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CLICK HERE - to read the extensive pleading of "Extrinsic Fraud on The Court" in the Brief below.
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For the Northern District of Texas, Fort Worth Division No. CA 4:99CV0406-Y Respectfully submitted,
CERTIFICATE OF INTERESTED PERSONS The undersigned counsel of record certifies that the following persons have an interest in the outcome of this case:
RICHARD L. COFFMAN
STATEMENT REGARDING ORAL ARGUMENT This action is a Fed. R. Civ. P. 60(b) independent action in equity and based on the Defendant-Appellees' fraud upon the court in connection with the settlement of a qui tam action filed by Ballew. On information and belief, this is the first case submitted to this Court since the United States Supreme Court issued its opinion in United States v. Beggerly, 524 U.S. 38 (1998). In granting the Defendant-Appellees' Fed. R. Civ. P. 12(b)(1); (b)(6) Motion to Dismiss, the district court did not distinguish between (or individually address) Ballew's independent actions. Instead, the district court confusingly "mixed and matched" principles individually applicable to the different independent actions. In doing so, the district court misinterpreted and misapplied Beggerly. Ballew, therefore, respectfully requests oral argument to clarify (i) his separate and distinct Fed. R. Civ. P. 60(b) independent actions, and (ii) the proper interpretation and application of Beggerly. TABLE OF CONTENTS Certificate of Interested Persons i
Conclusion 28 Certificate of Service 30 Addendum 31
TABLE OF AUTHORITIES CASES Addington v. Farmer's Elevator Mut. Ins. Co., 650 F.2d 663 (5th Cir.), cert. denied, 454 U.S. 1098 (1981) 26
STATUTES 28 U.S.C. § 1291 1
OTHER AUTHORITIES 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1357 (1969) 16
STATEMENT OF JURISDICTION This case was brought pursuant to the equitable jurisdiction of the district court under Fed. R. Civ. P. 60(b) ("Rule 60(b)") to reopen the final judgment in United States ex rel. Robert C. Ballew v. Aerospatiale Helicopter Corporation and Textron Lycoming Corporation; Civil Action No. CA 4-88-287-E; in the United States District Court for the Northern District of Texas (the "Underlying Qui Tam"). The district court, therefore, had federal question jurisdiction over this matter pursuant to 28 U.S.C. § 1331 and 31 U.S.C. § 3732. The district court's Order and Final Judgment dismissing this case were signed on September 29, 1999. Record Excerpts at Tabs C; D. On October 12, 1999, Ballew filed a Motion to Reconsider which, on November 12, 1999, was denied by the district court. Record Ex. at Tab E. Ballew filed his Notice of Appeal on November 17, 1999. Rec. Ex. at Tab B. This Court, therefore, has jurisdiction over this appeal pursuant to 28 U.S.C. § 1291. STATEMENT OF THE CASE A. Introduction. This is a case in which the Defendant-Appellees (hereafter collectively referred to as the "Government") intervened in and settled the Underlying Qui Tam, failed to disclose to the court and Ballew the true nature, extent and value of the settlement and, as a result, shortchanged Ballew his statutory share of the total settlement proceeds. During 1988, Ballew risked his career and reputation by filing the Underlying Qui Tam against Aerospatiale Helicopter Corporation ("AHC"), his then current employer, and the Textron Lycoming Division of AVCO Corporation ("AVCO"). The Underlying Qui Tam exposed numerous fiscal and safety-related defalcations in the design, manufacture and servicing of the HH65-A "Dolphin" Short Range Recovery ("SRR") helicopters then being manufactured by AHC and AVCO for the United States Coast Guard ("USCG"). The SRR helicopter was (and continues to be) the main drug interdiction and short range recovery helicopter used by the USCG. The Government ultimately intervened in and settled the Underlying Qui Tam on July 10, 1990. At that time, the announced cash settlement of over $17 million, all of which was paid by AVCO, was the then largest qui tam settlement in history. Rec. Ex. at. Tab H. The settlement announced to the court and Ballew by the Government, however, was not the entire settlement. Unbeknownst to the court and Ballew at that time, the Government also received, among other things, settlement proceeds from AHC in the form of dismissed administrative claims that AHC had asserted against the Government. These dismissed administrative claims were valued at over $26 million. Ballew, as the Relator, however, was not paid his statutory share of the value of the dismissed claims. Over the next decade, through private research, telephone calls and correspondence with various governmental agencies, and Freedom of Information Act ("FOIA") requests (one of which the Government litigated), Ballew finally pieced together the true nature, extent and value of the Underlying Qui Tam settlement. This Rule 60(b) independent action has been brought to secure Ballew's statutory share of the total value of the settlement proceeds. B. Course of Proceedings and Disposition Below. This case was filed on June 7, 1999. On August 11, 1999, the Government filed its Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(1); (b)(6). ROA at 78-122. In its Motion, the Government attempted to recharacterize this action as one brought under the Federal Tort Claims Act, Tucker Act and False Claims Act. Id. The Government, however, did not address the fact that this case is a Rule 60(b) action in equity and based on the Government's fraud upon the court. Id. Ballew alerted the district court to this fact in his September 2, 1999 Response. ROA at 123-208. Nevertheless, on September 29, 1999, the district court, without hearing oral argument, signed its Order and Final Judgment dismissing this case. Rec. Ex. at Tabs C; D. The September 29, 1999 Order, however, did not distinguish between the independent actions asserted and, in fact, confusingly "mixed and matched" principles individually applicable to the different independent actions. Rec. Ex. at Tab C. On October 12, 1999, Ballew filed his Motion to Reconsider Dismissal of the Case. ROA at 368-523. The district court denied his Motion on November 12, 1999. Rec. Ex. at Tab E. This appeal has resulted. C. The Undisputed Statement of Facts. 1. Background of The Underlying Qui Tam. On May 5, 1988, Ballew filed the Underlying Qui Tam. At that time, he was employed by AHC as a Senior Subcontract Administrator in its Grand Prairie, Texas facility. The allegations in the Underlying Qui Tam arose out of the (i) June 14, 1979 contract between AHC and the USCG for the production and delivery of ninety (90) SRR helicopters, and (ii) April 1, 1980 subcontract between AHC and AVCO under which AVCO would manufacture and deliver one hundred eighty (180) LTS 101-750 engines (the "AVCO engines") for inclusion in the SRR helicopters (i.e., two engines per helicopter). AHC and AVCO also entered into several subsequent follow-up contracts relating to the above two principal contracts. Ballew's job was to coordinate the receipt of hardware, software and services with the SRR helicopter production schedule. Ballew soon discovered that the AVCO engines were grossly deficient in performance in several ways. Ballew also discovered that parts were being incorporated into the AVCO engines, as well as being delivered as spare parts, that did not conform to the specifications in the contracts between AHC, AVCO and the USCG. The Underlying Qui Tam resulted. 2. Post-filing activity in the Underlying Qui Tam. Immediately after filing the Underlying Qui Tam, Ballew and/or his counsel met with Government attorneys to further explain his claims and deliver all relevant documents. From the date of his first disclosure through the conclusion of the litigation, Ballew delivered to the Government approximately 3900 pages of documents on microfiche (which was prepared at Ballew's expense) and over 1000 pages of documents and reports in hard copy format. Ballew also granted the Government open and unrestricted access to another three (3) filing cabinets of documents. Ballew and/or his counsel also participated in numerous meetings and telephone conference calls with Government attorneys and representatives explaining the case, reviewing the documents and other evidence produced, rebutting the arguments made by AHC and AVCO, and assisting with the preparation of document and information requests. During May 1989, one year after the Underlying Qui Tam was filed, and unbeknownst to Ballew at that time, the Government commenced serious settlement discussions with AHC and AVCO. Ballew subsequently learned about the settlement negotiations during September 1989. From September 1989 until the Underlying Qui Tam was settled, Ballew repeatedly asked Government representatives for details about the negotiations, and the opportunity to assist with the negotiations. Ballew's requests repeatedly were denied. Settlement negotiations (excluding Ballew), nevertheless, continued. On February 6, 1990, the Government and AVCO entered into a Memorandum of Understanding (the "MOU") to settle the case. ROA at 392-412. Ballew was not a party to the MOU, nor was he involved in negotiating the MOU, provided with drafts of the MOU, or provided with a copy of the executed MOU. The MOU, which ultimately became the basis for the final settlement agreement between the Government and AVCO, outlined, in general terms, the following settlement proceeds to be paid by AVCO:
After the MOU was executed, the Government sought to secure Ballew's approval of the proposed settlement. Ballew's approval was critical because pursuant to Paragraph 6(a) of the MOU, the settlement could not be consummated without it. ROA at 407-08. Numerous discussions ensued between Ballew and/or his lawyer and the Government regarding the proposed settlement. Notwithstanding the intent of the Government and AVCO to enter into the PBTH contract and Transition Period Agreement, the Government repeatedly represented to Ballew that the Underlying Qui Tam would be settled for $17 million (and only $17 million). The Government also told Ballew that it would recommend that he receive 15% of the $17 million if he would agree to the proposed settlement. After numerous communications between Ballew and/or his lawyer and the Government did not result in Ballew's buy-in to the proposed settlement, the Government resorted to strong-arm tactics. Notwithstanding the fact that Ballew risked his career and reputation to file a case that resulted in the then highest qui tam settlement in history, the Government threatened to oppose Ballew's claim for any share of the settlement, and seek Ballew's dismissal as the Relator, if Ballew did not go along with the proposed settlement. Under threat from the Government, Ballew, on June 29, 1990, executed a Waiver and Release Agreement with respect to his claims against AVCO. Rec. Ex. at Tab G. On July 10, 1990, the Government issued a press release announcing the AVCO settlement. Rex. Ex. at Tab H. The press release specifically stated that: Ballew also named Aerospatiale Helicopter Corporation [AHC], the helicopter's manufacturer, as a defendant. However, no evidence was discovered to suggest that Aerospatiale participated in Textron Lycoming's [AVCO's] misconduct. Id. at ROA at 109. Also on July 10, 1990, the Government filed its formal Notice of Intervention and Motion to Dismiss all claims against AHC and AVCO. Rec. Ex. at Tab I. The Court dismissed the Underlying Qui Tam on the same day. Rec. Ex. at Tab J. 3. Post-settlement revelations. During May 1996, when the initial six (6) year term of the PBTH contract was scheduled to expire, Ballew sent a FOIA request to the USCG (the "USCG FOIA Request") for a Contract Closeout Summary, the internal USCG contract recap document, to confirm whether the PBTH contract and Transition Period Agreement addressed the defalcations alleged in the Underlying Qui Tam. On or about July 29, 1996, Ballew received a packet of documents in response to his USCG FOIA Request. Thereafter, during September 1996, Ballew sent a FOIA request to the United States Department of Justice ("DOJ") (the "DOJ FOIA Request") seeking to confirm the corresponding DOJ analysis of the Underlying Qui Tam settlement. Although the DOJ refused to produce to Ballew its settlement analysis under a claim of privilege, Ballew, in December 1997, finally received a packet of documents in response to his request. The DOJ documents revealed previously undisclosed information about the nature, extent and value of the Underlying Qui Tam settlement. The most pertinent document is the March 15, 1990 Memorandum for File authored by Stuart M. Gerson, Assistant Attorney General, Civil Division (the "Gerson Memorandum"), which revealed to Ballew, for the first time anywhere, that AHC also had given consideration to the Government to settle the Underlying Qui Tam: In addition, authority is granted to accept Textron's [AVCO's] offer to pay the Government $17 million (with interest from November 2, 1989) and other valuable consideration, and to accept Aerospatiale's offer to dismiss administrative claims against and to grant other valuable consideration to the Government, in settlement of the above-referenced suit [the Underlying Qui Tam], and to move to dismiss that suit with prejudice. Rec. Ex. at Tab F (emphasis added). Thus, at the time the Government was seeking to secure Ballew's concurrence with the proposed AVCO settlement, and representing to the court, Ballew and the public at large that AHC was not guilty of any misconduct, the Government knew that it would receive additional settlement proceeds from AHC in the form of the dismissed administrative claims. The Government's failure to disclose to the court and Ballew these additional settlement proceeds, and pay Ballew his statutory share of these proceeds, has given rise to this case. Consistent with the Gerson Memorandum, the exact date being unknown at this time, AHC and the USCG filed with the United States Department of Transportation ("DOT") Board of Contract Appeals a Joint Motion to Dismiss AHC's administrative claims. See, e.g., Rec. Ex. at Tab K. On July 24, 1990, just two weeks after the Underlying Qui Tam was dismissed, the final order dismissing AHC's administrative claims, totaling $26,440,130, was signed. Id. This component of the Underlying Qui Tam settlement, however, was never revealed by the Government to the court or Ballew. Thereafter, Ballew continued his efforts to document the total value received by the Government to settle the Underlying Qui Tam. On or about September 15, 1998, Ballew secured a copy of the December 1989 Assessment of the U.S. Coast Guard's HH-65A Helicopter (i.e., the SRR Helicopter) Engine Options (the "Assessment"). ROA at 449-519. The Assessment was prepared for the DOT Assistant Secretary for Administration by the DOT Research and Special Programs Administration Transportation Systems Center. The Assessment is the final piece of the Underlying Qui Tam settlement puzzle because a substantial portion of the Assessment focuses on the LTS 101 [AVCO] Engine Improvement Program (a.k.a. the PBTH Contract). The Engine Improvement Program discussion specifically focuses on the very AVCO engine shortcomings identified in the claims, allegations and information provided by Ballew to the Government in the Underlying Qui Tam. In short, the Assessment is the final link between the Underlying Qui Tam settlement and the PBTH contract and the Transition Period Agreement as integral components of the settlement. Based on the above post-settlement revelations, which have taken Ballew almost ten years to piece together through relentless research, FOIA requests and FOIA request litigation, Ballew, in good faith, requested payment of his statutory share of the portion of the Underlying Qui Tam settlement proceeds fraudulently concealed from him by the Government. Ballew's request was denied. This case has resulted. STATEMENT OF THE ISSUES PRESENTED FOR REVIEW 1. Whether the district court erred in dismissing Ballew's Fed. R. Civ. P. 60(b) independent action in equity. 2. Whether the district court erred in dismissing Ballew's Fed. R. Civ. P. 60(b) independent action based on a fraud upon the court. STANDARD OF REVIEW The Government's Motion to Dismiss was predicated on Fed. R. Civ. P. 12(b)(1) ("Rule 12(b)(1)") and Fed. R. Civ. P. 12(b)(6) ("Rule 12(b)(6)"). ROA at 78-122. The district court's dismissal Order, however, is not clear as to whether this case was dismissed under one or both of these provisions. Rec. Ex. at Tab C. Accordingly, Ballew presents the standard of review for both of these Rule 12(b) provisions. A Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction may be decided by the district court on one of three bases: the complaint alone, the complaint supplemented by undisputed facts evidenced in the record, or the complaint supplemented by undisputed facts plus the court's resolution of disputed facts. Ynclan v. Dept. of Air Force, 943 F.2d 1388, 1390 (5th Cir. 1991) (citing Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir.), cert. denied, 454 U.S. 897 (1981)). In this case, the district court did not hold a hearing on the Government's Rule 12(b)(1) Motion. The district court's dismissal Order includes only a very limited recitation of the facts. Rec. Ex. at Tab C. While the legal reasoning for the dismissal is set forth in the district court's Order, it neither comports with established caselaw or the totality of the undisputed facts in the record. This Court's review of the Rule 12(b)(1) dismissal, therefore, is de novo. Ynclan, 943 F.2d at 1390. This Court's review of the Rule 12(b)(6) dismissal also is de novo. Lowrey v. Texas A&M Univ. System, 117 F.3d 242, 246 (5th Cir. 1997) (citing Blackburn v. Marshall, 42 F.3d 925, 931 (5th Cir. 1995)). SUMMARY OF THE ARGUMENT The district court erred in dismissing this case for the following four reasons. First, the material undisputed facts alleged in the First Amended Complaint, when taken as true, and as supplemented by the documentary evidence in the record, entitle Ballew to discover and present evidence in support of his claims for a statutory share of the Underlying Qui Tam settlement proceeds fraudulently concealed from him by the Government. As such, the Government's Rule 12(b)(6) motion to dismiss should have been viewed with disfavor by the district court and denied. Second, Rule 12(b)(1) dismissals are restricted only to those situations where it appears certain that a plaintiff cannot prove any set of facts in support of his claims that would entitle him to relief. Again, the material undisputed facts and documentary evidence in the record (exclusive of any further discovery) easily clear the Rule 12(b)(1) dismissal threshold and, in fact, go a long way towards proving Ballew's claims on the merits. Third, the Government's fraudulent concealment of the true nature, extent and value of the total Underlying Qui Tam settlement proceeds, as set forth in the pleadings and documentary evidence in the record, constitutes a "grave miscarriage of justice." Ballew's Rule 60(b) independent action in equity, therefore, should be allowed to proceed. Finally, and as set forth in the pleadings and documentary evidence in the record, the Government's fraudulent concealment of the true nature, extent and value of the Underlying Qui Tam settlement proceeds which, in fact, was perpetrated by officers of the court (i.e., DOJ attorneys), subverted the integrity of the judicial process in a manner involving far more than an injury to a single litigant. Ballew's Rule 60(b) independent action based on the Government's fraud upon the court, therefore, also should be allowed to proceed.
ARGUMENTS AND AUTHORITIES A. The Allegations and Undisputed Facts Set Forth in Ballew's First Amended Complaint, as Supplemented by the Documentary Evidence in the Record, Easily Clear the Threshold to Withstand a Rule 12(b) Motion to Dismiss. 1. Rule 12(b)(6) dismissals. A Rule 12(b)(6) motion to dismiss "is viewed with disfavor and is rarely granted." Kaiser Aluminum & Chem. Sales v. Avondale Shipyards, 677 F.2d 1045, 1050 (5th Cir. 1982), cert. denied, 459 U.S. 1105 (1983). The complaint must be liberally construed in favor of the plaintiff, and all facts pleaded in the complaint must be taken as true. Campbell v. Wells Fargo Bank, 781 F.2d 440, 442 (5th Cir.), cert. denied, 476 U.S. 1159 (1986). Exhibits properly appended to a complaint also may be considered. Neville v. Am. Repub. Ins. Co., 912 F.2d 813, 814 n.1 (5th Cir. 1990). The district court may not dismiss a complaint under Rule 12(b)(6) "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claims which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). See also Blackburn v. Marshall, 42 F.3d at 931. This strict standard of review under Rule 12(b)(6) has been summarized as follows: The question therefore is whether in the light most favorable to the plaintiff and with every doubt resolved in his behalf, the complaint states any valid claim for relief. 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1357 (1969). See also Lowrey, 117 F.3d at 247. 2. Rule 12(b)(1) dismissals. The threshold to withstand a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction is lower than that necessary to withstand a Rule 12(b)(6) motion. L.C. Renninger Co., Inc. v. Vik Bros. Ins., Inc., 180 F.R.D. 272, 274 (E.D. Pa. 1997) (citing Lunderstadt v. Colafella, 885 F.2d 66, 70 (3d Cir. 1989)). Dismissal under Rule 12(b)(1) is appropriate only if the right claimed is "so insubstantial, implausible, foreclosed by prior decisions of this Court or otherwise completely devoid of merit as not to involve a federal controversy." Oneida Indian Nation v. County of Oneida, 414 U.S. 661, 666 (1974). The Fifth Circuit further restricts Rule 12(b)(1) dismissals to those situations where "it appears certain that the plaintiff[s] cannot prove any set of facts in support of [their] claim which would entitle [them] to relief." Bank One, Texas v. United States, 157 F.3d 397, 403 (5th Cir. 1998) (citing Hobbs v. Hawkins, 968 F.2d 471, 475 (5th Cir. 1992)). 3. This case should not have been dismissed pursuant to Rule 12(b)(1) or Rule 12(b)(6). Reduced to its basic elements, this case is about a man (Ballew) who initiated a qui tam case on behalf of the Government that generated a substantial settlement for the Government. The Government, however, and for whatever reason, intentionally did not disclose to the court and Ballew the full nature and extent of the settlement proceeds, and pay Ballew his full statutory share of the recovery. With all due respect to the district court, the substantial, plausible and undisputed operative facts and allegations pled in Ballew's First Amended Complaint (as supplemented by the documentary evidence in the record) tell a compelling story of how the Government intentionally shortchanged Ballew that easily clears the Rule 12(b) dismissal threshold. Ballew has worked diligently over a decade to ferret out the truth; he is entitled to his day in court. B. The District Court Erred in Dismissing Ballew's Rule 60(b) Independent Actions. 1. An overview of Rule 60(b). The purpose of Rule 60(b) is to define the circumstances under which a party may obtain relief from a final judgment. Bankers Mortgage Co. v. United States, 423 F.2d 73, 77 (5th Cir.), cert. denied, 399 U.S. 927 (1970). The provisions of Rule 60(b) must be carefully interpreted to preserve the delicate balance between the sanctity of final judgments and the incessant command of the court's conscience that justice be done in light of all the facts. Id. Rule 60(b) contemplates two distinct procedures for obtaining relief from a final judgment: by motion or via an independent action. Id., 423 F.2d at 77-78. The provisions governing independent actions (such as the present case) are found in the three "savings clauses" of Rule 60(b), which state that: This rule does not limit the power of a court to entertain an independent action to relieve a party from a judgment, order, or proceeding, or to grant relief to a defendant not actually personally notified as provided in Title 28, U.S.C., § 1655, or to set aside a judgment for fraud upon the court. ... [T]he procedure for obtaining any relief from a judgment shall be by motion as prescribed in these rules or by an independent action.(emphasis added). The first savings clause (i.e., relief from a judgment, order or proceeding) refers to a procedure that historically has been known as an independent action in equity to obtain relief from a judgment. Bankers Mortgage Co., 423 F.2d at 78. This case is an independent action in equity as discussed in greater detail below. The second savings clause (referencing 28 U.S.C. § 1635) pertains to lien enforcement in situations involving absent defendants. The second savings clause does not pertain to this case. The third savings clause (i.e., setting aside a judgment for fraud upon the court) pertains to this case as discussed in greater detail below. Finally, a Rule 60(b) independent action brought in the same court as the original lawsuit (such as the present case) does not require an independent basis for jurisdiction. Beggerly, 524 U.S. at 46. 2. Ballew should be allowed to proceed with his Rule 60(b) independent action in equity. It long has been held in this Court that the essential elements of an independent action in equity are as follows:
In the Matter of West Texas Marketing Corp., 12 F.3d 497, 503 n.3 (5th Cir. 1994) (emphasis added) (citing Bankers Mortgage Co., 423 F.2d at 79). The standard for a Rule 60(b) independent action in equity was further burnished by the Supreme Court in Beggerly, which held that: Independent actions must, if Rule 60(b) is to be interpreted as a coherent whole, be reserved for those cases of "injustices which, in certain instances, are deemed sufficiently gross to demand a departure" from rigid adherence to the doctrine of res judicata. Id., 524 U.S. at 46 (citing Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 244 (1944)). In other words, a Rule 60(b) independent action in equity "should be available only to prevent a grave miscarriage of justice." Beggerly, 524 U.S. at 47. The most common ground for an independent action in equity is fraud. 11 Charles A. Wright, Arthur R. Miller & Mary K. Kane, Federal Practice and Procedure: Civil 2D § 2868 (1995) (hereafter referred to as "Wright, Miller & Kane at § ___"). While a Rule 60(b)(3) motion encompasses both "intrinsic" and "extrinsic" fraud, authority exists in the Second, Fourth, Ninth, Eleventh and District of Columbia Circuits that an independent action in equity based on fraud will lie for "extrinsic" fraud, but not for "intrinsic" fraud. See, e.g., Wright, Miller & Kane at § 2868 (citations omitted). Wright, Miller & Kane, on the other hand, criticize this analysis: The distinction rests on clouded and confused authorities, its soundness as a matter of policy is very doubtful, and it is extremely difficult to apply. It ought not to persist as a limit on independent actions now that it has been abolished for [Rule 60(b)(3)] motions. Id. at § 2868 (citations omitted). Indeed, this Court appears to support Wright, Miller & Kane's thesis. See, e.g., Browning v. Navarro, 826 F.2d 335, 344 (5th Cir. 1987); Bros, Inc. v. W.E. Grace Mfg. Co., 320 F.2d 594, 608 (5th Cir. 1963); West Virginia Oil & Gas Co. v. Geo. E. Breece Lumber Co., 231 F.2d 702, 706 (5th Cir. 1954). From a limitations perspective, there is no time limit for bringing a Rule 60(b) independent action in equity. Matter of West Texas Marketing Corp., 12 F.3d at 503 n.1 (citations omitted). See also West Virginia Oil & Gas Co., 213 F.2d at 707 (granting relief in a Rule 60(b) independent action in equity nine (9) years after entry of the original judgment). The doctrine of laches or undue delay in bringing the action may bar relief. Wright, Miller & Kane at § 2868 (citations omitted). The doctrine of laches, however, only bars Rule 60(b) independent actions in equity "when the party seeking relief has not exercised due diligence in presenting his claim or defense, and the opposing party has been prejudiced by such delay." Lockwood v. Bowles, 46 F.R.D. 625, 629 (D.C.D.C. 1969). In its dismissal Order, the district court erred by failing to address the separate and distinct independent actions asserted by Ballew. Rec. Ex. at Tab C. The legal reasoning the district court actually set forth in the Order also is flawed because it confusingly "mixes and matches" principles individually applicable to the two independent actions. The facts set forth in the First Amended Complaint (as supplemented by the documentary evidence in the record) clearly comply with the essential elements of an independent action in equity. The concurrence of both the court and Ballew with the Underlying Qui Tam settlement was obtained by the Government by fraudulently concealing the true nature, extent and value of the settlement proceeds. The Government's fraud is extrinsic to the Underlying Qui Tam because it does not pertain to the substantive issues involved, but only to how the Government wrongfully treated its qui tam benefactor.The district court's use of Beggerly to dismiss this case is misplaced. In fact, this case is exactly the type of independent action in equity that Beggerly sanctions. Unlike Beggerly, which involved a less than thorough records search by the government, this case involves the Government's (i) affirmative misrepresentation of the true nature, extent and value of the Underlying Qui Tam settlement, and (ii) fraudulent concealment of evidence pertaining to the settlement. This case is more closely aligned with Marshall v. Holmes, 141 U.S. 589 (1891), a case cited by the district court and the Supreme Court in Beggerly as an example of a "grave miscarriage of justice." In Marshall, an independent action in equity was allowed to proceed because the underlying judgment was secured based on a forged document. The Government's affirmative misrepresentations and fraudulent concealment in this case closely parallel the affirmative action of forging the document in Marshall. To the extent the district court relied on Porter v. Chicago School Reform Board of Trustees, 187 F.R.D. 563 (N.D. Ill. 1999) and Lehman Bros. v. Masselli, No. 93 Civ. 4478 (AGS)(RJW), 1998 U.S. Dist. Lexis 13064 (S.D.N.Y. August 21, 1998), such reliance also is misplaced. Unlike this case, Porter involved simple common law fraud between opposing parties. This case involves a fraud perpetrated by the Government on the Relator in order to avoid paying a statutorily mandated share of the total settlement proceeds. Masselli is inapplicable because it involves a Rule 60(b) action based on a fraud upon the court. Finally, what the Government did not assert in its dismissal papers is telling. The Government affirmatively chose to ignore that this action is a Rule 60(b) independent action. The Government did not assert that Ballew's claims and allegations do not constitute a "grave miscarriage of justice." The Government did not assert the doctrine of laches. The Government did not charge Ballew with undue delay in bringing his claims, or explain how the Government is (or would be) prejudiced by such delay. The Government did not assert these defenses because what has happened here truly is a "grave miscarriage of justice" that a Rule 60(b) independent action in equity is designed to remedy. Ballew should be allowed to proceed with his claims. 3. Ballew should be allowed to proceed with his Rule 60(b) independent action based on the Government's fraud upon the court. The power to vacate a judgment that has been obtained by a fraud on the court is inherent in all courts. Wright, Miller & Kane at § 2870 (citing Universal Oil Products Co. v. Root Ref. Co., 328 U.S. 575, 580 (1946)). Almost all of the principles governing a claim of fraud on the court are derivable from Hazel-Atlas, supra. Wright, Miller & Kane at § 2870. If it is found that there was a fraud on the court, the judgment should be vacated and the guilty party denied all relief. Id.; Hazel-Atlas, 322 U.S. at 250-51. The entire cost of the proceedings, including attorneys' fees, may be assessed against the guilty party. Universal Oil Products, 328 U.S. at 580. There is no time limit for setting aside a judgment for fraud upon the court asserted via a Rule 60(b) independent action. Serzysko v. Chase Manhattan Bank, 461 F.2d 699, 702 (2d Cir.), cert. denied, 409 U.S. 883 (1972). Even the doctrine of laches does not bar an independent action based on a fraud upon the court. Hazel-Atlas, 322 U.S. at 246. Several definitions have been formulated as to exactly what kind of conduct constitutes fraud on the court. Wright, Miller & Kane at § 2870. A number of courts (including the Second and Seventh Circuits) have defined fraud on the court as follows: "Fraud upon the court" as distinguished from fraud on an adverse party is limited to fraud which seriously affects the integrity of the normal process of adjudication. Gleason v. Jandrucko, 860 F.2d 556, 559 (2d Cir. 1988) (citations omitted); Transaero, Inc. v. La Fuerza Area Boliviana, 24 F.3d 457, 460 (2d Cir., 1994). The concept of "fraud on the court" embraces "only that species of fraud which does, or attempts to, defile the court itself, or is a fraud perpetrated by officers of the court so that the judicial machinery cannot perform in the usual manner its impartial task of adjudging cases." Kupferman v. Consol. Research & Mfg. Corp., 459 F.2d 1072, 1078 (3d Cir. 1972) (citations omitted). Hadges v. Yonkers Racing Corp., 48 F.3d 1320, 1325 (2d Cir. 1995) (emphasis added). The Ninth Circuit has fashioned a slightly different definition, holding that "to set aside a judgment or order because of fraud upon the court, ... it is necessary to show an unconscionable plan or scheme which is designed to improperly influence the court in its decision." Bailey v. Internal Revenue Service, No. 98-CV-123-TUC-RTT (JMR), 1998 U.S. Dist. Lexis 21517 at *26 (D. Ariz. 1998) (citing Wright, Miller & Kane at § 2870 (quoting England v. Doyle, 21 F.2d 304, 309 (9th Cir. 1960)). This Court has defined fraud on the court to mean a "scheme by which the integrity of the judicial process has been fraudulently subverted by a deliberately planned scheme in a manner involving 'far more than an injury to a single litigant.'" Addington v. Farmer's Elevator Mut. Ins. Co., 650 F.2d 663, 668 (5th Cir.), cert. denied, 454 U.S. 1098 (1981) (citing, among other authorities, Hazel-Atlas, 322 U.S. at 245-46; Wright, Miller & Kane at § 2870). The cases in which it has been found that there was, or might have been, a fraud on the court are cases involving "the most egregious conduct involving a corruption of the judicial process itself." Wright, Miller & Kane at § 2870 (citations omitted). These types of cases certainly include situations where an attorney, as an officer of the court, deliberately misleads the court. See, e.g., Hazel-Atlas, supra.; Lockwood, 46 F.R.D. at 632. In the present case, Ballew alleges that the DOJ attorneys conspired with the USCG (and the defendants in the Underlying Qui Tam) to mislead the court as to the true nature, extent and value of the Underlying Qui Tam settlement proceeds. This scheme, by which the integrity of the judicial process was fraudulently subverted, had a negative impact far greater than that suffered by Ballew. In fact, in his First Amended Complaint, Ballew specifically alleged that the Government:
Section 6.3 of the First Amended Complaint. ROA at 307. The district court erred in dismissing Ballew's independent action based on a fraud upon the court. The only case conceivably relied upon by the district court was Masselli. The district court, however, cited Masselli to dismiss Ballew's independent action in equity, not his independent action based on a fraud upon the court. Moreover, the district court only cited Masselli for the Second Circuit standard. The district court mysteriously failed to analyze the Fifth Circuit standard and/or apply it to the facts and allegations set forth in the First Amended Complaint. The Government's egregious conduct in the Underlying Qui Tam corrupted the judicial process itself. Ballew, therefore, should be allowed to proceed with his Rule 60(b) independent action based on the Government's fraud upon the court. CONCLUSION This case is exactly the type of case involving a gross "miscarriage of justice" that the Supreme Court, in Beggerly, determined should be remedied by a Rule 60(b) independent action in equity. This fact, coupled with the Government's fraud on the court, clearly vested the district court with jurisdiction over this case. Most importantly, however, the undisputed material facts alleged by Ballew, when taken as true, and supplemented by the documentary evidence in the record, easily clear the Rule 12(b) dismissal hurdle. Ballew, therefore, respectfully requests that this Court reverse the district court's Final Judgment, remand this case to the district court, and allow him to proceed with his Fed. R. Civ. P. 60(b) independent action in equity and based on a fraud upon the court. Respectfully submitted, By:________________________________
CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the Brief of Appellant has been served on counsel for the Defendant-Appellees, as set forth below, and the Clerk of the Fifth Circuit Court of Appeals, in both paper and electronic form (pursuant to 5th Cir. R. 31.1) via overnight delivery on December ___, 1999. ______________________________
Paul E. Coggins, Esq.
David W. Ogden, Esq.
ADDENDUM CERTIFICATE OF COMPLIANCE Pursuant to 5th Cir. R. 32.2.7(c), the undersigned certifies that this brief complies with the type-volume limitations of 5th Cir. R. 32.2.7(b).
Richard L. Coffman
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