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(A version of this article appears in the California
Construction Law Reporter, published by the West Group.)
By
James E. Acret
James
Jones Company manufactured water pipes for municipal water
systems and represented in its catalogs that all of its
pipes, valves and fittings complied with American Water
Works Association standards. AWWA standard C-800-89 requires
that all material that comes into contact with potable water
must contain 85 percent copper and 5 percent each of tin,
lead and zinc. The permissible variant for each element
is 1 percent. More zinc, more corrosion; more lead, more
contamination.
Beginning
in 1991, Jones began to use "81 metal" rather
than "85 metal" by increasing the zinc and lead
content. The trial court dismissed a California False Claims
Act cause of action against Jones after sustaining a demurrer
without leave to amend. REVERSED. City of Pomona v. Superior
Court, ___ Cal.App.4th ___, ___ Cal.Rptr.2d ___, 2001
DJDAR 5456 (2001)
The
False Claims Act establishes civil penalties and treble
damages against any person who knowingly presents a false
claim for payment or approval. Government Code §12651,
subdivision (a) (1). A governmental plaintiff may recover
three times damages plus costs and a penalty of $10,000
for each false claim.
Because
the act is designed to prevent fraud on the public treasury,
it should be given the broadest possible construction consistent
with that purpose. The act is intended to reach all types
of fraud without qualification and may be employed against
any person who knowingly assists in causing the government
to pay claims grounded in fraud. The claim itself need not
be false but need only be underpinned by fraud.
Here,
it is immaterial that the representations were made in catalogs
rather than on invoices. The very purpose of a catalog is
to generate sales. A catalog has no other reason for being.
This is true whether the catalog is disseminated directly
to potential customers or provided to distributors. Furthermore,
everyone understands that by specifying a part number or
model number, the customer incorporates into the order all
specifications represented in the catalog to apply to the
item.
When
Jones supplied 81 metal to the distributor while implying
that it was 85 metal, Jones caused the distributor to submit
to the city a false claim for payment. The invoice was false
because the city received 81 metal and not 85 metal. A writ
was issued. The trial court was directed to enter an order
overruling the demurrer.
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