WELA ALERT: NINTH CIRCUIT

State Prosecutor was Not an “Original Source” for Qui Tam Suit

Prather, the relator in this qui tam action, served as a state prosecutor for over thirty years and supervised hundreds of wiretaps.  In 1994 Congress passed the Communications Assistance to Law Enforcement Agencies Act (“CALEA”), which authorized the payment of $500 million to telecom companies for investment in the hardware and software necessary to maintain law enforcement’s ability to effectively eavesdrop, despite technological developments in telecommunications.

The government is required to pay the telecom companies for their assistance with eavesdropping procedures, including “reasonable expenses incurred in providing such facilities or assistance.”  Prather claimed that the telecom companies have used CALEA to overcharge law enforcement agencies for wiretaps and related surveillance assistance.  His concerns prompted an investigation by the FCC, which concluded that the telecoms were overcharging the federal government.

Prather filed a claim under the False Claims Act seeking to recover the amount of over payment to the government. The district court granted the defendants’ motion to dismiss Prather appealed.

In relevant part, the Ninth Circuit concluded that Prather was not the “original source” if the information upon which his action was based.  “To have direct knowledge required as an original source, a person’s knowledge must be first hand, obtained through his own labor, and unmediated by anything else.”  “The person must also have ‘true knowledge,’ as opposed to guesswork or suspicion, since ‘the purposes of the Act would not be served by allowing a relator to maintain a qui tam suit based on pure speculation or conjecture.’”  The Ninth Circuit concluded Prather was without “direct knowledge.”

In addition to having direct and independent knowledge of fraud, an “original source” under the pre-2010 FCA also must have “voluntarily provided the information to the Government before filing an action.”  The Court readily concluded that Prather was requested by the Government to provide information to the investigation, and was not a voluntary participant.  Lastly, the Court acknowledged that government employees are not the quintessential qui tam relator.

Prather v. AT&T, 847 F.3d 1097 (9th Cir. 2/6/2017) (Sessions (D. Vt.), Gould, Berzon).