Jing Shu Zheng v. Christina Ellis, et vir

This case involves civil penalties and damages arising under Section 8 housing and the False Claims Act (“FCA”). Petitioner was the landlord, Respondents the tenants. Petitioner represented herselfpro se in the District Court. Her native language is Mandarin Chinese, and she is not very proficient in the English language. Therefore, she relied upon Google translate. Petitioner did have counsel for her appeal to the Ninth Circuit. At all times, Respondents have been represented by pro bono counsel. The District Court expressly found no bad faith on the part of Petitioner. Nevertheless, the District Court determined that Petitioner’s agent made a fraudulent statement in the Section 8 housing contract it signed. Under the contract, Petitioner received automatic payments from the government without further demand, request, or further representation. Contrary to the terms of that contract, and the representations made by Petitioner’s counsel, Respondent was overpaid $300 in rent each month for 22 months, for a total of $6,600 in overpayments. The District Court rendered judgment against Petitioner for nearly $177,316, which included civil penalties and treble damages. The Ninth Circuit affirmed. In upholding the judgment, the Ninth Circuit applied a “promissory fraud” or “fraud-inthe-inducement” theory in calculating the number of FCA civil penalties. Under this approach, it determined that each time rent was overpaid, Petitioner was subject to a civil penalty. Thus, it upheld the District Court’s imposition of 22 civil penalties of $5,500 each. This came to a total of $121,000 in civil penalties. With respect to treble damages, the Ninth Circuit upheld the District Court’s methodology, which was not simply three times the overpayments of $6,600. Rather, the District