United States District Court, D. Maryland
UNITED STATES OF AMERICA ex rel. ELGASIM MOHAMED FADLALLA, et al., Plaintiff-Relators,
DYNCORP INTERNATIONAL LLC, et al., Defendants.
Paula Xinis, United States District Judge
qui tam action concerns the provision of translators
to assist our armed forces in the Middle East. Pending before
the Court are seven motions to dismiss filed by Defendants
TigerSwan, Inc. (ECF No. 64), AECOM National Security
Programs, Inc. (ECF No. 80), KMS Solutions, LLC (ECF No. 81),
DynCorp International, LLC (ECF No. 83), Global Linguist
Solutions, LLC (ECF No. 85), Thomas/Wright, Inc. (ECF No.
100), and Shee Atika Languages, LLC (ECF No. 129). The
motions are fully briefed, and no hearing is necessary.
See Loc. R. 105.6. For the following reasons, the
motions are GRANTED in part and DENIED in part.
Relators' false claims allegations
arise out of the performance of two government contracts
awarded to Global Linguist Solutions, LLC (“GLS”)
by the Commander, Headquarters, United States Army
Intelligence and Security Command (“INSCOM”). ECF
No. 9 ¶ 2. Relators are 29 United States citizens who
worked for GLS under one or both of the contracts “as
security-cleared linguists, translators and interpreters for
U.S. military and intelligence-gathering operations in the
Middle East.” Id. ¶ 5.
Subcontractor Fraud Scheme
December 5, 2007, INSCOM selected GLS as the “proposed
awardee” of Contract W911W4-08-D-0002 (“Contract
1”), a $4.645 billion contract of an indefinite
duration and quantity for “the provision of linguists
to support U.S. military and intelligence-gathering efforts
in the Middle East.” Id. ¶¶ 59-61.
To be awarded Contract 1, GLS had to submit a “Small
Business Subcontracting Plan.” Id.
¶¶ 69, 70. This plan included a statement of total
dollars to be subcontracted to various categories of small
businesses, to include those owned by veterans, women, and
those considered “disadvantaged” businesses.
Id. ¶¶ 69, 77. GLS was required to submit
reports at the close of each fiscal year, in which it would
note any subcontract awards to small disadvantaged business.
The contract also specifically stated that GLS' failure
“to comply in good faith with its subcontracting
plan” would amount to a “material breach.”
Id. ¶ 79. Relators assert that the small
business subcontract provisions were designed to
“enhance the ability of small businesses to perform the
contracts and provide the services needed to enhance the
competition necessary to promote a free
marketplace” as envisioned in the Aid to Small Business
Act. Id. ¶ 73 (emphasis in original).
bidding for Contract 1, GLS entered into “Teaming
Agreements” with Small Business Defendants KMS
Solutions, LLC (“KMS”), Shee Atika Languages, LLC
(“Shee Atika”), Thomas/Wright, Inc.
(“Wright”), TigerSwan, Inc.
(“TigerSwan”), and Invizion, Inc.
(“Invizion”). Id. ¶¶ 8, 83.
GLS next represented to INSCOM “that it intended to
utilize the Small Business Defendants in accordance with the
subcontracting requirements of Contract 1.”
Id. ¶ 84. However, in practice, and through the
Teaming Agreements, the Small Business Defendants acted as
“GLS affiliates” and not “bona
fide independent small business entities.”
Id. ¶ 86. As part of GLS' contracting
scheme, GLS performed all of the contract work while giving
the appearance that the Small Business Defendants performed
the same work under the subcontracts. Id. ¶ 88.
of the scheme, GLS had Relators sign various employment
contracts to make it appear, falsely, that one of the Small
Business Defendants was the Relator's employer. Each
Relator executed multiple employment contracts, seriatim,
within a matter of months. See, e.g., Id.
¶¶ 190, 230-32. GLS managers interacted with
Relators almost exclusively, not the Small Business
Defendants who nominally appeared on the employment
contracts. Id. ¶ 94. GLS oversaw the
recruitment and hiring process, paid for Relators'
training, coordinated background investigations and medical
testing, determined where Relators were deployed, and managed
Relators' transportation to Kuwait. Id.
¶¶ 96-111. When these “transfers”
occurred, GLS often told Relators to not worry and that
nothing about their employment would change, except they
would now be paid by the new subcontractor. Id.
¶¶ 261, 278-79, 283, 310, 340, 405. Small Business
Defendants, in turn, “did not know, at any given time,
which Relators were on their payrolls.” Id.
¶ 115. Accordingly, “GLS received unjustified
payments from the U.S. by falsely representing its employees,
including Relators, as working for the Small Business
Defendants, outsourcing task orders to them, and earning fees
for such outsourced work.” Id. ¶ 117.
National Defense Authorization Act for Fiscal Year 2008,
Congress established the Commission on Wartime Contracting in
Iraq and Afghanistan (“CWC”) to investigate
“fraud, waste, abuse and mismanagement of wartime
government contracts.” Id. ¶ 164. On
August 12, 2009, the CWC “held a hearing on linguist
support services provided by GLS, ” calling GLS
President John Houck to testify. Id. ¶ 165. In
questioning Houck on the role of the subcontractors, Houck
falsely testified that GLS was “leasing”
linguists from the Small Business Defendants. Id.
¶ 167. Houck also stated that 60% of the linguists were
employed by subcontractors, and that only 40% were GLS
employees, when in fact GLS employed almost all linguists.
Id. According to Relators, Houck's false
testimony “thwart[ed] discovery . . . of GLS's
material breaches of Contract 1 and false claims
thereunder.” Id. ¶ 177.
11, 2011, INSCOM awarded Contract No. W911W4-11-D0004
(“Contract 2”) to GLS for $9.7 billion.
Id. ¶ 92. Like Contract 1, Contract 2
“calls for provision of similar linguistic,
interpretation and translation services for U.S. military
personnel and other agencies, only on a global basis.”
Id. ¶ 4. In submitting its proposal for
Contract 2, GLS “falsely represented that it had
complied with Contract 1, ” including the small
business contracting requirements. Id. ¶ 92.
Relators aver that INSCOM awarded Contract 2 to GLS, relying
at least in part on these false representations. Id.
¶¶ 4, 180.
Work Visa Fraud Scheme with Alshora
Contract 1, GLS was responsible for ensuring that employees
such as Relators secured necessary travel documents, and that
all personnel, including subcontractors, complied with
“Host Country, local and international laws and
regulations . . . applicable to the contractor in the area of
operations.” Id. ¶ 65. As part of this
contractual obligation, GLS represented that performance
under Contract 1 complied with Kuwaiti labor and immigration
laws. Id. ¶ 506. However, foreign nationals
must obtain a Resident Visa to work in Kuwait, and businesses
owned by foreign nationals cannot serve as employers.
Id. ¶¶ 127-28.
circumvent Kuwait's prohibition on GLS employing the
Relators directly, GLS subcontracted with Alshora
International General Trading and Contracting Company
(“Alshora”), a Kuwaiti owned business, for
Alshora to obtain Resident Visas for GLS employees in
exchange for a “sponsorship fee.” Id.
¶ 124. Beginning December 9, 2009, “Alshora and
GLS obtained Relators' signatures on documents purporting
to identify Relators as Alshora employees.”
Id. ¶ 129. To further this scheme, GLS forced
Relators to open bank accounts in Kuwait and then deducted
from Relators' pay an amount for Alshora to deposit into
the Kuwait accounts all to make it appear as if Relators
worked for Alshora. Id. ¶ 130. GLS
also held Relators' passports for weeks or months at a
time and without explanation, thus preventing Relators from
leaving Kuwait or venturing off the U.S. military bases to
which they were assigned. Id. ¶¶ 194-97,
201, 219, 229, 249, 265, 373, 391, 419.
2012, the business relationship between GLS and Alshora began
to deteriorate and GLS planned to find a different Kuwaiti
company to assist in the performance of Contract 2.
Id. ¶ 134. GLS notified Alshora on January 10,
2013 to expect final payment under the subcontract on
February 17, 2013. Id. ¶ 135. This notice
prompted Alshora to demand that the linguists who had been
issued Resident Visas “report to Alshora to have those
visas cancelled” prior to February 17. Id.
¶¶ 136-37. Although GLS agreed to send linguists to
the Alshora office to process the visa cancellations, GLS did
not comply with the plan, which would have required their
linguists to leave Kuwait and return to the United States.
Id. ¶¶ 138-40. When the linguists,
including certain Relators (“Resident Visa
Relators”), failed to cancel their visas, Alshora
“reported to Kuwaiti authorities that these
linguists-its alleged ‘employees'-had abandoned
their worksites.” Id. ¶ 141.
Kuwaiti law, abandonment of a worksite amounts to the
criminal offense of “absconding.” Id.
¶ 142. During this time, Alshora also learned that other
GLS linguists, including certain Relators
(“Non-Resident Visa Relators”) had been working
in Kuwait without having obtained Resident Visas.
Id. ¶ 143. GLS never obtained Resident Visas
for a number of linguists, who entered Kuwait on tourist
visas and, unbeknownst to the linguists, worked in violation
of Kuwaiti law. Id. ¶¶ 316-19, 395-96,
440-43. Alshora reported these linguists “to Kuwaiti
authorities as working illegally in Kuwait.”
Id. ¶ 145.
consequence of Alshora reporting the Relators to Kuwaiti
authorities, Kuwait “ordered that Relators immediately
stop work for the U.S. military and intelligence forces in
Kuwait” as of February 19, 2013. Id. ¶
146. As a further consequence, affected Relators faced arrest
if they tried to leave the country. Id. ¶ 149.
One Relator was in fact arrested en route to Jordan to visit
his ill mother. Id. ¶¶ 235-38.
April 2013, GLS transported Resident Visa Relators to the
Kuwaiti Ministry of Labor and Social Affairs, and demanded
they execute Powers of Attorney (“POAs”) with the
false promise of being issued new visas. Id.
¶¶ 150-53. GLS instead used the POAs to file civil
complaints in Resident Visa Relators' names against
Alshora for unpaid wages and without the Relators'
knowledge or consent. Id. ¶¶ 154-55.
Alshora, in turn, filed counterclaims against the Relators,
seeking damages for the “allegedly frivolous
filing” of Relators' complaints. Id.
the criminal “absconding” charges, GLS also
coerced the Resident Visa Relators into signing false
confessions with the promise that they would be allowed to
leave Kuwait. Id. ¶ 158. However, unbeknownst
to the Relators, the “confessions” resulted in
their immediate expulsion from Kuwait and they were banned
from reentering any member nation of the Gulf Cooperation
Council. Id. ¶ 159. Those Relators
who refused to sign confessions were detained for months
before finally being released. Id.
further allege “inhumane” treatment they suffered
by being forced to stay in “overcrowded, unsanitary,
and dangerous living conditions” while stationed in
Kuwait. Id. ¶¶ 182-83. While private
contractors generally live off base in private housing or on
base in structures built by their employers, Defendants
placed Relators on bases in overcrowded tents not built to
serve as permanent quarters for large numbers of long-term
residents. Id. ¶¶ 185-87. Relators recount
living in tents infested with rodents, bed-bugs, lice and
mites. Id. ¶¶ 185-87, 274. Relators did
not receive any medical care despite their having sustained a
number of serious injuries. Id. ¶¶ 186,
on the above-described scheme, Relators filed this qui
tam action on behalf of the United States under the
False Claims Act (“FCA”), 31 U.S.C. §§
3729 et seq. The FCA generally assigns liability to
“any person who . . . knowingly presents, or causes to
be presented, a false or fraudulent claim for payment or
approval” to the United States. Id. §
3729(a)(1)(A). Private parties, known as qui tam
relators, may bring FCA actions on behalf of the United
States. The FCA provides the United States an opportunity to
investigate the claims and choose whether to intervene in the
Relators' place or allow Relators to proceed with the
litigation. Id. § 3730(b). After prolonged
investigation and deliberation in this case, the United
States declined to intervene. See ECF No. 29.
Amended Complaint, Relators assert three FCA counts against
prime contractor GLS and subcontractors Invizion, KMS, Shee
Atika, TigerSwan, and Wright for false claims related to
Contracts 1 and 2. See ECF No. 9 ¶¶
488-547. Relators aver AECOM National Security Programs, Inc.
(“AECOM”) and DynCorp International, LLC
(“DynCorp”) are liable as joint owners of GLS.
Id. ¶ 20. Relators further bring one count
under the Trafficking Victims Protection Reauthorization Act
(“TVPRA”) concerning Relators' treatment and
work conditions in Kuwait. Id. ¶¶ 548-93.
On May 21, 2019, the Clerk entered default as to Defendant
Invizion for failure to plead or otherwise defend. ECF No.
132. The other seven Defendants have moved to dismiss the
Amended Complaint on several grounds, each discussed below.
See ECF Nos. 64, 80, 81, 83, 85, 100, 129.
Standards of Review
challenge the Amended Complaint on jurisdiction and
sufficiency grounds, implicating Federal Rules of Civil
Procedure 12(b)(1), 12(b)(2), and 12(b)(6). Rule 12(b)(1)
motions challenge a court's authority to hear the matter.
See Jones v. Calvert Group, Ltd., 551 F.3d 297,
300-01 (4th Cir. 2009). The plaintiff bears the burden of
establishing subject matter jurisdiction by a preponderance
of the evidence. Lovern v. Edwards, 190 F.3d 648,
654 (4th Cir. 1999). In determining whether jurisdiction
exists, “the court may look beyond the pleadings and
the jurisdictional allegations of the complaint and view
whatever evidence has been submitted on the issue.”
Khoury v. Meserve, 268 F.Supp.2d 600, 606 (D. Md.
2003) (internal marks and citation omitted). Where the
defendant contends that the complaint “simply fails to
allege facts upon which subject matter jurisdiction can be
based, ” the Court construes the factual allegations as
true and most favorably to the plaintiff. Adams v.
Bain, 697 F.2d 1213, 1219 (4th Cir. 1982). Whether the
Court retains subject matter jurisdiction must be decided
before reaching the merits of the case. Jones v. Am.
Postal Workers Union, 192 F.3d 417, 422 (4th Cir. 1999).
personal jurisdiction is lacking, dismissal of the claims may
also be warranted. Lightfoot v. Cendant Mortg.
Corp., 137 S.Ct. 553, 562 (2017). Pursuant to Federal
Rule of Civil Procedure 12(b)(2), the plaintiff bears the
burden of establishing personal jurisdiction by a
preponderance of the evidence. Carefirst of Md., Inc. v.
Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 396 (4th
Cir. 2003). In deciding a Rule 12(b)(2) motion, the court is
“permitted to consider evidence outside the
pleadings.” All Risks, Ltd. v. Butler, No.
GLR-15-3146, 2016 WL 4435477, at *2 (D. Md. Aug. 22, 2016)
(internal citations omitted).
motion brought pursuant to Rule 12(b)(6) tests the
sufficiency of the complaint. Presley v. City of
Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006). The
Court accepts “the well-pled allegations of the
complaint as true, ” and construes all facts and
reasonable inferences most favorably to the plaintiff.
See Ibarra v. United States, 120 F.3d 472, 474 (4th
Cir. 1997). To survive a motion to dismiss, a complaint's
factual allegations “must be enough to raise a right to
relief above the speculative level on the assumption that all
the allegations in the complaint are true (even if doubtful
in fact).” Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007) (citations omitted). The Court may also
grant a 12(b)(6) motion on statute of limitations grounds,
but “only if the time bar is apparent on the face of
the complaint.” Semenova v. Md. Transit
Admin., 845 F.3d 564, 567 (4th Cir. 2017) (citation and
internal quotations omitted).
ruling on a Rule 12(b)(6) motion, the Court generally may not
consider extrinsic evidence. Zak v. Chelsea Therapeutics,
Int'l, Ltd., 780 F.3d 597, 606 (4th Cir. 2015)
(“Consideration of extrinsic documents by a court
during the pleading stage of litigation improperly converts
the motion to dismiss into a motion for summary
judgment.”). However, the Court may consider documents
attached to pleadings if “integral to and explicitly
relied on in the complaint” and the plaintiff does not
challenge the documents' authenticity. Id. at
606-07 (quoting Phillips v. LCI Int'l, Inc., 190
F.3d 609, 618 (4th Cir. 1999)).
Small Business Defendants, TigerSwan and Shee Atika, contend
that dismissal for lack of personal jurisdiction is warranted
under Rule 12(b)(2) because they lack “minimum
contacts” with this forum. ECF No. 64-1 at 1; ECF No.
129-1 at 13-15. TigerSwan more particularly argues that it
has conducted no business in Maryland and that mere corporate
registration and compliance with Maryland's unemployment
laws does not amount to “minimum contacts”
sufficient to confer personal jurisdiction. ECF No. 64-1 at
9-11. Shee Atika similarly contends that “minimum
contacts” with the state are lacking because it had
always been an Alaska limited liability company prior to its
dissolution and never operated in Maryland. ECF No. 129-1 at
14-15. TigerSwan and Shee Atika, however, advocate for their
dismissal under the wrong standard.
courts routinely determine whether personal jurisdiction is
proper under a “minimum contacts” theory,
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-72
(1985), where, as here, a federal statute authorizes
nationwide service of process, a “national
contacts” standard applies. Autoscribe Corp. v.
Goldman & Steinberg, 47 F.3d 1164, 1164 (4th Cir.
1995) (table decision). In this context, “so long as
the assertion of jurisdiction over the defendant is
compatible with due process, the service of process is
sufficient to establish the jurisdiction of the federal court
over the person of the defendant.” Hogue v. Milodon
Eng'g, Inc., 736 F.2d 989, 991 (4th Cir. 1984). A
defendant contesting personal jurisdiction under this
standard must demonstrate that trying its case in the forum
would violate its Fifth Amendment due process rights and that
“extreme inconvenience or unfairness . . . would
outweigh the congressionally articulated policy evidenced by
a nationwide service of process provision.” Becker
v. Noe, No. ELH-18-00931, 2019 WL 1415483, at *18 (D.
Md. Mar. 27, 2019) (quoting Trs. of the Plumbers &
Pipefitters Nat'l Pension Fund v. Plumbing Servs.,
Inc., 791 F.3d 436, 444 (4th Cir. 2015)); see
also 4 Charles Alan Wright & Arthur R. Miller,
Federal Practice and Procedure § 1068.1 (4th
ed. 2019) (noting substantial deference is given to
Congress' choice to include a nationwide service
the FCA, nationwide service of process is accomplished by
summons, which “as required by the Federal Rules of
Civil Procedure shall be issued by the appropriate district
court and served at any place within or outside the United
States.” 31 U.S.C. § 3732(a). Accordingly, the
Court considers TigerSwan and Shee Atika's national
contacts with the United States rather than minimum contacts
with the state of Maryland in determining whether it has
personal jurisdiction over these Defendants. Cf. United
States v. Hobbs, No. 16CV236, 2018 WL 1368325, at *6
(N.D. W.Va. Mar. 16, 2018) (“The Court discerns no
reason why the Fourth Circuit would not adopt the national
contacts test in the context of an FCA action such as this
maintains sufficient contacts with the United States for this
Court to exercise personal jurisdiction. TigerSwan is
qualified as a small business under the United States Small
Business Association. ECF No. 64-1 at 3. It formed as a
corporation in Colorado, converted to a limited liability
company in Delaware, and is registered in Maryland.
Id. at 2-3. TigerSwan made payments to the Maryland
Unemployment Insurance Department on behalf of a resident
employee in Maryland. Id. at 4. Further, all
back-office management duties arising from Contract 1 were
conducted at TigerSwan's headquarters in North Carolina.
Id. at 3-4. TigerSwan meets the minimum standard for
contacts with the United States to establish the Court's
Atika similarly meets the national contacts test. Shee Atika
was a limited liability company organized under the laws of
Alaska and was 51% owned by an Alaska Native Corporation and
49% by an individual who resides in New Hampshire. ECF No.
129-5 ¶¶ 5, 6, 8. Shee Atika “received
certifications from the United States Small Business
Association” (id. ¶ 9) and had around 20
employees who worked in the United States on Contract 1,
located in Alaska, North Carolina, and Virginia. Id.
¶ 22. The Court maintains personal jurisdiction over
both Defendants for the FCA claims.
and Shee Atika alternatively contend that even if they meet
the national contacts standard, notions of fairness and
convenience should bar the Court from exercising personal
jurisdiction. TigerSwan avers that, as a small business with
no other connection to the forum state, litigation in this
forum would unduly burden the corporation. ECF No. 75 at 5.
Shee Atika similarly contends that, as a business no longer
in operation that was located thousands of miles away in
Alaska, litigating the case in Maryland would be
“constitutionally unreasonable.” ECF No. 129-1 at
16-17. The Court finds that the proffered inconveniences
alone do not defeat personal jurisdiction.
“highly unusual cases” will “inconvenience
. . . rise to a level of constitutional concern.”
ESAB Grp., Inc. v. Centricut, Inc., 126 F.3d 617,
627 (4th Cir. 1997). This is especially so where
“[m]odern means of communication and
transportation” have undoubtedly lessened the burden
and expense of litigation. Republic of Panama v. BCCI
Holdings (Luxembourg) S.A., 119 F.3d 935, 947-48 (11th
Cir. 1997); Becker, 2019 WL 1415483, at *18
(dismissing Fifth Amendment concerns where the inconvenience
was related to costs of travel); see also ESAB Grp.,
126 F.3d at 627 (finding that personal jurisdiction was
established despite some inconvenience to the defendants but
refusing to decide issues of proper venue). Although the
Court is, and will remain, sensitive to Defendants'
concerns, FCA litigation will proceed in this forum as to
TigerSwan and Shee Atika. The motion to dismiss on this
ground is denied.
the Court will exercise pendant jurisdiction over the TVPRA
claims. Pendent personal jurisdiction is proper where the
claims arise under a “common nucleus of operative
fact.” See Burt v. Maasberg, No. ELH-12-0464,
2013 WL 1314160, at *36 (D. Md. Mar. 31, 2013) (quoting
ESAB Grp., 126 F.3d at 628). The FCA and TVPRA
claims arise from a common nucleus of operative facts
concerning the implementation of Contract 1. See
Sensormatic Sec. Corp. v. Sensormatic Elecs. Corp.,
452 F.Supp.2d 621, 626, 628 (D. Md. 2006),
aff'd, 273 Fed.Appx. 256 (4th Cir. 2008)
(stating multiple claims arising from the same insurance
policy arose from a common nucleus of operative fact);
Orteck Int'l Inc. v. TransPacific Tire & Wheel,
Inc., No. DKC 2005-2882, 2006 WL 2572474, at *9 (D. Md.
Sept. 5, 2006) (exercising pendent personal jurisdiction over
claims arising from a single sale). Thus, the Court may
extend personal jurisdiction over TigerSwan and Shee Atika to
the TVPRA claims. See ESAB Grp., 126 F.3d at 628-29.
As TigerSwan's motion to dismiss solely challenged
personal jurisdiction, its motion is denied. ECF No. 64.
FCA Claims (Counts I-III)
One through Three of the Amended Complaint allege violations
of three separate FCA provisions. In Count I, Relators aver
that “Defendants knowingly presented, or caused to be
presented, false and/or fraudulent claims for payment or
approval by the U.S. Government, in violation of 31 U.S.C.
§ 3729(a)(1).” ECF No. 9 ¶ 489. In Count II,
Relators aver that Defendants knowingly made, used, or caused
to be made or used, “false records or statements to get
false or fraudulent claims paid or approved by the U.S.
Government, in violation of 31 U.S.C. §
3729(a)(1)(B).” Id. ¶ 525. In Count III,
Relators allege a “reverse false claim, ” whereby
Defendants knowingly made false statements to avoid having to
pay an amount owed to the Government, in violation of 31
U.S.C. § 3729(a)(1)(G). Id. ¶ 542.
FCA claims are grounded in two primary factual theories.
First, Relators assert that GLS falsely claimed to the
Government that GLS had employed Small Business Defendants
when, in actuality, the subcontractors were
“fronts” for GLS which provided the services
pursuant to the Contracts with the Government. Id.
¶ 493. Relators contend that the Small Business
Defendants “knowingly participat[ed]” in this
scheme and thus “caused each of these false claims to
be presented.” Id. ¶ 499. Relators assert
that had the Government “known of the falsity as to
GLS's compliance with its Small Business Subcontracting
Plan, the [Federal Acquisition Regulation], and applicable
federal small business statutes, the Government may not have
paid the invoices submitted under Contract 1.”
Id. ¶ 502.
Relators allege that GLS falsely represented to the
Government that it was in compliance with the TVPRA and
Kuwaiti labor and immigration laws, including improper
“sponsorship” fees paid to Alshora under Contract
1. Id. ¶ 503. GLS' false statements under
Contract 1 were made “to induce the Government to award
it Contract 2.” Id. ¶ 533. Relators also
allege that invoices submitted for payment under Contract 2
constitute distinct false claims “because GLS was
ineligible to perform that contract due to its violations of
the federal small business regulations, TVPRA and Kuwaiti law
while performing Contract 1.” Id. ¶ 518.
Public Disclosure Bar
AECOM, DynCorp, GLS, KMS, Shee Atika, and Wright
(hereinafter, “Defendants”) principally argue
that Relators' FCA claims are foreclosed by the FCA's
public disclosure bar. See ECF No. 80-1 at 26. The
FCA's public disclosure bar “aims to strike a
balance between encouraging private persons to root out fraud
and stifling parasitic lawsuits in which a relator, instead
of plowing new ground, attempts to free-ride by merely
reiterating previously disclosed fraudulent acts.”
U.S. ex rel. Beauchamp v. Academi Training Ctr., 816
F.3d 37, 43 (4th Cir. 2016) (internal marks and citation
omitted). The statute, therefore, “disqualifies private
suits based on fraud already disclosed in particular
settings-such as hearings, government reports, or news
reports-unless the relator meets the definition of an
‘original source' under the FCA.”
Id. at 39.
claims in this case implicate two versions of the public
disclosure bar. Prior to 2010, the FCA public disclosure
No court shall have jurisdiction over an action under this
section based upon the public disclosure of allegations or
transactions in a criminal, civil, or administrative hearing,
in a congressional, administrative, or Government Accounting
Office report, hearing, audit, or investigation, or from the
news media, unless the action is brought by the Attorney
General or the person bringing the action is an original
source of the information.
31 U.S.C. § 3730(e)(4)(A) (2005). An “original
source” was further defined as “an individual who
has direct and independent knowledge of the information on
which the allegations are based and has voluntarily provided
the information to the Government before filing an action
under this section which is based on the information.”
Id. § 3730(e)(4)(B).
pre-2010 version of the statute “operated as a
jurisdictional limitation-the public-disclosure bar, if
applicable, divested the district court of subject-matter
jurisdiction over the action.” U.S. ex rel. May v.
Purdue Pharma L.P. (May I), 737 F.3d 908, 916 (4th Cir.
2013). The “relator bears the burden of proving that
the public disclosure bar does not preclude his FCA
action.” U.S. ex rel. May v. Purdue Pharma L.P.
(May II), 811 F.3d 636, 639-40 (4th Cir. 2016).
March 23, 2010, Congress amended the provision to clarify the
sources of public disclosure. This public disclosure
provision, operative today, now reads:
The court shall dismiss an action or claim under this
section, unless opposed by the Government, if substantially
the same allegations or transactions as alleged in the action
or claim were publicly disclosed-
(i) in a Federal criminal, civil, or administrative hearing
in which the Government or its agent is a party;
(ii) in a congressional, Government Accountability Office, or
other Federal report, hearing, audit, or investigation; or
(iii) from the news media, unless the action is brought by
the Attorney General or the person bringing the action is an
original source of the information.
31 U.S.C. § 3730(e)(4)(A) (2010).
“original source” definition was also amended to
include an individual who either:
(i) prior to a public disclosure under subsection (e)(4)(a),
has voluntarily disclosed to the Government the information
on which allegations or transactions in a claim are based, or
(2) who has knowledge that is independent of and materially
adds to the publicly disclosed allegations or transactions,
and who has voluntarily provided the information to the
Government before filing an action under this
Id. § 3730(e)(4)(B).
the previous public disclosure bar, the 2010 amendment is no
longer jurisdictional and instead operates as
“effectively, an affirmative defense.”
Beauchamp, 816 F.3d at 40. The amendment also
“changed the required connection between the
[relator's] claims and the public disclosure.”
Id. Where previously the statutory bar required a
showing that a relator “actually derived” his
knowledge from the public disclosure, under the amendment the
bar now applies “if substantially the same allegations
or transactions were publicly disclosed” as those
averred by the relator. Id. (citations omitted).
amendment also “expanded” the statute's
definition of the “original source” exception to
the bar. U.S. ex rel. Moore & Co., P.A. v. Majestic
Blue Fisheries, LLC, 812 F.3d 294, 299 (3d Cir. 2016).
In the pre-2010 version, the relator had to demonstrate
“direct” knowledge of the information and
disclosure to the Government in advance of filing suit. The
post-2010 version no longer requires a showing of direct
knowledge so long as the relator demonstrates that he shared
with the Government pre-suit information that is
“independent” of the public disclosures and that
“materially adds” to the information that had
been publicly disclosed. Id.
Subcontractor Fraud Claims
the 2010 amendments are not retroactive, the Court must apply
the pre-2010 version of the statute to any alleged conduct
that occurred before March 23, 2010 and the post-2010 version
to the conduct that occurred after that date. See May
I, 737 F.3d at 918; Citynet, LLC ex rel. U.S. v.
Frontier W.Va. Inc., No. 14-15947, 2018 WL 1582527, at
*15 (S.D. W.Va. Mar. 30, 2018). Here, the conduct
underpinning the subcontractor-related FCA claims straddle
both versions of the public disclosure bar in that Contract 1
remained in effect from 2007 to at least 2012. See