United States ex rel. Aryai v. Skanska
| Decision Date | 19 March 2019 |
| Docket Number | 09 Civ. 5456 (LGS) |
| Parties | UNITED STATES OF AMERICA ex rel. BRIAN ARYAI, Relator, v. SKANSKA, et al., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Relator Brian Aryai ("Relator") brings this action under the False Claims Act, 31 U.S.C. § 3729 et seq. (the "FCA") against several construction companies whom Relator alleges engaged in fraudulent payroll practices. Defendants Tishman Construction Company ("Tishman"), Plaza Construction Corporation ("Plaza"), Turner Construction Company ("Turner"), Hunter Roberts Construction Group ("Hunter Roberts") and Skanska, (collectively, "Defendants") move to dismiss the Third Amended Complaint (the "TAC") pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). Relator cross-moves for partial summary judgment. For the reasons discussed herein, Defendants' motion to dismiss is granted and Relator's cross-motion for summary judgment is denied as moot.
The facts below are taken from the TAC and exhibits attached to the TAC. See TCA Television Corp. v. McCollum, 839 F.3d 168, 172 (2d Cir. 2016). The facts alleged in the TAC are assumed to be true for purposes of this motion. See SRM Glob. Master Fund Ltd. P'ship v. Bear Stearns Cos. L.L.C., 829 F.3d 173, 175 (2d Cir. 2016).
Relator was the former Senior Vice President of Finance at Bovis Lend Lease LMB, Inc. ("BLL"), an international construction firm. In the course of his employment at BLL, Relator learned that there was a longstanding, industry-wide fraudulent payroll practice known as "gratis pay." Union foremen working on government-funded construction projects routinely recorded on their timesheets two hours of overtime per day for time they did not work. The construction companies then submitted these fraudulent pay records to federal, state and municipal government entities.
Relator learned that Defendants participated in the gratis pay practice. BLL executives told Relator that gratis pay was pervasive in the construction industry and that Defendants routinely submitted payment requisitions based on fraudulent payroll records. Two BLL senior executives told Relator that the practice was in place pursuant to a "silent" agreement between the construction unions and Defendants. Relator's investigation included numerous interviews of union foremen and a personal visit to a construction site.
Shortly before his termination from BLL, Relator spoke to Plaza, Tishman and Skanska executives who confirmed their respective companies' past, current and future participation in the gratis pay scheme. The Plaza and Tishman executives warned Relator to avoid asking questions about the practice. On January 22, 2009, Relator was terminated from BLL.
On February 6, 2009, Relator provided a comprehensive report regarding his investigation to Loretta Lynch, who at the time was a former U.S. Attorney for the Eastern District of New York. In June 2010, Relator again met with Lynch, who had returned to office as a U.S. Attorney. At the 2010 meeting, Lynch confirmed the widespread payroll fraud and stated that her office would roll out indictments over the next several years.
On June 12, 2009, Relator filed this qui tam action. The defendants named in the original Complaint included Skanska, Turner, Tishman, Plaza, BLL and 100 "John Doe" entities, but not Hunter Roberts.
On April 24, 2012, the U.S. Attorney's Office for the Eastern District of New York filed criminal charges against BLL and James Abadie, the former principal in charge of BLL's New York office. BLL admitted to participating in the gratis pay practice and entered into a deferred prosecution agreement. Subsequently, the U.S. Attorney's Office for the Eastern District of New York entered into deferred prosecution agreements with Tishman (the "Tishman DPA") and Plaza (the "Plaza DPA"), and a non-prosecution agreement with Hunter Roberts (the "Hunter Roberts NPA"). The Tishman DPA, Plaza DPA and Hunter Roberts NPA are attached to the TAC as exhibits G, H and I, respectively. The actions taken by the U.S. Attorney's Office against Tishman, Plaza and Hunter Roberts were the result of information provided by Relator regarding the gratis pay scheme.
The DPAs and NPA set forth that Tishman, Plaza and Hunter Roberts participated in a scheme to defraud government contracting and funding agencies by making misleading statements and omissions in billing requisitions and other documents. Specifically, the DPAs and NPA state that the companies added one or two hours of unworked or unnecessary overtime per day to the timesheets of labor foremen. The DPAs and NPA state that Tishman and Plaza engaged in the practice from at least 1999 until approximately 2009, and Hunter Roberts engaged in the practice from approximately 2006 through 2011.
On April 13, 2018, Relator filed the Second Amended Complaint, which added Hunter Roberts as a defendant. On June 22, 2018, Relator filed the TAC. Drawing all reasonable inferences in Relator's favor, the TAC alleges that Defendants Tishman, Plaza, Skanska andHunter Roberts engaged in the fraudulent conduct both before and after March 23, 2010. The TAC does not specify when Defendant Turner participated in the gratis pay scheme.
"'A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it.'" John Brady v. Int'l Bhd. of Teamsters, Theatrical Drivers & Helpers Local 817, 741 F.3d 387, 389 (2d Cir. 2014) (quoting Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000)). In deciding motions to dismiss under Rule 12(b)(1), a court accepts as true all factual allegations in the complaint and draws all reasonable inferences in favor of the plaintiff. See Lotes Co. v. Hon Hai Precision Indus. Co., 753 F.3d 395, 403 (2d Cir. 2014). "A plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists." Mastafa v. Chevron Corp., 770 F.3d 170, 177 (2d Cir. 2014) (internal quotation marks omitted).
To survive a motion to dismiss under Rule 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly, 550 U.S. at 556). It is not enough for a plaintiff to allege facts that are consistent with liability; the complaint must "nudge[]" claims "across the line from conceivable to plausible." Twombly, 550 U.S. at 570. "To survive dismissal, the plaintiff must provide the grounds upon which his claim rests through factual allegations sufficient 'to raise a right to relief above the speculative level.'" ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007) (quoting Twombly, 550 U.S. at 555). On a Rule 12(b)(6) motion, "all factualallegations in the complaint are accepted as true and all inferences are drawn in the plaintiff's favor." Apotex Inc. v. Acorda Therapeutics, Inc., 823 F.3d 51, 59 (2d Cir. 2016) (internal quotation marks omitted).
This Opinion applies the pre-amendment version of § 3730(e)(4) to claims based on fraudulent conduct occurring prior to March 23, 2010, and the current version of § 3730(e)(4) to claims based on later conduct.
Prior to amendments effective March 23, 2010, the FCA included a public disclosure bar that was jurisdictional in nature:
31 U.S.C. § 3730(e)(4) (2006). In 2010, § 3730(e)(4) was amended by the Patient Protection and Affordable Care Act ("PPACA"), which removed the jurisdictional bar and expanded the definition of "original source." See United States ex rel Chorches for Bankr. Estate of Fabula v. Am. Med. Response, Inc., 865 F.3d 71, 80 (2017) (). The current version of § 3730(e)(4) provides:
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