775 F.3d 628 (4th Cir. 2015), 13-2190, United States v. Triple Canopy, Inc.

Docket Nº:13-2190, 13-2191
Citation:775 F.3d 628
Opinion Judge:SHEDD, Circuit Judge.
Party Name:UNITED STATES OF AMERICA, Intervenor/Plaintiff - Appellant, v. TRIPLE CANOPY, INC., Defendant - Appellee. and UNITED STATES ex rel. OMAR BADR, Plaintiff, UNITED STATES ex rel. OMAR BADR, Plaintiff - Appellant, v. TRIPLE CANOPY, INC., Defendant - Appellee
Attorney:Charles W. Scarborough, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.; Earl N. Mayfield, III, DAY & JOHNS, PLLC, Fairfax, Virginia, for Appellants. Tara Melissa Lee, DLA PIPER LLP (U.S.), Reston, Virginia, for Appellee. Stuart F. Delery, Assistant Attorney General, Joyce Branda, Acting As...
Judge Panel:Before SHEDD, AGEE, and WYNN, Circuit Judges. Judge Shedd wrote the opinion, in which Judge Agee and Judge Wynn joined.
Case Date:January 08, 2015
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit
 
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775 F.3d 628 (4th Cir. 2015)

UNITED STATES OF AMERICA, Intervenor/Plaintiff - Appellant,

and

UNITED STATES ex rel. OMAR BADR, Plaintiff,

v.

TRIPLE CANOPY, INC., Defendant - Appellee.

UNITED STATES ex rel. OMAR BADR, Plaintiff - Appellant,

v.

TRIPLE CANOPY, INC., Defendant - Appellee

Nos. 13-2190, 13-2191

United States Court of Appeals, Fourth Circuit

January 8, 2015

Argued October 30, 2014

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[Copyrighted Material Omitted]

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Appeals from the United States District Court for the Eastern District of Virginia, at Alexandria. Gerald Bruce Lee, District Judge. (1:11-cv-00288-GBL-JFA).

ARGUED:

Charles W. Scarborough, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.; Earl N. Mayfield, III, DAY & JOHNS, PLLC, Fairfax, Virginia, for Appellants.

Tara Melissa Lee, DLA PIPER LLP (U.S.), Reston, Virginia, for Appellee.

ON BRIEF:

Stuart F. Delery, Assistant Attorney General, Joyce Branda, Acting Assistant Attorney General, Michael S. Raab, Civil Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.; Dana J. Boente, Acting United States Attorney, Richard W. Sponseller, Assistant United States Attorney, Peter S. Hyun, Assistant United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Alexandria, Virginia, for Appellant United States of America.

Paul A. Prados, Milt C. Johns, Christopher M. Day, DAY & JOHNS, PLLC, Fairfax, Virginia, for Appellant Omar Badr.

Joseph C. Davis, Reston, Virginia, Paul D. Schmitt, DLA PIPER LLP (U.S.), Washington, D.C., for Appellee.

Before SHEDD, AGEE, and WYNN, Circuit Judges. Judge Shedd wrote the opinion, in which Judge Agee and Judge Wynn joined.

OPINION

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SHEDD, Circuit Judge.

The Government appeals the district court's dismissal of Counts I and II of its complaint under the False Claims Act (FCA) against Triple Canopy, Inc. Omar Badr, the original relator, also appeals the dismissal of his complaint -- including four additional FCA counts (Counts II-V) -- against Triple Canopy. For the following reasons, we conclude that the district court correctly dismissed Counts II-V of Badr's complaint, but erred in dismissing Counts I and II of the Government's complaint.

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I.

In June 2009, the Government awarded a firm-fixed price contract to Triple Canopy to provide security services at the Al Asad Airbase, the second largest airbase in Iraq.1 Triple Canopy was one of several security firms awarded the Theatre-Wide Internal Security Services contract; under that contract, security at specific locations was governed by individual Task Orders. The Task Order for Al Asad was TO-11.

Under TO-11, Triple Canopy agreed to provide " internal security services" at Al Asad and to " supplement and augment security operations." (J.A. 98). These services included " providing internal operations at entry control points, internal roving patrols," and " prevent[ing] unauthorized access" by enforcing " security rules and regulations regarding authorized access to [Al Asad] including internal check points." (J.A. 98). TO-11 identified 20 " responsibilities" Triple Canopy was tasked with in providing these services, including typical security functions such as repelling attacks, providing escorts, performing entrance searches, and preventing theft, as well as ancillary services such as running background checks, checking ammunition lists, and computerizing personnel systems. (J.A. 99). As relevant here, the final responsibility was to " ensure that all employees have received initial training on the weapon that they carry, [and] that they have qualified on a U.S. Army qualification course." (J.A. 99) (marksmanship requirement). To satisfy the marksmanship requirement, employees had to score a minimum of 23 rounds out of 40 from a distance of 25 meters. Qualifying scorecards for the guards were to be maintained in their respective personnel files for one year. Nothing in TO-11 expressly conditioned payment on compliance with the responsibilities.

To fulfill TO-11, Triple Canopy hired approximately 332 Ugandan guards to serve at Al Asad under the supervision of 18 Americans. The guards' personnel files indicate that they met the qualifying marksmanship score at a course in Kampala, Uganda. Upon arriving at the base, however, Triple Canopy's supervisors learned that the guards lacked the ability to " zero" their rifles and were unable to satisfy the qualifying score of 23 on the marksmanship course. Thus, shortly after their arrival, Triple Canopy supervisors were aware that the Ugandans could not satisfy the final responsibility of TO-11: the marksmanship requirement. Nonetheless, Triple Canopy submitted its monthly invoices for the guards. After a failed training attempt, a Triple Canopy supervisor directed that false scorecard sheets be created for the guards and placed in their personnel files. Because there was attrition, replacement Ugandan guards arrived at Al Asad during the year. These guards were also unable to satisfy the marksmanship requirement, and consequently additional false scorecards were created.

In May 2010, toward the end of the contract, Triple Canopy attempted to have 40 Ugandan guards qualify in marksmanship before leaving for vacation. None could do so. A Triple Canopy supervisor ordered Omar Badr, a Triple Canopy medic, to prepare false scorecards for the guards, reflecting scores of 30-31 for male guards and 24-26 for the female guards. Triple Canopy's site manager signed these new scorecards and post-dated them,

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showing that the guards qualified in June 2010.

TO-11 was in effect for one year, and Triple Canopy presented 12 monthly invoices for guard services during that time. Each invoice listed the number of guards in service for that month; the term " guard" was undefined. Pursuant to TO-11, a contracting officer representative (COR) was " responsible for acceptance of the services [Triple Canopy] performed." (J.A. 41.) The COR was appointed by the Government and confirmed acceptance of Triple Canopy's guard services by filing a Material Inspection and Receiving Report (DD-250) Form. (J.A. 41). The DD-250 required the COR to accept the services if they " conform[ed] to contract" and to sign the form if the services provided " were received in apparent good condition." (J.A. 73). The COR completed twelve DD-250 forms, none of which included any certification or endorsement from Triple Canopy. In total, Triple Canopy submitted invoices totaling $4,436,733.12 for the Ugandan guards--a rate of $1,100 per month for each guard. Triple Canopy did not receive a renewal of TO-11, and the Ugandan guards were thereafter dispatched to four other contract sites around Iraq: Cobra, Kalsue, Delta, and Basra.

Badr eventually instituted a qui tam action under the FCA against Triple Canopy in the Eastern District of Virginia. Badr alleged five false claims counts: Al Asad (Count I) and Cobra, Kalsue, Basra, and Delta (Counts II-V). The Government intervened on the Al Asad count and filed an amended complaint alleging that Triple Canopy knowingly presented false claims, in violation of 31 U.S.C. § 3729(a)(1)(A) (Count I), and caused the creation of a false record material to a false claim, in violation of § 3729(a)(1)(B) (Count II). Specifically, the Government alleged that Triple Canopy knew the guards did not satisfy TO-11's marksmanship requirement but nonetheless " billed the Government the full price for each and every one of its unqualified guards" and " falsified documents in its files to show that the unqualified guards each qualified as a 'Marksman' on a U.S. Army Qualification course." (J.A. 24). The Government also brought several common law claims.

The district court granted Triple Canopy's motion to dismiss the FCA claims. United States ex rel. Badr v. Triple Canopy, Inc., 950 F.Supp.2d 888 (E.D. Va. 2013). The court first dismissed Count I because the Government failed to plead that Triple Canopy submitted a demand for payment that contained an objectively false statement. Next, the court dismissed Count II because the Government (1) failed to allege a false claim and (2) failed to allege that the COR ever reviewed the scorecards. Finally, the court dismissed Counts II-V in Badr's complaint because he failed to plead with particularity the facts giving rise to the claims. The court also dismissed Count I of Badr's complaint, concluding that Badr lacked standing to press that claim because of the Government's intervention. The court later dismissed the Government's remaining common law claims.2 Both the Government and Badr filed timely appeals.

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II.

We review de novo the district court's dismissal of a complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). United States ex...

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