Hueston Hennigan win summary judgment for Caltech in fraud lawsuit

A U.S. judge granted Caltech and three of its professors summary judgment of a lawsuit by a fourth teacher who alleged a fraud against the Department of Energy and retaliation.

U.S. District Court Judge Christina A. Snyder of the Central District granted the defense's motion Friday and found that the relator, professor Nathan S. Lewis, did not meet the False Claims Act materiality standard and did not show that Caltech had knowingly defrauded the U.S. government. The judge also granted the defense's motion for summary judgment regarding a claim that the university had retaliated against Lewis for whistle-blowing.

Lewis' attorneys said the decision will be appealed.

Joseph A. Reiter, counsel at Hueston Hennigan LLP, which represented Caltech, said, "We really appreciate the court's thorough and thoughtful order. As the court found, contrary to the relator's allegations, the Department of Energy approved and praised Caltech's actions in this case. We're thrilled to have obtained this result."

The Hueston Hennigan team included partners John C. Hueston and Moez M. Kaba and associates Montae Langston London and Karen Ding.

The relator, who sued the defendants on behalf of the U.S. government, was represented by Robert Hennig and Samuel Brown of Hennig Kramer Ruiz & Singh.

"We are disappointed with the court's ruling," said Hennig Kramer Ruiz & Singh in a statement provided by Brown on Monday. "Based on months of discovery, relator created a fulsome record of defendants' having misused and misappropriated millions in congressionally appropriated taxpayer dollars unbeknownst to the Department of Energy. Defendants sought summary judgment almost entirely on the basis that the Department of Energy continued to fund important work at Caltech after the complaint was unsealed."

"In granting the motion, the court allowed Congress' will to be circumvented based on statements by low level Department of Energy officials ... without even permitting a jury of taxpayers to weigh in as to whether Caltech and the Department of Energy were proper stewards of the public's money in this case," he said.

Brown added, "This result is unfortunately the byproduct of the defense bar's continued efforts to weaken the False Claims Act. This is of course, why we have appellate courts and we look forward to making some good law, getting a reversal, and getting this case to the jury."

Filed in 2018, the lawsuit accused the university of defrauding the Department of Energy of hundreds of millions of dollars in government funds that had been awarded to research renewable energy through the Joint Center for Artificial Photosynthesis, which Caltech has led for over 10 years. It focuses on the development of artificial solar fuels.

Lewis had formerly led the program, but was removed after a few years and replaced by professor Harry Atwater, a defendant in the case. United States of America v. Caltech et al., 2:18-CV-5964 (C.D. Cal., filed July 9, 2018).

"After Dr. Lewis' removal, he made accusations that Dr. Atwater and a few other professors who he had worked with, and Caltech in general, had been defrauding the Department of Energy out of federal funds by performing work that was not approved and steering funds to support alleged conflicts of interest that they had based on relationships with other companies," said Reiter, speaking for Caltech, in an interview Monday.

"What the evidence showed in this case is that contrary to his allegations, the Department of Energy knew of and approved all of the alleged acts that he claimed were inappropriate. That's what we proved through discovery, including our deposition of the Department of Energy," he added.

In 2019 the U.S. declined to bring an action against the school, the same year the defense filed a motion to dismiss, which was granted in part but left certain claims including materiality to the summary judgment round.

Lewis was allowed to file an amended complaint, which was soon followed by the university's motion to dismiss.