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United States ex rel. Scott v. Pacific Architects and Engineers (PAE), Inc.

United States District Court, District of Columbia

September 13, 2018

UNITED STATES OF AMERICA, ex rel. PATRICIA SCOTT and JOHN L. TUDBURY, Plaintiffs,
v.
PACIFIC ARCHITECTS AND ENGINEERS (PAE), INC. dba PAE Government Services, Inc, aka PAE Group, Defendant.

          MEMORANDUM OPINION AND ORDER

          COLLEEN KOLLAR-KOTELLY, UNITED STATES DISTRICT JUDGE

         Relators, Patricia Scott and John L. Tudbury, proceeding qui tam on behalf of the United States, seek leave to amend their Third Amended Complaint. Defendant Pacific Architects and Engineers, LLC (“PAE”) opposes.[1] Upon consideration of the pleadings, the relevant legal authorities, and the record as a whole, [2] the Court shall, in an exercise of its discretion, GRANT Relators' [52] Motion for Leave to Amend Complaint to File Correction or in the Alternative for Extension of Time to Respond to the Motion to Dismiss (“Motion to Amend”). In light of the filing of Relators' Fourth Amended Complaint as of this date, the Court also shall DENY WITHOUT PREJUDICE Defendant's [50] Motion to Dismiss the Third Amended Complaint.

         Because the Court permits the Fourth Amended Complaint on the basis of Relators' [50] Motion, the Court generally need not reach Relators' [59] Motion to Docket Their Fourth Amended Complaint and to Amend the Schedule (“Motion to Docket”), except insofar as that motion seeks a briefing schedule for any renewed motion to dismiss. The Court shall GRANT-IN-PART and DENY-IN-PART as MOOT Relators' [59] Motion. Relators' [59] Motion is granted only insofar as the Court adopts the briefing schedule proposed therein for any dispositive motion that Defendant may choose to file.

         The Court expects that Relators reviewed the Third Amended Complaint for any deficiencies and made the necessary edits in their Fourth Amended Complaint. The Court likewise expects that the Fourth Amended Complaint, the fifth iteration of Relators' pleading, will be the operative complaint for purposes of moving forward with Defendant's Motion to Dismiss and that no further need to amend will arise prior to discovery.[3]

         I. BACKGROUND

         The Court previously articulated many of Relators' then-allegations in ruling on Defendant's motion to dismiss the Second Amended Complaint. See Mem. Op. and Order at 2-6, United States ex rel. Scott v. Pacific Architects & Engineers (PAE), Inc., 270 F.Supp.3d 146, 150-52 (D.D.C. 2017), ECF No. 36. The Court shall summarize here only those allegations in the Third Amended Complaint that are pertinent to the disposition of the pending motions.

         Relators are former employees of the Defendant, a contractor enlisted to provide “logistics, construction, services including peace keeping, justice programs, capacity building, and international policing programs” to the United States Government. 3d Am. Compl., ECF No. 49, ¶¶ 7-8. Among Defendant's contracts were agreements with the U.S. Department of State's Bureau of International Narcotics and Law Enforcement Affairs to furnish “civilian police training and administrative services” in Lebanon and other countries. Id. ¶¶ 9-10. Relators allege that Defendant committed certain violations of the federal False Claims Act (“FCA”), as amended, 31 U.S.C. § 3729, et seq., including falsification of time records for work billed to the United States Government. See, e.g., id. ¶¶ 1-2, 27-41. Of interest here, according to the Third Amended Complaint, one of Defendant's program managers allegedly instructed employees to engage in billing strategies that were tailored “to avoid problems with [State Department] audits that had questioned time sheet billing practices.” Id. ¶ 41. But Relators now allege in their proposed Fourth Amended Complaint that the program manager's instructions were designed “to avoid problems with an internal audit from a company that was thinking about buying PAE, which apparently questioned time sheet billing practices.” Relators' Mot. to Amend at 5 (referring to proposed Fourth Amended Complaint, ¶ 41).

         Suing on behalf of the United States for Defendant's alleged violations of the FCA, Relators filed their [1] Complaint under seal in 2013. On March 12, 2014, the Court permitted withdrawal of that Complaint and the filing of a First Amended Complaint. Sealed Order, ECF No. 6; 1st Am. Compl., ECF No. 9. That First Amended Complaint was unsealed by the Court's [16] Order of March 18, 2016, issued upon receipt of the United States' [15] Notice Regarding Intervention. After filing a motion to dismiss the First Amended Complaint, Defendant consented to Relators' request to file a Second Amended Complaint, which the Court ordered by Minute Order of August 15, 2016. See 2d Am. Compl., ECF No. 30.

         On September 13, 2017, the Court granted-in-part and denied-in-part Defendant's motion to dismiss the Second Amended Complaint, dismissing certain of Relators' claims without prejudice. Scott, 270 F.Supp.3d 146. The Court held an Initial Scheduling Conference and ultimately permitted Relators to file a Third Amended Complaint, with Defendant's consent, to address deficiencies in the Second Amended Complaint that were identified by the Court in its September 13, 2017, decision. See Am. Scheduling & Procedures Order, ECF No. 45, at 5; Min. Order of Jan. 3, 2018; 2d Am. Scheduling and Procedures Order, ECF No. 48, at 5. As the Court expressly contemplated, Defendant then filed its [50] Motion to Dismiss the Third Amended Complaint. Shortly thereafter, and before the deadline for their opposition to that pending motion, Relators filed their [52] Motion to Amend, which in the alternative sought an extension in the deadline for their opposition. A flurry of subsequent briefing revolved around the core question of whether the Third Amended Complaint should be amended still further. Pending the Court's decision as to their Motion to Amend or to extend the opposition deadline, Relators did not respond to Defendant's Motion to Dismiss. Defendant argues that its Motion to Dismiss accordingly “may . . . be treated as conceded.” Def.'s Notice at 3.

         II. LEGAL STANDARD

         Under Federal Rule of Civil Procedure 15, a party is permitted to amend its complaint or other pleading “once as a matter of course within” certain alternative time periods. Fed.R.Civ.P. 15(a)(1). “In all other cases, a party may amend its pleading only with the opposing party's written consent or the court's leave.” Id. 15(a)(2). Rule 15 makes clear that when the court's leave is sought, that leave should be “freely give[n] . . . when justice so requires.” Id.; see Willoughby v. Potomac Elec. Power Co., 100 F.3d 999, 1003 (D.C. Cir. 1996) (finding that leave to amend a complaint is within the court's discretion and “should be freely given unless there is a good reason . . . to the contrary”), cert den., 520 U.S. 1197 (1997); Firestone v. Firestone, 76 F.3d 1205, 1208 (D.C. Cir. 1996) (noting that “it is an abuse of discretion to deny leave to amend unless there is sufficient reason”).

         “When evaluating whether to grant leave to amend, the Court must consider (1) undue delay; (2) prejudice to the opposing party; (3) futility of the amendment; (4) bad faith; and (5) whether the plaintiff has previously amended the complaint.” Howell v. Gray, 843 F.Supp.2d 49, 54 (D.D.C. 2012) (citing Atchinson v. District of Columbia, 73 F.3d 418 (D.C. Cir. 1996) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). “Courts that have found an undue delay in filing [a proposed amended complaint] have generally confronted cases in which the movants failed to promptly allege a claim for which they already possessed evidence.” United States ex rel. Westrick v. Second Chance Body Armor, Inc., 301 F.R.D. 5, 9 (D.D.C. 2013). An amendment would be unduly prejudicial if it “substantially changes the theory on which the case has been proceeding and is proposed late enough so that the opponent would be required to engage in significant new preparation”; it would “put [the opponent] to added expense and the burden of a more complicated and lengthy trial”; or it raises “issues . . . [that] are remote from the other issues in the case.” Djourabchi v. Self, 240 F.R.D. 5, 13 (D.D.C. 2006) (quoting 6 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1487 (2d ed. 1990)) (internal quotation marks omitted). With respect to the futility of an amendment, a district court may properly deny a motion to amend if “the amended pleading would not survive a motion to dismiss.” In re Interbank Funding Corp. Sec. Litig., 629 F.3d 213, 218 (D.C. Cir. 2010) (citing, e.g., Foman, 371 U.S. at 182). “With respect to bad faith, courts generally consider the length of the delay between the latest pleading and the amendment sought. However, delay alone is an insufficient ground to deny the motion unless it prejudices the opposing party.” Djourabchi, 240 F.R.D. at 13 (citing Wright, Miller & Kane, supra, § 1488).

         “Because amendments are to be liberally granted, the non-movant bears the burden of showing why an amendment should not be allowed.” Abdullah v. Washington, 530 F.Supp.2d 112, 115 (D.D.C. 2008).

         III. ...


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