United States: Disclosures In Public SEC Filings Aren't Really "Public" After All – At Least Not In California

Last Updated: February 2 2016
Article by Pablo A. Nichols

On January 19, 2016, the California Court of Appeals ruled that disclosures made in publicly available SEC filings do not qualify as public disclosures under the California False Claims Act ("CFCA").  State of Ca. ex rel. Bartlett v. Miller, 2016 WL 229468.  The ruling, while perhaps defensible as a matter of strict statutory interpretation, severely undercuts the policy goal of the CFCA's public disclosure bar: preventing parasitic actions in which the relator takes advantage of public information and fails to assist in exposing the fraud.

In 2011, ClubCorp, which owns a large number of country clubs throughout the United States, terminated the membership of one of its members, Robert Bartlett.  Mr. Bartlett responded by suing ClubCorp based on a variety of allegations, including the company's failure to refund his $7,500 initiation fee.  One year later, Mr. Bartlett amended his complaint with a qui tam claim alleging that ClubCorp failed to escheat to the State of California millions of dollars in unclaimed initiation deposits in violation of California law.

There were at least two problems with Mr. Bartlett's qui tam claim.  First, he based his qui tam claim solely on statements made by ClubCorp in its publicly available SEC filings as far back as March 2011.  In those public filings, ClubCorp acknowledged its practice of not escheating any members' unclaimed deposits.  ClubCorp's public filings also disclosed the fact that 20 states were reviewing its escheatment practice, and that the company may have to pay some amount to the investigating states.  Second, the State of California had been investigating and auditing ClubCorp's escheatment practice since 2008, and Mr. Bartlett's regurgitation of information from ClubCorp's SEC filings added no new information to that investigation.

Taken together, Mr. Bartlett sought to use ClubCorp's public disclosures in SEC filings to acquire a share of any potential recovery the State might receive from its ongoing investigation.  Unsurprisingly, the State Attorney General sought to prevent this opportunistic litigation and moved to dismiss Mr. Bartlett's qui tam claim as barred by the CFCA's public disclosure bar (CA Gov. Code § 12652).1  The trial court agreed, but the California Court of Appeals reversed.

The appellate court strictly construed the CFCA's public disclosure bar, which provides that no court has jurisdiction over an action based on the public disclosure of allegations "in a criminal, civil, or administrative hearing, in an investigation, report, hearing or audit conducted by or at the request of the Senate, Assembly, auditor, or governing body of a political subdivision, or by the news media, unless the action is brought by the State AG or the prosecuting authority of the political subdivision, or the person bringing the action is an original source of the information."  § 12652(d)(3)(A).  According to the court, a disclosure made in a federally mandated and publicly available SEC filing is not "public" because SEC filings are not one of the listed sources in the statute.  The court distinguished federal cases holding that SEC filings qualify as public disclosures based on the different language in the federal FCA and the CFCA.  While the federal FCA's list of public sources barring a claim includes administrative reports, the CFCA's corresponding list requires that the report be requested by the State or one of its political subdivisions.  Consequently, according to the appellate court, federal administrative reports do not qualify under the CFCA.

As the appellate court recognized, its decision conflicts with the policy goal of the public disclosure bar, which is to prevent "parasitic or opportunistic actions by persons simply taking advantage of public information without contributing to or assisting in the exposure of the fraud."  Slip Op. at 8, 14-15.  The court even suggested that the State Legislature might want to add the "Internet" to the list of categories barring a parasitic qui tam claim.  But at least for now, the court held it could not do what the Legislature had, to date, chosen not to do.

Key Takeaways

Unfortunately, the court's decision in Bartlett gives the green light to opportunistic plaintiffs to mine public SEC reports and other non-media online sources to find information upon which to allege a violation of the CFCA.  Companies doing business or residing in California, including non-government contractors like ClubCorp, are likely to see an uptick in parasitic qui tam claims as a result.  Ultimately, the State Legislature will need to amend the CFCA to close this loophole in the CFCA's public disclosure bar.  Allowing a windfall for relators who only regurgitate publicly available information and make no contribution toward uncovering fraud against the State violates the policy goal of the public disclosure bar and should be corrected by the Legislature.


1 The CFCA was amended effective January 1, 2013, including slight modifications to the public disclosure bar.  Both parties and the appellate court agreed that the pre-2013 version of the statute applied as nothing in the amendment indicated an intent to make it retroactive.  While all citations and discussion here relate to the pre-2013 statute, the slight changes in the amended statute would not likely impact the appellate court's reasoning.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Pablo A. Nichols
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.