The U.S. Supreme Court has granted a writ of certiorari in the case of Eisenstein v. New York. Eisenstein is a qui tam action brought by municipal employees in New York City. The complaint makes a rather unique argument, alleging that NYC is depriving the federal government of tax revenue by requiring city employees who are non-city residents to pay "a fee equivalent to the municipal income taxes paid by resident city employees." The non-resident employees then are permitted to take a federal tax deduction in the amount of the fee, which lowers their amount of taxable income, therefore lowering the amount of tax revenue going to the IRS.
The Supreme Court, however, is not looking at the substantive facts of the case. The Justices will be ruling only on the following issue: Whether a qui tam plaintiff has 30 or 60 days to file an appeal in a False Claims Act case in which the government has not intervened.
The Federal Rules of Civil Procedure Rule 4(a)(1)(A) requires all civil appeals to be filed in 30 days unless the United States is a party to the lawsuit, in which case Rule 4(a)(1)(B) extends the appeals deadline to 60 days. The plaintiffs in the Eisenstein case reason that, since the US government always stands to benefit from a qui tam action, then they are a "party" to the case even if they have not chosen to enter into the suit. However, the Second Circuit Court of Appeals threw out the Eisenstein case, holding that:
"…where the United States has declined to intervene in a False Claims action, the United States is not a party to the action…therefore a notice of appeal must be filed in 30 days."
This is an interesting case. We will keep you updated on it’s progress and outcome. Briefs are due to be filed by the end of March. See the links below for more information.