QUI TAM CASE - ISSUES PRESENTED

1. Does a "grave miscarriage of justice" occur, as required in United States v. Beggerly, 524 U.S. 38 (1998), when the Government attempts to (1) prevent the lawful return of the proceeds to the general fund, and, as a byproduct, (2) prevent the lawful payment of the qui tam relator’s portion?

STATEMENT OF THE CASE

COURSE OF PROCEEDINGS AND DISPOSITION OF THE CASE

        This case originally was filed in the Federal District Court of Judge Terry Means, in the Northern District of Texas 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). In its motion to dismiss, however, the Government 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.
        Ballew alerted the district court to this fact in his response. Nevertheless, on September 29, 1999, the district court, without hearing oral argument, dismissed the case for failure to state a claim. The district court subsequently denied Ballew’s motion to reconsider on November 12, 1999.
        The appeal was filed on November 17, 1999, and argued on October 2, 2000. The panel decision affirming the district court’s dismissal was filed on December 15, 2000. The timely filed Motion for Rehearing was denied on February 12, 2001. This Petition for Writ of Certiorari has resulted.

STATEMENT OF FACTS

A. Background of The Underlying Qui Tam.

        Ballew filed the Underlying Qui Tam on May 5, 1988. The Underlying Qui Tam arose out of the (i) June 14, 1979 contract between AHC and the United States Coast Guard (the "USCG") for the production and delivery of ninety (90) "Dolphin" Short Range Recovery ("SRR") helicopters, and (ii) April 1, 1980 subcontract between AHC and Textron Lycoming Corporation ("AVCO") under which AVCO would manufacture and deliver one hundred eighty (180) engines (the "AVCO engines") to power the SRR helicopters.
        As an AHC Senior Subcontract Administrator, Ballew soon discovered that the AVCO engines were grossly deficient in performance. Ballew also discovered that non-conforming parts were being incorporated into the AVCO engines, as well as being delivered as spare parts. The Underlying Qui Tam resulted.

B. Post-filing activity in the Underlying Qui Tam.

        During May 1989, one year after the Underlying Qui Tam was filed, and unbeknownst to Ballew at that time, the Government commenced settlement discussions with AVCO and AHC. Ballew subsequently learned about the settlement discussions during September 1989, although his requests to be involved were denied.
        On February 6, 1990, the Government and AVCO (but not AHC) entered into a Memorandum of Understanding (the "MOU") to settle the case. 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 the following settlement proceeds to be paid by AVCO:

• $17 million cash (plus interest);

• execution of a Power by the Hour ("PBTH") contract that allegedly would enable the USCG to avoid as much as $60 million in costs because it required AVCO to maintain the SRR helicopter engines and supply replacement parts for as long as six years; and

• execution of a "Transition Period Agreement" with the USCG for a maximum of 180 days under which, among other things, AVCO agreed to repair five (5) AVCO engines per month free of charge.

        More importantly, the MOU did not outline any consideration to be paid by AHC. After the MOU was executed, the Government sought to secure Ballew’s approval of the proposed settlement.
        After numerous communications between Ballew and/or his lawyer and the Government did not result in Ballew’s approval of the proposed settlement, the Government resorted to strong-arm tactics by threatening to oppose Ballew’s claim for any share of the settlement, as well as seeking Ballew’s dismissal as the Relator.
        Under threat from the Government, Ballew, on June 29, 1990, executed a Waiver and Release Agreement only with respect to his claims against AVCO. Ballew, however, did not dismiss any of his claims against AHC.
        On July 10, 1990, the Government filed its formal Notice of Intervention and Motion to Dismiss all claims against AHC and AVCO. The Court dismissed the Underlying Qui Tam on the same day pursuant to the terms of the settlement as outlined in the MOU.

C. Post-settlement Revelations.

        During May 1996, when the initial six (6) year term of the PBTH contract was scheduled to expire, Ballew sent a Freedom of Information Act ("FOIA") request to the USCG for a Contract Closeout Summary. Ballew, a long time government contractor, was interested in reviewing the Contract Closeout Summary, the internal USCG contract recap document, to confirm whether the PBTH contract and Transition Period Agreement, in fact, had fixed the problems alleged in the Underlying Qui Tam.
        Ballew also sent a FOIA request to the United States Department of Justice ("DOJ") seeking the corresponding DOJ documents analyzing the Underlying Qui Tam settlement. Although the DOJ initially refused to send Ballew its settlement analysis, 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.

        Id. (emphasis added). A true copy of the Gerson Memorandum is attached to the Petitioner’s brief before the Fifth Circuit Court of Appeals.

        Thus, at the same 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, AHC and the USCG subsequently filed with the United States Department of Transportation Board of Contract Appeals a joint motion to dismiss the administrative claims. 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. This component of the Underlying Qui Tam settlement, however, never was revealed by the Government to the court or Ballew.
        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 dismissed administrative claims fraudulently concealed from him by the Government. Ballew’s request was denied. This case has resulted.

REASONS FOR GRANTING THE WRIT

        There are special and important reasons for granting the writ in this case. This Honorable Court should grant certiorari because the decision in this case conflicts with the clear holding of this Honorable Court in United States v. Beggerly, 524 U.S. 38 (1998) which sets out the requirements for an independent action in equity due to a "grave miscarriage of justice." In Beggerly this Court underscored the special nature of the Rule 60(b) independent action in equity as a means of relief from a judgment, concluding that the remedy is available only where there has been a "grave miscarriage of justice." Beggerly, 524 U.S. at 46. The Supreme Court emphasized that the level of fraud or misconduct necessary to sustain an independent action under the "saving clause" of Rule 60(b) must be several notches of severity above that required for a Rule 60(b)(3) motion:

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.

Beggerly 524 U.S. at 46 (quoting Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 244 (1944)).

        The miscarriage of justice in this case is the fraud on the Court in failing to disclose the administrative claims which were intentionally negotiated in an attempt to avoid the payment to the relator for his portion of the value of the gross proceeds and to circumvent the law which provides for the payment of monies received from a qui tam action back into the general fund. The Government has issued memorandums which detail how the Government qui tam attorneys should attempt to negotiate separate agreements in order to keep the relator from receiving his statutory and lawful share and also so that the money will be left with the agency which allowed the fraud to occur. One of the most special and important of the reasons for this Court to grant certiorari and decide this case is the simple judicial economy which this Court’s decision would invoke. The Government’s attempt to circumvent the lawful payments to the relator in qui tam cases has caused considerable litigation by relators who discover that they were not paid for the benefits and proceeds repaid to the Government and the agencies involved. Justice Edith Jones decided this case but before she did, she expressed her displeasure with qui tam litigants who file the suits and keep litigating the actions for year after year after year. SEE: Texas Lawyer, "Counsel at Fifth Circuit Debate Supreme Court’s Ruling’s Effect on Qui Tam Litigation" by John Counsel. The litigation, for the most part is an attempt by qui tam litigants to obtain their fair share of the in-kind awards negotiated by the Government and hid from the relators in order to deprive them of the award and to keep the monies from returning to the treasury. The Fifth Circuit Court of Appeals has recognized that these savings or in-kind benefits are "proceeds" within the meaning of the qui tam statute. United States ex rel. Thornton v. Science Applications International Corp., 207 F.3d 769 (5th Cir., 2000). A final and definitive pronouncement by this Court that the alternative, in-kind benefits are in fact "proceeds" within the meaning of the statute would either abolish the end around of the statute which requires the sharing of funds or would decide that the benefits were outside the statute and end the attempts by qui tam relators to collect more.
        This Honorable Court should also dispose of the apparently conflicting opinions dealing with whether or not in-kind consideration, in this case, "power-by-the-hour" agreements and the waived claims whereby the offending company agrees to provide valuable services to the Government as restitution without payment or for greatly reduced payment for the services and the companies gave up valuable claims against the Government in settlement of the lawsuit. The Fifth Circuit directly held that such benefits are "proceeds" within the meaning of the statute. United States ex rel. Thornton v. Science Applications International Corp.,207 F.3d 769 (5th Cir., 2000). The Thornton case goes further and holds that the Government has an affirmative duty to advise qui tam relators of the value of all non-cash proceeds included in a qui tam settlement and to include those sums in the final payment to the relator. Mr. Thornton was lucky to find out about the arrangements before his time for finalizing the settlement was finished. The Government takes an active role in hiding these beneficial, financially rewarding contracts from the relators. In this case, the Government hid over $26 million from the Petitioner. The Petitioner could not have discovered this shortage because of the fraud and intrigue of the Government. The Government refused to let Judge Mahon know the truth so that a proper determination of the adequacy and fairness of the award could be decided.
        The Government’s constant and dedicated effort to subvert the Congress’ intent to have a relator awarded at least the minimum portion of all the proceeds received from the efforts of the qui tam relator needs direction and correction. If there is nothing wrong with the Justice Department’s activity in this regard, then it should be brought out for all to see and consider and not be conducted in the cloak and dagger manner these undercover negotiations are presently conducted. This Court’s decision determining the meaning of "proceeds" will go a long way toward achieving that honorable state.
        The second and final special and important reason for granting the writ is to determine whether the pleadings in Petitioner Ballew’s First Amended Complaint are sufficient to plead a Rule 60(b) fraud upon the court. The Complaint in its basic form shows that the Petitioner is seeking to right a wrong perpetrated upon the court by the Government’s fraudulent concealment of the true value of the entire settlement. This fraud was upon Mr. Ballew and the true value of his portion of the recovery, but as well it was a fraud upon the very Government the Justice Department represents. Without the relator coming forth and notifying the Justice Department of the wrong and in fact carrying the burden of the litigation for the most part in the early stages, the wrong would never be righted. Mr. Ballew came back into court to seek to remedy a grave miscarriage of justice and his pleadings adequately plead that equitable action. This Honorable Court should so find. This Honorable Court should grant certiorari and either grant a full hearing hereon or in the alternative, find that this case is ripe for disposition and grant a summary reversal.

I.
Does a "grave miscarriage of justice" as required in United States v. Beggerly, 524 U.S. 38 (1998) result when the Government in an attempt to prevent the lawful payment of the qui tam relator’s portion and prevent the lawful return of the proceeds regained to the general fund?

        The Fifth Circuit Court of Appeals in this case emphasized that the Petitioner had received a large sum of money in the initial settlement. (Opinion, p. 2-3) In addition, the Court erroneously found that "Ballew has shown injury to himself in his capacity as a ‘single litigant’ but this alone is not sufficient to constitute fraud on the court." (Opinion, p. 9) The grave miscarriage of justice is the consistent effort of the Justice Department to short qui tam litigants on the amount of money that Congress determined is their entitlement. The Government litigation tactics in this case are akin to the litigation tactics taken in all other qui tam cases. As evidence, the Government has shorted or attempted to short the qui tam litigant Mr. Pete Thornton as evidenced by the case of United States ex rel. Thornton v. Science Applications International Corp., 207 F.3d 769 (5th Cir., 2000). Litigation by qui tam relators who find that the Government has omitted some of the "proceeds" in computing their share of damages is widespread. [SEE: John Council, Qui Tam Provision’s Constitutionality Reconsidered", TEXAS LAWYER, October 2, 2000, at page 1.
        The allegations in this case clearly deal with the private attorney general status of a qui tam litigant. The qui tam litigant, as established by Congress, acts on behalf of the people of the United States and for the Government to protect its interests and rights. SEE: Marvin v. Trout, 199 U.S. 212 at 225, 26 S.Ct. 31 at 34, 50 L.Ed. 157; United States ex rel. Marcus v. Hess, 317 U.S. 537 at 546, 63 S.Ct. 379 at 385, 87 L.Ed. 443. As such, any fraud on the litigant is a fraud on the Court and the Government.
        Additionally, the trial court is required to make a fairness determination and when the trial court has been given no information on the missing data that function is impossible.
        Although the Fifth Circuit Court of Appeals addresses the issue as the greedy litigant, Petitioner is requesting only that he be given a hearing to prove his proper share of the $26 million of dismissed administrative claims that resulted from the qui tam action filed by Petitioner Ballew but which was never disclosed or considered in the funds he received. Although the Court of Appeals mentions that the Petitioner was seeking 15% of "$327,940,130" but as evidenced by the oral arguments before the Fifth Circuit the Petitioner was only seeking to prove the $26 million sum which was never disclosed. The entire reason for Congress providing the 15 to 25 per cent litigant’s fee is to encourage and not discourage people to file these claims on behalf of the Government and to retrieve the sums for the people and to help catch and eliminate fraud in Government contracts. The plan has worked well with qui tam litigants saving the Government literally hundreds of millions of dollars in cash, waivers of claims, and in-kind proceeds.
        The relevant facts establish the true nature of the Government’s consistent conduct as used not only in Mr. Ballew’s case but in the numerous other cases involving qui tam litigants.
        This Honorable Court should grant certiorari and determine if the Petitioner and the many other qui tam litigants can collect on the Government’s fraudulently concealed proceeds.

II.

Under the liberal rules of pleadings of the Federal Rules of Civil Procedure has Petitioner Ballew adequately pled a Rule 60(b) fraud on the court in light of the clear language in his First Amended Complaint?

        Under the liberal pleading rules of the Federal Courts, the Petitioner’s First Amended Complaint states a cause of action. This Honorable Court noted in several opinions:

"The Federal Rules of Civil Procedure do not require a claimant to set out in detail the facts upon which he bases his claim. To the contrary, all the Rules require is ‘a short and plain statement of the claim’ that will give the defendant fair notice of what the plaintiff’s claim is and the grounds upon which it rests. The illustrative forms appended to the Rules plainly demonstrate this. Such simplified ‘notice pleading’ is made possible by the liberal opportunity for discovery and the other pretrial procedures established by the Rules to disclose more precisely the basis of both claim and defense and to define more narrowly the disputed facts and issues. . . . The Federal Rules reject the approach that pleading is a game of skill in which one misstep by counsel may be decisive to the outcome and accept the principle that the purpose of pleading is to facilitate a proper decision on the merits." Conley v. Gibson, 355 U.S. 41 at 47-48, 78 S.Ct. 99 at 102-103, 2 L.Ed.2d 80 (1957); as cited in Kush v. Rutledge, 460 U.S. 719, 103 S.Ct. 1483, 75 L.Ed.2d 413 (1983)

        The Conley Court noted that "In appraising the sufficiency of the complaint we follow, of course, the accepted rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41 at 45-46, 78 S.Ct. 99 at 100-101, 2 LED.2d 80 (1957); as cited in Kush v. Rutledge, 460 U.S. 719, 103 S.Ct. 1483, 75 L.Ed.2d 413 (1983)
        The Opinion of the Fifth Circuit ignores these basic pleading rules which clearly allow the Petitioner to continue with his case and allow discovery to supplement any deficiency in the notice of the pleadings.
        This Honorable Court should grant Certiorari, reverse the dismissal of the Complaint and allow a trial on the merits. Petitioner will be able to prove his case.

CONCLUSION