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Whistleblower loses Supreme Court case
March 27, 2007 by Ross Runkel at LawMemo
What did he know, and when did he know it?
James Stone thought his ex employer was cheating the government. So he sued under the False Claims Act, hoping to get a chunk of money for his efforts.
One problem. Stone had to be an "original source" of information provided to the government. The US Supreme Court held (6-2) that he was not. Rockwell International Corp v. United States (US Supreme Court 02/27/2007)
Stone predicted that Rockwell's system for creating solid "pondcrete" blocks from toxic pond sludge and cement would not work because of problems in piping the sludge. However, Rockwell successfully made such blocks and discovered "insolid" ones only after Stone was laid off in 1986. In 1989, Stone filed a qui tam suit under the False Claims Act, which prohibits submitting false or fraudulent payment claims to the United States. In order to bring a qui tam suit, one must be an "original source" - one who "has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government before filing an action … based on the information."
Stone did not allege that his predicted defect caused the insolid blocks. Intead, he alleged that the pondcrete failed because a new foreman used an insufficient cement-to-sludge ratio.
Stone's knowledge fell short. The only false claims found by the jury involved insolid pondcrete discovered after Stone left his employment. Thus, he did not know that the pondcrete had failed; he predicted it. And his prediction was a failed one, for Stone believed the piping system was defective when, in fact, the pondcrete problem would be caused by a foreman's actions after Stone had left the plant.
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Editor: Ross Runkel, Professor of Law Emeritus. email Ross@LawMemo.Com, Phone 503-399-8028. Copyright LawMemo, Inc.
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