Summary
The United States Court of Appeals for the District of Columbia Circuit addressed claims under the False Claims Act arising from alleged violations of federal supply contracts. The court held that a proposed settlement of qui tam claims over the relator’s objection requires a judicial determination that it is fair, adequate, and reasonable under 31 U.S.C. § 3730(c)(2)(B), and remanded for that determination. The court also reversed summary judgment on the relator’s retaliation claim and remanded for further proceedings.
Topics
Practice areas
Questions Presented
- Whether the government may settle and dismiss qui tam claims over the relator's objection without a judicial determination that the proposed settlement is fair, adequate, and reasonable under 31 U.S.C. § 3730(c)(2)(B).
- Whether the government had to formally intervene before moving to dismiss the qui tam claims.
- Whether 31 U.S.C. § 3730(c)(2)(B) violates separation of powers as applied when the government seeks judicial involvement in enforcing a settlement.
- Whether genuine issues of material fact precluded summary judgment on Schweizer's False Claims Act retaliation claim.
- What legal framework governs a False Claims Act retaliation claim when the employer offers a legitimate, nonretaliatory reason for its employment action.
Holdings
- When the government and a qui tam defendant agree to settle and the relator objects, the government may not settle the case unless the district court holds a hearing and determines that the proposed settlement is fair, adequate, and reasonable under all the circumstances.
- The government need not formally intervene before moving to dismiss a qui tam action when it seeks to end the action rather than proceed with it.
- Section 3730(c)(2)(B) is constitutional as applied where the government affirmatively seeks judicial involvement in the settlement process.
- Summary judgment was improper because a reasonable jury could find that Schweizer engaged in protected activity, that Océ knew of that activity, and that Océ terminated her at least in part because of it.
- The McDonnell Douglas burden-shifting framework applies to § 3730(h) retaliation claims; after the employer offers a legitimate, nonretaliatory reason, the framework drops away and the court asks whether the evidence would permit a reasonable jury to infer retaliation.
Key quotations
“The government may not settle a case when the relator objects unless the court approves the settlement.” (at 12)
“An employee acts “in furtherance of an action under this section” if he advances a suit by the Attorney General pursuant to § 3730(a) or a qui tam suit filed under § 3730(b).” (at 21)
“Once that occurs, “the burden-shifting framework disappears, and a court reviewing summary judgment looks to whether a reasonable jury could infer . . . retaliation from all the evidence.”” (at 25)
Factual background
Océ held General Services Administration contracts requiring it to provide the government with private-sector discounts and to supply products made in the United States or designated countries. Schweizer, Océ's GSA contracts manager, investigated alleged failures to pass on private-sector discounts and alleged inclusion of products manufactured in China in government contract listings. After reporting her concerns to supervisors and management and warning of potential False Claims Act violations, she was suspended and terminated. Océ's termination letter cited insubordination and failure to follow the chain of command while acknowledging her allegations of fraud and illegal conduct.
Procedural history
Schweizer filed qui tam and retaliation claims under the False Claims Act. The government declined to intervene initially but later reached a settlement with Océ and moved to dismiss the qui tam claims over Schweizer's objection. The district court dismissed those claims without determining whether the settlement was fair, adequate, and reasonable, and later granted Océ summary judgment on the retaliation claim. The D.C. Circuit reversed on all counts and remanded.
Remand instructions
The district court must conduct a hearing and determine whether the proposed settlement is fair, adequate, and reasonable under 31 U.S.C. § 3730(c)(2)(B), address the parties' remaining summary-judgment arguments on Count III, and consider the unresolved issue concerning the government's own Trade Agreements Act claims.