UNITED STATES EX REL. DAVID GRANT, Plaintiff - Appellant,
UNITED AIRLINES INC., Defendant-Appellee.
Argued: September 27, 2018
from the United States District Court for the District of
South Carolina, at Charleston. David C. Norton, District
William Stephen Norton, MOTLEY RICE, LLC, Mt. Pleasant, South
Carolina, for Appellant.
J. Harrison, CROWELL & MORING LLP, Washington, D.C., for
M. Bograd, Washington, D.C., William P. Tinkler, MOTLEY RICE,
LLC, Mt. Pleasant, South Carolina, for Appellant.
Michael T. Cole, Erika Karnaszewski Fedelini, NELSON MULLINS
RILEY & SCARBOROUGH, LLP, Charleston, South Carolina;
Jason M. Crawford, Charles D. Austin, CROWELL & MORING
LLP, Washington, D.C., for Appellee.
WILKINSON, DUNCAN, and KEENAN, Circuit Judges.
DUNCAN, CIRCUIT JUDGE
David Grant brought this qui tam action against his former
employer, United Airlines, Inc. ("United"), under
the False Claims Act (the "FCA"), 31 U.S.C.
§§ 3729, et seq. The district court
dismissed Grant's second amended complaint (the
"SAC") for failure to state a claim under Federal
Rule of Civil Procedure 12(b)(6). For the reasons that
follow, we affirm in part, reverse in part, and remand to the
district court for proceedings consistent with this opinion.
was a Lead Aviation Maintenance Technician for United. From
2008 to 2014, he worked at Charleston Air Force Base
("CAFB"), where United provided engine maintenance
services for the U.S. Air Force's fleet of Boeing C-17
Globemaster III military transport airplanes
("C-17s"). United performed this work pursuant to a
series of subcontracts. The Air Force contracted with Boeing
to manufacture and repair C-17s. Boeing, in turn,
subcontracted with Pratt & Whitney ("P&W")
to build and maintain F117 engines ("F117 engines")
for the C-17s. Finally, P&W subcontracted with United to
maintain and repair those F117 engines.
the SAC alleges that pursuant to its subcontract with
P&W, United was responsible for, inter alia, repairing,
overhauling, and inspecting the F117 engines and accompanying
parts. According to the SAC, United is the only company in
the world that performs these services for F117 engines. The
subcontract requires that repairs be conducted in accordance
with numerous regulations for maintaining and inspecting
airplanes, including federal aviation regulations
("FAR"), P&W build standards, and Air Force
Technical Orders ("Air Force T.O.") (collectively
"the regulations"). The regulations required, for
example, that United use specific tools that were calibrated
to specified levels when conducting certain procedures and
investigations. Grant alleges that because United's work
was required to comply with the regulations, United violated
the FCA by certifying repairs that did not meet those
requirements as complete and serviceable and returning them
to the Air Force for payment.
SAC, Grant alleges that from 2008 to 2014, he observed three
specific practices that purportedly violated the FCA. First,
Grant alleges several instances when United "pencil
whipped" repairs, meaning it certified that work had
been completed even when it had not. For example, an
inspector employed by United reported being "[coerced]
into not making write ups" regarding problematic engines
and was instead asked to "make it disappear or shop for
another investigator to sign the item off." J.A. 118-19.
Second, Grant alleges several instances when United certified
repairs that had been performed by uncalibrated and
uncertified tools, in violation of the subcontract's
requirements. For example, the SAC alleges that United was
required under the regulations to conduct fluorescent
penetrant inspections ("FPIs") for cracks in engine
parts using a calibrated radiometer. However, between 2008
and 2014, United repeatedly certified that such inspections
had been completed even when they were performed using an
uncalibrated radiometer or without a radiometer at all; in
fact, between December 2013 and March 2014, there was no
radiometer at CAFB. Finally, the SAC alleges that United
allowed inspectors to continue certifying repairs even after
their training and eye exams had expired.
further alleges that beginning in early 2014, Grant alerted
United to numerous aircraft maintenance violations and was
ultimately terminated a few months later. For instance, on
February 19, 2014, Grant expressed his concerns that CAFB had
no radiometer on the premises to United's Provisioning
Coordinator, and later to one of United's F117 engine
engineers who in response asked him, "[d]on't you
have anything better to do than f[***] things up here?"
J.A. 134-35. On March 5 and 13, 2014, he attended
investigatory meetings where he discussed United's pencil
whipping, failure to use a radiometer, and use of
uncalibrated tools with several United managers. That same
month, Grant was observed taking pictures of CAFB's FPI
radiometer after it had been absent from the premises for
five months. He was immediately escorted out of the building.
On March 18, 2014, Grant alerted United's Managing
Director of Maintenance about the use of
"unserviceable" tools and management's
knowledge of such use. Two days later, he wrote to the same
managing director about these failures, observing that they
could "result in catastrophic failure to an
engine." J.A. 144. The next day, on March 21, 2014,
Grant was informed that his employment would be terminated. A
subsequent investigation into Grant's allegations in
April 2014 "did not identify any areas of deficiency in
the equipment or the training of personnel."
Id. Ultimately, Grant was terminated on May 6, 2014.
February 24, 2015, Grant filed a qui tam action against
United alleging that United violated three provisions of the
FCA. Specifically, Grant alleged that United "knowingly
present[ed], or caus[ed] to be presented, a false or
fraudulent claim for payment or approval," 31 U.S.C.
§ 3729(a)(1)(A); "knowingly ma[de], us[ed], or
caus[ed] to be made or used, a false record or statement
material to a false or fraudulent claim," id.
at § 3729(a)(1)(B); and unlawfully terminated Grant for
"lawful acts done . . . in furtherance of an [FCA]
action . . . or other efforts to stop 1 or more violations of
[the FCA]," id. at § 3730(h)(1).
district court dismissed Grant's SAC for failure to state
a claim under Rule 12(b)(6). See Fed. R. Civ. P.
12(b)(6). It dismissed the first two claims under the FCA
because the SAC failed to sufficiently allege that United
ever presented, or caused another contractor to present, a
false claim for payment to the government, as required by
§§ 3729(a)(1)(A) and (B). The district court also
dismissed the retaliation claim, reasoning that the SAC did
not allege that Grant engaged in the type of activity that is
protected by the FCA. This appeal followed.
we address Grant's claims under §§
3729(a)(1)(A) and (B). We review de novo the district
court's dismissal of a complaint for failure to state a
claim under Rule 12(b)(6). Garnett v. Remedi Seniorcare,
LLC, 892 F.3d 140, 142 (4th Cir. 2018). In our analysis,
we consider only the allegations contained in the SAC.
See E.I. du Pont de Nemours & Co. v. Kolon
Indus. Inc., 637 F.3d 435, 449 (4th Cir. 2011)
("[M]atters beyond the pleadings . . . cannot be
considered on a Rule 12(b)(6) motion.").
a complaint will survive a Rule 12(b)(6) motion to dismiss if
it "state[s] a claim to relief that is plausible on its
face," meaning that it pleads sufficient facts to
support a "reasonable inference that the defendant is
liable for the misconduct alleged." Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (citation omitted).
However, fraud-based claims must satisfy Rule 9(b)'s
heightened pleading standard. United States ex rel.
Nathan v. Takeda Pharm. N. Am., Inc., 707 F.3d 451,
455-56 (4th Cir. 2013). Rule 9(b) requires that "a party
must state with particularity the circumstances constituting
fraud or mistake." Fed.R.Civ.P. 9(b).
arising under §§ 3729(a)(1)(A) and (B) of the FCA
are fraud-based claims that must satisfy Rule 9(b)'s
pleading standard. Nathan, 707 F.3d at 455-56. The
FCA protects the government against false claims that are
presented to it in federal contracts. All FCA claims require,
among other elements, that the false statement or conduct
"caused the government to pay out money or to forfeit
money due." United States ex rel. Harrison v.
Westinghouse Savannah River Co., 352 F.3d 908, 913 (4th
Cir. 2003) (Harrison II). Section 3729(a)(1)(A) of
the FCA prohibits any person from "knowingly
present[ing], or caus[ing] to be presented, a false or
fraudulent claim for payment or approval." 31 U.S.C.
§ 3729(a)(1)(A). Section 3729(a)(1)(B) of the FCA
prohibits any person from "knowingly mak[ing], us[ing],
or caus[ing] to be made or used, a false record or statement
material to a false or fraudulent claim." 31 U.S.C.
order for a false statement to be actionable under either
subsection of the FCA, it must be made as part of a false or
fraudulent claim. Harrison v. Westinghouse Savannah River
Co., 176 F.3d 776, 786 (4th Cir. 1999) ("The
statute attaches liability not to the underlying fraudulent
activity or to the government's wrongful payment, but to
the 'claim for payment.'") (alterations
omitted). A "claim" is "any request or demand,
whether under a contract or otherwise, for money or property
that . . . is presented to an officer, employee, or agent of
the United States." 31 U.S.C. § 3729(b)(2)(A) &
(A)(i). Therefore, a central question in all FCA cases is
whether the ...