United States District Court, S.D. Ohio, Eastern Division
UNITED STATES OF AMERICA ex rel. KUSTOM PRODUCTS, INC., Plaintiff/Relator,
HUPP & ASSOCIATES, INC., Defendant.
Deavers Magistrate Judge.
OPINION & ORDER
ALGENON L. MARBLEY UNITED STATES DISTRICT JUDGE.
matter is before the Court on Defendant Hupp &
Associates, Inc.'s (“Hupp”) Motion to Dismiss
for failure to state a claim upon which relief can be granted
and failure to plead fraud with particularity pursuant to
Federal Rules of Civil Procedure 12(b)(6) and 9(b). For the
reasons set forth below, Hupp's Motion is GRANTED.
a qui tam lawsuit brought under the False Claims Act
(the “FCA”). 31 U.S.C. §§ 3729-33.
Plaintiff/Relator Kustom Products, Inc.'s
(“KPI”) FCA claims arise out of Hupp's
alleged purchase of unauthorized parts in connection with six
contracts for maintenance kits awarded to Hupp by the
Department of Defense's contracting arm, the Defense
Logistics Agency (“DLA”). Hupp is a leading
provider of such kits to the Department of Defense.
(See Compl., Doc. 1, ¶ 3.14.) The DLA uses
National Stock Numbers (“NSNs”) to identify each
unique part used by the government in these kits. (See
Id. ¶ 3.17.) Each kit has its own NSN, as do the
individual component parts within each kit. (Id.
specifically, the six contracts referenced in KPI's
Complaint are for annual maintenance kits for the U.S.
Military's Family of Medium Tactical Vehicles
(“FMTV”). (Id. ¶ 3.24.) Each kit
contains a variety of FMTV parts, such as “fluid
filters, O-ring washers, seals, and nuts.”
(Id. ¶ 3.28.) Each contract is for a slightly
different variation of the FMTV kits. (See id.) The
kits are specified by a technical data package with a drawing
(drawing number 57K4845) that identifies the quantity and
approved sources of supply for each part. (See Id.
¶ 3.26.) Unless the contract states otherwise, the
supplier must provide the exact parts from the specified
manufacturer to fulfill its contractual obligations to the
DLA. (Id. ¶ 3.22.) At issue here are five
variations of the FMTV kit in drawing number 57K4845 with
different NSNs. (Id. ¶ 3.27.) Each contract
required Hupp to include two different types of seals (each
type with its own NSN) in each kit. (See Def.'s
Mot. to Dismiss, Doc. 24, at 3.)
to the Complaint, pursuant to drawing number 57K4845,
“the only approved sources of supply” for the
seals in the FMTV kits are AxleTech, International, Inc. and
Meritor Heavy Vehicle Systems, LLC. (See Compl.
¶¶ 3.32, 3.33.) Meritor manufactures the seals, and
AxleTech distributes seals that it obtains from Meritor.
(Id. ¶ 3.34.) With regard to each of the six
contracts identified in the Complaint, KPI alleges that,
“in the course of business, ” it learned
“from AxelTech [sic] and Meritor that at or around the
time [the contract] was awarded to Hupp, Hupp did not
purchase these seals from AxelTech or Meritor.”
(Id. ¶¶ 3.49, 3.64, 3.78, 3.92, 3.106,
3.121.) KPI also claims “upon information and
belief” that, for each contract: (1) Hupp was able to
provide the DLA with the maintenance kits at a lower cost by
supplying seals that were not manufactured by AxleTech or
Meritor; (2) Hupp certified under the contract that it
provided the proper seals in each kit; and (3) Hupp submitted
an invoice to the government for the seals and has been paid
for those seals. (See Id. ¶¶ 3.50, 3.53,
3.54, 3.56, 3.65, 3.69, 3.71, 3.79, 3.82, 3.83, 3.85, 3.93,
3.96, 3.97, 3.99, 3.107, 3.110, 3.111, 3.113, 3.122, 3.125,
filed its Complaint against Hupp in December 2015. (Doc. 1.)
The United States declined to intervene in the lawsuit in
July 2016. (See Doc. 8.) Hupp now moves to dismiss
KPI's Complaint in its entirety. Hupp's motion is fully
briefed and ripe for adjudication.
STANDARD OF REVIEW
Complaint should be dismissed under Federal Rule of Civil
Procedure 12(b)(6) if it “fail[s] to state a claim upon
which relief can be granted.” Generally, a complaint
must merely contain a “short and plain statement of the
claim showing that the pleader is entitled to relief.”
Fed.R.Civ.P. 8(a)(2). The district court, in turn,
“must treat as true all of the well-pleaded allegations
of the complaint.” Bower v. Fed. Express, 96
F.3d 200, 203 (6th Cir. 1996). This “tenet is
inapplicable to legal conclusions, or legal conclusions
couched as factual allegations.” McCormick v. Miami
Univ., No. 1:10-cv-345, 2011 WL 1740018, at *4 (S.D.
Ohio May 5, 2011) (citing Ashcroft v. Iqbal, 556
U.S. 662 (2009)). KPI's ground for relief must entail
more than “a formulaic recitation of the
elements” of a cause of action. Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007).
well-pleaded complaint must “give the defendant fair
notice of what the claim is, and the grounds upon which it
rests.” Nader v. Blackwell, 545 F.3d 459, 470
(6th Cir. 2008). The plaintiff must plead “enough facts
to state a claim to relief that is plausible on its
face.” Twombly, 550 U.S. at 570. To
“survive a motion to dismiss under Fed.R.Civ.P.
12(b)(6), the ‘complaint must contain either direct or
inferential allegations respecting all the material elements
to sustain a recovery under some viable legal
theory.'” Noble v. Genco I, Inc., No.
2:10-cv-648, 2010 WL 5541046, at *2 (S.D. Ohio Dec. 30, 2010)
(quoting Scheid v. Fanny Farmer Candy Shops, Inc.,
859 F.2d 434, 436 (6th Cir. 1988)). Finally, the complaint
must be construed in a light most favorable to the party
opposing the motion to dismiss. See Watson Carpet &
Floor Covering, Inc. v. Mohawk Indus., Inc., 648 F.3d
452, 456 (6th Cir. 2011).
addition, Federal Rule of Civil Procedure 9(b) requires that
“in any complaint averring fraud or mistake, the
circumstances constituting fraud or mistake shall be stated
with particularity.” Yuhasz v. Brush Wellman,
Inc., 341 F.3d 559, 563 (6th Cir. 2003). The heightened
pleading standard set forth in Rule 9(b) applies to
complaints alleging violations of the FCA. Id. A
complaint's failure to comply with Rule 9(b)'s
pleading requirements is treated as a failure to state a
claim under Rule 12(b)(6). United States ex rel. Howard
v. Lockheed Martin Corp., 499 F.Supp.2d 972, 976-77
(S.D. Ohio 2007).
LAW AND ANALYSIS
KPI's FCA Claims Are Not ...