Responding to the U.S. Department of Justice’s Motion to Dismiss, the Zionist Advocacy Center (TZAC) filed a Notice of Voluntary Dismissal in its False Claims Act (FCA) lawsuit against Oxfam GB on December 18, 2019. The U.S. Attorney for the Southern District of New York previously moved to dismiss TZAC’s False Claims Act suit against Oxfam GB on November 18, 2019.

 Since TZAC began using the FCA to legally challenge nonprofit organizations (NPOs) working in Palestine, only three cases were publicly known. Although TZAC claims it has filed six more cases against NPOs, the identity of the defendants has been a mystery, as FCA cases are automatically sealed when filed for at least 60 days, often longer. Now a federal court has unsealed TZAC’s case against Oxfam GB (Great Britain). The complaint alleges that Oxfam’s Gaza Urban and Peri-Urban Agricultural Platform (GUPAP) provided material support to terrorism, contrary to its anti-terrorism certification to USAID.  TZAC argues that because GUPAP allegedly supports ministries tied to both Hamas, which is on the U.S. terrorist list, and the Palestinian Authority (which is not), Oxfam GB’s certification to USAID is false. The U.S. initially declined to intervene to exercise its statutory right to take over the case and on Sept. 20 told the court it plans to file a motion to dismiss. Oxfam told the New Humanitarian that “We are aware of the lawsuit and reject the allegation made in it.”

Motion to Dismiss

The memorandum in support of the motion argues that the government has discretion to seek dismissal under its law enforcement powers. In addition, the government argues that allowing TZAC to proceed with the case would “impose a substantial burden on government resources” and interfere “with government policies and the administration of its programs” and “implicate the Government’s foreign policy positions and international aid programs.”  The government notes that a relator’s “subjective disagreement with the Government’s investigative strategy and ultimate decision does not provide the Court with a basis to second-guess the Government’s decision to dismiss the case.” [p.13]

The False Claims Act allows private parties such as TZAC (Relators) to sue on behalf of the government, claiming fraud. Such suits are sealed while the government investigates the claim and determines whether it will intervene and take over the case, allow the Relator to proceed on its own or move to dismiss. The memorandum notes that the government investigated TZAC’s allegations and in July took the position it would not intervene. However, on Sept. 20 it notified the court that it would move to dismiss. It notes that the False Claim Act allows for dismissal over TZAC’s objections, if the court allows TZAC an opportunity to be heard on the issue.

The government further argues that the court should avoid decisions that could impair the governments decisions in foreign policy and national security.  It argues [p. 12]:

Should the pending litigation go forward, Relator would ask this Court to adjudicate

whether alleged actions purportedly involving certain foreign entities constitute material support of terrorism and violate the certification language contained in USAID’s grants to Oxfam. In order to decide the present action, the Court would need to determine, for example, the novel question of whether the non-monetary support described in the Complaint, which Relator alleges was provided to Hamas by Oxfam through an intermediary, see Compl. ¶¶ 14-15, constitutes “material support” of terrorism. The Court would also need to decide whether the Palestinian Authority, the self-government body of the Gaza Strip, should be considered a “terrorist” entity, as alleged by Relator. Id. ¶¶ 17-19. Lastly, the Court would need to determine whether Oxfam’s representations to USAID were in fact material to USAID’s decision to award funds to the defendant. The adjudication of these issues would necessarily interfere with the Government’s own foreign policies, as well as its administration of USAID grant funds. The Government accordingly has a valid interest in precluding Relator from litigating these issues on behalf of the Government in the context of a declined qui tam action.

The standard for dismissal in False Claims Act cases is unclear. The DC Court of Appeals has held that the government has absolute discretion to dismiss, while the Courts of Appeals in the 9th and 10th Circuits have held the government must show dismissal would serve a valid government purpose. The Southern District of New York is in the 2nd Circuit, which has not taken a position on this issue. The government’s memorandum argues that it meets both standards.

Background

TZAC’s complaint, filed Feb. 20, 2018, claims that Oxfam GB is part of a larger confederation that is “anti-Israel,” citing NGO Monitor (an advocacy group that engages in disinformation, according to the Policy Working Group, which is comprised of Israeli ex-diplomats, academics and others).

The complaint goes on to list 30 USAID grants to Oxfam between October 2013 and September 2017, amounting to over $53 million. It quotes USAID’s anti-terrorism certification, where grantees state they have not knowingly provided material support to terrorism for the last ten years and will not do so. Although the Oxfam grants were not for the GUPAP program, which was funded by the Swiss government, the USAID certification applies to all activities of an organization, however funded. GUPAP operated between 2013 and 2017 with the goal of increasing small-scale agriculture in Gaza, where land is in short supply, thereby addressing food insecurity and decreasing dependence on foreign aid and markets.

The short (seven-page) complaint then alleges that, because the Ministries of Agriculture and National Economy are part of the government in Gaza and Hamas controls the government, GUPAP provided material support to Hamas by assisting the ministries with the agricultural program. This is similar to arguments TZAC has made in past cases. However, in this case, TZAC goes on to expand its legal theory to claim that the ministries are “nominally subdivisions of the Palestinian Authority,” which it claims is an “entity” that supports terrorism by providing financial support to family members of people injured or killed in the conflict with Israel. This includes families of people convicted or accused of terrorist offenses. TZAC calls this a “pay to slay” scheme, bringing hotly contested issues of fact and policy into the gray area surrounding the definition of material support.

The argument that any assistance or support to the Palestinian Authority is material support, despite the fact that it is not on the terrorist list, attempts to stretch the law beyond the limits of how it is currently applied. The U.S. government has provided funding to the Palestinian Authority in the same time frame that Oxfam supported the GUPAP program. So if TZAC’s reasoning is taken to its logical conclusion, the U.S. government has violated its own material support prohibition, as have any other entities that have done business with or worked with the PA. That may explain why the U.S. declined to intervene in the case.

TZAC seeks triple damages under the FCA, although even if Oxfam were found liable TZAC would not automatically be entitled to that amount. If Oxfam wins the case it could seek to recoup its legal costs from TZAC.

The pleadings indicate that Oxfam is represented by J. Emmett Murphy and Jeffrey S. Bucholtz of the law firm King & Spalding LLP, who successfully defended The Carter Center in a False Claims Act suit filed by TZAC.

For more information on lawfare attacks against NPOs see:

False Claims Act Lawsuits: What Nonprofits Need to Know

False Claims Act Cases Against NPOs