United States Ex Rel. Yannacopoulos v. General Dynamics
2011 U.S. App. LEXIS 15374
| 7th Cir. | 2011Background
- Relator sues GD and Lockheed under the False Claims Act over Greece F-16 sale funded by FMF loans; district court granted summary judgment against relator; GD agreed to establish HBDIC in Greece and funded it with $50 million under Contract 5/86; Certification Agreement required representations about U.S. origins, non-U.S. items, and use of U.S. funds; DSAA oversaw financing and approvals; EPA draft clause was deleted in exchange for accelerated delivery; intermittent invoices certified compliance despite changes; modifications Five and Six by Lockheed after GD’s acquisition raised reverse false claim theories.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether HBDIC provisions breached Contract 5/86 and certifications were false | Yannacopoulos asserts GD used HBDIC costs to inflate contract price | GD argues Article 9.4 and Certification Agreement do not prohibit such capitalization | Summary judgment for GD; no material breach or falsity |
| Whether Certification Agreement certifications were false | Certifications misrepresented non-U.S. origin items and services | Disclosures to DSAA and contract context negate material falsity | Summary judgment for GD on the certification claims |
| Whether deletion of the EPA clause was a material misrepresentation | Interim invoices certified compliance despite deletion | DSAA was informed the clause was no longer applicable; not material | EPA clause claim fails for lack of materiality |
| Whether spare parts pricing certificate was knowingly false | Failure to update 8.5 price line shows knowledge of falsity | Initial estimate was arbitrary; no knowledge it was incorrect | Summary judgment for GD; no knowledge of falsity |
| Whether Modification Five/Six were reverse false claims | Modifications concealed overpayments and improper refunds | No objectively false statements; no proven falsity or knowledge | Affirmed district court; no reverse false claim |
Key Cases Cited
- United States ex rel. Garst v. Lockheed-Martin Corp., 328 F.3d 374 (7th Cir. 2003) (breach of contract alone not FCA fraud; need knowing false certification)
- United States ex rel. Lamers v. City of Green Bay, 168 F.3d 1013 (7th Cir. 1999) (falsehood requires knowledge or intent; imprecise statements not actionable)
- United States v. Rogan, 517 F.3d 449 (7th Cir. 2008) (materiality assessment governs FCA liability; failure to act later not sole proof)
- Allison Engine Co., Inc. v. United States ex rel. Sanders, 553 U.S. 662 (2008) (materiality to government’s payment decision required for FCA liability)
- Lamers v. City of Green Bay, 168 F.3d 1013 (7th Cir. 1999) (knowledge requirement for falsity; contract context)
- United States ex rel. Gross v. AIDS Research Alliance-Chicago, 415 F.3d 601 (7th Cir. 2005) (elements of FCA claim; knowledge of falsity)
- Omnicare, Inc. v. UnitedHealth Group, Inc., 629 F.3d 697 (7th Cir. 2011) (claims about statements of knowledge and reliance; de novo standard)