Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_03-cv-00949/USCOURTS-caed-2_03-cv-00949-19/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

EL DORADO IRRIGATION DISTRICT,

a political subdivision of the

State of California,

NO. CIV. S-03-949 LKK/GGH

Plaintiff,

v. O R D E R

TRAYLOR BROS., INC., an 

Indiana corporation,

Defendant.

 /

AND RELATED COUNTER-CLAIMS.

 /

Before the court is plaintiff’s motion to certify for

interlocutory appeal pursuant to 28 U.S.C. § 1292. Plaintiff seeks

certification of three questions all under the umbrella of this

court’s grant of summary judgment to defendants on the California

False Claims Act causes of action. See Order Filed Oct. 7, 2005.

////

////

////

Case 2:03-cv-00949-LKK -GGH Document 360 Filed 12/16/05 Page 1 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

2

I.

STANDARD

Certification is appropriate where the "order involves a

controlling question of law as to which there is substantial ground

for difference of opinion" and where "an immediate appeal from the

order may materially advance the ultimate termination of the

litigation." 28 U.S.C. § 1292(b). All three qualities must be

present in order to merit interlocutory certification; that an

issue is novel does not, in itself, make it immediately appealable.

See Krangel v. General Dynamics Corp., 968 F.2d 914, 915 (9th Cir.

1992). I address these standards below.

II.

ANALYSIS

The first question to ask is whether the False Claims Act

issues are controlling questions of law. The general standard is

that a question is controlling under § 1292(b) if resolving it on

appeal could materially affect the outcome of litigation. In re

Cement Antitrust Litig., 1020, 1026 (9th Cir. 1982). This question

is also tied to the third prong of analysis which asks whether

immediate appeal would materially advance the litigation. The

success of the False Claims Act claims is clearly controlling with

regards to certain types of damages sought, although it does not

substantially change the path that the litigation will take between

now and trial. 

The next issue is whether there is a substantial ground for

a difference of opinion on the questions which plaintiff seeks to

Case 2:03-cv-00949-LKK -GGH Document 360 Filed 12/16/05 Page 2 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

3

have certified. Each question will be addressed in turn. 

The first question that plaintiff seeks to have certified is

whether the California False Claims Act (CFCA) permits reference

to surrounding facts and circumstances when determining whether a

construction contractor’s payment applications are false claims.

The primary problem with the request for certification on this

issue is that plaintiff appears to misunderstand this court’s

ruling and thereby are primarily seeking to have a question of

fact, and not law, certified. In addressing plaintiff’s claim that

the payment applications were false claims, the court found that

the path from the applications themselves to the falsity was “too

long” and the argument was “too attenuated.” Order Filed Oct. 5,

2005 at 21. The court did not find that the law did not allow a

review of the surrounding facts and circumstances. Rather, the

court found that the circumstances in this case were simply too

convoluted to determine that there was a false claim. Therefore,

certification of this question would primarily result in an

analysis of the facts by the Ninth Circuit, and not the law. 

Section § 1292(b) requires a “controlling question of law” not

fact, and therefore it would be inappropriate for this court to

certify this question at this time. 28 U.S.C. § 1292(b); Link v.

Mercedes Benz of North America, Inc., 550 F.2d 860, 863 (3rd Cir.

1976).

The second question which plaintiff seeks to have certified

is newly raised here, it was not addressed at any point in the

papers prepared for the motions for partial summary judgment.

Case 2:03-cv-00949-LKK -GGH Document 360 Filed 12/16/05 Page 3 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

4

Plaintiff asks whether the CFCA and the Ninth Circuit recognize

“purposeful scheme” liability in the absence of express false

statements. This is a theory that has been discussed in some

federal FCA cases outside of the Ninth Circuit (it appears from the

parties papers that this has never been addressed by the Ninth

Circuit). This court cannot certify for appeal an issue that was

not decided by this court in the first place, except in unusual

circumstances, none of which have been shown here. Smith v. Arthur

Andersen LLP, 421 F.3d 989, 999 (9th Cir. 2005); United States v.

Flores-Payon, 942 F.2d 556, 558 (9th Cir.1991) ("Issues not

presented to the trial court cannot generally be raised for the

first time on appeal."). There is nothing to appeal. 

When defendants pointed this out in their opposition to the

motion for certification, plaintiff responded by stating that a

general allegation in their complaint raises the theory and that

cases that plaintiff cited in its brief rely on the theory. First,

plaintiff does not point to any specific mention of the fraudulent

scheme in their complaint, they only say that a reference to the

FCA statute itself was sufficient. Second, the fact that a theory

is addressed in two opinions (from other circuits) that were cited

for other issues in plaintiff’s briefs is hardly sufficient to show

that it was raised to this court. 

The third question plaintiff seeks certification of is the

only issue which appears to even qualify for consideration for

immediate appeal. Plaintiff seeks to have the court certify

whether the CFCA and the Ninth Circuit recognize liability on an

Case 2:03-cv-00949-LKK -GGH Document 360 Filed 12/16/05 Page 4 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

1 See Swan, 279 F.Supp.2d at 1216, n. 3; Lum v. Vision

Service Plan, 104 F.Supp.2d at 1241-42; U.S. ex rel. Hopper v.

Anton, 91 F.3d 1261, 1267 (9th Cir. 1996) (“For a certified

statement to be ‘false’ under the Act, it must be an intentional,

palpable lie. Innocent mistakes, mere negligent misrepresentations

and differences in interpretations are not false certifications

under the Act.” (internal citations omitted)); U.S. ex rel. Graves

v. ITT Educational Services, Inc., 284 F.Supp.2d 487, 497 (S.D.

Tex. 2003) (“The Fifth Circuit, with the Second, Fourth, Ninth, and

District of Columbia Circuits, has held that a claim under the

False Claims Act is ‘legally false’ only where a party

affirmatively certifies compliance with a statute or regulation as

a condition to receiving governmental payment or property”); see

also Shaw v. AAA Engineering & Drafting, Inc., 213 F.3d at 532

(10th Cir. 2000) (citing Ninth Circuit cases the court found that

“[n]ot all courts have embraced the theory that an FCA suit may be

based on an implied certification.”). But see U.S. ex rel. Holder

v. Special Devices, Inc., 296 F.Supp. 2d 1167, 1176 (C.D. Cal.

2003).

2 U.S. ex rel. Holder v. Special Devices, Inc., 296 F.Supp.2d

1167, 1176 (C.D. Cal. 2003).

5

implied certification theory. This court found that the Ninth

Circuit does not recognize the theory, based upon numerous cases

which make this point (most from other circuits) and from a recent

case out of the Eastern District which specifically states as

much.1 There is one case within the circuit which does recognize

the theory and it disputes the reading of the one Ninth Circuit

case which is most often referenced as rejecting the implied

certification theory.2 There is certainly a possibility that the

Ninth Circuit will decide otherwise, but it is questionable whether

that possibility is “substantial” in light of the number of other

circuits that also reject the theory, the general sentiment of the

lower courts, and the actual merit of the implied certification

theory. There is no compelling reason, however, why this court

should treat this question as unusual enough to qualify for early

Case 2:03-cv-00949-LKK -GGH Document 360 Filed 12/16/05 Page 5 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

6

certification. 

The final element of the test under § 1292(b) is whether

certification at this time will materially advance the ultimate

termination of the litigation. Plaintiff notes that there is a

risk that, if EID does not prevail on the fraud claims, that

collateral estoppel will not apply and therefore that a second

trial on the merits will be necessary because the False Claims Act

burden of proof is less stringent. This is true, it is possible

that if the Ninth Circuit disagrees with this court’s ruling it may

have to conduct a new trial. However, this is not an unusual

situation, it arises regularly when a court grants partial summary

judgment which dismisses a theory of liability in a case. The

grant of certification for interlocutory appeal is to be used

sparingly in cases where there is a risk of protracted litigation

which can be remedied by early appeal. In re Cement Antitrust

Litigation, 673 F.2d 1020, 1026 (9th Cir. 1982)(“the legislative

history of 1292(b) indicates that this section was to be used only

in exceptional situations in which allowing an interlocutory appeal

would avoid protracted and expensive litigation.”). 

For the above stated reasons, the motion for certification is

DENIED. 

IT IS SO ORDERED. 

DATED: December 16, 2005.

/s/Lawrence K. Karlton 

LAWRENCE K. KARLTON

SENIOR JUDGE

UNITED STATES DISTRICT COURT

Case 2:03-cv-00949-LKK -GGH Document 360 Filed 12/16/05 Page 6 of 6