06-3329-cv
United States v. City of New York, et al.
1 UNITED STATES COURT OF APPEALS
2 FOR THE SECOND CIRCUIT
3 August Term, 2007
4 (Argued: June 24, 2008 Decided: August 19, 2008)
5 Docket No. 06-3329-cv
6 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
7 UNITED STATES OF AMERICA, ex rel. IRWIN EISENSTEIN,
8 Plaintiff-Appellant,
9 - v. -
10 CITY OF NEW YORK, MICHAEL BLOOMBERG, JOHN DOE, JANE DOE,
11
12 Defendants-Appellees.
13
14
15 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
16
17 B e f o r e: WINTER, MINER, and CABRANES, Circuit Judges.
18 Motion to dismiss an appeal from the dismissal of a
19 complaint by the United States District Court for the Southern
20 District of New York (Deborah A. Batts, Judge). Appellant
21 brought a False Claims Act qui tam action in the name of the
22 United States. Appellant filed a notice of appeal more than 30
23 days after the dismissal. Appellees move to dismiss the appeal
24 as untimely, arguing that because the United States is not a
25 party, the notice of appeal was required to have been filed
26 within 30 days of final judgment, Fed. R. App. P. 4(a). The
27 motion to dismiss is granted.
1 LEWIS D. ZIROGIANNIS (Marc A. Weinstein on
2 the brief), Hughes Hubbard & Reed LLP, New
3 York, New York for Plaintiff-Appellant.
4
5 ANDREW G. LIPKIN, of counsel (Michael A.
6 Cardozo, Corporation Counsel of the City of
7 New York) New York, New York for Defendant-
8 Appellees.
9
10 Michael J. Garcia, United States Attorney for
11 the Southern District of New York (Sheila M.
12 Gowan and Jeffrey S. Oestericher, Assistant
13 United States Attorneys, on the brief) New
14 York, New York, for amicus curiae, the United
15 States of America.
16
17
18
19 WINTER, Circuit Judge:
20 Irwin Eisenstein appeals from the dismissal of his complaint
21 by Judge Batts. The City of New York has moved to dismiss the
22 appeal, asserting that the notice of appeal was untimely. The
23 issue is whether a private party bringing a False Claims Act qui
24 tam action must file a notice of appeal within the 30 days after
25 judgment applicable to civil actions generally, Fed. R. App. P.
26 4(a)(1)(A), or within the 60 days applicable when the United
27 States is a party, Fed. R. App. P. 4(a)(1)(B). We hold that,
28 where the United States has declined to intervene in a False
29 Claims action, the United States is not a party to the action
30 within the meaning of Rule 4(a)(1), and, therefore, a notice of
31 appeal must be filed within 30 days. Because Eisenstein filed
32 his notice of appeal more than 30 days after the entry of
33 judgment, his appeal is untimely, and we are without jurisdiction
2
1 to consider it.1
2 On January 17, 2003, Eisenstein and four City employees,
3 proceeding pro se, filed this action against the City and various
4 municipal officials. The gravamen of the complaint is that it is
5 unlawful for the City, as a condition of employment, to require
6 non-resident City-employees to pay a fee equivalent to the
7 municipal income taxes paid by resident City-employees. The
8 complaint alleges that this practice is actionable under various
9 theories of liability, most notably as a violation of the False
10 Claims Act, 31 U.S.C. §§ 3729-3733.2 Eisenstein contends that
11 because non-resident employees are able to deduct this fee as an
12 expense for federal income tax purposes, their taxable income is
13 less than it might otherwise be, and in this way, the City is
14 depriving the federal government of tax revenue. The complaint
15 initiates a qui tam action, in which the plaintiffs are to serve
1
Our decision in United States ex rel Mergent Services and
John Bal, , filed this day, holds that
pro se litigants may not pursue qui tam actions under the False
Claims Act. That principle would also bar this suit, but we
would have to have appellate jurisdiction in this matter to reach
that issue. Steel Co. v. Citizens for a Better Env’t, 523 U.S.
83, 94 (1998) (“Without jurisdiction the court cannot proceed at
all in any cause.” (quoting Ex parte McCardle, 74 U.S. 506, 514
(1868)).
2
The False Claims Act imposes civil liability upon “any
person” who, inter alia, “knowingly presents, or causes to be
presented, to an officer or employee of the United States
Government . . . a false or fraudulent claim for payment or
approval.” 31 U.S.C. § 3729(a). Defendants may be liable for
treble damages and a civil penalty of up to $10,000 per claim.
Id.
3
1 as relators, suing the City in the name of the United States.
2 The United States declined to intervene.3
3 The City moved to dismiss the complaint for failure to state
4 a claim. On March 31, 2006, the district court granted the
5 motion to dismiss, and, on April 12, 2006, rendered final
6 judgment for the City. On June 5, 2006, or 54 days later,
7 Eisenstein filed his notice of appeal.4
8 On December 26, 2006, we ordered Eisenstein and the City “to
9 brief the issue of whether the thirty-day time limit for filing a
10 notice of appeal . . . or the sixty-day time limit for filing a
11 notice of appeal . . . , which applies when the United States is
12 a party, applies to a qui tam action where the United States
3
An action brought under the False Claims Act may be
commenced in one of two ways. First, the federal government
itself may bring a civil action against a defendant. 31 U.S.C. §
3730(a). Second, as is the case here, a private person, or
“relator” may bring a qui tam action “for the person and for the
United States Government,” against the defendant, “in the name of
the Government.” Id. § 3730(b)(1). Under such circumstances,
the Government may elect to intervene, and if it recovers a
judgment, the relator gets a percentage. See id. § 3730(d)(1).
If the Government declines to intervene, the relator may pursue
the action on his own, and may get a larger percentage of the
judgment if he prevails. See id. § 3730(d)(2); United States v.
Baylor Univ. Med. Ctr., 469 F.3d 263, 265 (2d Cir. 2006).
4
The only notice of appeal specifies that Eisenstein is
appealing the judgment of the district court. See Fed. R. App.
P. 3(c)(1)(A) (requiring that the notice of appeal “specify the
party or parties taking the appeal by naming each one in the
caption or body of the notice”). Therefore, he is the only
appellant.
4
1 declines to intervene in the proceedings.” United States ex.
2 rel. Eisenstein v. City of New York, No. 06-3329 (2d Cir. Dec.
3 26, 2006). We also ordered the United States to brief this issue
4 as amicus curiae. On January 25, 2007, the City filed the
5 present motion to dismiss, based on, inter alia, the timeliness
6 issue. Thereafter, we appointed pro bono counsel for Eisenstein,
7 solely to address the City’s motion to dismiss.
8 The government played no role in this litigation until
9 filing an amicus brief as ordered by the court.5 Because we
10 conclude that the United States is not a “party” to this action
11 for the purposes of Fed. R. App. P. 4(a)(1)(A) and (B), we
12 further conclude that Eisenstein’s notice of appeal was untimely.
13 We are therefore without jurisdiction, and the City’s motion is
14 granted.
15 “[I]n a civil case, . . . the notice of appeal . . . must be
16 filed with the district clerk within 30 days after the judgment
17 or order appealed from is entered.” Fed. R. App. P. 4(a)(1)(A);
18 see 28 U.S.C. § 2107(a) (prescribing that “no appeal shall bring
19 any judgment . . . of a civil nature before a court of appeals
20 for review unless notice of appeal is filed, within thirty days
21 after the entry of such judgment”). However, “[w]hen the United
22 States or its officer or agency is a party, the notice of appeal
5
That brief urges us to apply the 30 day rule of Fed. R.
App. P. 4(a)(1)(A).
5
1 may be filed by any party within 60 days after the judgment or
2 order appealed from is entered.” Fed. R. App. P. 4(a)(1)(B); see
3 28 U.S.C. § 2107(b) (providing that “[i]n any [civil] action
4 . . . in which the United States or an officer or agency thereof
5 is a party, the time as to all parties shall be sixty days from
6 such entry”). The term “party” is not expressly defined for
7 these purposes by either statute or the appellate rules.6
8 When interpreting a rule of procedure, we review the text
9 for its “plain meaning.” Cooter & Gell v. Hartmarx Corp., 496
10 U.S. 384, 391 (1990); see also United States v. Capoccia, 503
11 F.3d 103, 109 (2d Cir. 2007). To the extent that the text is
12 ambiguous, we seek to determine the intent by looking to other
13 materials, such as the Advisory Committee Notes that often
14 accompany the rules. See Sorensen v. City of New York, 413 F.3d
15 292, 296 (2d Cir. 2005).
16 In the present case, the language of Rule 4(a)(1)(B) does
17 not support Eisenstein’s contention that he was entitled to file
18 his notice of appeal within 60 days of the rendering of judgment.
19 The text of Rule 4(a)(1)(B) states that the extended filing
6
“Compliance with Rule 4(a) is ‘mandatory and
jurisdictional.’” Williams v. KFC Nat’l Mgmt. Co., 391 F.3d 411,
415 (2d Cir. 2004) (quoting Browder v. Director, Dep’t of Corr.,
434 U.S. 257, 264 (1978)). That is, “[i]f a notice of appeal is
filed beyond the period allowed by [Rule 4(a)], the court of
appeals lacks subject matter jurisdiction to hear the appeal.”
Endicott Johnson Corp. v. Liberty Mut. Ins. Co., 116 F.3d 53, 56
(2d Cir. 1997).
6
1 period applies when the United States is a “party” to the action.
2 We hold that the United States is not a “party” to this action
3 for the purposes of the deadline for filing a notice of appeal.
4 In our view, the United States is not a party for these
5 purposes to a qui tam action when the government fails to
6 intervene or to raise or resist any legal claim. Where a private
7 person brings suit under the False Claims Act, the Act allows the
8 government “to intervene and proceed with the action within 60
9 days after it receives both the complaint and the material
10 evidence and information.” 31 U.S.C. § 3730(b)(2). Before that
11 60-day period expires, the Act mandates that the government carry
12 out one of two choices: “(A) proceed with the action, in which
13 case the action shall be conducted by the Government; or (B)
14 notify the court that it declines to take over the action, in
15 which case the person bringing the action shall have the right to
16 conduct the action.” Id. § 3730(b)(4). While the Act allows the
17 Government to intervene at a later date, it may do so only upon a
18 showing of good cause. Id. § 3730(c)(3). When the Government
19 declines to intervene, the Act specifies that the person who
20 brought the suit has the “right to conduct the action.” See id.
21 § 3730(c)(3). Absent a specific request, the government need not
22 be served with the pleadings thereafter filed by litigants. Id.
23 § 3730(c)(3). Moreover, the United States “is not liable for
24 expenses which a person incurs in bringing an action under” the
7
1 Act, id. § 3730(f), notwithstanding the fact that the claim is
2 that of the United States and that such actions are brought in
3 the name of the United States. See 31 U.S.C. § 3730(b); see also
4 Vermont Agency of Natural Res. v. United States ex rel. Stevens,
5 529 U.S. 765, 774 (2000) (describing claims under the Act as
6 belonging to the United States). And while under the Act, the
7 government must consent to any settlement that would call for the
8 dismissal of a qui tam action, see id., this is surely a sensible
9 requirement, inasmuch as the United States, is the “real party in
10 interest,” and is otherwise bound by the relator’s actions for
11 purposes of res judicata and collateral estoppel. See Stoner v.
12 Santa Clara County Office of Educ., 502 F.3d 1116, 1126 (9th Cir.
13 2007).
14 These provisions indicate that the United States is not a
15 party to litigation for all purposes brought by private persons
16 under the Act, absent an election to intervene. As used in Rule
17 4(a)(1), the word “party” refers to the person participating in
18 the proceedings with control over litigation. The government,
19 once having declined to intervene at the outset of an action may
20 not participate in it, save for asking that it be served with
21 pleadings and for approving any withdrawal with prejudice,
22 without moving to intervene upon a showing of good cause. The
23 inability to participate without moving to intervene is simply
24 not consistent with the principal characteristics of being a
25 party to litigation.
8
1 Eisenstein argues that the extended 60-day filing period
2 applies here because the United States is a “real party in
3 interest” in False Claims Act qui tam actions. See United States
4 ex rel. Stevens v. Vt. Agency of Natural Res., 162 F.3d 195, 202
5 (2d Cir. 1998), rev’d on other grounds, 529 U.S. 765 (2000).
6 This argument assumes that the United States’ status as a “real
7 party in interest” is equivalent to the status of a “party” to
8 litigation as contemplated by the drafters of Rule 4(a). We find
9 this assumption faulty. “Generally, the ‘real party in interest’
10 is the one who, under the applicable substantive law, has the
11 legal right which is sought to be enforced or is the party
12 entitled to bring suit.” In re Comcoach Corp., 698 F.2d 571, 573
13 (2d Cir. 1983). The litigation status of a real party in
14 interest and a “party” to litigation may overlap for some
15 purposes while being quite distinct for others. See, e.g.,
16 Arkwright-Boston Mfrs. Mut. Ins. Co. v. New York, 762 F.2d 205,
17 209 (2d Cir. 1985) (concluding it was not error to fail to join a
18 real party in interest as a plaintiff to a diversity action).
19 Indeed, the term “real party in interest” exists only to
20 distinguish the litigation interests it covers from those of a
21 “party” who is the person responsible for prosecuting the action.
22 The use of the “real party in interest,” as a term of art,
23 permits courts to intelligibly discuss those instances in which
24 an individual with a substantive right must appear as a party to
25 litigate a claim, and those instances in which another may appear
9
1 in his stead. Compare Local Union No. 17 v. Mason & Hanger Co.,
2 217 F.2d 687, 691-95 (2d Cir. 1954) (concluding that a union was
3 not entitled under the Labor Management Relations Act to bring a
4 civil conspiracy claim on behalf of its members, the real parties
5 in interest), with Blau v. Lamb, 314 F.2d 618, 619-20 (2d Cir.
6 1963) (providing that the real party in interest, a corporation,
7 need not be the one to bring a claim under Section 16(b) of the
8 Securities Exchange Act of 1934). Accordingly, the United
9 States’ status as a real party in interest is by itself
10 insufficient to trigger the 60-day filing period.
11 The failure of Rule 4(a)(1)(b)’s language to include
12 situations in which the United States is a “real party in
13 interest” in an action cannot be viewed as simply an oversight.
14 The term “real party in interest” is a term of art used in the
15 rules of procedure. See Fed. R. Civ. P. 17(a)(1) (requiring that
16 actions be brought in the name of the “real party in interest”);
17 Fed. R. Civ. P. 15 Notes of Advisory Committee on 1966 amendments
18 (noting that under the rules, there is mechanism for correcting a
19 failure to name the “real party in interest” to an action). We
20 therefore regard the omission of “real party in interest” from
21 Rule (a)(1)(B) as meaningful.
22 We turn now to the intent underlying Rule 4(a)(1)(B). The
23 purpose of providing a 60-day filing period, rather than the
24 usual 30 days, is to account for the slow machinery of government
25 when the United States is a party responsible for prosecuting the
10
1 action. “The Advisory Committee’s Notes of 1946 to Rule 73(a) of
2 the Federal Rules of Civil Procedure, the predecessor of Rule
3 4(a), explain that the government’s institutional decisionmaking
4 practices require more time to decide whether to appeal and that
5 in fairness, the same time should be extended to other parties in
6 a case in which the government is a party.” United States ex
7 rel. Russell v. Epic Healthcare Mgmt. Group, 193 F.3d 304, 306
8 (5th Cir. 1999) (citing 20 Moore’s Federal Practice § 304.11[2]
9 (3d ed. 1997)).7 This rationale is obviously inapplicable to the
10 present case, where the government has played no part in the
11 underlying litigation other than to decline to participate in it.
12 Our decision is not inconsistent with United States v.
13 American Society of Composers, Authors & Publishers, 331 F.2d 117
14 (2d Cir. 1964). In American Society of Composers, we applied the
15 60-day limit, but only because the United States actively
16 participated in the litigation. In that matter, several
17 television stations sought an order requiring the licensing of
18 the rights to use various musical compositions, rights that were
19 held by the American Society of Composers, Authors and Publishers
20 (the “Society”). Am. Soc’y of Composers, 317 F.2d 90, 91 (2d
21 Cir. 1963). The stations sought these licenses purportedly
22 pursuant to a consent decree entered in a previous action brought
7
This rationale applies with respect to Rule 4(a)(1)(B),
which is derived from the former Rule 73(a) “without any change
of substance.” Fed. R. App. P. 4 Notes of Advisory Committee on
1967 Adoption of Subdivision (a).
11
1 by the United States against the Society under the Sherman Act.
2 Id. The government actively participated in the ensuing
3 litigation, weighing in on the justiciability of the stations’
4 claims before the district court, 208 F. Supp. 896, 897 (S.D.N.Y.
5 1962), and on appeal, 331 F.2d at 120.
6 When a dispute arose as to the timeliness of an appeal
7 raising issues that pertained only to the claims brought by the
8 television stations and the Society and not to the antitrust
9 claims of the United States resolved in the consent decree, id.
10 at 119-20, we interpreted the predecessor to Rule 4(a) and
11 concluded that the 60-day filing period applied. In doing so, we
12 relied on the text of the former rule, which provided a 60-day
13 period to file an appeal in any action “in which the United
14 States or an officer or agency thereof is a party.” Id. at 119
15 (citing the former Fed. R. Civ. P. 73(a)). Because the rule
16 required only that the United States be a party for the 60-day
17 period to apply, we rejected the notion that this longer filing
18 period was triggered only when the United States had a particular
19 interest in the outcome of the appeal. Am. Soc’y of Composers,
20 331 F.2d at 119. In so doing, we cautioned that it is
21 “undesirable to read into a procedural statute or rule, fixing
22 the time within which action may be taken, a hidden exception or
23 qualification that will result in the rights of clients being
24 sacrificed when capable counsel have reasonably relied on the
25 language.” Id.
12
1 This sound principle is entirely consistent with our ruling
2 today. Rather than establishing filing deadlines based on the
3 nature of, or interests in, the claims asserted on appeal, we
4 look, as we did in American Society of Composers, to the plain
5 requirements of the rules, which call for a determination of
6 whether the United States was a party in the district court.
7 That is, what is of import is neither that Eisenstein brought a
8 False Claims Act claim in the name of the United States, nor that
9 the United States may be entitled to a portion of the recovery if
10 Eisenstein prevails; what is of import is that the United States
11 played no role in this matter before the district court.
12 We do note that our holding in this matter puts us in
13 conflict with three of four courts of appeals that have
14 considered this issue. See United States ex rel. Lu v. Ou, 368
15 F.3d 773, 775 (7th Cir. 2004) (applying the 60-day limit); United
16 States ex rel. Russell v. Epic Healthcare Mgmt. Group, 193 F.3d
17 304, 308 (5th Cir. 1999) (same); United States ex rel. Haycock v.
18 Hughes Aircraft Co., 98 F.3d 1100, 1102 (9th Cir. 1996) (same);
19 compare United States ex rel. Petrofsky v. Van Cott, Bagley,
20 Cornwall, McCarthy, 588 F.2d 1327, 1329 (10th Cir. 1978) (per
21 curiam) (applying the 30-day limit). Specifically, in Hughes
22 Aircraft, the Ninth Circuit concluded that in False Claims Act
23 qui tam cases, the application of the 60-day period was required
24 under a “literal interpretation” of Rule 4(a), and that such an
13
1 interpretation was called for in the interest of affording would-
2 be appellants the ability “to figure out which time period
3 applies, easily, without extensive research, and without
4 uncertainty.” Hughes Aircraft Co., 98 F.3d at 1102. Confronted
5 with this same issue, the Fifth Circuit has since adopted the
6 Ninth Circuit’s reasoning from Hughes Aircraft. See Epic
7 Healthcare Mgmt. Group, 193 F.3d at 308.
8 We are not similarly persuaded. As discussed in detail
9 supra, we do not agree that a “literal” reading of Rule 4(a)
10 accords a 60-day filing period to private individuals who bring
11 suit in the name of the United States. Nor do we share the fear
12 of other courts that confusion may result from applying Rule
13 4(a)(1)(B) in the manner we do today. In the circumstances
14 described, counsel of minimal competence will take pause upon
15 reading Rule 4(a) to consider whether the United States was
16 actually a “party” to the action. Even if doubt existed, any
17 reasonable counsel would allay these concerns by sensibly filing
18 a notice of appeal within 30 days. In fact, there is little
19 history of confusion, and, even with this decision, the issue has
20 not arisen in the majority of circuits despite the many decades
21 in which the provisions of Rule 4(a)(1)(B) and False Claims Act
22 qui tam actions have coexisted.
23 We are similarly not persuaded by the reasoning employed by
24 the Seventh Circuit in United States ex rel. Lu v. Ou. In
14
1 addition to reciting the grounds relied upon by the Ninth and
2 Fifth Circuits in Hughes Aircraft and Epic Healthcare, the
3 Seventh Circuit appears to have concluded that the United States
4 must be a party to qui tam actions because relators by themselves
5 lack standing to sue. Ou, 368 F.3d at 775. Respectfully, we
6 believe this reasoning cannot be reconciled with the Supreme
7 Court’s decision in Vermont Agency of Natural Resources v. United
8 States ex. rel. Stevens, 529 U.S. 765 (2000).
9 In Stevens, the Supreme Court specifically identified the
10 source of relator-standing in False Claims Act qui tam actions,
11 concluding that relators have standing to sue not as agents of
12 the United States, but as partial-assignees of the United States’
13 claim to recovery. Stevens, 529 U.S. at 773-74. This is so even
14 where the assignor, the United States, declines to intervene in
15 the case. See id. at 770 (noting the Government’s failure to
16 intervene). According to Stevens, relators have standing in
17 their own right, id. at 773-74, and, therefore, if they otherwise
18 comply with the requirements of the False Claims Act, they can
19 bring an action in the name of the United States without the
20 United States appearing as a party and participating in the
21 litigation.
22 Ultimately, we are more inclined to agree with the views of
23 the Tenth Circuit, the first court of appeals to have taken up
24 this issue. See Van Cott, 588 F.2d at 1329. In Van Cott, as in
15
1 the present case, the government declined to intervene in a qui
2 tam action, and, as a result, a relator pursued a False Claims
3 Act claim on his own. Id. at 1328. Under such circumstances,
4 the Tenth Circuit properly characterized the United States’
5 participation in the case as “tangential or nominal,” and soundly
6 recognized that it “was merely a statutory formality” that the
7 relator brought the suit in the name of the United States. Id.
8 at 1329. We also agree with its observation that, under such
9 circumstances, “[a]ll parties [are] aware the government [has]
10 disclaimed any participation in the suit” and that there is no
11 “need for more than the usual 30 days to make the appeal.” Id.
12 We therefore grant the City’s motion to dismiss.
13
16