Court Opinion

ID: 2665987
Source: CourtListenerOpinion
Date Created: 2014-04-04 08:21:02.643943+00
Date Added: 2024-06-11T13:23:37.027614
License: Public Domain

UNITED STATES DISTRICT COURT
                    FOR THE DISTRICT OF COLUMBIA

______________________________
                              )
UNITED STATES, ex rel.        )
WESTRICK,                     )
                              )
          Plaintiffs,         )
                              )
          v.                  )      Civil Action No. 04-280 (RWR)
                              )
SECOND CHANCE BODY ARMOR,     )
INC. et al.,                  )
                              )
          Defendants.         )
______________________________)

                    MEMORANDUM OPINION AND ORDER

     The government, by relator Aaron J. Westrick, filed a

complaint against defendants Second Chance Body Armor, Inc., and

related entities (collectively “Second Chance”), Toyobo Co.,

Ltd., Toyobo America, Inc. (collectively “Toyobo”), and several

individual defendants, alleging violations of the False Claims

Act (“FCA”), 31 U.S.C. §§ 3729-33, as well as common law claims

in connection with the sale of Zylon body armor.   A February 23,

2010 memorandum opinion denied the defendants’ motion to dismiss.

Toyobo filed a motion for reconsideration of the portion of the

February 23rd opinion analyzing the government’s FCA false

statements claim.   Although the February 23rd opinion erred in

stating that the amendments to the FCA’s false statements

provision brought about by the Fraud Enforcement and Recovery Act

of 2009 (“FERA”) applied retroactively here, Toyobo’s motion for
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reconsideration will be denied because the complaint nevertheless

alleges a cognizable claim under the unamended provision.

                            BACKGROUND

     The background of this case is discussed fully in United

States ex rel. Westrick v. Second Chance Body Armor, Inc., Civil

Action No. 04-280 (RWR), 2010 WL 623466 (D.D.C. Feb. 23, 2010).

Briefly, the government alleges that Second Chance and Toyobo

contracted for Toyobo to supply Second Chance with the synthetic

fiber “Zylon” for use in manufacturing Second Chance bulletproof

vests, and that Zylon deteriorated more quickly than expected.

Among other causes of action, the complaint asserts that “[a]ll

Defendants knowingly made or caused to be made false statements

in order to get a false claim paid by the United States . . . ,”

in violation of the FCA.   (Am. Compl. ¶ 117.)   The defendants

filed a motion to dismiss, and the February 23rd opinion denied

the motion to dismiss with respect to the false statements claim

on the ground that the government had pled that the alleged false

statements were material to Second Chance’s submission of false

claims.   Westrick, 2010 WL 623466, at *7.   Toyobo has filed a

motion for reconsideration, arguing that FERA’s amendments to 31

U.S.C. § 3729(a)(2) do not apply retroactively; that the opinion

erred in applying the amended statute’s requirement that the

false statements be material to a false claim, rather than the

unamended statute’s requirement that the false statement be made
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to get a false claim paid by the government; and that the

government failed to state a false statements claim because its

complaint did not allege that Toyobo intended that any of its

false statements be used by Second Chance to get the government

to pay its claims.

                            DISCUSSION

     The defendants’ motion for reconsideration will be decided

under Federal Rule of Civil Procedure 54(b), which governs

interlocutory orders.   See Williams v. Savage, 569 F. Supp. 2d

99, 108 (D.D.C. 2008) (“The standard of review for interlocutory

decisions differs from the standards applied to final

judgments[.]”).   A district court may revisit its interlocutory

decisions “at any time before the entry of judgment adjudicating

all the claims and all the parties’ rights and liabilities[,]”

Fed. R. Civ. P. 54(b), as justice requires.   Am. Fed’n of

Teachers, AFL-CIO v. Bullock, 605 F. Supp. 2d 251, 257 (D.D.C.

2009).   Relevant considerations include “whether the court

patently misunderstood the parties, made a decision beyond the

adversarial issues presented, made an error in failing to

consider controlling decisions or data, or whether a controlling

or significant change in the law has occurred[.]”   Id. (quoting

In Def. of Animals v. Nat’l Insts. of Health, 543 F. Supp. 2d 70,

75 (D.D.C. 2008)).   The moving party must demonstrate that “some

harm would accompany a denial of the motion to reconsider[.]”     In
                               - 4 -

Def. of Animals, 543 F. Supp. at 76.   Ultimately, a court has

wide discretion in deciding a motion for reconsideration and can

revise its earlier decision if such relief is necessary under the

circumstances.   Judicial Watch v. Dep’t of Army, 466 F. Supp. 2d

112, 123 (D.D.C. 2006).

     The February 23rd opinion held that:

     Congress amended § 3729(a)(2) in the Fraud Enforcement
     and Recovery Act of 2009 (“FERA”). The amended
     provision, 31 U.S.C.A. § 3729(a)(1)(B) (West 2010),
     creates a cause of action against anyone who “knowingly
     makes, uses, or causes to be made or used, a false
     record or statement material to a false or fraudulent
     claim.” FERA provided for § 3729(a)(1)(B)’s
     retroactive application “to all claims under the False
     Claims Act . . . that are pending on or after” June 7,
     2008. P.L. 111-21, at 1625. Because this suit was
     pending on June 7, 2008, the amended provision applies
     here.

Westrick, 2010 WL 623466, at *7.   However, it was error to

conclude that FERA’s amended provisions applied retroactively to

the claims at issue here.   The word “claims,” as it applies in

the relevant provision, refers to “a defendant’s request for

payment” and not to “civil actions for FCA violations.”   United

States v. Sci. Applications Int’l Corp., 653 F. Supp. 2d 87, 107

(D.D.C. 2009).   Because the complaint does not allege that any

requests for payment were pending after 2003, when Second Chance

discontinued selling Zylon vests, the unamended false statements

provision, 31 U.S.C. § 3729(a)(2) (2006), applies.

     The unamended provision creates a cause of action against

anyone who “knowingly makes, uses, or causes to be made or used,
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a false record or statement to get a false or fraudulent claim

paid or approved by the Government.”   31 U.S.C. § 3729(a)(2)

(2006).   Section (a)(2) attaches FCA liability to a defendant who

prepares in support of a claim a statement or record that it

knows to be a misrepresentation, even if that defendant did not

actually submit a claim to the government.1   United States ex

rel. Totten v. Bombardier Corp., 380 F.3d 488, 501 (D.C. Cir.

2004) (noting that “(a)(2) is complementary to (a)(1), designed

to prevent those who make false records or statements to get

claims paid or approved from escaping liability solely on the

ground that they did not themselves present a claim for payment

or approval”); see United States ex rel. Harris v. Bernad, 275 F.

Supp. 2d 1, 6 (D.D.C. 2003) (noting that “the main purpose of

section 3729(a)(2) is to remove any defense that the defendants

themselves did not submit false claims to the government”).      “To

prove a violation of section 3729(a)(2), a plaintiff must show

that (1) the defendant created a record and used this record to

get the government[] to pay its claim, (2) the record was false,

and (3) the defendants knew that the record was false.”   Harris,

275 F. Supp. 2d at 6.

     1
       When a defendant submits a claim to the government
directly, 31 U.S.C. § 3729(a)(1) applies. That provision
provides a cause of action against 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) (2006).
                                 - 6 -

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

Sanders, 128 S. Ct. 2123 (2008), the Supreme Court held that the

phrase “to get” requires that a person has the “purpose of

getting a false or fraudulent claim ‘paid or approved by the

Government’ in order to be liable under § 3729(a)(2).”      Id. at

2128.    “[A] subcontractor violates § 3729(a)(2) if the

subcontractor submits a false statement to the prime contractor

intending for the statement to be used by the prime contractor to

get the government to pay its claim.”      Id. at 2130.   The Court

interpreted the provision to make a defendant “‘answerable for

. . . the natural, ordinary and reasonable consequences of his

conduct’” but not more.    Id. (quoting Anza v. Ideal Steel Supply

Corp., 547 U.S. 451, 470 (2006)).

        Second Chance communicated to Toyobo –– after learning from

Toyobo about the accelerated degradation of Zylon –– that “they

both ‘must avoid even the perception of a possible problem’ with

Zylon.”    (Am. Compl. ¶ 52.)   Toyobo allegedly “knew that the

vests Second Chance was selling to the United States Government

degraded when exposed to sunlight, elevated temperatures, and

humidity but did not disclose this information to the United

States Government.”    (Id. ¶ 54.)   The government alleges that

Toyobo knowingly misrepresented and concealed facts, creating a

false record that in part caused Second Chance to submit a false

claim to the government.    (Id. ¶ 117.)    When the complaint is
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construed in the light most favorable to the plaintiff, see

Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002), these

factual allegations are sufficient to plead that Toyobo failed to

disclose information about Zylon’s degradation with the purpose

of having the government pay for the defective vests.   Moreover,

the complaint tracks the language of the unamended § 3729(a)(2)

by charging that the defendants made false statements “in order

to get a false claim paid by the United States[.]”   (Am. Compl.

¶ 117.)   Therefore, the defendants’ motion to dismiss would have

been denied even if the claim had been analyzed under the

unamended false statements provision, and Toyobo cannot

demonstrate that any harm would accompany a denial of the motion

to reconsider.

                       CONCLUSION AND ORDER

     Although the February 23rd opinion should have applied the

unamended version of 31 U.S.C. § 3729(a)(2) to the government’s

claim, the government has stated a cognizable claim under the

unamended provision of the FCA as well.   Accordingly, it is

hereby

     ORDERED that the defendants’ motion [219] for

reconsideration be, and hereby is, DENIED.
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SIGNED this 4th day of May, 2010.

                         __________/s/_______________
                         RICHARD W. ROBERTS
                         United States District Judge