Michael Perry v. Hooker Creek Asphalt and Pavin

FILED
NOT FOR PUBLICATION MAR 27 2014
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
MICHAEL RAY PERRY, United States of No. 12-35278
America ex rel.,
D.C. No. 6:08-cv-06307-HO
Plaintiff - Appellant,
v. ORDER and MEMORANDUM*
HOOKER CREEK ASPHALT AND
PAVING, LLC; et al.,
Defendants - Appellees.
Appeal from the United States District Court
for the District of Oregon
Michael R. Hogan, District Judge, Presiding
Argued and Submitted October 7, 2013
Portland, Oregon
Before: SILVERMAN, W. FLETCHER, and CALLAHAN, Circuit Judges.
Judges Silverman and Fletcher vote to grant the petition for panel rehearing
(ECF No. 75). Judge Callahan votes to deny the petition for panel rehearing.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
The full court has been advised of the petition for rehearing en banc and no
judge has requested a vote on whether to hear the matter en banc. See Fed. R. App.
P. 35.
The petition for panel rehearing is granted, and the petition for rehearing en
banc is denied.
The Memorandum Disposition filed October 24, 2013 is WITHDRAWN
and replaced with the following Memorandum Disposition:
Relator Michael Perry appeals from the district court’s order dismissing
Perry’s second amended complaint with prejudice. The district court ruled that
Perry’s claims failed to satisfy the pleading requirements of Federal Rules of Civil
Procedure 8(a) and 9(b). We have jurisdiction under 28 U.S.C. § 1291, and we
reverse in part and remand.
Perry generally alleges that defendants violated the False Claims Act, 31
U.S.C. § 3729, by knowingly and intentionally submitting bills to the State of
Oregon for work and materials that did not meet state quality assurance standards,
causing Oregon to submit false claims to the federal government for
reimbursement of federal highway apportionment funds. In his second amended
complaint, Perry offers a number of “representative examples” of what he alleges
was a broad scheme of fraud, spanning more than 200 contracts. Because these
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examples describe a wide variety of alleged violations, they do not serve to allege
with particularity the “who, what, when, where and how” of a consistent course of
fraudulent conduct. See, e.g., United States ex rel. Cafasso v. General Dynamics
C4 Systems, Inc., 637 F.3d 1047, 1054–55 (9th Cir. 2011) (False Claims Act
complaint must satisfy Federal Rules of Civil Procedure 8(a) and 9(b)); Ebeid ex
rel. United States v. Lungwitz, 616 F.3d 993, 998 (9th Cir. 2010) (False Claims Act
complaint must satisfy the heightened plausibility standard of Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) and Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007)), cert. denied, 131 S. Ct. 801 (2010). Because we find that Perry’s second
amended complaint fails to meet the burden of Rule 9(b) for such conduct, we do
not need to address whether the factual allegations contained in his complaint are
plausible under Rule 8(a).
Although we agree that Perry’s second amended complaint did not meet the
requirements of Rule 9(b) for a consistent course of fraudulent conduct, the district
court should have granted Perry a further opportunity to amend. Federal Rule of
Civil Procedure 15(a) provides that leave to amend should be freely granted “when
justice so requires.” A relator “is not required to allege all facts supporting each
and every instance” of fraudulent billing. Ebeid, 616 F.3d at 999 (internal
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quotation marks omitted). Rather, “it is sufficient to allege ‘particular details of a
scheme to submit false claims paired with reliable indicia that lead to a strong
inference that claims were actually submitted.’” Id. at 998–99 (quoting United
States ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 190 (5th Cir. 2009)).
“Under futility analysis, ‘[d]ismissal without leave to amend is improper
unless it is clear, upon de novo review, that the complaint could not be saved by
any amendment.’” United States ex rel. Lee v. Corinthian Colleges, 655 F.3d 984,
995 (9th Cir. 2011) (quoting Krainski v. Nevada ex rel. Bd. of Regents of Nevada
System of Higher Education, 616 F.3d 963, 972 (9th Cir. 2010), cert. denied, 131
S. Ct. 1678 (2011)). While Perry’s use of “representative examples” does not
succeed in alleging with particularity a consistent course of conduct, or scheme of
systemic fraud, Perry’s complaint contains specific examples that, if brought as
individual claims, could potentially provide sufficient particularity to satisfy Rule
9(b).
Because it is not clear that Perry’s complaint could not have been saved by
any amendment, we reverse the district court’s dismissal and remand to allow him
an opportunity to amend to narrow his complaint.
REVERSED in part and REMANDED.
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FILED
Perry v. Hooker Creek Asphalt, No. 12-35278 MAR 27 2014
MOLLY C. DWYER, CLERK
CALLAHAN, Circuit Judge concurring and dissenting. U.S. COURT OF APPEALS
I concur in the holding that the district court properly dismissed plaintiff’s
second amended complaint for failure to satisfy the pleading requirements of
Federal Rule of Civil Procedure 8(a) and 9(b). However, I remain of the opinion
set forth in our initial memorandum disposition that the district court did not abuse
its discretion in denying plaintiff leave to again amend his complaint.
We review a trial court’s denial of leave to amend a complaint for abuse of
discretion. United States ex rel. Lee v. Corinthian Colleges, 655 F.3d 984, 995
(9th Cir. 2011). This discretion is particularly broad when the plaintiff has
previously amended the complaint. Ascon Prop., Inc. v. Mobil Oil Co., 866 F.2d
1149, 1160 (9th Cir. 1989). We have further held that leave to amend may be
denied when an amendment would be futile. See Klamath-Lake Pharmaceutical
Ass’n v. Klamath Medical Service Bureau, 701 F.2d 1276, 1293 (9th Cir. 1983);
Miller v. Yokohama Tire Corp., 358 F.3d 616, 623 (9th Cir 2004).
Here, the district court properly determined that any amendment would be
futile. Plaintiff filed his qui tam complaint in 2008, and the United States declined
to intervene in 2010. In 2011, the defendants first moved to dismiss, but the
district court granted plaintiff leave to file an amended complaint. Plaintiff filed a
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33-page second amended complaint with an appendix listing over 260 various
projects for which six different entities had over a ten-year plus period of time
billed the State of Oregon in order to receive compensation from the United States.
Defendants again moved to dismiss and on March 16, 2012, the district court
granted the motion without leave to amend.
In granting the motion to dismiss, the district court found that plaintiff: (1)
“still tries to equate general allegations of substandard work to an [False Claims
Act] claim”; (2) failed to heed the district court’s determination that the claims
“were not amenable to representative example type pleading”; and (3) advanced
representative examples that still did “not connect any person to the alleged
fraudulent conduct, or state when and where the conduct occurred.” The court
further held that “because there are insufficient allegations of the billings
themselves, the complaint fails to allege with the requisite specificity defendants’
intent vis-a-vis the federal government, what information was presented to the
federal government, . . . or what role the information provided in the federal
government’s decision to pay.”
Our consistent, and unanimous, affirmance of the district court’s grant of the
motion to dismiss confirms the propriety of the district court’s determinations. The
majority, however, suggests that while plaintiff’s “representative examples” do not
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allege “with particularity a consistent course of conduct, or scheme of systemic
fraud,” plaintiff’s second amended complaint “contains specific examples that, if
brought as individual claims, could potentially provide sufficient particularity to
satisfy Rule 9(b).”
I cannot agree with such speculation. Plaintiff in twice responding to
motions to dismiss never asserted individual claims with sufficient specificity.
More importantly, the majority does not identify any specific example that actually
contains sufficient particularity to support an individual claim. Rather, the
majority suggests that some unspecified examples “could potentially provide
sufficient particularity.” This seems to me to be wishful thinking, particularly
because the district court noted, and plaintiff does not really contest, that plaintiff
does not have access to the information on billing, the records and practices
underlying the defendants’ billing for work performed, or “materials provided
relating to the road construction in issue.”
Having affirmed the district court’s dismissal of the second amended
complaint without in any way disagreeing with its reasoning, I cannot conclude
that the court abused its discretion in denying leave to amend. Indeed, insisting
that plaintiff be granted leave to file a third amended complaint appears to be a
futile exercise that unnecessarily burdens the district court and the defendants.
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Accordingly, I would not have granted the petition for rehearing and I dissent from
the order remanding the case to the district court.
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