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IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION UNITED STATES ex rel. CURTIS LOCKEY, et al., Plaintiffs, v. CITY OF DALLAS, et al., Defendants.

Civil Action No. 3:11-CV-354-O ECF

CITY OF DALLAS RESPONSE TO RELATORS RULE 60(b)(2) MOTION FOR RELIEF FROM FINAL JUDGMENT TO THE HONORABLE COURT: Defendant, the City of Dallas (the City), hereby files this response to Relators rule 60(b)(2) motion for relief from final judgment, and respectfully shows the Court as follows: I. INTRODUCTION The Court granted judgment on January 23, 2013. (ECF No. 102). The Court Relators

determined that Relators false claim act lawsuit was barred by public disclosures.

have appealed and filed their brief on November 5, 2013. In their appellate brief, Relators do not dispute that there were public disclosures but only argue that Relators were an original source. The Citys brief is due January 8, 2014. On November 25, 2013, the City received a copy of a letter from the regional office of United States Department of Housing and Urban Development (HUD). The Citys last communication with HUD regarding the housing complaint was in

October 2010 and it was only through discovery in this case that the City learned of additional communications by Relators with HUD to supplement the housing complaint. (See ECF No. 90 at 9 [page 4 of the brief]; ECF No. 104 at 19-20 [page 15-16 of the brief). The City emphatically denies the findings and conclusions in the HUD letter and the City will be filing its request for

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review on January 10, 2014.

The City requests that it be allowed to supplement this response

with a copy of what it files with the Washington office of HUD if this Court has not already dismissed or denied Relators rule 60(b)(2) motion. Contrary to Relators assertions, the HUD

letter contains no findings of fraud, rather only alleged regulatory non-compliance, as to disputed interpretations of regulations based on a disputed rendering of facts. Further, contrary to

Relators claims, there is no newly discovered evidence and nothing about the disputed HUD letter alters this Courts judgment. II. JURISDICTION

As a preliminary matter, this Court lacks jurisdiction to grant the relief sought by Relators because their appeal of the Courts final judgment has divested the Court of its subjectmatter jurisdiction. Lopez Dominguez v. Gulf Coast Marine & Assocs., Inc. , 607 F.3d 1066,

1073 (5th Cir. 2010) (When a notice of appeal transfers jurisdiction to the appellate court, district courts lose the ability to vacate or amend their orders that have been appealed.) (citing Winchester v. U.S. Attorney for the S. Dist. of Tex., 68 F.3d 947, 948-49 (5th Cir. 1995) (a perfected appeal divests the district court of jurisdiction.). The district court maintains Lopez

jurisdiction solely to consider and deny the Rule 60(b) motion brought by Relators.

Domingez, 607 F.3d at 1073. Even if the district court were inclined to grant the 60(b) motion, it is necessary to obtain the leave of the court of appeals. Without obtaining leave, the district court is without jurisdiction, and cannot grant the motion. Winchester, 68 F.3d at 949. The district court may grant the motion only if the court of appeals remands for that purpose. FED. R. CIV. P. 62.1(c). Additionally, it would be imprudent and a waste of judicial resources for the district court even to consider Relators Rule 60(b) motion in light of their perfected appeal. When a party

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seeking an indicative ruling under Rule 62.1, asks the district court to reconsider the same question being reviewed by the court of appeals, any indicative ruling on that very issue only interrupts the appellate process. Ret. Bd. of Policemens Annuity & Ben. Fund of the City of Chicago v. Bank of New York Mellon , 86 Fed. R. Serv. 3d 773 (S.D.N.Y 2013). In this case, Relators are challenging the district courts determination, as a matter of law, that they were not original sources. Any indicative ruling would do little to aid the Fifth Circuit in its de novo

review of the appeal. III. RULE 60(b)(2) MOTION

Relators have presented the Court with no new evidence that warrants the Courts amendment of its final judgment under FED R. CIV. P. 60(b)(2). To succeed on a motion for relief from judgment based on newly discovered evidence, Relators must demonstrate (1) that they exercised due diligence in obtaining the information; and (2) that the evidence is material and controlling and clearly would have produced a different result if present before the original judgment. Goldstein v. MCI WorldCom , 340 F.3d 238, 257 (5th Cir. 2003) (citation omitted). A judgment will not be reopened if the evidence is merely cumulative or impeaching and would not have changed the result. Hesling v. CSX Transp., Inc., 396 F.3d 632, 639-40 (5th Cir. 2005) (citation omitted). The HUD letter is not material or controlling, and does not provides a basis

for a different result even if it existed when the judgment was original granted. Initially, Relators made the same argument to the Court when the HUD investigation was pending. The issuance of the HUD letter does not alter the analysis or the result. Relators were not the original source of the information provided to HUD or the allegations or transactions alleged in this action. In deciding whether there was a public disclosure, the Court assumed the The Court then looked to the public disclosures and

allegations in the complaint were true.

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compared them to the allegations and transactions alleged in the complaint. Once it concluded that there were public disclosures, the Court looked to whether Relators were an original source and correctly concluded they were not. (See generally ECF Nos. 101, 138). Relators motion does not address how the Courts ruling was wrong or how the HUD letter invalidates the judgment even if it had been issued prior to Courts denial of the ir motion to amend the judgment. Nothing in Relators motion or brief suggests that HUDs letter is not also based on

publicly disclosed information or suggests that they are the original source of that information. To the contrary, the City already presented evidence that the claims on which the HUD letter is based were based upon previously public disclosures and Relators were not original sources. (See ECF No. 104 at 8-19 [pp. 4-16 of the brief]). The HUD letter provides no new or even additional evidence that the Relators were original sources, since all of Relators allegations and complaints considered by HUD were already before this Court as part of its analysis of whether the public disclosure bar applied. Therefore, even if the Court considered the HUD letter, the

evidence is not material or controlling and would not have produced a different result. In both the case before this Court and in Relators complaint to HUD, Relators alleged that the City failed to affirmatively further fair housing by supplying evidence of previously disclosed documents, their own review of those documents, plus allegations about their own interactions with the City. (See ECF No. 138 at 7-9) The HUD letter merely concludes that such evidence, taken together, puts the City in noncompliance with the Civil Rights Act and fair housing laws. (Relators Ex. 1 at 1) The HUD letter in no way opines upon, nor does it provide new or additional evidence of, Relators original source status that was not previously before this Court. As the Court has already determined, Relators had no direct and independent knowledge that qualified them as original sources. (ECF No. 101 at 20-23). Relators personal experiences

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and interactions with the City did not constitute qualitatively different information than what was already publicly disclosed. (ECF No. 138 at 507) To be qualitatively different, the

Relators information and allegations had to be more than just the product and outgrowth of publicly disclosed information. (ECF No. 138 at 7) As Relators point out, the HUD letter alleges a pattern of negative reactions to projects that would provide affordable housing in the northern sector of Dallas, of which Relators project at 1600 Pacific was just one. (ECF No. 147 at 2, citing Ex. 1 at 4) The HUD letter supports its conclusion by analyzing multiple public documents, such as the Citys analyses of impediments, and multiple other studies that were prompted by the Walker v. City of Mesquite litigation (NO. 3:85-CV-1210-O (N.D. Tex.), dating back to 1985. (See Relators Ex. 1 at 8-12) The HUD letter may purportedly support a theory that the Citys treatment of Relators 1600 Pacific project was a product and outgrowth the Citys pattern of negative reactions to affordable housing projects. However, there is nothing in the HUD letter supporting Relators

claim that they are an original source of independent or direct knowledge or information that was qualitatively different from what had previously been disclosed. As the Court has already

determined, Relators complaints to HUD about their experiences with the 1600 Pacific project do not magically transform their knowledge of information and allegations, gleaned almost entirely from public sources, into direct and independent knowledge. (ECF No. 138 at 9) Nor did the Relators knowledge add anything material to the publicly disclosed transactions because the knowledge Relators gained were so similar to the previously disclosed transactions. Court. (ECF No. 138 at 10). The HUD letter confirms this conclusion drawn by the

Accordingly, the new evidence raised by Relators in its Rule 60(b)(2) motion is not

material or controlling and clearly would not have produced a different result.

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Additionally, an original source must be an original source of the allegations in the pleadings. U.S. ex rel. Wright ex rel. Wright v. Comstock Resources, Inc. , 456 Fed. Appx. 347, 355-56 (5th Cir. 2011) (per curiam). In neither their original nor amended complaint did

Relators make any allegation about their project. Therefore, any claim by 1600 Pacific, LP to HUD is not material or controlling and would not change the result. Any evaluation of public

disclosure is limited to the allegations in the original complaint and not the amended complaint. U.S. ex rel. Jamison v. McKesson Corp., 649 F.3d 322, 327-28 (5th Cir. 2011). The original

complaint claimed false certifications only to the year 2009. (ECF No. 2 at 48 [173], 49[179]). The events alleged in the HUD letter nearly all appear to be after 2009 and again are not material or controlling and would not change the result.1 Apart from those issues, the Court correctly noted that the crux of the Relators complaint was that the Citys analyses of impediments were defective by not analyzing or including various impediments. (ECF No. 101 at 6-7; ECF No.138 at 17). The Court determined that the same issues had been previously raised by the TAHP report card and the motion to affirmatively further fair housing in the Walker case for which Relators were not an original source. (ECF No. 101 at 22-23; ECF No. 138 at 7-8). The Court further concluded that Relators knowledge was not otherwise independent of other publicly disclosed allegations and transactions. (Id.). The

Court agreed with the characterization of the Relators allegations as a regurgitation o f publicly disclosed information. (ECF No. 138 at 8, note 6). Nothing about the HUD information alters that result. Moreover, Relators already claimed they were the source of the allegations in the HUD letter. The only thing that has happened is that HUD has now acted. Therefore, there is no

newly-discovered evidence here as required by Goldstein v. MCI WorldCom , 340 F.3d at 257.
1

The original complaint also precludes application of the 2010 amendments to the False Claims Act to this action.

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Finally, a qui tam action that is even partly based upon a publicly disclosed allegation or transaction is based upon such allegations or transaction for purposes of the jurisdictional inquiry. U.S. ex rel. Fried v. West Indep. Sch. Dist., 527 F.3d 439, 442 (5th Cir. 2008). Thus, if any part of the complaint was based on publicly disclosed allegations and transactions, for which Relators were not the original source, the action is barred by public disclosure. Here, there is no question that Relators were not the original source for at least a part, if not all, of allegations and transactions asserted in this action. (E.g. the 1997 Analysis of Impediments was not timely updated). Thus, the information Relators now present is not material or controlling and does not

provide a clear basis for a different result. The motion should be denied. IV. DISMISSAL PURSUANT TO 31 U.S.C. 3730(e)(3)

In the alternative, all of the arguments now advanced by Relators require that the judgment be affirmed because the case should be dismissed pursuant to 31 U.S.C. 3730(e)(3). The statute states: In no event may a person bring an action under subsection (b) which is based upon allegations or transactions which are the subject of a civil suit or an administrative civil money penalty proceeding in which the Government is already a party. 31 U.S.C. 3730(e)(3). The City previously sought dismissal based on this provision because of the Walker litigation and the HUD proceeding. The issue was fully briefed. (See ECF Nos. 89, 90, 94, 97). The Court dismissed Relators action based on the public disclosure bar, which

rendered the Citys motion based on 31 U.S.C. 3730(e)(3) moot. (ECF No. 101 at 30). When the City first sought dismissal on this ground, Relators argued that the HUD proceedings were not an administrative civil penalty proceeding and the government was not a party because it was neutral. They argued that HUDs actions were a mere investigation and HUD had not yet

decided what action it will take. Relators asserted that the proceeding must be an enforcement

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proceeding. (ECF No. 94 at 11-12, 14- 15). The City disputed Relators interpretation of the statute and the circumstances. Now, Relators reliance on HUDs action leaves no doubt that

HUD was a party, not neutral, and it was proceeding in an administrative civil penalty proceeding. Relators also argued that the bar did not apply because the allegations in their false claim act case were not the subject of the HUD proceeding. (ECF No. 94 at 16). Now they are arguing the allegations are nearly identical. The statute is clear: In no event may a person bring an

action under subsection (b) which is based upon allegations or transactions which are the subject of a civil suit or an administrative civil money penalty proceeding in which the Government is already a party. 31 U.S.C. 3730(e)(3). Relators latest motion establishes that the judgment should be affirmed because the allegations and transaction in this lawsuit was the subject of the HUD proceedings and the Walker litigation and dismissal was proper. In the event the Court plans to issue an indicative ruling that would amend the Courts final judgment, the City requests that the indicative ruling include a determination that the action, if remanded, would be dismissed on the alternative basis of dismissal pursuant to 31 U.S.C. 3730(e)(3). V. CONCLUSION AND PRAYER

The City requests that the Court deny the motion. In the alternative, the City requests that the Court delay any ruling until after the City has submitted its request for review and provided a copy to the Court. In the event the Court plans to issue an indicative ruling that

would amend the Courts final judgment, the City requests that the indicative ruling include a determination that the action, if remanded, would be dismissed on the alternative basis of

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dismissal pursuant to 31 U.S.C. 3730(e)(3). The City requests such further relief as the Court finds just.

Respectfully Submitted, CITY OF DALLAS WARREN M. S. ERNST Interim City Attorney /s/ Charles Estee CHARLES ESTEE Texas Bar No. 06673600 Charles.estee@dallascityhall.com PETER B. HASKEL Texas Bar No. 09198900 peter.haskel@dallascityhall.com JENNIFER C. WANG Texas Bar No. 24049537 jennifer.wang@dallascityhall.com Assistant City Attorneys Dallas City Attorneys Office 1500 Marilla Street, Room 7DN Dallas, Texas 75201 Telephone: (214) 670-3519 Telecopier: (214) 670-0622 ATTORNEYS FOR THE CITY OF DALLAS

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CERTIFICATE OF SERVICE I hereby certify that on December 17, 2013, I electronically filed the foregoing document with the clerk of the court for the United States District Court, Northern District of Texas, using the electronic case filing system of the court. I hereby certify that I have served all counsel

electronically via ECF or by another manner authorized by Federal Rule of Civil Procedure 5(b)(2).

/s/ Charles Estee

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