United States ex rel. Conyers v. Conyers

108 F.4th 351

UNITED STATES of America, EX REL. Bud CONYERS, Plaintiffs,United States of America, Intervenor—Appellant/Cross-Appellee, v. Bud Conyers, Plaintiff—Appellee/Cross-Appellant.

No. 23-20227

United States Court of Appeals, Fifth Circuit

FILED July 16, 2024

Appeal from the United States District Court for the Southern District of Texas, USDC No. 4:06-CV-4024, Kenneth M. Hoyt, U.S. District Judge

Alan Grayson (argued), Indialantic, FL, Victor Kubli, Germantown, MD, for Plaintiff—Appellee/Cross-Appellant.

Graham White (argued), U.S. Department of Justice, Criminal Division, Washington, DC, Elspeth Alma England, Charles Wylie Scarborough, David W. Tyler, Washington, DC, for Intervenor—Appellant/Cross-Appellee.

Before Stewart, Duncan, and Engelhardt, Circuit Judges.

Stuart Kyle Duncan, Circuit Judge:

After the United States settled several False Claims Act (FCA) claims with military contractor Kellogg Brown & Root (KBR), the estate of Bud Conyers sought a relator's share of the proceeds. The district court awarded the estate around $1.1 million. Both sides appealed. The estate argues it deserved a larger share, whereas the Government argues it deserved nothing because the parties settled none of the FCA claims brought by Conyers. Agreeing with the Government, we reverse.

I.

The FCA "imposes civil liability on any person who presents false or fraudulent claims for payment to the Federal Government." United States ex rel. Polansky v. Exec. Health Res., Inc., 599 U.S. 419, 423, 143 S.Ct. 1720, 216 L.Ed.2d 370 (2023); see 31 U.S.C. §§ 3729-33. It is "enforced not just through litigation brought by the Government itself, but also through civil qui tam actions that are filed by private parties, called relators, 'in the name of the Government.' " Kellogg Brown & Root Servs., Inc. v. United States ex rel. Carter, 575 U.S. 650, 653, 135 S.Ct. 1970, 191 L.Ed.2d 899 (2015) (quoting 31 U.S.C. § 3730(b)). When a relator files suit, the Government can intervene, assuming "primary responsibility" for the case, and can add "additional claims." § 3730(c)(1); § 3731(c); see also § 3730(b)(4). If the Government opts not to intervene, the relator can proceed on its own. § 3730(c)(3). Either way, the relator may be entitled to a portion of the proceeds of the suit. § 3730(d)(1)-(3).

In January 2004, the Government began investigating fraud involving KBR's contracts with the U.S. Army, leading to the prosecution of three KBR employees. In 2005, Jeff Mazon was indicted for awarding an inflated fuel tanker subcontract to Kuwaiti subcontractor La Nouvelle General Trading and Contracting Company ("La Nouvelle") in exchange for kickbacks. In early 2006, Stephen Seamans pled guilty of wire fraud and money laundering for awarding La Nouvelle an inflated subcontract for cleaning services at an Army base, also in exchange for kickbacks. And in late 2006, Anthony Martin confessed to awarding an inflated truck and trailer subcontract to another company, First Kuwaiti Trading Company, again in exchange for kickbacks.¹

In December 2006, Bud Conyers filed a qui tam suit against KBR under the FCA. Conyers had been a KBR truck driver in Kuwait and Iraq from May to December 2003. Conyers's suit, however, alleged wrongdoing different from that engaged in by Mazon, Seamans, and Martin. First, Conyers claimed "KBR used mortuary trailers to deliver consumable supplies to United States soldiers" in Iraq. Second, he claimed two KBR employees, Willie Dawson and Rob Nuble, "accepted kickbacks" in exchange for defective or nonexistent trucks. Finally, he claimed KBR managers in Kuwait "billed prostitutes to the United States."²

In 2013, the Government intervened in Conyers's suit and filed its own complaint in 2014. The Government's complaint included allegations about two of the schemes alleged by Conyers (mortuary trailers and defective trucks) and added separate claims related to Mazon, Seamans, and Martin. See § 3731(c) (permitting the Government "to add any additional claims with respect to which the Government contends it is entitled to relief"). During discovery, however, the Government notified the parties and the district court that it was no longer pursuing Conyers's original claims. At that point, Conyers could have continued litigating those claims himself. See § 3730(c)(3) ("If the Government elects not to proceed with the action, the person who initiated the action shall have the right to conduct the action."). But he did not.

The parties settled just before trial. In a document signed by representatives of the United States, KBR, and Conyers's estate,³ KBR agreed to pay the United States $13,677,621 for a release of certain claims involving specified "Covered Conduct." As relevant here, the Covered Conduct included only the wrongdoing by Mazon, Seamans, and Martin, not the separate wrongdoing alleged in Conyers's complaint. Claims related to "any conduct other than the Covered Conduct" giving rise to "liability to the United States (or its agencies)" were "specifically reserved and . . . not released."⁴

Conyers then moved for a relator's share of the settlement, arguing he was automatically entitled to a share because of the Government's intervention in his suit. Conyers sought twenty-five percent of the total proceeds, or about $3.5 million. The Government opposed the motion, arguing Conyers was entitled to nothing because none of Conyers's original claims had been settled.

The district court granted Conyers's motion in part. It recognized that "the [C]overed [C]onduct d[id] not explicitly include the conduct that Mr. Conyers alleged." Nonetheless, relying on an Eighth Circuit decision, the court asked whether "there exists an overlap between" Conyers's allegations and the conduct covered by the settlement. See Rille v. PricewaterhouseCoopers LLP, 803 F.3d 368, 373 (8th Cir. 2015) (en banc). The court found "sufficient factual overlap," but only with respect to Martin. Both Conyers's allegations and Martin's wrongdoing, the court stated, involved "allegations of kickbacks for trucks and trailers."

True, Conyers's allegations did not involve Martin himself—they addressed different kickback schemes involving different persons, Dawson and Nuble. But the district court believed such "details" were "inconsequential because equity aids the statute in ensuring that a relator does not lose the favor of the statute based on the government's determination of how and on what basis it will proceed, either to trial or in settling the case." The court reasoned that Conyers "put the government on notice" of fraud in trucking contracts "and arguably impelled and/or focused its investigation into Mr. Martin's conduct." The court did not award Conyers any part of the settlement of the Mazon and Seamans claims, however. Dividing the three claims (i.e., Martin, Mazon, and Seamans) equally, the court awarded Conyers over $1.1 million. It also sua sponte ordered the Government to pay Conyers's "reasonable attorney's fees."

Each side unsuccessfully moved for reconsideration. Both sides then appealed. A motions panel of our court denied Conyers's motion to dismiss the Government's appeal as untimely.⁵

II.

"We review pure questions of law and mixed questions of law and fact de novo." GIC Servs., L.L.C. v. Freightplus USA, Inc., 866 F.3d 649, 666 (5th Cir. 2017).

III.

On appeal, the Government argues the district court erred by:

(1) awarding Conyers a share of a settled "claim" factually unrelated to Conyers's own claims, see § 3730(d)(1);

(2) awarding the maximum share of that claim (25%), without any showing that Conyers "substantially contributed" to its prosecution, ibid.; and

(3) awarding Conyers attorney's fees from the Government instead of the defendant. Cf. ibid. ("All such expenses, [attorney's] fees, and costs shall be awarded against the defendant.").

We agree with the Government on the first issue and so need not reach the second and third.

A.

The parties' dispute centers on this FCA provision, entitled "Award to qui tam plaintiff":

If the Government proceeds with an action brought by a person under subsection (b) [i.e., a relator], such person shall . . . receive at least 15 percent but not more than 25 percent of the proceeds of the action or settlement of the claim, depending upon the extent to which the person substantially contributed to the prosecution of the action.

Ibid. (emphasis added). According to the Government, this provision lets a relator recover only from a settlement of his own "claim," not from a settlement of factually unrelated claims added by the Government. The Government relies principally on the Eighth Circuit's en banc decision in Rille. See Rille, 803 F.3d at 372 ("The relators' right to recovery is limited to a share of the settlement of the claim that they brought." (emphasis added)). Conyers, by contrast, argues the provision lets a relator recover from the total settlement, including proceeds attributable to the settlement of other claims.

To umpire this disagreement, we start with § 3730(d)(1)'s text. It promises relators a cut of "the proceeds of the . . . settlement of the claim" (emphasis added). Which claim, you ask? The provision tells us: a claim in "an action brought by a person under subsection (b)," ibid., which is the subsection permitting a relator to "bring a civil action for a violation of section 3729." § 3730(b). And section 3729, in turn, sets out the grounds for FCA liability. See, e.g., § 3729(a)(1)(A) (making a person liable if he "knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval"). Putting those pieces together, a "claim" under § 3730(d)(1) is one brought by a relator to enforce § 3729. See Rille, 803 F.3d at 372 (agreeing "the claim" under § 3730(d)(1) is one " 'brought by' the relator in 'an action' that he initiates"). So, the text supports the Government's argument that a relator can share in the settlement only of his own "claim."

Context also supports...