United States Ex Rel. Sansbury v. LB & B Associates, Inc.
58 F. Supp. 3d 37
D.D.C.2014Background
- LB&B Associates, Inc. (LB&B), a Section 8(a) SBA-certified company (based on President Lily Brandon’s status), and its principals are accused in a qui tam False Claims Act (FCA) suit of misrepresenting Lily Brandon’s control of the company to obtain 8(a) set-aside contracts and of similar misrepresentations in Mentor–Protégé joint-venture agreements. Relators are two former LB&B employees; the United States later intervened in part (Section 8(a) claims) and filed a complaint in intervention adding common-law fraud and negligent misrepresentation claims.
- Government alleges (inter alia) that LB&B falsely represented Lily Brandon’s salary, role, and control of the company on its 8(a) application and annual certifications, that actual control was exercised by non‑disadvantaged individuals, and that LB&B continued to market itself as woman‑owned after “graduation.”
- Relators allege LB&B used Mentor–Protégé joint ventures (with Bering Straits Aki and Chilkat) to continue obtaining set‑aside contracts by listing LB&B employees as protégé project managers and later shifting their employment on paper.
- Defendants moved to dismiss both the Relators’ complaint and the Government’s complaint in intervention under Fed. R. Civ. P. 12(b)(6) and Rule 9(b).
- The court denied the motion to dismiss Relators’ complaint (as moot to the extent the government intervened) and granted in part and denied in part the motion to dismiss the Government’s complaint in intervention, resolving standing, statute‑of‑limitations, pleading‑particularity, conspiracy, and service issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether relators retain standing/ability to prosecute claims after Government intervenes | Relators assert they retain party status and may continue to pursue claims; only limitation is court‑ordered restriction under 31 U.S.C. § 3730(c)(2)(D). | Defendants contend intervening by the Government renders relators’ intervened claims duplicative and relators lack standing to pursue them. | Court: Relators remain parties with rights under § 3730(c)(1); Government’s complaint supersedes relators’ intervened claims but dismissal of relators’ pleading is not required absent a § 3730(c)(2)(D) showing; denial as moot. |
| Applicable statute of limitations (FCA claims): whether Government can reach back to 1997 via § 3731(b)(2) and § 3731(c) relation back | Gov’t: Because relator filed within three years of government officials’ knowledge (via an earlier qui tam), the government stands in relator’s shoes and may avail itself of the ten‑year tolling/backstop; relation‑back to relator complaint makes pre‑2001 claims timely. | Defendants: Government’s intervention years later cannot revive claims older than six years before government’s filing; many claimed violations predate the limitations period. | Court: Adopting reasoning like Pogue, court allows relation‑back and tolling such that Government’s FCA claims back to Feb. 1, 1997 are timely; but common‑law tort claims are governed by 28 U.S.C. § 2415(b) and claims before Feb. 1, 2004 are time‑barred. |
| Whether FCA and Mentor–Protégé allegations satisfy Rule 9(b) particularity | Relators/Gov’t assert complaints identify who, what, when, where, how, and link false representations to procurement/payment; scheme allegations and some contract examples suffice at pleading stage. | Defendants argue plaintiffs fail to identify specific false claims/invoices, specify dates/amounts, and rely on information‑and‑belief and generalized group allegations. | Court: Denied motions on Rule 9(b) ground; pleadings provide sufficient particularity about the fraudulent scheme, actors, timeframes, and connection to government contracts to put defendants on notice and survive dismissal. |
| FCA conspiracy claims and intra‑corporate conspiracy doctrine | Relators allege conspiracies between LB&B and protégé companies (BSA, Chilkat) and employees to obtain false 8(a)/JV approvals and contracts. Gov’t adds conspiracy but focuses on LB&B conduct. | Defendants argue intra‑corporate doctrine bars conspiracy claims among LB&B and its officers; plaintiffs fail to plead agreement/overt acts. | Court: Conspiracy claims against LB&B and its officers dismissed under intra‑corporate doctrine; conspiracy claims alleging agreement between LB&B and outside entities (BSA/Chilkat) survive at pleading stage. |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (plausibility standard for Rule 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (application of plausibility standard and limits on conclusory allegations)
- United States ex rel. Totten v. Bombardier Corp., 286 F.3d 542 (Rule 9(b) applies to FCA claims)
- United States v. Neifert‑White Co., 390 U.S. 228 (broad interpretation of the FCA)
- United States v. TDC Management Corp., 24 F.3d 292 (FCA intent/knowledge principles)
- United States v. Science Applications Int’l Corp., 626 F.3d 1257 (recognition of multiple FCA theories, including implied false certification)
- Swierkiewicz v. Sorema N.A., 534 U.S. 506 (pleading need not contain all prima facie elements)
- Graham County Soil & Water Conservation Dist. v. United States ex rel. Wilson, 545 U.S. 409 (limits on which § 3730 suits § 3731(b) applies to)