ContractsProf Blog

Editor: Jeremy Telman
Oklahoma City University
School of Law

Sunday, July 10, 2011

Second Circuit Issues Summary Order on Remand from SCOTUS in U.S. ex rel. Kirk

We have covered this case, United States ex rel. Kirk v. Schindler Elevator Corp., before, most recently here.  Here's our recitation of the facts and history up to the Supreme Court's decision in May:

Daniel Kirk, a Vietnam War veteran, worked at Millar Elevator Industries beginning in the late 70s.  In 2002, Millar's operations were integrated into those of the Schindler Elevator Company.  In 2003, Millar was demoted and resigned.  Eight months later, Kirk sued, alleging that he had been fired in violation of VEVRAA, the VIetnam Era Veterans Readjustment Assistance Act.  That claim was dismissed and the dismissal was affirmed last year.  

2d Circuit Meanwhile, Kirk brought suit under the False Claim Act in the name of the U.S. government.   In 2007, the government elected not to intervene and Kirk pursued his claim as a relator.  His suit alleged that Schindler had entered into hundreds of contracts subject to VEVRAA requirements but that Schindler had failed to comply with those requirements.  Among other claims, Kirk alleged that Schindler failed to submit required VETS-100 reports in some years and had filed false VETS-100 forms in others.   The district court dismissed the action finding, among other things, that the claim was bared under the FCA, 31 U.S.C. s. 3730(e)(4), which provides that information that has been publicly disclosed cannot be a basis for a FCA claim.  The information at issue here related to the allegedly missing and/or falsified VETS-100 forms that Mr. Kirk had discovered through FOIA requests.  

The relevant section of the FCA provides:

No court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation, or from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information. 

The Second Circuit vacated and remanded. There was no question that Mr. Kirk was not the original source of the information, so the only question whether a FOIA request counts as "public disclosure" for the purposes of the statute.  The Third Circuit answered that question in the affirmative.  The Ninth Circuit concluded that only a FOIA request that results in the production of an "enumerated source;" that is, one of the types of sources expressly named in the statute, creates a jurisdictional bar to an FCA claim.  The Second CIrcuit followed the Ninth.  It was supported in its position by the U.S. government as amicus curiae.

In the U.S. Supreme Court, the 5-3 majority (opinion by Justice Thomas) held that a government agency's response to a FOIA request constitutes a "report" and thus falls within the FCA's jurisdictional bar.  Justice Ginsburg wrote a short dissent, basically endorsing the Second Circuit's approach.  The opinion can be found here.  

Last week, the Second Circuit Revisited the case.  On its first pass on the case, the Second Circuit had left unresolved the following issues: 

(1) whether the Department of Labor's  FOIA responses indicating that reports were not found for certain years disclosed “allegations or transactions,” (2) whether Kirk’s failure-to-file claims were “based upon” any such disclosed “allegations or transactions,” or (3) whether Kirk qualifies as an “original source” of the relevant information underlying the failure-to-file claims.

The Second Circuit concluded that "Kirk’s failure-to-file claims were 'based upon' the 'allegations or transactions' disclosed in the FOIA responses and that Kirk does not qualify as an 'original source.'"  The Second Circuit thus affirmed the District Court's dismissal of Kirk's failure-to-file claims.  However, the Second Circuit left unchanged its earlier decision to vacate the District Court's dismissal of Kirks false reports claims, which were premised on Kirk's personal knowledge and thus did not run afoul of the FCA's jurisdictional bar.  

The most recent Second Circuit order can be found here.


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