Opinion
NO. 94-7000
October, 2000
MEMORANDUM
This is a qui tam action brought on behalf of the United States under the False Claims Act, 31 U.S.C. § 3729,-3733 (FCA) by plaintiff/relator Anthony J. Dunleavy, alleging that Delaware County and other defendants fraudulently retained Department of Housing and Urban Development (HUD) funds.
The following is a description of the relevant facts.
In 1976, Delaware County purchased a 56.6 acre tract of land known as the "Penza Tract" using approximately $1,839,500 of HUD funds. At the time of this purchase Mr. Dunleavy was an employee of a paid consultant to the County, whose role was to advise the County with respect to HUD's Community Development Block Grant ("CDBG") program and other related federal government programs. The intended use for the Penza Tract was to expand a pre-existing park. In January of 1979, the County entered into an agreement with the Pennsylvania Department of Transportation ("PennDOT"), in which PennDOT purchased 26.3 acres of the Penza Tract for approximately $1,988,550. In 1981, PennDOT bought an additional 1.9 acres for $103,950 and in 1988 the County received $1,000,000 from PennDot for a third parcel of the Penza Tract. The land was to be used by PennDot for the construction of a new highway, known locally as the "Blue Route." In consultation with Dunleavy, the County decided to put the proceeds from the sale of portions of the Penza Tract into an escrow account termed the "Penza Tract fund," with the idea that the money would be used to buy back the land in the event the highway was not constructed. Should the Blue Route be completed, the County was to return the funds, plus interest, to HUD.
HUD's CDBG program provides block grants to communities which may be used only for purposes considered both eligible and fundable under the program's regulations. See 42 U.S.C. § 5301, et seq.; 24 C.F.R. § 570.500, et seq.
After lengthy delays, the Blue Route was finally opened for public use in December 1991. During the interim the County occasionally used the money in the Penza tract for non-HUD purposes including general County expenses. Dunleavy left the service of the County in 1992 when his firm's contract was terminated. Dunleavy contends that the Penza Tract fund was subject to an agreement between the County and the federal government that required the County to follow HUD CDBG guidelines limiting the permissible uses of the funds and imposing certain reporting requirements on the County. Since the Penza Tract was originally bought with HUD funds, Dunleavy maintains that the County was required to treat the money it received from PennDot as HUD "program funds" and to provide accounts of transactions involving such money to that agency. Further, once it became apparent that the County would not be reacquiring the Penza Tract, Dunleavy contends that the County knowingly failed to return the principal plus interest from the Penza Tract fund to the government. Finally, Dunleavy alleges that as a result of the County's failure to report and return the Penza Tract funds in October of 1992 (the end of the fiscal year 1991), the County fraudulently received additional HUD funds during the fiscal years 1992, 1993, 1994, and 1995.
On November 18, 1994, Dunleavy initiated this suit seeking to recover the return of HUD funds made available to the County, trebled pursuant to the FCA. This action remained under seal as required by 31 U.S.C. § 3730(b)(2), until September 5, 1995, while the U.S. Attorney and HUD investigated the viability of Dunleavy's complaint. Following this investigation, the U.S. Attorney issued a Notice of Declination of Appearance pursuant to 31 U.S.C. § 3730(b)(4)(B), stating that the actions alleged in Dunleavy's complaint did not constitute fraud. The U.S. Attorney then turned over control of the investigation to HUD to review the matter for compliance with CDBG guidelines. In April of 1996, HUD issued a Limited Review Audit and made a demand on the County for the return of $1,779,299 plus interest. On September 11, 1996, HUD agreed to accept the County's settlement offer of $1,921,699. During the settlement negotiations Dunleavy claimed he was entitled to receive notice and a hearing pursuant to section 3730(c)(2)(B) of the FCA. HUD denied him the opportunity to intercede and participate in the negotiations. Under the settlement the County was to turn over the funds to HUD, who would then return the money to the County in the form of a line of credit, where it would be available for properly funded activities. Dunleavy's attempts to stay the administrative action necessary for execution of the settlement were denied by me and by the Court of Appeals.
Under the FCA, a private individual (a "relator") may bring a qui tam civil action in the name of the Federal Government. Before proceeding with the suit, the FCA requires a qui tam relator to disclose to the government the information on which the claim is based. 31 U.S.C. § 3730(b). The government then has sixty days to investigate the matter and to decide whether to intervene. The government may also enter the action at a later date upon a showing of "good cause." 31 U.S.C. § 3730(c)(3). The relator receives a share of any proceeds from the action regardless of whether or not the government intervenes. This share ranges from fifteen to twenty-five percent if the government intervenes, depending on the relator's contribution to the prosecution, and from twenty-five to thirty if it does not, depending on the court's assessment of what is reasonable.
"It is the government's view, following an investigation, that the matters raised in the relator's complaint do not involve fraud." Notice of Declination of Appearance of the United States, pursuant to 31 U.S.C. § 3730(b)(4)(B), Aug., 10, 1995.
"The Government may settle the action with the defendant notwithstanding the objections of the person initiating the action if the court determines, after a hearing, that the proposed settlement is fair, adequate, and reasonable under all the circumstances." § 3730(c)(2)(B).
I denied Dunleavy's motion for a stay because Dunleavy's Second Amended Complaint had been dismissed pursuant to my July 12, 1996 Memorandum and Order at the time the motion was filed.
Dunleavy is suing Delaware County, and current and former county officials, under the FCA to recover $4,350,000 in damages ($1,450,000 tripled under the statute); civil penalties; interest accrued on the monies between 1980 and October 1992; pre-judgment and post-judgment interest; and the amount of all HUD grants and loans made during the fiscal years 1992, 1993, 1994, and 1995, which plaintiff alleges is at least $16,466,000, plus pre-judgment and post-judgment costs. (Pl. Sec. Am. Comp. Counts 1-3). Plaintiff also asserts claims of fraud, unjust enrichment, payments under mistake of fact and breach of contract. Id. Counts 4-7.
I dismissed Dunleavy's Second Amended Complaint for lack of subject matter jurisdiction because in my view the action was based on publicly disclosed information. See No. 94-7000, 1996 WL 392545 (E.D.Pa. July, 12 1996). The Court of Appeals reversed and remanded the case for further proceedings. See 123 F.3d 734 (3d Cir. 1997). Defendants then moved to dismiss Dunleavy's claim pursuant to Fed.R.Civ.P. 12(b)(6), failure to state a claim, and Fed.R.Civ.P. 9(b), failure to plead allegations with sufficient particularity. These motions were denied. See No. CIV. A. 94-7000, 1998 WL 151030 (E.D.Pa. Mar. 31, 1998). Plaintiff subsequently moved for a hearing pursuant to 31 U.S.C. § 3730 (c)(2)(B) and (c)(5) to determine whether the settlement was fair and reasonable and, if it was, for a determination of the relator's share in the proceeds of HUD's Limited Review Audit under 31 U.S.C. § 3730(d). This motion was denied as was plaintiff's motion for an interlocutory appeal on this issue pursuant to 28 U.S.C. § 1292. I ordered the qui tam action to proceed as directed by the Court of Appeals.
The Court of Appeals held that a HUD grantee performance report prepared by the County and submitted to HUD did not qualify as an "administrative report" for purposes of the public disclosure bar under 31 U.S.C. § 3730(e)(4)(A). The Court found that only those actions based on reports that originate with the federal government are barred under the FCA. 123 F.3d at 746.
I held that the Limited Review Audit was not an "alternate" or "administrative proceeding to determine a civil money penalty" under section 3730(c)(5) of the FCA.
The Court of Appeals held "[s]ince Dunleavy is a proper relator, has an interest in pursuing his claim independently of the government, the government, which has not elected to intervene, cannot compromise Dunleavy's claim even if the government has settled its own claim. A viable case or controversy therefore continues to exist since Delaware County's potential exposure in Dunleavy's qui tam action may ultimately exceed that which it accepted in its settlement with HUD." 123 F.3d at 739.
On May 23, 2000, I directed the parties to brief the question of whether this action should proceed in light of the Supreme Court's decision in Vermont Agency of Natural Resources v. United States ex rel. Stevens, 120 S.Ct. 1858 (2000). The United States also submitted a brief in support of plaintiff's right to proceed. After consideration of the Stevens decision, I conclude that plaintiff's action may not continue against Delaware County due to the punitive nature of the damages mandated by the FCA.
This Order also denied all pending motions as moot with leave to renew at a later date if necessary.
I have considered the government's brief; however I note that the United States has not intervened in this action and did not move for leave to file an amicus curiae brief.
DISCUSSION
The FCA imposes civil liability upon "[a]ny person who knowingly presents, or causes to be presented, to an officer or employee of the United States Government. . . a false or fraudulent claim for payment or approval." 31 U.S.C. § 3729(a). The statute was initially passed in 1863 and until 1986 provided for a private civil action with remedies of double damages and civil penalties for each false claim. In 1986 Congress amended the statute increasing liability to "a civil penalty of not less than $5000 and not more than $10,000, plus three times the amount of damages which the Government sustains," except in certain specific circumstances where "the court may assess not less than two times the amount of damages which the Government sustains." 31 U.S.C. § 3729 (a).
Such circumstances exist where (A) a violator furnishes investigating officials all information known to such person about the violation within thirty days after the date on which the defendant first obtained the information; (B) such person fully cooperated with the government's investigation of such violation; and (C) at the time such person furnished the United States with the information, no criminal prosecution, civil action, or administrative action had commenced under the FCA with respect to the violation, and the person did not have actual knowledge of the existence of an investigation into such violation. 31 U.S.C. § 3729 (a)(A-C)
There has been a division among district courts as to whether or not a local government entity is a "person" which can be sued by a qui tam relator under the FCA. See United States ex rel. Graber v. The City of New York, 8 F. Supp.2d 343 (S.D.N.Y. 1998) (holding that a city is not a "person" under the FCA); United States ex rel. Garibaldi v. Orleans Parish Sch. Bd., 46 F. Supp.2d 546 (E.D.La. 1999) (holding that the term "person" under the FCA includes the political subdivisions of states); United States ex rel. Chandler v. The Hektoen Inst. for Med. Research, 35 F. Supp.2d 1078 (N.D.Ill. 1999) (holding that a county is a "person" under the FCA).
The Supreme Court granted certiorari in the Stevens case to resolve whether "a private individual may bring suit in federal court on behalf of the United States against a state (or a state agency) under the False Claims Act." 120 S.Ct. at 1860. On May 22, 2000, Justice Scalia writing for the majority in Stevens issued a two-part holding. First, the Court held that a private individual who brings a qui tam suit under the FCA has standing to sue so long as the United States has suffered an injury. Second, the Court held that states are not included within the FCA's definition of the word "person," and therefore, at least in cases where the government has not intervened, states may not be sued by qui tam relators.
In determining whether a state may be subject to qui tam liability under the FCA, the Stevens Court began its analysis by stating that it need not reach any Eleventh Amendment issue as the question of whether a state is a "person" subject to qui tam liability under section 3729(a) of the FCA could be decided solely on statutory grounds.Id. at 1866. The Court stated there is a presumption that the term "person" does not include sovereigns that may be overcome only if there is some showing of statutory intent to the contrary. Id. at 1867. Despite finding that the liability provision in the original FCA had undergone a number of changes since it was enacted in 1863, Justice Scalia held that "none of them suggests a broadening of the term `person' to include States" and the text of the statute itself does "less than nothing to overcome the presumption that States are not covered."Id. at 1868
The Court listed three additional reasons why states should not be subject to qui tam liability. First, the section of the FCA concerning the attorney general's authority to issue civil investigative demands, 31 U.S.C. § 3733, expressly defines "person" to include states. Justice Scalia reasoned that since section 3729(a), the provision of the FCA creating liability, did not define "person" the absence of an express definition including states suggests that they are not "persons" for purposes of qui tam liability. Id. at 1868-69.
Second, and particularly relevant to Dunleavy's claim, the Court stated that "the current version of the FCA imposes damages that are essentially punitive in nature, which would be inconsistent with state qui tam liability in light of the presumption against the imposition of punitive damages on governmental entities."Id. at 1869. The Court acknowledged that it had in the past labeled damages under the pre-1986 FCA as remedial rather than punitive, but noted the contrast between the old statute and the current version which generally imposes treble damages and a civil penalty of up to $10,000 per claim. Id.
Finally, the Court noted that the Program Fraud Civil Remedies Act of 1986 (PFCRA), a "sister scheme" of the FCA creating administrative remedies for false claims, has a definition of "persons" subject to liability that does not include states. Justice Scalia reasoned that it would be peculiar to subject states to treble damages and civil penalties in qui tam actions under the FCA, but to exempt them from lesser damages under the PFCRA. Id. at 1870.
The issue for me to resolve is whether absent federal intervention an individual may pursue claims under the FCA against a county. One of plaintiff's central arguments is that Stevens is inapplicable to this matter as the Stevens Court applied a statutory analysis similar to an Eleventh Amendment inquiry that is relevant only to states. According to the plaintiff since Delaware County is not a state and may not claim protection under the Eleventh Amendment defendants "cannot claim they fall within the issues discussed in Stevens." (Pl.'s Br. Resp. toStevens at 6). I agree that the Court's holding inStevens does not directly resolve the issue presented by this action. This does not mean, however, that the reasoning utilized by the Stevens Court is inapplicable to the circumstances surrounding Dunleavy's claim. In particular, Justice Scalia's explicit reference to the damage provision of the FCA as "essentially punitive in nature," rendering it inappropriate "in light of the presumption against the imposition of punitive damages on governmental entities," has a significant impact on the present matter. Stevens, 120 S.Ct. at 1869. Under the Stevens rationale, the FCA imposes mandatory damages that are punitive in nature that may not be brought by a qui tam relator against a county.
The issue of whether the United States, either as the initial plaintiff or as an intervener, may bring suit under the FCA against a local government entity is not before me.
Such statements may not, as plaintiff suggests, be dismissed as mere dicta. (Pl.'s Br. Resp. to Stevens at 13). The punitive nature of the damage provision was cited by the Court as one of "several features of the current statutory scheme that further support the conclusion that States are not subject to qui tam liability."Stevens 120 S.Ct. at 1869. Even if this determination were not essential to the judgment, it is persuasive, if not mandatory, authority. It is worth noting the Seventh Circuit has already citedStevens for the proposition that treble damages are punitive.See Perez v. Z Frank Oldsmobile, Nos. 99-2742, 00-1786, 99-2854, 00-1701, 2000 WL 1049185 *5 (7th Cir. July 31, 2000).
I. Treble Damages under the FCA are Punitive and May not Be Imposed on a County
The Stevens Court held that states presumptively are not covered by the term "person," and that nowhere in the FCA or its history is there sufficient indication that Congress intended to overcome this presumption. Id. at 1868. Local government entities, however, are in a different posture as they typically have been presumed to be persons at common law. Plaintiff maintains therefore that in the absence of any statutory definition counties presumptively ought to be considered "persons" under the FCA. (Pl.'s Br. Resp. to Stevens at 7-8). Both plaintiff and the government find support for this position by pointing out that such entities have been considered "persons" under other federal statutes. (Pl.'s Br. Resp. toStevens at 9; Govt.'s Br. Resp. to Stevens at 6-8, citing Monell v. Department of Social Servs. of the City of New York, 436 U.S. 658 (1978)). However, neither of these assertions address the Stevens Court's statement that the damage provision of the FCA is "essentially punitive in nature." In making this determination, the Court reiterated the presumption it established inCity of Newport v. Fact Concerts, 453 U.S. 247 (1981), that governmental entities may not be subjected to punitive damages. Stevens, 120 S.Ct. at 1869.
Newport involved the application of punitive damages to a municipality under 42 U.S.C. § 1983. In analyzing the historical context that produced this statute, the Newport Court stated that
[i]t was generally understood by 1871 that a municipality, like a private corporation, was to be treated as a natural person subject to suit for a wide range of tortious activity, but this understanding did not extend to the award of punitive or exemplary damages. Indeed, the courts that had considered the issue prior to 1871 were virtually unanimous in denying such [punitive] damages against a municipal corporation.
Newport, 453 U.S. at 259. In Stevens Justice Scalia employed this rationale in support of the Court's holding that the FCA may not be applied by qui tam relators against states. It is therefore almost inescapable that the same would be true concerning counties and other state subdivisions, the very subject matter before the Court inNewport.
I do not agree with the government's suggestion that subjecting a county to treble damages under the FCA is somehow more acceptable than applying punitive damages to a municipality under section 1983. (Govt.'s Br. Resp. to Stevens at 9). The government cites Brunswick Corp v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (1977), and American Society of Mechanical Engineers, Inc. v. Hydrolevel Corp., 456 U.S. 556, 574 (1982), antitrust cases, for the proposition that treble damages are not punitive. (Govt.'s Br. Resp. to Stevens at 10). But in addition to the unequivocal language of Stevens labeling the treble damage provision of the FCA punitive, Justice Scalia cited Texas Industries, Inc v. Radcliffe Materials, Inc., 451 U.S. 630,639 (1981), for the proposition that "[t]he very idea of treble damages reveals an intent to punish past and to deter future, unlawful conduct, not to ameliorate the liability of wrongdoers." Stevens, 120 S.Ct. at 1870.
In its brief the government also asserts without citation that "unlike the punitive damages contemplated by the Court in Fact Concerts . . . the FCA damages are imposed by a judge." (Govt.'s Br. Resp. to Stevens at 9). However, as the Garibaldi court stated in determining the viability of a qui tam suit under the FCA, "[w]here the evidence at trial shows a range of possible damages, the jury `enjoys substantial discretion in awarding damages within the range showed by the evidence.'" 46 F. Supp.2d. at 562, citingNeiman-Marcus Group, Inc. v. Dworkin, 919 F.2d 368, 372 (5th Cir. 1990).
Further, courts have long shown a reluctance to impose treble damages on state subdivisions. In Hunt v. City of Boonville, 65 Mo. 620 (1877), cited approvingly by the Newport Court, the Missouri Supreme Court held that a municipality could not be found liable for treble damages under a trespass statute notwithstanding the statute's authorization of such damages against "any person."Newport, 453 U.S. at 261. The Hunt court noted the existence of "respectable authority" in support of the proposition that municipal corporations "can not, as such, do a criminal act or willful and malicious wrong and they cannot therefore be made liable for exemplary damages." 65 Mo. at 624. Similarly, the Sixth Circuit in Barnier v. Szentmklosi refused to allow a treble damages award for the malfeasance of its police officers since damage awards against municipalities would not serve the purposes of deterrence and punishment and could create a serious risk to their financial integrity. 810 F.2d 594, 598-99 (6th Cir. 1987). This rationale is similar to that employed by the Newport Court which stated that since a "municipality. . . can have no malice independent of the malice of its officials, [d]amages awarded for punitive purposes. . . are not sensibly assessed against the governmental entity itself." Newport, 453 U.S. at 267. The Court also pointed out that "it is far from clear that municipal officials, including those at the policymaking level, would be deterred from wrongdoing by the knowledge that large punitive awards could be assessed based on the wealth of their municipality."Id. at 268. Such purposes would be no better served by allowing Dunleavy to recover treble damages against Delaware County, particularly since there has been no allegation that any individual defendant acted for his own benefit, profited at the public's expense, spent the money in question for any reason other than for public purposes, or acted in anything other than his official capacity.
Treble damages are a form of punitive damages, generally applied because of the wanton, reckless, malicious, or oppressive character of the acts complained of and as a warning to deter the offender from committing like offenses in the future. See Joel E. Smith, Recovery of Exemplary or Punitive Damages from Municipal Corporations, 1 A.L.R.4th 448 (Supp. 2000). I agree withGraber, 8 F. Supp.2d at 345: "[t]he False Claims Act was passed to protect the taxpayers. It was not intended to provide the federal government with a means to punish city and state taxpayers for the alleged wrongdoing of their local government officials." Plaintiff's contention that Delaware country is a "quasi-municipal corporation" that may "sue or be sued" under the statute that created it is not relevant to the question of whether or not it may be subjected to punitive damages under a federal statute. (Pl.'s Br. Resp. to Stevens at 4).
A. Program Fraud Civil Remedies Act
Plaintiff also asserts that, unlike states, counties are "persons" for purposes of the Program Fraud Civil Remedies Act of 1986 (PFCRA) and should be afforded similar treatment under the FCA. (Pl.'s Br. Resp. to Stevens at 23). Plaintiff's reasoning is based on the Stevens Court's assertion that as states were not specifically mentioned in the definition of "person" for purposes of the weaker penalties under the PFCRA it would be illogical to count them persons under the harsher sanctions of the FCA. Plaintiff asserts that Delaware County is defined as a "person" under the PFCRA because it is a "corporate" entity under local law and "corporations" are included as "persons" under the PFCRA. Therefore, plaintiff maintains, Delaware County is a "person" under the FCA. (Pl.'s Br. Resp. to Stevens at 23). I disagree. The penalties under the PFCRA are a civil penalty of not more that $5000 for each claim and an assessment in lieu of damages sustained by the United States of not more than twice the amount of the claim. 31 U.S.C. § 3802(a)(1)(D). In determining that the enhanced damage provision rendered the FCA punitive in nature, theStevens Court distinguished it from an earlier version that imposed only double damages and a civil penalty of $2000. SeeStevens, 120 S.Ct. at 1869. Therefore, even if plaintiff's interpretation of the definition of the word "corporation" is correct and Delaware County falls within the purview of the PFCRA a question I do not decide — this does nothing to help plaintiff overcome the County's immunity from the mandatory punitive damage measures of the FCA.
B. Surcharge
One of the reasons the Newport Court found punitive damages impermissible against municipalities was because such awards would burden the taxpayers and citizens for whose benefit the wrongdoer was being punished. Newport, 453 U.S. at 263. Plaintiff maintains that the rationale behind this rule is inapplicable in this case because there is a state surcharge action that may be brought against individuals to recover funds improperly held by county officials. (Pl.'s Br. Resp. to Stevens at 14, citing 16 Pa. Cons. Stat. § 4901). While it is far from clear whether the $4,350,000 in treble damages plaintiff is seeking in addition to the return of over $16 million he alleges the County must turn over to the government may be recovered in this fashion, I need not decide this issue. I will not engage in an analysis of possible state law remedies that under certain circumstances might alleviate the cost to local taxpayers of a successful treble damages suit against the County. As the Stevens Court stated, a "better reading of Newport is that [the Supreme Court was] concerned with imposing punitive damages on taxpayers under any circumstances." Stevens, 120 S.Ct. at 1869, n. 15.
It is worth noting, however, that § 4901 only empowers a county controller to recover the amount of money that was misused or misappropriated. There is nothing to indicate it would provide any relief in recovering the excess damages levied against the County in the form of treble damages and fines available under the FCA.
II. Punitive Damage Liability is Not Separable from a Cause of Action Under the FCA
The amendments to the FCA in 1986 increased liability from double to triple damages, raised the civil penalty limit by five times, and added section 3730(d)(5) allowing successful claimants to be awarded attorney's fees in addition to any other percentage of the award recovered. These were the changes that led Justice Scalia to label the damages mandated by the FCA as "essentially punitive in nature." Relying on City of Lafayette v. Louisiana Power and Light Co., 435 U.S. 389 (1978), and Community Communications Co v. City of Boulder, 455 U.S. 40 (1982), both the plaintiff and the government maintain that since under other statutes the Supreme Court has allowed suits against state subdivisions where treble damages were available it would be illogical not to do so under the FCA. (Govt's Br. Resp. to Stevens at 13; Pl.'s Resp. Br. to Govt.'s Resp. to Stevens at 2). In Lafayette andBoulder the Court held that cities were not automatically exempt from the operation of federal antitrust laws. The Court also held that a municipal body was a "person" within the contemplation of those laws despite the presence of a clause calling for treble damages liability for "persons" violating the law. However, in neither Lafayette nor Boulder did the Court reach the question of whether a municipality could be held liable for treble damages.
Any doubt as to whether the 1986 amendments to the FCA apply to this case was resolved by the Court of Appeals when it applied the amended FCA to determine that Dunleavy's claim was not barred by the Act's public disclosure bar, 31 U.S.C. § 3730(d). See 123 F.3d at 739-40.
"[I]t has not been regarded as anomalous to require compliance by municipalities with the substantive standards of. . . federal laws which impose [criminal and civil] sanctions upon `persons.' (Citations omitted) But [this does] not necessarily require the conclusion that remedies appropriate to redress violations by private corporations would be equally appropriate for municipalities; nor need we decide any question of remedies in this case."Lafayette, 435 U.S. at 401-402 (1978). "Among the many problems [with the majority's decision] will be whether the `per se' rules of illegality apply to municipal defendants in the same manner as they are applied to private defendants. Another is the question of remedies. The Court understandably leaves open the question whether municipalities may be liable for treble damages for enacting anticompetitive ordinances. . . ." Boulder, 455 U.S. at 65 (Rehnquist, J., dissenting).
Further, as the government itself points out, in the wake of the Court's decisions in these two cases, Congress enacted the Local Government Antitrust Act of 1984 ("LGAA"), codified at 15 U.S.C. § 34-36. This statute, "described by Congress as an act to `clarify' the application of the Clayton Act to the official conduct of local governments. . .", prohibited the recovery of antitrust damages from any local government, or any employee or official thereof acting in an official capacity. Opdyke Investment Co. v. City of Detroit, 883 F.2d 1265 (6th Cir. 1989) (precluding recovery of antitrust damages under 15 U.S.C. § 35(a) from the city of Detroit). Using the federal antitrust statutes as a model, as Dunleavy and the government suggest, supports rather than weakens the County's position that it is not subject to suit by private qui tam relators under the FCA.
A. A Lesser Damage Provision May Not be Imposed
Dunleavy maintains that even if Delaware County is immune from the FCA's treble damage provision this does not extinguish his cause of action but merely changes the remedy available to him. (Pl.'s Br. Resp. to Stevens at 18). This assertion is grounded in the notion that I "may mold or reduce the allowable damages." (Pl.'s Br. Resp. to Stevens at 19). I disagree. Section 3729(a) of the FCA specifically mandates the award of treble damages except in certain specific instances. The Stevens Court labeled this provision as punitive; therefore the only way to overcome the common law doctrine barring punitive damages against state subdivisions would be to allow suits under the FCA to go forward with some lesser form of damages to be imposed. However, since the FCA expressly provides a specific level of liability for violations of its provisions, adoption of this position would require me to rewrite the Act, an action clearly beyond my power. As Justice Scalia points out in Stevens, under the FCA treble damages may be reduced only in specific enumerated circumstances involving defendants who provide information concerning the violation before they know of any investigation. Stevens, 120 S.Ct. at 1870, n. 16. (referring to 31 U.S.C. § 3729(a)(A-C)). Dunleavy's claim does not involve such a situation.
I do not agree, however, with defendant's assertion that the doctrine of remittitur may never be used by a district court to reduce a damage award under the FCA. (Def.'s Br. Resp. to Stevens at 12). Under federal law, a district court may review damages for excessiveness and through remittitur restore the verdict to acceptable limits. See Robert Billet Promotions, Inc. v. IMI Cornelius, Inc., No. CIV. A. 95-1376, at *15 1998 WL 721081 (E.D.Pa. Oct. 14, 1998). This is no less true under the FCA than in any other area of the law. This doctrine does not assist plaintiff, however, because while a remittitur may be used to reduce an unjustified damage award it has not to my knowledge been used to evade a statutory mandate to triple whatever damages are found to have been sustained. Under the FCA, if the government's losses have been overstated they may be reduced under the doctrine of remittitur to the correct amount. Once determined however, these damages must be tripled unless the defendant falls into the narrow class of defendants entitled to reduced penalties. See 31 U.S.C. § 3729(a)(A-C). It is this tripling of damages that Justice Scalia found punitive in Stevens, and which precludes private actions against local governments under the FCA.
Plaintiff's common law claims of fraud, unjust enrichment, payments under mistake of fact, and breach of contract will also be dismissed. As I will dismiss plaintiff's federal claims under the FCA, I decline to exercise supplemental jurisdiction over the remaining state law claims. See 28 U.S.C. § 1367(c)(3). Further, as the Stevens Court stated, the FCA's unique history and construction provides standing for plaintiffs to sue on behalf of the federal government. Stevens, 120 S.Ct. at 1865. There is nothing before me to show how plaintiff would acquire similar standing to pursue these state law claims on behalf of the United States.
B. Claims Against Individual Defendants
In addition to the suit against Delaware County, there remain the claims against Thomas Killion, in his official capacity as current Chairman of the Delaware County Council; Edwin Erickson, Ph.D., in his official capacity as current County Executive Director; and Matthew J. Hayes, Jr., substituted for the deceased Matthew J. Hayes who was Executive Director of Delaware County during the period of alleged FCA violations. None of the briefs submitted in response to my Order dated May 23, 2000, discussed the viability of any of these remaining claims with the exception of plaintiff's, who noted in the "Factual and Procedural Background" section of his brief that defendant Hayes "sued in his individual capacity, cannot and has not claimed the immunities sought by County and County Council." (Pl.'s Br. Resp. to Stevens at 4). However the viability of plaintiff's claim against Hayes in his private capacity was briefed by the parties in connection with defendant's motion to dismiss, filed September 10, 1999, and denied as moot by my May 23, 2000, Order. I have considered those briefs in reaching my conclusion regarding the claims against Hayes.A suit against an individual in his official capacity is "in all respects other than name, to be treated as a suit against the [government] entity." Kentucky v. Graham, 473 U.S. 159, 166 (1985). Therefore a plaintiff seeking damages against a government employee in his official capacity must look to the government entity itself for recovery. See id. As I have determined that Delaware County may not be sued by plaintiff under the FCA, the claims against Thomas Killion, Edwin Erickson, and Matthew J. Hayes in his official capacity will be dismissed.
Plaintiff maintains that Hayes is liable in his individual capacity. However, there is nothing in plaintiff's Second Amended Complaint to suggest that Hayes is sued in anything other than his official capacity. Hayes is described as "at all relevant times, the Executive Director of defendant County. . ., at all relevant times an agent and/or servant and/or employee of Defendant County," who served as a consultant to the County giving advice related to financial planning, investments and other related matters. (Pl. Sec. Am. Comp. ¶ 8). The complaint also alleges that the County acted through Hayes. (Pl. Sec. Am. Comp. ¶¶ 21, 23). While plaintiff avers that Hayes had detailed knowledge of many of the transactions at issue (Pl. Sec. Am. Comp. ¶¶ 20-26), plaintiff does not allege that Hayes acted for his own benefit, profited at the public's expense, spent the money at issue for any non-public purpose, or acted in any capacity other than his official one. I hold that plaintiff's Second Amended Complaint does not state a claim against Hayes in his private capacity.
An appropriate Order follows.
ORDER
AND NOW, this day of October, 2000, for the reasons set forth in the accompanying memorandum, it is hereby ORDERED that plaintiff's Second Amended Complaint is DISMISSED.