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Ninth Circuit rules on public disclosure issue

The U.S. Court of Appeals for the Ninth Circuit has ruled that a whistleblower need not provide
the government with information pertaining to the fraud allegations prior to the information’s public disclosure.

The ruling will allow relators Roman Zaretsky and Robert Yardley to proceed with their False Claims Act suit against Johnson Controls, Inc. The suit claims that the company rigged bids on government jobs in violation of both the Federal False Claims Act and California False Claims Act.

Johnson Controls had sought dismissal of the suit, contending that an earlier antitrust action filed by the relators constituted a public disclosure that barred the False Claims Act suit and that the relators did not qualify as “original sources,” so as to qualify for that exception to the public disclosure bar.

The lower court agreed with Johnson, holding that to qualify as an “original source” under the federal act, a prospective informer must provide the government with the pertinent information prior to the public disclosure, but only if the public disclosure occurs through a private lawsuit brought by the prospective informer.

The Ninth Circuit said that this special rule had no statutory basis and that the only notice requirement for qualifying as an “original source” is that an individual provide information to the government prior to filing suit, not prior to the public disclosure.

The Metropolitan News-Enterprise ran a story on the opinion on August 10, 2006.

The opinion in Zaretsky v. Johnson Controls, Inc., 04-55536 is available at the court’s website.

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