In a victory for the right of whistleblowers to seal, temporarily, their claims of fraud against the government, U.S. District Court Judge Liam O'Grady late yesterday dismissed a case brought by the American Civil Liberties Union (ACLU), OMB Watch and the Government Accountability Project (GAP). The case, filed in Alexandria, Virginia, asked the court to declare that the "seal" required by the False Claims Act is unconstitutional. The case is known as ACLU v. Holder. If successful, this suit would have required whistleblowers to disclose their identities and their claims to the whole world while the government investigates the claim to determine if criminal, civil or no charges should be pursued. Such disclosure would tip off the crooks to the government's investigation against them, and could subject whistleblowers to retaliation.
This case divided whistleblower advocacy groups. Taxpayers Against Fraud (TAF) and the National Whistleblowers Center (NWC) opposed the suit. Despite concerted efforts to educate the ACLU, OMB Watch and GAP to the whistleblowers' need for confidentiality, the groups decided to proceed with their suit. They claim the the public's right to know about lawsuits as soon as they are filed should trump the government's need to investigate, and the whistleblowers' need for confidentiality. Lawyers Marc Vezina, Cleveland Lawrence and Zach Kitts filed an amicus brief for TAF's Education Fund. Judge O'Grady cited this amicus brief in his decision.
Under the False Claims Act (FCA), which starts at 31 U.S.C. Section 3729, whistleblowers with non-public information about a fraud against the government can file a lawsuit to recover the money wrongfully received. Such lawsuits are called "qui tam" claims because the government will share the recovery with the whistleblower. However, the FCA requires that the court and the whistleblower keep the lawsuit "sealed" until the government makes its decision about whether to intervene. The FCA gives the government sixty (60) days to investigate the claim and make this decision, but the government typically asks for and receives an extension of the seal that can last for years. During this time, government investigators can decide whether criminal charges should be filed against the alleged perpetrators of the fraud. The government may choose to execute warrants to search for evidence or make arrests before the lawsuit is made public. Meanwhile, if the whistleblower is an employee of a company engaged in the fraud, the seal permits the whistleblower to keep working, and collecting evidence, while the employer remains unaware of the lawsuit. The court would not make any adjudications about the merits of the lawsuit until after the government makes its decision on whether to intervene, the lawsuit is unsealed and served on the other side, and all parties have an opportunity to review the claims and make their cases to the court.
The plaintiffs, the ACLU, OMB Watch and GAP, raised three claims against the constitutionality of the seal provision. First, the claim that the public has a right under the First Amendment to know what claims are pending in court. Judge O'Grady rejected this claim, citing Los Angeles Police Department v. United Reporting, 528 U.S. 32 (1999), and Fisher v. King, 232 F.3d 391 (4th Cir. 2000). These cases hold that local laws restricting access to public records do not violate the First Amendment since everyone remains free to communicate the information they already have. While the public normally enjoys a First Amendment right of access to court documents, this right does not extend to all documents. For example, the public has a right to documents filed in connection with a motion for summary judgment since these documents serve to adjudicate substantive rights and serve as a substitute for trial. However, this right does not yet extend to motions to dismiss. Judge O'Grady concluded that qui tam complaints are analogous to even earlier stages of the case that are not traditionally public. For example, a government's criminal investigation, and even grand jury proceedings are normally secret. Judge O'Grady also noted that Congress created the seal provision in 1986, "in response to Justice Department concerns that qui tam complaints filed in open court might tip off targets of ongoing criminal investigations." S. Rep. 99-345, 1986 U.S.C.C.A.N. 5266, 5281. Judge O'Grady determined that the public interests are served when the government finishes its investigation and lifts the seal so the case can be adjudicated openly. Until then, the public interest is not served by tipping off the subjects of that investigation so they might have an opportunity to hamper it by destroying evidence.
The plaintiffs' second argument was that the seal infringes on the free speech rights of the whistleblowers who file qui tam lawsuits. Judge O'Grady cited TAF's amicus in holding that the plaintiff organizations did not have any close relationship with such persons, and they lacked standing to raise this claim on their behalf. More specifically, the injunction that the plaintiffs sought against the FCA's seal provision would be against the interests of those whistleblowers who want to keep their whistleblowing confidential. Moreover, the seal only applies to those whistleblowers who choose to file a qui tam and become subject to its seal. Any such whistleblower could choose not to file the lawsuit and to speak publicly about their claims of a fraud against the government. Judge O'Grady also noted that even if the plaintiff organizations did have standing, there is nothing in the FCA that prevents the whistleblower from speaking about the facts that support the fraud claim, as long as the existence of the lawsuit is not disclosed prematurely. Judge O'Grady noted that this was TAF's position, and TAF is a group that represents the interests of qui tam whistleblowers.
The plaintiff's third argument was that the FCA's seal upsets the balance of power under the Constitution by interfering in the court's decision about whether to seal or unseal any particular case. Judge O'Grady rejected this claim noting that judges do enjoy discretion as to whether to extend the seal beyond the initial sixty (60) day period. The initial seal is merely a ministerial function that does not interfere with judicial independence.
Now that Judge O'Grady has dismissed the ACLU lawsuit, the plaintiffs will have sixty (60) days to decide whether to appeal. Here is one voice urging them not to do so. An appeal will not further the public interest in access to information, but would rather discourage whistleblowers from coming forward if there is a risk that their identities would become known before their were ready. It is in the public interest to protect the confidentiality of qui tam lawsuits for those whistleblowers who want it, or who need it to keep their jobs while the case is pending. It is also in the public interest to encourage whistleblowers to come forward if they have information about a fraud against taxpayer money. We want the government to have every opportunity to investigate such frauds and catch the crooks to commit them. That is why TAF's Jeb White calls Judge O'Grady's decision, "a huge victory for the good guys."
Judge O'Grady's decision is available, on-line and free for those who have PACER accounts. The U.S. District Court for the Eastern District of Virginia provides directions on how to create a PACER account. Then you can read the Court's directions for accessing its opinions. Search for the August 21, 2009, decision in ACLU v. Holder, Case No. 1:09-cv-42. Or, follow this link to the full decision.
UPDATE:
Regrettably, the ACLU and GAP did appeal. You can read the briefs of the parties here:
ACLU/GAP principal brief
USDOJ response brief
TAFEF amicus brief
ACLU reply brief
We are waiting for the Fourth Circuit's decision which could be announced any day now.
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