     06-3081-cv
     United States v. Flaherty



1                           UNITED STATES COURT OF APPEALS

2                                 FOR THE SECOND CIRCUIT

3                                   August Term, 2007

4    (Argued:    June 24, 2008                      Decided: August 19, 2008)

5

6                      Docket No. 06-3081-cv

7    - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

 8   UNITED STATES OF AMERICA, ex rel. MERGENT SERVICES and JOHN BAL,
 9
10         Plaintiff-Appellants,
11
12               -     v.     -
13
14   MARIE FLAHERTY,
15
16         Defendant-Appellee.
17
18
19   - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
20
21   B e f o r e:      WINTER, MINER, and CABRANES, Circuit Judges.
22
23         Appeal from a dismissal of a complaint in the United States

24   District Court for the Southern District of New York (Harold

25   Baer, Jr., Judge).       The pro se appellant brought a False Claims

26   Act qui tam action.         Concluding that qui tam actions cannot be

27   brought pro se, the district court dismissed the complaint.         We

28   affirm.
29
30
31                                             JOHN BAL, pro se.
32
33                                             Marie Flaherty, pro se.
34
1    WINTER, Circuit Judge:

2         John Bal appeals from Judge Baer’s dismissal of his

3    complaint.   The principal issue is whether private persons

4    proceeding pro se may bring False Claims Act qui tam actions as

5    relators for the United States.       Because False Claims Act causes

6    of action are not personal to relators, they are statutorily

7    barred from bringing such actions pro se.      Accordingly, we

8    affirm.

9                                BACKGROUND

10        We briefly summarize the relevant facts as they pertain to

11   this appeal.   On May 23, 2005, Bal, proceeding pro se, filed this

12   action against Marie Flaherty on behalf of the United States,

13   himself, and his company, Mergent Services.      The amended

14   complaint alleges that Flaherty failed to pay Bal for air

15   purifying equipment that he provided to her.      Flaherty then

16   allegedly submitted a false receipt to New York State’s

17   Individual and Family Grant Program (Grant Program) in an effort

18   to be reimbursed for costs she never incurred.      The Grant

19   Program, funded in part by the Federal Emergency Management

20   Agency (FEMA), assisted New York residents with disaster-related

21   needs following the attack on New York City on September 11,

22   2001.   The complaint alleges that FEMA provided a $1,750

23   reimbursement to Flaherty as a result of her fraudulent scheme.


                                       2
1         Alleging that Flaherty’s conduct defrauded the federal

2    government in violation of the False Claims Act, 31 U.S.C. § 3729

3    et seq., Bal brought this qui tam action as relator for the

4    United States.1   His complaint also asserts other claims,

5    including defamation, unlawful retaliation, and deceit.       The

6    United States elected not to intervene.       See 31 U.S.C. § 3730.

7         Flaherty filed a motion to dismiss all counts, which the

8    district court granted.   With respect to Bal’s False Claims

9    count, the court concluded that because Bal “is not an attorney

10   . . . [he] is not qualified to represent the interests of the

11   United States.”   Accordingly, the court dismissed Bal’s claim

12   without prejudice.

13        On appeal, Bal initially sought review of the dismissal of

14   all of the claims he asserted in the district court.       He has

15   since consented to the dismissal of all claims except the one

16   asserted under False Claims Act.       Thus, the propriety of the

17   dismissal of his qui tam claim is the sole issue on appeal.

18                               DISCUSSION


          1
           The False Claims Act imposes civil liability upon “any
     person” who, inter alia, “knowingly presents, or causes to be
     presented, to an officer or employee of the United States
     Government . . . a false or fraudulent claim for payment or
     approval.” 31 U.S.C. § 3729 (a). A suit brought under the Act
     may be commenced by either the federal government or by a private
     person, or “relator,” who sues for the United States in a qui tam
     action. 31 U.S.C. § 3730(a), (b)(1).


                                        3
1         “We review a district court’s grant of a motion to dismiss

2    . . . de novo . . . .”   Tindall v. Poultney High Sch. Dist., 414

3    F.3d 281, 283 (2d Cir. 2005) (reviewing dismissal of a claim for

4    failure to retain counsel); see Jones v. Niagara Frontier Transp.

5    Auth., 722 F.2d 20, 22 (2d Cir. 1983) (affording no deference to

6    the district court’s dismissal of an action for a litigant’s

7    failure to retain counsel).

8         Bal first argues that the district court erred because it

9    dismissed his complaint without the consent of the Attorney

10   General.   Bal relies upon the provision of the False Claims Act

11   that provides that qui tam actions “may be dismissed only if the

12   court and the Attorney General give written consent to the

13   dismissal and their reasons for consenting.”   31 U.S.C. §

14   3730(b)(1).   Similarly, Bal contends that the dismissal violated

15   a district court order that noted that the court would solicit

16   the consent of the United States before approving the dismissal,

17   settlement, or discontinuation of the case.    Bal argues that by

18   dismissing the complaint, the district court “violated the United

19   States’ notice” of election not to intervene, which also

20   requested that the action be dismissed only with the approval of

21   the court and the Attorney General.

22        Bal’s arguments are without merit.   While the False Claims

23   Act appears to bar dismissal of qui tam actions absent the

24   Attorney General’s consent, see 31 U.S.C. § 3730(b)(1), we have

25   previously construed this provision to apply “only in cases where

                                      4
1    a plaintiff seeks voluntary dismissal of a claim or action

2    brought under the False Claims Act, and not where the court

3    orders dismissal.”    Minotti v. Lensink, 895 F.2d 100, 103 (2d

4    Cir. 1990).    Because the dismissal in this case came not as a

5    result of a settlement, the district court did not err by

6    neglecting to secure the Attorney General’s consent.    See id. at

7    104.

8           As to the claimed violations of the district court’s June 22

9    order and the United States’ notice of election not to intervene,

10   Bal would have us read these literally as prohibiting any

11   dismissal without the Attorney General’s consent.    To the

12   contrary, the district court and the United States were

13   contemplating the necessity of obtaining consent for a voluntary

14   dismissal executed as part of settlement, and not for a contested

15   dismissal.    Even if the district court and the United States

16   intended to prohibit any dismissal in the absence of the Attorney

17   General’s consent, the district court was free to modify this

18   requirement because there is no such limitation required by law.

19   See id.

20          Bal next argues that the district court erroneously

21   concluded that pro se litigants cannot bring False Claim Act qui

22   tam actions on behalf of the United States.    Specifically, Bal

23   suggests that courts should consider on a case-by-case basis

24   whether a given layman is capable of pursuing a claim without

25   counsel, taking into account developments in legal research

26   technology that are now available to the general public.


                                       5
1         Although the False Claims Act does not specifically address

2    whether private parties may bring qui tam actions pro se, see 31

3    U.S.C. §§ 3729-33, we have previously suggested that they cannot,

4    albeit in dicta.   See Safir v. Blackwell, 579 F.2d 742, 745 n.4

5    (2d Cir. 1978) (positing that “a litigant cannot prosecute a qui

6    tam action under [the Act] pro se”).   Nevertheless, the

7    proposition is a sound one.   See also Phillips v. Tobin, 548 F.2d

8    408, 412 (2d Cir. 1976) (citing with approval cases in which

9    other courts of appeals have concluded that a pro se plaintiff

10   who is not a lawyer cannot bring a qui tam action under the Act).

11        The circumstances under which civil litigants may appear

12   without counsel are limited by statute.    Specifically, 28 U.S.C.

13   § 1654 provides that in federal court, “parties may plead and

14   conduct their own cases personally or by counsel as, by the rules

15   of such courts, respectively, are permitted to manage and conduct

16   causes therein.”   Because the statute permits parties only to

17   “plead and conduct their own cases personally,” id. (emphasis

18   added), we have held that “an individual who is not licensed as

19   an attorney ‘may not appear on another person’s behalf in the

20   other’s cause.’”   Machadio v. Apfel, 276 F.3d 103, 106 (2d Cir.

21   2002) (quoting Iannaccone v. Law, 142 F.3d 553, 558 (2d Cir.

22   1998)).   That is, in order to proceed pro se, “[a] person must be

23   litigating an interest personal to him.”   Iannaccone, 142 F.3d at

24   558 (citing Pridgen v. Andresen, 113 F.3d 391, 393 (2d Cir.

25   1997)).


                                      6
1         Decisions adhering to this principle abound in our case law.

2    It is well established that a layman may not represent a

3    corporation even if the sole shareholder.   See Nat’l Indep.

4    Theatre Exhibitors, Inc. v. Buena Vista Distribution Co., 748

5    F.2d 602, 609 (11th Cir. 1984); Cheung v. Youth Orchestra Found.

6    of Buffalo, Inc., 906 F.2d 59, 61 (2d Cir. 1990) (noting in dicta

7    that “[s]ole shareholders of corporations are not allowed to

8    represent such corporations pro se”).   A non-lawyer general

9    partner may not represent the partnership, see Eagle Assocs. v.

10   Bank of Montreal, 926 F.2d 1305, 1310 (2d Cir. 1991), and a sole

11   member of a solely-owned limited liability company may not

12   represent it, see Lattanzio v. COMTA, 481 F.3d 137, 140 (2d Cir.

13   2007) (per curiam).   Similarly, we have held that a litigant may

14   not appear pro se to pursue a claim that a corporation has

15   assigned to him, see Niagara Frontier Transp. Auth., 722 F.2d at

16   23, or to bring a shareholder’s derivative suit, see Phillips v.

17   Tobin, 548 F.2d 408, 411-12 (2d Cir. 1976).   Finally, we have

18   held that a layman may not appear pro se on behalf of his minor

19   child, see Cheung, 906 F.2d at 61.

20        These rulings not only are called for by the text of 28

21   U.S.C. § 1654, but also constitute good policy for both litigants

22   and the courts.   As we have noted,

23             the conduct of litigation by a nonlawyer
24             creates unusual burdens not only for the
25             party he represents but as well for his
26             adversaries and the court. The lay litigant
27             frequently brings pleadings that are


                                      7
1               awkwardly drafted, motions that are
2               inarticulately presented, proceedings that
3               are needlessly multiplicative. In addition to
4               lacking the professional skills of a lawyer,
5               the lay litigant lacks many of the attorney’s
6               ethical responsibilities, e.g., to avoid
7               litigating unfounded or vexatious claims.
8
9    Niagara Frontier Transp. Auth., 722 F.2d at 22.

10        Turning to the present case, “the threshold question” is

11   whether the False Claims Act action is Bal’s “own case or one

12   that belongs to another.”   Iannaccone, 142 F.3d at 558 (citing

13   Phillips, 548 F.2d at 411 (“The basic question raised by [28

14   U.S.C. § 1654] is whether this stockholder’s derivative suit is

15   the plaintiff’s ‘own case’ or is a suit belonging to the

16   corporation.”)).   An action brought under the False Claims Act

17   may be commenced in one of two ways.     First, the federal

18   government itself may bring a civil action against a defendant.

19   31 U.S.C. § 3730(a).   Second, as is the case here, a private

20   person, or “relator” may bring a qui tam action “for the person

21   and for the United States Government,” against the defendant, “in

22   the name of the Government.”     Id. § 3730(b)(1).   Under such

23   circumstances, the government may elect to intervene, and if it

24   recovers a judgment, the relator receives a percentage of the

25   award.   See id. § 3730(d)(1).    If the government declines to

26   intervene, the relator may pursue the action and may receive as

27   much as 30 percent of any judgment rendered.     See id. §

28   3730(d)(2).

29

                                        8
1         While relators indisputably have a stake in the outcome of

2    False Claims Act qui tam cases that they initiate, “the

3    Government remains the real party in interest in any such

4    action.”   Minotti, 895 F.2d at 104; see United States ex rel.

5    Kreindler & Kreindler v. United Techs. Corp., 985 F.2d 1148, 1154

6    (2d Cir. 1993).   As we have explained:

 7              All of the acts that make a person liable
 8              under [the False Claims Act] focus on the use
 9              of fraud to secure payment from the
10              government. It is the government that has
11              been injured by the presentation of such
12              claims; it is in the government’s name that
13              the action must be brought; it is the
14              government’s injury that provides the measure
15              for the damages that are to be trebled; and
16              it is the government that must receive the
17              lion’s share –- at least 70% –- of any
18              recovery.
19
20   United States ex rel. Stevens v. Vt. Agency of Natural Res., 162

21   F.3d 195, 202 (2d Cir. 1998), rev’d on other grounds, 529 U.S.

22   765 (2000).   In considering the issue of relator standing, the

23   Supreme Court determined that a relator’s interest in a qui tam

24   suit is one as the “partial assignee” of the claims of the United

25   States but observed that the injury, and therefore, the right to

26   bring the claim belongs to the United States.   See Vermont Agency

27   of Natural Res. v. U.S. ex rel. Stevens, 529 U.S. 765, 774-75

28   (2000).    In short, while the False Claims Act permits relators to

29   control the False Claims Act litigation, the claim itself belongs

30   to the United States.   See id; cf. 31 U.S.C. § 3730(c)(5)

31   (providing that as an alternative to bringing a civil suit, “the


                                       9
1    Government may elect to pursue its claim through any alternate

2    remedy available to the Government”) (emphasis added).

3    Accordingly, as the United States “remains the real party in

4    interest” in qui tam actions, Minotti, 895 F.2d at 104, the case,

5    albeit controlled and litigated by the relator, is not the

6    relator’s “own case” as required by 28 U.S.C. § 1654, nor one in

7    which he has “an interest personal to him.”   Iannaccone, 142 F.3d

8    at 558.   Because relators lack a personal interest in False

9    Claims Act qui tam actions, we conclude that they are not

10   entitled to proceed pro se.   See id.; 28 U.S.C. § 1654.

11        Our holding is in accord with all of the circuits that have

12   considered the issue.   See Timson v. Sampson, 518 F.3d 870, 873-

13   74 (11th Cir. 2008) (per curiam); Stoner v. Santa Clara County

14   Office of Educ., 502 F.3d 1116, 1126-28 (9th Cir. 2007); United

15   States ex rel. Lu v. Ou, 368 F.3d 773, 775-76 (7th Cir. 2004);

16   United States v. Onan, 190 F.2d 1, 6-7 (8th Cir. 1951).2    While

17   we reach this conclusion as a matter of statutory construction,

18   we are also sympathetic to some of the other concerns voiced by

19   these courts, in particular that the United States might become



          2
           The Supreme Court’s recent decision in Winkelman v. Parm
     City School District, 127 S.Ct. 1994 (2007) (permitting parents
     to bring suit pro se under the IDEA) is not to the contrary.
     Winkelman reaffirmed the rights of parents, who have rights under
     the IDEA distinct from those afforded their children, to assert
     their own interest pro se. See Stoner, 502 F.3d at 1127
     (rejecting the application of Winkelman to the FCA’s qui tam
     provision). As we noted above, Bal does not have a personal
     interest in this suit.

                                     10
1    bound by res judicata or collateral estoppel as a result of the

2    actions of a pro se in bringing and losing a qui tam action.    See

3    Stoner, 502 F.3d at 1126-27.   This concern serves only to bolster

4    our belief that “Congress could [not] have intended to authorize

5    a layman to carry on such suit as attorney for the United States

6    but must have had in mind that such a suit would be carried on in

7    accordance with the established procedure which requires that

8    only one licensed to practice law may conduct proceedings in

9    court for anyone other than himself.”   Onan, 190 F.2d at 6.3

10                              CONCLUSION

11        For the reasons discussed above, we affirm.

12




          3
           Bal also argues that because the Government failed to
     object to Bal’s bringing this case and has explicitly stated that
     it “is not a party” to this action, the United States has
     constructively consented to Bal prosecuting this claim pro se.
     We fail to see how either the United States’ consent or its
     status as a non-party is material. The general rule of 28 U.S.C.
     § 1654 is that pro se litigants can only bring claims personal to
     them. See Iannaccone, 142 F.3d at 558. The statute contains no
     exception for instances in which a real party in interest either
     consents to representation by a layman or fails to join an action
     as a party. See 28 U.S.C. § 1654. Bal’s argument is therefore
     without merit.

                                     11
