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Hughes Aircraft Co. v. United States ex rel Schumer

June 16, 1997

HUGHES AIRCRAFT COMPANY, PETITIONER

v.

UNITED STATES, EX REL. WILLIAM J. SCHUMER



SYLLABUS BY THE COURT

Certiorari to the United States Court of Appeals for the Ninth Circuit

No. 95-1340

Argued February 25, 1997

Decided June 16, 1997

In 1989, respondent Schumer filed an action against petitioner Hughes Aircraft Company under the qui tam provision of the False Claims Act (FCA), which permits, in certain circumstances, suits by private parties on behalf of the United States against anyone submitting a false claim to the Government. Hughes' allegedly false claims were submitted between 1982 and 1984. Prior to 1986, qui tam suits were barred if the information on which they were based was already in the Government's possession. A 1986 amendment, however, permits qui tam suits based on information in the Government's possession, except where the suit is based on publicly disclosed information and was not brought by an original source of the information. Hughes moved to dismiss, contending, inter alia, that the 1986 amendment was not retroactive, and that the qui tam provision in effect when Hughes engaged in its allegedly wrongful conduct precluded the suit because it was based on information that Hughes had already disclosed to the Government. The District Court denied the motion, but ultimately granted Hughes summary judgment on the merits. Schumer appealed that judgment, and Hughes cross-appealed from the denial of the motion to dismiss. The Ninth Circuit rejected the cross-appeal, holding that the 1986 amendment should be applied retroactively to suits based on pre-1986 conduct because the amendment involved only the courts' subject-matter jurisdiction to hear qui tam claims and did not affect qui tam defendants' substantive liability. Finding, further, that the action was not barred under the 1986 amendment, the court reversed in part and remanded for further consideration on the merits.

Held: Because the 1986 amendment does not apply retroactively to qui tam suits regarding allegedly false claims submitted prior to its enactment, this action should have been dismissed, as required by the pre-1986 version of the FCA. Pp. 5-12.

(a) This Court applies the time-honored presumption against retroactive legislation unless Congress has clearly manifested its intent to the contrary. Landgraf v. USI Film Products, 511 U. S. 244, 268. Nothing in the 1986 amendment evidences a clear intent by Congress that it be applied retroactively. Thus, under Landgraf's analysis, if the amendment has a retroactive effect, then it will not apply to the conduct alleged here, which occurred before its effective date. P. 6.

(b) Schumer's contention that the 1986 amendment lacks retroactive effect is rejected. His argument that the amendment does not impose new duties with respect to transactions already completed because it has been unlawful to knowingly submit a false claim to the United States since 1863 was made, and rejected, in Landgraf. 511 U. S., at 281-282. He is also mistaken in contending that the amendment does not change the substance of the extant cause of action. By eliminating a defense to a qui tam suit-prior disclosure to the Government-the amendment attaches a new disability in respect to transactions or considerations already past. Id., at 269. Nor is it the case that the amendment does not create a new cause of action. As Schumer himself recognizes, it extended an FCA cause to private parties in circumstances where the action was previously foreclosed. This extension is not insignificant. Qui tam relators are motivated primarily by prospects of monetary reward rather than the public good and, thus, are less likely than is the Government to forego an action involving a technical violation but no harm to the public fisc. The amendment essentially creates a new cause of action, not just an increased likelihood that an existing cause of action will be pursued. See, e.g., Winfree v. Northern Pacific R. Co., 227 U. S. 296, 302. Before the amendment, Schumer's action was completely barred because of Hughes' disclosure. The amendment would revive that action, subjecting Hughes to previously foreclosed qui tam litigation. Finally, Schumer errs in contending that the amendment is jurisdictional and, hence, an exception to the general Landgraf presumption against retroactivity. Statutes merely addressing where a suit may be brought may not meet the conditions for the Landgraf presumption, for they regulate only the secondary conduct of the litigation and not the underlying primary conduct of the parties. However, the amendment speaks to the parties' substantive rights by creating jurisdiction where none previously existed; it is therefore subject to the presumption against retroactivity. Pp. 7-12. 63 F. 3d 1512, vacated and remanded.

Thomas, J., delivered the opinion for a unanimous Court.

Justice Thomas

On Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit

The qui tam provision of the False Claims Act (FCA or Act), 31 U. S. C. Section(s) 3730(b), permits, in certain circumstances, suits by private parties on behalf of the United States against anyone submitting a false claim to the Government. Prior to 1986, such suits were barred if the information on which they were based was already in the Government's possession. At issue in this case is whether a 1986 amendment to the FCA partially removing that bar applies retroactively to qui tam suits regarding allegedly false claims submitted prior to its enactment and, if so, whether this particular action meets the requirements of the amended Act. We hold that the 1986 amendment does not apply to this action and therefore that this action should have been dismissed, as required by the 1982 version of the Act.

I.

In December 1981, the Northrop Corporation awarded petitioner Hughes Aircraft Company a subcontract to design and develop a radar system for the B-2 bomber, which Northrop was then constructing under contract with the Air Force. Both Northrop's subcontract with Hughes and the Air Force's contract with Northrop were "cost-plus" contracts, which provided that the subcontractor and the contractor, respectively, were to be reimbursed for all costs properly incurred plus a reasonable profit. Several months after Hughes was awarded the B-2 subcontract, the McDonnell-Douglas Corporation awarded Hughes a "fixed-price" subcontract to design and develop an upgraded radar system for the F-15 fighter aircraft, which McDonnell-Douglas was then building for the Air Force. (Under the fixed-price contract, Hughes was to receive a set price, regardless of costs). When it became ...


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