Relators Gregory Lynn and Paulette Hamilton, principals of Enjoi Transportation, filed a qui tam lawsuit under the False Claims Act against the City of Detroit on behalf of the United States. The federal government declined to intervene. The relators alleged that the City knowingly presented false claims for federal funding from the Federal Transit Administration. The dispute centered on the City's annual Certifications and Assurances, which stated the City 'agrees to comply' with federal laws and regulations. The relators claimed these certifications were fraudulent because the City failed to comply with specific FTA requirements regarding paratransit pickup windows and reporting. The district court granted summary judgment for the City, determining that the Certifications were forward-looking promises rather than false statements of fact. The relators appealed, arguing the district court erred in denying their motions to amend the complaint and in its construction of the Certifications.
The Sixth Circuit addressed three main arguments. First, the court found no abuse of discretion in the district court's denial of the relators' motion to amend their complaint, noting the extreme delay and lack of diligence, as this was the sixth proposed complaint filed nearly seven years after the case began. Second, the court held that the relators failed to state a claim under 31 U.S.C. § 3729(a)(1)(B) because they did not adequately plead a connection between the alleged false records and an actual claim submitted to the government. Third, and most critically, the court affirmed that the Certifications and Assurances were forward-looking promises. The text of the certifications stated the City 'agrees to comply' with federal laws, which the court interpreted as a promise of future behavior rather than a representation of past or existing fact. Citing United States ex rel. Hobbs v. Medquest Assocs., Inc., the court reiterated that 'the falsity of a claim is determined at the time of submission.' Since the certifications were promises of future compliance, they could not constitute the 'false or fraudulent claim' required for liability under the False Claims Act. The court also rejected the relators' attempt to argue 'promissory fraud,' noting that the complaint did not allege the City had no intention of complying at the time the certifications were signed, and the Sixth Circuit has not explicitly endorsed this theory in the FCA context.
The judgment of the district court is affirmed, barring the relators from recovering damages under the False Claims Act based on the City's annual Certifications and Assurances. This decision clarifies that general pledges to comply with federal law in the future do not satisfy the statutory requirement of presenting a false claim as a factual assertion. The ruling leaves open the question of whether 'promissory fraud' theories might ever apply in the Sixth Circuit, but confirms that absent specific allegations of intent not to comply at the time of signing, such claims cannot proceed.
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