United States District Court, D. South Carolina, Charleston Division
United States of America, ex rel. Willie Cooley and Frank Rawlinson, Plaintiffs,
Carolina Wrecking, Inc., Charles Dowey, individually, and Fencon, Inc., Defendants.
ORDER AND OPINION
Richard Mark Gergel United States District Court Judge.
the Court are Defendant Fencon, Inc.'s motion to dismiss
the First Amended Complaint (Dkt. No. 43) and
Plaintiff-Relators' conditional motion to amend the First
Amended Complaint (Dkt. No. 47). For the reasons set forth
below, Fencon, Inc.'s motion to dismiss is granted in
part and denied in part and Plaintiff-Relators' motion to
amend is granted.
Cooley and Frank Rawlinson ("Plaintiff-Relators")
are former employees-a tractor-trailer driver and equipment
operator, respectively-of Defendant Carolina Wrecking, Inc.
("Carolina Wrecking"), a demolition contractor.
Plaintiff-Relators bring this qui tarn action
pursuant to the False Claims Act ("FCA"), 31 U.S.C.
§ 3729 et seq., alleging that contractor
Fencon, Inc. ("Fencon"), subcontractor Carolina
Wrecking, and Carolina Wrecking's majority owner, Charles
Dowey, defrauded the United States government by failing to
pay employees the "prevailing wages" mandated by
the McNamara-O'Hara Service Contract Act, 41 U.S.C.
§§ 351-358 ("SCA") and/or the Davis-Bacon
Act, 40 U.S.C. § 3141 et seq., but nonetheless
submitting statements that sought payment and certified
statutory compliance. (Dkt. No. 17 ¶¶ 5-7.)
Plaintiff-Relators specifically worked pursuant to an
approximately five-year contract issued on or about August
18, 2010 by the U.S. government to Defendant Fencon, Inc. for
demolition and construction work at the Joint Base
Charleston. (Id. ¶¶ 19-20.) In September
2011, the agreement was modified with an amendment to
"Incorporate the new Wage Determination 2005-2473, Rev.
(06/13/2011)" (the "Contract"). (Id.
¶ 28.) Wage Determination 2005-2473, Rev. (06/13/2011)
is issued by the Department of Labor to set the minimum
allowable hourly rate per employee classification pursuant to
the SCA. (Id. ¶ 29.)
12(b)(6) of the Federal Rules of Civil Procedure permits the
dismissal of an action if the complaint fails "to state
a claim upon which relief can be granted." A motion to
dismiss tests the legal sufficiency of the complaint and
"does not resolve contests surrounding the facts, the
merits of the claim, or the applicability of defenses. . . .
Our inquiry then is limited to whether the allegations
constitute a short and plain statement of the claim showing
that the pleader is entitled to relief." Republican
Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir.
1992) (internal quotation marks and citation omitted). On a
Rule 12(b)(6) motion, the Court is obligated to "assume
the truth of all facts alleged in the complaint and the
existence of any fact that can be proved, consistent with the
complaint's allegations." E. Shore Mkts., Inc.
v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th
Cir. 2000). Although the Court must accept the facts in a
light most favorable to the Plaintiff, the Court "need
not accept as true unwarranted inferences, unreasonable
conclusions, or arguments." Id. Generally, to
survive a motion to dismiss, the complaint must provide
enough facts to '"state a claim to relief that is
plausible on its face.'" Ashcroft v. Iqbal,
556 U.S. 662, 679 (2009) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)); see also
Fed. R. Civ. Pro. 8(a)(2).
"under the FCA must also meet the more stringent
particularity requirement of Federal Rule of Civil Procedure
9(b)." McLain v. KBR, Inc., 612 Fed.Appx. 187,
187-88 (Mem) (4th Cir. 2015). Rule 9(b) particularity
requires that "[i]n alleging fraud or mistake, a party
must state with particularity the circumstances constituting
fraud or mistake. Malice, intent, knowledge, and other
conditions of a person's mind may be alleged
generally." Fed.R.Civ.P. 9(b). The FCA "attaches
liability, not to the underlying fraudulent activity or to
the government's wrongful payment, but to the 'claim
for payment.'" Harrison v. Westinghouse Savannah
River Co., 176 F.3d 776, 785 (4th Cir. 1999). Meaning,
"to trigger liability under the Act, a claim actually
must have been submitted to the federal government for
reimbursement, resulting in a call upon the government
fisc." United States ex rel. Nathan v. Takeda
Pharms. N. A., Inc., 707 F.3d 451, 454 (4th Cir. 2013)
(internal quotation marks omitted); see also
Harrison, 176 F.3d at 785 ("A false statement is
actionable under the Act only if it constitutes a false or
fraudulent claim."). Accordingly, a "court should
hesitate to dismiss a complaint under Rule 9(b) if the court
is satisfied (1) that the defendant has been made aware of
the particular circumstances for which she will have to
prepare a defense at trial, and (2) that plaintiff has
substantial pre-discovery evidence of those facts."
Harrison, 176 F.3d at 784.
First Cause of Action for Presentation of False
state a cause of action under 31 U.S.C. § 3729(a)(1)(A),
Plaintiff-Relators must allege that Fencon "knowingly
present[ed], or cause[d] to be presented, a false or
fraudulent claim for payment or approval." 31 U.S.C.
§ 3729(a)(1)(A). Courts construe the phrase "false
or fraudulent claim . . . broadly to reach all types of
fraud, without qualification, which might result in financial
loss to the Government." United States v. Triple
Canopy, Inc., 775 F.3d 628, 634 (4th Cir. 2015)
(internal citations and quotation marks omitted). A
"presentment claim arises when a claim for payment that
is submitted to the government rests on a false
representation of compliance with an applicable federal
statute, federal regulation, or contractual term."
United States ex rel. Tran v. Computer Scis. Corp.,
53 F.Supp.3d 104, 122 (D.S.C. 2014) (internal quotation marks
omitted); accord Triple Canopy, Inc., 775 F.3d at
634-35 (adopting implied certification).
are two ways to adequately plead presentment under Rule
9(b)." United States ex rel. Grant v. United
Airlines Inc., 2018 WL 6786134, at *3 (4th Cir. Dec. 26,
2018). First, a plaintiff can "allege with particularity
that specific false claims actually were presented to the
government for payment." Id. This requires the
plaintiff to "at a minimum, describe the time, place,
and contents of the false representations, as well as the
identity of the person making the misrepresentations and what
he obtained thereby." United States ex rel. Wilson
v. Kellogg Brown & Root, Inc., 525 F.3d 370, 379
(4th Cir. 2008). These facts are also referred to as the
"who, what, when, where, and how of the alleged
fraud." Id. This demands "some indicia of
reliability" to "support the allegation that an
actual false claim was presented to the government."
United States ex rel. Nathan, 707 F.3d at 455
(internal quotation marks omitted). "Alternatively, a
plaintiff can allege a pattern of conduct that would
'necessarily have led to submission of false
claims' to the government for payment." United
States ex rel. Grant, 2018 WL 6786134, at *3. The
complaint must provide "at least some explanation of the
billing structure," including where the defendant is
alleged to have contracted directly with the Government.
Id. at *4.
Plaintiff-Relators appear to proceed by the first
method-alleging that Fencon actually presented false claims
to the Government-and these allegations are sufficient under
the Rule 9(b) standard. The First Amended Complaint alleges
that Fencon was the primary contractor (Dkt. No. 17 ¶
25), provides invoices and records of payment relating to
Fencon's work as the contractor (Dkt. No. 17-16) as well
as Cooley and Rawlinson's pay stubs from Carolina
Wrecking (Dkt. No. 17-6, No. 17-7, No. 17-15), and allege
that as a general rule "the prime contractor must submit
weekly payroll certifications to the federal government"
(Id. ¶ 48) and that Carolina Wrecking
"and/or" Fencon paid Cooley and Rawlinson less than
the prevailing wage (Id. ¶¶ 38-40, 62).
These allegations and documents sufficiently "connect
the dots" to payment by the Government to its primary
contractor, Fencon. United States ex rel. Grant,
2018 WL 6786134, at *5 ("Rule 9(b)'s heightened
pleading standard requires that plaintiffs connect the dots,
even if unsupported by precise documentation, between the
alleged false claims and government payment."); see
also United States ex rel. Lockhart v. Gen. Dynamics
Corp., 529 F.Supp.2d 1335, 1336 (N.D. Fl. 2007)
(presentment requirement satisfied where defendant contracted
directly with the Government and relator had first-hand
knowledge that certifications were false). Moreover,
"[n]either the FCA nor Rule 9(b) require the
identification of individuals within a defendant
corporation." United States v. Berkeley Heartlab,
Inc., 225 F.Supp.3d 487, 500 (D.S.C. 2016) (citing
Cook Cnty, III v. United States ex rel. Chandler,
538 U.S. 119, 125 (2003)). Taken together, and with the facts
alleged considered in a light most favorable to
Plaintiff-Relators, these allegations and documents support
"the plausible inference that false claims were
presented to the government" by Fencon. United
States ex rel, Nathan, 707 F.3d at 457. The Court is,
therefore, satisfied that these allegations and documents put
Fencon on notice of its alleged misconduct and support that
this is a sufficiently substantiated claim. United States
ex rel. Grant, 2018 WL 6786134, at *3 (noting Rule
9(b)'s purpose in the FCA context "of providing
defendants notice of their alleged misconduct, preventing
frivolous suits, and eliminating fraud actions in which all
the facts are learned after discovery").
motion to dismiss the first cause of action for presentation
of false claims is denied.
Second Cause of Action for ...