United States of America v. DHL Express (USA), Inc.

12-3829-cv
United States of America v. DHL Express (USA), Inc.
UNITED STATES COURT OF APPEALS 1
FOR THE SECOND CIRCUIT 2
August Term, 2012 3
(Argued: March 21, 2013 Decided: February 5, 2014) 4
Docket No. 12-3829-cv 5
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THE UNITED STATES OF AMERICA ex rel., 7
Plaintiff, 8
9
KEVIN GRUPP, ROBERT MOLL, 10
Plaintiffs-Appellants, 11
12
v. 13
14
DHL EXPRESS (USA), INC., DHL Worldwide Express, Inc., DHL 15
HOLDINGS (USA), INC., 16
Defendants-Appellees. 17
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B e f o r e: WINTER, CABRANES, and LIVINGSTON, Circuit Judges. 21
Appeal from an order of the United States District Court for 22
the Western District of New York (John T. Curtin, Judge) 23
dismissing a qui tam action for failure to satisfy a statutory 24
notice requirement that applies to shipping-rate disputes. We 25
vacate and remand. 26
27
JOHN L. SINATRA, JR. (Daniel C. 28
Oliverio, Reetuparna Dutta, on the 29
brief), Hodgson Russ, LLP, Buffalo, 30
NY, for Plaintiffs-Appellants. 31
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1
LAWRENCE VILARDO (Terrence M. 2
Connors, James W. Grable, Jr., on 3
the brief), Connors & Vilardo, LLP, 4
Buffalo, NY, for Defendants- 5
Appellees. 6
7
MICHAEL S. RAAB (Joshura P. Waldman 8
on the brief), Appellate Staff of 9
the Civil Division, for Stuart F. 10
Delery, Principal Deputy Assistant 11
Attorney Genera, U.S. Department of 12
Justice, Washington D.C.; William 13
J. Hochul, Jr., U.S. Attorney for 14
the Western District of New York, 15
Buffalo, NY, for Amicus Curiae 16
United States of America. 17
18
WINTER, Circuit Judge: 19
Kevin Grupp and Robert Moll appeal from Judge Curtin’s order 20
dismissing their qui tam action for failure to satisfy a 21
statutory notice requirement. Appellants commenced this action 22
against DHL Express, Inc. and its parent company DHL Holdings, 23
Inc. (collectively, “DHL”) under the False Claims Act, 31 U.S.C. 24
§ 3729 et seq., alleging that DHL billed the United States jet- 25
fuel surcharges on shipments that were transported exclusively by 26
ground transportation. We vacate and remand. 27
BACKGROUND 28
We assume the facts as alleged in the complaint to be true. 29
DHL is an international package delivery company. Appellants own 30
MVP Delivery Services and Logistics, a delivery company that 31
served as an independent contractor for DHL. From 2003 to 2008, 32
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DHL provided delivery services to the General Services 1
Administration, the Department of Homeland Security, and the 2
Department of Defense. 3
During this time, DHL offered three types of so-called “Air 4
Express Services” -- “Same Day”, “Next Day”, and “Second Day” –- 5
and a “Ground Delivery Service”, which provided delivery in one 6
to six business days. Customers who purchased one of the “Air 7
Express Services” were charged a jet-fuel surcharge and those who 8
purchased the “Ground Delivery Service” were charged a diesel- 9
fuel surcharge, without regard to the type of transportation 10
actually used in the delivery. The surcharges were calculated 11
using the monthly jet and diesel fuel price indexes published by 12
the U.S. Department of Energy. 13
According to appellants, DHL was obligated by its contract 14
with the U.S. Government to charge only the cheaper diesel-fuel 15
surcharge for shipments transported solely by ground. In their 16
complaint, appellants set forth three specific deliveries for 17
which the government was charged the jet-fuel surcharge, even 18
though the shipment was transported exclusively by ground 19
transportation. They further allege that DHL included the jet- 20
fuel surcharge for “Air Express Services” as a matter of common 21
practice, regardless of the actual means of transport used, and 22
that these facts support a finding that DHL knowingly defrauded 23
the U.S. Government. 24
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On November 8, 2011, DHL moved to dismiss the complaint on 1
several grounds. The district court granted the motion, and this 2
appeal followed. 3
DISCUSSION 4
We review dismissal pursuant to Rule 12(b)(6) de novo. 5
Pension Benefit Guar. Corp. ex rel. St. Vincent Catholic Med. 6
Ctr’s Ret. Plan v. Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705, 7
730 (2d Cir. 2013). 8
The district court dismissed the action on the ground that 9
appellants failed to satisfy the statutory notice requirement 10
imposed by 49 U.S.C. § 13710(a)(3)(B). Title 49 governs rates 11
and billing by motor carriers. Section 13710(a)(3)(B) states: 12
If a shipper seeks to contest the charges 13
originally billed or additional charges 14
subsequently billed, the shipper may request 15
that the [Surface Transportation] Board 16
determine whether charges billed must be 17
paid. A shipper must contest the original 18
bill or subsequent bill within 180 days of 19
receipt of the bill in order to have the 20
right to contest such charges. 21
22
Id. The Surface Transportation Board (the “STB”) is an 23
adjudicatory body within the U.S. Department of Transportation 24
charged with resolving disputes concerning motor carriers’ 25
shipping rates. “Section 13710(a)(3)(B) makes clear that such 26
disputes may be brought before the STB, but this provision is not 27
the exclusive provision for resolving such disputes where they 28
are a part of an otherwise valid legal claim for relief, e.g., 29
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under the False Claims Act (“FCA”), 31 U.S.C. § 3729, that may be 1
brought before a court.” 2
A failure to comply with the 180-day rule bars a challenge 3
to a shipping charge before the STB. At issue in this appeal is 4
whether a failure to comply also bars a shipping-rate challenge 5
before a federal court when brought pursuant to the FCA. The 6
district court concluded that it does and dismissed the action. 7
Without deciding how the 180-day rule applies to other kinds of 8
suits brought in court, we vacate on the ground that the 180-day 9
rule cannot apply to a qui tam action under the FCA. 10
The FCA prohibits any person from “knowingly present[ing], 11
or caus[ing] to be presented, [to the United States government] a 12
false or fraudulent claim for payment.” 31 U.S.C. § 13
3729(a)(1)(A). The Attorney General may institute an action 14
against a party who violates the FCA, id. § 3730(a), or a private 15
individual, known as a relator, may bring a civil qui tam action 16
on behalf of the government and share in the recovery therefrom, 17
id. § 3730(b)(1), (d). After filing a qui tam complaint, the 18
relator must serve a copy of the complaint on the government, and 19
the government may elect to intervene and litigate the action. 20
Id. § 3730(b)(2), (4). If the government declines to intervene, 21
the relator shall have the right to proceed. Id. 22
23
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A relator’s complaint must be filed in camera, and remain 1
under seal for at least 60 days. Id. § 3730(b)(2). The 2
government may move to extend the seal period for good cause 3
shown. Id. § 3730(b)(3). The complaint is not served on the 4
defendant until the court so orders. Id. § 3730(b)(2). 5
The government, in an amicus brief, 1 contends that 6
application of the 180-day rule to qui tam actions would 7
undermine both the FCA’s seal provisions and statute of 8
limitations. We agree. The purpose of the sealing provisions is 9
to allow the government time to investigate the alleged false 10
claim and to prevent qui tam plaintiffs from alerting a putative 11
defendant to possible investigations. U.S. ex rel Pilon v. 12
Martin Marietta Corp., 60 F.3d 995, 998-9 (2d Cir. 1995). The 13
relatively generous statute-of-limitations period –- within six 14
years of the violation or three years after the time at which 15
U.S. officials knew or should have known of the violation, 16
whichever occurs last –- serves a similar purpose, ensuring that 17
the government need not rush to file a complaint when such a 18
filing would alert a defendant to an ongoing criminal or civil 19
investigation. See 31 U.S.C. § 3731(b)(1)-(2). 20
21
1 The government declined to intervene in this matter, but it filed an
amicus brief in support of appellants in the proceedings before this court.
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DHL maintains that § 13710(a)(3)(B) and the FCA can be 1
reconciled because the 180-day rule is a notice requirement, not 2
a statute of limitations; so long as relators provide notice to 3
the carrier within the 180-day period, they need not file suit 4
for up to six years. Thus, in DHL’s view, because the statutes 5
are not in direct conflict, both must be given effect. See 6
Morton v. Mancari, 417 U.S. 535, 551 (1974) (“[W]hen two statutes 7
are capable of co-existence, it is the duty of the courts, absent 8
a clearly expressed congressional intention to the contrary, to 9
regard each as effective.”). 10
However, this argument ignores the purpose of the FCA’s 11
tolling provision. See 31 U.S.C. § 3731(b). In 1986, when 12
Congress amended FCA Section 3731(b) to include the tolling 13
provision –- which permits actions for up to three years after 14
the government’s discovery of the violation or the time at which 15
the government should have discovered the violation –- it 16
provided the following justification: “[F]raud is, by nature, 17
deceptive [and] such tolling . . . is necessary to ensure the 18
Government’s rights are not lost through a wrongdoer’s successful 19
deception.” S.Rep. No. 99-345, at 15 (1986), reprinted in 1986 20
U.S.C.C.A.N. 5266, 5280. Application of the 180-day rule would 21
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completely nullify the tolling allowance 2 inasmuch as the 1
Government is often unlikely to become aware of fraud immediately 2
following the violation. 3 For similar reasons, the rule as 3
understood by DHL, would pose an even more substantial obstacle 4
to relators’ ability to bring qui tam actions. 5
CONCLUSION 6
For the reasons stated herein, we vacate the judgment and 7
remand to the district court. 8
2 We identify this conflict between the 180-day rule and the tolling
provision but have no occasion to decide whether the tolling provision applies
in this particular case. Cf. United States ex rel. Sanders v. N. Am. Bus.
Indus., Inc., 546 F.3d 288, 293-96 (4th Cir. 2008) (holding that the tolling
provision does not apply to relators in cases where the government declined
intervention); United States ex rel. Ven-A-Care v. Actavis Mid Atl. LLC, 659
F. Supp. 2d 262, 273-74 (D. Mass. 2009) (holding that the tolling provision
applies to relators, but the limitations period begins to run when a
government official learns of the conduct). The conflict between the tolling
provision generally and the 180-day rule is sufficient to show that the 180-
rule does not bar suits under the FCA.”
3 DHL contends that if the 180-day rule and the FCA are in conflict,
then the former should trump the latter because it is more specific. See
Hinck v. U.S., 550 U.S. 501, 506 (2007) ("[I]n most contexts, a precisely
drawn, detailed statute pre-empts more general [statutes]." (internal
quotations omitted)). We reject the contention that Section 13710 is the more
precisely drawn of the two statutes. Although Section 13710 addresses
shipping-rate disputes specifically, it does not address fraudulent claims to
the government or qui tam actions.
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