United States Ex Rel. Wilson v. Kellogg Brown & Root, Inc.

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

UNITED STATES OF AMERICA ex rel. 

DAVID L. WILSON, JAMES WARREN,

Plaintiff-Appellant,

v.

KELLOGG BROWN & ROOT,  No. 07-1516

INCORPORATED; KBR, INCORPORATED;

KELLOGG BROWN & ROOT SERVICES,

INCORPORATED; SERVICES EMPLOYEES

INTERNATIONAL, INCORPORATED,

Defendants-Appellees.



Appeal from the United States District Court

for the Eastern District of Virginia, at Alexandria.

Gerald Bruce Lee, District Judge.

(1:04-cv-00595-GBL)

Argued: March 19, 2008

Decided: May 16, 2008

Before WILLIAMS, Chief Judge, WILKINSON, Circuit Judge, and

Irene M. KEELEY, United States District Judge for the

Northern District of West Virginia, sitting by designation.

Affirmed by published opinion. Judge Wilkinson wrote the opinion,

in which Chief Judge Williams and Judge Keeley joined.

COUNSEL

ARGUED: Andrew Grosso, ANDREW GROSSO & ASSOCIATES,

Washington, D.C., for Appellant. John Martin Faust, VINSON &

2 UNITED STATES v. KELLOGG BROWN & ROOT

ELKINS, L.L.P., Washington, D.C., for Appellees. ON BRIEF: Vic-

tor Kubli, GRAYSON & KUBLI, P.C., McLean, Virginia, for Appel-

lant. Vanessa M. Griffith, VINSON & ELKINS, L.L.P., Dallas,

Texas; Alden L. Atkins, Tirzah S. Fitzkee, VINSON & ELKINS,

L.L.P., Washington, D.C., for Appellees.

OPINION

WILKINSON, Circuit Judge:

This case arises from a qui tam action brought by Relators David

L. Wilson and James Warren under the False Claims Act against Kel-

logg Brown & Root, Inc., Kellogg Brown & Root Services, Inc.,

KBR, Inc., and Services Employees International, Inc. (collectively

"KBR"). Relators allege that KBR fraudulently induced the United

States into awarding it an Army task order in connection with its work

as a civilian contractor in Iraq. They also allege several employment-

related claims stemming from their termination by KBR.

Since initiating this litigation, Relators have consistently sought to

shoehorn what is, in essence, a breach of contract action into a claim

that is cognizable under the False Claims Act. This misguided journey

must come to an end. If every dispute involving contractual perfor-

mance were to be transformed into a qui tam FCA suit, the prospect

of litigation in government contracting would literally have no end.

The district court properly recognized this danger, and we affirm its

judgment.

I.

A.

This case concerns the contractual relationship between KBR and

the United States government. In December 2001, KBR entered into

a Logistics Civil Augmentation Program ("LOGCAP") contract with

the Department of Defense. The agreement called for KBR, acting as

a civilian contractor, to provide operational support to the United

States military in wartime situations. In exchange, KBR was to be

UNITED STATES v. KELLOGG BROWN & ROOT 3

reimbursed costs (up to an agreed-upon maximum amount) and paid

a "base fee" of one percent of those costs. In addition, KBR could be

awarded up to an additional two percent of costs based on perfor-

mance assessments by the Army and its LOGCAP Award Fee Evalua-

tion Board.

Under the LOGCAP contract, the military requested specific ser-

vices or commodities through various task orders. In Task Order 43,

the Army called for KBR to provide transportational services in con-

nection with the conflict in Iraq. In particular, KBR was to transport

fuel and other supplies from Kuwait to Iraq and between bases within

Iraq. Task Order 43 was also accompanied by several Statements of

Work ("SOWs") that further detailed KBR’s responsibilities and obli-

gations. KBR commenced performance under Task Order 43 and its

SOWs in February 2003.

The LOGCAP contract, Task Order 43, and the various SOWs con-

tained several provisions that imposed general safety and maintenance

requirements on KBR. For example, the LOGCAP agreement stated

that KBR "will ensure the safety and health of personnel, equipment

and supplies that the contractor has direct control over, within the

[Area of Operation]." It also established that "[a]ll contractor owned

motor vehicles shall meet required vehicle requirements within the

[Area of Responsibility]," "shall be properly equipped and designed

to ensure protection of [Government] property," and shall "be main-

tained in a safe operating condition and good appearance."

Similarly, an SOW dated July 11, 2003 — and applicable to Task

Order 43 from February 21, 2003 through December 31, 2003 —

directed KBR to "provide the equipment, tools, parts and personnel"

needed for the "maintenance and repair" of the vehicles used to trans-

port fuel and other supplies under the contract. A subsequent SOW,

dated December 19, 2003 — and applicable to Task Order 43 from

January 1, 2004 through December 31, 2004 — contained many simi-

lar provisions, including the obligation to operate "a vehicle mainte-

nance facility" in the theater of operation.

When ordering supplies or services through a task order, the mili-

tary issues a DD Form 1155 to be executed by the civilian contractor.

A DD Form 1155 is a standard document in which the contractor

4 UNITED STATES v. KELLOGG BROWN & ROOT

expressly accepts "the terms and conditions" of the numbered pur-

chase order and "agrees to perform the same." In the present case,

such "terms and conditions" include the safety and maintenance pro-

visions noted above.

Although KBR started performing under Task Order 43 in Febru-

ary 2003, it did not execute a corresponding DD Form 1155 until July

24, 2003. This DD Form 1155, however, was effective February 20,

2003 (when KBR commenced performance). According to Relators,

KBR could not have been paid for its work in connection with Task

Order 43 until it signed the relevant DD Form 1155.

In September-October 2003, KBR hired David Wilson and James

Warren to drive supply trucks in Iraq. Both Wilson’s and Warren’s

employment contracts contained an arbitration clause in which each

agreed to participate in the company’s Dispute Resolution Program

and arbitrate "any and all claims that [the employee] might have

against [KBR] related to [one’s] employment, including [one’s] ter-

mination."

During their time in Iraq, Wilson and Warren drove a 300-mile

convoy route between Base Cedar II, which is located south of Bagh-

dad, and Base Anaconda, which is north of Baghdad. According to

Relators, KBR neglected to perform several routine maintenance pro-

cedures on the trucks in their convoy. For example, they allege that

KBR failed to change the oil or replace the fuel filters and damaged

windshields of the convoy trucks. Although Wilson and Warren

acknowledge that KBR operated maintenance depots at both military

bases, they claim that the maintenance crews did little more than

"change a tire" and a "bit of electrical work."

Based on their observations, Wilson and Warren complained to

superiors about what they considered the lack of proper maintenance.

In addition, after a series of thefts from the convoy trucks, they com-

plained to KBR about inadequate security.

KBR terminated Wilson on March 29, 2004, and Warren three days

later. Wilson and Warren claim they were discharged because of their

complaints to management about the poor maintenance and security.

UNITED STATES v. KELLOGG BROWN & ROOT 5

B.

On May 21, 2004, Wilson and Warren filed suit against KBR under

the qui tam provisions of the False Claims Act ("FCA"). See 31

U.S.C. §§ 3729-3733 (2000). In addition to their FCA claims, Rela-

tors also alleged several employment-related counts, including wrong-

ful termination, quantum meruit, and retaliatory termination in

violation of the FCA.

After their initial set of FCA claims were dismissed by the district

court,1 Relators moved for leave to file a third amended complaint. In

this proposed complaint, Relators alleged that KBR fraudulently

induced the United States into awarding it Task Order 43 by know-

ingly misrepresenting that it would comply with the order’s mainte-

nance requirements. The crux of Relators’ claim is a DD Form 1155

signed by KBR in July 2003. According to Relators, when KBR

signed the DD Form 1155, and thereby accepted the task order subject

to its terms and conditions, KBR knew it had not (since February

2003) and would not fulfill the applicable maintenance and safety

requirements under the contract. Thus, Relators posit, the completed

form constituted a fraudulent representation by KBR to the United

States in order to receive payment under Task Order 43. Because such

payments were contingent on KBR’s execution of the DD Form 1155,

Relators contend that KBR fraudulently induced the United States in

violation of the FCA.

After conducting a hearing, the district court denied the motion for

leave to file an amended complaint, deeming it futile under Foman v.

Davis, 371 U.S. 178, 182 (1962). Specifically, the district court held

that the amended complaint failed to state a claim under Fed. R. Civ.

P. 12(b)(6) since the DD Form 1155 executed in July 2003 did not

constitute a "false statement or fraudulent course of conduct" under

Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 788

(4th Cir. 1999) ("Harrison I"). Instead, the court explained, Relators’

allegations were "at best a claim for breach of contract that the gov-

1

Relators’ initial claims were premised on a false certification theory

and based on payment vouchers KBR had submitted to the Department

of Defense. The district court dismissed the claims under Fed. R. Civ. P.

12(b)(6) and, in the alternative, Fed. R. Civ. P. 9(b).

6 UNITED STATES v. KELLOGG BROWN & ROOT

ernment has not asserted." In the alternative, the court held that Rela-

tors had not pled fraud with sufficient particularity under Fed. R. Civ.

P. 9(b).

With respect to the employment counts, KBR filed a motion to stay

the claims on the ground they were subject to binding arbitration pur-

suant to Relators’ employment contracts. The district court granted

the motion, finding that Relators and KBR had agreed to arbitrate

such employment disputes and that the arbitration agreements were

enforceable under either the Federal Arbitration Act or Texas state

law.

The district court entered a final judgment on the FCA and employ-

ment counts on April 30, 2007. Relators presently appeal (1) the dis-

trict court’s denial of the motion for leave to file a third amended

complaint and (2) the district court’s decision to stay the employment

counts pending arbitration. We address each issue in turn.

II.

Relators first contend that the district court erred when it denied

their motion for leave to file a third amended complaint. As noted

above, the complaint alleged that KBR fraudulently induced the

United States into awarding it Task Order 43 in violation of the FCA.

According to Relators, KBR fraudulently represented in a DD Form

1155 that it would comply with the contract’s maintenance require-

ments, all the while knowing it would not do so. We review the dis-

trict court’s denial of the motion for an abuse of discretion. Laber v.

Harvey, 438 F.3d 404, 428 (4th Cir. 2006) (en banc) (citing Foman,

371 U.S. at 182).

Under Rule 15 of the Federal Rules of Civil Procedure, a "court

should freely give leave [to amend] when justice so requires." Fed. R.

Civ. P. 15(a)(2). Although such motions should be granted liberally,

a district court may deny leave if amending the complaint would be

futile — that is, "if the proposed amended complaint fails to satisfy

the requirements of the federal rules." United States ex rel. Fowler v.

Caremark RX, LLC, 496 F.3d 730, 740 (7th Cir. 2007); Laber, 438

F.3d at 426, 429.

UNITED STATES v. KELLOGG BROWN & ROOT 7

Because Relators’ proposed amended complaint does not properly

state a claim under Rule 12(b)(6) and lacks sufficient particularity

under Rule 9(b), we find the district court correctly determined that

further amendment would be futile. Thus, the district court did not

abuse its discretion in denying the motion for leave to file a third

amended complaint.

A.

The False Claims Act imposes civil liability on any person who

"knowingly presents, or causes to be presented, to [the United States

government] a false or fraudulent claim for payment or approval" or

"knowingly makes, uses, or causes to be made or used, a false record

or statement to get a false or fraudulent claim paid or approved by the

Government." 31 U.S.C. § 3729(a). As we explained in Harrison I,

the term "false or fraudulent claim" includes those instances "when

the contract or extension of government benefit was obtained origi-

nally through false statements or fraudulent conduct." Harrison I, 176

F.3d at 787. That is, the fraud may have been in the inducement. Id.

In order to prove a fraudulent inducement claim, a plaintiff must

demonstrate that (1) "there was a false statement or fraudulent course

of conduct; (2) made or carried out with the requisite scienter; (3) that

was material; and (4) that caused the government to pay out money

or to forfeit moneys due (i.e., that involved a ‘claim’)." Id. at 788. For

the reasons discussed below, Relators fail to state a claim upon which

relief can be granted under the FCA, see Fed. R. Civ. P. 12(b)(6), and

instead allege a breach of contract action that only the government

may bring.

1.

The first deficiency in Relators’ fraudulent inducement claim is

that the DD Form 1155 signed by KBR in July 2003 was not a "false

statement or fraudulent course of conduct" for the purposes of the

FCA. As noted above, a DD Form 1155 is a document that accompa-

nies a corresponding task order and through which the civilian con-

tractor accepts the order subject to all its "terms and conditions,"

including the safety and maintenance provisions discussed above.

8 UNITED STATES v. KELLOGG BROWN & ROOT

To satisfy this first element of an FCA claim, the statement or con-

duct alleged must represent an objective falsehood. See United States

ex rel. Lamers v. City of Green Bay, 168 F.3d 1013, 1018 (7th Cir.

1999); see also United States ex rel. DRC, Inc. v. Custer Battles, LLC,

472 F. Supp. 2d 787, 797 (E.D. Va. 2007) ("It is well-established that

the FCA requires proof of an objective falsehood."). As a result, mere

"allegations of poor and inefficient management of contractual duties"

are "not actionable under the [FCA]." See Harrison I, 176 F.3d at

789. Likewise, "imprecise statements or differences in interpretation

growing out of a disputed legal question are similarly not false under

the FCA." Lamers, 168 F.3d at 1018; see also Hagood v. Sonoma

County Water Agency, 81 F.3d 1465, 1477 (9th Cir. 1996).

Relators contend that the completed DD Form 1155 constitutes a

false statement because KBR agreed to the maintenance conditions in

the contract even though it knew it would not, and later did not, abide

by those terms. However, this assertion rests not on an objective

falsehood, as required by the FCA, but rather on Relators’ subjective

interpretation of KBR’s contractual duties. Given the imprecise nature

of the general maintenance provisions at issue here, it is not exactly

clear what would qualify as adequate (or inadequate) maintenance

under Task Order 43. Moreover, although Relators posit that KBR did

not properly perform under Task Order 43, the United States govern-

ment — the actual party to the contract — has not expressed dissatis-

faction with KBR’s performance in the form of a breach of contract

action. Consequently, the question of whether KBR performed suffi-

cient maintenance under the contract represents, at the very least, "a

disputed legal question" about the "inefficient management of [one’s]

contractual duties." This is precisely the sort of claim that courts have

determined not to be a false statement under the FCA. See Hagood,

81 F.3d at 1477; Harrison I, 176 F.3d at 789.

The allegations in Relators’ third amended complaint thus stand in

contrast to the sort of false statements we found actionable in Harri-

son I. In that case, the FCA relator claimed that the defendant made

several objectively misleading statements in an attempt to fraudu-

lently induce the government to award it a Department of Energy con-

tract. For example, the defendant allegedly represented that a

particular project would take no more than 1.5 years to complete,

even though it knew it would take significantly longer. Harrison I,

UNITED STATES v. KELLOGG BROWN & ROOT 9

176 F.3d at 781. Similarly, the defendant purposefully underestimated

specific overhead costs when submitting a bid, a practice commonly

known as "low-balling." Id. at 781-83, 791. We found that such repre-

sentations, if indeed untrue, constituted false statements under the

FCA. Id. at 791.

Unlike the statements in Harrison I, the representations at issue

here do not include objective falsehoods. Relators do not claim that

the maintenance provisions in the contract set forth anything resem-

bling a specific maintenance program for the convoy trucks. Like-

wise, they make no contention that representations were made

concerning specific acts of maintenance that KBR knew it lacked the

capacity to perform. Instead, KBR’s alleged defalcations involve sev-

eral general and relatively vague maintenance provisions, such as

keeping vehicles "in a safe operating condition and good appearance."

These sorts of claims do not qualify as objective falsehoods and thus

do not constitute false statements under the FCA. Harrison I makes

clear that "fraud may only be found in expressions of fact which (1)

admit of being adjudged true or false in a way that (2) admit of empir-

ical verification." Id. at 792 (internal quotations omitted).

While the "phrase ‘false or fraudulent claim’ in the False Claims

Act should be construed broadly," id. at 788, it just as surely cannot

be construed to include a run-of-the-mill breach of contract action that

is devoid of any objective falsehood. An FCA relator cannot base a

fraud claim on nothing more than his own interpretation of an impre-

cise contractual provision. To hold otherwise would render meaning-

less the fundamental distinction between actions for fraud and breach

of contract. See Strum v. Exxon Co., 15 F.3d 327, 329-30 (4th Cir.

1994). This we refuse to do.

2.

In addition to the DD Form 1155 not constituting a false statement

under the FCA, Relators’ fraudulent inducement claim suffers from

a second flaw: the completed form was not "material." Under the

FCA, a statement or course of conduct is material if it "has a natural

tendency to influence agency action or is capable of influencing

agency action." United States ex rel. Berge v. Bd. of Trs. of the Univ.

of Ala., 104 F.3d 1453, 1460 (4th Cir. 1997) (internal quotations omit-

10 UNITED STATES v. KELLOGG BROWN & ROOT

ted); Harrison I, 176 F.3d at 791 (quoting Berge). Because fraudulent

inducement claims are concerned with whether "the contract or exten-

sion of government benefit was obtained originally through false

statements or fraudulent conduct," Harrison I, 176 F.3d at 787

(emphasis added), the form’s materiality depends on whether it could

have influenced the government’s decision to award Task Order 43

to KBR. Since Relators allege no facts suggesting that it did, they

likewise fail to satisfy this element of a proper fraudulent inducement

claim.

The main hurdle confronting Relators is the timing and sequence

of the relevant events. It is undisputed that KBR started performing

under Task Order 43 in February 2003. However, the DD Form 1155

at issue here was not signed until July 24, 2003 — more than five

months after KBR started performing under the task order. Therefore,

Relators do not, and could not, allege that the executed DD Form

1155 influenced the Department of Defense’s decision to initially

award Task Order 43 to KBR. It would be dubious at best to suggest

that KBR originally obtained the task order by executing a form five

months after it began performance.

Relators instead contend that the DD Form 1155 was material

because KBR could not have been paid for its work under Task Order

43 without completing the acceptance form. However, this does not

suffice. Even if KBR could not have been paid without signing a DD

Form 1155, this does not speak to how Task Order 43 was "obtained

originally" through fraudulent inducement.

Furthermore, it is doubtful that the executed DD Form 1155 had

the capability or "natural tendency" to influence, in July 2003 or oth-

erwise, Department of Defense decisions with respect to Task Order

43. This is true for at least two reasons. First, the government had

already observed KBR’s performance under the task order for five

months when KBR signed the form in July. Thus, it had ample basis

by which to judge KBR and its ability to comply with the task order

independent of the DD Form 1155. Second, the DD Form 1155 is

simply a standard government document that contains boilerplate

acceptance language. Given this, it is even more unlikely that the

signing of such a form could have had any effect, let alone a material

one, on the government’s actions in this case.

UNITED STATES v. KELLOGG BROWN & ROOT 11

Of course, if KBR had tried to get paid for work it had not done

(as opposed to only the work it had done, as appears the case here),

then plaintiffs could have brought and argued such a claim straight-

forwardly under the FCA. See Harrison I, 176 F.3d at 786. Indeed,

plaintiffs’ initial FCA claims were based on the submission of sup-

posedly fraudulent payment vouchers. However, these claims were

dismissed by the district court under Rule 12(b)(6) and Rule 9(b), and

Relators have not appealed that dismissal.

Instead of pursuing these claims on appeal, Relators brought an

amended complaint in which they shifted their theory of liability from

false certification to fraudulent inducement. This brings us to an

underlying problem with Relators’ case. The plaintiffs’ theory of the

case is something of a moving target, and plaintiffs’ inability through-

out this litigation to settle on a straightforward reason for recovery is

a revealing indication of the weakness of the underlying action. As it

currently stands, plaintiffs have tried to shoehorn what might have

been an ordinary FCA claim — and what really is a breach of contract

suit — into some sort of fraudulent inducement action. This they sim-

ply cannot do.

B.

We finally agree with the district court that Relators’ third

amended complaint does not plead fraud with the particularity

required by Fed. R. Civ. P. 9(b). To meet this standard, an FCA plain-

tiff must, at a minimum, describe "the time, place, and contents of the

false representations, as well as the identity of the person making the

misrepresentation and what he obtained thereby." Harrison I, 176

F.3d at 784 (internal quotations omitted). These facts are often "re-

ferred to as the ‘who, what, when, where, and how’ of the alleged

fraud." United States ex rel. Willard v. Humana Health Plan of Texas

Inc., 336 F.3d 375, 384 (5th Cir. 2003) (quoting United States ex rel.

Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 903

(5th Cir. 1997)). For the reasons that follow, Relators fail to satisfy

this settled pleading requirement.

Relators hinge their fraudulent inducement claim on the executed

DD Form 1155. While they do provide some details regarding the

form itself (such as what it was, when it was signed, and by whom

12 UNITED STATES v. KELLOGG BROWN & ROOT

it was signed), their complaint lacks any specific facts about several

important elements of the alleged scheme, including how the DD

Form 1155 influenced the government’s decision to award Task

Order 43 to KBR. In addition, Relators fail to adequately plead

scienter. Although "[m]alice, intent, knowledge, and other conditions

of a person’s mind may be alleged generally," Fed. R. Civ. P. 9(b),

an FCA plaintiff still "must set forth specific facts that support an

inference of fraud." Willard, 336 F.3d at 385 (internal quotations

omitted). With respect to KBR’s intent when it signed the DD Form

1155, Relators allege that defendants "knew no later than mid-2003

[that] they had failed and would continue to fail to provide adequate

[maintenance]." Third Amended Complaint ¶ 73. As support for this

assertion, Relators allege that "at no time during the period October

22, 2003 through April 1, 2004 did [KBR] perform" oil changes or

replace fuel filters and damaged windshields. Id. ¶¶ 66-67. Notably,

however, Relators do not allege any specific facts from February

2003 (when KBR started performing) to July 2003 (when KBR exe-

cuted the DD Form 1155). Rather, the factual basis for KBR’s pur-

ported intent in July 2003 is conduct that took place months

afterwards. This does not meet the minimum standards established by

Rule 9(b).

Such a tenuous basis from which to infer KBR’s intent is especially

problematic in light of the fact that "in the context of a fraudulent

inducement FCA claim, ‘the requisite intent must be coupled with

prompt, substantial nonperformance.’" Custer Battles, 472 F. Supp.

2d at 798 (quoting Willard, 336 F.3d at 386). As the Fifth Circuit

explained, it "would be illogical to find fraud where a party secretly

did not intend to perform the contract when it was signed, but in actu-

ality did perform." Willard, 336 F.3d at 386. Thus, an FCA plaintiff

must "show[ ] that the defendant promptly followed through on its

intent not to perform." Id. Since Relators do not allege any specific

facts that could support such a showing of prompt nonperformance

(e.g. facts from July or August 2003), their complaint also falls short

on this ground.

To the degree Relators allege specific facts relating to contractual

nonperformance in their complaint, they are more appropriately

viewed as a basis for a breach of contract action, not a fraudulent

inducement claim. Thus, if allowed to go forward, Relators’ FCA

UNITED STATES v. KELLOGG BROWN & ROOT 13

claim would have to rest primarily on facts learned through the costly

process of discovery. This is precisely what Rule 9(b) seeks to pre-

vent. See Harrison I, 176 F.3d at 789 ("The clear intent of Rule 9(b)

is to eliminate fraud actions in which all the facts are learned through

discovery after the complaint is filed." (internal quotations omitted)).

It also bears repeating that the United States, the actual party to the

contract with KBR, has not brought a breach of contract action

expressing dissatisfaction with KBR’s performance. We can only

conclude that the district court properly rejected Relators’ attempt to

make an end run around the pleading requirements of Rule 9(b).2

III.

The final issue on appeal is whether the district court erred when

it granted KBR’s motion to compel arbitration on the employment

counts. As noted above, the district court held that Relators’ employ-

ment claims were subject to arbitration based on agreements located

in their employment contracts. We review the court’s determination

de novo. See Washington Square Sec., Inc. v. Aune, 385 F.3d 432, 435

(4th Cir. 2004).

Because the parties clearly and explicitly agreed to arbitrate Rela-

tors’ employment claims, and because the agreements are enforceable

under Texas state law, the district court correctly held that arbitration

was required.

A.

We must first examine whether the parties agreed to arbitrate the

claims at issue here. See Mitsubishi Motors Corp. v. Soler Chrysler-

2

Relators also allege that KBR made false statements with respect to

written assessments submitted to the Army LOGCAP Award Fee Evalu-

ation Board in order to receive a higher award fee. While it is unclear

from the complaint and the briefs whether this is intended to be a sepa-

rate fraudulent inducement claim, even if it were distinct, we would like-

wise find that it should be dismissed. This is because Relators’ vague and

cursory allegations arguably do not even meet the pleading requirements

of Rule 8(a), let alone the requirements of Rule 9(b). See Willard, 336

F.3d at 385. Thus, they also cannot survive the pleadings stage.

14 UNITED STATES v. KELLOGG BROWN & ROOT

Plymouth, Inc., 473 U.S. 614, 626 (1985). Based on the language of

Relators’ employment agreements, it is evident that they did.

Paragraph 26 of each employment contract, which is entitled

"Claims/Disputes," states the following in bold typeface:

"You also agree that you will be bound by and accept as a

condition of your employment the terms of the Halliburton

Dispute Resolution Program which are herein incorporated

by reference. You understand that the Dispute Resolution

Program requires, as its last step, that any and all claims that

you might have against Employer [KBR] related to your

employment, including your termination, . . . must be sub-

mitted to binding arbitration instead of to the court system."

Both Wilson and Warren wrote their initials beneath this provision,

as well as signed the entire agreement, thereby indicating acceptance

of this condition of employment.

As the district court properly found, the employment counts in this

case clearly fall within the ambit of the arbitration clause: they are

related to Wilson’s and Warren’s employments, and particularly their

terminations. We thus find that the parties agreed to arbitrate all of

Relators’ employment claims.

B.

We next examine whether the arbitration clauses are enforceable.

1.

As an initial matter, Relators contend that their retaliatory termina-

tion claims under the FCA are not arbitrable. This is because, they

assert, the FCA’s anti-retaliation provision, 31 U.S.C. § 3730(h), pro-

hibits Relators from waiving their right to pursue such a claim in fed-

eral court rather than arbitration. We cannot accept such a contention.

To the extent Relators rely on the case of Nguyen v. City of Cleve-

land, 121 F. Supp. 2d 643, 647 (N.D. Ohio 2000), which found that

FCA retaliation actions were not arbitrable because of a conflict

UNITED STATES v. KELLOGG BROWN & ROOT 15

between "arbitration and the underlying purposes of the FCA," we

simply note that the other courts to consider that issue have not found

Nguyen persuasive. See United States ex rel. McBride v. Halliburton

Co., Civil Action No. 05-00828, 2007 WL 1954441, at *4-5 (D.D.C.

July 5, 2007) (holding that claims brought under § 3730(h) may be

subject to arbitration); Orcutt v. Kettering Radiologists, Inc., 199 F.

Supp. 2d 746, 754-56 (S.D. Ohio 2002) (same); see also Mikes v.

Strauss, 889 F. Supp. 746, 755-57 (S.D.N.Y. 1995) (same); Gilmer v.

Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991) (noting that

"statutory claims may be the subject of an arbitration agreement . . .

unless Congress itself has evinced an intention to preclude a waiver

of judicial remedies for the statutory rights at issue" (internal quota-

tions omitted)).

Even if the FCA permits a waiver, which we believe it does, Rela-

tors assert that the waiver must be stated in clear and unambiguous

terms in order to be enforceable. We need not inquire whether the

arbitration agreement at issue here meets that standard because we

think appellants’ proposed standard is inapplicable. Nothing in the

text of 31 U.S.C. § 3730(h), which authorizes retaliatory termination

claims under the FCA, imposes such a condition. Indeed, § 3730(h)

does not even discuss the issue of arbitration.

Furthermore, the primary case upon which Relators rely for their

proposed standard, Brown v. ABF Freight Sys., Inc., 183 F.3d 319,

322 (4th Cir. 1999), is readily distinguishable. Unlike the present

case, Brown involved an arbitration clause that was part of a union-

negotiated collective bargaining agreement. Brown, 183 F.3d at 320-

22. Relying on the Court’s decision in Wright v. Universal Mar. Serv.

Corp., 525 U.S. 70 (1998), we held in Brown that when interpreting

such a collective bargaining agreement, "we will not find an intent to

arbitrate statutory [discrimination] claims absent a ‘clear and unmis-

takable’ waiver of an employee’s ‘statutory right to a judicial forum

for claims of employment discrimination.’" Brown, 183 F.3d at 321

(quoting Wright, 525 U.S. at 80-81). However, as the Supreme Court

made clear in Wright, such a requirement does not apply to "an indi-

vidual’s waiver of his own rights" but "rather [to] a union’s waiver

of the rights of represented employees." 525 U.S. at 80-81. Since the

employment contracts at issue here were negotiated by Relators indi-

16 UNITED STATES v. KELLOGG BROWN & ROOT

vidually, and not by a union on their behalf, Brown and Wright are

inapplicable.

2.

With respect to the enforceability of the arbitration clause more

generally, the parties dispute whether the Federal Arbitration Act

("FAA") applies and, if so, whether the agreements are enforceable

under it. The parties agree, however, that if the agreements are not

governed by the FAA, they are governed by Texas state law. Because

the employment contract’s choice of law provision specifies the use

of Texas law, we need not address the issues involving the FAA. For

the reasons that follow, we find that the arbitration agreements are

enforceable under Texas law.

Like its federal counterpart, Texas law has a "strong presumption

in favor of arbitration." See Prudential Sec., Inc. v. Marshall, 909

S.W.2d 896, 899 (Tex. 1995). In furtherance of that goal, the Texas

General Arbitration Act ("TGAA") provides that written arbitration

agreements are generally valid and enforceable, subject to a few spe-

cific exceptions. See Tex. Civ. Prac. & Rem. Code Ann. § 171.001-

171.002 (Vernon 2005). One such exception requires that the agree-

ment be signed by each party and each party’s attorney if it is "an

agreement for the acquisition by one or more individuals of property,

services, money, or credit in which the total consideration to be fur-

nished by the individual is not more than $50,000." Id.

§ 171.002(a)(2) & (b). Because it is undisputed that the agreements

were not signed by Relators’ attorneys, the only issue in this case is

whether the agreements meet the statutory exception, thus rendering

them unenforceable. We find, as did the district court, that Relators’

employment agreements do not fall under the exception in

§ 171.002(a)(2).

Because the exception only applies when "one or more individuals"

acquire "property, services, money, or credit," the scope of the term

individual is critical. Id. § 171.002(a)(2) (emphasis added). Both par-

ties agree that under Texas law, the term "individual" encompasses

only human beings and does not include corporations. See Tex. Penal

Code Ann. § 1.07(a)(26) (Vernon 2008); see also Inteq v. Lotus, LLC,

No. 08-02-00079-CV, 2002 WL 1987938, at * 2 & n.1 (Tex. App.-El

UNITED STATES v. KELLOGG BROWN & ROOT 17

Paso Aug. 29, 2002) (interpreting "individuals" in § 171.002(a)(2)).

Since KBR is the party "acquiring" services from the Relators, and

because KBR is not an individual under the statute, § 171.002(a)(2)

is not applicable to Relators’ employment contracts. The arbitration

agreements are thus enforceable under the general provisions of the

TGAA. See Tex. Civ. Prac. & Rem. Code Ann. § 171.001.

Even if there were a doubt about the non-applicability of

§ 171.002(a)(2), two additional points strongly counsel a finding that

the arbitration clause is enforceable. First, as noted above, there is a

heavy presumption in favor of arbitration under Texas law. Second,

the exception urged by Relators is often referred to as a "consumer

protection" provision. See In re Educ. Mgmt. Corp., 14 S.W.3d 418,

421 (Tex. App.-Houston 2000) (referring to § 171.002(a)(2) as the

"consumer exception"); Palm Harbor Homes, Inc. v. McCoy, 944

S.W.2d 716, 721 (Tex. App.-Ft. Worth 1997) (noting that the excep-

tion applies to "consumer contract[s] for $50,000 or less"). Thus, the

exception is likely inapplicable when it comes to standard employ-

ment contracts, such as the ones at issue here.

For all these reasons, we are convinced that the arbitration agree-

ments are enforceable under Texas law.

IV.

With respect to each of these issues, Relators have attempted to

avoid a basic principle of contract law. The first is that breach of con-

tract claims are not the same as fraudulent conduct claims, and the

normal run of contractual disputes are not cognizable under the False

Claims Act. The second is that when parties agree to arbitrate, there

is a strong presumption that their contractual agreement is a valid one.

Because the district court properly applied these principles, its judg-

ment is

AFFIRMED.