now we now started ok although this case has an unusual history in its current posture it presents an opportunity to clarify and reaffirm the ninth circuit position within the emerging consensus of the sister cities of the billing information of the claim submissions in order to state the circumstances of the fraud do they have to be insiders they don't have to be insiders there's no there's no statutory requirement of an insider they do have to be able to plead facts sufficient to satisfy the twin purposes of the rule nine b which is to give notice to the defendants of what the claims are and to make sure that these aren't strike suits and fishing expeditions now the ninth circuit in the past and  those are both ninth circuit cases but they're both unpublished non presidential so this case anyway that someone in your client's position could get his hands on the bills short of discovery once you get past  require meant that the actual bill be part of the allegation in the complaint is necessary end of it in or under what circumstances what kinds of fraud the actual bill might simply not be available  know ok but you obviously your client does not have the actual bills but they have they don't have the invoices themselves but he does have significant information that is pleaded about contract adjustments contract increases things like that so i think but what makes that what makes that falls in the false the false claim act requires evidence of a false or fraudulent claim for payment or approval and i just didn't see anything in your complaint but if you've got something i'd  love to see it and i'm going to ask you to give me what you think is maybe the strongest but the strongest contract you've got the best the best contract you've got ok because you've been very frank compared to forty seven of admitting you don't have this information but the only thing we state and forty seven and it's been the same from the beginning is that we didn't have the billing information but it doesn't didn't stop us from sleeping in the park but isn't that the essence of the false claim none of us claim for payment not in this case your honor and maybe the best approach to this would be to state that the escobar decision talks about how materiality of the false claim can be proven by not by the bill itself the bill is simply just a statement of the work it's that the bill represents there's a material falsity that is made clear by the fact that they didn't adhere to the regulations so in this case it's a perfect example mr pirie saw the fraud he  saw he's not part of the fraud there is to say the complaint is true he saw the shoddy work and he saw a whole lot of it as part of the fraud and the bills themselves are just simply stating a claim for the work so there's nothing in accepted the work under under circumstances just they didn't realize that it was that it was shoddy and that they were paying that they were making full payment that there were no adjustments or that the officials were saying look i know what quality control telling us it's supposed to be within this range you're just off of that and i never thought that range was particularly relevant anyway so i'll take i'll take the highway the way you gave it to us i think it's i think it's just buying let's let's go forward that's that's not that's not fraud that's that's not a false claim there's a false claim if you're making if you're submitting a claim for payment and you know that you don't qualify for that payment now the question of adjustments is a separate question i'd like to address that directly if i could there are three points and i think we tried to address it in the briefs and in the last argument but but i think with the onset of our decision it helps us the first point is that these allegations do not lend themselves to adjustments you cannot adjust for failed verification tests for falsely reporting passing results for cherry picking locations for paving over failing materials for claiming cost increases decide despite  failures these are summarized on page four of the reply brief the types of things that went on here are not the kinds of things you can have adjustments and i think it be very helpful to point out that in paragraph one thousand of the complaint this was not so emphasized in the briefing it's on page three ten of the excerpts of record if you want federal funds you have to meet these regular federal regulations and specifications you have to design according to safety endure ability you have to maintain your records you have to report the quality and nature of your materials you have to they're given warnings no false statements about the quality of materials or it's a crime you have to participate in quality assurance and odone has to submit a certificate of compliance so those are the kinds of things that you can't adjust around if you have an old dot manager who's simply allowing these things to happen then they're not adhering to what the federal regulations require but a second point about the adjustment let me let me pause right there make sure i pick up the point i'm reading paragraph eighteen and nineteen together this is on year three town paragraph further work or corrective work that there has been somehow a false representation because the allegations are that the work wasn't done in accordance with the standards on the other hand it's also clear that there's no correction done physically to the work that was not the argument that's part of the argument yes there was no physical corrections to the work and they lied about it they lied about what they did or didn't do when you say they led about what allegations in last argument and i had a hard time arguing answering and i'm going to answer directly here but it's sort of like a sophie's choice all of these allegations are sympathetic just pick one they want to take if you want to pick one at random that's fine because they're all they're all equally good how about  ok let's go with one thirty ok one thirty is there were they claimed they claimed just under ten millions that were then ten million dollars of work that's the claim for payment that names the project manager that we knew at the time they didn't even know the right place non compliant materials yet requested payment including bonuses they agreed with the project manager to falsify the compliance documents so the falsification of the compliance documents is the is the law it's not just that they didn't do the work and they haven't identified you haven't identified you know who who representing the defendant and who the project manager i'm not sure whether you have to but if feels like this to be a good point to give us to put in some additional detail what we did identify the project manager as rob peter and we don't have this specific identity of the employee i believe in this case but any time we did have the identity of the individual employee within the defendant although there's plenty of case law that we cited that says you don't have to identify the individuals this is a rule nine b at the beginning of pleadings all we really need to do is put them on notice make them sure that they know which contracts to pull and what's out there anyways they had a failing test report showing ninety percent and yet they say they filed that they filed papers that said that they didn't they also falsely and progeny used a nuclear moisture dust density gauge so these they have these gauges that they need to be able to use and they were not in compliance with the calibration they knew that it was a miscalibrated it was miscalibrated to show passing tests this isn't just we didn't construct it correctly and then if you turn to paragraph one thirty two and when there are give specific details of the q the information quality  had if i could return back to this question of adjustments the adjustments go to damages they don't go to false claims if you're making a false claim and you have a voucher or invoice to the government that says pay me i did this work and there's a facial lie on it and the and the government sees the facial lie and says i'm not going to pay you all of that we're going to pay you less because your line the reduced payment doesn't obviate the liability for the false claim in other words it's a false claim it's not a false paid statute and under the false claims act you can make a false claim for money get denied any payment and you've still violated the law and the relator would still be entitled to recover penalties on behalf of the government and third of all the third point i want to make about these adjustments i think is very helpful that we can say today that we couldn't say the last argument and that it really the issue that we're all grappling with has to do with materiality if act the government knew about all of this problem all of these problems and they even say they even knew about the the  the the project than the cherry picking or the false documentation and they made adjustments that they and they paid the contract anyways that that is not material i think that's what this whole issue is were there adjustments made because the government knew about all these problems and made payments in the words of escobar it's not a false statement of compliance with the material regulation but assumes we have the mine run of cases you're talking about the mine run of cases project managers going to to deny these fees and deny payment and that assumes that the managers are being reasonable and acting lawful lawfully and that's not something we can assume in this case but it's even more important these allegations make it clear that the defendant never made a complete disclosure to the government so if the government made adjustments or didn't make good morning michael peter king for hooker creek i'll be arguing for the first eight minutes and then robin stein will address the court and ask if there will be any questions that the court has for her  materiality is measured by the contract and conduct in this case in escobar the court asks whether a defendant knowingly violated a contract regulation that the defendant knew was material to the government's payment decision those facts aren't present here let me explain why there is not sho and well and it was your question in the former oral argument in this case as well you question that you here's why and this is really important for the court to understand one quality test is not material and what perry does is he picks out quality verification tests those are tests done not by any contractor those are the tests moisture density again owned by defendant was not in compliance you just told me the tests were done by o doctor this says this test was done by defendant so i'm talking about the ten projects that hooker creek  performed in when you look at those ten projects you will see quality verifications you will not see any quality control tests in those not specifically so let me explain why this is important under the specifications on density compaction and mix designed verification you must have a series of either four or  five tests and so you look at the running average for a bigger four or five tests and all only the running average is material if you take one test that just shows a temporary noncompliance why why is it set up this way because the contractors using native material crushed rock and crushed rock does not come out of the ground in a uniform way so when you take the crushed rock and you mix it with oil and other ingredients and you make the asphalt you have to do a job formula document now in that document it does the testing it shows the testing and if it is out of conformance then they will adjust their formula so one test is not relevant it's not material to dot and you know what's here is  performance what mr perry is objecting to is dots testing not c i t ok which is carlson testing for cooker creep no the or your approach to this question is whether or not billing records are required i think first you have to look at false and false of the before you get to the billing records but let me answer your question directly under the broad discretion that dot as the owner of the project has it's not about damages as council just said it is about knowing doing their own testing knowing about it comparing it with the quality control testing done by an independent subcontractor of hooker creek sub contractors that s c r seven to change or they could adjust the specifications because the rock coming out of the ground isn't producing the asphalt with the job formula that is backed i mean this is not a white room case like a pharmaceutical case where you have an allegation that you produced a pharmaceutical in china like in campy case no this is where the contractors are out there in whether native material doing a very good job and these simple quality verification tests and sometimes by the way that he refers to three tests i mean if you look through the first ten projects there are times when he gets close but he never talks about the running average my point is this there is no factual falsity there is no legal fal i'm just looking at the complaint i have no idea as to the truthfulness of the complaint no we we take it as true but the the specifications as i've explained in the brief don't support that i have a question i am anxious to get to the store because he represents knife river which is that were we focus on things do you agree with mr peter that that is that we know that the contracts will call for a running average some of which would be done by zero dot some of which might be verified by an outside contractor i actually can't speak to that i think that the issue in this case is that the allegations against the particular defendants even as pleaded aren't particular enough and i can give an example of that for example in paragraph one fourteen of the third amended complaint that says that jason and determined to perform only twenty four tests despite knowing specifications required fifty tests these are the types of allegations the problem is that it doesn't say that only twenty four tests were performed it mit's that they don't know how many tests were performed and that in fact the only person who would know were the only records would the morning if you please the court my name is john spencer stuart i represent ny forever and have taylor and so forth seems to me that we all started a little different place i am starting with an order and memorandum which was filed with this court not for publication on march twenty seventh two thousand and fourteen that's the genesis of permitting this real a  tour to repleat in in march of two thousand and fourteen and basically let me say this about that i start practicing law in front of judge solomon and he never gave any of us the kind of leeway that we all thought we should have gotten and i very much applaud this court and you particularly judge fletcher and say let's give the person another shot at pleading this situation and they did and you did and he did it's no different there is absolutely no difference between the complaint that we're talking about now and the complaint that you said let's give them another chance nor is there an idea for my objection to the prior complaint if you'll recall is not that the allegations with each second amount of complaint now in the third let me address your first question first and your comments second there's nothing in there in the current complaint to discuss any overall arching scheme that's right that that makes it better at all  that makes it better now if you look at the if you look at the examples they still do not have who when why maybe or maybe turn to the one that was raised by judge watford ok that's the glacier hyland couple of projects o starts off with the defendant knew or should have known of the non compliant materials provided in the project and yet expected payment there's no indication again we go back to rule eight and rule nine with respect to the particular area that you have to l there's no there's no done if occasion of anybody or anything it's general allegations with lots of adjectives keep reading i mean and yeah yeah it's nice to stop after the first sentence but the reason i pick this one as maybe a his best example is simply that there is a specific allegation of a false statement made and in addition it's coupled with at least an implicit allegation of materiality because it says as a result of the false statement that was made the contractor received a bonus of whatever to sixteen thousand dollars so what's missing from at least that little snippet i grant you that's a much larger complaint but what's missing from that sort of allegation who why when where or who present the project matter it is identified in the prior paragraph and i remember when not i understand so who's ok what else do we need was government paid we know that we don't know how much they paid but we know they paid we know that they originally sued the government and they dismissed that case on summary judgment and there's nothing in here that indicates that the the government did not seek seek to intercede at all that's how little they think of this complaint well you know i do a lot of well i do we see a fair number of key tam complaints and the fact that the government chooses not to intervene is neither here nor there i mean since there are there are a lot of good ones which they intervene there are a lot of good ones which they don't intervene let me just suggest is i'm looking at the order that judge mcshane crafted and signed after he reviewed this work product and basically he my objection went away so i'm looking at i think we're talking four judges ok fine and we have three here today and i guess my point is if you look at what judge big chain had to say a person who was brand new to the job brand new to this particular case looks at every single piece of paper looks at all of the briefs looks at all of the amendments after this this particular complaint was filed there's thirty five requests for extensions of time to add additional stuff to this we still are in a situation where there is one example of something with perhaps the project managers name no other information that would indicate anything other than any of us could follow that same kind of a complaint and somehow we would be able to then ferret into some sort of discovery bonanza of trying to find out whether there was a a false billing prepared which he should have had like a false claim back if he alleges not that the building was fault in the sense that it knew what the build was coming and it's exactly what they agreed upon but that that but that the project manager representation if there were if there were a bribe offered and accepted by an old got project manager obviously that's a so that would be a separate charge would be a criminal charge of everything but for purposes of a false claims act if there were an allegation that a bribe was paid to the manager and the manager okayed the project knowing that it didn't satisfy the contract and therefore paid full price without an adjustment would that be sufficient under the false claims act it could be if played properly with particular with particular you know these are none of them are including the they want to paragraph they even even in one thirty where the project manager falsely substituted a passage compaction number yeah no i mean that it anyone can make that allegation the point is and i think you're under my question is as to then why is that relevant course anyone could make it but that's not the issue is that allegation made with sufficient particularity no it's not  because that is simply says this is what happened as you say when where what what what oh well we do have detail the prior sentence that says there was a failing test report showing ninety percent and that's and it's down to the tenth place so that's actually pretty specific he certainly hasn't shown us that particular test we don't we have no knowledge of that and i guess what i buy my fundamental point here is that as you judge fletcher indicated at the very beginning does it matter whether or not the relator  insider that's everything that's absolutely everything when you say as a matter of law if the person is not an insider he cannot make these allegations not on the basis of this kind of a complaint no no i'm going my questions different the reason i asked that question is it may be that the district judge thought as a precondition for bringing a successful he'd have complained that the relator had to be an insider which i think is wrong now often him maybe even usually the relator will be an insider but i don't think that's a legal requirement well but how do you then if and i and i take with respect what you just said how do you take how do you handle this so he says he has no access to information records underlying finance bill for work performed or materials provided related to the road construction and maintenance contracts that issue in this lawsuit he has no evidence of that he has no knowledge of that so what we're doing what we're now doing is we're saying is we're going to use a action false claim without ever proving a false claim there's no proof and here a false claim and we're going to use it as a discovery device to try to pick out well you see here's the problem and it's a tough one and i this is not an easy case i think and you're helping  show why it's not an easy case but it's possible that an allegation of a false claim can be made with a great deal of particularity without seeing the bill and i'll give you an example of it and it may or may not coincide precisely with the complaint so you can really get his mind sample maybe in the abstract we have particularities of allegation of false work we have an underlying legal structure there's no allegation that a bill was submitted i didn't see the bill but we know that it's been paid there's no dispute that has been paid that strikes me as a false claim even though we don't know the amount for which the claim was made they just to say if you cannot make a proper claim if the work is shoddy unsatisfactory yep them a claim was made in the claim was paid i don't think i need to know whether the claim was for a million or for a million one million five but that assumes your honor that there's shoddy work well that's level of pleading that has to take place and if you look basically in this case the has the history of this case every single time including this time there has been a question about the sufficiency of the allegations and i read and i wasn't involved at the time but i read the order that was signed that remanded this case for another chance i don't understand that and frankly by and large the allegations are no different than they were you can maybe pick out one here and there example so if if in reading the glacier highland cup but allegations i believe that this satisfied rule nine b do i reverse the district court and tiredly or do i have to go through project by project to decide between you and the and the other two defendants which ones qualify and which ones don't i think you do ok if you do there's enough to go by a project by that we think there is sufficient particularly with the claims made in paragraphs one twenty nine one can do one is that enough to reverse entirely or do we have to go through each defendant and each project it's unnecessary in my opinion i think as a bright line rule this court could reverse on the bright line rule and remand it back i think even if we even if even if that was did we just found one example well if there were other examples of other claims that were deficient that the court found deficient that could point that out but i don't i don't think that's necessary i don't what's happened here is that there was no to say i mean i picked out that one project but that was because i was trying to help you i think the vast majority of your allegations are completely deficient and i so i have the exact same question the ju pose there might be four or five that are like the one that i picked but there's the rest of it is definitely not sufficient so what you're saying that we would just say that well what we found is all we found one we just send it back and  to go forward on the whole complaint i'm sorry just one for i didn't understand you were that you had thought the others were deficient because i find them all quite i definitely do not i just let me be clear i definitely do not i was picking that one because i thought that was your best one but the rest i do not think arse official i went through in the brief where i lay out the specifics of the details of where they made falsities and on each project we talk about how much was claimed basically the  working in the field and not in the billing department was able to see all of the stuff that was going on and we put it in great detail here there's there's nothing further that needs to be said for the sentenced to be  notice of the claims there's nothing stopping after this claims go forward for the defendants from coming up with actual defenses we didn't lie about this we didn't take in the average of that all of those things can be litigated in the course of action going forward but the whole purpose of rule nine and twelve b six is to spare the defendant from the considerable expense of discovery and david frankly the risk that you might turn up something that you don't know know your honor we're not searching none of these things are going after projects we don't know mr perry worked on these projects saw the work going on saw the line going saw the falsification of the documents going on and we know now that these roads had failed he knew that they were going to fail or he said he he predicted that they would based upon the work but we can see what's happened with the conditions of these roads and we can show from the forensic investigation that it is these very types of things that failure do compaction the failure to do batch tolerances correctly these are the kinds of things entirely unpalatable in this case surely these oregon or highway construction projects by these defendants that we've listed here they're at their core at their foundation are failing and surely roads in those conditions are