United States ex rel. Patzer v. Sikorsky Aircraft Corp.

382 F. Supp. 3d 860
District Court, E.D. Wisconsin·Decided May 28, 2019·No. Case No. 11-C-0560·Published·Cited by 4 cases

Opinion

LYNN ADELMAN, District Judge

The United States alleges that Sikorsky Aircraft Corporation and two of its subsidiaries, Sikorsky Support Services, Inc. ("SSSI") and Derco Aerospace, Inc., are liable for submitting inflated invoices for payment by the U.S. Navy, in violation of the False Claims Act, 31 U.S.C. §§ 3729 - 33, and other laws. In their answers, the defendants plead a list of affirmative defenses. The government now moves to strike the defenses on the ground that the defendants did not plead them with the level of detail required by the Federal Rules of Civil Procedure. The government also contends that the affirmative defenses *862would fail as a matter of law and that therefore I should not grant the defendants leave to replead.

As explained below, I would like to find that the defendants have adequately pleaded their defenses. However, under Seventh Circuit precedent, affirmative defenses must be pleaded with more detail than the defendants have supplied here. Therefore, I will strike the defenses. But because the defendants could cure this pleading deficiency, I will grant them leave to amend. If the government chooses, it may file a fresh motion to strike the repleaded defenses. However, I will encourage the government to forego that step and instead file a motion for summary judgment after taking discovery on the defenses.

I. BACKGROUND

The government alleges that the defendants engaged in two fraudulent schemes while serving as contractors for the maintenance of Navy aircraft. First, the government alleges that SSSI, at the direction of its parent company, entered into an illegal cost-plus-percentage-of-cost subcontract with Derco. The government alleges that this illegal subcontract inflated the Navy's costs by 32%. Second, the government alleges that SSSI and Derco agreed that SSSI could take chargebacks or credits against Derco's invoices, but SSSI continued to bill the Navy for the face amount of the invoices, causing the Navy to pay more for parts than Derco actually charged. The government alleges that this conduct and certain other acts give rise to liability under the False Claims Act, common law theories of unjust enrichment and breach of contract, and the Truth in Negotiations Act, 10 U.S.C. § 2306a.

In their answers, the defendants plead a list of affirmative defenses, which I will reproduce here:

1. Counts I through XI are barred because the Untied States failed to exhaust available contractual and/or administrative remedies before bringing this action.
2. Counts I through XI are barred by the equitable defenses of waiver and ratification.
3. To the extent the alleged violations in Counts I through XI have been litigated, released, subject to audit or other administrative determinations, or otherwise compromised previously, they are barred by applicable law, including but not limited to the doctrines of accord and satisfaction, payment, waiver, release, and res judicata.
4. Counts I through XI are barred by the doctrines of course of performance, course of dealing, and/or usage of trade.
5. The United States is estopped by its prior conduct and admissions from obtaining a recovery against Defendants under Counts I through XI.
6. Defendants are entitled to a setoff against any amounts for which they are found liable under Counts I through XI to the extent Defendants made payments prior to judgment and for any amounts overpaid prior to judgment.
7. Defendants are not legally responsible for acts or omissions alleged in Counts I through XI that were undertaken by employees, subcontractors, and others to the extent that those acts or omissions prove to have been undertaken outside the scope of employment or authority, as criminal acts, in secret, and/or without the knowledge of persons having legally sufficient levels of responsibility or authority within the relevant Defendant companies.
8. Counts I through XI are barred in whole or in part because the government failed to mitigate its alleged damages.
9. Counts I through XI are barred by the equitable defense of laches.
*86310. Counts I through XI are barred in whole or in part by the applicable statutes of limitations.
11. Counts IX and XI [for unjust enrichment] are barred because there is an express contract between SSSI and the United States Navy's Naval Air Systems Command covering the subject of Counts IX and XI.

ECF No. 99 at 17-18.

The government moves to strike all affirmative defenses under Federal Rule of Civil Procedure 12(f). The government first contends that the affirmative defenses are not pleaded with the level of detail required by the Federal Rules of Civil Procedure. It then argues that I should not grant the defendants leave to replead the defenses because all of them would fail as a matter of law even if they were adequately pleaded.

II. DISCUSSION

Federal Rule of Civil Procedure 8 states general rules of pleading. Rule 8(c) governs affirmative defenses. It provides that "[i]in responding to a pleading, a party must affirmatively state any avoidance or affirmative defense, including ...." Fed. R. Civ. P. 8(c)(1). The rule then lists 18 affirmative defenses. Some examples are "accord and satisfaction," "contributory negligence," "estoppel," "res judicata," and "statute of limitations." Federal Rule of Civil Procedure 12(f) provides that a court may strike an "insufficient defense" from a pleading.

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United States ex rel. Patzer v. Sikorsky Aircraft Corp., 382 F. Supp. 3d 860 (E.D. Wis. 2019).

382 F. Supp. 3d 860 (United States ex rel. Patzer v. Sikorsky Aircraft Corp.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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