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United States ex rel. Sloan v. Waukegan Steel, LLC

United States District Court, N.D. Illinois, Eastern Division

February 28, 2018




         Relator, Jesse Sloan, brings this case on behalf of the United States under the False Claims Act, 31 U.S.C. §§3729, et seq., against his former employer, defendant Waukegan Steel, LLC (“Waukegan”). Defendant moves to dismiss. For the following reasons, the motion is denied.


         In February 2013, defendant Waukegan, a structural steel fabricator and contractor, accepted a “Purchase Order” from Charpie Korte Industries LLC (“Charpie Korte”), a general contractor hired by the United States Army Corps of Engineers (“USACE”) to build an Army Reserve Center in Rockford, Illinois. (Compl. ¶ 5., ECF No. 1; Id. Ex. A, Purchase Order, ECF No. 1 at 10.) The order called for defendant to fabricate and install structural steel at the Rockford project. (Id. ¶ 5.) Relator, who was employed by defendant at the time, brings this suit claiming that defendant made false statements in order to receive payment for the job with government funds.

         The Purchase Order specified that defendant's work was to “comply with the Contract Document, design criteria and function properly” and that defendant will produce “all reports on testing of systems, as required, to the Owner and Contractor.” (Compl. ¶ 10 (citing Exhibit A, Purchase Order Attachment “A” ¶ 1.4, 1.11).) The “Design Specifications” of the contract between Charpie Korte and USACE (attached as Exhibit B) required contractors to adhere to a number of professional codes, including those of the American Institute of Steel Construction (AISC), the American Society for Testing and Materials (ASTM), and the American Welding Society (AWS). (Compl. ¶ 11; id. Ex. A ¶ 1.23.5; id. Ex. B, Design Specifications, at 47-49, ECF No. 1 at 50-52.) The “material certification” provision of the Design Specifications required as follows:

The Fabricator shall provide an affidavit stating that the structural steel furnished meets the requirements of this specification. . . . [C]ertified reports of tests made by the Fabricator or a testing laboratory in accordance with ASTM A6 or A568, as applicable, shall constitute sufficient evidence of conformity with the above standards.

(Id. Ex. B at 49.)

         Relator alleges that after delivering the steel Charpie Korte had ordered, defendant sought payment. (Id. ¶ 15.) Charpie Korte required defendant to submit “fabrication quality control and weld inspection certifications” to the Army Corps of Engineers before it would pay defendant for its work. (Id. ¶ 15.) According to relator, defendant did not have any such certificates. (Id. ¶¶ 15-17.) Wayne Greisbaum, president of Waukegan, allegedly asked relator to fabricate the inspection certifications so that defendant could send them to Charpie Korte for payment out of government funds. (Id. ¶ 17.)

         When relator refused, Mr. Greisbaum allegedly approached another employee, Artemis Gonzales, who was not a qualified welding inspector, and requested that he fabricate the certifications. (Id. ¶¶ 19-20.) According to relator, Mr. Gonzales fabricated the requested certifications, and Mr. Greisbaum signed them. (Id. ¶¶ 19-20.) Defendant then submitted the certifications in order to obtain payment, knowing they were false. (Id. ¶ 20, see Id. Ex. C, Shop [Quality Control] Reports, In Process And Final Inspection of Fabricated Structural Steel.) Relator claims that, based on these facts, defendant “(a) knowingly presented and/or (b) caused to be presented, false or fraudulent claims to the United States government, ” which the government paid. (Id. ¶¶ 21-22.)


         A motion under Federal Rule of Civil Procedure 12(b)(6) tests whether the complaint states a claim on which relief may be granted. Richards v. Mitcheff, 696 F.3d 635, 637 (7th Cir. 2012). Under Rule 8(a)(2), a complaint must include “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). The short and plain statement under Rule 8(a)(2) must “‘give the defendant fair notice of what . . . the claim is and the grounds upon which it rests.'” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).

         Under federal notice-pleading standards, a complaint's “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. Stated differently, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). “In reviewing the sufficiency of a complaint under the plausibility standard, [courts must] accept the well-pleaded facts in the complaint as true, but [they] ‘need[ ] not accept as true legal conclusions, or threadbare recitals of the elements of a cause of action, supported by mere conclusory statements.'” Alam v. Miller Brewing Co., 709 F.3d 662, 665-66 (7th Cir. 2013) (quoting Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009)).

         Additionally, any claims asserted under the False Claims Act must comply with Federal Rule of Civil Procedure 9(b), which requires the pleading party to “state with particularity the circumstances constituting fraud.” United States ex rel. Presser v. Acacia Mental Health Clinic, LLC, 836 F.3d 770, 775 (7th Cir. 2016). Although fraudulent or deceptive intent “may be alleged generally, ” Rule 9(b) requires a plaintiff (or in this case, relator) to describe the “circumstances” of the alleged fraud with “particularity” by including such information as the “the identity of the person who made the misrepresentation, the time, place and content of the misrepresentation, and the method by which the misrepresentation was communicated, ” Windy City Metal Fabricators & Supply, Inc. v. CIT Tech. Fin. Servs., Inc., 536 F.3d 663, 668 (7th Cir. 2008). This “ordinarily requires describing the ‘who, what, when, where, and how' of the fraud, although the exact level of particularity that is required will necessarily differ based on the facts of the case.” AnchorBank, FSB v. Hofer, 649 F.3d 610, 615 (7th Cir. 2011) (citation omitted).

         A person is liable to the United States government under the False Claims Act (“FCA”), 31 ...

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