825 F.3d 1138
10th Cir.2016Background
- Boeing contracted with Ducommun to supply over 200 fuselage and related parts for 737NG aircraft; contracts required conformity to FAA type and airworthiness certificates and Boeing to maintain production certificates.
- Ducommun initially used CNC/Advanced Technology Assembly (ATA) with Statistical Process Control (SPC) data collection, but later shifted to manual methods (drill jigs); Boeing audited Ducommun, discovered tooling/process irregularities, and settled to accept manually made parts at a discount.
- Relators (former Boeing auditors) sued under the False Claims Act (FCA), alleging Boeing sold/leased aircraft to the government that violated the 737NG type design because flag note S3 required SPC (they argued "shall" mandates SPC), so Boeing knowingly submitted false certifications for payment.
- FAA conducted Suspected Unapproved Parts (SUP) investigations in 2004 and 2005, inspected Ducommun parts and records, found no type-design violations, and recommended closing the matters; the government declined to intervene in the qui tam suits.
- The district court admitted the FAA SUP reports, granted Boeing’s and Ducommun’s summary judgment motions, finding no genuine dispute on falsity, scienter, and materiality; relators appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of FAA SUP reports under Fed. R. Evid. 803(8)(A)(iii) | Reports are untrustworthy (redactions, hearsay, lack of photographs/hearings) and should be excluded | Reports are timely, prepared by qualified investigators, considered relators’ input, and not prepared for litigation | Court properly admitted SUP reports; relators failed to show lack of trustworthiness |
| Did the district court abdicate its judicial function or impermissibly defer to FAA findings? | District court improperly deferred to FAA, gave reports preclusive weight, and treated FAA as insulating Boeing from FCA liability | Court argued it independently applied FCA elements and did not treat FAA as dispositive | Court did not abdicate; it independently evaluated FCA elements and did not apply preclusive weight to FAA findings |
| Falsity (interpretation of flag note S3 — whether SPC/CNC was mandatory) | Flag note S3’s use of “shall” makes SPC mandatory for statistically toleranced features; thus parts drilled by jigs violated type design | Flag note S3 permits two manufacturing tracks: SPC-enabled statistical tolerances or tighter arithmetic tolerances without SPC; Boeing/design engineers and FAA so interpreted it | The note is reasonably susceptible to Boeing/FAA interpretation allowing non-SPC manufacture at tighter tolerances; falsity not established as a matter of law |
| Scienter / FCA liability (was Boeing’s certification "knowing") | Even if interpretation debatable, relators argue Boeing must have known nonconformities existed when certifying to government | No evidence any Boeing employee knew, deliberately ignored, or acted in reckless disregard that parts violated type design; conflicting expert/engineer opinions exist | Summary judgment affirmed: relators failed to produce evidence of knowledge, deliberate ignorance, or reckless disregard — an essential FCA element |
Key Cases Cited
- United States v. S.A. Empresa de Viacao Aerea Rio Grandense (Varig Airlines), 467 U.S. 797 (U.S. 1984) (describing FAA aircraft certification scheme)
- United States ex rel. Burlbaw v. Orenduff, 548 F.3d 931 (10th Cir. 2008) (FCA scienter and summary judgment standards)
- Perrin v. Anderson, 784 F.2d 1040 (10th Cir. 1986) (factors for evaluating trustworthiness of public reports)
- Denny v. Hutchinson Sales Corp., 649 F.2d 816 (10th Cir. 1981) (admissibility of agency reports that rely on outside information)
- United States ex rel. Conner v. Salina Reg’l Health Ctr., Inc., 543 F.3d 1211 (10th Cir. 2008) (definitions of factual and legal falsity under the FCA)
- United States ex rel. Lemmon v. Envirocare of Utah, Inc., 614 F.3d 1163 (10th Cir. 2010) (express and implied false certification doctrines)
- United States v. Rodella, 804 F.3d 1317 (10th Cir. 2015) (standard of review for evidentiary rulings)
- Moss v. Ole S. Real Estate, Inc., 933 F.2d 1300 (5th Cir. 1991) (distinguishing report trustworthiness for admission from credibility/weight)