Rockwell International Corp. v. United States
2007 U.S. LEXIS 3778, 167 L. Ed. 2d 190, 127 S.Ct. 1397 (2007)
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Rule of Law:
Under the False Claims Act's public disclosure bar, a relator qualifies as an "original source" only if they possess direct and independent knowledge of the information on which their allegations, as finally litigated, are based. Jurisdiction must be assessed based on the allegations as they stand at the end of the case, not merely on those in the original complaint.
Facts:
- From 1975 to 1989, Rockwell International Corp. operated the Rocky Flats nuclear plant under a contract with the Department of Energy (DOE), with compensation tied to performance evaluations.
- James Stone was a Rockwell engineer from 1980 to 1986.
- In 1982, Stone reviewed a plan to create 'pondcrete' by mixing toxic sludge with cement. He submitted an 'Engineering Order' to Rockwell management concluding the proposed piping system was flawed and would create unstable blocks.
- Rockwell proceeded with the project and successfully manufactured stable pondcrete throughout Stone's employment.
- After Stone was laid off in March 1986, a new foreman began reducing the cement-to-sludge ratio to increase production, which caused newly-made pondcrete blocks to be 'insolid' (not properly solidified).
- In June 1987, more than a year after leaving Rockwell, Stone contacted the FBI with allegations of various environmental crimes at the plant, providing 2,300 documents, including his 1982 report on the pondcrete system.
- In May 1988, leaking pondcrete blocks were discovered at the plant, and the media publicly reported on the thousands of insolid blocks.
Procedural Posture:
- In July 1989, James Stone filed a qui tam action against Rockwell International Corp. in the U.S. District Court.
- Rockwell's motion to dismiss for lack of subject-matter jurisdiction was denied by the District Court.
- The U.S. Government intervened in the action, and the parties filed a joint amended complaint that was later superseded by a final pretrial order.
- Following a trial, a jury found for Stone and the Government on the pondcrete claims, and the District Court entered a trebled judgment.
- The District Court denied Rockwell's post-verdict motion to dismiss Stone's claims for lack of jurisdiction.
- On appeal by Rockwell, the U.S. Court of Appeals for the Tenth Circuit affirmed in part but remanded for the District Court to determine if Stone had provided his information to the government before filing suit.
- On remand, the District Court found Stone had not met his burden, but the Tenth Circuit, on a subsequent appeal by Stone, reversed and held that Stone was an original source.
- The U.S. Supreme Court granted Rockwell's petition for a writ of certiorari.
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Issue:
Under the False Claims Act, 31 U.S.C. § 3730(e)(4), must a relator have direct and independent knowledge of the information underlying the specific fraudulent conduct that is ultimately proven at trial to qualify as an 'original source,' or is it sufficient that the relator had knowledge related to the general subject matter of the original complaint?
Opinions:
Majority - Justice Scalia
Yes, a relator must have direct and independent knowledge of the information underlying the specific fraudulent conduct proven at trial to qualify as an 'original source.' The term 'allegations' in the statute refers to the claims as they are ultimately litigated, not just those in the initial complaint. The 'original source' requirement is a jurisdictional prerequisite that must be satisfied throughout the litigation. Here, the fraud proven at trial was that pondcrete blocks were insolid because a foreman changed the cement-to-sludge ratio, a fact which occurred after Stone left Rockwell and of which he had no knowledge. Stone's knowledge consisted of a prediction that the blocks would fail due to a different reason (a faulty piping system), which was an incorrect premise. A failed prediction based on a wrong cause and effect does not constitute the 'direct and independent knowledge' required by the statute. Furthermore, the Government's intervention in the case does not cure this jurisdictional defect for Stone, as the action remains one brought by a private person, not one 'brought by the Attorney General.'
Dissenting - Justice Stevens
No, the original source inquiry should focus on the information underlying the publicly disclosed allegations, not the specific theory of recovery that ultimately succeeds at trial. A plain reading of the statute indicates that a relator must be an original source of the information that was made public, triggering the jurisdictional bar. Jurisdiction should be determined at the time the action is filed and should not be re-evaluated every time the complaint is amended. Stone provided the government with information, including his engineering report predicting the pondcrete system would fail, before the public disclosures and his lawsuit. He was therefore an original source of the allegations that Rockwell's pondcrete system was flawed, even if his theory about the specific cause of the failure differed from what was later proven.
Analysis:
This decision significantly narrows the 'original source' exception to the False Claims Act's public disclosure bar, increasing the burden on whistleblowers. By requiring the relator's knowledge to match the facts of the fraud as ultimately proven, the ruling makes it difficult for relators whose understanding of the fraudulent scheme evolves during discovery and litigation. It establishes that jurisdiction under the FCA is not fixed at the time of filing but can be lost if the litigated claims diverge from the information of which the relator had direct and independent knowledge. This creates a risk that a relator who initiates a valid case could be dismissed later if the government, upon intervening, pursues a theory of liability unknown to the relator.
