Morsell v. Symantec Corporation, Civil Action No. 2012-0800

The Government and several States (California, Florida, New York via relator) allege Norton (f/k/a Symantec) misrepresented prices/discounts in Commercial Sales Practices (CSP) disclosures and failed to apply its Price Reduction Clause (PRC), causing overpayments on GSA MAS contracts.
CSP disclosures and the PRC were contractually incorporated into Norton’s MAS schedule pricing and were relevant to GSA’s price determinations.
On summary judgment the court denied Norton’s motions that the CSPs and PRC were immaterial under the FCA and that Norton lacked scienter; the States’ parallel claims also survived summary judgment.
Norton moved for interlocutory reconsideration under Rule 54(b), arguing the court misapplied Escobar (materiality) and Purcell (scienter) and that the States’ claims fail for the same reasons.
The court reviewed whether it failed to consider controlling precedent and concluded it had applied Escobar and Purcell; it denied reconsideration because Norton did not show a failure to consider controlling authority or any intervening change in law or new evidence.
The court explained: (1) Escobar does not require proof of actual government payment decisions to show materiality and contractual/regulatory terms may be material depending on context; (2) Purcell was considered and contemporaneous adoption of an objectively reasonable interpretation is relevant to rebut scienter; and (3) States’ claims are not separately justified for reconsideration.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Materiality (FCA)	CSP/PRC falsities are tied to GSA price-setting and thus are material; genuine factual disputes preclude summary judgment.	Escobar requires evidence the government actually would not have paid if it knew the truth; cannot rely on contractual/regulatory text alone (no per se materiality).	Denied reconsideration. Court had applied Escobar; materiality can be shown by tendency to influence government behavior without proof of actual nonpayment; record shows sufficient connection to preclude summary judgment.
Scienter (knowledge)	Evidence supports disputed facts about Norton’s contemporaneous understanding and knowledge of falsities; factual disputes preclude summary judgment.	Under Purcell, a reasonable interpretation absolves knowledge; subjective intent and timing of interpretation are irrelevant—post-hoc interpretations suffice.	Denied reconsideration. Court had applied Purcell; reasonable interpretation must be contemporaneous (post-hoc litigation positions do not automatically defeat scienter) and factual disputes remain.
States’ parallel claims	States adopt federal FCA theory; surviving federal claims sustain state claims.	If federal claims fail under Escobar/Purcell, state claims fail too; States lack separate evidence.	Denied reconsideration. Court rejected Norton’s premise that federal claims failed and Norton did not show grounds for separate reconsideration of state claims.

Universal Health Sys., Inc. v. U.S. ex rel. Escobar, 136 S. Ct. 1989 (2016) (materiality looks to likely or actual effect on recipient’s behavior; statutory/regulatory requirements not automatically dispositive)
United States ex rel. Purcell v. MWI Corp., 807 F.3d 281 (D.C. Cir. 2015) (reasonable interpretation of an ambiguous regulatory term can negate knowledge; subjective intent generally irrelevant)
United States ex rel. McBride v. Halliburton Co., 848 F.3d 1027 (D.C. Cir. 2017) (materiality analysis requires some connection between alleged falsity and government payment decisions; lack of connection defeated materiality there)
Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 (2007) (reasonableness of an interpretation bears on culpability under statutory schemes)
Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923 (2016) (culpability is measured by the actor’s knowledge at the time of the challenged conduct)
Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary judgment standard and burdens of production)
Anderson v. Liberty Lobby, 477 U.S. 242 (1986) (definition of genuine dispute of material fact for summary judgment)