UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA, ex rel.,
MARK J. O’CONNOR and SARA F.
LIEBMAN,
Plaintiff-Relators,
No. 20-cv-2070 (TSC)
v.
U.S. CELLULAR CORPORATION, et al.,
Defendants.
MEMORANDUM OPINION
In this qui tam action under the False Claims Act, Relators Mark O’Connor and Sara
Liebman allege that U.S. Cellular Corporation—acting through its proxy, Allison DiNardo, and a
sham company, Advantage Spectrum, L.P.—purchased spectrum licenses at auctions conducted
by the Federal Communications Commission (“FCC”) using nearly $113 million in fraudulently
obtained small business bidding credits. At the time, U.S. Cellular was the “fifth largest
commercial mobile phone operator in the United States,” and ineligible for small business
credits. See Am. Compl. ¶ 13, ECF No. 174. Defendants now move to dismiss. See ECF Nos.
212, 213. For the following reasons, the court will DENY the motions.
I. BACKGROUND
A. False Claims Act
“Enacted in 1863, the False Claims Act ‘was originally aimed . . . at stopping the massive
frauds perpetrated by large contractors during the Civil War.’” Universal Health Servs., Inc., v.
United States ex rel. Escobar, 579 U.S. 176, 194 (2016) (quoting United States v. Bornstein, 423
U.S. 303, 309 (1976)). To that end, the FCA made it unlawful, among other things, for an
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individual to “knowingly present[], or cause[] to be presented, a false or fraudulent claim for
payment or approval” to the government. 31 U.S.C. § 3729(a)(1)(A). “A violator faces civil
penalties up to $10,000 per claim and treble damages.” United States ex rel. Cimino v. IBM, 3
F.4th 412, 415 (D.C. Cir. 2021).
If the government declines to proceed with an FCA claim, private individuals—called
“relators”—may pursue qui tam actions on the government’s behalf. 31 U.S.C. § 3730(b). A
prevailing relator can receive up to 30 percent of any settlement or judgment. See id. § 3730(d).
The FCA’s decision to authorize qui tam actions—which have “been used throughout American
and English history as a means to discover and to prosecute fraud against the national
treasuries”—“was precipitated by a desire to combat widespread corruption and fraud amongst
defense contractors who supplied the Union Army.” Riley v. St. Luke’s Episcopal Hosp., 252
F.3d 749, 752 (5th Cir. 2001) (en banc).
B. Spectrum Auctions
Telecommunications companies provide cellular and other wireless services by
“transmit[ing] sound, data, and video” across radio frequencies that form part of the
“electromagnetic spectrum.” SNR Wireless LicenseCo, LLC v. FCC, 868 F.3d 1021, 1025 (D.C.
Cir. 2017) (cleaned up). Under the Communications Act of 1934, no company may use radio
spectrum without an FCC license. See 47 U.S.C. §§ 301, 307. To “apportion spectrum licenses
among competing companies, the [FCC] holds auctions that involve a two-step license
application process.” United States ex rel. Vermont Nat’l Tele. Co. v. Northstar Wireless, LLC,
34 F.4th 29, 31 (D.C. Cir. 2022). First, “companies submit streamlined, short-form applications
. . . concerning their eligibility to bid in the auction.” Id. at 32 (cleaned up). “Second, winning
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bidders file a more comprehensive long-form application to demonstrate their qualifications to
hold spectrum licenses[.]” Id. (cleaned up).
Spectrum licenses are expensive—one of the many “high barriers to entry in the
telecommunications market.” United States ex rel. O’Connor v. USCC Wireless Inv., Inc., 128
F.4th 276, 281–82 (D.C. Cir. 2025) (“King Street”). To “avoid[] excessive concentration of
licenses” among deep-pocketed corporations, Congress directed the FCC to develop
“competitive bidding system[s]” to promote the dissemination of licenses “among a wide variety
of applicants, including small businesses.” 47 U.S.C. § 309(j)(3). “To implement this statutory
goal, the FCC established a program that provides qualifying small businesses, i.e., designated
entities, with bidding credits that effectively discount the cost of their licenses.” King Street, 128
F.4th at 281–82. Although “the FCC . . . encourages larger companies to invest in and support
designated entities,” id. at 282, “FCC regulations specify that bidding credits can only be used by
genuine small businesses—not by small sham companies that are managed by or affiliated with
big businesses.” SNR Wireless, 868 F.3d at 1026. Companies claiming bidding credits must
certify certain information regarding their eligibility for those credits—under penalty of
perjury—in both their short-form and long-form applications. See Northstar Wireless, 34 F.4th
at 32.
In May 2014, the FCC announced Auction 97. SNR Wireless, 868 F.3d at 1026. “The
Auction Notice explained that small businesses would be eligible to receive bidding credits [that]
would depend on the amount of the designated entities’ ‘attributable’ revenues over the
preceding three years.” Id. So-called “very small businesses”—i.e., “entities with less than $15
million in attributable annual revenues”—“could receive a twenty-five percent discount” on their
winning bids. Id.
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“As relevant here, attributable revenues included the revenues of the small business
itself[,] the revenues of any entity with ‘de facto control’ over” the small business, and the
revenues of any entity with an “attributable material relationship” to the small business. SNR
Wireless, 868 F.3d at 1026 (quoting Auction Notice, 29 F.C.C. Rcd. 8386, 8412–13 (2014)); see
also 47 C.F.R. § 1.2110(b)(1)(i) (2012)). De facto control “turns on whether the allegedly
controlling entity appoints a majority of the [small business]’s board of directors, has authority to
appoint its senior executives, or plays an integral role in its management.” United States ex rel.
O’Connor v. U.S. Cellular Corp., 153 F.4th 1272, 1276 (D.C. Cir. 2025) (“Advantage
Spectrum”). “An ‘attributable material relationship’ exists if the applicant agrees to lease at least
‘25 percent of the spectrum capacity’ of any license to another company.” Id. (quoting 47 C.F.R.
§ 1.2110(b)(3)(iv)(A) (2012)). Under the “unjust enrichment rule,” any designated entity that
receives a small business bidding credit must repay some or all of that credit if the entity sells its
spectrum license to, or becomes subject to the control of, “another entity that is ineligible for the
credit” “within five years of obtaining [that] license.” Id. (cleaned up).
C. Factual Allegations
This qui tam action is based on allegations “that U.S. Cellular controlled and had an
attributable material relationship with Advantage” Spectrum, L.P.—a relationship “which these
companies concealed from the FCC” in order to appear eligible for small business bidding
credits for use at Auction 97. Advantage Spectrum, 153 F.4th at 1276. Specifically, Relators
allege that since 2002, U.S. Cellular has worked with Defendant Allison DiNardo to form “small
business . . . fronts” “secretly” controlled by U.S. Cellular. Am. Compl. ¶ 68, ECF No. 174.
These fronts, nominally controlled by DiNardo, purchased spectrum licenses at several FCC
auctions using small business bidding credits for which U.S. Cellular was ineligible. Id. ¶¶ 68–
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69. When the unjust enrichment periods ended, the sham companies formally transferred their
licenses to U.S. Cellular. Id. ¶ 68.
After the FCC announced Auction 97 in May 2014, U.S. Cellular and DiNardo engaged
William Vail, a retiree living in Florida. Am. Compl. ¶ 76. Because several designated entities
were already registered in DiNardo’s name, U.S. Cellular and DiNardo needed to establish a
designated entity that appeared to be controlled by “someone other than DiNardo.” Id. ¶ 75. In
August 2014, Vail registered Advantage Spectrum as a limited partnership and listed himself,
through two corporate intermediaries, as its general partner. Id. ¶¶ 17, 21. Through a web of
intermediaries, Vail owned 5.1% of Advantage, DiNardo owned 4.9%, and U.S. Cellular owned
the remaining 90%. Id. ¶¶ 12–19. Although DiNardo and U.S. Cellular were purported to be
limited partners, Relators allege that under “undisclosed agreements,” DiNardo and U.S. Cellular
controlled Advantage’s bidding activities, U.S. Cellular built out Advantage’s network during
the unjust enrichment period, and Vail agreed that he would “formally transfer” Advantage and
its “licenses to U.S. Cellular” after the unjust enrichment period ended. Id. ¶¶ 102–03.
In November 2014, Advantage submitted its short-form application to participate in
Auction 97 and claimed bidding credits as “a very small business.” Am. Compl. ¶ 77. To obtain
those credits, Vail “falsely and fraudulently” certified that he had controlling interests in
Advantage, and that no one else had any such interest. Id. ¶ 78. Although Vail disclosed that
U.S. Cellular and DiNardo had non-controlling interests in Advantage, he “falsely and
fraudulently” certified that their revenues “were not attributable to Advantage” because “they
were not affiliates.” Id. ¶ 79.
At the auction, Advantage submitted winning bids for 124 spectrum licenses totaling
$451 million, for which it claimed nearly $113 million in small business bidding credits. Am.
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Compl. ¶ 95. U.S. Cellular provided the remaining $338 million. Id. Having won the licenses,
Advantage submitted a long-form application which again falsely claimed that Vail was
Advantage’s sole controlling interest holder, and that Vail had “sole authority” to determine
Advantage’s bids. Id. ¶¶ 96–103.
According to Relators, these various assertions were fraudulent because “U.S. Cellular
and DiNardo were and had the controlling interests in Advantage Spectrum,” such that
Advantage was ineligible for the small business bidding credits that it received, and U.S. Cellular
and DiNardo effectively controlled Advantage’s bidding. Am. Compl. ¶ 81. Relators allege that
they observed Advantage’s purported place of business at the time of the auction and discovered
that the office suite was “vacant without any furniture or signage.” Id. ¶ 87. Through
“surveillance,” Relators concluded that Advantage’s bidding was actually conducted from
DiNardo’s offices on King Street in Alexandria, Virginia. Id. ¶ 89. Moreover, although Vail had
worked “as a general manager of local or regional cellular telephone systems” before retiring to
Florida, he had no prior “experience in spectrum auctions” and thus was unqualified to lead
Advantage’s bidding. Id. ¶ 90. U.S. Cellular thus “arranged for DiNardo to oversee Vail’s”
bidding activities. Id. To facilitate DiNardo’s supervision, one of her employees, Stephen Hinz,
was listed on Advantage’s auction registration as Advantage’s only authorized bidder other than
Vail. Id. ¶ 91. Relators further allege that DiNardo and other U.S. Cellular employees were
present at the auction and “participated in the bidding decisions.” Id. ¶ 92. These allegations
therefore undercut Vail’s certification to the FCC that he had “sole authority” to determine
Advantage’s bidding activities. Id. ¶ 102.
While Advantage’s long-form application was pending, the FCC disqualified two
purported small businesses from receiving bidding credits because it found that those entities
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were “de facto controlled by their large investor, DISH Network.” Id. ¶ 106 n.4. Shortly
thereafter, DiNardo sold her interest in Advantage to Vail to further shield Advantage from FCC
scrutiny. Id. ¶ 105. In July 2016, the FCC issued the licenses to Advantage with nearly $113
million in small business bidding credits, with the unjust enrichment period set to end in July
2021. Id. ¶ 111. Those licenses were conditioned on compliance with certain buildout
requirements. See 47 CFR § 27.14(s)(1)–(2). Specifically, Advantage was required to offer
reliable signal coverage and service to at least 40 percent of the population living in the licensed
areas within six years—exactly one year after the unjust enrichment period ended. Id.
Relators claim that because Advantage “never had any employees other than William
Vail” and subsequently “claimed as its business addresses an unoccupied interior room in a
condo complex, a storefront in a strip mall, and a home address in a retirement community,”
Advantage had no real capacity to meet the six-year buildout requirements. Am. Compl. ¶¶ 118,
122, 124. “To enable Advantage to begin to appear to meet” these requirements, U.S. Cellular
entered into leases with Advantage. Id. ¶ 124. At the same time, to “prevent U.S. Cellular’s
gross revenues from being attributed to Advantage,” Advantage falsely and fraudulently certified
in FCC lease notifications that U.S. Cellular’s leases allowed U.S. Cellular to use less than 25%
of Advantage’s licensed spectrum. Id. ¶¶ 126–28. Between 2016 and 2020, Advantage
submitted annual reports to the FCC falsely certifying that “it had not entered into any
agreements or arrangements . . . related to its eligibility” as a designated entity. Id. ¶¶ 112–17.
D. Procedural History
In 2015, Relators filed their initial Complaint in this case. See Compl., ECF No. 2. In
2019, the Justice Department declined to pursue the claims itself, allowing Relators to press
forward on the government’s behalf. See Notice of Election to Decline Intervention, ECF No.
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42. Defendants then moved to dismiss, arguing in part that Relators’ claims were barred under
the public disclosure doctrine because Relators’ allegations were substantially the same as and
did not materially add to information already publicly disclosed by Advantage’s FCC filings,
which had revealed U.S. Cellular’s investments in Advantage. This court agreed with
Defendants and dismissed the Complaint without prejudice. See Mem. Op. at 14, ECF No. 170.
Because Relators’ Amended Complaint, ECF No. 174, did not materially alter the initial
Complaint, this court dismissed that pleading as well. See 2d Mem. Op. at 5, ECF No. 189
(“Advantage’s FCC filings and other publicly available documents continue to bar PlaintiffsRelators’ claims.”).
The D.C. Circuit reversed, explaining that to secure dismissal based on public disclosure,
a defendant must show that “‘substantially the same allegations or transactions as alleged’” by
the relators “were ‘publicly disclosed’” through certain “public channels.” Advantage Spectrum,
153 F.4th at 1277 (quoting 31 U.S.C. § 3730(e)(4)(A)). Even if the allegations are substantially
the same, the public disclosure bar does not apply if the relator “‘has knowledge that is
independent of and materially adds to the publicly disclosed allegations’ and has ‘voluntarily
provided’ it to the Government before filing the qui tam action.” Id. at 1280 (quoting 31 U.S.C.
§ 3730(e)(4)(B)(2)).
The D.C. Circuit expressed skepticism that Advantage’s FCC filings disclose
“substantially the same fraud” alleged by Relators, but declined to resolve the issue. See
Advantage Spectrum, 153 F.4th at 1279. Instead, the Circuit held that even if the Amended
Complaint focuses on substantially the same fraud, it nevertheless “adequately alleges facts that
materially add to information already publicly disclosed.” Id. at 1280. Specifically, Relators
“identified significant new evidence that Advantage never functioned as an independent
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business”—that is, Relators identified evidence that Advantage “never had a legitimate place of
business, employed anyone, or conducted itself in any way as if it were a business,” that Vail
lacked “the experience to run a wireless company,” and that Vail was purporting to run
Advantage from his “Florida retirement community.” Id. at 1281. The Circuit also credited
Relators’ allegations that Vail entered into “an undisclosed agreement” with U.S. Cellular to
transfer Advantage to U.S. Cellular once the unjust enrichment period ended. Id. at 1282. Those
allegations are plausible, the Circuit explained, because the Amended Complaint specifically
detailed facts which, if proven, would show that “Advantage entirely failed to build up a
telecommunications company capable of functioning independent of U.S. Cellular” and this
behavior would make “little sense unless [it] had agreed in advance” to eventually transfer its
licenses to U.S. Cellular. Id. (cleaned up).
On remand, Defendants U.S. Cellular and its affiliated companies, and Allison DiNardo
again move to dismiss, raising arguments not directly addressed by the D.C. Circuit. See U.S.
Cellular MTD, ECF No. 212; DiNardo MTD, ECF No. 213. Because neither motion persuades,
they will both be DENIED.
II. LEGAL STANDARDS
“Because the FCA is an antifraud statute, relators must satisfy both the ‘plausibility’
standard of Federal Rule of Civil Procedure 8 and the heightened ‘particularity’ standard of Rule
9.” Advantage Spectrum, 153 F.4th at 1277. “Under Rule 8, the complaint must ‘contain
sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.”
Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). “Under Rule 9, the complaint ‘must
state with particularity the circumstances constituting fraud.’” Id. (quoting Fed. R. Civ. P. 9(b)).
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III. ANALYSIS
A. Public Disclosure Bar
Defendants now contend that Relators’ claims are barred by a different public
disclosure—a 2008 complaint filed by O’Connor’s former law firm against U.S. Cellular and
DiNardo. See U.S. Cellular MTD at 19–26; DiNardo MTD at 10–15. That earlier complaint
alleged that U.S. Cellular created three sham entities—King Street, Carroll, and Barat—“all
under the control of Defendant Allison Cryor DiNardo,” as fronts for U.S. Cellular to
fraudulently obtain small business bidding credits. See DiNardo MTD – Ex. C at 4, ECF No.
213-5 (“2008 Complaint”); see also King Street, 128 F.4th at 282. Defendants argue that
Relators’ current allegations are substantially the same as the 2008 allegations because the
formation of another sham entity—now with Vail as the frontperson—is merely a continuation
of the scheme disclosed in 2008. U.S. Cellular MTD at 5. Thus, in Defendants’ view, the 2008
allegations gave the government “enough information to investigate” or at least alert authorities
to U.S. Cellular’s allegedly fraudulent formation of Advantage Spectrum as a sham small
business fronted by Vail. U.S. Cellular MTD at 20 (quoting United States ex rel. Winnon v.
Lozano, 146 F.4th 1197, 1208 (D.C. Cir. 2025)).
Defendants’ argument is not wholly without merit. The D.C. Circuit has “long held that
identifying additional examples of an already-exposed scheme does not breathe new life into an
otherwise barred claim.” Winnon, 146 F.4th at 1209 (citing United States ex rel. Davis v.
District of Columbia, 679 F.3d 832, 838 (D.C. Cir. 2012)). And in Defendants’ telling,
Advantage Spectrum is merely a new example of “U.S. Cellular’s purported general practice . . .
of forming sham entities” to obtain bidding credits. U.S. Cellular MTD at 23; see also United
States ex rel. Settlemire v. District of Columbia, 198 F.3d 913, 919 (D.C. Cir. 1999) (A relator
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does not overcome the public disclosure bar by “reveal[ing] specific instances of fraud where the
general practice has already been disclosed.”).
But Defendants fall short of showing that the 2008 Complaint alleged a general practice
by U.S. Cellular of which Advantage Spectrum is just one more example. Instead, the 2008
complaint focused on a more bounded scheme involving three specific companies all fronted by
DiNardo for use in three specific auctions. At this early stage in the litigation, Relators have
plausibly alleged that Advantage Spectrum constitutes a new, distinct, and restructured scheme
to create a sham entity “controlled by someone other than DiNardo”—not the already-exposed
scheme of shell companies with DiNardo as the figurehead. Am. Compl. ¶ 75.
To start, Defendants have failed to show that the 2008 Complaint alleged a sweeping
general practice whereby U.S. Cellular created sham companies fronted by various people to
participate in numerous auctions. To the contrary, the 2008 Complaint framed the case narrowly
around “three . . . public auctions of spectrum licenses,” and alleged that U.S. Cellular created
three sham companies—“all under the control of . . . DiNardo”—to fraudulently obtain bidding
credits “in connection with” those three auctions, “Auctions 58, 66, and 73.” 2008 Compl. at 2–
4. Thus, unlike the prior public disclosure at issue in Winnon, the 2008 Complaint was not as
“broad and encompassing” as Defendants suggest. U.S. Cellular Reply at 6, ECF No. 220
(quoting Winnon, 146 F.4th at 1209 (describing an earlier public disclosure which alleged “fraud
spann[ing]” nursing home locations “across the United States” (cleaned up))).
Defendants’ contrary reading of the 2008 Complaint rests in part on the complaint’s
reference to “U.S. Cellular’s business plan.” U.S. Cellular MTD at 23 (quoting 2008 Compl. at
4). Defendants describe the Complaint as alleging that U.S. Cellular had a business plan to
acquire bidding discounts through sham companies. Id. But the 2008 Complaint used “business
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plan” to refer to U.S. Cellular’s strategy of purchasing licenses adjacent to its existing licenses to
build contiguous markets. 2008 Compl. at 4–5. The Complaint mentioned this only to show that
U.S. Cellular stood behind DiNardo’s businesses, which had acquired licenses next to U.S.
Cellular’s own. It was not an allegation that U.S. Cellular had a standing practice of forming
sham companies to fraudulently obtain bidding credits across numerous auctions. As discussed
above, the 2008 Complaint alleged something narrower: three specific companies fronted by
DiNardo participating in three specific auctions. See 2008 Compl. at 2–4.
The scheme alleged here falls outside those bounds. Unlike with the three companies at
issue in 2008, DiNardo was not Advantage’s front person; she was initially cast as a limited
partner in Advantage. Compare Am. Compl. ¶ 79 with 2008 Complaint at 4 (alleging that the
sham companies were “all under the control of . . . DiNardo”). And after the FCC disqualified
other companies from receiving small business bidding credits, DiNardo allegedly sold her
interest in Advantage to Vail to further obscure her involvement. Id. ¶ 105. That is not to say
that a new front person will always create a new scheme if a defendant has an alleged general
practice of using front people. Rather, the 2008 Complaint alleged a bounded scheme of sham
companies fronted by DiNardo and DiNardo alone. See 2008 Compl. at 4. What Relators allege
here is a different scheme: a different sham company fronted by an entirely new person formed
more than five years later for a different auction. See Am. Compl. ¶ 79. Given these differences
and the absence of an allegation that U.S. Cellular had a general practice of using various
frontpeople, the allegations of the 2008 Complaint would not have “alerted authorities to . . . the
likelihood” that Advantage Spectrum was engaged in fraud. United States ex rel. Davis v.
District of Columbia, 679 F.3d 832, 836 (D.C. Cir. 2012).
Consequently, Defendants’ reliance on King Street, 128 F.4th 276, is misplaced. See
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U.S. Cellular MTD at 20; DiNardo MTD at 12; see also U.S. Cellular Reply at 5 (“The
conclusion in King Street all but resolves this case too.”). King Street is inapposite because
relators there merely alleged additional details about the same three shell companies propped up
by the same front person participating in the same three auctions. 128 F.4th at 285–86.
Defendants’ reliance on Settlemire, 198 F.3d 913, is similarly misplaced. There, D.C.
police officials “disclosed in public Congressional hearings that they were using the funds”
appropriated by Congress in the D.C. Police Authorization and Expansion Act of 1989 “for
purposes beyond those listed in the Expansion Act.” 198 F.3d at 919. The police chief testified
that “the District believed the funds were ‘virtually unencumbered in the way that the Congress
intended us to use it, as long as it was used . . . for law enforcement purposes.’” Id. Because the
District’s “general practice” of spending 1989 Act funds for nonapproved purposes “had already
been disclosed,” the relator’s ability to identify specific expenditures of those funds did not
expose a new fraud, but merely detailed a known one. Id. Settlemire thus stands for the more
limited proposition that a relator cannot revive a barred claim by cataloguing specific examples
of a known practice; it does not hold that a later fraud is “substantially the same” as a previous
one merely because they share a similar modus operandi. The 2008 Complaint did not allege a
similar general practice of which Advantage is one more example; it focused on three companies
fronted by DiNardo participating in three auctions. Relators do not merely add details regarding
the DiNardo frauds in Auctions 58, 66, and 73; they allege an entirely different shell company
using a different front person in a different auction.
Defendants similarly miss the mark by relying on United States ex rel. Findley v. FPCBoron Emps.’ Club, 105 F.3d 675 (D.C. Cir. 1997). There, government reports had publicly
disclosed a practice, documented and widespread across the government, whereby federal
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employees’ clubs stocked vending machines on federal property and kept the profits—to the
chagrin of private vendors. Id. at 678–79. The relators sued one club that had engaged in this
practice, and the D.C. Circuit held that the suit was barred because relators “substantially
repeat[ed] what the public already kn[ew]” and merely identified one member of the class of
entities already known to have engaged in the “previously documented generic practice.” Id. at
687. The 2008 Complaint, by contrast, documented no comparable generic practice. It did not
allege that U.S. Cellular deployed a rotating cast of shell companies fronted by different people
across numerous auctions. It alleged a bounded scheme involving three specific entities, all
fronted by DiNardo, in three specific auctions. Advantage Spectrum and William Vail are
therefore not one more example of “a previously documented generic practice”—they constitute
a new scheme that merely used a similar modus operandi. Id.
Finally, United States ex rel. Oliver v. Philip Morris USA Inc., 826 F.3d 466 (D.C. Cir.
2016), is also inapposite. That case held that “time difference does not undermine the disclosure
of [a defendant’s] general practice.” Id. at 473. But again, the 2008 Complaint did not disclose a
general practice by U.S. Cellular of forming sham companies with various front people across
numerous transactions. Had it done so, the fact that this particular sham company was
established more than half a decade after the 2008 Complaint would not matter. But Advantage
Spectrum constituted a new and distinct scheme allegedly designed to obscure any connection
with the previous scheme involving sham companies fronted by DiNardo. And because the 2008
Complaint did not disclose a general practice by U.S. Cellular but instead alleged a discrete one,
the time difference between that complaint and the instant allegations does affect the analysis.
“[W]hat was once a hot trail of fraud must cool at some point.” United States ex rel. Maur v.
Hage-Korban, 981 F.3d 516, 529 (6th Cir. 2020) (cleaned up). Because allegations from 2008
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regarding the scheme fronted by DiNardo would not have alerted authorities to a separate
scheme fronted by Vail more than five years after the 2008 Complaint, Defendants have failed to
show that the public disclosure bar applies here.
B. Undisclosed Agreements
Defendants next argue that Relators failed to plead with particularity the alleged
undisclosed agreements between U.S. Cellular, DiNardo, and Vail, through which U.S. Cellular
would secretly control Advantage’s bidding (through DiNardo), manage the buildout of the
spectrum during the unjust enrichment period, and then take formal control of the licenses once
that period ended. See U.S. Cellular MTD at 35; see also DiNardo MTD at 22 (arguing that
Relators’ conspiracy claim fails against her because the Amended Complaint “does not plausibly
plead” with particularity “that Ms. DiNardo entered an agreement with the other defendants”).
Defendants fault Relators for not specifying who was involved in that agreement, and where,
when, and how it was made. U.S. Cellular MTD at 35.
Under Rule 9(b), Relators must “state with particularity the circumstances constituting
fraud.” Fed. R. Civ. P. 9(b). This usually means identifying “the who, what, when, where, and
how of the alleged fraud.” United States ex rel. Scollick v. Narula, 215 F. Supp. 3d 26, 35
(D.D.C. 2016) (cleaned up). But “Rule 9(b) does not inflexibly dictate adherence to a
preordained checklist of ‘must have’ allegations.” U.S. ex rel. Heath v. AT&T, Inc., 791 F.3d
112, 125 (D.C. Cir. 2015) (citing United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 188
(5th Cir. 2009) (“Rule 9(b)’s ultimate meaning is context-specific, and thus there is no single
construction of Rule 9(b) that applies in all contexts.”). “Instead, the point of Rule 9(b) is to
ensure that there is sufficient substance to the allegations to both afford the defendant the
opportunity to prepare a response and to warrant further judicial process.” Id. The Amended
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Complaint satisfies this standard: It has given Defendants enough details to notify them of the
alleged fraudulent scheme and raised a strong enough inference of fraud to warrant further
proceedings.
To start, Relators allege how the agreements came about: U.S. Cellular and DiNardo,
who had long formed sham companies on U.S. Cellular’s behalf, resolved to engage a new front
person to prevent FCC scrutiny of their existing sham companies, and thus approached William
Vail. See Am. Compl. ¶¶ 68, 75–76. Relators also allege that the scheme was hatched sometime
between the FCC’s announcement of Auction 97 in May 2014 and Vail’s registration of
Advantage Spectrum as a limited partnership in August 2014. See id. ¶¶ 74–76. This reasonably
narrow three-month period “adequately specifie[s] the time frame”—absolute precision is not
required. See FTC v. Cantkier, 767 F. Supp. 2d 147, 155 n.9 (D.D.C. 2011); see also United
States ex rel. Tran v. Computer Scis. Corp., 53 F. Supp. 3d 104, 123 (D.D.C. 2014) (“To be sure,
the complaint does not relate the specific dates on which [the defendant] submitted each of the
invoices, but Rule 9(b) does not require as much.”); United States v. United Healthcare Ins. Co.,
848 F.3d 1161, 1180 (9th Cir. 2016) (“Because [the Rule 9(b)] standard does not require
absolute particularity . . . , a complaint need not allege a precise time frame.” (cleaned up)).
Relators also plainly alleged who was involved in the agreement: U.S. Cellular,
DiNardo, and Vail. Although Defendants fault Relators for not identifying a specific person
within U.S. Cellular, the D.C. Circuit has held that naming the precise actor within a corporation
“is not an inexorable requirement of Rule 9(b)” in False Claims Act cases. Heath, 791 F.3d at
125 (“Where the corporation is the defendant in a False Claims action, we hold that a relator
need not always allege the specific identity of the natural persons within the defendant
corporation[.]” (quoting United States ex rel. Bledsoe v. Cmty. Health Sys., Inc., 501 F.3d 493,
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509 (6th Cir. 2007) (cleaned up)). Moreover, Relators provided some specificity by alleging that
DiNardo, a businesswoman with a long-established relationship to U.S. Cellular, has functioned
as U.S. Cellular’s “proxy” in overseeing Vail. See Am. Compl. ¶¶ 76, 86, 89–92. These details
suffice to put Defendants on notice as to the scheme it must defend against.
Moreover, the D.C. Circuit has already concluded that Relators “plausibly alleged” the
existence of undisclosed agreements to carry out a fraudulent scheme by detailing in the
Amended Complaint how “Advantage entirely failed to build up a telecommunications company
capable of functioning independent of U.S. Cellular.” Advantage Spectrum, 153 F.4th at 1282.
According to the Circuit, Advantage’s alleged “behavior” as a company in name only would
make “little sense unless [Vail] had agreed in advance that [U.S. Cellular] would ultimately
control the licenses won at auction.” Id. (cleaned up). For similar reasons and given the
allegations regarding who entered what agreements when, this court concludes that the Amended
Complaint contains enough “particular details” to support “a strong inference” at this stage that
undisclosed agreements existed between U.S. Cellular, DiNardo, and Vail. Heath, 791 F.3d at
126 (cleaned up).
This conclusion also disposes of DiNardo’s related contention that Relators fail to state a
conspiracy claim against her under 31 U.S.C. § 3729(a)(1)(C), which is Count One of the
Amended Complaint. See DiNardo MTD at 22–24. To plead an FCA conspiracy, Relators must
allege “(1) an agreement . . . to have false or fraudulent claims allowed or paid by the United
States; (2) that [Defendants] willfully joined that agreement . . . ; and (3) that one or more
conspirators knowingly committed one or more overt acts in furtherance of the object of the
conspiracy.” United States ex rel. Miller v. Bill Harbert Int'l Constr., Inc., 608 F.3d 871, 899
(D.C. Cir. 2010) (per curiam). As described above and in Part III.D, the Amended Complaint
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adequately alleges that DiNardo entered an undisclosed agreement with U.S. Cellular and Vail to
defraud the FCC, Am. Compl. ¶¶ 68, 75–76, and that DiNardo and others committed several
overt acts to advance that agreement, including acting as U.S. Cellular’s proxy in directing Vail’s
bidding. Id. ¶ 86.
C. Materiality
“To be actionable under the FCA, ‘a misrepresentation about compliance with a statutory,
regulatory, or contractual requirement must be material to the Government’s payment decision.’”
Northstar Wireless, 34 F.4th at 36 (quoting Escobar, 579 U.S. at 192). “A misrepresentation is
‘material’ . . . if it has a ‘natural tendency to influence, or be capable of influencing, the payment
or receipt of money or property.’” Id. (quoting 31 U.S.C. § 3729(b)(4)). Pointing to the
Supreme Court’s decision in Escobar, Defendants emphasize that when “the Government pays a
particular claim in full despite its actual knowledge that certain requirements were violated, that
is very strong evidence that those requirements were not material.” DiNardo MTD at 27
(quoting Escobar, 579 U.S. at 195); see also U.S. Cellular MTD at 31 (quoting the same). Thus,
Defendants argue, because the FCC knew of Relators’ allegations from the initial complaint filed
in 2015, the FCC’s subsequent decision in 2016 to approve Advantage’s licenses and bidding
credits shows that Relators’ allegations were not material to the government. See DiNardo MTD
at 27; U.S. Cellular MTD at 31. That argument is unavailing.
Although the FCC may have known of Relators’ allegations in 2015 that U.S. Cellular
and Advantage Spectrum had violated the bidding credit regulations, that does not mean the FCC
had “actual knowledge that [those] requirements were violated.” Escobar, 579 U.S. at 195
(emphasis added). Knowledge of allegations is not knowledge of an actual violation. See United
States ex rel. Escobar v. Universal Health Servs., Inc., 842 F.3d 103, 112 (1st Cir. 2016)
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(explaining on remand from the Supreme Court that “mere awareness of allegations concerning
noncompliance with regulations is different from knowledge of actual noncompliance”); United
States ex rel. Heath v. Wisconsin Bell, 92 F.4th 654, 665 (7th Cir. 2024) (“The government’s
knowledge of a pending lawsuit making allegations simply does not indicate actual knowledge of
actual violations.”). The FCC may have approved Advantage’s bidding credits because it did not
believe Relators’ allegations, not because it deemed the alleged violations, if true, immaterial.
The materiality of a violation and an agency’s belief about whether that violation
occurred are separate questions. The materiality inquiry asks whether a misrepresentation, if it
was made, would have influenced the government’s payment decision. See Northstar Wireless,
34 F.4th at 36. The materiality requirement prevents the FCA from being used as “a vehicle for
punishing garden-variety breaches of contract or regulatory violations”—it distinguishes material
violations from trivial ones, not credible allegations from incredible ones. Escobar, 579 U.S. at
194. Escobar’s reference to the government’s conduct does not change that focus: it “looked to
the government’s ‘actual behavior’ only to assess whether the government attaches importance to
a particular statutory, regulatory, or contractual requirement.” Northstar Wireless, 34 F.4th at 37
(quoting Escobar, 579 U.S. at 194) (emphasis added). Escobar did not look to the government’s
behavior to see whether the government believed the allegations of noncompliance. Because the
court can at most conclude that the FCC knew of allegations, not actual violations, Escobar’s
inference does not apply. United States ex rel. Foreman v. AECOM, 19 F.4th 85, 115 (2d Cir.
2021) (“At the pleadings stage, such generalized assertions that the government is aware of the
relator’s lawsuit but nevertheless continued payment under the contract will not suffice to
overcome a relator’s detailed allegations of materiality.”).
Indeed, “[t]he question” at this stage is “whether [Relators] plausibly pleaded
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materiality,” and they have. Cimino, 3 F.4th at 423. At the pleading stage, Rule 12(b)(6)
“requires [this court] to accept [Relators’] factual allegations as true, and those allegations
plausibly plead that [Advantage’s false certifications were] material to the” FCC’s approval of
the bidding credits. Id. Relators alleged, for example, that during Auction 97, the FCC
disqualified two other designated entities from receiving bidding credits “because they were de
facto controlled by their large investor, DISH Network Corporation.” Am. Compl. ¶ 106 n.4; see
also SNR Wireless, 868 F.3d at 1025 (upholding the FCC’s determination that two purported
small businesses were not entitled to bidding credits because DISH exercised de facto control
over them). That strongly supports an inference that if the FCC believes a designated entity is
not compliant with the bidding credit regulations, it regards that noncompliance as material. See
Escobar, 579 U.S. at 194–95 (“[P]roof of materiality can include . . . evidence that the defendant
knows that the Government consistently refuses to pay claims in the mine run of cases based on
noncompliance with the particular . . . regulatory . . . requirement.”). The D.C. Circuit has
already recognized that a designated entity’s “alleged false certifications and failures to disclose
agreements central to their eligibility for bidding credits” were material because they “were
certainly ‘capable of influencing’ the Commission’s bidding-credit-eligibility determination.”
Northstar Wireless, 34 F.4th at 36–37 (quoting Cimino, 3 F.4th at 423)) (emphasis in original).
Nor does the D.C. Circuit’s decision in McBride aid Defendants. See United States ex
rel. McBride v. Halliburton Co., 848 F.3d 1027 (D.C. Cir. 2017). There, the relator claimed that
a government contractor provided inflated headcount data to the government, possibly to justify
excessive staffing costs. Id. at 1033. But the D.C. Circuit credited evidence that the “headcount
data (false or not) had no bearing on costs billed to the government.” Id. “Absent any
connection between headcounts and cost determinations,” the Circuit found it “difficult to
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imagine how the maintenance of false headcounts would be relevant, much less material to the
Government’s decision to pay.” Id. McBride’s holding thus turned on the fact that the alleged
misrepresentation, true or not, was immaterial. The certifications at issue here are different. Far
from being irrelevant to the FCC’s payment decision, Advantage’s representations regarding its
qualifications as a very small business not under U.S. Cellular’s control went to the core of its
eligibility for the bidding credits the FCC awarded.
McBride’s further observation—that the agency awarded the contractor for “exceptional
performance” after learning of the relator’s allegations and investigating—does not rescue
Defendants. 848 F.3d at 1034. That observation carried weight for reasons absent here.
Because the Circuit had already determined that the headcount data bore no relation to the
amounts billed, the exceptional performance award and continued payment merely corroborated
the conclusion that “the requirements allegedly violated” were “not material.” Id.; see also
Northstar Wireless, 34 F.4th at 37 (noting that McBride looked to the government’s conduct only
to assess whether the government attached importance to a particular regulatory requirement).
The McBride Court also had before it a summary judgment record showing that the agency
“investigated [the] allegations and did not disallow any charged costs.” 848 F.3d at 1034. The
D.C. Circuit has since emphasized the distinction between the summary judgment posture in
McBride and the pleading stage here. Cimino, 3 F.4th at 423. And here, there is no comparable
record of any FCC investigation into Relators’ allegations regarding Advantage and Auction 97,
followed by a decision to grant the credits anyway. 1 The facts Defendants identify—that
1
Defendants’ suggestion that the FCC had already investigated the allegations set forth in the
2008 Complaint is not evidence that the FCC investigated Spectrum Advantage. Any FCC
investigation into the 2008 allegations would have concerned different entities in different
auctions propped up by a different front person, and thus would not have revealed that
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Relators filed their complaint in 2015 and that the FCC approved Advantage’s bidding credits in
2016—show, at most, that the FCC was aware of Relators’ allegations, not that it investigated
them and awarded the credits anyway. “At a later stage in the litigation, evidence” regarding
what the FCC knew and when “might be used to demonstrate” immateriality. “But the resolution
of these questions is for another day.” Id.
Finally, Defendants point to the FCC’s decision in 2025 approving the transfer of control
over Advantage from Vail to U.S. Cellular. See U.S. Cellular MTD at 32; DiNardo MTD at 30.
Relators did petition the FCC to deny the transfer based on the alleged fraud, and the FCC denied
the petition. But the FCC did not adjudicate the veracity of Advantage’s earlier certifications
regarding its eligibility for bidding credits. To the contrary, by U.S. Cellular’s own telling, the
FCC declined to consider “most of [Relators’] allegations” because those allegations concerned
“actions taken . . . before Advantage was granted the licenses.” U.S. Cellular MTD at 32. Thus,
the 2025 approval order reflects, at most, the FCC’s decision not to resolve the Relators’
allegations, not actual knowledge that the bidding credit regulations had earlier been violated.
D. Presentment and Scienter
Count Two of the Amended Complaint asserts that Defendants “knowingly presented,
and caused to be presented, false and fraudulent claims and applications” for the payment of
bidding credits, in violation of 31 U.S.C. § 3729(a)(1)(A). Am. Compl. ¶ 148. Count Three
similarly asserts that Defendants “knowingly made, used, and caused to be made or used, false
records or statements material to a false or fraudulent claims to the FCC” in violation of 31
U.S.C. § 3729(a)(1)(B). Am. Compl. ¶ 152. DiNardo contends that both claims must be
Spectrum Advantage, an entity created years later under different circumstances, violated the
bidding credit regulations. See supra Part III.A.
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dismissed against her because Relators fail to plausibly allege her knowing role in the
presentment of false claims and statements. DiNardo MTD at 19, 24. The court disagrees.
Although the Amended Complaint does not allege that DiNardo herself presented any
false claims to the government, the Amended Complaint adequately pleads that DiNardo
knowingly caused Vail and Advantage Spectrum to present such claims. And “under the plain
language of the False Claims Act,” liability “extends beyond the person making a false claim”
and “attaches to one who ‘causes’” such a claim to be made, including by “engag[ing] in a
fraudulent course of conduct that induces payment by the government.” United States ex rel.
McCready v. Columbia/HCA Healthcare Corp., 251 F. Supp. 2d 114, 120 (D.D.C. 2003)
(quoting 31 U.S.C. § 3729(a)(1)) (emphasis added) (cleaned up). A defendant need not be “the
but-for cause” of the “submission of false claims” so long as her “conduct was at least a
substantial factor in causing” such submission. United States v. Toyobo Co., 811 F. Supp. 2d 37,
48 (D.D.C. 2011) (cleaned up). “[I]n examining whether a non-submitting party has ‘caused’ the
submission of a false claim or false statement, a court must look at the degree to which that party
was involved in the scheme that results in the actual submission.” United States ex rel. Tran v.
Computer Scis. Corp., 53 F. Supp. 3d 104, 128 (D.D.C. 2014). Even when the non-submitter is
not “the driving force behind an allegedly fraudulent scheme,” courts have still found their
involvement sufficiently significant where “they had agreed to take certain critical actions in
furtherance of the fraud.” United States ex rel. Scollick v. Narula, 215 F. Supp. 3d 26, 39
(D.D.C. 2016) (quoting Tran, 53 F. Supp. 3d at 128). This participation in the fraudulent scheme
must still be knowing. See 31 U.S.C. § 3729(a)(1)(A), (B) (imposing liability only on those who
“knowingly . . . cause[]” a fraudulent claim “to be presented” or “knowingly . . . cause[]” a false
statement “to be made”).
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Here, accepting Relators’ well-pleaded factual allegations as true, the court finds it
“abundantly clear that [DiNardo’s] participation in the scheme was sufficient to constitute a
‘substantial factor in causing’ [Advantage’s] submission of the false claims” and that her
participation was knowing. Tran, 53 F. Supp. 3d at 128 (quoting Toyobo, 811 F. Supp. 2d at 48).
“[T]he complaint is replete with allegations regarding [DiNardo’s] role in the [bidding credit]
scheme, such that there is no doubt that [DiNardo] was fully aware of, and an active participant
in, the arrangement that facilitated [Advantage’s] eventual submission of allegedly false claims
and false statements,” even if she was not the primary driver. Id.
Among other allegations, the Amended Complaint asserts that DiNardo had a long
history of working with U.S. Cellular to form sham designated entities, Am. Compl. ¶¶ 19, 68,
71, that she helped originate the scheme to form a designated entity fronted by a different
individual to “prevent FCC scrutiny” of sham companies already in existence, id. ¶ 75, and that,
in conjunction with U.S. Cellular, she “engaged with William Vail” to form Advantage. Id. ¶ 76.
These allegations, accepted as true, all indicate that DiNardo was well aware of the purpose of
the scheme.
The Amended Complaint goes on to allege that DiNardo took additional “critical actions”
in furtherance of the scheme. Scollick, 215 F. Supp. 3d at 39 (quoting Tran, 53 F. Supp. 3d at
128). She acted as “U.S. Cellular’s proxy” and directed Vail’s bidding strategy. Am. Compl.
¶ 86. That bidding was in fact conducted “from DiNardo’s offices” on King Street with Stephen
Hinz, DiNardo’s employee, acting as Advantage’s “only authorized bidder[]” other than Vail, id.
¶¶ 89, 91, and DiNardo, along with U.S. Cellular, controlled “the filings” that Advantage
“submitted to the FCC”—providing further indication that she knew the contents of the false
statements being submitted to the FCC. Id. ¶ 133. These allegations detail DiNardo’s
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involvement in the scheme with adequate particularity and are plausible because unlike Vail,
who had “no prior involvement or experience in spectrum auctions,” DiNardo had extensive
experience working with U.S. Cellular to obtain spectrum licenses and thus plausibly could have
acted as U.S. Cellular’s proxy in overseeing Vail and Advantage. Id. ¶¶ 68–69, 90.
DiNardo emphasizes that she “had transferred her entire indirect, minority, and noncontrolling interest in Advantage” to Vail in December 2015, before the FCC granted Advantage
bidding credits. DiNardo MTD at 20 (citing Am. Compl. ¶ 20). But this hardly helps her case.
The Amended Complaint alleges that DiNardo “sold her ownership interest” only to “further
limit[] Advantage’s visible connection to King Street,” DiNardo’s company, after the FCC
disqualified designated entities associated with DISH Network—not to end her involvement in
the scheme. Am. Compl. ¶¶ 105–06 & n.4. In any event, Advantage had already submitted its
allegedly fraudulent short- and long-form applications to the FCC before DiNardo sold her
interest, and it is these two allegedly fraudulent applications that form the linchpin of Relators’
presentment claims. See id. ¶¶ 96–104, 148, 152. The Amended Complaint thus adequately
pleads that DiNardo knowingly caused false claims to be presented.
E. Reverse False Claim
The FCA also imposes liability for so-called “reverse false claims”—that is, “fraudulent
conduct that deprives the government of money that it is owed.” United States ex rel. Kini v.
Tata Consultancy Servs., 146 F.4th 1184, 1188 (D.C. Cir. 2025); see also 31 U.S.C.
§ 3729(a)(1)(G). Count Four alleges such conduct. See Am. Compl. ¶ 156. Under the unjust
enrichment rule, any designated entity that receives a small business bidding credit must repay
some or all of that credit if the entity sells its spectrum license to, or becomes controlled by,
“another entity that is ineligible for the credit” “within five years of obtaining [that] license.”
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Advantage Spectrum, 153 F.4th at 1276 (cleaned up). Relators allege that Defendants made or
caused to be made false statements to the FCC during the unjust enrichment period to conceal the
extent of U.S. Cellular’s control over Advantage Spectrum and its licenses to evade Advantage’s
obligation to repay the bidding credits it used to obtain those licenses. See, e.g., Am. Compl. ¶¶
123–131, 156.
DiNardo first contends that Count Four cannot proceed against her because she had no
obligation to pay the government. See DiNardo MTD at 22. But a claim under § 3729(a)(1)(G)
can proceed against a person who “knowingly . . . causes to be made” a false “statement material
to an obligation to pay.” Nothing in the statute requires that Defendant herself owe the
obligation. It is enough that she knowingly caused the making of false statements with respect to
“an obligation.” 31 U.S.C. § 3729(a)(1)(G) (emphasis added). Just as a defendant may be liable
for causing the presentment of a false claim she did not herself submit, see supra Part III.D, so
too may she be liable for causing the making of a false statement material to an obligation she
does not herself bear.
DiNardo also contends that this claim cannot proceed against her because she transferred
her interest in Advantage before those false statements during the unjust enrichment period were
made. See DiNardo MTD at 22; DiNardo Reply at 18–19. But as explained above, the
Amended Complaint alleges that DiNardo sold her interest only to conceal her involvement in
the scheme—not to end it. See Am. Compl. ¶¶ 105–06 & n.4. Given the ample allegations
described above that DiNardo was deeply involved in originating and running the scheme, see
supra Part III.D, the court can reasonably infer that DiNardo, even if she did not directly make
any false statements to the FCC during the unjust enrichment period, nevertheless was a
substantial factor in causing such statements to be made, in violation of 31 U.S.C.
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§ 3729(a)(1)(G).
F. Constitutionality of the FCA’s Qui Tam Provisions
“Since its enactment” in 1863, “the FCA has empowered . . . private citizens acting on
the government’s behalf—known as qui tam relators—to sue persons who defraud the United
States.” United States ex rel. Doe v. Staples, Inc., 773 F.3d 83, 84 (D.C. Cir. 2014) (citing 31
U.S.C. § 3730). Because the government cannot prosecute every meritorious FCA case itself,
the FCA’s qui tam provisions “serve as a critical supplement to government enforcement.” Id.;
see also Seal 1 v. Seal A, 255 F.3d 1154, (9th Cir. 2001) (Congress has recognized “that the
government simply lacks the resources to prosecute all viable claims, even when it knows of
fraudulent conduct.”).
These provisions are not only critical, but also constitutional—at least according to every
U.S. Court of Appeals to address the question. See United States ex rel. Stone v. Rockwell Int’l
Corp., 282 F.3d 787, 804–07 (10th Cir. 2002); Riley v. St. Luke’s Episcopal Hosp., 252 F.3d 749,
753–58 (5th Cir. 2001) (en banc); United States ex rel. Taxpayers Against Fraud v. General
Elec. Co., 41 F.3d 1032, 1040–42 (6th Cir. 1994); United States ex rel. Kelly v. Boeing Co., 9
F.3d 743, 749–59 (9th Cir. 1993). Defendants’ contrary arguments fail to overcome the weight
of this authority and the centuries of historical practice that support it. See Vermont Ag. of Nat.
Res. v. United States ex rel. Stevens, 529 U.S. 765, 774, 776 (2000) (recognizing “the long
tradition of qui tam actions in England and the American Colonies” and noting that “the First
Congress enacted a considerable number” of qui tam provisions); see also CFPB v. Cmty. Fin.
Servs. Ass’n of Am., Ltd., 601 U.S. 416, 432 (2024) (“The practice of the First Congress . . .
provides contemporaneous and weighty evidence of the Constitution’s meaning.” (cleaned up)).
To start, the FCA’s qui tam provisions do not violate the Appointments Clause, which
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provides that “only the President, a court of law, or a head of a department” may appoint
“‘Officers of the United States.’” Lucia v. SEC, 585 U.S. 237, 244–45 (2018) (quoting U.S.
Const. Art. II) (cleaned up). But the Appointments Clause does not apply to relators because
they are not “Officers of the United States.” “Supreme Court precedent has established that the
constitutional definition of an ‘officer’ encompasses, at a minimum, a continuing and formalized
relationship of employment with the United States Government.” Riley, 252 F.3d at 757; see
also United States v. Germaine, 99 U.S. 508, 511 (1879) (holding that the term “officer”
“embraces the ideas of tenure, duration, emolument, and duties”); Lucia, 585 U.S. at 245
(“Stressing ideas of tenure and duration, the Court [has] made clear that an individual must
occupy a continuing position established by law to qualify as an officer.” (cleaned up)). “There
is no legislatively created office of . . . relator under the FCA.” Stone, 282 F.3d at 805. Nor are
relators “entitled to the benefits of officeholders, such as drawing a government salary.” Id.
“Indeed, the provision that authorizes qui tam suits is entitled ‘Actions by Private Persons.’”
Cochise Consultancy v. United States ex rel. Hunt, 587 U.S. 262, 272 (2019) (quoting 31 U.S.C.
§ 3730(b)). “Although that provision explains that the action is brought ‘for the person and for
the United States Government’ and ‘in the name of the Government,’ it does not make the relator
anything other than a private person.” Id. (quoting 31 U.S.C. § 3730(b)).
Moreover, “to qualify as an office, the position must not depend on the identity of the
person occupying it, and the duties should ‘continue, though the person be changed.’” United
States v. Donziger, 38 F.4th 290, 297 (2d Cir. 2022) (quoting United States v. Maurice, 26 F.
Cas. 1211, 1214 (C.C.D. Va. 1823) (Marshall, C.J.)). If an individual can “be replaced without
the duties of the positions terminating,” that, by contrast, supports a finding that there is a
continuing office. Id. But once a particular relator brings a qui tam action, they cannot be
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replaced. See 31 U.S.C. § 3730(b)(5) (“When a person brings an action under this subsection, no
person other than the Government may intervene or bring a related action based on the facts
underlying the pending action.”). At most, relators assist the government on “a temporary,
episodic basis”—suing on its behalf in a particular case. Freytag v. Comm’r, 501 U.S. 868, 881
(1991). Although DiNardo notes the independent counsel in Morrison v. Olson, 487 U.S. 654
(1988), was focused on a single individual, see DiNardo Reply at 22, that individual could be
(and had been) replaced, occupied an office created by Congress within the Justice Department,
drew a salary, and had access to significant government resources. A relator lacks this
continuing, formalized relationship with the government, and thus is a private person suing on
behalf of the United States, not an Officer thereof.
Nor do the FCA’s qui tam provisions violate Article II’s Vesting and Take Care Clauses.
See DiNardo MTD at 34–36. Although those Clauses vest the Executive with the power and
responsibility of enforcing the laws of the United States, they do “not require Congress to
prescribe litigation by the Executive as the exclusive means of enforcing federal law.” Riley, 252
F.3d at 753. A contrary view is impossible to square with centuries of historical practice.
“Statutes providing for actions by a common informer, who himself had no interest whatever in
the controversy other than that given by statute, have been in existence for hundreds of years in
England, and in this country ever since the foundation of our government.” United States ex rel.
Marcus v. Hess, 317 U.S. 537, 541 n.4 (1943) (quoting Marvin v. Trout, 199 U.S. 212, 225
(1905)). As mentioned, the First Congress enacted a “considerable number” of statutes
authorizing qui tam actions, demonstrating how the founding generation understood the original
meaning of the Constitution. Stevens, 529 U.S. at 774–77. The Supreme Court has already
recognized that the illustrious historical pedigree of qui tam statutes “was ‘well nigh conclusive’
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with respective to resolving the question of whether qui tam relators . . . under the FCA have
Article III standing,” and “it is logically inescapable that the same history . . . is similarly
conclusive with respect to the Article II question” raised by Defendants. Riley, 252 F.3d at 752
(quoting Stevens, 529 U.S. at 792). Defendants’ constitutional arguments are therefore
unavailing.
IV. CONCLUSION
For the reasons set forth above, Defendants’ Motions to Dismiss will be DENIED. A
separate order will follow this opinion.
Date: August 7, 2026
Tanya S. Chutkan
TANYA S. CHUTKAN
United States District Judge
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