U.S. ex rel. Purcell v. Mwi Corp.

• Decision Date: 25 March 2003
• Docket Number: Civil Action No. 98-2088 (RMU).
• Citation: 254 F.Supp.2d 69
• Parties: UNITED STATES of America ex rel. Robert R. PURCELL, Plaintiff, v. MWI CORPORATION et al., Defendants.
• Court: U.S. District Court — District of Columbia

254 F.Supp.2d 69

UNITED STATES of America ex rel. Robert R. PURCELL, Plaintiff, v. MWI CORPORATION et al., Defendants.

Civil Action No. 98-2088 (RMU).

United States District Court, District of Columbia.

March 25, 2003.

COPYRIGHT MATERIAL OMITTED

Jospeh J. Aronica, Porter, Wright, Morris & Arthur, Catherine Botticelli, Arter & Hadden LLP, Roscoe Conklin Howard, Jr. U.S. Attorney's Office Michael D. Granston, Washington, DC, for plaintiff.

Michael J. Madigan, Akin, Gump, Strauss, Hauer & Feld, L.L.P., for defendant.

Peter R. Kolker, Zuckerman Spaeder, LLP, Vincent Bernard Terlep, Jr., Washington, DC, Catherine M. Rodrigues, Conrad & Scherer, LLP, Fort Lauderdale, FL, for defendant/intervenor-defendant.

MEMORANDUM OPINION

URBINA, District Judge.

DENYING THE DEFENDANTS' MOTION TO DISMISS

I. INTRODUCTION

This qui tam action involving pump equipment sales to Nigeria comes back before the court on the defendants' motion to dismiss. Robert Purcell ("the relator") brings this case pursuant to the False Claims Act ("FACA"), 31 U.S.C. §§ 3729-3733, against his former employer, MWI Corporation ("MWI"), a manufacturer of industrial pumps. As is its option, the government subsequently intervened, bringing suit on its own accord against MWI and its former president, J. David Eller (collectively, "the defendants"). The defendants now move this court to dismiss all four counts of the government's complaint either as time-barred or as precluded by principles of equity. Because the government's complaint is timely under the relation-back doctrine, the record does not support dismissal of Mr. Eller, and the government may plead alternate theories of liability, the court denies the defendants' motion to dismiss.

II. BACKGROUND

A. Factual Background

According to the government, in the early 1990s MWI arranged to sell irrigation pumps and other equipment to seven Nigerian states. Gov't's Compl. 11118, 11. To finance the pump sales, the United States Export-Import Bank ("ExIm") made eight loans totaling $74.3 million to Nigeria in 1992. Id. ¶¶ 12-13. MWI received regular payments through a London bank which then was reimbursed by ExIm. Id. 1114.

Before Exlm would approve the bank reimbursements, however, it required MWI to submit a "supplier's certificate" certifying that it had not paid any commissions or other payments in connection with the pump sales. Id. If 15-16. In turn, before the bank would release each payment to MWI, the company had to submit an additional supplier's certificate again certifying that it had not paid commissions or other payments in connection with the pump sales. Id. H 17. Accordingly, MWI submitted supplier's certificates to obtain ExIm approval of the bank reimbursements and submitted 48 additional supplier's certificates for each of its payments from the bank. Id. fit 16, 18. On the supplier's certificates, 43 of which were signed by Mr. Eller, MWI certified that it had not paid any commissions or other payments in connection with the pump sales. Id. ¶¶ 19, 21.

The government alleges that these certifications were false. Id. If 24, 35. Specifically, the government claims that the defendants failed to disclose on the supplier's certificates that they had made $28 million in "excessive, highly irregular" commissions to their Nigerian sales representative to obtain the pump sales. Id. If 22-27. The defendants allegedly also failed to disclose that their representative subsequently made payments to various Nigerian officials in connection with the pump sales. Id. ¶¶ 28-37. Finally, the government contends that Mr. Eller made trips to the Bahamas and Grand Cayman with suitcases containing cash in an effort to move his assets out of the United States. Id. ¶¶38-43.

B. Procedural History

On August 28, 1998, the relator filed his complaint ("relator's complaint") alleging false or fraudulent claims under the FCA. In part because the relator's complaint sparked a criminal investigation of the defendants, the government requested and received multiple extensions of time to determine whether it would intervene in the civil action. Defs.' Mot. at 2-3; Gov't's Opp'n at 2-3. On January 28, 2002, the government filed a notice of election to intervene in the case. Gov't's Notice of Election to Intervene. On April 4, 2002,¹ after two further extensions of time, the government filed its complaint ("government's complaint") alleging (1) false or fraudulent claims under the FCA, (2) false statements under the FCA, (3) unjust enrichment, and (4) payment by mistake. Id. ¶¶ 46-56. For relief, the government seeks treble damages and civil penalties under the FCA, common law, and equity. Id. ¶1, 57. On May 28, 2002, citing various statutes of limitations as well as principles of equity, the defendants filed their motion to dismiss the government's complaint for failure to state a claim on which relief may be granted. The court now turns to the defendants' motion to dismiss.

III. ANALYSIS

A. Legal Standard for a Motion to Dismiss Pursuant to Rule 12(b)(6)

For a complaint to survive a Rule 12(b)(6) motion to dismiss, it need only provide a short and plain statement of the claim and the grounds on which it rests. FED.R.CIVP. 8(a)(2); Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). A motion to dismiss under Rule 12(b)(6) tests not whether the plaintiff will prevail on the merits, but instead whether the plaintiff has properly stated a claim. FED.R.CIVP. 12(b)(6); Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974), overruled on other grounds by Harlow v. Fitzgerald, 457 U.S. 800, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982). The plaintiff need not plead the elements of a prima-facie case in the complaint. Swierkiewicz v. Sorema N.A., 534 U.S. 506, 511-14, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002) (holding that a plaintiff in an employment-discrimination case need not establish her prima-facie case in the complaint); Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1114 (D.C.Cir.2000). Thus, the court may dismiss a complaint for failure to state a claim only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations. Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984); Atchinson v. District of Columbia, 73 F.3d 418, 422 (D.C.Cir.1996). In deciding such a motion, the court must accept all of the complaint's well-pled factual allegations as true and draw all reasonable inferences in the nonmovant's favor. Scheuer, 416 U.S. at 236, 94 S.Ct. 1683. The court need not accept as true legal conclusions cast as factual allegations. Kowal v. MCI Communications Corp., 16 F.3d 1271, 1276 (D.C.Cir.1994).

A defendant may raise the affirmative defense of statute of limitations via a Rule 12(b)(6) motion when the facts that give rise to the defense are clear from the face of the complaint. Smith-Haynie v. District of Columbia, 155 F.3d 575, 578 (D.C.Cir.1998). Because statute of limitations issues often depend on contested questions of fact, however, the court should hesitate to dismiss a complaint on statute of limitations grounds based solely on the face of the complaint. Firestone v. Firestone, 76 F.3d 1205, 1209 (D.C.Cir. 1996). Rather, the court should grant a motion to dismiss only if the complaint on its face is conclusively time-barred. Id.; Doe v. Dep't of Justice, 753 F.2d 1092, 1115 (D.C.Cir.1985). If "no reasonable person could disagree on the date" on which the cause of action accrued, the court may dismiss a claim on statute of limitations grounds. Smith v. Brown & Williamson Tobacco Corp., 3 F.Supp.2d 1473, 1475 (D.D.C.1998) (citing Kuwait Airways Corp. v. Am. Sec. Bank, N.A, 890 F.2d 456, 463 n. 11 (D.C.Cir.1989)).

B. The False Claims Act and the Complaints

The FCA imposes liability for civil penalties and treble damages on any person who submits or causes false claims to be submitted to the federal government. 31 U.S.C. § 3729. Under section 3730 of the FCA, a private person—known as the "relator"—may bring an FCA action in the name of the government. Id. § 3730(b). The relator must file the complaint in camera and under seal, and may not serve it upon the defendant until the court so orders. Id. The relator must serve a copy of the complaint on the government, however, which then has 60 days (subject to court-approved extensions of time) to elect to intervene in the case. Id. If the government elects to intervene, it has primary responsibility for prosecuting the action and is not bound by the actions of the relator, who may continue as a party to the action. Id. § 3730(c). If the government chooses not to intervene, the relator has the right to conduct the action. Id.

Section 3731(b) of the FCA establishes a two-pronged statute of limitations for FCA actions. 31 U.S.C. § 3731. First, section 3731(b)(1) limits FCA actions to those brought within six years of the date of the FCA violation. Id. § 3731(b)(1). Alternatively, section 3731(b)(2) limits FCA actions to those brought within three years of the date "when facts material to the right of action are known or reasonably should have been known by the official of the United States charged with responsibility to act[.]" Id. § 3731(b)(2).

For the purposes of the motion to dismiss, the content and filing date of the two complaints are particularly significant, and therefore merit comparison. The relator in this case filed his complaint on August 27, 1998, nearly four years after the defendants submitted the last allegedly false supplier's certificate. Gov't's Compl. Attach. B at 3. In his complaint, the relator names MWI as the sole defendant and seeks damages and civil penalties based on one count that describes several FCA violations. Id. ¶ 4, 11-17. Specifically, the relator's complaint describes MWI's pump sales to the seven Nigerian states, the $74 million in Exlm loan guarantees, the allegedly fraudulent supplier's certificates, and...