United States District Court, E.D. Louisiana
U.S. ex rel. TERRY D. MCLAIN and J. LEN HODGES
FLUOR ENTERPRISES, INC., SHAW ENVIRONMENTAL, INC., and CH2M HILL CONSTRUCTORS, INC
[Copyrighted Material Omitted]
For Terry D. McLain, ex rel,
USA, J. Len Hodges, ex rel, USA, Plaintiffs: Kirk A. Williams, LEAD ATTORNEY, Kirk A. Williams, A Law Corporation, Baker, LA; J. Cliff Johnson, J. Brad Pigott, Pigott & Johnson, Jackson, MS.
For Fluor Enterprises, Inc., Defendant: Brandon Kelly Black, LEAD ATTORNEY, James Conner Percy, Jones Walker (Baton Rouge), Baton Rouge, LA; Jones Walker (Baton Rouge), Baton Rouge, LA; Donald Wayne Washington, Jones Walker (Lafayette), Lafayette, LA; Michael William Magner, Pauline Hardin, Virginia Weichert Gundlach, Jones Walker (New Orleans), New Orleans, LA.
For Shaw Environmental, Inc., Defendant: Roy Clifton Cheatwood, LEAD ATTORNEY, Brian M. Ballay, Michael David Kurtz, Baker Donelson Bearman Caldwell & Berkowitz (New Orleans), New Orleans, LA; Thomas A. Lemmer, LEAD ATTORNEY, PRO HAC VICE, McKenna, Long & Aldridge LLP (Denver), Denver, CO; Christopher W. Myers, PRO HAC VICE, Sandra B. Wick Mulvany, PRO HAC VICE, McKenna, Long & Aldridge LLP (Denver), Denver, CO; Petrina McDaniel, PRO HAC VICE, McKenna, Long & Aldridge, LLP (Atlanta), Atlanta, GA.
For CH2M Hill Constructors, Inc., Defendant: Gerardo R. Barrios, LEAD ATTORNEY, Matthew R. Emmons, Tommy D. Snyder, Jr., Baker Donelson Bearman Caldwell & Berkowitz (Mandeville), Mandeville, LA.
For USA, Movant: Sharon Denise Smith, LEAD ATTORNEY, U.S. Attorney's Office, New Orleans, LA.
ORDER AND REASONS
HELEN G. BERRIGAN, UNITED STATES DISTRICT JUDGE.
This matter comes to the Court on the defendants', Fluor Enterprises, Inc. (" Fluor" ) and CH2M Hill Constructors, Inc. (" CH2M" ), motions to dismiss Counts 1, 2, 7, and 8, of relators', Terry D. McLain and J. Len Hodges (collectively, " relators" ), first amended complaint. Rec. Docs. 306 & 309. Relators have both opposed and moved to strike these motions to dismiss. Rec. Docs. 315, 317, 321, & 322. They have also filed a conditional motion to amend their complaint. Rec. Doc. 337. Defendants oppose both the motion to strike and the motion for leave to amend. Rec. Docs. 345, 346, 348, & 349. Finally, defendants Fluor and Shaw Environmental, Inc. (" Shaw" ) have also moved for summary judgment, which plaintiffs oppose. Rec. Docs. 335 & 352.
Having considered the record, the memoranda of counsel, and the law, the Court hereby, and for the reasons that follow:
1. DENIES relators' Motions to Strike,
2. DISMISSES Fluor's Motion to Dismiss as MOOT,
3. DENIES CH2M's Motion to DISMISS,
4. GRANTS IN PART and DENIES IN PART Fluor's Motion for Summary Judgment,
5. GRANTS IN PART and DENIES IN PART Shaw's Motion for Summary Judgment,
6. DISMISSES Shaw's Motion to Strike Relators' Exhibits Filed With Relators' Opposition to Motion for Summary Judgment as MOOT, and
7. DISMISSES relators' Motion to File a Second Amended Complaint as MOOT.
This case concerns the defendants' alleged failure to comply with Louisiana state liquefied petroleum (LP) safety statutes during the installation of temporary housing units (THUs) or travel trailers from September 2005 to January 2006 in the aftermath of Hurricanes Katrina and Rita. Rec. Doc. 53. Plaintiffs allege that FEMA " adopted and incorporated state licensing, permitting, and other safety-related standards governing the installation of travel trailers in Louisiana, as explicit requirements for entering and operating trailer installation contracts between FEMA and the Defendants." Id. ¶ 29. Defendants allegedly knew about these requirements but did not comply, repeatedly submitting invoices for payment and certifying that they were in compliance with the terms of the contract. Id. ¶ ¶ 49-64, 82-97.
Counts 1, 4, and 7 charge defendants with presenting false claims for payment in violation of 31 U.S.C. § 3729(a)(1) (False Claims Act, hereinafter " FCA" or " the Act" ). Id. ¶ ¶ 99-103, 129-33. Counts 2 and 8 of the complaint charge Fluor and CH2M with making false certifications in order " to get false claims paid" in violation of 31 U.S.C. § 3729(a)(2). Id. ¶ ¶ 104-08, 134-38. Relators claim that defendants' claims for payment were false both because they were not entitled to payment under the express terms of their FEMA contracts -- a breach of contract theory -
and because their failure to comply with LP gas regulations that existed for public safety rendered their installation contracts a nullity under Louisiana law -- a lack of capacity to claim theory. Id. ¶ ¶ 24-25, 29.
A. Fluor and CH2M's Motions to Dismiss
In their motions to dismiss, Fluor and CH2M argue that Counts 1 and 7 should be dismissed because a simple breach of contract is not equivalent to a " false claim" and thus not a violation of the Act. Rec. Doc. 306-1 at 9-16; Rec. Doc. 309-1 at 9. They argue that Counts 2 and 8 should be dismissed because plaintiffs have failed to allege, as required by Fifth Circuit precedent, that certification of compliance was a pre-requisite to receiving payment from FEMA. Rec. Doc. 306-1 at 6-9; Rec. Doc. 309-1 at 3-8. For support, the defendants rely heavily on this Court's decision to dismiss a related action brought by a separate group of plaintiffs, " the Warders." Rec. Doc. 255. The Court found that the plaintiffs were required, and failed to, plead that certification of compliance was a pre-requisite to payment. Id. at 8. The Court thus dismissed all claims against Fluor and CH2M " based on false certification of compliance with Louisiana or local statutes or regulations governing liquefied petroleum handling or installation . . . ." Id. at 11. Finally, in its motion to dismiss, CH2M brings the Court's attention to a recent Fifth Circuit opinion, U.S. ex rel. Spicer v. Westbrook, 751 F.3d 354 (5th Cir. 2014), which it argues requires dismissal of all claims against it.
Plaintiffs have responded that the defendants' non-compliance was not a mere breach of contract but a violation of a requirement affecting their entitlement to be paid. Rec. Doc. 321 at 3-6. With respect to Counts 2 and 8, they contend that even though such certifications were not expressly required, the defendants' compliance (if not the certification of that fact) was a pre-requisite to payment and thus the certifications to that effect were material to FEMA's decision to pay the defendants. Rec. Doc. 321 at 13. In direct response to CH2M, relators urge that Spicer is factually inapposite and should therefore be disregarded by this Court in deciding whether to grant the motions to dismiss. Rec. Doc. 322 at 15.
B. Relators' Motions to Strike and to Amend their Complaint
Relators have moved to amend their complaint should the Court find their pleading of false certification in the First Amended Complaint legally deficient. Rec. Doc. 337. Defendants oppose this motion on the grounds that the amended complaint does not remedy the deficiency. Rec. Doc. 345.
Relators have further moved to strike both motions to dismiss as repetitive of previous unsuccessful motions to dismiss. Rec. Doc. 315 & 317. Defendants oppose this motion, arguing both that the plaintiffs have not met the high standard for a motion to strike and that this Court possesses broad discretion to reconsider its prior orders. Rec. Doc. 346.
C. Fluor and Shaw's Motions for Summary Judgment
Fluor has moved for summary judgment, adopting the argument, first raised by CH2M, that the Fifth Circuit's opinion in Spicer forecloses the merit of relators' complaint. Rec. Doc. 335-2 at 5-9. Fluor also argues that it was entitled to compensation for non-conforming services under its FEMA contract, thereby precluding any possible FCA liability for providing nonconforming services. Id. at 9-13. Fluor argues, in the alternative, that it came into compliance with relevant LP
regulations within the period of performance such that its services did conform to the contract. Id. at 13-18. Fluor argues, further in the alternative, that whether or not its services conformed was irrelevant to its entitlement to bill for costs in particular. Id. at 19. Finally, Fluor argues that Louisiana law has no bearing on its entitlement to payment under the FEMA contract, which is governed by federal common law. Id. at 19-24. Shaw has filed its own motion for summary judgment that raises this final argument. Rec. Doc. 351.
In opposition, relators maintain that Spicer is, for various reasons, inapposite. Rec. Doc. 355-1 at 1-5. They further argue that Fluor was not entitled to payments for non-conforming services in light of the absence of express language providing for such entitlement. Id. at 7-9. Finally, they argue in various ways that the LP regulations that Fluor allegedly violated were so central to the requirements for performance that there is no way they could not have affected Fluor's entitlement to either fixed fees or cost-reimbursement. Id. at 9-24. Relators have not responded to either Shaw or Fluor's choice of law argument.
II. STANDARD OF REVIEW
A. Rule 12(b)(6) Dismissal