VERMONT AGENCY OF NATURAL RESOURCES v. UNITED STATES EX REL. STEVENS
Jonathan Stevens, a former attorney for the Vermont Agency of Natural Resources, filed suit against his former employer, the agency, alleging that it had submitted false claims to the Environmental Protection Agency (EPA) in order to induce the EPA to disburse more grant money than it was entitled to receive. Stevens filed suit under the False Calms Act (FCA), which provides for a private person to bring a qui tam civil action "in the name of the [Federal] Government," against "any person" who "knowingly presents...to...the...Government...a false or fraudulent claim for payment." The State of Vermont moved to dismiss the suit, arguing that a State or state agency is not a "person" subject to liability under the FCA and that a qui tam action in federal court against a State is barred by the Eleventh Amendment. The District Court denied the motion. Vermont then filed an interlocutory appeal. Thereupon, the court stayed its proceedings and the United States intervened in the appeal in support of Stevens. The Court of Appeals affirmed.
May a private individual bring suit in federal court on behalf of the United States against a state or state agency under the False Claims Act?
Legal provision: Article 3, Section 2, Paragraph 1: Case or Controversy Requirement
No. In a 7-2 opinion delivered by Justice Antonin Scalia, the Court held that a private individual has standing to bring suit in federal court on behalf of the United States under the False Claims Act, but that the False Claims Act does not subject a state or state agency to liability in such actions. The Court concluded that the False Claims Act does not include states as "persons" who can be sued under the law. Justices John Paul Stevens and David Souter dissented.
Argument of J. Wallace Malley, Jr.
Chief Justice Rehnquist: We'll hear argument next in No. 98-1828, Vermont Agency of Natural Resources v. the United States, ex rel., Jonathan Stevens.
Mr. Malley: Mr. Chief Justice, and may it please the Court:
This Court has asked us, of course, to brief and argue an additional issue in this case, and with the leave of the Court, I would like to begin with that issue.
Chief Justice Rehnquist: We asked you to brief the additional issue.
I think you're perfectly free to argue it.
Justice Breyer: We didn't ask you to argue it.
Mr. Malley: Thank you.
Thank you, Your Honor.
The additional issue, of course, is whether a private person has Article III standing to litigate claims of fraud against the Government.
And within the context of the False Claims Act, we would submit not, Your Honor.
Taking the respondents' own view of this case that all that has been asserted here are the injuries to the United States... and I would invite this Court's attention to paragraph 44 of the... of the relator's complaint in this case at page 40 of the joint appendix... the claim is that the United States has been damaged.
There is no claim in this case that this relator has been damaged.
So, in that circumstance, there is no standing, for under this Court's determination in... in the Lujan case, the irreducible constitutional minimum of standing is, of course, injury in fact, actual and particularized to this plaintiff.
And as Judge Weinstein indicated in the dissenting opinion below, up to the moment he filed this action, this relator had no greater interest than any taxpayer.
So, this complainant...
Justice O'Connor: But I guess we've had some form of qui tam suits authorized by Congress since the earliest days, haven't we?
Mr. Malley: We have, Your Honor, and I think, Justice O'Connor, the...
Justice O'Connor: And perhaps authorizing them in... in circumstances where the relator would not have an injury in fact, as we know it.
Mr. Malley: Some circumstances, and I think that the key part of your question, Your Honor, was in some form.
Now, we of course are going to be filing our brief on this tomorrow, and we've taken a look at all of these... these statutes...
Justice O'Connor: The early statutes?
Mr. Malley: The early statutes in the first Congress, and if I've got my sort of head count correct, I... we've counted about 17 statutes.
And of those, 14 fall into situations which don't raise any... any standing issue whatsoever.
Justice O'Connor: Because the relator would have suffered an injury in fact?
Mr. Malley: Well, there's a couple of ways it plays out.
One... one would be that... that probably the largest single category is where the individual just has a bounty, doesn't have any right to bring the case into court, but just gets a bounty at... at the tail end.
So, that doesn't raise a standing issue.
And then there's about three or four where the... the case can be brought into court by a... by an individual who's... who is a Federal official.
Now, in that instance I think it's fair to regard that as a case that's brought by the United States by a Federal official notwithstanding the fact that Federal official can also claim part of the bounty.
Justice O'Connor: Is the fact that this qui tam relator entitled to some portion of the recovery at the end of the day... does that make it a sort of bounty?
Mr. Malley: The fact that this qui tam relator is entitled to something I think that... that that... that is a bounty which gives this relator an incentive to sue.
But, of course, under the Valley Forge decision of this Court, that strong incentive and the fervor of the... of the litigant's convictions is not enough to grant standing.
Justice Scalia: The bounty... the bounty cases you were referring to I take it are cases in which the... the suit may be initiated by the... or was the suit initiated by the bounty receiver or it's just that if he brought the matter to the attention of the Government, the Government would sue, and at the end of the suit he'd get a bounty?
Mr. Malley: In that first group I was talking about... I think there's five in this category... they would bring the attention... bring it to the attention of the Government, the Government would sue, and there would be a... a bounty at... at the tail end.
Justice Kennedy: Right.
Mr. Malley: There... there were, of course, a small number of cases...
Justice Scalia: There were some.
Mr. Malley: and our count is three... where it would appear that... that the individual could bring the claim into court himself or herself.
But of course, one of those was actually a... a criminal case in...
Justice Ginsburg: But there was a common law background too.
If... if you... if you... we're trying to fathom what was the original understanding of standing.
The common law suit could be initiated by the... by the private person.
Mr. Malley: There is that common law background.
But of course, I think what's critical in this... in this instance, Your Honor, is... is what the Court has indicated in Marsh v. Chambers and that is it's one thing where there's a... a continuous and unambiguous historic record which... which creates a practice which... which has become a part of the fabric of our society.
But it's... but that certainly is not even remotely the case here where we have had some form of the so-called qui tam actions in various permutations.
They were very popular at the time of the first Congress, of course, fell into disuse, and... and really wasn't revived again until this formulation under the False Claims Act, which in and of itself fell into... into disuse between 1943 and 1986.
So, I don't think we have the situation here where we can look back and get a clear message from the historic record, whether it be from English common law or from our own American jurisprudence.
Justice Scalia: Well, the common law doesn't... doesn't necessarily prove anything.
I mean, at common law, I... I suppose all sorts of things occurred which would violate the new doctrine of separation of powers that the Federal Government adopted.
I presume at common law you could have had the decision of... of the Supreme Court overruled by Congress.
Mr. Malley: Certainly, Your Honor, and... and of course, obviously, we have to look at the time of the Convention.
Chief Justice Rehnquist: But if there actually was a qui tam statute enacted by, say, the First Congress, that would be some indication that the First Congress, which had a number of members from the Constitutional Convention in it, thought that a qui tam statute met the requirements of Article III.
Mr. Malley: No, Your Honor, I... I don't think that's the case, and this is... this is the reason why.
I... I think that... Mr. Chief Justice, I think that if these qui tam statutes were all of a kind where... where we could see a common thread there, then we might be able to draw some inferences from that.
But... but that... but that is... that is not the case.
And of course, history alone cannot... cannot overcome the irreducible constitutional minimum of... of Article III standing.
Chief Justice Rehnquist: Well, unless it shows that our irreducible minimum isn't consistent with the understanding of the Framers.
Justice Stevens: Maybe the Framers hadn't read Lujan.
Mr. Kneedler: [Laughter]
Mr. Malley: No, Your Honor, obviously they hadn't.
But... but in fact, I think they had something different on their mind at the time.
I think what they had on their mind at the time was a new republic.
They didn't have the institutions and the blessings of a new republic that we have today.
They do not have the... did not have the institutions of a Department of Justice which was ready and available to prosecute the laws.
They needed help.
And... and they were certainly... certainly they were looking for... for help.
And I... I... there's nothing in the historic record...
Justice Scalia: Didn't the First Congress also pass the statute that was stricken down in Marbury v. Madison?
Mr. Malley: Yes, Your Honor.
Justice Scalia: I guess they hadn't read Marbury v. Madison either, had they?
Mr. Kneedler: [Laughter]
Mr. Malley: Absolutely, Your Honor, and that was... that was not the... the only one.
And moreover, what is further absent from the historic record is any debate that we could find on... on something to do with separation of powers or cases and controversies in the context of... of these so-called qui tam actions.
Justice Souter: Mr. Malley, may I just go back with a technical question to your... your point earlier that until the action was filed, the qui tam plaintiff has no greater interest than... than any taxpayer?
My technical question is this.
If the qui tam plaintiff gives what I guess... it's the 60-day notice of an intent to commence such a suit and during that period, the United States decides that... the Justice Department decides that it in fact will initiate the action, under those circumstances, if the Government wins the case, does the qui tam plaintiff get anything?
Mr. Malley: Well, I think... I think that not without violating the Eleventh Amendment, Your Honor.
Justice Souter: Well, what does the statute provide?
Argument of Theodore B. Olson
Mr. Olson: The statute... the statute provides that while the Government takes over the action, that... that the... the relators still can make a claim for the portion of recovery.
Justice O'Connor: Let me ask you another question.
Assuming the Government never intervenes, as it has a right to do in one of these actions, would it be res judicata on the Government afterwards?
Rebuttal of J. Wallace Malley, Jr.
Mr. Malley: Yes, Your Honor.
Justice O'Connor: Do you know?
Mr. Malley: But the point... the point really that... that I think is... is urgent in this case... that is, that... is that this relator cannot... cannot have it both ways.
Either... either they have standing and then run headlong into the... to the bar of the Eleventh Amendment or...
Justice O'Connor: Well, let's talk about that because I think we've injected you into this whole issue that you've been talking about after the... the petition was filed.
Are you going to address those issues of whether the State is a person and the Eleventh Amendment concerns?
Mr. Malley: Absolutely, Your Honor.
We believe that... that all three issues are in play in this case, and both the statutory construction issue which, you know, harkening back to Mr. Chief Justice's remarks in the last case, that where there's a... where there's a statutory issue involved, then the Court normally does not go to the constitutional issues.
So, we feel the statutory construction issue is in play and certainly the Eleventh Amendment issue.
Justice O'Connor: Okay, but this is... this is on interlocutory posture, is it?
Mr. Malley: It is.
Justice O'Connor: And normally we wouldn't take jurisdiction over the interpretation of the statute I guess.
Mr. Malley: Normally you certainly wouldn't, and particularly in the case where it's an unrelated issue.
But as the courses... in... in the Swint case, we read the Swint case as having left the door open.
If... if the Court has before it a case that's...
Justice O'Connor: We didn't answer it, but suggested that we hadn't decided it.
Mr. Malley: Exactly, Your Honor, and I think that... I think that... that in all likelihood, if I can just speculate, the reason for that was to leave open the option in... in those circumstances where the issues are inextricably intertwined and where... it might not be meaningful to... to answer the... you know, the... the central question without answering the other.
And here, when we're dealing with the Eleventh Amendment, I mean, what do you look to?
You have to look to, well, who... who is suing and who can be sued.
And... and examination of the statute is rather critical to looking to that issue.
So, I... we believe it's... it's certainly fair game.
And even the Eleventh Amendment issue, as compared to the... to the Article III standing issue, admitting the fact that this... this Court has... has indicated a strong preference to go to the Article III issue first, still the... the Eleventh Amendment issue is one that is a jurisdictional issue, and I think this Court in the Shack case recognized that... that it... that it enjoyed a status... a jurisdictional status, perhaps somewhere between subject matter jurisdiction and personal jurisdiction.
And... and so, we believe they're... they're co-equal and the Court could choose, particularly in the aftermath of all Alden and Blatchford, which has really developed the issue for this case... could choose to go straight to the Eleventh Amendment issue.
Justice Scalia: I... I can... I can accept that as a possibility, but... but not perhaps going to the statutory issue.
Why is it intertwined?
Why do we have to resolve the statutory issue in order to... in order... I mean, the fact is you... you have a State as a defendant.
You have a private party as... as the plaintiff.
Mr. Malley: No, certainly, Justice Scalia, I did not mean to suggest that the Court has to go to that issue.
I was only suggesting the Swint case seems to have left the door open should it... should it choose to address the statutory issue as a... as a way... as being prior to the constitutional issue.
I certainly don't suggest that... that this Court has tied its hands in any way.
Chief Justice Rehnquist: But certainly... certainly we also have a... a practice we don't go to constitutional issues if we don't have to.
And as you suggest, there you can argue that the statutory issue should come before the Eleventh Amendment issue at any rate.
If Congress didn't intend to make States liable under qui tam, you don't get the Eleventh Amendment issue I would think.
Mr. Malley: And... and we're... I guess what I'm saying, Your Honor, is we would be happy if the Court addressed this case on any of the three issues.
Justice Scalia: I... I understand that, but... but just... just to get the record straight, do you know of any case where, in order to avoid a constitutional issue, we have ignored a jurisdictional question and jumped straight to the statutory question in order to avoid the constitutional question which was a jurisdictional one?
Mr. Malley: No.
I... I cannot... I cannot cite one to the Court, and...
Justice Scalia: Because there is none.
Mr. Malley: And I... and I certainly wouldn't suggest that, you know, the Court, you know, has... has to go that direction.
Justice Scalia: Many of our jurisdictional questions are constitutional questions.
Mr. Malley: Absolutely, Your Honor, and the Eleventh Amendment...
Justice Stevens: Yes, but on Eleventh Amendment jurisdiction, we usually ask whether there's a clear statement or not first, and if no clear statement, then we don't... don't reach the Eleventh Amendment issue.
Isn't that our practice?
Mr. Malley: That... that has been the practice, of course, as... as stated in the... in the Will case.
Justice Stevens: And this is much the same thing, isn't it?
Mr. Malley: And... and...
Justice Stevens: The same kind of statutory question.
Justice Kennedy: What's a person?
Mr. Malley: On the other hand, this Court has indicated its... its preference to go to jurisdictional issues as a threshold matter.
So, I... all I'm saying is I think the choices are there.
Chief Justice Rehnquist: One thing we know for sure is you only have half an hour to argue.
Mr. Kneedler: [Laughter]
Mr. Malley: Thank... thank you for that segue, Your Honor, Mr. Chief Justice.
The... the critical... the critical portion of the Eleventh Amendment article, which... argument which I really have not had a chance to... to speak much to, stems from the fact that we have a qui tam relator, a private person of his own motivation, of his own initiative, his own motivation, and under the Hughes case, a motivation for personal gain and... and perhaps ill will and... and not for the public good, has brought the State of Vermont into court without its consent.
And we believe that violates the... the Eleventh Amendment, and most particularly, the interest as laid forth in... in this Court in the Alden and Blatchford cases where the nature of the consent to suit by the United States in the plan of the convention was a suit brought by responsible Federal officials exercising political responsibility.
Justice Souter: Is... is there an argument here that whatever the force of your position is, it has been... it has been waived contractually?
Because as I understand it, the State of Vermont, of course, had an express contract with the United States and that contract provided that it was... that the United States, as a contracting party, would have all the... I think the phrase was all the rights provided by law, which I suppose would be enough to include the qui tam statute.
Would that be sufficient to effect a waiver of whatever Eleventh Amendment defense the United... the State of Vermont might otherwise have?
Mr. Malley: I... I don't think so, Your Honor, and... and the reason for that is that... that under the Edelman decision, mere participation in a Federal program is... is not... is not enough.
Justice Souter: Well, but this is... this is a step beyond mere participation.
I mean, it's... it's an agreement, as I understand it, to submit oneself to the... the State to submit itself to the remedial scheme of the United States statutes and... and the qui tam statute is part of it.
Mr. Malley: Well, of course, there wouldn't be any... just looking at it from a... you know, a contract standpoint, what was the meeting of the minds, well, certainly in the context of a... of a False Claims Act statute which is... is to be interpreted, which of course doesn't define the term person, and much... must be interpreted...
Justice Souter: Well, we assume... we assume we've got over the person issue in order to get to the Eleventh Amendment issue.
Mr. Malley: No, but...
Justice Souter: So, we'll assume that person does include the State.
Mr. Malley: Well, even if we assume that, Your Honor, the... the... how could there be a meeting of the minds?
I don't think there can be a meeting of the minds if... if the... if the State goes into a contractual relationship with the United States knowing that it is... it consents to the remedies that the United States can bring, those... those kinds of suits that are authorized by Alden and Blatchford but... but does... but is not consenting to suits by private persons.
Justice Souter: Yes, but I think the point of my question was that the statute provides, in fact, for a... a remedy at the behest of exactly the kind of plaintiff that we have here.
And if that is part of the remedial scheme to which the individuals seem to agree in the statute... in the contract, why doesn't the contract effect a waiver of whatever Eleventh Amendment immunity might otherwise be asserted?
Mr. Malley: Well, I would say, Justice Souter, that... that... that if it was clear under the clear statement rule and that that... the False Claims Act...
Justice Souter: Yes, but that's a... that's a rule... that's a rule of legislation.
We're talking here about a contractual provision.
Mr. Malley: But... but under the Pennhurst case, Your Honor, the... the Congress must make its intention clear and manifest if it... if it intends to impose a condition on the grant of Federal monies upon a State.
Justice Souter: And you say the... the uncertainty about what person means would... would be, in effect, to the failure to... to make its position...
Mr. Malley: Certainly... certainly that and also the effect that would... that would... that would be involved in... in the Eleventh Amendment.
Chief Justice Rehnquist: Did... did the respondent rely on...
Did the court of appeals rely on the contractual ground?
Mr. Malley: No, Your Honor.
Of course, the... the court of appeals merely... merely felt that... that there was a... the claim was...
Chief Justice Rehnquist: Did the... did the respondent raise the contractual point as a alternate ground for affirmance?
Mr. Malley: No... no, Your Honor.
Justice Scalia: What did the contract say, by the way?
I don't... I don't even know what it said.
Did it say we... we agree to all remedies that anybody may have or to any remedies that the United States may have?
Mr. Malley: The contract... the agreement under which we entered into this arrangement required that the State of Vermont submit to a range of... of remedies.
Most particularly are those under 40 C.F.R., part 31 which require for a full range of supplying records to the United States, submitting to performance reviews, the possibility of withholding cash payments, the possibility of disallowing part of prior costs, suspension of the program, even... even that the United States Environmental Protection Agency could come in and... and take over and operate these Clean Water Act programs.
And there was nothing in there suggesting that... that part of the deal was that... that the State of Vermont had to comply with a False Claims Act and particularly one that... that doesn't... doesn't apply to the States.
Justice Ginsburg: Do you think that if the State can't be a defendant, it also can't be a plaintiff, or would you make a distinction between those two?
Mr. Malley: I... I think there is a distinction between the two, Your Honor.
If... if there had been a prior case that had found that States are persons-plaintiffs, then obviously we would have to... we would have to get over the hurdle of, you know, the consistent meaning doctrine.
But in the context of this case where the issue is whether the State can be a... can be a defendant person, then the... the test is so different that I don't think that they provide any real comparability.
For example, under the Will case, it was the fact that... that defining the term person to include a State implicated actions which upset the constitutional balance between State and Federal governments, and for that reason, it... it implicated the clear statement rule.
And now here in this case where this statute would purport to lay down huge penalties on the State, treble damages and... and civil penalties up to $ 10,000...
Justice Stevens: Mr. Malley, can I just interrupt for a second?
I understand that there is a difference.
I don't understand your answer to Justice Ginsburg's question.
Do you think Vermont could bring a suit as a plaintiff, as you understand the statute today?
Mr. Malley: We... we do not... we do not assert that, Your Honor, and...
Justice Stevens: I know, but what's your answer to the question?
Mr. Kneedler: [Laughter]
Justice Stevens: Do you think Vermont could bring a suit or not under this statute?
Mr. Malley: We... we do not... we do not believe, given the plain statement of... of the meaning...
Justice Scalia: The answer is no?
Mr. Malley: the State... the State could bring that.
Justice Stevens: The answer is no.
Chief Justice Rehnquist: Okay.
Justice Kennedy: Has Vermont ever brought a... a suit under the False Claims Act?
Mr. Malley: No, Your Honor, we have not.
Other States have, but... but Vermont has not.
Justice Ginsburg: Do we have any indication of how many of these False Claims Act suits the United States itself has initiated against States, if any, as distinguished from the qui tam?
Mr. Malley: I do not have that number in mind, Your Honor, but... but my distinct impression is it is... it is precious little.
I think we cited the Graber case where the United States was involved.
But I think the reason... the reason that I cannot name a single case is... is that the... the United States has so many remedies involving the States with regard to the carrying out of these... these grant programs that... that the False Claims Act really is... is not necessary.
I mean, it... it... for one thing, the EPA officials in this instance are in our offices on a regular basis working hand in hand to implement these programs.
They... they know what's going on.
They have the full range of administrative remedies if necessary under 40 C.F.R., and even if it's necessary to get to issues involving lawsuits, which... which rarely is the case, there, of course, are common law actions that are available, such as unjust enrichment, common law fraud, and so forth.
But I think the reason that... that these cases are virtually nonexistent is that they are... are not necessary.
And for that reason, there's nothing really anomalous about construing the False Claims Act as not applying to the States.
In fact, the 1980... the Congress... the 1986 Congress passed the Program Fraud Civil... Civil Remedies Act which provided some additional administrative remedies, but explicitly included corporations and individuals and partnerships but not the States.
And the reason is, we submit, that it's because they have all of the ammunition that they already need to keep the... the States squeaky clean.
If there are no further questions, I'd like to retain my time.
Chief Justice Rehnquist: Very well, Mr. Malley.
Mr. Malley: Thank you.
Rebuttal of Theodore B. Olson
Chief Justice Rehnquist: Mr. Olson, we'll hear from you.
Mr. Olson: Mr. Chief Justice, and may it please the Court:
As the earlier segment of the argument has already delved into, the qui tam mechanism has existed for centuries.
It was well known when our Constitution was created.
It was adopted 23 times by our count by the first four Congresses of the United States.
It has been recognized by Congress and by this Court on various occasions.
Justice Scalia: You're counting... you're counting those... those situations where the suit is not brought by the individual, but he just gets a bounty?
Mr. Olson: Yes, and this Court...
Justice Scalia: Well, I don't consider that qui tam.
I mean, that's... that's...
Rebuttal of J. Wallace Malley, Jr.
Mr. Malley: In Marcus v. Hess, this Court in 1943, construing the earlier 1805 case, said that those cases that gave a common informer award were to be construed as including the right to bring the action to recover that reward by the qui tam relator.
That's what this Court said in 1943.
So that those 23 statutes, which included a number... which created a direct right in the statute itself, included a number that created the fund for the common informer, and this Court has construed those as allowing that kind of a right.
This Court has also recognized in Marcus v. Hess, and Congress has recognized, that this is one of the least expensive and most effective means of preventing fraud on... on the Treasury.
It's important to understand, in considering the Eleventh Amendment issue, that this is... a qui tam action is brought under the statute in the name of the United States to impose a liability owed to the United States.
It redresses injury to the United States.
Rebuttal of Theodore B. Olson
Chief Justice Rehnquist: Are you addressing the Eleventh Amendment question or the statutory question right now?
Mr. Olson: We are addressing... I'm addressing the Eleventh Amendment issue because the... because we're... our argument, as we've articulated in the brief, is that the Eleventh Amendment issue has to be considered based upon the fact that this is a claim that belongs to the United States.
Chief Justice Rehnquist: Well, I trust you will get to the statutory question somewhere in your argument.
Mr. Olson: Well, I will do that at any time.
The... in fact, I will do that now.
It is very clear under the statute that section 3733 defines the word false claim law to include sections 3729 through 3733.
It... it defines the term false claim investigation as including an investigation as to whether anyone has violated a false claims law, which was defined to include 3729, and then it defines person to include a State.
Justice Kennedy: Well, but that could apply... that could apply in the case where there's a suit against a private contractor and the State has some records.
Mr. Olson: No, but it... it specifically defines in those three terms... in 3733, there's only one way to read the conjunction of those three terms.
False claims investigation specifically defines false claims investigation as including an investigation as to whether any person violated the false claims law, which is included...
Justice O'Connor: But it just says in 3733, definitions, for purposes of this section.
Mr. Olson: Yes, but...
Justice O'Connor: I... I didn't see that it extended to the whole act.
Mr. Olson: But... but section... that same definition section includes a definition of false claims law to include section 3729 through 3722.
Chief Justice Rehnquist: Well, that's anything but a clear statement...
Mr. Olson: It seems to me it's a very clear statement.
There's only one way to read that section, especially when you take it into... into consideration with the legislative history where it was quite clear in the Senate Judiciary report that the Congress understood at...
Chief Justice Rehnquist: Well, are you saying then that Congress extended it to the States sometime recently or in 1860, whenever it was passed?
Mr. Olson: We contend that it is... it is unclear with respect to the 1863 version, but it is quite clear with respect to the 1966 amendment which removed the first section which defined a person not in the service of the military and... and eliminated that section, put in a new section which said...
Chief Justice Rehnquist: It's only by virtue of the amendment that your... your position would prevail.
Mr. Olson: We think it's considerably stronger with respect to the amendment in 1866.
Justice Breyer: Well, if there... if...
Mr. Olson: And I think it's...
Chief Justice Rehnquist: Just a minute, Mr. Olson.
If... if there was no clear statement in 1863... and I... I have a feeling then that the States weren't getting much from the Federal Government the way they are today.
There would be less reason for it... then wouldn't it be fair to say that without the amendment, your position would... would fail?
Mr. Olson: I think the case is quite weak, Chief Justice Rehnquist.
Chief Justice Rehnquist: Well, can you answer my question yes or no?
Mr. Olson: I think that we could make a very good argument, but possibly not persuasive to this Court.
But it's a very persuasive argument when you take into consideration that the... the definitional section was stricken and replaced with the words any person.
Any person is defined in the statute to include States.
Section... the provision can be also construed to give States a right as plaintiffs under the statute, and this Court said that it would be anomalous in... in Marcus v. Hess, the same case I meant before.
The Court held that the False Claims Act cannot have one meaning for actions brought by public officials and quite a different meaning when the same language is invoked by a qui tam plaintiff.
Justice Breyer: I don't understand how the CID section... I mean I see that it helps you, but it seems far from conclusive.
As I get it, it just says whenever the AG has reason to believe any person... that includes a State... may be in possession of any documentary information, et cetera, relevant to a false claims law investigation... and that includes the sections you define... he has to turn it over.
If States have information, they have to turn it over.
That doesn't mean they should be defendants.
Mr. Olson: It... I... I thought that was a difficult construction to make at first, Your Honor, until I read the statutes carefully together, including all three of the definitions, the definition of false claims law, which is in (l)(1), the false claims law investigation in (l)(2), and the definition of the word person in (l)(4).
If you put those together with the provisions that appear to allow States to bring cases as plaintiffs, if you put that together with the change in the definition to include any person...
Justice Breyer: I see.
It's in the...
Mr. Olson: and... and if you... and if you put it together with the Senate Judiciary Committee report which was quite clear that the Senate was assuming that States were persons under the statute as it was... being adopted...
Justice Breyer: The... the report they say, which is I think correct, that that's in a background section and that that report purports to be telling what the human being who wrote that report thought the law was before these amendments.
Of course, that person was wrong.
That isn't what the law was, as you've said, or at least it isn't very persuasive.
And so, why would a statement in a background section show that what Congress intends to do is to change that substance rather than just show Congress intends to pick up whatever the law was before?
Mr. Olson: It seems to me all of this put together, including the Senate report, including the fact that this is an action by the United States to protect the property of the United States against fraud against the United States, and you don't... this Court has held you don't need that so-called plain statement with respect to whether or not claims by the United States can be brought against States, and the interest of the United States in protecting its property from fraud, all of those put together, it strike me make a very persuasive case that the statute intended to include States as persons.
Certainly the people reading this report in the Senate and in... in the Congress of the United States would have assumed that that is what Congress was doing in 1966.
Justice Breyer: Wouldn't they... if they had flagged it as a change, they would have gotten a lot of testimony from States I guess who might have been opposed to it.
Mr. Olson: Or States who might have been in favor of it because...
Justice Stevens: Yes, they might have.
Mr. Olson: because States have been bringing cases under the... under the False Claims Act, as... as the discussion heretofore has indicated.
Justice Breyer: When... when a person writes in a background section this is the law, we're not making a change, then it tends to pass unnoticed.
Mr. Olson: Well, it... it... if standing alone, that might be the case, but standing in conjunction with the fact that the Senate and the Congress of the United States specifically defined the word person to include the State in section 3733.
And as I said, if one reads those three provisions together, plus the provision in 3732 I believe it was that makes it relatively clear that States can be plaintiffs under these circumstances and can have pendent jurisdiction with respect to a claim of fraud against the State treasury, the package makes it relatively clear.
Chief Justice Rehnquist: Your position seems to require quite a few props.
Mr. Olson: Well, the fact is it... I don't think it requires quite a few props, but it has quite a few props, and that makes it doubly persuasive.
With... with respect to the Eleventh Amendment question, this Court has repeatedly, since the late 19th century, determined that Eleventh Amendment questions have to be determined based upon who is the real party in interest, not who is the nominal party, but who gets the benefit of the judgment, who... upon whom will the effect of the judgment be imposed.
And in this case it's quite clear.
As I was saying, it is a case that's brought for fraud against the United States imposing liability to the United States for damage done to the United States, a recovery based upon damages to the United States...
Justice Scalia: Not all of which goes to the United States.
So, why can't you say it's a suit by the United States insofar as the... the reward that goes to the United States is concerned?
But it is not a suit against... brought by the United States to the extent that the recovery goes to somebody else.
Mr. Olson: The... we... in the case of Arizona v. California, the Court talked about whether an intervenor who would not change the outcome of a case would make any difference with respect to Eleventh Amendment issues.
And the Court said, since the intervention of those parties, which were Indian tribes in that case, would not make any different with respect to the ultimate liability, Mr. Stevens'...
Justice Scalia: But this isn't an intervenor.
I mean, this... this is the person who initiates the suit.
Mr. Olson: He initiates the suit.
Justice Scalia: And... and it seems to me, when... when all you have before you is that person, the question is who is the real party in interest as to that person's suit.
I mean, it's obvious who the real party in interest... he's looking to get the reward.
Mr. Olson: There is only one cause of action, Justice Scalia, under the statute and that's in favor of the United States.
If he participates by conducting the case with the approval of the Attorney General, subject to the Attorney General's power to dismiss the suit and to settle the suit and to intervene at any time, then he's entitled to recover a portion of the proceeds paid to the United States.
Justice Scalia: Well, if... if you say there is only one cause of action, then I'm not sure that helps you.
I mean, if... if... it seems to me all of the one cause of action has to be by the United States...
Mr. Olson: Because of...
Justice Scalia: and if any of... if any of the cause of action is not by the United States, it seems to me maybe the whole thing falls.
I can see you're splitting into two and saying the United States' portion is okay.
But if it's all going to be one, why should I accept your view that it's the United States who should be deemed to be the only person there, even though there are really two people in interest there?
Why should I accept your view that the United States should be deemed to be the one rather than... than the...
Mr. Olson: As I... as I read this Court's Eleventh Amendment decisions, the... the party who receives the primary benefit of the action is perceived to be the real party in interest.
And in fact, whether certain of the proceeds that are payable to the United States might subsequently be paid to Mr. Stevens as a relator would not change the fundamental character of it being an action in the name of the United States for a liability...
Chief Justice Rehnquist: What... what cases... maybe just one or two... do you rely on for that... for that real party in interest proposition that...
Mr. Olson: Well, there are several.
In fact, there's a long line of cases...
Chief Justice Rehnquist: Yes.
All I was asking was for one or two.
Mr. Olson: One is Kansas v. the United States, which is at 204 U.S....
Justice Scalia: It involves who the defendant is, who's the real party in interest as far as the State is concerned.
Justice Stevens: Yes.
Justice Ginsburg: Right?
Mr. Olson: And there are other cases, and I can't give you the name of the case, but there are cases cited in the brief in which the same test was applied with respect to questions of sovereignty irrespective of whether...
Chief Justice Rehnquist: Those... those are original jurisdiction cases that have nothing to do with the Eleventh Amendment.
Mr. Olson: Some of the cases cited were original jurisdiction cases.
Some of them were not original jurisdiction cases.
Chief Justice Rehnquist: Well, what are the Eleventh Amendment cases that... that you rely on?
You said that the Eleventh Amendment jurisprudence provides.
Mr. Olson: Those are cited in the brief, Chief Justice Rehnquist, and I can't give you the names of those.
Justice Kennedy: Why... why is it that the United States, under your rule, can bring an action on behalf of an employee under the Fair Labor Standards Act without an Eleventh Amendment violation?
Isn't the employee under your rule the real party in interest?
Mr. Olson: The fundamental difference in those cases are those cases are brought by... in the case where it's brought by the United States, it is brought to enforce the laws of the United States.
In the cases... in the Alden case and in the Blatchford case, the Court was... the Court was dealing there with cases that were brought by plaintiffs on their own behalf and not bringing a claim on behalf of the United States.
Justice Kennedy: If... if the United States brings an action for an employee under the Fair Labor Standards Act, who is the real party in interest under your test?
Mr. Olson: The United States remains the real party in interest because the United States' fundamental interest in that case is to enforce the laws of the United States.
Justice Scalia: But the whole name of actions comes from the Latin which says who on his own behalf as well as on the part of the king.
I mean, in the very title of these actions...
Mr. Olson: There is no...
Justice Scalia: it indicates that the suit is brought on behalf of the individual bringing the suit.
Mr. Olson: There is no question, Justice Scalia, and we're not denying the fact that the relator in these cases has an interest in the outcome of the case.
And that is the nominal form...
Justice Scalia: I didn't say interest in the outcome.
I say he brought the suit on his own behalf.
Mr. Olson: In the name of the United States to enforce a...
Justice Scalia: And also on behalf of the king.
That's the United States.
Mr. Olson: Well, that's correct.
Justice Scalia: That's what these actions are.
They're brought on behalf of the individual and on behalf of... of the sovereign.
Mr. Olson: To vindicate... but to vindicate the fundamental interests of the United States and to protect the broader interest of the United States in deterring... not just redressing, but also deterring fraud against the United States.
The purpose for this statute is to vindicate the interests of the United States.
And the fact that Mr. Stevens brings the case under scrupulous controls, considerable controls by the Attorney General does not change the fundamental character as it being an action being pursued for the benefit and to achieve the interests of the United States.
Justice Scalia: The purpose of treble damage...
Argument of Edwin S. Kneedler
Chief Justice Rehnquist: Thank you, Mr. Olson.
Mr. Kneedler, we'll hear from you.
Mr. Kneedler: Mr. Chief Justice, and may it please the Court:
Since Vermont has raised the question of Article III standing, I would like to make a few brief responses.
A qui tam action, it seems to us, is precisely what the Court had in mind in its decision in Lujan v. Defenders of Wildlife in distinguishing the standing issue there from a situation in which Congress has, quote, created a concrete private interest in the outcome of a suit for the Government's benefit by providing a cash bounty for the victorious plaintiff.
And the... that concrete interest in the outcome of the suit, the prospect of recovering is sufficient to create an interest.
Of course, the United States was injured by the... or allegedly injured by the violation of the False Claims Act.
So, there was an injury in fact, and the False Claims Act operates, in effect, as an assignment or in the nature of an assignment.
And under... under Vermont's theory, no assigned claim could be brought under Article III because the assignor was the injured party, but the person bringing the suit was not.
But it is commonplace under our system of justice for claims to be able to be assigned.
Justice Kennedy: Is it commonplace for the United States to assign its claims?
Mr. Kneedler: The United States does not commonly assign its claims, but the qui tam mechanism has been around since 1790 and operates in very much the same way.
Justice Kennedy: Let me ask this other question.
Has the United States often terminated actions brought by qui tam plaintiffs?
Mr. Kneedler: It has done it on a few occasions.
The Ninth Circuit's decision in Sequoia Orange was an instance in which the United States intervened not at the outset but... but later down the road and dismissed the case because of concern that the qui tam suit was continuing to upset that... that particular sector of the agricultural economy in California.
And the Ninth Circuit held... and the court below in this case agreed with the proposition... that the United States can intervene and dismiss a case for any reason rationally related to a legitimate governmental purpose, as that one was.
The other point I'd like to make about the Article III...
Justice Breyer: Well, I mean, if it is a straight assignment, suppose the United States just assigns a claim to Smith, a claim against a State.
Is it clear whether Smith is or isn't barred by the Eleventh Amendment?
Mr. Kneedler: I'm just... my point here simply goes to the Article III point not the... not the Eleventh...
Justice Breyer: Yes, but I mean, can you have it both ways?
That is, if...
Mr. Kneedler: No.
I think if there is a complete assignment of a claim, taking it out of the... of the qui tam situation for a moment, but an assignment of a commercial claim, I... I think that the Eleventh Amendment might well pose a bar.
Justice Breyer: All right.
So, I do too.
So, under those circumstances then, how can you have it both ways?
Mr. Kneedler: Well, because a qui tam action is... is a hybrid form of action that has been in existence since the beginning of the Nation.
The United States, particularly under the False Claims Act, retains an interest and retains the ability to come into the...
Justice Breyer: Your view would be for purposes of standing, an assignment; for purposes of Eleventh Amendment, not an assignment.
It's the interest of the United States.
Justice O'Connor: That isn't...
Mr. Kneedler: Well, we're... we're not... we're not saying it's literally an assignment.
All we're saying is that in response to the Article III argument, that the Article III argument, taken to its logical conclusion, would mean that an assigned claim could not be brought.
And while the United States has not often assigned its claims outside of this area, it's important to recognize that the Property Clause of the United States grants the Congress the power to dispose of all property of the United States, and that would include a show... an action.
And this Court has held that that power exists without limitation.
So, Congress has to be able... we think under the Property Clause, to be able to assign a cause of action just as any private litigate might.
Justice Scalia: Yes, but... but that... that would... that would only cover the situation where all the... all the qui tam plaintiff gets is... is his own recovery and nothing is... is then credited to... to the United States.
Mr. Kneedler: No, I don't think that's correct.
I think as... as long as the qui tam relator gets something, he has a concrete stake in the outcome of the case.
The fact that the United States also gets something... in fact, the bulk of the recovery... shows why the... why the United States has a substantial interest in the case, but it doesn't detract from the fact that the qui tam relator has a concrete interest.
Justice Scalia: You need standing.
I mean, the concrete interest has to pertain to each element of relief that you're... that you're asking for.
Justice Kennedy: And what is this...
Mr. Kneedler: Well, there is only one... there is only one judgment in a qui tam case.
There is one judgment and the statute provides then that the relator recovers his share out of the proceeds of that... of that action, in other words, out of the judgment that is rendered in favor of the United States.
There are not two separate causes of action.
The other point I wanted to make before I move on from Article III standing is that this Court's modern standing jurisprudence has been an effort to apply the case or controversy principles in the new context of modern public law litigation.
But the... the ultimate inquiry is what is a case or controversy.
Those are the constitutional terms.
And on that point, we think it's critical to look what the Founders meant by those terms.
And in fact, just several terms ago in the Steel Company case, the Court said that a case or controversy means cases and controversies of the sort traditionally amenable to and resolved by the judicial process.
And that classically describes qui tam actions which were in existence both before the adoption of the Constitution and after.
And the case or controversy provision in Article III was intended to have continuity.
It is not, for example, like Marbury v. Madison which involved a... a new structural feature of our Constitution.
It... it refers to provisions of the Constitution in which the Framers intended continuity.
On... on the statutory point, I'd like to make clear at the outset that there is no clear statement requirement in a situation involving the relationship between the United States and a State.
This is not a situation in which Congress has abrogated a State's sovereign immunity on behalf of a private person.
The False Claims Act is fundamentally a statute that regulates the relationship between the United States and a State.
A relator, in some circumstances, is permitted to bring an action to invoke the United States' cause of action to recover from the defendant.
Chief Justice Rehnquist: Well, that's... that's not quite as clear as you make it I think.
The... the action can proceed without the United States ever intervening, can it not?
Mr. Kneedler: Yes, if there is a qui tam action.
But my... my point is that the... that the definition of person is... is important first of all in section 3729 of the act which is not the suit filing provision of the act.
3729 of the act is what defines the liability of a... of any person to the United States.
And the legislative history of the 1986 amendment shows quite clearly... clearly that Congress anticipated that States would be proper defendants.
While it may have been described in the background section of the... of the committee report, as Justice Breyer explained, the whole purpose of the 1986 amendments was to round out and reinforce and to... and to make effective what... what Congress understood the present regime to be.
Chief Justice Rehnquist: Well, what... what was the law before those amendments as to States?
Mr. Kneedler: We... we think that the law probably did apply to the States because there was no clear statement requirement.
Now, as you pointed out, there may not have been many instances in which the States at the time that the False Claims Act was enacted would be getting grants of this sort, but of course that had become commonplace by the time of Marcus v. Hess.
It's very commonplace today.
Chief Justice Rehnquist: Well, Marcus against Hess didn't amend the statute...
Mr. Kneedler: No, no.
Chief Justice Rehnquist: at least not purportedly.
Mr. Kneedler: Right.
No, just descriptive... excuse me... descriptively.
But in 19... in 1986, Congress was revamping the statute at a time when Federal grants had become common.
Chief Justice Rehnquist: Well, if it were revamping the statute, why... why are you so dependent on something called a background report that, as Justice Breyer says, can probably better be read for describing existing law?
Mr. Kneedler: Well, this is the reason why I think it's specific.
What Congress, in fact, did to 3729, it previously read a person not in the military is liable for various things.
Well, Congress repealed that paragraph and enacted a new paragraph which said any person, deleting the qualification of not in the military, which might be an awkward way to describe a State...
Justice Breyer: It might.
Mr. Kneedler: [Laughter]
Mr. Kneedler: but... but also said any person.
Any person is usually an expansive term, and there's certainly no reason to think that it... that it wasn't to be expansive here.
And two other significant...
Justice O'Connor: But we... we've had cases saying that person... the use of the word person doesn't ordinarily include States.
Mr. Kneedler: But that's typically where there is a private interest at stake.
As far as I'm aware, petitioner has cited no case where the... where the term person has not been held to involve a State where there's a relationship between the United States and a State.
Justice O'Connor: Well, but here... well, let's... let's get back to the... the relator.
What is the relator's injury in fact...
Mr. Kneedler: The...
Justice O'Connor: until the time the suit is filed...
Mr. Kneedler: The relator... there is...
Justice O'Connor: that's different from the ordinary taxpayer?
Mr. Kneedler: There is no prior injury to the relator, but there certainly is a prior injury to the United States.
And as I've said, the statute operates in the nature of an assignment.
The... the relator is given the opportunity to invoke... to redress the United States' injury, but also given his own standing, because once he files the suit, he has in a sense distinguished himself from every other taxpayer because the statute gives him the exclusive right to see the case through to judgment.
He has reduced the... this free-floating cause of action, captured it, made it his own, and... and the statute then gives him a personal right and a personal...
Justice Scalia: Gives him a personal right to... to his portion of the recovery, but that's... we don't do standing in gross the way you're describing it.
So long as he has standing for something, he has standing for everything.
And there's... there's no way to see how he has standing to get the money that's going to go to somebody else...
Mr. Kneedler: Well...
Justice Scalia: namely the United States.
Mr. Kneedler: Well, in citizen suit cases, it's... it's not at all unusual for the plaintiff to be able to bring the suit because of a personal injury to the... to the... to the private plaintiff, the private citizen.
But the relief in the case may well be that civil penalties awarded to the United States.
So, the relief... the relief in question... and it's often... in Brown v. Board of Education, the relief awarded went beyond relief that just benefitted the individual who was seeking a desegregated school.
It had a broader ramification, and so too here.
But the fact... the fact that it had...
Justice Scalia: All of the relief awarded benefitted that person.
It may have benefitted other persons as well.
Mr. Kneedler: Well, again, there is a single, unitary judgment out of which the... the... in a way the United States and the relator in that way could be looked at as joint tenants, and a... and a joint tenant is typically empowered to protect the interests on behalf of both tenants.
Justice Ginsburg: Mr. Kneedler...
Mr. Kneedler: These are just analogies, but I think they show why a single judgment in which one person has an interest was enough to give a... a concrete stake.
Justice Ginsburg: Would you adopt in any way as a fall-back position that the False Claims Act includes the State as a person if the United States is bringing the suit, but does not include the State as a person if a private individual is bringing the suit?
Mr. Kneedler: Well, we certainly think if the Court were to conclude that... that a clear statement is required that's not for the relator... that wouldn't be true for the United States, and I... but that would... that would come under 3730, not the definition of person but who could bring a cause of action under 3730(a) or (b) which distinguished the Attorney General and... and the private relator.
But with respect to the word person, we don't think that that makes any logical sense.
Justice Ginsburg: Because you did say in your brief one of the reasons the United States has a large stake in this is that the United States itself couldn't sue under the False Claims Act.
Mr. Kneedler: Right, and we think that... we think that's a particular reason why the idea that the statute should be saved by construing States not to be persons, it would be an odd sort of saving of... saving construction to deprive the United States of suing States when States receive $ 250 billion a year now.
Justice Ginsburg: Well, but that's...
Justice O'Connor: Well, presumably the United States has an... an array of additional remedies.
It's not like the State is going to get away with something, is it?
Mr. Kneedler: No, but Congress specifically determined in 1986 that those other remedies were inadequate and that the False Claims Act measures, including the provisions for informers to bring information to the United States or to... to file suit were critical to ferret out and... and redress.
Justice Breyer: But that's the very point.
Hundreds of billions of dollars of joint programs means that when you bring the States in, it changes the nature of the statute.
It's one thing to have private people, you know, going through technical violations and searching the books of private companies.
It's quite another to set loose an army of people on the States who will find every technical violation they can because they get money for it.
Mr. Kneedler: But that... that...
Justice Breyer: So, the latter should be left to the political process or other methods, not this one.
That's the argument.
Mr. Kneedler: But that... that concern does not go to the question of whether the United States itself should be able to bring a False Claims Act...
Justice Breyer: No, no.
It goes to the question of whether you take the word person, which up till 1986 has in practice been included not States, and then just say that a background statement and a couple of other little... little things in the statute, maybe worth an ounce each, should be taken to work what I would characterize pejoratively... I don't really mean it... as a kind of revolution in the way the States... potentially a revolution in the way that the States...
Mr. Kneedler: But again, your concern goes I... I thought primarily to the question of the qui tam provision.
That's different from the United States.
If the United States is bringing the suit, it can... it can exercise all appropriate cautions.
I wanted to just... several things on the Eleventh Amendment, if I may.
New Hampshire v. Louisiana I think is the principal case where the Court found that there was an Eleventh Amendment bar because the State was not the real party in interest, even though nominally the plaintiff.
The... the claim was really being brought on behalf of private individuals.
And here I think we have really the reverse situation where the relator is really representing the interests of the United States in a lawsuit, but the United States is substantially a real party in interest in the case.
Chief Justice Rehnquist: There... there the... the finding was that the plaintiff was... was not the real party in interest.
Mr. Kneedler: But because there was a... a private party that stood behind the State that... that stood to benefit, and here we have very much the same thing, that although the relator brings the suit, he first of all brings it in the name of the United States to recover for the United States.
And the United States stands behind the relator, although the relator has a personal interest... stands behind the relator as a real party in interest in the lawsuit.
And the relator's interest in this case is derivative.
This is not a situation like Alden v. Maine or Blatchford where the plaintiff was suing to vindicate an injury to himself.
The plaintiff's interest in this lawsuit is entirely derivative of that of the United States.
And the... a False Claims Act suit, whether brought by the relator or brought by the United States, retains its public character throughout.
The United States... the Attorney General is always able to intervene in the case, to take it over, to get pleadings, to intervene and dismiss it.
Her settlement... or her approval is required for settlement.
This is control over the suit that preserves political accountability in the United States in the... in the Federal Government for the processing of the suit, but if the Attorney General decides not to take over the suit, the suit can proceed within the parameters that Congress has prescribed and that the Attorney General provides in...
Justice Scalia: It still remains a suit by the United States in your view.
Mr. Kneedler: It's a suit both by the... it's a hybrid by the United States and by the relator.
Rebuttal of J. Wallace Malley, Jr.
Chief Justice Rehnquist: Thank you, Mr. Kneedler.
Mr. Malley, you have 4 minutes remaining.
Mr. Malley: Thank you, and may it please the Court:
I'd just like to focus on the inconsistency which I believe I just heard from the Government's case.
On the one hand, the Government admits that it has... that the relator has no prior injury in this case, no prior injury prior to bringing this suit.
Well, if that's the case, there is no standing.
Justice Breyer: Why can't you assign a claim to someone who has no prior injury and they can bring a... they can bring the claim?
Justice Kennedy: Can't they?
Justice Breyer: An assignee never has a prior injury.
Mr. Malley: Assignments... assignments certainly are a possibility, Your Honor.
But that's not...
Justice Breyer: Well, he said look at this like an assignment.
Mr. Malley: But this... this is... it's certainly not like an... an assignment.
We don't have anything to indicate, number one, that that's an assignment.
There's nothing to indicate there's been some transfer of ownership of... of... of the... of the injury that's... in fact... in fact, the United States wants to have it both ways.
They want to both say that it's... it's an assignment, and... but... but they still have it.
And that's exactly the problem here, is that... is that on the one hand, they want to say it's only the United States' claim that's being brought here, and in that case there's a standing problem.
On the other hand, they want to say that once the case is filed, that... that the relator captures it and makes it his own.
Well, if that's the case, then it's an Eleventh Amendment problem.
We submit they cannot have it...
Justice Stevens: What about his example of a joint tenancy where two parties both have an interest in a unitary judgment?
Justice Kennedy: Isn't that possible?
Mr. Malley: A joint... a joint tenancy...
Justice Stevens: He said it's comparable to a joint tenancy, yes.
Mr. Malley: I don't think so, Your Honor.
Justice Stevens: A partial assignment.
Mr. Malley: In... in that... in that instance either joint tenant has his or her own specific property interest, and when that's infringed upon...
Chief Justice Rehnquist: That's right.
Justice Stevens: The Government has 75 percent and the qui tam relator has 25 percent.
Mr. Malley: But it... but... but up until the time this suit was filed, there was... there was no injury.
This... this... I mean, as... as the Court has observed in... in the Sierra Club and Lujan, is that the plaintiff must be among those who were injured, and there is no injury.
Admittedly they have procedural interests, but these are not...
Justice Stevens: Well, you're not suggesting an assignee could never sue if... if the assignee had never been injured.
Mr. Malley: No, Your Honor.
But I'm just submitting this is not an assignee here.
Chief Justice Rehnquist: Well, if the Government had assigned the claim in toto to the relator, I suppose the relator could sue without any trouble and clearly have standing.
Mr. Malley: Well, except for the Eleventh Amendment, yes, Your Honor.
Justice Scalia: I'm not sure you could partially assign claims anyway.
I mean, it would be a nice way to harass somebody, you know, divvy up a claim against somebody into 100 pieces and give them to 100 different people.
I don't think it is doable.
Mr. Malley: Let me just underscore one... one other point and that's the need for the plain statement rule here.
This relator is claiming, just on civil penalties alone, a claim for $ 25 million.
That... that exceeds the total annual outlay for the Department of Environmental Conservation in the State of Vermont by about $ 7 million.
Now, clearly if that's what was implicated in this statute, there should be a plain statement rule so that we can be on fair notice that that is what has happened.
Your Honor, we submit that's not what happened.
We ask the Court to reverse and dismiss this case.
Chief Justice Rehnquist: Thank you, Mr. Malley.
The case is submitted.
The honorable court is now adjourned until tomorrow at ten oclock.
Argument of Speaker
Mr. Kneedler: The opinion of the Court in No. 98-1828, Vermont Agency of Natural Resources versus United States, will be announced by Justice Scalia.
Argument of Justice Scalia
Mr. Scalia: This case comes to us on Writ of Certiorari to the United States Court of Appeals for the Second Circuit.
Under the False Claims Act, a private person known as the relator may bring a civil action “in the name of the government” against “any person” who among other things knowingly presents to the government a false or fraudulent claim for payment.
The relator receives a share of the proceeds from the action where the remainder of course going to the government.
Such actions brought by private persons on behalf of the government are known as qui tam action, Latin name with which the pleadings used to begin.
Respondent Stevens brought this qui tam action against petitioner, a Vermont State Agency alleging that it had submitted false claims to the environmental protection agency in connection with various federal grant programs administered by that agency.
Petitioner moved to dismiss making two arguments: First, that a State or a state agency is not a person subject to liability under the False Claims Act; and second, that a qui tam action in Federal Court against the State is barred by the Eleventh Amendment, which generally prohibits private suits against the State by citizens of other states in Federal Court.
The District Court denied the motion and petitioner, the State, filed an interlocutory appeal.
Respondent, United States intervened in the appeal in support of respondent Stevens, the Second Circuit affirmed.
As a preliminary matter, we conclude that Stevens has a standing to bring this suit.
Stevens meets all of the requirements necessary to establish standing under Article III of the Constitution.
In particular he has demonstrated injury in fact that is a harm, which is concrete, actual and imminent, not conjectural or hypothetical.
We agree with Vermont that the interest that Stevens has in the outcome of the suit, namely the bounty he will receive, if the suit is successful, is insufficient to confer standing since that interest does not consist of obtaining compensation for or preventing the violation of a legally protected right.
It is not compensating him for any injury.
Stevens relies, however, upon the injury in fact suffered by the United States, both the injury to its sovereignty arising from violation of its laws and the proprietary injury resulting from the alleged fraud.
We conclude that an adequate basis for Stevens standing is to be found in the doctrine that an assignee of a claim has standing to assert the injury, in fact suffered by the assignor.
The False Claims Act can reasonably be regarded as affecting a partial assignment of the government’s damages claim.
This conclusion is confirmed by the long tradition of qui tam actions in England and the American colonies, which demonstrates that such actions were cases and controversies of this sort traditionally amendable to and resolved by judicial process.
We express no view on the question whether qui tam suits violate Article II of the Constitution as oppose to Article III in particularly the Appointments Clause of Section 2 and the “take Care” Clause of Section 3.
Turning to the merits of the matter, we find it unnecessary to reach the Eleventh Amendment question.
We conclude that the False Claims Act does not by its terms subject to state or a state agency to liability because of the longstanding interpretive presumption that the statutory term, ‘person’ does not include the sovereign, although that is not a hard and fast rule of exclusion.
The presumption may be disregarded only upon some affirmative showing of statutory intent to the contrary.
Various features of the False Claims Act both has originally enacted and as amended far from providing the requisite affirmative indications that the term ‘person’ includes states indicate quite the contrary.
This conclusion is buttressed by two additional considerations.
The rule of statutory construction that if Congress intends to alter the usual constitutional balance between States and the Federal Government, it must make its intention to do so unmistakably clear, and the doctrine that Statute should be construed so as to avoid difficult constitutional questions, in this case the Eleventh Amendment question.
Justice Breyer has filed a concurring statement; Justice Ginsburg has filed an opinion concurring in the judgment in which Justice Breyer has joined; Justice Stevens has filed a dissenting opinion in which Justice Souter has joined.