Yuhasz v. Brush Wellman, Inc.

• Decision Date: 14 December 2001
• Docket Number: No. 3:00CV7237.,3:00CV7237.
• Citation: 181 F.Supp.2d 785
• Parties: Richard M. YUHASZ, Plaintiff, v. BRUSH WELLMAN, INC. et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

181 F.Supp.2d 785

Richard M. YUHASZ, Plaintiff, v. BRUSH WELLMAN, INC. et al., Defendants.

No. 3:00CV7237.

United States District Court, N.D. Ohio, Western Division.

December 14, 2001.

Charles M. Murray, Dennis E. Murray, Jr., Murray & Murray, Sandusky, OH, John J. Wargo, Wargo and Wargo, Berea, OH, for Richard M. Yuhasz, Plaintiff.

Denise M. Hasbrook, Roetzel & Andress, Toledo, OH, Dennis M. Kelly, Geoffrey J. Ritts, Jones, Day, Reavis & Pogue, Cleveland, OH, for Brush Wellman, Inc., James Feldhouse, Defendants.

Lawrence J. Kiroff, Office of U.S. Atty., Toledo, OH, for U.S.

ORDER

CARR, District Judge.

Relator Richard M. Yuhasz brings this action against defendants Brush Wellman, Inc. ("Brush") and James Feldhouse claiming Brush violated the False Claims Act and wrongfully terminated plaintiff. This court has jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1367 and 31 U.S.C. §§ 3732(a) and 3730(h). Pending is Brush's motion to dismiss pursuant to Fed. R.Civ.P. 12(b)(6) and 9(b). For the following reasons, Brush's motion shall be granted.

BACKGROUND

By itself or through intermediaries, defendant Brush supplies "super" alloys, spinodal alloys, and other alloys to the United States for aerospace and military aviation uses. Some of Brush's alloys, supplied under requirements of and pursuant to contracts with the United States, are subjected to additional processing and/or manufacturing before they are delivered to the United States. Defendant Feldhouse is the manager of Brush's Lorain, Ohio Facility.

Relator worked for Brush as a laboratory manager between September, 1996, and January, 2000, at Brush's Lorain facility. The laboratory conducted chemical, mechanical, and physical testing of Brush's alloys. Relator's responsibilities included design and establishment of the testing laboratory, management of the laboratory, and conducting and supervision of testing procedures.

To receive payment under the contracts, Brush must submit reports, invoices, and certifications of compliance with technical specifications. Certification as to compliance with certain specifications and requirements includes certification under the Aerospace Materials Specifications, a government standard called the "QQC," and standards of the American Society for Testing and Materials. The certifications of compliance state, represent, and warrant that the alloys are in strict conformity with the specifications and that Brush is entitled to receive payment.

Relator brings this action alleging Brush violated the False Claims Act, 31 U.S.C. § 3729, et seq, by making false certifications by itself or through intermediaries. Relator also claims that Brush wrongfully terminated him in retaliation for his allegations of wrongdoing by Brush.

STANDARD OF REVIEW

No complaint shall be dismissed unless the plaintiff has failed to allege facts in support of plaintiff's claim that, construed in plaintiff's favor, would entitle the plaintiff to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). When deciding a motion brought pursuant to Fed.R.Civ.P. 12(b)(6), the inquiry is essentially limited to the content of the complaint, although matters of public record, orders, items appearing in the record, and attached exhibits also may be taken into account. See Yanacos v. Lake County, 953 F.Supp. 187, 191 (N.D.Ohio 1996). The court must accept all the allegations stated in the complaint as true, Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984), while viewing the complaint in the light most favorable to the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974). A court, however, is "not bound to accept as true a legal conclusion couched as a factual allegation." Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986).

DISCUSSION

I. Count One: False Claims Act

The False Claims Act ("FCA"), 31 U.S.C. § 3729(a), prohibits any person from:

(1) knowingly present[ing], or caus[ing] to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval; [or] (2) knowingly mak[ing], us[ing], or caus[ing] to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government.

A person or entity that violates the FCA is liable "for (1) a penalty between $ 5,000 and $ 10,000 under the present provisions; (2) three times the amount of damages sustained by the government; and (3) costs of the civil action brought to recover the penalty or damages." Kaminski v. Teledyne Indus., Inc., No. 96-3620, 1997 WL 415314, *2 n. 3, 1997 U.S.App. LEXIS 19192, at *9 n. 3 (6th Cir. July 21, 1997) (citing 31 U.S.C. § 3729(a)).

Relator claims Brush violated the FCA, through Brush's own acts or through intermediaries, by knowingly submitting false and fraudulent claims for payment and receiving payment for alloys not meeting government specifications. Relator claims that Brush had actual knowledge and/or acted in deliberate or reckless disregard or ignorance of the truth or falsity of its certifications because: 1) alloys did not meet specifications because of defects such as cracks; 2) certifications of compliance with technical specifications were false and fraudulent; 3) it used improper traceability and identifiability controls for alloys; 4) alloys were contaminated with beryllium; 5) it failed to perform required alloy tests; and 6) it lacked required internal controls, thereby preventing the tracing and identifying of alloys.

A. Pleading Requirements for a FCA Claim

A complaint alleging a claim under the FCA must meet the heightened pleading requirements of Fed.R.Civ.P. 9(b). See United States ex rel. Lee v. SmithKline Beecham, Inc., 245 F.3d 1048, 1050 (9th Cir.2001); United States ex rel. Russell v. Epic Healthcare Mgmt. Group, 193 F.3d 304, 308 (5th Cir.1999); Gold v. Morrison-Knudsen Co., 68 F.3d 1475, 1476 (2d Cir. 1995); United States ex rel. Cooper v. Blue Cross & Blue Shield of Florida, Inc., 19 F.3d 562, 567 (11th Cir.1994); United States ex rel. Schwartz v. Coastal Healthcare Group, Inc., No. 99-3105, 2000 WL 1595976, *3, 2000 U.S.App. LEXIS 26914, at *9 (10th Cir. Oct. 26, 2000); United States ex rel. Branhan v. Mercy Health Sys. of Southwest Ohio, No. 98-3127, 1999 WL 618018, *2, 1999 U.S.App. LEXIS 18509, at *7 (6th Cir. Aug. 5, 1999). Rule 9(b) states, "In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge, and other condition of mind of a person may be averred generally."

Both parties agree that Coffey v. Foamex L.P., 2 F.3d 157 (6th Cir.1993), enumerates the basic requirements for pleading a fraud claim under Rule 9(b). (Doc. 31 at 14; Doc. 39 at 8). In Coffey, the court stated:

Fed.R.Civ.P. 9(b) requires that averments of fraud must be stated with particularity. The Sixth Circuit reads this rule liberally, however, requiring a plaintiff, at a minimum, to "allege the time, place, and content of the alleged misrepresentation on which he or she relied; the fraudulent scheme; the fraudulent intent of the defendants; and the injury resulting from the fraud."

Id. (citing Ballan v. Upjohn Co., 814 F.Supp. 1375, 1385 (W.D.Mich.1992) (citing Michaels Bldg. Co. v. Ameritrust Co., 848 F.2d 674, 679 (6th Cir.1988))). The complaint must put a defendant on sufficient notice of the alleged misrepresentation so that a defendant can make an informed answer. Id. at 162 (citing Brewer v. Monsanto Corp., 644 F.Supp. 1267, 1273 (M.D.Tenn.1986)). Rule 9(b) thus requires relator to allege the: 1) time, place, and content of the fraud; 2) the fraudulent scheme; 3) fraudulent intent; and 4) injury.

The parties disagree, however, on the interpretation of that standard.

Relator argues that Rule 9(b) is read liberally and that relator adequately has met the pleading requirements of Coffey. Relator concedes that the complaint does not cite a specific claim or contract at issue. (Doc. 31 at 23). Relator, however, contends that this absence does not justify dismissal under Rules 12(b)(6) and 9(b). Relator cites several cases in support of his argument that he need not specify the claim or contract at issue under Rule 9(b). Brush contends that other circuits, which use the same standard as set forth in Coffey, have held, under Rule 9(b), a FCA complaint must provide specific information about the false claims.

The issue is, therefore, whether a FCA claim can survive a motion to dismiss when the relator does not plead a specific false statement or a specific false claim made to the government. Neither party points to, and independent research has not uncovered, a Sixth Circuit case addressing this issue. I must, therefore, look to district courts and other circuits for guidance.

Relator discusses several cases purportedly supporting his argument, including: United States ex rel. Roby v. Boeing Co., 184 F.R.D. 107 (S.D.Ohio 1998), United States ex rel. Pogue v. American Healthcorp, Inc., 977 F.Supp. 1329 (M.D.Tenn. 1997), and United States v. United Technologies Corp., No. C-3-99-093, 2000 WL 988238, 2000 U.S. Dist. LEXIS 6219 (S.D.Ohio Mar.20, 2000). Although these cases allowed a FCA claim to survive a motion dismiss under Rule 9(b), each is distinguishable.

In United Technologies, the plaintiff alleged that the defendant submitted a false claim through a contract bid which overstated the prices to be charged by the defendant's subcontractors. Defendant moved to dismiss for failure to comply with Rule 9(b). The court found that the plaintiff pleaded fraud with particularity because the plaintiff pleaded: 1) the circumstances of fraud; 2) that the cost to the plaintiff was higher because of wrongful conduct; and 3) that throughout performance of the subsequent contract, the bills and invoices were based on the initial...