GENERAL DYNAMICS CORPORATION,
No. 96-55821
Plaintiff-Appellee,
D.C. No.
v.
CV-89-06762-JGD
UNITED STATES OF AMERICA,
OPINION
Defendant-Appellant.
Appeal from the United States District Court
for the Central District of California
John G. Davies, District Judge, Presiding
Argued and Submitted
October 6, 1997--Pasadena, California
Filed March 27, 1998
Before: Diarmuid F. O'Scannlain, Ferdinand F. Fernandez,
and Sidney R. Thomas, Circuit Judges.
Opinion by Judge Fernandez;
Dissent by Judge O'Scannlain
_________________________________________________________________
COUNSEL
Daniel R. Unumb, Torts Branch, Civil Division, and Mark B.
Stern and Thomas M. Bondy, Appellate Staff, Civil Division,
United States Department of Justice, Washington, D.C., for
the appellant.
Gregory S. Gallopoulos, Jenner & Block, Chicago, Illinois,
and William E. Ireland, Haight, Brown & Bonesteel, Santa
Monica, California, for the appellee.
_________________________________________________________________
OPINION
FERNANDEZ, Circuit Judge:
General Dynamics Corporation brought this action under
the Federal Tort Claims Act, 28 U.S.C. S 1346(b), against the
United States for the purpose of obtaining reimbursement of
attorneys fees it expended in defending a fraud prosecution,
and a related civil action. The United States claimed that,
among other things, it was protected by the discretionary
function exception to liability, but the district court agreed
with General Dynamics and held the United States liable for
damages in the amount of $25,880,752. The United States
appealed, and we reverse and remand.
BACKGROUND
In January of 1978, the Department of the Army awarded
General Dynamics a contract to develop two prototypes for
the Divisional Air Defense System (DIVAD Contract). The
DIVAD Contract was, according to its explicit terms, a "firm
fixed-price (best efforts)" contract. The Defense Contract
Audit Agency, the auditing branch of the United States
Department of Defense, audited General Dynamics as a part
of a general program designed to verify compliance with
defense contracts. The DCAA reported suspected labor mis-
charging by General Dynamics to the United States Naval
Investigative Service and to the United States Department of
Justice. The DCAA then continued its audit and on February
29, 1984, issued an audit report, which indicated that General
Dynamics had fraudulently mischarged over $8,000,000 of
DIVAD Contract costs. That report was negligently prepared
because the DCAA, unaccountably, failed to recognize, or
seek information about, the vast difference between a firm
fixed-price contract and a firm fixed-price (best efforts) con-
tract.
Still, based at least in part on the DCAA's report, the DOJ
sent General Dynamics a grand jury subpoena in which it
sought documents relating to the DIVAD Contract. On that
same day, General Dynamics received a copy of the DCAA's
flawed audit report. An extensive investigation followed in
which the DOJ subpoenaed millions of documents and inter-
viewed numerous witnesses. Beyond that, General Dynamics'
perspicacious attorneys met with the prosecutors and tried to
explain the differences between the two types of contracts.
The prosecutors, it seems, were not impressed and decided to
plow ahead.
Thus, a grand jury returned an indictment against General
Dynamics and four of its employees which charged them with
conspiracy and the making of false statements to the United
States. See 18 U.S.C. SS 371, 1001. Unaccountably, the
indictment charged that the contract was a firm fixed-price
contract, and left out the limiting language "best efforts."
Despite General Dynamics' continued emphasis on the latter
language, the prosecution was vigorously pursued until, at
last, the prosecutors obtained information from those who
knew, gained an understanding of the significance of the dif-
ferences, and forthrightly moved to voluntarily dismiss the
indictment.
Fortunately for the cause of justice, General Dynamics and
its employees could afford to keep fighting; unfortunately, it
cost them a lot of money to do so. General Dynamics hoped
to recover that money under the FTCA, so this action fol-
lowed. The district court agreed that General Dynamics could
recover, and the United States appealed.
JURISDICTION AND STANDARDS OF REVIEW
In general, the district court has jurisdiction over FTCA
cases pursuant to 28 U.S.C. S 1346(b). We have jurisdiction
pursuant to 28 U.S.C. S 1291. Of course, whether jurisdiction
is precluded by the discretionary function exception, 28
U.S.C. S 2680(a), is an important issue in this case. We will
turn to it in due course.
Because it is a question of jurisdiction,"[w]e review the
district court's determination of subject matter jurisdiction
under the discretionary function exception de novo. " Valdez
v. United States, 56 F.3d 1177, 1179 (9th Cir. 1995). Simi-
larly, we review questions of law de novo. See, e.g., Twenty-
Three Nineteen Creekside, Inc. v. Commissioner, 59 F.3d 130,
131 (9th Cir. 1995), cert. denied, 516 U.S. 1154, 116 S. Ct.
1034, 134 L. Ed. 2d 111 (1996). That includes questions of
state law. See In re McLinn, 739 F.2d 1395, 1397 (9th Cir.
1984) (en banc).
DISCUSSION
The United States attacks the district court's judgment on
many fronts. Among other things, it asserts that this action is
barred by the discretionary function exception, which applies
to prosecutors, and that under California law the action would
be precluded by the statutory privilege for submitting infor-
mation to prosecutors. While we hold that the former issue
does, indeed, bar jurisdiction in this action, we will also
allude to the latter issue because it bears a close resemblance
to the discretionary function exception. Analogically, it sup-
ports our application of that exception to this case.
Under the FTCA, the United States may be held liable in
tort "for injury or loss of property . . . caused by the negligent
or wrongful act or omission of any employee . . . under cir-
cumstances where the United States, if a private person,
would be liable to the claimant in accordance with the law of
the place where the act or omission occurred." 28 U.S.C.
S 1346(b). That waiver of sovereign immunity is subject to a
number of exceptions. If an exception applies, sovereign
immunity is not waived, and no subject matter jurisdiction
exists. See Sabow v. United States, 93 F.3d 1445, 1451 (9th
Cir. 1996). Jurisdiction does not exist when the claim is
"based upon the exercise or performance or the failure to
exercise or perform a discretionary function." 28 U.S.C.
S 2680(a); see also Sabow, 93 F.3d at 1451.
[1] The Supreme Court has explained the two-step process
that must be gone through for the purpose of determining
whether the discretionary function bar applies to any given
case. See Berkovitz v. United States, 486 U.S. 531, 536-37,
108 S. Ct. 1954, 1958-59, 100 L. Ed. 2d 531 (1988). We have
done the same. See, e.g., Sabow, 93 F.3d at 1451. We need
not go through that detailed, and often difficult, analysis here
because no one doubts that prosecutorial discretion is cov-
ered. As we have succinctly put it: "The decision whether or
not to prosecute a given individual is a discretionary function
for which the United States is immune from liability." Wright
v. United States, 719 F.2d 1032, 1035 (9th Cir. 1983). See
also Gray v. Bell, 712 F.2d 490, 513 (D.C. Cir. 1983). The
exercise of that discretion is by no means easy, and prosecu-
tors do make mistakes. Regardless, in general a prosecution
does not go forward, and defendants are not sucked into its
vortex merely because a report of one kind or another has
been given to the prosecutor. Indeed,
[t]he prosecutor has a duty to measure the facts in
the report by legal standards and decide whether they
add up to probable cause to prosecute. The possibil-
ity of less than perfect investigative conduct on the
part of the police is no doubt one reason the law
requires an exercise of the prosecutor's informed
discretion before the initiation of prosecution.
Smiddy v. Varney, 803 F.2d 1469, 1472 (9th Cir. 1986),
modified on other grounds, 811 F.2d 504 (9th Cir. 1987).
General Dynamics does not really dispute these observa-
tions. It, instead, recognizes that it cannot succeed in an attack
on that revetment and adopts the ancient tactic of attempting
to circumvent it instead. That is, it seeks to posture its case as
an attack on the DCAA rather than as an attack on the prose-
cutors. If it can do that, as the district court thought it could,
it may enhance its claims of success immeasurably. But it
cannot do it.
[2] Courts are not required to, and should not, simply look
at the surface of a complaint for the purpose of ascertaining
the true basis of an attack upon something the government has
done. Thus, a party may choose to dub his claim as one for
negligence when it is truly a claim for misrepresentation, for
which jurisdiction is excluded. Courts need not accept the
label. See United States v. Neustadt, 366 U.S. 696, 703, 81 S.
Ct. 1294, 1299, 6 L. Ed. 2d 614 (1961). Similarly, a party
might choose to say that he is suing for infliction of emotional
distress so that he can avoid the bar against slander claims.
Again, the courts need not accept the label. See Thomas-
Lazear v. FBI, 851 F.2d 1202, 1206-07 (9th Cir. 1988); see
also Metz v. United States, 788 F.2d 1528, 1535 (11th Cir.
1986); Enterprise Elec. Corp. v. United States, 825 F. Supp.
983, 985 (M.D. Ala. 1992).
We see no reason to accord amaranthine obeisance to a
plaintiff's designation of targeted employees when we refuse
to be bound by his choice of claim labels. We may take cogni-
zance of the fact that a target has been selected for the pur-
pose of evading the discretionary choice of the persons who
actually caused the damage -- here the prosecutors', who
were pushing a criminal (and civil) attack upon General
Dynamics and its employees. Were it otherwise, it would be
a simple matter to bog down the government in a new litiga-
tion whenever the erstwhile defendant had been the victor.
Prosecutors do not usually do all of their own investigation,
so a victorious defendant could almost always argue that this
or that report was negligently prepared. We referred to that
very problem in Smiddy, 803 F.2d at 1471, when we said that
the exercise of prosecutorial judgment will usually insulate
investigating officers from liability.
The same note was sounded by the Third Circuit when it
turned back an action against the United States. See Fisher
Bros. Sales, Inc. v. United States, 46 F.3d 279, 286 (3rd Cir.)
(en banc), cert. denied, 516 U.S. 806, 116 S. Ct. 49, 133 L.
Ed. 2d 15 (1995). In Fisher Bros., the United States Food and
Drug Administration received information from the United
States Embassy in Chile that an anonymous caller had warned
that fruit from Chile would be injected with cyanide. The
FDA decided that that was a hoax. Then a second call came
in, and the caller said that he had already injected some fruit.
The FDA then took steps to see if there was any tainted fruit
and a report was issued from an FDA laboratory, which said
that a couple of grapes were tainted. Those results were not
duplicated and no more tainted fruit was found. Based upon
the information before him, including the allegedly negli-
gently prepared report from the FDA's laboratory, the FDA
Commissioner exercised his discretion to refuse entry of any
Chilean fruit into this country, and to withdraw all Chilean
fruit already in domestic distribution channels. That damaged
the plaintiffs from whom the Commissioner had not requested
information before he acted. Id. at 282-83. The plaintiffs
chose not to attack the Commissioner's exercise of discretion;
they hardly could. Instead, they attacked the work of the labo-
ratory technicians. The Third Circuit noted that it was not
required to "accept plaintiffs' characterization of" the facts
and that plaintiffs could not "by the manner in which they
draft their complaints, . . . dictate that their claims are `based
upon' one government employee's actions and not another's."
Id. at 286. It continued:
The reality here is that the injuries of which the
plaintiffs complain were caused by the Commission-
er's decisions and, as a matter of law, their claims
are therefore "based upon" those decisions. Any
other view would defeat the purpose of the discre-
tionary function exception. In situations like this
where the injury complained of is caused by a regu-
latory policy decision, the fact of the matter is that
there is no difference in the quality or quantity of the
interference occasioned by judicial second guessing,
whether the plaintiff purports to be attacking the data
base on which the policy is founded or acknowl-
edges outright that he or she is challenging the pol-
icy itself.
Id. As the court noted, decision makers do, of necessity, rely
upon information from others, and the purpose of the discre-
tionary function exception would be severely undercut if a
plaintiff could adopt the simple expedient of attacking one or
more of the people who supplied information to the decision
maker. Id. at 286-87.
We recognize that if Fisher Bros. is read too broadly, the
discretionary function exception could swallow up a large part
of the FTCA itself. No doubt many actions within an agency
pass through the hands of somebody with some discretion at
some stage. We have previously made that very point. See
United Cook Inlet Drift Assoc. v. Trinidad Corp. (In re Gla-
cier Bay), 71 F.3d 1447 (9th Cir. 1995). In Glacier Bay,
hydrographers had allegedly failed to follow required proce-
dures when they collected data for the preparation of nautical
charts for Cook Inlet. Their reports and data had to pass
through the hands of reviewers before the charts were
released. The former did not perform a discretionary function,
but the latter did, although the extent of their discretion is not
clear. Id. at 1449-50. We held that the intervention of the
reviewers did not preclude an action for the negligence of the
hydrographers. Id. at 1451. Rather, we said that we would
make our inquiry as to each "specific actor." Id. Of course,
the only information before the reviewers had to have been
the hydrographic manuals coupled with the reports and data
generated by the hydrographers, and the nautical charts them-
selves would reflect only that information, unless the review-
ers sent the whole project back for some reason. That tight
coupling between hydrographers, reviewers, charts, and
results does show that there is a danger in allowing any slight
discretionary component to cut off all acts of negligence
within an agency. But if Glacier Bay is read too broadly, the
specific acts or actions theory could swallow up a large part
of the discretionary function exception.
In other words, while Glacier Bay and Fisher Bros. seem
to be in healthy tension, they are not in opposition unless one
or the other is read in an overly broad fashion. Glacier Bay
seeks to avoid the problem of expanding the discretionary
function exception to the point that it overcomes the purposes
of the FTCA, while Fisher Bros. seeks to avoid shrinking the
exception to a mere formality, which redirects suits against
the government from one named actor to another, but which
has no real effect on the right to sue. We fully understand
General Dynamics' argument that we could accept an asthenic
exception and, thus, easily find a waiver of sovereign immu-
nity because a lawsuit might still founder on the causation ele-
ment of a claimed state tort. But that would elide what
Congress has written, and we cannot wholly ignore causation
concepts when a robust exercise of discretion intervenes
between an alleged government wrongdoer and the harm suf-
fered by a plaintiff. An attempt to go around the exception
then amounts to an exercise in mislabeling and misdescription
of the truly discretionary source of the injury.
Again, Glacier Bay and Fisher Bros. illustrate that nicely.
In the former, little intervened between the hydrographers'
wrongdoing and the injury to the plaintiff. That was not true
in Fisher Bros. Whether the laboratory report indicated that
two grapes had been tampered with, or not, the FDA Commis-
sioner had to make a high level and far reaching discretionary
decision based upon all of the information available to him.
He had to decide whether he would stop the import of all fruit
from Chile, or some, or none. The report was part of that deci-
sion, perhaps a significant part, but much more than a yes-no
answer based upon that report was before the Commissioner
for decision.
[3] Similarly, there is no danger to the FTCA when a totally
separate exercise of discretion stands between the generators
of a report and the commencement of a prosecution. Prosecu-
tors have access to a great deal of information beyond that
submitted by any one agency, such as the DCAA. That was
the case here. Indeed, the prosecutors could have had even
more information if they had chosen to pursue it. Theirs was
a broad based discretion which was independent of the DCAA
in every sense of the word. Here the prosecution was clearly
based upon the discretionary decisions of the prosecutors.
Thus, the Third Circuit's wisdom in Fisher Bros. is applica-
ble.
[4] California has applied the same wise thinking when
considering the scope of its judicial proceedings privilege.1
See Cal. Civ. Code S 47. The courts have made it clear that
the privilege applies to communications made to prosecutors,
even when those are designed to prompt a prosecution, which
has not yet commenced. See Passman v. Torkan, 34 Cal. App.
4th 607, 619, 40 Cal. Rptr. 2d 291, 299 (1995); see also Leb-
bos v. State Bar of California, 165 Cal. App. 3d 656, 668, 211
Cal. Rptr. 847, 853 (1985). In Block v. Sacramento Clinical
Labs, Inc., 131 Cal. App. 3d 386, 182 Cal. Rptr. 438 (1982),
a plaintiff sought to circumvent that privilege by purporting
to attack the preparer of a report for his own negligence,
rather than for his transmittal of the report to a prosecutor,
who then relied upon it. In other words, the plaintiff attempted
the same kind of flanking maneuver that General Dynamics
attempts here. The Court of Appeal was not impressed. It
stated that despite plaintiff's assertions, the claim was not
really for preparation of the report at all. It was for the com-
munication of the report to the prosecutor. Id. at 392, 182 Cal.
Rptr. at 442. "Whether the matter be characterized as the pub-
lication of a negligently prepared report or the negligent pub-
lication of the report," the wrong was in the publication, not
in the preparation. Id. at 393, 182 Cal. Rptr. at 442. Any other
approach would "substantially defeat the purpose of [the]
privilege." Id. at 394, 182 Cal. Rptr. at 442. The same is true
here. General Dynamics did not suffer an injury simply
because the DCAA negligently prepared a report. It was the
communication of that report to the prosecutors which can be
connected to the ultimate harm suffered by General Dynam-
ics. But California protects that communication and "labeling
the complaint as one for `professional negligence,' " does not
evade the protection given to citizens by California law. Id. at
388, 182 Cal. Rptr. at 439.
The explication of the tort of malicious prosecution in the
Restatement subtends the same result. As the drafters explain:
When a private person gives to a prosecuting officer
information that he believes to be true, and the offi-
cer in the exercise of his uncontrolled discretion ini-
tiates criminal proceedings based upon that
information, the informer is not liable under the rule
stated in this Section [the malicious prosecution rule]
even though the information proves to be false and
his belief was one that a reasonable man would not
entertain. The exercise of the officer's discretion
makes the initiation of the prosecution his own and
protects from liability the person whose information
or accusation has led the officer to initiate the pro-
ceedings.
Restatement (Second) of Torts S 653 cmt. g (1977). Just so.
The quoted material also demonstrates that what General
Dynamics attempts here is not only an avoidance of the stric-
tures of the discretionary function exception, but also nothing
less than a direct assault on the whole citadel of prosecutorial
discretion and the protection that discretion offers to citizens
who communicate with prosecutors.2
[5] When the threads of these insights are woven together,
they manifest the principles which animate our decision.
Where, as here, the harm actually flows from the prosecutor's
exercise of discretion, an attempt to recharacterize the action
as something else must fail. And there can be no doubt that
the buck stopped at the prosecutors. True, they had a report
from the DCAA, but the decision to prosecute was all their
own. They were not required to prosecute, and were not
forced to do so. Nothing prevented them from gathering fur-
ther information before they proceeded. In fact, they gathered
a great deal of information and even met with General
Dynamics' redoubtable lawyers before the prosecution went
forward. The prosecutors had the difference between firm
fixed-price contracts and firm fixed-price (best efforts) con-
tracts explained to them. They also knew that the DCAA had
not explicated that difference in its report. Nothing stopped
the prosecutors from investigating further by speaking to
those who had negotiated the contract on behalf of the gov-
ernment. They alone chose not to do so. But there can be no
doubt that the choices were, indeed, in the prosecutors' hands.
They had the discretion to advance or resile. Advance they
did, but "whether or not the discretion involved[was]
abused," the United States cannot be sued under the Federal
Tort Claims Act. 28 U.S.C. S 2680(a).3
CONCLUSION
The actions taken against General Dynamics and its
employees will not be recorded as the Department of Justice's
finest hour, nor, considering the ultimate candid request for
dismissal, was it the Department's darkest one. A mistake was
made, but, because prosecutors do not have ichor in their
veins, mistakes can be expected from time to time. Mistakes,
however, do not necessarily equal governmental liability.
Perhaps the prosecutors should have listened to General
Dynamics' lawyers; perhaps they should have done more of
their own investigation and spoken to government employees
who really knew what the contract meant; perhaps they were
merely misled by the arcane differences between the phrase
"firm fixed-price" and the phrase "firm fixed-price (best
efforts)"; perhaps reasonable minds could, even today, differ
about the true meaning of the contractual words. In any event,
General Dynamics' troubles flowed directly from the prosecu-
tors' exercise of discretion. The United States is immune from
suit under the FTCA.
REVERSED and REMANDED, with directions to dismiss
for lack of jurisdiction.
_________________________________________________________________
O'SCANNLAIN, Circuit Judge, dissenting in part.
Prosecutors are understandably enticed by the lure of the
big fish. But when an unsubstantiated indictment can lead to
the imposition of over $25,000,000 in attorney's fees on an
innocent party without recompense, we should hope for --
nay, we expect -- more responsible conduct by the govern-
ment, regardless how attractive the quarry.
Unfortunately for General Dynamics, the government
failed to observe basic precautions. It conducted an investiga-
tion of the alleged defense-contract fraud which was either
unconscionably inadequate at best or recklessly arrogant at
worst. As former Assistant Attorney General William Weld
frankly conceded, the Department of Justice ("DOJ") blindly
relied upon the faulty interpretation of the contract that the
Defense Contract Audit Agency ("DCAA") had provided:
The audit of General Dynamics was predicated upon
the DCAA's belief that the DIVAD contract was a
firm fixed price contract which had specific, manda-
tory requirements. The audit report and the advice of
DCAA personnel in connection therewith were criti-
cal to the prosecution's early understanding of the
contract as a firm fixed price type. . . . This under-
standing formed the premise upon which the entire
investigation was conducted and the indictment pres-
ented to the grand jury.
Securities Laws Enforcement and Defense Contractors: Joint
Hearings Before the Subcomm. on Oversight and Investiga-
tions of the House Comm. on Energy and Commerce, and the
Subcomm. on Criminal Justice of the House Comm. on the
Judiciary, 100th Cong. 39 (1987) (statement of William Weld,
Assistant Attorney General, Criminal Division, U.S. Dept. of
Justice) (emphasis added).
The government did not engage in a dispassionate, inde-
pendent analysis of the DIVAD contract.1 Had it done so --
or had it simply given more careful analysis to General
Dynamics's position ab initio -- the DOJ would have realized
quite clearly that the document at issue was not a "fixed-
price" contract at all, but rather one of "best-efforts," the
terms of which General Dynamics had completely satisfied.
Too willing to discount the company's explanation as a mere
post-hoc rationalization, the DOJ wrongfully pursued its ill-
based prosecution for three-and-a-half years. That the Depart-
ment is immune from suit in this case does not mean that it
is also immune from criticism.
I
Yet this case is not about finger-pointing. It is about the
jurisdiction of the federal courts. We lack jurisdiction when
a claim is "based upon the exercise or performance or the fail-
ure to exercise of perform a discretionary function." 28
U.S.C. S 2680(a) (emphasis added). As this court has previ-
ously recognized, "[t]he decision whether or not to prosecute
a given individual is a discretionary function for which the
United States is immune from liability." Wright v. United
States, 719 F.2d 1032, 1035 (9th Cir. 1983). The DOJ's mis-
conduct, therefore, cannot be the basis for General Dynam-
ics's cause of action. To that extent I agree with the court.
The misconduct of the DCAA, however, is a different
story. Although the court holds that the DOJ's immunity
shields the DCAA, I am unfortunately unable to join in such
conclusion and therefore respectfully dissent as to that portion
of the court's opinion. Were we deciding this case on a blank
slate, I might see things differently. Indeed, I share my col-
leagues concern that, because "[p]rosecutors do not usually do
all of their own investigation," a litigant could almost always
resort to the argument "that this or that report was negligently
prepared," thereby "swallow[ing] up a large part of the discre-
tionary function exemption." (Opinion at 2748, 2751). How-
ever, this is not an issue of first impression for our court, and
we must decide General Dynamics's claim against the back-
drop of precedent.
In United Cook Inlet Drift Assoc. v. Trinidad Corp. (In re
The Glacier Bay), 71 F.3d 1447 (1995), we held that a discre-
tionary review of a negligent hydrographic report did not
shield the drafters of that report from liability. See id. at 1451.
The court held, in no uncertain terms:
Each separate action must be examined to determine
whether the specific actor had discretion of a type
Congress intended to shield.
Id. at 1451. My colleagues conclude that the discretionary
reviewers in Glacier Bay did not have the "broad based
discretion" that the DOJ had in this case. To them, it would
seem, the distinction is a matter of degree. The DOJ was more
independent than Glacier Bay's hydrographic reviewers; it
had more information on which to base its decision.
Although my colleagues are correct that this is a distinc-
tion, it is a distinction without a difference. The Glacier Bay
court was unequivocal: "[T]he proper level of inquiry must be
act by act. . . . [W]e must determine whether each person tak-
ing an allegedly negligent act had discretion." Id. There was
no suggestion that the result depended at all on the amount of
discretion possessed by reviewers. To the contrary,"[e]ven if
[the hydrographic] reviewers had discretion to approve the
final charts, such discretion would not shield allegedly negli-
gent non-discretionary acts by [those who prepared the
charts]." Id.
To be sure, there is reason to be skeptical of Glacier Bay's
reasoning, which could have the tendency to "bog down the
government" and "elide what Congress has written." (Opinion
at 2748, 2751). However, Glacier Bay's net, as described by
the panel that decided that case, is wide enough to encompass
the DCAA's negligence. I am thus unable to join the court's
application of discretionary-function immunity. The DCAA
clearly was not immune.
II
I nevertheless concur in the result because, in my view,
General Dynamics's otherwise valid claim is time-barred. The
Federal Tort Claims Act provides that a claim against the
United States is barred unless the plaintiff presents it in writ-
ing to the appropriate federal agency within two years of
accrual. See 28 U.S.C. S 2401(b). The claim accrues once the
plaintiff knows of his injury and its cause, see United States
v. Kubrick, 444 U.S. 111, 122 (1979); Gibson v. United
States, 781 F.2d 1334, 1344 (9th Cir. 1986), irrespective of
whether the plaintiff is also aware of the government's negli-
gence or the full extent of the damages, see Kubrick, 444 U.S.
at 123.
In this case, identifying the injury for which General
Dynamics seeks relief is simple: the injury is the indictment.
In defending itself against the erroneously premised indict-
ment, General Dynamics spent over $25,000,000 in attorney's
fees. Identifying the "cause" of this injury is a more compli-
cated issue because, in fact, there were two causes attributable
to the government: the DCAA's release of its audit report and
the DOJ's conduct during the course of its inadequate investi-
gation. However, of these two causes, only the former is
actionable. We all agree that the other, the DOJ's misjudg-
ment, is shielded by discretionary immunity. Therefore, the
operative question for determining the accrual of General
Dynamics's cause of action is just the following: When did
the company know that the audit report was a cause of the
indictment? The answer, it seems to me, is December 1985,
the time of the indictment. Because the company did not file
its administrative claim until over three years later, in March
1989, and because equitable tolling was unavailable, the claim
was untimely.
A
At the time of the indictment, General Dynamics knew that
the DCAA's report was a cause of its injury. By then, it had
already received the audit report, which notified the company
that "[c]ertain of the matters addressed[therein were] cur-
rently under investigation by the Naval and Investigative Ser-
vice and the Department of Justice." Also by that time,
General Dynamics had made numerous written and oral
appeals to the DOJ urging the Department to disregard the
audit report and to acknowledge that the contract was one of
"best efforts." Although the company might not have under-
stood why the DOJ was confused despite the clear "best
efforts" language in the contract, there can be no doubt that
General Dynamics knew that the audit report was at the root
of the problem, as is evidenced by its flurry of communica-
tions with the government. General Dynamics did not have to
know the existence and extent of the DOJ's negligence, or
even the DCAA's negligence, in order to file a claim based
on the DCAA's report, see Kubrick, 444 U.S. at 123; all it had
to know was that the DCAA's report was a cause of its injury.
It therefore seems clear that General Dynamics had sufficient
knowledge at the time of the indictment in December 1985,
and its claim accrued thereupon.
B
The limitations period began to run immediately upon
indictment. The district court abused its discretion by tolling
the statute of limitations before the dismissal of the indict-
ment. Equitable tolling is generally available only "where the
claimant has actively pursued his judicial remedies by filing
a defective pleading during the statutory period, or where the
complainant has been induced or tricked by his adversary's
misconduct into allowing the filing deadline to pass." Irwin v.
Department of Veterans Affairs, 498 U.S. 89, 96 (1990). Gen-
eral Dynamics does not fall within either category. The com-
pany contends that filing its claim sooner than it did might
have impeded its efforts to convince the government to dis-
miss the indictment, and also might have resulted in the sus-
pension of its business with the government. Perhaps so, but
the mere difficulty of such strategic choices does not autho-
rize tolling; the government engaged in no "misconduct" dur-
ing this period.
The district court also abused its discretion by tolling the
statute of limitations after the dismissal of the indictment, dur-
ing the period of negotiations between the company and the
government for reimbursement of attorney's fees. Because
these negotiations in no way precluded General Dynamics
from filing a tort challenge, they should not have been the
basis for tolling the statute of limitations. Thus, the limitations
period continued to run, and it expired prior to General
Dynamics's filing of its administrative claim.
III
Glacier Bay supports the district court's conclusion that the
government was not immune in this case and should have
reimbursed the $25,880,752 in resulting attorney's fees.
Because General Dynamics's claim was time-barred, how-
ever, I must concur in the result of reversal. the end
_______________________________________________________________
FOOTNOTES
1 This privilege would by itself point unerringly toward reversal, if we
had jurisdiction to decide the issue.
2 Of course, reporting citizens may be sued for malicious prosecution.
General Dynamics wisely avoids claiming malicious prosecution because
recovery would be barred if it did claim that. See 28 U.S.C. S 2680(h). It
seeks to avoid that horn of its dilemma by saying that the DCAA's wrong
was the less heinous wrong of negligence. But that impales it on the other
horn of the dilemma.
3 If we had jurisdiction to decide the issue, we would agree with Judge
O'Scannlain that General Dynamics' claim is time barred.
1 In fairness, Mr. Weld did eventually own up to the government's short-
comings. In testifying before Congress, he stated:"[B]ecause of the rela-
tively limited function performed by DCAA, it is all the more important
for the Justice Department to conduct, in essence, a de novo investigation
and evaluation of the evidence." Id. at 50. Alas, too little, too late.