of § 3729 until subsection 4. The word "knowingly" is the first requirement of subsection (1). This issue is not one of first impression.
Five of the eleven circuits have spoken directly on whether specific intent to defraud is a necessary element of this specific violation, including the Third Circuit in U.S. v. Rohleder, 157 F.2d 126 (1946)(evidence was sufficient to show that defendant knew that the bids being submitted for Navy approval were not bona fide).
All five cases have held that the government is required to prove that defendants knew the claims to be false.
Part II - RDL, Inc.
It seems but a truism to state that corporations may act only through persons. United States v. Hougland Barge Line, Inc., 387 F. Supp. 1110 (W.D. Pa. 1974). It follows that the fraud of an officer of the corporation may be imputed to the corporation when his conduct was (1) in the course of his employment and (2) for the benefit of the corporation.
The third circuit has held that an officer acting for the corporation may make that corporation vicariously liable under the doctrine of respondeat superior. Donsco, Inc. v. Casper Corp., 587 F.2d 602 (3rd Cir. 1978).
DiBona was the highest ranking officer of the corporation. Rights was its Secretary-Treasurer. The apex of power in RDL, Inc. was vested in these two men. The factual questions concerning the scope of their authority and whether benefits inured to RDL, Inc. are not present here.
DiBona and Rights point to United States v. Kates, 419 F. Supp. 846 (E.D. Pa. 1976) for the proposition that collateral estoppel applies only to the defendants who pleaded guilty and not to their principals. This court believes that the defendants miscomprehend the holding of Kates.
In Kates numerous defendants were brought to trial for violations of the False Claims Act. In an antecedent criminal proceeding some of the defendants were granted immunity and were required to testify against the others on conspiracy charges.
The court held that admissions of filing false claims by those granted immunity in the criminal action could be used against them in the civil action to estop them from denying liability. Furthermore, in one instance, the corporation was held liable through the action of its president even though the corporation was not convicted on criminal charges.
The case law supports the government's position that RDL, Inc. may not now deny its liability after its top officers, acting through the corporation, admitted to violations of the False Claims Act.
Through an Order dated June 29, 1984 the court inadvertently ordered defendants' Exhibit 5 to be struck from the pleadings. That portion of the Order will be vacated. Defendants' motion for summary judgment on the basis of exhibit 5 (an affidavit) was denied in that same Order. Again, defendants ask the court to grant summary judgment on the basis of this affidavit.
The affidavit does not make their false statements truthful, nor can it overturn their guilty pleas. It is relevant only to the issue of damages which is not before the court at this present moment. Defendants will have an opportunity in the future to present their argument on the lack of any causal connection between their action and the damages suffered by the United States government. The defendants' motion for summary judgment will be denied. An appropriate Order follows.
AND NOW, this 9th day of November, 1984, upon consideration of defendants' motion for reconsideration of the June 29, 1984 Order, and for the reasons set forth in the foregoing Memorandum, it is hereby ORDERED that:
1. Defendants' motion for summary judgment is DENIED.
2. Plaintiff's motion to strike defendants' Exhibit 5 is DENIED.
The June 29, 1984 Order striking defendants' Exhibit 5 is VACATED.
3. Plaintiff's motion for partial summary judgment is GRANTED against defendants Joseph G. DiBona, David J. Rights and RDL, Inc.
4. The June 29, 1984 Order denying plaintiff's motion for partial summary judgment against RDL, Inc. is VACATED.