PAGE 1 – OPINION AND ORDER

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

UNITED STATES OF AMERICA,

Plaintiff,

v.

PACIFIC COAST MARITIME AGENCY,

PAUL SOGOTIS, Individually,

Defendants.

Case No. 3:15-cv-02415-YY

OPINION AND ORDER

Michael H. Simon, District Judge.

Plaintiff United States of America brings this civil action against Defendants under the 

False Claims Act (“FCA”), 31 U.S.C. §§ 3729-3733. On December 29, 2015, Plaintiff filed a 

Complaint alleging that Defendants submitted false and fraudulent claims and statements to the 

United States by knowingly engaging in systemic and fraudulent overstatement of services 

rendered to the United States Transportation Maritime Administration (commonly known as 

“MARAD”) in violation of 31 U.S.C. § 3729(a)(1)(A). Defendant Paul Sogotis (“Sogotis”) has 

failed to appear in this action or answer the complaint served on him February 25, 2016. Before 

the Court is Plaintiff’s Motion for Default Judgment against Defendant Sogotis under Federal 

Rule of Civil Procedure 55(b)(2). ECF 15. For the following reasons, the Court grants in part 

Case 3:15-cv-02415-YY Document 17 Filed 09/29/16 Page 1 of 8
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Plaintiff’s motion, and will enter a default judgment against Defendant Sogotis in the amount 

of $225,769.51.

STANDARDS

Under Federal Rule of Civil Procedure 55(a), the Clerk of the Court is required to enter 

an order of default if a party against whom affirmative relief is sought fails timely to answer or 

otherwise defend an action. Fed. R. Civ. P. 55(a) (“When a party against whom a judgment for 

affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by 

affidavit or otherwise, the clerk must enter the party’s default.”). Upon the entry of default, the 

Court accepts “the well-pleaded factual allegations” of the complaint “as true.” DIRECTV, Inc. v. 

Hoa Huynh, 503 F.3d 847, 854 (9th Cir. 2007) (quoting Cripps v. Life Ins. Co. of N. Am., 980 

F.2d 1261, 1267 (9th Cir. 1992)); see also Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th 

Cir. 1977). The court, however, does not accept as admitted facts that are not well-pleaded, 

conclusions of law, or facts relating to the amount of damages. DIRECTV, 503 F.3d at 854; 

Geddes, 559 F.2d at 560; see also Derek Andrew, Inc. v. Poof Apparel Corp., 528 F.3d 696, 702 

(9th Cir. 2008) (“‘The general rule of law is that upon default the factual allegations of the 

complaint, except those relating to the amount of damages, will be taken as true.’” (quoting 

TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987))).

After default has been entered against a defendant, a court may enter a default judgment 

against that defendant. See Fed. R. Civ. P. 55(b). “The district court’s decision whether to enter a 

default judgment is a discretionary one.” Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980); 

see also Dreith v. Nu Image, Inc., 648 F.3d 779, 786 (9th Cir. 2011) (noting that a district’s court 

decision whether to enter a default judgment is reviewed for abuse of discretion). In Eitel v. 

McCool, 782 F.2d 1470 (9th Cir. 1986), the Ninth Circuit set out factors to guide a district 

court’s consideration of whether to enter a default judgment. See DIRECTV, 503 F.3d at 852 

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(noting that Eitel “set[] out factors to guide district court’s determination regarding the 

appropriateness of granting a default judgment”). 

The Ninth Circuit in Eitel held:

Factors which may be considered by courts in exercising discretion 

as to the entry of a default judgment include: (1) the possibility of 

prejudice to the plaintiff, (2) the merits of plaintiff's substantive 

claim, (3) the sufficiency of the complaint, (4) the sum of money at 

stake in the action, (5) the possibility of a dispute concerning 

material facts, (6) whether the default was due to excusable 

neglect, and (7) the strong policy underlying the Federal Rules of 

Civil Procedure favoring decisions on the merits.

Eitel, 782 F.2d at 1471-72. The “starting point” of the court’s analysis, however, “is the general 

rule that default judgments are ordinarily disfavored.” Id. at 1472.

BACKGROUND

Because a default has been entered against Sogotis, the facts as alleged by Plaintiff, 

except those relating to damages, are taken as true and are summarized herein. Defendant Pacific 

Coast Maritime Agency (“PCMA”) is a corporation with its principal place of business in 

California. It is a shipping agent and conducts business along the sea ports of the Pacific Coast, 

including Portland. Sogotis was at all relevant times President of PCMA.

From 2009 to 2011, Interocean American Shipping (“IAS”) contracted with PCMA to

serve as a ship agent to obtain tug services for the vessels in the District of Oregon. IAS was 

serving as a general agent for MARAD, to manage MARAD’s Pacific vessels. MARAD is an 

agency of the United States Department of Transportation. 

Under its contract with IAS, PCMA retained Shaver Transportation Company (“Shaver”) 

to provide services to the vessels in the District of Oregon. Shaver performed all services as 

requested and fully performed all of its obligations to Defendants. Shaver submitted invoices to 

PCMA for those services. PCMA and Sogotis knowingly participated in a fraudulent scheme to 

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falsely claim and receive payment from the United States by knowingly altering the Shaver 

invoices before submitting them for payment. Under the scheme, PCMA increased certain 

charges and deleted discounts provided by Shaver. On 11 separate occasions, PCMA submitted 

altered invoices to IAS and MARAD for payment. MARAD paid the altered invoices, resulting 

in an overpayment of $56,923.17 to PCMA. Defendants knew of these fraudulent practices and 

false statements. Defendants accepted, condoned, and used those fraudulent practices and false 

statements to increase their own earnings and profits, resulting in a loss of money to the United 

States.

On December 29, 2015, Plaintiff filed its complaint in this case, asserting that Defendants 

violated the FCA by knowingly presenting or causing to be presented to MARAD false or 

fraudulent claims for payment and by knowingly making or using a false record or statement 

material to a false or fraudulent claim. The Complaint includes the following chart that identifies 

the false invoices submitted to the United States:

Invoice 

Number

Invoice Date Final 

Payment

Date

Genuine 

Invoice 

Amt

Altered 

Invoice 

Amt

Difference

216326 09/02/2009 12/30/2009 $5,076.00 $7,153.00 $2,077.00

216460 10/19/2009 12/30/2009 $5,076.00 $7,153.00 $2,077.00

217757 04/30/2010 09/26/2010 $5,741.84 $7,217.00 $1,475.16

217929 05/28/2010 10/28/2010 $5,276.00 $7,217.00 $1,941.00

219441 01/24/2011 03/30/2011 $5,690.08 $7,217.00 $1,526.92

219586 02/18/2011 05/05/2011 $6,568.75 $14,687.00 $8,118.25

219587 02/18/2011 05/05/2011 $35,672.09 $55,198.75 $19,526.66

219605 02/22/2011 05/05/2011 $9,156.25 $20,345.00 $11,188.75

219606 02/22/2011 05/05/2011 $9,801.08 $10,812.60 $1,011.25

219826 04/04/2011 08/31/2011 $6,840.00 $10,125.00 $3,285.00

220215 05/31/2011 08/31/2011 $6,947.09 $11,643.75 $4,695.91

Total $101,845.09 $158,769.10 $56,923.17

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Sogotis properly was served with a copy of the summons and complaint on February 25, 

2016. ECF 10. Sogotis has not answered or otherwise appeared in this action. The Court entered 

an order of default against Sogotis on May 31, 2016. ECF 13. On August 11, 2016, Plaintiff filed 

a motion for default judgment against Sogotis seeking $113,846.34 (double the amount of the 

alleged overcharge of $56,923.17),1plus civil penalties in the amount of $55,000 ($5,000 for 

each of the 11 false claims Defendant presented), for a total requested judgment of $168,846.34.

ECF 15.

DISCUSSION

A. Standards

Under 31 U.S.C. § 3729(a)(1), 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. See 31 U.S.C. § 3729(a)(1)(A), (B). The factual assertions in Plaintiff’s 

Complaint, summarized above, establish those elements. Accordingly, a judgment of default is 

appropriate in this case. The Court now turns to the proper amount of that default.

Generally, any person who violates 31 U.S.C. § 3729(a)(1) “is liable to the United States 

Government for . . . 3 times the amount of damages which the Government sustains because of 

the act of that person,” as well as “a civil penalty of not less than $5,000 and not more 

than $10,000, as adjusted by the Federal Civil Penalties Inflation Adjustment Act of 1990.” 31

U.S.C. § 3729(a)(1). The civil penalty as relevant to Plaintiff’s claims is $5,500 to $11,000.

 

1

In its Complaint, Plaintiff requested treble damages (plus civil penalties). See ECF 1. In 

its Motion for Default Judgment, Plaintiff appears to explain the reduced damages request as 

aimed at increasing the likelihood of default judgment against Sogotis. See ECF 15 at 5 (“The 

sum of money at stake, considered in [Eitel] factor four, is large, but is not excessive in light of 

the Defendant’s conduct. In addition, the United States is requesting the minimum amount of 

damages provided for under the False Claims Act . . . . ”). 

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See 28 CFR § 85.3(a)(9) (establishing that for FCA violations occurring after September 29, 

1999 and before November 2, 2015, the penalty is a minimum of $5,500 and maximum 

of $11,000); see also Horn & Associates, Inc. v. United States, 123 Fed. Cl. 728, 762 n.76 (2015)

(noting that “[t]he Department of Justice, by regulation, has increased the penalties for FCA 

violations to a minimum of $5,500.00 and a maximum of $11,000.00”). The amount of damages 

sustained by the United States is ordinarily “the amount that it paid out by reason of the false 

statements over and above what it would have paid if the claims had been truthful.” United States

v. Mackby, 339 F.3d 1013, 1018 (9th Cir. 2003).

A court has discretion under certain circumstances to assess reduced damages in the 

amount of double (versus treble) damages. 31 U.S.C. § 3729(a)(2). Reduced damages may only 

be assessed if the court finds:

(A) the person committing the violation of this subsection 

furnished officials of the United States responsible for 

investigating false claims violations with all information known to 

such person about the violation within 30 days after the date on 

which the defendant first obtained the information;

(B) such person fully cooperated with any Government 

investigation of such violation; and

(C) at the time such person furnished the United States with the 

information about the violation, no criminal prosecution, civil 

action, or administrative action had commenced under this title 

with respect to such violation, and the person did not have actual 

knowledge of the existence of an investigation into such 

violation[.]

Id.

B. Analysis

Plaintiff provided to the Court copies of both the original invoices and the altered 

invoices. ECF 15-2. Plaintiff also provided the sworn declaration of the investigator into the 

allegations against Defendants. Id. This investigator reviewed the relevant documents, confirmed 

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that the invoices submitted by Defendants had been altered, and verified the amount of the 

overpayment. Id. Accordingly, the Court finds that Plaintiff has properly calculated the amount 

of damages sustained in this case by the United States. See Mackby, 339 F.3d at 1018 (noting that 

damages equal the amount overpaid by the government).

Regarding the requirement of treble or double damages, Plaintiff requests only double 

damages. Plaintiff has failed, however, to assert any basis upon which the Court may award 

reduced damages in this case. Plaintiff has not alleged or otherwise shown that Sogotis in any 

way or at any time furnished officials of the United States with information relevant to the false 

claims or cooperated with any Government investigation of those claims, let alone did so before 

this case was filed or Sogotis was aware of the investigation into his actions. Absent such 

assertions, the Court lacks the discretion to reduce damages below the otherwise statutorily 

mandated treble amount. See Vermont Agency of Nat. Res. v. U.S. ex rel. Stevens, 529 U.S. 765, 

785 n. 16 (2000) (concluding that the exception for reduced damages “applies only in some of 

those (presumably few) cases involving defendants who provide information concerning the 

violation before they have knowledge that an investigation is underway” (emphasis added)); see 

also U.S. ex rel. Kozak v. Chabad-Lubavitch Inc., 2015 WL 2235389, at *12 (E.D. Cal. May 11, 

2015) (noting that 31 U.S.C. § 3729(a)(1) “makes imposition of treble damages mandatory”)

(emphasis added). Plaintiff provides no contravening authority to support that the Court has the 

ability to award reduced damages absent the requisite findings of 31 U.S.C. § 3729(a)(2). The 

Court finds that it lacks the discretion to grant Plaintiff’s request for reduced damages in this 

case. Instead, the Court awards the statutorily required amount of treble the damages of

$56,923.17, for a total damages award of $170,769.51. See 31 U.S.C. § 3729(a)(1).

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The Court also lacks the discretion to grant Plaintiff’s requested civil penalties of $55,000 

($5,000 for each of Sogotis’s 11 false claims). As noted above, the current penalty range 

is $5,500 to $11,000. “In addition to treble damages, the FCA requires a court to award” an 

amount within the statutorily set range “for each false claim or statement submitted to the 

government[.]” In re Schimmels, 85 F.3d 416, 419 n.1 (9th Cir. 1996) (emphasis added); accord 

Horn, 123 Fed. Cl. at 762 n.76; see also U.S. ex rel. Kozak, 2015 WL 2235389, at *12 (stating 

that when a court finds that a defendant submitted false claims to the government, the FCA 

“mandates” a civil penalty of not less than $5,500 for each violation). The Court thus lacks the 

discretion to grant Plaintiff’s request for a civil penalty of only $5,000 per violation. Instead, the 

Court awards the statutorily required minimum penalty of $5,500 for each of Sogotis’s false 

claims, for total penalties of $55,000.

CONCLUSION

Plaintiff’s motion for default judgment (ECF 15) is GRANTED IN PART. Defendant 

Paul Sogotis is ordered to pay Plaintiff damages of $170,769.51, plus civil penalties in the 

amount of $55,000, for a total award of $225,769.51.

IT IS SO ORDERED.

DATED this 29th day of September, 2016.

/s/ Michael H. Simon

Michael H. Simon

United States District Judge

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