UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

)
UNITED STATES OF AMERICA, )
ex rel. LAURENCE SCHNEIDER, et al., )
)
Plaintiffs, )
Civil Action No. 14-1047 (RMC)
)
v. )
UNDER SEAL 1
)
J.P. MORGAN CHASE BANK, N.A., et al., )
)
Defendants. )
)

UNITED STATES’ APPLICATION FOR A PARTIAL LIFTING

OF THE SEAL AS TO THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK

For the reasons set forth below, the United States respectfully applies for an order

partially lifting the seal over the First Amended Complaint (“FAC”) to allow Relator and

Defendants -- J.P. Morgan Chase Bank, N.A. and certain other entities (collectively “Chase”) --

to disclose a copy of the FAC on an under seal or in camera basis to the United States District

Court for the Southern District of New York (“SDNY”) in private litigation pending between

Chase and entities controlled or owned Relator. Chase, through its counsel, consents to this

request. Relator, through his counsel, does not consent to this request. A proposed order is

enclosed herewith.

PROCEDURAL HISTORY

Relator Laurence Schneider (“Relator”) commenced this action on May 6, 2013, in the

U.S. District Court for the District of South Carolina (“DSC”) under the qui tam provisions of

1
The United States files this Application under seal pursuant to the terms of the False
Claims Act. The United States does not file this Application on an in camera basis because the
Court has partially lifted the seal as to Defendants and this Application does not otherwise
contain sensitive information regarding the United States’ investigation of this matter.
the federal False Claims Act (“FCA”) and companion state statues on behalf of the United States

and several states and the District of Columbia (collectively, the “States”), respectively, against

J.P. Morgan Chase Bank N.A.; J.P. Morgan Chase & Company; and Chase Home Finance LLC

(collectively, “Chase”). See R.1. Initially, Relator’s claims focused on allegations that Chase

claimed credits under its National Mortgage Settlement (“NMS”) for forgiving loans that

Relator, and not Chase, owned. The United States declined to intervene in Relator’s initial

claims and filed a notice with the DSC indicating as such on January 13, 2014. See R.24. The

States similarly declined and filed notices thereafter. See, e.g., R.25-37. Relator then moved to

transfer his case to this Court, which the DSC granted on June 19, 2014. See R.57, 58.

In October 2014, Relator moved for leave to file an amended complaint in this action

under seal pursuant to the FCA, which the Court subsequently granted. See R.78, 79. The Clerk

docketed Relator’s FAC under seal on November 17, 2014. Relator’s FAC repeats a number of

the same allegations contained in his initial Complaint, but adds other distinct theories of

liability. Specifically, Relator now also alleges that Chase violated certain servicing standards

set forth in the NMS and other authorities regarding the servicing of home loans, which allegedly

allowed Chase to avoid penalties and claim credits to which it was not entitled.

The Government moved to extend its intervention period as to the FAC, which the Court

granted. The United States’ intervention period is currently set to expire on July 16, 2015.

Pursuant to the Court’s prior order partially lifting the seal in this matter as to Chase, the United

States has provided a copy of the FAC to Chase. The United States did so to learn Chase’s

response to Relator’s allegations, which the United States wishes to consider in reaching a fair,

just, and well-informed intervention decision as to the FAC.

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 RELATOR AND CHASE’S PRIVATE LITIGATION

On or about December 24, 2014, certain entities controlled or owned by Relator (the

“Schneider Entities”) filed suit against Chase and certain related entities stemming from Chase’s

alleged breach of contract and other alleged tortious actions. Mortg. Resolution Serv’g, LLC v.

J.P. Morgan Chase Bank, N.A., Civ. A. No. 15-0293 (S.D.N.Y.) (the “SDNY Action”).

Thereafter, the Schneider Entities amended their complaint and Chase removed the case to

federal court. On March 31, 2015, the Schneider Entities filed a second amended complaint in

the SDNY Action. Id. at R.27. Both parties provided counsel for the United States a copy of

that complaint.

In conjunction with receiving the Schneider Entities’ second amended complaint in the

SDNY Action, Chase’s counsel informed counsel for the United States that Chase wished to

provide a copy of the FAC in this action (which is presently under seal) to the SDNY during the

course of motions practice in the SDNY Action. As such, Chase requested that the United States

consider seeking a partial lift of the seal in this action.

DISCUSSION

The United States has reviewed Chase’s request and allowed Relator, through counsel, to

respond with his thoughts on a partial lift to permit sharing the FAC with the SDNY. Based on

the entire record before the United States and the status of its review of Relator’s FAC, the

United States has no objection to permitting Relator and Chase to disclose a copy of the FAC to

the SDNY in the parties’ private action on an under seal or in camera basis.

A qui tam complaint is filed under seal so that the Government has an adequate

opportunity to evaluate the allegations without interference and to determine whether it is in the

Government’s interest to intervene and take over the civil action. Indeed, the legislative history

of the False Claims Act makes this clear:

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 Keeping the qui tam complaint under seal . . . is intended to allow the
Government an adequate opportunity to fully evaluate the private enforcement
suit and determine both if that suit involves matters the Government is already
investigating and whether it is in the Government’s interest to intervene and take
over the civil action.

S. Rep. No. 99-345, 99th Cong. 2nd Sess. 24 (1986), reprinted in 1986 U.S. Code Cong. &

Admin. News 5266, 5289. The legislative history also notes that the qui tam seal allows the

Government “an opportunity to study and evaluate” fraud allegations. Id.

Although the United States continues to study and evaluate Relator’s allegations in the

FAC, it sees no reason why sharing a copy of the FAC with the SDNY in the parties’ private

litigation will hinder the Government’s efforts. Indeed, the existence of this qui tam action is

already a matter of public record and Chase has received a copy of the FAC. The Government

sees no just reason to keep Relator’s specific allegations hidden from the SDNY in the parties’

private litigation when both parties are aware of them. The United States believes, however, that

it is not yet prudent to seek a full public disclosure of Relator’s allegations because its review of

the FAC continues. Consequently, the United States seeks this partial lift only to permit Chase

and Relator to disclosed the FAC on an under seal or in camera basis to the SDNY in the parties’

private litigation.

The United States believes this request appropriately balances the purposes of the seal --

to allow the Government an opportunity to review and investigate outside the view of public --

with the parties’ needs to provide the SDNY with information potentially relevant to their

litigation. 2

2
For the avoidance of doubt, the United States expressly notes that it takes no position (i)
on whether the FAC is relevant to the SDNY Action or (ii) as to any position or issue raised by
Chase or the Schneider Entities in that private litigation.

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 CONCLUSION

The United States respectfully requests that the seal be partially lifted to permit Relator

and Chase to provide the SDNY a copy of the FAC on an under seal or in camera basis in the

parties’ SDNY Action. A proposed order is enclosed herewith.

Dated: April 16, 2015

Washington, DC
Respectfully submitted,

BENJAMIN C. MIZER
Principal Deputy Assistant Attorney General

VINCENT H. COHEN, JR., D.C. Bar #471489

Acting United States Attorney

DANIEL F. VAN HORN, D.C. Bar #924092

Chief, Civil Division, U.S. Attorney’s Office

By: /s/ Brian P. Hudak

BRIAN P. HUDAK
Assistant United States Attorney
555 Fourth Street, NW
Washington, DC 20530
(202) 252-2549

MICHAEL D. GRANSTON
RENÉE BROOKER
WILLIAM C. EDGAR
Attorneys, Commercial Litigation Branch
Civil Division, Department of Justice
P.O. Box 261 Ben Franklin Station
Washington, D.C. 20044
(202) 353-7950

Attorneys for the United States of America

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