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Philip Marstettler, Et Al.v.Lynn Tilton, Et Al.

CourtUnited States Court of Appeals for the Eleventh Circuit
Docket No.16-11997
DecidedJanuary 26, 2018
JudgesUnited States Court of Appeals for the Eleventh Circuit
Tags
CivilGovernment LawContract LawFraudCivil ProcedureMotion to DismissStatutory InterpretationRemand
Case Summary

Relators brought a False Claims Act qui tam action alleging that defense contractors and related individuals obtained Army helicopter contracts through undisclosed conflicts, misleadingly incomplete pricing information, and promises they did not intend to honor. The district court dismissed the complaint under Rules 12(b)(6) and 9(b), concluding that the allegations did not support implied-certification liability or fraud in the inducement. While the appeal was pending, the Supreme Court decided Universal Health Services v. Escobar, explaining that implied certification may support liability when a payment request makes specific representations that become misleading through omitted violations and the omission is material. The Eleventh Circuit held that the district court had evaluated the implied-certification theory under a superseded framework and should reconsider materiality under Escobar’s demanding standard. It also held that the complaint plausibly alleged fraud in the inducement through promises of legal compliance and incomplete pricing data that allegedly affected contract awards. The court vacated the dismissal and remanded for reconsideration, including whether the relators should amend their complaint.

Opinion

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