FILED
NOT FOR PUBLICATION
MAY 05 2017
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES ex rel. MARK No. 15-17206
MCGRATH,
D.C. No. 2:13-cv-00864-DJH
Plaintiff-Appellant,
v. MEMORANDUM*
MICROSEMI CORPORATION; WHITE
ELECTRONIC DESIGNS
CORPORATION, DBA Microsemi Power
and Electronics Group,
Defendants-Appellees.
MARK MCGRATH, ex rel. United States No. 15-17478
of America,
D.C. No. 2:13-cv-00864-DJH
Plaintiff-Appellant,
v.
MICROSEMI CORPORATION; WHITE
ELECTRONIC DESIGNS
CORPORATION, DBA Microsemi Power
and Electronics Group,
Defendants-Appellees.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Appeal from the United States District Court
for the District of Arizona
Diane J. Humetewa, District Judge, Presiding
Argued and Submitted April 18, 2017
San Francisco, California
Before: D.W. NELSON and IKUTA, Circuit Judges, and BURGESS,** Chief
District Judge.
Mark McGrath, on behalf of the United States of America, appeals the
district court’s order dismissing his qui tam complaint under Rules 8(a) and 9(b) of
the Federal Rules of Civil Procedure and denying leave to amend. We have
jurisdiction under 28 U.S.C. § 1291.
McGrath’s complaint failed to state a false certification claim under the
False Claims Act (FCA), 31 U.S.C. §§ 3729–3733, because the complaint failed to
plead facts plausibly alleging that compliance with the International Traffic in
Arms Regulations (ITAR) was material to the Government’s decision to pay White
Electronic Designs Corporation and Microsemi Corporation (collectively,
“Microsemi”). Universal Health Servs., Inc. v. United States ex rel. Escobar, 136
S. Ct. 1989, 2002–03 (2016). Moreover, even assuming that the statement “ITAR
controlled” on Microsemi’s receipts constituted a false representation that
**
The Honorable Timothy M. Burgess, United States Chief District
Judge for the District of Alaska, sitting by designation.
2
Microsemi was in compliance with ITAR, the complaint cannot plead facts
sufficient to support an inference that Microsemi knew it had failed to comply with
ITAR at the time of the representation because Microsemi’s good faith
interpretation of the term “disclose” in 22 C.F.R. § 120.17 at that time was
reasonable. See Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 70 n.20 (2007).
Because McGrath cannot establish Microsemi’s scienter as a matter of law, and has
not indicated what facts he could add to the complaint to establish that
Microsemi’s alleged ITAR violation was material to the Government’s payment
decision, the district court did not err in denying leave to amend. See id.; Hildes v.
Arthur Andersen LLP, 734 F.3d 854, 859 (9th Cir. 2013).
Finally, McGrath waived his argument that Microsemi provided the
Government worthless products by failing to raise it in his opening brief.
Martinez-Serrano v. I.N.S., 94 F.3d 1256, 1259 (9th Cir. 1996). To the extent
McGrath is now raising the modified argument that Microsemi knowingly
demanded payment for products that had lost value due to Microsemi’s failure to
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comply with ITAR, such a claim fails for the same reasons as his false certification
claim.1
AFFIRMED.
1
McGrath failed to raise his FCA claim for fraud in the inducement before
the district court. We therefore decline to address this issue on appeal. Bolker v.
Comm’r of Internal Revenue, 760 F.2d 1039, 1042 (9th Cir. 1985).
4