U.S. v. Martin-Baker Aircraft Co., Ltd.

Decision Date26 November 2004
Docket NumberNo. 03-7079.,03-7079.
Citation389 F.3d 1251
PartiesUNITED STATES of America, ex rel. Richard WILLIAMS, Appellant, v. MARTIN-BAKER AIRCRAFT COMPANY, LTD., et al., Appellees.
CourtU.S. Court of Appeals — District of Columbia Circuit

Appeal from the United States District Court for the District of Columbia (No. 97cv02699).

Dean F. Pace argued the cause and filed the briefs for appellant.

Harvey G. Sherzer argued the cause for appellee Teledyne Ryan Aeronautical. With him on the brief was Scott Arnold.

Matthew H. Kirtland argued the cause for appellee Martin-Baker Aircraft Company, Ltd. With him on the brief was Stephen M. McNabb.

Before: SENTELLE, TATEL, and ROBERTS, Circuit Judges.

Opinion for the Court filed by Circuit Judge TATEL.

TATEL, Circuit Judge:

In this case, a qui tam relator alleges that his former employer and one of its subcontractors violated the False Claims Act. The relator also alleges that by suspending and ultimately firing him, the employer violated the statute's protections for whistleblowers. The district court dismissed both claims — the false claims count for failure (among other things) to plead fraud with the particularity required by Federal Rule of Civil Procedure 9(b), and the whistleblower count pursuant to Rule 12(b)(6) for failure to state a claim. We affirm the dismissal of the false claims allegations, but because the relator has stated a claim under the more liberal pleading rules that govern whistleblower allegations, we reverse the district court's dismissal of that claim and remand for further proceedings.

I.

A plaintiff, either an individual or the United States, may state a claim under the False Claims Act ("FCA") by alleging that a defendant "knowingly ma [de], use[d], or cause[d] to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government." 31 U.S.C. § 3729(a)(2). FCA violators are liable for civil penalties and treble damages, id. § 3729(a), and private individuals, known as "relators," may bring civil actions in the United States government's name, id. § 3730(b)(1). The government may opt to take over the suit, but if (as here) it declines to do so, the relator may elect to proceed and collect a significant percentage of any recovery. Id. §§ 3730(b)(4), (d). Cases brought under the FCA are known as qui tam actions, an abbreviation of the Latin phrase, "qui tam pro domino rege quam pro se ipso in hac parte sequitur" — or, "who pursues this action on our Lord the King's behalf as well as his own." Vt. Agency of Natural Res. v. United States ex rel. Stevens, 529 U.S. 765, 768 n. 1, 120 S.Ct. 1858, 1860 n. 1, 146 L.Ed.2d 836 (2000).

The False Claims Act contains a "whistleblower" provision to protect qui tam relators, who are often either current or former employees of FCA defendants. See 31 U.S.C. § 3730(h). In particular, the statute protects those who suffer retaliation because of their conduct "in furtherance of an action under [the FCA]." Id.

Appellee Martin-Baker Aircraft manufactures Naval Aircrew Ejection System ("NACES") seats for U.S. Navy aircraft. Appellee Teledyne Technologies, a Martin-Baker subcontractor, produces the "NACES sequencer," an electronic component of the ejection seat. Martin-Baker sells the seats to the Navy in production batches known as "lots." For each lot, Martin-Baker negotiates the price of the sequencer with Teledyne and then negotiates the price of the entire ejection seat with the Navy. Pursuant to the Federal Acquisition Regulations ("FAR"), which require government contractors to certify that "to the best of [their] knowledge and belief, the cost or pricing data [are] accurate, complete, and current as of the date of agreement on price," Teledyne had to certify to Martin-Baker the accuracy of the data for the sequencer, and Martin-Baker had to certify the same to the Navy for the ejection seat lots. See 48 C.F.R. § 15.403-4 (2002).

Appellant Richard Williams served as Martin-Baker's Chief Contract Negotiator from 1991 until the company fired him in July 1996. Williams's responsibilities included assessing the reasonableness of Martin-Baker's prime contracts with the Navy, which entailed analyzing Teledyne's cost and pricing data. Williams also participated in prime contract negotiations with the Naval Air Systems Command ("NAVAIR") contracting team.

In 1997, Williams filed a qui tam action against Martin-Baker, Teledyne, and another defendant not involved in this appeal. Twice amending his complaint, Williams served only the third version, i.e., the Second Amended Complaint (throughout this opinion, we shall refer to it as "the complaint"), on Martin-Baker and Teledyne. After five years and numerous extensions of time, the government chose not to intervene.

Although difficult to decipher, Count I of the complaint generally alleges that Martin-Baker and Teledyne violated the FCA by failing to comply with certification requirements under the Truth in Negotiations Act and the accompanying FAR, which together regulate government contracts. Teledyne "acted in knowing deliberate ignorance and reckless disregard" of both the historical actual cost of the sequencer and the updated "accurate, complete and current cost and pricing data" for "at least NACES Sequencer Lots IV through XIII." See Compl. ¶ 9. Because Teledyne certified the data's accuracy to Martin-Baker, which then submitted the data to the Navy, Teledyne made "false statements and lies to the United States Government." Id. Teledyne also employed six "false methods to falsely support" the certificates, culminating in "coverup, deception and lies to the United States Government." Id. ¶ 11. According to Count I, Williams informed Martin-Baker of the sequencers' historical cost, but the company refused to use historical cost in negotiations with the Navy for at least Lots IX through XIII. Id. ¶¶ 14-15. Finally, "[e]ach and every Teledyne ... false Certificate of Cost or Pricing Data and false invoice to Martin-Baker" is a false claim in violation of the FCA, resulting in a cost to the government of "at least $10 million." Id. ¶¶ 17-19.

In Count III (Count II is not at issue in this appeal), Williams alleges that in February 1996, he reported to his superior, Peter Hogg, that he had recommended to NAVAIR that it "continue to challenge" the cost or pricing data for Lot XI of the sequencer. Id. ¶ 40. Martin-Baker, Williams alleges, then "abruptly concluded" his mission with NAVAIR and "ordered [him] to return to Martin-Baker whereupon Williams was immediately suspended." Id. Williams claims that Martin-Baker then "forced" him to see "a company doctor ... and then a specialist for a contrived mental illness," despite his personal physician's certification that he was fit to work. Id. ¶ 41. The company eventually fired Williams "in retaliation... on the contrived and false ground of indeterminate mental illness and mental incapacity." Id. ¶ 43. According to the complaint, Martin-Baker later "retracted its mental incapacity reason for the employment termination," writing a letter to his insurance company "confirming that its mental incapacity reason for the employment termination of Williams was false." Id. ¶ 44.

Following a hearing, the district court granted the companies' motion to dismiss, doing so with prejudice. Finding Count I's allegations "simultaneously excessively prolix and equally abstruse," the district court ruled the count violated Federal Rule of Civil Procedure 8. United States ex rel. Williams v. Martin-Baker Aircraft Co., No. 97-2699 at 4 (D.D.C. May 15, 2003). The court found that Count I also failed Rule 9(b)'s heightened pleading requirement for fraud because it "alleges no specifics as to the time, place, or content of any deceptive submissions actually made to the government by either defendant, nor does [the plaintiff] identify any ostensibly culpable officials." Id. at 5. The district court dismissed Count III under Rule 12(b)(6), finding that it failed to state a claim for retaliation because Martin-Baker fired Williams in July 1996, eighteen months before he filed suit. Id. at 7.

Williams appeals the district court's dismissal of Counts I and III. We consider each in turn.

II.

Federal Rule of Civil Procedure 8(a) provides that a pleading "shall contain ... a short and plain statement of the claim showing that the pleader is entitled to relief." Rule 8(e)(1) requires that "[e]ach averment of a pleading shall be simple, concise, and direct." When a plaintiff alleges fraud, as when stating a claim under the FCA, see United States ex rel. Totten v. Bombardier Corp., 286 F.3d 542, 551-52 (D.C.Cir.2002), Rule 9(b) requires that "the circumstances constituting fraud or mistake ... be stated with particularity." We review Rule 8(a) and 9(b) dismissals de novo. See Kowal v. MCI Communications, Corp., 16 F.3d 1271, 1278 (D.C.Cir.1994) (reviewing de novo a dismissal based jointly on Rule 8 and Rule 9(b)); see also In re Dominguez, 51 F.3d 1502, 1508 & n. 5 (9th Cir.1995) (reviewing de novo a finding of failure to comply with Rule 8). "[A]ll the allegations of material fact are taken as true and construed in the light most favorable to the non-moving party ... [and] it must appear to a certainty that the plaintiff would not be entitled to relief under any set of facts that could be proved." Kowal, 16 F.3d at 1278 (quoting Wool v. Tandem, 818 F.2d 1433, 1439 (9th Cir.1987)) (alterations in original).

At the outset, we reject Williams's argument that Rule 8(a)'s requirement of a "short and plain statement" is the "antithesis" of Rule 9(b). As we have explained,

Rule 9(b) is not ... to be read in isolation from other procedural canons. As Professor Moore notes, "[t]he requirement of particularity does not abrogate Rule 8, and it should be harmonized with the...

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