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| [1] | UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT |
| [2] | No. 95-2811, No. 95-2811 |
| [3] | 1997.C04.41082 <http://www.versuslaw.com>;
104 F.3d 1453 |
| [4] | decided: January 22, 1997. |
| [5] | UNITED STATES OF AMERICA, EX REL. PAMELA A. BERGE, PLAINTIFF-APPELLEE,
AND UNITED STATES OF AMERICA, INTERVENOR, v. THE BOARD OF TRUSTEES OF THE UNIVERSITY OF ALABAMA; ROBERT F. PASS, PROFESSOR OF PEDIATRICS; SERGIO B. STAGNO, PROFESSOR AND CHAIRMAN, DEPARTMENT OF PEDIATRICS; CHARLES A. ALFORD, PROFESSOR OF PEDIATRICS; KAREN B. FOWLER, DEFENDANTS-APPELLANTS. AMERICAN COUNCIL ON EDUCATION; THE AMERICAN ASSOCIATION OF STATE COLLEGES & UNIVERSITIES; THE NATIONAL ASSOCIATION OF STATE UNIVERSITIES AND LAND-GRANT COLLEGES; AMERICAN ASSOCIATION OF COMMUNITY COLLEGES; COUNCIL OF GRADUATE SCHOOLS; THE REGENTS OF THE UNIVERSITY OF MINNESOTA; THE UNIVERSITY OF TEXAS SYSTEM; THE UNIVERSITY OF COLORADO; THE REGENTS OF THE UNIVERSITY OF CALIFORNIA; THE REGENTS OF THE UNIVERSITY OF MICHIGAN; ASSOCIATION OF AMERICAN MEDICAL COLLEGES; EUGENE DONG, M.D., J.D.; ROBERT L. SPRAGUE, M.D., PH.D.; JEFFREY F. WILLIAMS, B.V.SC., M.R.C.V.S., PH.D.; TAXPAYERS AGAINST FRAUD, THE FALSE CLAIMS ACT LEGAL CENTER, AMICI CURIAE. |
| [6] | Appeal from the United States District Court for the District of Maryland,
at Baltimore. Edward S. Northrop, Senior District Judge. (CA-93-158-N). |
| [7] | ARGUED: William Allen Bradford, Jr., HOGAN & HARTSON, L.L.P., Washington,
D.C., for Appellants. |
| [8] | David Jonathan Fine, DANGEL, DONLAN & FINE, L.L.P., Boston, Massachusetts,
for Appellee. |
| [9] | Michael Eugene Robinson, Appellate Staff, Civil Division, UNITED STATES
DEPARTMENT OF JUSTICE, Washington, D.C., for Intervenor. |
| [10] | ON BRIEF: Barbara F. Mishkin, Sarah E. Mitchell, HOGAN & HARTSON,
L.L.P., Washington, D.C., for Appellants. |
| [11] | Edward T. Dangel, III, Alexander T. Bok, DANGEL, DONLAN & FINE, L.L.P.,
Boston, Massachusetts, for Appellee. |
| [12] | Frank W. Hunger, Assistant Attorney General, Lynne A. Battaglia, United
States Attorney, Douglas N. Letter, Appellate Litigation Counsel, Appellate
Staff, Civil Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington,
D.C., for Intervenor. |
| [13] | Richard O. Duvall, John Thorpe Richards, Jr., HOLLAND & KNIGHT, Washington,
D.C.; Sheldon Elliot Steinbach, AMERICAN COUNCIL ON EDUCATION, Washington,
D.C., for Amici Curiae American Council, et al. |
| [14] | Mark B. Rotenberg, General Counsel, Mark A. Bohnhorst, OFFICE OF THE GENERAL
COUNSEL, Minneapolis, Minnesota; Elsa K. Cole, General Counsel, UNIVERSITY
OF MICHIGAN, Ann Arbor, Michigan; James E. Holst, General Counsel, John
F. Lundberg, Christopher M. Patti, UNIVERSITY OF CALIFORNIA, Oakland, California;
Charles V. Sweet, University Counsel, Daniel J. Wilkerson, UNIVERSITY OF
COLORADO HEALTH SCIENCES CENTER, Denver, Colorado. Ray Farabee, Vice Chancellor
and General Counsel, THE UNIVERSITY OF TEXAS, Austin, Texas; C. Peter McGrath,
President, NATIONAL ASSOCIATION OF STATE UNIVERSITIES AND LAND-GRANT COLLEGES,
Washington, D.C., for Amici Curiae Regents of the University of Minnesota,
et al. |
| [15] | Robert A. Burgoyne, Cristina C. Chou, FULBRIGHT & JAWORSKI, L.L.P.,
Washington, D.C.; Joseph A. Keyes, Jr., ASSOCIATION OF AMERICAN MEDICAL
COLLEGES, Washington, D.C., for Amicus Curiae Association. |
| [16] | Eugene Dong, Palo Alto, California, for Amici Curiae Dong, et al. |
| [17] | Priscilla R. Budeiri, Gary W. Thompson, Lisa R. Hovelson, TAXPAYERS AGAINST
FRAUD, THE FALSE CLAIMS LEGAL CENTER, Washington, D.C., for Amicus Curiae
Taxpayers. |
| [18] | Before Ervin and Wilkins, Circuit Judges, and Michael, Senior United States
District Judge for the Western District of Virginia, sitting by designation.
Judge Ervin wrote the opinion, in which Judge Wilkins and Senior Judge Michael
joined. |
| [19] | Author: Ervin |
| [20] | ERVIN, Circuit Judge: |
| [21] | Defendants-Appellants appeal from a denial of their motion for judgment
as a matter of law following a jury verdict awarding the United States,
after trebling and the imposition of a civil penalty, $1.66
million, 30% of which ($498,000) is to be awarded to Relator-Appellee Pamela
A. Berge (Berge), on a False Claims Act claim, and awarding Berge $265,000
in compensatory and punitive damages on a pendent state law claim for conversion
of intellectual property. We reverse. |
| [22] | I. |
| [23] | At the time the events at issue occurred, Pamela Berge was a doctoral
candidate in nutritional sciences at Cornell University. The individual
Defendants-Appellants Sergio Stagno, Charles Alford, and Robert Pass were
medical researchers and professors at Defendant-Appellant The University
of Alabama at Birmingham (UAB). Defendant-Appellant Karen Fowler was a doctoral
candidate at UAB supervised by Pass. |
| [24] | Scientists at UAB have been studying cytomegalovirus (CMV), the most common
infectious cause of birth defects, since 1971, and over the years have accumulated
the leading database on maternal and congenital CMV in the world. A significant
part of the funding for this research has been provided by grants from the
National Institutes of Health (NIH), in particular grant HD-10699, "Perinatal
Infections, Immunity and Maldevelopment Research Program Project,"
administered by NIH's National Institute of Child Health and Human Development
(NICHD). This grant is renewable every five years, with years 11 to 15 relevant
to this case. Alford was the principal investigator for this project, although
Stagno and Pass were closely associated with it. All three are internationally
recognized as leading authorities on CMV. |
| [25] | Berge decided to do her dissertation on CMV as a possible cause of low
birth weight. She arranged access to and extensive assistance with UAB's
database through Stagno, and she worked closely with Stagno and his colleagues
while she was in residence as a visiting graduate student at UAB from February
to August 1987. After Berge returned to Cornell, she resisted others' attempts
to use the collected data and began to complain about Cornell faculty members,
including her thesis chairman. She made three further trips to Birmingham
during which she made presentations of her work. She completed her thesis
in May 1989 and received her Ph.D. Berge thereafter attempted to publish
papers based on her thesis, but she was rejected repeatedly by Journal of
the American Medical Association, Epidemiology, and Journal of Infectious
Diseases. |
| [26] | In the meantime, Defendant-Appellant Fowler decided in June 1988 to do
her dissertation on the relationship between CMV and sexually-transmitted
diseases and began working with Pass. After Fowler had begun her data analysis,
based in part on UAB's existing database and in part on original medical
records, she consulted completed theses, including Berge's, to choose a
format. She defended her dissertation in May 1990. The following month,
Fowler presented her research at a meeting of the Society of Epidemiological
Research. Berge was in the audience and became shocked at what she considered
to be plagiarism of her own work by Fowler. |
| [27] | Berge brought her allegations to Stagno's attention but did so in such
a way that ultimately Stagno and his colleagues determined they could no
longer collaborate with her. Two investigations of the allegations were
conducted at UAB, but the allegations were found to be baseless. Unsatisfied
with these results, as well as those produced from the other avenues she
pursued, Berge next obtained copies of UAB's grant applications through
a Freedom of Information Act (FOIA) request and then brought this litigation. |
| [28] | As the basis for her qui tam action under the False Claims Act, 31 U.S.C.
§§ 3729-3733, Berge alleged that UAB had made false statements to NIH in
its annual progress reports under its grant. In particular, these false
statements were that (1) UAB misled NIH in year 11 about the amount of data
that had been computerized; (2) UAB had included an abstract of Berge's
work in year 12 without mentioning her name, thereby overstating UAB's competence
and progress in epidemiology; (3) UAB, although including Berge's name on
the abstracts in years 13 and 14, had "submerged" her research
so that serious questions about one of UAB's central theses would not be
noticed; and (4) UAB misled NIH in year 15 by including abstracts of Fowler's
work which plagiarized Berge's. Although Berge also alleged a number of
pendent state law claims, only the conversion of intellectual property is
at issue on this appeal. |
| [29] | After this action was filed, the government naturally investigated to
determine whether it would choose to prosecute the matter on its own behalf.
The Office of the Inspector General (OIG) of the Department of Health and
Human Services conducted such an investigation and recommended that no action
be taken. Its report stated: |
| [30] | This investigation, which has involved the interview of NICHD grant officials,
interview of University officials, and the examination of documents of relator,
NICHD and the University of Alabama, has found no evidence that the subjects
committed a criminal violation in connection with grant applications or
progress reports submitted to the Government. Information has been obtained
however, which shows many of the assumptions behind the relator's allegations
to be in error or exaggerations of the truth. |
| [31] | J.A. at 179 (emphasis added). The government accordingly declined to become
involved in the litigation below pursuant to 31 U.S.C. § 3730. This OIG
report was never submitted into evidence at trial. The parties make various
contentions as to why this is so and whether the district court abused its
discretion in failing to allow it. Given our Disposition of this case, we
do not reach this issue. |
| [32] | After a ten-day jury trial, the jury returned a verdict in favor of Berge,
finding False Claims Act liability against all defendants except Fowler
but assessing damages only against UAB in the amount of $550,000. Pursuant
to 31 U.S.C. § 3729(a), this amount was trebled to $1.65 million, and the
district court imposed a civil fine of $10,000 against all the defendants,
jointly and severally, except Fowler. Pursuant to § 3730(d)(2), the district
court awarded Berge as relator 30% of the United States' total recovery,
or $498,000. The jury also found the four individual defendants liable for
conversion of intellectual property in differing amounts, imposing a total
of $50,000 in compensatory damages and $215,000 in punitive damages. The
district court, without opinion, denied defendants' motions for judgment
as a matter of law and a new trial. This appeal followed. |
| [33] | II. |
| [34] | Berge instituted the action below under the False Claims Act, 31 U.S.C.
§§ 3729-3733. Subject matter jurisdiction of the district court was thus
based on the federal question statute, 28 U.S.C. § 1331. Supplemental jurisdiction
over the pendent state law claims was pursuant to 28 U.S.C. § 1367. This
appeal arises from a final judgment below, and thus we possess appellate
jurisdiction under 28 U.S.C. § 1291. Normally that would end our jurisdictional
inquiry, but the defendants and various amici raise issues concerning the
constitutionality of the False Claims Act, whether qui tam relators possess
standing, and whether state instrumentalities can be held liable pursuant
to the Act under the Eleventh Amendment, especially in light of Seminole
Tribe v. Florida,
134 L. Ed. 2d 252,
116 S. Ct. 1114
(1996). None of these issues were raised below, but to the extent they partake
of jurisdictional matters, we may properly consider them. Because we reverse
on the facts of this case, we naturally see no need to reach the issue of
the constitutionality of the Act itself. We do, however, briefly address
why we consider the general issue of standing to be unproblematic, why the
government, as the real party in interest, possesses standing under the
facts of this case, and why Seminole does not change our view that Eleventh
Amendment immunity is a red herring in these circumstances. |
| [35] | We have previously held that the "United States is the real party
in interest in any False Claims Act suit, even where it permits a qui tam
relator to pursue the action on its behalf." United States ex rel.
Milam v. University of Tex. M.D. Anderson Cancer Ctr.,
961 F.2d 46,
50 (4th Cir. 1992). Although Milam arose in the pre-Seminole context of
a claim of Eleventh Amendment immunity, which was denied since states may
be sued in federal court by the United States, we see Milam as resolving
the general issue of standing in this circuit. The Seventh Circuit has concluded
that "once we accept the premise that the United States is the real
plaintiff in a qui tam action, it stands to reason that challenges to the
standing of the government's representative are beside the point."
United States ex rel. Hall v. Tribal Dev. Corp.,
49 F.3d 1208,
1213 (7th Cir. 1995). Similarly, the Ninth Circuit has analyzed extensively
whether the qui tam provisions of the False Claims Act conflict with Article
III or violate the principle of separation of powers, the Appointments Clause,
or the Due Process Clause, points which various amici raise again here,
and our sister circuit concluded they do not. United States ex rel. Kelly
v. Boeing Co.,
9 F.3d 743,
747-60 (9th Cir. 1993), cert. denied , 510 U.S. 1140,
127 L. Ed. 2d 433,
114 S. Ct. 1125
(1994). That court has recently affirmed its rejection of these same arguments
in United States ex rel. Schumer v. Hughes Aircraft Co.,
63 F.3d 1512,
1520-21 (9th Cir. 1995), cert. granted in part,
117 S. Ct. 293,
136 L. Ed. 2d 212
(U.S. Oct. 15, 1996), and we note that the Supreme Court has granted certiorari
to consider, inter alia, whether the lower courts erred "in asserting
jurisdiction over this action under qui tam provisions of FCA."
117 S. Ct. 293,
136 L. Ed. 2d 212
(U.S. 1996). Although we would not hazard to predict what the Supreme Court
may do in Schumer or whether it will even reach the question on which certiorari
was granted, given that our Disposition reverses the liability of the defendants
in toto, we decline to enter into a long disquisition on the standing issue. |
| [36] | However, it must be admitted that, notwithstanding a qui tam relator's
general standing as the government's representative, the government, as
the real party in interest, must still have suffered an injury in fact.
See Lujan v. Defenders of Wildlife, 504 U.S. 555,
119 L. Ed. 2d 351,
112 S. Ct. 2130
(1992). Amicus Association of American Medical Colleges contends that Berge
lacks standing because the United States suffered no injury in fact, as
evidenced by the OIG report. We find this argument meritless. In the first
place, the OIG report was more concerned with possible criminal violations,
which would put the Government to a higher burden of proof than in a civil
action as here. Second, and most importantly, the plain language of the
Act clearly anticipates that even after the Attorney General has "diligently"
investigated a violation under 31 U.S.C. § 3729, the Government will not
necessarily pursue all meritorious claims; otherwise there is little purpose
to the qui tam provision permitting private attorneys general. Cf. id. at
§ 3730(a) ("If the Attorney General finds that a person has violated
or is violating section 3729, the Attorney General may bring a civil action
under this section against the person." (emphasis added)) with id.
at § 3730(c)(3) ("If the Government elects not to proceed with the
action, the person who initiated the action shall have the right to conduct
the action." (emphasis added)); see also United States ex rel. McGough
v. Covington Techs. Co.,
967 F.2d 1391,
1397 (9th Cir. 1992) (stating that "to hold that the government's initial
decision not to take over the qui tam action is the equivalent of its consent
to a voluntary dismissal of a defendant with prejudice would require us
to ignore the plain language of § 3730(b)(1)"). The OIG report is not
an admission by the United States that it has suffered no injury in fact,
but rather it amounts to a cost-benefit analysis. Here the Government surmised--and,
as we decide this case, it turns out rightly--that the costs of proceeding
on Berge's claims outweighed the anticipated benefits. Finally, we note
that injury in fact is not to be Judged post hoc. The logical outcome of
amicus 's position is that any losing plaintiff-relator would not have possessed
standing in the first place. In this context, it is worth noting that the
district court determined in a lengthy memorandum that Berge's allegations
of false statements were sufficient to overcome a motion for summary judgment.
See United States ex rel. Berge v. Board of Trustees of the Univ. of Ala.,
Civil No. N-93-158 (D. Md. filed Mar. 14, 1995), at 9-14. |
| [37] | As a final jurisdictional matter, we recognize that no court has yet considered
the interposition of the Eleventh Amendment to the False Claims Act in the
wake of Seminole. Amici Regents of the University of Minnesota et al. make
an interesting case that the False Claims Act was not intended to apply
to the states, which they think takes on added significance post-Seminole.
Amici American Council on Education et al. also suggest we need to take
another look at Eleventh Amendment immunity in the qui tam context. We disagree.
Seminole 's relevant holding here is its reconfirmation that Congress must
use unequivocal statutory language if it intends to abrogate the sovereign
immunity of states in suits brought by and for private parties. Seminole,
134 L. Ed. 2d at 266.
But as we already said in Milam, this is a non-issue in the False Claims
Act context. Milam,
961 F.2d at 50
n.3. There is simply no question of abrogation of immunity here. Seminole
certainly left intact what is beyond purview: that the federal government
may sue states in federal court. Seminole,
134 L. Ed. 2d at 276
n.14 (citing United States v. Texas,
143 U.S. 621,
644-45,
36 L. Ed. 285,
12 S. Ct. 488
(1892), for the proposition that such power is necessary to the "permanence
of the Union"); see also West Virginia v. United States,
479 U.S. 305,
311,
93 L. Ed. 2d 639,
107 S. Ct. 702
(1987). The United States is the real party in interest. The Act itself
states that the "action shall be brought in the name of the Government."
31 U.S.C. § 3730(b)(1). We affirm our reasoning in Milam : "The states
have no Eleventh Amendment immunity against the United States ab initio.
Therefore, there is no reason Congress would have displaced it in the False
Claims Act." Milam,
961 F.2d at 50
n.3. |
| [38] | III. |
| [39] | Turning to the merits, appellants assign at least seven points of error
to the district court below. We reach only three of them in reversing the
entire judgment below: the lack of materiality to the government's funding
decisions of the alleged false statements; the insufficiency of the evidence
that appellants even made false statements to the government, as merged
into the first issue on the False Claims Act claim; and the preemption,
by federal copyright law, of the state law conversion of intellectual property
claim.*fn1 We address
the materiality and insufficiency of evidence issues in this section and
the preemption issue in the next section. |
| [40] | The civil False Claims Act provides in relevant part: |
| [41] | (a) Any person who-- |
| [42] | (2) knowingly makes, uses, or causes to be made or used, a false record
or statement to get a false or fraudulent claim paid or approved by the
Government; . . . |
| [43] | is liable to the United States Government for a civil penalty of not less
than $5,000 and not more than $10,000, plus 3 times the amount of damages
which the Government sustains because of the act of that person . . . . |
| [44] | 31 U.S.C. § 3729(a). We have previously suggested that the civil False
Claims Act requires a materiality element. See United States v. Snider,
502 F.2d 645,
652 n.12 (4th Cir. 1974) (construing the FCA's predecessor statute, 31 U.S.C.
§ 231). If previously unclear, we now make explicit that the current civil
False Claims Act imposes a materiality requirement. See also Tyger Constr.
Co. v. United States, 28 Fed. Cl. 35, 55 (1993) ("The FCA covers only
those false statements that are material."). |
| [45] | On this materiality issue, however, we must initially determine whether
the issue is to be properly decided by the court. In the context of the
criminal false statements statute, 18 U.S.C. § 1001, we had previously held
that materiality is a question of law whose test is "whether the false
statement has a natural tendency to influence agency action or is capable
of influencing agency action." United States v. Norris,
749 F.2d 1116,
1122 (4th Cir. 1984) (citations omitted), cert. denied,
471 U.S. 1065,
85 L. Ed. 2d 496,
105 S. Ct. 2139
(1985). In the criminal context, that holding can no longer stand as a result
of United States v. Gaudin,
132 L. Ed. 2d 444,
115 S. Ct. 2310
(1995). In Gaudin, a unanimous Court held that the materiality of false
statements was an element of the crime under 18 U.S.C. § 1001 to which a
defendant has a constitutional right under the Fifth and Sixth Amendments
for a jury to determine guilt beyond a reasonable doubt. Id. at 458. Berge's
expansive interpretation that Gaudin 's rationale must apply even in civil
cases where there is a right to jury trial under the Seventh Amendment is
unwarranted. The Court expressly declined to reach that issue, stating that
"the courts' power to resolve mixed-law-and-fact questions in civil
cases is not at issue here; civil and criminal juries' required roles are
obviously not identical, or else there could be no directed verdicts for
civil plaintiffs." Id. at 454; see also id. at 460 (stating that the
"Court properly acknowledges that other mixed questions of law and
fact remain the proper domain of the trial court") (Rehnquist, C.J.,
Concurring). Moreover, the Court refused to overrule its unanimous opinion
in Kungys v. United States,
485 U.S. 759,
99 L. Ed. 2d 839,
108 S. Ct. 1537
(1988), a civil denaturalization case, that the "materiality requirement
under . .. statutes dealing with misrepresentations to public officers"
is one for the court,*fn2
id. at 772 (citations omitted), since the constitutional ramifications were
different. Gaudin,
132 L. Ed. 2d at 458.
|
| [46] | In addition, we have already indicated our reluctance to construe Gaudin
broadly. See, e.g., United States v. Daughtry,
91 F.3d 675,
675 (4th Cir. 1996) (stating that "Gaudin held only that in prosecutions
for violations of [18 U.S.C.] § 1001, the element of materiality must be
submitted to the jury" (emphasis added)); see also United States v.
Klausner, 80 F.3d 55, 61 (2d Cir. 1996) (holding that even in some criminal
contexts materiality remains a purely legal question after Gaudin). Thus,
in light of our earlier determination that the materiality of false statements
is a legal question and of our inclination not to give an expansive interpretation
to Gaudin, we hold that in the context of the civil False Claims Act the
determination of materiality, although partaking of the character of a mixed
question of fact and law, is one for the court. See also United States ex
rel. Butler v. Hughes Helicopter Co., No. CV 89-5760 SVW, at*fn*
43-44 (C.D. Cal. Aug. 25, 1993) (holding that the materiality of false statements
under the False Claims Act is a legal question for the court), aff'd on
other grounds,
71 F.3d 321
(9th Cir. 1995). Moreover, we see no reason to depart from the test we enunciated
in Norris, even though the remainder of its holding cannot stand post-Gaudin,
that is, the materiality of the false statement turns on "whether the
false statement has a natural tendency to influence agency action or is
capable of influencing agency action." Norris,
749 F.2d at 1122;
see also Kungys,
485 U.S. at 770
(recognizing that a "misrepresentation is material if it has a natural
tendency to influence, or was capable of influencing, the decision of the
decisionmaking body to which it was addressed" (internal quotation
marks omitted)). |
| [47] | In any event, even the Gaudin Court acknowledged that there always remains
as a threshold question of law whether the case for materiality is "so
weak that no reasonable juror could credit it." Gaudin,
132 L. Ed. 2d at 454.
In the instant case, our de novo review, see, e.g., Benedi v. McNeil-P.P.C.,
Inc.,
66 F.3d 1378,
1383 (4th Cir. 1995) ("We review a denial of a motion for judgment
as a matter of law de novo." (citation omitted)), of the alleged false
statements plainly shows they were not material to NICHD's funding decisions,
and, furthermore, are so lacking in materiality, indeed, are not even false,
that no reasonable jury could have so found. |
| [48] | As a general matter, NICHD's program officer with responsibility for UAB's
grant testified that Berge's contributions were not central to UAB's project
and that the progress reported by UAB was satisfactory for a recommendation
of continued funding without Berge's contribution. As even the government
notes in its brief as intervenor on appeal, "NICHD determined that
the information Berge alleged was false or misrepresented was not material
to its funding decisions." Br. of United States as Intervenor at 34. |
| [49] | More particularly, Berge's assertion of UAB's alleged misstatement concerning
the extent of computerization in year 11 is belied by the fact that information
on upwards of 20,000 patients had been computerized by that time. Even accepting
Berge's assertion that only 124 cases of congenitally-infected babies were
computerized, that fact is irrelevant to the greater computerization effort,
and, moreover, is one fully consistent with Berge's own dissertation claim
that congenital infection affects only 0.2%-2.4% of all live births. Furthermore,
the program officer testified that the principal purpose of the project
was the collection of data, not its computerization. Thus, not only did
UAB not mislead NIH about the extent of computerization, but UAB fully reported
the number of subjects of the project every year and thereby complied with
NIH's expectation on the collection of data. In fact, the program officer
stated that UAB's data collection "is considered to be the largest
single source of information on maternal and congenital CMV in the world."
J.A. at 1510. |
| [50] | Second, the year 12 omission of Berge's name from an abstract submitted
as part of the progress report cannot possibly be material. In the first
place, NIH did not even require the inclusion of her name, or anyone's name.
There can only be liability under the False Claims Act where the defendant
has an obligation to disclose omitted information. United States ex rel.
Milam v. Regents of the Univ. of Calif., 912 F. Supp. 868, 883 (D. Md. 1995).
More importantly, the abstract itself was included, and was required to
be included, because Stagno appeared on the abstract as a co-author. Berge
expended considerable effort in attempting to convince us, both in her briefs
and at oral argument, that the jury properly found this failure to attribute
the abstract to her and obtain her permission to use it was a material false
statement. The report, in fact, did not attribute the abstract to any of
its authors; it simply "abstracted" the study for the purpose
of reporting on project activity. Under federal copyright law, Stagno, as
co-author, is a coowner of copyright in the work. See 17 U.S.C. § 201(a).
Coowners are treated as tenants in common with each coowner having an undivided,
independent right to use the work, subject only to a duty of accounting
for profits to other coowners. See H.R. Rep. No. 1476, 94th Cong., 2d Sess.,
at 121 (1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5736; Erickson v. Trinity
Theatre, Inc.,
13 F.3d 1061
(7th Cir. 1994). Thus it was perfectly proper for Stagno to use the abstract
as he did, and that use therefore is not a false statement, let alone a
material one capable of affecting NIH's funding decision. |
| [51] | Third, Berge's claim of the "submergence" of her work in the
progress reports for years 13 and 14 is inexplicable. In each year's progress
report, fully half of the Discussion of activity under Specific Aim # 1
of Project 1 is given over to quoting in full from Berge's abstracts, with
attribution. If Berge's work supported the hypothesis that there was a downside
risk to a live vaccine, the development of which she claims was a central
goal of UAB's project, then it was incumbent upon her to note that implication
in her work, which she did not. The omission is her own fault, not UAB's.
An ex post facto realization of the possible importance of this implication
cannot support a charge of falsity at the time the report was submitted.
Moreover, NIH's expectation that only the abstract would be included in
the progress report cannot form the basis for liability for an omission
in any event. While it is true that the reports mistakenly referred to Berge
as a "postdoctoral graduate student from the Department of Biostatistics"
at Cornell, see J.A. at 1188, 1202, when, in fact, she was in year 13 a
doctoral candidate in nutritional sciences and by year 14 had obtained her
Ph.D., no reasonable jury could conclude that such trivial errors were materially
capable of influencing NIH's funding decision. |
| [52] | As to Berge's final asserted false statement by UAB, that NIH was misled
by including an abstract of Fowler's work in year 15, which allegedly plagiarized
Berge's own work and about which plagiarism UAB knew, the evidence is patently
clear that there was no plagiarism by Fowler and thus no false statement
by UAB. The government itself points out that "none of the scientific
or administrative bodies to which [Berge] complained found that Fowler had
plagiarized Berge's work." Br. of United States as Intervenor at 5.
As Berge herself concedes, "Ms. Fowler's ultimate hypothesis and Conclusions
were different from [mine]." Br. of Appellee at 19. But if the hypothesis
and Conclusions were different, what was plagiarized? Certainly not independently-obtained
data sets extracted from UAB's own collection; nor the case control method,
one of the most frequently-used research designs in epidemiology; nor the
textbook statistical methodologies employed; nor the risk factors, derived
from the scientific literature, commonly used in perinatal studies; nor
even the organization of Fowler's and Berge's tables which do nothing more
than reflect UAB's own clinic forms. None of these "ideas" were
original to Berge, and thus none of these could have been taken by Fowler
from Berge and passed off as her own. The ideas that were original to Berge
were her hypotheses and Conclusions concerning the relationship between
CMV infection and low birth weight, but these ideas are concededly different
from Fowler's hypotheses and Conclusions concerning the relationship between
sexually-transmitted diseases and maternal CMV infection. As the Public
Health Service's Office of Research Integrity has determined, plagiarism
does not include credit disputes. See 3 ORI Newsletter 3 (Office of Research
Integrity, U.S. Public Health Service, Dec. 1994). But once the surface
is scratched, there is nothing to Berge's claim except her complaint that
Fowler did not give Berge's work the notice she felt she deserved. If that
be scientific misconduct, it is far too attenuated to any federal right
for us, or any federal court, to decide. |
| [53] | Berge also makes much of the fact that the year 15 review had to be performed
three times before UAB could allegedly get its grant renewed. Indeed, she
claims it is "difficult to imagine a more concrete demonstration of
the materiality of the false statements." Br. of Appellee at 29. However,
the record clearly shows that the first review had to be rejected because
of a conflict of interest by one of the reviewing scientists, and the second
had to be rejected because it impermissibly had access to the first review.
The third review was thus the only clean review, and it recommended funding
the project. Thus Berge's most concrete demonstration of materiality rests
on no foundation whatsoever.*fn3 |
| [54] | In addition to this allegation by allegation analysis that demonstrates
the lack of materiality, as well as the lack of falsity, of the statements,
we also decide that no reasonable jury could possibly conclude that a multi-million
dollar grant, continually renewed over a period of more than a decade, undertaken
by three internationally-respected scientists engaged, in part, in the collection
of the world's leading database on CMV, would be reduced or eliminated due
to UAB's lack of expertise in an area that could only be bolstered by the
work of an unknown graduate student in nutritional sciences--work that,
when reviewed by independent scientists at peer-reviewed journals, was determined
to be "scarcely comprehensible," J.A. at 1489, "extremely
difficult to read and even more difficult to evaluate," J.A. at 1486,
and so cavalier in its design and conduct as to induce great skepticism
in "any findings reported from it," J.A. at 1489. The hubris of
any graduate student to think that such grants depend on the results of
her work is beyond belief. That is not the way Big Science works. Assuming
arguendo that all of Berge's allegations were true and UAB had made these
false statements, it is hard to imagine that NIH's decision-making would
have been influenced by them. |
| [55] | Reviewing all this evidence in the light most favorable to Berge, it is
abundantly clear that substantial evidence upon which the jury could have
found for Berge is lacking. See Benedi v. McNeil-P.P.C., Inc.,
66 F.3d 1378,
1383 (4th Cir. 1995) (citation omitted). Her evidence amounts at most to
a scintilla, which is insufficient to sustain the verdict. See Trandes Corp.
v. Guy F. Atkinson Co.,
996 F.2d 655,
660 (4th Cir.), cert. denied, 510 U.S. 965,
126 L. Ed. 2d 377,
114 S. Ct. 443
(1993). At best, Berge fails on her burden of showing materiality; at worst,
she cannot even show the statements were false. In either case, judgment
as a matter of law is appropriate for appellants on the False Claims Act
claim since Berge has "failed to make a showing on an essential element
of [her] case with respect to which she had the burden of proof." Singer
v. Dungan,
45 F.3d 823,
827 (4th Cir. 1995) (internal quotation marks and citation omitted). We
reverse the judgment below on the False Claims Act claim in its entirety. |
| [56] | IV. |
| [57] | We turn now to the claim of conversion of intellectual property under
Alabama law. The Alabama conversion statute provides: |
| [58] | The owner of personalty is entitled to possession thereof. Any unlawful
deprivation of or interference with such possession is a tort for which
an action lies. |
| [59] | Ala. Code § 6-5-260. Whether federal copyright law preempts a state law
claim is a question of law that we review de novo. Rosciszewski v. Arete
Assocs., Inc.,
1 F.3d 225,
229 (4th Cir. 1993). |
| [60] | Berge's conversion claim in this instance is clearly preempted by federal
copyright law. Section 301(a) of the Copyright Act provides in pertinent
part: |
| [61] | All legal or equitable rights that are equivalent to any of the exclusive
rights within the general scope of copyright as specified in section 106
in works of authorship that are fixed in a tangible medium of expression
and come within the subject matter of copyright as specified by sections
102 and 103 . . . are governed exclusively by this title.[After January
1, 1978], no person is entitled to any such right or equivalent right in
any such work under the common law or statutes of any State. |
| [62] | 17 U.S.C. § 301(a). We have recently held that the statute thus sets up
a two-prong inquiry to determine when a state law claim is preempted: first,
the work must be "within the scope of the 'subject-matter of copyright'
as specified in 17 U.S.C. §§ 102, 103," and second, "the rights
granted under state law" must be "equivalent to any exclusive
rights within the scope of federal copyright as set out in 17 U.S.C. § 106."
Rosciszewski,
1 F.3d at 229
(quotation marks and citation omitted). |
| [63] | There can be no doubt that Berge's work--her dissertation, to which she
herself affixed a copyright mark; her abstracts; her drafts, etc.--falls
within the scope of the subject-matter of copyright. All of these written
works are clearly "original works of authorship fixed in a[ ] tangible
medium of expression." 17 U.S.C. § 102(a). Berge's argument that her
conversion claim is not preempted because it is her "ideas and methods,"
which are specifically excluded from copyright protection, see id. at §
102(b), that have been converted rests on a fallacious interpretation of
the Copyright Act. In other words, Berge wants to argue that ideas embodied
in a work covered by the Copyright Act do not fall within the scope of the
Act because the Act specifically excludes them from protection. But scope
and protection are not synonyms. Moreover, the shadow actually cast by the
Act's preemption is notably broader than the wing of its protection. |
| [64] | The second prong of the preemption test is satisfied unless there is an
"extra element" that changes the nature of the state law action
so that it is "qualitatively different from a copyright infringement
claim." Rosciszewski,
1 F.3d at 229-30
(emphasis in original) (internal quotation marks and citation omitted);
see also Trandes Corp. v. Guy F. Atkinson Co.,
996 F.2d 655,
659-60 (4th Cir.), cert. denied, 510 U.S. 965,
126 L. Ed. 2d 377,
114 S. Ct. 443
(1993). It is hornbook law that a "state law action for conversion
will not be preempted if the plaintiff can prove the extra element that
the defendant unlawfully retained the physical object embodying plaintiff's
work." Paul Goldstein, Copyright, Patent, Trademark and Related State
Doctrines 777 (3d ed. 1993) (quoting Paul Goldstein, Copyright (1989));
see also Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 1.01[B](1)(i)
(1995) ("The torts of conversion and trespass relate to interference
with tangible rather than intangible property . . . ."). However, §
301(a) will preempt a conversion claim "where the plaintiff alleges
only the unlawful retention of its intellectual property rights and not
the unlawful retention of the tangible object embodying its work."
Goldstein, supra, at 777; see Dielsi v. Falk,
916 F. Supp. 985,
992 (C.D. Cal. 1996) (holding that a claim for conversion of a television
script was preempted since there was no extra element to the essential claim
that the ideas were misappropriated); compare Patrick v. Francis,
887 F. Supp. 481,
482, 484 (W.D.N.Y. 1995) (holding a conversion claim preempted where the
action actually sought to recover for unauthorized copying of the work,
concepts, and ideas of a research paper), with Oddo v. Ries,
743 F.2d 630,
635 (9th Cir. 1984) (conversion of tangible property not preempted). It
could hardly be clearer that Berge's conversion claim is preempted. We have
already dismissed Berge's argument that her "ideas and methods"
are not within the scope of copyright's protection or preemption as to the
first prong. See supra. As to the second prong, what is crucial is that
Berge makes no claim that appellants converted any tangible objects embodying
her intellectual property. |
| [65] | Berge attempts to salvage her conversion claim first by claiming that
Alabama recognizes the conversion of intangible property and, second, by
claiming that the extra element is unauthorized use.*fn4
She must founder on both attempts. Although the Alabama Supreme Court has
held that "in appropriate circumstances, intangible personal property
can be converted," National Sur. Co. v. Applied Sys., Inc., 418 So.
2d 847, 850 (Ala. 1982), it was a specific computer program that was converted
there, at a time when the manner of the applicability of copyright law to
computer programs was unclear. If National Surety holds only that intellectual
property may be converted in particular circumstances, then it is unexceptional.
However, if it holds that such intellectual property can be converted without
an extra element beyond copyright infringement, then it must be repudiated
as contrary to the Copyright Act under the Supremacy Clause. |
| [66] | Perhaps recognizing the weakness of that reed, Berge also grasps onto
G.S. Rasmussen & Assocs. v. Kalitta Flying Serv.,
958 F.2d 896
(9th Cir. 1992), cert. denied, 508 U.S. 959,
124 L. Ed. 2d 678,
113 S. Ct. 2927
(1993). But Kalitta only held that a conversion claim did not run afoul
of copyright preemption where an unauthorized copy of a Supplemental Type
Certificate from the Federal Aviation Administration had been used improperly
to obtain an airworthiness certificate from the FAA.
958 F.2d 896
at 904. In distinguishing Kalitta, the Fifth Circuit properly recognized
in Daboub v. Gibbons,
42 F.3d 285
(5th Cir. 1995), that where the core of the state law theory of recovery,
as in conversion, goes to wrongful copying, in its case, the plagiarism
of an entire song, it is preempted. Id. at 289. Recognizing the broad and
absolute preemption of § 301, "stated in the clearest and most unequivocal
language possible, so as to foreclose any conceivable misinterpretation
of its unqualified intention that Congress shall act preemptively, and to
avoid the development of any vague borderline areas between State and Federal
protection," H.R. Rep. No. 1476, 94th Cong., 2d Sess. (1976) reprinted
in 1976 U.S.C.C.A.N. 5659, 5746, the Daboub court concluded that "if
the language of the act could be so easily circumvented, the preemption
provision would be useless, and the policies behind a uniform Copyright
statute would be silenced." Id. at 290 & n.8. Berge's charge of
plagiarism and lack of attribution can only amount to, indeed, are tantamount
to, a claim of copyright infringement, for Berge has certainly not been
prevented from using her own ideas and methods. See Garrido v. Burger King
Corp., 558 So. 2d 79, 82 (Fla. Dist. Ct. App. 1990) (holding that where
the gravamen of a conversion claim was the unauthorized taking or use of
ideas, the elements of the claim were not qualitatively different from copyright
infringement). |
| [67] | Berge complains that if the Copyright Act's idea-expression dichotomy,
see 17 U.S.C. § 102(b), and § 301's preemption provision be read this way,
then there is "no legal remedy for the theft of [my] intellectual property.
Intellectual property which can be stolen without fear of legal punishment
ceases to be property." Br. of Appellee at 41. But what Berge fails
to realize is that, as a general proposition, ideas are simply part of the
public domain. See, e.g., Hoehling v. Universal City Studios, Inc.,
618 F.2d 972,
979-80 (2d Cir.) (holding that, in non-fiction works, since facts, themes,
and research "have been deliberately exempted from the scope of copyright
protection to vindicate the overriding goal of encouraging contributions
to recorded knowledge, the states are pre-empted from removing such material
from the public domain"), cert. denied,
449 U.S. 841,
66 L. Ed. 2d 49,
101 S. Ct. 121
(1980); see also Nimmer and Nimmer, supra, at § 16.01 (stating that "the
concept that ideas are 'free as air' is of ancient origin, and is well rooted
in our jurisprudence" (footnotes omitted)). It is not that this form
of intellectual property ceases to be property, rather it is just not intangible
personalty. See, e.g., Richter v. Westab, Inc.,
529 F.2d 896,
902 (6th Cir. 1976) ("The law does not favor the protection of abstract
ideas as the property of the originator."). Berge wants to fence off
the commons, but the only part she may rightly claim is the original expression
of her ideas fixed in a tangible medium. The law recognizes her stake there
and accords it copyright protection. |
| [68] | Berge's conversion claim is preempted by federal copyright law. We therefore
reverse the judgment below on this claim in its entirety. |
| [69] | V. |
| [70] | For the foregoing reasons, we hold that the district court erred when
it improperly denied appellants' motion for judgment as a matter of law,
both as to Berge's False Claims Act claim and to her conversion claim. The
judgment of the district court is therefore |
| [71] | REVERSED. |
| [72] | Disposition |
| [73] | REVERSED. |
|
|
|
| Opinion Footnotes | |
|
|
|
| [74] | *fn1 The other four
assignments of error are that the district court failed to set aside a flawed
damages award on the False Claims Act claim since the verdict was inconsistent,
the court abused its discretion by excluding the OIG report, the court erred
in its instructions on the state law claim, and there was insufficient proof
of conversion. |
| [75] | *fn2 Although the Court
was split on the judgment, the Court was unanimous in the opinion that materiality
was a question for the court. |
| [76] | *fn3 Moreover, Berge
totally ignores the fact that, at the time of trial, well after all of Berge's
allegations had been repeatedly probed, NIH continued to fund UAB under
the grant. |
| [77] | *fn4 We summarily reject
Berge's additional arguments that the extra element in this conversion claim
may be supplied by (1) the severe harm she suffered as a result of appellants'
alleged "scooping" of her work, i.e. publishing her ideas before
she could do so herself, that in turn led to the rejection of her work by
academic journals and thence to the ruin of her career, and (2) breach of
trust in her relationship with Stagno. We find these to be facially implausible
as extra elements to a conversion of intellectual property claim in these
circumstances. Berge cites no authority for the proposition that severity
of harm has any effect on copyright preemption. We decline to erode the
preemption provisions of the Copyright Act. The evidence is abundantly clear
that Berge's work did not merit publication on the basis of its quality
alone, notwithstanding any possibility that she had been "scooped."
To support her claim that breach of trust provides the extra element,
Berge cites Sargent v. American Greetings Corp.,
588 F. Supp. 912
(N.D. Ohio 1984). But Sargent held only that a claim for breach of confidential
relationship was not preempted by the Copyright Act, not that a claim
qualitatively the same as a copyright infringement claim could be made
into one qualitatively different from it if it involved a breach of confidential
relationship. Id. at 923-24. The tort for breach of confidential relations
involves a wholly different proof scheme than the tort of conversion,
and Berge was not required for purposes of her conversion claim to show
any such breach, nor did she. Cases that find breach of trust important
are ones involving claims whose core consists of a breach --such as trade
secret cases--and cases where the cause of action requires that breach
of confidentiality or the like be shown. See, e.g., Avtec Sys., Inc. v.
Peiffer,
21 F.3d 568,
574 (4th Cir. 1994); Rosciszewski,
1 F.3d at 230;
Bateman v. Mnemonics, Inc., 79 F.3d 1532, 1549 (11th Cir. 1996); Data
General Corp. v. Grumman Sys. Support Corp.,
36 F.3d 1147,
1164-65 (1st Cir. 1994). |
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