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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: July 2, 2019

Qui Tam Claim Not Subject to Particularity Requirements of CPLR 3106

On June 20, 2019, Justice Ostrager of the New York County Commercial Division issued a decision in State of New York v. Fieldturf USA Inc., 2019 NY Slip Op. 31726(U), holding that a qui tam claim was not subject to the particularity rules of CPLR 3106, explaining:

While fraud claims must be pled with particularity under the heightened pleading standard of CPLR ยง 3016, the qui tam plaintiff shall not be required to identify specific claims that result from an alleged course of misconduct, or any specific records or statements used, if the facts alleged in the complaint, if ultimately proven true, would provide a reasonable indication that one or more NYFCA violations are likely to have occurred. Thus, Relator need only allege facts that, if true, would reasonably indicate that FieldTurf likely violated the NYFCA at least once.

. . .

First, Relator’s allegations regarding FieldTurf’s affirmative misrepresentations are sufficiently pled under NYFCA’s more lenient pleading standard which does not require a qui tam relator to identify specific claims or specific records or statements used in connection with a false claim. Thus, it is sufficient that Relator alleges that each sale of Duraspine to the Government was caused by FieldTurf’s allegedly fraudulent sales literature and its agents’ knowing misrepresentations. Under the NYFCA pleading standard, Relator need not allege which specific records or statements used were relied upon by each Government entity in connection with each specific sale of Duraspine.

Second, Relator’s allegations that FieldTurf intentionally omitted significant information regarding the quality of Duraspine fields are sufficient to state a NYFCA violation. The United States Supreme Court has held that the False Claims Act encompasses claims that make fraudulent misrepresentations, which include certain misleading omissions. When a defendant makes representations in submitting a claim but omits its violations of statutory, regulatory, or contractual requirements, those omissions can be a basis for liability if they render the defendant’s representations misleading with respect to the goods or services provided.

Here, Relator alleges that the Government was fraudulently induced to purchase FieldTurf’s fields and that FieldTurf misleadingly omitted material information regarding the fields’ lack of durability when it sold the fields to the Government. In sum, Relator alleges that FieldTurf–despite a large-scale marketing campaign advertising its fields as having a ten-year lifespan-was entirely aware that its fields were failing after less than two years when it sold such fields to the Government. Based on the allegations that FieldTurf omitted material information regarding the defective nature of its products in connection with sales to the Government, Relator has pied one or more violations of the NYFCA sufficient to survive pre-answer dismissal.

(Internal quotations and citations omitted).

The New York False Claims Act (as well as the federal False Claims Act on which it is modeled) provides a way for private citizens to bring claims against those who defraud the government by making false claims to the government. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have non-public information about someone who has been cheating the government.

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