United States ex rel. v. Exelis, Inc., No. 14-4155 (2d Cir. 2016)Annotate this Case
Plaintiff, a former employee of Power Solutions, filed suit under the False Claims Act (FCA), 31 U.S.C. 3729 et seq., alleging that Power Solutions and others made fraudulent representations to the United States in connection with certain equipment supplied to the government pursuant to a procurement contract. The court dismissed the Substitute Second Amended Complaint (SSAC) in part pursuant to Fed. R. Civ. P. 12(b)(1), ruling that plaintiff had released his claims against Power Solutions and its parent corporation and thus lacked standing to bring claims against them, and in part pursuant to Fed. R. Civ. P. 9(b) on the ground that the fraud claims were not pleaded with the requisite particularity. The court concluded that, although the right to bring a qui tam suit can be released when the government has knowledge of the relator's fraud allegations, the court did not endorse the district court's conclusion that the government had such knowledge in this case. The court affirmed the dismissal of the action against Power Solutions and Exelis for failure to allege fraud with the requisite particularity where the SSAC did not contain plausible allegations of fact that showed, as required for FCA purposes, that any claim for payment submitted by Power Solutions, ITT, or Exelis was false or that any of the devices delivered to the government failed to meet contract specifications. Finally, the district court did not abuse its discretion in denying leave to amend.