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

Rolls-Royce Corporation (defendant) employed Curtis Lusby (plaintiff) as an engineer. Lusby worked on a turboprop engine that Rolls-Royce had sold to both military and civilian customers since 1954. In 1991, the Air Force rejected certain parts as substandard. Lusby believed that Rolls-Royce did not correct the problem and was falsely representing that the parts it was delivering met government standards. Lusby raised the issue with Roll-Royce, and some time thereafter, Rolls-Royce terminated Lusby’s employment. In 2002, Lusby sued Rolls-Royce under the False Claims Act, alleging that Rolls-Royce penalized him for preparing to bring or support litigation under that statute. In 2003, Lusby filed a separate qui tam action on behalf of the United States under the False Claims Act. As required under the statute, Lusby filed the qui tam action under seal. Two months later, Lusby and Rolls-Royce filed a joint stipulation dismissing the first lawsuit. More than two years after Lusby filed the qui tam action, the government declined to intervene, and an additional 16 months later, the complaint was unsealed and served on Rolls-Royce. The district court granted Rolls-Royce’s motion to dismiss the qui tam complaint because it failed to plead fraud with particularity, and Lusby filed an amended complaint. The district court then declined to allow the amendment, finding that the qui tam action was barred by res judicata, or claim preclusion, due to Lusby’s earlier False Claims Act suit. The district court also ruled that Lusby still had not pleaded fraud with sufficient particularity and that the amendment thus would have been futile in any event. Lusby appealed.