United States v. Bollinger Shipyards, Inc.
979 F. Supp. 2d 721
E.D. La.2013Background
- The United States sued Bollinger alleging False Claims Act (FCA) violations and common-law fraud for overstating the 123-foot cutter "section modulus" in Hull Load and Strength Analyses (HLSAs) submitted to the Coast Guard, which purportedly induced acceptance and payment for converted cutters.
- Key factual allegations: Bollinger generated multiple section-modulus calculations in 2002 (reported figures: 3,037; 2,836; 5,232 cubic inches), ultimately submitted a HLSA reporting 5,232; an earlier 2000 internal calculation had shown 7,152; the "true" post-failure recalculation was ~2,615 cubic inches.
- The United States alleged Bollinger knowingly falsified inputs and avoided independent ABS review; Bollinger responded that there is no allegation it knew the correct inputs or that any specific report was the truthful one it intentionally concealed.
- The Coast Guard accepted several cutters and made payments before and after discovery of the defect; the government continued payments for years, supporting a government-knowledge defense as to some payments.
- District court dismissed the original complaint with leave to amend FCA and fraud claims; after the First Amended Complaint the court dismissed the FCA and common-law fraud claims with prejudice, concluding the amended pleading failed to plead scienter with particularity and further amendment would be futile.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Bollinger presented a materially false statement that induced government payment (FCA §3729(a)(1)(A)) | Bollinger submitted HLSAs overstating section modulus knowing or recklessly ignoring their falsity, inducing acceptance/payment | Bollinger lacked actual knowledge of correct inputs; multiple differing calculations show lack of knowledge, not deliberate falsification | Dismissed — plaintiff failed to plead scienter with particularity under Rule 9(b) and Iqbal/Twombly standards |
| Whether Bollinger made/used false records material to claims (FCA §3729(a)(1)(B)) | HLSAs were false records material to the government’s decision to pay | HLSAs did not plausibly reflect deliberate falsity; oral statements re: ABS review were immaterial and unconnected to required certification | Dismissed — no plausible allegation of knowing or reckless falsity; materiality and causation not established |
| Whether government reliance/knowledge precludes FCA liability for post-notice payments | N/A (plaintiff sought recovery for payments induced by false HLSAs) | Government continued payments despite awareness of variability and later knew results were incorrect, negating FCA causation for later payments | Court found government-knowledge defense supported as to payments after government knew of inaccuracies |
| Whether common-law fraud pleaded with required specific intent | Bollinger intentionally deceived Coast Guard about structural integrity via false HLSAs | Bollinger lacked specific intent to deceive; allegations insufficient to show deliberate intent | Dismissed — fraud requires a higher scienter; plaintiff failed to meet that standard |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for pleadings under Rule 8)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (complaint must allege facts raising plausible entitlement to relief)
- United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180 (5th Cir. 2009) (Rule 9(b) applies to FCA and fraud claims)
- United States ex rel. Longhi v. Lithium Power Techs., 575 F.3d 458 (5th Cir. 2009) (elements of FCA claim: false statement, scienter, materiality, causation)
- United States v. Southland Mgmt. Corp., 326 F.3d 669 (5th Cir. 2003) (government-knowledge defense to FCA liability)
- Jamieson By & Through Jamieson v. Shaw, 772 F.2d 1205 (5th Cir. 1985) (leave to amend may be denied as futile)