In re: Natural Gas Royalties Qui Tam Litigation

Relator-Appellant Jack Grynberg appealed two district court orders awarding attorney fees. In 1995, Grynberg filed an action in federal district court for the District of Columbia alleging 70 companies in the natural gas industry violated the False Claims Act (FCA). Specifically, he accused the defendants of using techniques that under-measured the gas they extracted from federal and Indian lands under lease agreements. Sixty of the defendants filed motions to dismiss, which the district court granted. It held the defendants were improperly joined under Federal Rule of Civil Procedure 20, and that Grynberg's complaint failed to satisfy the particularized pleading requirement of Rule 9(b). Three months after "Grynberg I's" dismissal, Grynberg began filing 73 separate lawsuits against more than 300 companies in the natural gas industry. The 73 complaints, which closely resembled one another, formed the basis of this case. In this, "Grynberg II," Grynberg moved to consolidate the cases as an Multi-District Litigation (MDL), and they were eventually consolidated in federal district court for the District of Wyoming. Between the dismissal in Grynberg I and filing the complaints in Grynberg II, Grynberg served Freedom of Information Act ("FOIA") requests with the Minerals Management Service ("MMS"), seeking data on pipeline company-purchasers of natural gas. Grynberg created "Exhibit B's" to his complaints from that MMS data, which allegedly showed the defendants were mismeasuring gas. The inaccuracy of the Exhibit Bs did not surface until long after the complaints were filed and after the government conducted a time-consuming investigation. Without yet knowing the Exhibit Bs were inaccurate, the district court denied motions to dismiss for lack of particularity under Rule 9(b), which the court read as requiring a complaint to state the "time, place and contents of the false representation, [and] the identity of the party making the false statements." After surviving the motions to dismiss, Grynberg then faced the defendants' motions for summary judgment, which argued the complaints were based on publicly disclosed information and Grynberg was not an "original source" of the information. Following discovery, a special master recommended 40 of the 73 cases be dismissed for lack of jurisdiction. The district court went further by holding that all 73 cases were jurisdictionally barred. Following the dismissal of the claims and the Tenth Circuit's decision in the first appeal, the district court entered two orders awarding attorney fees: (1) under the FCA's fee-shifting provision; and (2) fees relating to the first appeal on the original-source question. Between the two orders, the court granted 35 defendant groups attorney fees totaling nearly $17 million. As to the remaining defendants in this appeal, around $5.5 million of attorney fees was awarded to the FCA Appellees for district court proceedings, and around $1 million of attorney fees was awarded to the Appellate-Fee Appellees for the first appeal. Grynberg appealed the award of fees under the FCA as to seven defendant groups. He appealed the award of fees to 13 other defendant groups. After review, the Tenth Circuit affirmed the FCA fees, but reversed the appellate-related attorney fees. View "In re: Natural Gas Royalties Qui Tam Litigation" on Justia Law