United States of America, ex rel Michael J. Fisher v. JPMorgan Chase Bank, N.A.

REPLY to Response to Motion re MOTION for Summary Judgment / Defendant's Motion for Summary Judgment Under Public Disclosure Bar

E.D. Tex.February 22, 2019

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS SHERMAN DIVISION UNITED STATES OF AMERICA, Ex rel., Michael J. Fisher, Keith Franklin, Chezza Hartfield and Reginald McPhaul, Plaintiffs-Relators, - against - JPMORGAN CHASE BANK, N.A., Defendant. CASE NO. 4:16-CV-00395 JUDGE AMOS L. MAZZANT, III ORAL HEARING REQUESTED DEFENDANT’S REPLY IN FURTHER SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT UNDER THE PUBLIC DISCLOSURE BAR Richard A. Sayles Texas State Bar No. 17697500 dsayles@bradley.com Mark D. Strachan Texas State Bar No. 19351500 mstrachan@bradley.com E. Sawyer Neely Texas State Bar No. 24041574 sneely@bradley.com Bradley Arant Boult Cummings LLP 4400 Renaissance Tower 1201 Elm Street Dallas, Texas 75270 Telephone: (214) 939-8700 Facsimile: (214) 939-8787 Jonathan Rosenberg New York State Bar No. 1992890 jrosenberg@omm.com Anton Metlitsky New York State Bar No. 4383527 ametlitsky@omm.com O’Melveny & Myers LLP Seven Times Square New York, New York 10036 Telephone: (212) 326-2000 Facsimile: (212) 326-2061 Elizabeth Lemond McKeen California State Bar No. 216690 emckeen@omm.com O’Melveny & Myers LLP 610 Newport Center Dr., 17th Fl. Newport Beach, California 92660 Telephone: (949) 823-7150 Facsimile: (949) 823-6994 Counsel for Defendant Case 4:16-cv-00395-ALM Document 122 Filed 02/22/19 Page 1 of 16 PageID #: 2140 TABLE OF CONTENTS Page i PRELIMINARY STATEMENT ................................................................................................... 1 ARGUMENT ................................................................................................................................. 2 A. Relators’ fraud claim is based on public disclosures. ............................................ 2 B. Relators are not original sources as a matter of law. ............................................. 6 CONCLUSION ............................................................................................................................ 10 Case 4:16-cv-00395-ALM Document 122 Filed 02/22/19 Page 2 of 16 PageID #: 2141 TABLE OF AUTHORITIES Page(s) ii Cases Abbott v. BP Expl. & Prod., Inc., 851 F.3d 384 (5th Cir. 2017) ....................................................................................................... 6 BedRoc Ltd., LLC v. United States, 541 U.S. 176 (2004) .................................................................................................................... 9 Cannon v. Principal Health Care of La., 87 F.3d 1311, 1996 WL 335498 (5th Cir. 1996) ....................................................................... 10 Cause of Action v. Chicago Transit Auth., 815 F.3d 267 (7th Cir. 2016) ....................................................................................................... 6 Connecticut Nat. Bank v. Germain, 503 U.S. 249 (1992) .................................................................................................................... 9 Fed. Recovery Servs., Inc. v. United States, 72 F.3d 447 (5th Cir. 1995) ......................................................................................................... 6 In re Nat. Gas Royalties, 562 F.3d 1032 (10th Cir. 2009) ................................................................................................. 10 Little v. Shell Expl. & Prod. Co., 690 F.3d 282 (5th Cir. 2012) ....................................................................................................... 5 Rockwell Intern. Corp. v. U.S., 549 U.S. 457 (2007) .................................................................................................................... 4 Rusello v. U.S., 464 U.S. 16 (1983) ...................................................................................................................... 7 U.S. ex rel. Advocates for Basic Legal Equal., Inc. v. U.S. Bank, N.A., 816 F.3d 428 (6th Cir. 2016) ..................................................................................................... 10 U.S. ex rel. Barth v. Ridgedale Elec., Inc., 44 F.3d 699 (8th Cir. 1995) ......................................................................................................... 9 U.S. ex rel. Boise v. Cephalon, Inc., 2014 WL 5089671 (E.D. Pa. Oct. 9, 2014) ................................................................................. 9 U.S. ex rel. Boothe v. Sun Healthcare Grp., Inc., 496 F.3d 1169 (10th Cir. 2007) ................................................................................................... 4 U.S. ex rel. Branch Consultants, L.L.C. v. Allstate Ins. Co., 782 F. Supp. 2d 248 (E.D. La. 2011) .......................................................................................... 8 U.S. ex rel. Colquitt v. Abbott Labs., 858 F.3d 365 (5th Cir. 2017) ....................................................................................................... 4 U.S. ex rel. Colquitt v. Abbott Labs., 864 F. Supp. 2d 499 (N.D. Tex. 2012) ........................................................................................ 5 Case 4:16-cv-00395-ALM Document 122 Filed 02/22/19 Page 3 of 16 PageID #: 2142 TABLE OF AUTHORITIES (continued) Page(s) iii U.S. ex rel. Duxbury v. Ortho Biotech Prod., L.P., 579 F.3d 13 (1st Cir. 2009) ..................................................................................................... 7, 8 U.S. ex rel. Fisher v. Ocwen Loan Serv., LLC, No. 12-543, 2016 WL 3031713 (E.D. Tex. May 25, 2016) ........................................................ 5 U.S. ex rel. Guardiola v. Renown Health, 2014 WL 5307955 (D. Nev. Oct. 16, 2014) ................................................................................ 6 U.S. ex rel. Hendrickson v. Bank of Am., N.A., 343 F. Supp. 3d 610 (N.D. Tex. 2018) ........................................................................................ 6 U.S. ex rel. Howard v. Lockheed Martin Corp., 2011 WL 4348104 (S.D. Ohio Sept. 16, 2011) ........................................................................... 9 U.S. ex rel. LaCorte v. SmithKline Beecham Clinical Labs., Inc., 149 F.3d 227 (3d Cir. 1998) ........................................................................................................ 9 U.S. ex rel. Lockey v. City of Dallas, 576 F. App’x 431 (5th Cir. 2014) .............................................................................................. 10 U.S. ex rel. Merena v. SmithKline Beecham Corp., 205 F.3d 97 (3d Cir. 2000) ...................................................................................................... 4, 7 U.S. ex rel. Precision Co. v. Koch Indus., Inc., 31 F.3d 1015 (10th Cir. 1994) ..................................................................................................... 9 U.S. ex rel. Reagan v. E. Texas Med. Ctr. Reg’l Healthcare Sys., 384 F.3d 168 (5th Cir. 2004) ............................................................................................... 1, 2, 3 U.S. ex rel. Ritchie v. Lockheed Martin Corp., 558 F.3d 1161 (10th Cir. 2009) ................................................................................................... 9 U.S. ex rel. Stone v. Rockwell Int’l Corp., 282 F.3d 787 (10th Cir. 2002) ..................................................................................................... 4 U.S. ex rel. Winkelman v. CVS Caremark Corp., 118 F. Supp. 3d 412 (D. Mass. 2015) ......................................................................................... 6 U.S. v. Educ. Mgmt. Corp., 871 F. Supp. 2d 433 (W.D. Pa. 2012) ......................................................................................... 9 Statutes 31 U.S.C. § 3729(a)(1)(A) .............................................................................................................. 3 31 U.S.C. § 3730(b)(1) ................................................................................................................... 3 31 U.S.C. § 3730(e)(4)(A) .......................................................................................................... 3, 7 31 U.S.C. § 3730(e)(4)(B) ................................................................................................ 2, 6, 7, 10 Case 4:16-cv-00395-ALM Document 122 Filed 02/22/19 Page 4 of 16 PageID #: 2143 1 PRELIMINARY STATEMENT1 For all its attempted misdirection, Relators’ Opposition ultimately concedes the key fact that triggers the public disclosure bar: at least two of the four types of HAMP violations they allege Chase committed—dual-tracking and failure to run a compliant HAMP program—were publicly disclosed.2 The Fifth Circuit has held that an FCA qui tam claim “even partly based” on public disclosures is precluded unless the relators are original sources. U.S. ex rel. Reagan v. E. Texas Med. Ctr. Reg’l Healthcare Sys., 384 F.3d 168, 176 (5th Cir. 2004). Relators’ effort to avoid that result is based on a sleight of hand. They correctly note that the public disclosure bar is evaluated on a claim-by-claim basis. But they wrongly assert that their four categories of factual allegations raise four distinct FCA “claims”; under Relators’ construct, the dual-tracking and HAMP-compliance “claims” may have been publicly disclosed, but their other two “claims” (capitalization of unpaid principal and anticipated escrow shortages) were not. The problem for Relators, however, is that they only allege one FCA fraud claim—i.e., that Chase falsely certified its legal compliance when it was actually out of compliance in the four respects Relators allege. Those four categories of alleged legal noncompliance are not separate “claims,” but rather separate factual allegations supporting their single FCA claim. And because half of those supporting allegations were publicly disclosed, so too necessarily was the FCA claim. Binding precedent therefore requires that the Complaint be dismissed unless Relators are original sources. They are not. Relators Franklin, Hartfield, and McPhaul cannot be original sources because they admittedly did not provide the government the information on which their 1 Capitalized terms not otherwise defined have the same meanings as in Defendant’s Motion for Summary Judgment under the Public Disclosure Bar (Dkt. No. 106) (the “Motion” or “Mot.”). “Opposition” or “Opp.” refers to Relators’ Opposition to the Motion (Dkt. No. 117). All emphasis is added and all citations and quotations are omitted, unless otherwise noted. 2 Opp. at 11, 14. Case 4:16-cv-00395-ALM Document 122 Filed 02/22/19 Page 5 of 16 PageID #: 2144 2 allegations are based “before filing an action under this section,” as the statute requires. 31 U.S.C. § 3730(e)(4)(B). Relators respond that “action” does not mean “action.” That argument is irreconcilable not only with the statute’s plain language, but also with its structure and purpose, and with every relevant precedent. Fisher, meanwhile, cannot be an original source because the only information he claims to have provided the government before filing this action cannot possibly “materially add[] to,” id., the public disclosures, because it is an afterthought in the current Complaint, and not among the four categories of Chase’s alleged legal noncompliance on which Relators say their FCA claim is based. The Motion should be granted and the Complaint dismissed. ARGUMENT A. Relators’ fraud claim is based on public disclosures. Relators effectively concede in the Opposition that their FCA claim is based on publicly- disclosed information. Their FCA claim is that Chase’s annual, HAMP-mandated certifications of legal compliance were materially false because Chase was actually violating HAMP and other legal prohibitions in four ways: (i) capitalizing unpaid principal, (ii) capitalizing anticipated escrow shortages, (iii) “dual tracking,” and (iv) non-compliance with HAMP rules and regulations. And Relators concede Chase’s showing that before Relators alleged here that “Chase engaged in dual tracking and failed to run a compliant HAMP program,” those allegations had been publicly disclosed.3 That concession confirms that Relators’ entire FCA claim triggers the public disclosure bar, because “[a]n FCA qui tam action even partly based upon publicly disclosed allegations or transactions is nonetheless ‘based upon’ such allegations or transactions.” Reagan, 384 F.3d at 176. The public disclosure analysis ends there. 3 Id.; see also Mot. 12–20 (detailing public disclosure and HAMP compliance). Case 4:16-cv-00395-ALM Document 122 Filed 02/22/19 Page 6 of 16 PageID #: 2145 3 Relators’ contrary argument is that the public disclosure bar applies on a claim-by-claim basis and they have alleged “four different claims, based on four different theories of fraud”4— and that the first two “claims” (capitalization of unpaid principal and anticipated escrow shortages) were not publicly disclosed. Relators are right that the public disclosure bar is analyzed claim by claim: it is triggered as to “an action or claim under this section . . . if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed.” 31 U.S.C. § 3730(e)(4)(A). But they are wrong that they allege four FCA “claims.” A “claim under this section”—i.e., § 3730—is a claim for fraud under the FCA. See id. § 3730(b)(1) (“A person may bring a civil action for a violation of section 3729”); id. § 3729(a)(1)(A) (liability for any person who, e.g., “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval.”). Yet none of Relators’ alleged examples of legal noncompliance constitutes fraud under the FCA—there is no FCA claim for capitalizing unpaid principal or dual tracking. The only fraud alleged here is that Chase fraudulently certified its compliance with HAMP and other legal proscriptions while knowing that it was actually not complying in the four ways Relators allege. That is why Relators’ Complaint does not assert any separate claims relating to Chase’s alleged underlying HAMP violations. Instead, Relators allege counts under § 3729(a) for a single claim of fraud: falsely certifying HAMP compliance. (Compl. ¶¶ 136–141.) And Relators’ allegations of that fraud is “partly based upon publicly disclosed allegations or transactions,” Reagan, 384 F.3d at 176, because the allegation that Chase was not complying with the rules applicable to dual tracking and establishing proper HAMP compliance were publicly disclosed. 4 Opp. at 9. Case 4:16-cv-00395-ALM Document 122 Filed 02/22/19 Page 7 of 16 PageID #: 2146 4 The cases on which Relators rely demonstrate the point, as each one involved multiple claims based on distinct frauds: • In U.S. ex rel. Boothe v. Sun Healthcare Grp., Inc., 496 F.3d 1169 (10th Cir. 2007), “each of the ten fraudulent schemes [relator] identifies is tantamount to a discrete and independent cause of action for fraud.” Id. at 1177; see also id. at 1171 (describing ten discrete fraudulent schemes). • In U.S. ex rel. Merena v. SmithKline Beecham Corp., 205 F.3d 97 (3d Cir. 2000), the relevant complaint “contained eight separate [FCA] claims,” each alleging a “separate violation of Section 3729” for defrauding the government, including “billing for tests that were not performed, double billing, [and] paying illegal kickbacks to health care professionals.” Id. at 99, 102. • In Rockwell Int’l Corp. v. United States, 549 U.S. 457 (2007), the relator’s FCA count was divided at trial into separate “claims” because each FCA “violation” corresponded to “different award fee periods.” Id. at 466. The jury was asked whether the defendant had committed a distinct fraud for each time period, and found for the defendant “on seven of the ten FCA claims” and for the relator on the other three. U.S. ex rel. Stone v. Rockwell Int’l Corp., 282 F.3d 787, 796 (10th Cir. 2002). Thus, it is no surprise, as Relators argue at length (Opp. at 8–10) but no one disputes, that the Fifth Circuit likewise applies the public disclosure bar claim-by-claim. What matters, though, is how the Fifth Circuit applies the bar to each claim. Take, for example, U.S. ex rel. Colquitt v. Abbott Labs., 858 F.3d 365 (5th Cir. 2017), in which the relevant claim alleged that the defendant’s representation to the FDA that certain stents were not intended for vascular use was false based upon the sizes of (i) the stents (publicly disclosed) and (ii) the accompanying catheters (not disclosed). The Court held the claim barred because the publicly-disclosed stent sizes “were all that one would have needed to discover the purported fraud.” Id. at 374. So too here—publicly disclosed allegations of dual tracking and failure to run a compliant HAMP program (along with the publicly disclosed fact that Chase annually certified legal compliance) were all that one would need to discover that Chase’s certifications of legal compliance were false. Relators seek to distinguish Colquitt as a “quintessential example of a relator producing new evidence going to the same factual claim as distinguished from fundamentally independent Case 4:16-cv-00395-ALM Document 122 Filed 02/22/19 Page 8 of 16 PageID #: 2147 5 theories of fraud.”5 But that is also a perfect description of their own Complaint—they allegedly offer new evidence (capitalizing unpaid principal and anticipated escrow shortages) going to the same claim that Chase’s annual legal-compliance certifications were false. As the district court in Colquitt explained—in words fully applicable to Relators’ claim—“[t]hat the [claim] relies on more than one piece of evidence to allege the falsity of the Defendants’ statements does not mean that one piece of evidence alone is insufficient to publicly disclose that falsity.” U.S. ex rel. Colquitt v. Abbott Labs., 864 F. Supp. 2d 499, 521 (N.D. Tex. 2012). This Court followed this precedent to a tee in Ocwen, which is directly on point. Relators say that the allegations in Ocwen were much “broader” and that this Court merely held that the public disclosure bar “‘likely’ applied to at least some claims when the complaint alleged that the defendant was generally failing to comply with federal and state lending requirements.”6 But that is not what this Court held. Rather, it held that “it is likely that the publicly disclosed information was sufficient to set the government on the trail of the fraud,” Ocwen, 2016 WL 3031713, at *6—singular. That is because the relators alleged in Ocwen, as Relators allege here, a single fraud—false certification of legal compliance. And that single fraud is publicly disclosed here for the same reason it was in Ocwen. In short, the cited public disclosures did “furnish evidence of the fraudulent scheme alleged”7—i.e., evidence that Chase certified legal compliance while in fact failing to comply with legal requirements, such as the rule against dual tracking and having a compliant HAMP 5 Opp. at 9. 6 Id. at 10–11 (quoting U.S. ex rel. Fisher v. Ocwen Loan Serv., LLC, No. 12-543, 2016 WL 3031713, at *6 (E.D. Tex. May 25, 2016)). 7 Id. at 12 (quoting Little v. Shell Expl. & Prod. Co., 690 F.3d 282, 293 (5th Cir. 2012). Case 4:16-cv-00395-ALM Document 122 Filed 02/22/19 Page 9 of 16 PageID #: 2148 6 program. Thus, Relators’ claim must be dismissed unless they are “original sources.” For the reasons explained below, they are not, as a matter of law. B. Relators are not original sources as a matter of law.8 1. Relators can only be original sources if they “voluntarily provided the information [supporting his claim] to the Government before filing an action under this section,” 31 U.S.C. § 3730(e)(4)(B), i.e., before “the filing of this suit,” Fed. Recovery Servs., Inc. v. United States, 72 F.3d 447, 452 n.3 (5th Cir. 1995). And Relators admit that Michael Fisher is the only Relator who disclosed the information supporting his allegations before filing this “action” in September 2013.9 The plain language and purpose of the FCA therefore disqualifies Franklin, Hartfield, and McPhaul from original source status.10 Each of their three contrary arguments is wrong. First, Relators assert that “Chase’s argument is nothing more than added emphasis to the word ‘action.’” Exactly right—Chase relies on the plain statutory language, which is irreconcilable with Relators’ position that an original source can provide the government with information after “the action” is filed. Relators’ only attempt at a textual response is to cite then- Judge Alito’s explanation in Merena that a previous version of § 3730 was “based on the model of a single-claim complaint,” such that the word “action” in the public disclosure bar provision 8 Relators argue that the 2010 amendments to the FCA fundamentally changed the well-established burden-shifting standard for the public disclosure bar, such that Chase now has the burden to prove that Realtors are not original sources. See Opp. at 4–6. Not so. Chase has the burden of showing that the public disclosure bar is triggered, Abbott v. BP Expl. & Prod., Inc., 851 F.3d 384, 387 n.2 (5th Cir. 2017), but every case to have considered the question holds that the burden then shifts to Relators to show they are original sources, see, e.g., Cause of Action v. Chicago Transit Auth., 815 F.3d 267, 274, 283 n.22 (7th Cir. 2016) (“relator bears the burden of proof” under post- 2010 original-source provision); U.S. ex rel. Hendrickson v. Bank of Am., N.A., 343 F. Supp. 3d 610, 630 (N.D. Tex. 2018) (noting that under “the 2010 version of the public-disclosure bar . . . [t]he burden is on Relator to show that” he is an original source); U.S. ex rel. Winkelman v. CVS Caremark Corp., 118 F. Supp. 3d 412, 424 (D. Mass. 2015) (same); U.S. ex rel. Guardiola v. Renown Health, 2014 WL 5307955, at *7 (D. Nev. Oct. 16, 2014) (same). Regardless of the original-source burden, however, the record here amply shows that Relators are not original sources as a matter of law. 9 Opp. at 17; Boyd Decl. ¶ 2 (Dkt. No. 117-1). 10 See Mot. at 22–25. Case 4:16-cv-00395-ALM Document 122 Filed 02/22/19 Page 10 of 16 PageID #: 2149 7 (not the original source provision) should be read to mean “claim” in a multi-claim complaint. 205 F.3d at 101–02. That explanation is irrelevant because no Relator added any new “claims”—they provided only new factual allegations supporting the same claim alleged in the original complaint, i.e., that Chase violated the FCA by falsely certifying its legal compliance under HAMP. (Original Compl. ¶¶ 32, 50, 52) Moreover, the public disclosure bar provision was amended in 2010 to fix the problem that then-Judge Alito identified: it now provides that “an action or claim under this section” must be dismissed “if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed,” 31 U.S.C. § 3730(e)(4)(A), with the emphasized language added in 2010 to affirm the then-accepted view that the public disclosure bar applies claim-by-claim. Crucially, however, Congress did not similarly amend the relevant portion of the “original source” definition, which still provides that an original source must provide the government information “before filing an action under” the FCA—not an “action or claim.” Id. § 3730(e)(4)(B). “Where Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.” Rusello v. U.S., 464 U.S. 16, 23 (1983). Had Congress intended for “original source” to include those who provide the government with information before asserting an action or claim, “it presumably would have done so expressly as it did in the immediately [previous] subsection.” Id. Second, Relators’ attempts to distinguish Chase’s cases are unavailing. U.S. ex rel. Duxbury v. Ortho Biotech Prod., L.P., 579 F.3d 13 (1st Cir. 2009), is directly on point, holding that “§ 3730(e)(4)(B) . . . requires that a relator provide his or her information prior to the filing of the qui tam suit.” Id. at 28. Relators admit that Duxbury held that a relator was not an original Case 4:16-cv-00395-ALM Document 122 Filed 02/22/19 Page 11 of 16 PageID #: 2150 8 source because he failed to provide the government with requisite information before filing his original complaint, even though he did provide information before filing an amended complaint (exactly the fact pattern here). Id. Relators argue that this was only so, however, because the amended complaint there added no new claims, only new allegations supporting the original claims.11 But even if Duxbury turned on that distinction, the same is true here—Relators’ amended complaints added allegations but maintained the same claim Fisher originally brought in 2013, namely, that Chase committed fraud by falsely certifying HAMP compliance. In any event, Relators do not dispute that U.S. ex rel. Branch Consultants, L.L.C. v. Allstate Ins. Co., 782 F. Supp. 2d 248 (E.D. La. 2011), made no exceptions to its rule that a relator “cannot rely on . . . supplemental disclosures it made to the government after filing the original complaint but before filing the . . . Amended Complaint.” Id. at 269. Instead, Relators argue that Branch is no longer good law because it was construing the previous, jurisdictional version of the public disclosure bar, and thus relied on extra-textual jurisdictional principles. In fact, however, Branch relied primarily on the statute’s text, unchanged in the current version, requiring original sources to provide the government information “before filing an action.” Id. at 259. The court did note that in some circumstances, the term “action” in the pre-amendment FCA could mean “action or claim” for the reasons explained by then-Judge Alito in Merena, id. at 260, and relied on jurisdictional and other principles to reject that reading for the original source provision, id. at 260–64. But as explained above, Congress’s 2010 public disclosure bar provision amendment fixed the problem that led Branch to look to extra-textual principles to confirm that “action” means “action”—after 2010, no extra-textual principles are needed to confirm that plain-language point. 11 Opp. at 19. Case 4:16-cv-00395-ALM Document 122 Filed 02/22/19 Page 12 of 16 PageID #: 2151 9 Third, Relators argue that “established practice” permits them to add new relators and new factual allegations. Even if there were such a practice, it could not trump the FCA’s plain and unambiguous language—courts must “presume that [the] legislature says in a statute what it means and means in a statute what it says there,” Connecticut Nat. Bank v. Germain, 503 U.S. 249, 253–54 (1992), so the “inquiry begins with the statutory text, and ends there as well if the text is unambiguous,” BedRoc Ltd., LLC v. United States, 541 U.S. 176, 183 (2004). But of course there is no such counter-textual practice. The FCA does not prohibit amending complaints or adding relators in cases not implicating the public disclosure bar, which is all Relators’ cases stand for. No case Relators cite holds that relators who did not make disclosures to the government until after the original complaint can be original sources.12 Indeed, Relators make no effort to show how their counter-textual rule or “established practice” would be consistent with the FCA qui tam provision’s purpose “to encourage private individuals who are aware of fraud against the government to bring such information forward at the earliest possible time and to discourage persons with relevant information from remaining silent.” U.S. ex rel. Barth v. Ridgedale Elec., Inc., 44 F.3d 699, 704 (8th Cir. 1995). The Court should hold that Franklin, Hartfield, and McPhaul fail the original-source test. 12 For example, U.S. ex rel. Precision Co. v. Koch Indus., Inc., 31 F.3d 1015 (10th Cir. 1994), did not, as Relators claim, permit the relators to “cure[] a public disclosure problem by the addition of additional relators by amendment.” Opp. at 18. The district court rejected an attempt to add two new relators as untimely. Id. at 1016– 17. The Tenth Circuit reversed because relators were within the deadline to amend the complaint as a matter of right, but expressly withheld ruling on the public disclosure bar: “[w]hether [relators have] overcome the [public disclosure bar] problem by the addition of the [new relators] is as yet unanswered and not before us.” Id. at 1019. U.S. ex rel. LaCorte v. SmithKline Beecham Clinical Labs., Inc., 149 F.3d 227 (3d Cir. 1998), meanwhile, involved several different groups of relators who brought separate suits against the same defendant; the Third Circuit determined that a new group of relators failed to satisfy the public disclosure bar because the original relators’ settlement covered the same general fraud claim alleged in the new lawsuit. Id. at 235–38. Relators’ other examples of “established practice” address only the first-to-file rule, see U.S. ex rel. Boise v. Cephalon, Inc., 2014 WL 5089671, at *2–3 (E.D. Pa. Oct. 9, 2014); U.S. v. Educ. Mgmt. Corp., 871 F. Supp. 2d 433, 459–60 (W.D. Pa. 2012); U.S. ex rel. Howard v. Lockheed Martin Corp., 2011 WL 4348104, at *3–*4 (S.D. Ohio Sept. 16, 2011) ; or the Federal Rules of Civil Procedure governing motions to amend, U.S. ex rel. Ritchie v. Lockheed Martin Corp., 558 F.3d 1161, 1166–67 (10th Cir. 2009), not the public disclosure bar. Case 4:16-cv-00395-ALM Document 122 Filed 02/22/19 Page 13 of 16 PageID #: 2152 10 2. Nor can Fisher be an original source, as a matter of law.13 Even if Fisher’s TILA- related disclosures—the only disclosures allegedly made before filing the action14—sufficed to fulfill the FCA’s government-disclosure requirement, Fisher would still not qualify as an original source because his TILA allegations do not “materially add to” the public disclosures. 31 U.S.C. § 3730(e)(4)(B); see Mot. at 25–27. To add materially to the public disclosures, the relator’s allegations must be “qualitatively different”15 and add something “significant” or “essential”16 to the public information. But the allegations of TILA-prohibited balloon-payments that Fisher says he disclosed to the government cannot possibly add materially to the public disclosures because (i) they are barely even mentioned in Relators’ own Complaint; and (ii) when Relators lay out in the Opposition the four factual allegations of legal violations on which their FCA claim is based, TILA violations are nowhere to be found. See Opp. at 2. Fisher’s TILA allegation could not possibly have added anything “significant” to the public disclosures when Relators fail even to mention it among the four categories of alleged violations pleaded in the Complaint.17 CONCLUSION For the foregoing reasons and those stated in the Motion, the Motion should be granted. 13 Relators submit affidavits to support their contention that their allegations are based on personal observations, and not publicly-disclosed information. See Franklin Decl.; Hartfield Decl.; McPhaul Decl.; Fisher Decl. (Dkt. Nos. 117- 1–117-5). Whether Relators personally observed their allegations is irrelevant to this motion; as discussed above, Relators are not original sources as a matter of law. If the Court were to find that Relators legally could be original sources, they must still prove that they are, including by showing that they have independent knowledge of allegations that are based on or materially add to publicly-disclosed information, and that they timely provided this information to the government. Chase reserves all rights to renew its motion for summary judgment on the public disclosure bar based on new evidence obtained during discovery, including Relators’ deposition testimony. See, e.g., Cannon v. Principal Health Care of La., 87 F.3d 1311, 1996 WL 335498, at *2 (5th Cir. 1996) (affirming district court decision awarding renewed motion for summary judgment based on new information obtained through deposition testimony). 14 Boyd Decl. ¶ 2. 15 U.S. ex rel. Lockey v. City of Dallas, 576 F. App’x 431, 437 (5th Cir. 2014). 16 U.S. ex rel. Advocates for Basic Legal Equal., Inc. v. U.S. Bank, N.A., 816 F.3d 428, 431–32 (6th Cir. 2016). 17 See, e.g., In re Nat. Gas Royalties, 562 F.3d 1032, 1046 (10th Cir. 2009) (affirming dismissal of FCA claims and finding relator did not qualify as original source where his “limited” information was “minimal in comparison to the broad scope of his allegations against [defendants]” and thus did not substantially add to the public disclosures). Case 4:16-cv-00395-ALM Document 122 Filed 02/22/19 Page 14 of 16 PageID #: 2153 11 Respectfully submitted this 22nd day of February, 2019. Richard A. Sayles Texas State Bar No. 17697500 DSayles@bradley.com Mark D. Strachan Texas State Bar No. 19351500 mstrachan@bradley.com E. Sawyer Neely Texas State Bar No. 24041574 sneely@bradley.com Bradley Arant Boult Cummings LLP 4400 Renaissance Tower 1201 Elm Street Dallas, Texas 75270 Telephone: (214) 939-8700 Facsimile: (214) 939-8787 /s/ Jonathan Rosenberg Jonathan Rosenberg New York State Bar No. 1992890 jrosenberg@omm.com Anton Metlitsky New York State Bar No. 4383527 ametlitsky@omm.com O’Melveny & Myers LLP Seven Times Square New York, New York 10036 Telephone: (212) 326-2000 Facsimile: (212) 326-2061 Elizabeth Lemond McKeen California State Bar No. 216690 emckeen@omm.com O’Melveny & Myers LLP 610 Newport Center Dr., 17th Fl. Newport Beach, California 92660 Telephone: (949) 823-7150 Facsimile: (949) 823-6994 Counsel for Defendant Case 4:16-cv-00395-ALM Document 122 Filed 02/22/19 Page 15 of 16 PageID #: 2154 12 CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing was served upon all counsel of record, via the Court’s CM/ECF system, this 22nd day of February, 2019. /s/ Jonathan Rosenberg Jonathan Rosenberg Case 4:16-cv-00395-ALM Document 122 Filed 02/22/19 Page 16 of 16 PageID #: 2155