In the

United States Court of Appeals

For the Seventh Circuit

No. 09-3037

UNITED STATES OF AMERICA ex rel.

DIMITRI YANNACOPOULOS,

Plaintiff-Appellant,

v.

GENERAL DYNAMICS, et al.,

Defendants-Appellees.

Appeal from the United States District Court 

for the Northern District of Illinois, Eastern Division.

No. 03 C 3012—Robert W. Gettleman, Judge.

ARGUED SEPTEMBER 21, 2010—DECIDED JULY 26, 2011

Before BAUER, SYKES, and HAMILTON, Circuit Judges.

HAMILTON, Circuit Judge. Relator Dimitri Yannacopoulos

brought this qui tam suit under the federal False

Claims Act. He alleges that defendants General

Dynamics Corporation and Lockheed Martin Corporation violated the False Claims Act in a number of ways

in a sale of F-16 fighter jets to Greece, which paid for

the jets with money borrowed from the United States.
2 No. 09-3037

The district court granted summary judgment against

Yannacopoulos, finding that no reasonable jury could

find in his favor on any of his claims. After reviewing

the voluminous record, we agree with the district court

that Yannacopoulos has not shown the existence of a

genuine issue of material fact. We affirm.

I. Background

In January 1987, General Dynamics agreed to sell to

the government of Greece 40 F-16 fighters, as well as

related services and equipment. The initial terms of this

sale were set forth in a Letter of Intent dated March 6,

1985, to which was attached a draft contract that

reflected the status of the parties’ negotiations at the

time. The terms of the Greek sale were set out in “Contract Number 5/86 for the Direct Sale of F-16 C/D Aircraft”

(“Contract 5/86”), executed on January 12, 1987, as well

as in a number of contract amendments executed over

the next several years. The total price of the Greek sale

was set at $616,497,013, with a payment schedule set

out in Annex AG to Contract 5/86.

The sale by General Dynamics to Greece was conducted under the United States’ Foreign Military Financing (“FMF”) program. Under that program, Greece

bought the fighters and related services directly from

General Dynamics, but it did so using funds that were

loaned by the United States government. General Dynamics would submit invoices for payment to the United

States, which then paid General Dynamics directly and

assessed the amount of that payment against Greece’s
No. 09-3037 3

In 1998, the Department of Defense renamed the DSAA as 1

the Defense Security Cooperation Agency. We use here the

original DSAA designation in the record.

trust account. The details of this arrangement were overseen by the Defense Security Assistance Agency (“DSAA”),

an agency of the United States Department of Defense,

which reviewed Contract 5/86 and gave the approvals

needed to use FMF funds to finance the Greek sale.1

Several years before the Greek sale, Yannacopoulos

entered into an agreement to help a General Dynamics

telecommunications subsidiary market commercial telephone equipment in Greece. That consulting arrangement was maintained between the parties until October 1983, when General Dynamics released Yannacopoulos

for undisclosed reasons. When Yannacopoulos later

learned that Greece had agreed to purchase F-16s

from General Dynamics, he claimed that he was entitled

to $39 million in commissions on the sale, which

General Dynamics refused to pay. Yannacopoulos

then sued General Dynamics. A jury rejected

Yannacopoulos’ claims, and the Eighth Circuit affirmed.

See Yannacopoulos v. General Dynamics Corp., 75 F.3d 1298

(8th Cir. 1996).

Relying, at least in part, on information obtained in

the course of that lawsuit against General Dynamics,

Yannacopoulos filed this suit against General Dynamics

and Lockheed alleging numerous violations of the

False Claims Act in relation to the Greek sale. After

extensive discovery, the defendants moved for partial
4 No. 09-3037

In 2009, Congress amended the False Claims Act, Pub. L. 2

111-21, § 4(a)(1), making those amendments generally applicable only to conduct occurring on or after May 20, 2009,

Pub. L. 111-21, § 4(f). The one exception is the amendment

to section 3729(a)(1)(B), which applies to cases, such as this,

that were pending on or after June 7, 2008. Id.

summary judgment. The district court granted the defendants’ motion, United States ex rel. Yannacopoulos v.

General Dynamics, 2007 WL 495257 (N.D. Ill. Feb. 13,

2007), but later reconsidered its grant of summary judgment regarding Yannacopoulos’ claim based on the

Economic Price Adjustment clause proposed for Contract 5/86, United States ex rel. Yannacopoulos v. General

Dynamics, 2007 WL 1597670 (N.D. Ill. May 31, 2007).

General Dynamics filed a renewed motion for summary judgment on that claim, and both defendants

moved for summary judgment on the remainder of

Yannacopoulos’ claims. The district court granted the

defendants’ motions in their entirety. United States ex rel.

Yannacopoulos v. General Dynamics, 636 F. Supp. 2d 739

(N.D. Ill. 2009). This appeal followed.

II. The False Claims Act and the Standard of Review

The False Claims Act makes it unlawful to knowingly

(1) present or cause to be presented to the United States

a false or fraudulent claim for payment or approval,

31 U.S.C. § 3729(a)(1) (2006); (2) make or use a false

record or statement material to a false or fraudulent

claim, § 3729(a)(1)(B); or (3) use a false record or state2

ment to conceal or decrease an obligation to pay money
No. 09-3037 5

to the United States, § 3729(a)(7) (2006). Under the Act,

private individuals such as Yannacopoulos, referred to

as “relators,” may file civil actions known as qui tam

actions on behalf of the United States to recover

money that the government paid as a result of conduct

forbidden under the Act. Glaser v. Wound Care Consultants,

Inc., 570 F.3d 907, 912 (7th Cir. 2009). As an incentive

to bring suit, a prevailing relator may collect a substantial percentage of any funds recovered for the

benefit of the government. Id. To establish civil liability

under the False Claims Act, a relator generally must

prove (1) that the defendant made a statement in order

to receive money from the government; (2) that the statement was false; and (3) that the defendant knew the

statement was false. E.g., United States ex rel. Gross v.

AIDS Research Alliance-Chicago, 415 F.3d 601, 604 (7th

Cir. 2005).

In this appeal, Yannacopoulos claims that the

defendants made a number of false statements to the

United States to obtain payments for the Greek sale. We

consider them in turn. First, he contends that General

Dynamics lied about its use of funds loaned by the

United States to capitalize a Greek business development company, as required by the terms of Contract 5/86.

Next, he says that General Dynamics failed to

disclose promptly to the United States its decision

to delete the Economic Price Adjustment clause from

the draft contract. Yannacopoulos also argues that

General Dynamics made misrepresentations relating to

Contract 5/86’s provisions concerning spare part

purchases and an ill-fated “depot program.” Finally,
6 No. 09-3037

The False Claims Act was enacted in 1863, in the midst of the 3

Civil War, in response to flagrant frauds committed against

the government, such as selling defective rifles and artillery

shells filled with sawdust instead of explosives. See J. Randy

Beck, The False Claims Act and the English Eradication of Qui

Tam Legislation, 78 N.C. L. Rev. 539, 555 (2000). The claims

here, arising from a complex, long-term contract involving

many contingencies, allowances, predictions, and amendments, are considerably more difficult to prove than those

simpler frauds.

he claims that after Lockheed assumed General Dynamics’

obligations under Contract 5/86, Lockheed made a

number of misrepresentations in two amendments to

the contract.3

We review de novo the district court’s grant of summary judgment against Yannacopoulos on these claims.

Omnicare, Inc. v. UnitedHealth Group, Inc., 629 F.3d 697,

705 (7th Cir. 2011). Summary judgment is appropriate

when the pleadings and submissions in the record

indicate the absence of any genuine issues of material

fact, so that the moving parties are entitled to judgment

as a matter of law. Midwest Imports, Ltd. v. Coval, 71 F.3d

1311, 1317 (7th Cir. 1995). As the party opposing summary judgment, Yannacopoulos is entitled to the benefit

of any reasonable inferences in his favor that are supported by the record. Jakubiec v. Cities Service Co., 844

F.2d 470, 471 (7th Cir. 1988). We may affirm the district

court’s grant of summary judgment only if, upon viewing

the record in this light, no reasonable jury could have

rendered a verdict in Yannacopoulos’ favor. Wilson v.

Williams, 997 F.2d 348, 350 (7th Cir. 1993).
No. 09-3037 7

In opposing summary judgment, however,

Yannacopoulos could not “rest on the allegations in

the pleadings,” but was required to present “evidentiary

material which, if reduced to admissible evidence,

may allow him to carry his burden of proof.” Reed v.

AMAX Coal Co., 971 F.2d 1295, 1299 (7th Cir. 1992). In

other words, reversal would be appropriate only if

Yannacopoulos’ evidence is sufficient to enable a reasonable jury to think it more likely than not that the

defendants violated the False Claims Act. With that

standard in mind, we turn to the merits of the claims.

III. The HBDIC Claim

Yannacopoulos’ primary claim on appeal concerns

General Dynamics’ involvement in establishing the Hellenic Business Development and Investment Company

(“HBDIC”) as part of the F-16 sale to Greece. Under

Article 35 of Contract 5/86, General Dynamics agreed

to “establish [HBDIC] in Greece . . . for the purpose of

developing and implementing Business Development

projects.” HBDIC was to be incorporated in Greece,

with General Dynamics as the majority shareholder

and the Greek government as a minority shareholder.

Once incorporated, HBDIC was to act as a venture

capital company, providing seed money and loans to

new companies in Greece.

General Dynamics agreed to capitalize HBDIC with

a total of $50 million over the course of ten years after

the signing of Contract 5/86. General Dynamics also
8 No. 09-3037

agreed to provide three “in-country management and

coordination personnel” for the initial ten years of

HBDIC’s existence. General Dynamics admits that it

paid these amounts, at least in part, using profits it

made under Contract 5/86. After five years of operation,

half of HBDIC’s profits were to be paid out as dividends

to its shareholders. After fifteen years, HBDIC was to be

dissolved (unless its funds ran out before that time and

absent action to the contrary by General Dynamics

and/or Greece), at which time all of its remaining assets

up to $50 million, as well as half of any assets over

that amount, were to revert to Greece.

Before the United States DSAA would release funds to

finance the Greek sale, it required General Dynamics to

execute a “Contractor’s Certification Agreement with

Defense Security Assistance Agency.” General Dynamics

executed two such agreements with the DSAA, one

in February 1986 relating to the draft contract, and

another in February 1987 relating to Contract 5/86 (collectively, the “Certification Agreement”). In the Certification Agreement, General Dynamics made a number of

representations regarding the Greek sale. We discuss

the relevant ones below.

Between February 1987 and August 1990, General

Dynamics submitted a number of invoices to the United

States for payment. On each invoice, General Dynamics

certified that, “to the best of [its] knowledge and belief

this invoice is in accordance with” Contract 5/86 and

the Certification Agreement. These certifications are significant because a mere breach of contract does not
No. 09-3037 9

Yannacopoulos also argues that the Arms Export Control Act, 4

22 U.S.C. § 2751 et seq., as interpreted by the DSAA, forbids the

use of United States funds for indirect offsets such as HBDIC.

In his reply brief, however, he admits that General Dynamics

“never certified compliance with [that statute]. . . . Of course

it did not.” But if General Dynamics never certified compliance

with the Arms Export Control Act, then any violations of that

act would not support a claim under the False Claims Act.

See United States ex rel. Main v. Oakland City University, 426

F.3d 914, 917 (7th Cir. 2005); United States ex rel. Lamers v. City

of Green Bay, 168 F.3d 1013, 1020 (7th Cir. 1999) (“The FCA is

a fraud prevention statute; violations of . . . regulations are not

fraud unless the violator knowingly lies to the government

about them.”); United States ex rel. Thompson v. Columbia/HCA

(continued...)

give rise to liability under the False Claims Act. See

United States ex rel. Garst v. Lockheed-Martin Corp., 328

F.3d 374, 378 (7th Cir. 2003). If the breaching party

falsely claims to be in compliance with the contract to

obtain payment, however, there may an actionable false

claim. United States ex rel. Lemmon v. Envirocare of Utah,

Inc., 614 F.3d 1163, 1168 (10th Cir. 2010) (describing

such a statement as a “legally false request for payment”), citing United States ex rel. Conner v. Salina Regional

Health Center, Inc., 543 F.3d 1211, 1217 (10th Cir. 2008).

Here, Yannacopoulos argues that General Dynamic’s

certifications were false because General Dynamics allegedly violated both (1) Contract 5/86 and (2) the Certification Agreement when it “charged the HBDIC costs

as part of the [Contract 5/86] price.” We address each

alleged violation in turn.4
10 No. 09-3037

(...continued) 4

Healthcare Corp., 125 F.3d 899, 902 (5th Cir. 1997); United States ex

rel. Hopper v. Anton, 91 F.3d 1261, 1266 (9th Cir. 1996) (“Violations of laws, rules, or regulations alone do not create a cause

of action under the FCA. It is the false certification of compliance

which creates liability when certification is a prerequisite to

obtaining a government benefit.”). To the extent Yannacopoulos’

claims are based on the theory that General Dynamics

violated the Arms Export Control Act, summary judgment

was proper.

For ease of reference, we refer to the HBDIC stock and man- 5

agement personnel collectively as the “HBDIC costs.”

A. Contract 5/86

Yannacopoulos first argues that General Dynamics’

certifications of compliance with Contract 5/86 were

false because General Dynamics breached that contract

by passing on the costs of its HBDIC investment to the

United States, as lender to Greece. In particular, he

claims that General Dynamics breached Article 9.4 of

the contract, under which General Dynamics “confirm[ed]

that the material for which payment is requested are

United States source end products.” Yannacopoulos

interprets this provision to forbid General Dynamics

from incorporating its expenditures on HBDIC stock

and management personnel into the contract price because, he insists, those expenditures were not for

“United States source end products.”5

For the sake of argument, we will assume that

Yannacopoulos is correct that the HBDIC costs were not
No. 09-3037 11

“United States source end products” within the meaning

of Article 9.4. That is not enough, however, to show that

General Dynamics breached the terms of that article,

under which General Dynamics confirmed only that the

“material for which payment is requested” was in fact

“United States source end products.” In other words,

General Dynamics could have falsely certified compliance with the contract only if the HBDIC costs constituted “material” within the meaning of Article 9.4.

Article 9.4 did not have such a broad reach. That article

required General Dynamics to confirm the U.S. origins

of the material it provided only if Greece financed “the

purchase of the items to be delivered” with United

States government loans. “Material” is not a freestanding

contractual term. It relates back to the “items” referenced

in the preceding portion of Article 9.4. See, e.g., Delta

Mining Corp. v. Big Rivers Elec. Corp., 18 F.3d 1398, 1403

(7th Cir. 1994) (noting that a court interpreting a contractual term should take account of “the context in

which the word is used”).

This relationship between “materials” and “items” is

reinforced by the ordinary meaning of the word “material.” See, e.g., Rain v. Rolls-Royce Corp., 626 F.3d 372, 379

(7th Cir. 2010) (noting that courts should use the “plain

and ordinary meaning” of a contractual term whenever

possible). As commonly defined, a “material” is a “substance or substances out of which a thing is or can be

made” or “something . . . that is to be refined and made or

incorporated into a finished effort.” The American Heritage

Dictionary of the English Language, 1109 (3d ed. 1992). The

materials covered by Article 9.4 are the individual
12 No. 09-3037

Scheideman’s precise statement was that it would have been 6

“outside the spirit and intent” of Contract 5/86 to add “a

separate contract line item . . . invoicing Greece for the capitalization costs to HBDIC.”

physical parts comprising or otherwise used in the production or provision of the “items to be delivered” under

Contract 5/86 — the engines used in the fighter jets, spare

parts, construction materials, etc. Thus, even if HBDIC

could be deemed an “item to be delivered” under

Contract 5/86 (itself an unlikely and strained reading

of the contract), HBDIC’s stock or its management personnel were not “materials” as that term was used

in Article 9.4. In other words, General Dynamics, by

complying with its obligations regarding HBDIC, was not

simultaneously violating its obligations to the United

States government.

Yannacopoulos’ other arguments for a more expansive

reading of Article 9.4 are misplaced. First, he makes

much of General Dynamics executive Douglas Scheideman’s statement that it would have been “inconsistent

with the spirit and intent of Contract 5/86” to pass

HBDIC’s costs on to Greece. The language of Article 9.4 6

is clear on its face, however, in which case “the intent of

the parties is to be derived only from the express language

of the contract.” Bratton v. Roadway Package System, Inc.,

77 F.3d 168, 173 (7th Cir. 1996) (citation omitted). Even

if one or more of the parties subjectively intended to bar

General Dynamics from spending United States funds

on the HBDIC costs, the language of Contract 5/86

simply failed to make that intent manifest.
No. 09-3037 13

Yannacopoulos also insists that Article 9.4 must

forbid the use of the United States loan funds to capitalize HBDIC because a contrary construction “would

destroy the stated contractual consideration” of Contract 5/86 — General Dynamics’ agreement to capitalize

HBDIC — and would fatally undermine Article 35’s

stated purpose of providing “near term and long term direct and substantial benefits to the Hellenic Industry,

economy, and balance of payments.” When General

Dynamics “secretly” incorporated the HBDIC costs into

the price of Contract 5/86, he insists, Greece ended up

“unknowingly pay[ing] for its own offset company.” But

if Greece intended to pay for the HBDIC costs itself,

we understand him to ask, why did it not finance

the company directly without going through General

Dynamics? Contract 5/86 cannot be read, he argues, to

permit what he characterizes as a nonsensical result. See

Futuresource LLC v. Reuters Ltd., 312 F.3d 281, 284 (7th

Cir. 2002).

This argument is not persuasive. For one thing, it was

not a secret that General Dynamics charged Greece for

the expenses it incurred in capitalizing HBDIC. Article 35

of Contract 5/86 explicitly required General Dynamics

and its two main subcontractors to capitalize HBDIC

with $50,000,000 over a ten-year period as part of the

Greek sale. Anyone who read that significant term of

Contract 5/86 should have realized that the $50 million

or more in HBDIC costs would be incorporated into

the final amount charged to Greece. Unless the sale has

an element of charity, the final amount charged for a
14 No. 09-3037

The DSAA provided a control by evaluating whether the 7

prices charged for the items in Contract 5/86 were reasonable.

In his previous lawsuit against General Dynamics, 8

Yannacopoulos made essentially the same argument, claiming

that HBDIC was “of de minimis value” and “valueless to the

Greek government” as it was structured in Contract 5/86.

Yannacopoulos, 75 F.3d at 1302 & n.3.

particular good or service will depend at least in part

on the seller’s expenses. That is why, for example, a

product purchased from an online retailer is often

less expensive than the same product purchased from a

brick-and-mortar store. The products are no different,

but the physical store must pass on to its customers

a number of expenses not incurred by the online retailer. There is no reason to believe that the Greek government or the United States government thought

that General Dynamics would charitably invest

millions of dollars in a Greek business for the benefit

of the Greek government without somehow recouping

that expense. General Dynamics’ HBDIC-related charges

were not secret and were required under the contract.7

But if Greece knew of and was willing to pay for the

HBDIC costs, Yannacopoulos asks, why didn’t Greece

just pay those costs itself? The answer is simple. Greece 8

could not have obtained a loan from the United States

government specifically to capitalize HBDIC. But if

General Dynamics capitalized HBDIC itself and rolled

its costs for doing so into the price of Contract 5/86,

Greece could obtain just such a loan from the United
No. 09-3037 15

States as part of the larger deal to arm a NATO ally

during the Cold War. General Dynamics’ involvement

effectively allowed Greece to invest in HBDIC millions

of American dollars that would have otherwise been

unavailable. And the financial benefits Greece hoped to

realize from this investment are clear: under Article 35,

HBDIC was required to begin paying dividends to the

Greek government after five years of operation and, if

HBDIC ever dissolved, to turn over to the Greek government all of its corporate assets up to $50 million, plus

half of any assets exceeding that amount. These benefits

are in addition to the economic benefits that Greece

might have realized from any new economic opportunities HBDIC provided to Greece.

Article 9.4 of Contract 5/86 simply did not prevent

General Dynamics from capitalizing HBDIC with funds

derived from the United States loans to Greece. Given

the financial benefits that Greece would realize from

such an arrangement, such indirect use of American

funds to capitalize HBDIC was part of the consideration

Greece bargained for in Contract 5/86, and the terms

that the United States government approved. Because

Article 9.4 permitted exactly what Yannacopoulos

accuses General Dynamics of doing, General Dynamics

did not breach Contract 5/86 by complying with the

same contract and therefore did not falsely certify

its compliance with that contract. To the extent

Yannacopoulos’ claim turns on that alleged breach, summary judgment for General Dynamics was appropriate.
16 No. 09-3037

B. The Certification Agreement

Yannacopoulos argues that General Dynamics also

falsely certified its compliance with the Certification

Agreement, which he interprets to forbid General Dynamics from capitalizing HBDIC. In Paragraphs 4 and 6

of that agreement, General Dynamics made three certifications relevant to this appeal: (1) that “the material or

components to be provided under the Purchase Agreement are predominantly of U.S. manufacture;” (2) that “all

non-U.S. origin or non-U.S. manufactured items and

components, and non-U.S. services procured or to be

procured specifically for this Purchase Agreement are

identified” in a document attached thereto; and (3) that,

aside from commissions and contingent fees, any

funds General Dynamics received from the United States

government would “not be used to purchase services . . .

utilized in the execution of the Purchase Agreement

from non-U.S. contractors or individuals that are not

resident in the United States of America, unless the

financing of such services is expressly authorized by

the DSAA.” Each certification, Yannacopoulos argues,

forbade General Dynamics from using United States

funds to pay for the HBDIC costs without the DSAA’s

prior authorization. Because each certification concerns

a distinct subject matter, we address each in turn.

The first certification, referring to “material or components,” did not bar General Dynamics from spending

FMF funds on the HBDIC costs. Neither stock nor management personnel can be considered “material or components,” as the first certification used those terms. As
No. 09-3037 17

This is consistent with the DSAA’s October 1985 and Feb- 9

ruary 1987 “Guidelines for FMS Loan Financing of Direct

Commercial Contracts,” which state that “items purchased

must be manufactured in the U.S. and be composed mainly of

U.S. made items, components[,] and services.” The February

1989 and July 1991 Guidelines differ only in that they

further clarify that the items must be “U.S. manufactured and

assembled.” 

we observed in our discussion of Article 9.4, the word

“material” typically refers to a substance or part from

which something is made. The term “component” also

does not reach the HBDIC aspects of the contract. See

The American Heritage Dictionary of the English Language,

387 (defining a “component” as “a constituent element,

as of a system” or a “part of a mechanical or electrical

or electrical complex”). The first certification is limited

to “material and components” capable of being “manufacture[d],” a description clearly inapplicable to stock

and management personnel.9

Yannacopoulos contends the second certification was

false because General Dynamics failed to identify the

HBDIC costs among the “non-U.S. origin or non-U.S.

manufactured items and components” and “non-U.S.

services procured or to be procured specifically for”

Contract 5/86. Turning to the second certification, we

see that General Dynamics did in fact indicate that it

had identified all such items, components, and services

in a document attached to the Certification Agreement.

General Dynamics did so by checking a box in the
18 No. 09-3037

second certification; a box in that certification informing the DSAA that such items, components, and

services could be found in Contract 5/86 was left unchecked. The document attached to the Certification

Agreement made no mention of the HBDIC costs.

In arguing the falsity of the second certification,

Yannacopoulos overlooks the undisputed fact that the

DSAA had already been notified of General Dynamics’

payment of the HBDIC costs when it received Contract 5/86

for review. In light of that undisputed disclosure, no

reasonable jury could think General Dynamics’ failure

to check the proper box in the Certification Agreement

was a material false statement, as required for liability

under the False Claims Act. See United States ex rel. Longhi

v. United States, 575 F.3d 458, 467 (5th Cir. 2009) (requiring

that false statement on which FCA claim is based be

material); United States ex rel. Wilson v. Kellogg Brown &

Root, Inc., 525 F.3d 370, 376 (4th Cir. 2008) (same); United

States ex rel. A+ Homecare, Inc. v. Medshares Management

Group, Inc., 400 F.3d 428, 443 (6th Cir. 2005) (same); see

Allison Engine Co., Inc. v. United States ex rel. Sanders,

553 U.S. 662, 665 (2008) (requiring that defendant have

intended that false statement “be material to the Government’s decision to pay or approve the false claim”);

cf. United States v. Rogan, 517 F.3d 449, 452 (7th Cir. 2008).

The Certification Agreement relating to Contract 5/86

was signed by General Dynamics in late February 1987,

weeks after Contract 5/86 was submitted to the DSAA

for review. That contract required General Dynamics to

pay the HBDIC costs and to provide management per-
No. 09-3037 19

sonnel in Greece. The best that Yannacopoulos can claim

is that General Dynamics, by neglecting to refer explicitly to Contract 5/86 in the second certification, failed

to remind the DSAA of what was already clear from

the contract itself: that General Dynamics was paying

a number of costs associated with the establishment of

a foreign business development corporation. General

Dynamics’ failure to remind the DSAA of information

set forth in some detail in the contract it had just recently

received for review could not reasonably be deemed

material to the DSAA’s decision. See Rogan, 517 F.3d at 452.

Yannacopoulos also argues that the third certification,

in which General Dynamics certified that the funds

it received from the United States government would “not

be used to purchase services . . . utilized in the execution

of the Purchase Agreement from non-U.S. contractors

or individuals that are not resident in the United States,”

was false. This language says nothing about whether

General Dynamics could expend any funds on HBDIC

stock. Corporate stock is clearly not a “service” of any

kind. Nor can this certification be read to say that General

Dynamics would not expend any funds on the HBDIC

management personnel. The third certification restricted General Dynamics’ use of government funds

only to pay for services “utilized in the execution of the

Purchase Agreement” (emphasis added). Such services

might include, for example, the manufacture of individual components installed in the F-16s sold to Greece,

or the assembly of F-16s from components manufactured in the United States or elsewhere; in other words,
20 No. 09-3037

services General Dynamics obtained for the purpose of

fulfilling the obligations it undertook under Contract 5/86.

This language simply cannot reasonably be read to

pertain to any services that may have been provided by

the HBDIC management personnel. General Dynamics

was required to certify that it was in compliance with

Contract 5/86, which required it to fund and support HBDIC. The third certification cannot be interpreted

to have required General Dynamics to violate Contract 5/86 itself.

For all of these reasons, the district court correctly

granted summary judgment for General Dynamics on

all of Yannacopoulos’ claims related to HBDIC.

IV. The “Economic Price Adjustment Clause” Claim

Yannacopoulos next claims that General Dynamics

violated the False Claims Act in relation to the “Economic

Price Adjustment Clause” found in the draft of what

eventually became Contract 5/86. Under the terms of the

Greek sale, General Dynamics was to receive payments

well before it provided all of the goods and services

Greece purchased. Because General Dynamics would

derive substantial economic benefit from these advance

payments — namely, interest on the loan funds received

from the United States on Greece’s behalf — the parties

included in the draft contract a provision entitled “Economic Price Adjustment for Advance Payments.” Under

this draft EPA clause, the total contract price was to be

reduced “for imputed interest on excess contract pay-
No. 09-3037 21

ments” by “summing the published 90-day U.S. Treasury

Bill yield rate average for each month of a calendar

year and dividing the summation by 12,” then

multiplying that number by “the amount defined in

Annex AC” of the draft contract. Annex AC, which

would define the amount needed to calculate the adjustment under the draft EPA clause, was conspicuously

absent from the draft contract.

In exchange for General Dynamics’ agreement to

deliver F-16s to Greece more quickly than was initially

contemplated, Greece agreed to delete the EPA clause

from the draft contract. On April 8, 1986, General Dynamics and Greece executed Addendum One “to supplement and amend” the draft contract. General

Dynamics sent DSAA a copy of Addendum One

in May and July of that year. Although that

addendum left the EPA clause in the draft contract, an

accompanying document explained that, as a “quid pro

quo for the accelerated delivery schedule,” the EPA

clause was “no longer applicable” under Addendum

One. At some point thereafter (the disputed date is irrelevant for reasons we discuss below), the parties

deleted the EPA clause from the draft contract as a condition for General Dynamics’ accelerated delivery of

aircraft. When Contract 5/86 was executed and submitted

to the DSAA for review on February 3, 1987, it no longer

contained the EPA clause.

By the time it executed Contract 5/86, however, General

Dynamics had already submitted $70 million in invoices to DSAA for payment in June, September, and
22 No. 09-3037

December 1986. Each of those invoices certified

that General Dynamics was in compliance with the

Certification Agreement relating to the draft contract.

Yannacopoulos contends that these interim certifications were false because General Dynamics failed to

provide the DSAA “direct unambiguous notice of

deletion of the EPA Clause” before it executed Contract 5/86, and because these invoices falsely certified

General Dynamics’ compliance with Paragraph 10 of

that Certification Agreement, which required General

Dynamics to “report[ ] to DSAA upon effect” any

“future changes to the terms of the Purchase Agreement.”

Paragraph 10 required General Dynamics to notify the

DSAA of any changes made to the EPA clause when

they took effect. The deletion of a material clause constitutes a change to the contract of which the DSAA was

to receive notice. Thus, Paragraph 10 of the Certification

Agreement required that the DSAA be notified when

the EPA clause was deleted from the draft contract.

General Dynamics does not appear to dispute that the

DSAA was first informed of the EPA clause’s deletion

when it received a copy of Contract 5/86 for review

in January 1987, some time after the invoices at issue

here had been submitted for payment. Accordingly,

we assume for the sake of argument that any invoices

submitted for payment after the parties reached a final

agreement to delete that clause, but before the DSAA

received a copy of Contract 5/86, falsely certified compliance with the Certification Agreement.

But was this presumed falsehood material for the

purposes of the False Claims Act? Put more precisely,
No. 09-3037 23

Yannacopoulos argues that General Dynamics’ communica- 10

tions to the DSAA merely “expressed GD’s negotiating position” or “communicat[ed] that Greece’s . . . version of the EPA

Clause modification was ‘no longer applicable.” He calls our

attention to nothing in the record, however, that supports

that strained interpretation.

could this falsehood have influenced (or naturally

tended to influence) the DSAA’s decision to continue

financing the Greek sale? See, e.g., Rogan, 517 F.3d at 452.

The undisputed facts show that it was not material.

Before General Dynamics submitted any of the allegedly

fraudulent interim invoices for payment, it sent the

DSAA a letter explaining that “the provision for

imputed interest in Article 11 of the Draft Contract is no

longer applicable.” By sending this letter to the DSAA,

General Dynamics notified the DSAA that, even though

the language of the EPA clause remained in the draft

contract for the time being, the parties no longer

intended for that clause to have any effect.10

Having been told that the EPA clause no longer had any

effect, why would the DSAA have cared if that clause

were later deleted by the parties? In an attempt to

answer this question, Yannacopoulos relies on former

DSAA deputy director H. Diehl McKalip’s written declaration that, “had [he] been aware that the price adjustment provision had been deleted from the parties’ final

contractual materials,” he would have recommended

that financing of the Greek sale be suspended if General

Dynamics did not “adjust[ ] the contract’s payment
24 No. 09-3037

If McKalip had been able to recall the DSAA’s approval of 11

Contract 5/86, he might have recalled, for instance, that the

DSAA had been told that the EPA clause was “under consideration for being taken out” in exchange for “accelerated aircraft deliveries” well before that clause was

actually deleted. 

This may explain why McKalip’s declaration does not

12

address a former DSAA official’s testimony that (1) the EPA

clause had nothing to do with the DSAA’s approval of the

draft contract; and (2) that the DSAA disliked that clause

because it provided for money to be returned directly to

Greece, rather than to the United States government.

schedule in view of the deletion of the [EPA] clause.” But

McKalip could not say with any certainty that he was

not aware of the EPA clause’s deletion or ineffectiveness

in the first place — McKalip read neither the draft

contract nor Contract 5/86, and he could not recall the

actual circumstances surrounding his recommendation,

explaining that “the devil . . . is in the details.” In 11

fact, McKalip could remember having approved

Contract 5/86 only because “my signature is on the

worksheet . . . so I obviously had oversight.”12

As a general matter, speculation like McKalip’s is not

sufficient to defeat (or win) summary judgment. See, e.g.,

Chiaramonte v. Fashion Bed Group, Inc., 129 F.3d 391, 402

(7th Cir. 1997). That is particularly true here, where the

undisputed facts show that, after receiving and reviewing Contract 5/86, the DSAA neither suspended

General Dynamics’ financing nor required that General

Dynamics alter the payment schedule to account for the
No. 09-3037 25

absence of the EPA clause from that contract. In other

words, the agency failed to take action when it actually

learned of the supposed misrepresentation. In that

case, speculative testimony about how that party might

have acted if it had discovered that misrepresentation earlier cannot raise a genuine issue of fact as to

materiality. See American Nat. Fire Ins. Co. v. Rose Acre

Farms, Inc., 107 F.3d 451, 458 (7th Cir. 1997) (affirming

grant of summary judgment on grounds that defendant’s

misrepresentation was not material).

If that were not enough, recall that the draft EPA clause

was incomplete and could not have been given any

specific content. Annex AC, which would have been

needed to calculate any price reductions under the

draft contract, was nowhere to be found in that draft

contract. No reasonable juror could think that the DSAA

would care about the deletion of an unenforceably

vague contract provision. Given all of this, no reasonable

juror could find that the DSAA, having taken no action

when first told that the EPA clause was “no longer applicable,” and having continued to take no action

when provided with a final contract lacking that clause,

could have been goaded into action if only it had been

told again, and a little more specifically, of the EPA

clause’s deletion at some time in between. To believe

this, one would have to assume that the DSAA would

consider the deletion of the EPA clause from the draft

contract more significant to its final approval than the

absence of such a clause from the outset. A reasonable

jury could not accept such an unlikely proposition.
26 No. 09-3037

Yannacopoulos also argues that his due process rights 13

were violated because the district court allowed General

Dynamics to present additional evidence in support of its

renewed motion for summary judgment on the EPA clause

claim without allowing him to present additional evidence of

his own. Yannacopoulos gives no reason, however, that he

was unable to include this additional evidence with the substantial amount of evidence he attached to his objection to

General Dynamics’ request for leave to file its renewed motion. Regardless, summary judgment for General Dynamics

on the EPA clause claim was appropriate even in light of the

additional evidence described in Yannacopoulos’ briefs.

Under the evidence presented on summary judgment,

a reasonable jury could conclude only that the deletion

of the “no longer applicable” EPA clause was immaterial

to the DSAA’s decision regarding its funding of the

Greek sale. Summary judgment for General Dynamics

on Yannacopoulos’ claim regarding the EPA clause

was appropriate as a matter of law.13

V. The Spare Parts Claim

Yannacopoulos next argues that General Dynamics

falsely certified its compliance with the terms of the

Certification Agreement in relation to the purchase of

spare parts under Contract 5/86. Of the total price set out

in Contract 5/86, $70 million was allocated for “Initial

Support Spares” ordered by Greece. Article 8.5 went on

to explain that the “total price for . . . Initial Support

Spares, consists of a services element and a hardware
No. 09-3037 27

element.” While the services element was “not subject to

adjustment for quantity changes,” the hardware element was “a reference planning number . . . based on

[Greece’s] forecast of this value” to be used “on an

interim basis” until that value could be adjusted to

reflect the outcome of a “spares selection conference” in

January 1987. After that conference, any adjustment to

the spare parts price would be incorporated into the

contract “as may be appropriate prior to the [March 31,

1987] payment.” Even then, however, that price

remained a mere estimate. The final price of the hardware element was to be calculated “by summing

the prices of the individual items of hardware

authorized by [Greece] during the life of the contract.”

Prior to the spares selection conference in January 1987,

Greece decided to purchase a number of spare parts

from suppliers other than General Dynamics. Despite

this news, Greece and General Dynamics did not adjust

the spare parts line item in Contract 5/86 before the

March 31, 1987 payment. General Dynamics submitted

a number of invoices to the DSAA for payment in

relation to the spare parts line item. Those invoices represented that General Dynamics was in compliance

with the Certification Agreement, under which General

Dynamics had agreed to report to the DSAA “any future

changes to the terms of the Purchase Agreement . . . upon

effect.”

Yannacopoulos claims that General Dynamics falsely

certified its compliance with the Certification Agreement

by failing to inform the DSAA of what he calls “the par-
28 No. 09-3037

ties’ understanding that they would not abide by

the deadline in Article 8.5” when it submitted these

invoices. Yannacopoulos has no evidence of any formal

agreement (written or otherwise) between the parties.

His claim is that the parties reached an implicit,

informal agreement that they would “disregard” the

violation of Article 8.5 that he says (and that we will

assume, for the sake of argument) resulted when they

failed to change the price of the spare parts line item

after Greece decided to purchase spare parts from

other suppliers.

To succeed on this claim, Yannacopoulos must show

that, when General Dynamics filed the invoices relating

to spare parts, it knew that it had failed to comply with

Article 8.5. See United States ex rel. Lamers v. City of

Green Bay, 168 F.3d 1013, 1018 (7th Cir. 1999) (observing

that “it is impossible to meaningfully discuss falsity

without implicating the [False Claims Act’s] knowledge

requirement”). The False Claims Act does not penalize

all factually inaccurate statements, but only those statements made with knowledge of their falsity. “Innocent

mistakes or negligence are not actionable under this

section.” Hindo v. University of Health Sciences / The Chicago

Medical School, 65 F.3d 608, 613 (7th Cir. 1995); see 31 U.S.C.

§ 3729(a)(2) (requiring that false statement be made

“knowingly”). For General Dynamics to have known of

its failure to comply with Article 8.5, however, it also

had to know that Article 8.5 required an alteration to

the spare parts line item prior to the March 31, 1987

payment. Article 8.5 required such an alteration only if

the initial estimate regarding the price of the spares to be
No. 09-3037 29

purchased was incorrect. If General Dynamics did not

know that Greece’s estimate regarding the price of the

spare parts line item was no longer correct, then it could

not have known that it had failed to comply with

Article 8.5 and could not be held liable under the False

Claims Act. See, e.g., Hindo, 65 F.3d at 613.

To avoid summary judgment on this claim,

Yannacopoulos needed to present evidence sufficient

to allow a reasonable jury to conclude that, by

March 1987, General Dynamics knew of facts conclusively establishing that the initial $70 million estimate

was incorrect. By basing the initial spare parts line item

on a flexible estimate rather than a firm price, General

Dynamics and Greece admitted their uncertainty about

what that line item’s price should be. Faulty calculations

are not actionable under the False Claims Act. Lamers,

168 F.3d at 1018. Yannacopoulos needed to offer evidence

that General Dynamics knew by March 31, 1987 that

Greece would never order $70 million in spare parts

over the long life of Contract 5/86. See United States ex rel.

Owens v. First Kuwaiti Gen. Trading & Contracting Co.,

612 F.3d 724, 733-34 (4th Cir. 2010) (explaining that an

estimate is fraudulent for purposes of the FCA if that

estimate is made by an individual who knows of “facts

that preclude that estimate” (emphasis added)); United

States ex rel. Siewick v. Jamieson Science & Engineering, Inc.,

214 F.3d 1372, 1378 (D.C. Cir. 2000) (same); United States

v. Foster Wheeler Corp., 447 F.2d 100, 101 (2d Cir. 1971)

(“Inflated cost estimates are quite different from fraudulent estimates.”); cf. Lamers, 168 F.3d at 1018 (noting

that “promises of future compliance” are knowingly
30 No. 09-3037

Under the FCA, a defendant lacking actual knowledge of a 14

falsehood will still be deemed to have known of that falsehood

if he acted in (1) deliberate ignorance; or (2) reckless disregard of that falsehood. 31 U.S.C. § 3729(b). Here, however,

Yannacopoulos argues only that General Dynamics and

Greece actually knew of the inaccuracy of their initial estimate

and agreed to disregard the provisions of Contract 5/86 that

purportedly required them to rectify that inaccuracy by

March 1987.

false only if the party making that promise “never intended to comply”).14

Yannacopoulos’ theory is that because General

Dynamics knew that Greece had decided to purchase

at least some spares from other suppliers, it also had to

know that a reduction in the original spare parts

estimate was necessary. This assumption, crucial to

Yannacopoulos’ claim, is simply not borne out by the

record. Greece did not base its initial $70 million estimate “on a set quantity of spares” to be purchased, but

merely provided that estimate without any explanation. Unaware of the basis for Greece’s initial estimate,

General Dynamics would have been hard pressed to

know how that estimate was affected, if at all, by

Greece’s decision to purchase some spare parts from

other suppliers. Only complicating matters is the early

date — March 1987 — by which Yannacopoulos claims

General Dynamics must have known that the $70 million

estimate was incorrect. So early in the parties’ contractual

relationship, General Dynamics could only speculate

about any effect the events of the next decade would
No. 09-3037 31

In fact, it took several years before the final price of the 15

spare parts line item was agreed upon, with a number of

price adjustments taking place during that time. The first

adjustment to that line item occurred in 1988, when the price

of the spares was reduced to $69,000,000. It was again

reduced to $30,288,097 in 1990. Ultimately, the spares line

item was reduced to the final price of $24,359,722 in 1996.

have on the total value of spare parts Greece would wish

to purchase. Further, it is hard to see how General 15

Dynamics could have known that the initial estimate

was incorrect after Greece said that it wanted to “keep

the price of the spares line item roughly at the same

level it was initially,” despite purchasing some spare

parts from other suppliers.

Given this evidence, no reasonable jury could have

concluded that General Dynamics knew that Greece

would never purchase $70 million of spare parts over

the lifetime of Contract 5/86. We can assume that

General Dynamics, upon learning that Greece intended

to purchase spares from other suppliers, suspected

that Greece might purchase fewer spare parts from

General Dynamics than initially estimated. But especially

where the initial estimate was so arbitrary, a suspicion is a far cry from actual knowledge that the initial

arbitrary estimate was no longer reliable. To prove

this claim, Yannacopoulos had to come forward with

evidence that General Dynamics knew the estimate was

incorrect before the March 31, 1987, payment, nearly a

decade before the final price for the spare parts was

decided. He has failed to do so. Summary judgment
32 No. 09-3037

against Yannacopoulos on his spare parts claim was

appropriate.

VI. The Depot Claim

Yannacopoulos also claims that General Dynamics

falsely certified its compliance with the terms of the

Certification Agreement in relation to Contract 5/86’s

depot program. Article 8.2 of Contract 5/86 contained a

$49,887,435 line item for a “depot program,” relating

to materials and equipment for use in repairing and

maintaining the F-16s. Article 8.11 explained that the

depot program was “subject to reassessment” by Greece

until no later than 12 months after Contract 5/86’s

effective date. During the time period for “reassessment,”

General Dynamics agreed to “limit the cost[s] incurred”

for the depot program to those “required to maintain

the contract delivery schedule,” which were “anticipated

to include the depot site survey, preparation of recommended lists and schedules and preparation for and

support of the depot working conference(s).” Greece

never authorized General Dynamics to begin work on the

depot program, and the parties ultimately cancelled that

program in July 1995.

General Dynamics submitted a number of invoices

relating to the depot program, each of which certified

General Dynamics’ compliance with Contract 5/86 and the

Certification Agreement. As in his spare parts claim,

Yannacopoulos contends that these certifications were

false because General Dynamics “failed to report to

[the] DSAA . . . that it had reached an [implicit] under-
No. 09-3037 33

standing with Greece to disregard the timetable imposed

by Article 8.11.” Under this “timetable,” he says, Greece

had until April 25, 1987 “to either ‘delete’ the depot

program in whole or in part, or [to] select the depot work

it wanted and authorize GD to begin performance.”

We disagree with this strained interpretation of

Article 8.11, which rests on a reading of select language

from that article without regard for its context. Although

Article 8.11 provided a limited period of time in which

Greece could “reassess” the depot program, that time

limit must be read in conjunction with the contractual language found immediately thereafter. See Delta

Mining Corp., 18 F.3d at 1403. That language required

General Dynamics to “limit the cost[s] incurred” on that

depot program during “the period of time allowed for

reassessment.” Article 8.11 did nothing to limit the

Greek government’s ability to “reassess” its interest

in the depot program at any time. Rather, that article

gave the Greek government a year in which it could

reassess its interest in that program without having to

worry about incurring unnecessary costs for a program

that it had decided not to purchase. Greece could

reassess its interest in buying the depot program after

the Article 8.11 deadline had passed, but it would do

so at its own risk. After that deadline passed, General

Dynamics was no longer prohibited from incurring

costs beyond those specifically delineated in that article,

costs that we presume were assessed against Greece

like any other costs under Contract 5/86.

Because Yannacopoulos’ claim regarding the depot program rests on an incorrect interpretation of Article 8.11,
34 No. 09-3037

the claim fails as a matter of law. The district court

was correct to grant summary judgment for General

Dynamics on that claim.

VII. The Modifications Five and Six Claims

In March 1993, defendant Lockheed acquired General

Dynamics’ Fort Worth Division and assumed all of

General Dynamics’ rights and obligations under Contract 5/86. Following its assumption of those responsibilities, Lockheed and Greece executed two modifications to Contract 5/86, both of which Yannacopoulos

now contends were “reverse false claims.”

A. The Modification Five Claim

Yannacopoulos’ first claim against Lockheed concerns

Amendment H0005 to Contract 5/86 (“Modification

Five”), executed on March 17, 1993. In February 1987,

Greece had exercised its option under Article 35 of Contract 5/86 to participate in a co-production program

with General Dynamics. Under that program, General

Dynamics was to provide technical support and materials

to Hellenic Aerospace Industry. The price of the co-production program was based on a projection regarding

the amount of support work the Hellenic Aerospace

Industry would require over the course of the program.

Each year after the first four years of that program, Greece

and General Dynamics were to “review the level of

coproduction support to be provided” to the Hellenic

Aerospace Industry. The contract provided that, if
No. 09-3037 35

Hellenic Aerospace Industry’s “actual performance” was

“such that the level of [General Dynamics’] support

[could] be reduced, the support will be reduced and the

coproduction price . . . will be reduced accordingly.” The

parties agreed to “work out the details for the implementation of [this article] during the fourth year after

the signature of [the] Contract.”

The agreed price for the co-production program was

$53,693,555. Because Hellenic Aerospace Industry produced fewer F-16 components than originally anticipated, however, less support was required to produce

those components than was initially anticipated. By

late September or October 1990, General Dynamics

had collected $47,693,487 for its co-production work,

though Greece had authorized only about $24 million

worth of co-production work by that time. In March 1993,

Greece and Lockheed executed Modification Five to

Contract 5/86, which maintained the price of the coproduction program line item at $53,693,555. Lockheed

made no refund to the United States until 1996, when it

made a refund of $7,042,940 related to the co-production

charges.

Under the False Claims Act, a “reverse false claim” is

a false statement used not to obtain payments from the

government, but to “conceal, avoid, or decrease an obligation to pay or transmit money or property to the

Government.” 31 U.S.C. § 3729(a)(7) (2006); see United

States ex rel. Bahrani v. Conagra, Inc., 465 F.3d 1189, 1194-95
36 No. 09-3037

The 2009 amendments to the False Claims Act make it 16

unlawful to “knowingly conceal[ ] or knowingly and improperly

avoid[ ] or decrease[ ] an obligation to pay or transmit money

or property to the Government,” apparently regardless of

whether such actions involve an a falsehood. Pub. L. 111-21,

§ 4(a)(1). This amendment does not apply here, however, because it applies only to conduct occurring on or after May 20,

2009. See Pub. L. 111-21, § 4(f).

(10th Cir. 2006). Yannacopoulos contends that Modifica- 16

tion Five “was a reverse false claim because it concealed

and avoided [Lockheed’s] contractual obligation to make

a coproduction-related refund by maintaining the price

of the coproduction line item unchanged at $53,693,555.”

In trying to prove this, Yannacopoulos argues that,

because General Dynamics had been overpaid for its

work on the co-production line item, it had an obligation

to pay the amount of that overpayment to the United

States government, an obligation he says Lockheed concealed when it submitted Modification Five to the government without mentioning that overpayment.

Assuming that such an obligation existed, however,

and assuming that Modification Five concealed that

obligation, Yannacopoulos’ claim can succeed only if

Modification Five was false. See, e.g., Gross, 415 F.3d

at 604; 31 U.S.C. § 3729(a)(7) (2006). Despite this,

Yannacopoulos failed to argue the falsity of Modification

Five in his opening brief. Only after Lockheed pointed

out this omission in its response brief did Yannacopoulos

offer an explanation as to how a mere contract modification — an agreement between two parties altering their
No. 09-3037 37

We reject Lockheed’s argument that, because any amounts 17

that should have been refunded in Modification Five were

allegedly later refunded in Modification Six, discussed below,

Yannacopoulos has no standing to bring his claim regarding

Modification Five. Even if those funds were later returned, the

United States was presumably harmed when it was denied the

opportunity to collect interest on the funds in its possession.

And even if the United States was not actually harmed by the

loss of any such interest funds, we may not dismiss a suit

for lack of standing “just because the plaintiff fails to prove

injury.” See, e.g., Mainstreet Organization of Realtors v. Calumet

City, 505 F.3d 742, 745 (7th Cir. 2007).

contractual obligations to one another — could be false.

First, he claims that Modification Five’s $53,693,555

price tag for the co-production line item was “false and

inflated.” Second, he argues that Modification Five

was false because “the U.S. Government recoupment

line item” in that Modification was priced at $29,047,706,

when nearly $23 million of that amount had already

been repaid to the United States. We address in turn

these alleged falsehoods, neither of which is sufficient

to give rise to liability under the False Claims Act.17

1. Modification Five’s Co-production Program Line Item

Showing the objective falsity of the price contained in

Modification Five’s co-production program line item,

however, is not as simple a task as establishing the

falsity of a statement of historical fact. A statement may

be deemed “false” for purposes of the False Claims Act
38 No. 09-3037

Even if he could meet this burden, Yannacopoulos would 18

also have to show that Lockheed knew that Greece did not

really agree to pay the amount set out in the co-production

line item, despite the fact that Greece specifically said as

much by signing Modification Five.

only if the statement represents “an objective falsehood.”

Wilson, 525 F.3d at 376, citing Lamers, 168 F.3d at 1018.

Although a breached contractual term may be considered

a falsehood in a looser sense — a false promise — a mere

breach of a contractual duty does not satisfy this standard. See United States ex rel. Garst v. LockheedMartin Corp., 328 F.3d 374, 378 (7th Cir. 2003) (observing

that a mere “fail[ure] to keep one’s promise is just

breach of contract,” not fraud); Harrison v. Westinghouse

Savannah River Co., 176 F.3d 776, 789 (4th Cir. 1999) (affirming dismissal where allegations showed only “poor

and inefficient management of contractual duties”). Nor

do mere “differences in interpretation growing out of a

disputed legal question” involving the terms of a contract. See Lamers, 168 F.3d at 1018. To establish the

objective falsity of the co-production line item price in

Modification Five, Yannacopoulos needed to present

evidence showing that Greece did not in fact agree “to

pay [that amount] for the items and services to be delivered” under the co-production line item.18

None of the evidence on which Yannacopoulos

relies is sufficient to show either the falsity of the coproduction line item price in Modification Five or

Lockheed’s knowledge of that falsity. Much of that evi-
No. 09-3037 39

dence shows, at best, that General Dynamics and Greece

reached other agreements regarding the co-production

program before Modification Five was executed. But

nothing about those agreements prevented Lockheed

and Greece from reaching a new agreement when they

negotiated the final terms of Modification Five. The

parties to the original agreement were not bound to

follow that agreement even after both agreed that it

was not in their best interests to do so. Yannacopoulos

also claims that General Dynamics collected millions of

dollars for work on the co-production program that was

not yet completed at the time Modification Five was

signed, but we fail to see how this goes to show that Greece

did not actually agree to pay the price set forth in that

modification. The remainder of the evidence on which

he relies — the decrease in demand for F-16 parts and

General Dynamics’ decision to no longer submit invoices in relation to the co-production program — suffer

from that same failing. None of it could enable a reasonable jury to conclude that the price of the co-production program line item in Modification Five was

objectively false, in the sense that Greece did not

actually agree to pay the price set forth in that line item.

2. Government Recoupment Line Item Price

In his reply brief, Yannacopoulos takes issue with the

fact that a $29,047,706 line item for “U.S. Government

recoupment” was included in the total contract price
40 No. 09-3037

Government recoupment was described by one deponent 19

as encompassing such things as the cost to the U.S. Government for developing the F-16.

By contrast, the facts allegedly showing the falsity of the co- 20

production line item were all discussed in Yannacopoulos’

opening brief. He failed to connect the dots adequately in that

(continued...)

set forth in Modification Five. This was false, he says, 19

because a later amendment to Contract 5/86 states that

most of this money had already been repaid to the

United States. Moreover, he claims that Article 8.7

of Contract 5/86 prohibits this line item — accurate or

not — from being included in the contract price in the

first place. By placing an inaccurate price for the government recoupment line item into the total price of

Contract 5/86, Yannacopoulos says, Lockheed “inflat[ed]

the contract’s total price and conceal[ed] the fact that

[it had retained] millions of dollars of [loan] funds that

defendants had been paid for the value of work they

never performed.”

Yannacopoulos waived this argument for purposes

of this appeal. Unlike his argument regarding the coproduction program line item — the falsity of

which Yannacopoulos also argued only in his reply

brief — Yannacopoulos failed to present any facts or

argument regarding the government recoupment line

item anywhere in his opening brief’s discussion of

Modification Five. The argument was waived. E.g.,

United States v. Diaz, 533 F.3d 574, 577 (7th Cir. 2008).20
No. 09-3037 41

(...continued) 20

brief, but a finding of waiver on that issue would not be

appropriate. See Hernandez v. Cook County Sheriff’s Office, 634

F.3d 906, 913 (7th Cir. 2011) (“While arguments made for the

first time in a reply brief are generally treated as waived, it

does not necessarily follow that arguments that are better

developed in a reply brief are waived.”). On this issue, however, we simply had no dots to connect until we received

Yannacopoulos’ reply brief, too late to have given Lockheed

notice it might need to justify the recoupment line item.

B. The Modification Six Claim

Yannacopoulos’ final claim on appeal is that Amendment H0006 to Contract 5/86 (“Modification Six”), executed on February 26, 1996, was also a reverse false

claim. In Modification Six, Lockheed agreed to refund

to Greece $29,926,515. Of that amount, $22,883,575 related directly to the aircraft sale and $7,042,940 related

to the co-production program — an amount that Lockheed later paid to the United States to be credited to the

Greek trust fund account. On appeal, Yannacopoulos

contends that Modification Six constituted a reverse

false claim designed to conceal Lockheed’s purported

“obligation to refund tens of millions of . . . unearned

[loan] funds” to the United States government, among

other things.

To establish a reverse false claim, Yannacopoulos

must first show that Modification Six was objectively

false in some way. See Wilson, 525 F.3d at 376. He asserts

that Modification Six was false in two separate respects.

First, he claims that Annex AK to Modification Six
42 No. 09-3037

Lockheed argued in its response brief that Modification 21

Six contained no objectively false statements. In his reply,

Yannacopoulos could articulate only two alleged falsehoods.

To the extent he may believe that Modification Six was false

in some other respects, Yannacopoulos has waived any argument on those points.

was false because it “states that [the] defendants paid

to the Government . . . $29,047,706 GD collected from

Greece for recoupment,” despite the fact that $1,891,146

in “additional facilities rental recoupment” charges

included in that amount was allegedly unpaid by that

time. Second, he argues that Annex AG to Modification

Six was false because it “did not . . . truthfully reconcile

the payments received by [the] defendants with the

value of the work they performed.” Rather, it set forth

“new payment schedules . . . to collect additional [loan]

funds for the remaining contract work as if [the defendants’] had retained no advance payments.” We address

each of these claims in turn, finding neither sufficient

to defeat summary judgment.21

1. The Annex AK Claim — Additional Facilities Rental

In Article 8.3 of Modification Six, Lockheed and Greece

agreed that line item 14, entitled “U.S. Government

Recoupments,” would be in the amount of $6,097,706.

(A. 408). As explained in Article 8.7 of Modification Six,

this line item represented “the amount of recoupment

that the U.S. Government has directed to be collected

by” Lockheed from Greece. This amount was to be “collected by [Lockheed] and paid to the U.S. Government
No. 09-3037 43

and is not included in the Contract Price nor . . . in the

Payment Schedule.” Article 8.7 went on to say that the

“method of payment, the frequency of payment[,] and

other payment terms and information are included in

ANNEX AK — U.S. GOVERNMENT RECOUPMENTS.”

Turning to Annex AK of Modification Six, one finds, as

of September 30, 1991, a total recoupment amount

of $29,047,706. This amount was comprised of two

discrete components: (1) $1,891,146 for what Annex

AK calls “Additional Facility Rental Recoupment”; and

(2) $27,156,560 for “Item Delivery Recoupment.” At

issue here is the amount for “Additional Facility Rental

Recoupment,” which was a charge owed to the United

States government for use of the United States’ Fort

Worth facility to produce F-16 aircraft for Greece.

Yannacopoulos argues that, because Article 8.7 discussed Annex AK in terms of “payment” rather than

“collection,” we must read that Annex as a representation that the defendants had paid the entire $29,047,706

recoupment amount to the United States Government by

the time the parties executed Modification Six. But see

Lamers, 168 F.3d at 1018 (noting that “imprecise statements” are not actionable false statements). Because

General Dynamics allegedly never paid the $1,891,146

amount for “Additional Facilities Rental Recoupment,”

Yannacopoulos insists that Annex AK was false.

Yannacopoulos misreads the language of Modification

Six. While Annex AK says that, between March 31,

1989 and September 30, 1991, General Dynamics had

collected from Greece $29,047,706 in funds designated
44 No. 09-3037

This is consistent with the minutes of Greece’s and Lock- 22

heed’s June 1995 negotiations regarding Modification Six,

which state that the modification “credits $22,950,000 against

Annex AK and [line item] 14” while the “remaining amount of

U.S. $6,097,706 consists of $4,206,560 in reserve and U.S.

$1,891,146 committed for payment to the U.S. Government for

facility rental.” (Emphasis added.)

for recoupment, it cannot be read to say that this entire

amount had already been repaid to the United States

government. Footnote 4 to that Annex states that, out of

that amount, “$22,950,000 [was] refunded to the Greece

commercial sales account of the [FMF] trust fund on

[May 17, 1991].” That amount related solely to “Item

Delivery Recoupment,” though, and not the “Additional Facility Rental” amount that Yannacopoulos

says was never paid. Footnote 5 to Annex AK went on

to explain that the remaining $6,097,706 recoupment

amount — $1,891,146 for “Additional Facility Rental”

and $4,206,560 for “Item Delivery Recoupment” — “has

been paid and moved below the line under [line item] 14.”

Footnote 5 — the crucial provision of Modification

Six — cannot reasonably be understood to say, falsely or

otherwise, that the $6,097,706 in line item 14 had already

been repaid to the United States government by the

time Modification Six was executed. Line item 14 was

the amount designated by the United States for collection from Greece. By saying that this amount “has

been paid,” footnote 5 indicates that this designated

amount has already been paid by Greece, not by

Lockheed. Because Modification Six never says that

22

the $1,891,146 for facility rental had already been paid
No. 09-3037 45

This $29,926,515 refund should not be confused with the 23

$29,047,706 recoupment amount set out in Annex AK.

to the United States, it is irrelevant whether such a statement would have been false if it had actually been made.

2. The Annex AG Claim — Reconciliation of Payments

Finally, Yannacopoulos argues that Annex AG of Modification Six “implicitly represented” that an agreedupon refund of $29,926,515 to the United States government “was the totality of [the loan] funds that [the] defendants had been paid for the value of . . . work that

they never performed.” This “implicit” representation, 23

he says, was false because Lockheed “secretly retained

over $21 million in advance payments for the value of

work it never performed.”

As noted above, a claim under the False Claims Act

requires proof of an objective falsehood. See Wilson,

525 F.3d at 376. In the context of a contractual agreement such as Modification Six, an objective falsehood requires proof that the parties did not actually reach

the agreement set forth therein. Yannacopoulos does not

claim that Lockheed and Greece did not actually agree

to the refunds set forth in Modification Six, however.

Instead, he says only that they “implicitly” represented

that the refunds provided for in that modification were

the only funds that Lockheed had been paid for work

it had not completed. But see Lamers, 168 F.3d at 1018

(noting that “imprecise statements” are not actionable

false statements). Yannacopoulos provides no eviden-
46 No. 09-3037

Because we conclude that Yannacopoulos has failed to 24

adduce sufficient evidence showing that Modifications Five

and Six were false, we do not reach the United States’ argument that the defendants had an “obligation” to return money

to the United States as required for a reverse false claim.

7-26-11

tiary support for such a strained reading between the

lines of Modification Six, apparently believing that a

bald assertion about that modification’s meaning should

suffice. It does not. See, e.g., Drake v. Minn. Min. & Mfg.

Co., 134 F.3d 878, 887 (7th Cir. 1998) (“Rule 56 demands

something more than the bald assertion of the general

truth of a particular matter, rather it requires . . . specific

concrete facts establishing the existence of the truth of

the matter asserted.”) (quotation omitted).

At its core, Yannacopoulos’ complaint is that Lockheed and Greece reached an agreement that allowed

Lockheed “to collect additional [loan] funds for the remaining contract work as if it had retained no advance

payments.” But this is nothing more than an argument

that the parties should have agreed in Modification

Six to refund more than a mere $29,926,515. Even if that

may be true as a matter of contract law and sound public

policy, that would not make Modification Six false. And

absent evidence of a knowing falsehood, Yannacopoulos’

final claim stumbles right out of the gate.24

The judgment of the district court is AFFIRMED.