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UNITED STATES EX REL. THISTLETHWAITE v. DOWTY WOOD

August 11, 1997

UNITED STATES OF AMERICA ex rel. JEFFREY THISTLETHWAITE and JEFFREY THISTLETHWAITE, Plaintiffs, against DOWTY WOODVILLE POLYMER, LIMITED, RICHARD WALKER and MICHAEL THOMPSON, Defendants.


The opinion of the court was delivered by: STANTON

 Jeffrey Thistlethwaite, a resident of England, brought this action in 1994 on behalf of the United States of America under the qui tam provisions of the False Claims Act ("the FCA"), 31 U.S.C. §§ 3729 et seq., against Dowty Woodville Polymer, Limited ("Dowty"), an English corporation, and two of its employees, Richard Walker and Michael Thompson, who are residents of England. The United States later joined the action as a plaintiff. Defendants moved to dismiss the complaint on various grounds, and the court granted the motion on the ground that it lacked subject matter jurisdiction over the claims, 911 F. Supp. 130 (S.D.N.Y. 1996), and entered judgment dismissing the complaint. The Court of Appeals for the Second Circuit vacated that judgment and remanded for further proceedings. See United States ex rel. Thistlethwaite v. Dowty Woodville Polymer, Ltd., 110 F.3d 861, 868 (2d Cir. 1997).

 Defendants renew their motion to dismiss the complaint on two remaining grounds: that this court lacks personal jurisdiction over them, and that the Southern District of New York is a inconvenient forum for the litigation.

 BACKGROUND

 The amended complaint alleges the following.

 Dowty manufactures wing slot seals used in variable geometry or "swing wing" aircraft. Beginning in the 1980s, Dowty entered into contracts to develop and supply the seals to a California corporation, Rockwell International Corporation ("Rockwell"), for use in aircraft that Rockwell manufactured for the United States Air Force ("Air Force"). Dowty also entered into contracts with the Air Force at McClellan Air Force Base in California and at Tinker Air Force Base in Oklahoma to supply the seals for use in aircraft at those bases. Defendant Richard Walker, a project manager at Dowty and later a director and general manager there, and defendant Michael Thompson, a commercial manager and later a financial manager there, both repeatedly travelled to California and Oklahoma in connection with the negotiation and execution of those contracts. Dowty ultimately provided thousands of seals to the Air Force for over $ 52 million. Jeffrey Thistlethwaite, a business manager at Dowty from 1989 to 1992, then discovered that Dowty had fraudulently overcharged the Air Force and its contractor, Rockwell, by inflating its costs, on which the price of the seals was based.

 The complaint asserts that the defendants made false and fraudulent statements to the Air Force and Rockwell in violation of the FCA and the Truth in Negotiations Act, 10 U.S.C. § 2306(a), and also asserts federal common law claims of breach of contract, unjust enrichment, and payment made under mistake of fact.

 DISCUSSION

 I. Personal Jurisdiction

 Defendants claim that the FCA does not authorize this court to exercise personal jurisdiction over them and that, even if it did, the exercise of jurisdiction over them would violate due process.

 A. Statutory authorization of service of process

 In actions brought under section 3730 of the FCA, as here, the FCA provides:

 
Any action under section 3730 may be brought in any judicial district in which the defendant or, in the case of multiple defendants, any one defendant can be found, resides, transacts business, or in which any act proscribed by section 3729 occurred. A summons as required by the Federal Rules of Civil Procedure shall be issued by the appropriate district court and served at any place within or outside the United States.

 31 U.S.C. § 3732(a) (1997).

 The first sentence refers to venue. See United States ex rel. Thistlethwaite v. Dowty Woodville Polymer, Ltd., 110 F.3d 861, 866 (2d Cir. 1997). The second sentence limits the exercise of personal jurisdiction by providing that while a summons may be served anywhere, it may issue only from an "appropriate" district court. The statute does not define "appropriate," but it appears from the context that ...


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