Case 1:09-cv-01985-ABJ Document 24-1 Filed 11/15/12 Page 1 of 5 UNITED STATES DISTRICT COURT DISTRICT OF COLUMBIA UNITED STATES OF AMERICA, ex rel. Michael Lindley, Plaintiff, vs. THE GALLUP ORGANIZATION, Defendant. Civil Action No. 09-cv-01985 MEMORANDUM IN SUPPORT OF MOTION OF THE UNITED STATES TO INTERVENE The United States moves, pursuant to the False Claims Act, 31 U.S.C. 3730(c(3, to intervene for good cause as to certain additional claims in this qui tam action against defendant The Gallup Organization ( Gallup. On August 2, 2012, the United States filed a notice that it was intervening in part in this action, and declining in part. In accordance with the Court s Order of August 6, 2012, the United States intends to file and serve its own complaint in intervention on or before November 30, 2012, as to all intervened claims. Should this Court act favorably upon the government s motion after service of the government s complaint has been made, the United States intends to file and serve an amended complaint in intervention reflecting its allegations as to the newly intervened claims within 14 days of the filing of the Court s Order. The relator assents to this motion, and, as further explained below, government intervention at this stage will not prejudice the defendant, which has not yet been served with the government s Complaint in intervention.
Case 1:09-cv-01985-ABJ Document 24-1 Filed 11/15/12 Page 2 of 5 FACTUAL BACKGROUND Relator, a former employee of Gallup, brought this action on behalf of the United States alleging that Gallup violated the False Claims Act, 31 U.S.C. 3729 by submitting false and inflated labor hour estimates to the U.S. Mint and the Department of State, resulting in inflated contract prices, by knowingly and wrongfully entering into prohibited employment discussions with an employee of the Federal Emergency Management Agency ( FEMA to obtain a FEMA subcontract at an inflated price, and other favorable treatment, in violation of federal conflict of interest laws. On August 2, 2012, the United States intervened with respect to relator s allegations concerning Gallup s contracts with the United States Mint and the United States Department of State, but otherwise declined to intervene in the action. After notifying the Court of its election decision, the United States continued to investigate Gallup s conduct with respect to its contract with the FEMA contract, and found good cause to allege that Gallup violated the False Claims Act with respect to that contract as well. Accordingly, the United States now respectfully seeks to intervene and take over the action as to these additional claims.. On August 6, 2012, this Court ordered the United States to serve its complaint in intervention on Gallup within 120 days. After partially intervening in this case, the United States continued its investigation into Gallup s conduct with respect to the contracts for which the United States had not intervened. As a result of this additional investigation, the United States now respectfully requests authority to intervene on relator s claims related to Gallup s work for FEMA. 2
Case 1:09-cv-01985-ABJ Document 24-1 Filed 11/15/12 Page 3 of 5 ARGUMENT Good cause exists to permit the United States to intervene because the United States now has determined through additional investigation that the facts merit intervention and because the relator, for whom the statutory good cause requirement was created, assents to this motion. In addition, given that the United States has not yet filed and served its Complaint in Intervention, Gallup will not be unduly prejudiced by the United States intervening at this time. Under the False Claims Act, a private person, known as a relator, may file a civil action on behalf of the United States government. 31 U.S.C. 3730(b(1. The complaint must be filed in camera and shall remain under seal for at least 60 days, subject to court-approved extensions. Id. 3730(b(2, (3. Before the intervention deadline, the government must proceed with the action, in which case the action shall be conducted by the Government, or notify the court that it declines to take over the action, in which case the person bringing the action shall have the right to conduct the action. Id. 3730(b(4. In this case, the relator has not yet begun to pursue his claims that were not the subject of the United States Notice of Intervention filed on August 2, 2012. The False Claim Act further provides, however, that the court, without limiting the status and rights of the person initiating the action, may nevertheless permit the Government to intervene at a later date upon a showing of good cause. Id. 3730(c(3. The United States now seeks to intervene because it has determined through further investigation that the facts support intervention as to this additional claim and that it would be in the public interest for the government to conduct the litigation brought on its behalf as to Gallup s conduct with respect to the work it performed for FEMA. The purpose of the good cause requirement is to protect the interests of the relator. United States ex rel. Stone v. Rockwell Int l Corp., 950 F. Supp. 1046, 1049 (D. Colo. 1996. 3
Case 1:09-cv-01985-ABJ Document 24-1 Filed 11/15/12 Page 4 of 5 Under 31 U.S.C. 3730(d, a relator may be awarded 25-30 percent of any recovery if the relator proceeds alone, but only 15-25 percent of the recovery if the government intervenes in the action. Thus, the Stone court observed, [g]overnment intervention late in the proceedings may be unfair to a relator who has expended considerable resources to advance the case and then lose up to half of the reward for bringing the action. Id. Here, since the relator assents to the government s intervention here, the purpose of the good cause requirement has been satisfied. Furthermore, good cause exists where, as here, the reason for the government s delay is that it was continuing to investigate the relator s allegations and conducting discussions with the defendants. It would disadvantage relators, defendants, and federal taxpayers if the government rushed to make an intervention decision without an adequate opportunity to obtain and evaluate substantial evidence. Accordingly, it is not unusual for the government to intervene later, after completing its investigation or in light of additional evidence sufficient to make an informed decision about whether to intervene. See, e.g., United States ex rel. Lam v. Tenet Healthcare Corp., 481 F. Supp. 2d 689, 694 (W.D. Tex. 2007 (permitting United States to intervene after prior declination where formal discovery had commenced; United States ex rel. Tyson v. Amerigroup Ill., Inc., 2005 WL 2667207, at *3 (N.D. Ill. Oct. 17, 2005 (allowing government s motion to intervene more than two years after filing notice of declination, given new and significant evidence obtained by the relator during discovery, and given lack of undue prejudice to the parties or proceeding caused by late intervention. Here, when the seal was lifted in August 2012, the United States had not completed its investigation of the relator s allegations. Since then, the government has interviewed additional witnesses and reviewed newly obtained documents. Intervention at this stage, when discovery has not begun and the 4
Case 1:09-cv-01985-ABJ Document 24-1 Filed 11/15/12 Page 5 of 5 United States intends to file its complaint in intervention promptly, will not prejudice Gallup or the proceedings. Intervention also will serve the public interest in having the United States litigate for itself those claims that it has determined to be meritorious. CONCLUSION For the foregoing reasons, the Court should permit the United States to intervene as to allegations that Gallup s work for FEMA resulted in claims being submitted to the government in violation of the False Claims Act. Respectfully submitted, STUART F. DELERY Principal Deputy Assistant Attorney General /s/ Patricia M. Fitzgerald MICHAEL D. GRANSTON MICHAL TINGLE DANIEL HUGO FRUCHTER PATRICIA M. FITZGERALD Civil Division U.S. Department of Justice Post Office Box 261 Ben Franklin Station Washington, DC 20044 Tel: (202 305-3173 Fax: (202 616-4286 DATE: 5