United States Court of Appeals, District of Columbia Circuit
United States, ex rel. Anthony Oliver, and Anthony Oliver, Appellant
Philip Morris USA Inc., a Virginia Corporation, formerly known as Philip Morris Incorporated, Appellee
January 15, 2016
from the United States District Court for the District of
Columbia (No. 1:08-cv-00034)
S. Golub argued the cause for appellant. With him on the
brief were Carl S. Kravitz and Jason M. Knott.
Elizabeth P. Papez argued the cause for appellee. With her on
the brief were Andrew C. Nichols, Eric M. Goldstein, Eric T.
Werlinger, and Thomas J. Frederick. Ilan Wurman entered an
Before: Rogers and Wilkins, Circuit Judges, and Williams,
Senior Circuit Judge.
WILKINS CIRCUIT JUDG.
and relator Anthony Oliver brings this qui tam
action alleging that Appellee Philip Morris USA violated the
False Claims Act ("FCA"), 31 U.S.C. §§
3729-3733 (2006),  by charging the
Navy Exchange Service Command ("NEXCOM") and the
Army and Air Force Exchange Service ("AAFES")
prices for cigarettes that violated the terms of their
contracts. The District Court concluded that it lacked
jurisdiction to hear the claim under the FCA's public
disclosure bar, 31 U.S.C. § 3730(e)(4)(A). After
reviewing the record, we affirm the judgment of the District
Court. The transactions that Oliver contends create an
inference of fraud were publicly disclosed through a
statutorily enumerated channel, triggering the jurisdictional
bar. Additionally, Oliver does not possess any direct
information about the underlying transactions that would
allow him to rescue his claim from the jurisdictional bar by
qualifying as an original source.
is the President and CEO of Medallion Brands International
Company ("Medallion"), which sells tobacco products
to civilian and military markets in the United States and
abroad. NEXCOM and AAFES
(collectively "the Exchanges") provide goods and
services to customers in the military community. Each of the
Exchanges' contracts with its vendors includes "Most
Favored Customer" provisions (the "MFC
provisions"). These provisions ensure that "the
prices paid by [the Exchanges] for the products they purchase
are equal to or more favorable than the prices, including any
customer discounts, at which the vendors sell like products
to other non-governmental and government purchasers."
Compl. ¶ 9, J.A. 17. Philip Morris USA ("Philip
Morris" or "PM USA") has, since at least 2002,
sold cigarette products to the Exchanges pursuant to
contracts including the MFC provisions. Despite Philip
Morris's knowledge of the MFC provisions, Philip Morris
sold the Exchanges at least 1.8 million cartons of cigarettes
at prices higher than the MFC provisions require.
Specifically, Philip Morris sold cigarettes to Philip Morris
Duty Free, Inc., ("PM DFI") and Philip Morris
International, Inc. ("PMI"), at prices lower than
the prices sold to the Exchanges. One of these affiliates
purchased Philip Morris cigarettes for resale on American
Samoa at a cost of $13.83 per carton, while NEXCOM purchased
cigarettes for the Navy on Guam at a cost of $27.77 less a
$4.00 rebate, for a price differential of $9.94.
filed this action in 2008 alleging that these transactions
violated the MFC provisions, and, as a result, the FCA. The
FCA removes jurisdiction from the federal courts for certain
actions brought under it. 31 U.S.C. §
3730(e).Specifically, the statute
No court shall have jurisdiction over an action under this
section based upon the public disclosure of allegations or
transactions in a criminal, civil, or administrative hearing,
in a congressional, administrative, or Government Accounting
Office report, hearing, audit or investigation, or from the
news media, unless the action is brought by the Attorney
General or the person bringing the action is an original
source of the information.
Id. § 3730(e)(4)(A). The FCA further defines an original source
as "an individual who has direct and independent
knowledge of the information on which the allegations are
based and has voluntarily provided the information to the
Government before filing an action under this section which
is based on the information." Id. §
District Court dismissed Oliver's complaint in 2013,
reasoning that Oliver's action was subject to the
FCA's jurisdictional bar and that he did not qualify as
an original source. U.S. ex rel. Oliver v. Philip
Morris, 949 F.Supp.2d 238, 251 (D.D.C. 2013). Oliver
appealed, and we vacated and remanded. U.S. ex rel.
Oliver v. Philip Morris (Oliver I), 763 F.3d
36, 44 (D.C. Cir. 2014). In Oliver I, we held that
the FCA's public disclosure bar was not triggered because
"Philip Morris . . . made no attempt to show that its
allegedly false certifications of compliance with [the MFC]
provisions were in the public domain." Id. at
41. We rejected Philip Morris's contention that
Government awareness of the MFC provisions constituted public
disclosure that triggers the FCA's jurisdictional bar.
Id. at 42. Additionally, we held that the Iceland
Memo, a 1999 inter-office memorandum discussing concerns
about cigarette pricing at a United States naval station in
Iceland, did not publicly disclose the MFC provisions or
Philip Morris's obligation to charge the Exchanges its
lowest price for cigarettes. Id. at 43. We also
rejected efforts by Philip Morris after oral argument to
demonstrate that the MFC provisions were generally available
so as to trigger the public disclosure bar because it had
abandoned those arguments on appeal and submitted new
evidence that we were unable to properly evaluate.
Id. at 43-44. Accordingly, we vacated the District
Court's decision and remanded the case for further
proceedings. Id. at 44.
remand, Philip Morris moved again to dismiss the complaint
for lack of subject matter jurisdiction. This time, Philip
Morris argued that the FCA's public disclosure bar was
triggered because the MFC provisions were published online
prior to the filing of the complaint. The District Court
concluded that, based on the archived webpages Philip Morris
submitted in conjunction with its motion, the MFC provisions
were publicly disclosed in an "administrative
report" and in the "news media, " and that the
allegations or transactions in the complaint were
substantially similar to those in the public domain. U.S.
ex rel. Oliver v. Philip Morris USA, Inc., 101 F.Supp.
3d 111, 123-27 (D.D.C. 2015). The District Court also
concluded that Oliver did not qualify as an "original
source" under the statute and once more dismissed the
Complaint. Id. at 127-29.
review de novo a dismissal for lack of subject
matter jurisdiction. Oliver I, 763 F.3d at 40.
explained in Oliver I, "[t]he False Claims
Act's public disclosure bar states that a court lacks
subject matter jurisdiction over an action 'based upon
the public disclosure of allegations or
transactions.'" 763 F.3d at 40 (quoting 31 U.S.C.
§ 3730(e)(4)(A)). "Transaction" in this sense
"refers to two or more elements that, when considered
together, give rise to an inference that fraud has taken
place." Id. at 40 (citing U.S. ex rel.
Springfield Terminal Co. v Quinn, 14 F.3d 645 (D.C. Cir.
1994)). Springfield Terminal provides the familiar
equation we use in such cases:
[I]f X=Z, Z represents the allegation of fraud and
X and Y represent its essential elements. In order to
disclose the fraudulent transaction publicly, the
combination of X and Y must be revealed, from which readers
or listeners may infer Z, i.e., the conclusion that
fraud has been committed. The language employed in §
3730(e)(4)(A) suggests that Congress sought to prohibit
qui tam actions only when either
the allegation of fraud [Z] or the critical elements
of the fraudulent transaction themselves were in the public
14 F.3d at 654 (final two emphases added). In other words, we
lack subject matter jurisdiction if either of the following
has been publicly disclosed: (1) the allegation of fraud
itself, or (2) the transactions that give rise to an
inference of fraud. Applied to this case, the transaction
would be "the fact that Philip Morris was not providing
the Exchanges with the best price for cigarettes (X) plus the
fact that Philip Morris falsely certified that it complied
with the Most Favored Customer provisions (Y), " which
"gives rise to the conclusion Philip Morris committed
fraud (Z)." Oliver I, 763 F.3d at 41.
Accordingly, we "lack jurisdiction over Oliver's
suit only if X and Y, i.e., both the