Complex litigation case filed against Walt Disney World under the Federal False Claims Act.
Appealed to the 11th Circuit, and then Cert Denied by U.S. Supreme Court
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
UNITED STATES OF AMERICA , )
Ex rel. L. BROWN, )
) Case No. 6:06-cv- 1943-Orl-22KRS
WALT DISNEY WORLD CO. and )
REEDY CREEK IMPROVEMENT DISTRICT, )
Defendants. ) ________________________________________ )
RELATOR’S MEMORANDUM IN OPPOSITION TO DEFENDANTS’ JOINT MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION, STATUTE OF LIMITATIONS, AND FAILURE TO PROVE FRAUD WITH
PARTICULARITY REQUIRED BY RULE 9(b)
Relator, by her undersigned counsel, pursuant to this Court’s April 8, 2008 Order and Local Rule 3.01(b) MDFla., files this brief opposing the joint motion to dismiss by Walt Disney World Co. (“WorldCo”) and Reedy Creek Improvement District (“RCID”), jointly (“Disney”), Dkt. No.38, based on Fed R.Civ.P. 9(b), 12(b)(1), 12(b)(6), and 31 U.S.C.§ 3730. This action was filed on November 6th, 2006, under the False Claims Act, 31 U.S.C. § 3729 et seq. (“FCA”), on behalf of the United States government (“U.S.”). The United States Attorney declined to intervene. Dkt. No. 8. The contents of the First Amended Complaint are incorporated herein by reference.
This qui tam action is to recover damages and civil penalties due to the U.S. because of Disney’s claims for money directly from the U.S., that are false, and are knowingly so, as follows:
(a) To obtain a contract for a Contract Postal Unit (“CPU”) in Lake Buena Vista, Florida, with the U.S. Postal Service (“USPS”), RCID certified knowingly and falsely, in its offering to USPS, that it did not: (1) segregate housing facilities furnished employees, under its control, and that such prohibition would apply to its subcontractor, Walt Disney World Co. (” WorldCo”), and (2) WorldCo was not the “parent” of RCID. Resulting fraud-in-the-inducement creates liability under the FCA for each of RCID’s monthly claims for payment by U.S. since inception of the contract, because the contract was obtained, as alleged herein, by fraudulent conduct.
(b) USPS executed the Lake Buena Vista CPU contract with RCID, subject to
required approval by RCID’s Board of Supervisors (“Board”). The Board failed to be
duly elected and authorized, rendering the contract void ab initio, not just voidable. As a
consequence of Disney’s alleged fraudulent conduct, all payments by U.S. of RCID’s
monthly claims, since inception of the void contract, constitute false claims.
The Smoking Gun: Exh. 66, a book, p.63, discloses Disney was previously warned
that Disney’s acts depriving residents of their right to vote are unconstitutional.
A book does not trigger the jurisdictional bar. None of the other exhibits
makes this disclosure.
II. CENTRAL ISSUES
Disney’s motion to dismiss this qui tam action is predicated on three
First, Disney asserts this Court lacks subject matter jurisdiction. In support, two
massive volumes of 81 exhibits are submitted. Each of these exhibits, except Exh. 66,
contains “information,” which does not amount to “allegations or transactions.” FCA bars
suits based on publicly disclosed “allegations or transactions,” as specified in 31 U.S.C.
§ 3730(e)(4)(A), as distinguished from Disney’s submission of “information,”as specified
in, 31 U.S.C.§ 3730(e)(4)(B).
Second, Disney spuriously alleges, p.24:
“II. ALL COUNTS ARE BARRED BY THE STATUTE OF LIMITATIONS BECAUSE THE ALLEGED “FALSE CLAIM” OCCURRED IN 1988″
The applicable statute of limitations is “6 years after the date on which
the violation of Section 3729 is committed,’ 31 U.S.C.§ 3731(b)(1). Violations result
when false claims are submitted for payment to the government, which continue to date
Disney submits their USPS contract in Exhs. 5, 6 and 7. Concealed is the amendment
dated February 1, 2002, renewing the Representations and Certifications, within the 6
year statute of limitations. Please see attached [Exh. P-1].
Third, The false claims are pleaded with the particularity required by Rule 9(b),
alleging details including Disney’s fraudulent acts, when they occurred, and by whom.
III. STANDARD OF REVIEW
Disney’s jurisdictional challenge includes Rules 12(b)(1) and 12(b)(6) of
the Fed. R.Civ.P. In this case, however, the jurisdictional question is intertwined with the
merits under the United States Constitution relating to violation of Equal Opportunity,
segregation, and deprivation of voting rights, ultimately resulting in false claims. The
challenge, per authorities below, should proceed based on summary judgment, Rule 56.
(Disney brief, p. 20, relies on Rockwell, 127 S. Ct. at 1412. The Supreme Court ruled that
Section 3730(e)(4)’s original-source requirement is jurisdictional but did not address the
issue of intertwining.)
(1) U.S. ex rel. Hafter, et al. v. Spectrum Emergency Care, Inc. et al., 190 F.3d
1156, 1159 (10th Cir. 1999), held:
[t]he statutory provisions of 31 U.S.C.§ 3730(e)(4) implicate the district
court’s subject matter jurisdiction. Jurisdictional challenges brought under that section arise out of the same statute creating the cause of action (i.e. the False Claims Act) and are thus necessarily intertwined with the merits of the case. United States ex rel. Fine v. MK-Ferguson Co., 99 F.3d 1538, 1543 (10th Cir.1996). As such, the court’s jurisdictional inquiry should be resolved under Federal Rule of Civil Procedure 12(b)(6) or, after proper conversion into a motion for summary judgment, under Rule 56. Id. ***
Summary judgment is appropriate if the pleadings, depositions, discovery, and admissions on file, together with any affidavits, show no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law.
(2) The court in U.S. ex rel. Laird and U.S. ex rel. Mayfield v. Lockheed Martin
Engineering and Science Services Co., 336 F.3d 346, 349 (5th Cir.2003), held:
By its terms, the ‘public disclosure’ bar is jurisdictional. Other circuit courts have specifically held that “[i]n a qui tam suit brought under the FCA, the jurisdictional issue of ‘public disclosure’ clearly arises out of the same statute that creates the cause of action”Thus, a challenge under the FCA jurisdictional bar is necessarily intertwined with the merits and should be resolved pursuant to either Federal Rule of Civil Procedure 12(b)(6) or 56. See, e.g., United States ex rel. Ramsever v. Century Healthcare Corp., 90 F.3d 1514, 1518 (10th Cir. 1996). While our court has not addressed this specific jurisdictional point, we have previously stated that ‘[t]he questions of subject matter jurisdiction and the merits will normally be considered intertwined where the statute provides both the basis of federal court subject matter jurisdiction and the cause of action.’ Clark v. Tarrant Cty.798 F.2d 736,742 (5th Cir. 1986); see also Eubanks v. McCotter, 802 F.2d 790, 792-93 (5th Cir. 1986) (When the basis of federal jurisdiction is intertwined with the plaintiff’s federal cause of action, the court should assume jurisdiction over the case and decide the case on the merits,’). We see this case as presenting one such instance where questions of subject matter jurisdiction and the merits are intertwined because ‘the defendant’s challenge to the court’s jurisdiction is also a challenge to the existence of a federal cause of action.’ Williamson v. Tucker, 645 F.2d 404, 415-16 (5th Cir. 1981) (citing Bell v. Hood, 327 U.S. 678 (1945)). The proper course of action for the district court was thus ‘to find that jurisdiction exist[ed] and deal with the merits of the case.’ Williamson, 645 F.2d at 415-The district court basically followed this procedure here. It styled Lockheed’s challenge to the court’s subject matter as a summary judgment***
(3) The U. S. Supreme Court in Bell v. Hood, 327 U.S. 678, 684-85 (1946), decreed:
[w]here federally protected rights have been invaded, it has been the rule from the beginning that courts will be alert to adjust their remedies so as to grant the necessary relief [Footnote 6] And it is also well settled that, where legal rights have been invaded and a federal statute provides for a general right to sue for such invasion, federal courts may use any available remedy to make good the wrong done[Footnote7] Whether the petitioners are entitled to recover depends upon an interpretation***Thus, the right of the petitioners to recover under their complaint
will be sustained if the Constitution and laws of the United States are given one construction, and will be defeated if they are given another. For this reason, the district court has jurisdiction.
(4) The U. S. Supreme Court in Franklin v. Gwinnett County Public Schools,
112 S.Ct. 1028, 1029 (1992) decreed:
The longstanding general rule is that, absent clear direction to the contrary by Congress, the federal courts have the power to award any appropriate relief in a cognizable cause of action brought pursuant to a federal statute. See, e.g., Bell v. Hood, 327 U.S.678, 684; Davis v. Passman, 442 U.S. 228, 246-247.
(5) In Marbury v. Madison, 5 U.S. 137, 1 Cranch 137, 163 (1803), Chief Justice
Marshall observed that our Government “has been emphatically termed a government of
laws, and not of men. It will certainly cease to deserve this high appellation, if the laws
furnish no remedy for the violation of a vested legal right.”
IV. RELATOR’S OPPOSITION TO DISNEY’S DISPOSITIVE MOTION
(A) GENERAL BACKGROUND
Reedy Creek Improvement District (“RCID”) made a written offer to USPS to
operate a Contract Postal Unit (“CPU”) on premises controlled by Disney Development
Company (“DDC”). It is in the city of Lake Buena Vista (“Buena”), one of two cities
within RCID’s jurisdiction. In the offer, RCID states DDC has a binding commitment to
lease the premises for such CPU.
1. First Cause of Action includes two claims: one related to RCID’s
certification of nonsegregated housing facilities for employees; and the second, denial
that RCID has a parent company, as that term is expressly specified in the proposal.
Proof that either or both certifications are false voids the contract ab initio, rendering
every payment a false claim.
(a) As to nonsegregation:
(i) The offer includes “Certification of Nonsegregated
Facilities” covering housing facilities for employees. It provides that RCID or
“subcontractor” agree that its breach is a violation of the Equal Opportunity Clause.
The proposed contract warns that “criminal penalty (fine or imprisonment),” pursuant to
18 U.S.C. 1001, applies for false statements in the proposal.
(ii) The proposal states that direct supervision will be
provided by the Services Supervisor of Walt Disney World Company (“WorldCo”).
(iii) Further, due to a “management agreement” between RCID
and WorldCo, if additional back-up of operators is required, persons employed at
WorldCo would be allowed to provide support.
(iv) The proposal further states that this staff is committed to
providing quality guest service, as much as the “Walt Disney World Co. is so
(v) Where disadvantaged contractor improperly diverted work to
another contractor, full amount paid to contractor deemed government loss, despite the
fact that work was completed to contract terms. United States v. Brothers Const. Co. of
Ohio, 219 F.3d 300, 317-18 (4th Cir.), cert denied, 531 U.S. 1037 (2000).
(vi) Harrison and U.S. v. Westinghouse Savannah River Co., 176
F.3d 776, 785 (4th Cir. 1999), fn 7, states, “In fact, there is no requirement that the government
have suffered damages as a result of the fraud.” (Citations omitted.)
Fraud-in-the Inducement Cases
Another set of cases involves False Claims Act liability for claims ***
the fraud-in-the-inducement cases. In these cases, courts, including the Supreme Court, found False Claims Act liability for each claim submitted to the government under a contract, when the contract***was obtained originally through false statements or fraudulent conduct.***The Court
found that each claim submitted constituted a false or fraudulent claim:
The fraud did not spend itself with the execution of the contract.***The
initial fraudulent action and every step thereafter taken, pressed ever to the ultimate goal- payment of government money to persons who had caused it to be defrauded.***
[i]n many of the cases cited above the claims that were submitted were
not in and of themselves false. In each of the false certification cases the actual ‘claim’ submitted was not false.***the work contracted for was actually performed to specifications at the price agreed. False Claims Act
liability attached, however, because of the fraud surrounding the efforts to obtain the contract or benefit status or the payments thereunder.***
Thus, any time a false statement is made in a transaction involving a call
on the U.S. fisc, False Claims Act liability may attach. The test for False Claims Act liability distilled from the statute and the sources discussed above is (1) whether there was a false statement or fraudulent course of conduct; (2) made or carried out with the requisite scienter; (3) that was material; and (4) that caused the government to put out money or to forfeit moneys due (i,e,, involved a ‘claim’). Id. 787-88.
2. As to control of RCID by a parent company, WorldCo:
(i) In response to the query whether RCID is controlled
by a parent company as described in the offer, RCID certified, “No.”
(ii) In the Offer, RCID entered the name RCID under the
caption, “Company, Name & Address.”
(iii) The Supreme Court in Cook County, Illinois v. United
States ex rel. Chandler,.538 U.S.119 (2003), held local governments are “persons”
amenable to qui tam actions under the FCA.
(iv) Each of the RCID Supervisors received 5 acre grants from
WorldCo, or Ranch and Grove Holding Corp., which has merged into WorldCo. Exhs.
55, 56, 57, 58, and 59. WorldCo or affiliate have an option to buy these grants back at
original token cost. The total market value is well over $500,000, giving WorldCo
coercive financial leverage over each of the five RCID Supervisors.
(v) The Organizational Chart of employees and departments of
Reedy Creek Energy Services (“”RCES”), a division of WorldCo, see attached [Exh. P-3], is
integrated into RCID’s Organizational Chart, see attached [Exh. P-2], as included in the Annual Report, Utility System, Reedy Creek Improvement District, as of September 30, 2006, prepared
by R.W. Beck, to comply with RCID’s bond indenture. Obtained on the internet.
(vi) WorldCo and wholly owned subsidiaries of The Walt
Disney Company provide services to RCID, which include financial and other
administrative services; management and construction of various capital improvements;
operation and maintenance of various RCID water control facilities; and maintenance of
certain right of ways and RCID property. RCID’s Enterprise Fund had accounts
receivable of $13,598,064 and accounts payable of $6,337,062 with WorldCo and other
subsidiaries of The Walt Disney Company. In connection with the termination of an asset
lease in 2003, RCID agreed to pay WorldCo $4,595,021 over six years. See attached [Exh. P-4].
This information was included in the report of Ernst & Young, 1/18/2008.
3. The Second Cause of Action includes multiple claims:
(a) Under color of law, WorldCo’s grants of approximately five acres to
each of the Supervisors, all nonresidents of RCID, to qualify them to hold office and
vote in RCID, are void. These grants constitute a practice different from that applied to
residents otherwise qualified, in violation of the Florida Election Code, Ch. 104.0515, a
felony. All payments by USPS constitute false claims because the contract is void, having
been signed by Supervisors not duly authorized.
(b) Under color of law, RCID permits non-landowner residents to vote on
the issuance of general obligation bonds but forbids them to vote on all other issues, in
violation of the United States Constitution and Florida law. This is a practice treating
voters differently, a further violation, Florida Election Code, Ch.104.0515, a felony. As a
result, false claims are paid by the United States to RCID under a contract not duly authorized.
(c) The Florida Election Code, Ch. 104.0515, one person/one vote,
supersedes the voting provisions in the Enabling Act, one acre/one vote, because RCID
has general governmental responsibility. As a result, false claims were paid by USPS
because the Supervisors were not duly elected and authorized to execute the contract.
(d) Grants to the five Supervisors were made for a total of less than $500.
The value far exceeds $500,000. The excess is an unlawful gratuity, voiding the election
and resulting in false claims to USPS, because the Supervisors are not duly elected and
authorized to execute the contract.
(e) WorldCo or its affiliates have the right to buy back the Supervisors’
five acre grants at any time. This negates the requirement that the Supervisors own
“freehold” estates. False claims result because the Supervisors do not own the freehold
estates required to hold office and perform as Supervisors under the Enabling Act.
(f) Buying five acres for each, worth a total of substantially greater than
$500,000 for $500 or less, and having to transfer back at the original cost of $500 or
less when their terms of office end, are sham transactions. False claims result because
the USPS contract is not duly authorized under such conditions.
(B) LEGAL BACKGROUND
(1) DISTINCTION BETWEEN PUBLICLY DISCLOSED “INFORMATION” AND “ALLEGATIONS OR TRANSACTIONS.”
(a) Cooper v. Blue Cross and Blue Shield of Florida, Inc., 19 F.3d 562,
565 n.4 (11th Cir. 1994) (per curiam):
This Court uses a three-part inquiry to determine jurisdiction over an FCA claim based on publicly disclosed information: “(1) have the allegations made by the plaintiff been publicly disclosed; (2) if so, is the disclosed information the basis of the plaintiff’s suit; (3) if yes, is the plaintiff an “original source’ of that information. (Emphasis added.)
(b) “[W]hen general allegations of widespread fraud in an industry are
publicly disclosed, does the jurisdictional bar of the False Claims Act preclude a qui tam
plaintiff from bringing suit for the same kind of fraud against a defendant who has not
been specifically identified in the public disclosures?” The court in Cooper, held:
The allegations of widespread MSP fraud made in sources in which BCBSF was not specifically named or otherwise directly identified are insufficient to trigger the jurisdictional bar.***See United States ex rel. Stinson, Lyons, Gerlin & Bustamante v. Provident Life & Acci. Ins. Co., 721 F.Supp. 1247, 1258 (S.D.Fla.1989)***(qui tam suit not barred when neither defendant’s name nor its alleged fraudulent conduct was disclosed in government reports); 1990 Implementation Hearing, at 6 (“The publication of general, non-specific information does not necessarily lead to the discovery of specific, individual fraud which is the target of the qui tam action”)(Statement of Sen. Grassley). (Emphasis added.)
(c) On the subject of “based on” or “supported by,” the court’s dicta,
“the language is most naturally read to preclude suits based in any part on publicly
disclosed information See id.,” uses the term “information” as constituting allegations,
otherwise the order vacating dismissal of Cooper in that case could not have been issued.
(d) Cooper involved a Government Accounting Office report that
criticized a particular Blue Cross and Blue Shield of Florida (“BCBSF”) payment
monitoring plan and noted a potential conflict of interest. The report, however, did not
allege any wrongdoing by BCBSF, so the court found it to “not constitute a ‘public
disclosure of allegations or transactions’ that BCBSF knowingly violated” the law. Id. at
567. The court did not invoke the transactional aspect of the bar despite the fact that the
hospital payments and monitoring plan detailed in the report were also the subject
transactions of the relator’s claim of fraudulent BCBSF conduct.
(e) Wang v. FMC Corporation, 975 F.2d 1412, 1418 (9th Cir. 1992) states:
Courts sometimes speak loosely of barring a qui tam suit because it is
based on ‘publicly disclosed information.’ *** But the Act bars suits
based on publicly disclosed ‘allegations or transactions,’ not information. 31 U.S.C. 3730(e)(4)(A). The point is not mere semantics: the Act distinguishes between ‘allegations’ and the ‘information on which the allegations are based.’ 31 U.S.C. 3730(e)(4)(B). The Act appears to be invoking the common logical
distinction between an assertion and its proof.***No doubt when the courts speak of ‘publicly disclosed information,’ they mean both the allegation of fraud and all information proving the allegation that has made its way to the public.
(f) United States ex rel. Springfield Railway Co.,14 F.3d 645, 653
(DC Cir. 1994) vacated dismissal and remanded.
As the Ninth Circuit recently recognized,*** the Act bars suits
based on publicly disclosed ‘allegations or transactions,’ not information.’ ***We too find a distinction between ‘allegations or transactions’ and ordinary ‘information’ as a matter of common usage
and sound interpretation of the FCA. The pay vouchers and telephone
records***were not in and of themselves sufficient to constitute
‘allegations or transactions’ of fraudulent conduct within the meaning of the FCA jurisdictional bar.
(g) United States ex rel. Precision Company, 971 F.2d 548, 553-54 (10th
Allegations that Defendants ***stole crude oil and natural gas from Federal and Indian lands were publicly disclosed on three occasions prior to Precision filing this qui tam action.***majority shareholder, raised allegations of crude oil theft in three previous lawsuits *** The record before us leaves no doubt Precision’s complaint is ‘based upon’ publicly disclosed allegations and Precision must therefore qualify as an original source in order to proceed with its claim,
(h) In Dingle v. Bioport Corporation, 388 F.3rd 209, 209,12 (6th Cir. 2004), the appellate court held:
Either a public disclosure which includes an allegation of fraud,
or a public disclosure that describes a transaction that includes
both the state of facts as they are plus the misrepresented state
of facts must be present to eliminate jurisdiction in a case.
(i) A New York district court in U.S. ex rel. Mikes v. Straus et al., 931
F. Supp.248 (S.D.N.Y. June 26, 1996)(Motion to certify appeal denied, 939 F, Supp 301
(S.D. N.Y. 1996)), held that a qui tam suit alleging false claims was not jurisdictionally
barred under §3730(e)(4) because there was no public disclosure of ‘allegations or
The critical issue before the court was whether the “relator’s allegations
were publicly disclosed elsewhere and prior to the qui tam action” ; not just information
concerning the allegations. Defendant had previously filed a civil suit for breach of
contract. The defense alleged that the contractual agreement was illegal because it called
for referral payments. Defendants in the Mikes case argued that the relator’s related
allegations were based upon the allegations of referral payments. The court did not agree.
“The information in the [prior case] cannot rise to the level of
‘allegations or transactions’ so as to prevent the exercise of jurisdiction,” the court
stated. Mikes did not allege fraud for receipt of referral fees. Rather, she alleged that the
physicians had knowingly submitted fake Medicare claims for unnecessary MRIs. Id. 254.
According to the court, the prior litigation documents lacked any allegation of false or
fraudulent claims knowingly filed with the Government.
As the court explained, under §3730(e)(4)(A) “jurisdiction hinges upon
the public disclosure of ‘allegations or transactions’ occurring prior to a qui tam
complaint, not the public disclosure of ‘information’ relating to the allegations. It is the
distinction between allegations and information that is crucial.” Id. 258. Thus, Mikes’
allegations were not publicly disclosed within the meaning of that provision prior to the
filing of her qui tam action.
(j) United States ex rel.. Feingold v. AdminaStar Federal, Inc. et al.,
324 F.3d 492, 495(7th Cir. 2003), states:
“[A] ‘public disclosure’ exists under §3730(e)(4)(A) when the
critical elements exposing the transaction as fraudulent are placed
in the public domain.”
(k) Exhs. Disclose Information Not Allegations
Disney’s 81 Exhibits, except Exh. 66, contain information but not
required “allegations or transactions” knowingly done in order to bar jurisdiction.
Allegation/ Not No
Exh. Description Transaction Named Bar
1 Personal Injury None RCID Personal Letter
2 Enabling Act None WorldCo Legislation
3 Publicity None WorldCo Publicity
4 Financials None WorldCo Financials
5 Postal Operations None RCID/ Manual
6. USPS Contract None Contract
7. ” ” ” ”
8. Census Bureau Letter None RCID/ Letter
9 Buena City Letter None RCID/ Letter
10 Census Bureau Letter None RCID/ Letter
11 Census Bureau Letter None RCID/ Letter
12 Encyclopedia Extract None RCID/ Encyclopedia
13 Encyclopedia Extract None RCID/ Encyclopedia
14 Washington Post None
15 Orlando Sentinel None WorldCo
16 Los Angeles Times None RCID/
17 Orlando Sentinel None
18 Book Extract None Book
19 Collegian Chronicles None RCID
20 Florida Times-Union None
21 Orlando Sentinel None
22 Orlando Business Journal None WorldCo
23 Orlando Sentinel None WorldCo
24 New York Times None RCID/
25 Orlando Sentinel None RCID/ Advertisement
26. Orlando Sentinel None RCID/ Advertisement
27 Orlando Sentinel None RCID/ Advertisement
28 Orlando Sentinel None RCID/ Advertisement
29 Orlando Sentinel None RCID/ Advertisement
30 Orlando Sentinel None WorldCo Advertisement
31 Orlando Sentinel None WorldCo Advertisement
32 Buena City Ordinance None RCID/ Legislative
33 Buena City Ordinance None RCID/ Legislative
34. Buena City Ordinance None RCID/ Legislative
35 RCID Resolution None WorldCo Legislative
36 Lang v RCID & WorldCo None
37 ” ” ” None
38 Sipkema v. RCID None
39 Chicago Tribune Book Review None WorldCo
40 Orlando Sentinel None WorldCo
41 Orlando Sentinel None WorldCo
42 State of Florida v. RCID None WorldCo
43 Black’s Law Dictionary None RCID/ Dictionary
44 Glossary of R.E.Terms None RCID/ Dictionary
45 Chicago Title – Words None RCID/ Dictionary
46 Oppaga Report None Legislative
47 Florida statute None RCID/ Legislative
48 FL Attny Genl Opinion None RCID/ FL Attny Genl Op.
WorldCo ” ” ” ”
49 FL Div Elections Opinion None RCID/ FL Div Elections Op
WorldCo ” ” ” ”
50 FL Div Elections Opinion None RCID/ FL Div Elections Op
WorldCo ” ” ” ”
51 Zedalis v. Foster None RCID/ Def. Names Omitted
WorldCo ” ” ”
52 Avery v. Midland Cty, TX None RCID/ Def. Names Omitted
WorldCo ” ” ”
53 Turner v. Fouche None RCID/ Def. Names Omitted
WorldCo ” ” ”
54 Woodward v. Deerfield Bch None RCID/ Def. Names Omitted
WorldCo ” ” ”
55 Deed No RCID Deed /DeWolf
56 Deed None RCID/ Deed-Duda
57 Deed None RCID/ Deed-Greer
58 Deed None RCID Deed-Hames
59 Deed None RCID Deed-Schoolfield
60 RCID Comprehensive Plan None WorldCo RCID Plan
61 Orlando Sentinel None WorldCo
62 Orlando Sentinel None
63 Associated Press None
64 Miami Herald None
65 Orlando Sentinel None
66 Book Extract * *Book – alleged
67 Deseret News None
68 Michigan Law Review None Mich. Law Review
69 Harvard Business Review None Harvard Business Rev
70 New York Times None
71 NBC Today None
72 Orlando Sentinel None
73 Orlando Sentinel None WorldCo
74 Orlando Sentinel None
75 Orlando Sentinel None RCID
76 Orlando Sentinel None
77 Agreement Orange Cty & RCID None WorldCo Agreement
78 Orlando Sentinel None
79 Miami Herald None
80 Orlando Sentinel None
81 Orlando Sentinel None
(l) Disney’s Wrongful Acts Are Done Knowingly
(i) The book by Richard E. Foglesong, Married To The Mouse (Yale U. Press
2001), pp. 61- 63, discloses:
Disney acted on their consultant’s advice, creating the Reedy Creek Drainage District in May 1966.***The drainage district only partially solved Disney’s governance problem, however. It created a proprietary government to move dirt and water but left how the community would be governed once people lived there. How could the company protect their investment***when they had residents who could vote?***The answer from ERA was to limit the scope of democracy*** They proposed a compromise rather than abandoning democracy altogether. The compromise, on one hand, was a bifurcated government with planning and development under landowner control, and the remaining functions of government entrusted to citizens and elected
officials. Democracy would still apply to health, safety, welfare, education, and civil rights, as well as the housekeeping affairs of government. On the other hand, this arrangement would be temporary ; the developer’s proprietary authority would be relinquished ‘after a reasonable period of years, after the property is almost fully developed, or when the developer retains ownership of less than 20 percent of the land.’ Once it was safe, full democratic control was okay.
In more lawyerly terms, the same issue was addressed
in a May 23, 1966, memo that attorney Paul Helliwell wrote to Walt Disney and other top company executives. The memo summarized their earlier conversations regarding the threat of county government. Helliwell
noted, for example, that Orange County had adopted a comprehensive zoning ordinance in 1964 that might limit the company’s ‘freedom of action.’ In response, he proposed a Disney-controlled government with powers ‘superseding to the fullest extent possible under law, state and county regulatory authorities.’ Like the drainage district, the governing body would be elected on the principle of acreage: one acre equaled one vote. But how could this governing body be established democratically, in a way that observed constitutional niceties, and for how long could landowner control continue?
Helliwell’s answer was to found a two-tier government, with the landowner-controlled government embracing the whole property and, beneath it, one or more municipalities exercising carefully circumscribed powers. Creating the municipalities, would solve two problems. First, it would prevent residents from incorporating ‘independent of WDP [Walt Disney Productions] and its program.’ Second, it would empower the Disney Co. to exercise planning and zoning authority, while shielding itself from external regulation. Florida law appeared to say that only a popularly elected government could regulate buildings and land use, explained Helliwell. This was a potential stumbling block for their proprietary government, since they wanted to avoid external regulation. But Helliwell had an ingenious solution: to create their own municipalities, give them popularly elected governments, and secure regulatory powers for them. Then they would subordinate the municipalities to their proprietary government.
Helliwell’s scheme was not foolproof. There was still the problem of who would govern the municipalities, and how the Disney landowner could permit popular government and not be bound by it. The law was constraining, explained the attorney. They could name the initial members of the municipal governing boards, possibly for as long as four years, but after that residents would elect the board. He cautioned against a property
qualification for voting, an idea that Disney executives had discussed, saying it was unconstitutional.
Walt’s response to the memo clearly indicates his thinking on these issues. He wrote comments directly on the memo, which was found in his desk when he died. Every place where Helliwell referred to the problem of ‘permanent residents,’ Walt crossed it out and wrote ‘temporary residents/tourists.’ Despite his fanciful mind, he clearly grasped the political reality; if people lived there, they could vote there, undermining the company’s political control. And where the memo explained that, legally, their private government could not exercise planning and zoning powers unless it was popularly elected, Walt switched from lead pencil to red grease pencil, writing “NO” in inch-high letters at the margin. The message, extremely important for later events, seems clear: Walt wanted no permanent residents in his model community.
(ii) The U.S. Supreme Court in Heckler v. Community Health Services,
467 U.S. 51, 62 (1984) ruled:
Protection of the public fisc requires that those who seek public funds act
with scrupulous regard for the requirements of law; respondent could expect no less than to be held to the most demanding standards in its quest for public funds. This is consistent with the general rule that those who deal with the Government are expected to know the law and may not rely on the conduct of Government agents contrary to law.
(2) EXCLUSIVE TYPES OF PUBLIC DISCLOSURE
(a) United States ex rel Williams v. NEC Corp., 931 F.2d 1493, 1499
(11th Cir, 1991), held that the disclosures specified in the FCA are exclusive:
[T]he methods of public disclosure set forth in section 3730(e)(4)(A)
are exclusive of the types of public disclosure that would defeat jurisdiction under that section. The list of methods of “public disclosure” is specific and is not qualified by words that would indicate that they are only examples of the types of “public disclosure”
to which the jurisdictional bar would apply. Congress could easily have used “such as” or “for example” to indicate that its list was not exhaustive. But it did not; however, we will not give the statute a broader basis than that which appears in its plain language,
Under section 3730(e)(4)(A), a qui tam action is barred only if based upon information disclosed in ‘a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation’ 31 U.S.C. Sec. 3730(e)(4)9A). A plain reading of this language reveals that ‘congressional, administrative or Government Accounting Office’ modifies ‘report, hearing, audit, or investigation.’
Any other reading of that phrase would be illogical. Because Williams’s report on bidding practices was not issued by Congress, an administrative agency, or out of the Government Accounting Office, therefore, it is not a ‘public disclosure’ within the meaning of section 3739(e)(4)(A).
Because we find no ‘public disclosure’ under section 3730(e)(4)(A),
Williams’s qui tam is not jurisdictionally barred under that section. Therefore, we need not reach the question of whether Williams was an ‘original source’ of the information that formed the basis of his suit.
The ‘original source’ inquiry only becomes necessary once a court makes a factual determination that the particular qui tam suit before it was based upon information that was publicly disclosed.
(b) “Book” is not listed in §3730(e)(4)(A).
(c) Freedom of Information Act (FOIA) is not listed in
(i) United States ex rel. Haight v. Healthcare West, 445 F. 3d
1147, 1156 (9th Cir. 2006):
We hold that whether a document obtained via FOIA request should invoke the jurisdictional bar should be determined by reference to the nature of that document itself. If the document obtained via FOIA does not itself qualify as an enumerated source, its disclosure in response to the FOIA request does not make it so.
(ii) The sponsors of the modern False Claims Act support the
position that not all FOIA disclosures should trigger the
public disclosure bar.
(iii) False Claims Act, 106th Cong. 1st Sess. in 145 Cong Rec E
1546-1547 (July 14, 1999) (Berman). Representative
Berman, on behalf of himself and Sen Grassley, noted:
[W]e want forcefully to disagree with cases holding that qui tam suits are barred if the relator obtains some, or even all, of the information necessary to prove fraud from publicly available documents, such as those obtained through a Freedom of Information Act (FOIA) We believe that a [relator] who uses
their education, training, experience, or talent to uncover a fraudulent scheme from publicly available documents, should be
allowed to file a qui tam action if, absent the relator’s ability to
understand a fraudulent scheme, the fraud would go undetected, then we should reward relators who with their talent and energy come forward with allegations snd file a qui tam suit. This is especially true where a relator must piece together facts exposing a fraud from separate documents.
(d) The court in United States ex rel. Cooper, fn 7, states
We are reluctant to consider legislative history because “debates in Congress are not appropriate or even reliable guides to the meaning of the language of an enactment.”***But statements by committee chairmen in charge of a bill or the sponsor or author of legislation are entitled to some weight. Id; see also, S.& E. Contractors, Inc. v. United States, 406 U.S. 1, 12-15 n. 9, 92 S.Ct. 1411, 1418-19, n. 9, 31 L.Ed. 2d 658 (1972).
(e) Legislative reports are not listed in §3730(e)(4)(A).
(3) OMMISSION OF NAME DISQUALIFIES DISCLOSURE
U.S. ex rel. Cooper v. Blue Cross and Blue Shield of Florida, Inc. 19 F.3d 562, 566 (11th Cir.1994), ruled:
Because we consider it to be crucial whether BCBSF was mentioned by name or otherwise specifically identified in public disclosures, we consider separately those sources in which it was identified and those in which it was not.
(4) STATUTE OF LIMITATIONS
(a) In an action alleging violations of the FCA, the statute of limitations
provision contained within the FCA controls. See 31 U.S.C. §3731(b).
(b) Under §3731(b)(1), a six year statute of limitations is mandated.
(c) A civil action under section (b)(2) may not be brought more than 3
years after the date when facts material to the right of action are known or reasonably
should have been known by the official of the United States charged with responsibility
to act in the circumstances, but in no event more than 10 years after the date on which the
violation is committed.
(d) The contract was amended February 1, 2002, renewing the
Representations and Certifications. See attached [Exh. P-1].
(5) REPRESENTATIONS AND CERTIFICATIONS IN RCID’S OFFER
(a) On pages captioned, “REPRESENTATIONS AND CERTIFICATIONS”
The offeror is recorded as “Reedy Creek Improvement District,” followed by,
“The offeror makes the following representations and certifications as a part of the offer
identified above. (Check and /or complete all applicable boxes and blocks.***”
“3. Parent Company and Employer Identification Number
(a) Is the offeror owned or controlled by a parent company as described below _ Yes, _ No.
(For the purpose of this offer, a “parent company” is defined as one which either owns or controls the activities and basic business policies of the offeror. To “own another company” means the parent company must own at least a majority (more than 50 percent) of the voting rights in that company. To “control another company,” such ownership is not required; if another company is able to formulate, determine, or veto basic business policy decisions of the offeror, such other company is considered the parent company of the offeror. This control may be exercised through the use of dominate minority voting rights, use of proxy voting, contractual arrangement, or otherwise.)
(b) If the answer to (a) is “Yes”, offeror shall insert in the space below the
name and main office address of the parent company.”
RCID answered “No” by a check mark.
“4. Certification of Nonsegregated Facilities
By the submission of this offer, the offeror certifies that he does not maintain or provide for his employees any segregated facilities at any of his establishments, and that he does not permit his employees to perform their services at any location, under his control, where segregated facilities are maintained. He certifies further that he will not maintain or provide for his employees any segregated facilities at any of his establishments, and that he will not permit his employees to perform their services at any location, under his control, where segregated facilities are maintained. The offeror or subcontractor agrees that a breach of this certification is a violation of the Equal Opportunity Clause in this contract. As used in this certification, the term “segregated facilities” means any waiting rooms, work areas, rest rooms and wash rooms, restaurants and other eating areas, time clocks, locker rooms, and other storage or dressing areas, parking lots, drinking fountains, recreation or entertainment areas, transportation, and housing facilities provided for employees which are segregated by explicit directive or are in fact segregated on the basis of race, color, religion, or national origin, because of habit, local custom, or otherwise.”
“5, Control of Space
(a) The space proposed by the offeror is in a building the offeror _owns, _leases,
_has a binding commitment to lease***
RCID checked “has a binding commitment.”
(b) If answer to (a) is “binding commitment” state type of commitment***written) and furnish name and address of owner ______________”
RCID inserted: “Disney Development Co., P.O.Box 22771
Lake Buena Vista, FL 32830-2771” ***
(e) The unit _will, _will not, be operated in a facility exclusively devoted to
providing contract postal service.***”
RCID checked “will.”
(b) Under the caption “Contract Provisions”:
“Proposals must comply with all provisions, representations, and specifications
whether attached or included by reference. These are part of the contract even if not
returned with your offer***”
d. 18 U.S.C. 1001. States the criminal penalty (fine or imprisonment) for false
statements in your proposal.”
“Conditions – Offerors must give accurate and complete information required in this
(c) Under the caption “General Provisions:”
“1. Payment – The agreed annual rate for a contract will be paid to you in 12 equal
25. Equal – The Postal Contracting Manual prohibits discrimination based on
Opportunity race, color, religion, sex, national origin, or physical or mental
handicap or against disabled veterans.***”
(6) EACH RELATOR CLAIM IS A SEPARATE CAUSE OF ACTION
(a) Each of the Relator’s claims, within the First and Second Causes of
Action, as referred to in this brief, is separate with differing allegations. Rockwell
International Corp. et al. v. United States et al., 127 S.Ct.1397, 1410 (2007), quoting United States ex rel. Marena v. SmithKline Beecham Corp., 205 F.3d 97, 102 (CA3 2000)
recognizes the need to consider each claim on its own merits. The Supreme Court stated:
As then-Judge Alito explained, ‘[t]he plaintiff’s decision to join all of his or her claims in a single lawsuit should not rescue claims that would have been doomed by section (e)(4) if they had been asserted in a separate action. And likewise, this joinder should not result in the dismissal of claims that would have otherwise survived.’
(b). The court held in United States ex rel. Hays v. Hoffman et al., 325 F.3d 982, 990 (8th Cir. 2003):
[W]e must resolve the original source issue on a claim-by-claim basis. The jury found the defendants committed eleven types of false claims *** defendants concede that Hays was the original source of one allegation***.
In United States v. Neifert-WhiteCo., 390 U.S. 228, 233 (1968), the Supreme
[t]he False Claims Act was broadly to protect the funds and property of the
Government from fraudulent claims, regardless of the particular form, or function, of the government instrumentality upon which such claims were made.’
[t]he False Claims Act***reaches***all fraudulent attempts to cause the Government to pay out sums of money.
(8) RELATOR’S ALLEGATIONS ARE ORIGINAL
RCID’s repeated certifications, signed by the president of RCID’s Board of
Supervisors, in their bond indentures, confirm that Relator’s allegations are original, see attached
As of the date of this Official Statement, there is no pending litigation restraining or enjoining the issuance or delivery of the Series 2005 Bonds or the proceedings and authority under which they are to be issued, or which would adversely affect the District’s ability to pay principal of and interest on the Series 2005 Bonds. Neither the creation, organization or existence of the District, nor the title of the present members of the Board of Supervisors of the District or other officers of the District to their respective offices is being contested.
(C) SUNDRY STATEMENTS IN DISNEY’S MOTION & BRIEF
Response to Disney’s Motion and Memorandum is a complete denial, including allegations not specifically addressed. A supplement to the foregoing response follows:
PP.4, 5, A.1. Disney’s interpretation of confidential settlement negotiations is
denied. Exh. 1 is a fair example of differences in interpretation; however, not relevant.
The court in United States v. Griswold, 24 F. 361, 366 (D Or 1885) explained that the
original False Claims Act, and specifically the qui tam provision:
[w]as passed upon the theory, based on experience as old as modern civilization, that one of the least expensive and most effective means of preventing frauds on the treasury is to make the perpetrators of them liable to actions by private persons acting, if
you please, under the strong stimulus of personal ill will or the hope of gain.
P.5, A.2. RCID differs from other special districts because the broad scope of
their governmental authority mandates one person rather than one acre per vote.
P.6, B The issue relates to false claims resulting from false certifications in an
effort to induce the award of the contract.
P.7, C WorldCo is a subcontractor jointly bound to the certifications.
P.8 RCID and WorldCo, employing over 50,000, many black persons and
Hispanics, are guilty of de facto employee housing segregation. They have restricted
permanent residents, former employees and families, to approximately 39, in an area
twice that of Manhattan, all white, except one black person, no Hispanics, for more than
20 years, by means of de-annexations. AND, PER THEIR PUBLISHED
COMPREHENSIVE PLAN, THEY INTEND TO CONTINUE TO DO SO,
despite renewing their nonsegregation certification in the February 1, 2002 contract
P.10, C.2. WorldCo made grants of five acres to each of the five current RCID
non-resident Supervisors to enable them to vote and hold office. The total of the sales
prices was under $500, the assessed value is over $500,000, and the market value is in the
millions. WorldCo retains an option to buy back the acreage at original sales price of
This option spells “CONTROL.”
PP 12, 13, C3 The RCID Supervisors were not duly elected, either (1) under the
terms of the Florida Enabling Act, or (2) under the Florida Election Act of 1977.
Therefore, the execution of the USPS contract is void, not just voidable, and all
payments thereunder are false claims.
PP.13, 14, D The public disclosures, including Exh. 66 (a book), relied upon by
Relator, were not specified in the FCA statute as triggering a jurisdictional bar.
PP 14, 15 D.1. The First Amended Complaint ¶ 62 reports the
population history of the city of Lake Buena Vista, per the U.S. Census count, as
follows: in 1970¶12; in 1980¶98; in 1990¶1,776; in 2000¶16. The decreases in
population were accomplished by deannexations before and after the initial date of the
USPS contract and the amended contract date February 1, 2002. The only recorded
permanent residents remaining in Buena are white. None remain of a minority race.
P 16, D.1. The community of Celebration was deannexed by RCID before
residents of mixed races were permitted. None of Disney’s exhibits contains
disqualifying public disclosures of “allegations” against RCID and WorldCo
as to their employee housing segregation. Again, information does not constitute
1. With fundamental misunderstandings, including fraud-in-the-inducement
under the False Claims Act, the joint motion to dismiss should be denied in all respects.
2. If this Court is of the opinion that there are any deficiencies in this First
Amended Complaint, Relator respectfully requests leave of Court to file an amendment.
Dated: May 14, 2008 Respectfully submitted,
Raphael J. Musicus,_______
Raphael J. Musicus, Esquire
Illinois Bar No. 2004658
Admitted pro hac vice
530 Locust Road
Wilmette, Illinois 60091-2268
Phone: (847) 251-7970
Fax: (847) 251-7970
ALLEN & ARCADIER, P.A.
Maurice Arcadier, Esquire
Florida Bar No. 131180
Wayne L. Allen, Esquire
Florida Bar No. 0110025
Co- Counsel for Relator
2815 W. New Haven, #304
Melbourne, Florida 32904
Phone: (321) 953-5998
Fax: (321) 953-6075
More Information: False Claims Act, Disney, Florida
Attorney: Arcadier and Associates
Date Filed: 2008-02-01
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