Fifth Circuit affirms summary judgment against qui tam relator on public disclosure grounds

by Ben Vernia | July 1st, 2010

In a June 16 decision in United States ex rel. Bailey v. Shell Western, the Fifth Circuit Court of Appeals upheld the Southern District of Texas’s grant of summary judgment to a subsidiary of Shell Oil, finding that he was not an original source of publicly disclosed allegations.

The Court first disagreed with the relator that the SD Tex lacked jurisdiction over the False Claims Act allegations because the False Claims Act’s “first-to-file” rule barred the suit based on an earlier qui tam he had filed in Colorado (which had been transferred to Texas). The Court agreed with the Colorado district court which had ordered the transfer that the first-to-file rule did not apply to a subsequent case brought by the same qui tam relator.

The Court of Appeals dealt only briefly with the relator’s argument that the public disclosure bar should not have been applied to him, reasoning that the claims were “based primarily on public information and [the relator] is unable to offer evidence that he was the original source.”

In the district court below, the relator had conceded that the claims were publicly disclosed, but had argued in vain that various steps he took in earlier years gave him direct and independent knowledge of the alleged fraud (Shell’s underpayment of oil and gas royalties). See Bailey v. Shell Western E & P, Inc., 555 F.Supp.2d 767 (S.D.Tex. 2008).

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