UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 08-1423
UNITED STATES OF AMERICA ex rel. BARRINGTON T. GODFREY,
Plaintiff - Appellant,
v.
KBR, INCORPORATED; KELLOGG BROWN & ROOT SERVICES,
INCORPORATED,
Defendants – Appellees,
and
JAMAL NASERY; ABC INTERNATIONAL GROUP; GULF CATERING
COMPANY; TAMIMI GLOBAL CATERING COMPANY,
Defendants.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Gerald Bruce Lee, District
Judge. (1:05-cv-01418-GBL-TRJ)
Argued: October 29, 2009 Decided: January 6, 2010
Before TRAXLER, Chief Judge, and GREGORY and DAVIS, Circuit
Judges.
Affirmed by unpublished per curiam opinion.
ARGUED: W. Clifton Holmes, KUBLI & ASSOCIATES, PC, Vienna,
Virginia, for Appellant. John Martin Faust, VINSON & ELKINS,
Washington, D.C., for Appellees. ON BRIEF: Alan M. Grayson,
Victor A. Kubli, GRAYSON & KUBLI, PC, Vienna, Virginia, for
Appellant. Sharon Stagg, KBR, INC., Houston, Texas; Alden L.
Atkins, Amy L. Riella, J. Randall Warden, VINSON & ELKINS,
Washington, D.C., for Appellees.
Unpublished opinions are not binding precedent in this circuit.
2
PER CURIAM:
Barrington Godfrey brought this action under the False
Claims Act (“FCA”), see 31 U.S.C.A. § 3729 (West 2003 & Supp.
2009) against KBR, Inc., Kellogg Brown & Root Services, Inc.
(together referred to as “KBR”), a KBR employee, and three KBR
subcontractors. Godfrey alleged that KBR violated the False
Claims Act when it knowingly paid inflated invoices submitted to
it by the subcontractors and then sought payment from the
government based on those inflated costs. The district court
dismissed Godfrey’s amended complaint for failure to state a
claim, but gave Godfrey leave to amend. Godfrey submitted a
second amended complaint, and the district court again granted
KBR’s motion to dismiss. Godfrey appeals, and we affirm.
I.
KBR was awarded a prime contract under the Logistics Civil
Augmentation Program (“LOGCAP”) to provide dining facilities and
meal service at various sites in Iraq. The LOGCAP contract was
a cost-plus-fee-award contract, through which KBR was reimbursed
its costs (up to a maximum amount) and was paid a base fee of 1%
of those costs, with the opportunity to be awarded another 2%
based on performance assessments by the government. KBR entered
into subcontracts with defendants ABC International Group, Gulf
Catering Co., and Tamimi Catering Co. In July 2004, Godfrey
3
began working for KBR as a contract administrator, and he
supervised the relationship between KBR and the subcontractors.
According to the allegations in Godfrey’s second amended
complaint, 1 billing under the subcontracts “was supposed to be
largely a function of ‘head counts,’ i.e., the actual number of
personnel to whom food was served at each dining facility. The
payment per meal ranged up to approximately $5 per ‘head,’ and
the payment for a full day’s meal was approximately $10 per
‘head.’” J.A. 224. Godfrey, however, believed that the
subcontractors were invoicing KBR based on greatly inflated
headcounts. He alleged that ABC was claiming a headcount of
5000 per meal, when the actual headcount was about 2500 per
meal; that Gulf was billing for a headcount of 5400 when the
actual headcount never exceeded 1321; and that Tamimi “engaged
in the same overcharging as ABC and Gulf,” J.A. 232.
Godfrey also alleged other financial misconduct by the
subcontractors. He alleged that ABC was to build a new dining
1
Godfrey filed a sealed complaint in December 2005.
The government declined to intervene, and the district court
unsealed the complaint on May 1, 2007. Shortly thereafter,
Godfrey filed an amended complaint. The district court
dismissed that complaint, giving Godfrey the opportunity to file
another complaint to cure the deficiencies. Godfrey eventually
filed a second amended complaint, which was in large part
identical to the prior complaint. Unless otherwise specified,
the discussion of Godfrey’s claims come from the allegations in
his second amended complaint.
4
facility with a larger capacity, that it never built the
facility but billed KBR as if the facility were in operation,
and that ABC failed to provide 40% of the staffing that its
contract with KBR required. Godfrey alleged that ABC billed KBR
with rates reflecting new kitchen equipment that was never
purchased and a new camp for its employees that was never built.
Godfrey asserted that after a bomber attack on one of the dining
facilities, KBR issued a “contract modification adding over $1
million in unnecessary charges to ABC’s contract.” J.A. 228.
Godfrey also alleged that subcontractor Gulf likewise failed to
provide the full level of staffing that its contract with KBR
required, and that KBR modified Gulf’s contract to authorize the
purchase of temperature-controlled storage units. According to
Godfrey, the government “had neither requested nor authorized
this purchase,” and “[t]he pricing was both unsupported and
extremely exorbitant.” J.A. 230. As to subcontractor Tamimi,
Godfrey alleged in his complaint that it understaffed its dining
facilities and deliberately withheld equipment and supplies
required by its contracts with KBR. J.A. 232.
Godfrey alleged that KBR knew or should have known about
the overcharging by the subcontractors, and that he specifically
talked about these problems with Jamal Nasery, KBR’s lead
contract administrator for the dining facility subcontracts.
Godfrey claims that KBR knowingly passed on these overcharges to
5
the government, because, given the pay structure under the
LOGCAP contract, higher payments to subcontractors also meant
higher fee-award payments from the government to KBR. Godfrey
alleged that Nasery repeatedly threatened to fire Godfrey, and
that subcontractor ABC eventually joined in these efforts.
Godfrey was suspended for 10 days in December 2004. Godfrey
alleged that after he was reinstated, “Nasery and others had
made his work environment so hostile that Godfrey could not
continue,” J.A. 234, and Godfrey’s employment with KBR
terminated in February 2005.
In his substantive claims under the False Claims Act,
Godfrey alleged that (1) KBR submitted false claims to the
government by seeking payment for inflated invoices; (2) KBR
made false statements in connection with claims made to the
government, by falsely certifying compliance with all contract
terms; (3) KBR and the subcontractors conspired to submit false
claims to the government; and (4) he is entitled to participate
in any recovery that the government might obtain from KBR should
the government elect to proceed against KBR in an alternate
proceeding. 2
2
Godfrey also alleged that KBR improperly harassed and
retaliated against him for his investigation of the billing
improprieties. The district court concluded that Godfrey was
required to submit his retaliation claim to arbitration, and the
(Continued)
6
The district court granted KBR’s motion to dismiss the
second amended complaint. The court concluded that the
complaint failed to allege fraud with the specificity required
by Rule 9(b) of the Federal Rules of Civil Procedure. The court
further concluded that the complaint failed to allege that KBR
had actually certified compliance with contract terms when
presenting its claims to the government or that any term of the
LOGCAP contract required such certification, that Godfrey failed
to plead any terms of the relevant contracts that would show
that the billing was improper, and that Godfrey failed to
sufficiently allege an agreement to support the conspiracy
claim. The district court dismissed count V, the “alternate
proceeding” claim, as premature, since there was no indication
that the government had settled with KBR.
II.
A.
Godfrey appeals, challenging the district court’s dismissal
of his first amended complaint and his second amended complaint.
We review de novo a district court’s grant of a motion to
court therefore severed that claim and dismissed it. Godfrey
does not challenge that ruling on appeal.
7
dismiss. See Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir.
2008).
“To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim
to relief that is plausible on its face.’” Ashcroft v. Iqbal,
129 S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial
plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Iqbal, 129 S.
Ct. at 1949.
Moreover, because this action involves allegations of
fraud, the complaint is also subject to Rule 9 of the Federal
Rules of Civil Procedure, which requires that “the circumstances
constituting fraud” be stated “with particularity.” Fed. R.
Civ. P. 9(b); see Harrison v. Westinghouse Savannah River Co.,
176 F.3d 776, 783-84 (4th Cir. 1999) (applying Rule 9 to False
Claims Act complaint). To meet the requirements of Rule 9, an
FCA complaint must “describe ‘the time, place, and contents of
the false representations, as well as the identity of the person
making the misrepresentation and what he obtained thereby.’”
United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525
F.3d 370, 379 (4th Cir. 2008) (quoting Harrison, 176 F.3d at
784)); see also United States ex rel. Bledsoe v. Cmty. Health
8
Sys., Inc., 501 F.3d 493, 509 (6th Cir. 2007) (explaining that
to satisfy Rule 9, an FCA plaintiff must allege “the time,
place, and content of the alleged misrepresentation . . .; the
fraudulent scheme; the fraudulent intent of the defendants; and
the injury resulting from the fraud.”). “These facts are often
referred to as the ‘who, what, when, where, and how’ of the
alleged fraud.” Wilson, 525 F.3d at 379 (internal quotation
marks omitted).
B.
As is relevant to this case, the FCA prohibits (1)
knowingly presenting a false or fraudulent claim for payment or
approval, see 31 U.S.C.A. § 3729(a)(1); (2) knowingly using a
false record or statement to induce the government to pay or
approve a false or fraudulent claim, see 31 U.S.C.A. §
3729(a)(2); and (3) conspiring to induce the government to pay
or approve a false or fraudulent claim, see 31 U.S.C.A. §
3729(a)(3). To prevail under the FCA, a plaintiff must
therefore prove:
(1) that the defendant made a false statement or
engaged in a fraudulent course of conduct; (2) such
statement or conduct was made or carried out with the
requisite scienter; (3) the statement or conduct was
material; and (4) the statement or conduct caused the
government to pay out money or to forfeit money due.
United States ex rel. Harrison v. Westinghouse Savannah River
Co., 352 F.3d 908, 913 (4th Cir. 2003).
9
The bulk of Godfrey’s claims are based on his assertion
that the subcontractors submitted to KBR invoices based on
inflated headcounts and that KBR violated the FCA by including
those inflated costs in the invoices it submitted to the
government. The submission of an invoice based on an inflated
headcount could amount to a false claim within the meaning of
the statute, however, only if the contract required that billing
be based on the actual number of meals served. If the contract
based payment on some other metric -- for example, the cost of
supplies purchased by the subcontractor -- an inflated headcount
contained in an invoice would not lead to overpayment.
Godfrey’s complaint, however, fails to allege that the relevant
contracts made payment dependent on the number of meals actually
served. In fact, the second amended complaint alleges that
billing under the subcontracts was “largely” based on
headcounts, which in and of itself indicates that there were
other factors relevant to the subcontractors’ billing. 3
3
Moreover, Godfrey himself submitted documents
affirmatively undermining his claims about the terms of the
subcontracts. In response to KBR’s motion to dismiss, Godfrey
submitted to the district court portions of the contract between
KBR and ABC. These portions of the contract, as modified on
July 16, 2004, seem to establish fixed-price bands for given
numbers of meals -- $2.6 million for a headcount of 5500; $2.7
million for a headcount of 6500; and $3.0 million for a
headcount of 7500. J.A. 307. Because the lowest headcount band
provided is 5500, it appears that the contract sets a minimum
(Continued)
10
The facts necessary to show that Godfrey is entitled to
relief under the False Claims Act are the terms of the
subcontracts. Godfrey’s complaint, however, simply does not
allege those necessary facts. Without allegations about the
terms of the subcontracts, the complaint fails to sufficiently
set forth the content of the false statements, as required by
Rule 9. Although the failure to allege the requirements of the
underlying contracts is the complaint’s most significant
shortcoming, we note that the complaint does not allege the
specifics of anything -- the terms of the subcontracts, the
amounts claimed by the subcontractors on the invoice, or the
amounts that should have been claimed. The complaint fails to
set forth the “who, what, when, where, and how of the alleged
fraud,” Wilson, 525 F.3d at 379 (internal quotation marks
omitted), and the complaint therefore fails to satisfy the
requirements of Rule 9. Godfrey’s suggestion that he should be
able to ferret out that kind of detail through discovery is
without merit. See id. at 380 (“[I]f allowed to go forward,
Relators’ FCA claim would have to rest primarily on facts
learned through the costly process of discovery. This is
precisely what Rule 9(b) seeks to prevent.”).
price that will be paid to the subcontractor, even if the number
of meals actually served is less.
11
Godfrey also contends that the district court erred by
rejecting a false certification claim that was based on
allegations that were included in his first amended complaint
but were omitted from his second amended complaint. We need not
decide whether, as KBR contends, Godfrey waived this claim by
failing to re-assert the relevant facts in his second amended
complaint, 4 because, when we consider the allegations underlying
Godfrey’s certification claims, the claims were properly
dismissed.
A false certification of contract compliance can give rise
to liability under the False Claims Act if: “a government
contract or program required compliance with certain conditions
as a prerequisite to a government benefit, payment, or program;
the defendant failed to comply with those conditions; and the
defendant falsely certified that it had complied with the
conditions in order to induce the government benefit.”
Harrison, 176 F.3d at 786. Godfrey did not allege that LOGCAP,
the contract between KBR and the government, made payment
4
In Young v. City of Mount Rainier, 238 F.3d 567 (4th
Cir. 2001), we held that “if a claim is dismissed without leave
to amend, the plaintiff does not forfeit the right to challenge
the dismissal on appeal simply by filing an amended complaint
that does not re-allege the dismissed claim,” id. at 572-73, but
we expressly declined to consider the waiver question where, as
in this case, a claim is dismissed with leave to amend, see id.
at 573 n.4.
12
contingent on compliance with any particular conditions, nor did
he allege any facts to support his conclusory assertion that KBR
in fact certified compliance. The allegations in the first
amended complaint of any express or implied certification by KBR
thus fail to meet the requirements of Rule 9. See United States
ex rel. Gross v. AIDS Research Alliance-Chicago, 415 F.3d 601,
605 (7th Cir. 2005) (affirming dismissal of FCA complaint,
noting that “where an FCA claim is based upon an alleged false
certification of regulatory compliance, the certification must
be a condition of the government payment in order to be
actionable. The second amended complaint makes no such
allegation.”).
Moreover, the certification claim suffers from the
overarching deficiency that we have already discussed -- the
absence of any plausible allegations that the subcontractors’
billing practices were improper under their contracts.
According to Godfrey, the certifications, whether express or
implied, were false because KBR paid the subcontractors money to
which KBR knew they were not entitled. Because there are no
allegations to support the underlying claim of improper billing,
the certification claims necessarily fail as well.
Godfrey during oral argument seemed to suggest that his
certification claim is also based on his assertions that the
subcontractors failed to provide the staffing, equipment, etc.,
13
required under their contracts with KBR. Because there are no
allegations that any contract required certification of
compliance with contract terms, this argument fails, for the
reasons discussed above. And to the extent that Godfrey
believes that the failure to meet staffing or other contractual
requirements can support an FCA claim on its own, without regard
to a certification requirement, we disagree. These assertions
amount to nothing more than a claim that KBR or the
subcontractors breached the terms of their contracts and thus
cannot give rise to liability under the act. See Wilson, 525
F.3d at 377 (“While the phrase ‘false or fraudulent claim’ in
the False Claims Act should be construed broadly, it just as
surely cannot be construed to include a run-of-the-mill breach
of contract action that is devoid of any objective falsehood. .
. . To hold otherwise would render meaningless the fundamental
distinction between actions for fraud and breach of contract.”
(citation omitted)).
Because Godfrey’s complaint fails to meet the pleading
requirements of Rule 9, the district court properly dismissed
count I (§ 3729(a)(1) -- false claims) and count II (§
3729(a)(2) -- false statements). 5 Count III, alleging a
5
The district court also dismissed count II because
Godfrey did not allege that KBR presented the false statements
to the government. As Godfrey points out, the Supreme Court, in
(Continued)
14
conspiracy between KBR and the subcontractors to violate the
FCA, was also properly dismissed by the district court. The
district court concluded that the complaint “failed to provide
sufficient facts giving rise to an inference of a meeting of the
minds and agreement sufficient to support a claim for
conspiracy.” J.A. 408. We agree. Moreover, the complaint
fails to plead sufficient facts to show that the conspirators
intended to defraud the government. See Allison Engine Co. v.
United States ex rel. Sanders, 128 S. Ct. 2123, 2130 (2008)
(“Where the conduct that the conspirators are alleged to have
agreed upon involved the making of a false record or statement,
it must be shown that the conspirators had the purpose of
‘getting’ the false record or statement to bring about the
Government’s payment of a false or fraudulent claim.”). And as
discussed above, Godfrey’s complaint fails to allege sufficient
facts to show even an individual violation of the False Claims
Act by KBR or the subcontractors. Since Godfrey’s conspiracy
an opinion issued after the district court’s decision in this
case, rejected the presentment requirement as to claims made
under § 3729(a)(2). See Allison Engine Co. v. United States ex
rel. Sanders, 128 S. Ct. 2123, 2128-30 (2008). The district
court’s error on the presentment issue is irrelevant, however,
because the district court also rejected count II for the
reasons discussed above.
15
claim is premised on those claims of underlying FCA violations,
the conspiracy claim rises and falls with the individual claims.
Finally, we conclude that the district court properly
dismissed count V, through which Godfrey sought to participate
in any alternate remedy that the government may pursue. See 31
U.S.C.A. § 3730(c)(5) (“Notwithstanding subsection (b), the
Government may elect to pursue its claim through any alternate
remedy available to the Government, including any administrative
proceeding to determine a civil money penalty. If any such
alternate remedy is pursued in another proceeding, the person
initiating the action shall have the same rights in such
proceeding as such person would have had if the action had
continued under this section.”); see also United States ex rel.
LaCorte v. Wagner, 185 F.3d 188, 191 (4th Cir. 1999). Although
the government declined to intervene in this action, there is
nothing in the record suggesting that the government is in fact
pursuing any alternate remedy against KBR. Moreover, any claim
that Godfrey might have under § 3730(c)(5) would be against the
government, not KBR or the other defendants in this action. In
any event, because Godfrey’s FCA claims have failed, he has no
right to participate in any recovery by the government. See
Bledsoe, 501 F.3d at 522 (“Absent a valid complaint which
affords a relator the possibility of ultimately recovering
damages, there is no compelling reason for allowing a relator to
16
recover for information provided to the government.”); United
States ex rel. Hefner v. Hackensack Univ. Med. Ctr., 495 F.3d
103, 112 (3d Cir. 2007) (“[A] relator is not entitled to a share
in the proceeds of an alternate remedy when the relator’s qui
tam action under § 3729 is invalid.”).
III.
Accordingly, for the foregoing reasons, the district
court’s orders dismissing Godfrey’s first amended complaint and
second amended complaint are hereby affirmed.
AFFIRMED
17