United States Ex Rel. Conteh v. Ikon Office Solutions, Inc. ( 2014 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
____________________________________
)
UNITED STATES OF AMERICA, )
ex rel. ISSA CONTEH )
)
Plaintiff/Relator, )
)
v. ) Civil Action No. 12-1074 (RBW)
)
IKON OFFICE SOLUTIONS, INC., )
)
Defendant. )
____________________________________)
MEMORANDUM OPINION
The plaintiff/relator, Issa Conteh, brings this qui tam action against the defendant, IKON
Office Solutions, Inc. (“IKON”), under the False Claims Act, 31 U.S.C. § 3729 (2006). See
Complaint and Jury Demand (“Compl.”) ¶¶ 21-32. The plaintiff/relator alleges that IKON
violated the False Claims Act by falsely reporting to the Federal Deposit Insurance Company
(“FDIC”) that IKON provides its employees the fringe benefits mandated by the Service
Contract Act, 41 U.S.C. §§ 351-358.1 See id. ¶¶ 11-20. Currently before the Court is IKON’s
Motion to Dismiss under Federal Rules of Civil Procedure 12(b)(6) and 9(b) for failure to state a
claim upon which relief can be granted and for failure to plead fraud with sufficient particularity.
Upon careful review of the parties’ submissions,2 the Court concludes that because the
1
In 2011, the Service Contract Act was recodified at 41 U.S.C. §§ 6701-6707, and the provisions relevant to this
litigation were subject to stylistic revisions. See Pub. L. No. 111-350, ch. 67, 124 Stat. 3811 (2011). However, this
opinion will cite to the previous version as these provisions are cited by the plaintiff/relator in his complaint.
2
In addition to the filings already referenced, the Court considered the following filings in reaching its decision: (1)
the Defendant’s Memorandum of Points and Authorities in Support of Its Motion to Dismiss Plaintiff’s Complaint
(“Def.’s Mem.”); (2) the Plaintiff’s Memorandum of Points and Authorities in Support of His Opposition to
Defendant’s Motion to Dismiss Complaint (“Pl.’s Opp’n”); and (3) the Defendant’s Reply in Support of Its Motion
to Dismiss Plaintiff’s Complaint (“Def.’s Reply”).
1
plaintiff/relator does not have standing to assert any private causes of action under the Service
Contract Act, his claims concerning his personal compensation for lost wages, benefits, or any
other personal remuneration are dismissed with prejudice. The Court further concludes that the
plaintiff/relator has failed to plead fraud with sufficient particularity as required by Rule 9(b).
Therefore, IKON’s motion to dismiss the plaintiff/relator’s False Claims Act claim based on
fraud will be dismissed without prejudice.3
I. BACKGROUND
The following facts are as alleged, primarily based on information and belief, by the
plaintiff/relator in his complaint. From September 2007 to November 2010, the plaintiff/relator
“was employed by IKON as a Mail Clerk 2 in furtherance of IKON’s contract with the FDIC.”
Compl. ¶ 8; Pl.’s Opp’n at 6. On May 11, 2007, prior to employing the plaintiff/relator, IKON
entered into a contract with the FDIC to provide “copying and other document services . . . that
required payment of specific wages and benefits [to employees] under the Service Contract Act.”
Compl. ¶ 1; Pl.’s Opp’n at 5. The Service Contract Act requires that private contractors: “(1) pay
a ‘prevailing wage’ to employees who work on federal contracts; (2) contribute a certain amount
to pay fringe benefits for covered employees (‘health and welfare’); (3) provide covered
3
A private action under the False Claims Act “may be dismissed only if the court and the Attorney General give
written consent to the dismissal and their reasons for consenting.” 31 U.S.C. § 3730(b)(1). Accordingly, the Court
previously indicated that “[s]hould the relator or the defendant propose that this action be dismissed, settled, or
otherwise discontinued, the Court will solicit the written consent of the United States before ruling or granting its
approval.” Order, ECF No. 8 ¶ 7. However, this provision does not apply in this circumstance because it “pertains
only to voluntary dismissals, and does not prevent a court from dismissing an action, without prejudice, without
obtaining the consent of the Attorney General.” United States ex rel. Baggan v. DME Corp., No. 96-1983, 1997 WL
600569, at *3 n.6 (D.D.C. Sept. 22, 1997) (citing Minotti v. Lensink, 895 F.2d 100, 103-04 (2d Cir. 1990)); see also
United States ex rel. Mergent Servs. v. Flaherty, 540 F.3d 89, 91 (2d Cir. 2008) (“[W]e have previously construed
this provision to apply ‘only in cases where a plaintiff seeks voluntary dismissal of a claim or action brought under
the False Claims Act, and not where the court orders dismissal.’” (quoting Minotti, 895 F.2d at 103)). Because the
plaintiff/relator is not seeking a voluntary dismissal, and since the plaintiff/relator will be granted leave to amend his
complaint, the Court did not solicit the written consent of the United States before issuing this Memorandum
Opinion and the Order that is issued contemporaneously with this Opinion.
2
employees a minimum number of paid holidays and vacation days; and (4) notify employees of
their rights under the statute.” Compl. ¶ 12 (citing 41 U.S.C. §§ 351(a)(1)-(4)). Prior to the
plaintiff/relator’s employment with IKON, he “essentially held the same position for the same
contract requirements with the FDIC under four . . . previous contractors; all four . . . previous
contractors provided [him] fringe benefits” in accordance with the Service Contract Act. Id. ¶
15.
The plaintiff/relator contends that “during the life of its contract with [the] FDIC, [the
d]efendant failed to provide [the p]laintiff any fringe benefits.” Id. ¶ 14. Based on the
plaintiff/relator’s discussions “with several other employees from [the d]efendant’s Arlington,
Virginia facility,” the plaintiff/relator ascertained that the “[d]efendant failed to pay fringe
benefits to any of its approximately twenty-two . . . personnel.” Id. ¶ 18. On multiple occasions
the plaintiff/relator questioned his direct supervisor, Landon Johnson, and IKON’s Project
Manager, Ted Tuck, “regarding his non-receipt of any fringe benefits.” Id. ¶ 16. During those
conversations, the plaintiff/relator provided the defendant with “actual notice of the [Service
Contract Act] requirement to provide fringe benefits, or, [that they] had a duty to research the
issue.” Id. Yet, based on “information and belief, [the d]efendant ignored [the p]laintiff’s
inquiries and notices,” id., and from September 2007 to November 2010, IKON submitted
invoices to the FDIC approximately every two weeks certifying its compliance with the terms of
the contract,4 id. ¶¶ 11, 23, 29.
4
Although in his complaint the plaintiff/relator alleges that the defendant continued to submit fraudulent claims
until the day he filed his complaint, see Compl. ¶¶ 11, 20, 23, in his opposition brief he only alleges that the fraud
occurred between “October 2007 through 2010”. Pl.’s Opp’n at 7. Therefore, the Court confines its analysis to this
timeframe.
3
Based on these factual allegations, the plaintiff/relator filed a complaint under seal on
June 29, 2012, alleging that IKON: (1) “knowingly presented, or caused to be presented, false or
fraudulent claims to the United States for payment[] in violation of 31 U.S.C. §3729(a)(1)
[sic],”5 id. ¶¶ 25-26; (2) “knowingly made and used, or caused to be made or used, false
statements to get false or fraudulent claims paid by the United States[] in violation of 31 U.S.C. §
3729(a)(2),”6 id. ¶ 27; (3) conspired to “defraud[] the United States by submitting false or
fraudulent claims” and by “getting falsely certified claims paid or approved[] in violation of 31
U.S.C. § 3729(a)(3),” id. ¶¶ 28, 30; and (4) “knowingly certified, implicitly and expressly, or
caused to be certified invoices claiming payment[s] for satisfactory compliance with the [Service
Contract Act] and the terms of the contract . . . in violation of 31 U.S.C. § 3729(a)(2),” id. ¶ 29.
In addition to seeking civil penalties and treble damages under the False Claims Act, the
plaintiff/relator also seeks “[c]ompensation for lost wages, benefits and other remuneration.” Id.¶¶ A-B (Prayer for Relief). On May 15, 2013, the United States declined to intervene in this
case, ECF No. 7, and the Court ordered that the case be unsealed, Order, ECF No. 8. The
defendant now moves to dismiss the case pursuant to Federal Rules of Civil Procedure 12(b)(6)
and 9(b).
5
Although Congress amended § 3729(a)(1) and renumbered it as § 3729(a)(1)(A) in 2009, see Fraud Enforcement
and Recovery Act of 2009, Pub. L. No. 111-21, § 4, 123 Stat. 1617, 1621-25, the plaintiff/relator concedes that these
changes are not material to his presentment claims, see Pl.’s Opp’n at 9. Accordingly, all citations to § 3729(a)(1)
are to the pre-revision version.
6
Congress amended and renumbered § 3729(a)(2) in 2009, adding a requirement that the false record or statement
be “material to a false or fraudulent claim.” See Fraud Enforcement and Recovery Act of 2009 § 4. This provision
applies to “all claims . . . pending on or after [June 7, 2008].” Id. § 4(f). Although “members of this Court have
held on multiple occasions that ‘claims’ refers to claims for payment, and not pending court cases,” United States ex
rel. Folliard v. Hewlett-Packard Co., 272 F.R.D. 31, 35 n.6 (D.D.C. 2011) (citing United States ex rel. Westrick v.
Second Chance Body Armor, Inc., 709 F. Supp. 2d 52, 55 (D.D.C. 2010); United States ex rel. Bender v. N. Am.
Telecomms., Inc., 686 F. Supp. 2d 46, 49 n.4 (D.D.C. 2010)), the distinction is irrelevant for purposes of this
opinion.
4
II. STANDARDS OF REVIEW
A Rule 12(b)(6) motion tests whether the complaint “state[s] a claim upon which relief
can be granted.” Fed. R. Civ. P. 12(b)(6). “To survive a motion to dismiss [under Rule
12(b)(6)], a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A plaintiff receives the “benefit of all
inferences that can be derived from the facts alleged.” Am. Nat’l Ins. Co. v. FDIC, 642 F.3d
1137, 1139 (D.C. Cir. 2011) (internal quotation marks and citation omitted). But raising a “sheer
possibility that a defendant has acted unlawfully” fails to satisfy the facial plausibility
requirement. Iqbal, 556 U.S. at 678. Rather, a claim is facially plausible “when the plaintiff
pleads factual content that allows the court to draw [a] reasonable inference that the defendant is
liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). While the Court must
“assume [the] veracity” of any “well-pleaded factual allegations” in the complaint, conclusory
allegations “are not entitled to the assumption of truth.” Id. at 679.
Fraud claims, however, are also subject to the heightened pleading requirement of Rule
9(b), which provides that “[i]n alleging fraud or mistake, a party must state with particularity the
circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). “Rule 9(b) is not an
antithesis of Rule 8(a)’s ‘short and plain statement’ requirement, but rather a supplement to it.”
Baker v. Gurfein, 744 F. Supp. 2d 311, 315 (D.D.C. 2010) (Walton, J.) (quoting United States ex
rel. Williams v. Martin-Baker Aircraft Co., 389 F.3d 1251, 1256 (D.C. Cir. 2004)). To satisfy
Rule 9(b)’s heightened standard, “‘the pleader [must] . . . state the time, place and content of the
false misrepresentations, the fact misrepresented . . . [,] what was retained or given up as a
consequence of the fraud,’” and “identify individuals allegedly involved in the fraud.” Williams,
5
389 F.3d at 1256 (first alteration in original) (citations omitted). “Rule 9(b)’s particularity
requirement serves several purposes,” including ensuring that “‘all defendants [have] sufficient
information to allow for preparation of a response.’” Id. (citation omitted). Accordingly, in
order to withstand a motion to dismiss for failure to plead a False Claims Act claim with the
degree of particularity required by Rule 9(b), a “complaint must . . . provide a defendant with
notice of the who, what, when, where, and how with respect to the circumstances of the fraud.”
Stevens v. InPhonic, Inc., 662 F. Supp. 2d 105, 114 (D.D.C. 2009) (Walton, J.) (internal
quotation marks and citations omitted)).
III. LEGAL ANALYSIS
Because the plaintiff’s complaint implicates the False Claims Act, the Court begins its
analysis by assessing whether the complaint complies with the heightened pleading requirement
of Rule 9(b). See United States ex. rel. Totten v. Bombardier Corp., 286 F.3d 542, 551-52 (D.C.
Cir. 2002) (holding that “because the False Claims Act is self-evidently an anti-fraud statute,
complaints brought under it must comply with Rule 9(b)”). The defendant argues that the
complaint fails to satisfy the particularity requirements of Federal Rule of Civil Procedure 9(b)
because it fails to identify: (1) “a single alleged false claim . . . presented or caused to be
presented by IKON, let alone who prepared it, when it was prepared or who knew it was false”;
(2) “a single alleged false statement made by IKON or caused to be made by IKON to get a false
claim paid—let alone who made it, when it was made[,] or who knew it to be false”; (3) “who
within IKON conspired with another, or who the co-conspirator is or that any unlawful
‘agreement’ was entered into, let alone when such an agreement was made”; and (4) “a single
IKON employee with knowledge that IKON was either submitting false claims or falsely
certifying compliance with the Service Contract Act.” See Def.’s Mem. at 2-3, 8-18. The
6
plaintiff/relator, in response, argues that because he is not required to plead evidence supporting
his claim “at the early stages of litigation,” the complaint adequately pleads facts with sufficient
particularity. See Pl.’s Opp’n at 2-3. Construing all the facts alleged in the complaint as true,
the Court now turns to the plaintiff/relator’s allegations, as pleaded.
A. Standing
As an initial matter, because the Service Contract Act does not create a private cause of
action, Danielsen v. Burnside-Ott Aviation Training Ctr., Inc., 941 F.2d 1220, 1228-29 (D.C.
Cir. 1991), the plaintiff/relator lacks standing to pursue his claims for “[c]ompensation for lost
wages, benefits[,] and other remuneration” as required by the Service Contract Act,7 Compl. ¶¶
A-B (Prayer for Relief). In Danielsen, the Circuit held that “the implication of a private right
under the [Service Contract Act] would undercut the specific [administrative] remedy prescribed
by Congress” and that therefore, “by all authority and reason, it is plain that the [Service
Contract Act] creates no private remedy,” 941 F.2d at 1228-29 (holding that a “private civil
action, even couched in RICO terms, will not lie for an alleged breach of the [Service Contract
Act]”). See also United States ex rel. Sutton v. Double Day Office Servs., Inc., 121 F.3d 531,
533-35 (9th Cir. 1997) (applying the Danielsen analysis and finding standing to assert the False
Claims Act claim there, but noting that “[t]o the extent any of [the plaintiff/relator’s] claims are
for damages to himself because he was not paid [Service Contract Act]-required wages, [he]
lacks standing to pursue those specific claims”).
7
IKON does not specifically raise the issue of the plaintiff/relator’s standing. However, it is unclear from the filings
whether the plaintiff/relator is asserting both a private cause of action and an action under the False Claims Act or
just asserting a violation of the False Claims Act. See generally Compl. Because of this confusion, the Court finds
it necessary to address the plaintiff/relator’s lack of standing under the Service Contract Act. See ANR Pipeline Co.
v. FERC, 205 F.3d 403, 407-408 (D.C. Cir. 2000) (holding that the court is obliged to question plaintiff’s standing
sua sponte even when defendants have not).
7
Because it is not the alleged violation of the Service Contract Act, but rather the
defendant’s alleged presentment of a false claim and false certification of compliance to the
government for payment that implicates the False Claims Act, the plaintiff/relator has standing to
bring a qui tam claim under the False Claims Act. Sutton, 121 F.3d at 355-34. However, he
lacks standing to bring an action which seeks an award for alleged lost wages and benefits. Id.
(finding that although “a party may not bring an action for the equivalent of damages [under the
Service Contract Act] under the guise of another statute[,]” the False Claims Act “attaches
liability to the claim for payment, not to the underlying activity”). Therefore, the
plaintiff/relator’s claim seeking compensation for lost wages and benefits is dismissed with
prejudice,8 see Compl. ¶ B.
B. Adequacy of the Complaint
Upon review of the plaintiff/relator’s False Claims Act claim alleged in his complaint, the
Court concurs with the defendant that it fails to satisfy Rule 9(b)’s heightened particularity
requirement. The plaintiff/relator predicates this claim on the inference that because “previous
contractors [that were fulfilling the same contractual requirements with the FDIC as IKON]
provided [him] fringe benefits,” id. ¶ 15, and since the “[d]efendant failed to provide [him] any
fringe benefits,” id. ¶ 14, IKON must have fraudulently certified compliance with the Service
Contract Act each time it “submitted invoices under [its] contract . . . to [the] FDIC,” id. ¶ 23.
However, the plaintiff/relator does not allege personal knowledge regarding the contents of the
8
Although IKON does not raise the issue of the plaintiff/relator’s standing explicitly, it does assert that the
plaintiff/relator’s lost wages claim should be dismissed as an inappropriate remedy under the False Claims Act. See
Def.’s Mem. at 18. Because the plaintiff/relator does not respond to this argument in his opposition brief, is it is
deemed conceded. See Lewis v. District of Columbia, No. 10-5275, 2011 WL 321711, at *1 (D.C. Cir. Feb. 2,
2011) (per curiam) (“‘It is well understood in this Circuit that when a plaintiff files an opposition to a dispositive
motion and addresses only certain arguments raised by the defendant, a court may treat those arguments that the
plaintiff failed to address as conceded.’” (citation omitted)); see also Def.’s Reply at 10 n.3.
8
invoices nor does he allege that he has seen any invoices or spoken to anyone who has seen
them. Moreover, the complaint lacks any basis to support a finding that these invoices even
exist, much less that they contain false certifications. Furthermore, even if the plaintiff/relator’s
claims regarding the requirements of the Service Contract Act are correct,9 and that IKON in fact
falsely certified its submissions to the FDIC, the complaint lacks any information regarding who
participated in the fraudulent activity and fails to identify a single false claim or statement
allegedly made by that person.
1. Specificity Under Rule 9(b)
To satisfy Rule 9(b)’s heightened requirements, the plaintiff/relator must at least identify
“the ‘who, what, when, where, and how’ with respect to the circumstances of the fraud.” See
Elemary v. Philipp Holzmann A.G., 533 F. Supp. 2d 116, 137 (D.D.C. 2008). This circuit
interprets Rule 9(b) as “requir[ing] pleaders to identify [the] individuals allegedly involved in the
fraud.” See Williams, 389 F.3d at 1256-57 (finding a complaint lacked specificity where it
“repeatedly refer[red] generally to ‘management’ and provide[d] a long list of names without
ever explaining the role these individuals played in the alleged fraud”). To that end, the
plaintiff/relator asserts that he has satisfied the identification requirement by alleging that “IKON
by[] and through its officers” violated the False Claims Act. Compl. ¶ 11. Citing United States
ex rel. Head v. Kane Co., 798 F. Supp. 2d 186 (D.D.C. 2011), the plaintiff/relator argues that “it
is sufficient that the Plaintiff has also alleged that the fraudulent acts were committed by and
through the Defendant’s officers.” Pl.’s Opp’n at 7 (emphasis added); see also Compl. ¶ 11.
9
The Court will not consider what obligations IKON owed the plaintiff/relator with respect to fringe benefits at this
time, other than to note that contractors can satisfy the Service Contract Act’s requirements through various means
other than through fringe benefits. See 41 U.S.C. § 351(a)(2) (2012) (“The obligation under this subparagraph may
be discharged by furnishing any equivalent combinations of fringe benefits or by making equivalent or differential
payments in cash under rules and regulations established by the Secretary.” (emphasis added)); see also 29 C.F.R. §
4.177(a)(2012).
9
However, Head is amply distinguishable from the present case. In Head, the plaintiff/relator not
only alleged that the fraudulent acts were committed by and through the respective defendant’s
officers, but both the plaintiff/relator and the government went on to “specifically identify those
Kane Company personnel involved in perpetuating the scheme.” Head, 798 F. Supp. 2d at 204
& nn.26-27. What the plaintiff/relator alleges here is by no means adequate or particular.
The plaintiff/relator indicates that he “has alleged the ‘who’ (IKON-officers; Ted Tuck,
Landon Johnson[)]” and alleges that “information on precisely who failed to pay the fringe
benefits is solely within the [d]efendant’s possession and control.” Pl.’s Opp’n at 7. As an
initial matter, this assertion undermines the entirety of the plaintiff/relator’s argument that he
identified the proper individuals since now it is unclear whether he understands what “scheme”
implicates the False Claims Act. There is no indication in the complaint, even read in the most
liberal and generous light possible, that the plaintiff/relator is alleging that anyone at IKON
created false internal records regarding the payment of fringe benefits. Therefore “information
on precisely who failed to pay the fringe benefits” is inconsequential to the asserted False Claims
Act violation. See Compl. ¶ 18. The “who” that the plaintiff/relator must identify is the
individual who filed a claim falsely purporting to the FDIC that the fringe benefits were paid.
The plaintiff/relator mischaracterizes the complaint as identifying Ted Tuck and Landon
Johnson as being involved in the purported scheme of submitting false claims to the FDIC.
Rather, the complaint merely alleges that the “[p]laintiff . . . advised [Ted Tuck and Landon
Johnson] that the [Service Contract Act] required [them] to provide fringe benefits.” See Compl.
¶ 16. Nowhere in the complaint does the plaintiff/relator make any connection between Ted
Tuck or Landon Johnson and the alleged submission of fraudulent claims to the FDIC. Simply
identifying IKON employees with whom the plaintiff/relator discussed the requirements of the
10
Service Contract Act, without also connecting these individuals to the allegedly fraudulent
submissions, is inadequate. See United States v. Sci. Applications Int’l Corp., 626 F.3d 1257,
1274 (D.C. Cir. 2010) (ruling that “under the [False Claims Act], ‘collective knowledge’
provides an inappropriate basis for proof of scienter because it effectively imposes liability,
complete with treble damages and substantial civil penalties, for a type of loose constructive
knowledge that is inconsistent with the Act’s language, structure, and purpose”).
Not only does the complaint fail to identify a single individual responsible for submitting
false claims, it also fails to identify a single false claim or statement that IKON submitted to the
federal government, a deficiency that is particularly problematic due to the lack of other
evidence to support the plaintiff/relator’s claim. “While a complaint that covers a multi-year
period may not be required by Rule 9(b) to contain a detailed allegation of all facts supporting
each and every instance of submission of a false claim, some information on the false claims
must be included.” United States ex rel. Barrett v. Columbia/HCA Healthcare Corp., 251 F.
Supp. 2d 28, 35 (D.D.C. 2003) (emphasis added).
In sum, failing to identify: (1) a single individual who submitted a false claim; and (2)
proof of the submission of a single false claim are omissions that doom the plaintiff/relator’s
complaint. See Digital Healthcare, 778 F. Supp. 2d at 53 (finding that a plaintiff/relator’s failure
to identify a single false claim, combined with a failure to identify anyone engaged in the fraud,
were fatal deficiencies in the plaintiff/relator’s case). This result is compelled because, as
written, the complaint fails to adequately “provide [the] defendant with notice of the who, what,
when, where, and how with respect to the circumstances of the fraud,” see Stevens, 662 F. Supp.
2d at 114 (internal quotation marks and citations omitted)), and therefore fails to satisfy Rule
9(b)’s heightened particularity requirement. As filed, the plaintiff/relator’s imprecise pleading
11
“fail[s] to give the compan[y] sufficient information to answer the complaint” and subjects
IKON “to vague, potentially damaging accusations of fraud.” See Williams, 389 F.3d at 1257;
see also United States ex rel Digital Healthcare, Inc. v. Affiliated Computer Servs., Inc., 778 F.
Supp. 2d 37, 53 (D.D.C. 2011).
2. Pleading on “Information and Belief”
In his opposition to the dismissal motion, the plaintiff/relator alleges that his complaint,
which is based upon “information and belief,” satisfies Rule 9(b)’s particularity requirement
because IKON is in exclusive possession of “essential information” necessary to factually allege
that IKON violated the False Claims Act. See Pl.’s Opp. at 8; see also Compl. ¶¶ 11, 16, 19, 20,
23. Although pleadings made upon “information and belief” generally do not satisfy the
particularity requirement of Rule 9(b), United States ex rel. Davis v. District of Columbia, 591 F.
Supp. 2d 30, 37 (D.D.C. 2008), “this circuit provides an avenue for plaintiffs unable to meet the
particularity standard because defendants control the relevant documents—plaintiffs in such
straits may allege lack of access in the complaint,” Williams, 389 F.3d at 1258. Thus, “[a]
relator invoking this exception must plead a lack of access to necessary information in the
complaint.” Davis, 591 F. Supp. 2d at 37 (emphasis added) (citing Williams, 389 F.3d at 1258).
The current iteration of the complaint fails to allege anything about lack of access, a
deficiency the plaintiff/relator attempts to remedy by alleging lack of access in his opposition.
See Pl.’s Opp. at 1, 8. “While it is generally understood that the complaint may not be amended
by legal memoranda that are submitted as opposition to motions for dismissal . . . [,] courts have
allowed, for Rule 9(b) purposes, a party to supplement its complaint through such legal
memoranda . . . for the sake of judicial economy.” Shekoyan v. Sibley Int’l Corp., 217 F. Supp.
2d 59, 73 (D.D.C. 2002) (Walton, J.) (citation omitted), aff’d, 409 F.3d 414 (D.C. Cir. 2005) .
12
“[C]ourts that have allowed a party to supplement a fraud allegation in the complaint with legal
memoranda . . . have concluded that allowing such amendments was fair because, given the
allegations contained in the plaintiffs’ legal memoranda, the defendants had adequate notice of
the specifics of the fraud claims.” Id. at 74. Here, due to the complaint’s other deficiencies and
because the Court will grant the plaintiff/relator leave to file an amended complaint, “judicial
economy” does not provide an adequate basis for the Court to consider the allegations in the
opposition as the basis for denying the defendant’s motion.
The defendant opposes the plaintiff/relator’s requests that he be granted leave to amend
his complaint. See Pl.’s Opp’n at 12. The defendant contends that the opposition merely
“regurgitate[s] the vague and conclusory allegations” set forth in the complaint and asserts that
granting leave to amend would be futile because the “little information” the plaintiff/relator did
provide in his opposition “suggests that he was provided—and took advantage of—fringe
benefits by [the d]efendant.” Def.’s Reply at 4, 10.
The Court is not convinced that allowing the plaintiff/relator to amend the complaint will
necessarily be futile. Federal Rule of Civil Procedure 15(a) provides that “leave to amend
pleadings shall be freely given when required by justice.” Shekoyan, 217 F. Supp. 2d at 74
(citing Firestone v. Firestone, 76 F.3d 1205, 1209 (D.C. Cir. 1996) (per curiam)). Further, this
Court has recognized that “leave to amend is ‘almost always’ allowed to cure deficiencies in
pleading fraud.” Id. (quoting Firestone, 76 F.3d at 1209). In Digital Healthcare, for example,
this Court granted the plaintiff/relator leave to amend his amended complaint because the case
was “still in a relatively early procedural status and the Court [was] reluctant . . . to draw any
conclusions about the futility of a hypothetical second amended complaint.” Digital Healthcare,
778 F. Supp. 2d at 55-56. Here, the case is in an even earlier procedural posture, as the
13
plaintiff/relator has not yet filed a single amended complaint. As in Digital Healthcare, the Court
hesitates at this point to reach a conclusion about the futility of a hypothetical amended
complaint. See id. The Court accordingly grants the plaintiff/relator leave to amend his
complaint in order to, if possible, cure the deficiencies described above.
IV. CONCLUSION
For the reasons set forth above, the Court concludes that because the plaintiff/relator does
not have standing to assert any private causes of action arising under the Service Contract Act,
any claims seeking personal recovery for lost wages, benefits, or any other personal
remuneration are dismissed with prejudice. The Court further concludes that the plaintiff/relator
has failed to plead fraud with the degree of particularity required by the Federal Rules of Civil
Procedure Rule 9(b). Therefore, IKON’s motion to dismiss as it relates to its alleged violation of
the False Claims Act will be granted and the plaintiff/relator’s complaint is dismissed without
prejudice. The Court further grants the plaintiff/relator leave to amend his complaint and
instructs the plaintiff/relator that, if he intends to do so, he must file an amended complaint on or
before April 18, 2014.
SO ORDERED this 18th day of March, 2014.10
10
The Court will contemporaneously issue an Order consistent with this Memorandum Opinion.
14