Tuesday, May 1, 2007

U.S. ex rel. Sanders v. North American Bus Industries, Inc. (Maryland U.S.D.C.) (Not Approved for Publication)

Signed April 23, 2007--Memo to Counsel by Judge J. Frederick Motz.

This memo is in response to defendant's motion for summary judgment as to a surviving claim from a prior ruling.

The Court relied on the Fourth Circuit's establishment of a two-part test for determining whether under Fed. R. Civ. P. 15(d)(2) a new claim or defense relates back to the party's original complaint: (1) whether a factual nexus exists between the original pleading and the amendments; and (2) if such a factual nexus exists, whether defendant had notice of the amended claim and would not be prejudiced by its assertion. In the instant matter, although plaintiff's original and first amended complaints did not contain the specific allegations in a separate count, the allegations put defendant on notice of the claim now asserted. Further, defendant did not show any prejudice that would result from permitting assertion of the claim.

However, on the undisputed facts, plaintiff's claim failed as a matter of law. Plaintiff asserted that had NABI declared the proper payments in the Customs declarations, the amount of Customs duties paid by NABI would have been higher. The flaw here is a hypothetical declaration that was never made and that would have been erroneous in light of the finding subsequently made by Customs that no Customs duties were due because the imported items were non-dutiable. This flaw is of the most fundamental nature because one of the four required elements of a False Claims Act claim is that a defendant's statement or conduct caused the government to pay or forfeit money due.

Defendant's motion granted.

The full Memorandum is available in PDF.

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