Minge et al v. TECT Corporation et al

Filing 143

MEMORANDUM AND ORDER denying without prejudice 117 Motion for Leave to Amend Complaint. Signed by Magistrate Judge Kenneth G. Gale on 4/21/2011. (df)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

UNITED STATES OF AMERICA
EX. REL. DONALD MINGE and
DAVID KIEHL, and DONALD MINGE
and DAVID KIEHL, individually,

)
)
)
)
)
Plaintiffs,
)
)
vs.
)
)
TURBINE ENGINE COMPONENTS
)
TECHNOLOGIES CORP., et al.,
)
)
Defendant.
)
___________________________________ )

Case No. 07-1212-MLB-KGG

MEMORANDUM AND ORDER
Before the Court is Plaintiffs’ Motion to Amend (Doc. 117) in which
Plaintiffs/Relators seek an Order allowing them to file their Fifth Amended
Complaint “to add additional references to invoices with certifications for planes
delivered during the time of the fraudulent scheme described in the Third Amended
Complaint . . . and Fourth Amended Complaint . . . .” (Doc. 118, at 4.)
BACKGROUND
Relators in this case have brought a False Claims Act pursuant to the qui tam
provisions of 31 U.S.C. § 3730(b). They also bring a retaliatory discharge claim

under 31 U.S.C. § 3730(h). The Scheduling Order in this matter, which was
entered on November 12, 2010, contains a summary of the case, which is
incorporated by reference. (Doc. 98, at 1-4). That summary states, in relevant
part, that
[a]fter the relators filed a Third Amended Complaint
(Doc. 18), the defendants filed motions to dismiss (Docs.
36, 38). The District Judge notified the parties of his
intent to view those motions as motions for summary
judgment under Rule 56, and then issued a Memorandum
and Order denying the defendants’ motions as to the
retaliation claim, but granting the motions as to the
remaining claims on the grounds that relators had not
plead fraud with the particularity required under Rule
9(b). The Court ruled that the Third Amended Complaint
failed to specify whether any planes were equipped with
the allegedly defective parts and, if so, which parts and
which planes. The Court also found that the complaint
failed to adequately plead false claims for payment. (Doc.
65, pages 19, 22). Thereafter, relators filed a motion to
file a Fourth Amended Complaint (Doc. 69). The
proposed amendments included allegations concerning
specific exemplar aircraft (paragraphs 293 and 294 of the
Fourth Amended Complaint) which relators contend were
manufactured and sold to the government with the
specified defects and false representations. Defendants
opposed the motion to amend. However, the Court
granted the motion (Doc. 79) and ruled that the additional
information provided in the information cured the
previous Rule 9(b) deficiencies. However, in granting
the motion the District Judge provided the following
guidance to the parties and the Magistrate Judge
concerning the management of this case:

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The court recommends that discovery be
initially limited in this case to determining
whether non-conforming parts were in fact
present on the planes identified in the fourth
amended complaint and the extent of the
false statements provided to the government
at the time of the claim for payment. At the
close of the initial discovery period,
defendants may file a motion for summary
judgment, if one is appropriate at that time.
Doc. 79, page 5. As permitted by the Court, relators filed
their Fourth Amended Complaint (Doc. 80).
...
This court intends to accept and follow the District
Judge’s recommendation. An initial period of discovery
will be set to enable the parties to perform discovery
directed to the topics specified by the Districts Court’s
order. During this initial period, discovery shall be
limited to determining whether non-conforming parts
were in fact present on the planes identified in the fourth
amended complaint (those aircraft identified in
paragraphs 293 and 294) and the extent of the false
statements provided to the government at the time of the
claims for payment.
Discovery on those topics may proceed within the scope
of Rule 26(b) concerning any matters ‘relevant to any
party’s claim or defense’ regarding the specified issues.
Because the Court has invited an interim motion for
summary judgment at the conclusion of this period,
discovery concerning defenses raised or available to the
specified claims is appropriate. Discovery shall not
extend to issues relating solely to damages, or relating
solely to the retaliation claim at this time. After the initial
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discovery period, the court and parties may revisit these
issues.
(Doc. 98, at 2-3.)
It was anticipated in the Scheduling Order that discovery on those initial
topics would be completed within eight to ten months (between July and
September of 2011). An additional status conference was set for April 7, 2010,
before this Court to set final dates for the completion of the specified initial
discovery, including the exchange of expert reports on those issues and the
deposition of experts, and to set a deadline for the filing of initial dispositive
motions as recommended by the District Judge. Based on statements of counsel at
the April 7, 2010, conference, as well as from some of the pleadings and motions
filed in this case, it appears that additional clarification of the Court's intent may be
helpful.
The Relators survived a motion to dismiss their fraud claims after receiving
permission to amend their complaint (the Fourth Amended Complaint, Doc. 80) to
allege some specific aircraft relators contend were part of the alleged fraud.
Relators describe these specifically identified aircraft as "exemplar" aircraft.
Without subscribing to any legal conclusion which may be implied by the label, the
Court adopts this adjective for convenience. In granting the motion to amend
(Doc. 79), the District Court recommended limiting discovery as described, and
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invited Defendants to file a motion for summary judgment, if appropriate, at the
conclusion of the period of limited discovery.
In recommending this procedure, and in implementing the recommendation
in the Scheduling Order, this Court has prescribed a procedure for testing relators'
claims to determine whether the qui tam fraud action should proceed. This litmus
test allows the parties to conduct full discovery on the limited issues concerning
whether the relators can support their claims as to the exemplar aircraft sufficient
to survive a summary judgement motion challenge. This necessarily means
limiting or delaying discovery which might otherwise be appropriate, but the
procedure may avoid the expense and delay caused by the very broad discovery
which might be justified in this action. If, after this initial discovery period, the
Relators' claims concerning the exemplar aircraft survive, broader discovery may
ensue.
It is apparent to this Court that the intention of the District Court was
specifically to limit the subject matter of this case during the initial, “litmus test”
phase. As such, allowing Relators to expand the subject matter of the case at the
present time through a Motion to Amend would contravene the specific intent of
this Court as well as the District Court. The Court, therefore, DENIES Relator’s
Motion to Amend (Doc. 117) without prejudice, subject to potential renewal
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should Relator’s claims survive the interim dispositive motion(s) invited by the
Court.

IT IS SO ORDERED.
Dated at Wichita, Kansas, on this 21st day of April, 2011.

S/ KENNETH G. GALE

KENNETH G. GALE
United States Magistrate Judge

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