U.S. Ex Rel. Dimitri Yannacopoulos v. Gen. Dynamics

• Decision Date: 26 July 2011
• Docket Number: No. 09–3037.,09–3037.
• Citation: 652 F.3d 818
• Parties: UNITED STATES of America ex rel. Dimitri YANNACOPOULOS, Plaintiff–Appellant,v.GENERAL DYNAMICS, et al., Defendants–Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

652 F.3d 818

UNITED STATES of America ex rel. Dimitri YANNACOPOULOS, Plaintiff–Appellant,

v.GENERAL DYNAMICS, et al., Defendants–Appellees.

No. 09–3037.

United States Court of Appeals, Seventh Circuit.

Argued Sept. 21, 2010.Decided July 26, 2011.

Jeffrey I. Cummings (argued), Attorney, Miner, Barnhill & Galland, Thomas R. Meites, Attorney, Meites, Mulder & Glink, Chicago, IL, for Plaintiff–Appellant.Barry Levenstam (argued), Attorney, Jenner & Block LLP, Joshua T. Buchman (argued), Attorney, McDermott, Will & Emery, Chicago, IL, for Defendants–Appellees.Jeffrey A. Clair (argued), Attorney, Department of Justice, Civil Division, Appellate Staff, Washington, DC, for Amicus Curiae.Before BAUER, SYKES, and HAMILTON, Circuit Judges.HAMILTON, Circuit Judge.

Relator Dimitri Yannacopoulos brought this qui tam suit under the federal False Claims Act. He alleges that defendants General Dynamics Corporation and Lockheed Martin Corporation violated the False Claims Act in a number of ways in a sale of F–16 fighter jets to Greece, which paid for the jets with money borrowed from the United States. The district court granted summary judgment against Yannacopoulos, finding that no reasonable jury could find in his favor on any of his claims. After reviewing the voluminous record, we agree with the district court that Yannacopoulos has not shown the existence of a genuine issue of material fact. We affirm.

I. Background

In January 1987, General Dynamics agreed to sell to the government of Greece 40 F–16 fighters, as well as related services and equipment. The initial terms of this sale were set forth in a Letter of Intent dated March 6, 1985, to which was attached a draft contract that reflected the status of the parties' negotiations at the time. The terms of the Greek sale were set out in “Contract Number 5/86 for the Direct Sale of F–16 C/D Aircraft” (“Contract 5/86”), executed on January 12, 1987, as well as in a number of contract amendments executed over the next several years. The total price of the Greek sale was set at $616,497,013, with a payment schedule set out in Annex AG to Contract 5/86.

The sale by General Dynamics to Greece was conducted under the United States' Foreign Military Financing (“FMF”) program. Under that program, Greece bought the fighters and related services directly from General Dynamics, but it did so using funds that were loaned by the United States government. General Dynamics would submit invoices for payment to the United States, which then paid General Dynamics directly and assessed the amount of that payment against Greece's trust account. The details of this arrangement were overseen by the Defense Security Assistance Agency (“DSAA”), an agency of the United States Department of Defense, which reviewed Contract 5/86 and gave the approvals needed to use FMF funds to finance the Greek sale.¹

Several years before the Greek sale, Yannacopoulos entered into an agreement to help a General Dynamics telecommunications subsidiary market commercial telephone equipment in Greece. That consulting arrangement was maintained between the parties until October 1983, when General Dynamics released Yannacopoulos for undisclosed reasons. When Yannacopoulos later learned that Greece had agreed to purchase F–16s from General Dynamics, he claimed that he was entitled to $39 million in commissions on the sale, which General Dynamics refused to pay. Yannacopoulos then sued General Dynamics. A jury rejected Yannacopoulos' claims, and the Eighth Circuit affirmed. See Yannacopoulos v. General Dynamics Corp., 75 F.3d 1298 (8th Cir.1996).

Relying, at least in part, on information obtained in the course of that lawsuit against General Dynamics, Yannacopoulos filed this suit against General Dynamics and Lockheed alleging numerous violations of the False Claims Act in relation to the Greek sale. After extensive discovery, the defendants moved for partial summary judgment. The district court granted the defendants' motion, United States ex rel. Yannacopoulos v. General Dynamics, 2007 WL 495257 (N.D.Ill. Feb. 13, 2007), but later reconsidered its grant of summary judgment regarding Yannacopoulos' claim based on the Economic Price Adjustment clause proposed for Contract 5/86, United States ex rel. Yannacopoulos v. General Dynamics, 2007 WL 1597670 (N.D.Ill. May 31, 2007). General Dynamics filed a renewed motion for summary judgment on that claim, and both defendants moved for summary judgment on the remainder of Yannacopoulos' claims. The district court granted the defendants' motions in their entirety. United States ex rel. Yannacopoulos v. General Dynamics, 636 F.Supp.2d 739 (N.D.Ill.2009). This appeal followed.

II. The False Claims Act and the Standard of Review

The False Claims Act makes it unlawful to knowingly (1) present or cause to be presented to the United States a false or fraudulent claim for payment or approval, 31 U.S.C. § 3729(a)(1) (2006); (2) make or use a false record or statement material to a false or fraudulent claim, § 3729(a)(1)(B); ² or (3) use a false record or statement to conceal or decrease an obligation to pay money to the United States, § 3729(a)(7) (2006). Under the Act, private individuals such as Yannacopoulos, referred to as “relators,” may file civil actions known as qui tam actions on behalf of the United States to recover money that the government paid as a result of conduct forbidden under the Act. Glaser v. Wound Care Consultants, Inc., 570 F.3d 907, 912 (7th Cir.2009). As an incentive to bring suit, a prevailing relator may collect a substantial percentage of any funds recovered for the benefit of the government. Id. To establish civil liability under the False Claims Act, a relator generally must prove (1) that the defendant made a statement in order to receive money from the government; (2) that the statement was false; and (3) that the defendant knew the statement was false. E.g., United States ex rel. Gross v. AIDS Research Alliance–Chicago, 415 F.3d 601, 604 (7th Cir.2005).

In this appeal, Yannacopoulos claims that the defendants made a number of false statements to the United States to obtain payments for the Greek sale. We consider them in turn. First, he contends that General Dynamics lied about its use of funds loaned by the United States to capitalize a Greek business development company, as required by the terms of Contract 5/86. Next, he says that General Dynamics failed to disclose promptly to the United States its decision to delete the Economic Price Adjustment clause from the draft contract. Yannacopoulos also argues that General Dynamics made misrepresentations relating to Contract 5/86's provisions concerning spare part purchases and an ill-fated “depot program.” Finally, he claims that after Lockheed assumed General Dynamics' obligations under Contract 5/86, Lockheed made a number of misrepresentations in two amendments to the contract.³

We review de novo the district court's grant of summary judgment against Yannacopoulos on these claims. Omnicare, Inc. v. UnitedHealth Group, Inc., 629 F.3d 697, 705 (7th Cir.2011). Summary judgment is appropriate when the pleadings and submissions in the record indicate the absence of any genuine issues of material fact, so that the moving parties are entitled to judgment as a matter of law. Midwest Imports, Ltd. v. Coval, 71 F.3d 1311, 1317 (7th Cir.1995). As the party opposing summary judgment, Yannacopoulos is entitled to the benefit of any reasonable inferences in his favor that are supported by the record. Jakubiec v. Cities Service Co., 844 F.2d 470, 471 (7th Cir.1988). We may affirm the district court's grant of summary judgment only if, upon viewing the record in this light, no reasonable jury could have rendered a verdict in Yannacopoulos' favor. Wilson v. Williams, 997 F.2d 348, 350 (7th Cir.1993).

In opposing summary judgment, however, Yannacopoulos could not “rest on the allegations in the pleadings,” but was required to present “evidentiary material which, if reduced to admissible evidence, may allow him to carry his burden of proof.” Reed v. AMAX Coal Co., 971 F.2d 1295, 1299 (7th Cir.1992). In other words, reversal would be appropriate only if Yannacopoulos' evidence is sufficient to enable a reasonable jury to think it more likely than not that the defendants violated the False Claims Act. With that standard in mind, we turn to the merits of the claims.

III. The HBDIC Claim

Yannacopoulos' primary claim on appeal concerns General Dynamics' involvement in establishing the Hellenic Business Development and Investment Company (“HBDIC”) as part of the F–16 sale to Greece. Under Article 35 of Contract 5/86, General Dynamics agreed to “establish [HBDIC] in Greece ... for the purpose of developing and implementing Business Development projects.” HBDIC was to be incorporated in Greece, with General Dynamics as the majority shareholder and the Greek government as a minority shareholder. Once incorporated, HBDIC was to act as a venture capital company, providing seed money and loans to new companies in Greece.

General Dynamics agreed to capitalize HBDIC with a total of $50 million over the course of ten years after the signing of Contract 5/86. General Dynamics also agreed to provide three “in-country management and coordination personnel” for the initial ten years of HBDIC's existence. General Dynamics admits that it paid these amounts, at least in part, using profits it made under Contract 5/86. After five years of operation, half of HBDIC's profits were to be paid out as dividends to its shareholders. After fifteen years, HBDIC was to be dissolved (unless its funds ran out before that time and absent action to the contrary by General Dynamics and/or Greece), at which time all of its remaining assets up to $50 million, as well as half of any assets over that amount, were to revert to Greece.

Before the United States DSAA would release funds to finance the Greek sale, it required General Dynamics...