On February 1, 2022, a federal court in California issued the first major ruling in a False Claims Act case testing the Department of Justice’s newly minted Civil Cyber-Fraud Initiative, notching a win for the government. In United States ex rel. Markus v. Aerojet RocketDyne Holdings, Inc., the district court held that there was a triable issue of fact whether noncompliance with NASA and DoD cybersecurity requirements was material to the government’s decision to enter into contracts, and denied the defendant contractors’ motion for summary judgment on the relator’s FCA claim.
By way of background, in October 2021, Deputy Attorney General Lisa Monaco announced the Civil Cyber-Fraud Initiative, which was aimed at using "the False Claims Act to pursue cybersecurity-related fraud by government contractors and grant recipients." DOJ explained that it intends to use the FCA to "hold accountable" those who "put U.S. information or systems at risk by knowingly providing deficient cybersecurity products or services, knowingly misrepresenting their cybersecurity practices or protocols, or knowingly violating obligations to monitor and report cybersecurity incidents and breaches." Our past coverage of the Initiative can be found here.
Weeks after announcing the Initiative, DOJ launched its opening salvo in the Aerojet case pending in the Eastern District of California. There, a former Senior Director of Cyber Security, Compliance, and Controls at Aerojet RocketDyne Inc. and Aerojet...
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