N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT
THOM AS A. B ER G; e t a l., Plaintiffs - Appe lla nts,
v. HONEYW ELL INTER

NATIONAL, INC
. And HONEYW ELL, INC ., De fe nda

nts - Appe lle e s. No. 13-35617 D.C . No. 3:07-c v-00215-JW S
M EM O R ANDUM *

Appe a l from

the Unite d

Stat e s Distric t C ourt for the Distric t of Ala ska John W . Se dwic k, Distric t Judge , Pre siding Argue d and Subm itte d June 3, 2014 Anc hora ge , Ala ska B e fore : WALLAC E, W ARD LAW , a nd C HR ISTEN, C irc uit Judge s. In this qui tam a c tion unde r the Fa lse C la im s Ac t (FC A ), Thom a s B e rg and thre e othe r pla intiffs (c olle c tive ly , “ the R e l a tors” ) a lle ge tha t Hone ywe ll, Inc
. (“ Hone ywe ll” ) knowingly subm itte d fra

udule nt e n e rgy ba se line e s tim at e s to induc e the U .S. Arm

y to c ontra c t with it to ove

rha ul the e ne rgy produc tion sy ste m a t Fort 

# FIL ED
JUN 24 2014 M OLLY C. DW Y ER, CLERK U
. S
. CO URT O F APPEALS

* This disposition is not a ppropria te for public a t ion a

nd is not pre c e de nt e xc e pt a s provide d

by 9th C ir. R . 36-3.R ic ha

rdson, Ala ska . The R e lators a p pe a l from

the distric t c ourt’ s dism issa l of the ir
a c tion, whic h

dism isse d the ir First Am e n de d C om pla int (FAC ) and de nie d the ir
m otion for le a ve to a

m e nd the c om

pla int. W e have jurisdic tion pursua nt to 28 U.S.C . § 1291. W e a ffirm in pa rt, re ve rse in pa

rt, a nd re m and. 1. The distric t c ourt did not err in c onc luding tha t the FAC fa ils to ple a d Hone y we ll’ s a lle ge d fraud with suffic i e nt pa rtic ula rity to sa tisfy Fe d e ra l R

ule of C ivil Proc e dure 9(b). The FAC doe s not provide e nough “ pa rtic u la riz e d supporting de ta il” to put Hone ywe ll on notic e of the spe c ific c onduc t it m ust de fe nd. Bly -Mage e v . C

alifornia , 236 F.3d 1014, 1018 (9th C ir. 2001). The FAC ge ne ra lly a l le ge s tha

t Hone ywe ll knowingly

fa lsifie d its c a lc ulat ions of e xisting

“ ba se line ” e n e rgy

c osts a t Fort R ic h ardson a

nd fra u dule ntly proje c t e d sa

vings it kne w it c ould not a c hie ve . B ut the FAC fa ils to a lle ge how Hone ywe ll did so. 2. The distric t c ourt a buse d its disc re tion by de ny i ng le a ve to a m e nd on the s ole ba sis tha

t a ny am e ndm e nt would befutile . De nia l of le a ve to a m e nd on the g rounds of futility

is im p rope r unle ss it is “ c le ar . . . tha t the c om pla i nt c ould not be sa ve d by a n y a m e ndm e nt.” Unite d State s e x re l. Le e v . C

orinthian C

olls. , 655 F.3d 984, 995 (9th C ir. 2011) (e m pha sis a dde d) (inte rna l quota t ion m arks
om i tte d). The R e lators’ propose d Se c ond Am e nde d C o m pla int (SAC ) and the ir pre v iously

subm itte d de c la

ra t ions se t forth suffic ie nt fa c tua l de ta il to prope rly

2ple a d a

n FC A fra

ud-in-the -induc e m e nt c la i m unde r R ule 9(b). Se e Unite d State s
e x re l. He ndow

v . Univ . of Phx
. , 461 F.3d 1166, 1173 (9th C ir. 2006). The SAC
and the de c la

ra tions e xpla i n how Hone y we ll a lle ge dly

fa lsifie d its e stim a te s— for insta nc e , by ove rwriting De pa

rtm e nt of Ene rgy

softwa re to inc lude non-sta

nda rd
va lue s for he a t infiltra

tion— and ide ntify

spe c ific individua l s a lle g e dly aware of the fraud from

its inc e ption. There c ord c o nta ins suffic ie nt fa c tua l a lle ga tions for the R e lators to ple a d the “ w ho, wha t, whe n, whe re , a

nd how” of the a lle ge d fra ud. C oope r v . Pic k

e tt , 137 F.3d 616, 627 (9th C ir. 1998). The R e lators would bewe ll
se rve d, howe ve r, to c onsolida te a ll of the re le va

nt m a te ria l in one c o nc ise ple a ding that om its e xtra

ne ous a lle ga tions of m e re “ [b] a d m a th.” W

ang v . FMC

C o rp. , 975 F.2d 1412, 1420 (9th C ir. 1992). The possibility that Hone ywe ll m ay pre va il a t a late r sta ge of this litiga

tion unde r the so-c a lle d gove rnm e nt knowle dge de fe nse to FC A lia bility doe s not support thec onc l usion tha t the R e lators’ c o m

pla int c annot be sa

ve d by any a m e ndm e nt. Gove rnm e nt offic ia ls’ knowle dge of a c la im ’ s fa lsity

is not a de fe nse to lia bility , but it m a

y be “ highly

re le va nt” in de m onstra

ting tha t the gove rnm e nt
c ontra c tor “ did not subm

it its c la im

in de libe rate ignora

n c e or re c kle ss disre ga

rd of the t ruth.” Unite d State

s e x re l. Hagood v . Sonoma C nty . W a te r Age nc

y , 929 F.2d 1416, 1421 (9th C ir. 1991). This is a fa c t-spe c ific inquiry

tha t re quire s the c ourt to 3draw infe re nc e s from e vide n c e in the re c ord. S e e Hoope r v . Loc k

he e d Martin C orp. , 688 F.3d 1037, 1051 (9th C ir. 2012). It is the re fore a ppropria te “ a t the
sum m ary judgm e nt sta ge or a fte r tria l,” Unite d State s e x re l. Butle r v . Hughe

s He lic opte rs, Inc
. , 71 F.3d 321, 327 (9th C ir. 1995), not a t the m otion to dism

iss sta ge . W e de c line Hone y

we ll’ s invita

tion a t ora l a rgum e nt to a ffirm

the de nia l of le a ve to a m e nd on the a lte rnative ba s is tha t a ny am e n dm e nt would befutile be c a use the R e lators c annot sta te a pla usible c la im

for re lie f. Se e Alv are

z v . C he v ron C orp. , 656 F.3d 925, 930–31 (9th C ir. 2011). Hone ywe ll a rgue s tha t, be c a use it c ould not bepa id unde r an Ene rgy Sa vings Pe rform anc e C o ntra c t without a c hie ving sa

v i ngs, the a lle ga tion tha

t it fra udule ntly proje c te d sa

vings it kne w it c ould not a c hie ve is inhe re ntly illogic a l. The R e lat ors a lle ge , howe ve r, that Hone ywe ll be lie ve d from the outse t tha

t the Arm y would e v e ntua lly
re ne gotia te the c ontra c t on te rm s m ore fa vora b l e to Hone yw e ll e ve n if no sa vings
we re initia lly

re a liz e d. This the ory

is not im pla usible
. Ea c h pa rty sha ll be a r its own c osts. AFFIRM E D IN PART , RE V E RSE D IN PART , AND RE M ANDE D.

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