United States ex rel. Keaveney v. SRA Int'l, Inc., Civil Action No. 13–855 (EGS)

• Court: United States District Courts. United States District Court (Columbia)
• Citation: 219 F.Supp.3d 129
• Docket Number: Civil Action No. 13–855 (EGS)
• Parties: UNITED STATES of America, EX REL. KEAVENEY, et al. Plaintiffs, v. SRA INTERNATIONAL, INC., et al. Defendants.
• Decision Date: 29 November 2016

219 F.Supp.3d 129

UNITED STATES of America, EX REL. KEAVENEY, et al. Plaintiffs,
v.
SRA INTERNATIONAL, INC., et al. Defendants.

Civil Action No. 13–855 (EGS)

United States District Court, District of Columbia.

Signed November 29, 2016

219 F.Supp.3d 135

Lynne Ann Bernabei, Alan Robert Kabat, Bernabei & Kabat, PLLC, Washington, DC, for Plaintiffs.

219 F.Supp.3d 136

Timothy D. Belevetz, Holland & Knight, LLP, Richard D. Holzheimer, Jr., McGuireWoods LLP, Tysons Corner, VA, Megan Mocho Jeschke, Holland & Knight LLP, McLean, VA, Christian B. Nagel, McGuireWoods LLP, Vapro Hac Vice, for Defendants.

MEMORANDUM OPINION

Emmet G. Sullivan, United States District Judget

Qui Tam Relators Kevin Keaveney and Margot Brennan (collectively "Relators") allege violations of the False Claims Act ("FCA"), 31 U.S.C. §§ 3729 –3733, against Defendants SRA International, Systems Research and Applications Corporation (collectively "SRA") and Triton Services (collectively "Defendants"). Am. Compl., ECF No. 32 at 71–79. Relators allege that, to secure a Department of Defense ("DOD") contract, Defendants made numerous false statements to the government. Id. Defendants SRA and Triton move to dismiss Relators' Complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) and for failure to plead with particularity as required under Federal Rule of Civil Procedure 9(b). SRA Mot. Dismiss, ECF No. 35; Triton Mot. Dismiss, ECF No. 38. Upon review of Defendants' motions, the responses and replies thereto, and for the reasons discussed below, Defendants' Motions to Dismiss are GRANTED in part and DENIED in part.

I. BACKGROUND

A. Procedural History

On June 7, 2013, Relators filed their Complaint, Compl., ECF No. 1, and on February 23, 2015, the United States filed a Notice of Election to Decline Intervention. ECF No. 14. Defendants were served with the Amended Complaint on August 19, 2015, and on October 16, 2015, Defendants filed the two motions to dismiss pursuant to Rules 12(b)(6) and 9(b) that are now before this Court. SRA Mot. Dismiss, ECF No. 35; Triton Mot. Dismiss, ECF No. 38.

In the Amended Complaint, Relators allege that Defendants engaged in a wide array of conduct that ultimately led to the submission of false claims to the government, including that Defendants: (1) made misrepresentations and concealed key information from their proposals to fraudulently induce the government to enter into the contract (Count I); (2) charged excessive pass-through fees for subcontractor labor (Count II); (3) made misrepresentations in monthly status reports and other submissions to the government (Counts III and IV); (4) inflated invoices and charged the government for services that were never rendered (Count V); and (5) implemented a kickback scheme wherein Defendants shared the proceeds of their allegedly fraudulent conduct amongst themselves (Count VI). Am. Compl., ECF No. 32 ¶¶ 121–150.

B. Relationship Between the Parties

Relator Kevin Keaveney is the President of K2 Global Solutions, Inc. ("K2GS"), a defense contracting company that supplies a variety of services to federal entities, including strategic planning, risk analysis, predictive modeling, defense readiness systems and data analysis. Id. ¶ 4. Mr. Keaveney has extensive experience in the national security sector and has developed a range of products and strategic management systems that have been widely adopted by the United States military. Id. ¶¶ 12–16. These products include, inter alia , the Army Reserve Expeditionary Force ("AREF"), a doctrinal and strategic management system used by the Army Reserve, and an automated version of AREF known as the Army Reserve Pool

219 F.Supp.3d 137

Based Sourcing ("ARPBS"). Id. ¶¶ 12–14. Relator Margot Brennan is an officer of K2GS. Id. ¶ 5.

Defendant Systems Research and Applications Corporation is a wholly-owned subsidiary of Defendant SRA International, Inc. and serves as SRA's primary contract vehicle with the U.S. government. Id. ¶ 6. In 2007, SRA entered into a joint venture named "Project Galaxy" with Defendant Triton Services, Inc. ("Triton"), a subcontractor. Id. ¶ 8. To perform the contract, Triton engaged various second-tier subcontractors, including K2GS, Tiber Creek Consulting, Inc. ("Tiber Creek"), Concurrent Technologies Corporation ("CTC"), and an individual named Jim Song.

From June to October 2005, Mr. Keaveney worked as a contractor for the DOD reporting to Joseph Angello, the Director of the Office of the Undersecretary of Defense, Personnel and Readiness, Readiness, Programming and Assessments. Id. ¶ 15. In February 2007, after Mr. Keaveney's contract expired, Mr. Angello requested Mr. Keaveney's assistance to continue the ARPBS and other military projects Mr. Keaveney had developed. Because Mr. Angello required Mr. Keaveney to procure his own contract vehicle, Mr. Keaveney approached Triton, a pre-approved subcontractor for various Department of Defense prime contractors. Id. ¶ 18. Triton's Chief Executive Officer, Larry Stack, informed Mr. Keaveney that Triton would use one of its existing prime contracting relationships, ultimately its relationship with SRA, to obtain the requisite contract vehicle. Id. ¶ 18.

C. Defendants' Contracts with the U.S. Department of Defense

In 2003, the Department of Defense awarded Galaxy Scientific Corporation ("Galaxy"), a future subsidiary of SRA, a contract to provide analytic services and software. Id. ¶ 19. Galaxy teamed with Triton in early 2007 to become the prime contractor for an additional contract anticipated to be let in May 2007. Id. In March 2007, Mr. Angello met with Triton, Mr. Keaveney and another DOD representative to discuss the anticipated contract. Id. ¶ 20. At this meeting, the participants discussed Mr. Keaveney's future role, the structure of the prospective contract, limits on Triton's pass-through rates, and the roles of second-tier subcontractors. Id.

On June 13, 2007, Triton and SRA submitted a proposal, called a Task Execution Plan ("TEP" or "task proposal"), to the DOD outlining their anticipated work on the contract. Id. ¶ 23. The TEP highlighted Mr. Keaveney's role as "Technical Team Leader" and detailed the six discrete tasks to be performed. Id. Defendants' proposal was ultimately successful and SRA and Triton secured the task order. Id. ¶ 24. On May 6, 2008, Defendants submitted a "follow-on" TEP to the DOD to request additional funds for the second half of the contract's base year and the following two option years. Id. ¶ 35. The 2008 TEP was largely similar to the 2007 TEP. Id. To keep the government apprised of their progress under the contract, Defendants submitted Monthly Status Reports ("MSRs"). Id. ¶ 59. In late 2008, Defendants removed Mr. Keaveney, K2GS and Tiber Creek from the contract and replaced them with Triton employees. Id. ¶¶ 39–42; 138.

II. STANDARD OF REVIEW

A. Federal Rule of Civil Procedure 12(b)(6)

A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of a complaint. Browning v. Clinton , 292 F.3d 235, 242 (D.C. Cir. 2002). The pleading must contain a "short and plain statement of the claim showing that the pleader is

219 F.Supp.3d 138

entitled to relief." Ashcroft v. Iqbal , 556 U.S. 662, 677–78, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). The pleading standard does not require detailed factual allegations, but should be "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Id. at 678, 129 S.Ct. 1937. Naked assertions without factual enhancements or formulaic recitations of the elements of a cause of action will not suffice. Id. Rather, to survive a motion to dismiss, a complaint "must contain sufficient factual matter ... to ‘state a claim to relief that is plausible on its face.’ " Id. Plausibility entails that the plaintiff has pled factual content that is not merely consistent with liability but allows the Court to draw a reasonable inference that the defendant is liable for the alleged misconduct. Id.

In considering a 12(b)(6) motion, the Court should liberally view the complaint in the plaintiff's favor, accepting all factual allegations as true, and giving the plaintiff the benefit of all inferences that can be drawn therefrom. Redding v. Edwards , 569 F.Supp.2d 129, 131 (D.D.C. 2008) (citing Kowal v. MCI Commc'ns Corp. , 16 F.3d 1271, 1276 (D.C. Cir. 1994) ).

A. Federal Rule of Civil Procedure 9(b)

Rule 9(b) requires that when alleging fraud, "the circumstances constituting fraud or mistake... be stated with particularity." Fed. R. Civ. P. 9(b). Complaints brought under the False Claims Act are subject to Rule 9(b)'s heightened pleading requirements. See U.S. ex rel. Totten v. Bombardier , 286 F.3d 542, 551–52 (D.C. Cir. 2002) ("Every circuit to consider the issue has held that, because the False Claims Act is self-evidently an anti-fraud statute, complaints brought under it must comply with Rule 9(b)."). That said, a...