Opinion ID: 185649
Heading Depth: 3
Heading Rank: 1

Heading: Flaws In Totten's Unamended Complaint

Text: 35 This legal conclusion does not, however, mean that Totten's complaint, at least in its current form, actually states a valid claim under the False Claims Act. Indeed, as suggested above, there are several ways in which his present complaint is deficient. First, Totten has alleged merely that the Contractors knowingly presented or caused to be presented equipment to an officer or employees of the National Railroad Passenger Corporation, that was knowingly substandard or noncompliant with engineering specifications for the Superliner II Contract to obtain payments from the National Railroad Passenger Corporation ... Complaint, at ¶ 22; see also id. at ¶¶ 27, 57. However, the bare assertion that defendants delivered goods that did not conform to contractual specifications is not enough to state a violation of the FCA. Instead, in the sections relevant here, the statute proscribes only false claims — that is, actual demands for money or property, see 31 U.S.C. §§ 3729(a)(1), (a)(3); § 3729(c) — and false records or statements used to induce such claims, see § 3729(a)(2). The FCA, in other words, attaches liability, not to underlying fraudulent activity, but to the `claim for payment.' United States ex rel. Hopper v. Anton, 91 F.3d 1261, 1266 (9th Cir.1996) (quoting United States v. Rivera, 55 F.3d 703, 709 (1st Cir.1995)). And, to date, Totten has simply made no allegation that the Contractors actually made false demands or submitted false records, whether to Amtrak or to anyone else. 36 The second problem with the present complaint is that Totten has provided no basis for concluding that, even if the defendants did present claims to Amtrak, those would be claims within the meaning of § 3729(c). This provision defines claim to include a request for payment made to: 37 a contractor, grantee, or other recipient if the United States Government provides any portion of the money or property which is requested or demanded, or if the Government will reimburse such contractor, grantee, or other recipient for any portion of the money or property which is requested or demanded. 38 Thus, in order to satisfy Rule 12(b)(6), Totten would at least have to plead that the federal government provided some portion of the money requested by the Contractors, or that the government reimbursed Amtrak for what it paid out to improve the toilet systems on its trains. Though he has not yet done so, it appears that Totten is aware of this requirement, and that he informed the District Court that he was prepared to amend his complaint to allege that federal money was implicated in the specific projects at issue. See Br. for the United States of America as Amicus Curiae Supporting Appellant 14. 39 A third difficulty with the complaint as it stands is that it does not appear to satisfy Rule 9(b) of the Federal Rules of Civil Procedure. This rule requires that [i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. Totten does not argue that his complaint satisfies this standard, but instead that the rule does not apply to him because he has not alleged that defendants made fraudulent claims, but merely false ones. He suggests that because false claims are actionable under the FCA even without proof of specific intent to defraud, § 3729(b)(3), there is no averment of fraud within the meaning of Rule 9(b). We disagree. 40 Every circuit to consider the issue has held that, because the False Claims Act is self-evidently an anti-fraud statute, complaints brought under it must comply with Rule 9(b). See Bly-Magee v. California, 236 F.3d 1014, 1018 (9th Cir.2001); United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 903 (5th Cir.1997); Gold v. Morrison-Knudsen Co., 68 F.3d 1475, 1476-77 (2d Cir.1995). Totten cites no authority whatsoever for the hairsplitting distinction he seeks to draw between fraudulent and false claims under 9(b). And we can see no reason to recognize such a distinction. 41 The difference between the two categories of claims is simply the degree of scienter involved. See United States v. TDC Mgmt. Corp., 24 F.3d 292, 297 (D.C.Cir.1994) (distinction turns on whether the defendant acted with an intent to deceive). But this difference is entirely insignificant in the context of Rule 9(b)'s pleading requirements. Indeed, the rule specifically allows allegations of intent, knowledge, and other condition of mind to be averred generally. See Gold, 68 F.3d at 1477. In contrast, the circumstances that must be pleaded with specificity are matters such as the time, place, and contents of the false representations, such representations being the element of fraud about which the rule is chiefly concerned. See 5 CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1297 (2d ed.1990) (emphasis added). Therefore, in order to satisfy Rule 9(b), Totten must set forth an adequate factual basis for his allegations that the Contractors submitted false claims (or false statements in order to get false claims paid), including a more detailed description of the specific falsehoods that are the basis for his suit. See Bly-Magee, 236 F.3d at 1018-19; Columbia/HCA, 125 F.3d at 903.