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UNITED STATES EX REL. ALEXANDER v. DYNCORP

April 30, 1996

UNITED STATES OF AMERICA ex rel. FLORENCE HICKS ALEXANDER, d/b/a EBON RESEARCH SYSTEMS, Plaintiff,
v.
DYNCORP, INC., et al., Defendants.



The opinion of the court was delivered by: HARRIS

 Before the Court are defendants' motion to dismiss plaintiff's complaint, plaintiff's opposition thereto, the United States' memorandum regarding defendants' motion to dismiss, defendants' response to plaintiff's opposition, and defendants' response to the United States' memorandum. *fn1" The Court grants defendants' motion to dismiss with respect to Counts I, II, and IV, and grants summary judgment for defendants with respect to Count III. Although "findings of fact and conclusions of law are unnecessary on decisions of motions under Rule 12," Fed. R. Civ. P. 52(a), the Court nonetheless sets forth its reasoning.

 BACKGROUND

 In considering a motion to dismiss, the Court accepts as true the factual allegations of the complaint and draws from them all reasonable inferences favorable to the plaintiff United Parcel Serv., Inc. v. International Bhd. of Teamsters, 859 F. Supp. 590, 593 (D.D.C. 1994). The following facts are taken from plaintiff's complaint. Plaintiff Florence Hicks Alexander, d/b/a Ebon Research Systems ("Ebon"), submitted a Business Management Proposal, a Basic Technical Proposal, and a Basic Price Proposal to the United States Department of Justice on or about November 12, 1992, in response to DoJ Solicitation No. JOJMD-93-R-0014 ("1992 Solicitation"). The 1992 Solicitation requested proposals for the performance of follow-on administrative support services in connection with the DoJ's Asset Forfeiture Program. *fn2" Ebon submitted a Revised Best and Final Offer to the DoJ in response to the 1992 Solicitation on or about May 18, 1993.

 On or about November 12, 1992, defendant Dyncorp, Inc. ("Dyncorp") also submitted a comprehensive proposal to the DoJ in response to the 1992 Solicitation. Dyncorp likewise submitted a Revised Best and Final Offer on or about May 18, 1993. Plaintiff alleges that defendant Dyncorp and defendants Gorkowski, Walter, and Konvica (the "individual defendants"), represented to the DoJ that the company had a satisfactory record of business ethics despite a 1987-88 conviction for bid rigging and a 1992 finding by the Army that Dyncorp had submitted false claims and committed theft and mail fraud in connection with an Army contract (the "Fort Huzchuca Contract"). *fn3"

 In their bid proposals, defendants allegedly indicated that certain "key personnel" were willing and able to work under DoJ's proposed contract salaries, which allowed defendants to bid $ 122 million for the 1993 Contract. Plaintiff alleges that, after the award of the 1993 Contract to Dyncorp, defendants informed the DoJ that the "key personnel" had refused the salaries offered as part of their bid proposal. Plaintiff claims that Dyncorp dealt with the rejection of the proposed salaries by informing the DoJ that the Wage Determination incorporated into the 1992 Solicitation was too low and by requesting a revised Wage Determination. The DoJ issued a revised Wage Determination with respect to the Data Analyst I, Data Analyst II, Legal Technician I, and Legal Technician II positions. Plaintiff also claims that, in addition to requesting a second Wage Determination, Dyncorp submitted false invoices to the DoJ charging higher benefit rates for employees under the contract than the rates passed on to the employees; submitted false invoices and billing statements for Legal Technician positions, because the employees in question do not perform legal duties; and submitted false invoices and billing statements for Supervisor positions, because the employees in question do not perform supervisory activities.

 Plaintiff also alleges that defendants utilized the services of Ebon's former General Counsel and Ebon's Project Director for a prior DoJ contract to write and prepare Dyncorp's bid proposal for the 1992 Solicitation. Plaintiff also contends that individual defendants submitted false affidavits to the DoJ indicating that they did not receive assistance from former Ebon employees in the preparation of their bid proposals.

 Plaintiff's complaint also contains allegations unrelated to the 1992 Solicitation. First, plaintiff contends that defendants submitted false invoices and billing statements to the Army in connection with labor hours worked on a Fort Belvoir base maintenance contract, because the payment requested was related to buildings which were demolished or vacant. Second, plaintiff alleges that defendants filed annual and interim reports with the Securities and Exchange Commission ("SEC") in 1991, 1992, and 1993, which failed to disclose Army findings of theft, mail fraud, and false claims, and which included an erroneous statement of corporate earnings inflated to include amounts improperly billed to the Army under the Fort Huzchuca contract and a misrepresentation of corporate earnings due to the inclusion of amounts improperly billed under the 1993 Contract.

 Plaintiff filed this action on January 31, 1994. Count I alleges violations of the False Claims Act for submitting false statements in connection with the 1992 Solicitation. Count II alleges violations of the False Claims Act for submitting false information to the DoJ to obtain unauthorized monies under the 1993 Contract in the form of the revised Wage Determination and false invoices for work not performed under the contract. Count III alleges a violation of the False Claims Act in obtaining funds under the Fort Belvoir Contract. Finally, Count IV alleges a violation of the False Claims Act for submitting false claims to the SEC. Defendants have moved for dismissal of the complaint in full on the grounds of lack of subject matter jurisdiction, failure to state a claim upon which relief may be granted, lack of personal jurisdiction, and failure to plead with particularity as required by Fed. R. Civ. P. 9(b).

 ANALYSIS

 As a preliminary matter, the Court will address defendants' third ground for dismissal, lack of personal jurisdiction over defendants Gorkowski, Walter, and Konvica, in their individual capacities. Fed. R. Civ. P. 4 provides that service of a summons or filing of a waiver of service is effective to establish jurisdiction over the person of a defendant "when authorized by a statute of the United States." Fed. R. Civ. P. 4. The False Claims Act, 31 U.S.C. § 3729 et seq. (1994) [hereinafter "FCA"], authorizes nationwide service of process. The jurisdictional portion of the FCA provides in relevant part:

 
Any action under § 3730 may be brought in any judicial district in which the defendant, or in the case of multiple defendants, any one defendant can be found, resides, transacts business, or in which any act proscribed by § 3729 occurred. A summons as required by the Federal Rules of Civil Procedure shall be issued by the appropriate district court and served at any place within or outside the United States.

 31 U.S.C.A § 3732(a)(1994). Defendants' argument that § 3732(a) should be limited to suits by the government fails, because it conflicts with the statutory language of the FCA. Section 3732 applies to "any action under § 3730," which explicitly includes actions by private parties. 31 U.S.C.A. § 3730(b)(2).

 Because plaintiff filed suit in the District of Columbia, consistent with the FCA authorization of nationwide service, the Court conducts a minimum contacts due process analysis with respect to the District of Columbia. As part of this analysis, the Court notes that the 1992 Solicitation which underlies this claim was issued in Washington, D.C., the bid proposal was submitted in Washington, D.C., and Dyncorp's prior government contracts presumably led the company to transact business regularly in the District. Further, defendant Dyncorp does not contest its amenability to personal jurisdiction. Because the jurisdictional portion of the FCA authorizes jurisdiction over all defendants when there exists jurisdiction over one defendant, the Court will exercise personal jurisdiction over all defendants to this action. Dismissal on the ground that there is a lack of personal jurisdiction would be inappropriate. Accordingly, the remainder of this Opinion applies with equal force to Dyncorp and the other defendants in their individual capacities.

 Lack of Subject Matter Jurisdiction

 The Court considers each argument for lack of subject matter jurisdiction in turn: the failure to set forth a "claim" as defined under the FCA with respect to Counts I, II, and IV, the failure to show that the complaint is not based on public information or that plaintiff is the "original source" for such information with respect to all four Counts, and that the claim is jurisdictionally barred by 31 U.S.C. § 3730(e)(3) with respect to Counts I and II.

 1. Failure To Set Forth a "Claim" as Defined by the False Claims Act

 Defendants request dismissal of Counts I, II, and IV for failure to set forth a "claim." The False Claims Act defines "claim" as follows:

 
Any request or demand, whether under a contract or otherwise, for money or property which is made to a contractor, grantee, or other recipient if the United States provides any portion of the money or property which is requested or demanded, or if the government will reimburse such contractor, grantee or ...

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