United States v. Toyobo Co. Ltd
2011 U.S. Dist. LEXIS 98861
| D.D.C. | 2011Background
- The government sues Toyobo and Toyobo America, alleging FCA violations and common law fraud/unjust enrichment over Zylon body armor sales.
- Toyobo manufactured Zylon, distributed via two trading companies to three weavers, who supplied vest manufacturers; Toyobo retained control of access to Zylon for ballistic use.
- Vests were paid for by the government through GSA and BPVGPA programs; total government payments exceed $34 million across thousands of vests.
- Discovery revealed Zylon degradation and defects (accelerated aging, hydrolysis, Red Thread) and Toyobo’s delayed, selective disclosure of data.
- NIJ 2001–2005 testing and public warnings emerged; Toyobo allegedly misrepresented data to vest manufacturers to keep them selling to government buyers.
- The complaint asserts presentment, false statements, conspiracy, and common law fraud/unjust enrichment; Toyobo moves to dismiss under Rule 12(b)(6).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FCA presentment claim is pleaded with falsity and causation | Toyobo sold degraded Zylon, inducing payments | No factually false claims or implied certifications pleaded | Pleadings show factual falsity via induced claims; causation alleged |
| Whether false statements claim under § 3729(a)(2) is pleaded adequately | Misrepresentations induced government to pay through chain | Statements immaterial or insufficiently linked to payment | Adequate allegations of misrepresentation and its consequences to payment |
| Whether FCA conspiracy claim against Toyobo and vest manufacturers is stated | There were agreements to defraud the government via claims | No concrete agreement between Toyobo and vest makers to defraud | Conspiracy shown with weavers; not with vest manufacturers |
| Whether common law fraud claim is sufficient | Non-disclosure and misrepresentation of Zylon degradation | FCA sufficiency should foreclose separate fraud claim | Common law fraud adequately pled |
| Whether unjust enrichment claim is viable against Toyobo | US paid for defective vests benefiting Toyobo indirectly | Benefit flowed to vest manufacturers, not Toyobo | Unjust enrichment stated; fact-intensive questions remain |
Key Cases Cited
- Allison Engine Co., Inc. v. United States ex rel. Sanders, 553 U.S. 662 (U.S. 2008) (intent standard for implied certifications under § 3729(a)(2))
- Harris v. Bernad, 275 F. Supp. 2d 1 (D.D.C. 2003) (proof of falsity and knowledge for false statements)
- Totten v. Bombardier Corp., 380 F.3d 488 (D.C. Cir. 2004) (a record used to obtain payment can create § 3729(a)(1) liability)
- Westrick v. Second Chance Body Armor, Inc., 685 F. Supp. 2d 129 (D.D.C. 2010) (conspiracy claims under FCA with chain participants)
- Schwedt v. Planning Research Corp., 59 F.3d 196 (D.C. Cir. 1995) (fraudulent inducement theory for FCA claims)