
CORPORATION; COASTAL OIL &
GAS CORP.; COASTAL GAS
SERVICES COMPANY; COASTAL
GAS MARKETING COMPANY;
COASTAL FIELD SERVICES
COMPANY; GREAT DIVIDE GAS
SERVICES, LLC; DAUGHIN
ISLAND GATHERING PARTNERS;
COASTAL CHEM, INC.; GREELEY
GAS COMPANY; ENRON
CORPORATION; BLACK MARLIN
PIPELINE CO.; ENRON OIL & GAS
COMPANY; LOUISIANA
RESOURCES COMPANY;
NORTHERN BORDER PIPELINE
CO.; NORTHERN NATURAL GAS
COMPANY; NORTHERN NATURAL
GAS PRODUCTION COMPANY;
TRANSWESTERN PIPELINE
COMPANY; ENRON GAS
MARKETING, INC.; EL PASO
NATURAL GAS COMPANY;
TENNESSEE GAS PIPELINE
COMPANY; EAST TENNESSEE
NATURAL GAS COMPANY; EL
PASO ENERGY MARKETING
COMPANY; EL PASO FIELD
SERVICES COMPANY;
CORNERSTONE NATURAL GAS,
INC.; EL PASO GAS MARKETING
COMPANY; EL PASO TENNESSEE
PIPELINE CO.; PREMIER GAS
COMPANY; TRANSCOLORADO
GAS TRANSMISSION COMPANY;
PANENERGY CORP.; DAUGHIN
ISLAND GATHERING COMPANY
LP; PAN GAS STORAGE CO.;
PANHANDLE EASTERN PIPE LINE
COMPANY; TEXAS EASTERN
TRANSMISSION LP; TRUNKLINE
2
GAS COMPANY; UTILICORP
UNITED, INC.; AQUILA ENERGY
CORPORATION; AQUILA GAS
PIPELINE CORPORATION;
UTILICORP PIPELINE SYSTEMS,
INC.; UTILICORP ENERGY
SOLUTIONS, INC.; TRISTAR GAS
INVESTMENTS CORP.; PUBLIC
SERVICE COMPANY OF
COLORADO; MGTC, INC.; MIGC,
INC.; KERN RIVER GAS
TRANSMISSION COMPANY;
NORTHWEST PIPELINE
CORPORATION; WILLIAMS
COMPANIES, INC.; WILLIAMS
INTERSTATE NATURAL GAS
SYSTEMS; TEXAS GAS
TRANSMISSION CORP.;
TRANSCONTINENTAL GAS
PIPELINE CORP.;
TRANSCONTINENTAL GAS
SUPPLY; TRANSCONTINENTAL
OIL CORPORATION; WILLIAMS
FIELD SERVICES COMPANY;
WILLIAMS GAS MARKETING;
WILLIAMS GAS SUPPLY;
WILLIAMS PRODUCTION;
SOUTHERN NATURAL GAS
COMPANY; SEA ROBIN PIPELINE
COMPANY; FLORIDA GAS
TRANSMISSION COMPANY;
SONAT, INC.; SONAT
EXPLORATION COMPANY; SONAT
ENERGY SERVICES; SONAT
MARKETING COMPANY, L.P.;
CITRUS CORP.; BEAR CREEK
STORAGE COMPANY; CORAL
ENERGY, L.P.; EVANGELINE GAS
PIPELINE COMPANY LP;
EVANGELINE GAS
3
CORPORATION; TEJAS GAS, LLC;
TEJAS GAS OPERATING, LLC;
ACADIAN GAS LLC; TEJAS
NATURAL GAS, LLC; TRANSOK,
LLC; GULF COAST NATURAL GAS
COMPANY; TEJAS-MAGNOLIA
ENERGY, LLC; GULF ENERGY
PIPELINE, LLC; CONSOLIDATED
NATURAL GAS COMPANY; CNG
TRANSMISSION CORPORATION;
CNG PRODUCING COMPANY;
EAST OHIO GAS COMPANY; CNG
ENERGY SERVICES
CORPORATION; COLUMBIA GULF
TRANSMISSION COMPANY;
COLUMBIA GAS SYSTEM, INC.;
COLUMBIA GAS SYSTEM
SERVICE CORPORATION;
COLUMBIA LNG CORPORATION;
COLUMBIA GAS TRANSMISSION
CORPORATION; COLUMBIA
NATURAL RESOURCES, INC.;
COLUMBIA ENERGY SERVICES
CORPORATION; COLUMBIA GAS
OF KENTUCKY, INC.; COLUMBIA
GAS OF OHIO, INC.; COLUMBIA
GAS OF MARYLAND, INC.;
COLUMBIA GAS OF
PENNSYLVANIA, INC.;
COMMONWEALTH GAS
SERVICES, INC.; AVIARA ENERGY
CORPORATION; LOUISIANA
INTRASTATE GAS COMPANY,
LLC; EQUITABLE RESOURCES,
INC.; EQUITRANS, LP; JEFFERSON
ISLAND STORAGE & HUB LLC;
DYNEGY, INC.; VENICE ENERGY
SERVICES COMPANY, L.L.C.;
CONTINENTAL NATURAL GAS,
INC.; CONTINENTAL GAS
4
GATHERING, LLC; CONTINENTAL
GAS PROCESSING, L.L.C.; LG & E
NATURAL MKTG; LG&E
NATURAL GATHERING AND
PROCESSING CO.; LG&E
NATURAL PIPELINE CO.;
TRANSOK, INC., predecessor to
Transok LLC, k/n/a Enogex Inc.;
ENOGEX, INC.; ENOGEX
SERVICES CORPORATION, k/n/a
OGE Energy Resources, Inc.;
OKLAHOMA GAS & ELECTRIC
COMPANY; CADDO GAS
GATHERING COMPANY;
WOODWARD PIPELINE, INC.;
NORAM USA, INC.; NORAM
ENERGY CORPORATION;
NORMAN GAS TRANSMISSION
COMPANY,; NORAM ENERGY
SERVICES, INC.; NORAM FIELD
SERVICES CORP.; MISSISSIPPI
RIVER TRANSMISSION
CORPORATION; ARKANSAS
LOUISIANA GAS COMPANY;
ARKLA, INC.; ARKLA ENERGY
RESOURCES; MINNEGASCO AND
LOUISIANA INTRASTATE GAS
CORPORATION; DELHI GAS
PIPELINE CORPORATION;
MARATHON OIL COMPANY;
MARATHON PIPE LINE
COMPANY; BLUE DOLPHIN PIPE
LINE COMPANY; MONTANA
POWER COMPANY; FMC
CORPORATION; FMC WYOMING
CORPORATION; BURLINGTON
RESOURCES OIL & GAS
COMPANY; BURLINGTON
RESOURCES, INC.; BURLINGTON
RESOURCES TRADING, INC.;
5
LOUISIANA LAND AND
EXPLORATION COMPANY;
INEXCO OIL COMPANY; INEXCO
GAS TRANSMISSION COMPANY;
SNYDER OIL CORPORATION;
SNYDER GAS MARKETING, INC.;
SOCO OFFSHORE, INC.; CONOCO,
INC.; LOUISIANA GAS SYSTEMS,
INC., BARGATH, INC.; WILLIAMS
PRODUCTION RMT COMPANY;
TRANSMONTAIGNE OIL
COMPANY; SOUTHWESTERN
ENERGY COMPANY;
SOUTHWESTERN ENERGY
PRODUCTION COMPANY;
SOUTHWESTERN ENERGY
SERVICES COMPANY;
SOUTHWESTERN ENERGY
PIPELINE COMPANY; ARKANSAS
WESTERN GAS COMPANY;
ASSOCIATED NATURAL GAS
COMPANY; ARKANSAS WESTERN
PIPELINE COMPANY; SEECO,
INC.; DOW CHEMICAL COMPANY;
DOW CHEMICAL USA; ANR
PIPELINE COMPANY; ANR
PRODUCTION COMPANY; ANR
STORAGE COMPANY; HIGH
ISLAND OFFSHORE SYSTEM; U-T
OFFSHORE SYSTEM; BLUE LAKE
GAS STORAGE COMPANY;
CONSUMERS ENERGY;
CONSUMERS POWER; MICHIGAN
GAS STORAGE COMPANY; CMS
ENTERPRISES COMPANY; CMS
GAS TRANSMISSION AND
STORAGE COMPANY; CMS GAS
CO.; CMS GAS MARKETING; CMS
NOMECO OIL & GAS CO.; TERRA
ENERGY LTD.; AGAVE ENERGY
6
CO.; PHILLIPS PIPE LINE
COMPANY; APACHE
CORPORATION; MOBIL NATURAL
GAS, INC.; SUPERIOR OIL
COMPANY; MOBIL EXPLORATION
& PRODUCING U.S., INC.; EXXON
COMPANY, USA; SHELL OIL
COMPANY; SHELL OFFSHORE,
INC.; SHELL PIPELINE
CORPORATION; ATLANTIC
RICHFIELD COMPANY; VASTAR
RESOURCES, INC.; ARCO OIL AND
GAS COMPANY; VASTAR GAS
MARKETING, INC.; ARCO PIPE
LINE COMPANY; ARCO PERMIAN,
DBA Atlantic Richfield Company;
NATURAL GAS PIPELINE
COMPANY OF AMERICA;
STINGRAY PIPELINE COMPANY;
OCCIDENTAL OIL AND GAS
CORPORATION; MIDCON CORP.;
MIDCON GAS SERVICES CORP.;
OCCIDENTAL ENERGY
VENTURES CORP.; MIDCON
TEXAS PIPELINE OPERATOR,
INC.; PLACID OIL COMPANY; OXY
USA INC.; MIDCON MARKETING
CORP.; CROSS TIMBERS OIL
COMPANY, k/n/a XTO Energy Inc.;
CROSS TIMBERS OPERATING
COMPANY; CROSS TIMBERS
ENERGY SERVICES, INC.;
RINGWOOD GATHERING
COMPANY; TIMBERLAND
GATHERING & PROCESSING
COMPANY; COVE POINT LNG
LIMITED PARTNERSHIP; ENTEX,
INC.; CMS NATURAL GAS
GATHERING, LLC; SHELL LAND &
ENERGY COMPANY; SHELL
7
WESTERN E&P INC.; SOUTHERN
STAR CENTRAL GAS PIPELINE,
INC., f/k/a Williams Natural Gas
Company; HUNT PETROLEUM
CORPORATION; ATMOS ENERGY
CORPORATION, DBA Greeley Gas
Company; DCP MIDSTREAM, LP;
DUKE ENERGY SERVICES, INC.;
BARRETT RESOURCES
CORPORATION; PLAINS
PETROLEUM COMPANY; CITRUS
INTERSTATE PIPELINE
COMPANY, n/k/a Citrus Energy
Services, Inc.; EQUITABLE
STORAGE COMPANY, n/k/a
Jefferson Island Storage & Hub LLC;
PONTCHARTRAIN NATURAL GAS
SYSTEM, assignee of Louisiana
Industrial Gas Supply Systems,
Defendants - Appellees.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF WYOMING
(D.C. Nos. 99-MD-1602, 1603, 1604, 1605, 1607, 1608, 1609, 1610, 1611, 1612,
1613, 1614, 1625, 1626, 1627, 1628, 1630, 1631, 1638, 1639, 1640, 1641, 1642,
1644, 1645, 1650, 1654, 1655,1656, 1657, 1659, 1666, 1667, 1669, 1670,
00-MD-1632-WFD, 1633, 1635, 02-MD-1682-WFD, 04-MD-1684-WFD,
99-MD-1618-WFD, 1621, 1629, 1665, 1668, 1672)
Jeffrey A. Chase (Elizabeth L. Harris with him on the briefs), Jacobs Chase Frick
Kleinkopf & Kelley, LLC, Denver, Colorado, for Relator-Appellant.
L. Poe Leggette, Fulbright & Jaworski, LLP, Washington, D.C. (Donald I. Shultz,
Holland & Hart LLP, Cheyenne, Wyoming, and Nancy L. Pell and Laura S.
Morton, Fulbright & Jaworski, LLP, Washington, D.C., with him on the brief),
and Michael L. Beatty (Rebecca H. Noecker with him on the brief), Beatty &
8
Wozniak, PC, Denver, Colorado, for Coordinated Defendants-Appellees.
Submitted on the briefs:
Michael L. Beatty and Rebecca H. Noecker, Beatty & Wozniak, PC, Denver,
Colorado, for Defendants-Appellees KN Energy, et al.
Elizabeth A. Phelan, Holland & Hart, LLP, Boulder, Colorado, and Donald I.
Shultz, Holland & Hart, LLP, Cheyenne, Wyoming, for Defendants-Appellees
Questar Corporation, et al.
Charles D. Tetrault, Vinson & Elkins, LLP, Washington, D.C., for Defendant-
Appellee Transwestern Pipeline Company, LLC.
Michael L. Beatty and Rebecca H. Noecker, Beatty & Wozniak, PC, Denver,
Colorado, for Defendant-Appellee TransColorado Gas Transmission Company.
Kevin D. Evans, Steese & Evans, PC, Denver, Colorado, for Defendant-Appellee
Public Service Company of Colorado.
Robin F. Fields and Charles B. Williams, Connor & Winters LLP, Oklahoma City,
Oklahoma, for Defendants-Appellees Enogex, OG&E, and Cross Timbers.
Lawrence G. McBride, Foley & Lardner, LLP, Washington, D.C., for Defendant-
Appellee Blue Dolphin Pipe Line Company.
Michael L. Beatty and Rebecca H. Noecker, Beatty & Wozniak, PC, Denver,
Colorado, for Defendant-Appellee Apache Corporation.
Robert Salcido, Akin Gump Strauss Hauer & Feld LLP, Washington, D.C., and
Daniel M. McClure and Laura S. Morton, Fulbright & Jaworski LLP, Houston,
TX, for Defendants-Appellees Shell, Mobil, and Exxon.
Before MURPHY, McKAY, and McCONNELL, Circuit Judges.
McKAY, Circuit Judge.
In these consolidated appeals, Relator-Appellant Jack Grynberg appeals the
9
district court’s dismissal of a large number of coordinated qui tam cases Relator
had brought against numerous natural gas pipelines and other companies involved
in measuring natural gas produced from federal or Indian lands. 1 The district
court dismissed the cases for lack of subject matter jurisdiction under 31 U.S.C. §
3730(e)(4), holding that Relator’s complaints were based upon publicly disclosed
allegations and that Relator was not an original source of the information upon
which the allegations in his complaints were based. We affirm.
B ACKGROUND
Beginning in June of 1997, Relator filed a series of seventy-three lawsuits
under the qui tam provisions of the False Claims Act against a large number of
natural gas pipeline companies and their various parents, subsidiaries, and
affiliates, accusing them of underpaying royalties to the government in violation
of 31 U.S.C. § 3729(a)(7). Each complaint accused the Defendants named therein
of utilizing several identified mismeasurement techniques to knowingly
underreport or cause others to underreport the heating content and volume of gas,
with a resultant underpayment of federal royalties. Most of the alleged
1
Of the seventy-three related appeals originally filed and consolidated by
this court, appellant voluntarily dismissed twenty-nine of those appeals during the
course of appellate proceedings. The dismissed appeals were: 06-8100, 06-8109,
06-8113, 06-8114, 06-8115, 06-8116, 06-8117, 06-8118, 06-8119, 06-8128, 06-
8134, 06-8137, 06-8138, 06-8139, 06-8140, 06-8142, 06-8143, 06-8144, 06-8146,
06-8150, 06-8152, 06-8153, 06-8154, 06-8155, 06-8162, 06-8163, 06-8167, 06-
8169, 06-8175.
10
mismeasurement techniques were common to all seventy-three cases.
The cases were transferred as multidistrict litigation to the District of
Wyoming, where Defendants filed motions to dismiss for lack of subject matter
jurisdiction. Under the direction of a special master, the parties conducted
limited discovery on this issue. Because the special master and district court
considered evidentiary materials and because the jurisdictional question was
intertwined with the merits, the special master and district court properly treated
Defendants’ motions to dismiss as motions for summary judgment under Rule
56(c) of the Federal Rules of Civil Procedure. See United States ex rel. Hafter v.
Spectrum Emergency Care, Inc., 190 F.3d 1156, 1159 (10th Cir. 1999).
In his report and recommendations, the special master concluded that forty
of the seventy-three cases should be dismissed under § 3730(e)(4) because the
allegations in these cases had been publicly disclosed and Relator was not an
original source of the information upon which the allegations were based. The
special master concluded that the remaining thirty-three cases were not
jurisdictionally barred because none of the Defendants in these cases were
identified in any public disclosure alleging mismeasurement of natural gas. The
district court adopted in part and modified in part the special master’s report,
holding that all of the cases were barred under § 3730(e)(4) because the publicly
disclosed allegations of widespread mismeasurement were sufficient to set the
government on the trail of the fraud as to all Defendants and Relator did not fit
11
within the original source exception to the public disclosure bar. The court
therefore entered judgment in favor of Defendants in each of the seventy three
cases. 2
On appeal, Relator challenges the district court’s conclusions that the
public disclosure bar was triggered as to all Defendants and that Relator was not
an original source of the information upon which the allegations were based. We
review these issues of subject matter jurisdiction de novo, employing the same
legal standard as the district court. See United States ex rel. Grynberg v. Praxair,
Inc., 389 F.3d 1038, 1047 (10th Cir. 2004).
D ISCUSSION
The False Claims Act imposes liability on any person who “knowingly
makes, uses, or causes to be made or used, a false record or statement to conceal,
avoid, or decrease an obligation to pay or transmit money or property to the
Government.” 31 U.S.C. § 3729(a)(7). The FCA’s qui tam provisions allow a
private individual, known as a relator, to bring a civil action on behalf of the
government against such persons and to share in any resulting government
recovery. See Kennard v. Comstock Res., Inc., 363 F.3d 1039, 1041 (10th Cir.
2004) (citing 31 U.S.C. § 3730(b)(1) and (d)). “The purpose of the FCA ‘is to
2
In seven cases, judgment was entered pursuant to Fed. R. Civ. P. 54(b)
because the district court’s order did not dispose of all claims. The subsequent
dismissal of these remaining claims was separately appealed and is not addressed
in this opinion.
12
enhance the Government’s ability to recover losses sustained as a result of fraud
against the Government.’” Praxair, 389 F.3d at 1041 (quoting S. Rep. No. 99-
345, at 1 (1986), reprinted in 1986 U.S.C.C.A.N. 5266, 5266). To further that
purpose, Congress has sought through the qui tam provisions to achieve “‘the
golden mean between adequate incentives for whistle-blowing insiders with
genuinely valuable information and discouragement of opportunistic plaintiffs
who have no significant information to contribute of their own.’” United States
ex rel. Fine v. Sandia Corp., 70 F.3d 568, 571 (10th Cir. 1995) (quoting United
States ex rel. Springfield Terminal Ry. v. Quinn, 14 F.3d 645, 649 (D.C. Cir.
1994)). Accordingly, a relator’s action will be jurisdictionally barred if it is
based on allegations or transactions already in the public domain unless the
relator can show that he is an “original source” of the information on which the
allegations are based. 31 U.S.C. § 3730(e)(4)(A). “If jurisdiction is challenged,
the burden is on the party claiming jurisdiction to show it by a preponderance of
the evidence.” Hafter, 190 F.3d at 1160.
To determine whether the FCA’s public disclosure bar has been triggered,
we consider “(1) whether the alleged ‘public disclosure’ contains allegations or
transactions from one of the listed sources; (2) whether the alleged disclosure has
been made ‘public’ within the meaning of the FCA; [and] (3) whether the
relator’s complaint is ‘based upon’ this ‘public disclosure.’” United States ex rel.
Holmes v. Consumer Ins. Group, 318 F.3d 1199, 1203 (10th Cir. 2003). If each
13
of these three questions is answered in the affirmative, the public disclosure bar is
triggered and the relator must demonstrate original source status in order to
proceed with his qui tam action. United States ex rel. Fine v. Advanced Scis.,
Inc., 99 F.3d 1000, 1004 (10th Cir. 1996).
Public Disclosure
The district court concluded that the public disclosure bar had been
triggered as to all Defendants based upon two main sets of documents: (1) several
documents related to an investigation conducted in the 1980s by the United States
Senate Select Committee on Indian Affairs and (2) court documents from and
newspaper reports describing a qui tam action Relator had filed in 1995 against
forty-four natural gas pipeline companies in the District of Columbia, which the
court dismissed in March 1997 for failure to plead fraud with specificity and
improper joinder of parties. The Senate Committee documents disclosed the
mismeasurement of oil and gas on a large scale but did not identify any specific
companies that engaged gas mismeasurement, while the defendants named in the
1995 qui tam action overlapped with Defendants or affiliates of Defendants in
approximately half of the seventy-three 1997 complaints. Rejecting the special
master’s conclusion that the public disclosure bar was only triggered by public
disclosures that specifically named Defendants or affiliates of Defendants, the
district court concluded that the Senate Committee documents and the 1995 action
had triggered the public disclosure bar as to all Defendants because these
14
documents alerted the government to the industry-wide nature of the fraud and
enabled the government to readily identify wrongdoers through an investigation
of the companies measuring gas produced from federal or Indian lands.
On appeal, Relator does not dispute that the 1995 action and Senate
Committee documents were publicly disclosed and were from sources listed in §
3730(e)(4)(A). 3 Rather, he disputes the applicability of the third prong of the
public disclosure test to his complaints. This prong of the analysis asks whether
the qui tam complaint was “based upon,” meaning “supported by,” the publicly
disclosed allegations or transactions. See United States ex rel. Fine v. MK-
Ferguson Co., 99 F.3d 1538, 1545 (10th Cir. 1996). “The test is whether
‘substantial identity’ exists between the publicly disclosed allegations and the qui
tam complaint.” Id. Relator argues that this prong was not satisfied as to at least
some Defendants and some mismeasurement techniques because these Defendants
and techniques were not identified in any public disclosed allegation.
As an initial matter, we address Relator’s argument that each alleged
mismeasurement technique was a separate and unique claim of fraud that should
not be barred unless specifically alleged in a public disclosure. Relator correctly
3
Relator asserts in a footnote that a relator’s own prior qui tam action
should not trigger the public disclosure bar against him. Relator has not properly
raised this issue on appeal. See United States v. Hardman, 297 F.3d 1116, 1131
(10th Cir. 2002) (“Arguments raised in a perfunctory manner, such as in a
footnote, are waived.”). Moreover, we see no basis in the statute or our case law
for such an exception.
15
points out that we use a claim-by-claim analysis to determine whether the
allegations in a complaint were publicly disclosed. See, e.g., id. at 1547; see also
United States ex rel. Boothe v. Sun Healthcare Group, Inc., 496 F.3d 1169, 1177
(10th Cir. 2007) (holding that “courts must analyze the jurisdictional status of
each reasonably discrete claim of fraud in a qui tam action”). After reviewing the
qui tam complaints at issue here, however, we agree with the district court that
the alleged mismeasurement techniques are not separate claims of fraud but are
rather interrelated parts of the alleged fraud of deliberately mismeasuring natural
gas volume and misanalyzing gas heating content in order to underpay royalties to
the United States. We conclude that the district court correctly considered
whether there was substantial identity between the complaints and the publicly
disclosed documents based on the overall fraudulent mismeasurement scheme
rather than each mismeasurement technique allegedly employed in the scheme.
We further agree with the district court that the fraudulent scheme alleged in the
1997 complaints shares substantial identity with the allegations publicly disclosed
in the Senate Committee documents and 1995 lawsuit. See MK-Ferguon, 99 F.3d
at 1546-47 (holding that inclusion of additional details in qui tam complaint does
not prevent application of public disclosure bar); see also Praxair, 389 F.3d at
1051 (holding that qui tam actions only partially based upon publicly disclosed
allegations or transactions may still be barred).
The next question we must address is whether the public disclosures of
16
natural gas mismeasurement by other industry members and in the industry as a
whole were sufficient to trigger the public disclosure bar as to Defendants not
named in these disclosures. A handful of relevant cases provide us with guidance
on this issue.
The first circuit to squarely address this issue was the Eleventh Circuit in
Cooper v. Blue Cross & Blue Shield of Florida, Inc., 19 F.3d 562 (11th Cir.
1994). In Cooper, a relator sued Blue Cross Blue Shield of Florida for incorrectly
instructing him that Medicare and not BCBSF should pay on his claims first, thus
causing Medicare to make payments that should have been covered by BCBSF as
his primary insurer. The Eleventh Circuit rejected the district court’s conclusion
that the relator’s allegations had been publicly disclosed in several sources,
including a General Accounting Office report describing widespread Medicare
secondary payer fraud throughout the insurance industry, newspaper accounts
publicizing similar wrongful practices committed by other insurance companies,
and a prior qui tam action against Blue Cross Blue Shield of Georgia alleging the
same type of conduct. Stating that it was “crucial whether [the defendant] was
mentioned by name or otherwise specifically identified in public disclosures,” the
Eleventh Circuit held that “[r]equiring that allegations specific to a particular
defendant be publically disclosed before finding the action potentially barred”
implemented the goals of the statute by “encourag[ing] private citizen
involvement and increas[ing] the chances that every instance of specific fraud
17
will be revealed.” Id. at 566.
We distinguished Cooper in United States ex rel. Fine v. Sandia Corp., 70
F.3d 568 (10th Cir. 1995). In Sandia, the relator sued Sandia Corporation under
the FCA for misappropriating nuclear waste funds. A prior General Accounting
Office report and a congressional hearing had disclosed that contractors operating
at two of the Department of Energy’s nine multi-program laboratories were
engaging in this practice. Although Sandia was not named in these public
disclosures, we held that the public disclosure bar had been triggered as to Sandia
because the report and hearing “set the government squarely on the trail of the
alleged fraud without [the relator’s] assistance.” Id. at 571. Because these
disclosures “detailed the mechanics of the practice, revealed that at least two of
Sandia’s eight sister laboratories were engaged in it, and indicated the DOE’s
acquiescence,” we concluded that “they sufficiently alerted the government to the
likelihood” that Sandia would also engage in the practice. Id. at 571. We held
that Cooper was distinguishable because, “[w]hen attempting to identify
individual actors, little similarity exists between combing through the private
insurance industry in search of fraud and examining the operating procedures of
nine, easily identifiable, DOE-controlled, and government-owned laboratories.”
Id. at 572. In light of “Congress’ twin goals of rejecting suits which the
government is capable of pursuing itself, while promoting those which the
government is not equipped to bring on its own,” we concluded that it would be
18
contrary to the purposes of the FCA to exercise jurisdiction over the relator’s
claim in this case. Id. at 571 (internal quotation marks omitted).
Other circuits have followed the Sandia reasoning and similarly
distinguished Cooper where the public disclosures at issue are sufficient to set the
government squarely upon the trail of the alleged fraud. For instance, in United
States v. Alcan Electrical and Engineering, Inc., 197 F.3d 1014, 1019 (9th Cir.
1999), the Ninth Circuit held that a qui tam action making identical allegations to
a prior lawsuit was barred by the public disclosure bar because, although only one
of the defendants had been named in the prior lawsuit, the qui tam defendants
were all part of a “narrow class of suspected wrongdoers—local electrical
contractors who worked on federally funded projects over a four-year period” and
filed weekly payrolls with the government during this period. The Ninth Circuit
held that “the instant case is similar to Sandia, in that the government, as
regulator and owner, presumably would have ready access to documents
identifying those contractors. This ready access makes it highly likely that the
government could easily identify the contractors at issue.” Id.
Likewise, in United States ex rel. Findley v. FPC-Boron Employees’ Club,
105 F.3d 675 (D.C. Cir. 1997), the D.C. Circuit held that publicly disclosed
allegations that federal employees’ clubs inappropriately retained revenue from
vending services on federal property triggered the public disclosure bar as to the
relator’s qui tam action against employees’ clubs of the Bureau of Prisons.
19
Noting that the public disclosures at issue disclosed that the practice occurred
throughout the federal government, identified the nature of the fraud, and
identified the types of actors engaged in the allegedly fraudulent activity, the
court concluded that the relator’s allegations “substantially repeat what the public
already knows and add only the identity of particular employees’ clubs engaged in
the questionable and previously documented generic practice.” Id. at 687. The
court rejected the relator’s argument that the public disclosures at issue were
similar to a generic disclosure of fraud by defense contractors, stating that
“[l]ittle similarity exists between combing through the myriad of transactions
performed by the various defense contractors in search of fraud and finding easily
identifiable federal employee organizations that provide vending services on
federal property.” Id.
Applying the reasoning from these cases to the facts before us, we hold that
the Senate Committee documents and 1995 qui tam action publicly disclosed the
allegations against all Defendants named in Relator’s 1997 complaints. We note
that, as in Sandia, the public disclosures at issue named a significant percentage
of industry participants as wrongdoers and indicated that others in the industry
were very likely engaged in the same practices. 4 The 1995 action alleged
4
In fact, the percentage of industry participants named in the public
disclosures is, according to Relator’s own figures, exactly the same as the
percentage named in Sandia.
20
mismeasurement by natural gas pipeline companies in general and did not suggest
that the alleged practices were limited to the named defendants. Indeed, the
complaint indicated that further investigation might lead to knowledge of more
mismeasurement techniques and participation in this type of activity by other
companies. Newspaper reports regarding this action also disclosed the
industrywide nature of this action’s broad allegations.
As in Findley, Alcan, and Sandia, the public disclosures provided specific
details about the fraudulent scheme and the types of actors involved in it,
removing this from a situation where the government would need to comb through
myriad transactions performed by various types of entities in search of potential
fraud. A general allegation of Medicare fraud—or even more a specific allegation
of Medicare fraud through the practice of incorrectly informing patients or health-
care providers that claims should be submitted first to Medicare and not the
primary insurer—does not help the government know where to focus in an
investigation of the countless individual Medicare claims submitted to the
government by vast numbers of health care providers and individuals. By
contrast, the specific allegation that measurers of natural gas on federal and tribal
lands engage in identified techniques to mismeasure gas obtained from federal or
tribal properties allows the government to target its investigation toward specific
actors and a specific type of fraudulent activity.
The government’s ability to investigate the potential fraud in this case is
21
also furthered by the information in its records and its control over the locations
at which the fraud is allegedly occurring. The government knows and has
contracts with the royalty payors who either measure or rely on purchasers’
measurements of gas produced from federal land. Although the royalty payors
may not always measure the gas themselves, the government should be able to
discover from these royalty payors the source of the measurements upon which
they are basing their royalty payments. Moreover, the measuring facilities at
which the alleged fraud is occurring are located at government-controlled
facilities on federally or tribally owned lands and are subject to physical
inspection by the government. 5 Thus, an investigation into the publicly disclosed
allegations at issue here is not analogous to poring over millions of individual
Medicare claims looking for specific instances of fraud by insurers, health-care
providers, and other potential wrongdoers.
We therefore conclude that the allegations of industrywide gas
mismeasurement disclosed in the 1995 complaint and the Senate Committee
documents were sufficient to set the government on the trail of the fraud as to all
Defendants and thus that the allegations in Relator’s 1997 complaints were
5
Although Relator argues that the district court impermissibly resolved
disputed issues of material fact in Defendants’ favor, he cites to no evidence in
the record calling these facts recited by the district court into dispute.
22
publicly disclosed. 6 Because the public disclosure bar has been triggered, all the
instant cases will be barred for lack of subject matter jurisdiction unless Relator
can demonstrate original source status. Accordingly, we turn to the question of
whether Relator fits within the original source exception to the public disclosure
bar.
Original Source
The FCA defines an “original source” as “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.” 31 U.S.C. §
3730(e)(4)(B). We first consider how the second part of this definition, the pre-
filing disclosure requirement, affects our analysis of the first part, then consider
whether Relator has demonstrated that he had direct and independent knowledge
of the information underlying his allegations.
In United States ex rel. King v. Hillcrest Health Center, Inc., 264 F.3d
1271, 1280 (10th Cir. 2001), we discussed the pre-filing disclosure requirement of
the original source definition. We noted that “courts have not settled on what it
means to have ‘voluntarily provided the information to the Government before
6
Because we conclude that these documents publicly disclosed the
allegations of all the instant complaints, we need not consider whether any other
documents could also constitute public disclosures of the allegations.
23
filing an action.’” Id. (quoting § 3730(e)(4)(B). We also noted that this pre-filing
disclosure requirement is distinct from the written disclosure requirement of §
3730(b)(2) and requires the relator to “voluntarily provide the Government with
the essential elements or information on which the qui tam allegations are based”
before filing the qui tam action. Id. We stated: “The pre-filing voluntary
disclosure requirement encourages private individuals to come forward with their
information of fraud ‘at the earliest possible time and . . . discourage[s] persons
with relevant information from remaining silent.’” Id. at 1280-81 (alterations in
original) (quoting United States v. Bank of Farmington, 166 F.3d 858, 866 (7th
Cir. 1999)). Additionally, we noted, “this requirement also gives the government
the chance to consider whether there has already been public disclosure of the
matters, whether the prospective relator in fact possesses direct and independent
knowledge of the matters he is disclosing, and whether he is making disclosures
on a voluntary basis.” Id. at 1281 (internal quotation marks omitted). We then
held that a relator could not qualify as an original source if he had withheld
essential elements of the fraud transaction from his pre-filing disclosure and thus
“deprive[d] the government of key facts necessary in its efforts to confirm,
substantiate or evaluate the fraud allegations.” Id.
Based mainly on Hillcrest, the district court held that the “direct and
independent knowledge” element of the original source test must be satisfied with
information the relator voluntarily disclosed to the government before filing and
24
that no other information can be considered in the original source assessment.
Although we agree with Relator that this result was not directly compelled by
Hillcrest, we conclude that the district court’s holding was a sensible
interpretation of the statute in light of the purposes of the FCA.
As noted above, the FCA’s qui tam provisions are intended to achieve “‘the
golden mean between adequate incentives for whistle-blowing insiders with
genuinely valuable information and discouragement of opportunistic plaintiffs
who have no significant information to contribute of their own.’” Sandia, 70 F.3d
at 571 (quoting Springfield, 14 F.3d at 649). As an incentive for individuals with
genuinely valuable information to come forward with that information, the
original source statute provides an exception to the public disclosure bar for a
relator who voluntarily provides the government with information about which he
has direct and independent knowledge before filing the qui tam action. If a
relator does not voluntarily provide such information to the government, however,
the purposes of the FCA weigh against allowing him to bring a qui tam action and
share in any resulting government recovery, at least where the government has
already been alerted to the fraud by a public disclosure. “[I]t is our task to ensure
that ‘qui tam suits are limited to those in which the relator has contributed
significant independent information.’” Findley, 105 F.3d at 686 (quoting
Springfield, 14 F.3d at 653) (emphasis added).
As we held in Hillcrest, it is appropriate to apply the statute’s jurisdictional
25
requirements in a manner that “encourages private individuals to come forward
quickly with their information, to not dawdle when there has been a public
disclosure, and to discourage persons from withholding or remaining silent about
their relevant information.” 264 F.3d at 1281. Permitting a relator to satisfy the
pre-filing disclosure requirement by providing the government with a minimal
amount of information regarding the fraud, while other information about which
the relator has direct and independent information is withheld from the
government until trial, would hamper the government’s ability to investigate the
fraud and would provide no incentive for individuals to come forward quickly
with all relevant information in their possession. We agree with the special
master that, “if a relator does not deem information important enough to
voluntarily disclose it to the government before filing suit, he should not be
allowed to later rely upon it to establish his status as an original source.” (Report
and Recommendations at 102-03.) We thus hold that our assessment of Relator’s
knowledge in this case is limited to information he voluntarily provided to the
government before filing suit.
Accordingly, we now consider whether the information Relator provided to
the government shows that he had “direct and independent knowledge” of the
information underlying the allegations in any of his 1997 qui tam complaints. 7
7
As stated above, we reject Relator’s argument that each individual
(continued...)
26
Knowledge is “direct and independent” if it is “marked by [the] absence of an
intervening agency” and “unmediated by anything but [the relator’s] own efforts.”
MK-Ferguson, 99 F.3d at 1547 (alterations in original) (internal quotation marks
omitted). “To establish original source status knowledge, a qui tam plaintiff must
allege specific facts—as opposed to mere conclusions—showing exactly how and
when he or she obtained direct and independent knowledge of the fraudulent acts
alleged in the complaint and support those allegations with competent proof.”
Hafter, 190 F.3d at 1162. Secondhand information, speculation, background
information, or collateral research do not satisfy a relator’s burden of establishing
the requisite knowledge. Id. at 1162-63. “A relator’s ability to recognize the
legal consequences of a publicly disclosed fraudulent transaction does not alter
the fact that the material elements of the violation already have been publicly
disclosed.” Findley, 105 F.3d at 688. The fact that a relator has background
information or unique expertise allowing him to understand the significance of
publicly disclosed allegations and transactions is also insufficient. United States
ex rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v. Prudential Ins. Co., 944 F.2d
7
(...continued)
mismeasurement technique constituted a separate allegation of fraud. Relator
chose to plead the mismeasurement techniques as interrelated parts of his broad
claim of fraud in Defendants’ measurement of gas. Therefore, like the district
court, we consider for each case whether Relator demonstrated original source
status as to the broad mismeasurement claim as a whole, not as to each fact
alleged in support of this claim.
27
1149, 1160 (2d Cir. 1991).
Relator bears the burden of alleging the facts essential to show jurisdiction
and supporting those facts with competent proof. United States ex rel. Precision
Co. v. Koch Indus., Inc., 971 F.2d 548, 551 (10th Cir. 1992). The district court
concluded that there was insufficient evidence in the record to support
consideration of either Relator’s oral communications with government
employees or documents that may have been copied by government
representatives during their reviews of Relator’s files. We agree. Thus, like the
district court, we will limit our assessment of Relator’s knowledge to the two sets
of disclosure documents he provided to the government before filing suit. 8
Relator provided the government with no information regarding any named
Defendant in several of the 1997 qui tam cases. He contends that his experience
in the industry, his hypotheses regarding the accuracy of certain measurement
techniques, and his interviews with third parties such as manufacturers of
measuring devices and government representatives are sufficient to show direct
and independent knowledge that all members of the industry were engaging in the
alleged fraudulent practices. We disagree and hold that, in those cases where
Relator did not even provide the names of any Defendants to the government, he
8
We agree with the special master that, to the extent there is a dispute of
fact regarding whether Relator provided these documents to the government
before filing suit, it must be resolved in favor of Relator for purposes of summary
judgment.
28
cannot qualify as an original source as to the allegations in those complaints.
In several other cases, Relator provided the government only with pages of
handwritten notes briefly mentioning telephonic or attempted telephonic
interviews with employees of various Defendants. For certain Defendants, the
notes indicated that Relator or his staff confirmed through these interviews that
Defendants used one or two specific measurement practices that were the subject
of the qui tam complaints, such as measuring gas downstream of the orifice plate.
We conclude that this secondhand knowledge from employees of various
Defendants does not constitute “direct and independent” knowledge, and thus that
Relator is not an original source as to these Defendants.
A few other Defendants were briefly mentioned in one or two documents
besides the phone call notes, but the references to these Defendants were
innocuous, irrelevant to the allegations in Relator’s complaints, or based upon
speculation, publicly available documents, and secondhand information. We thus
hold that Relator did not demonstrate “direct and independent” knowledge as to
these Defendants.
The special master identified three cases in which Relator’s claim of
original source status was strongest because, taken in the light most favorable to
him, the information he provided to the government demonstrated that he had a
limited amount of direct and independent knowledge about a handful (though far
from a majority) of the mismeasurement techniques these defendants allegedly
29
employed. As the special master noted, these three cases thus raised the issue of
just how much direct and independent information a relator must have in order for
his allegations to be “based” upon this information in accordance with the
statutory mandate. See § 3730(e)(4)(B). The special master considered four
possible approaches to make this assessment and concluded that an “all or nothing
approach” requiring direct and independent knowledge of every alleged fact in the
complaint would be too restrictive, while a “bare minimum” approach would err
in the opposite extreme. The third approach suggested by the special master, a
“pick and choose” approach, would limit the relator to claims based on
allegations for which he had direct and independent knowledge, while the rest
would be dismissed. However, as the special master noted, this approach would
require the district court to effectively redraft relators’ complaints. Moreover,
this approach also suffers from the “all-or-nothing” approach’s draconian
rejection of individual claims based even in small part on publicly disclosed
information. Thus, the special master concluded that the best approach would be
the fourth suggested approach, a “substantiality” standard. Under this standard,
the district court would evaluate the relator’s independently discovered
information against the entirety of the allegations on which he based his claim
and sustain the relator’s invocation of subject matter jurisdiction only if his
contribution in terms of direct and independent knowledge was substantial.
We agree with the special master that “substantiality” is the best approach
30
to assess whether a relator’s direct and independent information is sufficient to
qualify him as an original source. This standard provides a balance between “the
dual goals of ‘avoidance of parasitism and encouragement of legitimate citizen
enforcement actions.’” Kennard, 363 F.3d at 1041 (quoting Springfield, 14 F.3d
at 651). The substantiality standard’s emphasis on the relative value of the
relator’s direct and independent knowledge when compared with the rest of the
complaint encourages the relator not to overreach by tacking reams of publicly
disclosed information onto his complaint. However, the standard still allows the
realtor to supplement his direct knowledge with some information derived from
innocuous public sources, thus avoiding the pitfalls inherent in the “all or
nothing” and “pick and choose” approaches. Applying this standard to the facts
before us, we conclude that Relator’s limited direct and independent information
as to each of these Defendants is minimal in comparison to the broad scope of his
allegations against them and thus fails to meet the substantiality standard. We
therefore hold that Relator lacks sufficient direct and independent knowledge to
qualify as an original source as to these Defendants.
We conclude that Relator did not provide the government with information
demonstrating sufficient direct and independent knowledge to qualify as an
original source as to any Defendants. Because we affirm the district court’s
dismissal of the complaints on this ground, we do not address Defendants’
additional arguments regarding Relator’s status as an original source. We
31
likewise do not address Defendants’ alternate argument for dismissal based on the
written disclosure requirement of 31 U.S.C. § 3730(b)(2).
C ONCLUSION
For the foregoing reasons, we AFFIRM the district court’s dismissal of
Relator’s qui tam complaints. We DENY Relator’s motion to remand based on
supervening law.
32