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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 20-12622
Non-Argument Calendar
________________________
D.C. Docket No. 2:18-cv-00543-MHH
STARTLEY GENERAL CONTRACTORS, INC.,
MANDY POWRZANAS,
STEVEN ALLEN STEWART,
Plaintiff-Appellants,
versus
WATER WORKS BOARD OF THE CITY OF BIRMINGHAM, THE,
MACAROY UNDERWOOD, Mac,
TM JONES, Sonny,
JERRY LOWE, Lee,
RICHARD NEWTON, Wayne,
JONES UTILITY AND CONTRACTING CO. INC.,
Defendant-Appellees.
________________________
Appeal from the United States District Court
for the Northern District of Alabama
________________________
(May 24, 2021)
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Before JORDAN, GRANT, and ANDERSON, Circuit Judges.
PER CURIAM:
Plaintiff-Appellants appeal the district court’s order denying their motion for
the district court to reconsider, pursuant to Federal Rule of Civil Procedure 60(b),
an order dismissing their claims with prejudice for failure to state a claim under the
False Claims Act (“FCA”).1 After a thorough review of the parties’ briefs and the
record, we affirm.
I.
Because we write for the parties, we assume familiarity with the facts and
set out only those necessary for the resolution of this appeal.
Plaintiffs filed a complaint in Alabama state court alleging violations of the
FCA and Sarbanes-Oxley Act, as well as state law claims, against the Water Works
Board of the City of Birmingham and its employees (collectively, the “Board”) and
a competing contractor, Jones Utility & Contracting Company, Inc., and its
principal (collectively, “Jones”). The plaintiffs alleged that they were harmed from
Jones’s and the Board’s “pay to play” scheme that ignored bidding laws and
1
Attorney Scott Thomas Morro’s motion to withdraw as counsel is GRANTED.
The Joint Stipulation of dismissal with prejudice of all claims of plaintiff-appellant, Steve
Stewart, is GRANTED. The term “plaintiffs-appellants” as used hereafter in this opinion shall
include the plaintiffs-appellants other than Steve Stewart.
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fraudulently used federal program dollars to fund public water utility projects. The
case was removed on April 5, 2018.
Plaintiffs filed an amended complaint on April 27, 2018, after a hearing with
the district court on their pending motions for injunctive relief. The defendants
filed motions to dismiss the amended complaint. On May 24, 2018, the district
court granted the motions to dismiss; the court dismissed the plaintiffs’ federal law
claims—pursuant to the Sarbanes-Oxley Act and the FCA—without prejudice, and
plaintiffs’ state law claims were remanded back to the state court. In dismissing
the FCA claim, the district court explained that “the plaintiffs have not and cannot,
on the facts of this case, identify a false claim that a defendant allegedly made to
the federal government.”
On May 30, 2018, the plaintiffs filed a motion for reconsideration of the
district court’s dismissal of their case and requested permission to amend their
complaint to re-allege their FCA claim. The district court conditionally granted the
motion as to the request to amend the complaint. The district court explained that it
had dismissed the FCA claim because there was no allegation of a false claim
made by the defendants to the federal government and that it had determined that
amendment to the complaint again would have been futile because the plaintiffs
could not identify any such claim. On reconsideration, the court considered the
plaintiffs’ arguments that the Fraud Enforcement and Recovery Act amended the
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FCA to allow the plaintiffs to assert a colorable FCA claim without alleging a false
claim was submitted by the defendants to the federal government. The court also
considered the assertion that plaintiffs had access to an insider formerly employed
with Jones with firsthand knowledge of a fraudulent scheme involving billing
practices, underbidding, bribery, and kickbacks, in addition to the source of
funding for projects. Accepting the plaintiffs’ arguments, the court explained,
however, that the FCA still required the plaintiffs—in order to properly allege a
claim based on their theory of fraudulent invoices and consistent with Federal
Rules of Civil Procedure 8, 9, and 11—to identify Board-funded projects that used
federal funds and tie those to Jones’s submission of fraudulent invoices (or
otherwise allege another violation of the FCA). The plaintiffs needed more than
just allegations of improper billing practices; they needed specific allegations that a
fraudulent claim was submitted to the federal government or to an entity
administering federal funds.
In response, the plaintiffs filed a second amended complaint on April 30,
2018, asserting FCA and state law claims. The defendants filed a motion to
dismiss the second amended complaint. The court granted the motion to dismiss
and dismissed the FCA claims with prejudice and decided not to recall the state
law claims previously remanded to the state court. At a hearing on October 10,
2019, the court explained its reasons for the dismissal, including that the plaintiffs
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failed to “connect the dots” to demonstrate that federal funds were used by the
Board to pay fraudulent invoices or that there was otherwise a submission of a
fraudulent claim to the federal government. Instead, it seemed that the Board was
allegedly using federal funds as a guarantee to seek bonds and that invoices were
paid—not from federal funds—but from bond revenues. In addition, the Board’s
ratepayers seemed to be the victim of any alleged fraud—not the federal
government—since any fraudulently made claim would fall ultimately on the
ratepayer.
On November 10, 2019, the plaintiffs filed a second motion for
reconsideration, requesting that the district court reconsider its order dismissing
their second amended complaint. On July 1, 2020, the district court denied this
second motion for reconsideration pursuant to Rule 60, 2 explaining that the
plaintiffs had only reiterated their theory of FCA liability and failed to address the
concerns the court had previously expressed; that is, the plaintiffs reargued the
same theory without alleging a connection between the fraudulent scheme and a
claim being submitted to the federal government, as required for an FCA claim.
The district court also found that the plaintiffs had failed to explain why the
Board’s ratepayers were not the defrauded parties or how the fact that federal funds
2
Because the plaintiffs had not filed a motion within 28 days of the entry of the order
granting the motions to dismiss the second amended complaint, the district court did not consider
the motion under Rule 59.
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were not being used to pay the invoices still allowed for a theory of FCA liability.
Instead, the plaintiffs had reiterated their initial arguments that the FCA claims
were based on the Board’s application and reception of federal funds and the
plaintiffs’ access to insider knowledge of a fraudulent billing scheme provided
sufficient indicia of reliability that the submitted claims were fraudulent. Because
the plaintiffs merely reargued already defeated arguments and asserted their
dissatisfaction with the district court’s prior reasoning, the second motion for
reconsideration was denied.
On July 13, 2020, the plaintiffs timely filed a notice of appeal of the district
court’s July 1 order on their motion for reconsideration.
II.
The plaintiffs argue that the district court abused its discretion in denying
their second motion for reconsideration. As an initial matter, we address the scope
of our review.
The plaintiffs’ notice of appeal indicates that the plaintiffs only appeal the
district court’s order dated July 1, 2020, denying their second motion for
reconsideration. The defendants emphasize the text of the notice in their response
brief because the defendants read plaintiffs’ statement of jurisdiction in their
opening brief as attempting to appeal other orders, and the defendants argue that
this Court’s review is limited to the July 1 order and that the court is without
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jurisdiction over any other orders of the district court. In reply, the plaintiffs do
not argue that this Court should consider any order not specifically listed in their
notice of appeal.3
While the plaintiffs’ arguments are focused on the merits of the viability of
the second amended complaint’s allegations, the plaintiffs briefing includes only
the standard of review of a motion for reconsideration denial pursuant to Rule 60
and does not state that the district court erred in its conclusions in any other order.
Indeed, Rule 4 of the Federal Rules of Appellate Procedure limits our review given
that the notice of appeal was filed well over 30 days after the entry of any order
other than the order on the second motion for reconsideration and the motion was
filed more than 28 days after the entry of the order granting the defendants’ motion
to dismiss. Therefore, our review is appropriately limited only to the district
court’s July 1, 2020, order denying the second motion for reconsideration pursuant
to Rule 60.
III.
“We review the denial of a motion for reconsideration for an abuse of
discretion.” Corley v. Long-Lewis, Inc., 965 F.3d 1222, 1234 (11th Cir. 2020).
3
Cf. J.J. Rissell, Allentown, PA Tr. v. Marchelos, 976 F.3d 1233, 1235 (11th Cir. 2020)
(“Despite the clear requirements of Federal Rule of Appellate Procedure 3(c), we have excused
defective notices of appeal that failed to designate expressly the district court order appealed or
to specify the parties taking the appeal when the appellant’s intent to appeal was clear from
context.” (citations omitted)).
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“Our review is fairly circumscribed and deferential; this appeal ‘does not bring up
the underlying judgment for review.’” Rice v. Ford Motor Co., 88 F.3d 914, 919
(11th Cir. 1996) (quoting Cavaliere v. Allstate Ins. Co., 996 F.2d 1111, 1115 (11th
Cir. 1993)). An appellant “must do more than show that a grant of its motion
might have been warranted” and “must demonstrate a justification for relief so
compelling that the district court was required to grant [the] motion” for
reconsideration. Id. “A motion for reconsideration cannot be used,” however, “to
relitigate old matters, raise argument or present evidence that could have been
raised prior to the entry of judgment.” Richardson v. Johnson, 598 F.3d 734, 740
(11th Cir. 2010) (quoting Michael Linet, Inc. v. Village of Wellington, 408 F.3d
757, 763 (11th Cir. 2005)).
In this case, plaintiffs do not make an argument as to why there was an
abuse of discretion in denying their Rule 60 motion. The plaintiffs state that newly
discovered evidence may warrant reconsideration pursuant to Rule 60(b)(2) and
that another basis for consideration may include an intervening change in
controlling law or the need to correct a manifest injustice. But the plaintiffs do not
attempt to identify any such circumstances in this case. They do not identify which
subsection of Rule 60 they rely on. Indeed, apart from articulating the standard of
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review, the test for newly discovered evidence, and briefly mentioning Rule 60,4
the plaintiffs make no argument about how the district court purportedly abused its
discretion or why Rule 60 would have afforded them relief. And while the
plaintiffs recognize that the district court required them to allege a specific instance
in which federal funds were used or connected with fraud, they fail to directly
respond to the district court’s concerns, nor do they argue that the district court
erred by, for example, relying on an incorrect standard of law on this point.
Instead, the plaintiffs’ two main arguments on appeal are attempts to “to
relitigate old matters” once again. Those arguments are, first, that an insider has
provided them with firsthand knowledge of billing practices, which would provide
the sufficient indica of reliability of the alleged fraud; and second, that the
defendants violated federal regulations and guidelines in their handling of federal
funds. Neither of these arguments indicate an abuse of discretion. Nor do they
address the concerns of the district court regarding a lack of a nexus between
federal funds and the alleged fraudulent claims in the second amended complaint.
They merely reassert the same reasons previously raised as to why they think their
allegations are sufficient.
4
Plaintiffs also mention Rule 59(e) but do not argue that the district court erred in holding
that their second motion for reconsideration could only be considered under Rule 60. Even if
they did, the argument would be without merit.
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As to the first main argument, the plaintiffs cite our Court’s decision in
United States ex rel. Clausen v. Laboratory Corp. of America, Inc., for the
propositions that some indicia of reliability of fraud is needed, and that “an insider
might have an easier time obtaining information about billing practices and
meeting the pleading requirements under the False Claims Act.” 290 F.3d 1301,
1311 (11th Cir. 2002). 5 In doing so, the plaintiffs merely attempt to relitigate the
dismissal of their FCA claims and fail to demonstrate how the district court abused
its discretion in denying the plaintiffs’ motion for reconsideration. For example,
the plaintiffs do not state that their access to the insider constitutes newly
discovered evidence that the district court ignored. Even so, the argument is
without merit, made clear by the fact that the plaintiffs continue to pass over the
fault in their pleading that the district court identified. Indeed, the plaintiffs’
quotation of Clausen in their opening brief makes this obvious.
Relevant to the plaintiffs’ citation, the Clausen court held (a) that the FCA
and Rule 9(b) require some indicia of reliability be alleged “to support the
allegation of an actual false claim for payment being made to the Government,” id.
(emphasis removed and added); and (b) an “outsider”—as opposed to an insider,
5
Clausen is only one of two cases cited by the plaintiffs in the substance of their argument;
they cite four cases for the motion for reconsideration standard, which they do not use to make
an argument. The other substantive case is a district court decision that relies, in part, on
Clausen and that the plaintiffs quote for the same “insider” argument, which we explain is
insufficient to demonstrate an abuse of discretion.
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like the plaintiffs argue they have access to—is not “offer[ed] any special
leniency” when he “fail[s] to allege with the required specificity the circumstances
of the fraudulent conduct,” id. at 1314. As to the former point, the plaintiffs still
fail to explain how their allegations regarding fraudulent billings connect to federal
funds. And as to the latter, the plaintiffs fail to indicate how the insider
information they do have provides any basis for concluding that their second
amended complaint plausibly alleged an FCA claim.
As to plaintiffs’ second main argument, that the defendants violated federal
regulations, this argument too fails to indicate an abuse of discretion in the district
court’s decision to deny the second reconsideration motion. And if we were to
reach the merits, the argument still fails to indicate why those alleged federal
regulatory violations provide a basis to conclude that a false claim implicated
federal funds and was submitted to the federal government. In particular, the
plaintiffs repeatedly refer to the fact that federal regulations require separation
(from funds from other sources) of federal funds received through the relevant
federal program. Yet, the plaintiffs do not argue why the district court was wrong
to conclude—as it did in dismissing the second amended complaint—that “even if
there was some commingling of . . . funds, there’s no way right now for the Court
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based on the allegations before it to identify a specific instance in which federal
funds were used to pay a fraudulent claim.”6
Therefore, the plaintiffs’ appellate arguments fail to demonstrate an abuse of
discretion in the district court’s denial of the second motion for reconsideration.
AFFIRMED.
6
The plaintiffs spend much of their opening brief outlining what they describe as
“follow[ing] the trail of federal funds,” implying that they made the connection that the district
court requested despite the “comingling” of funds. Opening Br. at 52. The plaintiffs fail to
indicate the relevance of these arguments to the abuse of discretion standard that they must meet
on appeal, nor do they indicate how the district court erred in concluding such allegations were
insufficient. Furthermore, similar to how the district court observed that the plaintiffs restated
verbatim portions of their previous motion for reconsideration in their second motion for
reconsideration, the plaintiffs restate verbatim portions of their second motion for
reconsideration in their opening appellate brief. This is another symptom of the plaintiffs’
attempts to inappropriately relitigate the prior dismissal of their second amended complaint.
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