Court Opinion

ID: 2764312
Source: CourtListenerOpinion
Date Created: 2014-12-24 01:00:58.793636+00
Date Added: 2024-06-11T10:45:06.489719
License: Public Domain

Case: 13-31301      Document: 00512880560        Page: 1     Date Filed: 12/23/2014

         IN THE UNITED STATES COURT OF APPEALS
                  FOR THE FIFTH CIRCUIT

                                     No. 13-31301
                                                                        United States Court of Appeals
                                                                                 Fifth Circuit

                                                                               FILED
                                                                       December 23, 2014
UNITED STATES OF AMERICA,                                                 Lyle W. Cayce
                                                                               Clerk
                                                Plaintiff-Appellant,
v.

BOLLINGER SHIPYARDS, INCORPORATED; BOLLINGER SHIPYARDS
LOCKPORT, L.L.C.; HALTER BOLLINGER JOINT VENTURE, L.L.C.,

                                                Defendants-Appellees.

                   Appeal from the United States District Court
                      for the Eastern District of Louisiana

Before DAVIS, DeMOSS, and ELROD, Circuit Judges.
W. EUGENE DAVIS, Circuit Judge:
      The United States of America appeals from the district court’s final
judgment in which the court granted the defendants-appellees’ motion to
dismiss its False Claims Act case under FED. R. CIV. P. 12(b)(6). We conclude
that the United States alleged sufficient facts in its complaint to allow a
factfinder to infer that the defendants-appellees either knew that their
statements were false or had a reckless disregard of their truth or falsity. We
therefore REVERSE and REMAND for further proceedings consistent with
this opinion. 1

1The district court had federal question jurisdiction under 28 U.S.C. §§ 1331 and 1345, and
we have jurisdiction over this appeal from a final judgment under 28 U.S.C. § 1291.
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                                        No. 13-31301
I.       FACTS
         The United States filed this action under the False Claims Act (“FCA”),
31 U.S.C. §§ 3729 et seq., alleging that Bollinger Shipyards, Inc., Bollinger
Shipyards Lockport, L.L.C., and Halter Bollinger Joint Venture, L.L.C.
(collectively, “Bollinger”) knowingly submitted false statements and false
claims for payment to the government in relation to a government contract
under which Bollinger was to modify eight vessels owned by the United States
Coast Guard (“Coast Guard”). After allowing the United States to replead once,
the district court granted Bollinger’s second Rule 12(b)(6) motion to dismiss,
holding that the United States failed to satisfy the plausibility and
particularity requirements of the Federal Rules of Civil Procedure concerning
Bollinger’s knowledge under the FCA. The United States appeals this
dismissal.
         Because this case comes up on the grant of a motion to dismiss under
Rule 12(b)(6), we review the district court’s ruling de novo. 2 Generally, we
“must assess whether the complaint contains sufficient factual matter,
accepted as true, to state a claim for relief that is plausible on its face under
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d
929 (2007), and Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173
L.Ed.2d 868 (2009).” 3
         The facts as stated in the United States’ First Amended Complaint are
as follows: In 1999, the Coast Guard began a program called Deepwater to
upgrade or replace its aging fleet of vessels, aircraft, and electronics systems.
One of the contractors competing for the project was Integrated Coast Guard
Ship Systems (“ICGS”). ICGS’s proposal included converting existing 110-foot

2   Scanlan v. Texas A&M Univ., 343 F.3d 533, 536 (5th Cir. 2003).
3   Spitzberg v. Hous. Am. Energy Corp., 758 F.3d 676, 683 (5th Cir. 2014) (footnote omitted).

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Coast Guard patrol boats into 123-foot patrol boats to extend the service life of
the boats by adding a 13-foot extension to the hulls, among other changes.
Under this proposal, the conversion of the 110-foot boats would be
subcontracted to Bollinger, which had originally built the boats.
      In September 2000, the Coast Guard expressed concerns to Bollinger
about the feasibility of converting the vessels and questioned whether the hulls
of the converted vessels would have adequate structural integrity. In response,
Bollinger prepared a longitudinal strength analysis describing the modified
boats’ projected “section modulus,” a measure of longitudinal strength.
Bollinger performed its calculation of the section modulus using the Midship
Section Calculator (“MSC”) program, which uses as inputs a number of
components, including the structural geometry of the ship’s hull, the physical
and engineering properties of the hull, and shell plate material and thickness.
Bollinger advised the Coast Guard that the minimum section modulus
required by the American Bureau of Shipping (“ABS”), an independent
organization that develops standards for shipbuilding, was 3,113 cubic inches,
and the calculated section modulus for the proposed modified boats would be
7,152. As was later discovered, Bollinger reached this calculated section
modulus by inputting a thicker hull plating than existed in the 110-foot boats.
Bollinger did not advise the Coast Guard that it used a thicker hull plating in
its calculations, and its proposal did not include a provision for replacing or
thickening the hull in the boats. In August of 2001, Bollinger was notified that
the Coast Guard would require Bollinger to certify compliance with ABS
structural standards.
      In June 2002, the Coast Guard then selected ICGS as the contractor for
the Deepwater program and entered into a contract with ICGS. The contract
required ICGS and its subcontractors, including Bollinger, to provide the Coast

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Guard with a “CDRL S012-11,” a Hull and Load Strength Analysis, to verify
that the 123-foot boat design met the program and contract requirements. The
contract also required Bollinger to obtain ABS certification of compliance with
ABS structural standards.
      In August 2002, the Coast Guard issued the first of four delivery task
orders under the contract for the design and modification of the 123-foot patrol
boats. On August 26, 2002, Bollinger’s chief executive officer, Boysie Bollinger,
sent an email to other Bollinger officials stating that an ABS official had
offered to provide a confidential assessment of the structural analysis of the
converted vessels. Boysie Bollinger sought advice on whether to accept the
offer. T.R. Hamblin, Bollinger’s vice president, recommended declining the
offer, reflecting concern that the review would find that the design required
additional structural support. Boysie Bollinger replied:
            I’m concerned that [ABS] sells CG on the fact that they
            need this review. . . . [ABS] would love the additional
            responsibility from the CG and as we both know,
            adverse results could cause the entire 123 to be an un-
            economical solution if we had to totally rebuild the
            hull. . . . MY CONCERN—we don’t do anything—ABS
            gets CG to require it without our input, and the result
            is we BLOW the program.

      The same day this email exchange occurred, Bollinger found that the
actual section modulus, without an increase in hull plating thickness, was less
than the 7,152 cubic inches it reported to the Coast Guard. Bollinger ran the
MSC application at least three times that day, changing the input data each
time, and obtaining results of 2,836, 3,037, and 5,232 cubic inches. Each
calculation used some incorrect inputs, with the 5,232 calculation having one
input that was 16,000 times greater than the correct input value. A few days
later, for internal purposes, Bollinger used the 3,037 value in its draft version

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of the CDRL S012-11. However, in an initial CDRL S012-11 sent to the Coast
Guard on September 4, 2002, Bollinger submitted a section modulus of 5,232
cubic inches and certified that the section modulus met ABS requirements.
      On October 9, 2002, Bollinger met with Coast Guard officials during a
Preliminary Design Review meeting. To address the Coast Guard’s concerns
regarding the validity of the 5,232 cubic inch section modulus calculation in
light of Bollinger’s original calculation of 7,152, Bollinger told the Coast Guard
that it would have ABS review the calculation and the vessels’ longitudinal
strength. Nonetheless, Bollinger never requested ABS review of the midship
section modulus calculation and longitudinal strength, and ABS never
performed this review. Bollinger submitted its final version of the CDRL S012-
11 to the Coast Guard on December 16, 2002, reporting that the section
modulus was 5,232 cubic inches and again certifying that the section modulus
met ABS requirements. On December 18, 2002, during a Critical Design
Review meeting with the Coast Guard, Bollinger represented that it had
engaged ABS to review compliance with ABS standards; however, the ABS
never reviewed the section modulus calculation.
      In March 2004, the first 123-foot boat, the Matagorda, was delivered to
and accepted by the Coast Guard. In September 2004, it was discovered that
the Matagorda had suffered a structural casualty, including buckling of the
hull. An investigation by the Coast Guard and a recalculation of the section
modulus by Bollinger revealed that the true section modulus of the completed
ship was 2,615 cubic inches, well below the ABS minimum of 3,113 cubic inches
required by the contract and also below any figure Bollinger reported to the
Coast Guard prior to delivery.
      Before the Coast Guard realized that the section modulus number was
incorrect, it had accepted delivery of four modified patrol boats. For vessels five

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                                  No. 13-31301
through eight, the Coast Guard and ICGS pursued structural modifications to
increase the section modulus, and made two structural modifications to the
vessels. In reliance on the feasibility of the modifications, the Coast Guard
accepted delivery of vessels five through eight. Ultimately, the structural
modifications were inadequate, and the Coast Guard removed all eight boats
from service. On May 17, 2007, the Coast Guard revoked its acceptance of the
boats.
II.      PROCEDURAL HISTORY
         The United States brought suit against Bollinger under the FCA,
alleging that Bollinger knowingly presented or caused to be presented false or
fraudulent claims for payment to the United States and knowingly made
statements material to false or fraudulent claims for payment or approval by
the United States in violation of 31 U.S.C. § 3729(a)(1). The district court
granted Bollinger’s initial motion to dismiss with leave to amend the FCA
claims. However, while granting leave to amend the FCA claims, the court
applied the “government knowledge defense” to foreclose all FCA claims for
payments made after the Coast Guard was made aware that the section
modulus calculation was incorrect.
         After the United States filed an amended complaint, the district court
granted Bollinger’s second motion to dismiss and entered final judgment in the
case. The district court held that the United States failed to plead plausibly
and with particularity that Bollinger acted “knowingly’’ in making false
statements or claims for payment. The court again ruled that the “government
knowledge defense” foreclosed the United States’ claims for those payments
made after the Coast Guard became aware that the section modulus
calculation was incorrect. The United States timely appealed the final
judgment dismissing its claims.

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III.    LAW AND ANALYSIS
        A.    The United States Properly Pleaded Knowledge.
        The primary issue on appeal is whether the district court correctly held
that the United States failed to sufficiently plead Bollinger’s scienter. The
resolution depends on the Rule 12(b)(6) standard set out above, the elements
of an FCA claim, and the pleading requirements set out in FED. R. CIV. P. 8
and 9(b). On de novo review, we disagree with the district court’s holding and
conclude that the United States adequately pleaded Bollinger’s scienter.
        B.    Applicable Law
        A violation of the FCA occurs when (1) “there was a false statement or
fraudulent course of conduct; (2) made or carried out with the requisite
scienter; (3) that was material; and (4) that caused the government to pay out
money or to forfeit moneys due (i.e., that involved a claim).” 4 To meet the
“requisite scienter” requirement, the United States must plead that Bollinger
acted with knowledge of the falsity of the statement, which is defined, at a
minimum, as acting “in reckless disregard of the truth or falsity of the
information.” 5
        To state a claim under the FCA, the plaintiff must meet both the
plausibility pleading standard of Fed. R. Civ. P. 8 and the heightened pleading
standard of Fed. R. Civ. P. 9(b). 6 Thus, the United States must (1) plead
“enough facts [taken as true] to state a claim to relief that is plausible on its
face,” 7 and (2) plead “with particularity the circumstances constituting fraud

4 United States ex rel. Longhi v. Lithium Power Techs., Inc., 575 F.3d 458, 467 (5th Cir. 2009)
(quoting United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 376 (4th
Cir. 2008)).
5 31 U.S.C. § 3729(b)(1)(A)(iii).
6 See United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 185 (5th Cir. 2009).
7 Id. (quoting Twombly, 550 U.S. at 570) (alteration in original).

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or mistake,” although “[m]alice, intent, knowledge, and other conditions of a
person’s mind may be alleged generally.” 8
       A claim is plausible if “the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is liable for the
misconduct alleged. The plausibility standard is not akin to a ‘probability
requirement,’ but it asks for more than a sheer possibility that a defendant has
acted unlawfully.” 9 The plausibility standard “does not give district courts
license to look behind [a complaint’s] allegations and independently assess the
likelihood that the plaintiff will be able to prove them at trial.” 10 The
particularity standard of Rule 9(b) generally requires the plaintiff to plead the
time, place, and contents of the false representation and the identity of the
person making the representation. 11 However, an FCA claim can meet Rule
9(b)’s standard if it alleges “particular details of a scheme to submit false
claims paired with reliable indicia that lead to a strong inference that claims
were actually submitted.” 12 Knowledge need not be pled with particularity
under Rule 9(b); it need only be pled plausibly pursuant to Rule 8. 13
       C.     The District Court Erred in Imposing a Higher Pleading
              Standard for Bollinger’s State Of Mind.
       As an initial matter, the district court erred by requiring the United
States to plead the FCA’s knowledge element with particularity under Rule
9(b). 14 The United States asserted in its First Amended Complaint that,

8 FED. R. CIV. P. 9(b).
9 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation and internal quotation marks omitted).
10 Harold H. Huggins Realty, Inc. v. FNC, Inc., 634 F.3d 787, 803 n.44 (5th Cir. 2011).
11 Grubbs, 565 F.3d at 190.
12 Id.
13 See FED. R. CIV. P. 9(b); Iqbal, 556 U.S. at 686-87.
14 See United States v. Bollinger Shipyards, Inc., 979 F. Supp. 2d 721, 731 (E.D. La. 2013)

(“Because the United States has not alleged with particularity, pursuant to Rule 9(b), that
Bollinger made material false statements with the requisite scienter, its theory of FCA

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because Bollinger ran three different section modulus calculations with false
inputs and submitted the highest to the United States, “it can be reasonably
inferred that Bollinger knowingly input false data into the MSC application to
obtain a false section modulus result high enough to avoid further Coast Guard
scrutiny and ABS review of the vessel’s structural integrity.” This allegation
complies with Rule 9(b)’s requirement that Bollinger’s intent and knowledge
be pled only generally, as well as Rule 8’s requirement that the allegation be
plausible.
       The district court erroneously concluded that the fact “that Bollinger
reported only the highest of the three section modulus figures to the Coast
Guard does not indicate that it acted with the requisite scienter” because the
United States failed to allege that Bollinger knew the correct section modulus
figure and therefore concealed the true calculation. 15 Furthermore, the district
court stated:
              There is no allegation that any relevant document—
              and the United States has had access to hundreds of
              thousands in this litigation—suggests any particular
              reason why Bollinger chose one figure over another,
              much less that the reason was to choose a false
              number that was higher than the minimum ABS
              requirement. 16

       The FCA does not require the United States to show that Bollinger knew
the correct figure. The FCA is satisfied if the plaintiff alleges the defendant
either knew that the figure was false or acted with reckless disregard of its
truth or falsity. The facts alleged by the United States support the inference
that Bollinger, at a minimum, acted with reckless disregard of the truth or

liability cannot survive Bollinger’s motion to dismiss.” (emphasis added)).
15 Id. at 731.
16 Id.

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falsity of the section modulus figures, including the highest figure it submitted
to the Coast Guard. Equally significant, in rejecting the United States’
argument for why Bollinger submitted the highest of three false figures to the
United States, the district court did not consider the circumstantial evidence
and general allegations of Bollinger’s knowledge and intent. Therefore, the
district court failed to apply the correct standard for pleading knowledge under
Rules 8 and 9(b).
         D.     The District Court Erred In Drawing Inferences Against
                The United States And In Favor Of Bollinger.
         Given that knowledge may be pled generally, we conclude the United
States did plead facts making it more than a sheer possibility that Bollinger
acted with knowledge. 17 The First Amended Complaint, viewed in the light
most favorable to the United States, states a claim under the FCA. The district
court erred by viewing the facts in the light most favorable to Bollinger and
drawing inferences against the United States.
         The complaint clearly alleges that all of the factors that Bollinger
entered into the MSC to calculate the section modulus were within Bollinger’s
knowledge and control as the designer and builder of both the original 110-foot
boats and the modified 123-foot boats. The complaint states that Bollinger
realized on August 27, 2002, that with the correct hull-plate thickness, the
ships did not meet the original projected section modulus value of 7,152 that it
gave to the Coast Guard. Bollinger ran three section modulus calculations that
produced results of varying section modulus strength. Bollinger used a lower
figure internally and then submitted a higher figure to the United States.

17   See Iqbal, 556 U.S. at 678.

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      The United States also pointed to an email exchange from around the
same time between Bollinger’s CEO, Boysie Bollinger, and vice president, T.R.
Hamblin, regarding an offer by ABS’s Robert Kramer to perform a confidential
structural analysis of a converted vessel. Mr. Hamblin recommended that Mr.
Bollinger decline ABS’s offer to conduct the analysis because, the United States
contends, he was concerned that the ABS analysis would find that the design
required additional structural support. Mr. Bollinger agreed with Mr. Hamblin
and declined ABS’s offer. In an email between Mr. Bollinger and Mr. Hamblin,
Mr. Bollinger stated that “[ABS] would love the additional responsibility from
the [Coast Guard] and as we both know, adverse results could cause the entire
[conversion] to be an uneconomical solution if we had to totally rebuild the
hull. . . . MY CONCERN—we don’t do anything—ABS gets CG to require it
without our input, and the result is we BLOW the program.” The United States
alleged this email implied that the vice president “should take steps to avoid
ABS review of the design of the complete hull, a review likely to have exposed
the inadequacy of the structural integrity of the hull.” We agree that this is a
permissible interpretation of the emails which would arguably support an
inference that Bollinger was attempting to conceal the inadequate structural
integrity of the hulls.
      Bollinger eventually submitted the highest of three calculations (5,232)
to the Coast Guard, while employing in its internal documents the middle
calculation (3,037). The 5,232 figure submitted to the Coast Guard used one
input value 16,000 times greater than the value that had been used in the other
two calculations. Finally, even after the Coast Guard expressed concern over
the section modulus of 5,232 and Bollinger represented that it would have ABS
review the calculation, Bollinger did not have ABS do so.

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         On these facts, the district court improperly drew inferences in favor of
Bollinger and focused on the fact that the United States failed to include
certain facts in its complaint, none of which was necessary in this case which
depends so much on circumstantial evidence. First, the district court found
that Mr. Bollinger’s email does not “on its face” say anything “about taking
steps to avoid ABS review, much less falsifying figures.” 18 The letter need not
explicitly state that; indeed, the complaint alleged that the letter “indicated”
it. The district court did not view the letter, including its potential
implications, in the light most favorable to the United States.
         Second, concerning Mr. Bollinger’s concern that Bollinger might “BLOW
the program” if ABS reviewed the converted vessel at the Coast Guard’s
request, the court found, “His email reads most naturally as expressing a desire
that Bollinger be involved in any ABS review, to answer questions and provide
information or insights that could help ABS evaluate the design.” 19 The
district court found the United States’ allegations concerning the 2002 email
exchange “simply not reasonable.”          20   With respect to the three false
calculations noted above, the district court declined to draw the reasonable
inference urged by the United States: “The United States argues simply that
three incorrect calculations suggest an effort to fabricate. This is
unpersuasive. . . . Further, the allegation that one of the incorrect values in
the reported calculation was 16,000 times greater than the correct input is of
little significance without knowing the context and nature of these inputs.” 21

18   979 F. Supp. 2d at 732.
19   Id. (emphasis added).
20   Id. at 733.
21   Id. at 731.

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         We conclude the district court erred by improperly weighing the
evidence, by focusing on facts the United States did not plead rather than the
inferences that the pleaded facts supported, and by viewing the facts in the
light most favorable to Bollinger. Rule 12(b)(6) does not require the United
States to present its best case or even a particularly good case, only to state a
plausible case. The First Amended Complaint satisfies that minimum
standard and sets out facts sufficient to support a claim under the FCA.
Whether or not the United States may prevail on its claim in later stages of
this proceeding, it has at least stated enough to survive this facial challenge.
         Based on the facts set out in the complaint, one may reasonably infer
that Bollinger acted “in reckless disregard of the truth or falsity” of the
measurements. 22 A key factor is Bollinger declining outside review of a critical
calculation while expressing concern that such review might reveal problems
in hull strength—the exact problem with the section modulus calculation that
ultimately caused the boats to be decommissioned. Relatedly, Bollinger falsely
certified that the boats had been reviewed for unrestricted service by a
representative of an independent agency, when Bollinger had not had any
independent agency review them. Similarly, one could reasonably infer that
Bollinger acted, at a minimum, recklessly in regard to the truth or falsity of
the section modulus number because it calculated three different incorrect
values (one of which included a value overinflated by 16,000 times) and
submitted only the highest one to the United States. Viewed in the light most
favorable to the United States, these facts state a claim under the FCA.

22   31 U.S.C. § 3729(b)(1)(A)(iii).

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       E.     The District Court Applied the Government Knowledge
              Defense Prematurely.
       Because we conclude the United States has sufficiently pleaded
knowledge, we must address whether some of the United States’ claims are
subject to dismissal under the “government knowledge defense” because the
Coast Guard continued to make payments and accept delivery of the ships after
it was aware of the incorrect section modulus calculation. “The inaptly-named
‘government knowledge defense’” is the principle “that under some
circumstances, the government’s knowledge of the falsity of a statement or
claim can defeat FCA liability on the ground that the claimant did not act
‘knowingly,’ because the claimant knew that the government knew of the
falsity of the statement and was willing to pay anyway.” 23 “This defense is
inaptly named because it is not a statutory defense to FCA liability but a
means by which the defendant can rebut the government’s assertion of the
‘knowing’ presentation of a false claim.” 24 Under this principle, “[w]here the
government and a contractor have been working together, albeit outside the
written provisions of the contract, to reach a common solution to a problem, no
claim arises.” 25
       The question is whether the government knowledge defense may be
applied at the motion to dismiss stage. Research discloses only one district
court case where it has been applied at this stage rather than at the summary
judgment or trial stage. 26 All circuit court authorities suggest that the defense

23 United States v. Southland Mgmt. Corp., 326 F.3d 669, 682 (5th Cir. 2003) (en banc) (Jones,
J., specially concurring) (citation and internal quotation marks omitted).
24 Id. at 682 n.8 (Jones, J., specially concurring).
25 Id. at 682 (Jones, J., specially concurring) (citations omitted).
26 See United States ex rel. Marquis v. Northrop Grumman Corp., No. 09-C-7704, 2013 WL

951095 (N.D. Ill. Mar. 12, 2013). Even though the district court in Marquis granted the
motion to dismiss based in part on the government knowledge defense, it noted that the
underlying facts might not actually support the defense:

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should not be applied at this stage because it serves simply as a factor weighing
against the defendant’s knowledge, as opposed to a complete negation of the
knowledge element. 27
       We agree with our sister circuits. The government knowledge defense is
not appropriate at the motion to dismiss stage, which requires us to draw all

                Based upon such facts, Marquis has alleged that the
                Government paid Northrop under the Contract after acquiring
                knowledge of and investigating the purported Contract
                violations. Thus, Marquis has failed to state a valid FCA claim.
                The court notes that the facts alleged in the complaint leave open
                the possibility that a claim or claims may have been presented for
                payment before the Government received notice of the purported
                Contract violations. However, the complaint does not sufficiently
                allege that such was the case, which leads the court to the second
                deficiency in the complaint, Marquis’ failure to plead with the
                particularity required of Federal Rule of Civil Procedure Rule
                9(b) (Rule 9(b)).
2013 WL 951095 at *2 (emphasis added). Even if it is proper to address the government
knowledge defense at the motion to dismiss stage, the district court’s conclusion in Marquis
seems suspect, given Rule 12(b)(6)’s requirement that a court construe the facts in the light
most favorable to the plaintiff.
27 In United States ex rel. Hagood v. Sonoma Cnty. Water Agency, 929 F.2d 1416 (9th Cir.

1991), the Ninth Circuit reasoned:
                [T]he knowledge possessed by officials of the United States may
                be highly relevant. Such knowledge may show that the
                defendant did not submit its claim in deliberate ignorance or
                reckless disregard of the truth. But this comforting conclusion
                for the Water Agency cannot be reached by mere inspection of
                Hagood’s complaint. Only at the stage of trial or summary
                judgment will it be possible for a court to say, for example, that
                the Water Agency did merely what the Corps bid it do, that the
                Water Agency had no knowledge that its contract was based on
                what Hagood has alleged was false information.
Id. at 1421; see also United States ex rel. Burlbaw v. Orenduff, 548 F.3d 931, 952 (10th Cir.
2008) (“[The government knowledge defense] is only an inference. It does not automatically
preclude a finding of scienter.” (citation omitted)); Southland, 326 F.3d at 682 n.8 (Jones, J.,
specially concurring) (describing the defense as “a means by which the defendant can rebut
the government’s assertion of the ‘knowing’ presentation of a false claim”); United States ex
rel. Kreindler & Kreindler v. United Techs. Corp., 985 F.2d 1148, 1156 (2d Cir. 1993) (“[W]e
agree with Hagood that the statutory basis for an FCA claim is the defendant’s knowledge of
the falsity of its claim, which is not automatically exonerated by any overlapping knowledge
by government officials.” (citation omitted)).

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inferences in favor of the United States. It is more proper at the summary
judgment or trial stage as “a means by which the defendant can rebut the
government’s assertion of the ‘knowing’ presentation of a false claim.” 28
IV.     CONCLUSION
        Because we conclude that the complaint alleges sufficient facts to state
a claim, we REVERSE and REMAND for further proceedings consistent with
this opinion. 29

28 Southland, 326 F.3d at 682 n.8 (Jones, J., specially concurring).
29 On appeal, Bollinger asserted four alternative grounds for dismissal which we decline to
adopt, including its contention that the First Amended Complaint should be dismissed
because it refers only generally to “Bollinger” and fails to allege with particularity the specific
acts taken by each of the three defendants. The United States argues that its ability to plead
the acts of each defendant with greater particularity depends on discovery of facts within
Bollinger’s control, and Bollinger has not provided that information in discovery. The district
court has not yet addressed this issue, but in the event the district court finds some merit in
Bollinger’s argument on remand, it may consider less drastic alternatives to dismissal,
including leave to amend, perhaps after additional discovery. See FED. R. CIV. P. 15(a)(2);
Grubbs, 565 F.3d at 192 & n.36.

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