United States v. Bollinger Shipyards, Inc.
775 F.3d 255
5th Cir.2014Background
- The United States sued Bollinger under the False Claims Act, alleging Bollinger submitted false structural-strength data (section modulus) and certifications in connection with a contract to convert 110-foot Coast Guard cutters into 123-foot cutters.
- Bollinger ran the Midship Section Calculator (MSC) multiple times in August 2002 and obtained differing section-modulus results (2,836; 3,037; 5,232), but submitted the highest figure (5,232) to the Coast Guard and certified compliance with ABS standards while not disclosing use of incorrect inputs or thicker plate assumptions.
- Bollinger’s CEO exchanged emails expressing concern that an ABS review might reveal problems and potentially “BLOW the program,” and Bollinger declined ABS review despite telling the Coast Guard ABS would review the calculation.
- After delivery, hull buckling occurred and recalculation showed the true section modulus (~2,615) well below the contract-required ABS minimum (3,113); the Coast Guard later revoked acceptance of all eight converted vessels.
- The district court dismissed the amended FCA complaint under Rule 12(b)(6), finding the United States failed to plead Bollinger’s scienter with required particularity and applied a government-knowledge defense to post-notice payments; the government appealed.
- The Fifth Circuit reviewed de novo, concluded the complaint pleaded facts supporting at least reckless disregard as to falsity, and reversed and remanded, holding the government-knowledge defense was premature at the motion-to-dismiss stage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the complaint plausibly pleads Bollinger’s scienter under the FCA | Allegations (multiple conflicting MSC runs, submission of the highest result, internal email expressing desire to avoid ABS review, false certification of ABS review) support an inference of knowledge or reckless disregard | United States failed to plead the mental state with particularity; no direct allegation Bollinger knew the correct figure or intentionally chose false number | The court held scienter sufficiently pleaded under Rule 8 (plausible inference of knowledge or reckless disregard); Rule 9(b) does not require particularized pleading of knowledge |
| Whether Rule 9(b) requires particularized pleading of intent/knowledge in FCA cases | Knowledge may be alleged generally under Rule 9(b); plausibility standard (Rule 8) controls scienter pleading | 9(b) demands particularity as to scienter | Court held district erred; intent/knowledge need not be pleaded with particularity—only generally and plausibly under Rule 8 |
| Whether the district court improperly drew inferences against the United States at 12(b)(6) | The complaint must be viewed in the light most favorable to plaintiff and permit reasonable inferences from circumstantial evidence | Facts favor defendant; government had access to documents; no explicit admission of falsification | Court held district improperly weighed evidence and drew inferences for Bollinger instead of construing allegations favorably to the United States |
| Whether the government-knowledge defense bars FCA claims at motion to dismiss | Government knowledge is merely a fact that may rebut scienter and is typically addressed later (summary judgment/trial) | Defense can defeat claims where government knowingly paid despite falsity, possibly foreclosing claims for post-notice payments | Court held applying the defense at 12(b)(6) was premature; government-knowledge is an inference for later stages |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for pleading)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard and inferences at motion to dismiss)
- United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180 (Rule 9(b) and FCA pleading rules)
- United States ex rel. Longhi v. Lithium Power Techs., Inc., 575 F.3d 458 (elements of FCA claim)
- United States v. Southland Mgmt. Corp., 326 F.3d 669 (government-knowledge defense discussed)
- United States ex rel. Hagood v. Sonoma Cnty. Water Agency, 929 F.2d 1416 (government-knowledge defense not appropriate at complaint stage)
- United States ex rel. Burlbaw v. Orenduff, 548 F.3d 931 (government knowledge is an inference; does not automatically preclude scienter)
- United States ex rel. Kreindler & Kreindler v. United Techs. Corp., 985 F.2d 1148 (government knowledge overlap does not automatically exonerate defendant)