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United States ex rel. Fadlalla v. Dyncorp International LLC

United States District Court, D. Maryland

September 4, 2019

UNITED STATES OF AMERICA ex rel. ELGASIM MOHAMED FADLALLA, et al., Plaintiff-Relators,
v.
DYNCORP INTERNATIONAL LLC, et al., Defendants.

          MEMORANDUM OPINION

          Date Paula Xinis, United States District Judge

         This 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.

         I. Background

         Relators'[1] 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.

         A. Subcontractor Fraud Scheme

         On 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).

         In 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.

         As part 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.

         In the 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.

         On July 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.

         B. Work Visa Fraud Scheme with Alshora

         Under 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.

         To 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.

         In late 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.

         Under 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.

         As a 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.

         In 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. ¶ 156.

         As to 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.[2] Id. ¶ 159. Those Relators who refused to sign confessions were detained for months before finally being released. Id.

         Relators 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, 346.

         C. Procedural History

         Based 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.

         In the 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.

         II. Standards of Review

         Defendants 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).

         Where 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).

         A 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).

         In 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)).

         III. Personal Jurisdiction

         Two 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.

         Although 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 provision).

         Under 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 one.”).

         TigerSwan 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 personal jurisdiction.

         Shee 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.

         TigerSwan 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.

         Only in “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.

         Similarly, 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.

         IV. FCA Claims (Counts I-III)

         Counts 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.

         Relators' 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.

         Second, 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.

         A. Public Disclosure Bar

         Defendants AECOM, DynCorp, GLS, KMS, Shee Atika, and Wright (hereinafter, “Defendants”)[3] 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.

         The FCA claims in this case implicate two versions of the public disclosure bar. Prior to 2010, the FCA public disclosure provision read:

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).

         The 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).

         On 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).

         The “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 section.[4]

Id. § 3730(e)(4)(B).

         Unlike 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).

         The 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.

         i. Subcontractor Fraud Claims

         Because 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 ...


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