Blowing the Whistle: Court of Appeals makes landmark decision in False Claims Act whistleblower lawsuit

LOS ANGELES, CA - On Aug. 2, 2012, the U.S. Court of Appeals for the Ninth Circuit issued an opinion marking the first time a circuit court has held that an underbid can be the basis for liability in a False Claims Act (FCA) lawsuit.

This decision reversed a portion of the lower court's ruling on two claims in the case involving wrongful termination and underbidding.

"Underbidding to obtain government contracts, as we strongly believe Lockheed did in this case, unfortunately seems to be business as usual for many defense contractors. The practice is so prevalent that it is sometimes referred to in the industry behind closed doors as a buy-in—a fraudulent game that's played at the tremendous expense of American taxpayers. We are pleased at the court's decision and hope it initiates some industry change moving forward," said Motley Rice whistleblower attorney Mark Labaton, who represents Hooper.

Under the qui tam provisions of the False Claim Act, former Lockheed Martin Corporation project engineer Nyle Hooper filed a lawsuit against Lockheed in 2005 alleging, among other claims, that the global company defrauded the government by knowingly providing false information to the U.S. Air Force (USAF) and underbidding by millions of dollars to acquire a contract on the USAF Range Standardization and Automation IIA program involving the development of satellite and missile launch software.

The appeals court reversed the lower court's dismissal of Hooper's claim that Lockheed violated the FCA by submitting a fraudulently low bid to obtain the contract. It also reversed the statute of limitations decision on Hooper's claim that he was wrongfully fired for threatening to expose his employer's alleged fraud to the government.  

"Lockheed's alleged underbidding has had a number of unfortunate consequences. We believe these include overcharges on the contract and delays fulfilling the contractual terms involving the development and delivery of the satellite and missile launch software," Labaton added.

The case is Nyle Hooper v. Lockheed Martin Corporation. Labaton represents Hooper along with Joseph A. Black of Cullen Law Firm located in Washington, D.C.