All right, Council, we have two cases. I know you all know our lighting system as long as you have a green light. You're running free when the yellow light comes on, begin to bring your argument to a close, and then when the red light appears, finish your silence and stop. And the rebuttal is for rebuttal only. We call it first case, U.S.V. Ballinger, and we hear first from Mr. Wright. Good morning. May it please the court, Abbey Wright on behalf of the United States. We'll have my couple of little men right. Is that better, Your Honor? Yeah. Good morning, Abbey Wright on behalf of the United States. I've preserved five minutes of for a while. Excuse me. Is that saying word in the bed seemed to add much? Good microphone? Yes. Yes, sir. I'll speak louder, Your Honor. If you'll speak right into the microphone, maybe that will have my ears all over the morning. You might find that you could move it around to you so that it's closer to you, so we're not having to. Sorry. Is that better, Your Honor? Okay, that's not better. Ballinger does not dispute here that the Coast Guard spent approximately $80 million per eight patrol boats that were structurally unsound and ultimately unusable
. Ballinger also does not dispute that it is an experienced shipbuilder that employs professional architects and engineers whose job it is to design and construct sea worthy vessels. And Ballinger does not dispute that its employees created a false section modulus figure and submitted that figure to the Coast Guard. What this case turns on then is the Ballinger employees state of mind when they created the false section modulus and submitted it to the Coast Guard. The government has alleged here that Ballinger submitted that false calculation knowing it was false or at the very least with reckless disregard as to its truth or falsity. Let me ask you something. Does the government have the figures that were input into the computer and making the calculations? The government has, Your Honor, pronounced from the application, three different calculations. So we have the numbers that they put in. Yes, that's correct. I mean, I didn't remember seeing anything about those individual numbers and which were wrong and how grossly wrong, if they were grossly wrong. Sure, Your Honor. We didn't put all of the exact numbers in the complaint but we did with respect to the 5232 figure that was submitted to the Coast Guard. We discussed which inputs were incorrect. Indeed, that one of those incorrect inputs was 16,000 times higher than it should have been. What was that figure? I mean, what value did that figure describe? I'm not an engineer, Your Honor, but basically you have the whole of the ship and then you have beams that support that structure. What's that issue here is called bulb T-beams, which is basically made with shaped, I mean, you should imagine like a T, and there are six different shape properties measurements of basically the size of that beam that go into this computer program. And so for one of those, in only one of the calculations, Bollinger increased that number 16,000 times. Do we know which figure was accurate, which figure was right, which was right? For that particular one, they used the correct input, I believe, in the other calculations using the 16,000 only in the one that was that so much higher and ultimately was submitted to the Coast Guard. Is that in your complaint? The incorrect input is in the complaint, yes, Your Honor. And you say that it's right and the first figure was right and the second figure was wrong? Well, as it turns out, the section modulus totals, all of them were incorrect. All of them used some incorrect inputs, Your Honor. When it was ultimately calculated in 2004 after the Coast Guard's investigation, the number, the correct number was 26, 15. I understand that. I'm talking about the individual values
. The individual values. The individual values that we have. What is the nature of the incorrectness of the data that Bollinger increased? So, basically, mismeasurements, I think, is the simplest way to understand it. So, by measured something and they measured it wrong, is that what you're continuing? Well, our positions, of course, they didn't measure it wrong. They made up the numbers to manipulate the outcome. But what went wrong is that the measurements, Bollinger had within its possession that it knew what kind of these steel beams it was going to be using. And instead, put in numbers that described beams that were much, much larger and much, much heavier. And they're for much, much stronger. And our position as a legend in the complaint is they were putting in false data in order to manipulate that ultimate outcome, knowing full well that the Coast Guard needed the number to be sufficiently high to assuage concerns regarding the conversion of the 110 vessel, but vessels into 123 vessels. How is that in the complaint? The district court says that Bollinger had to know the correct section modulus in order to know that the figure it submitted was false. I don't see that you alleged that Bollinger knew the correct figure and why does your complaint fail in this basis. Well, you're on our way, Simit, that it's not relevant whether Bollinger knew the correct section modulus. What Bollinger needed to know was that what it was submitting was false or at least entertained doubts as to that falsity under the False Claims Act. If I say to this court that the moon is 40,000 miles from the earth, I don't know the actual number, but I'm reckless because I'm entertaining dots in my head. I have no idea how far the moon is from the earth, your honor. And even if Bollinger didn't know the 2600 figure, it knew that it was manipulating the inputs and inputting false data, and that's included in our complaint. But did you alleges that they knew the individual values they put in, you know, try to in, try to out? Did they know that the individual values they were putting in? We alleged, Your Honor, that the inputs were within their control, meaning that they, what they were describing were steel beams they were proposing to use. So they had those steel beams that they could properly measure. And Bollinger talks in their brief about it being a math error. It really isn't a math error. The computer does the calculation. It's really, and as you said garbage in garbage, it's the physical properties they put in, the measurements they made that led to these faulty numbers. It isn't as if they were doing the calculations on paper and kept making mistakes
. They had the beams, they knew what they were doing, and of course they're professionals. So we can expect the Coast Guard contracts with them through the prime contractor because they know how to do these kinds of calculations. But do you say that they knew that the data was incorrect? Yes, we are moving in, and that therefore it caused, it caused the grand mistake. I don't think that you say that's the second part of it. We might say the data is incorrect. So we say, we alleged that Bollinger knowingly inputted false data into the midship section calculation program. We do not alleges the district court was correct that they knew the correct number, what the correct number should have been coming out of that calculation. They may never have done the correct calculation. But we do alleged that they put in false knowing they knew that the data they were putting in were false. You know, in your moon example, or it wouldn't necessarily be reckless, it depends on where you got the data about the $40,000. If you picked up a children's book in the library on the way here, and it said that, and it was a typo, you wouldn't be reckless. It depends on where you got the input and whether it was some sort of intent. And that's what I'm not sure is present here in this complaint. I think you're right, your honor. But the procedural posture here, I think, is really important, because Bollinger can make these arguments at some re-judgment, and we hope ultimately at a trial in terms of undermining whatever the government's theory of the case is. What we need to do in our complaint is alleged facts taken as true that raise our right to relief above the speculative level. And I think we've done so here in the district court, indeed, imposed a too stringent reading of Iqbal and Twombles to require us to show that it was more likely than not that Bollinger committed knowing fraud, where at the complaint stage, we need to just raise, we need to tell a story that raises our right to relief above the speculative level, which we believe we've done so here. So you say they put in data that indicated beams that were of a different dimension and material that were actually in the boat? That's right, your honor. So they were just wrong about the kind of beams they were going to be using to extend the vessels. When did the cost of art become aware of these faults representation? Well, it was in September 2004 that the first vessel suffered buckling of the hull, which the section of module's calculations were talking about are concerned the strength of the hull. So it raised the question of what's going on with these strength measurements, and then it was in October of 2004 that..
. Was there any effort to get an outside expert who evaluated these figures and should now say more faults within the meaning of the faults played now? Yes, your honor. So our complaint details that the Coast Guard, as early as 2000, said to Bollinger, we have concerns about the strength of these converted vessels. And that Bollinger, I believe it's October 2000, says, we're going to get the American Bureau of Shipping, which is an outside entity to review the strength of the hulls, the ship's hulls. And it repeats that several more times to the Coast Guard. We alleged in our complaint that that was indeed a requirement of their subcontract and then they certified compliance in 2004, but they never obtained that outside review that they said they would of the entire vessel. As they note in their brief, they obtained review of the new portions in this conversion that both were linked and then there was an additional superstructure. There were additional other structural additions. And so those who reviewed, but the entire vessel was never reviewed for unrestricted service as the Coast Guard believed that it would. Is it inappropriate? Sorry. You said that you alleged that they knowingly input false data. I see in paragraph 26, you say Bollinger also failed or refused to provide the data input resulting in the section modulus calculations. So where do you say that they knowingly input false data? So where we say they knowingly input false data is 27. E, your honor, that's on page 122. We say from these contemporaneous events, those are the multiple runs and the emails that we have from the day before and the day of those runs. And including volunteers ongoing failure or refusal to identify the individuals. It can be reasonably inferred that Bollinger knowingly input false data into the MSC application to obtain a false section modulus result high enough to avoid further Coast Guard scrutiny and that they indeed avoid that they didn't. So if you look at the data on the beams that were different in structural strength and dimensions than actually, than the beams were, you don't say that in the couple. Well, if we look at, so 27D, which is on the previous page, it describes Bollinger what Bollinger did to get that 5232 figure, which is Bollinger changed the materials that was in alluant them to steel. What are you now skewming? Sorry, I'm on the record excerpts 121 or page 19. Sorry, 10 of our complaint. Ten? Ten, yes sir. Okay. So that's that sub paragraph
. D. Now that's the first vessel that Bollinger worked on was the Matter Board. Is that right? Yes, that's the first that was delivered. And it got completed and turned over to the Coast Guard before there was any knowledge on the part of the Coast Guard that there was a e-pacet. Is that true? That's correct. There were the Matter Gorda and then three additional vessels were accepted and taken from Bollinger before it came to light that the section modulus number had been incorrect. Now what about the rest of the eight vessels? What did the Coast Guard do in regard to the same that you used to use? About the whole deal here all the eight and have both representations still. That's our position here on our... So, factually what happened was after it was determined in late October 2004, there were four more vessels that the Coast Guard accepted preliminarily with the understanding that they could be fixed. What is the nature of that acceptance in writing or oral or just looking back over history and now say that you did accept? I believe it's in writing your honor in terms of the acceptance they were ultimately rejected and payments were stopped as of 2006. Is it when you accept something that you ultimately reject? What is the significance of the acceptance? Well, it's a provisional acceptance under the contract. I think we don't think... The word provisional in there. Our complaint says accepted with the... You can get the exact language. With the understanding that they would be fixed. So, the complaint alleges we
... The Coast Guard told them in writing that they would not accept delivery of the Nunavik. That's the next one until a structural fix had been implemented to correct the latent defect. And then the prime contractor and the Coast Guard attempted to fix the vessels that ultimately was not successful. The Coast Guard then revoked acceptance and ceased making payments. Is that vessels 5-8? That is vessels 5-8, Your Honor. That they conditionally accepted? That's right. With the understanding that they could be fixed with the expectation that they could be fixed. Doesn't that show government knowledge, though, as a matter of law? And why shouldn't we therefore use the government knowledge defense at this dismissal stage? Well, the district court imposed, I think, a sort of per se rule that any time the government knows anything about the fraud, there can't be liability. And no court of appeals has done something similar. The courts of appeals say that the Coast Guard has to be informed... The government agency has to be informed of the particular... particularities of the claim and approve those. And then be working... Basically, there has to be a meeting of the lines. There's nothing in our complaint that alleges that the Coast Guard approved of the claims as they were being submitted
. The Coast Guard was making what were known as milestone payments, that it did continue to make under the contract. But we don't believe that meets the requirements of the government knowledge defense where the Coast Guard has not approved. And Bollinger has not said, you know, Coast Guard, we have... We're going to continue making claims, but you know, right, that we're giving you these vessels that are not what we said we would give. But we could apply the government knowledge defense at the motion dismissed stage. I think it would be a very rare circumstance where that would be the appropriate thing for a court to do. No court of appeals decision that we could locate or Bollinger located has done so. I think that's because it would be pretty bad complaint that would on its face provide those elements. So we think it would be a very rare case and we'd urge this court to allow the District Court to consider that at summary judgment, or even at the stage of fact. Did you complete discovery? Discovery is not completed. Your Honor, some discovery took place during the motion to dismiss briefing. But for example, we have an outstanding motion to compel that has never been ruled on. There's additional discovery that we would like to do or if this court were to remand and give us the opportunity to do so. I see that I'm into my rebuttal of time. Thank you very much. Thank you. Okay, Mr. McBride. Thank you very much. May I please the court, Andrew McBride, on behalf of the Bollinger defendants. I'd like to go first to some of the questions that Judge Elrod asked
. And the first thing I would say is that the core of the two holdings, there were two complaints in this case. The government was allowed to amend the court chief judge vanse's holding is exactly what Judge Elrod hit on that. You cannot have a false statement when no one knows the truth. And the government does an alleged falsity in the sense of Bollinger knowing the true number and picking a false number. The facts that are alleged in the complaint are consistent with an honest mistake. There's entry of data into a software program and a number exits. It's a modeling enterprise. It is done with facts and figures that are inputted into a computer model. And the complaint is just as consistent with an honest error in inputs. And some defect in software that produced a result that was not accurate but unknown to everyone. And one big indicator of that is that when the Coast Guard received the Madagora, it did not reject the Madagora or the other boats. In fact, what it did was issue a, and this is in their complaint, issue a notice of a latent defect. In other words, the Coast Guard said there's a defect here that nobody knew about or anticipated. And the FAR defines latent defect as a defect no one knew about. And I have to correct the record. The Coast Guard, after October 2004, Judge Elrod asked a question about the government knowledge defense. The record there, and it's all in paragraph 41 of the government's own complaint. The record there is that it is Bollinger who reported the correct number of 2615 after testing the Madagora. And the government gave Bollinger the opportunity to do two modifications of the contract. So just as in Southland, there's extra contractual activity to try and correct the error. And that is whether you view it as an absolute defense, which frankly I think is what Judge Reavley's opinion, the majority opinion in Southland on Bollinger says, or whether you view it as going to knowledge, as deflating the idea that there's any knowing falsity. And that's Judge Jones's concurrence, which you joined, Judge Nemos. And I think either view the defense is made out here because you have all the elements of the contractor telling the government the truth, the government knowing the truth, and the contractor and the government working together to a solution
. Trying, as one court has said, grasping or groping for a solution. And that meets, that's exactly the facts of Southland where they say, how can you deceive someone when you've told them the truth? Well, it's back to the fact, though, isn't it? Well, but no, October 2004, the truth is told, and four boats are delivered after that, and the government accepts the boats. And it is an attempt to modify the boats to make the structural integrity work. But I guess the point is, the government didn't revoke its acceptance here, and this is in paragraph 41 as well, until May of 2007. So what we have here is the government consistently following a pattern of, with a contractor who has a spotless record, a pattern of attempting to correct an honest mistake or defect. Don't forget, and it's alleged in the complaint, these boats had been in service for a long time, and to quote the complaint, their hulls had substantial degradation. So everybody went into this, eyes open, that this was an attempt to extend the life of these boats, that may or may not be successful. And, you know, the government's own complaint, if you look at the paragraph that Judge Davis was led to by government counsel, paragraph 27 on page 10 over to 11, that is entirely consistent with mistake. What you have is three different calculations performed by Bollinger, by an engineer, and the government has actually interviewed that engineer, David Chatham. And that engineer's calculations were wrong, and you see what you see is a series of calculations within attempt to correct each calculation. And the last number is the 5,000 number. And I would submit to you that if Bollinger, there are more than 70 inputs into this calculation. And if Bollinger were going to commit fraud, wouldn't it have slightly manipulated some of the inputs? In other words, the government's argument from the 16,000 is more consistent with mistake than it is with fraud. Let me ask you this, it might be consistent with mistake, I mean, a jury could find that. But if they draw the inferences in favor of the government, they may find that you acted at least recklessly in disregard of the truth. Well, I think the key point there, Your Honor, is that the government misreads Twombly and Ickball. I mean, the Supreme Court has said, it has abandoned Conley, and the new standard is plausibility, facial plausibility. And in Twombly, the court said, look, if it's 50-50 from the complaint, the complainant loses and you must dismiss, because they must plead on the face of the complaint a plausible case for there. It must be more plausible in essence than the other. If it's 50-50, and I just don't say, think you can say, this complaint provides a plausible rationale without the theory that the true number was known. And that was the heart of Chief Judge Vance's opinion, dismissing the first complaint in the second. And by the way, what we have here is a case of a complaint kind of searching for fraud. Don't forget, the government's initial theory was fraud in the inducement on the first number
. And Chief Judge Vance said in her first opinion that the government wisely abandoned that theory. So now their second theory is fraud in the delivery. And let me say a little bit about that. There's some other facts that a jury could draw inferences against Bollinger. I mean, Bollinger is an experienced builder. You design this original boat. You had to work up the design on the modification and to input values of beams that are of different dimension and strength. It seems outrageous for the builder who's got design drawings. Well, I think the key there is that it may be an error in input, it may be an error in software. But there's no allegation that. And you said you're on a garbage in, garbage out. Well, I mean, that's just as consistent with a mistake. And that's the key point, I think. But why don't you get to a jury question really fast there? If the question is whether they were reckless in putting that garbage in. Well, first of all, the reckless theory, the first time we see that is on appeal. I mean, there's no allegation that I can see that the government's theory seems to be knowing falsity. Well, that's a standard under grub, so this is the standard. Well, and that's another point, Your Honor, is that there is a heightened pleading standard here under 9B. And who, what, when, where? And the what is not pleat, is not pleat with the kind of 9B particularity that's required. I mean, when you look at the claims, there's no two wit and the particular statement that was false. And when you're pleading a case and you know it's a strong case, and I work for the government for 10 years, to wit this. And the second point I would make, and this is an important point that goes beyond the 9B and 8A2 pleading point, is that there's no allegation that either the section modulus or any kind of ABS review was a requirement of the contract. And you get to this court's story precedent and Judge L. Rod's opinion and spicer. And the point is the prerequisite point that if you have a fact that it's submitted, even if the fact is inaccurate or false, if it's not a condition of payment, then there can be no fraud under the FCA. And here, we know it's not a condition of payment because the government consistently took delivery of the boats, no matter what the section modulus number was. And I think the government, not intentionally, of course, but there's a misleading inference that ABS review was required for all of the boat. And that's not accurate. What was the ABS review? Only the new parts of the boat, which may seem strange, but there was no ABS review as to the strength of the old parts of the boat. And Bollinger did submit the ABS review in August of 2004. So when the government says that there was no ABS review of the entire boat, that was not a contractual requirement. And I would ask you to ask counsel that straight out. Isn't it true that, in fact, only ABS review the new parts of the boat was required? The other thing that's in the complaint that's a little troubling is the government moves directly from the section modulus calculation to the failure of the Madaguarda as if the two are connected. And there's no causality at all there. In fact, the government found in its report on that issue that there could be seven or eight possible causes. So the idea of the inference that's attempted to be created that the section modulus calculation affected the efficiency of the Madaguarda is not accurate. And in fact, the comment on the coast guard found that he couldn't say what the cause was. But I think the key point there is Judge Davis, I would say that all the elements putting aside the failure on the pleading side, putting aside the fact that relief is as a Jail Rod wrote. And Spicer relief is doomed here because there is no element of the representations that was specifically required under the contract, be they false or be they negligent. Putting those aside, the government knowledge defense, whether you view it as an absolute defense or whether you view it as something that negates the knowledge of the contractor, it's here in spades. It's even a better case than Southland itself because in October, my client tested the Madaguarda, reported the correct number. And the coast guard said it's a latent defect. Let's work with you to fix it. There were two modifications of the contract to fix it. So at that point, everybody is eyes open. And I don't know how I defraud you when I've told you the truth
. Rod's opinion and spicer. And the point is the prerequisite point that if you have a fact that it's submitted, even if the fact is inaccurate or false, if it's not a condition of payment, then there can be no fraud under the FCA. And here, we know it's not a condition of payment because the government consistently took delivery of the boats, no matter what the section modulus number was. And I think the government, not intentionally, of course, but there's a misleading inference that ABS review was required for all of the boat. And that's not accurate. What was the ABS review? Only the new parts of the boat, which may seem strange, but there was no ABS review as to the strength of the old parts of the boat. And Bollinger did submit the ABS review in August of 2004. So when the government says that there was no ABS review of the entire boat, that was not a contractual requirement. And I would ask you to ask counsel that straight out. Isn't it true that, in fact, only ABS review the new parts of the boat was required? The other thing that's in the complaint that's a little troubling is the government moves directly from the section modulus calculation to the failure of the Madaguarda as if the two are connected. And there's no causality at all there. In fact, the government found in its report on that issue that there could be seven or eight possible causes. So the idea of the inference that's attempted to be created that the section modulus calculation affected the efficiency of the Madaguarda is not accurate. And in fact, the comment on the coast guard found that he couldn't say what the cause was. But I think the key point there is Judge Davis, I would say that all the elements putting aside the failure on the pleading side, putting aside the fact that relief is as a Jail Rod wrote. And Spicer relief is doomed here because there is no element of the representations that was specifically required under the contract, be they false or be they negligent. Putting those aside, the government knowledge defense, whether you view it as an absolute defense or whether you view it as something that negates the knowledge of the contractor, it's here in spades. It's even a better case than Southland itself because in October, my client tested the Madaguarda, reported the correct number. And the coast guard said it's a latent defect. Let's work with you to fix it. There were two modifications of the contract to fix it. So at that point, everybody is eyes open. And I don't know how I defraud you when I've told you the truth. We both know the truth. I mean, that's the only place in the complaint though. I think it is. I think it's all in paragraph 41 of the complaint. I mean, the idea that there was an attempt to repair that the true number was reported. It was Balundru who tested the boat and gave the government the true number. That's in the complaint. And so when, you know, in Southland, it was a HUD situation. And the, although the property was not safe and sanitary as was certified, the court said, well, on bond, the court said, well, both sides knew the truth. And they were working to try and fix it. And therefore, there can be no liability in that circumstance. On the point of, I think there's a case that's on all three and three quarters with this case out of the ninth circuit. It's the Wang case. And in the Wang case, there was an error in calculation that led to a gear failure in a successor to the Bradley fighting vehicle. And key tamer-related brought in action and said, well, you know, I think the calculations were done improperly and some of the inputs might have been wrong. And I brought this to their attention. And the ninth circuit says there's no FCA claim here. And as this court has often said, there's a difference between breach of contract and an FCA claim. And what the Wang court said is, because something is scientifically untrue, doesn't make it a lie. And going to Judge L. Rods Point and the hypothetical about the moon, what the ninth circuit said is because Ptolemy thought that the Earth was the center of our solar system doesn't mean that he lied, because nobody knew the truth. And you can't lie unless there's some truth out there. You can't even be reckless as to the truth unless there is some objective truth somewhere
. We both know the truth. I mean, that's the only place in the complaint though. I think it is. I think it's all in paragraph 41 of the complaint. I mean, the idea that there was an attempt to repair that the true number was reported. It was Balundru who tested the boat and gave the government the true number. That's in the complaint. And so when, you know, in Southland, it was a HUD situation. And the, although the property was not safe and sanitary as was certified, the court said, well, on bond, the court said, well, both sides knew the truth. And they were working to try and fix it. And therefore, there can be no liability in that circumstance. On the point of, I think there's a case that's on all three and three quarters with this case out of the ninth circuit. It's the Wang case. And in the Wang case, there was an error in calculation that led to a gear failure in a successor to the Bradley fighting vehicle. And key tamer-related brought in action and said, well, you know, I think the calculations were done improperly and some of the inputs might have been wrong. And I brought this to their attention. And the ninth circuit says there's no FCA claim here. And as this court has often said, there's a difference between breach of contract and an FCA claim. And what the Wang court said is, because something is scientifically untrue, doesn't make it a lie. And going to Judge L. Rods Point and the hypothetical about the moon, what the ninth circuit said is because Ptolemy thought that the Earth was the center of our solar system doesn't mean that he lied, because nobody knew the truth. And you can't lie unless there's some truth out there. You can't even be reckless as to the truth unless there is some objective truth somewhere. As a builder of the boat and designer of the modifications, couldn't it jury? Look at all the information that Ballinger had about the structural components of the vessel. And just say that they were reckless and not inputting the correct values. And then all of the different computations that were made and the email that Judge Vance gave the inference to Ballinger on that email. But it could be read as saying we don't want to preliminary confidential assessment by ABS. We don't want to run this contract. Well, I guess Judge Davis as to that point, and this is something that comes out of Ickball and Twombly. The court is allowed to reject unreasonable inferences. I mean, that's part of the change from Conley. And so I think the reason that any inference from the Boise Ballinger email exchange is unreasonable. It has nothing to do with section modulus. And Boise Ballinger is not saying there won't be ABS review. He's saying when should the review occur and who should be the sponsor of the review, either Ballinger or the Coast Guard. So to draw that inference, I think, you know, Chief Judge Vance said that inference is not reasonable in the context of an argument that the section modulus was false. Because it had nothing to do with section modules. And there's a DC circuit case, very much on point here, the SAIC case where Judge Tadal writing for the DC circuit said, look, you know, you cannot aggregate various acts that are appear to be negligent or breaches of contract. So that's the fact from one employee to the other in a sort of collective knowledge theory and create falsity. What did they may or what was you talking about? It was talking about ABS review. But, you know, the point, I guess, is on the story and Spicer line of cases. ABS review occurred. ABS review of the new materials was submitted in August of 2004. And that satisfied the contractual requirement. And, you know, throughout this, this is a key point on the government knowledge defense. But also the same facts helped to negate intent when you look at the complain as a whole
. As a builder of the boat and designer of the modifications, couldn't it jury? Look at all the information that Ballinger had about the structural components of the vessel. And just say that they were reckless and not inputting the correct values. And then all of the different computations that were made and the email that Judge Vance gave the inference to Ballinger on that email. But it could be read as saying we don't want to preliminary confidential assessment by ABS. We don't want to run this contract. Well, I guess Judge Davis as to that point, and this is something that comes out of Ickball and Twombly. The court is allowed to reject unreasonable inferences. I mean, that's part of the change from Conley. And so I think the reason that any inference from the Boise Ballinger email exchange is unreasonable. It has nothing to do with section modulus. And Boise Ballinger is not saying there won't be ABS review. He's saying when should the review occur and who should be the sponsor of the review, either Ballinger or the Coast Guard. So to draw that inference, I think, you know, Chief Judge Vance said that inference is not reasonable in the context of an argument that the section modulus was false. Because it had nothing to do with section modules. And there's a DC circuit case, very much on point here, the SAIC case where Judge Tadal writing for the DC circuit said, look, you know, you cannot aggregate various acts that are appear to be negligent or breaches of contract. So that's the fact from one employee to the other in a sort of collective knowledge theory and create falsity. What did they may or what was you talking about? It was talking about ABS review. But, you know, the point, I guess, is on the story and Spicer line of cases. ABS review occurred. ABS review of the new materials was submitted in August of 2004. And that satisfied the contractual requirement. And, you know, throughout this, this is a key point on the government knowledge defense. But also the same facts helped to negate intent when you look at the complain as a whole. The point is, you know, the government continued to accept the boats and accepted all eight boats. And it wasn't until May in May of 2007, the Coast Guard said, this is in paragraph 41 of the complaint. Coast Guard said, we revoke our acceptance, which of course is a contract remedy. And then you get to the government's first complaint. And I think you can consider the first complaint. And obviously it was before Chief Judge Vance. In the first complaint, there are these Freudian slips. You know, paragraph 18 of the first complaint. The government says the calculation was not reasonable. Now, that is the language of mistake, not the language of fraud. In the first complaint, the government brought a common law negligent representation claim. And then they dumped it in the second complaint. In other words, oops. You know, we kind of, we, I'm sorry to tell you, please go ahead. So even the paragraph 28 or whatever that we were reading earlier, it says it could reasonably be inferred that they knew something different. That's kind of soft language for alleging fraud. And that's something I think that the court can consider here because there was and Chief Judge Vance noted this. There was extensive discovery in this case. So the government has interviewed eight separate employees that were offered by Ballinger. The government has about 100,000 documents from the company. So this is not raw pleading in the blind. And the government's had two shots at this, an emotion for recon in front of Chief Judge Vance. And she, you know, in Iqbal, and I think this is an important point in Iqbal, the court says that one of the key principles in Twombly is that the district court must exercise judicial experience and common sense
. The point is, you know, the government continued to accept the boats and accepted all eight boats. And it wasn't until May in May of 2007, the Coast Guard said, this is in paragraph 41 of the complaint. Coast Guard said, we revoke our acceptance, which of course is a contract remedy. And then you get to the government's first complaint. And I think you can consider the first complaint. And obviously it was before Chief Judge Vance. In the first complaint, there are these Freudian slips. You know, paragraph 18 of the first complaint. The government says the calculation was not reasonable. Now, that is the language of mistake, not the language of fraud. In the first complaint, the government brought a common law negligent representation claim. And then they dumped it in the second complaint. In other words, oops. You know, we kind of, we, I'm sorry to tell you, please go ahead. So even the paragraph 28 or whatever that we were reading earlier, it says it could reasonably be inferred that they knew something different. That's kind of soft language for alleging fraud. And that's something I think that the court can consider here because there was and Chief Judge Vance noted this. There was extensive discovery in this case. So the government has interviewed eight separate employees that were offered by Ballinger. The government has about 100,000 documents from the company. So this is not raw pleading in the blind. And the government's had two shots at this, an emotion for recon in front of Chief Judge Vance. And she, you know, in Iqbal, and I think this is an important point in Iqbal, the court says that one of the key principles in Twombly is that the district court must exercise judicial experience and common sense. So I think we have to, and this is where the government, I think, gets off the rails a little bit. You know, that was a sea change in the law. And the idea that, you know, you engage in the sort of connoisse speculation about what could be or what is possible is no longer the case because, and the court says this in Iqbal, possible is not plausible. I mean, it was possible in Twombly that the incumbent carriers had indeed agreed not to compete. And in fact, there was a statement in Twombly by the CEO of Quest, Mr. Notabart, that looks a lot like the very ambiguous statement by Mr. Boyzie Ballinger here. But, you know, the point, excuse me please. I have a question, though, it is troubling. It's the same type of question that Judge Davis has asked you repeatedly. The, the, the, you have the expertise, your client has the expertise, and they're supposed to be the ones who know all of this and delivering. And they're not checking or I mean, it's not some kind of willful blindness or something that would show that they were, in fact, being fraudulent. Well, you know, I think one answer there, your honor is that in the under the facts of the case, this was this calculation was in the entire whole integrity report was reviewed by the Chief Naval architect. And another Naval architect inside the company and by the Coast Guard. And nobody caught the defect. I mean, nobody caught the mistake. What was the mistake? The mistake, the final mistake was the entry of improper values of, I believe, size and strength for these bold teas. And we believe there's been a forensic review. I mean, Ballinger's point of view, and this is outside the record, but is that there was both an input error and it was, it was amplified by a software error. And that's what created this enormous difference. But, you know, look, when you're dealing with computers, there can be errors. I think at the end of the day what the court is confronted with here is the question, whether in its present posture of pushing these FCA cases has the government gone too far, taken an honest contractor who has an impeccable record with the government and tried to make a mistake into a big dollar FCA case. Thank you, Mr
. So I think we have to, and this is where the government, I think, gets off the rails a little bit. You know, that was a sea change in the law. And the idea that, you know, you engage in the sort of connoisse speculation about what could be or what is possible is no longer the case because, and the court says this in Iqbal, possible is not plausible. I mean, it was possible in Twombly that the incumbent carriers had indeed agreed not to compete. And in fact, there was a statement in Twombly by the CEO of Quest, Mr. Notabart, that looks a lot like the very ambiguous statement by Mr. Boyzie Ballinger here. But, you know, the point, excuse me please. I have a question, though, it is troubling. It's the same type of question that Judge Davis has asked you repeatedly. The, the, the, you have the expertise, your client has the expertise, and they're supposed to be the ones who know all of this and delivering. And they're not checking or I mean, it's not some kind of willful blindness or something that would show that they were, in fact, being fraudulent. Well, you know, I think one answer there, your honor is that in the under the facts of the case, this was this calculation was in the entire whole integrity report was reviewed by the Chief Naval architect. And another Naval architect inside the company and by the Coast Guard. And nobody caught the defect. I mean, nobody caught the mistake. What was the mistake? The mistake, the final mistake was the entry of improper values of, I believe, size and strength for these bold teas. And we believe there's been a forensic review. I mean, Ballinger's point of view, and this is outside the record, but is that there was both an input error and it was, it was amplified by a software error. And that's what created this enormous difference. But, you know, look, when you're dealing with computers, there can be errors. I think at the end of the day what the court is confronted with here is the question, whether in its present posture of pushing these FCA cases has the government gone too far, taken an honest contractor who has an impeccable record with the government and tried to make a mistake into a big dollar FCA case. Thank you, Mr. President. Thank you, Mr. President. Thank you, Mr. President. Good luck to you, Mr. President. Good morning again. I'd like to start with a quote from Twombley. I think we disagree a little bit on the reading of that case. Twombley says, expressly, that it does not impose a probability requirement. So we don't need to show in our complaint that it is more likely than not that Ballinger committed knowing fraud. We need to raise our right to relief above the speculative level. I'd also like to talk a little bit about the Wang case. The Wang case is, I think, easily distinguishable, even from a reading of the opinion itself, which discusses the allegations that were made in that complaint. And that complaint itself said the problem was, I'm quoting a low level of engineering understanding. So that complaint contained its own statement of negligent engineering. And of course, we don't have anything like that in our complaint. So I think the ninth circuit there was reacting to the fact that the complaint itself said that it was bad math. We've not alleged that it was bad math here, your honor. The..
. President. Thank you, Mr. President. Thank you, Mr. President. Good luck to you, Mr. President. Good morning again. I'd like to start with a quote from Twombley. I think we disagree a little bit on the reading of that case. Twombley says, expressly, that it does not impose a probability requirement. So we don't need to show in our complaint that it is more likely than not that Ballinger committed knowing fraud. We need to raise our right to relief above the speculative level. I'd also like to talk a little bit about the Wang case. The Wang case is, I think, easily distinguishable, even from a reading of the opinion itself, which discusses the allegations that were made in that complaint. And that complaint itself said the problem was, I'm quoting a low level of engineering understanding. So that complaint contained its own statement of negligent engineering. And of course, we don't have anything like that in our complaint. So I think the ninth circuit there was reacting to the fact that the complaint itself said that it was bad math. We've not alleged that it was bad math here, your honor. The... Chemical, let me ask. Before there was any work done on the matter of order or any others that was there a set of pranks prepared which spoke to this issue that became a critical issue as long. So there were plans... Was there anything in the original plan of what the changes to be made consisted of that spoke to this question about the measurement of whatever this factor is? And I had to confess I hadn't absolutely no idea of what you were referring to as the... It's the section modulus. I think... I think the simple way to understand it is that it's a measurement of how much force a boat can withstand before it buckles. So it's a strength, the longitudinal strength of the vessel. And in this contract took place in two phases. The first phase was when ICGS was competing for the contract. And there was a design proposal submitted at that point that showed how the conversion would take place. And Bollinger calculated at that point that the section modulus would be in the 7,000 range. And that was in response to the Coast Guard's concerns which I think were quite reasonable. That when you cut off part of the end of a boat and you add on more boat you're going to have some structural questions there. So the design was part of that proposal and then there were further design meetings along the way where that loop became more fleshed out. I think we do have a dispute with Bollinger regarding what the.
. Chemical, let me ask. Before there was any work done on the matter of order or any others that was there a set of pranks prepared which spoke to this issue that became a critical issue as long. So there were plans... Was there anything in the original plan of what the changes to be made consisted of that spoke to this question about the measurement of whatever this factor is? And I had to confess I hadn't absolutely no idea of what you were referring to as the... It's the section modulus. I think... I think the simple way to understand it is that it's a measurement of how much force a boat can withstand before it buckles. So it's a strength, the longitudinal strength of the vessel. And in this contract took place in two phases. The first phase was when ICGS was competing for the contract. And there was a design proposal submitted at that point that showed how the conversion would take place. And Bollinger calculated at that point that the section modulus would be in the 7,000 range. And that was in response to the Coast Guard's concerns which I think were quite reasonable. That when you cut off part of the end of a boat and you add on more boat you're going to have some structural questions there. So the design was part of that proposal and then there were further design meetings along the way where that loop became more fleshed out. I think we do have a dispute with Bollinger regarding what the... Is the pin foot section that is referred to? Was that movable up and down the links that the boat you put it in place A at the rear plus B in the middle place C at the bout? Is that what y'all were debating? I'm not aware of a debate regarding where that extension would go. Your Honor, I'm not aware of that and our complaint doesn't address that. I think it was always in one place because they were going to... Would it be in the calculations that you now say has falls and picked dishes where it was put? I think it might your Honor because the question was that the strength of the boat and so if you were cutting out a midsection it might be different than if you were cutting out one end or the other. But I don't... we don't know legend or complaint that there was that kind of discussion regarding where it would go. There was some... Bollinger in terms of these beams was trying to determine what kind of beam to use and then use those inputs into the program. We do I think... we do a legend our complaint paragraph 28 that the ABS review was required. So I think there is some dispute about that... But
.. Is the pin foot section that is referred to? Was that movable up and down the links that the boat you put it in place A at the rear plus B in the middle place C at the bout? Is that what y'all were debating? I'm not aware of a debate regarding where that extension would go. Your Honor, I'm not aware of that and our complaint doesn't address that. I think it was always in one place because they were going to... Would it be in the calculations that you now say has falls and picked dishes where it was put? I think it might your Honor because the question was that the strength of the boat and so if you were cutting out a midsection it might be different than if you were cutting out one end or the other. But I don't... we don't know legend or complaint that there was that kind of discussion regarding where it would go. There was some... Bollinger in terms of these beams was trying to determine what kind of beam to use and then use those inputs into the program. We do I think... we do a legend our complaint paragraph 28 that the ABS review was required. So I think there is some dispute about that... But... You did not insist on that being done if I hear incorrectly. We said, yeah, the ABS ought to look this thing over but you didn't ever say where's the ABS available. So we don't rely on that certification in 2004 which we take to be a certification that this was done. We don't rely on that as a material fall statement here because your Honor is correct that that came in after we began making payments and accepting delivery of the vessels. So we're not relying on that as a material fall statement here. I need to ask you the question your opposing counsel said I should ask you. Isn't it true that in fact the ABS review was for new parts only? Well that's... I think we disagree with Bollinger about that fact. In our complaint paragraph 28 we say that it was required to review the whole vessel for unrestricted service. Where's that in the complaint? So that's... So we have a subcontract with Northrop Grumman. That's on pages 11 to 12 of our complaint. Right. Okay. So we have a disagreement with them. So it's 3.2
.2.2 of attachment JTN that authorizes that? That's correct. Okay. All right. Thank you very much. Thank you very much. Thank you