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United States ex rel. Smith v. Athena Construction Group, Inc.

United States District Court, District of Columbia

August 29, 2018




         Plaintiff William “Bill” Smith (“Relator”) brings this qui tam action on behalf of the United States pursuant to the False Claims Act (“FCA”), 31 U.S.C. §§ 3729-3732, against Athena Construction Group, Inc. (“Defendant”). Presently before the court is Defendant's motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(2), (3) and (6). (Doc. 17.) For the reasons that follow, the court will deny Defendant's motion, but will transfer venue in the interest of justice to the United States District Court for the District of Columbia.

         I. Factual Background and Procedural History

         The following facts are taken from Relator's amended complaint and are taken as true for purposes of this motion to dismiss. Defendant is a general construction contractor located in northern Virginia that regularly contracts with the federal government for construction projects throughout the Mid-Atlantic and Southern regions of the United States. (Doc. 15, ¶¶ 3, 8, 27.) In bidding for and entering into contracts with the federal government, Defendant has availed itself of federal Small Business Administration (“SBA”) programs that seek to encourage the use of small businesses, service-disabled-veteran-owned businesses, and women and minority-owned businesses. (Id. at ¶¶ 2, 9.) Through the various SBA programs, the federal government reserves a portion of certain contracts, typically those with a value between $3, 000 and $150, 000, for businesses that have been certified under one or more of the SBA programs. (Id. at ¶ 45.) In order to be considered eligible for participation in SBA programs, Defendant was required to apply for and receive certification that it qualifies under the 8(a) Business Development Program (“8(a) BDO”), [1] the Historically Underutilized Business Zone Program (“HUBZone”), [2] the Service-Disabled-Veteran-Owned Small Business Concern Program (“SDVO”), and the Women-Owned Small Business Federal Contracting Program (“WOB”).[3] (Id. at ¶ 46.) From 2010 to 2016, Defendant received approximately $22, 000, 000 in SBA program contracts related to its HUBZone and 8(a) BDO certifications. (Id. at ¶ 4.)

         Relator is a Maryland resident who previously worked for Defendant as a Director of Operations from approximately 2007 to 2012. (Doc. 15, ¶¶ 7, 105, 117.) Relator avers that he discovered numerous individuals on Defendant's “roster” of employees that he had never met or seen at a worksite. (Id. at ¶ 105.) When he inquired as to the identities of these employees, he was told that they were on the roster in order to satisfy the requirements of various SBA certifications held by Defendant. (Id. at ¶¶ 106-107.) Relator also avers that Defendant unlawfully subcontracted SBA contracts, in violation of SBA requirements. (Id. at 108-110.) On January 10, 2017, Relator reported the alleged violations and falsifications to the Attorney General of the United States via sealed complaint. (Id. at 117.) Relator avers that, in an attempt to intimidate him into withdrawing the complaint, Defendant filed a lawsuit in the Circuit Court for the County of Prince William in Virginia, seeking over $106, 000 in damages for a breach of the severance agreement between Relator and Defendant. (Id. at 122-23.) Specifically, Defendant alleged in the Virginia state court action that Relator violated the severance agreement by filing the complaint because the allegations therein constituted “derogatory remarks” against Defendant. (Id. at ¶ 123.)

         Relator filed the instant action on January 10, 2017, alleging, inter alia, qui tam claims under the FCA on behalf of the United States for Defendant's allegedly fraudulent statements made in order to receive various SBA certifications. (Doc. 1.) The United States filed a notice of its decision not to intervene on September 6, 2017. (Doc. 8.) Defendant filed a motion to dismiss on November 1, 2017, and Relator filed an amended complaint on November 21, 2017. (Docs. 11, 15.) Relator's amended complaint included only his FCA claim and the claim for retaliation based on Defendant's filing of the Virginia state court claim against him. (Doc. 15.) Defendant filed the instant motion to dismiss on December 5, 2017, arguing that this court lacks personal jurisdiction, that the Middle District of Pennsylvania is an improper venue, and that Relator has failed to state a claim upon which relief may be granted or has failed to plead its fraud claim with sufficient specificity. (Doc. 17.) Defendant's motion to dismiss has been fully briefed and is ripe for disposition. For the reasons discussed below, Defendant's motion will be denied, but venue shall be transferred in the interest of justice and for the convenience of the parties.

         II. Discussion

         In its motion to dismiss, Defendant seeks dismissal of Relator's amended complaint for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2), improper venue under Rule 12(b)(3), and failure to state a claim upon which relief can be granted under Rule 12(b)(6). Defendant also requests, in the alternative, that Relator's amended complaint be dismissed without prejudice for failure to plead fraud with sufficient particularity under Rule 9(b).

         A. Personal Jurisdiction

         Defendant argues that this court lacks personal jurisdiction to hear Relator's claims because Relator has failed to plead sufficient facts to establish the requisite minimum contacts with Pennsylvania under International Shoe Co. v. Washington, 326 U.S. 310 (1945). The Due Process Clause of the Fifth Amendment requires that individuals only be required to appear in a court if they have voluntarily associated themselves with the territory in which the court sits. Heft v. AAI Corp., 355 F.Supp.2d 757, 765 (M.D. Pa. 2005) (citing Burger King v. Rudzewicz, 471 U.S. 462, 474 (1985)). Courts apply the minimum contacts analysis to determine if a defendant had sufficient contacts with the forum to satisfy due process concerns. Id. If the court is satisfied that the defendant had the requisite minimum contacts with the forum, the court must next determine if the “assertion of jurisdiction comports with ‘traditional notions of fair play and substantial justice.'” Id. (quoting Int'l Shoe Co., 326 U.S. at 316.) Indeed, Relator's contacts with the forum state are tenuous, even viewing the complaint in the light most favorable to the plaintiff. Were this court sitting in diversity, the Defendant's limited association with Pennsylvania may compel dismissal. See RP Healthcare, Inc. v. Pfizer, Inc., No. 12-cv-5129, 2017 WL 4330358, *5 (D. N.J. Sept. 29, 2017), aff'd sub nom. In re Lipitor Antitrust Litig., 722 Fed.Appx. 132 (3d Cir. 2018) (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980)). The FCA, however, is a statue that authorizes nationwide service of process. 31 U.S.C. § 3732. Thus, the court's inquiry does not rest on an analysis of Defendant's contacts with the Commonwealth of Pennsylvania alone.

         In determining personal jurisdiction in an action arising under a statute authorizing nationwide service of process, the Third Circuit has held that:

[W]here Congress has spoken by authorizing nationwide service of process[], as it has in the Securities Act, the jurisdiction of a federal court need not be confined by the defendant's contacts with the state in which the federal court sits. See DeJames v. Magnificence Carriers, Inc., 654 F.2d 280, 284 (3d Cir. 1981). Following this reasoning, the district courts within this Circuit have repeatedly held that a “national contacts analysis” is appropriate “when appraising personal jurisdiction in a case arising under a federal statute that contains a nationwide service of process provision.” AlliedSignal, Inc. v. Blue Cross of Calif., 924 F.Supp. 34, 36 (D. N.J. 1996); see also Green v. William Mason & Co., 996 F.Supp. 394, 396 (D. N.J. 1998) (“[A]n assessment of personal jurisdiction under [a statutory provision authorizing nationwide service of process] necessitates an inquiry into the defendant's contacts with the national forum.”). We too are persuaded by the reasoning of our prior opinions on the subject, and, consistent with several of our sister courts of appeals, hold that a federal court's personal jurisdiction may be assessed on the basis of the defendant's national contacts when the plaintiff's claim rests on a federal statute authorizing nationwide service of process.

Pinker v. Roche Holdings Ltd., 292 F.3d 361, 369 (3d Cir. 2002). “It necessarily follows that the ‘forum' of the federal courts is the entire territory of the United States. Regardless of their location, federal courts are components of the national government, and exercise a portion of its sovereign powers.” Heft, 355 F.Supp.2d at 765 (citing Max Daetwyler Corp. v. Meyer, 762 F.2d 290, 293-95 (3d Cir. 1985)). Moreover, where a defendant “resides within the territorial boundaries of the United States, ” that defendant “has sufficient minimum contacts with the United States that the [c]ourt's exercise of personal jurisdiction does not offend traditional notions of fair play and substantial justice.” Hericks v. Lincare Inc., No. 07-cv-387, 2014 WL 1225660, *1 n.2 (E.D. Pa. Mar. 25, 2014) (citing U.S. v. Metzinger, No. 94-cv-7520, 1996 WL 412811, *2 n.3 (E.D. Pa. July 18, 1996); U.S. v. Torkelsen, No. 06-cv-5674, 2007 WL 4245736, *3 (E.D. Pa. Dec. 3, 2007)). Because it is undisputed that Defendant, a Virginia-based company doing business in the United States, has minimum contacts with the United States, this court has personal jurisdiction over Defendant under the FCA.

         B. ...

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