Former whistleblower lacks standing to intervene in consent decree litigation, SDNY holds

by Ben Vernia | January 10th, 2012

On January 4, District Judge Denise Cote of the Southern District of New York rejected a former whistleblower’s motion to intervene in litigation relating to the violation of the terms of a consent decree that resulted from the settlement of a qui tam suit. The case presented unusual facts: the Anti-Discrimination Center of New York sued Westchester County, New York, under the False Claims Act for falsely certifying that it was making progress in reducing housing discrimination in applying for Community Development Block Grants. After the court awarded the whistleblower partial summary judgment, the parties and the government entered a settlement under which the relator was paid $7.5 million, and the County entered a consent decree that included hiring an independent monitor.

The monitor found the County’s implementation plan to be unacceptable, and the County failed to submit to HUD an “analysis of impediments” to fair housing. In November, the monitor found that the County had breached its obligations, and the County appealed this decision to the magistrate judge assigned to the case.

The whistleblower sought to intervene in the proceeding, arguing that but for its diligence as a qui tam plaintiff, the consent decree would not have been entered. The Court disagreed, noting that although the relator in an FCA case has standing to prosecute it, it is because of a partial assignment of the interests of the government, which remains the real party in interest in the matter. When the center accepted the settlement – agreeing at the time that it was fair and reasonable – it terminated its interest in the case. The center could not, therefore, satisfy Fed. R. Civ. P. 24(a)’s requirement of a legally protectable interest in the matter.

The court likewise rejected the center’s argument that its interest in ending segregation conferred standing upon it; at this point, the Court reasoned, the center was a stranger to the litigation.

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