Ninth Circuit Affirms DOJ’s Right to Dismiss FCA Action Over Relator’s Objections

On December 18, 2015, the Ninth Circuit affirmed the dismissal of a False Claims Act (“FCA”) case against Raytheon Company based on the perceived risk by the Department of Justice (“DOJ”) that litigation would risk disclosure of classified information.  In United States ex rel. Mateski v. Raytheon Co, the DOJ moved to dismiss an FCA action challenging Raytheon’s conduct in its performance under a classified government contract, over the objections of the relator, because continued litigation of the case would substantially burden government resources and risk disclosure of classified information.  Under section 3730(c)(2)(A) of the FCA, the Government may move to dismiss a FCA action notwithstanding the relator’s objections where it demonstrates that there is a rational relationship between dismissal and a valid government purpose.

In August 2014, the district court granted the motion to dismiss.  The court held that preserving government resources and protecting classified information from inadvertent disclosure are legitimate government purposes, and that dismissal of the lawsuit was rationally related to those purposes.  The court explained that “Mateski’s claims are inextricably intertwined with classified information.  And if the Court were to dismiss the lawsuit, the government would not have to dedicate personnel to oversee discovery responses, depositions, motion papers, or other aspects of litigation to ensure that no classified information would be inadvertently disclosed.”  The court also found that Mateski’s argument that his claims had merit was irrelevant, as under Ninth Circuit precedent the Government may dismiss meritorious FCA claims if it meets the standard under section 3730(c)(2)(A).  The court also found that the Relator was not entitled to a hearing on the motion to dismiss, as he failed to make the required showing of “substantial and particularized need” for a hearing.  The Relator moved for reconsideration of the district court’s order, arguing that the case did not implicate classified information.  The court denied the motion on the grounds that Mateski failed to identify any new facts or law, and therefore failed to meet the standard for reconsideration.

The Ninth Circuit agreed with the district court that the Government demonstrated that dismissal was rationally related to the legitimate government purpose of protecting classified information, and rejected the Relator’s arguments that dismissal was arbitrary, capricious and unlawful, and that he was denied due process in the lower court.  Specifically, the court noted that Mateski did not challenge that preventing the disclosure of classified information is a valid government purpose, and held that the Government’s classified submission confirmed that dismissal would prevent inadvertent disclosure by the parties during the course of the litigation.  The court also rejected Mateski’s suggestion that the information at issue had been publicly disclosed and was therefore not classified, holding that the Government’s classification determinations are entitled to deference, and that the DOJ’s response that information may be classified in one context and not classified in another context was persuasive.  Because it found protecting classified information to be a sufficient basis for dismissal, the court did not reach the question of whether preservation of government resources was, by itself, a sufficient basis to affirm the district Court’s dismissal order.  The Ninth Circuit also held that the district court did not err in denying Mateski’s request for a hearing on the motion to dismiss, as Mateski failed to show that (1) dismissal was unreasonable in light of the existing evidence, (2) the Government failed to fully investigate the allegations, or (3) the Government’s decision was based on arbitrary or improper considerations.  Finally, the Ninth Circuit rejected Mateski’s argument that he was denied procedural due process in the trial court because the FCA claim ultimately belonged to the Government, and thus Mateski lacked a protectable property interest under the Due Process clause, and, in any event, notice of the motion to dismiss and the opportunity to oppose it in writing afforded Mateski due process.