United States Ex Rel. Snapp, Inc. v. Ford Motor Co.

496 statute, 1631, § recognize, says 28 U.S.C. we

federal transfer the statute “is broadly claims to the plaintiffs’ permit to transfer United drafted to transfer between courts,” specifi- any Tax because it is not two S.Rep. States Court federal No. 97- 275, (1981), a ‘court’ at 11 cally reprinted enumerated as under 28 in 1982 610.”); 11, added), § v. 21 (emphasis Waterhouse United U.S.C.C.A.N. U.S.C. States, S-07-619, perhaps argue general No. Civ. 2007 WL one could in a sense (E.D.Cal. 2007) 24, 2418620, Aug. at *4 that the Tax is a Court federal court. But Comm’r, (same); Morgan mean, v. see also 23 that is not what it has to at all 813, Dec.19, 2 Fed.Appx. 815 & n. Cir. events this isolated statement cannot alter curiam) 2001) (declining to (per unambiguous only answer the the statute’s reference question definitively noting but that “the to “a court as defined section 610 of this § of the federal transfer applicability statute title.” 28 U.S.C. 1631. questionable, this context is

[§ 1631]

best, appear as the Tax Court does not III.

be a court to which a transfer reasons, For these we affirm. received”). made or The addressing conclusions courts support,

similar issues also or are at least with,

not interpretation. inconsistent 1349, Army,

See 405 Oja Dep’t v. F.3d (Fed.Cir.2005) (holding n. 2 1355

EEOC could not transfer case under EEOC, § though per 1631 because “[t]he America, UNITED STATES of ex rel. nature, haps quasi-judicial in among is not Snapp, Inc., Plaintiff-Appellant, 610”); listed in section those Mills v. (1st Cir.1997) Maine, 37, 51 that a (holding transfer to a state court COMPANY, FORD MOTOR § permitted was not under 1631 because Defendant-Appellee. § only courts”); 610 “includes other federal No. 07-1474. Rawlins, Advisory

Moravian Sch. Bd. v. (3d Cir.1995) 270, (same); United Appeals, States Court of Dir., Shendock v. Comp. Workers’ Office of Sixth Circuit. (3d 1458, Programs, 893 F.2d 1467-68 Cir. 24, Argued: April 2008. 1990) § (holding that au “does not petition mistakenly thorize transfer of a Decided July and Filed: [i.e., filed in an administrative tribunal

Benefits Review to the appropriate Board] appeals”); see also Jackson v. States, (2008)

United 80 Fed.Cl.

(“[W]hile the of Appeals Court for Veter

ans is an Article I Claims court rather

than an agency, administrative it is not a

‘court’ meaning within the of 28 U.S.C. 1631.”)(citation omitted).

§ point

That leaves one final for consider-

ation. legislative history The claiming that seq., et Defen-

U.S.C. (“Ford”) fraud- Company Motor dant Ford government to ulently the federal induced by inflating, in official with Ford contract the extent of government, reports to minority- dealings with small Ford’s The district dis- owned businesses. complaint for failure missed 9(b)’s require- Fed.R.Civ.P. comply with fraud “state party alleging that a ment particularity the circumstances consti- with ” Relator fraud.... Because failed tuting the particularity such nature plead with from the fed- payment claim for of Ford’s we AFFIRM the district government, eral dismissing Relator’s First court’s decision However, because Complaint. Amended have the benefit district court did not the Stamper, Dale Jeffrey ARGUED: in ex rel decision United States of our Fran- Louisville, Kentucky, Appellant. for Inc., Cmty. Sys., Health 501 Bledsoe v. PLLC, De- Ortiz, Wright Dickinson cis R. Cir.2007) (“Bledsoe II”) (6th 493, 502 F.3d troit, Appellee. for ON Michigan, motion file an Fink, denying Relator’s Miller, before David E. Powell BRIEF: Rochester, we the dis- Firm, Michi- VACATE amended Law The Miller Ortiz, R. Ken- motion to denying Francis order Appellant. trict court’s gan, for Wright McIntyre, Dickinson REMAND complaint neth J. and an amended file PLLC, Detroit, Appellee. for Michigan, light in the matter consideration II. SUHRHEINRICH, CLAY, and

Before:

COOK, Judges. Circuit FACTS OF STATEMENT J.,

CLAY, opinion delivered SUHRHEINRICH, (pp. J. 510- court. Allegations Factual A. 11), concurring separate a delivered 511), a district COOK, appealing delivered a Relator is (p. J. Because opinion. concurring part under opinion dismissing its separate order dissenting part. 12(b)(6), accept must as this Court allegations contained all of the factual true

OPINION Coopers Lyb & Bovee v. complaint.1 CLAY, Judge. Circuit (6th 356, C.P.A., 360 Cir. rand 2001). Relator, is a Ford According to SNAPP, brings Inc. Relator States,2 Act, United “prime 31 contractor” to False Claims under the tarn action government. See directly the federal specified, t he word ''com- otherwise 1. Unless Engine to Relator’s First v. Allison plaint'' will refer ex rel. United States Sanders subject Cir.2006); of most of which is the Complaint, Co., Inc., appeal. claims on Engine grounds Allison on other vacated - Sanders, Co., ex rel. v. United States Inc. to a "prime refers term contractor” 2. The eligible to contract general contractor who is accordingly required comply Despite and is Relator’s claims that it func- entirely Ford, tioned as a subdivision governing laws certain federal the use of Ford filed official reports govern- with the minority-owned small and businesses as that, stating ment between 1991 and Among require these subcontractors. significant improvements Ford made in the ments, a contractor not con prime amount of business it subcontracted to government federal tract with the unless minority-owned small and businesses. As they plan “provide[ a establish ] prime government contractor, Ford was practicable opportunity” maximum required yearly to file reports document- minority-owned small businesses busi ing percentage what of the subcontracts with the prime nesses to subcontract cont related to its contracts were 637(d)(4)(D). ractor.3 Fail U.S.C. made with minority-owned small or busi- develop plan ure to such a can render According nesses. reports, these Ford prime ineligible contractor to receive fed increased subcontracting with small eral contracts. See id. businesses from 19.2% in 1991 to 22.9% in 1998, reaching peak 24% 1993. that, alleges from 1991 until Over the period, same Ford also increased fraudulently exaggerated subcontracting its minority- with small dealings extent of its with small and mi- owned businesses from 2.6% of the total businesses, nority-owned and that these government-related amount of its subcon- exaggerations induced the federal govern- tracts to 4.8%. In report, its 1999 Ford Ford, ment to contract though with even stated that government-relat- 23.3% of its implemented plan Ford never a “pro- to ed subcontracts were made with small maximum practicable opportuni- vide[ the] Although businesses. report this also ty” to such According businesses. to Rela- sharp shows a decline in the amount of tor, during eight-year period this Relator subcontracts made minority- with small entirely was by controlled Ford. Ford businesses, owned report also indicates majority nominated the of Relator’s board that Ford purchase intended to billion $3.3 members, organization its charts included supplies worth of minority-owned from Relator employees, and its and Ford had businesses, which, true, statement if full control dealings over its with Relator. would have reflected increase in Though nominally Relator was owned and dealings Ford’s with such businesses be- color, managed by person of Relator tween 1998 and 1999.

maintains that this nominal control was a The crux that, of complaint is sham, and that Relator actually operated despite reports claiming Ford’s that it had as a subdivision of the Ford Motor Compa- enacted and was successfully implementing ny. Moreover, claims, Relator even if it plan “provide[ practi- ] the maximum qualify minority-owned did as a business cable opportunity” to small minority- and during Ford, dealings its from 1995 businesses, owned Ford had inflated the 1999, until many Relator had too employ- extent of dealings its with such businesses ees to qualify as a small business. fraudulently declaring money paid to

U.S.-, 2123, 1030, concem[s]," vantaged S.Ct. 170 L.Ed.2d small business which is 9, (June 2008). racial, 2008 WL 2329722 defined as a small business in which ethnic and cultural minorities who have his- Specifically, requires prime torically experienced federal law con- discrimination hold at plan provide tractors to oppor- establish a ownership least a share of the 51% business. 637(a)(4) "socially economically (5). tunities to and disad- 15 U.S.C. & prime to act as a contrac- permitted Ford a small and a subcontract Relator as of According Accordingly, argues, to Re- Relator tor. none minority-owned business. by Ford lator, being used contracts Ford re- government Relator was “the the federal Ford’s, satisfaction for the period alleg- as a conduit that it was during ceived ma- Relator’s, obligations Ford’s not the dealings with edly inflating its small and services to goods jority suppliers would have minority-owned businesses 245) claims, (J.A. Ford, Relator Ford.” to Ford. Because these con- been awarded majority- large, awith would subcontract as a allegedly were awarded Ford tracts launder business; then Ford would owned Ford’s fraudulent state- direct result of majority-owned large, to that payments its ments, that further claims none Relator Under through Relator. business made to Ford under payments these scheme, pay- those would receive been made had Ford contracts would have passing only purpose for the ments government. not deceived the majority-owned large, through to the them report subcontractor, Ford would still but History B. Procedural as a these transactions 30, 2003, origi- Relator filed April On its small, minority-owned awith subcontract seal, in the nal under Southern business. That un- District of Ohio. was know- alleges Ford Relator further 19, 2004, July on when the United sealed recklessly reports submitted ingly or to intervene.4 Neverthe- States declined with small and dealings exaggerated less, on Ford until process was not served businesses, these and that minority-owned only after the February In were substantial. exaggerations or- of Ohio issued two Southern District paid it reported example, reason this de- inquiring into the ders small, minority-owned sub- billion to $2.46 delay, stipulated lay. Despite the Relator, howev- According to contractors. service, this and does not acceptance its were er, of this billion million $2.46 $461 this case should be allege on that appeal Rela- through laundered payments sham delay. the On account of dismissed on predicted in 1999 Ford Similarly, tor. 2006, 14, parties stipulated also April the it would government to the that reports its this case to the Eastern to a transfer of small, minority-owned pay billion $3.3 Michigan.5 District that subcontractors, claims but Relator sham billion were of this million 2006, $3.3 7, $556 district the September On payments. dismissing portion issued order Relator file ordering and Relator’s claim payments, alleged sham light

In of these issuing In this complaint. an amended gov- that had the federal Relator claims hold- order, court reached two the district exag- aware that Ford was ernment been appeal. to this are relevant ings which minor- dealings with small and its gerating the First, court concluded that the businesses, have district it would not ity-owned government does If the elect to Claims Act claim intervene. qui is a False 4. A tam action action, may the relator relator, in the alleging not intervene private person brought by a 3730(b)(4)(B), § action. proceed against government contractors fraud (c)(3). § relator 3730. government. 31 U.S.C. The gov- complaint upon the serve must first indicated, we ernment, Except as otherwise use complaint then remains un- and the court,” 3730(b)(2). to refer to the Eastern sixty days. term "district for at least der seal Michigan. District of period, the During this time a qui limitations for tam action concluded that it already statute of had considered accordingly any held that years, is six and reports these in the context of its decision pre-dating April of Relator’s claims dismissing the First Amended Complaint, prior filing to the years 1997—six this and denied Relator’s motion. untimely. claim—must be dismissed as Court, appeals Relator now to this argu- Additionally, the district court held that ing that the district court erred dismiss- original complaint comply did not ing its in denying reconsidera- particularity requirements with the of Fed. case, tion of its in holding 9(b), finding R.Civ.P. statute of in qui limitations tam cases is allegations “contains no as to which claims years. six by Ford would not submitted have been alleged paid” but Ford’s fraudulent DISCUSSION (J.A. 208) Accordingly, statements. court ordered Relator to amend its com- REQUIRE- I. THE PARTICULARITY plaint bring order to it into compliance 9(B) MENT OF RULE AND RELA- 9(b).

with Rule TOR’S FIRST AMENDED COM-

Relator filed its First Amended Com- PLAINT 4, 2006, plaint on shortly October Standard of Review thereafter, copies it filed of the annual Relator alleges fraud in its com reports Ford had govern- submitted to the plaint, and comply therefore must ment in order to retain eligibility as a 9(b). Fed.R.Civ.P. Dismissal of a com prime February contractor. In a plaint for failure to comply with Rule order, the district court dismissed this is reviewed as a dismissal for failure to complaint, holding amended it still state a claim. See United States ex rel any had not “identified contract that Ford Inc., Bledsoe v. Cmty. Sys., Health allegedly wrongfully was awarded as a re- (6th Cir.2007) (“Bledsoe (J.A. being sult of a Prime Contractor.” ”). II Accordingly, such a dismissal is re 356) 9, 2007, February On filed viewed de novo. Id. In the tam con motion, which the district court construed text, “the Court must construe the com as a motion to vacate its dismissal of this plaint in the light most 59(e) favorable to the case under Rule permit and to Rela- plaintiff, accept allegations all factual tor as subsequently to a file Second Amended true, and determine whether the Complaint. complaint Accompanying this motion ‘enough contains were additional facts to state a copies of Ford’s claim to 1991-99 ” reports to the relief that government. plausible federal is on Al- its face.’ Id. — though argued (quoting reports Corp. these Bell Atl. v. Twombly, -, constituted new justifying 1955, 1974, evidence the re- U.S. 127 S.Ct. 167 case, consideration of (2007)6). the district court L.Ed.2d 929 Under the special present, 6. At there is some just confusion as to ed Twombly, two weeks after the Su- when a require particular court should facts preme Twombly Court by holding clarified pled, required by Twombly, be as and when prisoner bringing that a §a 1983 claim apply pleading court should a more liberal against captor required his is not to state 143, Iqbal Hasty, standard. See v. 490 F.3d ''[sjpecific complaint; facts” in their Erick- (2d Cir.2007). Twombly 155-58 held that in son, 2200, 127 Twombly S.Ct. at and itself cases, plaintiff some plead particular must suggests holding may that its be limited to complaint. facts in their 127 S.Ct. at 1965. likely produce "sprawling, cases costly, Pardus,-U.S.-, In 2197, Erickson 127 S.Ct. hugely time-consuming” litigation. and 127 (2007), 167 L.Ed.2d 1081 a case decid-

503 alleged misconduct."); pleading 9(b), their see also rules contained in Rule Sanderson v. HCA-The Healthcare Com complaint alleges sufficient facts to survive pany, (6th Cir.2006) plaintiff 447 F.3d a motion to dismiss when the (holding complaint may particularity that a be dis states "with the circum- 9(b) constituting missed under Rule if it contains "no stances fraud or mistake." 9(b). specific filing Fed.R.Civ.P. information about the themselves-nothing, is, claims Analysis precise alert the defendants `to the mis pleads they charged When a tam relator "a conduct with which are complex far-reaching protect against spurious fraudulent defendants "provide[] examples charges scheme" it must of immoral and fraudulent behav specific gov (quoting false claimssubmitted to the ior'" United States ex. rel. Clau pursuant Corp. Am., Inc., ernment to that scheme"in order sen v. Lab. comply 9(b). II, (11th Cir.2002))). Instead, with Rule follow, 9(b) interpreted F.3d at 510. For the reasons which Rule should be in harmo we hold that Relator has not met this ny with Rule 8's statement that a com standard, plaint only provide and therefore concludethat the must "a short and decision of the district court should be plain statement of the claim" made respect "simple, concise, allegations." affirmed with to the dismissal of and direct complaint 9(b) (quoting 8(a)). Petitioner's on Rule Id. Fed.R.Civ.P. This Rule grounds. requirement is born out of a need to ensure fundamental fairness for defen 9(b) Generally A. Rule provide dants-a need not roadmap plaintiffs claims, Although 9(b)'s special plead exhaustive of a Rule "give ing undoubtedly but it must be sufficient to the de standard is more de manding pleading fendant fair notice of what the . . claim is than the liberal notice governs cases, grounds upon standard which most see and the which it rests." Erickson, 9(b)'s Erickson, (quoting 127 S.Ct. at Rule 127 S.Ct. at 2200 Twombly, 1964). long special requirements 127 S.Ct. at So as a should not be read as formalism, decoupled complaint provides a mere from the the defendant with notice, require general pleading only such minimal Rule 8's rule that a must necessary provide ments are met. so detailed as is a de fendant with sufficient notice to defend pleading against pleading's adds additional claims. See Bledsoe

II, ("[I]t requirements allegations 501 F.3d at 503 is clear that the of fraud or mistake, purpose but it should not be read to defeat of Rule 9 is not to reintroduce general policy "simplicity pleading, and flexi formalities to but is instead to bility" pleadings contemplated by provide specific defendants with a more Bldg. particulars Federal Rules. Michaels Co. v. Ame form of notice as to the express language requires pleading alleging 6; Iqbal, a S.Ct. at 1973 n. see also 490 F.3d at specific facts, applying 157-15 8. fraud to state Erick- pleading inap- JNevertfleless, son's liberal standard would be tne instant case arises unaer propriate case, regardless of this case involves the kind of in the instant heightened pleading applicable standard whether allegations fraud, requires which itself "sprawling, costly hugely time-consum- party alleging particu- fraud to "state with ing" litigation generally triggers which Twom- larity constituting the circumstances fraud or bly's special pleading 9(b). 9(b)'s rule. mistake." Fed.R.Civ.P. As Rule 504 (6th Co., N.A., F.2d particularity, 848 678 fraud with

ritrust it is not mandato- Cir.1988) 5 (quoting ry.” CHARLES ALAN Id. at 506. MILLER, & ARTHUR R. WRIGHT however, It is worth noting, that al AND FEDERAL PRACTICE PROCE 9(b)’s though Rule overarching purpose is (1969)). at DURE: CIVIL to ensure that a defendant possesses suffi 9(b) Rather, predominantly Rule exists cient respond allega information to to an purpose provide the same as Rule 8: “to a fraud, tion of two related concerns are defendant fair notice of the substance of a implicit this overarching purpose. See

plaintiffs claim in order that the defendant Cremi, Sons, Banca S.A. Alex. Brown & may prepare responsive a pleading.” Id. Inc., 1017, 1036, 132 F.3d n. 25 Cir. 9(b), however, Rule also reflects the rule- 1997) (listing purposes three behind Rule that, makers’ additional understanding in 9(b)). First, by requiring relator to state mistake, involving cases fraud and a “more with particularity the basis for a claim of specific form of necessary notice” is to fraud, 9(b) Rule discourages “fishing expe permit a responsive defendant to draft a ditions and appear strike suits” which II, pleading. Bledsoe likely more to consume a defendant’s re sources than to reveal evidences of wrong In our recent decision II, doing. Bledsoe 501 F.3d at 510. Be II, we reiterated our long-standing holding cause the defendant is informed of which that, 9(b), under Rule a plaintiff must “al specific of its allegedly actions constitute time, lege the place, and content of the fraud, it can limit discovery and subse alleged misrepresentation ... the fraudu quent litigation to matters relevant scheme; lent the fraudulent intent of the 9(b)’s allegations. Additionally, these defendants; injury and the resulting from particularity requirement protects the fraud.” Id. at 504. As Bledsoe II also tam defendant from damage unwarranted clear, however, made requirement reputation “spurious caused should be understood in terms of Rule charges of immoral and fraudulent behav 9(b)’s purpose broad of ensuring that a Sanderson, ior.” 447 F.3d at (quoting provided defendant is with at least Clausen, 1310). 290 F.3d at Because the degree minimum necessary of detail defendant is immediately notified begin competent “Essentially, defense. focus of a relator’s it can quick complaint] [a provide should fair notice to ly disputes by resolve frivolous attacking Defendants and enable them ‘prepare the narrow basis of an allegation of fraud. pleading informed responsive to the ” specific allegations of fraud.’ Id. (quoting 9(b) B. Rule and the False Claims Act Advocacy Org. Patients & Providers v. Qui 1. The Elements of a Tam Claim Ass’n, Auto Club Ins. (6th Cir.1999)). So long as a relator Having require determined the pleads time, sufficient detail—in terms of generally, ments Rule we now turn place content, the nature of a defen to its application in the qui tam context. scheme, dant’s fraudulent injury and the In part, relevant the False Claims Act resulting from the fraud —to allow imposes the de liability on a person who “know fendant to prepare a responsive makes, uses, pleading, ingly causes be made or requirements the used, of general Rule will a false record or get statement a ly be met. While may additional detail be false or fraudulent claim paid approved or “relevant inquiry to the of whether by a rela the Government.” 31 U.S.C. tor pled 3729(a)(2). had the § constituting circumstances statutory As this language of whether question as the government, of portions these under a claim suggests, in- purpose particular acted a Act has several elements. Ford with the False Claims mind, made a have state of First, quires company’s must into the defendant the record, a created false Ford’s of inquiry regarding or state false statement knowl- “with ‘actual have done so Id. may only pled generally. and must be mind or ‘reckless ignorance,’ Nevertheless, comply edge,’ ‘deliberate Relator must with of the falsity truth or 9(b)’s disregard in plead- rules special pleading Rule ” Au- ex rel. States United is, information.’ remaining elements —that Rela- ing the Services, 289 Health Century gustine v. regard- details provide tor must sufficient Cir.2002). Second, (6th the 409, 413 time, of Ford’s place the and content ing a claim for submitted must have defendant statements, Ford’s claim alleged false See government. to the federal payment government, the federal payment from Y- v. BWXT rel. Marlar States ex United the false statements the manner in which Cir.2008). (6th 12, L.L.C., 439, 447 525 F.3d to make a claimed induced the Third, false statement defendant’s Ford, allow Ford to ade- payment purpose made with must have been pleading. prepare responsive quately ‘paid or fraudulent claim false or “getting a II, F.3d at 509. See Bledsoe ” Allison by the Government.’ approved Co., rel. States ex Inc. v. United Engine identified allegedly has Relator — 2123, 170 Sanders, U.S.-, 128 S.Ct. by or statements made false fraudulent 3729(a)(2)). (2008) (quoting L.Ed.2d 1030 particularity. Accord Ford with sufficient or false statement Finally, the defendant’s complaint: ing to Relator’s to the have been material record must fraudulently represented to the Ford pay- to make decision government’s payments made United States claim. sought in the defendant’s ment payments Ford to were Relator Homecare, Inc. A+ States ex rel. United and con- concern owned small business Inc., Group, Management v. Medshares economically dis- by socially and trolled Cir.2005). when, fact, individuals advantaged sham; the were a Rela- payments these Particularity Requirement The by Ford as conduit being tor was used 9(b), party “a must Under Ford’s, not for the satisfaction the circumstances particularity state with majority Ford’s obligations Malice, in fraud or mistake. constituting and services to Ford. suppliers goods tent, of a knowledge, and other conditions (J.A. 245) Moreover, alleges, Relator these alleged generally.” mind person’s were made misrepresentations fraudulent tam action is insofar as a Accordingly, annually with reports filed particular “knowledge,” this Ford’s with concerned and Relator has government, the federal pled to be with does not need element are reports which copies of these 9(b). provided Similar Fed.R.Civ.P. particularity.7 identifying In in the record. included necessary plead for Relator to ly, it is not particu- Relator states reports, these made its claim that Ford particularity time, content of place, and larity “the get purpose with the a false statement II, alleged misrepresentation.” approved by paid claim or ting a false 244), (J.A. does and Ford gible payment,” expressly alleges in its 7. Relator recklessly pled "knowingly sufficiently has has been not contest that submitting the United States claims qui tam claim. element of its the scienter ineli- otherwise were false Ford knew and/or Accordingly, 501 F.3d at 504. Relator has fraudulently was diagnosed pay- to induce identifying met its burden of government). false or ment from the by statements made fraudulent Ford with Despite requirement that Relator particularity. provide must specific examples claims government submitted to the part as said, The same cannot be how scheme, alleged Ford’s fraudulent Relator ever, respect requirement to the provide does not single example of a identify with particularity Relator claima specific claim by Instead, made Ford. Re- payment by Ford. Under the False merely alleges lator that “[f]rom 1991 Act, a “claim” Claims is defined as through at least Ford was awarded demand, any or request whether under a by contracts on an annual basis the Gener- otherwise, contract or for money or (J.A. 240) al Services Administration.” Al- property contractor, which is made to a though provides Relator also an estimate grantee, recipient or other if the United approximate value of these contracts provides any portion States Government during years 1991-2000, Realtor does money property or which is re- identify any not representative individual demanded, quested or ifor the Govern- payment claim for by made Ford to the contractor, ment will reimburse such government federal during peri- this time grantee, recipient any or other por- Accordingly, od. we hold that Relator has money property tion of the which is complied not with Bledsoe II’s mandate “ requested or demanded. order for a proceed ‘[i]n relator to discovery scheme,’ on a fraudulent it must 3729(c). essentially that, argues pled with specificity ‘characteristic exam- during the time that it allegedly was mak- ple[s]’ that are ‘illustrative of class’ of [the] ing reports government, false to the Ford all claims by covered the fraudulent a large, entered into num- undetermined 510-11; scheme.” 501 at see also ber of contracts with govern- the federal Sanderson, (“Rule 9(b) 447 F.3d at 877 ment, government and that the made hun- permit ‘does not a False Claims Act plain- dreds of millions of of payments dollars merely tiff private describe a scheme aas result of these contracts. When detail but then allege simply ... alleges relator such a “complex far- requesting claims illegal payments must reaching fraudulent scheme” to induce the submitted, have been likely were submit- making payments, into howev- ted or should have been submitted to the er, requires Bledsoe II the relator’s com- ” Clausen, Government.’ (quoting plaint specific to include examples of the 1310)). We therefore affirm the deci- payment defendant’s claims for from the sion of the district court dismissing Rela- government. federal See id. at 510. “In complaint. tor’s order for a relator proceed to discovery scheme, on a fraudulent the claims that II. RELATOR’S MOTION TO FILE are pled specificity must be ‘charac- AN AMENDED COMPLAINT example[s]’ teristic that are ‘illustrative of Standard of Review [the] class’ of all claims covered (altera- fraudulent scheme.” Id. at 510-11 Subsequent to the district court’s original); tions in see also id. at 514-15 dismissing decision (affirming a claim widespread Medicare Relator filed a motion seeking leave to file and Medicaid fraud when the Relator iden- a Second Complaint, which the tified a single, representative patient who district court properly construed as a mo-

507 filed his motion Although Relator of Relator’s the dismissal to vacate tion 59(e). Complaint Amended sub district to file a Second The under Rule complaint deny such court’s final grant sequent or district order the discretion court has deny the motion motion, Relator’s First Amended Com dismissing so its decision Intera of discretion. court discretion for abuse we allow a district plaint, is reviewed (6th 605, Henderson, 619 F.3d judgment 428 under Rule Corp. prior aside a to set .2005). 59(e) complaint an amended permit Cir and circumstances. be filed under such See

Analysis 566, States, Fed.Appx. 27 Oleson v. United court’s (6th to the district Subsequent Cir.2001); see also 6 n. 1 570 complaint, Relator dismissing its AL., decision ET WRIGHT ALAN CHARLES Amended to file a Second sought leave AND FEDERAL PROCE PRACTICE listing of the included “a which Complaint, 1990) (“Most (2d ed. DURE 1489 value, and the contracts, the contracts have problem the held courts faced with Motor awarded to Ford vehicles number of filing the judgment once a is entered 1991 to from period for the Company cannot be allowed until an amendment of 16, (J.A. 21) 2007 In a March 1999.” under is set aside or vacated judgment the order, court denied Relator’s the district 60.”) Setting judg aside 59 or Rule Com- file a Second Amended motion to in appropriate in is four ment this manner would that the amendment holding plaint, “(1) if there is: a clear circumstances: simply “has been futile because (2) law; newly discovered evi error of the allegations within frame its unable to (3) dence; intervening change in con an (Id.) September On the FCA.” confines of (4) law, prevent a need to trolling a new 2007, handed down 6, this Court injustice.” Henderson v. Walled manifest II, holding that a in Bledsoe rule law Schools, 479, Lake Consolidated discovery if may proceed qui tam case added). Cir.2006) (emphasis complex “pleads the relator’s Second Amended proposed Relator’s fraudulent scheme far-reaching and greater far detail than Complaint provides examples of provides and particularity, stating that Complaint, First Amended gov- to the claims submitted specific false 1999, Ford was through “[f]rom scheme.” 501 to that pursuant ernment GSA,” by the 65 contracts court did awarded the district Because F.3d 510. many of those contracts identifying even to consider our opportunity not have Nos.,” pro- thus “Ford Contract by their denying the II holding before filing specific num- viding Ford with complaint, we file an amended motion to identify individual contacts it bers uses to for appeal of denial remand system.8 accounting internal its own II. within light of Bledsoe further consideration gov- to the federal Indeed, payment submitted conten- to the dissent's in contrast necessary element of tion, ernment —another in the Second new details included Marlar, 447. For F.3d at examples false claim. Complaint include several Amended ¶ the Second Amendment example, in 45 of First Similar to Relator’s claims. of false alleges federal Complaint, Relator Amended Complaint, the Second payment claims government paid Ford's specific Complaint false statements identifies 10048, Nos. Contract Ford, pursuant to "Ford fulfilling thereby one of the made 95021, 10147, 10152, Augustine, 289 a false claim. See elements 95042,” payments were and these Com- the First Amended at 413. Unlike $28,778,143.00, however, "respective amounts Com- Second Amended plaint, $31,556.00, $3,132,114.00, $12,181,678.00, numerous claims also identifies plaint (J.A. 381-82) Nevertheless, question pled are with specificity must be whether, light in of our intervening deci- example[s]” “characteristic “il- are II, in Bledsoe the district court sion should lustrative of class” of all [the] claims the motion to file an grant amended com- by covered the fraudulent scheme. The plaint rests within the district court’s dis- examples of pled false claims speci- Insofar as II may cretion. Bledsoe now ficity should, in all respects, material justify granting motion the to file an including general frame, time substan- complaint, amended the district court content, tive and relation to the alleged- permitted should exercise discre- ly scheme, fraudulent be such that a regarding tion that motion in the first materially similar set of claims could appellate instance—an generally court have produced been with a reasonable should not substitute its own judgment for probability aby random draw the from district court’s unexercised discretion. pool total of all claims. With this condi- II, 22; See Bledsoe 501 F.3d at 521 n. satisfied, tion will, the defendant in all Eberlin, Nash v. F.3d 526 n. 10 likelihood, be able to infer with reason- (6th Cir.2006). Accordingly, we vacate the accuracy able precise the claims issue district court’s denial of Relator’s motion by examining to file a Second Complaint, Amended the representa- relator’s remand the matter to allow the samples, tive thereby district striking an appro- to decide whether exercise its priate balance between affording de- the in light discretion of Bledsoe II. 9(b) fendant the protections that Rule remand, was intended provide

On the district and allowing court should rule, consider whether the following relators to pursue complex which and far- II, we articulated in justifies set- reaching fraudulent schemes without be- ting prior judgment aside its and allowing ing subjected to onerous pleading re- Relator to amend its complaint: quirements.

We conclude that concept the of a false (internal 501 F.3d at 510-11 citations omit- or fraudulent scheme should be con- ted). In reconsidering Relator’s in motion strued as narrowly as is necessary to light II, of Bledsoe the “governing princi- protect policies the promoted by Rule ple” guiding the district court’s consider- 9(b). Specifically, we hold that the ex- ation should be whether vacating its order amples that a provides relator will sup- dismissing Relator’s complaint, and allow- port generalized more allegations of ing the amended required “is in only fraud to the extent that the rela- prevent order to injustice; an examples tor’s representative are and where sam- ples injustice of the result, broader class will otherwise claims. the trial In order for a proceed relator to judge has duty the discov- as well as the power to ery scheme, on a fraudulent the claims order a new trial.” by Davis Davis v. $8,960,822.00, $32,409,513.52, requirement plead particu- that Relator $11,116,100.00, $16,319,424.00 larity alleged that Ford's false statement $168,397,635.00.” (J.A. 382) Moreover, the record was government’s material to the deci- Second Complaint alleges also "[i]n payment sion to requested make the by Ford. response payment, Ford's claims Homecare, Inc., A+ 400 F.3d at 443. As we paid GSA money under each contract already have explained in Part opin- I of this that it paid would not have Ford had it been ion, require does not a relator to aware that the Subcontract Plans and SF-295 plead any additional elements of a false claim Forms 384) (J.A. submitted Ford were false.” with particularity. allegation This complies 9(b)'s with Rule civil action Act, initiate a may Inc., tion Hospital, Community Jellico committing fraud. person against (1990). 129, 133 3730(a). any per- Additionally, U.S.C. that, light acknowledge Finally, we of infor- source” “original who is son recent decision Court’s Supreme defendant potential implicating mation ex rel. States Engine Co. United Allison against fraud an act of less is now Sanders, in this Circuit law name in the as a relator bring a suit it was than plaintiffs tam friendly 3730(b)(1) § & States. the United of Sanders, the In decision. to that prior suit, a the (e)(4)(A). filing such Before plain- qui a tam held that Supreme Court complaint upon the must first serve relator showing that a upon only prevail may tiff must government, the the with statement a made false defendant the sixty days. least seal for at under remain or fraudu- a false “getting of purpose the 3730(b)(2). period, the During this time § the Gov- by ‘paid approved or claim lent action, in the may “take over” government WL at 2008 S.Ct. 128 ernment.’” is litigation conducted all future case which 3729(a)(2)). Be- § (quoting *5 at 3730(b)(4)(B). If § government. the by of allegations exempts cause so, however, to do declines government the con- other intent, knowledge, and “malice, litigation with the may proceed relator the height- from mind” person’s of a ditions direction, the caveat with its own at neces- it is not requirement, pleading ened upon intervene may later government the of the early stage this sary, at least 3730(c)(3). § cause. showing good of partic- with allege to Relator litigation, by prove a relator initiated a suit Should with Ford acted showing that ularity facts to a meritorious, is entitled relator the 9(b). Fed.R.Civ.P. purpose. particular the lion’s although proceeds, share court the Nevertheless, district because be awarded proceeds of these will share to consider opportunity the has not had 3730(d). § government. the Com- Amended Second proposed Sanders, also be it would in of light plaint of § the statute 31 U.S.C. Under of our view impose for us to inappropriate the brought under a claim limitations from Relator prevents Sanders whether as follows: Act is Claims False Complaint filing his Second (b) section 3730 under A civil action the had has not court the district when brought- not in the question this to consider opportunity II, F.3d at 501 See Bledsoe first instance. date (1) after the years 6 than more n. 10. Nash, at 526 22; 437 n. of section the violation on which district allow Accordingly, we will committed, or is remand. issue on court consider date after (2) years than 3 more of the right material facts when OF LIMITATIONS III. STATUTE reasonably should known action are district challenges the Finally, Relator by the official known have been the statute determination court’s responsi- charged United States by a brought case in a tam limitations circumstances, but in the bility to act years. always six is relator party private after years than more in no event alleg- a suit permits Act The False Claims is com- violation which the on the date pro- against ing fraud mitted, First, Attorney ways. multiple ceed last. occurs whichever viola- discovering potential General, upon 3731(b). § applicability The the Sikkenga, 472 (Hartz, J., F.3d at 735 dis- 3731(b)(2) tolling provision § senting). to suits liti- gated entirely private party relators Because we affirm the district court’s issue appears to be an of first impression dismissal of Relator’s complaint on Rule before this Circuit.9 Relying on the Ninth 9(b) grounds, however, it is not necessary Circuit’s decision United States ex rel. for us 3731(b)(2) resolve whether the Hyatt Northrop Corp., 91 F.3d 1211 tolling provision applies private party Cir.1996), that, argues notwith- Moreover, relators. inasmuch as this stat- 3731(b)(2)’s standing § reference to an “of- ute of question limitations could be raised ficial of the charged again United States should the district grant court Rela- responsibility circumstances,” to act in tor’s motion for leave to file an amended the extended the district period statute limitations yet has not granted motion, contained that subsection thus the should issues none- by raised Relator’s proposed applied theless be to Second litigated suits by a Amended Complaint do not currently raise private-party relator. Under the Ninth a live controversy before this Court. Ac- view, Circuit’s “the statute of limitations cordingly, the statute of ques- limitations begins to run qui plaintiff once tam [the] tion is presently not ripe for review this reasonably knows or should have known Court. Lee, See United v. States the facts to right material this of action.” (6th Cir.2007). Id. at 1217. United States courts of appeal are not CONCLUSION united around the Ninth Circuit’s view. The district court correctly determined argues that we apply should that Relator’s First Complaint Amended Tenth Circuit’s in decision United States does not comply with the particularity re- ex rel. Sikkenga v. Regence Bluecross quirement 9(b). of However, because Utah, Blueshield 472 F.3d 702 of our recent decision in Bledsoe II alters the Cir.2006), which held that “the tolling pro law governing Relator’s motion to file a 3731(b) § vision of was not intended to Second Amended Complaint, the district apply to private tam Id. at suits.” court permitted should to decide wheth- Additionally, a handful of judges federal er to exercise its discretion in light of the confronted with question of currently applicable rule of law. Accord- 3731(b)(2)’s § applicability private to party ingly, AFFIRM we the dismissal of Rela- relators have adopted third view. Under tor’s First Complaint, Amended VACATE this third way of resolving the statute of denying order the motion to amend limitations question, appropriate “[t]he that complaint, and REMAND for further standard for determining when the three consideration of that motion in light of year 3731(b)(2) period § limitation be Bledsoe II. gan to run is Department when the of SUHRHEINRICH, Circuit Judge,

Justice received information toas the vio concurring. lation.” United States ex Colunga rel.

Hercules, Inc., 89-CV-954B, No. 1998 WL I in Judge Clay’s concur opinion, except (D.Utah Mar.6, 1998); *5 see to the extent suggests footnote 8 that 9. Bledsoe II years that stated six is “the stat- and the applicability provision pri- to ute of limitations under the [False Claims vate-party relators appear not does to have Act],” 501 F.3d at but it contains no been raised in BledsoeII. 3731(b)(2)’s discussion of tolling provision, claim every false drafted, issue—whether nent as Complaint, Amended Second Act by a False Claims 9(b). must be identified Proc. Our R. Civ. Fed. complies fraudulent complex, alleging a plaintiff consid- court to the district instruction disturb, It did not at 509-10. Id. scheme. imply taken not be II should er specifi- alter, modify requirement grant Relator must the district false least one claim-“the identify at cally or that amended to file an leave viola- a False Claims Act non of qua sine draft- as Complaint, Amended the Second (inter- Sanderson, F.3d at 878 tion.” ed, is sufficient. omitted); also see marks quotation nal concurring part COOK, Judge, Circuit (affirming dismissal at 503-06 Maj. Op. dissenting part. Complaint for First Amended Relator’s claim”). identify specific [false] “a failing conclu- right reaches majority The Complaint Amended the Second court’s Because to the district regard sion claim, see no I no false identifies also First Relator’s dismissal court so the district to remand to “provide reason failure Complaint. decision. reissue the same it claim” that specific [false] of a example single require another I see a reason Fed. Nor do because doomed to re-confront this court panel a False permit not ‘“does R.Civ.P. today. be resolved should describe case—it merely to Act plaintiff Claims allege but then in detail scheme private from dissent Accordingly, respectfully I illegal requesting claims ... simply opinion. majority’s II of the part submitted, were been must have payment have been sub- or should likely submitted ” Maj. Op. at Government.’ mitted to the v. HCA-The Sanderson (quoting Co.,

Healthcare .2006)).

Cir Re- correctly concluded having But CROSKEY, Plaintif-Appellant, William Complaint deserves Amended First lator’s v. keeps dismissal, majority nevertheless AMERICA, and INC. OF NORTH BMW de- Complaint, Amended alive Second Aktienge Bayerische Werk Motoren that it too finding court’s spite district (BMW Defendants-Ap AG), sellschaft 21. JA claim. identify a false failed pellees. point to majority cannot Although the by the Second identified claim false No. 06-1386. re- it vacates Complaint,1 Appeals, States Court United States concluding that United after mands Sixth Circuit. Sys., Inc. Cmty. Health rel. Bledsoe ex (6th Cir.2007), (“Bledsoe IF), 501 F.3d 493 29, 2008. Jan. Argued: change in con- intervening announced 10, 2008. July and Filed: Decided ought the district law trolling which II, first instance. apply imperti- on an however, ground new broke dollar value attached fraud spe- Ford’s Clay highlights Judge In his footnote is not a contract contracts. But allege those plaintiffs that the contracts cific claim. a result as awarded

Case Details

Case Name: United States Ex Rel. Snapp, Inc. v. Ford Motor Co.

Court Name: Court of Appeals for the Sixth Circuit

Date Published: Jul 9, 2008

Citation: 532 F.3d 496

Docket Number: 19-3435

Court Abbreviation: 6th Cir.