Schindler Elevator Corporation v. U.S. ex rel. Kirk

Are Freedom of Information Act (FOIA) responses by the Department of Labor (DOL) “reports” under the public disclosure bar of the False Claims Act?

U.S. Supreme Court No. 
Oral Argument 
March 1, 2011
May 16, 2011
Background of the Case 

Relator Daniel Kirk, a former employee of Schindler Elevator Corporation (Schindler), brought a qui tam complaint against Schindler, alleging that the company violated the False Claims Act (FCA) because it failed to comply with the Vietnam Era Veterans Readjustment Assistance Act (VEVRAA), as required by its federal contracts. 

VEVRAA requires contractors to submit “VETS-1000” reports by September 30th every year, detailing the number of employees who are veterans and covered by the statute.  The relator was a Vietnam veteran employed by Schindler until 2003 when he resigned in response to what he perceived as the company’s efforts to push him out.  In 2005 the relator filed his FCA complaint, claiming that the defendant violated the VEVRAA reporting requirements by failing to file certain reports and including false information in others.  In support of these claims, the relator presented responses from the Department of Labor (DOL) to three Freedom of Information Act (FOIA) requests submitted by his wife.

The District Court dismissed the complaint, holding that the FOIA responses constituted federal “reports” or “investigations” and therefore the Court was deprived of jurisdiction by the public disclosure bar.  The Second Circuit vacated and remanded the District Court’s decision, finding that responses to FOIA requests were neither “reports” nor “investigations.”  The defendant  appealed and was granted certiorari.  

The Court's Decision 

The Supreme Court reversed and remanded the District Court’s decision, holding that FOIA responses from the Department of Labor were “reports” within the meaning of the FCA’s public disclosure bar. 

The public disclosure bar prevents individuals from bringing qui tam suits that are “based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation, or from the news media.”  As the term “report” is not defined by the FCA, the Court relied on the ordinary meaning:  something that gives information.  The court held that this definition was consistent with the broad scope of the public disclosure bar.  The Court explained that this broad interpretation was consistent with Graham County, in which the Supreme Court also favored a broad definition of “administrative” over a narrow one.  Further, the Court found that broad interpretation would prevent individuals from bringing opportunistic lawsuits, which is the primary intent of the public disclosure bar.

Therefore, adopting the ordinary meaning of “report,” the Supreme Court held that DOL’s FOIA responses established a public disclosure.  The Court reversed and remanded the Second Circuit’s decision and ordered the Court of Appeals to proceed in accordance with this opinion and determine whether Kirk’s claims were based solely on these documents or if his claims could stand without them.