Court Opinion

ID: 4166715
Source: CourtListenerOpinion
Date Created: 2017-05-05 20:05:11.668499+00
Date Added: 2024-06-11T07:46:57.587934
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                            MAY 05 2017
                    UNITED STATES COURT OF APPEALS                       MOLLY C. DWYER, CLERK
                                                                          U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

UNITED STATES ex rel. MARK                       No.   15-17206
MCGRATH,
                                                 D.C. No. 2:13-cv-00864-DJH
              Plaintiff-Appellant,

 v.                                              MEMORANDUM*

MICROSEMI CORPORATION; WHITE
ELECTRONIC DESIGNS
CORPORATION, DBA Microsemi Power
and Electronics Group,

              Defendants-Appellees.

MARK MCGRATH, ex rel. United States              No.   15-17478
of America,
                                                 D.C. No. 2:13-cv-00864-DJH
              Plaintiff-Appellant,

 v.

MICROSEMI CORPORATION; WHITE
ELECTRONIC DESIGNS
CORPORATION, DBA Microsemi Power
and Electronics Group,

              Defendants-Appellees.

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
                   Appeal from the United States District Court
                            for the District of Arizona
                   Diane J. Humetewa, District Judge, Presiding

                       Argued and Submitted April 18, 2017
                            San Francisco, California

Before: D.W. NELSON and IKUTA, Circuit Judges, and BURGESS,** Chief
District Judge.

      Mark McGrath, on behalf of the United States of America, appeals the

district court’s order dismissing his qui tam complaint under Rules 8(a) and 9(b) of

the Federal Rules of Civil Procedure and denying leave to amend. We have

jurisdiction under 28 U.S.C. § 1291.

      McGrath’s complaint failed to state a false certification claim under the

False Claims Act (FCA), 31 U.S.C. §§ 3729–3733, because the complaint failed to

plead facts plausibly alleging that compliance with the International Traffic in

Arms Regulations (ITAR) was material to the Government’s decision to pay White

Electronic Designs Corporation and Microsemi Corporation (collectively,

“Microsemi”). Universal Health Servs., Inc. v. United States ex rel. Escobar, 136

S. Ct. 1989, 2002–03 (2016). Moreover, even assuming that the statement “ITAR

controlled” on Microsemi’s receipts constituted a false representation that

      **
             The Honorable Timothy M. Burgess, United States Chief District
Judge for the District of Alaska, sitting by designation.
                                          2
Microsemi was in compliance with ITAR, the complaint cannot plead facts

sufficient to support an inference that Microsemi knew it had failed to comply with

ITAR at the time of the representation because Microsemi’s good faith

interpretation of the term “disclose” in 22 C.F.R. § 120.17 at that time was

reasonable. See Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 70 n.20 (2007).

Because McGrath cannot establish Microsemi’s scienter as a matter of law, and has

not indicated what facts he could add to the complaint to establish that

Microsemi’s alleged ITAR violation was material to the Government’s payment

decision, the district court did not err in denying leave to amend. See id.; Hildes v.

Arthur Andersen LLP, 734 F.3d 854, 859 (9th Cir. 2013).

      Finally, McGrath waived his argument that Microsemi provided the

Government worthless products by failing to raise it in his opening brief.

Martinez-Serrano v. I.N.S., 94 F.3d 1256, 1259 (9th Cir. 1996). To the extent

McGrath is now raising the modified argument that Microsemi knowingly

demanded payment for products that had lost value due to Microsemi’s failure to

                                           3
comply with ITAR, such a claim fails for the same reasons as his false certification

claim.1

      AFFIRMED.

      1
         McGrath failed to raise his FCA claim for fraud in the inducement before
the district court. We therefore decline to address this issue on appeal. Bolker v.
Comm’r of Internal Revenue, 760 F.2d 1039, 1042 (9th Cir. 1985).
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