United States v. DHL Express (USA), Inc., No. 12-3829 (2d Cir. 2014)

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Plaintiffs filed a qui tam action against DHL under the False Claims Act, 31 U.S.C. 3729 et seq., alleging that DHL billed the United States jet-fuel surcharges on shipments that were transported exclusively by ground transportation. On appeal, plaintiffs challenged the district court's dismissal for failure to satisfy a statutory notice requirement. The court concluded that the 180-day rule, which barred a challenge to a shipping charge before the STB, could not apply to a qui tam action under the FCA. Accordingly, the court vacated and remanded.

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12-3829-cv United States of America v. DHL Express (USA), Inc. 1 UNITED STATES COURT OF APPEALS 2 FOR THE SECOND CIRCUIT 3 August Term, 2012 4 (Argued: March 21, 2013 Decided: February 5, 2014) 5 Docket No. 12-3829-cv 6 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 THE UNITED STATES OF AMERICA ex rel., Plaintiff, KEVIN GRUPP, ROBERT MOLL, Plaintiffs-Appellants, v. DHL EXPRESS (USA), INC., DHL Worldwide Express, Inc., DHL HOLDINGS (USA), INC., Defendants-Appellees. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - B e f o r e: WINTER, CABRANES, and LIVINGSTON, Circuit Judges. Appeal from an order of the United States District Court for 23 the Western District of New York (John T. Curtin, Judge) 24 dismissing a qui tam action for failure to satisfy a statutory 25 notice requirement that applies to shipping-rate disputes. 26 27 28 29 30 31 vacate and remand. We JOHN L. SINATRA, JR. (Daniel C. Oliverio, Reetuparna Dutta, on the brief), Hodgson Russ, LLP, Buffalo, NY, for Plaintiffs-Appellants. 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 LAWRENCE VILARDO (Terrence M. Connors, James W. Grable, Jr., on the brief), Connors & Vilardo, LLP, Buffalo, NY, for DefendantsAppellees. MICHAEL S. RAAB (Joshura P. Waldman on the brief), Appellate Staff of the Civil Division, for Stuart F. Delery, Principal Deputy Assistant Attorney Genera, U.S. Department of Justice, Washington D.C.; William J. Hochul, Jr., U.S. Attorney for the Western District of New York, Buffalo, NY, for Amicus Curiae United States of America. WINTER, Circuit Judge: Kevin Grupp and Robert Moll appeal from Judge Curtin s order 21 dismissing their qui tam action for failure to satisfy a 22 statutory notice requirement. 23 against DHL Express, Inc. and its parent company DHL Holdings, 24 Inc. (collectively, DHL ) under the False Claims Act, 31 U.S.C. 25 § 3729 et seq., alleging that DHL billed the United States jet- 26 fuel surcharges on shipments that were transported exclusively by 27 ground transportation. 28 29 Appellants commenced this action We vacate and remand. BACKGROUND We assume the facts as alleged in the complaint to be true. 30 DHL is an international package delivery company. 31 MVP Delivery Services and Logistics, a delivery company that 32 served as an independent contractor for DHL. 2 Appellants own From 2003 to 2008, 1 DHL provided delivery services to the General Services 2 Administration, the Department of Homeland Security, and the 3 Department of Defense. 4 During this time, DHL offered three types of so-called Air 5 Express Services -- Same Day , Next Day , and Second Day - 6 and a Ground Delivery Service , which provided delivery in one 7 to six business days. 8 Express Services were charged a jet-fuel surcharge and those who 9 purchased the Ground Delivery Service were charged a diesel- Customers who purchased one of the Air 10 fuel surcharge, without regard to the type of transportation 11 actually used in the delivery. 12 using the monthly jet and diesel fuel price indexes published by 13 the U.S. Department of Energy. The surcharges were calculated 14 According to appellants, DHL was obligated by its contract 15 with the U.S. Government to charge only the cheaper diesel-fuel 16 surcharge for shipments transported solely by ground. 17 complaint, appellants set forth three specific deliveries for 18 which the government was charged the jet-fuel surcharge, even 19 though the shipment was transported exclusively by ground 20 transportation. 21 fuel surcharge for Air Express Services as a matter of common 22 practice, regardless of the actual means of transport used, and 23 that these facts support a finding that DHL knowingly defrauded 24 the U.S. Government. In their They further allege that DHL included the jet- 3 1 On November 8, 2011, DHL moved to dismiss the complaint on 2 several grounds. 3 The district court granted the motion, and this appeal followed. 4 DISCUSSION 5 We review dismissal pursuant to Rule 12(b)(6) de novo. 6 Pension Benefit Guar. Corp. ex rel. St. Vincent Catholic Med. 7 Ctr s Ret. Plan v. Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705, 8 730 (2d Cir. 2013). 9 The district court dismissed the action on the ground that 10 appellants failed to satisfy the statutory notice requirement 11 imposed by 49 U.S.C. § 13710(a)(3)(B). 12 and billing by motor carriers. Title 49 governs rates Section 13710(a)(3)(B) states: 13 14 15 16 17 18 19 20 21 22 23 If a shipper seeks to contest the charges originally billed or additional charges subsequently billed, the shipper may request that the [Surface Transportation] Board determine whether charges billed must be paid. A shipper must contest the original bill or subsequent bill within 180 days of receipt of the bill in order to have the right to contest such charges. Id. 24 adjudicatory body within the U.S. Department of Transportation 25 charged with resolving disputes concerning motor carriers 26 shipping rates. 27 disputes may be brought before the STB, but this provision is not 28 the exclusive provision for resolving such disputes where they 29 are a part of an otherwise valid legal claim for relief, e.g., The Surface Transportation Board (the STB ) is an Section 13710(a)(3)(B) makes clear that such 4 1 under the False Claims Act ( FCA ), 31 U.S.C. § 3729, that may be 2 brought before a court. 3 A failure to comply with the 180-day rule bars a challenge 4 to a shipping charge before the STB. 5 whether a failure to comply also bars a shipping-rate challenge 6 before a federal court when brought pursuant to the FCA. 7 district court concluded that it does and dismissed the action. 8 Without deciding how the 180-day rule applies to other kinds of 9 suits brought in court, we vacate on the ground that the 180-day 10 11 At issue in this appeal is The rule cannot apply to a qui tam action under the FCA. The FCA prohibits any person from knowingly present[ing], 12 or caus[ing] to be presented, [to the United States government] a 13 false or fraudulent claim for payment. 14 3729(a)(1)(A). 15 against a party who violates the FCA, id. § 3730(a), or a private 16 individual, known as a relator, may bring a civil qui tam action 17 on behalf of the government and share in the recovery therefrom, 18 id. § 3730(b)(1), (d). 19 relator must serve a copy of the complaint on the government, and 20 the government may elect to intervene and litigate the action. 21 Id. § 3730(b)(2), (4). 22 the relator shall have the right to proceed. 31 U.S.C. § The Attorney General may institute an action After filing a qui tam complaint, the If the government declines to intervene, 23 5 Id. 1 A relator s complaint must be filed in camera, and remain 2 under seal for at least 60 days. 3 government may move to extend the seal period for good cause 4 shown. 5 defendant until the court so orders. Id. § 3730(b)(3). Id. § 3730(b)(2). The The complaint is not served on the Id. § 3730(b)(2). 6 The government, in an amicus brief,1 contends that 7 application of the 180-day rule to qui tam actions would 8 undermine both the FCA s seal provisions and statute of 9 limitations. We agree. The purpose of the sealing provisions is 10 to allow the government time to investigate the alleged false 11 claim and to prevent qui tam plaintiffs from alerting a putative 12 defendant to possible investigations. 13 Martin Marietta Corp., 60 F.3d 995, 998-9 (2d Cir. 1995). 14 relatively generous statute-of-limitations period - within six 15 years of the violation or three years after the time at which 16 U.S. officials knew or should have known of the violation, 17 whichever occurs last - serves a similar purpose, ensuring that 18 the government need not rush to file a complaint when such a 19 filing would alert a defendant to an ongoing criminal or civil 20 investigation. U.S. ex rel Pilon v. The See 31 U.S.C. § 3731(b)(1)-(2). 21 1 The government declined to intervene in this matter, but it filed an amicus brief in support of appellants in the proceedings before this court. 6 1 DHL maintains that § 13710(a)(3)(B) and the FCA can be 2 reconciled because the 180-day rule is a notice requirement, not 3 a statute of limitations; so long as relators provide notice to 4 the carrier within the 180-day period, they need not file suit 5 for up to six years. 6 are not in direct conflict, both must be given effect. 7 Morton v. Mancari, 417 U.S. 535, 551 (1974) ( [W]hen two statutes 8 are capable of co-existence, it is the duty of the courts, absent 9 a clearly expressed congressional intention to the contrary, to 10 11 Thus, in DHL s view, because the statutes See regard each as effective. ). However, this argument ignores the purpose of the FCA s 12 tolling provision. See 31 U.S.C. § 3731(b). In 1986, when 13 Congress amended FCA Section 3731(b) to include the tolling 14 provision - which permits actions for up to three years after 15 the government s discovery of the violation or the time at which 16 the government should have discovered the violation - it 17 provided the following justification: 18 deceptive [and] such tolling . . . is necessary to ensure the 19 Government s rights are not lost through a wrongdoer s successful 20 deception. 21 U.S.C.C.A.N. 5266, 5280. [F]raud is, by nature, S.Rep. No. 99-345, at 15 (1986), reprinted in 1986 Application of the 180-day rule would 7 1 completely nullify the tolling allowance2 inasmuch as the 2 Government is often unlikely to become aware of fraud immediately 3 following the violation.3 4 understood by DHL, would pose an even more substantial obstacle 5 to relators ability to bring qui tam actions. 6 7 8 For similar reasons, the rule as CONCLUSION For the reasons stated herein, we vacate the judgment and remand to the district court. 2 We identify this conflict between the 180-day rule and the tolling provision but have no occasion to decide whether the tolling provision applies in this particular case. Cf. United States ex rel. Sanders v. N. Am. Bus. Indus., Inc., 546 F.3d 288, 293-96 (4th Cir. 2008) (holding that the tolling provision does not apply to relators in cases where the government declined intervention); United States ex rel. Ven-A-Care v. Actavis Mid Atl. LLC, 659 F. Supp. 2d 262, 273-74 (D. Mass. 2009) (holding that the tolling provision applies to relators, but the limitations period begins to run when a government official learns of the conduct). The conflict between the tolling provision generally and the 180-day rule is sufficient to show that the 180rule does not bar suits under the FCA. 3 DHL contends that if the 180-day rule and the FCA are in conflict, then the former should trump the latter because it is more specific. See Hinck v. U.S., 550 U.S. 501, 506 (2007) ("[I]n most contexts, a precisely drawn, detailed statute pre-empts more general [statutes]." (internal quotations omitted)). We reject the contention that Section 13710 is the more precisely drawn of the two statutes. Although Section 13710 addresses shipping-rate disputes specifically, it does not address fraudulent claims to the government or qui tam actions. 8

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