Garst, Joseph E. v. Lockheed Integrated ( 2003 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 02-3175
UNITED STATES OF AMERICA
BY AND THROUGH JOSEPH E. GARST,
Plaintiff-Appellant,
v.
LOCKHEED-MARTIN CORPORATION, et al.,
Defendants-Appellees.
____________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 98 C 5072—John F. Grady, Judge.
____________
ARGUED APRIL 14, 2003—DECIDED MAY 8, 2003
____________
Before CUDAHY, POSNER, and EASTERBROOK, Circuit
Judges.
EASTERBROOK, Circuit Judge. In 1990 the Department
of Veterans Affairs chose Lockheed-Martin as the supplier
of a new office automation system that was supposed to
provide software, hardware, and services for database
management and other services across a secure nation-
wide network. Lockheed performed under this contract
between 1991 and 1997. Shortly after the VA replaced
Lockheed with a different vendor, Joseph Garst, who used
to work at the VA, filed this qui tam action on behalf of
2 No. 02-3175
the United States. Garst alleged that Lockheed had vio-
lated the False Claims Act, 31 U.S.C. §§ 3729-33, by over-
promising and under-performing, submitting fraudulent
claims in the process. After reviewing Garst’s allegations,
the Department of Justice declined to take over the suit,
leaving it in private hands.
Garst’s complaint did not allege any specific fraud,
leading Lockheed to move for its dismissal. (We use
“Lockheed” as a collective description for all defendants,
which include multiple corporate subsidiaries. Lockheed
Martin Integrated Solutions Co., which performed the
services under the contract, has been sold since 1997 to
ACS State and Local Solutions, Inc., a subsidiary of Affili-
ated Computer Services, Inc., but Lockheed apparently
retains all potential liability in this case.) Before the
district court could act on Lockheed’s motion, Garst filed
an amended complaint. At 16 pages and 71 paragraphs,
it was 50% longer than the initial complaint—but, the
district judge concluded, no better. The court dismissed it
for failure to plead fraud with particularity, 158 F. Supp. 2d
816 (N.D. Ill. 2001), a requirement that applies because
the False Claims Act condemns fraud but not negligent
errors or omissions. The district court observed that Garst
had not given any specific example of a fraudulent claim.
The judge permitted Garst to try again but reminded him
of the need to allege “the who, what, when, where, and
how: the first paragraph of any newspaper story.” See DiLeo
v. Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990). The
judge instructed Garst to file an organized and concise
document.
Garst’s second amended complaint ballooned to 74 double-
spaced pages with 198 paragraphs. Concise it was not.
Before Lockheed could respond, Garst filed a third amended
complaint, which broke the scale at 109 pages containing
345 numbered paragraphs; this document had 74 attach-
ments, many of them lengthy. Lockheed asked the dis-
No. 02-3175 3
trict judge to dismiss this complaint for failure to plead
fraud with particularity, as Fed. R. Civ. P. 9(b) requires,
and for the omission of any “short and plain statement of
the claim”, as Fed. R. Civ. P. 8(a)(2) contemplates. These
rules are not in conflict: it is possible to write a short
statement narrating the claim—which is to say, the basic
grievance—even if Rule 9(b) requires supplemental par-
ticulars. But the district judge concluded that this com-
plaint is so sprawling as to be essentially incomprehen-
sible (a Rule 8 problem) and that despite the bloat it
lacks details outlining fraud (a Rule 9 shortcoming). In-
stead of dismissing this complaint, the judge directed
Garst to file a more definite statement. To make sure that
Garst knew exactly what was needed, the judge explained
that the statement “should be brief and should as to each
count: (1) identify specific false claims for payment or
specific false statements made in order to obtain payment;
(2) if a false statement is alleged, connect that statement to
a specific claim for payment and state who made the
statement to whom and when; and (3) briefly state why
those claims or statements were false” (underlining
in original). Garst responded with 23 single-spaced pages
plus 25 new attachments. The statement is loaded with so
many acronyms and cross-references to the third amended
complaint (plus its attachments) that no one could under-
stand it without juggling multiple documents. Concluding
that matters had taken a turn for the worse, the district
judge threw up his hands and dismissed the complaint,
with prejudice, for Garst’s inability or unwillingness to
conform his pleadings to Rules 8 and 9. 2002 U.S. Dist.
LEXIS 14307 (N.D. Ill. July 31, 2002).
The third amended complaint and statement together
equate to 155 double-spaced pages and more than 400
numbered paragraphs, plus 99 attachments. You’d think
that all this paper and ink would be enough to narrate
at least one false claim. Yet Garst’s appellate brief does
4 No. 02-3175
not extract from the pleadings a single instance of a false
statement made to obtain payment. A few selections from
the “more definite statement” show why, after four years
of overseeing Garst’s efforts to plead a claim, the district
judge’s patience ran out. Here is the first paragraph of
the “more definite statement,” right under the caption
“SPECIFIC FALSE OR FRAUDULENT CLAIMS FOR
PAYMENT (SFCFP)” (a caption that shows Garst’s love of
inscrutable acronyms):
Claim for $2,584,926.04, MDS Ex. 1, TAC Ex. 47,
submitted on August 9, 1993 and related payments
by T.A. Sieverson, Vice-President of Lockheed
Integrated Solutions Company, Lockheed Corpora-
tion to VA Contracting Officer Steve Stapleton for
equipment and service provided during Phase I
and Phase II of the OA&MM/ISMS LAN/WAN
PROJECT. See TAC ¶¶ 141-181, 217-243, 252, 280-
282, 291-295.
The acronyms alone force readers to look elsewhere. MDS
means “More Definite Statement” and “TAC” means
“Third Amended Complaint.” LAN is local area network,
WAN is wide-area network, and PROJECT appears to
be the word “project” masquerading as an acronym. What
“OA&MM/ISMS” might mean, we have not endeavored
to discover. It is not defined anywhere in the more def-
inite statement. To understand the paragraph one would
have to read two exhibits and seventy-seven paragraphs
scattered throughout the third amended complaint! This
is simplification? Yet still one would not learn (a)
what Sieverson said, (b) why it is false, and (c) what
OA&MM/ISMS stands for. Paragraph 21 of the “specific
false claims” reads: “All Lockheed invoices and payments
within the statute of limitations following Lockheed
purchasing tickets in excess of one thousand dollars for VA
presidential appointees and senior executives, as detailed
in TAC ¶55-Ex 5 and 6.” This is specific? How does “[a]ll
No. 02-3175 5
Lockheed invoices and payments within the statute of
limitations” zero in on the fraud? And, once again, what
were the statements and why were they false? Garst reveals
in his appellate brief that, in his view, any claim for
payment implies that the vendor has not violated any
ethical rules and that by lobbying the VA’s top officials
Lockheed committed such violations. Why ethical problems
(if any) equate to fraudulent claims is hard to see; at all
events, the pleading defect is that Garst has made it so
hard to grasp his point.
The second section of the “more definite statement” begins
with the caption “SPECIFIC FALSE STATEMENTS OR
RECORDS MADE IN ORDER TO OBTAIN PAYMENT”.
The first paragraph in this section reads:
The total claims for the OA&MM LAN/WAN are
fraudulent or false because Lockheed’s cost esti-
mate given to the VA’s Stapleton was false because,
to obtain the project task order, Lockheed told
the VA that it could accomplish the OA&MM
LAN/WAN statement of work for $1.2 million, a
savings of $700,000 over the previously selected
Banyan VINES configuration. Lockheed billed the
VA for at least $2.6 million and never delivered a
working LAN/WAN that met the contract require-
ments. Lockheed submitted the false cost statement
to the NOAVA Contracting Officer (Stapleton). TAC
¶ 141, Ex. 41.
“NOAVA” stands for “National Office Automation for
Veterans Affairs.” VINES expands to “Virtual Integrated
Network Services” but used in this paragraph is the name
of a competitor’s product rather than an acronym for a
family of network protocols. What “the OA&MM LAN/WAN
statement of work” might be is a mystery; perhaps Garst
meant to say “segment of work.” A contention that the
“total claims” are false again fails the requirement of
6 No. 02-3175
specificity. What did Lockheed say? This time Garst at
least hints at a falsehood: Lockheed promised to do a task
for $1.2 million and eventually billed $2.6 million without
meeting contract requirements. (Other parts of the com-
plaint and statement suggest that the shortcoming that
most concerns Garst is Lockheed’s inability to make the
network secure enough for the transmission of military
secrets, though an outsider might suppose that a data-
base of pensions and health benefits does not require
quite that degree of sophisticated encryption.) Yet failing
to keep one’s promise is just breach of contract, and cost
overruns in government procurement projects may occur
without fraud. To satisfy Rule 9(b), Garst had to allege
that Lockheed said something knowing at the time that
the representation was false (or not intending to perform);
failures to satisfy the customer ex post are not fraud, for
as Judge Friendly remarked there is no “fraud by hind-
sight.” Denny v. Barber, 576 F.2d 465, 470 (2d Cir. 1978).
See also Murray v. Abt Associates Inc., 18 F.3d 1376 (7th
Cir. 1994). The VA hired Lockheed to solve problems. That
Lockheed knew in advance that there were problems (the
most charitable description of Garst’s allegations), some
of which turned out to be insuperable (by Lockheed’s staff,
at least), does not come close to alleging fraud with particu-
larity.
We could go on with other paragraphs of the complaint
and statement, but there would be little point to the
exercise. Some come closer to specific allegations of deceit
but fail to link them to any claim for payment. (Lockheed
says that it swallowed some of the costs, and did not sub-
mit bills, when it realized that certain objectives could not
be achieved.) But even if it were possible to navigate
through these papers to a few specific instances of fraud,
why should the court be obliged to try? Rule 8(a) requires
parties to make their pleadings straightforward, so that
judges and adverse parties need not try to fish a gold coin
No. 02-3175 7
from a bucket of mud. Federal judges have better things to
do, and the substantial subsidy of litigation (court costs do
not begin to cover the expense of the judiciary) should
be targeted on those litigants who take the preliminary
steps to assemble a comprehensible claim. Garst’s lawyer
filed documents so long, so disorganized, so laden with
cross-references and baffling acronyms, that they could not
alert either the district judge or the defendants to the
principal contested matters.
Some complaints are windy but understandable.
Surplusage can and should be ignored. Instead of insisting
that the parties perfect their pleadings, a judge should
bypass the dross and get on with the case. A district court
is not “authorized to dismiss a complaint merely because
it contains repetitious and irrelevant matter, a disposable
husk around a core of proper pleading.” Davis v. Ruby
Foods, Inc., 269 F.3d 818, 820 (7th Cir. 2001). But although
“[f]at in a complaint can be ignored”, Bennett v. Schmidt,
153 F.3d 516, 518 (7th Cir. 1998), “dismissal of a complaint
on the ground that it is unintelligible is unexceptionable.”
Davis, 269 F.3d at 820. Length may make a complaint
unintelligible, by scattering and concealing in a morass of
irrelevancies the few allegations that matter. Three other
circuits have held that length and complexity may doom a
complaint by obfuscating the claim’s essence. See In re
Westinghouse Securities Litigation, 90 F.3d 696, 702-03
(3d Cir. 1996) (600 paragraphs spanning 240 pages); Kuehl
v. FDIC, 8 F.3d 905, 908-09 (1st Cir. 1993) (358 paragraphs
in “only” 43 pages); Michaelis v. Nebraska State Bar
Association, 717 F.2d 437, 439 (8th Cir. 1983) (144 para-
graphs in 98 pages). At 400 paragraphs covering 155 pages,
and followed by 99 attachments, Garst’s distended plead-
ings join that unsavory company. A concise statement
of the claim illustrated by 400 concrete examples of fraud
would be one thing, but 400 variations on the kind of
paragraph we have quoted are quite another. Complaints
8 No. 02-3175
like this are pestilential, and the district court showed
great restraint in wading through four iterations plus one
“more definite statement” before giving up. Garst received
more judicial attention than his pleadings deserved.
AFFIRMED
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—5-8-03