MARCIA A. CRONE, District Judge.
Pending before the court is Defendant Kellogg Brown & Root, Inc.'s ("KBR") Motion to Dismiss the Complaint of the United States (#51). KBR seeks dismissal of the United States' claims pursuant to Federal Rules of Civil Procedure 9(b), 12(b)(1), and 12(b)(6). Having considered the pending motion, the submissions of the parties, the complaint, and the applicable law, the court is of the opinion that KBR's motion should be GRANTED IN PART and DENIED IN PART.
On January 21, 2004, Relators David Vavra and Jerry Hyatt (collectively, "Relators") filed this qui tam action against numerous defendants, including Kellogg Brown & Root, Inc.
On May 5, 2010, the United States filed a Notice of Election to Intervene "in that part of the action that alleges unlawful payments to employees of" KBR by EGL and Panalpina and, on August 2, 2010, filed its complaint-in-intervention asserting several causes of action.
KBR filed the instant motion to dismiss on October 1, 2010. KBR argues that the United States' complaint should be dismissed pursuant to the provisions of the FCA because it fails to: (1) link the alleged kickbacks to a false claim for payment made to the government; (2) allege the particular details of a scheme by KBR to submit false claims; or (3) plead the requisite scienter. KBR also claims that the United States improperly asserts an AKA violation under 41 U.S.C. § 55(a)(1), which KBR maintains does not apply to prime contractors. KBR further contends that the United States' common law claims for breach of contract, unjust enrichment, and payment by mistake fall under the exclusive jurisdiction of the Armed Services Board of Contract Appeals ("ASBCA") or the Court of Federal Claims pursuant to the Contract Disputes Act ("CDA"). Finally, KBR avers that the United States' quasi-contract claims for unjust enrichment and payment by mistake should be dismissed because an express contract exists between the parties.
"`When a Rule 12(b)(1) motion is filed in conjunction with other Rule 12 motions, the court should consider the Rule 12(b)(1) jurisdictional attack before addressing any attack on the merits....'" In re Great Lakes Dredge & Dock Co., 624 F.3d 201, 209 (5th Cir.2010) (quoting Ramming v. United States, 281 F.3d 158, 161 (5th Cir.2001), cert. denied, 536 U.S. 960, 122 S.Ct. 2665, 153 L.Ed.2d 839 (2002)); Hitt v. City of Pasadena, 561 F.2d 606, 608 (5th Cir.1977) (holding that when there is both a want of jurisdiction under Rule 12(b)(1) and a failure to state a claim on which relief can be granted under Rule 12(b)(6), the trial court should dismiss on the jurisdictional ground without reaching the question of failure to state a claim). "This requirement prevents a court without jurisdiction from prematurely dismissing a case with prejudice." Ramming, 281 F.3d at 161 (citing Hitt, 561 F.2d at 608); accord In re Great Lakes Dredge & Dock Co., 624 F.3d at 209. KBR avers that this court lacks subject matter jurisdiction over the United States' claims for breach of contract (count three), unjust enrichment (count four), and payment by mistake (count five) because these common law contractual claims are subject to the exclusive jurisdiction of the ASBCA and the Court of Federal Claims under the CDA. The United States responds that these claims "involve fraud" and, therefore, fall within this court's jurisdiction.
A motion to dismiss filed under Rule 12(b)(1) of the Federal Rules of Civil Procedure challenges the subject matter jurisdiction of the federal district court. See FED. R. CIV. P. 12(b)(1). Federal courts are courts of limited jurisdiction and, absent jurisdiction conferred by statute or the Constitution, lack the power to adjudicate claims. See Rasul v. Bush, 542 U.S. 466, 489, 124 S.Ct. 2686, 159 L.Ed.2d 548 (2004); Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994); Griffin v. Lee, 621 F.3d 380, 388 (5th Cir.2010); Johnson v. United States, 460 F.3d 616, 621 n. 6 (5th Cir.2006); Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir.), cert. denied, 534 U.S. 993, 122 S.Ct. 459, 151 L.Ed.2d 377 (2001). "`"A case is properly dismissed for lack of subject matter jurisdiction when the court lacks the statutory or constitutional power to adjudicate the case."'" CleanCOALition v. TXU Power, 536 F.3d 469, 473 (5th Cir.2008) (quoting Home Builders Ass'n of Miss., Inc. v. City of Madison, 143 F.3d 1006, 1010 (5th Cir. 1998) (quoting Nowak v. Ironworkers Local 6 Pension Fund, 81 F.3d 1182, 1187 (2d Cir.1996))); see Krim v. PcOrder.com, Inc., 402 F.3d 489, 494 (5th Cir.2005); John Corp. v. City of Houston, 214 F.3d 573, 576 (5th Cir.2000). "[S]ubject-matter jurisdiction cannot be created by waiver or consent." Howery, 243 F.3d at 919; accord Gasch v. Hartford Accident & Indem. Co., 491 F.3d 278, 284 (5th Cir.2007); In re TXNB Internal Case, 483 F.3d 292, 298 n. 6 (5th Cir.), cert. denied, 552 U.S. 1022, 128 S.Ct. 613, 169 L.Ed.2d 393 (2007).
The burden of establishing federal jurisdiction rests on the party seeking to invoke it. See Hertz Corp. v. Friend, 559 U.S. 77, ___, 130 S.Ct. 1181, 1194, 175 L.Ed.2d 1029 (2010); DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342, 126 S.Ct. 1854, 164 L.Ed.2d 589 (2006); SmallBizPros, Inc. v. MacDonald, 618 F.3d 458, 461 (5th Cir.2010). Indeed, "there is a presumption against subject matter jurisdiction that must be rebutted by the party bringing an action to federal court." Coury v. Prot, 85 F.3d 244, 248 (5th Cir. 1996) (citing Strain v. Harrelson Rubber Co., 742 F.2d 888, 889 (5th Cir.1984)); accord
In ruling on a Rule 12(b)(1) motion, a court may consider "`(1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts.'" Spotts v. United States, 613 F.3d 559, 565 (5th Cir.2010) (quoting St. Tammany Parish v. Fed. Emergency Mgmt. Agency, 556 F.3d 307, 315 (5th Cir.2009)); Freeman v. United States, 556 F.3d 326, 334 (5th Cir.), cert. denied, 558 U.S. 826, 130 S.Ct. 154, 175 L.Ed.2d 39 (2009); New Orleans & Gulf Coast Ry. Co. v. Barrois, 533 F.3d 321, 327 (5th Cir.2008); Lane v. Halliburton, 529 F.3d 548, 557 (5th Cir.2008). When deciding a Rule 12(b)(1) motion, "[the district court] must accept all factual allegations in the plaintiff's complaint as true." Den Norske Stats Oljeselskap As v. HeereMac V.O.F., 241 F.3d 420, 424 (5th Cir.2001), cert. denied, 534 U.S. 1127, 122 S.Ct. 1059, 151 L.Ed.2d 967 (2002); see Lane, 529 F.3d at 557.
The CDA applies to contracts entered into by an executive agency of the United States and a contractor. See 41 U.S.C. § 602. Federal district courts lack jurisdiction over government contract claims that are subject to the Act. See United States v. Rockwell Int'l Corp., 795 F.Supp. 1131, 1134 (N.D.Ga.1992) (citing McDonnell Douglas Corp. v. United States, 754 F.2d 365, 370 (Fed.Cir.1985)). Accordingly, under the CDA, claims between the United States and government contractors must first be decided by the contracting officer. 41 U.S.C. §§ 601(3), 605(a). The officer's decision may then be appealed to an agency board of contract appeals or the Court of Federal Claims. 41 U.S.C. §§ 607(d), 609(c). The Act contains an exception, however, for "claims involving fraud," making such claims subject to the jurisdiction of federal district courts. 41 U.S.C. § 605(a). The dispute between the parties here centers upon whether the United States' contractual and quasi-contractual claims fall within the CDA's fraud exception.
The Act's fraud exception applies broadly to all claims "involving fraud," not just to "causes of action for fraud itself." Rockwell Int'l Corp., 795 F.Supp. at 1135; accord United States ex rel. Becker v. Tools & Metals, Inc., No. 3:05-CV-0627-L, 2009 WL 577604, at *9 (N.D.Tex. Mar. 5, 2009). Accordingly, where "the events, transactions, and contracts at issue in the lawsuit give rise to fraud allegations, the CDA no longer governs." Rockwell Int'l Corp., 795 F.Supp. at 1135; see Becker, 2009 WL 577604, at *9.
The United States' contractual claims allege that KBR breached its obligations under the LOGCAP III agreement and Federal Acquisition Regulation 52.253-7 by failing to prevent and report Bennett's and other KBR employees' acceptance of kickbacks. The same conduct forms the basis of the United States' FCA and AKA claims; namely, that kickbacks occurred during the execution of the corporation's duties under LOGCAP III, resulting in mistaken payment by the United States and unjust enrichment to KBR. Thus, the United States' contractual claims arise from the same "events, transactions, and contracts" that underlie the fraud claims against KBR. Accordingly, the CDA fraud exception applies, and jurisdiction is appropriate in this court.
In count one of its complaint, the United States claims that KBR violated the FCA by invoicing the government for services under LOGCAP III that were "tainted" by kickbacks. KBR argues that the United States' FCA allegations fail to state a claim for relief because the complaint: (1) does not link the alleged kickbacks to an inflated claim for payment made to the United States; fails to plead fraud with the necessary particularity; (3) does not plead the requisite scienter; and (4) lacks facts to support vicarious liability against KBR for the acts of its employees.
"The FCA generally permits the government or a party suing on the government's behalf to recover for false claims made by the defendants to secure payment by the government." United States ex rel. Doe v. Dow Chem. Co., 343 F.3d 325, 329 (5th Cir.2003). The FCA is a statutory cause of action intended to combat fraud against the government. United States ex rel. Longhi v. Lithium Power Techs., Inc., 530 F.Supp.2d 888, 891 (S.D.Tex.2008). The statute imposes liability on any person who:
31 U.S.C. § 3729(a)(1), (2). The test for FCA civil liability is: (1) "whether `there was a false 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.'" United States ex rel. Longhi v. Lithium Power Techs., Inc., 575 F.3d 458, 467 (5th Cir.2009), cert. denied, ___ U.S. ___, 130 S.Ct. 2092, 176 L.Ed.2d 722 (2010) (quoting United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 376 (4th Cir.2008)).
"To state a claim under the FCA, subsection (a)(1), a relator must allege that the defendant `knowingly' made a `false or fraudulent claim' to the United States Government." United States ex rel. Riley v. St. Luke's Episcopal Hosp., 355 F.3d 370, 376 (5th Cir.2004) (quoting 31 U.S.C.
"Claims brought under the FCA must comply with Rule 9(b), which requires pleading with particularity in cases alleging fraud." Doe, 343 F.3d at 328 (citing United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 903 (5th Cir.1997)); accord United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 185 (5th Cir.2009); United States ex rel. Rafizadeh v. Cont'l Common, Inc., 553 F.3d 869, 873 (5th Cir.2008); United States ex rel. Willard v. Humana Health Plan of Tex., 336 F.3d 375, 384 (5th Cir. 2003). Rule 9(b) provides that in order to state a claim for fraud in federal court, the plaintiff must state with particularity the circumstances constituting the fraud. See FED. R. CIV. P. 9(b); Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 319, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007); Shandong Yinguang Chem. Indus. Joint Stock Co., Ltd. v. Potter, 607 F.3d 1029, 1032 (5th Cir.2010); Grubbs, 565 F.3d at 185; United States ex rel. Williams v. Bell Helicopter Textron Inc., 417 F.3d 450, 453 (5th Cir.2005); Willard, 336 F.3d at 384. Specifically, Rule 9(b) states:
FED. R. CIV. P. 9(b); see Tellabs, Inc., 551 U.S. at 319, 127 S.Ct. 2499; Dorsey v. Portfolio Equities, Inc., 540 F.3d 333, 339 (5th Cir.2008); Ferrer v. Chevron Corp., 484 F.3d 776, 779 n. 7 (5th Cir.2007). Therefore, instead of the "short and plain statement of the claim" required by Rule 8(a) of the Federal Rules of Civil Procedure, Rule 9(b) imposes a heightened standard of pleading for averments of fraud. See FED. R. CIV. P. 8(a), 9(b); Grubbs, 565 F.3d at 185; Rafizadeh, 553 F.3d at 872-73; Dorsey, 540 F.3d at 338-39; ABC Arbitrage Plaintiffs Grp. v. Tchuruk, 291 F.3d 336, 349 (5th Cir.2002). This higher standard of pleading "stems from the obvious concerns that general, unsubstantiated charges of fraud can do damage to a defendant's reputation." Guidry v. Bank of LaPlace, 954 F.2d 278, 288 (5th Cir.1992) (citing Segal v. Gordon, 467 F.2d 602, 607 (2d Cir.1972)). In fact, the requirements of Rule 9(b) serve several purposes:
United States ex rel. King v. Alcon Labs., Inc., 232 F.R.D. 568, 570 n. 2 (N.D.Tex. 2005); see also United States ex rel. Butler v. Magellan Health Servs., 74 F.Supp.2d 1201, 1215 (M.D.Fla.1999) (stating that purpose of rule is to prevent fishing expeditions to uncover imagined wrongs).
The Fifth Circuit applies Rule 9(b) to fraud complaints "with `bite' and `without apology'" but also recognizes that Rule 9(b) "supplements but does not supplant Rule 8(a)'s notice pleading." Grubbs, 565 F.3d at 185 (quoting Williams v. WMX Techs., Inc., 112 F.3d 175, 178 (5th Cir.1997)). Therefore, Rule 9(b) "requires only simple, concise, and direct allegations of the `circumstances constituting fraud,' which after [Bell Atl. Corp. v. Twombly, 550 U.S. 544, 563, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)] must make
In the context of the False Claims Act, however, the Fifth Circuit has recognized that the "who, what, when, where, and how" of the alleged fraud is "not a straitjacket for Rule 9(b)." Grubbs, 565 F.3d at 190. Rather, the rule must remain flexible to achieve the "remedial purpose" of the FCA. Id. Therefore, if a relator's complaint cannot allege the details of an actual false claim, it may nonetheless survive by "alleging particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted." Id. While a plaintiff must still plead the circumstances constituting fraud with particularity, pleading the specific details of individual false claims is unnecessary. Wagemann v. Doctor's Hosp. of Slidell, LLC, No. 09-3506, 2010 WL 3168087, at *4 (E.D.La. Aug. 6, 2010) (citing Grubbs, 565 F.3d at 190). "In other words, should a plaintiff allege a general scheme to defraud the government, when the scheme occurred, those involved, its mechanics, an explanation of how the claims were false, and a description of the billing system, the `time, place, contents, and identity' standard is met." Id. at *4 (citing Grubbs, 565 F.3d at 190-91). Nonetheless, this standard "is not meant to encourage the use of merely suggestive or conclusory allegations." Id. To the contrary, "the Rule 9(b) standard requires `specificity as to the statements (or omissions) considered to be fraudulent, the speaker, when and why the statements were made, and an explanation of why they were fraudulent.'" United States ex rel. Dekort v. Integrated Coast Guard Sys., 705 F.Supp.2d 519, 530 (N.D.Tex.2010) (quoting Plotkin v. IP Axess, Inc., 407 F.3d 690, 696 (5th Cir.2005)); see also Southland Secs. Corp., 365 F.3d at 362. Furthermore, when the facts relating to the alleged fraud are "peculiarly within the perpetrator's knowledge," the pleading requirements
Moreover, Rule 9(b) "relaxes the particularity requirement for conditions of the mind, such as scienter ...." Tuchman, 14 F.3d at 1068; accord Dorsey, 540 F.3d at 339; Murungi v. Tex. Guaranteed, 693 F.Supp.2d 597, 603 (E.D.La.2010). "Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally." FED. R. CIV. P. 9(b). "Although Rule 9(b) expressly allows scienter to be `averred generally,' simple allegations that defendants possess fraudulent intent will not satisfy Rule 9(b)." Dorsey, 540 F.3d at 339 (quoting Melder v. Morris, 27 F.3d 1097, 1102 (5th Cir.1994)). "The plaintiffs must set forth specific facts supporting an inference of fraud." Id. (emphasis in original).
Under Fifth Circuit precedent, a dismissal for failure to plead fraud with particularity is treated as a dismissal for failure to state a claim upon which relief can be granted under Rule 12(b)(6) of the Federal Rules of Civil Procedure. See Shandong Yinguang Chem. Indus. Joint Stock Co., Ltd., 607 F.3d at 1032; Flaherty & Crumrine Preferred Income Fund, Inc., 565 F.3d at 206; Motient Corp. v. Dondero, 529 F.3d 532, 535 (5th Cir.2008); Southland Secs. Corp., 365 F.3d at 361. When evaluating a motion to dismiss for failure to state a claim, "courts must limit their inquiry to the facts stated in the complaint and the documents either attached to or incorporated in the complaint." Lovelace v. Software Spectrum Inc., 78 F.3d 1015, 1017 (5th Cir.1996); see Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010); Rafizadeh, 553 F.3d at 872 n. 2. To avoid dismissal, the complaint must contain facts showing that the plaintiff is entitled to relief on its substantive causes of action. See Twombly, 550 U.S. at 563, 127 S.Ct. 1955; McLain v. Real Estate Bd. of New Orleans, Inc., 444 U.S. 232, 246, 100 S.Ct. 502, 62 L.Ed.2d 441 (1980); Frank v. Delta Airlines, Inc., 314 F.3d 195, 197 (5th Cir.2002). Following the Supreme Court's decision in Twombly, the accepted pleading standard is "once a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint." 550 U.S. at 563, 127 S.Ct. 1955 (citing Sanjuan v. Am. Bd. of Psychiatry & Neurology, Inc., 40 F.3d 247, 251 (7th Cir.1994), cert. denied, 516 U.S. 1159, 116 S.Ct. 1044, 134 L.Ed.2d 191 (1996)); City of Dallas v. Hall, 562 F.3d 712, 717 (5th Cir.2009). Nonetheless, the plaintiff must plead specific facts, not mere conclusory allegations, to prevent dismissal. See Ackerson v. Bean Dredging LLC, 589 F.3d 196, 209 (5th Cir.2009); Hall, 562 F.3d at 717; Kane Enters. v. MacGregor (USA) Inc., 322 F.3d 371, 374 (5th Cir.2003) (citing Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir.2000)).
KBR first seeks dismissal of the United States' complaint on the ground that it fails to satisfy the particularity requirements of the FCA and Rule 9(b). Specifically, KBR avers that, while the complaint describes the alleged kickback scheme in detail, it provides no facts linking the accepted gratuities to any false claims for payment submitted to the government. KBR also asserts that the United States' complaint should be dismissed because it is devoid of particular facts describing how KBR's claims for payment
The FCA attaches liability "not to the underlying fraudulent activity or the government's wrongful payment, but to the claim for payment." Longhi, 575 F.3d at 467 (quoting Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 785 (4th Cir.1999) (quoting United States v. Rivera, 55 F.3d 703, 709 (1st Cir.1995))). Therefore, "claims for services rendered in violation of a statute do not necessarily constitute false or fraudulent claims under the FCA." Thompson, 125 F.3d at 902; accord United States v. Southland Mgmt. Corp., 288 F.3d 665, 678 (5th Cir.2002); United States ex rel. Weinberger v. Equifax, Inc., 557 F.2d 456, 460-61 (5th Cir.1977), cert. denied, 434 U.S. 1035, 98 S.Ct. 768, 54 L.Ed.2d 782 (1978).
Furthermore, the United States' complaint does not allege facts that tie KBR's acceptance of kickbacks to its submitted claims for payment. As discussed supra, the FCA requires the plaintiff's complaint to "alleg[e] particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted." Grubbs, 565 F.3d at 190. Here,
KBR next asserts that the United States' complaint fails to plead adequately the intent element of the FCA, as it provides only a "conclusory statement [as to intent] that the court should not credit." The United States counters that its pleadings fulfill the FCA scienter requirement because the knowledge of KBR's employees regarding the accepted kickbacks may be imputed to the corporation. KBR responds that it cannot be held vicariously liable for the acts of its employees because the complaint does not allege that the kickbacks were accepted with an intent to benefit the corporation.
The FCA requires that a defendant "knowingly" make false claims for payment to the government. 31 U.S.C. § 3729(a). While "the FCA is plain that `proof of specific intent to defraud' is not necessary ... [the] mens rea requirement is not met by mere negligence or even gross negligence." United States ex rel. v. City of Houston, 523 F.3d 333, 338 (5th Cir.), cert. denied, 555 U.S. 1012, 129 S.Ct. 570, 172 L.Ed.2d 430 (2008) (quoting 31 U.S.C. § 3729(b)); accord Longhi, 575 F.3d at 468. "Indeed, `it is a long-established rule of [the Fifth Circuit] that to show a violation of the FCA, the evidence must demonstrate "guilty knowledge of a purpose on the part of the defendant to cheat the government."'" United States ex rel. Taylor-Vick v. Smith, 513 F.3d 228, 231 (5th Cir.2008) (citing United States v. Aerodex, Inc., 469 F.2d 1003, 1007 (5th Cir.1972) (quoting United States v. Priola, 272 F.2d 589, 594 (5th Cir.1959))). Accordingly, the United States must demonstrate that KBR (1) had "actual knowledge of falsity, (2) acted with deliberate ignorance of the truth or falsity of the information provided, or (3) acted with reckless disregard of the truth or falsity of the information provided" to the government. Longhi, 575 F.3d at 468; Farmer, 523 F.3d at 339. As discussed previously, the intent element of the FCA may be alleged generally. FED. R. CIV. P. 9(b); Tuchman, 14 F.3d at 1068; accord Dorsey, 540 F.3d at 339; Murungi, 693 F.Supp.2d at 603. Nonetheless, "simple allegations that defendants possess fraudulent intent will not satisfy Rule 9(b)." Dorsey, 540 F.3d at 339 (quoting Melder, 27 F.3d at 1102).
Fifth Circuit precedent dictates that a corporation may be vicariously liable under the FCA for the acts of an employee where the employee is acting within the scope of his employment and with the purpose of benefitting the employer. United States v. Hangar One, Inc., 563 F.2d 1155, 1158 (5th Cir.1977); United States v. Ridglea
Here, the United States' complaint summarily alleges that "Mr. Bennett and the other KBR employees knew that it was illegal to accept kickbacks in connection with the award and performance of subcontracts under LOGCAP III" and that KBR submitted its costs to the government, "knowing that the subcontracts were tainted by kickbacks." No facts are provided, however, to demonstrate either that (1) Bennett knew the cost of the kickbacks were included in KBR's invoices to the government or (2) KBR knowingly submitted inflated claims to the government. Furthermore, the United States does not assert allegations sufficient to support a claim of vicarious liability against KBR. Nowhere in the complaint does it allege that KBR employees were acting for the benefit of the corporation when accepting the purported kickbacks. See Hangar One, Inc., 563 F.2d at 1158; Ridglea State Bank, 357 F.2d at 500. In fact, the complaint states only that the kickbacks were paid by EGL and Panalpina to ensure favorable treatment on their subcontracts with KBR, suggesting that the subcontractors, rather than KBR, benefitted from the kickbacks. Although KBR may have violated the terms of the LOGCAP III contract by failing "to ensure that all deployed employees, subcontractors, and subcontractors' employees ... comply with pertinent" federal statutes, contractual non-compliance does not suffice to state an FCA claim. See United States v. Southland Mgmt. Corp., 326 F.3d 669, 682 (5th Cir.2003) (en banc) (Jones, J., specially concurring) (stating that "claimants [do not] `knowingly' present false claims where there were instances of `mere' contractual or regulatory noncompliance"); Dekort, 705 F.Supp.2d at 543 (noting that "contractual noncompliance, standing alone, is not a basis for FCA liability" because a knowing false statement by the contractor is also necessary).
Therefore, the United States' complaint fails to allege facts sufficient to state a claim of vicarious liability against KBR. For this and the foregoing reasons, dismissal of the United States' FCA claim is appropriate. Given the policy of the federal rules to permit liberal amendment of
KBR also alleges that count two of the United States' complaint alleging violations of the AKA should be dismissed pursuant to Rule 12(b)(6) because it improperly alleges a knowing violation of the statute. Specifically, KBR argues that the complaint, which states a cause of action under 41 U.S.C. § 55(a)(1), is improperly pleaded because a prime contractor, such as KBR, cannot be held liable for a knowing violation based solely on the acts of its employees. KBR maintains that such vicarious liability is referenced in 41 U.S.C. § 55(a)(2), which the United States does not cite in its complaint. The United States responds that its complaint is properly pleaded because KBR employees were directly involved in the alleged fraud and their knowledge may be imputed to the corporation.
A motion to dismiss for failure to state a claim upon which relief can be granted under Rule 12(b)(6) of the Federal Rules of Civil Procedure tests only the formal sufficiency of the statement of a claim for relief and is "appropriate when a defendant attacks the complaint because it fails to state a legally cognizable claim." Ramming, 281 F.3d at 161. It is not a procedure for resolving contests about the facts or the merits of a case. See 5A CHARLES A. WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE: CIVIL 2d § 1356, at 294 (1990). In ruling on such a motion, the court must accept the factual allegations of the complaint as true, view them in a light most favorable to the plaintiff, and draw all reasonable inferences in favor of the plaintiff. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974), abrogated on other grounds by Harlow v. Fitzgerald, 457 U.S. 800, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982); In re S. Scrap Material Co., LLC, 541 F.3d 584, 587 (5th Cir.2008); Lovick v. Ritemoney Ltd., 378 F.3d 433, 437 (5th Cir.2004); Ramming, 281 F.3d at 161; Collins, 224 F.3d at 498. Nevertheless, "the plaintiff's complaint [must] be stated with enough clarity to enable a court or an opposing party to determine whether a claim is sufficiently alleged." Ramming, 281 F.3d at 161 (citing Elliott v. Foufas, 867 F.2d 877, 880 (5th Cir.1989)). The "[f]actual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555, 127 S.Ct. 1955; accord Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir.2007); In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir.2007).
Generally, the court may not look beyond the four corners of the plaintiff's pleadings. See Indest v. Freeman Decorating, Inc., 164 F.3d 258, 261 (5th Cir. 1999); Baker v. Putnal, 75 F.3d 190, 196 (5th Cir.1996); McCartney v. First City Bank, 970 F.2d 45, 47 (5th Cir.1992). The court may, however, consider matters that are outside the pleadings if those materials are matters of public record. See Fin. Acquisition Partners LP v. Blackwell, 440 F.3d 278, 286 (5th Cir.2006) (citing Davis v. Bayless, 70 F.3d 367, 372 n. 3 (5th Cir.1995)); Cinel v. Connick, 15 F.3d 1338, 1343 n. 6 (5th Cir.), cert. denied, 513 U.S. 868, 115 S.Ct. 189, 130 L.Ed.2d 122 (1994); see also 5A CHARLES A. WRIGHT & ARTHUR R. MILLER, supra, § 1357, at 299. The court may also consider documents attached to a motion to dismiss if they are referred to in the complaint and are central to the plaintiff's claim. Collins, 224
The AKA was amended in 1986 "to enhance the government's ability to prevent and prosecute kickback practices" in connection with contracts of the federal government. H.R. REP. No. 99-964, at 4 (1986), 1986 U.S.C.C.A.N. 5960, 5961. The Act prohibits the acceptance or payment of a kickback, as well as the inclusion of any kickback in the cost of a contract. See 41 U.S.C. § 51 et seq.; H.R. REP. No. 99-964, at 4 (1986). Under the Act, a kickback is defined as
41 U.S.C. § 52(2). Further,
41 U.S.C. § 55(a)(1)-(2). Here, it is undisputed that the items, if indeed provided by EGL and Panalpina and accepted by KBR, were "kickbacks" under the statutory definition. See 41 U.S.C. § 52(2) (defining a kickback as a thing of value provided for the purpose of rewarding favorable treatment). KBR asserts, however, that if liability is proved, it should be subject only to civil penalties equal to the amount of the kickback as provided in § 55(a)(2), rather than the larger penalties contemplated under § 55(a)(1), which is cited by the United States in its complaint. Based on principles of statutory interpretation and an examination of the AKA's history, the court agrees.
Rules of statutory interpretation require this court, "when possible, to give each word in a statute operative effect" and to render none superfluous. United States v. Vargas-Duran, 356 F.3d 598, 603 (5th Cir.), cert. denied, 541 U.S. 965, 124 S.Ct. 1728, 158 L.Ed.2d 410 (2004); accord United States v. Molina-Gazca, 571 F.3d 470, 474 (5th Cir.2009), cert. denied, 558 U.S. 1150, 130 S.Ct. 1138, 175 L.Ed.2d 977 (2010). Similarly, a court is "authorized to deviate from the literal language of a statute only if the plain language would lead to absurd results, or if such an interpretation would defeat the intent of Congress." Kornman & Assocs., Inc. v. United States, 527 F.3d 443, 451 (5th Cir.2008) (citing Lamie v. United States Tr., 540 U.S. 526,
The statutory history of the AKA also supports this interpretation. Prior to the AKA's amendment in 1986, the statute authorized a penalty only against subcontractors and individual recipients of kickbacks, rather than prime contractors. Gen. Dynamics Corp., 19 F.3d at 772 n. 3. The statute's amendment, in part, was designed to enable the government to sue a prime contractor or a "higher tier subcontractor" for a "lower tier subcontractor's" AKA violation under a theory of vicarious liability. H.R. Rep. No. 99-964, at 15, 1986 U.S.C.C.A.N. 5960, 5972. The penalty for such vicarious liability is expressly limited to the amount of the kickback. 41 U.S.C. § 55(a)(2); H.R. REP. No. 99-964, at 15. The United States argues that the knowledge of KBR's employees may be imputed to the corporation, making it eligible for increased fines under the statute. As discussed in section B, supra, however, "the knowledge or guilty intent of an [employee] not acting with a purpose to benefit his employer, will not be imputed to the employer, when the latter is sought to be held liable under a statute requiring knowledge or guilty intent." Ridglea State Bank, 357 F.2d at 500 (citing Standard Oil Co. of Tex. v. United States, 307 F.2d 120, 128-29 (5th Cir.1962)). Because the United States has not sufficiently alleged that KBR employees were acting for the corporation's benefit, imputation is not appropriate in this case. Accordingly, the United States' AKA claim is dismissed without prejudice to refiling.
Finally, KBR asserts that the United States' quasi-contractual claims for unjust enrichment (count 4) and payment by mistake (count five) must be dismissed as impermissible where, as here, an express contract unequivocally governs the dispute. The United States avers that the liberal pleading policy of the federal rules permits it to plead alternate theories of recovery.
Federal Rule of Civil Procedure 8(a) allows the pleading of alternative theories of recovery. FED. R. CIV. P. 8(a)(3). Therefore, it is permissible for a plaintiff to plead both express and quasicontractual claims in a complaint. Sw. Bell Tel. Co. v. Fitch, 643 F.Supp.2d 902, 911 (S.D.Tex. 2009); Recursion Software, Inc. v. Interactive Intelligence, Inc., 425 F.Supp.2d 756, 768 (N.D.Tex.2006). Nonetheless, when an express contract governs, no implied or quasi-contract will be found. Coghlan v. Wellcraft Marine Corp., 240 F.3d 449, 454 (5th Cir.2001). Here, the parties do not dispute that LOGCAP III governs their dispute.
Based upon the foregoing analysis, the court finds that counts one and two of the United States' complaint should be dismissed without prejudice. The court further finds that the existence of LOGCAP III precludes the United States' assertion of quasi-contractual claims for unjust enrichment and payment by mistake. Accordingly, counts four and five of the complaint are dismissed with prejudice. KBR's motion is DENIED as to its remaining grounds for dismissal.