[00:00:02] Speaker 00: Case number 14-7094, United States of America ex-real Todd Heath at L and Todd Heath appellant versus AT&T Inc. [00:00:11] Speaker 00: at L. Ms. [00:00:12] Speaker 00: Luzon for the appellant, Mr. Pinkus for the appellee. [00:00:20] Speaker 05: Good morning. [00:00:31] Speaker 01: Good morning, may it please the court. [00:00:36] Speaker 01: There is no question the legal standard that applies to the first to file issued before the court is the Hampton material facts test. [00:00:47] Speaker 01: When this test is applied to the particular facts and circumstances of this case, the case is not barred by the first to file. [00:00:55] Speaker 05: Are we allowed to look beyond the complaints? [00:00:57] Speaker 05: Do we do something beyond just picking up the two complaints and looking at them? [00:01:01] Speaker 01: Your Honor, the standard, it's a jurisdictional issue. [00:01:04] Speaker 01: So yes, to some extent, you can look outside of the pleadings. [00:01:07] Speaker 05: However... Well, let's get to the... Is it jurisdictional, first-to-file jurisdictional? [00:01:13] Speaker 01: Yes, Your Honor, it is. [00:01:14] Speaker 05: What's your authority for that? [00:01:17] Speaker 01: Just the fact that the first-to-file issue is... It's a 12B1 issue. [00:01:24] Speaker 05: And the authority for that, I know the district court said it was, but what's the authority for that? [00:01:29] Speaker 05: Hasn't the Supreme Court given us some guidance on this, that statutory jurisdiction? [00:01:36] Speaker 05: Do you have a case that says first to file is a jurisdictional issue? [00:01:42] Speaker 05: Not before me, Your Honor. [00:01:44] Speaker 03: Do you need it to be jurisdiction? [00:01:46] Speaker 03: Do you want it to be jurisdiction? [00:01:47] Speaker 03: I mean, for your legal purposes, not personally, but for your legal purposes, [00:01:51] Speaker 03: Does it matter to your case whether it's jurisdictional or not? [00:01:56] Speaker 03: Whether it's a failure to state a claim? [00:01:57] Speaker 03: Sure. [00:01:58] Speaker 01: What matters, Your Honor, and it goes to your question, Judge Griffith, about do we need to look beyond the pleadings? [00:02:03] Speaker 01: In this particular case, we don't. [00:02:06] Speaker 01: The operative complaints... But can we? [00:02:08] Speaker 05: Are we permitted to look beyond the pleadings to determine what this first-to-file bar holds? [00:02:18] Speaker 01: Can you [00:02:19] Speaker 01: My understanding is yes. [00:02:20] Speaker 01: However, we don't need to in this case. [00:02:23] Speaker 01: What matters most is the Hampton test. [00:02:26] Speaker 01: And under the test, the analysis requires us to look first at the earlier filed complaint and the later filed complaint. [00:02:34] Speaker 01: When we apply that test to the complaints, and in particular the Wisconsin complaint, what we have is a complaint that is... Was there anything going on in Wisconsin that wasn't also going on nationwide? [00:02:49] Speaker 01: Your Honor, the Wisconsin complaint is a very limited complaint. [00:02:52] Speaker 01: It's a complaint about Wisconsin contracts, VNS contracts. [00:02:55] Speaker 05: But the district court said, as I recall, and correct me if I'm wrong, I could be wrong on this, I thought the district court said that if you just scratch below the surface of the first complaint, you'll find [00:03:11] Speaker 05: the same set of facts that are alleged in the second complaint. [00:03:16] Speaker 05: Those aren't his words, but I think that's the gist of what he said. [00:03:19] Speaker 05: Is that right? [00:03:19] Speaker 01: There are two basic similarities between the Wisconsin complaint and our complaint here, but they're very superficial. [00:03:28] Speaker 01: The Wisconsin complaint involves e-rate violations. [00:03:31] Speaker 01: The Wisconsin complaint involves one AT&T subsidiary. [00:03:35] Speaker 01: But beyond that, there's not more. [00:03:38] Speaker 01: The Wisconsin complaint is materially different from our complaint in very important ways. [00:03:43] Speaker 01: First of all, it involved contracts specific between a Wisconsin company, Wisconsin Bell, and the Department of Administration. [00:03:52] Speaker 01: It involved [00:03:53] Speaker 01: misconduct with respect to Wisconsin's sales representatives. [00:03:57] Speaker 05: Was it a different form of misconduct than is alleged in the second complaint? [00:04:01] Speaker 01: Yes, it is, Your Honor. [00:04:02] Speaker 05: I thought they were all the same. [00:04:03] Speaker 05: I thought they were all defrauding over the role of the LSP. [00:04:07] Speaker 01: In a very broad and general sense, there are similarities. [00:04:11] Speaker 01: Both cases are about e-rate, and both cases are about an AT&T company. [00:04:16] Speaker 01: But our case is materially different. [00:04:19] Speaker 01: All along, what we've alleged in our complaint here in DC is that AT&T Corp, the corporation apparent, has engaged in corporate malfeasance. [00:04:29] Speaker 01: It's engaged in a failure to have policies for years relating to lowest corresponding price rates. [00:04:37] Speaker 03: Am I right that your Wisconsin case involved [00:04:40] Speaker 03: affirmative misrepresentations by, allegedly, by the Wisconsin Bell employees that are not at issue here? [00:04:51] Speaker 03: That is correct, Your Honor. [00:04:53] Speaker 03: And if the failure to train, corporate failure to train that you allege here had been in place in Wisconsin, [00:05:03] Speaker 03: Would it have necessarily prevented that misconduct because it involved separate affirmative misrepresentations by individuals? [00:05:11] Speaker 01: It may have, but what we've alleged in the Wisconsin complaint has nothing to do with corporate-wide policies of AT&T Corp, corporate malfeasance. [00:05:20] Speaker 01: That's a completely different theory of misconduct that gave rise to the e-rate violations. [00:05:24] Speaker 01: Wisconsin is a limited case. [00:05:27] Speaker 01: It's limited to contracts. [00:05:28] Speaker 01: It's limited to breaches of contracts. [00:05:30] Speaker 01: It's limited to a Wisconsin entity. [00:05:32] Speaker 01: And it's limited to Wisconsin public schools and libraries. [00:05:35] Speaker 01: That's very distinct from the kind of misconduct that we're alleging here that gave rise to the violations. [00:05:41] Speaker 05: What's the specific fraud that you've alleged? [00:05:45] Speaker 05: Your opponents cite Rule 9B and say you haven't made specific allegations of fraud. [00:05:51] Speaker 05: Where's the specificity? [00:05:53] Speaker 05: Where's the particularity in your [00:05:55] Speaker 01: As to the particularity of what we've pledged, what we are required to plead is falsity of the claim. [00:06:01] Speaker 05: We've pledged a long-standing... Don't you also have to plead individuals and time and place and circumstance? [00:06:07] Speaker 05: Yes, Your Honor, and... Who are the individuals? [00:06:09] Speaker 01: And we have. [00:06:10] Speaker 01: Who are the individuals? [00:06:11] Speaker 05: Name an individual. [00:06:12] Speaker 01: In terms of individual pleading. [00:06:15] Speaker 01: We've pled employees of AT&T Corp. [00:06:21] Speaker 01: We've pled specific subsidiaries. [00:06:22] Speaker 05: How many employees of AT&T Corp. [00:06:24] Speaker 05: are there? [00:06:24] Speaker 05: I don't think that meets the particularity requirement, does it? [00:06:28] Speaker 01: Names. [00:06:28] Speaker 01: Names. [00:06:29] Speaker 01: Are there any names? [00:06:30] Speaker 01: There's no names, Your Honor, that we've pled. [00:06:32] Speaker 05: Time and place? [00:06:33] Speaker 01: We've pled from 1996 on. [00:06:35] Speaker 05: And I think you did, you've alleged that it was, is it Form 474? [00:06:39] Speaker 01: Yes, Your Honor, there's several forms where we've pledged specifically. [00:06:43] Speaker 05: Anything beyond that? [00:06:44] Speaker 05: Is that what you rest your allegations of specific fraud on, or those forms? [00:06:49] Speaker 01: No, our pleading is specific as to, we've attached 2007 and 2008 trading manuals where we clearly specify that AT&T lacked LCP obligations and requirements in there. [00:07:02] Speaker 01: We've also pled a 2010 Detroit Public Schools audit wherein even notwithstanding the belated 2009 implementation of policies that AT&T Corp instituted, notwithstanding that in 2010 Detroit Public Schools were overcharged in excess of $3 million in services provided by AT&T. [00:07:29] Speaker 01: We've also pled, Your Honor, that [00:07:35] Speaker 01: AT&T breached a 2004 consent decree requiring e-rate program remedial measures. [00:07:43] Speaker 01: We've also pledged state investigations occurring in 2009 in the states of Missouri, Indiana, Wisconsin, as to AT&T's e-rate violations. [00:07:52] Speaker 03: Can I ask you about, and maybe it's, maybe this is not for this court, maybe it's for, when your complaint talks about [00:08:00] Speaker 03: problems in Missouri, Indiana, Connecticut, elsewhere, does that not raise a public disclosure bar issue? [00:08:09] Speaker 01: The public disclosure bar issue was raised below, Your Honor, that was not addressed by the court. [00:08:14] Speaker 01: Is that jurisdictional? [00:08:16] Speaker 01: It's jurisdictional as well. [00:08:17] Speaker 01: Well, wouldn't we have to decide it if it were jurisdictional? [00:08:21] Speaker 01: It's an issue that was not raised below. [00:08:24] Speaker 01: And as to public disclosure issues, we've set forth in our briefing below, I think well stated, that the public disclosure bar does not apply to our case. [00:08:32] Speaker 03: Can you just explain quickly why? [00:08:34] Speaker 03: Because you just talked about three other jurisdictions where litigation was going after other related fraud by AT&T. [00:08:43] Speaker 01: In those investigations, Your Honor, AT&T Corp, the parent, [00:08:48] Speaker 01: is not specifically identified in those cases or in those investigations and in some of the documents underlying those investigations that became public. [00:08:58] Speaker 01: They're not specific to the allegations of fraud that we're alleging in our current case. [00:09:06] Speaker 03: During the time period at issue here that you're alleging, did Form 473 actually require [00:09:14] Speaker 03: affirmative statements about compliance with the lowest price requirement? [00:09:18] Speaker 01: 473 required that AT&T, yes, comply with [00:09:33] Speaker 01: e-rate obligations and LCP requirements. [00:09:36] Speaker 01: It also required that the eligible schools and libraries, the customers, in other words, of AT&T, attest to them being eligible. [00:09:46] Speaker 03: I mean, the fact that the matter is... Who filed Form 473? [00:09:51] Speaker 01: I believe it's... Library or school? [00:09:53] Speaker 01: The library and schools. [00:09:56] Speaker 03: So there are a testing that AT&T gave them the lowest price, or there's just a testing what... [00:10:01] Speaker 03: AT&T charged them? [00:10:03] Speaker 01: Well, part of the process is that the schools have to be deemed LCP eligible or lowest corresponding price eligible. [00:10:10] Speaker 01: And to be a provider, you also have to say that you're providing schools LCP rates. [00:10:17] Speaker 01: You have to bid for that. [00:10:18] Speaker 01: So if you're providing services to schools that you knowingly that you know are submitting [00:10:24] Speaker 01: forms and declaring their eligibility for LCP rates, you're providing those to the schools, then you're also testing to the fact that you yourself are providing LCP rates to the schools, you're in effect affecting or facilitating the submission of false claims to the government. [00:10:43] Speaker 01: And that's our theory as to that particular form, Your Honor. [00:10:50] Speaker 05: Okay, your time's up. [00:10:51] Speaker 05: We'll give you back two minutes. [00:10:52] Speaker 01: Thank you. [00:11:06] Speaker 06: Good morning, Your Honor. [00:11:07] Speaker 06: May it please the Court? [00:11:10] Speaker 06: The question on the first defile issue, as this Court has said in Batiste and Selco, is whether the second complaint alleges a fraudulent scheme that the government would have been equipped to investigate based on the first complaint. [00:11:24] Speaker 06: And we think the District Court correctly held that that test [00:11:29] Speaker 06: is not satisfied here. [00:11:31] Speaker 05: Is it jurisdictional? [00:11:32] Speaker 05: The district court treated it as jurisdictional. [00:11:34] Speaker 05: We don't have any case law on that, do we? [00:11:37] Speaker 06: Not that I'm aware of, Your Honor, but as you know, the Supreme Court in recent years has narrowed the scope of what's jurisdictional for jurisdiction purposes, and I think it would be hard to say that this particular question comes under that rubric. [00:11:51] Speaker 03: So your position is it's not jurisdictional? [00:11:53] Speaker 05: We don't believe it's jurisdictional. [00:11:54] Speaker 05: How about the public disclosure bar? [00:11:56] Speaker 05: Under that same test, that fails. [00:11:59] Speaker 05: The amendment to the statute took the jurisdictional language out, so that can't be jurisdictional. [00:12:03] Speaker 06: I think that's right. [00:12:04] Speaker 06: I haven't looked at that issue, Your Honor, but I believe that's correct. [00:12:10] Speaker 06: So here, the second complaint alleges precisely the same fraudulent scheme as was alleged in the Wisconsin complaint. [00:12:19] Speaker 03: But how would I know if I were just looking at the Wisconsin complaint or working for the U.S. [00:12:24] Speaker 03: government that that case involved anything other than a rogue actor? [00:12:28] Speaker 03: What indication of the Wisconsin complaint is there that there is a nationwide corporate failure to train? [00:12:36] Speaker 06: Well, I think two answers, Your Honor. [00:12:38] Speaker 06: I think as the district court held here where the complaint does allege this is a national program, that this is one subsidiary of a nationwide company that's engaged in the e-rate program, the question is, what would a reasonable investigator do? [00:12:53] Speaker 03: No, it's a national program, which most federal programs are. [00:12:58] Speaker 03: And it's a subsidiary of a national company. [00:13:00] Speaker 03: Surely that is not enough. [00:13:03] Speaker 03: to put me on notice that it's a national, surely AT&T wouldn't take the position that every time some rogue actor in a bell somewhere in this country does something, because it's a subsidiary and maybe a national program's involved, they are now implicated in that fraud. [00:13:18] Speaker 06: I don't think they take the position they were implicated, Your Honor. [00:13:21] Speaker 06: I think the question is, what would the scope of a reasonable investigation be? [00:13:25] Speaker 06: And we think the district court correctly concluded, but here there's something more. [00:13:29] Speaker 06: Here's the, there is the allegation in the second complaint that is quite specific in paragraph 28 on page 56 of the appendix that AT&T, and I'm quoting, completely controls the methods and terms of the operating companies. [00:13:42] Speaker 03: But we have to know from looking at the first complaint. [00:13:45] Speaker 03: Someone had to be on, I think that's our test. [00:13:47] Speaker 03: I don't think so. [00:13:47] Speaker 03: Someone had to be on notice from the first complaint that there was a national fraud going on. [00:13:52] Speaker 06: I think your test, Your Honor, is [00:13:55] Speaker 06: Would the investigation triggered by the first complaint encompass the allegations of the second complaint? [00:14:02] Speaker 06: And I don't think that requires you, especially in a situation where the same relator has filed both complaints, to ignore it. [00:14:09] Speaker 05: Do you have a case for that? [00:14:10] Speaker 05: I mean, that stands to reason, and that's what the district court said. [00:14:13] Speaker 05: But what's the authority for that? [00:14:14] Speaker 06: I don't think there is any authority either way, Your Honor. [00:14:16] Speaker 06: I don't think this issue frankly has come up. [00:14:19] Speaker 06: But it seems to me that the relator here can't have it both ways. [00:14:23] Speaker 06: It can't say, we've alleged in our second complaint this nationwide program where AT&T controls all of the operating companies and say, oh, but the investigation triggered by the Wisconsin allegations would not find this nationwide program. [00:14:37] Speaker 06: I think they have to. [00:14:38] Speaker 06: take both, take their allegation. [00:14:41] Speaker 03: Well, I guess I'm asking with some particularity, what exactly in the first complaint, the Wisconsin complaint, would let somebody know that this, again, is not a rogue problem confined to Wisconsin with its affirmative people making affirmative misrepresentations, and that instead there's a collapse of corporate responsibility, allegedly? [00:15:01] Speaker 06: Well, there are two answers, Your Honor. [00:15:03] Speaker 06: I think the district court [00:15:05] Speaker 06: The question is not, does the complaint itself delineate everything that could be found? [00:15:11] Speaker 06: That's the test the court explicitly rejected in SELCO. [00:15:14] Speaker 06: What the court said in SELCO was, would a reasonable, would an investigation based on the first allegation trigger an investigation that would encompass the second complaint's allegations? [00:15:30] Speaker 03: Right, and what would trigger, you know, people have resources, and what's going to let them know that there's any problem [00:15:36] Speaker 03: outside Wisconsin borders? [00:15:38] Speaker 03: Well, I think two things, Your Honor. [00:15:39] Speaker 06: I think they would look into the reason why Wisconsin engaged in wrongdoing. [00:15:45] Speaker 06: If it was, they would trace that down. [00:15:47] Speaker 06: And if there were a nationwide program, how would they look into it? [00:15:50] Speaker 05: What would be the nature of that investigation? [00:15:53] Speaker 05: How far would they have to go to trace that down? [00:15:55] Speaker 06: Well, based on the allegations of the second complaint, not very far, because the second complaint says that basically everything that is done with respect to e-rate billing and pricing is controlled by AT&T. [00:16:05] Speaker 05: Are we supposed to read the complaints in tandem to determine where to file? [00:16:09] Speaker 06: Well, I think in the circumstances presented here, where it is the same relator, it is reasonable to say that the relator's allegations, which [00:16:20] Speaker 06: presumably are fatusoid rule 11, are relevant in ascertaining what would happen if the Wisconsin investigation were undertaken. [00:16:30] Speaker 03: I'm not sure why the identity of the relator tells us anything about what the complaint would have put the government [00:16:38] Speaker 03: On notice of says your position is if it were a different relator brand this national one. [00:16:43] Speaker 06: I don't know whether it would or it won't your honor but I think again the case is pretty easy where it's the same. [00:16:48] Speaker 06: I think it's pretty easy where it's the same relator. [00:16:51] Speaker 03: It's a relevant factor for anyone else. [00:16:52] Speaker 06: I think it's relevant in whether this relator avoids the first to file bar to ascertain to say [00:16:59] Speaker 06: where this relator is coming to the district court here and saying this is a nationwide scheme, that's why I don't have to allege any particulars. [00:17:07] Speaker 06: I can allege, I can bring a complaint based on a nationwide scheme because I can allege in good faith that it is, but then, and included by the way, Wisconsin, [00:17:20] Speaker 06: Bell amongst the defendants in that case and in the allegations that Wisconsin Bell's actions were controlled by AT&T and then say, but if the government undertook an investigation based on what I said in Wisconsin, it wouldn't possibly find this nationwide scheme. [00:17:37] Speaker 06: That just seems to me totally inconsistent and you just can't have it both ways. [00:17:43] Speaker 04: Soko involved allegations of corporate fraud in the first complaint. [00:17:50] Speaker 06: SELCO had an allegation that there was uniform pricing. [00:17:55] Speaker 06: It did not identify other agencies and other contracts. [00:17:59] Speaker 04: I understand, but the tip-off was there in SELCO. [00:18:02] Speaker 04: Whereas in this case, it's not. [00:18:03] Speaker 04: Well, I think... The whole of them, they had, as opposed to the Southern Circuit suggesting, merely because you have a road, does not mean to suggest that there's corporate wide fraud. [00:18:16] Speaker 06: Well, I think two answers, Your Honor. [00:18:18] Speaker 06: I think that here, where all of the operating companies are engaged in precisely the same program, I think the district court was correct in saying a reasonable investigation would look at whether what was going on in Wisconsin was going on somewhere else. [00:18:36] Speaker 06: But here, I do think the allegation of the complaint [00:18:38] Speaker 06: in the second case is quite telling because what the second complaint says is this was all controlled by AT&T. [00:18:48] Speaker 04: If that is true... What's telling is that the first complaint doesn't say that. [00:18:53] Speaker 04: Well, but the question, Your Honor, is what would, if the investigation... Well, we've been asking you what's the tip to the government to suggest that this is corporate law. [00:19:04] Speaker 04: You keep saying you look at the second complaint. [00:19:06] Speaker 04: That doesn't make a lot of sense to me. [00:19:08] Speaker 06: Well, I have two answers. [00:19:09] Speaker 06: The district court didn't really place much reliance on the second complaint. [00:19:12] Speaker 06: What the district court said... [00:19:13] Speaker 06: Well, I'm placing reliance on both. [00:19:16] Speaker 06: I think there are two answers, Your Honor. [00:19:19] Speaker 06: I think that the district court correctly said a nationwide program operating companies that do exactly the same thing in every state, a reasonable government investigator would look to see whether this was being duplicated elsewhere or whether it was triggered by a corporate-wide policy. [00:19:36] Speaker 03: But that's where I have the problem with your position, or the question, I guess, at least, not so much a problem is, [00:19:42] Speaker 03: When the Wisconsin complaint says, what's going wrong here is you've got individual sales representatives making specific affirmative misrepresentations, that seems like sort of isolated fraudulent activity by some bad actors. [00:19:59] Speaker 03: It's not alleging a failure to train at a nationwide level. [00:20:02] Speaker 03: It's just some bad apples in Wisconsin bell. [00:20:07] Speaker 06: I think the complaint, Your Honor, is fairly read as alleging precisely the same Wisconsin-wide misconduct as the second complaint alleges nationwide misconduct, because the allegation is that there were false certifications and false representations regarding e-rates because the Wisconsin-Bell people did not provide the LCP, the lowest corresponding [00:20:33] Speaker 06: tariff, and they instead withheld that information. [00:20:37] Speaker 06: That's precisely the allegation of the board. [00:20:39] Speaker 06: It's not withheld, it's that they actually told, they lied to people, told them the... But that would always be true, Your Honor, because in all of these cases, there's an interaction between some sales representative and the e-rate recipient, and the AT&T or the service provider's representative says, here's our rate. [00:20:56] Speaker 06: And so that would always be the case in any of these situations. [00:21:02] Speaker 03: I would have thought a fraud based on affirmative misrepresentations, X lied to Y, would be different than, oh my gosh, negligence. [00:21:11] Speaker 03: They didn't train people so people didn't know, and people just weren't even bothering to assert this. [00:21:16] Speaker 03: And then the company was signing off on this stuff without training its people, without being careful, without enforcing these requirements to go down. [00:21:22] Speaker 03: We don't know whether it was [00:21:24] Speaker 03: Reckless or whether it was intentional? [00:21:26] Speaker 06: I think the second complaint, Your Honor, alleges precisely the same comment, that there were false certifications. [00:21:31] Speaker 05: Do you have a case for us where a court has read the complaints in tandem to answer this question? [00:21:38] Speaker 06: I don't have a case where it has, and I don't have a case where it hasn't, Your Honor. [00:21:41] Speaker 06: But the test that this court and other courts apply, the question just hasn't come up. [00:21:46] Speaker 05: But then isn't the question, are we supposed to look at the first complaint? [00:21:49] Speaker 05: And from that, would the government have been tipped off [00:21:52] Speaker 05: to understand that they're allegations of a nationwide corporate conspiracy. [00:21:59] Speaker 05: So let's just focus on the first complaint. [00:22:01] Speaker 05: What is there in the first complaint? [00:22:03] Speaker 05: that tips the government off as to that allegation. [00:22:08] Speaker 05: Just the first complaint. [00:22:09] Speaker 06: In the first complaint, the fact that this was a nationwide program that the complaint alleges, as is common knowledge, that this is one of many operating companies that are engaged in similar conduct across the country would have tipped off a reasonable, as the district court agreed, would tip off a reasonable government investigator to look [00:22:32] Speaker 06: to see, given that exactly the same activity goes on in all these operating companies, to see whether there was some corporate-wide problem. [00:22:39] Speaker 06: Here, we think added to that is the fact that the second complaint says, if this investigation... Back to Judge Malloy's question. [00:22:48] Speaker 05: How is that, how would this complaint be different if it was just a rogue individual for Wisconsin Bell who was [00:22:59] Speaker 05: misbehaving. [00:23:00] Speaker 05: Would this complaint say anything different then? [00:23:02] Speaker 06: Well, the complaint, although it identifies one, what the complaint says is here's one. [00:23:08] Speaker 05: Surely you'll allow for that possibility, that in a nationwide program, there could be an individual acting on his or her own [00:23:17] Speaker 05: engaging misconduct. [00:23:18] Speaker 06: And if this complaint said here there is one instance of misconduct, then maybe that would be true. [00:23:24] Speaker 06: But what this complaint says is there are e-rate contracts with many entities in Wisconsin, and there is a second contract [00:23:33] Speaker 06: which is with the Wisconsin government at a lower rate, therefore all of the e-rate agreements that violate the LCP requirement. [00:23:44] Speaker 06: It didn't say there was one salesman or one place or anything. [00:23:48] Speaker 03: Let's just assume the complaint said, Wisconsin Bell is rotten to the core. [00:23:54] Speaker 03: obviously all allegations here, but liars, thieves, at every level from the general forums that they're signing to the on the ground people, they're making misrepresentations. [00:24:07] Speaker 03: From that alone, we're going to bar a later discovery that in fact, it wasn't just Wisconsin Bell that was rotten to the core, Company X, [00:24:18] Speaker 03: kind of pervasive culture of doing this. [00:24:20] Speaker 03: It seems to me like very different arguments, and the one isn't going to necessarily lead to the other. [00:24:25] Speaker 03: You can have things that are just bad in one jurisdiction. [00:24:28] Speaker 06: You can, Your Honor, and I think that the question he, in this particular situation where it's precisely the same government program that's operated nationwide, I think that's a difference. [00:24:39] Speaker 06: And where there is nothing in the Wisconsin complaint that identifies some one single bad actor in Wisconsin, but I do think [00:24:47] Speaker 06: turning to the relevance of the second complaint. [00:24:51] Speaker 06: I do think it's an odd situation. [00:24:53] Speaker 06: The question here is what would an investigation based on the first complaint trigger? [00:25:00] Speaker 06: The relator says in his representation to the district court here that it would trigger finding a nationwide [00:25:10] Speaker 03: No, but I think we don't look into, as I understand the test, it doesn't say if you pick up this complaint, you would then roll up your sleeves and spend six months to a year doing your own discovery and investigation. [00:25:20] Speaker 03: And if that would lead to it, it's barred. [00:25:23] Speaker 03: You really have to see from the face of the first complaint some arrows pointing, at least, in the direction of a bigger problem. [00:25:31] Speaker 03: We don't ask whether the government doing its own spade work after reading this complaint could find this bigger problem. [00:25:38] Speaker 06: You have done that and SELCO certainly says that because what SELCO says is we're going to look at this broader, we're going to bar this broader allegations regarding other agencies and other contracts because we're going to assume that the government would have encompassed it and Judge Hubell in the Foliar case did the same thing. [00:25:58] Speaker 06: So I think the question here really is, [00:26:01] Speaker 06: It wouldn't, based on the allegations that the relator has made, it would have been quite obvious that this was a conspiracy, a wrongful conduct that was being centrally controlled because the allegations of complaint number two say this very specifically. [00:26:15] Speaker 06: So it seems to me it would be a quite odd situation to say, yes, you can rely on those allegations to bring this complaint, but we have to close our eyes to them in determining what the government would have done based on complaint number one. [00:26:28] Speaker 06: When this very relator says, [00:26:31] Speaker 06: The result of investigation number one would have inevitably led to the discovery of the broader conspiracy because the directives that would have been found, the obvious first question that an investigator would ask is, so why are you doing what you're doing? [00:26:45] Speaker 06: And the answer, according to the allegations of the second complaint, is because these are the company-wide standards that we apply. [00:26:50] Speaker 05: So you're saying it's not going to take six months of [00:26:52] Speaker 06: It wouldn't take six months of spade work. [00:26:54] Speaker 06: It would take the first week of spade work to say, give us your documents. [00:26:58] Speaker 06: And the documents would be, based on these allegations, the corporate-wide policy. [00:27:04] Speaker 05: Would you take a minute and give us your 9-D argument in response to your friend's argument about specificity, particularly the fraud allegations? [00:27:14] Speaker 06: Sure. [00:27:15] Speaker 06: What this court has said is there has to be some specificity in Totten and other cases, time, place, and context of the false representations. [00:27:26] Speaker 06: And what the courts have said is where there's a very broad conspiracy or broad set of violations alleged, they don't have to all be laid out there, but at least some representative ones have to be. [00:27:37] Speaker 03: You say the courts say that, but there's actually a circuit conflict on that issue, right? [00:27:42] Speaker 06: on whether there has to be at least one. [00:27:45] Speaker 03: Specificity, this person on this date under the False Claims Act. [00:27:49] Speaker 06: Well, I think the degree of specificity, there may be a conflict, but I don't think there's a conflict that there has to be some specificity. [00:27:55] Speaker 03: Well, there has to be compliance with 9B. [00:27:57] Speaker 03: I think we all agree on that. [00:27:59] Speaker 06: Well, let me give you an example. [00:28:02] Speaker 06: The relator relies on Judge Huvel's first decision on the Foliard case that addressed the 9b issue and says she didn't require the identity of persons. [00:28:11] Speaker 06: That's true. [00:28:11] Speaker 06: But what was in that complaint was specifically 140 products that allegedly were being misrepresented and being purchased by the government. [00:28:20] Speaker 06: And the complaint alleged that the purchases happened so often that those 140 products, you could assume there was a purchase based on the false [00:28:30] Speaker 06: false certification. [00:28:32] Speaker 06: Here, other than the general statement that every single form, 474, 473, has been false, there isn't even one specific comparison of one rate charged to an e-rate customer with a rate charged not to an e-rate customer. [00:28:49] Speaker 06: And that seems to us to be the minimum requirement of specificity. [00:28:53] Speaker 06: Otherwise, you can just say everything you've filed is false without any indication of what it is. [00:28:59] Speaker 03: Are you familiar with the position the Solicitor General took in the Nathan case, I think last term of the Supreme Court? [00:29:05] Speaker 03: No, I'm not. [00:29:05] Speaker 03: OK, never mind then. [00:29:06] Speaker 03: They won't ask you if your position is consistent. [00:29:08] Speaker 03: Do you happen to know if your position is consistent with the position of the United States on this? [00:29:11] Speaker 06: I don't know the position that he took. [00:29:13] Speaker 06: I'd be glad to look at it and advise the court afterwards. [00:29:16] Speaker 03: No, I'm sorry. [00:29:16] Speaker 06: I just thought I would ask him. [00:29:17] Speaker 06: And the second problem here is, is there really any representation or certification at all? [00:29:24] Speaker 06: As Your Honor asked, my friend [00:29:27] Speaker 06: Form 473 is filed by the service provider, but 473 prior to July 2013 did not have a general representation about compliance, and we think it didn't really have any representation that's related to LCP. [00:29:40] Speaker 06: There were some quite specific representations as to other requirements, competitive bidding and other things, but nothing about compliance with this requirement. [00:29:50] Speaker 03: What about an implicit false certification? [00:29:52] Speaker 06: well i think the question is where is who's making an implicit false certification i think the argument would be form 473 is filed by the service provider the other forms 471 and 472 are filed by the recipient of the service and as as [00:30:08] Speaker 06: we laid out in our brief, we couldn't see anything that the recipient is certifying either about compliance that it has been told or that the service provider represented or any compliance with LCP. [00:30:24] Speaker 06: There are certifications there again about competitive bidding and about entitle eligibility of the recipient to receive the [00:30:33] Speaker 06: e-rate benefits, but nothing about the rate, the particular amount that it's being charged. [00:30:38] Speaker 03: So it's your position if company X, a very bad actor company X, is engaged in this program and consciously, deliberately, with lots of memos, says we're going to stiff the government and these little libraries and charge them our highest price. [00:30:56] Speaker 03: And these forms were all getting filed, and they knew they filed every form they did with the U.S. [00:31:02] Speaker 03: government, conscious of the fact that they were deliberately trying to rip them off. [00:31:06] Speaker 03: And they knew that they were charging prices that were then going to be reported by the libraries as, this is the price we paid. [00:31:13] Speaker 03: That just wouldn't be fraud. [00:31:14] Speaker 03: Might be something else wrong with it, but it would not be fraud. [00:31:16] Speaker 06: Well, it wouldn't be actually under the False Claims Act until the government did what it did in July 2013, which is to revise the form to require that kind of certification. [00:31:24] Speaker 03: It wouldn't even be an implicit false certification. [00:31:25] Speaker 06: But there probably would be. [00:31:27] Speaker 06: I'm not familiar with the remedies. [00:31:28] Speaker 06: The administrator would probably have the ability to get the payments back. [00:31:33] Speaker 06: I don't think there'd be nothing on some contractual basis. [00:31:38] Speaker 02: Does your company have a contract with the government? [00:31:40] Speaker 06: Excuse me? [00:31:41] Speaker 02: Do you have a contract with the government on the program? [00:31:43] Speaker 06: I don't know. [00:31:43] Speaker 06: I believe that that's true, but I don't. [00:31:47] Speaker 06: unless the court has any further questions. [00:31:49] Speaker 06: Thank you. [00:31:50] Speaker 06: Thank you very much. [00:31:58] Speaker 01: Thank you. [00:32:00] Speaker 01: There was a tip-off in Hampton. [00:32:03] Speaker 01: There was a tip-off in Selco. [00:32:06] Speaker 01: To be clear, there's no tip-off in the Wisconsin complaint. [00:32:10] Speaker 03: Well, what's your answer to his response that they'd pick up the complaint and they'd go, huh, better get some papers, and then the papers would show? [00:32:18] Speaker 03: That's a highly speculative position. [00:32:20] Speaker 03: What's highly speculative? [00:32:21] Speaker 03: That the government would ask for the papers or that the papers would have revealed it? [00:32:24] Speaker 01: That the papers would have revealed it, Your Honor. [00:32:26] Speaker 01: That the allegations they're in would have revealed and equipped the government to go, hmm, there must be something fishy going on with AT&T Corp. [00:32:35] Speaker 01: That's just not there. [00:32:36] Speaker 01: All we've got is references to e-rate, background on e-rate, as well as a named defendant who so happens to be an affiliate of AT&T. [00:32:45] Speaker 05: How would they, if they had the first complaint and conducted the investigation, how would they have uncovered the nationwide? [00:32:52] Speaker 01: I think we don't need to stray too far from the precedent in this circuit. [00:32:57] Speaker 05: In this case, imagine the Justice Department got involved and conducted the investigation. [00:33:03] Speaker 05: What would they have needed to do to find out what you allege in the second complaint? [00:33:09] Speaker 01: Well, Your Honor, again, Hampton and Selco are instructive as to this point, what the government would need and what the government lacks in the Wisconsin case. [00:33:18] Speaker 01: In Hampton, we're talking about specific examples of fraud that were alleged by a bunch of subsidiaries of the parent company in a bunch of states all across the country. [00:33:29] Speaker 05: In Selco, Judge Chantel specifically home in... So are you saying if they went and spoke to some folks in Wisconsin, that would not have uncovered the nationwide fraud? [00:33:39] Speaker 01: I think we have to limit the analysis and what the government would need to uncover fraud to the allegations in the complaint in Wisconsin. [00:33:47] Speaker 01: And when we look at the complaint in Wisconsin, there's such limited references to E-Rate and to AT&T. [00:33:54] Speaker 05: But when they went to speak to an employee of Wisconsin Bell, they wouldn't have discovered that this was part of a corporate approach? [00:34:01] Speaker 05: They wouldn't have discovered that, you're saying? [00:34:02] Speaker 05: Again, Your Honor, under the test that applies here, we have to look at the allegations that are... I'm saying the Department of Justice investigator travels to Wisconsin, sits down with an executive or someone, and starts asking questions. [00:34:18] Speaker 05: How many questions would he have had to ask before he found out that this is part of a corporate nationwide scheme? [00:34:24] Speaker 01: I think the answer is I don't know, and that's highly hypothetical, and that's the reason why we have to stick to the allegation of the complaint. [00:34:30] Speaker 05: You're about to get asked a hypothetical question, and you're just saying there's no answer to it. [00:34:33] Speaker 05: You don't have any idea. [00:34:34] Speaker 01: I don't have an answer to that, Your Honor, because what we're instructed by, Judge Sentel said specifically in Selco, what he found was the tip-off in that case were uniform billing practices. [00:34:45] Speaker 01: In other words, a corporate-wide scheme to defraud. [00:34:48] Speaker 01: We've got that in Hampton. [00:34:51] Speaker 01: We just do not have that in this case. [00:34:53] Speaker 01: And for this reason, it's just a step back. [00:34:56] Speaker 03: I guess I would have thought you would have said that maybe they would find a problem across Wisconsin, but it's hard to figure out how in asking for Wisconsin Bell documents they were going to uncover problems in Arizona or wherever all the other states are that they are, Illinois or Indiana or all the other states that you're suing. [00:35:13] Speaker 01: I think that's right, Your Honor. [00:35:14] Speaker 01: I think that their investigation would have been limited to what was provided to them with respect to the Wisconsin complaint and the allegations they're in. [00:35:23] Speaker 01: But there's nothing in the complaint that meaningfully talks about corporate-wide practices that were the same all over the country. [00:35:31] Speaker 01: There was nothing that tipped off AT&T Corp misbehaving. [00:35:35] Speaker 01: This Wisconsin case is a bad apple case for sure. [00:35:38] Speaker 01: And when we're talking about what [00:35:40] Speaker 01: what really our position is, we're not straying from precedent. [00:35:45] Speaker 01: In fact, we embrace Hampton. [00:35:47] Speaker 01: In fact, what [00:35:50] Speaker 01: If there is an unprecedented expansion of the first-to-file rule that's being advocated, it's being advocated by the defendant. [00:35:57] Speaker 01: Because really, what we have here is a test that stays true to the first-to-file policies as well as to the reality of the situation. [00:36:09] Speaker 01: You cannot have looked at the Wisconsin complaint, the allegations therein, and said to yourself, [00:36:16] Speaker 01: There must be something else going on on a much broader scale. [00:36:19] Speaker 01: And in that way, we maintain the precedence of Hampton. [00:36:22] Speaker 01: We maintain the precedence of Selco, Bautiste. [00:36:25] Speaker 01: This is a case that remains true to those principles as well as to the goals of the first file rule. [00:36:32] Speaker 01: Thank you. [00:36:33] Speaker 05: Thank you very much. [00:36:34] Speaker 05: The case is submitted.