Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca5-03-30243/USCOURTS-ca5-03-30243-0/pdf.json

Parties Involved:
Donald Patrick J Adrian
Appellant
Biomedical Research Foundation of Northwest Louisiana
Appellee
Robert Burleson
Appellee
Anthony Chargin
Appellee
Ronald Cochran
Appellee
Lawrence Livermore National Laboratory
Appellee
Louisiana Center for Manufacturing Sciences
Appellee
Regents of the University of California
Appellee
John Sharp
Appellee
Daniel Thompson
Appellee
George Weinert
Appellee

Document Text:

United States Court of Appeals

Fifth Circuit

FILED

March 30, 2004

Charles R. Fulbruge III

Clerk

UNITED STATES COURT OF APPEALS

FIFTH CIRCUIT

____________

No. 03-30243

____________

UNITED STATES OF AMERICA, ex rel, DONALD PATRICK J

ADRIAN,

Plaintiff - Appellant,

v.

REGENTS OF THE UNIVERSITY OF CALIFORNIA;

LAWRENCE LIVERMORE NATIONAL LABORATORY;

RONALD COCHRAN; ANTHONY CHARGIN; ROBERT

BURLESON; DANIEL THOMPSON; GEORGE WEINERT;

BIOMEDICAL RESEARCH FOUNDATION OF NORTHWEST

LOUISIANA; LOUISIANA CENTER FOR MANUFACTURING

SCIENCES; JOHN SHARP,

Defendants - Appellees.

Appeal from the United States District Court

For the Western District of Louisiana

Before EMILIO M. GARZA, DeMOSS, and CLEMENT, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

Donald Patrick J. Adrian, Relator-Appellant, filed a sealed complaint under the qui tam

provision of the False Claims Act (“FCA”), 31 U.S.C. § 3730(b), on behalf of the United States of

America in the United States District Court for the Northern District of California (the “California

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It is a violation of the FCA when “any person” inter alia “knowingly presents, or causes to

be presented, to an officer or employee of the United States Government . . . a false or fraudulent

claim for payment or approval;” or “knowingly makes, uses, or causes to be made or used, a false

record or statement to get a false or fraudulent claim paid or approved by the Government;” or

“conspires to defraud the Government by getting a false or fraudulent claim allowed or paid.” 31

U.S.C. § 3729(a)(1)-(3).

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court”). The complaint alleged that the Regents of the University of California (“Regents”) as

manager of the Lawrence Livermore National Laboratory (“Livermore”) violated the FCA.1 Adrian

subsequentlyamended this complaint to include as defendantsLivermore employeesRonaldCochran,

Anthony Chargin, Robert Burleson, Daniel Thompson and George Weinert (collectively these

individuals, the Regents, and Livermore are referred to as the “California Defendants”). The first

amended complaint also named BiomedicalResearch Foundation of Northwest Louisiana, Louisiana

Center for Manufacturing, and John Sharp, the president of both companies, as defendants

(collectively these companies and Sharp are referred to as the “Louisiana Defendants”). After the

United States government declined to intervene, the complaint was unsealed and served on the

defendants.

All of the defendants filed motions to dismiss in the California court. The Louisiana

Defendants also filed a motion to transfer the case to the Western District of Louisiana (the

“Louisiana court”). The California court found that the FCA did not provide a cause of action against

the California Defendants and granted their motion to dismiss because the complaint failed to state

a claim upon which relief could be granted. See Vt. Agency of Natural Res. v. United States ex rel.

Stevens, 529 U.S. 765, 787-88, 120 S. Ct. 1858 (2000) (holding that the FCA “does not subject a

State (or state agency) to liability in [private relator] actions”); FED. R. CIV. P. 12(b)(6). The

California court then transferred the case to Louisiana. It did not rule on the Louisiana Defendants’

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 Neither party challenges, nor briefs, our jurisdiction to hear the appeal from the California

court’s order. Cf. Tel-Phonic Servs., Inc. v. TBS Int’l, Inc., 975 F.2d 1134, 1138 (5th Cir. 1992)

(holding that an out-of-circuit pre-transfer decision dismissing some of the claims against the

defendants is appealable to this Court after a district court in this circuit enters final judgment on the

remaining claims). The California court did not issue a FED.R.CIV.P. 54(b) certification in this case.

Consequently, there was no final order in this case before the Louisiana court issued its order

dismissing the Louisiana Defendants. See Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d

912, 923 (9th Cir. 2001) (noting that a motion to dismiss is not an appealable order until a court

order disposes of all of the claims or the district court issues a Rule 54(b) certification).

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motions to dismiss the first amended complaint for failure to allege fraud with particularity. FED. R.

CIV. P. 9(b). Adrian filed a seco nd amended complaint in the Louisiana court. The Louisiana

Defendants filed new motionsto dismiss claiming the second amended complaint also failed to plead

fraud with the specificity required by FED.R.CIV.P. 9(b). The Louisiana court granted these motions

to dismiss and refused to allow Adrian another opportunity to amend his complaint. Adrian appeals

both district court orders claiming that 1) the California court erred when it found the FCA did not

provide a cause of action against Livermore and the California Regents; 2) the California court erred

when it dismissed the complaint against the individual Livermore employees; and 3) the Louisiana

court erred by refusing to allow Adrian to file another amended complaint before dismissing the case

with prejudice.2 As discussed below, both the California court and the Louisiana court acted properly

in this case. 

Adrian argues the California court improperly found that the Regents is an arm of the state

ofCalifornia and that consequently the FCA did not provide a cause of action against it. See Stevens,

529 U.S. at 787-88 (the FCA does not provide a cause of action against state agencies). He contends

Stevens, where all parties agreed the defendant was a state agency, differsfrom this case because the

Regents is organized as a corporation with the power to “sue and be sued,” see CAL.CONST. art. IX,

§ 9(a), (f), and municipal or public corporat ions are subject to FCA claims. See Cook County v.

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United States ex rel. Chandler, 538 U.S. 119, 127-29, 123 S. Ct. 1239 (2003) (distinguishing

municipal or public corporations from state agencies for purposes of FCA liability). Further, Adrian

argues t hat even if the Regents is a state agency when performing its main educational mission, it

ceases to act as an arm of the state in its capacity as manager of the Livermore laboratory because

Livermore competes against private companies in a commercial arena instead of performing the

functions of a state agency.

We review de novo a dismissal for failure to state a claim under FED. R. CIV. P. 12(b)(6).

Rosborough v. Mgmt. & Training Corp., 350 F.3d 459, 460 (5th Cir. 2003). While we have not

previously determined whether the Regents is an arm of the state of California, the Ninth Circuit has

consistently found that the Regents is an arm of the state for purposes of 28 U.S.C. § 1983 and the

Eleventh Amendment even though it is organized as a corporation with the power to sue and be sued.

See, e.g., Armstrong v. Meyers, 964 F.2d 948, 949-50 (9th Cir. 1992) (“The Regents, a corporation

created by the California constitution, is an arm of the state for Eleventh Amendment purposes, and

therefore is not a ‘person’ within the meaning ofsection 1983.”). Further, the Ninth Circuit recently

held that the Regents, as manager of a university hospital, is not subject to FCA claims by private

relators because the Regents is a state entity under Stevens. See Donald v. Univ. of Cal. Bd. of

Regents, 329 F.3d 1040, 1043-44 (9th Cir. 2003). Finally, the Ninth Circuit has also held that the

Regents acts as an armofthe state when managing Livermore. See Doe v. Lawrence Livermore Nat’l

Lab., 131 F.3d 836, 839 (9th Cir. 1997) (holding that the Regents, as manager of Livermore, is

entitled to Eleventh Amendment immunity in a breach of contract case). We see no reason to deviate

from this consistent line of precedent. The California court pro perly dismissed the FCA claims

against the Regents and Livermore because those entities are California state agencies and the FCA

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 On appeal Adrian also claimed that the Regents and Livermore were subject to suit under

the FCA because 1) the “sue and be sued” language in the California constitution constitutes a waiver

of any immunity the University may have transformed the Regents into a normal corporation, and 2)

the contract with the federalgovernment in this case included a waiver ofthe Regents’ immunityfrom

FCA liability. The Regents and Livermore are state agencies for purposes of the FCA and the FCA

does not provide a cause of action against state agencies. See Stevens, 529 U.S. at 787-88. Thus, we

do not need to consider either of Adrian’s waiver arguments. Id. at 779-80 (directing courts to

consider the FCA statutory analysis before inquiring into any Eleventh Amendment immunity). 

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does not provide a cause of action against state agencies.3 See Stevens, 529 U.S. at 787-88.

Adrian argues that the California court improperly dismissed the complaint against the

Livermore employees. This claim is also reviewed de novo. Rosborough, 350 F.3d at 460; see also

Tel-Phonic Servs., Inc. v. TBS Int’l, Inc., 975 F.2d 1134, 1138 (5t h Cir. 1992) (Fifth Circuit

precedent governs the appeal of pre-transfer out-of-circuit decisions to this Court). We have not

previously considered when state agency employees qualify as “persons” under the FCA. In the

context of a § 1983 claim, however, the Supreme Court held that “a suit against a state official in his

or her official capacity is not a suit against the official but rather is a suit against the official’s office,”

and consequently “it is no different from a suit against the State itself.” Will v. Mich. Dep’t of State

Police, 491 U.S. 58, 71, 109 S.Ct. 2304 (1989); see also Kentucky v. Graham, 473 U.S. 159, 165-

66, 105 S. Ct. 3099 (1985) (“Official-capacity suits . . . ‘generally represent only another way of

pleading an action against an entity of which an officer is an agent.’ As long as the government entity

receives notice and an opportunity to respond, an official-capacity suit is, in all respects other than

name, to be treated as a suit against the entity.”) (citations omitted). In light of this precedent, we

hold that claims against state agencyemployeesin their official capacities are treated as claims against

the state agency for purposes of the FCA. See United States ex rel. Gaudineer & Comito, L.L.P. v.

Iowa, 269 F.3d 932, 936 (8th Cir. 2001) (holding that the FCA does not permit a suit against a state

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4

 As we hold that the Livermore employees were named in only their official capacities, we

need not address any potential cause of action under the FCA against state officialsin their personal

capacities.

5Adrian also argued on appealthat this case wasincorrectly transferred to the Louisiana court

because the California Defendants should not have been dismissed. We review a district court’s

decision to transfer a case for abuse of discretion. Save Power Ltd. v. Syntek Fin. Corp., 121 F.3d

947, 950 n.3 (5thCir. 1997). The California court properly dismissed the California Defendants from

this case, eliminating Adrian’s only challenge to the transfer of this case. 

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official in their official capacity). Thus, there is no FCA cause of action against the Livermore

employees in their official capacities. See Stevens, 529 U.S. at 787-88.

Although it is unclear whether the first amended complaint named the Livermore employees

in their official or in their personal capacities, the course of the proceedingsin this case demonstrates

that these employees were only named in their official capacities. See Graham, 473 U.S. at 167 n.14

(“In many cases, the complaint will not clearly specify whether officials are sued personally, in their

official capacity, or both. ‘The course of proceedings’ in such cases typically indicate the nature of

the liability sought to be imposed.”) (citations omitted). The California Defendants clearly stated, in

both the initial and the reply memoranda supporting their motion to dismiss, that the Livermore

employeesshould be dismissed because theywere only named in their official capacity. Adrian never

challenged this assertion, arguing only that these employees were subject to liability because the

Regents and Livermore were subject to liability. In its analysis of this motion to dismiss, the

California court did not distinguish between the Livermore employees and Livermore. Thus, the

course of proceedings in this case clearly indicatesthat in the first amended complaint the Livermore

employees were only named in their official and not in their personal capacities.4 The California court

correctly dismissed the Livermore employees because the FCA does not provide a cause of action

against state agency employees in their official capacity.5

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6 Adrian assertsin the issues presented portion of his briefthat the Louisiana court incorrectly

found that his second amended complaint failed to plead fraud with particularity. In the argument

portion of his brief, however, Adrian cites no cases supporting this claim, does not specifically

address the requirements of FED. R. CIV. P. 9(b), points to no facts included in the second amended

complaint fulfilling these requirements, and expressly states that his argument is focused on the

Louisiana court’s refusal to allow him another opportunity to amend. See Trico Marine Assets Inc.

v. Diamond B Marine Servs. Inc., 332 F.3d 779, 790 n.6 (5thCir. 2003) (“Issues not raised or argued

in the brief of the appellant may be considered waived and thus will not be noticed or entertained by

the court of appeals.”) (citation omitted, emphasis in original). Even assuming this claim is not

waived, Adrian still has not articulated any facts that fulfill his burden under FED. R. CIV. P. 9(b).

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Adrian claims that the Louisiana court improperly refused his request for an additional

opportunity to amend his complaint before dismissing his second amended complaint with prejudice

because it failed to plead fraud with specificity.6 FED. R. CIV. P. 9(b). We review the decision to

deny a party leave to amend its complaint for abuse of discretion. United States ex rel. Willard v.

Humana Health Plan of Tex., Inc., 336 F.3d 375, 387 (5th Cir. 2003). Leave to amend should be

freely given, FED.R.CIV.P. 15(a), and outright refusal to grant leave to amend without a justification

such as “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure

deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of

allowance of the amendment, futility of amendment, etc.” is considered an abuse of discretion.

Foman v. Davis, 371 U.S. 178, 182, 83 S. Ct. 227 (1962); see also Humana Health Plan, 336 F.3d

at 386 (citing Foman for examples of permitted reasons to deny leave to amend).

When Adrian opposed the Louisiana Defendants’ motions to dismiss before the California

court he claimed that, if necessary, he could allege additionalfactsto support hisfraud claims. Based

on this assertion, the Louisiana court asked Adrian to seek leave to amend his complaint so the court

could have all amended allegations before it when considering the pleadings. Although the order

dismissing the second amended complaint was the first time a court ruled that Adrian failed to plead

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fraud with specificity, Adrian drafted this complaint after receiving the objections raised in the

Louisiana Defendants’ motions to dismiss his first amended complaint. When the Louisiana

Defendants challenged the second amended complaint, Adrian again claimed he could add additional

detail if necessary. The Louisiana court refused to allow Adrian to file a third amended complaint,

stating “pleadingsreview is not a game where the plaintiffis permitted to file serial amendments until

he finally getsit right. One opportunity to amend, in the face of motions that spelled out the asserted

defects in the original pleadings, was sufficient under the circumstances.” 

Adrian has not indicated what additional facts he could plead that would correct the

deficiencies in his previous complaints. Accordingly, the district court did not abuse its discretion

in this case. See Humana Health Plan, 336 F.3d at 387 (holding leave to amend was properly denied

in an FCA case where the plaintiff had already had two opportunities to amend and “[t]he record

indicatesthat the second instance in which the district court granted [the Relator] leave to amend was

to cure the complaint’slack ofspecificity, which isthe same basis on which [the Relator] now argues

he should be allowed to amend for a third time”); see also Goldstein v. MCI WorldCom, 340 F.3d

238, 255 (5thCir. 2003) (finding no abuse of discretion when the plaintiff “did not proffer a proposed

second amended complaint to the district court, and did not suggest in their responsive pleading any

additional facts not initially plead that could, if necessary, cure the pleading defects raised by the

defendants”). 

For the reasons discussed above, we hold that the California court correctly dismissed the

claims against the California Defendants because the FCA does not provide a cause of action against

state agencies or state agency officials in their official capacity. The Louisiana court did not abuse

its discretion by dismissing Adrian’s claims against the Louisiana Defendantsfor failing to plead fraud

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with specificity and without granting leave to further amend the complaint. The judgments of both

district courts are AFFIRMED.

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