US ex rel. Zotos v. Town of Hingham ( 2024 )

United States Court of Appeals
For the First Circuit
No. 23-1694
UNITED STATES, ex rel. Frederic P. Zotos and COMMONWEALTH OF
MASSACHUSETTS, ex rel. Frederic P. Zotos,
Plaintiffs, Appellants,
v.
TOWN OF HINGHAM; ROGER FERNANDES, individually and as former
Town Engineer; TOM MAYO, individually and as Town Administrator;
TED C. ALEXIADES, individually and as former Town Administrator,
former Town Accountant/Finance Director; KEVIN E. PAICOS,
individually and as former Town Administrator; and SUSAN
NICKERSON, individually and as Town Accountant,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Nathaniel M. Gorton, U.S. District Judge]
Before
Barron, Chief Judge,
Selya and Rikelman, Circuit Judges.
Frederic P. Zotos, pro se, on brief for appellants.
Kerry T. Ryan, Bogle, DeAscentis & Coughlin, Douglas I.
Louison, Joseph A. Padolsky, and Louison, Costello, Condon & Pfaff,
LLP on brief for appellees.
April 8, 2024
SELYA, Circuit Judge. An old motto teaches that "if at
first you don't succeed, try, try again." Thomas H. Palmer, The
Teacher's Manual 223 (1840). Whatever virtue such unfailing
persistence may have in everyday life, it is an uncertain
blueprint. This case, in which relator-appellant Frederic P. Zotos
tries once again to vindicate a purported grievance with municipal
authorities, illustrates the point.
I
We briefly rehearse the relevant facts and travel of the
case. Because this appeal follows the district court's grant of
a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6),
we draw the facts from the plaintiff's complaint and its
attachments. See Lanza v. Fin. Indus. Regul. Auth., 953 F.3d 159,
161 (1st Cir. 2020).
Relator Frederic P. Zotos is an attorney residing in
Cohasset, Massachusetts. The Town of Hingham (the Town) is a
municipality in Massachusetts, and the other defendants all were
officials and administrators of the Town at times relevant to the
complaint.
On multiple prior occasions, Zotos has been involved in
litigation — either as a plaintiff or an attorney — against the
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Town concerning the legality of various speed limit signs posted
within its jurisdiction.1 Time and again, the Town has prevailed.
The latest skirmish in this long-running battle
commenced on September 24, 2019, when Zotos filed a qui tam
complaint in the United States District Court for the District of
Massachusetts on behalf of the United States of America and the
Commonwealth of Massachusetts under the federal False Claims Act
(FCA), 31 U.S.C. §§ 3729(a)(1)(A)-(C), and the Massachusetts False
Claims Act (MFCA), M.G.L. ch. 12, §§ 5B(a)(1)-(3). The complaint
first alleges that the Town and its officials posted speed limit
signs and advisory speed plaques that did not comply with (and in
some cases violated) applicable federal and state laws and
regulations. As of March 2012 — according to the complaint — the
Town had posted at least twenty-six such speed limit signs and at
least thirty-four such advisory speed plaques. The complaint
further alleges that the Town applied for and received
reimbursements for these purportedly ultra vires speed limit signs
and advisory speed plaques from both the federal government and
the Commonwealth. Building on this foundation, the complaint
The reader who hungers for greater details may wish to
1
consult the following earlier opinions: Zotos v. Town of Hingham,
No. 12-11126, 2013 WL 5328478 (D. Mass. Sept. 19, 2013), aff'd,
No. 13-2308 (1st Cir. 2015); Zotos v. Town of Hingham, No. 13-
13065, 2016 U.S. Dist. LEXIS 195835 (D. Mass. March 25, 2016);
Belezos v. Bd. of Selectmen of Hingham, 94 N.E.3d 880 (Mass. App.
Ct. 2017).
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asserts that the defendants caused the Massachusetts Department of
Transportation (MassDOT) to present false claims, records, and
statements material to false claims to the Federal Highway
Administration (FHWA) with respect to two separate projects
administered under the Federal-Aid Highway Program (FAHP). So,
too, the defendants allegedly presented a plethora of false claims,
records, and statements material to false claims to the MassDOT
and were reimbursed pursuant to the Commonwealth's funding program
for local transportation projects under Mass. Gen. Laws ch. 90,
§ 34 (Chapter 90). In sum — according to the complaint — the Town
fraudulently induced the federal government to pay it roughly
$3,300,000 and the Commonwealth to pay it approximately
$7,300,000.
On July 21, 2023, the district court, ruling on a joint
defense motion filed pursuant to Federal Rule of Civil Procedure
12(b)(6), dismissed the relator's complaint for failure to state
a claim upon which relief could be granted. See United States ex
rel. Zotos v. Town of Hingham, No. 19-12002, 2023 WL 4686092, at
*8 (D. Mass. July 21, 2023). The district court first concluded
that the qui tam action was not barred by either claim or issue
preclusion. See id. at *5. Although Zotos had previously brought
a number of similar lawsuits, the presence of the United States
and the Commonwealth as the "real governmental parties in
interest," it determined, meant that these doctrines of preclusion
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did not apply. See id. The district court then found that Zotos's
claims fell short of the FCA and MFCA's requirements. See id. at
*5-8. In particular, it ruled that the relator failed sufficiently
to plead that the alleged misrepresentations were in fact material
to the federal government's and the Commonwealth's respective
decisions. See id. at *7-8. This timely appeal ensued.
II
We review the grant of a motion to dismiss for failure
to state a claim de novo. See SEC v. Tambone, 597 F.3d 436, 441
(1st Cir. 2010) (en banc). We accept as true all well-pleaded
facts set forth in the complaint and construe all reasonable
inferences therefrom to the pleader's behoof. See id. To stave
off dismissal, "[Zotos] need not demonstrate that [he] is likely
to prevail, but [his] claim must suggest 'more than a sheer
possibility that a defendant has acted unlawfully.'" García-
Catalán v. United States, 734 F.3d 100, 102-03 (1st Cir. 2013)
(quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). This
inquiry requires that we separate factual allegations from
conclusory ones and then evaluate whether the factual allegations
support a "reasonable inference that the defendant is liable for
the misconduct alleged." Iqbal, 556 U.S. at 678-79.
As a threshold matter, we note that we need not decide
the question of whether the doctrines of claim or issue preclusion
bar Zotos's present qui tam action. Although the district court
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found that neither doctrine barred this action, it suggested that
the question was ostensibly one of first impression in the Circuit.
See Town of Hingham, 2023 WL 4686092, at *5. Inasmuch as the
defendants do not develop any legal arguments in their appellate
briefing as to why the district court erred — they merely state in
a perfunctory manner that the relator's prior litigation
"appl[ies] to bar relitigation of Mr. Zotos' ultra vires claims in
this case" — they are deemed to have waived any right to appeal
the district court's determination. See United States v. Zannino,
895 F.2d 1, 17 (1st Cir. 1990) ("[I]ssues adverted to in a
perfunctory manner, unaccompanied by some effort at developed
argumentation, are deemed waived.").
III
"We have long held that the FCA is subject to a
judicially-imposed requirement that the allegedly false claim or
statement be material." United States ex rel. Loughren v. Unum
Grp., 613 F.3d 300, 307 (1st Cir. 2010); see Universal Health
Servs., Inc. v. United States ex rel. Escobar, 579 U.S. 176, 192
(2016) (explaining that "a misrepresentation about compliance with
a statutory, regulatory, or contractual requirement must be
material to the Government's payment decision"). Similarly, the
MFCA has been read as requiring "proof that a false claim was
material." Commonwealth ex rel. Minarik v. Tresca Bros. Concrete,
Sand & Gravel, Inc., No. 1784-02608, 2021 WL 800111, at *3 (Mass.
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Super. Ct. Jan. 25, 2021). In this instance, Zotos takes issue
with the district court's determination that he failed adequately
to allege that the defendants' purported misrepresentations were
material. See Town of Hingham, 2023 WL 4686092, at *7-8.
A misrepresentation is material if it has "a natural
tendency to influence, or [is] capable of influencing, the decision
of the decisionmaking body to which it was addressed." Neder v.
United States, 527 U.S. 1, 16 (1999) (quoting United States v.
Gaudin, 515 U.S. 506, 509 (1995)); see United States ex rel.
Winkelman v. CVS Caremark Corp., 827 F.3d 201, 211 (1st Cir. 2016)
(stating that fundamental inquiry of materiality focuses "on
whether a piece of information is sufficiently important to
influence the behavior of the recipient"). In ascertaining whether
any individual misrepresentation is material, several non-
dispositive factors are relevant. See United States ex rel.
Escobar, 579 U.S. at 194-95; see also Guilfoile v. Shields, 913
F.3d 178, 187 (1st Cir. 2019) ("Whether an express or implied false
representation of compliance with statutes or regulations is
'material' is ordinarily 'a fact-intensive and context-specific
inquiry.'" (quoting New York v. Amgen Inc., 652 F.3d 103, 111 (1st
Cir. 2011))). These factors include whether the government
expressly identified compliance with a particular provision as a
condition of payment, see United States ex rel. Escobar, 579 U.S.
at 194, whether the government paid "a particular type of claim in
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full despite actual knowledge that certain requirements were
violated, and has signaled no change in position," id. at 195, and
whether the noncompliance in question goes to "the very essence of
the bargain," id. at 193 n.5, or is merely "minor or
insubstantial," id. at 194.
Here, Zotos argues that he adequately alleged that the
defendants' purported misrepresentations to the FHWA and to the
MassDOT were material. We do not agree. We explain briefly why
this is the case in respect to his allegations regarding the FAHP
before turning to those dealing with the Chapter 90 program.
A
On appeal, Zotos argues that his complaint adequately
alleged materiality with respect to his allegations concerning the
FAHP. First, he contends, the complaint stated that the government
expressly conditioned reimbursement upon the defendants'
certification that they adhered to the applicable federal laws,
regulations, and guidelines. Under the first aforementioned
factor, he avers, this constitutes evidence of materiality.
Second, he asserts that the complaint merely alleged that the
government was unaware of the falsity of the defendants' claims —
and that there was no allegation that it continued to reimburse
the defendants despite knowing that they were not complying with
the various requirements. In turn, under the second non-
dispositive factor, this allegation does not undercut the
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materiality of the purported misrepresentations. Third, he
submits, "this is not a case about 'minor or insubstantial
noncompliance' with relatively ancillary regulations," but is
rather about violations that are "by definition antithetical to
the successful operation of the Government's Federal-Aid Highway
Programs."
We are not persuaded. To begin, it is unclear from the
complaint whether the defendants actually certified (or caused the
MassDOT to certify) that they adhered to the applicable laws,
regulations, and guidelines when they sought reimbursement.
Moreover, even if the complaint had alleged that the defendants
made such a certification, it is far from clear that the resulting
certification would have been material. After all, as the district
court noted, "there is no express indication on [the relevant
reimbursement form] that compliance with regulations related to
the establishment of speed limits signs was necessary for federal
funding." Town of Hingham, 2023 WL 4686092, at *8.
Zotos's contention that his complaint merely alleged
that the government was unaware of the falsity of the defendants'
claims is likewise unavailing. Even assuming that this is the
case, we take note of the fact that, by the time that Zotos had
filed the present complaint, he had already initiated a number of
similar lawsuits advancing nearly identical allegations — and the
government had nonetheless continued to fund the defendants'
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projects. See Banco Santander de P.R. v. Lopez-Stubbe (In re
Colonial Mortg. Bankers Corp.), 324 F.3d 12, 15 (1st Cir. 2003)
(explaining that appellate court may "consider not only the
complaint but also matters fairly incorporated within it and
matters susceptible to judicial notice").
Finally, despite Zotos's strenuous efforts to convince
us otherwise, we agree with the district court that "the very
essence of the bargain" undergirding FAHP funding was that the
"MassDOT incurred permissible costs on FAHP projects that were
duly reimbursed." Town of Hingham, 2023 WL 4686092, at *8.
Zotos's complaint does not allege that the defendants sought
reimbursement for nonexistent or duplicative costs. Instead, its
sole allegation is that the defendants sought reimbursement for
FAHP projects carried out on roadways featuring ultra vires highway
signs. In view of the "essence of the bargain" at issue here,
this alleged violation amounts at best to the kind of ancillary
violation for which "the Government would be entitled to refuse
payment were it aware," United States ex rel. Escobar, 579 U.S. at
195 — but this, without more, is insufficient to establish
materiality.
B
We reach a similar conclusion with respect to Zotos's
allegations concerning the Chapter 90 program. In particular, we
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find that the complaint falls short of alleging materiality under
the latter two non-dispositive factors.2
The complaint explicitly noted that in July of 2012 Zotos
alerted the MassDOT about the defendants' purported
misrepresentations and requested that it withhold or withdraw
funding earmarked for the Town. The complaint further asserted
that the General Counsel of the MassDOT responded to Zotos and
denied his request and, thereafter, the Commonwealth continued to
provide the Town with Chapter 90 funding.
This sequence of events constitutes "strong evidence"
that the requirements in question were not material to the
Commonwealth's decision-making process. Id. By the same token,
the complaint failed to allege materiality under the third
aforementioned factor. The essence of the Chapter 90 bargain was
that the Commonwealth reimbursed the Town for money that it spent
on approved transportation projects. Given that the complaint did
not allege that the defendants received funding from the
Commonwealth for projects that it never carried out but, rather,
only that they were reimbursed for projects carried out on roads
Although an argument could be made that the complaint's
2
allegation that the defendants certified that they complied with
the applicable Massachusetts laws and regulations weighs in favor
of materiality, we do not read Zotos's papers as having explicitly
alleged that compliance was expressly identified as a condition of
payment. Consequently, any such argument has been waived. See
Zannino, 895 F.2d at 17.
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featuring illegal signage, we hold that it did not adequately plead
materiality under the third non-dispositive materiality factor.
Under the holistic materiality inquiry, the complaint thus did not
sufficiently plead that the defendants' purported
misrepresentations were material.
IV
We need go no further. For the reasons elucidated above,
the judgment of the district court is
Affirmed.
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