Malhotra v. Steinberg, No. 13-35165 (9th Cir. 2014)
Annotate this CasePlaintiffs filed a qui tam action against their bankruptcy trustee and others under the False Claims Act (FCA), 31 U.S.C. 3729-3733, alleging that the trustee presented fraudulent claims to the bankruptcy court in order to obtain payment of the $60 trustee's fee. The court held that the deposition of the trustee's realtor, James Grace, constitutes a public disclosure as to plaintiffs where plaintiffs were outsiders to the administrative investigation conducted by the Trustee's Office, which was entirely independent of plaintiffs' own investigation. Subject matter jurisdiction did not exist because plaintiffs were not the original source of the information under section 3730(e)(4)(B). Accordingly, the court affirmed the district court's dismissal.
Court Description: False Claims Act. The panel affirmed the district court’s dismissal of a qui tam action brought under the False Claims Act on the basis that the court lacked subject matter jurisdiction because the Act’s “public disclosure” bar applied. The plaintiffs, chapter 11 debtors, alleged that a former bankruptcy trustee presented fraudulent claims for payment to the bankruptcy court, falsely certifying that he had faithfully performed his duties as trustee. The panel held that alleged kickback scheme transactions were publicly disclosed during a deposition taken by the Office of the United States Trustee, as part of its administrative investigation of the trustee, because the transactions were disclosed to the plaintiffs, who were outsiders to the investigation. In addition, the plaintiffs were not original sources of the kickback scheme allegations because they did not have independent knowledge of this information. Accordingly, the public disclosure bar applied.
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.