Court Opinion

ID: 185169
Source: CourtListenerOpinion
Date Created: 2011-02-05 02:28:38+00
Date Added: 2024-06-11T17:26:13.685013
License: Public Domain

214 F.3d 1372 (D.C. Cir. 2000)
United States of America ex rel. Joseph T. Siewick, Appellantv.Jamieson Science and Engineering, Inc., et al.,Appellees
No. 99-7090
United States Court of AppealsFOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 8, 2000Decided June 30, 2000

[Copyrighted Material Omitted]
Appeal from the United States District Court for the District of Columbia(No. 92cv00045)
Joseph J. Aronica argued the cause for appellant.  With  him on the briefs was Robert B. Norris.
Gary Howard Simpson argued the cause and filed the brief  for appellees.
Before:  Williams, Henderson and Randolph, Circuit  Judges.
Opinion for the Court filed by Circuit Judge Williams.
Williams, Circuit Judge:

1
Any person can initiate a lawsuit  in the name of the United States for substantive violations of  the False Claims Act (the "Act" or "FCA").  See 31 U.S.C.   3730(b) (authorizing action by a "person").  Such violations  include presenting to the government "a false or fraudulent  claim for payment or approval."  See id.  3729(a) (establishing liability).  Here the non-government person (known as  the relator), Dr. Joseph T. Siewick, a physicist hired by  Jamieson Science and Engineering, Inc. ("JSE") in May 1990  but laid off in December 1991, presses a claim against JSE  and two of its officers at the relevant time, Vincent T.  O'Connor and Dr. John A. Jamieson.  He argues that the  monthly invoices that JSE submitted to the government for  payment under government contracts were false claims. They were false, in his view, because JSE filed them notwithstanding alleged violations by O'Connor of a criminal statute  aimed at "revolving door" abuses by former government  employees, 18 U.S.C.  207.

2
Siewick proposes two theories to support the alleged falsity.  First, he says, the certified invoices implicitly declared  "compliance with applicable law, including Section 207," and  thus were "impliedly false."  Appellant's Br. at 11.  Second,  Siewick argues that a violation of  207 renders a government contract unenforceable.  From this supposed unenforceability he reasons that both O'Connor and Jamieson knew  that JSE was not entitled to the payments JSE requested, so  JSE's invoices claiming that JSE was entitled to payment  were false.

3
Neither of Siewick's theories convinces us that the alleged   207 violations transformed JSE's invoices into the type of  false claims made actionable by the qui tam provisions of the  FCA.  We affirm the district court's grant of partial summary judgment.

4
In 1986, the Strategic Defense Initiative Organization  ("SDIO") sought proposals for a project assessing its infrared  sensors and related technology.  O'Connor was the contract officer assigned to the project and consequently received the  proposal submitted by JSE.  Although he didn't have the  power to choose the winning bidder, he was assigned the task  of negotiating JSE's fee and the final contract price.  After a  day of negotiations, the contract was signed on December 8,  1986 by O'Connor for the United States and Jamieson for  JSE.  O'Connor retained some role in administeringthe contract, but the parties disagree as to its scope.

5
In the summer of 1987, O'Connor decided to leave government service.  He filed the requisite notice indicating his  intention to retire and began discussing employment opportunities with government contractors.  A technical representative within SDIO, Peter Franklin, mentioned to Jamieson that  O'Connor was retiring and that he would be a helpful addition  to JSE's staff.  And after Jamieson and O'Connor met,  Jamieson offered O'Connor the job of Executive Vice President of JSE, which he accepted as of November 1, 1987.

6
JSE bid on and received a second and third contract as the  previous contracts expired.  Siewick alleges that in representing JSE in matters related to these contracts, O'Connor  repeatedly violated 18 U.S.C.  207.  According to Siewick,  these violations began even before O'Connor had fully parted  company with the Navy (he had been on terminal leave from  November 1, 1987 to January 1, 1988) and continued through  to the period covered by the third contract.  Siewick claims  that these violations taint nearly every invoice submitted on  the three contracts.

7
The district court granted summary judgment in favor of  the defendants on the claims premised upon  207 violations. The court found both that Siewick's evidence was insufficient  as a matter of law to prove a violation of  207 and that even  if  207 had been violated, the violation did not transform the  invoices into false claims.  But it denied the defendants'  motion for summary judgment on Siewick's claims premised  upon padding and falsification of time sheets;  those claims  remain before the district court.  Siewick requested that the  district court enter final judgment pursuant to Fed. R. Civ. P.  54(b) on his  207 claims, and the district court granted this request after explicitly finding no just reason for delay. Siewick filed a timely appeal.

8
After hearing oral argument we ordered this case held in  abeyance pending the Supreme Court's decision in Vermont  Agency of Natural Resources v. United States ex rel. Stevens,  ___ U.S. ____, 120 S. Ct. 1858 (2000);  the Court had expressed interest in standing in qui tam actions generally,  Stevens, 120 S. Ct. at 523 (expanding cert. grant).  As the  Court ultimately found no generic lack of standing, Stevens, 120 S. Ct. at 1863, 1865, and as we see no particular infirmity  here, we turn to the merits.

9
We review a district court's grant of summary judgment de  novo;  a party is not entitled to summary judgment if a  reasonable jury could return a verdict for the nonmoving  party.  See Anderson v. Liberty Lobby, Inc., 477 U.S. 242,  248 (1986);  Aka v. Washington Hosp. Ctr., 156 F.3d 1284,  1288 (D.C. Cir. 1998) (en banc).  We assume in favor of  Siewick that his case could withstand summary judgment on  the proposition that JSE violated  207.  But we find that   207 violations would not in themselves render JSE's invoices "false claims" covered by the Act.

10
The Act establishes liability for anyone who "knowingly  presents, or causes to be presented, to an officer or employee  of the United States Government ... a false or fraudulent  claim for payment or approval."  31 U.S.C.  3729(a)(1).Siewick's problem is that because of defects in his theories  and the evidence, a reasonable jury could not find that JSE  knowingly presented a false or fraudulent claim.

11
For both theories it is essential that the vouchers and  invoices at issue here constitute "claims" within the meaning  of the Act.  They do.  A "claim" is "any request or demand,  whether under a contract or otherwise, for money or property  which is made to a contractor, grantee, or other recipient."  Id.  3729(c).  Indeed, any request for payment is properlyconsidered a claim for purposes of the FCA.  See United  States v. Neifert-White Co., 390 U.S. 228, 233 (1968);  see also United States ex. rel. Schwedt v. Planning Research Corp., 59 F.3d 196, 203 (D.C. Cir. 1995).

12
Siewick's first theory--that the vouchers made an "implicit  certification" of non-violation of  207--is a non-starter.  It is  doomed by the rule, adopted by all courts of appeals to have  addressed the matter, that a false certification of compliance  with a statute or regulation cannot serve as the basis for a  qui tam action under the FCA unless payment is conditioned  on that certification.  As the Ninth Circuit said,

13
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.

14
United States ex rel. Hopper v. Anton, 91 F.3d 1261, 1266  (9th Cir. 1996) (second emphasis added).  Courts have been  ready to infer certification from silence, but only where  certification was a prerequisite to the government action  sought.  See, e.g., Harrison v. Westinghouse Savannah River  Co., 176 F.3d 776, 793 (4th Cir. 1999) ("[The FCA] claim fails  on the pleadings because [the relator] has never asserted that  such implied certifications were in any way related to, let  alone prerequisites for, receiving continued funding.").  See  also United States ex rel. Weinberger v. Equifax, Inc., 557 F.2d 456, 461 (5th Cir. 1977);  compare United States ex rel.  Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899,  902 (5th Cir. 1997) (seeming to require that the certification  be a prerequisite to receiving funds before liability under the  FCA can attach, even where the certification is express:"false certifications of compliance create liability under the  FCA when certification is a prerequisite to obtaining a government benefit.").  Siewick points to nothing suggesting that  JSE was required to certify compliance with  207 as a  condition of its contract.  Thus his claim of implied certification fails.

15
The assessment of Siewick's second theory--that JSE's  invoices contained "expressly false" statements--turns in part  on the FCA's definition of "knowingly."  It says that a defendant acts "knowingly" if he "(1) has actual knowledge of  the information;  (2) acts in deliberate ignorance of the truth  or falsity of the information;  or (3) acts in reckless disregard  of the truth or falsity of the information."  Id.  3729(b).The key issue, then, is whether (assuming violations of  207)  JSE's claims were knowingly false or fraudulent.

16
The invoices in the record request that the U.S. Government pay JSE "the sums owing for all work performed"  under the relevant contract and certify that (1) "all these  charges are for work authorized and performed under the  referenced contract and that payment has not been received,"  (2) "all claims are consistent with this clause," and (3) "the  required deliveries ... have been made to the distribution  specified in the contract."  The parties agree that these  statements "inform[ ] the government that work which entitles JSE to reimbursement has been performed."  See Appellee's Br. at 27.  Siewick's argument is that JSE knew that the  contract was void or voidable (Siewick flips back and forth  between these characterizations), and thus knew that it was  not entitled to be paid.

17
A void contract is one under which the promis or has no  duty of performance.  See Restatement (Second) of Contracts   7 cmt. a.  (Indeed, some purists say that a "void contract"  is a contradiction in terms, because the word contract always  includes some element of enforceability.  See 1 Joseph M. Perillo, Corbin on Contracts  1.7 (rev. ed. 1993)).  A voidable contract is one under which a party, usually a victim of  some wrong by another party, may "elect" to avoid any legal  obligations.  Restatement (Second) of Contracts 71.  The first category is generally reserved for a handful of contracts  that are seen as being in fundamental violation of public  policy, such as agreements to do acts that both parties know will constitute a felony, see Corbin on Contracts  1.7, or  wagering agreements made in jurisdictions where gambling is  illegal, see 7 Richard A. Lord, Williston on Contracts  17:22  (4th ed. 1997).  See generally id. at  12:1 (examining kinds  of agreements usually considered void).

18
We can safely rule out any suggestion that  207 violations  could, alone, have voided the contracts (let alone that JSE  could have "known" of the voiding).  In United States v.  Mississippi Valley Generating Co., 364 U.S. 520 (1961), decided in an era when Supreme Court readiness to infer  remedies from criminal statutes was at a high point, the  Court found that violations of a predecessor of  207's statutory neighbor criminalizing certain conflicts of interest, 18  U.S.C.  208, gave the government the right to "disaffirm a  contract which is infected by an illegal conflict of interest."364 U.S. at 566.  There is no suggestion in the opinion that  the contract self-destructed into voidness, depriving the government of its election.  The decision assumes (without discussion, to be sure) that the government would want to retain  the option to treat the contract as fully in effect.  See id. at  563 ("This protection [from corrupting influences] can be fully  accorded only if contracts which are tainted by a conflict of  interest ... may be disaffirmed by the Government." (emphasis added)).  Reasons why the government would wish to  preserve that election abound:  the officials authorized to  decide might regard the violation as minor;  they might think  that the criminal penalties provide ample punishment of the  present violation and deterrence of future ones;  they might  be concerned that disaffirmance would unduly impede future  transactions with the contracting firm (possibly in possession  of skills or other resources of exceptional value to the government) or with other potential contractors.  Longrun interests  often argue against pushing legal rights to the hilt.

19
We note that the Federal Circuit has said that government  contracts "tainted by fraud or wrongdoing" are "void ab  initio."  In the first such case, J.E.T.S., Inc. v. United States,  838 F.2d 1196, 1200 (Fed. Cir. 1988), nothing turned on the  characterization.  In the second, Godley v. United States, 5 F.3d 1473, 1476 (Fed. Cir. 1993), the consequences were obscure, and the opinion in any event disregarded the language of Mississippi Valley Generating that supports void ability and pointed to none supporting voidness.  Read for all  their worth, these opinions would vastly expand the normally  minute group of contracts treated as void.

20
But the issue is open whether  207 violations in the  securing or execution of a contract might render it voidable. Of course the revolving door at which  207 is aimed may  seem less problematic than the sort of actual conflict of  interest at stake in  208 and in Mississippi Valley Generating.  And in concluding that the void ability issue was open,  the court in United States v. Medico Indus., Inc., 784 F.2d 840 (7th Cir. 1986), noted that at the time of Mississippi  Valley Generating the Court "was freer [than currently] with  the creation of additional remedies."  Id. at 845.  But the  Medico court went on to point out that remedies created in  that era had generally survived and that the Mississippi  Valley Generating viewpoint was the one prevailing at the  time of  207's enactment.  Id.  In the end the Seventh  Circuit left theissue open because Medico had dropped the  issue in the district court.  Id. at 844-45.  We also leave the  issue open;  its resolution is unnecessary to today's case.

21
Whatever the ultimate answer to that question, the obstacles to a conclusion that JSE "knowingly" misrepresented the  validity of the contract obligations are legion.  First, if the  panel in Medico was uncertain whether a  207 violation  created voidability, it is hard to see how Jamieson or O'Connor could--with respect even to voidability, let alone validity--have satisfied even the loosest standard of knowledge,  i.e., acting "in reckless disregard of the truth or falsity of the  information."  31 U.S.C.  3729(b)(3).  While a faulty estimate or opinion can qualify as a false statement where the  speaker knows facts "which would preclude such an opinion,"  Harrison, 176 F.3d at 792 (emphasis added), the "facts" of  which the Harrison court spoke are those that the speaking  party could reasonably classify as true or false, see id.  Here  there is only legal argumentation and possibility.

22
Moreover, a final decision that  207 violations may allow  the government to disaffirm a contract would leave other  legal uncertainties.  Assuming that O'Connor and Jamieson  had some reason to think that  207 had been violated, and  that a contract tainted with such a violation could become  voidable, they would also have had to know whether voidability requires materiality, i.e., whether the  207 violations must  have affected the terms of the contracts.  In most circumstances, the party seeking to avoid the contract must prove  that the defect had a material effect on the transaction in  question.  See Restatement (Second) of Contracts  7 cmt.  b (fraud, mistake, or duress);  15 cmt. b (mental illness);  16  cmt. b (intoxication);  but see id.  7 cmt b (materiality  presumed when one party is an infant).

23
Second, even assuming that JSE's contracts were voidable,  invalidity is a distinct issue.  Siewick's theory is concededly  and necessarily that JSE knew that the contracts were  invalid.  But even if voidable they would have become invalid  only on a contingency--the contingency that the government  would exercise the assumed right to disclaim.

24
Third, a court that found contracts invalid in a qui tam  action where the government has not joined the plaintiff  would have unilaterally divested the government of the opportunity to exercise precisely the discretion that is among the  key differentiations of voidness from voidability:  the discretion to accept or disaffirm the contract on the basis of  complex variables reflecting the officials' views of the government's longterm interests.

25
The implications of Siewick's position are extraordinary. Disputes arise between the government and its contractors  every day.  Contractors do not win every penny they claim. On Siewick's theory, any contracting party that misunderstands its legal entitlements and therefore fails to recover on  an invoice in full would be liable under the False Claims  Act--except in instances where it was unaware of the facts  that led to its failure to recover in full.  This is not a  prescription for fair or efficient contracting.

26
Accordingly, we find a want of evidence from which a jury  could reasonably infer that JSE knowingly asserted a falsity  in its claims for payment under the contracts.

27
The district court's grant of partial summary judgment is

28
Affirmed.

Notes:

1
 Siewick most commonly argues that the contracts at issue  here were "unenforceable," a legal status that appears to encompass  voidable contracts but is often treated separately.  See Restatement (Second) of Contracts  8 & cmts. a & b;  1 Corbin on  Contracts  1.8.  In context, however, his claims are best understood as alleging either voidness or voidability.