United States of America v. Monaco Enterprises Inc, 2:12-cv-00046

Background

Relators Maximillian Salazar, Jason Voss, and Drake (and Lisa) Osborn are former employees of Monaco Enterprises, Inc. (MEI) who filed qui tam actions under the False Claims Act (FCA); the United States partially intervened in both matters and the cases were consolidated.
The Government intervened on a limited subset of allegations (e.g., billing for services not rendered; deceptive travel charges); other allegations remained with the relators.
Relators’ complaints allege multiple theories of FCA liability: overbilling, billing for unperformed services, inflated parts pricing, mislabeling OEM parts, false certifications (including Davis-Bacon wage issues), and retaliation under 31 U.S.C. § 3730(h).
Defendants moved to dismiss all non-intervened claims for failure to plead plausibly and with the particularity required by Rule 9(b). Defendants also argued the retaliation claim against individual defendants is improper.
The court dismissed the deficient claims in part, granted leave to amend for both the Salazar and Voss/Osborn pleadings (deadline July 31, 2016), denied consolidation and the relators’ motions to strike, and held § 3730(h) does not permit suits against individual non-employer defendants.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Sufficiency of non-intervened FCA pleadings under Rule 9(b)	Relators rely on their complaints and incorporation of the Government’s intervenor complaint to supply detail and request leave to amend if needed	MEI argues the complaints lack particularity (no who/what/when/where/how, no contracts, invoices, dates, amounts) and thus fail Rule 9(b) and plausibility	Court: Most non-intervened FCA claims dismissed for failure to plead with Rule 9(b) particularity but relators granted leave to amend
Use of wholesale incorporation of Government intervenor complaint	Relators contend incorporation supplies necessary factual detail	Defendants say wholesale incorporation is impermissible and leaves claims unclear	Court: Incorporation is insufficient as a substitute pleading; relators must plead discrete claims tied to specific allegations
§ 3730(h) retaliation claim against employer and individuals	Osborn alleges protected internal complaints (verbal and emails) and adverse employment action	MEI contends relator fails to plead protected activity with requisite particularity and that individuals cannot be sued	Court: Retaliation claim against MEI dismissed with leave to amend for lack of particularity; claim against individual defendants dismissed—§ 3730(h) does not create individual non-employer liability
Consolidation of separate § 3730(h) retaliation case with qui tam litigation	Plaintiffs sought consolidation for efficiency	Defendants opposed; court had previously denied consolidation	Court: Motion to consolidate denied—cases differ in scope, posture, and would cause delay

Key Cases Cited

Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (complaint must plead facts showing plausible entitlement to relief)
Ashcroft v. Iqbal, 556 U.S. 662 (courts may disregard legal conclusions; plausibility standard)
Universal Health Servs. v. U.S. ex rel. Escobar, 136 S. Ct. 1989 (materiality standard in FCA; rigorous inquiry)
Cafasso v. U.S. ex rel. United States v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047 (9th Cir.) (FCA claims require Rule 9(b) particularity)
Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097 (9th Cir.) (fraud pleading must provide who, what, when, where, how)
Ebeid ex rel. United States v. Lungwitz, 616 F.3d 993 (9th Cir.) (relator may plead ‘representative examples’ in FCA cases)
U.S. ex rel. Hendow v. University of Phoenix, 461 F.3d 1166 (9th Cir.) (recognizes promissory fraud and false certification theories under FCA)
United States v. Corinthian Colleges, 655 F.3d 984 (9th Cir.) (elements of FCA claim)
U.S. ex rel. Hopper v. Anton, 91 F.3d 1261 (9th Cir.) (elements of § 3730(h) retaliation claim)