United States Ex Rel. Bahrani v. Conagra, Inc.

FILED
United States Court of Appeals
Tenth Circuit

October 26, 2010
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

UNITED STATES OF AMERICA, ex
rel. ALI BAHRANI,

Plaintiff-Appellant and Cross-
Appellee,
v. Nos. 09-1163; 09-1180; & 09-1388
CONAGRA, INC.; CONAGRA HIDE
DIVISION; CONAGRA BEEF
COMPANIES; MONFORT, INC.,

Defendants-Appellees and
Cross-Appellants.
_________________

UNITED STATES OF AMERICA,

Amicus Curiae.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
(D.C. No. 1:00-CV-01077-JLK-KLM)

George Bryan Ulmer, III, (Larissa A. McCalla with him on the briefs), of The
Spence Law Firm, LLC, Jackson, Wyoming, for Plaintiff-Appellant and Cross-
Appellee.

Patricia C. Campbell, (Darrell G. Waas with her on the briefs), of Waas Campbell
Rivera LLP, Denver, Colorado, for Defendants-Appellees and Cross-Appellants.

Michael D. Granston, Attorney, Department of Justice, Washington, D.C., (Tony
West, Assistant Attorney General; David M. Gaouette, United States Attorney;
Douglas N. Letter and Nicholas Bagley, Attorneys, Appellate Staff, Civil
Division, Department of Justice, Washington, D.C., with him on the brief), for
Amicus Curiae.

Before BRISCOE, Chief Judge, BALDOCK, and TYMKOVICH, Circuit
Judges.

BRISCOE, Chief Judge.

Plaintiff Ali Bahrani filed this action under the reverse false claims

provision of the False Claims Act (FCA), 31 U.S.C. § 3729(a)(7), alleging that

defendants ConAgra, Inc., ConAgra Hide Division, ConAgra Beef Company, and

Monfort, Inc. (collectively ConAgra or defendants) altered thousands of beef and

hide export certificates issued by the United States Department of Agriculture

(USDA), rather than obtaining replacement certificates, in order to avoid paying

the fees charged by the USDA for replacement certificates. The district court

initially granted summary judgment in favor of defendants, but this court, in U.S.

ex rel. Bahrani v. Conagra, Inc., 465 F.3d 1189 (10th Cir. 2006) (Bahrani I),

reversed and remanded for further proceedings. On remand, a jury found that

Bahrani was not an “original source” for his meat export certificate claims. A

separate jury found in Bahrani’s favor on only five of the hide export certificates

at issue and awarded him actual damages of $107.50. The district court

subsequently trebled the actual damages and imposed statutory penalties of

2
$5,500 per claim, as required by the FCA, resulting in a total judgment of

$27,822.50 in favor of Bahrani. Following the entry of judgment, Bahrani moved

for an award of attorney fees, expenses and costs in the amount of $3,449,469.10.

The district court, pursuant to a magistrate judge’s recommendation, awarded

Bahrani $9,274.16 in fees, expenses and costs.

Bahrani now appeals (No. 09-1163) from the judgment entered by the

district court, asserting the district court committed a host of errors in resolving

his meat and hide export certificate claims. Defendants have filed a cross-appeal

(No. 09-1180) alleging three errors relating to the resolution of Bahrani’s hide

export certificate claims. Bahrani has also filed a second appeal (No. 09-1388)

challenging the district court’s ruling on his motion for attorney fees, expenses

and costs.

Exercising jurisdiction pursuant to 28 U.S.C. § 1291, we affirm the portion

of the district court’s judgment pertaining to Bahrani’s meat export certificate

claims, but reverse the portion of the judgment pertaining to Bahrani’s hide

export certificate claims and remand with directions to enter judgment in favor of

ConAgra on those claims. We also reverse the award of attorney fees, expenses

and costs in favor of Bahrani and dismiss Bahrani’s appeal of the fee, expense

and cost award as moot.

I

The underlying facts of this case were set forth in considerable detail in

3
Bahrani I. Accordingly, we will revisit only the background information

necessary to an understanding of the instant appeals.

USDA export certificates

In Bahrani I, we explained how USDA export certificates are utilized by

companies, such as ConAgra, that export animal products:

To facilitate and promote foreign trade and to protect the food
supply, the USDA provides certificates to companies that export
animal products. These export certificates are part of a
comprehensive scheme administered by the Food Safety and
Inspection Service . . . , which regulates meat exports, and the
Animal Plant Health Inspection Safety Service [APHIS] . . . , which
regulates hide exports. The regulations are authorized by the Federal
Meat Inspection Act, 21 U.S.C. §§ 601-695, the Poultry Products
Inspection Act, 21 U.S.C. §§ 451-471, and the Agricultural
Marketing Act, 7 U.S.C. §§ 1621-27.

Under the Food Inspection Service regulations, exporters are
required to obtain certificates from USDA inspectors for each
shipment. Each certificate has a unique serial number and states the
shipment’s destination, the exporter, the consignee, and the number
and kinds of products it contains. 9 C.F.R. § 322.2. The destination
may affect the content of the certificates: some countries require
more information than the Food Inspection Service does, and, in
those instances, the USDA provides exporters with certificates that
comply with those other countries’ requirements.

The [APHIS] regulations contain a similar provision addressing
certificates for exports of animal hides. 9 C.F.R. § 156.3. In
contrast to the Food Inspection Service regulations, the [APHIS]
regulations do not require a certificate for every shipment. However,
some foreign countries do require certificates, and the [APHIS]
regulations provide that exporters shipping hides to those countries
may obtain a certificate from an inspector.

The Food Inspection Service and the [APHIS] both charge fees
for the certificates. The Food Inspection Service’s export certificate

4
 fee is based upon the time expended by its inspectors for providing
information over and above the minimum certification requirements
set forth by federal law. See 9 C.F.R. §§ 307.4—307.6, 322.2,
391.1—391.3. In contrast, the [APHIS] charges a flat fee . . . [t]he
purpose of [which] is to reimburse the government for the costs
incurred.

Occasionally, an exporter may discover inaccuracies in an export
certificate after it has been issued by a USDA inspector. There may
be typographical errors or more substantive deficiencies involving
matters such as the grade of beef or the destination of the product. In
those instances, the inspectors’ practice has been to make corrections
on the original certificate themselves, authorize those corrections to
be made by the exporters, or to issue a new certificate. * * *
Although there is not a[n] [APHIS regulatory] provision addressing
the payment of fees for these “in lieu of” and replacement
certificates, the parties do not dispute that the regulations authorize
the . . . [APHIS] to charge fees for them.

The regulations do not set forth a standard for determining when
these “in lieu of” and replacement certificates are required.

465 F.3d at 1192-93.

ConAgra’s export operations/Bahrani’s employment with ConAgra

Defendants are engaged in the business of exporting meat and animal

products, including beef hides. Bahrani began working for ConAgra in 1996 as “a

documentation coordinator/international negotiator” at ConAgra’s Greeley,

Colorado office. Aplt. App. at 410-11. In that role, Bahrani “worked with all

documents pertaining to the exports of raw hides, bills of lading, export

certificates, insurance forms, slaughter date certificates, [and] weight sheets.” Id.

at 411. Most of Bahrani’s work involved shipments of hides to Korea, some to

Japan and Taiwan, and a few to Thailand. Later in his employment with

5
ConAgra, Bahrani also worked on shipments to Canada and Mexico.

Bahrani allegedly knew several people that worked in ConAgra’s meat

documentation division, which was physically housed in the same building and on

the same floor as the hide documentation division. According to Bahrani, he also,

on occasion, visited the meat documentation division, either to speak with friends

or to use that division’s photocopying equipment.

Bahrani was terminated from his employment with ConAgra on April 7,

1998, as part of a reduction in force. On that same date, Bahrani spoke with an

FBI agent and informed him “that Con[A]gra was altering government documents

and that [he] needed to get immunity from prosecution for [him]self and for [his]

co-workers.” Id. at 449-50. The FBI subsequently turned that information over

to USDA investigators.

Procedural background

Bahrani filed this action on May 25, 2000, alleging that defendants violated

the FCA’s “reverse false claims” provision, 31 U.S.C. § 3729(a)(7), by routinely

altering both meat and hide export certificates without obtaining replacement or

“in lieu of” certificates and, in turn, without paying the fee for such replacement

or “in lieu of” certificates to the government. The district court granted summary

judgment in favor of defendants, concluding that: (a) the statutes and regulations

invoked by Bahrani did not establish that defendants were obligated to obtain and

pay for “in lieu of” or replacement certificates every time a change was required;

6
(b) even if the regulations required ConAgra to obtain new certificates when it

discovered errors and omissions, the act of altering a certificate was not an

actionable reverse false claim because the obligation to obtain an “in lieu of” or

replacement certificate arose only as a result of the alteration and did not exist

before; and (c) the fact that USDA inspectors could exercise their discretion and

permit defendants to forego obtaining “in lieu of” or replacement certificates

indicated that ConAgra’s “obligation” was a contingent one, and thus not covered

by § 3729(a)(7).

Bahrani appealed from the entry of summary judgment. This court, in

Bahrani I, reversed the grant of summary judgment in favor of defendants and

remanded for further proceedings. In doing so, this court concluded: (a) although

USDA officials possessed some discretion to waive the necessity of a replacement

or “in lieu of” certificate, that did not “take[] the obligation to pay the fees

outside the scope of § 3729(a)(7),” 465 F.3d at 1204; (b) the evidence presented

by both parties “indicate[d] that when export certificates required ‘significant’ or

‘major’ changes, the USDA required exporters to obtain ‘in lieu of’ or

replacement certificates, id.; (c) “[t]he fact that a government official may

subsequently waive an established fee does not negate the ‘potential effect’ of a

false record or statement,” id.; and (d) that Bahrani presented sufficient evidence

to allow a reasonable jury to find he was an “original source” for his meat export

certificate claims. Id. at 1209.

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 On remand, the district court bifurcated the proceedings on Bahrani’s meat

export certificate and hide export certificate claims. In April of 2008, a trial

commenced on the issue of whether Bahrani qualified as an “original source” for

his meat export certificate claims (the “jurisdictional trial”). 1 At the conclusion

of the evidence, the jury found that Bahrani was not an “original source” for any

of the 9,328 meat export certificate claims at issue.

The second phase of the case, which was then limited to Bahrani’s hide

export certificate claims, was tried to a jury beginning in March of 2009. After

less than a day of deliberations, the jury returned a verdict finding that, of the

approximately 1057 hide export certificates proffered by Bahrani as reverse false

claims under 31 U.S.C. § 3729(a)(7), five had been changed in a “major” or

“significant” way, and all five had been changed under circumstances where the

employee who made the changes did so “knowing” that, rather than making the

changes directly to the certificate, he or she was required to secure and pay the

government for a replacement certificate. The jury found that the government

sustained actual damages of $107.50 (i.e., five times a $21.50 fee per certificate).

The district court subsequently trebled the actual damages and imposed statutory

1
We refer to this initial trial as the “jurisdictional trial” because the FCA’s
“original source” requirement, which we explain in greater detail below, is
jurisdictional in nature. See In re Natural Gas Royalties, 562 F.3d 1032, 1043
(10th Cir. 2009) (“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.”).

8
penalties of $5,500 per claim, as required by the FCA, resulting in a total

judgment of $27,822.50 in favor of Bahrani.

Bahrani filed a motion to alter or amend judgment seeking attorney fees

pursuant to the FCA. The district court denied that motion without prejudice and

directed Bahrani to file a formal motion for fees. As directed, Bahrani filed a

timely motion pursuant to Federal Rule of Civil Procedure 54(d)(2) and 31 U.S.C.

§ 3730(d)(2) for an award of expenses, attorney fees and costs in the amount of

$3,449,469.10. Defendants objected to Bahrani’s motion and filed a cross motion

for expenses, attorney fees and costs related only to the meat export certificates

portion of the case in the amount of $1,211,113.97. The district court referred the

motions to a magistrate judge for a report and recommendation. The magistrate

judge recommended that Bahrani’s motion be granted in part and that, pursuant to

31 U.S.C. § 3730(d)(2), he be awarded expenses, fees and costs in the amount of

$9,274.16. The magistrate judge also recommended that defendants’ cross-

motion be denied. On August 28, 2009, the district court issued a one-page order

overruling Bahrani’s objections to the magistrate judge’s recommendation and

adopting that recommendation “in toto as its Order.” Dist. Ct. Doc. 541 at 1

(italics in original).

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 II

A. Appeal No. 09-1163 (Bahrani’s main appeal)

1. Bifurcation/jurisdictional trial issues

Bahrani’s first general issue on appeal focuses on the district court’s

decision to bifurcate the jurisdictional inquiry (i.e., whether Bahrani was an

“original source” of his meat export certificate claims) from the merits of his

meat and hide export certificates claims. In support, Bahrani asserts three

specific arguments. First, he contends that bifurcating the jurisdictional inquiry

from the merits of his claims constitutes error requiring a new trial. Second, he

contends the district court improperly instructed the jury in the jurisdictional trial.

Third, he contends the district court erred during the jurisdictional trial by

admitting evidence of his prior litigation history. As discussed below, only one

of these three arguments, i.e., the instructional challenge, has any merit, and that

error does not warrant reversal. Thus, we affirm the portion of the district court’s

judgment arising out of the bifurcated original source proceedings.

a) The decision to bifurcate

Bahrani contends the district court’s “decision to bifurcate the § 3730(e)(4)

original source jurisdictional issue from the merits constitutes reversible error

because jurisdiction is not ‘clearly separable’ from the merits.” Aplt. Br. at 23

(quoting Angelo v. Armstrong World Indus., Inc., 11 F.3d 957, 964 (10th Cir.

1993)).

10
 We review a district court’s decision to bifurcate a trial for abuse of

discretion. Anaeme v. Diagnostek, Inc., 164 F.3d 1275, 1285 (10th Cir. 1999).

“District courts have broad discretion in deciding whether to sever issues for trial

and the exercise of that discretion will be set aside only if clearly abused.” Id.

(quotation omitted). Federal Rule of Civil Procedure 42(b) authorizes a district

court to “order a separate trial of one or more separate issues, claims, crossclaims,

counterclaims, or third-party claims” “[f]or convenience, to avoid prejudice, or to

expedite and economize . . . .” Fed. R. Civ. P. 42(b).

Following our remand in Bahrani I, the district court “ordered the parties to

confer and prepare a joint status report with . . . a framework for getting th[e]

case to trial.” Aplt. App. at 68-69. A status conference was held on August 21,

2007. On August 30, 2007, defendants filed a motion asking the district court to

conduct “a hearing pursuant to Fed.R.Civ.P. 12(d) or the bifurcation provisions of

Fed.R.Civ.P. 42(b), to determine the jurisdictional issue of whether [Bahrani]

[wa]s an ‘original source’ as required by 31 U.S.C. § 3730(e)(4).” Id. at 35. In

support, defendants asserted that “[t]he claims relating to meat certificates ma[d]e

up the vast majority of [Bahrani’s] case, and there [wa]s no reason to wait for

trial to determine whether there [wa]s jurisdiction over those claims.” Id. at 36.

Defendants further argued that the original source issue was clearly separable

from the merits because, “[a]lthough [Bahrani] would likely testify in both

phases, the focus in the jurisdictional phase [would be] on [his] knowledge, while

11
the focus at a trial on the merits [would be] on Defendants’ conduct.” Id. at 42.

Finally, defendants asserted that bifurcation would “promote judicial economy,”

id., because “an early ruling on the original source issue w[ould] define what

discovery must be completed before trial,” and if Bahrani was determined not to

be an original source for the meat claims, there would “be no need to try the

liability/damages issues related to those certificates, which constitute[d] the vast

majority of certificates at issue.” Id. at 43.

On January 29, 2008, the district court held a follow-up status conference,

during which it addressed defendants’ bifurcation request. Notably, Bahrani’s

counsel agreed to the bifurcation of the original source issue: “So my suggestion

would be bifurcate it [the original source issue] but do it starting June 2nd [2008],

two day trial, then we will be presenting evidence [at a second trial] one way or

another on some certificates [either hides alone, or meat and hides, depending on

the outcome of the original source trial].” Id. at 74. Ultimately, the district court

agreed with this proposal and scheduled a three-day trial on the original source

issue, to be followed at a subsequent date by a trial on the merits of the

certificates determined to be at issue. Id. at 100.

As we see it, Bahrani effectively invited the district court to bifurcate the

original source issue from the merits issues. Although Bahrani did not formally

move to bifurcate, he ultimately agreed with defendants’ motion and indeed urged

the district court to bifurcate. Consequently, he is precluded under the invited

12
error doctrine “from arguing that the district court erred in” bifurcating. 2 United

States v. Deberry, 430 F.3d 1294, 1302 (10th Cir. 2005).

b) Instructional error at jurisdictional trial

Bahrani next contends the district court improperly instructed the jury in

the jurisdictional trial regarding the requirements for him to qualify as an

“original source” under the FCA. Normally, “[w]e review de novo whether the

[district] court erroneously instructed the jury on the applicable law.” Gonzales

v. Duran, 590 F.3d 855, 859 (10th Cir. 2009). If, however, a party did not

preserve its challenge by timely objecting to an instruction in the district court,

we review only for plain error. Therrien v. Target Corp., — F.3d —, 2010 WL

3095233 at *8 (10th Cir. 2010). “To obtain reversal on plain-error review, the

appellant must satisfy a four-prong test.” Id. “It must show (1) an error (2) that

is plain, meaning clear or obvious under current law, and (3) affecting substantial

rights.” Id. (internal quotation marks omitted). “If these elements are satisfied,

we may exercise discretion to correct the error if it seriously affects the fairness,

integrity, or public reputation of judicial proceedings.” Id. (internal quotation

marks omitted).

Before turning to Bahrani’s specific challenges to the district court’s

2
Even if we were to assume the invited error doctrine did not apply in
these circumstances, we are not persuaded the district court abused its discretion
in bifurcating the original source issue. See Angelo, 11 F.3d at 964 (“Bifurcation
is not an abuse of discretion if [the] interests [of judicial expedition and
economy] favor separation of issues and the issues are clearly separable.”)

13
“original source” instructions, we find it useful to first review the requirements a

relator must satisfy to establish himself as an “original source” under the FCA,

the relevant “original source” rulings in Bahrani I, the district court’s handling of

the “original source” issue on remand, including its instructions to the jury in the

jurisdictional trial, and Bahrani’s apparent failure to object to the district court’s

handling of the “original source” issue.

At all times relevant to this action, “[t]he FCA define[d] an ‘original

source’ as ‘an individual who ha[d] direct and independent knowledge of the

information on which the allegations [we]re based and ha[d] voluntarily provided

the information to the Government before filing an action under this section

which is based on the information.’” 3 In re Natural Gas Royalties, 562 F.3d 1032,

1043 (10th Cir. 2009) (Natural Gas I) (quoting 31 U.S.C. § 3730(e)(4)(B)). “To

establish original source status knowledge” under this definition, “a qui tam

plaintiff [was required to] allege specific facts — as opposed to mere conclusions

3
The FCA’s public disclosure bar, designed to prevent parasitic suits
brought by relators with little or no direct knowledge of the alleged fraud,
“remove[d] jurisdiction over an action ‘based upon the public disclosure of
allegations or transactions in a criminal, civil, or administrative hearing, in a
congressional, administrative, or [GAO] report, hearing, audit, or investigation, or
from the news media.’” In re Natural Gas Royalties Qui Tam Litig., 566 F.3d
956, 961 (10th Cir. 2009) (Natural Gas II) (quoting 31 U.S.C. § 3730(e)(4)(A)).
“The public disclosure bar ha[d] an exception for when ‘the person bringing the
action [wa]s an original source of the information.’” Id. (quoting §
3730(e)(4)(A)).
Effective March 23, 2010, the FCA’s public disclosure bar, along with the
original source definition, were amended by Congress. Pub. L. No. 111-148
(Mar. 23, 2010). The new amendments have no impact on the instant appeal.

14
— 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.” Id. at 1045 (internal quotation marks

omitted). “Secondhand information, speculation, background information, or

collateral research d[id] not satisfy a relator’s burden of establishing the requisite

knowledge.” Id. Finally, “the term ‘allegations,’” as used in § 3730(e)(4)(B),

were “not limited to the allegations of the original complaint,” and instead

“include[d] (at a minimum) the allegations in the original complaint as amended.”

Rockwell Int’l Corp. v. United States, 549 U.S. 457, 473 (2007).

Turning to Bahrani I, this court reached two related conclusions that

significantly affected Bahrani’s burden of establishing that he qualified as an

“original source.” First, this court rejected Bahrani’s assertion that the applicable

regulatory framework required a new meat or hide certificate every time a

correction was made. 465 F.3d at 1199. Instead, this court concluded, the

evidence in the summary judgment record indicated that only “a certain class of

changes,” i.e., “major” or “significant” changes, might “require such certificates.”

Id. at 1200. Ultimately, this court concluded that Bahrani had submitted

sufficient evidence, in particular an affidavit “stating that he personally observed

the alteration of export certificates while he worked for Con[A]gra and . . . heard

a supervisor authorizing such changes,” id. at 1209, to survive summary judgment

on the original source issue.

15
 On remand, the district court, as noted, bifurcated and held an initial trial

on the issue of whether Bahrani qualified as an “original source” for purposes of

his meat-certificate claims. Immediately prior to this initial trial, the district

court issued a pretrial order that stated, in pertinent part:

In assessing whether Bahrani is “an original source” of the
information underlying his claims, the jury does not need to
determine Bahrani had direct and independent knowledge that
Con[A]gra employees were making “major” (as opposed to minor)
changes to export certificates and not securing replacement
certificates, only that employees were making changes to certificates
under circumstances where it was reasonable to conclude they should
obtain replacement certificates and did not do so. Stated otherwise,
Bahrani cannot be deemed an “original source” of information
underlying a False Claims Act claim based on personal knowledge of
activities he had no reason to believe were fraudulent.

We will frame this requirement for the jury in terms of Bahrani’s
being the original source of information and activities he “reasonably
believed” constituted an avoidance, on the part of Con[A]gra, of an
obligation to obtain and pay for replacement certificates. I am aware
this articulates a new standard in the “original source” inquiry, but
the nature of Relator’s reverse false claim in this action — and the
fact that only “materially altered” certificates even fall within the
FCA’s scope as potential reverse false claims — requires the jury to
be given some guidance in this area. At this stage of the
proceedings, the jury is only making the threshold inquiry as to
whether Bahrani is an “original source” of the information
underlying his reverse false claim. That information as a threshold
matter needs to be information that some wrong was being
perpetrated to the detriment of the government. Bahrani’s reasonable
belief that “some wrong” was being committed is sufficient and
Con[A]gra’s request that the jury consider whether the changes he
allegedly observed were “major” as opposed to “minor” changes is
rejected. That said, however, Bahrani will not be able to establish he
was “an original source” of information underlying his reverse false
claims simply with evidence that he observed employees making
“changes” to meat or hide export certificates.

16
Aplt. App. at 370-72 (underlining added; italics in original).

At the conclusion of all the evidence in the jurisdictional trial, the district

court, consistent with its statements in the pretrial order, instructed the jury as

follows:

The information of which Mr. Bahrani must have had “direct and
independent” knowledge to qualify as an “original source” of his
meat certificate claims is information that Con[A]gra, through its
employees, was defrauding the government out of fees it should have
received for issuing replacement export certificates by making
changes directly to those certificates rather than obtain corrected
replacement certificates for a fee. For purposes of this trial, you do
not need to decide whether Con[A]gra’s actions did, in fact,
constitute fraud, only that Mr. Bahrani is “an original source” of the
information on which he bases his claim that it did or not.

Accordingly, Mr. Bahrani’s status as an “original source” is
neither proven or disproven by the actual illegality of anything he
observed. However, to be an “original source” of information that
Con[A]gra employees were defrauding the government, Mr. Bahrani
must have had “direct and independent” knowledge of facts he
reasonably believed constituted fraud. A “reasonable belief” is one
which a reasonable person in Mr. Bahrani’s position would have
believed to be true, under the circumstances. It is not enough, in
other words, that Mr. Bahrani had “direct and independent”
knowledge that Con[A]gra employees “made changes” to meat export
certificates. Rather, he must have “direct and independent”
knowledge that they were making those changes under circumstances
where a reasonable person in Mr. Bahrani’s position would have
believed they were defrauding the government.

Id. at 859-60 (Instruction 3.7).

Although Bahrani now objects to this instruction on appeal, he does not

identify in his opening appellate brief precisely where in the voluminous record

on appeal he presented his objections to the district court. Having conducted our

17
own review of that record, we note that prior to trial Bahrani submitted proposed

original source instructions that differed from those ultimately given by the

district court. However, we have found no instance in which Bahrani objected to

the district court’s proposed original source instructions during the jury

instruction conferences. Indeed, it appears from our review of the jury instruction

conferences that Bahrani expressly agreed with the district court’s proposed

original source instructions. Id. at 756-57. Consequently, we review his

appellate objections only for plain error. 4

Turning to the merits of his arguments, Bahrani asserts that “[t]his Court

[in Bahrani I] previously examined [his] affidavit wherein he reported [seeing]

ConAgra employees altering export certificates and overheard a supervisor

authorizing alterations,” and held that “such information established [him] as an

original source even though [he] did not work in the meat[] [documentation]

department or understand the significance of what he was seeing.” Aplt. Br. at 25

(italics in original). However, Bahrani complains, “[u]pon remand the district

court impermissibly added a ‘new standard’ to [his] ‘original source’ burden of

proof” by “instruct[ing] the jury that, to qualify as an ‘original source,’ [he] must

have understood the significance of what he was seeing and hearing as it related

to each and every element of his [FCA] allegation.” Id. In other words, Bahrani

4
We are not persuaded the standard of review is outcome determinative.
That is, as we discuss below, we do not believe, even under a de novo standard of
review, that the district court committed reversible error.

18
asserts, “[t]he district court required, for the first time in FCA jurisprudence, that

a relator must have held a subjective belief that the defendant was intentionally

committing fraud on the government to meet the minimum jurisdictional threshold

of an ‘original source.’” Id.

We agree with Bahrani on this point. Neither the FCA nor applicable case

law indicated that a relator’s subjective belief was a component or element of the

original source test as it existed at the time of the remand proceedings in this

case. Instead, as the language of the FCA made clear, the relator simply had to

establish that he had “direct and independent knowledge of the information on

which [his FCA] allegations [we]re based . . . .” 31 U.S.C. § 3730(e)(4)(B)

(2008). As applied here, that means, given the rulings in Bahrani I, which are the

law of the case, that the jury should have been asked to decide whether Bahrani

had direct and independent knowledge that ConAgra employees were making

“major” or “significant” changes to certificates (and not whether he reasonably

believed that the changes he actually observed were fraudulent). See generally

Rockwell, 549 U.S. at 473 (emphasizing that qualification as an original source

required the relator to have information upon which the relator’s allegations, as

ultimately amended, were based). In other words, Bahrani had to establish he was

“personally aware of at least one instance of [a] fraudulent” certificate change

19
(i.e., a “major” or “significant” certificate change). 5 Glaser v. Wound Care

Consultants, Inc., 570 F.3d 907, 921 (7th Cir. 2009).

Assuming that Bahrani can satisfy the first two prongs of the plain error

test, we conclude he cannot satisfy the third prong of that test, i.e., that the

alleged error affected his substantial rights. The heart of Bahrani’s original

source evidence was his testimony that, although he worked exclusively in the

hide documentation department and had never been trained to complete meat

export certificates, he often visited employees he knew who worked in the nearby

meat documentation department, and on more than one occasion observed

employees in that department “altering” meat export certificates. Aplt. App. at

432. Specifically, Bahrani testified he “saw the use of white-out,” “erasers being

used,” “export certificates in the typewriters,” id. at 433, and meat export

certificates that had “different typewritten face on them.” Id. at 475. Bahrani

also testified that on more than one occasion he heard Lotfollah Sabzevari, a

supervisor in the meat documentation department, give a subordinate permission

to change a USDA meat export certificate. Lastly, Bahrani testified that on one

occasion a country that was to receive hides from ConAgra insisted upon getting a

5
In his opening appellate brief, Bahrani suggests that his “personal
observations while working at ConAgra — witnessing alterations or overhearing a
supervisor authorizing alterations — were all that were required to confer original
source status.” Aplt. Br. at 28. But this is wrong. As outlined above, this court’s
holdings in Bahrani I required Bahrani to establish that he was personally aware
of at least one instance of a “major” or “significant” certificate change.

20
meat export certificate. Notably, Bahrani conceded on cross-examination that

every time he changed a certificate, it was for the purposes of correcting

erroneous information. Bahrani further conceded that it was impossible to tell

just by looking at an export certificate, even if it had a piece of eraser tape on it

or a change in typeface or anything else, what precisely had happened with it, and

whether or not a replacement certificate may ultimately have been issued for it.

In short, Bahrani’s knowledge of what transpired in the meat export certificates

department was far too limited to allow a jury to reasonably find that he was an

original source for his meat export certificate claims. Thus, we conclude

Bahrani’s substantial rights were not adversely impacted by the district court’s

instructional error. 6

c) Admission of evidence regarding Bahrani’s prior litigation history

In his third and final challenge to the jurisdictional trial proceedings on

remand, Bahrani contends the district court erred in allowing ConAgra to cross-

examine him regarding his participation in prior lawsuits. “We review a [district]

court’s evidentiary rulings for an abuse of discretion, according ‘deference to a

6
For essentially the same reasons, we are not persuaded the district court’s
instructional error seriously affected the fairness, integrity, or public reputation of
the underlying judicial proceedings. Likewise, even if we were to assume that
Bahrani timely objected to Instruction 3.7 and we could thus review the error de
novo, we are not persuaded the error was prejudicial. Sherouse v. Ratchner, 573
F.3d 1055, 1059 (10th Cir. 2009) (“An erroneous jury instruction requires
reversal . . . only if the error is determined to have been prejudicial, based on a
review of the record as a whole.”) (internal quotation marks omitted).

21
district court’s familiarity with the details of the case and its greater experience in

evidentiary matters.’” Frederick v. Swift Transp. Co., — F.3d —, 2010 WL

3122883 at *5 (10th Cir. 2010) (quoting Sprint/United Mgmt. Co. v. Mendelsohn,

552 U.S. 379, 384 (2008)).

Prior to the jurisdictional trial, Bahrani filed a motion in limine seeking to

exclude evidence of his litigation history. The district court granted Bahrani’s

motion in part “to exclude testimony [of Bahrani] alleging national origin

discrimination against three employers; filing lawsuits against two different

employers alleging national origin discrimination; filing discrimination charges

against four prospective employers for not hiring him, ultimately suing two of

them.” Aplt. App. at 298-99. The district court also granted Bahrani’s motion to

exclude evidence of his “filing discrimination charges against two newspapers

that ran ads for jobs for which he was not hired; filing a grievance against a

former lawyer and suing a former lawyer.” Id. at 299. The district court denied

Bahrani’s motion in part and agreed to “permit evidence to show bias, prejudice

that he has accused three employers of forcing him to falsify records or

documents twice in litigation that he brought against those employers.” Id. The

district court advised that its rulings were subject to change at trial and that

Bahrani should “be very careful” not to open the door to further inquiry. Id. at

300-01.

Bahrani was the first witness to testify at the jurisdictional trial. During his

22
direct examination, he and his counsel engaged in the following exchange

regarding his knowledge of Rule 26 disclosures, which pertained to the question

of whether Bahrani’s FCA claims were “based upon” information publicly

disclosed during the “Kim litigation” in California, see Bahrani I, 465 F.3d at

1208 (discussing Kim litigation):

Q. So May 25th, 2000 you filed your False Claims Act case against
the defendants. And I want to ask you in 1998, August of 1998 when
you went to the FBI, did you know what a False Claims Act case
was?

A. No, I did not.

Q. Had you ever heard of the False Claims Act?

A. No, not until later.

Q. You were also – let me – strike that. Also during opening
statement Mr. Waas [ConAgra’s counsel] talked to the jury about
disclosures, Rule 26 disclosures in this case. Do you recall that in
his opening statement?

A. Yes, I do.

Q. Do you know what a Rule 26 disclosure is?

A. No, I don’t.

Q. Do you know what the purpose of a Rule 26 disclosure is?

A. It has something to do with disclosure.

Q. Did you prepare any Rule 26 disclosures in this case, you
personally?

A. No, I did not.

23
 Q. Do you know what the lawyers are required to disclose in a Rule
26 disclosure?

A. No, I don’t.

Q. Did you collect any or obtain any of the documents that are
identified in the Rule 26 disclosure?

A. I don’t even know what they are.

Q. Well, you recall Mr. Waas was relating that all of these
documents [came] from the Kim litigation. Do you recall that?

A. Yes, I do.

Q. Did you obtain those documents from the Kim litigation?

A. No, I did not.

Q. Did you review any documents from the Kim litigation?

A. No, I did not.

Q. Okay. One other thing here. Let’s see if I can find that. Okay.
It’s Defendant’s Exhibit K. This is what Mr. Waas was talking
about, the Rule 26 disclosure. You see that?

A. Yes, I do.

Q. Okay. And again, if we go to the back here, if we can get there,
do you see the date on those disclosures?

A. February 2002.

Q. Okay. And again, is that before or after you filed this False
Claims Act case?

A. Well, I filed my False Claims Act case in 2000, so it was almost
two years later that this disclosure happened.

Aplt. App. at 470-72.

24
 During cross-examination, ConAgra’s counsel engaged in the following

exchange with Bahrani:

Q. Mr. Ulmer [Bahrani’s counsel] showed you – remember those
Rule 26 disclosures that I used in my opening statement that had all
those references to the Kim litigation?

A. Yes, sir.

Q. Mr. Ulmer asked you a little bit about whether you even knew
what Rule 26 disclosures were, and I think you said you really don’t
know.

A. All I know is it’s about disclosure.

Q. Mr. Bahrani, you have been involved in litigation before, haven’t
you?

A. Yes, I have.

Q. You, in fact, served as your own attorney in litigation, haven’t
you?

A. Yes.

Q. Many times?

MR. ULMER: Objection, Your Honor, relevance.

THE COURT: Overruled.

A. I don’t remember how many times I represented myself.

Q. Take a stab.

A. I think three times, four times.

Q. And how many times with a lawyer that you have worked with?

A. I don’t remember the total.

25
Q. More than a dozen?

A. Possibly.

Q. So you have been around the litigation block a few times, Mr.
Bahrani, haven’t you?

A. Yes.

Q. As a plaintiff?

A. Yes.

Q. You understand the concept that in a lawsuit a plaintiff has to
come forward with information to support their claim at some point,
right?

A. Yes.

Q. And you may not know exactly which Rule 26 whatever [sic] that
required someone to come forward with information in this case, but
you are very familiar with that process, that if you make a claim you
have to come forward and you have to say what supports your claim,
right?

A. Right.

MR. ULMER: Objection, Your Honor. I don’t think that’s
what the testimony is and I think it’s irrelevant.

THE COURT: It’s not irrelevant. The direct testimony talked
about his familiarity or lack there [sic] with the rules,
discovery rules, Rules of Civil Procedure. The objection to the
last question, however, is sustained. You can rephrase.

Q. Mr. Bahrani, you are familiar with the disclosure process and
how that works in litigation, aren’t you?

A. I am generally, roughly familiar with it.

Q. And you understand that when you are the plaintiff, when you are

26
 the party seeking recovery in a lawsuit, you have obligations to
disclose information to the other side, correct?

A. Yes.

Q. And you know that because you have been the plaintiff in many
cases. Can we just say many?

A. Yes.

Aplt. App. at 480-82.

Bahrani now contends on appeal that “[a]llowing this line of questioning

[on cross-examination] was error.” Aplt. Br. at 37. Specifically, Bahrani

contends the testimony was “irrelevant because [his prior lawsuits] involved

different types of cases, such as discrimination, and different defendants, such as

former employers, prospective employers, and newspapers.” Id. at 38. “Beyond

being irrelevant,” Bahrani also contends, “evidence of [his] prior lawsuits is

unfairly prejudicial, substantially outweighing any probative value.” Id. “The

risk,” he contends, “is that evidence of prior lawsuits persuades a jury to conclude

that [he] simply acted in conformity with his purported character trait, and that

his claims lacked merit.” Id.

Bahrani’s arguments notwithstanding, we conclude the district court did not

abuse its discretion in allowing ConAgra to cross-examine Bahrani regarding his

prior litigation history. As noted by defendants, Bahrani effectively “opened the

door” to this cross-examination by attempting to suggest to the jury, by way of

his testimony that he was unfamiliar with the FCA and knew essentially nothing

27
about Rule 26 disclosures, that he was unfamiliar with the litigation process and

that his motives in reporting ConAgra’s alleged fraud to the FBI were innocent,

i.e., that he was not motivated by the desire to file suit against ConAgra. 7

2. Hide export certificate trial issues

Bahrani contends the district court committed five errors during the hide

export certificates trial: (a) it erroneously excluded all evidence of official USDA

policy; (b) it gave erroneous materiality instructions; (c) it erroneously took

judicial notice of the Department of Justice’s (DOJ’s) involvement in the case; (d)

it allowed a witness, not authorized by Federal Rule of Evidence 615, to remain

present during the trial; and (e) it admitted the hearsay affidavit of a witness that

did not fit into any exception to the hearsay rule. As we discuss below, however,

none of these challenged rulings constitute reversible error.

a) Exclusion of USDA policy

Bahrani contends “[t]he district court erroneously excluded evidence of

USDA policy by striking testimony of Dr. Joyce Bowling, an Assistant Director

for the Technical Trade Services Department of the USDA’s Animal Plant Health

Inspection Service (APHIS), and excluding government documents reflecting that

policy . . . .” Aplt. Br. at 39. We review for abuse of discretion the district

7
Even assuming, for purposes of argument, that the district court abused its
discretion in allowing the cross-examination, the error was harmless. As we have
already discussed, Bahrani lacked the information necessary to establish himself
as an “original source” of his meat export certificate claims, and thus was not
prejudiced by the cross-examination regarding his prior litigation history.

28
court’s evidentiary rulings. Frederick, — F.3d —, 2010 WL 3122883 at *5.

Following this court’s decision and remand in Bahrani I, Bahrani located a

new witness, Bowling, to testify on his behalf regarding the issue of what

certificate changes were “major” or “significant” and thus violative of the FCA

under the law of the case. In turn, Bahrani filed a pleading with the district court

indicating he intended to present Bowling as a witness at trial and stating she

would testify that, according to a memo she drafted and purportedly distributed to

USDA area offices and veterinarians, i.e., USDA Memorandum 594.1, the making

of any changes to hide export certificates was a prohibited practice. In other

words, Bahrani sought to present testimony from Bowling that all certificate

changes were “significant” or “major.” ConAgra moved for an order prohibiting

Bowling from so testifying. In support, ConAgra argued that this court in

Bahrani I had already considered and rejected Bahrani’s assertion that all

certificate changes were prohibited under the FCA, and that Bowling’s proposed

testimony was thus in conflict with Bahrani I.

The district court held a hearing on ConAgra’s motion. The district court

stated at the outset that it was “not going to consider or reconsider the legal

standards articulated and applied by the Tenth Circuit in [Bahrani I], certainly not

before trial . . . .” Aplt. App. at 1233. Bahrani’s counsel argued that the decision

in Bahrani I was “[b]ased in [sic] the limited summary judgment record, the

snapshot in 2004,” id. at 1236, and that the record “developed since 2004” was

29
different and should be submitted to the jury. Id. at 1237. Bahrani’s counsel

further argued that “[n]either the Tenth Circuit nor [the district court] ha[d] made

any findings of law on [USDA] policy,” and that Bowling would testify regarding

USDA policy (specifically that it was contrary to the conclusions reached by this

court in Bahrani I). Id. at 1247. The district court ultimately rejected Bahrani’s

position and granted ConAgra’s motion. In doing so, the district court stated:

But I cannot read the Tenth Circuit opinion the way that the
relator wants me to read in this case. It is totally inadmissible
whether Dr. Bowling thinks there is no such thing as a minor change
or not. The Court of Appeals has spoken, and at 465 F.3d in its
conclusion under Part 3 the Court says this, and I quote:

“As applied to these circumstances we read Section 3729(a)(7)
more narrowly than Mr. Bahrani, but more broadly than ConAgra.
Like the District Court, we are not persuaded that every change to a
signed export certificate made by a ConAgra employee creates an
obligation under the statute. However, to the extent that ConAgra
employees made ‘major’ or ‘significant’ changes without applying
for ‘in lieu of’ or replacement certificates, they avoided an obligation
under Section 3729(a)(7).

“We emphasize that the appropriate inquiry is certificate-
specific,” it’s not a policy issue. I am interposing that statement.

To continue with the quote, “Because of their interpretations of
the regulatory scheme, both Mr. Bahrani and ConAgra have advanced
arguments that pertain to all changes to original export certificates no
matter how extensive. In our view, however, whether a given change
to an original certificate triggers a 3729(a)(7) obligation depends
upon the nature of the change, whether it is ‘major’ or ‘significant’
and thus requires a new certificate. Although many of the
unauthorized changes alleged by Mr. Bahrani appear to be minor,
there is evidence that at least some of them fell within the ‘major’ or
‘significant’ class. Further development of the record is required to
determine the extent to which ConAgra employees made ‘major’ or

30
 ‘significant’ changes without obtaining ‘in lieu of’ or replacement
certificates and paying the accompanying fee.”

We have to have a trial in which the hide certificates are
examined and determine whether they contain major or minor
changes; and if major, then they are required to apparently get the fee
and whatever damage might ensue from that.

But the testimony of Dr. Bowling, or the proposed testimony, to
the effect that all changes require the certificate will not be admitted,
and the motion is granted to that extent.

* * * * And I have to instruct the jury that as a matter of law
decided by the Tenth Circuit, not U.S.D.A. policy, which won’t go
before them, but as a matter of law a legal obligation occurs only
when there is a major change, and the jury’s decision will have to be
based upon expert testimony. It cannot be and it would be highly
prejudicial to have some government official come in at the eleventh
hour after all the discovery and say: They’re all major. That is a
direct contradiction of what the instructions are to us.

So, as I’ve indicated, she will not be allowed to testify to that at
all.

****

I don’t know whether you [Bahrani] are going to try to call Dr.
Bowling or not. But I can tell you she’s going to be on a very short
leash, and any attempt on her part to contravene or attempt to
contravene the holding as I have read it and as I interpret it will be
met with severe response. So I don’t know if you want to call her or
not, that’s up to you.

Id. at 1251-55. The district court subsequently issued a written order reiterating

its conclusions. Aplee. Supp. App. at 356 (“Because only the making of a ‘major

or significant’ change to an export certificate triggers a § 3729(a)(7) obligation

for purposes of FCA liability, Dr. Bowling’s testimony that there is no such thing

31
as a ‘minor’ or authorized change under the USDA regulatory scheme does not

justify a change in the Tenth Circuit’s reasoning or the law of the case.”).

At trial, Bahrani proceeded to present Bowling as a witness. Bowling

testified, among other things, about how export certificates are reissued and the

frequency with which certificates are reissued. Although Bahrani’s counsel

sought to question her about the contents of USDA Memorandum 594.1, the

district court prohibited him from doing so. Aplt. App. at 1777. The district

court also prohibited Bahrani’s counsel from questioning Bowling about the

specific hide export certificates at issue in the case. Id. at 1780. Indeed, the

district court ruled that Bowling could not testify at trial as an expert witness

because she did not, prior to trial, file a proper expert report. 8 Id. at 1781.

On appeal, Bahrani contends the district court erred in interpreting

Bowling’s proposed testimony as inconsistent with Bahrani I. More specifically,

he contends that this court in Bahrani I “clearly did not anticipate that all of the

evidence that would be developed had been developed and there would be no

8
ConAgra’s counsel argued in this regard:
Your Honor, we raised, many months ago, the question of whether
Dr. Bowling ought to be permitted to testify whether changes were
major or minor; and the Court ruled unequivocally and several times
that she cannot. They’re trying to get her to say the same thing in
the form of opinions. They did no Rule 26 disclosure. They just
now handed her a stack they say constituted 30 categories of
documents. And I just saw that 30 seconds ago. That’s what I would
have gotten under Rule 26.
Aplt. App. at 1782-83.

32
further evidence — freezing the record in time.” Aplt. Br. at 45.

We reject Bahrani’s contentions. As the district court correctly noted in

precluding Bowling’s proposed testimony, Bahrani I expressly rejected Bahrani’s

argument that every change necessitated a new certificate. 465 F.3d at 1199

(concluding that Bahrani’s submitted evidence “d[id] not support the theory that

new certificates are required every time a correction must be made”), (“we

therefore do not agree with Mr. Bahrani’s expansive reading of the USDA statutes

and regulations”). Further, Bahrani I held that only “major” or “significant”

changes necessitated a new certificate. Id. at 1200. Although the Bahrani I

decision employed the phrase “we conclude from this record,” id., and also stated

that “[f]urther development of the record [wa]s required,” id. at 1209, nothing in

Bahrani I indicated that Bahrani was free to gather additional evidence for the

purpose of reasserting that all export certificate changes required replacement

certificates. Rather, the clear import of Bahrani I was that the parties would

engage in additional limited discovery regarding only “the extent to which

Con[A]gra employees made ‘major’ or ‘significant’ changes without obtaining ‘in

lieu of’ or replacement certificates and paying the accompanying fee.” Id.

Although Bahrani and Bowling clearly disagreed with Bahrani I’s distinction

between “major” or “significant” changes and other minor certificate changes,

they were bound by that ruling under the law of the case doctrine, as was the

district court. See McIlravy v. Kerr-McGee Coal Corp., 204 F.3d 1031, 1034

33
(10th Cir. 2000) (“The law of the case doctrine posits that when a court decides

upon a rule of law, that decision should continue to govern the same issues in

subsequent stages in the same case.” (quotations, alterations, and citations

omitted)). Thus, the district court did not abuse its discretion in precluding

Bowling from testifying.

b) Instruction 3.4 - defining major or significant change

Bahrani next contends the district court gave what Bahrani describes as an

erroneous and prejudicial materiality instruction, i.e., Instruction No. 3.4, during

the hide export certificates trial. “We review de novo whether the [district] court

erroneously instructed the jury on the applicable law.” Gonzales, 590 F.3d at

859.

Instruction No. 3.4, entitled “‘MAJOR’ OR ‘SIGNIFICANT’ CHANGE –

DEFINED,” stated as follows:

As you have already been told, there is no requirement under
USDA statutes or regulations that an exporter must obtain a
replacement certificate every time a change to an existing certificate
is made. It is the law of this case that only the making of “major” or
“significant” changes triggers an obligation to obtain and pay for a
replacement certificate.

That is not to say that the law allows exporters to change
certificates at will or that it is not unlawful to do so. There are, in
fact, laws that prohibit exporters from making any kind of
unauthorized change or alteration to a government-issued certificate
and which subject exporters to administrative fines and penalties if
they do so. These laws say nothing, however, about replacement
certificates and say nothing about when an exporter who wishes to
make a change to a certificate must get a replacement certificate to

34
 do so. For this reason, it is not a Con[A]gra employee’s making of a
correction or change to a certificate that creates an “obligation”
under the law to obtain a replacement certificate and pay the fee at
issue in this case. Instead, that obligation arises from the discovery,
by the employee making the correction, that a “major” or
“significant” change is necessary.

You will hear considerable testimony from various witnesses
about what does and does not constitute a “major” or “significant”
change to a hide export certificate. All I can tell you about what
“major” or “significant” means is that it embodies a principle of
materiality. Something is “material” if it has the tendency to
influence or persuade a person to act in a certain way. As it is
contemplated in this case, a “major” or “significant” change is one
that would have influenced or persuaded the certifying official that a
replacement certificate was, in fact, required.

Aplt. App. at 2400-01. Bahrani objected to the last sentence of the last paragraph

of the instruction, asserting that the word “would” should be replaced with the

word “could.” Id. at 1303-04. Bahrani’s objection was overruled and the

instruction was given as originally worded by the district court.

Bahrani argues on appeal that Instruction 3.4’s use of the word “‘would’

instead of ‘could’ impermissibly increased the standard beyond that required by

Bahrani I, elevating the standard from one focusing on the potential effect of the

change and a ‘tendency to influence,’ to one requiring certainty.” Aplt. Br. at 48.

Bahrani further argues that “[u]se of the word ‘would’ in reference to the

‘certifying official’ impermissibly emphasized the importance of an individual

official’s decision rather than keeping the proper focus on agency action.” Id.

(italics in original). In sum, Bahrani asserts, “[t]his instruction conflicts not only

35
with the decision in Bahrani I, but also with the intent of the FCA.” Id.

To date, we have never directly addressed whether civil claims under the

FCA incorporate a materiality element and, if so, what the proper test is for

materiality. 9 That said, the decision in Bahrani I referred to the concept of

materiality by concluding “that there is a certain class of [certificate] changes,”

i.e., “major” or “significant” changes, “that . . . require [replacement certificates.”

465 F.3d at 1200 (emphasis added). Indeed, Bahrani I held that “[t]his agreed

description of the circumstances in which the USDA requires exporters to obtain

new certificates . . . adopts a principle — materiality — that has been widely

employed in various circumstances, including False Claims Act actions.” Id.

The instruction now challenged by Bahrani clearly tracks Bahrani I by

9
Several circuits have concluded “that a civil claim brought under the
FCA includes a materiality requirement” for the false claims at issue. U.S. ex rel.
A+ Homecare, Inc. v. Medshares Mgmt. Grp., Inc., 400 F.3d 428, 441-42 (6th Cir.
2005). The majority of these circuits, i.e., the First, Fourth, Fifth, Sixth and
Ninth Circuits, have “adopted a natural tendency test for materiality, which
focuses on the potential effect of the false statement when it is made rather than
on the false statement’s actual effect after it is discovered.” U.S. ex rel.
Hutcheson v. Blackstone Med., Inc., 694 F. Supp. 2d 48, 63-64 (D. Mass. 2010)
(internal quotation marks omitted). “[A]ll that th[is] test requires is that the false
or fraudulent statement is capable of influencing the Agency’s decision.” U.S. ex
rel. Loughren v. Unum Grp., — F.3d —, 2010 WL 2951175 at *7 (1st Cir. 2010).
“In contrast, the Eighth Circuit relies upon an ‘outcome materiality test,’ which
requires a showing that the defendant’s actions (1) had the purpose and effect of
causing the United States to pay out money it [wa]s not obligated to pay, or (2)
intentionally deprive[d] the United States of money it is lawfully due.”
Hutcheson, 694 F. Supp. 2d at 64 (internal quotation marks omitted). We find it
unnecessary in the context of this case to resolve which, if either, is the proper
test for materiality. Instead, we simply conclude that the district court’s
instruction was proper under the law of the case as established by Bahrani I.

36
informing the jury that the terms “major” and “significant” “embod[y] a principle

of materiality.” As for the instruction’s use of the phrase “would have

influenced,” instead of the “could have influenced” language suggested by

Bahrani, we conclude this language was necessary to properly enforce Bahrani I’s

distinction between so-called “major” or “significant” changes and other, “minor”

changes that did not require the issuance of a new certificate. As ConAgra

persuasively argues, if the instruction had said “could have influenced,” it would

have effectively allowed Bahrani to argue (as he persisted in doing below and

continues to attempt to do on appeal) that literally all certificate changes were

major or significant; a position clearly foreclosed by Bahrani I. Thus, in sum, the

challenged instruction was consistent with, and indeed mandated by, Bahrani I.

Bahrani also complains about Instruction 3.4’s use of the phrase “certifying

official,” arguing it should have instead utilized the terms “‘an agency official’ or

‘an official action on behalf of the agency.’” Aplt. Br. at 54. Notably, however,

Bahrani failed to assert that objection below, and indeed effectively invited the

alleged error by proposing that the district court refer to “the United States

government official who endorsed the original certificate.” Dist. Ct. Doc. 317

(Proposed Instr. No. 3.1). Thus, we decline to address Bahrani’s argument.

c) Designation of Mark Gustafson as defendants’ representative

Bahrani contends the district court erred in allowing Mark Gustafson to

appear as defendants’ representative and remain present during the testimony of

37
other witnesses at both trials, rather than being sequestered. We review for abuse

of discretion a district court’s sequestration decisions. See United States v.

Samuels, 493 F.3d 1187, 1190-91 (10th Cir. 2007).

Federal Rule of Evidence 615 authorizes a district court to “order witnesses

excluded so that they cannot hear the testimony of other witnesses . . . .” Fed. R.

Evid. 615. The Rule also exempts certain classes of witnesses from sequestration

orders. In particular, subsections (2) and (3) of Rule 615 provide that a

sequestration order does not apply to “an officer or employee of a party which is

not a natural person designated as its representative by its attorney” or “a person

whose presence is shown by a party to be essential to the presentation of the

party’s cause . . . .” Id.

At the beginning of the jurisdictional trial in this case, Bahrani’s counsel

asked that the witnesses be sequestered pursuant to Rule 615. The district court

granted that motion. Gustafson, who worked at ConAgra’s Greeley, Colorado

facility continuously throughout its ownership by ConAgra, including during the

time frame relevant to the claims asserted by Bahrani, 10 remained in the

courtroom, as defendants’ representative, throughout the jurisdictional trial.

Gustafson testified at the trial and was asked by defense counsel to respond to

10
According to the record, Gustafson continued to work at the Greeley
facility after Swift & Co. acquired it from ConAgra. And, at the time of trial,
Gustafson remained employed at the Greeley facility under its ownership by JBS
Swift & Company (JBS).

38
various witnesses’ testimony.

On the first day of the hide export certificates trial, prior to the admission

of any evidence, Bahrani’s counsel objected to Gustafson appearing as a

representative for ConAgra and sitting at ConAgra’s table throughout the trial. In

support, Bahrani’s counsel argued that Gustafson “was no longer an officer or

employee of any of the corporate defendants in the case” and “had not been since

2002 . . . .” Aplt. App. at 1330-31. The district court denied Bahrani’s request,

stating: “I think each side’s entitled to have an advisory witness, and the

designated witness can be present throughout the trial to assist counsel. It would

be grossly unfair, in my view, to require the defendants to have some

representative of the company who knew absolutely nothing about the case or

wasn’t there to try and advise them.” Id. at 1331.

We conclude the district court acted well within its discretion in allowing

Gustafson to remain in the courtroom throughout both trials. As noted by

defendants, it appears that the current owner of the Greeley facility, JBS, even

though never named as a party defendant, “is financially responsible for this

litigation and is therefore the real party in interest.” Aplee. Supp. App. at 223-24.

Consequently, Gustafson effectively qualified as a party representative under the

terms of Rule 615(2). Alternatively, Gustafson could reasonably be classified as

“a person whose presence is shown by [the defendants] to be essential to the

presentation of the[ir] . . . cause,” and thus fell within the exception outlined in

39
Rule 615(3). More specifically, he was, as noted by defendants, “the person most

knowledgeable about the history and complex factual details of the matters at

issue, and with whom counsel needed to confer during trial,” “the Defendants’

designated representative in the Kim case,” “the employee responsible for

coordinating the USDA investigation, and . . . the only witness with direct

personal knowledge about the scope of that investigation — a critical issue in the

jurisdictional trial because of the ‘based-upon’ requirement, and in the hide

export certificates trial because of the government knowledge instruction.”

Aplee. Br. at 57.

d) Judicial notice of government’s position on allowing changes

During the cross-examination of Dr. Bowling at the hide export certificates

trial, defense counsel asked Bowling, “Are you aware that prior to your testimony

today, there’s not a single instance in the nine-year history of this lawsuit where

the Department of Agriculture has ever taken the position that a veterinarian

should have declined to make minor changes [to hide export certificates]?” Aplt.

App. at 1815. Bowling responded, I don’t know what the Justice Department has

done previously.” Id. at 1816. Defense counsel then asked the district court to

“take judicial notice that in pleadings filed in this case to date, the nine-year

history of the case, the USDA has never taken the position that minor changes

cannot be made to export certificates, in any pleading they filed.” Id. The

district court responded as follows:

40
 I can take judicial notice of the files. Let me explain, ladies and
gentlemen of the jury, what that means.

Judicial notice, which I explained in the instructions when I read
them all to you, relates to certain things that we can take as proved,
the simplest one would be a commonly accepted geographic or
meteorological fact, such as the sun rises in the east and sets in the
west. Another one is that we can say that the Postal Service delivers
— that’s stretching it, but, you know, that they deliver mail.

Then one of the things we can do is to take judicial notice of the
court’s files, so rather than bring all the files here, I can say, that’s
the case, and you can accept it as true. How much weight you give
to it, what you do with it, is entirely up to you.

But I do take judicial notice of the files and I do take judicial
notice of the statement made by [defense counsel], that there is
nothing in the files that, that relates to the government — the
Department of Justice taking a position on this.

Id. at 1816-17.

Bahrani now contends on appeal that the district court erred in taking

judicial notice of this fact. According to Bahrani, “[t]he evidence was wholly

irrelevant and was presented completely out of context, unfairly and unduly

prejudicing [him] and misleading the jury.” Aplt. Br. at 56. More specifically,

Bahrani complains that “[t]aking judicial notice that the DOJ did not take a

position that minor changes were prohibited . . . inferred . . . that the USDA had

no policy, or at a minimum, the policy was unclear, or that the government was

not interested in the outcome.” Id. Relatedly, Bahrani argues that “[w]hether the

DOJ intervenes, or actively ‘takes a position’ [in an FCA case] is irrelevant

because it does not make any fact at issue more likely true than not.” Id.

41
 Generally speaking, a district court’s decision whether to take judicial

notice of facts is reviewed for abuse of discretion. United States v. Williams, 442

F.3d 1259, 1261 (10th Cir. 2006). Here, however, Bahrani’s counsel did not

assert a contemporaneous objection to the district court’s decision to take judicial

notice. Accordingly, we review the district court’s decision only for plain error.

United States v. Foust, 457 F.2d 653, 654 (10th Cir. 1972).

After examining the record on appeal, we agree with Bahrani that the

district court erred, in the course of explaining its action to the jury, by referring

to the “Department of Justice” rather than the USDA. But we in turn conclude

that this error was not prejudicial to Bahrani, since the jury heard both defense

counsel’s questioning of Bowling and defense counsel’s subsequent and detailed

request for the district court to take judicial notice, all of which expressly referred

to the USDA rather than the DOJ.

That minor error aside, we conclude the district court did not err in taking

judicial notice that the USDA had never taken an official position regarding

whether minor certificate changes were prohibited. Although Bahrani suggests

“the USDA did take [the] position” that such changes were prohibited, Aplt. Br.

at 58, and notes that he proffered Bowling’s testimony to that effect, that

testimony was properly excluded by the district court as inconsistent with the

holdings in Bahrani I. In other words, as we have noted, the district court and

parties were bound under the law of the case doctrine by Bahrani I’s legal

42
determination that minor certificate changes were not violative of the FCA’s

reverse false claims provision.

e) Admissibility of Brad Schmeh’s affidavit

Lastly, Bahrani contends the district court erred in admitting at the hide

export certificates trial an affidavit from an individual named Brad Schmeh. As

previously noted, “[w]e review a [district] court’s evidentiary rulings for an abuse

of discretion, according deference to a district court’s familiarity with the details

of the case and its greater experience in evidentiary matters.” Frederick, — F.3d

—, 2010 WL 3122883 at *5 (internal quotation marks omitted).

At the time of trial, Schmeh was “the owner and operations manager of

Interlogistix, Inc.,” a Denver-based “freight forwarder . . . responsible for

facilitating the transportation and export of ConAgra Beef Company’s animal

hides from its various beef plants, [sic] to various importing countries.” Aplt.

App. at 6. Schmeh’s affidavit outlined the export process employed by

Interlogistix. Id. at 6-7. The affidavit then discussed the topic of errors in and

changes to hide export certificates:

10. Occasionally, it comes to my attention that I have made a
typographical error or otherwise included incorrect information on
the export certificate, such as a transposition of numbers in the
container number, or a consignee’s name spelled incorrectly. I then
contact the USDA veterinarian, give him the certificate number, and
request permission from ConAgra to make changes. Once I have
received permission, I fax a copy of the changed certificate to the
veterinarian. An example of this type of request and permission is
illustrated in the email attached hereto as Exhibit 2, which was sent

43
 to and received from Dr. Diemer of APHIS in Lakewood, Colorado.

11. On every occasion that I have requested permission to
make corrections on an export certificate, the APHIS veterinarian has
granted that permission.

12. In some circumstances, I do obtain a replacement or in-
lieu-of certificate, rather than making changes directly on the
certificate. Those circumstances would include situations where the
customer needs an entirely different shipment, or if the weights used
for the hides are completely wrong as opposed to one digit being
incorrect or transposed.

Id. at 7-8.

The attached e-mail messages referred to in Schmeh’s affidavit were

between Schmeh and Dr. Ian Stewart, a USDA veterinarian, and between Schmeh

and a ConAgra employee. Id. at 10. In the first e-mail message, Schmeh stated

to Stewart, in pertinent part: “Please note that ConAgra needs to change a digit on

a container number . . . . Once they have made the change, I will fax a copy for

your file. Please just respond saying ok.” Id. The second e-mail message, from

Dr. Stewart to Schmeh, stated simply: “OK.” Id. In the third and final message,

Schmeh forwarded a copy of the first two messages to a ConAgra employee and

wrote: “Here is the ok from the USDA to change the H/C [hide certificate].

Please fax me the revised copy on Monday.” Id.

Prior to trial, Bahrani moved to exclude both the affidavit and the exhibit

on the grounds of relevance and hearsay. The district court denied that motion.

Bahrani then moved to reconsider, this time agreeing to stipulate to foundation for

44
the exhibit, but continuing to object to admission of the affidavit. The district

court denied the motion to reconsider and admitted both the affidavit and

accompanying exhibit pursuant to Federal Rule of Evidence 803(3). 11

Bahrani contends the district court erred in admitting the affidavit pursuant

to Rule 803(3), arguing “that factual recitations of events and the belief as to the

cause of the events do not meet the 803(3) exception.” Aplt. Br. at 63 (citing

Allen v. Sybase, Inc., 468 F.3d 642 (10th Cir. 2006)). We agree. Rule 803(3)

permits the admission of “[a] statement of the declarant’s then existing state of

mind, emotion, sensation, or physical condition (such as intent, plan, motive,

design, mental feeling, pain, and bodily health) . . . .” Fed. R. Evid. 803(3). In

other words, Rule 803(3) “permits an out-of-court statement regarding a

declarant’s then-existing state of mind where the statement serves as evidence of

the declarant’s intent to perform an act.” Allen, 468 F.3d at 659. Schmeh’s

affidavit does not fit within this exception because it does not outline Schmeh’s

then-existing state of mind, nor was it presented by defendants for the purposes of

evidencing Schmeh’s intent to perform a particular act. Moreover, although

defendants argue on appeal that “Schmeh’s affidavit was not used to prove the

truth of the matter asserted,” Aplee. Br. at 50, that is refuted by the record.

11
Defendants used the exhibit with several witnesses, including Mariana
Lambert, Bahrani’s former supervisor. In particular, Lambert agreed that the
practices described in Schmeh’s affidavit were consistent with her understanding
of freight forwarders’ practices between 1996 and 2000. Defendants also used the
exhibit during their cross-examination of Dr. Bowling.

45
Indeed, the record indicates that Schmeh’s affidavit was offered by defendants

precisely to demonstrate, at least in part, that its freight forwarders routinely

requested and received permission from USDA veterinarians to make changes to

hide export certificates.

The question then becomes whether the erroneous admission of Schmeh’s

affidavit was harmless. “Evidentiary errors are not grounds for reversal unless

the aggrieved party shows the admission of the evidence was not harmless.” U.S.

Aviation Underwriters, Inc. v. Pilatus Bus. Aircraft, Ltd., 582 F.3d 1131, 1149

(10th Cir. 2009). Bahrani’s only assertion of prejudice is that, “[b]y allowing the

affidavit, the [district] court insulated Mr. Schmeh from cross-examination where

he would have been forced to admit: it was obvious (to him) no changes were

allowed without permission; the veterinarian could have denied permission; and

withholding permission would have required a replacement certificate and

payment of a fee.” Aplt. Br. at 63 (italics in original). But Bahrani’s counsel was

able to argue these points to the jury at the hide export certificates trial,

notwithstanding the fact that Schmeh did not appear as a witness. 12 Moreover, as

noted by defendants, Schmeh’s description of how he handled certificate changes

was echoed by several other witnesses without objection from Bahrani. Thus, we

conclude the district court’s error was harmless.

12
We note that Schmeh’s affidavit was specifically cited by this court in
Bahrani I in support of the conclusion that “major” or “significant” changes
warranted new certificates. 465 F.3d at 1193.

46
 B. Appeal No. 09-1180 (Defendants’ cross-appeal)

Defendants assert three issues in their cross-appeal, all of which focus on

the hide export certificates portion of the remand proceedings. First, defendants

contend the district court erred in entering judgment against them in light of the

fact that the jury at the hide export certificates trial found, in response to a special

interrogatory on the verdict form, that no hide export certificates were changed by

defendants’ employees for the purpose of avoiding an obligation to the

government. Second, defendants contend that the fines and penalties assessed

against them at the hide export certificates trial violate the Eighth Amendment

and the Due Process Clause. Third, defendants contend the district court erred in

failing to exclude evidence of certificates that were changed by defendants after

the period of Bahrani’s employment with ConAgra. As outlined in greater detail

below, we agree with defendants that the jury’s findings at the hide export

certificates trial entitled them to judgment as a matter of law on Bahrani’s hide

export certificates claims. Consequently, it is unnecessary for us to address the

remaining two issues asserted by defendants in their cross-appeal.

1) Allison Engine - the applicable scienter requirement

Defendants first raised the issue of the proper scienter requirement in a

post-Bahrani I, pretrial motion for summary judgment based upon the Supreme

Court’s June 9, 2008 decision in Allison Engine Co. v. United States, 553 U.S.

662 (2008). The district court summarily denied the motion “with the admonition

47
that the issue raised w[ould] need to be addressed in the context of drafting

appropriate jury instructions.” Dist. Ct. Doc. 337 at 1. The district court

subsequently issued a pretrial order entitled “ORDER RE SCIENTER

STANDARD,” Aplee. Supp. App. at 353, that concluded as follows:

To summarize, the scienter requirement will be articulated as the
act of making a major or significant change (or correction) to a hide
export certificate without getting a replacement when the actor either
(1) knew at the time he discovered a change was necessary that the
change required getting a replacement certificate; (2) knew major or
significant changes required replacement certificates but was
deliberately ignorant of whether the particular change made fell into
that category; or (3) knew major or significant changes required
replacement certificates but acted in reckless disregard of whether
the change fell into that category. I apply this standard out of an
abundance of caution and am aware that Allison Engine may support
the imposition of a higher (specific intent) level of scienter for
reverse false claims under the Act. However, it will be for the Tenth
Circuit to hold Mr. Bahrani to this higher standard, not me.

Id. at 358-59.

At trial, defendants moved for judgment as a matter of law pursuant to

Federal Rule of Civil Procedure 50 based upon Allison Engine. Aplt. App. at

2213-14 (“Your Honor, our motion relates to the evidence relating to whether the

ConAgra employees making the changes had any purpose or intent to avoid a fee

for replacement certificates. * * * [I]t is absolutely clear that there is no

evidence to support any finding that the ConAgra employees acted with any

purpose, [or] intent to avoid a fee for replacement certificates.”). Consistent with

its pretrial rulings, the district court denied those motions, but included on the

48
verdict form a special interrogatory that asked the jury, “How many of the hide

export certificates containing major or significant changes, for which no

replacement certificate was obtained, do you find by a preponderance of the

evidence were changed with the intent or purpose of ‘concealing, avoid or

decreasing’ the obligation to secure and pay for a replacement certificate?” Aplt.

App. at 2420. At the conclusion of all the evidence, the jury found that only five

out of the thousand-plus certificates at issue contained “major” or “significant”

changes. The jury also found that none of these five certificates were changed

with the intent or purpose of concealing, avoiding, or decreasing the obligation to

secure and pay for a replacement certificate.

On March 19, 2009, the district court issued an “AMENDED ORDER FOR

JUDGMENT” that stated, in pertinent part:

The first phase of the bifurcated trial in this reverse-false claim
qui tam action commenced on April 28, 2008 and resulted in a jury
verdict finding Relator Ali Bahrani was not the original source of his
meat export certificate claims. The second phase of the trial, which
was then limited to Relator’s reverse-false claims related to hide
export certificates, was tried to a jury of 12 commencing Monday,
March 9, 2009. After less than a day of deliberations yesterday, the
jury returned a verdict finding that, of the 1000+ certificates
proffered by the Relator as reverse false claims under 31 U.S.C. §
3729(a)(7), five had been changed in a “major” or “significant” way,
and all five had been changed under circumstances where the
employee who made the changes did so “knowing” that rather than
making the changes directly to the certificate, he or she was required
to secure a replacement certificate at a cost of $21.50 payable to the
United States Government. Because actionable scienter in this case
was framed in terms of “knowledge,” rather than intent, these
findings support the entry of judgment in favor of Relator and against

49
 Defendants on five of Relator’s reverse false claims under 31 U.S.C.
§ 3729(a)(7), and in favor of Defendants and against Relator on
Relator’s remaining 995+ reverse false claims.

Id. at 2422-23 (citation omitted). In a footnote that accompanied this paragraph,

the district court also stated:

I note that the jury, in an advisory capacity in the event the Tenth
Circuit adopts the Supreme Court’s Allison Engine intent or purpose
to defraud standard for scienter on appeal, also found that the
employee actions in changing the five certificates at issue in a
“major” or “significant” way were not made with the intent or
purpose of concealing, avoiding or decreasing any obligation to
secure and pay for replacement certificates.

Id. at 2423 n. 1 (citation omitted).

In their cross-appeal, defendants now challenge the district court’s denial

of their Rule 50 motions. We review such rulings de novo. Burrell v. Armijo,

603 F.3d 825, 832 (10th Cir. 2010) (“We review de novo the district court’s

decision on a Rule 50(b) motion for judgment as a matter of law.”).

In Allison Engine, the Supreme Court “granted review . . . to decide what a

plaintiff asserting a claim under” two specific provisions of the FCA, i.e., 31

U.S.C. §§ 3729(a)(2) and (3), 13 “must show regarding the relationship between the

making of a ‘false record or statement’ and the payment or approval of ‘a false or

fraudulent claim . . . by the Government.’” 553 U.S. at 665 (quoting §

13
Section 3729(a)(2) imposes liability on “[a]ny person who . . . knowingly
makes, uses, or causes to be made or used, a false record or statement to get a
false or fraudulent claim paid or approved by the Government . . . .” Section
3729(a)(3) imposes liability on “[a]ny person who . . . conspires to defraud the
Government by getting a false or fraudulent claim allowed or paid . . . .”

50
3729(a)(2)). Turning first to § 3729(a)(2), the Court held that “a plaintiff

asserting a . . . claim [thereunder] must prove that the defendant intended that the

false record or statement be material to the Government’s decision to pay or

approve the false claim.” Id. In reaching this conclusion, the Court emphasized

that “the intent requirement [it] discern[ed] in § 3729(a)(2) derive[d] not from the

term ‘knowingly,’ but rather from the infinitive phrase ‘to get.’” Id. at 671 n.2.

Relatedly, the Court also emphasized that while § 3729(b)’s definition of

“knowing” and “knowingly” “refers to specific intent with regard to the truth or

falsity of the ‘information,’” its “holding refer[red] to a defendant’s purpose in

making or using a false record or statement.” Id. Moving on to § 3729(a)(3), the

Court held, in similar fashion, that “a plaintiff asserting a claim [there]under . . .

must show that the conspirators agreed to make use of the false record or

statement” in order to get the government to pay or approve a false claim. Id. at

665. In other words, the Court held, “it must be established that the[]

[conspirators] agreed that the false record or statement would have a material

effect on the Government’s decision to pay the false or fraudulent claim.” Id. at

673.

Defendants argue that “although Allison Engine involved claims brought

under §§ 3729(a)(2) and (a)(3), the holding is equally applicable to claims

brought under § 3729(a)(7),” i.e., the FCA’s reverse false claims subsection that

defendants purportedly violated when they made “major” or “significant” changes

51
to hide certificates. Aplee. Br. at 67. More specifically, defendants assert that

“[t]he language of (a)(7) is the mirror of (a)(2)” because “[s]ection (a)(2)

prohibits using a false statement ‘to get’ paid, and section (a)(7) prohibits using a

false statement ‘to avoid’ paying.” Id. “Just as the term ‘to get’ denotes

purpose,” defendants argue, “so does the term ‘to avoid.’” Id. In short, they

argue, “[t]here is no principled way to impute an intent requirement onto (a)(2)

claims without doing the same for (a)(7) claims.” Id.

We agree. Section 3729(a)(7) imposes liability on “[a]ny 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). 14 As the Ninth Circuit has noted,

“[t]he plain language of this statute requires that a defendant make or use a false

record or statement in order to conceal, avoid or decrease an obligation to pay the

government.” United States v. Bourseau, 531 F.3d 1159, 1169 (9th Cir. 2008).

And, as defendants suggest and the government agrees in its amicus brief,

14
Congress substantially revised § 3729, and effectively overruled Allison
Engine, on May 20, 2009 by enacting the Fraud Enforcement and Recovery Act of
2009. Subsection (a)(7) was amended to become subsection (a)(1)(G) and now
reads as follows: “Subject to paragraph (2), any person who . . . knowingly
makes, uses, or causes to be made or used, a false record or statement material to
an obligation to pay or transmit money or property to the Government, or
knowingly conceals or knowingly and improperly avoids or decreases an
obligation to pay or transmit money or property to the Government, is liable to
the United States Government for a civil penalty . . . .” 31 U.S.C. §
3729(a)(1)(G). This newly revised subsection was not made retroactive by
Congress and is thus inapplicable to this case.

52
subsection (a)(7)’s use of the phrase “to conceal, avoid, or decrease an obligation

to pay or transmit money or property to the Government” is effectively

indistinguishable from subsection (a)(2)’s operative phrase “to get a false or

fraudulent claim paid or approved by the Government.” In other words, as the

Supreme Court indicated in Allison Engine, both phrases incorporate an intent

requirement. See Gov’t Br. at 10 (“the same connotation of purpose that the

Supreme Court found in the infinitive phrase ‘to get’ in § 3729(a)(2) is present in

the corresponding phrase ‘to conceal, avoid, or decrease’ in § 3729(a)(7).”). In

the case of subsection (a)(7), this means that a plaintiff attempting to prove

liability thereunder must establish that the defendant “made a false record or

statement for the purpose of” concealing, avoiding, or decreasing an obligation to

pay or transmit money or property to the Government. Allison Engine, 553 U.S.

at 671.

In turn, it is clear, given the jury’s findings in response to the special

interrogatory at the hide export certificates trial, that the judgment entered in

favor of Bahrani and against defendants as it relates to the hide export certificate

claims must be reversed and the case remanded to the district court. The only

question is whether, as suggested by defendants, the district court should be

instructed to enter judgment in favor of defendants on all the hide certificate

claims, or whether, as urged by the government, the five viable hide export

certificate claims must be retried. In its amicus brief, the government argues, in

53
somewhat confusing fashion, that the FCA’s reverse false claims provision, §

3729(a)(7), “must cover those cases where a defendant employs a statement for

the purpose of avoiding an obligation to pay — whether or not he has actual

knowledge of the existence or scope of the obligation.” Gov’t. Br. at 15.

“Otherwise,” the government argues, “the word ‘knowingly’ in § 3729(a)(7)

would cease doing any independent work.” Id. Here, the government argues,

“[t]he jury’s advisory verdict is ambiguous, and leaves open the possibility that

ConAgra lacked the requisite intent [to defraud] only because it remained

recklessly ignorant of whether it owed the obligation.” Id. at 19. “The jury

should instead have been instructed,” the government argues, “to determine

whether Con[A]gra acted with the purpose of diminishing the amount it paid to

the government, whether or not it had actual knowledge that it should have

secured the five replacement certificates.” Id. Thus, the government asserts, the

case must be remanded to the district court for further trial proceedings on those

five certificates.

We reject the government’s position. As we see it, the government’s

position improperly conflates § 3729(b)’s “knowingly” standard and §

3729(a)(7)’s intent requirement. In Allison Engine, the Supreme Court

emphasized that “the intent requirement . . . derives not from the term

‘knowingly,’ but rather from the infinitive phrase [‘to conceal, avoid, or decrease’

in § 3729(a)(7)].” 553 U.S. at 671 n.2. In other words, Allison Engine

54
effectively rejected the notion that the intent requirement incorporates §

3729(a)(7)’s “knowingly” standard. And with good reason. As defendants aptly

note, “[i]f every defendant who knows or should know about an obligation to pay

money is automatically deemed to have acted with the purpose of decreasing the

obligation, there is no purpose or intent standard left,” Aplee. Reply Br. at 10-11,

and we would be left with something akin to “a strict liability standard,” id. at 10.

Thus, in sum, we conclude the district court’s judgment pertaining to the

hide export certificates trial must be reversed and the case remanded to the

district court with directions to enter judgment in favor of defendants on

Bahrani’s hide export certificate claims.

C. Appeal No. 09-1388 (Bahrani’s appeal of the fee award)

In a separate appeal (No. 09-1388), Bahrani challenges on several grounds

the district court’s ruling on his motion for fees, expenses and costs. These

challenges, however, have been rendered moot by our ruling on defendants’ cross-

appeal. More specifically, because we find it necessary to reverse the district

court’s pertaining to the hide export certificates trial, the district court’s award of

expenses, fees and costs in favor of Bahrani must necessarily also be reversed.

III

The district court’s judgment pertaining to Bahrani’s meat export certificate

claims is AFFIRMED. The district court’s judgment pertaining to Bahrani’s hide

export certificate claims is REVERSED and the case REMANDED to the district

55
court with directions to enter judgment in favor of defendants on the hide export

certificate claims. The district court’s award of fees, expenses and costs in favor

of Bahrani is REVERSED, and Bahrani’s fee-related appeal (No. 09-1388) is

DISMISSED as moot.

56