United States District Court, S.D. California
ORDER GRANTING SUMMARY JUDGMENT
HONORABLE LARRY ALAN BURNS United States District Judge
evaluating a False Claims Act case, courts must “ensure
that government contractors will not face onerous and
unforeseen FCA liability as the result of noncompliance with
any of potentially hundreds of legal requirements established
by contract. Payment requests by a contractor who has
violated minor contractual provisions that are merely
ancillary to the parties' bargain are neither false nor
fraudulent.” United States ex rel. Kelly v. Serco,
Inc., 846 F.3d 325, 333 (9th Cir. 2017) (quotations and
citation omitted). That's the case here.
Perry filed a qui tam action on behalf of the United
States against his former employer-Pacific Maritime
Industries, Harcon Precision Metals, and owner John Atkinson
(“Pacific”)-for knowingly submitting false claims
for payment to the United States in violation of the False
Claims Act. 31 U.S.C. § 3729. Perry says Pacific tried
to cheat the Navy on three contracts by supplying (1)
overweight doors, (2) cheap locks, and (3) defective lockers.
The Court disagrees. Pacific's motion for summary
judgment is granted.
judgment is appropriate when there's no genuine issue as
to any material fact. Fed.R.Civ.P. 56(c). “To survive
summary judgment, the relator must establish evidence on
which a reasonable jury could find for the plaintiff.”
Serco, Inc., 846 F.3d at 330 (9th Cir. 2017)
(affirming summary judgment for defense contractor accused of
submitting fraudulent claims to Navy) (quotations and
the False Claims Act, Perry must prove that Pacific knowingly
presented a false claim for payment or approval. 31 U.S.C.
§ 3729 (a)(1)(A). “A misrepresentation about
compliance with a . . . contractual requirement must be
material to the Government's payment decision in order to
be actionable under the False Claims Act.”
Universal Health Servs., Inc. v. United States, 136
S.Ct. 1989, 1996 (2016). Perry hasn't offered material
evidence that Pacific was trying to cheat the government. In
fact, Perry didn't mention a single case or offer any
argument on how the specific aspects of the law apply to his
agreed to build 50 doors for Defense Logistics Agency for use
on Navy ships. The contract specified payment of some $86,
000-roughly $82, 500 for the doors and $3, 500 for a First
Article Test. The Test required Pacific to inspect one of the
doors to ensure the door complied with the contract
specifications. The contract also required Defense Contract
Management Agency to approve the Test.
says the Test had two parts. Juvenal Torres performed the
first part; Perry performed the second part. The doors
complied with all of the contract specifications, except, on
Perry's reading of the relevant military provision, the
doors were too heavy. Perry told CEO John Atkinson and
Engineering Manager Phu Vu. They disagreed. Atkinson said
there was no weight requirement for the doors. Perry alleges
Atkinson instructed him to write down “that all items
tested” “were in conformance with the
requirements.” Perry prepared the Test, but refused to
sign it. Instead, Juvenal Torres, Phu Vu, and Roger Kemp
(Quality Department) signed the Test.
shipped the doors to Defense Logistics before Defense
Contract Management Agency approved the Test as the contract
required. As a result, Defense Logistics paid Pacific for the
doors, but it never paid for the Test. About nine months
after Pacific shipped the doors, Defense Logistics modified
the contract and deleted the provision requiring the Test.
Atkinson says the problem was that Pacific hadn't
performed a First Article Test in a while, there was some
confusion over what needed to be done, and ultimately,
Pacific performed a standard inspection of the 50 doors
instead of a true First Article Test.
alleges two false statements: (1) Perry's statements on
the First Article Test that the doors conformed with weight
requirements even though they didn't; and (2) Torres, Vu,
and Kemp's signatures approving the portion of the Test
that Perry performed.
submission of claims that, as here, are not false or
fraudulent, obviously does not give rise to liability.”
U.S. ex rel. Lindenthal v. Gen. Dynamics Corp., 61
F.3d 1402, 1412 (9th Cir. 1995). Perry says that he falsified
the First Article Test on Atkinson's orders by writing
down that the doors “were in conformance with the
requirements.” But that's not what the Test says.
Item 78, “Weight of Furnishing, ” states that
“the weight of the furnishing shall not be greater than
105 percent of the weight ...