Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_05-cv-00604/USCOURTS-azd-2_05-cv-00604-2/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 31:3729 False Claims Act

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

United States of America ex rel. W.

Austine Sallade, 

Plaintiff, 

vs.

Orbital Sciences Corporation, 

Defendant. 

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CV-05-0604-PHX-NVW

ORDER

The court has considered Defendant Orbital Sciences Corporation’s (“Orbital”)

Motion to Dismiss Count VI of the Second Amended Complaint for Failure to Plead

Fraud with Particularity (Rule 9(b)). (Doc. # 57). The motion is granted for the

following reasons.

Count VI of Sallade’s second amended complaint alleges that Orbital violated the

False Claims Act (“FCA”), 31 U.S.C. § 3729(a), and the Truth in Negotiations Act

(“TINA”), 10 U.S.C. § 2306a, by failing to report certain “cost and pricing data” so that it

could inflate its expected costs on a Boeing subcontract (the “CE 1 contract”), for which

it was then negotiating a price. (Doc. # 56 ¶¶ 186–194.) The court has twice dismissed

this count for failure to plead fraud with particularity. Sallade’s original complaint failed

because it did not allege that Orbital submitted a false claim for payment knowing that it

had obtained the CE 1 contract price in violation of TINA. In his first amended

Case 2:05-cv-00604-NVW Document 60 Filed 05/09/08 Page 1 of 3
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complaint, Sallade simply added the bare allegation that Orbital “was able to obtain

inflated cost recovery” because of the TINA violation. The only factual support that

Sallade included was a statement made by Orbital’s Senior Vice President, Mr. Jim Utter,

that certain cost under-runs should not be disclosed to Boeing until after completion of

the CE1 contract price negotiations. Sallade failed to allege facts showing that Orbital

did not disclose the cost under-runs during negotiations, that as a result Orbital obtained

an inflated contract price, or that Orbital ultimately did submit claims for payment based

on that fraudulently negotiated price. The court made clear that Sallade’s first amended

complaint failed Rule 9(b) because it merely assumed that Orbital submitted invoices on

the CE1 contract, and that those invoices reflected a fraudulently negotiated contract

price. 

Sallade now submits his second amended complaint. He has, for the first time,

clearly alleged in Count VI that under the CE1 contract “Orbital submitted and obtained

payment from the government on its fraudulently inflated invoices,” which “were inflated

by and as a consequence of Orbital’s knowing and intentional failure to disclose . . . its

cost under-runs.” (Id. ¶ 193.) However, he has alleged no facts beyond what already

appeared in his previous complaints to support these broad conclusions. The entire basis

for the count remains a single statement allegedly made by Mr. Utter and overheard by

Sallade before completion of the CE1 contract price negotiations. Sallade provides no

facts, such as persons, places, times, or dates, that indicate that he knows that Orbital

obtained an inflated contract price and ultimately submitted invoices reflecting that price. 

Rule 9(b) exists “to deter the filing of complaints as a pretext for the discovery of

unknown wrongs, to protect [defendants] from the harm that comes from being subject to

fraud charges, and to prohibit plaintiffs from unilaterally imposing upon the court, the

parties and society enormous social and economic costs absent some factual basis.”

Bly-Magee v. State of California, 236 F.3d 1014, 1018 (9th Cir. 2001). It requires that

broad allegations of fraud be supported by the alleged facts. United States ex rel. Lee v.

Smithkline Beecham, Inc., 245 F.3d 1048, 1051 (9th Cir. 2001) (holding that Rule 9(b)

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was not satisfied where a “broad claim had no factual support”). Count VI of Sallade’s

second amended complaint therefore fails to satisfy the requirements of Rule 9(b). 

When pressed by the court at oral argument, Sallade admitted that beyond having

overheard one statement by Mr. Utter he “[didn’t] have additional information to plead.” 

(Doc. # 53, Hr’g Tr. 25, Mar. 13, 2008.) Out of an abundance of caution, the court again

granted Sallade leave to amend Count VI and provided explicit guidance on the type of

general pleading that would fail to satisfy Rule 9(b) in this context. Despite that

guidance, Sallade has now failed to plead Count VI with particularity for a third time. 

The only explanation for Sallade’s repeated failure to add supporting detail to Count VI is

that he has no additional support for his allegations. Further leave to amend would be

futile and would only cause further delay in this case. Count VI is therefore dismissed

with prejudice. See Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir. 1995) (“Futility of

amendment can, by itself, justify the denial of a motion for leave to amend.”); Ascon

Properties, Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 1989) (“The district

court’s discretion to deny leave to amend is particularly broad where plaintiff has

previously amended the complaint.”). 

IT IS THEREFORE ORDERED that Defendant Orbital Sciences Corporation’s 

Motion to Dismiss Count VI of the Second Amended Complaint for Failure to Plead

Fraud with Particularity (Rule 9(b)) (doc. # 57) is granted and Count VI is dismissed with

prejudice. 

 DATED this 9th day of May, 2008.

Case 2:05-cv-00604-NVW Document 60 Filed 05/09/08 Page 3 of 3