United States: Tenth Circuit Affirms False Claims Act Summary Judgment On Scienter Grounds

In United States ex rel. Smith v. The Boeing Co., 825 F.3d 1138 (10th Cir. 2016), the Tenth Circuit affirmed the district court's grant of summary judgment on scienter grounds, finding that a difference of opinion as to two reasonable but conflicting interpretations of a contractual manufacturing requirement could not render Defendant Boeing's certifications "knowingly false" as a matter of law.


Between 1997 and 2002, Boeing contracted with the federal government for the sale and lease of "next generation" 737 aircraft ("737NG"). Unlike prior 737 models, Boeing contracted to manufacture the 737NG using advanced, computer-aided assembly techniques. Boeing subcontracted with Ducommun to supply parts for the 737NGs. The subcontract required Ducommun to use a computer-guided manufacturing process called Advanced Technology Assembly ("ATA"). After observing irregularities, Boeing discovered through an audit that Ducommun had instead used manual, hand-directed manufacturing techniques. The companies entered into a settlement agreement that resulted in Boeing accepting the parts at a reduced price. Ducommun continued to supply parts for the 737NG using traditional (manual) manufacturing techniques. The parts were then used in the aircraft leased and sold to the federal government.

The relators—members of the Boeing team that audited Ducommun—filed a qui tam complaint in 2005 alleging that Boeing and Ducommun were required to manufacture the 737NGs using ATA processes and tools capable of collecting "statistical process control" ("SPC") data.1 Because the companies failed to do so, the relators argued, the 737NG's parts did not conform to the "type design" previously approved by the Federal Aviation Administration ("FAA"). The FAA must approve the "type design"—essentially manufacturing requirements—for all types of aircraft. The Relators supported their theory by citing engineering documents that they contended required the use of SPC data in manufacturing the 737NG. Both Boeing and the FAA interpreted the same engineering documents differently. Relying on these documents, the relators argued that Boeing falsely certified that its aircraft complied with FAA regulations when it knew Ducommun's parts did not conform to the type design for 737NG aircraft. The Relators further argued that compliance with FAA-established manufacturing requirements was a condition of payment.

The district court granted Boeing and Ducommun's motions for summary judgment, concluding that the relators failed to identify evidence of falsity, materiality, and scienter sufficient to proceed to trial.

The Tenth Circuit Decision

A unanimous panel of the Tenth Circuit agreed with the district court that the relators had failed to demonstrate that they could prove the scienter required under the False Claims Act ("FCA"). In doing so, the Court reiterated that a FCA relator "must show more than a falsehood—they must show that [a defendant] knowingly presented a false claim for payment." 825 F.3d at 1149. In reviewing the record, the Court found that the relators had presented no evidence that anyone at Boeing knew that the Ducommun parts failed to comply with FAA regulations. Without facts showing Boeing's knowledge of nonconformities with the pertinent regulations when submitting claims for payment, the Court found that the relators' "naked assertions, devoid of any evidence of scienter, can't survive summary judgment." 825 F.3d at 1149.

As the primary grounds for its decision, the court rejected the relators' claim that advanced manufacturing processes and SPC were "so clearly required" under the 737NG type design that Boeing's claims for payment were "knowingly false as a matter of law." Id. The relators relied on the 737NG's engineering notes and supporting expert testimony. Yet, the Tenth Circuit observed that both the original authors of the engineering notes, contemporaneous Boeing documents, and the FAA disagreed with the relators' self-interested reading of these documents, and that the documents appeared to permit the use of traditional (manual) manufacturing methods, albeit at tighter tolerances, when sophisticated SPC machinery was not employed. Thus, the court held, the record revealed, at most, "conflicting opinions" on whether the 737NG and its parts required the use of computerized manufacturing processes. 825 F.3d at 1151. The Court found such evidence did not raise a genuine dispute of material fact as to Boeing's scienter.

Implications of the Court's Decision

The Boeing decision is one of the latest in a growing line of authority that declines to find the scienter element of an FCA claim satisfied when a statute, regulation, or contract provision is susceptible to more than one reasonable interpretation and the defendant conducts itself in a manner that is consistent with one of the reasonable interpretations. The case also illustrates the challenges of trying to use government standards that are open to more than one interpretation—here manufacturing standards—as the basis for an FCA action.


1 The relators previously filed a qui tam complaint in 2002, which they voluntarily dismissed after the Federal Aviation Administration found no violations and the government declined to intervene.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions