State Farm singing second verse same as the first, a little bit louder and a little bit worse in documents filed yesterday

OK, Scouts, you don’t have to sing along; but, you do need to know that no matter what the farmer said, it did do harm when the cow kicked Nellie in the stomach in the barn.  Nellie was fine, just a little stunned, but the cow broke its leg and was done.

State Farm filed a Response and Memorandum Wednesday singing the verse about the stolen [sic] documents and broken [sic] seal a little bit louder and a little bit worse. in opposition to the Rigsbys motion to propound expedited document requests.  Needless to say, they weren’t singing to a choir here – not with that songbook; not with all of the contradicting information readily available to those willing to search.

(1) courts have held that employees with a good faith reason to believe their employer is engaged in unlawful conduct “[have] a legitimate interest in preserving evidence of [their employer’s] unlawful employment practices.

(2) the court also dealt with the issue of whether a former employee could be compelled to return materials taken from the employer that might demonstrate fraud. The court responded in the negative, finding less onerous ways of preventing this information from being used…

(3)…it is paramount to recognize that the duties of confidentiality and loyalty are qualified and must acquiesce to matters of public interest irrespective of whether those duties flow from an express confidentiality agreement or a common law fiduciary duty.

(4)…a claim for conversion cannot be found where the owner has not been deprived of title or right to use the property. The gravamen of the tort of conversion is the deprivation of the possession or use of one’s property… possession of copies of documents…does not legally rise to an interference with the owner’s property sufficient to constitute conversion.

(5) Even if the confidential documents constitute “property” of a type subject to conversion, holding the Relators responsible for engaging in conduct for the purposes of pursuing an FCA claim would undercut a statutorily protected right and further undermine the pivotal purpose of the FCA to uncover false and fraudulent claims on the United States.

(6) ..the Congressional intent in creating the 1986 FCA amendment for whistleblower protection is plain—to encourage the detection and exposure of potential frauds against the United States Treasury.  Thus, private agreements, whether entered into as a condition of employment, during the course of employment, or in settlement of claims outside of the FCA framework, that would frustrate this public interest and Congressional objective are generally unenforceable.

(7)…the [Congressional] Committee explicitly stated that “[b]y providing for sealed complaints, the Committee does not intend to affect defendants’ rights in any way.” Id. For these reasons, protecting the rights of defendants is not an appropriate consideration when evaluating the appropriate sanction for a violation of the seal provision.

(8) Nothing in the Act requires a qui tam relator to make supplemental disclosures to the government. However, Rule 26 does require supplemental disclosures, and, even in those cases where the Department of Justice has not intervened, it is probably wise to continue to supply the Department of Justice with supplemental information which might impact its decision regarding intervention.

(9) No court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government [General] Accounting Office report, hearing, audit, or investigation, or from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.

(10) By picking a case with no dispute over the preliminary issue of whether a public disclosure occurred, the Supreme Court had no opportunity to clear up any of ..[the]…confusion [from Appeals decided by the various district courts]. The Rockwell opinion actually ended up adding to the confusion. It held emphatically that the “allegations or transactions” that define a public disclosure are not the same as the “allegations” in the complaint for which the Relator must be the original source..

(11) Court’s ruling…[in Rockwell was]…very fact-specific…[but while it]…provided the first decision on the public disclosure jurisdictional bar, it also left critical issues of statutory interpretation for later cases. Issues avoided include: [1] sufficiency of public disclosure to trigger the jurisdictional bar; [2] quantum of direct and independent knowledge necessary to be an original source…

Judge Senter’s scheduling Order provided for discovery specific to the dispositive motions filed in the case.  I have no idea if the Notice of Intervening Supplemental Authority also filed today will be considered an additional dispositive motion or decided separately.

If counsel represents to the Court that it will be necessary to take discovery in order to prepare responses, rebuttals, or supporting memoranda, I will require that the discovery requests be specific and that they be directly relevant to the issues framed by these motions.

The eleven motions he identified fall under these three categories – one of each category linked below, noting there was only one version of the Motion for Summary Judgment listed in his order.

• Motion to Dismiss for Lack of Jurisdiction
• Motion to Dismiss for Failure to State a Claim
• Motion for Summary Judgment on Relators’ Claim for Retaliatory Discharge

The catch-all I posted earlier included State Farm’s Response to the Rigsbys motion requesting an extension of time to respond to the dispositive motions.  This document claimed the reasons set forth in the Response and Memorandum of this post supported the State Farm position that no discovery was necessary for the Rigsbys to respond to the dispositive motions.

Although expanded in the Memorandum, the reasons set forth appear in both documents.  Those listed below are from the Response with any related reference from my afternoon/evening of research – once again noting that I’m a reader and not a lawyer.

(1) Not Directly Relevant and Necessary. The “data dump” documents are not even tangentially related, let alone “directly relevant” to the issue of whether the Rigsbys are “original sources” as the term is used in the qui tam provision of the False Claims Act. This is so because the FCA expressly requires a relator to disclose all original source material to the government “before filing an action under this section.” Here, the Rigsbys did not even obtain the “data dump” documents until after this lawsuit was filed. Thus, they are not relevant to determining whether the Rigsbys are original sources.  Re: # 8

(2) Improper Attempt to Launder Stolen Property. The Rigsbys are seeking to improperly use discovery to circumvent this Court’s ruling that “[the stolen documents are not going to come into evidence in this case (or in any other case under my control as judge] unless the party sponsoring the document can show
that the document was acquired through the ordinary channels of discovery.”  Re: # 1,2,4,5

(3) An Attempt to Misuse This Action to Evade the Renfroe Injunction. The Rigsbys are seeking to use discovery in this Action as a vehicle to circumvent Judge Acker’s injunction in Renfroe. Re: # 1,2,4,5

(4) Flawed in Construction. Even if the Rigsbys’ proposed discovery was “specific and . . . directly relevant to the issues framed by these motions[,] and not an impermissible attempt to launder stolen property, it would still be subject to objection for at least two reasons: (1) it seeks the production of materials – in part – that State Farm cannot currently identify; and (2) it seeks the production of some materials that the Rigsbys may never have reviewed.
(5) Further Exposes the Rigsbys’ False Testimony. The Rigsbys’ use of Exhibit A to their proposed discovery further exposes the falsity of prior testimony regarding the “data dump.”

State Farm’s claim at four (4) tests the limits of believability given the recognized expertise of their former qui tam attorney, Tony Dewitt.  Although State Farm contended otherwise, at some point in the disqualification process, Dewitt claimed the need to clarify the testimony the Rigsby sisters had given in depositions and pointed out there had been no opportunity for that to take place.

Ignoring a differing view of reality is not uncommon for State Farm.  For example, their defense relies heavily on Judge Acker’s contention the documents were stolen [sic] when even my limited research suggests otherwise. With that case in mediation, the Scruggs appeal soon to be considered, and the likelihood Judge Senter will make an exhaustive review as he’s done in the past, over-reliance on Judge Acker’s decisions may be a more apt description.  I continue to be amazed he continued Renfroe v Rigsby once he was aware of the qui tam claim.

State Farm paints with a broad brush.  Their view of discovery appears to overlook the Relators are acting without the Government’s involvement and the related impact that has on discovery.  Likewise, their broad brush approach overlooks relevant evidence in plain sight on the docket – as well as the law established in the FCA defining public disclosure..The claim was sealed on April 26, 2006, but the government didn’t request a six month extension of the 60 day period until July 5, 2006 (70 days) and the request was not granted until early December (December 6, 2006)

Consequently, I await with interest the response from the Rigsby sisters qui tam attorneys and wonder if they will point out what some consider to be the significant impact of the Rockwell decision -defendants fending off substantive discovery – or if they think it so obvious no mention is needed.

second verse same as the first, a little bit louder and a little bit worse