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United States District Court, Southern District of New York

June 29, 2000


The opinion of the court was delivered by: Sprizzo, District Judge.


Plaintiffs Pentagen Technologies International Limited ("Pentagen") and Russell D. Varnado (collectively "plaintiffs") bring the instant action alleging violations of the Federal False Claims Act ("False Claims Act") and abuse of process by defendants United States of America ("United States"), E.F. Brasseur ("Brasseur")*fn1 (collectively "United States defendants"), CACI International Inc. ("CACI International"), CACI Systems Integration, Inc. ("CACI Systems"), CACI, Inc. — Federal ("CACI Federal"), International Business Machines Corporation ("IBM"), Lockheed Martin Corporation ("Lockheed Martin"), AT & T Company ("AT & T"), PRC Inc. ("PRC"), I-Net Inc. ("I-Net"), Statistica, Inc. ("Statistica"), Express Company Secretaries Limited ("Express"), Jordans & Jordan & Sons Limited ("Jordan"), Jordan Group LTD ("Jordan Group"), Steptoe and Johnson ("Steptoe"), J. William Koegel, Jr., Esq., Davies Arnold & Cooper ("Davies"), and George Menzies, Esq. ("Menzies") (collectively "non-United States defendants"). United States defendants and non-United States defendants have moved to dismiss plaintiffs' complaint pursuant to Rules 12(b)(1), 12(b)(2), and 12(b)(6) of the Federal Rules of Civil Procedure. Moreover, during the pendency of these motions, plaintiffs have requested leave to file a Second Amended Complaint which includes several new causes of action based upon evidence they claim was recently discovered. Defendants have opposed such request by arguing that all new claims asserted by plaintiffs must be dismissed and, accordingly, the proposed amendment would be futile. For the reasons set forth herein, this action is dismissed in its entirety with prejudice and plaintiffs' request to amend their complaint is denied.


This action, like approximately ten other actions previously brought by plaintiffs, stems from Pentagen's failure to procure a substantial contract to provide software to the United States Army ("the software contract"). Most relevant here, after the software contract was awarded to several other contractors and subcontractors, many of them defendants in the instant action, plaintiffs brought forward an action against such contractors and subcontractors under the qui tam provisions of the False Claims Act, 31 U.S.C. § 3729, et seq. In that action which was before Judge Robert L. Carter of this Court ("the first qui tam action"), plaintiffs alleged, inter alia, that (1) such contractors and subcontractors had without plaintiffs' permission submitted a proposal to the Army that required the use of a software application owned by plaintiff ("Mentix"); and (2) defendants, upon being awarded the software contract, were generally failing in their performance obligations under such contract.*fn2 Judge Carter dismissed the first qui tam action for lack of subject matter jurisdiction on November 21, 1995.*fn3 See United States ex rel. Pentagen Tech. Int'l Ltd. v. CACI Intern. Inc., No. 94 Civ. 2925(RLC), 1995 WL 693236 (S.D.N.Y.).

In the instant action, plaintiffs allege that defendants' conduct while litigating the qui tam actions constituted an abuse of due process under state law and was in violation of the False Claims Act.*fn4 Specifically, with respect to the United States defendants, plaintiffs allege that the United States improperly (1) filed an amicus curiae brief in the first qui tam action; (2) colluded with non-performing government contractor defendants in their defense of the first and second qui tam action; (3) prohibited plaintiffs from meeting with members of the Executive Branch to assist them in their prosecution of the first and second qui tam actions; and (4) permitted defendant Brasseur, a Government employee, to meet with defendant contractors and provide a witness statement ("the Brasseur statement") for use in related litigation proceedings pending in the United Kingdom ("the U.K. Proceeding"). See Amend. Cmplt. at ¶¶ 41, 46. Similarly, plaintiffs claim that the remaining defendants colluded with the United States in preparing the aforementioned amicus curiae brief and the Brassuer statement, and in otherwise seeking the United States' assistance in preparing for their defense of the qui tam actions. See id. at ¶¶ 42-45.


A. Personal Jurisdiction

Defendants CACI Systems, CACI International, CACI Federal, Davies, Menzies, Express, Jordan and Jordan Group each move to dismiss plaintiffs' complaint pursuant to Fed. Rule Civ. Proc. 12(b)(2) for lack of personal jurisdiction. Here, where the parties have not engaged in discovery, "a plaintiff challenged by a jurisdiction testing motion may defeat the motion by pleading in good faith . . . legally sufficient allegations of jurisdiction, i.e., by making a prima facie showing of jurisdiction." See Jazini v. Nissan Motor Company, Ltd., 148 F.3d 181, 184 (2d Cir. 1998) (citations and quotations omitted).

With respect to defendants CACI Systems, CACI International, Express, Jordan, and Jordan Group, plaintiffs' Amended Complaint pleads absolutely no factual allegations detailing the basis for this Court's jurisdiction over such defendants. Moreover, plaintiffs have entirely failed to respond to such defendants' arguments that the Court lacks personal jurisdiction over them. In these circumstances the Court must dismiss plaintiffs' action as to such defendants.

As to defendant CACI Federal, plaintiffs' complaint alleges that such defendant is authorized to do business in New York and is presently found in the State of New York. See Amend. Cmplt. at ¶ 6. Similarly, plaintiffs plead that law firm Davies is comprised in part of New York attorneys, namely its partner defendant Menzies, who allegedly is licensed to practice in New York and met with plaintiff Pentagen in New York at times relevant to this action. See id. at ¶ 15. While defendants argue that such allegations are either inaccurate or legally insufficient to assert personal jurisdiction over them, at this early stage of litigation they constitute prima facie jurisdictional allegations sufficient to survive a motion to dismiss.*fn5

B. False Claims Act

The False Claims Act empowers the United States to recover damages from those who knowingly make false claims for payment upon the United States. See 31 U.S.C. § 3729(a); United States ex rel. Dick v. Long Island Lighting Co., 912 F.2d 13, 16 (2d Cir. 1990). As noted by the Supreme Court, a "claim against the Government normally connotes a demand for money or for some transfer of public property." United States v. McNinch, 356 U.S. 595, 599, 78 S.Ct. 950, 2 L.Ed.2d 1001 (1958) (internal quotation and citation omitted). Accordingly, the terms "claim against the government . . . must be carefully restricted, not only to their literal terms but to the evident purpose of Congress in using those terms, particularly where they are broad and susceptible to numerous definitions." Id.

To encourage reporting of false claims, any person may commence a civil action on behalf of the United States for a violation of the False Claims Act. See 31 U.S.C. § 3730(b). Such person must serve a copy of the complaint upon the United States, which may proceed with the action and take "primary responsibility" for its prosecution. See 31 U.S.C. § 3730(c)(1). It may also decline to proceed with the action, whereupon the originator of the suit may proceed as a qui tam plaintiff. See id. Should the Government decline to proceed with the action, it is still entitled to be served with copies of all pleadings in the action and may upon good cause intervene at a later date. See id. at § 3730(c)(3). In either case, if the action is ultimately successful, the qui tam plaintiff is entitled to a portion of the recovery. See id. at § 3730(d).

As to the United States defendants, plaintiffs claims under the False Claims Act must be dismissed as the United States has never waived its sovereign immunity with respect to such suits. The United States is immune from suit unless it has unequivocally waived its sovereign immunity by statute. See United States v. Sherwood, 312 U.S. 584, 586, 61 S.Ct. 767, 85 L.Ed. 1058 (1941); United States v. Mitchell, 445 U.S. 535, 538, 100 S.Ct. 1349, 63 L.Ed.2d 607 (1980). No such waiver has been promulgated by Congress and, to the contrary, the False Claims Act provides that any person who violates the Act will be "liable to the United States Government." See 31 U.S.C. § 3729(a); see also Juliano v. Federal Asset Disposition Ass'n, 736 F. Supp. 348, 352, 353 (D.D.C. 1990) ("The Court is aware of nothing in the Act that allows a private individual to sue selected federal agencies to recover money from the United States, and to reap a sizable profit in the process."), aff'd., 959 F.2d 1101, 1992 WL 76922 (D.C.Cir. 1992).*fn6

As to the non-United States defendants, plaintiffs' claims must be dismissed because the False Claims Act provides no private right of action for litigation misconduct during the pendency of a qui tam action. Four factors must be considered in determining whether a statute implies a private right of action: (1) whether the plaintiff is part of the class for whose benefit the statute was enacted; (2) whether there is any indication of legislative intent that would either favor or oppose creation of a private remedy; (3) whether implication of a private remedy is consistent with the underlying purposes of the statute; and (4) whether the cause of action is one traditionally relegated to state law, such that it would be inappropriate to infer the existence of a federal cause of action. See Cort v. Ash, 422 U.S. 66, 78, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975).

The second factor, legislative intent, is central in such analysis with the other factors looked upon as "proxies for legislative intent." DiLaura v. Power Authority of New York, 982 F.2d 73, 77-78 (2d Cir. 1992) (citations omitted). When a statute fails to provide for a private right of action, legislative intent is determined by reference to "the language of the statute itself, its legislative history, the underlying purpose and structure of the statutory scheme, and the likelihood that Congress intended to supersede or to supplement existing state remedies." Schuloff v. Queens College Foundation, Inc., 994 F. Supp. 425, 427 (E.D.N.Y. 1998) (citations omitted), aff'd, 165 F.3d 183 (2d Cir. 1999).

The False Claims Act specifically provides for private actions based upon the making of a false claim for payment upon the United States. Beyond creating this type of action, the Act provides a specific and detailed procedure for how such actions are to proceed, either with or without Governmental involvement. See 31 U.S.C. § 3730. No other mention of a private action is made by the statute, and, in particular, no mention is made of a private action based upon litigation misconduct during the pendency of a False Claims Act proceeding. In these circumstances, this Court cannot infer the right of a party to instigate such an action. Indeed, as the Supreme Court has noted, "it is an elemental canon of statutory construction that where a statute expressly provides a particular remedy or remedies, a court must be chary of reading others into it." Meghrig v. KFC Western, Inc., 516 U.S. 479, 488, 116 S.Ct. 1251, 134 L.Ed.2d 121 (1996) (citations omitted).

C. Abuse of Process

Plaintiffs' abuse of process claims are clearly time-barred under the applicable limitations period. Under New York law, the statute of limitations for plaintiffs' abuse of process claims is one year. See N.Y.C.P.L.R. § 215(3); Heinfling v. Colapinto, 946 F. Supp. 260, 266 (S.D.N.Y. 1996). Here, plaintiffs' Amended Complaint alleges that the United States filed its amicus brief on or before June 26, 1995, and that certain non-United States defendants obtained the Brassuer Statement for use in the U.K. Proceeding on or before August 14, 1996. See Amend. Cmplt. at ¶¶ 31, 33-34. Assuming that such actions do in fact constitute an abuse of process,*fn7 they occurred one year before February 17, 1998, the date upon which this action was commenced. Accordingly, plaintiffs' abuse of process claims must be dismissed.

D. Plaintiffs' Motion to Amend their Complaint

Finally, while plaintiffs have requested leave to file a Second Amended Complaint, the Court denies such request because the federal claims asserted by such complaint would be futile. See Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962). Initially, plaintiffs' claims under the False Claims Act must be dismissed for the reasons stated above. Moreover, as defendants argue, plaintiffs' new RICO claims must be dismissed because they fail to identify any "enterprise" separate from each individually named defendant. See Discon, Inc. v. NYNEX Corp., 93 F.3d 1055, 1063 (2d Cir. 1996); Notice of Motion of Relator for Relief from Final Judgment dated May 30, 1998, Proposed Complaint ("Proposed Complaint") at ¶¶ 52-52M. Plaintiffs also fail to plead any facts permitting a rational inference that defendants participated in the "operation or management of a RICO enterprise," further necessitating dismissal. See Reves v. Ernst & Young, 507 U.S. 170, 179, 113 S.Ct. 1163, 122 L.Ed.2d 525 (1993); Proposed Complaint at ¶¶ 52-55M.

Similarly, assuming this Court could even entertain this application, plaintiffs' requests for relief from the final judgments in Pentagen I, Pentagen II, and the Trademark Action must also be denied because plaintiffs present no new evidence that warrants such relief. See Proposed Complaint at 53; cf. M.W. Zack Metal Co. v. Navigation Corp. of Monrovia, 675 F.2d 525, 530 (2d Cir. 1982) (denying request for relief because fraud was "intrinsic" to prior proceedings and thus not reviewable in an independent action); James Wm. Moore, et al., Moore's Federal Practice ¶ 60.81[1][b][i-ii] (1999). Specifically, Pentagen I and Pentagen II were each dismissed for lack of subject matter jurisdiction because plaintiffs could not demonstrate that they were the "original source" of a false claim as required by the False Claims Act. See Pentagen I, 1995 WL 693236 at *11; Pentagen II, at 1997 WL 473549 at *6-*10. As no new evidence of collusion by defendants speaks to that issue, relief from such judgments is inappropriate.

Additionally, while plaintiffs point to new evidence that defendants copied their Mentix software in violation of the Copyright Act, such evidence does not provide any basis for relief from the judgment in the Copyright Action. See Proposed Complaint at ¶¶ 26B-26E. Indeed, according to such evidence, this copying occurred prior to December 1990, well before December of 1993 when Pentagen registered its copyright in Mentix. See Copyright Action at 8; Cross-Examination of E.F. Brasseur dated April 12, 2000, at 38.

In sum, all the federal claims advanced by plaintiffs' proposed Second Amended Complaint would be futile, and the Court denies leave to amend on that basis. Moreover, as all federal and state claims properly before the Court have been dismissed, the Court declines to exercise supplemental jurisdiction over plaintiffs' state claims. See 28 U.S.C. § 1367(c)(3); United Mine Workers v. Gibbs, 383 U.S. 715, 726, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966).


For the foregoing reasons, defendants' motions to dismiss are hereby granted and plaintiffs' request to amend their complaint shall be and hereby is denied. Plaintiffs are directed to file their response to defendants' CACI International, CACI Systems and CACI Federal's motion for sanctions on or before July 31, 2000.


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