Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

U.S. EX REL. ROSALES v. SAN FRAN. HOUSING AUTHOR.

March 26, 2001

UNITED STATES EX REL. CARMEN T. ROSALES AND MICHAEL
V.
MEADOWS, PLAINTIFFS, V. SAN FRANCISCO HOUSING AUTHORITY, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Legge, District Judge.

  ORDER ON DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

INTRODUCTION

This matter comes before the Court on the motion for summary judgment or partial summary judgment of defendants the San Francisco Housing Authority ("SFHA"), the City and County of San Francisco ("San Francisco" or "the city"), and individual defendants Albert Nelson and David I. Gilmore (collectively "defendants").*fn1

Although this case was filed in 1995, it did not progress significantly between 1995 and 1997, when the United States finally decided not to intervene. Discovery commenced in early 1998. An amended complaint was filed in 1999, and the case was set for trial in late 1999. But extensive criminal proceedings were initiated in November of 1999 and have only recently been concluded.

The court previously dismissed with prejudice the claims against the State of California. Defendants make the present motion for summary judgment or partial summary judgment on the first and third claims for relief of qui tam relators/plaintiffs Carmen T. Rosales and Michael V. Meadows ("plaintiffs"). The court heard oral argument of the motion, but later stayed all proceedings pending the U.S. Supreme Court's decision in Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000). After Vermont Agency was decided on May 22, 2000, the parties submitted supplemental briefing on the applicability of that decision to the present case. The court then heard further argument. Having considered the oral arguments and written submissions of counsel, the evidence of record, and the applicable law, the court now issues the following order.

I.

THE COMPLAINT

Plaintiffs Carmen T. Rosales and Michael V. Meadows filed this action alleging, among other things, violations of the federal False Claims Act ("FCA"), 31 U.S.C. § 3729-3733, by their employer the SFHA, the City and County of San Francisco, and individual employees of the SFHA. In their fourth amended complaint ("complaint") plaintiffs allege that defendants made false and fraudulent statements to the Department of Housing and Urban Development ("HUD") in order to receive grant funds for which the SFHA was not qualified. Plaintiffs also contend that defendants issued so-called "Section 8" subsidized housing certificates to ineligible individuals, and that SFHA employees charged personal fees for this service. Finally, plaintiffs claim that their supervisors retaliated against them for complaining about these improprieties and for making the allegations public.

Plaintiffs' complaint states three claims for relief. First, plaintiffs allege that all of the defendants participated in submitting false claims for payment to the United States government in violation of the FCA, 31 U.S.C. § 3729. Second, plaintiffs allege that defendants Nelson, Davis and the SFHA retaliated against them for complaining about the SFHA's failure to comply with HUD regulations and guidelines. This retaliation allegedly consisted of derogatory remarks and epithets, unwarranted reprimands, exclusion from meetings, and office reorganizations eliminating plaintiffs' employment positions. Plaintiffs claim that this retaliatory conduct was performed in derogation of their rights under the First and Fourteenth Amendments in violation of 42 U.S.C. § 1983. Third, plaintiffs also claim that this retaliatory conduct by Nelson, Davis and the SFHA violated the FCA's anti-retaliation provision, 31 U.S.C. § 3730(h). Plaintiffs seek, inter alia, treble and punitive damages.

Defendants' present motion for summary judgment or partial summary judgment concerns only the first and third claims for relief.

II.

SUMMARY JUDGMENT STANDARD

Summary judgment should be granted if "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no `genuine issue for trial.'" Matsushita Elec. Industrial Co. v. Zenith Radio, 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (citing First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 289, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968)). "At the summary judgment stage, the district court is not to weigh the evidence or determine the truth of the matter but should only decide whether there is a genuine issue for trial." Washington v. Garrett, 10 F.3d 1421, 1428 (9th Cir. 1993) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).

The moving party bears the initial responsibility of "informing the district court of the basis for its motion, and identifying those portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (quoting from Fed.R.Civ.P. 56(c)).

When the nonmoving party will bear the burden of proof at trial on a dispositive issue, she must then "go beyond the pleadings and by her own affidavits, or by the `depositions, answers to interrogatories and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Id. at 324, 106 S.Ct. 2548 (quoting from Fed.R.Civ.P. 56(c) & (e)). The court views all facts and draws all inferences therefrom in the light most favorable to the nonmoving party. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962). If, however, the nonmoving party's evidence is "merely colorable" or "not significantly probative," summary judgment may be granted. Anderson, 477 U.S. at 249-50, 106 S.Ct. 2505 (citations omitted).

III.

FALSE CLAIMS

Plaintiffs allege that defendants violated the False Claims Act ("FCA") by submitting false claims for payment to the federal government. The allegations concern various grant and subsidy programs administered by HUD.

To establish a violation of the FCA, plaintiffs must prove three elements: (1) a "false or fraudulent" claim; (2) which was presented, or caused to be presented, by defendants to the United States for payment or approval; (3) with knowledge that the claim was false. See United States v. Mackby, 243 F.3d 1159 (9th Cir. 2001) (citing 31 U.S.C. § 3729(a)(1)).

Defendants argue that plaintiffs' first claim for relief for violation of the FCA is barred by the FCA's jurisdictional requirements. They further maintain that plaintiffs present no evidence that defendants' allegedly false submissions to HUD wrongly qualified the SFHA for federal grant money, or that San Francisco and the SFHA had the requisite scienter. Finally, defendants contend that the FCA does not allow suit against San Francisco or the SFHA under Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000).

A. Jurisdictional Requirements

Rosales and Meadows, as the qui tam plaintiffs, bear the burden of establishing subject matter jurisdiction by a preponderance of the evidence. See United States v. Alcan Electrical and Engineering, Inc., 197 F.3d 1014, 1018 (9th Cir. 1999) (citing United States ex rel. Biddle v. Board of Trustees of the Leland Stanford, Jr. University, 161 F.3d 533, 540 (9th Cir. 1998), cert. denied, 526 U.S. 1066, 119 S.Ct. 1457, 143 L.Ed.2d 543 (1999)).

Section 3730(e)(4) of the FCA requires, in pertinent part:

(B) For purposes of this paragraph, "original source" means an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the government before filing an action under this section which is based on the information.

31 U.S.C. § 3730(e)(4) (emphases added).

The United States Supreme Court, construing § 3730(e)(4), has stated that the FCA authorizes "qui tam suits based on information in the government's possession, except where the suit was based on information that had been publicly disclosed and was not brought by an original source of the information." Hughes Aircraft Co. v. United States ex rel. Schumer, 520 U.S. 939, 946, 117 S.Ct. 1871, 138 L.Ed.2d 135 (1997). To qualify as an "original source," a qui tam plaintiff must show that he or she: (1) has direct and independent knowledge of the information on which the allegations are based; (2) voluntarily provided the information to the government before filing the qui tam action; and (3) had a hand in the public disclosure of allegations that are a part of the suit. See United States ex rel. Devlin v. California, 84 F.3d 358, 360 fn. 3 (9th Cir. 1996), cert. denied, 519 U.S. 949, 117 S.Ct. 361, 136 L.Ed.2d 252 (1996).

Accordingly, this court must examine each alleged false claim to determine whether the allegation or transaction had been publicly disclosed before filing of the suit, and if so whether plaintiffs were the original source of the information. If the jurisdictional hurdle is cleared as to each alleged false claim, the court will then address the further arguments raised by the parties. See Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765, 120 S.Ct. 1858, 1865, 146 L.Ed.2d 836 (2000) ("Questions of jurisdiction, of course, should be given priority — since if there is no jurisdiction there is no authority to sit in judgment of anything else."); Wang v. FMC Corp., 975 F.2d 1412, 1415 (9th Cir. 1992) ("We must examine whether any of Wang's claims are blocked by the jurisdictional bar of section 3730(e)(4) before we can consider any other question.") (emphasis in original).

B. HOPE VI and COMP Grants

Plaintiffs allege that defendants knowingly made false claims for moneys to the United States by applying for and receiving HOPE VI and Comprehensive ("COMP") grants from HUD based on inaccurate assessments of management performance under the Public Housing Management Assessment Program ("PHMAP"). Based on these falsified figures, HUD allegedly awarded the SFHA $49,992,377 in HOPE VI grant funds in 1994 and more than $58,173,963 in COMP grant funds for 1992-1995.

The PHMAP is a system designed to allow HUD, in concert with local public housing authorities, to improve management of public housing programs by evaluating the authorities' performance according to a number of key indicators. See 42 U.S.C. § 1437d(j). The indicators include vacancy rates, modernization, rents uncollected, operating reserves, routine operating expenses, and annual inspection of units and systems. See 24 C.F.R. § 901.10-901.45. Public housing authorities assign themselves a "score" on each indicator and certify the accuracy of the data. See 24 C.F.R. § 901.105, 901.100(a)-(b).

Plaintiffs contend that from 1992 to 1995 the SFHA manipulated its PHMAP scores by knowingly misstating its operating reserves and occupancy/vacancy figures. The SFHA allegedly did so in order to appear to be in compliance with HUD regulations and gain removal from HUD's "troubled" housing authority list, which the SFHA was on from 1989 to 1992.

1. Public Disclosure

Citing two documents — a 1992 HUD Inspector General audit of the SFHA dated September 10, 1992 and a newspaper article dated September 8, 1992 — defendants argue that plaintiffs' allegations were publicly disclosed before the filing of the present lawsuit on December 15, 1995.

The HUD audit report, entitled "The SFHA's Questionable Fiscal Year 1991 PHMAP Certification Led to HUD's Premature Removal of the Authority's `Troubled' Designation," certainly draws attention to irregularities in the SFHA's PHMAP self-assessment and certification. See Def. Req. for Jud. Not., Exh. A ("HUD audit"). It states: "Based on our review, we believe that the SFHA's PHMAP certification and PHMAP self-assessment were of questionable accuracy. Indications are that the SFHA scored itself higher than warranted and certified to questionable PHMAP performance data which prompted HUD to remove the Authority's `troubled' agency designation prematurely." Id. at H00468. The HUD audit concluded, inter alia, that the SFHA had understated the actual number and percentage of vacancies by leasing vacant units and counting them as occupied even though they were not occupied. See id. at H00474. It also found that the SFHA had not overstated its operating reserves although there appeared to be some discrepancies in the reported figures. See id. at H00487-00488.

The Employment and Housing Subcommittee on government Operations of the U.S. House of Representatives held a public hearing concerning the HUD audit on September 14, 1992. See Def. Req. for Jud. Not., Exh. D ("subcommittee hearing"). U.S. Representative Tom Lantos, chairman of the subcommittee, repeated many of the findings of the HUD audit. See, e.g., id. at 3 ("The IG found that the San Francisco Housing Authority was counting vacant units as occupied as of the dates they were leased to a new tenant, even though the units were empty and not yet habitable.")

Defendants also cite an article published in the San Francisco Independent on September 8, 1992, two days before release of the official HUD audit, entitled "Feds Slam Housing Authority." See Def. Req. for Jud. Not., Exh. E ("Independent article"). The Independent article recapitulated many of the findings in the HUD audit. For example, the article reported that, according to a draft report of the HUD audit, "the Housing Authority provided HUD with an erroneous self-assessment in order to convince the federal office to remove the housing agency from the `troubled list.'" Id. at H02148. It also stated: "As part of that self-assessment, the Authority did not report all of its vacancies to HUD and knowingly submitted false information." Id. The Independent article further reported that "[n]o acceptable documentation could be provided for the $7.8 million operating reserves reported by the Housing Authority." Id. at H02149.

Audits performed and released to the public by inspectors general qualify as public disclosures under 31 U.S.C. § 3730(e)(4)(a). See United States ex rel. Fine v. Chevron, Inc., 72 F.3d 740, 743 (9th Cir. 1995) (en banc), cert. denied, 517 U.S. 1233, 116 S.Ct. 1877, 135 L.Ed.2d 173 (1996). Prior media coverage of allegations can also raise the jurisdictional bar. See, e.g., United States ex rel. Aflatooni v. Kitsap Physicians Services, 163 F.3d 516, 521 (9th Cir. 1998) (citing United States ex rel. Biddle v. Board of Trustees of the Leland Stanford, Jr. University, [161] F.3d [533, 540] (9th Cir. 1998)).*fn2 "Where the information underlying the relator's complaint has already been publicly disclosed, the government receives no additional benefit from the relator's filing of a qui tam suit." Aflatooni, 163 F.3d at 522.

Faced with the prior public information cited by defendants, plaintiffs make two arguments. First, citing Biddle, [161] F.3d at [537], they maintain that a qui tam claim is not "based upon" a public disclosure within the meaning of 31 U.S.C. § 3730(e)(4)(a) unless the claim "repeats" information that has already been disclosed to the public. See Opposition at 6:20-25. Plaintiffs assert that their allegations go beyond mere overstatements of operating reserves and occupancy rates. The present lawsuit does not "repeat" the public disclosures, plaintiffs maintain, because the factual allegations underlying the suit are more specific and detailed than the previously disclosed information. See id. at 7:1-8:11.

In support of their position, plaintiffs cite to evidence that SFHA Executive Director David Gilmore "instituted an aggressive leasing strategy to falsely inflate the SFHA's [PHMAP] score by beginning to lease all possible vacant units, whether habitable or occupied, or not." Jones Decl., Exh. D., Rosales Interrog. Resp. No. 2 at 3:11-13. Gilmore allegedly directed SFHA staff to indicate units were leased and occupied when they were not. See Jones Decl., Exh. B, Bains Depo. at 185:16-193:25. Gilmore reportedly asked staff to "pull a dollar from [their] own pocket if necessary to constitute deposits for the units, whether habitable or not, so they could be counted as rented for purposes of SFHA occupancy rates." Jones Decl., Exh. C., Meadows Interrog. Resp. No. 1 at 3:3-6.*fn3 Plaintiffs argue that these and other similar factual allegations do not "repeat" information disclosed in the HUD audit, the subcommittee hearing, or the Independent article and therefore do not trigger the FCA's jurisdictional bar.

Plaintiffs' argument misinterprets the FCA's public disclosure provisions. Biddle does not hold that publicly disclosed information must precisely mirror the allegations stated in the qui tam lawsuit in order for the jurisdictional bar to operate. Plaintiffs quote Biddle for the proposition that "a claim is `based upon' public disclosure when the claim repeats allegations that have already been disclosed to the public." See Opposition at 6:20-25 (citing Biddle, [161] F.3d at [537]). However, the full sentence from Biddle reads: "This language [ie., the language from Wang v. FMC Corp., 975 F.2d 1412, 1417 (9th Cir. 1992) just cited by the court] supports [one party's] view that a claim is `based upon' public disclosure when the claim repeats allegations that have already been disclosed to the public." Biddle, 161 F.3d at 537 (emphasis added). However, Biddle omitted the "repeats" language that plaintiffs emphasize: "We, therefore, hold that if at the time a relator files a qui tam complaint, the allegations or transactions of the complaint have been publicly disclosed, then the allegations are `based upon' the publicly disclosed information, and the relator must show that he is an original source of the information in order for a district court to have jurisdiction over the lawsuit." Id. at 540. The Ninth Circuit reached this conclusion relying on a passage from Wang that belies plaintiffs' emphasis on the term "repeats":

It is true that Wang's allegation about the Bradley is supported by a few factual assertions never before publicly disclosed; but "fairly characterized" the allegation repeats what the public already knows: that serious problems existed with the Bradley's transmission.

Biddle, 161 F.3d at 537 (quoting from Wang, 975 F.2d at 1417). Thus Biddle does not stand for the proposition that a plaintiffs allegation must precisely repeat a public disclosure for the jurisdictional bar to arise; rather, it is the qui tam allegation, "fairly characterized," that must be considered to determine whether it has already been disclosed to the public.

In Wang the Ninth Circuit clarified that an "allegation" and the "information" on which the allegation is based are distinct concepts:

Courts sometimes speak loosely of barring a qui tam suit because it is based on "publicly disclosed information." . . . But the Act bars suits based on publicly disclosed "allegations or transactions," not information. [31] U.S.C. § 3730(e)(4)(A). The point is not mere semantics: the Act distinguishes between "allegations" and the "information on which the allegations are based." [31] U.S.C. § 3730(e)(4)(B). The Act appears to be invoking the common logical distinction between an assertion and its proof. Although not empty, this distinction rarely matters in applying the Act, because where the public knows of information proving an allegation, it necessarily knows of the allegation itself. But the reverse is not always true. An allegation can be made public, even it its proof remains hidden.

Wang, 975 F.2d at 1418 (citations omitted). As the Ninth Circuit has later stated, "allegations divorced from the information upon which they are based can constitute public disclosure." United States v. Alcan Electrical and Engineering, Inc., 197 F.3d 1014, 1020 (9th Cir. 1999) (citing Wang, 975 F.2d at 1418).

The gravamen of plaintiffs' present claim, fairly characterized, is that the SFHA through its agents fraudulently manipulated SFHA's PHMAP scores and certified their accuracy in order to gain removal from HUD's "troubled" list and receive HOPE VI and COMP grant funds. This allegation was clearly publicized at least three years before plaintiffs filed the original complaint in this lawsuit. Although all of the purported means by which the SFHA's fraud was perpetrated may not have been commonly known, the prior public disclosures contained enough information to enable the government to pursue an investigation into them. This is enough to trigger the jurisdictional bar. See id. at 1019 (citing United States ex rel. Fine v. Sandia Corp., 70 F.3d 568, 571 (10th Cir. 1995)).

Plaintiffs' second argument concerns the timing of the public disclosures. Because the HUD audit, subcommittee testimony, and Independent article concerned transactions in 1992 and before, plaintiffs argue that post-1992 transactions were not publicly disclosed. Separate grant applications were made for each year after 1992, plaintiffs contend, so "[e]ach application constituted a new and separate transaction by which false statements were knowingly made to obtain grant funds." Opposition at 8:13-14.

This argument is also answered by the plain terms of the FCA and applicable Ninth Circuit precedent. Even if each allegedly fraudulent application for grant funding constitutes a "new transaction," the FCA's jurisdictional bar applies not only to publicly disclosed transactions but also to publicly disclosed allegations. See 31 U.S.C. § 3730(e)(4)(A) ("the public disclosure of allegations or transactions") (emphasis added); United States ex rel. Dunleavy v. County of Delaware, 123 F.3d 734, 740 (3d Cir. 1997) ("It is clear that the FCA's reference to `allegations or transactions' is in the disjunctive, so that disclosures which reveal either the allegations of fraud or the elements of the underlying fraudulent transaction are sufficient to invoke the jurisdictional bar.").

As discussed above, plaintiffs' allegations, fairly characterized, are that the SFHA defrauded the U.S. government by falsely inflating its PHMAP scores from 1992 to 1995. Although the fraudulent transactions may change with each iteration during the relevant period, the allegation of fraud remains substantially the same. The allegation was first disclosed in 1992; it cannot be reanimated simply by complaining that defendants performed the same fraudulent acts in succeeding years.

This interpretation is supported by the Ninth Circuit's decision in United States ex rel. Lujan v. Hughes Aircraft Co., 162 F.3d 1027 (9th Cir. 1998). In Lujan the qui tam relator alleged that her employer submitted fraudulent claims to the U.S. government as a defense subcontractor on the B2 bomber and other projects from 1982 to 1989. Id. at 1029. In an earlier filed case, however, a qui tam relator named Schumer had already alleged fraud in connection with Hughes' cost-sharing transactions, commonality agreements and radar program contracts. See id. at 1032-33. Schumer's allegations concerned only false claims submitted to the government between 1982 and 1984. See id. at 1032. Noting the temporal discrepancy, the Lujan Court nevertheless held that Schumer's publicly disclosed 1982-1984 allegations also disclosed Lujan's 1982-1989 allegations, including the 1985-1989 allegations. "Lujan's allegations are substantially similar to those disclosed in the earlier Schumer action, thereby constituting `public disclosure' of Lujan's qui tam claims." Id. at 1033.

The same is true in the present case. Regardless which annual grant application the court considers, plaintiffs' allegations remain substantially the same as those previously disclosed, i.e., fraudulent PHMAP self-assessment and certification. As such, plaintiffs' 1995 allegations were publicly disclosed by the 1992 HUD audit, the subcommittee hearing and the Independent article.

2. Original Source

To avoid the jurisdictional bar, plaintiffs must therefore show that they were the original source of the information on which the publicly disclosed allegations were based. "A `whistleblower' sounds the alarm; he does not echo it." Wang, 975 F.2d at 1419.

To qualify as an "original source," a plaintiff must show that he or she: (1) has direct and independent knowledge of the information on which the allegations are based; (2) voluntarily provided the information to the government before filing the qui tam action; and (3) had a hand in the public disclosure of allegations that are a part of the suit. See United States ex rel. Devlin v. California, 84 F.3d 358, 360 fn. 3 (9th Cir. 1996) (citing Wang, 975 F.2d at 1418).

Defendants assert that neither Rosales nor Meadows: (1) had direct and independent knowledge of the information on which the allegations are based, or (2) had a hand in the public disclosure of the information.

To satisfy the "direct and independent knowledge" requirement, plaintiffs must "see the fraud with their own eyes or obtain their knowledge of it through their own labor unmediated by anything else." Id. at 361. Defendants cite plaintiff Meadows' deposition testimony that he had no independent knowledge of the SFHA's procedure for reporting vacancy rates in 1991. See Margolis Decl., Exh. C., Meadows Depo. at 186:7-11. Plaintiffs point out that Meadows had direct information concerning "Ronnie Davis' alleged errant expenditure of COMP Grant funds." Opposition at 10:23-24 (citing Jones Decl., Exh. F, Meadows Depo. at 323:12-329:4). The record does not demonstrate that either side has proffered substantial evidence concerning the directness and independence of Meadows' knowledge of the allegations in suit.

Defendants contend that plaintiff Rosales could not have observed firsthand or directly participated in the misreporting of vacancy rates for the periods when she was Director of Grants and was not Eligibility Manager, i.e., the periods from March 1994 to November 1995, and April 1998 to the present. See Margolis Decl., Exh. B., Rosales Depo. at 26:1-11. Plaintiffs respond, to the contrary, that even as Director of Grants Rosales was present at staff meetings where the allegedly fraudulent conduct was encouraged by Gilmore. See Jones Decl., Exh. D., Rosales Interrog. Resp. No. 2. Defendants also assert that Rosales had no direct and independent knowledge concerning the SFHA operating reserves, and admitted receiving her information from Controller Lugenia Yates and Director of Finance Barry Stewart. See Margolis Decl., Exh. B, Rosales Depo. at 438:3-13. Plaintiffs do not counter this assertion.

The record on the "direct and independent knowledge" prong of the Devlin test is, at best, inconclusive. Since plaintiffs bear the burden of establishing by a preponderance of the evidence that they were the original source of the public allegations, and bear their burdens under Celotex and Matsushita, this failure of proof weighs heavily against jurisdiction. However, there is another decisive reason why jurisdiction does not lie.

Defendants contend that plaintiffs have offered no evidence that they had a hand in the public disclosures discussed above. Even though they are the parties bearing the burden of proof on the issue, plaintiffs have simply responded in conclusory fashion that they satisfy the third prong of the Devlin standard. See Opposition at 11:5-8. The only evidence proffered to support the contention that plaintiffs had a hand in the public disclosure of the allegations is a memorandum written by Rosales to Ronnie Davis dated December 10, 1996. See Rosales Decl. (filed Oct. 19, 1999), Exh. A. This memo is dated after the filing of the present lawsuit and long after the HUD audit, the subcommittee hearing and the Independent article became public. Even if the memorandum had been disclosed before suit, though, it was addressed to Ronnie Davis, who was then Acting Director of the SFHA. Thus, without more, it does not appear to have been part of any "public" disclosure of the allegations.

Because plaintiffs' allegations regarding improprieties in the SFHA's applications for HOPE VI and COMP grants were publicly disclosed before this suit, and plaintiffs have not established that they were original sources of the information, this court lack subject matter jurisdiction under 31 U.S.C. § 3730(e)(4). Accordingly, the court GRANTS summary judgment in favor of defendants on the HOPE VI and COMP grant claims.

C. YAP and ADPCT Grants

Plaintiffs allege that defendants made false claims to the United States by applying for and receiving Youth Apprenticeship Program ("YAP") and Apprenticeship Demonstration Program in the Construction Trades ("ADPCT") grant funds, despite the presence of a "union only" clause in the memorandum of understanding ("MOU") in support of the grant application. In 1994-1995 the SFHA and San Francisco purportedly received $1,200,000 in YAP funds and $250,000 in ADPCT funds. But HUD regulations do not allow "union only" clauses in MOUs. Plaintiffs claim that the SFHA and San Francisco received the funds after promising to rewrite the MOU to comply with HUD regulations, a promise that was never kept.

Defendants argue that plaintiffs' allegations regarding the MOU were publicly disclosed by a prior lawsuit. United States ex rel. McKenzie v. BellSouth Tel., Inc., 123 F.3d 935, 939 (6th Cir. 1997), cert. denied, 522 U.S. 1077, 118 S.Ct. 855, 139 L.Ed.2d 755 (1998) and Federal Recovery Servs., Inc. v. United States, 72 F.3d 447, 450 (5th Cir. 1995) hold that 31 U.S.C. § 3730(e)(4)(A) treats information disclosed through civil litigation and on file with the clerk's office as a public disclosure of allegations.

On December 5, 1995 certain labor unions brought suit in this court in San Francisco Building and Construction Trades Council, et al. v. United States Department of Housing and Urban Development, San Francisco Housing Authority, et. al., No. C96-4328 SBA. See Def. Req. for Jud. Not., Exh. C. That complaint alleged that the SFHA had not complied with the MOU because it had been informed by HUD that compliance would violate HUD regulations. See id. at ¶¶ 11, 14. The complaint was filed ten days before plaintiffs filed the present lawsuit.

Plaintiffs do not make any arguments or offer any evidence to counter defendants' point. In fact, the only trace of opposition occurs in a footnote that addresses the merits of the claim and not the threshold issue of jurisdiction. See Opposition at 12 fn.8.*fn4 Given that plaintiffs bear the burden of proof on subject matter jurisdiction, this does not suffice.

Defendants have established that the prior suit recited the contested terms of the MOU and aired the allegations that the MOU violated HUD regulations. Since plaintiffs fail to contest the public disclosure and offer no evidence that they were the original source of the information, this court lacks subject matter jurisdiction. The court therefore GRANTS summary judgment in favor of defendants on the YAP and ADPCT grant claims.

D. Section 8 Certificates

Plaintiffs allege that defendants knowingly made false claims to the United States by securing Section 8 subsidized housing certificates from HUD for individuals who were ineligible. Plaintiffs further allege that SFHA employees "sold" for their personal profit Section 8 housing certificates to the ineligible individuals with the actual or constructive knowledge of the SFHA.

Under the Section 8 program "tenants make rental payments to private landlords based on the tenants' income and ability to pay, and HUD subsidizes that rent with assistance payments intended to provide the landlord with a fair rent." Bellevue Manor Associates v. United States, 165 F.3d 1249, 1250 (9th Cir. 1999) (citing 42 U.S.C. § 1437f; Cisneros v. Alpine Ridge Group, 508 U.S. 10, 12, 113 S.Ct. 1898, 123 L.Ed.2d 572 (1993)). Congress mandated such assistance for "the purpose of aiding low-income families in obtaining a decent place to live and of promoting economically mixed housing." 42 U.S.C. § 1437f(a). Each year, housing authorities like the SFHA enter into an Annual Contributions Contract ("ACC") with HUD. See id. § 1437f(b). Under its ACC, the SFHA requisitions the funds from HUD for eligible participants, see id. § 1437n, and HUD disburses the money to the SFHA via electronic fund transfers. The SFHA in turn disburses Section 8 checks to landlords, or transfers funds to their designated financial institutions, as rental assistance for the Section 8 certificate holders. See Cal. Health & Saf.Code § 34327.3; Cal. Welf. & Inst.Code § 16517.

Plaintiffs contend that at least 148 individuals who had not submitted applications and were not on the Section 8 waiting list received Section 8 housing, some at the behest of various San Francisco officials. They claim that the SFHA has not even accepted applications for Section 8 assistance since 1986 because the waiting list has been continuously full since that time. They also allege that their boss, former SFHA Executive Director David I. Gilmore, ordered plaintiff Rosales to ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.