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On August 26, 2024, the Eleventh Circuit Court of Appeals[1] rendered its opinion in U.S. ex rel. Jacobs v. JP Morgan Chase Bank, N.A., No. 22-10963 (11th Cir. Aug. 26, 2024).[2] The Court addressed the False Claims Act’s (“FCA”)[3] public disclosure bar, which provides “that a ‘court shall dismiss an [FCA] action or claim . . . if substantially the same allegations . . . as alleged in the action or claim were publicly disclosed . . . from the news media.’”[4] As the Eleventh Circuit noted, “[t]his prohibition does not apply if ‘the action is brought by the Attorney General or the person bringing the action is an original source of the information.’”[5]

As explained by the Eleventh Circuit, the district court dismissed the Relator’s FCA action for two reasons: (1) “it concluded that his amended complaint did not plead fraud with particularity as required by Federal Rule of Civil Procedure 9(b); and (2) “it concluded that the gravamen (or essence) of his fraud claims had already been disclosed on three blogs and that he was not an original source of that information.”[6] On appeal, the Eleventh Circuit focused only on the public disclosure bar.[7]

By way of background, the case was filed by a Florida foreclosure attorney alleging that JP Morgan Chase forged mortgage loan promissory notes and submitted false reimbursement claims to Fannie Mae and Freddie Mac (government-sponsored enterprises) for loan servicing costs.[8] JP Morgan Chase acquired the promissory notes from Washington Mutual upon its collapse in 2008.[9] According to the Relator, “Washington Mutual forgot to endorse every loan it originated, a violation of federal guidelines, which is discovered would have required it [and JP Morgan Chase] to repurchase the mortgages from Fannie and Freddie or to remit make-whole payments.”[10] Relator alleged that JP Morgan Chase developed a scheme to forge endorsements on millions of loans using a former Washington Mutual employees’ signature stamps.[11] Relator further alleged that despite its knowing and willful noncompliance with the pertinent federal guidelines, JP Morgan Chase submitted payments claims totaling hundreds of millions of dollars for loan servicing costs.[12] He further claimed that JP Morgan Chase covered up the scheme by committing perjury and coaching witnesses.[13]

In February 2020, the Relator filed suit.[14] The district court dismissed the claim for failure to meet the heightened fraud pleading standard found in Federal Rule of Civil Procedure 9(b).[15] The court further noted that the Relator needed to plead that he was “an original source of the allegations under the FCA’s public disclosure bar[.]”[16] Relator then filed an amended complaint, which was also dismissed by the district court.[17] On the public disclosure issue, the district court “concluded that the FCA’s public disclosure provision independently bars Jacobs’s lawsuit because online blog articles from before the lawsuit allege that employees would use [former Washington Mutual employees’] rubber stamps to fraudulently endorse the loan promissory notes.”[18] The district court took judicial notice (i.e., declared a fact presented as evidence as true without a formal presentation) of three blog posts.[19] All three posts mentioned JP Morgan’s alleged fraudulent scheme and disclosed details regarding one of the former Washington Mutual employees.[20]   One of the blog posts was created in January 2014, six years prior to Relator’s filing of the complaint.[21] Based on these blog posts, the district court determined that “substantially the same information as the allegations in the complaint had been publicly disclosed in the news media before Jacobs’s lawsuit and concluded that Jacobs wasn’t an original source of the information, requiring dismissal under the FCA’s public disclosure bar.”[22]

In affirming the district court, the Eleventh Circuit examined the purpose of the FCA’s public disclosure bar.[23] As the court noted, “[w]ithout this public disclosure bar, ‘opportunistic relators—with nothing new to contribute—could exploit the FCA’s qui tam provisions for their personal benefit.’”[24] The Eleventh Circuit asserted that there is a three-part test to determine if the public disclosure bar applies.[25] First, the court examines whether the allegations had been publicly disclosed.[26] If the answer is “yes,” the court will ask whether “‘the allegations in the complaint are “substantially the same” as . . . allegations or transactions contained in public disclosures.’”[27] If the answer to that question is also “yes,” the court will ask if the relator is “‘an “original source” of that information.’”[28]

As to the first question, the court initially easily determined that the blog posts were disclosed prior to the suit.[29] The court further held that the blog posts constituted “news media” under the FCA.[30] As the court had concluded in Osheroff, “‘publicly available websites . . . intended to disseminate information’ are ‘news media’ under the FCA.”[31] The court rejected the Relator’s argument that the blog posts were not news media because they were individually-run blogs.[32] According to the Eleventh Circuit, “[t]hese blogs—no matter their precise size or sweep—are publicly available websites that bill themselves as disseminating foreclosure-related and mortgage-related information to the public.”[33] According to the court, “[b]ecause there is nothing private or personal about these blogs, we need not address whether the term ‘news media’ under the FCA covers a private or personal social media page.”[34]

Regarding the second part of the analysis, the court held that Relator’s allegations were substantially the same as the allegations contained in the blog posts.[35] The court noted that although the blog posts were not exactly the same as Relator’s allegations, they were substantially similar.[36] The court concluded its analysis of this issue by asserting, “[o]ur case law requires significant overlap, not that a mirror image of the complaint’s allegations had been publicly disclosed.”[37]

As to the final inquiry, the court rejected the Relator’s argument that he was the original source of the information “because his law practice gave him independent knowledge of JP Morgan Chase’s fraud.”[38] The court held that the Relator’s “litigation against JP Morgan Chase has not provided him with independent information to corroborate his stamping scheme theory or his allegation that JP Morgan Chase submitted false claims to the government.”[39] The court further determined that the allegations in the amended complaint did not materially add to the claims made in the blog posts.[40] Thus, the court concluded that “[t]he blog articles publicly disclosed in the news media substantially the same allegations as those in Jacobs’s lawsuit before he filed it, and he is not an original source of the information.”[41] Therefore, the district court properly dismissed the action.[42]

The Jacobs case highlights some of the intricacies of FCA claims. Such causes of action are highly complicated, and it is important to seek counsel if you feel you have such a claim.  If you have any questions or concerns regarding this topic, or any topic related to labor and employment law, please contact us.

[1] As noted in previous blog posts, Florida is in the Eleventh Circuit.

[2] The opinion is available at https://media.ca11.uscourts.gov/opinions/pub/files/202210963.pdf (last visited Oct. 24, 2024).

[3] For an overview of the False Claims Act, please review our previous blog post: https://www.schwartzlawfirm.net/dont-cross-uncle-sam-a-brief-overview-of-the-false-claims-act/ (last visited Oct. 24, 2024).

[4] U.S. ex rel. Jacobs, at *2 (quoting 31 U.S.C. § 3730(e)(4)(A)).

[5] Id. (quoting 31 U.S.C. § 3730(e)(4)(A)).

[6] Id.

[7] Id., at *2-3.

[8] Id., at *3.

[9] Id.

[10] Id.

[11] Id., at *3-4.

[12] Id., at *4.

[13] Id.

[14] Id.

[15] Id.

[16] Id.

[17] Id., at *4-5.

[18] Id., at *5.

[19] Id.

[20] Id.

[21] Id.

[22] Id., at *6.

[23] Id., at *7.

[24] Id. (quoting U.S. ex rel. Bibby v. Mortg. Invs. Corp., 987 F.3d 1340, 1353 (11th Cir. 2021) (other citation omitted)).

[25] Id., at *8.

[26] Id.

[27] Id. (quoting U.S. ex rel. Osheroff v. Humana, Inc., 776 F.3d 805, 812 (11th Cir. 2015) (other citation omitted)).

[28] Id., at *9 (quoting Osheroff, 776 F.3d at 812 (other citation omitted)).

[29] Id.

[30] Id.

[31] Id., at *10 (quoting Osheroff, 776 F.3d at 813).

[32] Id., at *10-11.

[33] Id., at *11.

[34] Id.

[35] Id., at *12.

[36] Id., at *13.

[37] Id., at *13-14.

[38] Id., at *14.

[39] Id., at *15.

[40] Id.

[41] Id., at *16.

[42] Id.

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