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United States ex rel. Perry v. Hooker Creek Asphalt & Paving, LLC

United States District Court, D. Oregon

May 26, 2017



          Michael McShane United States District Judge

         Nearly ten years ago, relator Michael Ray Perry filed this complaint alleging defendants violated the False Claims Act, 31 U.S.C. § 3729, by conspiring to defraud the United States over many years in the construction of road projects. Judge Michael Hogan twice pointed out the deficiencies in Perry's complaint. A Ninth Circuit panel unanimously agreed Perry's complaint lacked the requisite particularity needed to support a fraud claim but, over a dissenting opinion, concluded Judge Hogan should have granted Perry leave to amend as the allegations “could potentially provide sufficient particularity to satisfy Rule 9(b).” United States ex rel. Perry v. Hooker Creek Asphalt and Paving, LLC, 565 Fed.Appx. 669, 670 (9th Cir. 2014). Defendants now move to dismiss Perry's fourth attempt at providing sufficient facts to support his fraud claims. Because Perry's complaint still fails to state a claim under the False Claims Act, this action is dismissed, with prejudice.


         To survive a motion to dismiss under rule 12(b)(6), a complaint must contain sufficient factual matter that “state[s] a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible on its face when the factual allegations allow the court to infer the defendant's liability based on the alleged conduct. Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). The factual allegations must present more than “the mere possibility of misconduct.” Id. at 678.

         While considering a motion to dismiss, the court must accept all allegations of material fact as true and construe them in the light most favorable to the non-movant. Burget v. Lokelani Bernice Pauahi Bishop Trust, 200 F.3d 661, 663 (9th Cir. 2000). But the court is “not bound to accept as true a legal conclusion couched as a factual allegation.” Twombly, 550 U.S. at 555. If the complaint is dismissed, leave to amend should be granted unless the court “determines that the pleading could not possibly be cured by the allegation of other facts.” Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995).


         The parties, and now five judges, are quite familiar with Perry's claims. Judge Hogan's previous opinions dismissing the case provide much more detail on both the alleged facts and how Perry's claims are “woefully lacking in detail.” United States ex rel. Perry v. Hooker Creek Asphalt & Paving, LLC, 2012 WL 913229 at *2 (D. Or. March 16, 2012 Opinion) (quoting December 13, 2011 Opinion)). It is worth noting Judge Callahan's dissenting opinion in which he suggests that the plaintiff's ability to plead a claim is nothing more than aspirational:

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. Accordingly, I would not have granted the petition for rehearing and I dissent from the order remanding the case to the district court.

565 Fed.Appx. at 671-72 (emphasis added).

         I too am cognizant of unduly burdening these parties and their attorneys. For that reason, and because Perry's new complaint does not fix the fatal flaws found in each earlier complaint, I conclude that oral argument in this matter is unnecessary and unduly burdensome.

         Over the past 9 years, the parties filed thousands of pages of briefs and exhibits. Despite all those filings, Perry still admits that he “does not have access to the information, records and practices underlying defendants' bills for work performed and materials provided relating to road construction and maintenance contracts at issue in this lawsuit. Such information is in the exclusive possession or control of defendants and/or the United States.” Third Am. Compl., ¶ 47. For one bringing a claim under the False Claims Act, this admission presents a problem. See Cafasso, United States ex rel. v. Gen. Dynamics C4 Sys., Inc. 637 F.3d 1047, 1055 (9th Cir. 2011) (“It seems to be a fairly obvious notion that a False Claims Act suit ought to require a false claim.”) (quoting United States ex rel. Aflatooni v. Kitsap Physicians Serv., 314 F.3d 995, 997 (9th Cir. 2002)).

         Judge Hogan's conclusion from over five years ago-a conclusion the Ninth Circuit unanimously affirmed-rings equally true with respect to Perry's now fourth bite at the apple:

There are no facts concerning the alleged false vouchers and cost schedules caused to be presented to the federal government or when and by whom they were submitted. It is simply not plausible that all defendants submitted falsified billings for all projects for all work ...

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