IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 14-50704

United States of America, ex rel, GEORGE GAGE, 

 Plaintiff - Appellant

v.

DAVIS S.R. AVIATION, L.L.C., doing business as Challenger Spares and 

Support; CHALLENGER REPAIR GROUP, L.L.C.; ORION AIR GROUP, 

L.L.C.; BOMBARDIER, INCORPORATED; NORTHROP GRUMMAN 

CORPORATION; STEVE DAVIS, Individually; NORTHRUP GRUMMAN 

DEFENSE MISSION SYSTEMS; NORTHROP GRUMMAN SPACE AND 

MISSION SYSTEMS, INCORPORATED, 

 Defendants - Appellees

Appeal from the United States District Court

for the Western District of Texas

USDC No. 1:12-CV-904

Before BARKSDALE, SOUTHWICK, and HIGGINSON, Circuit Judges.

STEPHEN A. HIGGINSON, Circuit Judge:*

The False Claims Act is a potent remedial statute. As a counterweight 

to the statute’s power and as a shield against fishing expeditions, FCA suits 

are subject to the screening function of Federal Rule of Civil Procedure 9(b). 

 

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not 

be published and is not precedent except under the limited circumstances set forth in 5TH 

CIR. R. 47.5.4.

United States Court of Appeals

Fifth Circuit

FILED

July 14, 2015

Lyle W. Cayce

Clerk

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Relator George Gage raises allegations about the maintenance and operation

of military aircraft in a war zone; however, despite repeated opportunities, he 

has not complied with the FCA’s pleading requirements. For that reason, we

AFFIRM the district court’s dismissal of his complaint.

FACTS AND PROCEEDINGS

The following allegations come from Gage’s Third Amended Complaint 

(“TAC”). In 2009, Northrop Grumman contracted with the United States Air 

Force (“USAF”) to provide the Battlefield Airborne Communication Node 

(“BACN”)—a system critical to interservice troop communication—and to 

operate three Bombardier aircrfaft containing the BACN. Orion Air Group, 

L.L.C., in turn, subcontracted with Northrop to operate and maintain the 

BACN aircraft. Gage alleges that the critical nature of the BACN missions 

and the heavy use of the aircraft required Orion to acquire replacement parts, 

many of which were not readily available from original equipment 

manufacturers. One of the sources to which Orion looked was CSS.1

In April 2008, CSS, assisted by Bombardier, acquired a civilian 

Bombardier aircraft (Serial Number 9211) that had crash landed in Canada

(the “9211 Aircraft”). Gage alleges that parts from the 9211 Aircraft, including 

Rolls Royce engines and a Variable Frequency Generator (“VFG”), were 

defective and could present a potential safety risk. Indeed, many parts were 

listed as “suspect” on a Worldwide Communication issued by Rolls Royce

following the crash. Gage alleges that CSS sold parts from the 9211 Aircraft 

to Orion, which installed them on BACN aircraft. On June 28, 2010, an Orionoperated BACN aircraft containing the 9211 Aircraft’s VFG suffered a 

“catastrophic incident” over Afghanistan after the VFG exploded. Gage alleges 

 

1 In this opinion, “CSS” refers to defendants Davis S.R. Aviation, L.L.C. d/b/a 

Challenger Spares and Support; Challenger Repair Group, L.L.C., and Steve Davis, 

individually.

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that defendants were part of a scheme to defraud the government whereby CSS 

and Bombardier supplied non-conforming parts to Orion, who installed them 

on aircraft as Northrop’s subcontractor in violation of contractual or regulatory 

requirements.

Relator Gage’s involvement in this case stems from his participation in 

a prior lawsuit that also arose from the crash of the 9211 Aircraft. In May 

2010, CSS sued Rolls Royce in the Western District of Texas, alleging that Rolls 

Royce made false statements in the Worldwide Communication about the 

condition of the engines acquired by CSS in an attempt to prevent CSS from 

selling the engines on the open market. CSS alleged that it was damaged 

because it was forced to lease the engines to Orion for less than CSS would 

have received had Rolls Royce not issued the advisory. Gage asserts that he 

learned of defendants’ false claims during his review of Rolls Royce documents 

while employed as an expert for Rolls Royce during that litigation.

On September 27, 2012, Gage filed his initial qui tam complaint. After 

Gage filed a First Amended Complaint, the government declined to intervene. 

Gage then filed a Second Amended Complaint. After a hearing, the district 

court granted defendants’ motions to dismiss but permitted Gage a “final 

opportunity” to amend his complaint to comply with Rule 9(b). Defendants 

again filed motions to dismiss the resulting TAC, and CSS filed a motion for 

sanctions, claiming that Gage had violated a protective order in the Rolls Royce

litigation. On July 2, 2014, the district court dismissed both the TAC and 

CSS’s motion for sanctions. The district court held that most of Gage’s claims 

were foreclosed by the public disclosure bar, and that no claims were pled 

adequately under Rule 9(b). Gage was denied leave to amend a fourth time,

and appeals the district court’s dismissal with prejudice.

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DISCUSSION

I.

The dispositive issue on appeal is whether the district court properly 

dismissed the TAC for failure to state a claim with particularity.

A.

This court reviews a district court’s dismissal of a complaint for failure 

to state a claim de novo, accepting as true the plaintiff’s well-pleaded factual 

allegations. United States ex rel. Steury v. Cardinal Health, Inc. (“Steury I”), 

625 F.3d 262, 266 (5th Cir. 2010). “The plaintiff’s factual allegations must 

support a claim to relief that is plausible on its face and rises above mere 

speculation.” Id. An FCA complaint must meet the heightened pleading 

standard of Rule 9(b). To allege fraud, “a party must state with particularity 

the circumstances constituting fraud.” Fed. R. Civ. P. 9(b). “Rule 9(b) requires, 

at a minimum, that a plaintiff set forth the ‘who, what, when, where, and how’ 

of the alleged fraud.” Id. (internal quotation marks and citation omitted); see 

also United States ex rel. Doe v. Dow Chem. Co., 343 F.3d 325, 329 (5th Cir. 

2003) (“The time, place and contents of the false representations, as well as the 

identity of the person making the misrepresentation and what [that person] 

obtained thereby must be stated . . . in order to satisfy Rule 9(b).” (alteration 

in original) (internal quotation marks and citation omitted)).

B.

Any person who “knowingly presents, or causes to be presented, a false 

or fraudulent claim for payment or approval” or who “knowingly makes, uses, 

or causes to be made or used, a false record or statement material to a false or 

fraudulent claim” is liable under the FCA. 31 U.S.C. § 3729(a)(1)(A)–(B). “[T]o 

state a claim under the FCA, a plaintiff must allege: (1) a false statement or 

fraudulent course of conduct; (2) made or carried out with the requisite 

scienter; (3) that was material; and (4) that is presented to the Government.” 

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Steury I, 625 F.3d at 267 (citing United States ex rel. Longhi v. Lithium Power 

Techs., Inc., 575 F.3d 458, 467 (5th Cir. 2009)).

C.

Gage does not allege that defendants expressly certified that parts sold 

to the government complied with any statute, regulation, or contractual 

provision. Rather, Gage’s allegations fall under the implied false certification 

theory of FCA liability. He alleges that the defendants, by selling parts to and

requesting reimbursement from the government, implied that the parts 

complied with certain contractual or regulatory provisions. See id. at 268. For 

over a decade, this court has avoided deciding whether to recognize the implied 

certification theory. See, e.g. id. (“This Court has not yet recognized the 

implied-certification theory. . . . We need not resolve the issue today, because 

in any event the factual allegations in Steury’s amended complaint provide no 

basis for implying a false certification.”); United States ex rel. Willard v. 

Humana Health Plan of Tex. Inc., 336 F.3d 375, 382 (5th Cir. 2003) (assuming 

without deciding that the implied false certification theory applies). Because 

even assuming the theory applies, we find that the district court correctly held 

that Gage’s factual allegations do not plead with particularity the required 

“who, what, when, where, and how” of an implied false claim, once again we 

defer that decision to another day.

1.

Gage’s implied false certification theory fails because he does not plead 

with particularity what was false about the claims or how they were false. A 

prerequisite for claims to be false is that they “certif[y] compliance (implicitly 

or explicitly) with some statute, regulation, or contract provision . . . .” Steury 

I, 625 F.3d at 269. To plead the “what” of a claim in a case such as this, 

therefore, a plaintiff must state with particularity the statute, regulation, or 

contract provision with which defendants have certified compliance. See id. 

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Gage does not allege that defendants violated a statute. Instead, he claims 

that defendants violated several Federal Acquisition Regulation (“FAR”) and 

Defense Federal Acquisition Regulation Supplement (“DFARS”) provisions. 

Gage does not plausibly allege that the operative contract between the USAF 

and Northrop (the “Northrop contract”) contains these provisions. He does not

directly identify any contract provision that was violated, because he 

acknowledges he has not seen the Northrop contract.2 See United States ex rel. 

Steury v. Cardinal Health, Inc. (“Steury II”), 735 F.3d 202, 206 (5th Cir. 2013) 

(holding allegations deficient because they did “not identify the contractual 

provisions” allegedly violated). Gage argues that the Northrop contract must 

contain these provisions because they are mandatory, but FAR and DFARS 

provisions are not required in all government contracts. See 48 C.F.R. § 1.104 

(“The FAR applies to all acquisitions as defined in part 2 of the FAR, except 

where expressly excluded.” (emphasis added)); see also 48 C.F.R. § 46.311(a)

(“The contracting officer shall insert the clause at 52.246-11 . . . in solicitations 

and contracts when the inclusion of a higher-level contract quality requirement 

is necessary.” (emphasis added)); see Ins. Co. of N. Am. v. Aberdeen Ins. Servs., 

Inc., 253 F.3d 878, 885 (5th Cir. 2001) (noting that some FAR provisions are 

not automatically included in government contracts). Neither has Gage 

plausibly alleged that provisions listed in the TAC are independently 

applicable to the USAF or to military aircraft in Afghanistan. See, e.g., 14 

C.F.R. § 91.9 (referring only to “civil” aircraft).3

 

2 Defendant Northrop, the only party in this action that signed the contract, disputes 

that the contract is classified. On a motion to dismiss, we accept as true all factual allegations 

contained within the complaint, so we assume the contract is classified. See Ashcroft v. Iqbal, 

556 U.S. 662, 678–79 (2009).

3 Gage criticizes the district court for not crediting his allegations that Orion breached 

a second contract—between USAF and Orion—that required Orion to follow FAR and 

DFARS. The district court was correct to discount the Orion contract because the TAC 

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Gage’s failure to allege with particularity that the Northrop contract 

includes the listed provisions, or that regulations are otherwise applicable, is 

fatal to his claim because materiality is a required element of an FCA claim. 

See Steury I, 625 F.3d at 267. And materiality—whether the false claim has

“a natural tendency to influence, or [is] capable of influencing, the payment or 

receipt of money or property”—is necessarily speculative without 

particularized and plausible identification of the contractual or regulatory 

provision allegedly violated. 31 U.S.C. § 3729(b)(4) (defining materiality as the 

term is used in the FCA); Steury II, 735 F.3d at 207 (“[M]erely descriptive or 

conclusory allegations about the . . . contracts [are] insufficient.”). Gage 

therefore has not sufficiently pleaded the what of a false claim. See United 

States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 903 

(5th Cir. 1997) (“Thompson’s allegations . . . amount to nothing more than 

speculation, and thus fail to satisfy Rule 9(b).”).

Even if the cited provisions did apply to defendants’ actions, Gage merely 

lists them and has not pleaded how they were violated. Gage uses conclusory 

terms such as “non-conforming” and “unapproved” to describe the parts CSS 

sold, but does not explain how the parts failed to comply with the contract to 

maintain the BACN aircraft or with any applicable regulation. The essence of 

Gage’s complaint is that CSS sold a government contractor parts from a 

crashed aircraft without informing the government of their pedigree, and at 

least one of those parts failed. Yet Gage fails to provide details on how these 

events were false or fraudulent. Gage concedes that “there is nothing 

inherently wrong under [FAA] regulations or the [FAR] with obtaining parts 

from an accident related aircraft” and merely contends, without elaboration, 

 

references the Orion contract in a single conclusory paragraph and does not plead the “what” 

or “how” of the false claims with any particularity.

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that “the manner in which the defendants conspired to obtain the parts” 

violated the regulations. Gage has failed to allege how the parts deviated from 

any government standards. See Steury II, 735 F.3d at 206 (“[S]imply stating 

the conclusion will not do. . . . [T]he essence of the fraudulent activity of implied 

false certification of compliance cannot be gauged unless [the relator] reveals 

how the [product] deviated from the government’s specifications.”). Gage 

argues that the VFG’s failure and explosion show that it was non-airworthy 

and so failed to comply with regulations. But post hoc product failure is not 

enough, standing alone, to create an inference that the product was noncompliant at the time of sale. Cf. Casey v. Toyota Motor Eng’g & Mfg. N. Am., 

Inc., 770 F.3d 322, 326 (5th Cir. 2014) (stating the general rule that product 

failure, standing alone, is insufficient proof of a manufacturing defect under 

state products liability law).

Gage further argues that complying with the Rule 9(b) pleading 

standard is impossible because the Northrop contract is classified. We may 

relax the pleading requirements of 9(b) if “facts relating to the fraud are 

peculiarly within the perpetrator’s knowledge.” Dow Chem. Co., 343 F.3d at 

330 (internal quotation marks and citation omitted). Here, relaxation is not 

warranted. The contract is not peculiarly within Northrop’s knowledge

because the USAF, as Northrop’s counterparty, presumably also has 

knowledge of the contract. See United States ex rel. Russell v. Epic Healthcare 

Mgmt. Grp., 193 F.3d 304, 308 (5th Cir. 1999) (declining to relax the 9(b) 

standard where a government entity possessed documents containing requisite 

information), abrogated on other grounds by United States ex rel. Eisenstein v. 

City of New York, 556 U.S. 928 (2009).

2.

The TAC also fails to plead with particularity when and where

defendants made false claims. Gage states the precise dates of Bombardier’s 

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alleged submissions of parts to original equipment manufacturers for repair, 

and of CSS’s sales of parts to Orion. However, Gage does not allege with any 

specificity when Northrop—or any other defendant—presented invoices to the 

USAF. Gage alleges only that defendants submitted nearly $4 million of false 

invoices to the government between 2009 and 2011. This range is not specific 

enough to comply with Rule 9(b). See United States ex rel. Hebert v. Dizney, 

295 F. App’x 717, 722–23 (5th Cir. 2008) (allegations that defendants routinely 

submitted bills over the course of seven years were not sufficiently specific 

under 9(b)). Gage hypothesizes, in his brief and without citing the TAC, that 

the submission of invoices occurred within sixty days of the sale of the parts. 

This contention is speculative and does not withstand dismissal under Rule 

9(b). Gage also fails to plead where the alleged wrongful acts occurred.

3.

By not alleging with particularity the who, what, when, where, and how

of the alleged fraudulent scheme, Gage has failed to comply with Rule 9(b).

D.

Gage contends that the district court erred in not permitting him to

amend his complaint for a fourth time. We review a district court’s denial of 

leave to amend a pleading for abuse of discretion. See Steury I, 625 F.3d at 

266. “The district court properly exercises its discretion . . . when it denies 

leave to amend for a substantial reason, such as undue delay, repeated failures 

to cure deficiencies, undue prejudice, or futility.” United States ex rel. Spicer 

v. Westbrook, 751 F.3d 354, 367 (5th Cir. 2014). The district court denied Gage 

leave to amend because it determined that he had years and several chances 

to refine his pleadings, he was previously warned that the TAC would be his 

last chance, and “leave to amend would be wholly futile.” Gage does not 

identify new allegations that would make amendment effective. Instead, he 

reargues that the TAC already satisfies the requirements of Rule 9(b) and says

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that he would name additional defendants if granted leave to amend.4 The 

district court did not abuse its discretion in determining that Gage has had 

sufficient opportunity to plead his claims and that further amendment would 

be futile.5

II.

We therefore hold that this case was properly dismissed with prejudice 

for failure to plead fraud with particularity. “Because this Court may affirm 

on any grounds supported by the record below,” we need not address the 

interesting and difficult jurisdictional questions concerning the public 

disclosure and original source doctrines. Dow Chem. Co., 343 F.3d at 330.

CONCLUSION

For the foregoing reasons, we AFFIRM the judgment of the district court.

 

4 Gage also argues that he is no longer constrained from including detailed allegations 

in the TAC because the specter of sanctions for violating the protective order in the Rolls 

Royce litigation has been removed. The motion for sanctions was dismissed, not denied, so 

Gage has not shown that he may freely add any new allegations that previously had been 

subject to the protective order. 5 Gage’s difficulty in serving Orion does not warrant granting leave to amend because 

curing it will have no effect on the deficient allegations in the complaint.

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