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UNITED STATES EX REL. NEWSHAM

November 7, 1995

UNITED STATES OF AMERICA, ex rel. MARGARET A. NEWSHAM and MARTIN OVERBEEK BLOEM, Plaintiffs,
v.
LOCKHEED MISSILES AND SPACE COMPANY, INC., Defendant.



The opinion of the court was delivered by: WARE

 I. INTRODUCTION

 The Court issues this Amended Order re Lockheed's Motion for Reconsideration consolidating this Court's April 20, 1995 Order Granting in Part and Denying in Part Lockheed's Motion for Reconsideration with the points clarified in this Court's August 2, 1995 Order Denying Lockheed's Motion for Reconsideration or in the Alternative for Certification; and Granting Plaintiff's Motion for Clarification. *fn1"

 II. BACKGROUND

 Margaret A. Newsham ("Newsham") began working for Lockheed in 1981. During 1984, Newsham observed what she thought was pervasive false charging of labor hours to government contracts by Lockheed. In 1984, Newsham notified the Defense Contract Audit Agency ("DCAA") of this alleged false charging. In 1988, Newsham, along with another employee, filed a lawsuit against Lockheed under the False Claims Act ("FCA"), 31 U.S.C. § 3729 et seq.

 Pursuant to 31 U.S.C. § 3730, an individual is permitted to bring a civil action for false claims made to the government. The individual bringing the suit is referred to as a qui tam plaintiff or relator. *fn2" The FCA requires that the lawsuit be brought for the person and for the government. The government is given the option to enter and assume the primary responsibility for the prosecution of the action. If the government assumes responsibility, the individual who initiated the action is entitled to recover a percentage of any recovery or settlement. If the government elects not to enter the action, the individual may continue to prosecute the action and, if successful, recover a higher percentage of any recovery or settlement.

 Up until 1986, the FCA provided that unless the government proceeded with the action, the court was required to dismiss the action upon discovering that the action was based on information the government possessed when the action was commenced. The FCA required dismissal of an individual's case even if the government's source of its information came from the individual who filed suit. Therefore, prior to 1986, Newsham was precluded from proceeding with her lawsuit against Lockheed since her report to the DCAA prior to filing suit meant that the government had prior notice.

 In 1989, Lockheed moved to dismiss the suit on the ground that the 1986 Amendments could not be retrospectively applied to 1984 events. Lockheed contended that the applicable law was the version of the FCA which was in effect at the time of its conduct.

 United States District Court Judge Robert P. Aguilar denied the motion, relying on Bradley v. School Board of City of Richmond, 416 U.S. 696, 94 S. Ct. 2006, 40 L. Ed. 2d 476 (1974), which held that a court should "apply the law in effect at the time it renders its decision, unless doing so would result in manifest injustice or there is statutory direct or legislative history to the contrary." 94 S. Ct. at 2016. Judge Aguilar held that the 1986 Amendments, which were in effect at the time of Newsham's lawsuit, applied. Since the FCA as amended allowed an original source plaintiff to bring suit, and Newsham alleged that she was the original source of the government's knowledge, she could file suit.

 In 1990, the case was transferred from Judge Aguilar to this Court. In a ruling on other issues in the case, this Court noted that Judge Aguilar had previously decided that the 1986 Amendments to the FCA applied to the case.

 On April 26, 1994, the United States Supreme Court decided Landgraf v. USI Film Products, 128 L. Ed. 2d 229, 114 S. Ct. 1483 (1994). The Supreme Court attempted to reconcile the conflict between applying "the law in effect at the time it renders its decision," articulated in Bradley, 94 S. Ct. at 2016, with the presumption against retrospective application articulated in Bowen v. Georgetown Univ. Hospital, 488 U.S. 204, 109 S. Ct. 468, 471, 102 L. Ed. 2d 493 (1988). While not overruling Bradley, the Supreme Court substantially limited the "law in effect at the time it renders its decision" doctrine.

 Lockheed now moves the Court to reconsider Judge Aguilar's 1989 ruling that the 1986 Amendments to the FCA apply to this case. Lockheed contends that under Landgraf, the 1986 Amendments may not be applied and that Newsham's complaint must be dismissed. The Court referred the matter to Paul C. Valentine, the Special Master appointed to this case for recommendation with respect to this issue. The Court has read and considered de novo the recommendations of the Master and the supplemental briefs of the parties and accordingly renders its decision below.

 III. AUTHORITY TO RECONSIDER

 This court has the authority and discretion to reconsider its orders under Rule 54(b) of the Federal Rules of Civil Procedure, which provides in relevant part:

 
Any order or other form of decision, however designated, which adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties . . . is subject to revision at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties.

 Fed. R. Civil P. 54(b) (1995).

 The 1989 Order denying Lockheed's motion was interlocutory. Reconsideration is justified if, among other things, there is an intervening change in controlling law, or there is a need to correct clear error or to prevent manifest injustice. See e.g. Kern-Tulare Water Dist. v. City of Bakersfield, 634 F. Supp. 656 (E.D.Cal. 1986) (reconsidering order denying summary judgment), (aff'd in part and rev'd in part on other grounds, 828 F.2d 514 (9th Cir. 1987)).

 Lockheed's motion for reconsideration is properly brought under Rule 54(b). See Dellums v. Powell, 184 U.S. App. D.C. 339, 566 F.2d 231 (D.C.Cir. 1977) (reconsidering order to dismiss class action plaintiffs under Rule 54(b)); U.S. v. Desert Gold Mining Co., 433 F.2d 713 (9th Cir. 1970) (reconsidering order granting partial summary judgment under Rule 54(b)).

 IV. LANDGRAF ANALYSIS TO DETERMINE THE TEMPORAL REACH OF STATUTES

 
Elementary considerations of fairness dictate that individuals should have an opportunity to know what the law is and to conform their conduct accordingly; settled expectations should not be lightly disrupted. For that reason, the "principle that the legal effect of conduct should ordinarily be assessed under the law that existed when the conduct took place has timeless and universal appeal.

 114 S. Ct. at 1497. As with most legal decisions, this elegantly simple principle can be extraordinarily difficult to apply to a specific set of facts. This Court adopts the method of analysis outlined in Landgraf for determining the retroactivity of statutes in deciding whether the 1986 Amendments to the FCA apply to this case.

 A. Did Congress Expressly Prescribe the Reach of the Statute?

 The first question is whether Congress has prescribed the reach of the statute. Landgraf states:

 
When a case implicates a federal statute enacted after the events in suit, the court's first task is to determine whether Congress has expressly prescribed the statute's proper reach. If Congress has done so, of course, there is no need to resort to judicial default rules.

 Id. at 1505. After examining the 1986 Amendments, the Court finds that Congress did not expressly prescribe the reach of the 1986 Amendments to the FCA. Therefore, further analysis as described in Landgraf is necessary.

 B. May Congressional Intent Regarding Retroactivity be Inferred?

 While the parties may agree that no express statement of Congressional intent resides within the 1986 Amendments, Newsham argues that because many of the 1986 Amendments resolved splits in the circuit courts as to the law or had the restorative effect of codifying existing law, Congress clearly intended that the 1986 Amendments apply retrospectively.

 In a companion case to Landgraf, Rivers v. Roadway Express, 128 L. Ed. 2d 274, 114 S. Ct. 1510 (1994), the Supreme Court rejected this argument:

 
Congress' decision to alter the rule of law established in one of our cases -- as petitioners put it, to "legislatively overrule" . . . does not, by itself, reveal whether Congress intends the "overruling" statute to apply retroactively to events that would otherwise be governed by the judicial decision.

 114 S. Ct. at 1515. In considering this argument in United States ex rel. Peterson & Kroll v. Northrop Corporation, No. CV 87-3698 KN (C.D.Cal. Sept. 2, 1994), the Peterson court found the legislative history of the 1986 Amendments to the FCA no more instructive as to Congress' intent regarding retroactivity than the evidence rejected in Rivers. Peterson at 5, n.6. Newsham and Amici have presented legislative history to show that Congress intended certain provisions of the pre-1986 FCA should be interpreted narrowly. However,

 
[a] restorative purpose may be relevant to whether Congress specifically intended a new statute to govern past conduct, but we do not "presume" an intent to act retroactively in such cases. [Footnote omitted] We still require clear evidence of intent to impose the restorative statute "retroactively."

 Rivers, 114 S. Ct. at 1518. While Congress may have intended the 1986 Amendments to be restorative, the Court finds that the restorative nature of the Amendments is not sufficient to show a Congressional intent to apply the 1986 Amendments retrospectively.

 The next question is whether the 1986 Amendments have "retroactive effect."

 
The court must determine whether the new statute would have retroactive effect, i.e., whether it would impair rights a party possessed when he acted, increase a party's liability for past conduct, or impose new duties with respect to transactions already completed. If the statute would operate retroactively, our traditional presumption ...

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