Cafasso v. Gen. Dynamics C4 Sys. Inc.

Decision Date24 March 2011
Docket NumberNos. 09–16181,09–17710.,09–16607,s. 09–16181
Citation637 F.3d 1047
PartiesMary Angela CAFASSO, UNITED STATES ex rel., Plaintiff–counter–defendant–Appellant,v.GENERAL DYNAMICS C4 SYSTEMS, INC., Defendant–counter–claimant–Appellee.Mary Angela Cafasso, United States ex rel., Plaintiff–Appellant,v.General Dynamics C4 Systems, Inc., Defendant–Appellee.Mary Angela Cafasso, United States, ex rel., Plaintiff–counter–defendant–Appellant,v.General Dynamics Corporation, Defendant–Appellee,General Dynamics C4 Systems, Inc., Defendant–counter–claimant–Appellee.
CourtU.S. Court of Appeals — Ninth Circuit


Mike Bothwell (argued), Julie Keeton Bracker, and Richard J. Harris, Roswell, GA; Thomas Rogers, Phoenix, AZ; for plaintiff-appellant Mary Angela Cafasso.Mark G. Kisicki (argued), Lawrence Allen Katz, Peter S. Kozinets, and Thomas Michael Stanek, Phoenix, AZ; J. William Koegel, Washington, DC; for defendant-appellee General Dynamics C4 Systems, Inc.Appeal from the United States District Court for the District of Arizona, Neil V. Wake, District Judge, Presiding. D.C. No. 2:06–cv–01381–NVW.Before: RONALD M. GOULD and CONSUELO M. CALLAHAN, Circuit Judges, and MORRISON C. ENGLAND, JR., District Judge.*


GOULD, Circuit Judge:

In this False Claims Act (“FCA”) appeal, relator Mary Cafasso challenges orders of the district court dismissing her qui tam complaint, rejecting her proposed amended pleading, granting summary judgment on remaining claims, and awarding attorneys' fees.1 We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.


Cafasso alleges that her former employer General Dynamics C4 Systems (GDC4S), a technology company that services the military, defrauded the government by withholding disclosure of new inventions which, GDC4S had agreed by contract, the government had rights to use and license. Cafasso discovered the alleged fraud, according to her complaint, and made repeated inquiries and requests for internal audits. She claims that as a result of her activities in that regard, GDC4S retaliated against her by eliminating her department and position. GDC4S denies those allegations.

After learning that her job would be terminated but before leaving GDC4S, Cafasso copied almost eleven gigabytes of data from company computers in anticipation of bringing a qui tam action. Within days of her departure, GDC4S realized that she had taken thousands of its internal documents. GDC4S filed suit in state court seeking to recover documents that it believed Cafasso took in violation of a confidentiality agreement that she executed when her employment began. The state court issued a temporary restraining order (“TRO”) that required Cafasso to return the electronic files that she removed from GDC4S.

Two days later, Cafasso filed this qui tam action in federal district court with a conclusory six-page complaint. The complaint alleged FCA violations and retaliation. The district judge, at Cafasso's request, issued orders sealing the case and permitting Cafasso to inform the state court of the pendency of the qui tam action. With the orders and sealed complaint in-hand, Cafasso presented the state court with an ex parte request to lift the TRO, which the state court granted. The state court also stayed the state action in its entirety, although the Arizona Court of Appeals later reversed both orders. When the district court learned that Cafasso had used its orders to disrupt the state court suit, it vacated the orders that it had issued. GDC4S was then served with the complaint and filed an answer and counterclaim. That counterclaim alleged, among other things, that Cafasso's appropriation of GDC4S's electronic files breached her confidentiality agreement with the company.

Continuing prosecution of the qui tam action, Cafasso lodged more specific allegations against GDC4S in an amended complaint. In response to GDC4S's objections about privileged information contained in that amended pleading, Cafasso filed a substitute amended complaint that struck the objectionable language. Around the same time, the United States announced that it would decline to intervene in the FCA action. Cafasso continued to litigate the matter in her own name.

The parties then began an acrimonious period of discovery. The district court's November 4, 2009, order recites numerous discovery abuses by Cafasso. Specifically, Cafasso refused to identify which documents, of the thousands she had appropriated, actually supported her claim or were privileged. Further, Cafasso sought discovery into 110 inventions that were not mentioned in her complaint, which the court prohibited. GDC4S asked by interrogatory that Cafasso [i]dentify each specific provision of 31 U.S.C. § 3729(a)(1)-(7) of the False Claims Act (‘FCA’) that you allege in paragraph 173 of the Substitute Amended Complaint that Defendant ‘knowingly violated’....” In response, Cafasso stated that she “has not made a claim as described in this Interrogatory, nor does the law require that she claim such to have been the case.” Because Cafasso's answer to this interrogatory appeared to abandon her qui tam allegations, GDC4S promptly filed a motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c). Thereafter, Cafasso sought to file a 733–page second amended complaint, which the district court rejected for failing to state a “short and plain statement of the claim,” as required by Federal Rule of Civil Procedure 8(a)(2). The district court granted GDC4S's motion for judgment on the pleadings. It then denied Cafasso's subsequent motion to amend her pleading.

Both parties moved for summary judgment on the remaining claims (Cafasso's retaliation claim against GDC4S, and GDC4S's counterclaims against Cafasso). GDC4S prevailed on both motions, and the district court entered judgment and a permanent injunction against Cafasso. GDC4S then moved for an award of attorneys' fees, which the district court granted in part.

This appeal followed.


We first address the district court's dismissal of Cafasso's qui tam claim pursuant to Federal Rule of Civil Procedure 12(c). Our review is de novo. Fleming v. Pickard, 581 F.3d 922, 925 (9th Cir.2009). When considering a Rule 12(c) dismissal, we must accept the facts as pled by the nonmovant, here, Cafasso. Id.; see also Jenkins v. McKeithen, 395 U.S. 411, 421, 89 S.Ct. 1843, 23 L.Ed.2d 404 (1969) (“For the purposes of a motion to dismiss, the material allegations of the complaint are taken as admitted.”). We caution that the facts set forth below have not been determined judicially, but are rather what we think to be a fair summary of the complaint's 2 allegations.


Cafasso worked as the chief scientist/technologist at GDC4S, a technology company that services the military, and was so employed at the predecessor-company that was acquired by General Dynamics in 2001. As a participant in the Advanced Telecommunications & Information Distribution Research Program (“ATIRP”), GDC4S's predecessor-company had contracted with the Army to assign to the United States certain rights to “subject inventions” developed in performance of military contracts. Specifically, ATIRP gives the government “license to practice or have practiced for or on behalf of the United States the subject invention throughout the world,” and the right to require GDC4S to license the invention to anyone “upon terms that are reasonable under the circumstances.” In other words, ATIRP grants the government the royalty-free right to use or have used on its behalf subject inventions, as well as the right to require GDC4S to license the inventions to another party (such as a competing contractor) on reasonable terms.

ATIRP also requires timely disclosure of applicable new inventions to the government. Once it discloses a new invention, GDC4S may opt to retain title to the invention, subject to the government's right to use or have used on its behalf, and to require licensing of, the invention. If GDC4S chooses not to retain title to the invention, the government may assume title. Cafasso worked in the office that identified, documented, and protected GDC4S's intellectual property. Her responsibilities included ensuring that GDC4S complied with ATIRP's requirements by, among other things, disclosing new inventions to the Army.

In early 2004, Cafasso became aware of what she believed was a scheme to deprive the United States of its ATIRP rights to a new invention. GDC4S had applied for a patent for an invention known as GE04582, but the United States Patent and Trademark Office had preliminarily rejected that application subject to a response from GDC4S. Rather than responding to the Patent Office—and telling the government so that it could protect its rights in the invention by preparing its own response—GDC4S instead opted to abandon the patent application and, according to Cafasso, delayed before notifying the government in order to deprive it of the opportunity to prepare a response.

Cafasso alleges that by refusing to prosecute its patent application, GDC4S had “claim[ed] ownership of ... [the new] technology as [its] own trade secret,” and had denied the United States an opportunity to protect its interest in the invention. Further, because GDC4S had not disclosed its newly invented technology to the government, competing contractors would not know to ask the government for permission to use the technology when bidding on later contracts. According to Cafasso, the government might therefore pay GDC4S or another contractor to invent technologies like GE04582 that either already had been invented or with respect to which the government already had the right to authorize its contractors to use free of charge. In other words, Cafasso alleges that the United States could potentially pay twice for the same technologies.

Cafasso reported...

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