Omnipol, A.S. v. Multinational Def. Servs., LLC

• Decision Date: 03 May 2022
• Docket Number: 19-14597
• Citation: 32 F.4th 1298
• Parties: OMNIPOL, A.S., a Private Limited Company, Elmex Praha, A.S., a Private Limited Company, Plaintiffs-Appellant, v. MULTINATIONAL DEFENSE SERVICES, LLC, a Florida Registered Limited Liability Company, et al., Defendant, Christopher Worrell, an individual, James Brech, an individual, Bryan Siedel, an individual, Amy Strother, an individual, Kirk Bristol, an individual, Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

32 F.4th 1298

OMNIPOL, A.S., a Private Limited Company, Elmex Praha, A.S., a Private Limited Company, Plaintiffs-Appellant,

v.MULTINATIONAL DEFENSE SERVICES, LLC, a Florida Registered Limited Liability Company, et al., Defendant,Christopher Worrell, an individual, James Brech, an individual, Bryan Siedel, an individual, Amy Strother, an individual, Kirk Bristol, an individual, Defendants-Appellees.

No. 19-14597

United States Court of Appeals, Eleventh Circuit.

Filed: May 3, 2022

Mario Bernard Williams, Dallas S. LePierre, Hdr LLC, Atlanta, GA, Maria-Vittoria Carminati, NDH, LLC, Denver, CO, for Plaintiffs-Appellants.

Brian Calciano, Calciano Pierro, PLLC, St. Petersburg, FL, for Defendant-Appellee Christopher Worrell.

Chance Lyman, Joshua Samuel Michael Smith, Buchanan Ingersoll & Rooney, PC, Tampa, FL, for Defendant-Appellee James Brech.

Jennifer Waugh Corinis, Greenberg Traurig, PA, Tampa, FL, Benjamin M. Shultz, U.S. Attorney General's Office, Washington, DC, U.S. Attorney Service - Middle District of Florida, U.S. Attorney's Office, Tampa, FL, for Defendants-Appellees Bryan Siedel, Amy Strother, Kirk Bristol.

Before Jordan, Newsom, and Tjoflat, Circuit Judges.

Tjoflat, Circuit Judge:

This case arises out of a contract between Purple Shovel, LLC, and two Czech companies, Omnipol and Elmex Praha ("Elmex"), for the manufacture and delivery of 7,500 AK-47 assault rifles. In June of 2017, the U.S. Special Operations Command ("SOCOM") entered into a contract (the "SOCOM contract") with Purple Shovel to deliver the rifles for a price of $2,984,250. Purple Shovel in turn contracted with Elmex to execute the delivery, and Elmex contracted with Omnipol to be the supplier. Together, the parties entered into a "Cooperation Agreement" on June 26, 2017. Non-party Benjamin Worrell signed on behalf of Purple Shovel.

The rifles were delivered to SOCOM on July 20, 2017. Yet although SOCOM paid Purple Shovel the $2,984,250 due under the contract, Purple Shovel never paid Elmex. Elmex, in turn, failed to pay Omnipol. Instead, on June 1, 2018, Purple Shovel petitioned the Bankruptcy Court of the Middle District of Florida for Chapter 11 relief. Complaint, In re Purple Shovel , LLC , Case No. 8:18-bk-04599 (Bankr. M.D. Fla. June 1, 2018). On September 24, 2018, Omnipol filed a proof of claim in the sum of $2,865,000, while Elmex filed a proof of claim in the sum of $300,000.

Close to a year later, on April 3, 2019, Omnipol and Elmex brought this action against several individuals allegedly involved in the formation of the two contracts: Amy Strother, Bryan Siedel, and Kirk Bristol, civilian employees of SOCOM, and Christopher Worrell and James Brech, two executive officers of Purple Shovel.¹ Their complaint asserted six claims against the defendants: common law fraud, civil theft, unjust enrichment, a violation of Florida's Racketeer Influenced and Corrupt Organizations Act ("FL RICO"), and two violations of the federal Racketeer Influenced and Corrupt Organizations Act ("RICO").²

The complaint alleged that the defendants had engaged in two fraudulent schemes. First, the complaint alleged that the defendants had conspired to defraud the government by tricking SOCOM into accepting defective arms, ammunition, and supplies. Second, the complaint alleged that the defendants induced Omnipol and Elmex into contracting with Purple Shovel to supply and deliver the 7,500 assault rifles, all the while intending to divert the SOCOM payment into their own coffers and leave Omnipol and Elmex unpaid.³

The District Court dismissed the complaint for failure to comply with Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure after finding that the allegations in the complaint were "speculative and conclusory," as well as "lack[ing] sufficient detail." Omnipol and Elmex thereafter filed an amended complaint on July 26, 2019. The amended complaint, however, made essentially the same allegations as the original complaint and did not add any meaningful facts in support.

The United States subsequently filed a notice of substitution for Strother, Siedel, and Bristol under the Westfall Act as to the state law claims of fraud, unjust enrichment, and civil theft, certifying that each defendant had been operating within the scope of their employment at the time of the incident giving rise to the claims.⁴ The United States then filed a motion to dismiss the entire complaint. The United States argued, first, that the Federal Tort Claims Act ("FTCA") exempts from its waiver of sovereign immunity claims against the United States based on fraud. 28 U.S.C. § 1346(b), §§ 2401, 2402, 2671 – 2680. The state law claims, the United States asserted, all arose from the defendants’ allegedly fraudulent promise to pay Omnipol and Elmex for the rifles on receipt of payment from SOCOM. Because these claims were therefore barred by sovereign immunity, the United States argued that the Court should dismiss the claims for lack of subject matter jurisdiction. The United States also argued that the amended complaint, in its entirety, failed to comply with the pleading requirements of Rule 9(b) of the Federal Rules of Civil Procedure. Purple Shovel executives Brech and Worrell also filed motions to dismiss, arguing, among other things,⁵ that the complaint failed to meet the pleading requirements of Rules 12(b)(6) and 9(b).

After careful review, the District Court dismissed the amended complaint on all counts and with respect to all defendants. The District Court first found that because Strother, Siedel, and Bristol had been operating within the scope of their employment according to Florida law, the United States’ substitution under the Westfall Act was proper.⁶ 28 U.S.C. § 2679. The Court then concluded that, because the "gravamen" of the complaint was one of fraud, misrepresentation, and deceit, the state law claims were barred under the sovereign immunity exception of the FTCA.⁷ As such, the Court was "without subject-matter jurisdiction against the United States, as the substituted defendant for the Federal Defendants"⁸ as to those counts.

The Court then found that the amended complaint, in its entirety, failed to state a claim of fraud against any defendant, failed to state a claim of civil theft against any defendant, failed to state a claim for unjust enrichment against any defendant, and failed to state a claim under either the state or federal RICO statutes.⁹ The Court therefore dismissed the amended complaint without leave to amend.

I.

We review de novo a district court's dismissal for failure to state a claim, accepting all alleged facts as true and construing them in the light most favorable to the plaintiff. Butler v. Sheriff of Palm Beach Cnty ., 685 F.3d 1261, 1265 (11th Cir. 2012).

II.

On appeal, Omnipol and Elmex first challenge the District Court's substitution of the United States as a party in the place of Strother, Siedel, and Bristol as to the state law claims. Consequently, they also challenge the District Court's finding that it lacked subject matter jurisdiction to consider the state law claims due to the bar of sovereign immunity. We consider each issue in turn.

A.

"The Federal Employees Liability Reform and Tort Compensation Act of 1988, commonly known as the Westfall Act, accords federal employees absolute immunity from common-law tort claims arising out of acts they undertake in the course of their official duties." Osborn v. Haley , 549 U.S. 225, 229, 127 S. Ct. 881, 887, 166 L.Ed.2d 819 (2007) (citing 28 U.S.C. § 2679(b)(1) ). The Act empowers the Attorney General to respond to a suit against a federal employee by certifying that an employee "was acting within the scope of his office or employment at the time of the incident out of which the claim arose." § 2679(d)(1), (2). Upon such certification, the employee is dismissed from the action and the United States is substituted in her stead.

The Attorney General's Westfall certification, however, is subject to judicial review. Gutierrez de Martinez v. Lamagno , 515 U.S. 417, 420, 115 S. Ct. 2227, 2229, 132 L.Ed.2d 375 (1995). If a plaintiff challenges the Attorney General's certification, the District Court must apply de novo review to the Attorney General's scope of employment certification. S.J. & W. Ranch , Inc. v. Lehtinen , 913 F.2d 1538, 1543 (11th Cir. 1990). Yet because the Attorney General's certification serves as prima facie evidence that the conduct at issue occurred within the scope of employment, the "burden of altering the status quo by proving that the employee acted outside the scope of employment is ... on the plaintiff." Id. at 1543. The question of whether an employee acted within the scope of her employment for purposes of § 2679(d)(1) "is an issue governed by the law of the state where the incident occurred." Id . at 1542 (citing Nasuti v. Scannell , 906 F.2d 802, 813 (1st Cir. 1990), abrogated on other grounds by Osborn , 549 U.S. 225, 127 S. Ct. 881.

Here, the District Court reviewed the United States Attorney's certification under the proper de novo standard of review. Accepting the allegations in Omnipol and Elmex's amended complaint as true, the District Court turned to Florida law to determine whether Omnipol and Elmex had proven that Strother, Siedel, and Bristol had acted outside the scope of their employment. Under Florida law, the conduct of an employee is considered within the scope of employment when it (1) is of the kind the employee is hired to perform, (2) occurs substantially within the time and space limits authorized or required by the work to be performed, and (3) is activated at least in part by a purpose to serve the master. Sussman v. Fla. E. Coast Props. , Inc ., 557 So. 2d 74, 75–76 (Fla. 3d Dist. Ct. App. 1990).

According to Omnipol and Elmex's amended complaint, Strother, Siedel, and Bristol were all civilian contracting officers at SOCOM "charged with issuing and overseeing prime contracts for the purchase and delivery of arms, ammunition, and...