Ninth Circuit upholds whistleblower complaint, applying relaxed particularity standard

by Ben Vernia | March 1st, 2013

On February 13, the Court of Appeals for the Ninth Circuit, in an unpublished opinion in U.S. ex rel. Jajdelski v. Kaplan, Inc. reversed a district court’s dismissal of the qui tam complaint. The relator in the case was a former employee of a for-profit college, who alleged that the college defrauded the government by enrolling sham students (and continuing others who had withdrawn), and insisting that prospective students complete a financial aid application before being given a tour of the college. The college’s motion to dismiss argued that the complaint lacked the particularity required under Fed. R. Civ. P. 9(b), and was barred by the statute of limitations.

The Court disagreed on the particularity question, noting that it had previously rejected requiring qui tam plaintiffs to identify representative examples of claims. The Court continued:

That standard is met here because Jajdelski “alleges his first-hand experience of the scheme unfolding” and “describes in detail, including the date, place, and participants,” meetings during which the phantom student scheme was revealed. Grubbs, 565 F.3d at 191–92. It would “stretch the imagination” to believe that Kaplan employees fastidiously (and secretively) documented fake student enrollment statistics and met about them once the threshold for financial aid eligibility was crossed, “only for the scheme to deviate . . . at the last moment” such that they did not submit those claims to the Department of Education. Id. at 192.

The Court nevertheless upheld the dismissal of the relator’s other claims as untimely filed, because he learned of them no later than the date of his firing in 2003, but did not file until after the 6-year limitations period had expired.

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