United States Ex Rel. Westrick v. Second Chance Body Armor, Inc.
266 F. Supp. 3d 110
| D.D.C. | 2017Background
- Toyobo manufactured Zylon fiber and supplied it (via Second Chance and other vest manufacturers) for ballistic vests sold to government customers through two channels: GSA MAS (federal purchases) and the BPVGPA (state/local purchases reimbursed by the U.S.).
- Toyobo’s internal testing in 2001–2002 showed significant Zylon strength degradation under heat/humidity and identified residual phosphoric acid as a likely cause; Toyobo did not fully disclose those findings and instead issued public/industry letters that downplayed severity.
- Second Chance included a 6% catalog “guarantee” (±6% V50 performance over a five‑year life) in a June 2002 modification to its GSA MAS contract; other manufacturers’ catalogs did not contain the 6% guarantee.
- The United States asserted FCA theories (factual falsity, express and implied false certification, and fraudulent inducement) and common‑law claims (fraud, unjust enrichment) based on nondisclosure and alleged misrepresentations about Zylon’s durability.
- Trial‑court proceedings: Judge Roberts (D.D.C.) granted and denied parts of cross motions for partial summary judgment in 2015; the government moved for reconsideration arguing Judge Roberts ignored GSA Contract Specialist Kellie Stoker’s declarations and failed to assess warranties for non‑Second Chance manufacturers.
- This opinion (July 14, 2017) grants reconsideration in part: it (1) holds Toyobo’s nondisclosures from July 2001 can support fraudulent inducement claims tied to both GSA MAS and BPVGPA, (2) limits express/implied false‑certification FCA claims to Second Chance’s 6% catalog guarantee for GSA MAS contracts, and (3) clarifies which claims survive to trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Toyobo’s partial disclosures/nondisclosures (including Stoker declarations) create triable issues on fraudulent inducement for GSA MAS contracts | Toyobo’s concealment of 2001–02 testing data was a fraudulent omission; Stoker’s declarations show GSA would have acted on the data (materiality/reliance) | Toyobo says no GSA contracting officer had Toyobo statements, and GSA considered only price/warranty; thus no reliance/materiality | Court: Stoker declarations create genuine issues of material fact on reliance/materiality; Toyobo’s partial disclosures to the government generally sufficed to trigger duty to disclose; deny summary judgment on fraudulent inducement for GSA MAS and BPVGPA (fraudulent inducement available against Toyobo) |
| When fraudulent conduct began | Gov: March 2001 | Defendants: earliest March 2001 or later | Court: March 2001 testing showed aging issues but not heat/humidity degradation; July 2001 is earliest date Toyobo learned of heat/humidity degradation and thus start of alleged fraud |
| Whether express or implied false‑certification FCA claims can be grounded on contract clauses/assurances other than Second Chance’s 6% catalog guarantee | Gov: multiple contract clauses and extra‑contractual assurances (warranty, workmanship, new‑materials, NIJ certification, five‑year protective property warranty) impose durability obligations supporting FCA claims | Defendants: clauses/assurances do not unambiguously impose a five‑year durability requirement; some are ambiguous or not part of contracting decision | Court: Reconsideration denied as to expanding false‑certification claims; express and implied false‑certification FCA claims limited to Second Chance’s 6% catalog guarantee for GSA MAS; other clauses/assurances do not support durability‑based FCA claims |
| Scope of claims that survive summary judgment | Gov: keep fraudulent inducement, express/implied certification, common‑law claims across GSA MAS and BPVGPA | Defendants: seek dismissal of various FCA theories and claims | Court: Surviving to trial — (1) common‑law fraud and unjust enrichment (BPVGPA and GSA MAS), (2) fraudulent inducement under the FCA (BPVGPA and GSA MAS), and (3) express and implied false certification under the FCA limited to Second Chance’s 6% catalog guarantee for the GSA MAS only |
Key Cases Cited
- United States ex rel. Westrick v. Second Chance Body Armor Inc., 128 F. Supp. 3d 1 (D.D.C. 2015) (prior summary judgment opinion framing the four FCA theories and treating the 6% catalog guarantee as ambiguous)
- United States v. Toyobo Co., Ltd., 811 F. Supp. 2d 37 (D.D.C. 2011) (earlier dismissal‑stage discussion of fraudulent inducement and related allegations)
- United States ex rel. Bettis v. Odebrecht Contractors of Cal., Inc., 393 F.3d 1321 (D.C. Cir. 2005) (FCA covers procurement‑by‑fraud/fraudulent inducement principles)
- United States ex rel. Marcus v. Hess, 317 U.S. 537 (fraudulent procurement liability reaches third parties who knowingly cause government to pay claims grounded in fraud)
- Schindler Elevator Corp. v. United States ex rel. Kirk, 563 U.S. 401 (discussing scope of statutes amended after Marcus and relevance to third‑party liability)
- Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (U.S. 2016) (materiality standard for implied‑false‑certification FCA claims)
- Astoria Fed. Sav. & Loan Ass’n v. Solimino, 501 U.S. 104 (1991) (courts may apply established common‑law principles when interpreting statutes unless contrary legislative purpose appears)
- D’Agostino v. ev3, Inc., 845 F.3d 1 (1st Cir. 2016) (fraudulent inducement requires causation — defendant’s conduct must cause government payment or loss)