United States ex rel. Romero v. AECOM
| Decision Date | 08 March 2021 |
| Docket Number | CIVIL ACTION NO. 16-15092 SECTION "L" (4) |
| Court | U.S. District Court — Eastern District of Louisiana |
| Parties | UNITED STATES OF AMERICA Ex Rel. Robert Romero v. AECOM, ET AL. |
Before the Court are Defendants AECOM's and Louisiana Department of Education's Motions to Dismiss Under 12(b)(1) or 12(b)(6), R. Docs. 89; 90. Plaintiff United States of America filed oppositions to these motions, R. Docs. 98; 99. Defendants filed replies, R. Docs. 105; 107. Oral argument was held via Zoom on January 6, 2021. Having considered the parties' arguments and the applicable law, the Court now rules as follows.
I. BACKGROUND
On September 30, 2016, qui tam Plaintiff-Relator Robert Romero filed the instant case against AECOM Corporation ("AECOM"), Xavier University, and the Archdiocese of New Orleans ("Archdiocese") under the False Claims Act (the "FCA"), 31 U.S.C. § 3729-33. R. Doc. 1. AECOM is a multinational engineering firm and a Federal Emergency Management Association ("FEMA") contractor, and Relator Mr. Romero was an AECOM employee at all material times. Id. Plaintiff alleges that AECOM misused the FEMA Public Assistance Program funds it received in the wake of Hurricane Katrina. Id. at 2-3. Plaintiff alleges that "Defendants knowingly, recklessly or with willful blindness submitted false information to FEMA, to qualify ineligible buildings for post-Katrina replacement Funding." Id. Plaintiff's claims center around the FEMA assistance received for the Xavier University gymnasium and electrical distribution system, as well as the Archdiocese-owned St. Raphael School cafeteria building and Villa St. Maurice complex. Id. at 10-21. Additionally, Plaintiff alleges that Defendants violated the FCA in connection with at least seven other AECOM projects throughout New Orleans. Id. at 23. Plaintiff claims that Randall Krause was employed by AECOM to work on Katrina recovery efforts from 2006 to 2010 and worked on each of the projects at issue (the "Subject Projects"). Plaintiff alleges that Mr. Krause engaged in fraudulent practices associated with the Subject Projects and that AECOM became aware of this by 2010 but did nothing about it. Id. at 23. Plaintiff claims that he was assigned to AECOM's New Orleans response unit after Mr. Krause's termination, which allowed him to discover inflated repair and deflated replacement costs associated with the Subject Projects. Id. at 23. Plaintiff claims that after he relayed these concerns to AECOM, the company failed to inform the Government of these fraudulent practices or mitigate the overpayments and damages. Id. at 24.
On May 29, 2020, the Government notified the Court of its decision to intervene and proceed in this case pursuant to Sections 3730(b)(2) and (4) of the False Claims Act. R. Doc. 41. The Government filed an Intervenor Complaint shortly thereafter, in which it added more detailed allegations, Subject Projects, and additional defendants, including the Louisiana Department of Education ("LDE") and AECOM's subsidiaries AECOM Technical Services, Inc., Emergency Response Program Management Consultants, and AECOM Recovery (collectively part of "AECOM"). R. Doc. 59. The Government alleges that the LDE is liable for payment by mistake, negligent misrepresentation, and unjust enrichment in connection with the FEMA funding it managed for the Lawrence D. Crocker Elementary School, the Florence J. Chester Elementary School Classroom Building, the Florence J. Chester Elementary SchoolCafeteria, the Edward Livingston Middle School Main Building, and Fannie C. Williams Middle School, collectively referred to as the "Recovery School District." Id. at 66. Specifically, the Government argues that the Recovery School District received a substantial amount of funding it was not entitled to receive as a result of its false descriptions of the pre-disaster design and damage to these schools. R. Doc. 99.
Xavier University was terminated from this lawsuit on June 5, 2020, following a Joint Stipulation of Dismissal. R. Doc. 44. According to a Joint Status Report issued on January 25, 2021, the Government and the Archdiocese are working toward a settlement and plan to request approval pursuant to the Archdiocese's bankruptcy proceedings. R. Doc. 110. However, the report explained that a motion to dismiss had been filed in the bankruptcy proceedings, so this effort is currently on hold until that motion is resolved. Id. at 1; see also The Roman Catholic Church for the Archdiocese of New Orleans, 2:20-bk-10846 (Bankr. E.D. La).
On October 19, 2020, the LDE filed the instant Motion to Dismiss the Complaint in Intervention pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure, or, alternatively Rule 12(b)(6). R. Doc. 89. That same day, AECOM filed a Motion to Dismiss the Government's complaint pursuant to Rule 9(b) and 12(b)(6). R. Doc. 90. Oral argument was held on these motions on January 6, 2021, via Zoom.
LDE filed the instant motion to dismiss to Dismiss the Complaint in Intervention pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure or, alternatively, Rule 12(b)(6). R. Doc. 89. LDE argues that the Government has prematurely asserted "common law tort and equity claims when administrative procedures have not first been exhausted for this Court to have subject matterjurisdiction." Id. at 1. LDE explains that the Robert T. Stafford Disaster Relief and Emergency Assistance Act (the "Stafford Act") provides for procedures such as the right to arbitrate or appeal whenever FEMA claims overpayment of grant funds. R. Doc. 89-1 at 1. LDE asserts that these remedies have not been exhausted, which deprives the Court of subject matter jurisdiction over this case. Id. at 1-2. LDE contends that even if jurisdiction was proper, the Government "fails to state claims for relief under payment by mistake or unjust enrichment" based on its Complaint in Intervention, and that the Government's claim of negligent misrepresentation is time-barred. R. Doc. 89 at 1. Additionally, LDE argues that the Government's claim of negligent misrepresentation is barred by the three-year statute of limitations under 28 U.S.C. § 2415(b) and should therefore be dismissed. Id. The Government opposes this motion, arguing that the Court has subject matter jurisdiction over this case, its complaint satisfies the requirements of Rule 12(b)(6), and its negligent misrepresentation claim is not barred. R. Doc. 99.
Defendant AECOM also filed a Motion to Dismiss, arguing that the "[G]overnment's complaint suffers from several fundamental pleading deficiencies and should be dismissed in its entirety" pursuant to Rule 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure. R. Docs. 90; 90-1 at 1. AECOM first contends that the claims against it should be dismissed under Rule 9(b) because (1) "the government engages in impermissible 'group pleading' - offering generalized assertions regarding fraudulent conduct;" (2) "the government fails even to identify, let alone describe with particularity, any claims for payment submitted to the government;" (3) "the government fails adequately to plead that any claims for payment or statements were in fact false;" and (4) "the government fails to plead with particularity a causal connection between Krause's allegedly fraudulent statements and actual claims for payment." R. Doc. 90-1 at 2. Moreover,AECOM argues that the complaint should be dismissed under Rule 12(b)(6) because the Government failed to plead the requisite scienter for imposing FCA liability. Id.
The Government filed an opposition to AECOM's motion, arguing that its intervenor complaint satisfies Rule 9(b) because (1) AECOM misunderstands the law, and the complaint is complies with Fifth Circuit precedent on pleading FCA claims; (2) federal courts often permit group pleading, and the Complaint adequately identifies each AECOM entity as a Defendant; (3) the Complaint adequately pleads details of a scheme, as required by the FCA; (4) "[t]he Complaint adequately alleges 'reliable indicia that lead to a strong inference that claims were actually submitted' as part of AECOM's 'scheme to submit false claims;" and (5) the Complaint sufficiently pleads causation as required by the FCA. Id. at 6-17. The Government further argues that its complaint meets the pleading standards of Rule 12(b)(6) because it sufficiently alleges AECOM's requisite knowledge through plausible theories and "alleges facts sufficient to support imputing Krause's knowledge to AECOM." Id. at 23-25.
Motions filed pursuant to Federal Rule of Civil Procedure 12(b)(1) allow a party to seek dismissal of a complaint based on lack of subject-matter jurisdiction. Fed. R. Civ. P. 12(b)(1). For a Rule 12(b)(1) motion to dismiss, the burden of proof is on the party asserting jurisdiction. Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001) (citing McDaniel v. United States, 899 F. Supp. 305, 307 (E.D. Tex. 1995)). "When a Rule 12(b)(1) motion is filed in conjunction with other Rule 12 motions, the court should consider the Rule 12(b)(1) jurisdictional attack before addressing any attack on the merits." Id. (citing Hitt v. City of Pasadena, 561 F.2d 606, 608 (5th Cir. 1977) (per curiam)). When examining a Rule 12(b)(1) motion, the district courtmay consider matters of fact that may be in dispute. Id. (citing Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir. 1981)). "Ultimately, a motion to dismiss for lack of subject matter jurisdiction should be granted only if it appears certain that the plaintiff cannot prove any set of facts in support of his claim that would entitle plaintiff to relief." Id. (citing Home Builders Ass'n of Miss., Inc. v. City of Madison, Miss., 143 F.3d 1006, 1010 (5th Cir. 1998)).
The Federal Rules of Civil Procedure also permit a defendant to seek a...
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