Second Circuit limits scope of FOIA as a public disclosure, reverses dismissal of whistleblower's claim for false veteran employment filings

by Ben Vernia | April 12th, 2010

In an April 6 decision in US ex rel. Kirk v. Schindler Elevator Corp., the Second Circuit ruled that documents released in FOIA are only “public disclosures” if they themselves satisfy the bar’s requirements. Stating that it drew from the Supreme Court’s recent decision in Graham County Soil and Water Conservation District v. United States ex rel. Wilson, 559 U.S. — (2010):

We hold that a document obtained in response to a request made under the Freedom of Information Act (“FOIA”), 5 U.S.C. § 552, qualifies as an enumerated source triggering the jurisdictional bar of the False Claims Act (“FCA”), 31 U.S.C. § 3730(e)(4)(A), only when the document itself is a “congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation,” and that the documents obtained by the plaintiff through FOIA do not fall within any of these categories.

The relator was a veteran and a manager at an elevator company which merged with Schindler. He was demoted, and complained that neither he nor his coworkers at his predecessor company was never asked to self-identify as a veteran despite Schindler’s contracts with the government, as required under the Vietnam Era Veterans Readjustment Assistance Act (“VEVRAA”), 38 U.S.C. § 4212. The District Court had dismissed the case on public disclosure grounds, but held that the relator had stated a valid FCA claim but for the public disclosure.

Looking at the materials disclosed pursuant to FOIA requests by the relator and his wife, the Court wrote:

In this case, the materials produced to the Kirks by the DOL in response to Mrs. Kirk’s FOIA requests consisted only of Schindler’s VETS-100 filings as well as letters indicating that for certain years no responsive records had been found, neither of which constitutes an “administrative . . . report . . . or investigation” under the statute. Accordingly, the materials are not enumerated sources, and the FCA’s jurisdictional bar does not apply.

As for the relator’s theory of liability under the FCA, the Court of Appeals noted that “not every instance in which a false representation of compliance with a regulatory regime is made will lead to liability.” Nevertheless, it agreed with the District Court that, because of the clear statutory and regulatory requirement for federal contractors to comply with the Act, the company’s alleged failure to comply and alleged false reports was sufficient to trigger liability under the FCA. In reaching this conclusion, the Court rejected the District Court’s distinction between claims filed for contracts entered before vs. after the implementation of the regulations.

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