United States Ex Rel. Vavra v. Kellogg Brown & Root, Inc.
727 F.3d 343
| 5th Cir. | 2013Background
- KBR held LOGCAP III with the U.S. Army, a IDIQ contract issuing task orders later subcontracted to EGL and Panalpina.
- KBR employees in the transportation department allegedly accepted kickbacks from EGL and Panalpina to obtain favorable treatment on subcontracts.
- Robert Bennett and four colleagues allegedly received kickbacks from EGL between 2002–2006; Grant Wattman and Panalpina employees allegedly provided kickbacks 2003–2006.
- The government intervened in a qui tam action, and sued KBR, alleging violations of the Anti-Kickback Act (AKA).
- The district court dismissed the AKA claim under Rule 12(b)(6), holding §55(a)(1) cannot impose vicarious liability on a corporation.
- The court of appeals holds that §55(a)(1) permits vicarious liability and remands for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 55(a)(1) permits vicarious liability | United States: corporate liability may attach under § 55(a)(1) via apparent authority and imputable knowledge. | KBR: statute implies vicarious liability only if employees act within scope and for the benefit of the corporation. | Yes; § 55(a)(1) permits vicarious liability. |
| Whether the complaint adequately alleges vicarious liability | Government pleads corporate liability imputable to KBR through Bennett and transportation staff under apparent authority. | KBR argues insufficiency to attribute conduct to the corporation and questions the knowledge/benefit basis. | The complaint adequately states an AKA claim at the motion to dismiss stage; remand for factual development. |
| What knowledge and authority requirements apply under § 55(a)(1) for imputing to a corporation | Knowledge imputable to the corporation via officers/managers or those with sufficient responsibility; mere employee knowledge is insufficient. | KBR argues a stricter standard (scope of employment, managerial level) should apply akin to punitive-damages vicarious liability. | Knowledge imputable to the corporation may support vicarious liability when tied to officers/managers or those with authority imputable to the corporation; no punitive-damages strict rule governs this non-punitive statute. |
Key Cases Cited
- Acme Process Equip. Co. v. United States, 385 U.S. 138 (U.S. 1966) (kickbacks and government costs analyzed in AKAs context)
- ASME, v. Hydrolevel Corp., 456 U.S. 556 (U.S. 1982) (apparent authority and agency principles apply to statutory liability)
- Ridglea State Bank, 357 F.2d 495 (5th Cir.1966) (limits on imputing stock knowledge when enforcing FCA penalties; knowledge-for-imputing standard discussed)
- Kellogg Brown & Root Servs., Inc. v. United States (KBR II), 103 Fed.Cl. 714 (Fed. Cl. 2012) (prior district court ruling on knowledge/imputation under § 55(a)(1) discussed)
- Hellenic, Inc., 252 F.3d 391 (5th Cir.2001) (apparent authority and agency principles in belief-Imputed knowledge context)