[00:00:00] Speaker 05:
Case number 23-7044, United States of America, ex-railed Mark J. O'Connor and Sarah F. Lippman, and Mark J. O'Connor and Sarah F. Lippman, balance, versus USCC wireless investment, Inc.

[00:00:14] Speaker 05:
EDF.

[00:00:15] Speaker 05:
Mr. Wolfter for the balance, Mr. Fulomilo for the appellees.

[00:00:19] Speaker 00:
Good morning, Ms.

[00:00:20] Speaker 00:
Wolfter.

[00:00:21] Speaker 00:
Good morning, Your Honors.

[00:00:22] Speaker 00:
I'm Daniel Wolfter, appearing on behalf of the appellant relators, Mark O'Connor and Sarah Lippman.

[00:00:27] Speaker 00:
I'd like to reserve three minutes for rebuttal, please.

[00:00:30] Speaker 00:
The district court dismissed this case under the public disclosure bar based on a 2008 complaint that was unsealed in 2009.

[00:00:38] Speaker 00:
Because the allegations in this case are not substantially the same as those in the 2008 complaint, that was wrong.

[00:00:45] Speaker 00:
Relators allege they independently uncovered long after that complaint was unsealed and voluntarily dismissed that King Street secretly agreed to transfer a disqualifying amount of its spectrum to USCC in 2011

[00:00:59] Speaker 00:
and then it hid that 2011 agreement from the FCC so that it would not compromise its over $100 million in discounts it received to purchase the licenses.

[00:01:10] Speaker 00:
Even those frauds that the prior complaint did disclose were voluntarily communicated to the government by relator Mark O'Connor before that complaint was unsealed.

[00:01:19] Speaker 00:
This case is thus the opposite of a parasitic lawsuit that should be dismissed under the public disclosure bar.

[00:01:26] Speaker 00:
The latest 2015 com search study showed not only that the spectrum was in use by one single network across USCC and King Street licenses, but it also showed that the network signal was coming from cell towers that were owned or leased by USCC, not King Street.

[00:01:42] Speaker 00:
This was a per se violation of the FTC's attributable material relationship or AMR rule.

[00:01:49] Speaker 00:
Governing transactions, a designated entity must report during its post-licensing unjust enrichment period.

[00:01:57] Speaker 00:
At the same time, relators were voluntarily communicating with the government about that, which prompted a second DOJ investigation.

[00:02:04] Speaker 00:
Relators uncovered that USCC, in a separate license auction, described a fictitious agreement that it claimed to have with King Street in 2012.

[00:02:12] Speaker 00:
For only a tiny portion of the King Street spectrum, USCC already controlled under the hidden 2011 agreement.

[00:02:20] Speaker 00:
Even then, King Street itself did not submit or even describe either the real or the fake agreement in its submission to the FCC, which it was independently required to do in its annual reporting during the unjust enrichment period.

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That isn't all.

[00:02:35] Speaker 00:
Relators also conducted market research and interviews and obtained customer contracts from USCC stores in three King Street markets,

[00:02:44] Speaker 00:
which led them to discover that USCC was offering wireless services to the consumers in the King Street markets under USCC's name, not King Street.

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The local construction permits that were filed to meet King Street's build-out obligations were filed by USCC.

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And antennae in the King Street licensed areas were owned and registered under USCC alone.

[00:03:06] Speaker 00:
These discoveries.

[00:03:08] Speaker 01:
This information, I mean, there was a lot of information in the FCC and SEC filings

[00:03:13] Speaker 01:
in this case that suggested, I guess, the X and the Y that would lead to an inference of fraud.

[00:03:21] Speaker 01:
And so while the relators here have uncovered other facts surrounding those allegations, how do they substantially add to what was already in the public record?

[00:03:34] Speaker 00:
Are you referring to the FCC and SEC documents that were submitted in 2014?

[00:03:39] Speaker 00:
OK, so I was addressing the 2009 complaint.

[00:03:43] Speaker 00:
But regarding those documents, which the district court did not rely on in this case, and I think it's quite important to note the defendants are relying on those documents and not seriously defending the district court's reasoning.

[00:03:56] Speaker 00:
They do not disclose anything about how King Street transferred a disqualifying amount of its spectrum in 2011.

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And if they did,

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King Street would have had to repay its licenses.

[00:04:11] Speaker 00:
And I think that the comm search study I was just describing is really indicative of that.

[00:04:18] Speaker 00:
And in fact, when the DOJ was doing its investigation, and remarkable here, we're talking about a lot of facts that are outside of the complaint.

[00:04:26] Speaker 00:
And I think that's also something to note.

[00:04:28] Speaker 00:
This is an affirmative defense.

[00:04:30] Speaker 00:
Defendants do not dispute that.

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So as I'm speaking, I may be referring to facts that aren't in the complaint.

[00:04:35] Speaker 00:
that we could absolutely allege on remand if this court thinks it's necessary to establish that this is not a public disclosure.

[00:04:44] Speaker 00:
So when we give that information to the government, the government conducted the second investigation.

[00:04:49] Speaker 00:
We then also gave information to the government about how we found this 2012 agreement that USCC submitted in a separate auction that only described a non-disqualifying amount of spectrum transfer.

[00:05:00] Speaker 00:
And when the government went back to USCC and said,

[00:05:04] Speaker 00:
You know, the relators in this case have said that everything you're describing about the 2012 agreement doesn't comport with what's actually happening on the ground.

[00:05:12] Speaker 00:
Only then did they finally turn over the 2011 agreement to the government.

[00:05:16] Speaker 00:
They had never previously done that.

[00:05:17] Speaker 00:
And the government gave that to us.

[00:05:19] Speaker 00:
And that's what will be used to make the allegations about the secret 2011 transfer in the current complaint.

[00:05:25] Speaker 00:
Now, the district court looked at the, just accepted the defendant's description that they're basically the same.

[00:05:31] Speaker 00:
It said, because the 2012 agreement showed that during the unjust enrichment period, this spectrum would be used to a very non-disqualifying degree by USCC, that's no different than the fake or the real agreement that happened a year earlier that showed a disqualifying amount of spectrum under the rule.

[00:05:51] Speaker 00:
But that can't be the case, or else the FCC would not have granted the licenses and would not have approved that they retained the $100 million in bid credits.

[00:05:59] Speaker 00:
Also important to note,

[00:06:00] Speaker 00:
In 2018, the King Street and USCC asked the FCC for approval to sell those licenses.

[00:06:08] Speaker 00:
As far as to USCC formally, that application remains pending.

[00:06:14] Speaker 00:
We're unaware of any application like that that's gone unchallenged that the FCC has held without deciding for this long.

[00:06:23] Speaker 00:
I think that, you know, to the extent the court wants to think about anything outside of the complaint,

[00:06:29] Speaker 00:
There's actually quite a bit here that shows that what our relators discovered in their independent discoveries is material of the government and was not disclosed in any of these public filings in the FCC or SEC.

[00:06:41] Speaker 00:
And in fact, back to the 2008 complaint, those fraudulent transactions that were alleged in 2008 aren't substantially the same as the pre-licensing auction frauds.

[00:06:51] Speaker 00:
the 2008 complaint alleged because the unjust enrichment fraud pleaded now could not have even plausibly been alleged in the 2008 complaint because the transactions that violated the AMR rule and the Macy rules had not yet occurred and they couldn't because the FCC had not approved King Street as a designated entity entitled to bid credits so it hadn't entered an unjust enrichment period where it would violate those rules.

[00:07:17] Speaker 01:
Does the 2008 complaint though say that

[00:07:20] Speaker 01:
the alleged fraud was obtaining the licenses and continuing to use those licenses with the discount?

[00:07:27] Speaker 00:
No, the 2008 complaint says it was obtaining the licenses and then retaining them by parking them with the designated entities until such time as they could be formally transferred to USCC.

[00:07:39] Speaker 01:
Isn't the retaining it part of the 2008 complaint?

[00:07:44] Speaker 00:
Even if this court believed that as to King Street, what that does not say is that it wouldn't just retain them, but that it would actually then just formally or give them in a secret agreement in 2011 to USCC without telling the FCC about that.

[00:08:00] Speaker 00:
That's an entirely different violation of the rule than an agreement to retain them until the unjust enrichment period is over.

[00:08:06] Speaker 00:
They didn't wait till that time.

[00:08:07] Speaker 00:
They did it in 2011.

[00:08:08] Speaker 04:
It's a different

[00:08:13] Speaker 04:
regulation in the FCC scheme, the attributable relationship as opposed to the de facto control.

[00:08:23] Speaker 04:
So if that's how we look at it, you have a pretty strong argument.

[00:08:29] Speaker 04:
But why shouldn't we think of this?

[00:08:31] Speaker 04:
I mean, this whole thing we're talking about is the allegation is that a very big company conspired to set up

[00:08:44] Speaker 04:
these sham-front companies to obtain licenses with the bid credit fraudulently.

[00:08:53] Speaker 04:
And I mean, if that's what's going on, it's just baked into that that they're obtaining the licenses in order to use them.

[00:09:02] Speaker 04:
And what you're specifying is sort of just the completion of that scheme.

[00:09:12] Speaker 04:
I don't know, sorry.

[00:09:14] Speaker 00:
No, no, no worries, Your Honor.

[00:09:16] Speaker 04:
When the big company actually uses those licenses for its own benefit.

[00:09:24] Speaker 00:
Perhaps that might be true as to USCC, Your Honor.

[00:09:27] Speaker 00:
It would not be true of these individual designated entities, which are also defendants, as we'll talk about in a little bit in the advantage case.

[00:09:35] Speaker 00:
If that's true here,

[00:09:36] Speaker 00:
that would bar the advantage complaint.

[00:09:38] Speaker 00:
An advantage did not even exist for 10 years until after this auction.

[00:09:43] Speaker 00:
And there was no relationship with this other scheming defendant, William Vale.

[00:09:48] Speaker 04:
Sorry, let's just stick with King Street for now.

[00:09:52] Speaker 04:
I didn't get the distinction between answering my question.

[00:09:57] Speaker 04:
You said, well, maybe that's right as to US cellular, but not as to King Street or

[00:10:05] Speaker 00:
was one that yes and even and as to this case and that was just the first part of my answer the other part of my answer is look if you look at the text of the amended public disclosure part it's a substantially the same transactions.

[00:10:19] Speaker 00:
It is not substantially the same transaction fraudulent transaction.

[00:10:23] Speaker 00:
to say that the transfer that occurred in 2011 after that prior complaint was dismissed is substantially the same as any of the transactions alleged in the 2008 complaint, because it's just a transaction that had not occurred if we had pled in 2008.

[00:10:41] Speaker 00:
I think a better way to think about this is if our relators had pled in 2008 that we anticipate that in 2011 during the, or let's just say during the unjust enrichment period,

[00:10:53] Speaker 00:
The King Street will not only retain the bid credits until after the unjust enrichment period, it will actually secretly transfer those licenses to USCC during the unjust enrichment period.

[00:11:05] Speaker 00:
I think that would be an implausible allegation based on speculation, right?

[00:11:09] Speaker 00:
That had to have occurred.

[00:11:12] Speaker 00:
Defendants, or I'm sorry, our clients had to discover it and share it with the government.

[00:11:16] Speaker 00:
And it prompted a second investigation, which itself, I think, is very good.

[00:11:21] Speaker 00:
good indication that it is not substantially the same allegation.

[00:11:24] Speaker 04:
There are a lot of cases under the 1986 statute.

[00:11:30] Speaker 04:
It says based upon the judicial gloss is substantially similar.

[00:11:35] Speaker 04:
And there are a lot of cases saying that if something is continuing the fraud, implementing it, you're supplying additional details.

[00:11:45] Speaker 04:
None of that is good enough.

[00:11:48] Speaker 04:
Are you saying that that law

[00:11:51] Speaker 04:
is no longer good law under 2010 or are you saying that this is something more different?

[00:12:02] Speaker 00:
I don't think to the extent this court had already said that it has to be substantially the same fraud or transactions previously, I do think that that describes what the text of the statute says and to say that this general allegation of fraud against USCC untied to any perhaps

[00:12:20] Speaker 00:
you know sham entity or untied to any of these other defendants that were part of the scheme had there was like this general modus operandi that USCC was falling that does violence to the text of the statute which says substantially the same transactions.

[00:12:36] Speaker 00:
It just can't be that this general allegation of fraud covers substantially the same transactions which didn't even occur until many years after that suit was just voluntarily dismissed.

[00:12:48] Speaker 03:
So it was your contention that that statutory language means that, let's suppose it was publicly disclosed like every single possible detail of the fraud, but up to, you know, year 2014 or something.

[00:13:17] Speaker 03:
and then you your clients disclose to the government that the fraud continued in the same manner in 2015 that that would be outside the public disclosure bar because these are different transactions.

[00:13:42] Speaker 00:
I don't think that we're saying that if all the essential elements of this substantially same fraud had already been disclosed, continuing those things would fall outside of the statutory language.

[00:13:56] Speaker 00:
What I'm saying is that to the extent the prior disclosure disclosed that kind of fraud to set up a sham entity to obtain PINDA credits, the fact that the FCC ultimately granted them and said

[00:14:09] Speaker 00:
There's not enough here to think that King Street is a sham entity.

[00:14:14] Speaker 00:
Sort of diminishes that complaint even as the basis for these allegations of fraud that are alleged now, which aren't continuing frauds.

[00:14:23] Speaker 00:
And another way to think about it is to say that King Street, the FCC determined, was not, in fact, a sham.

[00:14:30] Speaker 00:
It was a legitimate designated entity.

[00:14:33] Speaker 00:
We have that.

[00:14:34] Speaker 00:
And that's a reasonable inference.

[00:14:35] Speaker 00:
You can fawn the complaint.

[00:14:36] Speaker 00:
And because of that,

[00:14:39] Speaker 00:
But that doesn't mean that it could not then violate the other regulations from the FCC in its adjusted enrichment period and cause an FCA violation by hiding it from the SEC, which is exactly what we allege occurred in 2011 and 2012.

[00:14:54] Speaker 00:
And to the extent this court even thinks that the 2008 complaint does substantially allege the same frauds again,

[00:15:06] Speaker 00:
We have explained how Relator Mark O'Connor's own work that he voluntarily disclosed to the government prior to that unsealing makes him an original source of those allegations, and he'll always be an original source of those allegations.

[00:15:20] Speaker 03:
But he didn't disclose to the government a different legal entity did, right?

[00:15:27] Speaker 00:
No, Your Honor.

[00:15:27] Speaker 00:
And again, this is why we should be granted leave to replete if necessary.

[00:15:32] Speaker 00:
You know, again, this is an affirmative defense.

[00:15:35] Speaker 00:
But as this court sent into chapel, we don't have to plead around an affirmative defense in the complaint.

[00:15:41] Speaker 00:
This was dismissed after one motion to dismiss with prejudice, with no leave to be pleaded, even though we asked for it.

[00:15:47] Speaker 00:
And if given the opportunity to replete, if this court does think it's important,

[00:15:51] Speaker 00:
we will be able to plead and then show to the other side.

[00:15:55] Speaker 00:
And Mark O'Connor himself was sending communications to the government, voluntarily disclosing these allegations to the government in the lead up to the unsealing of that complaint when the government then asked the FCC to look at the allegations there in the partially unsealed complaint before making its determination.

[00:16:13] Speaker 01:
Did you raise this argument in the district court that O'Connor, I mean, isn't this argument forfeited?

[00:16:19] Speaker 00:
It is not forfeited for a couple of reasons, Your Honor.

[00:16:22] Speaker 00:
First of all, we not only say it in the sentence, in the first sentence of the text, how this was Relator Mark O'Connor's work, we then explain in a footnote, with case citation, how Relator's own work cannot bar their own later complaint, right?

[00:16:39] Speaker 00:
So we definitely preserve the argument.

[00:16:41] Speaker 00:
And we certainly preserved the claim that he was an original source.

[00:16:44] Speaker 00:
So any refinement of the argument on appeal is not forfeited.

[00:16:50] Speaker 00:
That's from the Supreme Court's decision in Citizens United.

[00:16:53] Speaker 00:
And yes, Yeevy Escondido, it's a long-running proposition.

[00:16:56] Speaker 00:
But the other reason is because, as we said, this is an affirmative defense.

[00:17:04] Speaker 00:
And we have argued from the outset that from the face of the complaint, it must be that the plaintiffs have pleaded themselves out of being able to show that this isn't a public disclosure.

[00:17:17] Speaker 00:
The defendants then come and they say, well, the 2008 complaint under the firm O'Connor Lampert is, you know, Mark O'Connor and Lampert is a public disclosure.

[00:17:29] Speaker 00:
And there's nothing in the face of the complaint that suggests that Mark O'Connor did not, as part of that lawsuit, communicate these allegations to the government.

[00:17:37] Speaker 04:
Sure, but he was doing it in his capacity as counsel for a different relator.

[00:17:45] Speaker 00:
Mark O'Connor was not counseled to the law firm in that case, Your Honor.

[00:17:50] Speaker 00:
So it's actually not even accurate to say he was doing it as counsel to the relator.

[00:17:54] Speaker 00:
And again, all of that is supposition that is outside of the complaint or anything because- I'm sorry, who is the relator in the 2008- Mark O'Connor's prior titular law firm.

[00:18:07] Speaker 00:
Right.

[00:18:09] Speaker 00:
But the statute doesn't say you must be the relator to be an original source.

[00:18:14] Speaker 00:
The statute literally says to be an original source means you're just an individual who, prior to the public disclosure, has voluntarily disclosed to the government the information on which allegations or transactions in the claim are based.

[00:18:31] Speaker 00:
Mark O'Connor is an individual.

[00:18:33] Speaker 00:
who disclosed these allegations to the government.

[00:18:35] Speaker 00:
There could be multiple original sources, and there's a reason.

[00:18:37] Speaker 04:
He is, but he's also a partner in the firm that is seeking the bounty that comes from being a relator.

[00:18:48] Speaker 04:
If your theory is, well, but he's also kind of off on his own doing this work in an individual capacity, it would seem to be a conflict of interest among other things.

[00:19:00] Speaker 04:
to set up his own related complaint as opposed to that of his firm.

[00:19:06] Speaker 00:
You know, we're getting quite far afield from the allegations in the complaint, but I'll say I'm not sure that conflict of interest is necessarily, you know, there's any conflict of interest between a now defunct law firm whose own prior complaint has since been dismissed and that can't pursue these allegations.

[00:19:22] Speaker 00:
And the reason Congress used this broad language about

[00:19:26] Speaker 00:
Being an original source of the information is because the government you know the government contemplated that suppose that multiple individuals before the 2008 complaint had been unseen and been communicating with the government about this they would all be an original source and and there's good reason for that and the reason is if As happened here that complaint is dismissed or for some reason the relator decides not to pursue it and

[00:19:49] Speaker 00:
Someone else who can claim original source status can pick up the torch and continue with the case.

[00:19:53] Speaker 00:
That's exactly what Mark O'Connor did here.

[00:19:56] Speaker 00:
And there's no reason to add this, you know, a textual limitation to the language that Congress has modified three times in the history of this particular provision.

[00:20:07] Speaker 00:
It added it, it modified it in 1986 and because the

[00:20:12] Speaker 00:
The sponsor of the 86 amendments thought that the courts were being too strict about the language.

[00:20:16] Speaker 00:
They modified it again in 2011 to make it even, to make the public disclosure bar even narrower and the original source status broader.

[00:20:27] Speaker 01:
What is the pleading burden on someone who's claiming to be an original source?

[00:20:32] Speaker 01:
I mean, what do they have to plead?

[00:20:35] Speaker 00:
They have to plead.

[00:20:36] Speaker 00:
I think that they have to plead that before the public disclosure,

[00:20:41] Speaker 00:
They had voluntarily disclosed to the government the information on which allegations or transactions in the claim are based.

[00:20:47] Speaker 00:
And the reason that alone is sufficient in this case, because the public documents the defense rely on are on their face.

[00:20:58] Speaker 00:
I mean, literally, the law firm is in Mark O'Connor's own name.

[00:21:02] Speaker 00:
So it's not apparent on the face of the complaint or any of the documents that the defendants rely on that

[00:21:09] Speaker 00:
He is not an original source.

[00:21:11] Speaker 00:
And as this court said in De Cepul and its other cases addressing affirmative defenses that we highlighted, defendants do not use the words affirmative defense one time in any of their briefing to dismiss at the 12b6 stage.

[00:21:24] Speaker 00:
And that's where we are on an affirmative defense.

[00:21:27] Speaker 00:
It has to be apparent from the face of the complaint.

[00:21:30] Speaker 00:
The plaintiffs cannot establish that they can defeat the affirmative defense.

[00:21:33] Speaker 00:
This may be a factual dispute.

[00:21:35] Speaker 00:
The jury will want to resolve or the court will want to resolve at a later stage.

[00:21:39] Speaker 00:
after discovery, but certainly not at this stage, the pleading stage, have the plaintiffs pleaded themselves out showing their, or an original source of the claims against King Street and the related defendants.

[00:21:50] Speaker 04:
You think it's clear that the 2010 amendment makes this into a merits issue rather than a jurisdictional issue?

[00:22:01] Speaker 04:
I just sort of the language is it's a direction to the court.

[00:22:05] Speaker 04:
The court shall dismiss.

[00:22:07] Speaker 04:
And I know there are a lot of cases in the last 15, 20 years saying, don't overuse the J word.

[00:22:14] Speaker 04:
But a direction to the court is something that might feel jurisdictional.

[00:22:23] Speaker 04:
And so one way of reading this amendment is it's still jurisdictional.

[00:22:29] Speaker 04:
for most purposes except the government can waive it by opposing.

[00:22:35] Speaker 00:
I am not aware of any legislative or statutory history case where Congress has taken the word jurisdictional out of the statute and the court has said, nonetheless, it is still jurisdictional.

[00:22:47] Speaker 00:
That would seem to me to go quite against the mountain of authority you were alluding to earlier.

[00:22:54] Speaker 00:
Um, and, and the circuit courts, this court's, uh, sister circuits had unanimously held that this change made it an affirmative defense and that, you know, I just, if this court were inclined to disagree with the other circuits, I don't think it should create a split in a case where the defendants have not made the argument.

[00:23:12] Speaker 01:
If the public disclosure bar is an affirmative defense, isn't the original source an exception to the affirmative defense on which the relators would bear the burden?

[00:23:22] Speaker 00:
Um, that is also something no circuit court has held and how the circuits have sort of thought about it.

[00:23:28] Speaker 01:
They haven't just accepted that somebody was an original source, kind of on the, I understand.

[00:23:34] Speaker 00:
So I have reviewed the circuit cases that we cite in our brief that defendants do not acknowledge that address this.

[00:23:41] Speaker 00:
And I haven't found a single one that says that does it in that stepped into query that your honor is suggesting this would be the first course to definitively so hold.

[00:23:50] Speaker 00:
And for the same reasons I was just answering Judge Katz's prior question, I don't think the court needs to even get there because the defendants simply do not address this argument at all in their briefing.

[00:24:02] Speaker 00:
We made it very clear under the standard of review in both of these appeals that this is now an affirmative defense, that this court's sister circuits have unanimously so concluded, and the defendants had nothing to say in response.

[00:24:15] Speaker 04:
Except that you

[00:24:18] Speaker 04:
failed to adequately show at this stage of the case, the voluntary disclosure to the government, which is a little hard to make sense of.

[00:24:31] Speaker 04:
If this is a merits defense on 12b6 makes perfect sense if it's still sort of jurisdictional in the sense I was asking about.

[00:24:41] Speaker 00:
So, you know, and that also is not an argument the defendants made.

[00:24:45] Speaker 00:
The defendants do not argue that the statute continues to be jurisdictional.

[00:24:51] Speaker 00:
But to the extent... No, but they say you have to show... They say we did not sufficiently plead that we voluntarily disclosed... We have the allegation that we voluntarily disclosed all of this to the government.

[00:25:02] Speaker 00:
They say that our private information,

[00:25:05] Speaker 00:
So they say that our allegations about having private information and alleging that we voluntarily disclose it to the government prior to the suit being unsealed are insufficiently alleged.

[00:25:18] Speaker 00:
We don't see how like how they were insufficiently as we alleged we have private information that we gave to the government.

[00:25:24] Speaker 00:
We know that the government actually investigated these allegations long before the complaint was unsealed.

[00:25:31] Speaker 00:
And it's just hard to suggest that they have pleaded themselves out of socialing.

[00:25:38] Speaker 00:
And that is why we would be totally fine with an order from this court saying, you know what, go back, add your obligations about how you voluntarily disclose this information to the government, and then establish that you're in fact original sources of the 2008 complaint.

[00:25:57] Speaker 03:
All right, we'll give you some time on rebuttal.

[00:26:10] Speaker 02:
Thank you.

[00:26:15] Speaker 02:
District Court correctly dismissed the relator's second amended complaint under public disclosure bar because it alleges the same fraud against the same 10 defendants in the same auctions involving the same licenses as the 2008 complaint.

[00:26:34] Speaker 04:
What about this 2011 licensing agreement?

[00:26:38] Speaker 04:
And that seems different because you could assume, could assume all the de facto controlled

[00:26:46] Speaker 04:
in the world or not.

[00:26:49] Speaker 04:
If there's a later agreement that triggers a different theory of disqualification, which is you've transferred too much spectrum, seems a little different to me.

[00:27:01] Speaker 02:
Yeah.

[00:27:02] Speaker 02:
Your Honor, a few responses to that.

[00:27:06] Speaker 02:
First, they're incorrect that a network sharing arrangement is disqualified.

[00:27:13] Speaker 02:
The FCC amended its rules in 2015 to prospectively prohibit the network sharing agreements would have been prohibited prior to that time.

[00:27:26] Speaker 04:
I'm sorry, but which reg is governed?

[00:27:28] Speaker 04:
I assume we all agree that at the relevant time,

[00:27:36] Speaker 04:
if there were a lease transferring more than 25% of any one license that would disqualify the designated

[00:27:48] Speaker 02:
Yes, but the network sharing agreement is not a lease.

[00:27:53] Speaker 02:
It was an agreement that would allow the use of King Street spectrum on a fee-for-service basis, categorized by the FCC later in 2015 as a network sharing agreement.

[00:28:07] Speaker 02:
But even putting that aside, stepping back, the entire thrust of the 2008 complaint was that US Sailor had set up each of the three designated entities as shams and fronts that would bid on spectrum licenses for the benefit of US Sailor.

[00:28:31] Speaker 02:
And that US Sailor would use that spectrum

[00:28:35] Speaker 02:
in its discretion.

[00:28:37] Speaker 02:
That's set forth in the complaint.

[00:28:40] Speaker 02:
They repeatedly allege in the 2008 complaint that US Sailor exercises de facto control over all three designated entities.

[00:28:50] Speaker 02:
And that's paragraph 64, 68, and 72 of the 2008 complaint.

[00:28:57] Speaker 02:
It specifically alleges that the ownership, financing, and control of all three were identical in all material respects.

[00:29:05] Speaker 02:
And the plate alleges that post-award fraud was already occurring.

[00:29:11] Speaker 02:
And that's it, JA 665 and 666.

[00:29:15] Speaker 02:
And it also specifically alleged that US Sailor was following the same strategy

[00:29:21] Speaker 02:
for King Street, that's at JA-653.

[00:29:25] Speaker 02:
So under any plausible definition of substantially the same, the complaint, the Second Amendment Complaints allegations are substantially the same as the 2008.

[00:29:37] Speaker 02:
And to the extent there's a temporal difference later in time,

[00:29:42] Speaker 02:
continuation of the fraud.

[00:29:43] Speaker 02:
There are many, many DC circuit cases that say later in time examples or continuations of the fraud aren't enough to evade or circumnavigate the substantial the same requirement.

[00:29:58] Speaker 03:
Aren't those cases construing substantially similar rather than substantially the same?

[00:30:04] Speaker 02:
They are, but we think other it's substantially the same or substantially the similar here.

[00:30:09] Speaker 02:
I mean here you could you have.

[00:30:10] Speaker 03:
Aren't those two things when Congress changes it substantially the same?

[00:30:16] Speaker 03:
I'm sorry from substantially similar to substantially the same.

[00:30:21] Speaker 03:
Isn't that tell you that they?

[00:30:26] Speaker 03:
want it to be kind of more restrictive?

[00:30:30] Speaker 02:
Sure, I think whatever.

[00:30:32] Speaker 02:
Whatever delta there is between substantially similar and substantially the same, we more than satisfy the same requirement because the auctions are the same.

[00:30:45] Speaker 02:
The 10 defense are the same.

[00:30:47] Speaker 02:
The fraud is the same.

[00:30:49] Speaker 02:
So there is no daylight between the allegations of the 2008 complaint and what you have before you hear.

[00:30:56] Speaker 02:
I did want to make sure I address a kind of recurring

[00:31:02] Speaker 02:
I mean, it's very well settled that you must make a request to the district court to for leave to a man and it is also very well settled that

[00:31:25] Speaker 02:
a bare bones request in an opposition to a motion to dismiss saying we would like to amend without any elaboration of what allegations would be added is not sufficient.

[00:31:41] Speaker 03:
The rule says you're supposed to attach the proposed amended complaint, doesn't it?

[00:31:44] Speaker 02:
Exactly.

[00:31:45] Speaker 02:
That's exactly right.

[00:31:46] Speaker 02:
Local rule 7.1 and 15.1 both make that clear in COWAL versus MCI communications

[00:31:56] Speaker 02:
16 F 3rd, 1271 in this court.

[00:32:01] Speaker 02:
And that is bread and butter everyday practice in the district courts of this circuit, that you don't do drive-by, oh, we can amend.

[00:32:12] Speaker 02:
We won't tell you what we will amend.

[00:32:14] Speaker 02:
Well, I mean, what did they want the district court to evaluate or to do?

[00:32:18] Speaker 02:
They did nothing.

[00:32:20] Speaker 02:
There was two and a half years they had while this, in the face of our arguments that they

[00:32:25] Speaker 02:
the public disclosure bar applied, and they did nothing to signal to the district court that there could be amendments that might change the outcome.

[00:32:35] Speaker 04:
This goes to voluntary disclosure, right?

[00:32:39] Speaker 04:
This goes to this point, amend in order to spell out that the Mr. O'Connor

[00:32:48] Speaker 04:
Disclosed to the government before the 2008 complaint.

[00:32:52] Speaker 02:
Yeah, well, it goes.

[00:32:53] Speaker 02:
It even goes backing up.

[00:32:54] Speaker 02:
It goes even to that he was an original source, which is not something even, but the district court could.

[00:33:01] Speaker 04:
Why did they have to plead any of that?

[00:33:05] Speaker 04:
If this is now a non jurisdictional defense.

[00:33:11] Speaker 04:
You know they can plead themselves out of court, but other than that, they don't have to anticipate

[00:33:17] Speaker 04:
defense and rebutted in their pleading.

[00:33:21] Speaker 02:
Your honor, generally.

[00:33:23] Speaker 02:
Let me take this in a few different ways.

[00:33:27] Speaker 02:
They never argued below that.

[00:33:31] Speaker 04:
This was an affirmative defense that would have required a sort of if you agree, it's now a merits issue rather than a jurisdictional issue as 2010.

[00:33:40] Speaker 02:
I think I think it likely is a merits issue, but it is.

[00:33:45] Speaker 04:
But for purposes of what we're talking about, which is pleading burden, I think it is very different than sort of some traditional affirmative defenses that are listed in Rule 8, like lackeys, because it is... Even though it's a merits affirmative defense, the relator in the complaint has to plead out and satisfy Twombly and Iqbal and Rule 8 and maybe Rule 9.

[00:34:15] Speaker 04:
on the original source and voluntary disclosure issues?

[00:34:20] Speaker 02:
Subtle tweak on that, which is that the statutory command to dismiss the case, that even assuming it's an affirmative defense, merits defense, not jurisdiction,

[00:34:34] Speaker 02:
Nothing has changed under the traditional rules that the court can consider items of biojudicial notice, items that are integral to the complaint.

[00:34:45] Speaker 02:
There's nothing that bars a district court at Rule 12b6 from considering those.

[00:34:50] Speaker 02:
Now, if, properly viewing all of those materials, it is obvious that the affirmative defense applies, then yes, there is a pleading burden on the plaintiff

[00:35:04] Speaker 02:
to come forward to claim the benefit of the statutory exception under the public disclosure bar.

[00:35:11] Speaker 02:
And that is what two district courts in this circuit have held.

[00:35:15] Speaker 02:
Judge Mehta in the Athena construction group case traced that through.

[00:35:20] Speaker 02:
And Judge Leon, following that case in United States, Lozano,

[00:35:25] Speaker 02:
And the eighth circuit has specifically reached this issue and has said, assuming it is perhaps even holding if it's not even if it's not jurisdictional post the 2010 amendment.

[00:35:39] Speaker 02:
Courts still and this is Amber Secchia can still dismiss.

[00:35:45] Speaker 02:
If the told me six stage if what if.

[00:35:48] Speaker 04:
complaint and the east amount of court now or yeah, let me give you the I just want to make sure I have to trigger correct.

[00:35:58] Speaker 04:
Or judicially noticeable materials conclusively establish the defense with a high enough.

[00:36:09] Speaker 04:
degree of certainty that we're comfortable doing it at an early stage.

[00:36:13] Speaker 02:
The latter.

[00:36:14] Speaker 02:
The latter, OK?

[00:36:15] Speaker 02:
And that also tracks this court's precedence with Title VII exhaustion, which there had been a long debate about whether exhaustion was jurisdictional or was merits.

[00:36:27] Speaker 02:
In Zipes, the Supreme Court said, hey, it's not jurisdictional.

[00:36:32] Speaker 02:
It's merits.

[00:36:33] Speaker 02:
And then this court, in three cases, including, I would add, a case

[00:36:40] Speaker 02:
we later cite as the proper standard of review, okay?

[00:36:45] Speaker 02:
Bowden versus United States, along with Salts versus Lehman and Williamson versus Shalala, they make clear that if defendant meets its burden, this is talking about affirmative defenses, defendant bears the burden of pleading and proving it.

[00:37:04] Speaker 02:
If the defendant meets its burden, the plaintiff then bears the burden of pleading

[00:37:10] Speaker 02:
and proving facts supporting equitable avoidance of the exhaustion defense.

[00:37:15] Speaker 02:
And then in both the Shalala case and the Saltz case, the court affirmed dismissals under 12b6 on the ground that the defendant had come forward and shown through the judicially noticeable and other materials that exhaustion had not been, the plaintiff had not exhausted.

[00:37:38] Speaker 02:
and concluded that we believe the plaintiff has the burden of pleading and proving in the district court any equitable reasons for its failure to exhaust.

[00:37:47] Speaker 04:
Sorry, I don't see Shalala.

[00:37:49] Speaker 04:
Can you just give me your best case for the conceptual point from our court or the Supreme Court and then your best district court case or what best case applying this principle to this question?

[00:38:04] Speaker 02:
Bowden versus United States from the DC Circuit.

[00:38:08] Speaker 02:
on the conceptual point.

[00:38:11] Speaker 02:
Yeah, on the conceptual point.

[00:38:13] Speaker 02:
And I'd say Judge Mehta's case in Smith versus Athena construction group and Ambrosekia.

[00:38:23] Speaker 02:
But Judge Katz says I could go one step forward, I think, to make

[00:38:28] Speaker 02:
or further to make the analysis even easier, let's say that it is a full-blown, deceptive kind of rule, and we need to find something somewhere that absolutely negates and obliterates the plaintiff on the face of the complaint.

[00:38:46] Speaker 02:
Well, at footnote one of the Second Amendment complaint, they alled, they made clear that the pre-2010 act

[00:38:58] Speaker 02:
applies to the pre 2010.

[00:39:03] Speaker 02:
Conduct and remember that this nowhere in 2024 now, but.

[00:39:09] Speaker 02:
Auction 58 was in 2000 and five.

[00:39:13] Speaker 02:
Auction 65 was 66 was in 2000 and six auction 73 was in 2000 and eight.

[00:39:21] Speaker 02:
So when you look at their complaint, the five causes of action.

[00:39:27] Speaker 02:
conspiracy, making false claims in those auctions, using false records in those auctions, obtaining false government property when the licenses were awarded.

[00:39:38] Speaker 02:
So much of that conduct occurs before 2010, when they themselves plead that the prior version of the statute applies.

[00:39:48] Speaker 02:
And that is why, frankly, they took on the burden of trying to plead

[00:39:53] Speaker 02:
that they were original sources.

[00:39:54] Speaker 02:
It's why they, in my view, filed in the Western District of Oklahoma, which has zero connection to this district, to get as far away as possible from that earlier complaint, because they were trying to evade the preclusive impact of the earlier public disclosure.

[00:40:15] Speaker 02:
So even going all the way, I think it is satisfied.

[00:40:24] Speaker 03:
All right.

[00:40:25] Speaker 03:
If you have anything else that you didn't cover and want to cover, I'll give you a minute.

[00:40:31] Speaker 03:
OK.

[00:40:32] Speaker 02:
I don't.

[00:40:36] Speaker 02:
I just haven't committed to memory.

[00:40:39] Speaker 02:
I think it's Meacham is the Supreme Court case that holds that the party

[00:40:46] Speaker 02:
seeking the benefit of a statutory exception has the burden to pleading.

[00:40:52] Speaker 02:
That's the last point I would close with.

[00:40:54] Speaker 02:
Thank you.

[00:40:55] Speaker 03:
Thank you.

[00:40:58] Speaker 03:
All right, Mr. Wooster, you were out of time, but we'll give you two minutes.

[00:41:03] Speaker 00:
I'll be very brief, Your Honor.

[00:41:04] Speaker 00:
I just want to make a couple of points.

[00:41:06] Speaker 00:
The first point is that when Judge Katz, as you asked my colleague on the other side about the 2011 agreement,

[00:41:13] Speaker 00:
His response is that our allegations about that agreement shows are factually inaccurate.

[00:41:18] Speaker 00:
That is obviously not something that the court should be resolving at the 12b6 stage.

[00:41:23] Speaker 00:
Two, a lot of the argument was centered on this pleading burden.

[00:41:28] Speaker 04:
And on that, I mean, I'm not really comfortable

[00:41:33] Speaker 04:
trying to figure out whether or not there was or wasn't a lease in the meaning of the regs.

[00:41:39] Speaker 04:
But whether that was the same kind of thing alleged in the 2008 complaint, I think we can get our arms around.

[00:41:50] Speaker 00:
I think that's right.

[00:41:53] Speaker 00:
But that is not what my colleague's response was.

[00:41:57] Speaker 00:
And two, we absolutely argued to the district court multiple times that this is now an affirmative defense.

[00:42:04] Speaker 00:
And the reason you don't, you know, you were asking about Shalala and not seeing it in the pleadings or in the briefing is because, again, my colleagues on the other side nowhere addressed this.

[00:42:16] Speaker 00:
And they could have, and we never had a chance to respond.

[00:42:19] Speaker 00:
whether these Title VII or other reticulated statutory or regulatory regime pleading burden shifting things apply in this context.

[00:42:27] Speaker 00:
And as to whether or not this is a full-blown DiCepel sort of inquiry, DiCepel very clearly says that even after Twombly, you just don't need to plead around an affirmative defense.

[00:42:40] Speaker 00:
And we never got the chance.

[00:42:42] Speaker 00:
And the reason that we never even thought to make the kinds of local rule seven attachments or anything like, we had no idea that the district court was going to ignore our argument that, look, setting aside that it's contrary to logic, fact, and law, that Mark O'Connor's own prior suit could bar his later suit as parasitic.

[00:43:07] Speaker 00:
The district court said nothing about it.

[00:43:09] Speaker 00:
So we didn't know that we would have to say something

[00:43:11] Speaker 00:
You know, apparently our allegation that this was voluntarily disclosed was insufficient.

[00:43:16] Speaker 00:
And the last point I wanted to make is that my friend on the other side said nothing about the materially ads inquiry.

[00:43:25] Speaker 00:
We explained in our briefing about how, in all events, both of the relators here are original sources, because the later allegations about the 2011 transfer

[00:43:36] Speaker 00:
not only could influence the government decision on this, it did.

[00:43:40] Speaker 00:
The government investigated.

[00:43:42] Speaker 00:
And through that investigation, found this secret 2011 agreement and gave it to us.

[00:43:47] Speaker 00:
And that itself is sufficient to show that their original source is under the second path to original source status.

[00:43:53] Speaker 00:
And my friend on the other side has not said anything about in this oral argument.

[00:43:58] Speaker 03:
Thank you.

[00:43:58] Speaker 03:
Make the case under advisement.