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United States ex rel. Lusby v. Rolls-Royce Corp.

United States Court of Appeals for the Seventh Circuit

May 6, 2009, Argued; June 30, 2009, Decided

No. 08-3593


 [*850]  EASTERBROOK, Chief Judge. Curtis Lusby was an engineer for Rolls-Royce from 1992 through 2001. (He started at Allison Engine Co., which Rolls-Royce acquired in 1995.) Lusby worked on the T56 turboprop engine, which Rolls-Royce has sold to both military and civilian customers since 1954. He came to believe that Rolls-Royce was not making the parts properly and was falsely telling the United States that the engines conformed to the government's specifications. The Air Force rejected some T56 turbine blades in [*851]  1991 as substandard; Lusby concluded that Rolls-Royce had not fixed the problem. He raised this subject within the corporate hierarchy--which responded by firing him. (This  [**2] is Lusby's version; Rolls-Royce sees matters otherwise.)

Lusby filed suit in 2002, contending that his discharge violated 31 U.S.C. § 3730(h), part of the False Claims Act, because Rolls-Royce had penalized him for preparing to bring or support litigation under that statute. The next year Lusby and Rolls-Royce filed a joint stipulation for dismissal. In May 2003, two months before dismissing the first suit, Lusby filed another--this one a qui tam action on behalf of the United States. As § 3730(b)(2) requires, that filing was under seal. After considering its options for 27 months, the United States declined to intervene in the qui tam action, which was unsealed and served on Rolls-Royce in December 2006, after a further 16 months had passed. (The record does not reveal a justification for that additional delay, but Rolls-Royce does not contend that it requires the complaint's dismissal.)

Unhappy that Lusby was still its adversary, Rolls-Royce moved to dismiss the qui tam action. The district court granted this motion on the ground that the complaint did not plead fraud with the particularity required by Fed. R. Civ. P. 9(b). 2007 U.S. Dist. LEXIS 94144 (S.D. Ind. Dec. 20, 2007). Lusby's  [**3] lawyer drafted a new complaint in an attempt to supply the information that the judge thought necessary. But the court declined to allow the complaint's amendment, ruling that the qui tam action is barred by the claim preclusion (res judicata) effect of Lusby's employment suit. 2008 U.S. Dist. LEXIS 69300 (S.D. Ind. Sept. 10, 2008). The judge added that the revised complaint also flunked the test of particularity, so an amendment would have been futile.

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570 F.3d 849 *; 2009 U.S. App. LEXIS 14119 **; 158 Lab. Cas. (CCH) P10,034; 29 I.E.R. Cas. (BNA) 519

UNITED STATES OF AMERICA on the relation of CURTIS J. LUSBY, Plaintiff-Appellant, v. ROLLS-ROYCE CORPORATION, Defendant-Appellee.

Subsequent History: Motion granted by, in part, Motion denied by, in part United States ex rel. Lusby v. Rolls-Royce Corp., 2010 U.S. Dist. LEXIS 69556 (S.D. Ind., July 12, 2010)

Prior History:  [**1] Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 1:03-CV-0680-SEB/WGH. Sarah Evans Barker, Judge.

United States ex rel. Lusby v. Rolls-Royce Corp., 2008 U.S. Dist. LEXIS 69300 (S.D. Ind., Sept. 10, 2008)


qui tam, district court, certificate, preclusion, intervene, military, False Claims Act, particularity, invoices, suits

Civil Procedure, Judgments, Preclusion of Judgments, Res Judicata, Governments, Federal Government, Claims By & Against, Labor & Employment Law, Retaliation, Statutory Application, False Claims Act, Pleadings, Heightened Pleading Requirements, Fraud Claims, Business & Corporate Compliance, Public Contracts Law, Voiding Contracts, Fraud & Whistleblowing