IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
Summary Calendar
No. 06-30304
United States of America, ex rel, RONALD K BAIN
Plaintiff - Appellant
v.
GEORGIA GULF CORPORATION
Defendant - Appellee
Appeal from the United States District Court
for the Middle District of Louisiana, Baton Rouge
No. 3:01-CV-562
Before KING, HIGGINBOTHAM and GARZA, Circuit Judges.
PER CURIAM:*
Plaintiff-appellant Ronald K. Bain appeals the district
court’s order awarding attorneys’ fees to defendant-appellee
Georgia Gulf Corporation on the basis that Bain’s False Claims
Act suit was frivolous or vexatious. Finding no abuse of
discretion, we AFFIRM.
I. BACKGROUND
*
Pursuant to 5TH CIR. R. 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.
The facts underlying this litigation have previously been
set forth in a prior opinion of this court, see United States, ex
rel. Bain v. Georgia Gulf Corp., 386 F.3d 648 (5th Cir. 2004),
and will not be repeated here. A discussion of the procedural
background, however, will provide the relevant context for the
question presented here.
Pursuant to the False Claims Act (“FCA”), 31 U.S.C. § 3729
et seq., plaintiff-appellant Ronald K. Bain filed an original
complaint under seal on July 13, 2001 against his former
employer, Georgia Gulf Corporation (“Georgia Gulf”). The
original complaint sought to establish a reverse false claim
under § 3729(a)(7) of the FCA. When the United States declined
to intervene on November 8, 2001, the district court unsealed the
complaint, and it was served on Georgia Gulf.
On April 22, 2002, Georgia Gulf moved to dismiss the
original complaint pursuant to FED. R. CIV. P. 12(b)(6). Georgia
Gulf asserted that the complaint failed to state a cause of
action under FCA’s reverse-false-claims provision. Before ruling
on the motion, the district court ordered that Bain first amend
his complaint to plead with particularity the allegations of
fraud underlying the FCA reverse false claim as required by Rule
9(b). Bain then filed an amended complaint on July 10, 2002,
which both added allegations related to the § 3729(a)(7) reverse
false claim and added a new direct false claim against Georgia
Gulf. On September 3, 2002, the district court denied Georgia
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Gulf’s April 22, 2002, Rule 12(b)(6) motion to dismiss, ruling
that Bain did state a reverse false claim under the FCA. The
district court’s ruling did not address the new direct false
claim.
On October 25, 2002, the district court stayed its
proceedings pending the outcome of an appeal before this court
addressing the same issue challenged by Georgia Gulf’s Rule
12(b)(6) motion for failure to state a reverse false claim.1 The
district court certified an interlocutory appeal on the Rule
12(b)(6) ruling and this court granted leave to appeal.
We concluded that the amended complaint did not state a
reverse false claim under § 3729(a)(7) of the FCA and reversed
the district court’s ruling on the Rule 12(b)(6) motion to
dismiss. Bain, 386 F.3d at 648. Because Georgia Gulf filed its
motion to dismiss before Bain filed the amended complaint (with
its new direct claim) the motion to dismiss related only to the
reverse false claim asserted in the original complaint.
Accordingly, we remanded Bain’s new direct false claim to the
district court. In doing so, we questioned whether in filing a
new direct claim Bain had complied with § 3730(b)(2), which
requires that the government be served with the complaint and
1
In United States, ex rel. John Doe v. Dow Chemical Co.,
343 F.3d 325 (5th Cir. 2003), we affirmed dismissal on another
ground and did not reach the question of whether the complaint
stated a reverse false claim under the FCA.
3
written disclosure of all material evidence and information so
that it may choose whether to intervene.
On remand, Georgia Gulf filed a motion for summary judgment
on the remaining new direct false claim, challenging subject
matter jurisdiction under the FCA and particularity of pleading
under Rule 9(b). The district court granted summary judgment on
June 22, 2005, specifically determining:
(1) The Direct False Claim Act claim is a new
claim.
(2) The plaintiff has failed to comply with
the specific provisions of the Act which
require the plaintiff to file the claim under
seal and to serve a copy of the complaint to
the United States for its review. It is clear
that the amended complaint was not filed under
seal and the United States was never given an
opportunity to consider the claim before it
was made public by the plaintiff in clear
contravention of the statute. It is also
clear that the United States has not given the
plaintiff permission to proceed with this
suit.
(3) The record also establishes that
plaintiff’s amended complaint is based at
least in part on publicly disclosed
information and prior litigation. It is clear
that the plaintiff has failed to prove that he
was an “original source” and that he
voluntarily provided this information to the
government before he filed this amended
complaint.
(4) Plaintiff has also failed to properly
amend his complaint to specifically set forth
the allegations of fraud as required by the
Federal Rules of Civil Procedure.
3 R. 377-78, Opinion of the District Court (citations omitted).
4
Bain appealed the district court’s ruling to this court. We
dismissed the appeal as frivolous. Before the appeal was
dismissed, Georgia Gulf filed a post-judgment motion with the
district court seeking attorneys’ fees under both 31 U.S.C.
§ 3730(d)(4) (the FCA fee-shifting provision) and 28 U.S.C.
§ 1927. The district court denied the motion for attorneys’ fees
relating to the original complaint but granted the motion under §
3730(d)(4) as to the amended complaint. In mediation, the
parties stipulated that $65,000 was reasonable and attributable
to the amended complaint. Bain, however, reserved the right to
appeal Georgia Gulf’s entitlement to attorneys’ fees. Bain now
timely appeals.
II. STANDARD OF REVIEW
In our only previous review of a district court’s award of
attorneys’ fees under § 3730(d)(4) of the FCA, we applied an
abuse of discretion standard of review. Martel v. Maxxam Inc.,
211 F.3d 584, 2000 WL 329354, at *1 (5th Cir. 2000) (per curiam)
(unpublished table opinion). This standard of review is
consistent with that employed by our sister circuits having
occasion to consider an award of attorneys’ fees under
§ 3730(d)(4). United States ex rel. Grynberg v. Praxair, Inc.,
389 F.3d 1038, 1058 (10th Cir. 2004); United States ex rel.,
Mikes v. Straus, 274 F.3d 687, 704 (2d Cir. 2001); see also
United States ex rel. Chandler v. Cook Co., Ill., 277 F.3d 969,
5
976 (stating that the addition of § 3730(d)(4) to the FCA gives
courts more discretion to regulate qui tam suits). The abuse of
discretion standard is also consistent with our review of
attorneys’ fees under analogous circumstances. See, e.g.,
Skidmore Energy, Inc. v. KPMG, 455 F.3d 564, 566 (5th Cir. 2006)
(reviewing Rule 11 sanctions for legally or factually frivolous
filings under an abuse of discretion standard); Travelers Ins.
Co. v. St. Jude Hosp. of Kenner, Inc., 38 F.3d 1414, 1417 (5th
Cir. 1994) (applying abuse of discretion standard to award of
attorneys’ fees under 28 U.S.C. § 1927, which allows fees where
an attorney’s conduct unreasonably and vexatiously multiplies the
proceedings); Alizadeh v. Safeway Stores, Inc., 910 F.2d 234,
237-38 (5th Cir. 1990) (applying abuse of discretion standard
when reviewing award of attorneys’ fees under 42 U.S.C. § 1988,
which allows fees when plaintiff’s suit is frivolous and
unreasonable); EEOC v. First Ala. Bank, 595 F.2d 1050, 1056 (5th
Cir. 1979) (applying abuse of discretion standard when reviewing
award of attorneys’ fees pursuant to Title VII, which allows fees
when plaintiff’s action is frivolous, unreasonable, or without
foundation). Accordingly, we will review the district court’s
award of attorneys’ fees to Georgia Gulf pursuant to § 3730(d)(4)
of the FCA for abuse of discretion.
We are mindful that the district court is in the best
position to render an informed judgment on an award of attorneys’
fees as it is intimately involved with the case, the litigants,
6
and the attorneys. Skidmore Energy, 455 F.3d at 566.
Accordingly, our review is deferential. Under the abuse of
discretion standard, a district court’s decision to award
attorneys’ fees will not be disturbed unless the award is based
on (1) an erroneous view of the law or (2) a clearly erroneous
assessment of the evidence. Id. at 566.
III. DISCUSSION
Section 3730(d)(4) provides reasonable attorneys’ fees to a
prevailing defendant in a qui tam action if the court “finds that
the claim of the person bringing the action was clearly
frivolous, clearly vexatious, or brought primarily for purposes
of harassment.” 31 U.S.C. § 3730(d)(4). Bain does not challenge
that Georgia Gulf is a prevailing defendant, nor does he
challenge the amount of the fees awarded. The sole issue before
us is Georgia Gulf’s entitlement to fees.
In its ruling, the district court determined that the record
“clearly established” that the “plaintiff’s first amended
complaint was filed in a frivolous or vexatious manner.” 3 R.
487, Ruling of District Court. The court further determined that
“it is probable that the amended complaint was also filed to
harass the defendant considering the number of other claims the
plaintiff has filed against the defendant as set forth in the
record.” Id. The court’s ruling adopted its earlier findings
from its opinion granting summary judgment to Georgia Gulf. The
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ruling also separately summarized these findings, detailing that
summary judgment previously was granted because Bain had added an
“entirely new claim” in his amended complaint and had failed to
(1) comply with the FCA’s filing requirements, (2) establish that
he was an “original source” for the information alleged as
required by law, and (3) plead his allegations of fraud with
particularity as required by Rule 9(b).
A claim is frivolous if it has no arguable support in
existing law or any reasonably based suggestion for its
extension. See Farguson v. MBank Houston, N.A., 808 F.2d 358,
359 (5th Cir. 1986). A claim is vexatious when the plaintiff
brings the action for an improper purpose, such as to annoy or
harass the defendant. Pfingston v. Ronan Eng’g Co., 284 F.3d
999, 1006 (9th Cir. 2002). Either of these grounds is
independently sufficient to support an award of attorneys’ fees
under § 3730(d)(4). Mikes, 274 F.3d at 704-705.
The district court did not abuse its discretion in ruling
that Bain’s suit was frivolous or vexatious. When Bain filed his
amended complaint, adding a new direct false claim, he failed to
satisfy a number of jurisdictional and procedural prerequisites
under the FCA. Under the proper circumstances, a single defect
may merit a ruling on frivolousness or vexatiousness. Cf.
Martel, 2000 WL 329354, at *2-3 (upholding ruling that suit was
frivolous solely on basis that plaintiff knew he was not the
original source of information). In this case, the district
8
court concluded that it lacked subject matter jurisdiction
because Bain’s amended complaint was “based at least in part on
publicly disclosed information and prior litigation” and that
Bain “had failed to prove he was an ‘original source’” of the
information. 3 R. 488. Our previous rulings make clear that a
FCA qui tam action is barred for lack of subject matter
jurisdiction even where it is partly based upon publicly
disclosed allegations or transactions. Fed. Recovery Servs.,
Inc. v. Crescent City E.M.S., 72 F.3d 447, 450 (5th Cir. 1995).
The district court also concluded that Bain’s new direct
claim failed to comply with heightened pleading requirements for
claims of fraud under the FCA as required by Rule 9(b). Notably,
the court’s Rule 9(b) decision came after the court gave Bain
clear notice of the heightened pleading requirements for FCA
claims and allowed him the opportunity to amend his original
complaint to plead his reverse false claim with particularity.
In his amended complaint, Bain added an entirely new direct
claim, where he again failed to satisfy Rule 9(b). Bain concedes
that Rule 9(b) governs claims brought under the FCA. Bain
instead argues in vain that the court’s later Rule 9(b) decision
on summary judgment was a “hasty and unannounced” “complete
reversal” of its earlier decision. As our previous opinion made
clear, however, the district court’s earlier decision on Georgia
Gulf’s 12(b)(6) motion related only to the reverse false claim in
9
the original complaint and not the new direct false claim. As
such, Bain’s protestations have no merit.
Taken together, Bain’s overwhelming failure to establish
subject matter jurisdiction and satisfy pleading
requirements——even after the district court gave notice of
heightened pleading requirements before the amended complaint was
filed——leads us to conclude that the district court did not abuse
its discretion in determining that Bain’s suit was frivolous or
vexatious. Based on these defects, the court did not err in
concluding that Bain’s suit was without foundation and had no
reasonable chance of success, or in the alternative, that the
suit was filed for an improper purpose.2
IV. CONCLUSION
For the foregoing reasons, the ruling of the district court
is AFFIRMED. Georgia Gulf’s pending motions are DENIED. Bain is
cautioned, however, that any further filings in this court will
likely result in sanctions.
2
Because we decide that the district court did not abuse
its discretion in concluding that the suit was frivolous or
vexatious, we do not address the trial court’s conclusion that it
was probable that the suit was filed to harass the defendant.
10