Case Information
*1 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ______________________________
)
UNITED STATES OF AMERICA, )
)
Plaintiff, )
) v. ) Civil Action No. 04-1543 (RWR) )
SCIENCE APPLICATIONS )
INTERNATIONAL CORPORATION, )
)
Defendant. )
______________________________)
MEMORANDUM OPINION AND ORDER
Thе United States brought this suit against Science Applications International Corporation (“SAIC”) under the False Claims Act (“FCA”), 31 U.S.C. § 3729, and District of Columbia common law, alleging that SAIC failed to make disclosures of organizational conflicts of interest (“OCIs”) as was required under two contracts that SAIC entered into with the Nuclear Regulatory Commission (“NRC”) in 1992 and 1999. After a jury found SAIC liable on the FCA and breach of contract claims and SAIC’s motion for judgment as a matter of law or, alternatively, for a new trial was denied, SAIC appealed. The D.C. Circuit affirmed the denial of SAIC’s motion for judgment as a matter of law and the denial of SAIC’s motion for a new trial on the breach of contract claim. However, the D.C. Circuit vacated the judgment on FCA liability and damages and remanded the case for further proceedings. SAIC now moves for summary judgment regarding the FCA knowledge element and damages and the government moves for partial summary judgment regarding the FCA falsity element. Because there are genuine disputes of material fact regarding the FCA scienter and falsity elements and damages, the parties’ motions will be denied.
BACKGROUND
The relevant facts were set out in United States v. Science
Applications International Corp. (SAIC II),
The NRC is an independent federal agency established to regulate the civil use of nuclear materials. The NRC creates scientific standards for allowing radioactive materials with low levels of contamination to be released to the private sector for recycling and reuse. In 1992 and 1999, the NRC contracted with SAIC to provide technical assistance related to this effort. Under the 1992 contract, SAIC was to provide the NRC with technical assistance related to the recycling and reuse of radioactive material and was to present an options paper outlining the possible approaches to rulemaking for the release of these materials. The goal of the 1999 contract was to assess regulatory alternatives regarding the release of reusable materials. SAIC’s neutrality was critical under both contracts.
SAIC promised in both contracts to forego entering into any consulting or other contractual arrangements with any organization that could create a conflict of interest. The purpose of this clause was to avoid OCIs that were, among others, financial, organizational, or contractual. SAIC warranted upon entering both contracts that it had no OCIs as that term is defined in 41 C.F.R. § 20–1.5402(a). The regulation defined an OCI as “a relationship . . . whereby a contractor or prospective contractor has present or planned interests related to the work to be performed under an NRC contract which: (1) may diminish its capacity to give impartial, technically sound, objective assistance and advice or may otherwise result in a biased work product, or (2) may result in its being given an unfair competitive advantage.” 41 C.F.R. § 20–1.5402(a) (1979). [1] SAIC further promised in both contracts to disclose any OCIs it discovered after entering the contract. SAIC repeatedly certified throughout the periods its contracts were in force that it had no OCIs and would notify the NRC of any changes resulting in an OCI.
SAIC II,
The government contends “that SAIC breached its OCI obligations under the 1992 and 1999 contracts by engaging in relationships with organizations that created an appearance of bias in the technical assistance and support it provided the NRC.” Id. at 93. Specifically, the government alleges that SAIC had five actual or potential OCIs that SAIC did not disclose to the NRC as required under the 1992 and 1999 contracts. First, the government argues that SAIC’s relationship with British Nuclear Fuels, Ltd. (“BNFL”) created an OCI. The Department of Energy (“DOE”) contracted with BNFL in 1997 to “decommission and decontaminate buildings at a [DOE] site in Oak Ridge, Tennessee.” United States v. Sci. Applications Int’l Corp. (SAIC III), 626 F.3d 1257, 1263 (D.C. Cir. 2010). BNFL “engaged SAIC to serve as a subcontractor” on the project. Id. “[T]he government argued that SAIC’s relationship with British Nuclear created a potential conflict because the project involved the recycling and release of radioactive materials that would become subject to NRC competitive advantage for the offeror or contractor.
See 48 C.F.R. [§] 2009.570–3(b)(1). regulation after leaving the DOE facility and entering into interstate commerce.” Id.
Second, in 1999, SAIC performed consulting work for Bechtel Jacobs Corporation (“BJC”).
SAIC helped Bechtel Jacobs with a dose assessment and performed a cost-benefit analysis regarding the recycling of radioactively contaminated materials from the site. Thе government contended that SAIC’s work for Bechtel Jacobs closely overlapped with the company’s work for the NRC, as illustrated most starkly by the allegation that a company employee copied material from a report prepared for the NRC and pasted it into one for Bechtel Jacobs.
Id.
Third, “SAIC pursued potential radioactive metal recycling opportunities” with Alaron Corporation. SAIC II, 653 F. Supp. 2d at 100. The government alleges that Alaron was “both licensed and regulated by the NRC” and that SAIC’s proposed work with Alaron was “in technical areas that were very similar if not identical to the advice that SAIC gave to the NRC.” United States v. Sci. Applications Int’l Corp. (SAIC I), 555 F. Supp. 2d 40, 54 (D.D.C. 2008) (internal quotation marks omitted).
Fourth, SAIC’s Vice President Gerald Motl served “as an
officer and board member of the Association of Radioactive Metal
Recyclers (ARMR), a trade association that advocated for national
regulatory standards governing the reuse and recycling of
radioactive materials.” SAIC III,
Fifth, in 1990, SAIC began developing the Plasma Hearth Process (“PHP”), “an experimental plasma treatment technology for high-temperature treatment of radioactive waste.” Pl. U.S.’s Mot. for Partial Summ. J. (“U.S. Mot. (Falsity)”), Pl. U.S.’s Stmt. of Undisputed Material Facts in Supp. of U.S.’s Mot. for Partial Summ. J. (“U.S. Stmt. (Falsity)”) ¶ 78. The government alleges that “[t]he goal for the technology was to treat radioactive wastе in such a way that a large portion of it could be released or recycled into general commerce.” Id. It further alleges that, if used, the PHP would be regulated by the NRC and thus created an OCI with SAIC’s work for the NRC. See U.S. Mot. (Falsity), U.S.’s Mem. of P. & A. in Supp. of its Mot. for Partial Summ. J. (“U.S. Mem. (Falsity)”) at 14.
The government filed a five-count amended complaint against SAIC. Count One charged that SAIC knowingly presented, or caused to be presented, to the NRC false or fraudulent claims for payment or approval in violation of the FCA, 31 U.S.C.
§ 3729(a)(1). Am. Compl. ¶¶ 103-05. Count Two alleged that SAIC knowingly made, or caused to be made or used false records and statements for the purpose of getting the NRC to pay SAIC’s false and fraudulent vouchers in violation of the FCA, 31 U.S.C. § 3729(a)(2). [2] Am. Compl. ¶¶ 106-08. Counts Three and Four alleged quasi-contract theories. Id. ¶¶ 109-13. Count Five alleged that SAIC breached its 1992 contract by failing to disclose its OCIs as required under the contract. Id. ¶¶ 114-16.
Judgment was entered in favor of SAIC on Counts Three and Four of the amended complaint pretrial, SAIC I, 555 F. Supp. 2d at 60, and a jury trial was held on Counts One, Two, and Five.
The jury found SAIC liable under § 3729(a)(1) and (a)(2) and liable for breach of its 1992 contract with the NRC. Specifically, the jury found that SAIC knowingly presented or caused to be presented sixty false or fraudulent claims for payment or approval by the government, causing the government to pay to SAIC $1,973,839.61 over and above what the government would have paid had SAIC presented truthful claims. The jury also found that SAIC knowingly made, used, or caused to be made or used seventeen false records or statements to get a false or fraudulent claim paid or approved by the United States government, causing the government to pay to SAIC $1,973,839.61 on the false or fraudulent claims over and above what the government would have paid had SAIC made truthful statements. In addition, the jury found that there was a contract between the United States and SAIC and that SAIC breached the contract by failing to fully perform a duty under the contract without legal excuse and awarded the United States monetary damages of $78 for the breach. Judgment was entered in favor of the United States against SAIC in the amount of $5,921,518.83 in damages for the FCA claims, $577,500 in civil penalties for the FCA claims, and $78 in damages for the contract claim, for a total of $6,499,096.83.
SAIC II,
After trial, SAIC moved for judgment as a matter of law
under Federal Rule of Civil Procedure 50(b) or, in the
alternative, for a new trial under Federal Rule of Civil
Procedure 59(a). SAIC’s motion was denied, SAIC II, 653 F. Supp.
2d at 112, and SAIC appealed “seeking judgment as a matter of law
with respect to liability on all causes of action and with
respect to FCA damages.” SAIC III,
On appeal, the D.C. Circuit
affirm[ed] the district court’s denial of SAIC’s motion for judgment as a matter of law, as well as its judgment as to both liability and damages on the government’s claim for breach of contract. With respect to the judgment as to liability and damages under FCA sections 3729(a)(1) and 3729(a)(2), [the court] vacate[d] and remand[ed] for further proceedings consistent with [its] opiniоn.
Id. at 1280.
On remand, SAIC now moves for summary judgment arguing that the government cannot establish that SAIC is liable under the FCA because there are insufficient facts for a jury to find that SAIC “knowingly” failed to disclose its alleged OCIs to the NRC. SAIC also moves for partial summary judgment on FCA damages. The government moves for partial summary judgment that SAIC’s claims and statements were false.
DISCUSSION
Summary judgment may be granted when “the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ.
P. 56(a); see also Moore v. Hartman,
“A party asserting that a fact cannot be or is genuinely
disputed must support the assertion by . . . citing to particular
parts of materials in the record, including depositions,
documents, electronically stored information, affidavits or
declarations, stipulations, . . . admissions, interrogatory
answers, or other materials[.]” Fed. R. Civ. P. 56(c). The
movant may also rely on sworn testimony given in an earlier
judicial proceeding. See Langston v. Johnson,
To survive a motion for summary judgment, the nonmoving
party “must provide evidence showing that therе is a triable
issue as to an element essential to that party’s claim.”
Arrington v. United States,
The law of the case “‘doctrine posits that when a court
decides upon a rule of law, that decision should continue to
govern the same issues in subsequent stages in the same case.’”
Pepper v. United States,
Under the FCA, a person who
(1) knowingly presents, or causes to be presented, to an officer or employee of the United States Government . . . a false or fraudulent claim for payment or approval; [or]
(2) knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government; . . .
is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government sustains because of the act of that person[.]
31 U.S.C. § 3729(a) (2008). “‘The three elements of FCA
liability [under § 3729(a)(1)] are that (1) defendant submitted a
claim to the government; (2) which was false; and (3) which the
defendant knew was false.’” SAIC I,
I. FCA LIABILITY
There are several types of false claims under the FCA.
Here, the government argues that SAIC’s claims and statements
were false under the “implied certification theory.” Id. at
1266. “Under this theory, a claim for payment is false when it
rests on a false representation of compliance with an applicable
federal statute, federal regulation, or contractual term.” Id.;
see also SAIC I,
A. Scienter
To be liable under the FCA, a defendant must have presented a false claim or made a false statement knowingly, meaning that the defendant had “actual knowledge of the information” or “act[ed] in deliberate ignorance [or reckless disregard] of the truth or falsity of the information.” 31 U.S.C. § 3729(b) (2008); see also United States v. TDC Mgmt. Corp., Inc., 24 F.3d 292, 297-98 (D.C. Cir. 1994) (еxplaining that a defendant subject to liability under the FCA must have “‘actual knowledge’ of the falsity of their claims or acted with ‘deliberate ignorance’ or ‘reckless disregard’ of the truth or falsity of their claims” (quoting 31 U.S.C. § 3729(b)). Thus, a defendant is liable if it had actual knowledge or if it had constructive knowledge of the falsity of its claims or statements. See S. Rep. No. 99-345, at 7, 14-15 (1986), reprinted in 1986 U.S.C.C.A.N. 5266, 5272.
Under the implied certification theory, the plaintiff must
establish that “the defendant knows (1) that it violated a
contractual obligation, and (2) that its compliance with that
obligation was material to the government’s decision to pay.”
See SAIC III,
1.
D.C. Circuit’s consideration of SAIC’s scienter
SAIC argues that it is entitled to summary judgment on
Counts One and Two of the amended complaint because a reasonable
jury could not find that SAIC knowingly submitted false claims
and made false statements. The government asserts that “the D.C.
Circuit has already considered, and rejected SAIC’s argument, and
has explicitly held that record evidence supports a finding that
individual SAIC employees acted with knowledge.” U.S.’s Mem. in
Opp’n to Def. SAIC’s Mot. for Summ. J. on FCA Liability (“U.S.
Opp’n (FCA Liability)”) at 21. The government makes several
arguments to support its assertion. First, the government quotes
the D.C. Circuit’s language that “record evidence is sufficient
to have allowed the jury to reasonably believe that SAIC
knowingly submitted false claims for payment and made false
Mot. for Summ. J. on FCA Liability at 33. However, the D.C.
Circuit made clear that the materiality element of the scienter
requirement in this case requires that an SAIC employee knеw that
the contractual obligation was “material to the government’s
decision to pay
.” SAIC III ,
statements of compliance with the organizational conflict of
interest requirements set forth in its NRC contracts.” SAIC III,
Second, the government contends that the D.C. Circuit “explicitly considered and rejected SAIC’s argument,” U.S. Opp’n (FCA Liability) at 22, when the D.C. Circuit stated:
We agree that the jury, relying entirely on evidence of actual knowledge possessed by individual company employees, could have found that SAIC knowingly submitted false claims and made false statements. Alternatively, relying on evidence regarding the actions of employees or SAIC’s systems and structure, the jury could also have concluded that the company acted recklessly or with deliberate ignorance of the truth.
SAIC III,
Moreover, the import and meaning of that language is оpen to
interpretation. Immediately after that language, the court
commented that “record evidence suggests that some employees who
knew about SAIC’s organizational conflict of interest obligations
to the NRC were also aware of the company’s business
relationships with British Nuclear, MSC, and Bechtel Jacobs.”
SAIC III,
2. Actual knowledge
a. D.C. Circuit’s standard SAIC argues that under the implied certification theory, to prove that SAIC had actual knowledge of a false claim or statement, the government must show that at least one individual SAIC employee knew both that SAIC had an OCI and that SAIC’s conflict of interest obligations were material. See Def. SAIC’s Mot. for Summ. J. on FCA Liability (“SAIC Mot. (FCA Liability)”), Mem. of P. & A. in Supp. of Def. SAIC’s Mot. for Summ. J. on FCA Liability (“SAIC Mem. (FCA Liability)”) at 14-15. The government counters that it can meet its burden by showing that one SAIC employee knew that SAIC had an OCI and a different SAIC employee knew that the conflict of interest obligations were material. See U.S. Opp’n (FCA Liability) at 27-31.
The D.C. Circuit did not expressly address this issue on appeal. However, in rejecting the “collective knowledge” jury instruction, it explained that, to establish a corporation’s scienter under the implied certification theory, the FCA plaintiff must show that an individual employee knew both that the corporation was noncompliant with its contractual obligations and that the obligations were material. At trial, the jury was instructed that SAIC is
liable for the collective knowledge of all employees and agents within the corporation so long as those individuals obtained their knowledge acting on behalf of the corporation.
Therefore, if a corporation has many employees or agents, you must consider the knowledge possessed by those employees and agents as if it was added together and combined into one collective pool of information. If that collective pool of information here gives a reasonably complete picture of false or fraudulent statements or claims -- false or fraudulent claims or false statements, you may find that SAIC itself possessed a reasonably complete picture of the false or fraudulent claims or false statements and acted knоwingly.
Final Jury Instructions, 7/28 a.m. Tr. at 17:1-14.
On appeal, the D.C. Circuit held that the “collective
knowledge” instruction “provides an inappropriate basis for proof
of scienter because it . . . is inconsistent with the Act’s
language, structure, and purpose.” SAIC III,
to capture the “‘ostrich-like’ conduct which can occur in large corporations” where “corporate officers insulate themselves from knowledge of false claims submitted by lower-level subordinates” . . . [without] “punishing honest mistakes or incorrect claims submitted through mere negligence” or imposing “a burdensome obligation” on government contractors rather than a “limited duty to inquire.” The resulting statutory language demonstrates the care Congress took to balance competing objectives. Although Congress defined “knowingly” to include some forms of constructive knowledge, its definition of that term imposes liability for mistakenly false claims only when the defendant deliberately avoided learning the truth or engaged in aggravated gross negligence.
SAIC III,
[l]ack[s] such balance and precision . . . and allows
“a plaintiff to prove scienter by piecing together
scraps of ‘innocent’ knowledge held by various
corporate officials, even if those officials never had
contact with each other or knew what others were doing
in connection with a claim seeking government funds.”
Id. (quoting United States ex rel. Harrison v. Westinghouse
Savannah River Co.,
Like its view of the collective knowledge instruction, the
government’s interpretation of the scienter requirement lacks the
balance that Congress intended to establish in defining knowing
and knowingly. The government’s scienter requirement would allow
it to prove that SAIC knowingly submitted false claims and made
false statements by piecing together “innocent” knowledge. For
example, the government could show that SAIC had the requisite
scienter by showing that one employee knew that SAIC was
noncompliant with the NRC contracts because SAIC had OCIs and
that another employee knew the conflict of interest obligations
were material. To establish scienter, the government would not
have to show that the employees ever spoke to each other, were
aware of what each other knew, or recklessly disregarded the
truth or falsity of their claims or statements. However, the
D.C. Circuit made clear that this kind of “constructive
knowledge” should be the basis for liability only where a
corporation’s structure or processes prevented an employee from
learning what the other knew. See SAIC III,
Under the implied certification theory, a claim is false if
“the contractor withheld information about its noncompliance with
material contractual requirements.” Id. at 1269. Thus, the
government must prove either that the same employee knew of the
noncompliance with a contractual obligation
and
knew that the
obligation was material, or that SAIC deliberately ignored or
recklessly disregarded the truth. See United States v. Fadul,
No. DKC 11-0385,
The government counters that the evidence shows that
multiple SAIC employees knew both that SAIC had OCIs that
government.
violated the NRC contracts and that SAIC’s conflict of interest obligations were material to the government’s decision to pay SAIC’s claims. Specifically, the government argues that five SAIC employees knew bоth that SAIC had an OCI and that SAIC’s OCI obligations were material.
First, the government argues that SAIC employee Steve Turner knew that SAIC’s claims were false. There is sufficient evidence in the record to create a triable question of whether Turner was aware that the BNFL Oak Ridge project could create an OCI with the work being done for the NRC under the 1992 and 1999 contracts. See, e.g., Turner Test., 7/7 p.m. Tr. 87:22-90:25 (testifying that the Oak Ridge project would involve recycling metal from commercial nuclear power plants); Turner Test., 7/8 a.m. Tr. 61:18-62:16 (suggesting that he may have known that the NRC was working on developing rules regarding recycling radioactive materials); Murray Test., 7/2 p.m. Tr. 75:11-25, 76:18-21, 92:1-6, 109:21-110:2 (testifying that Murray told Turner that the Oak Ridge project may create an OCI with the NRC project). However, the government has not identified evidence that shows that Turner was aware that SAIC had conflict of interest obligations under the NRC contracts and thus, that SAIC was noncompliant with the 1992 and 1999 contracts. Similarly, although Turner testified that both he and SAIC “take [OCIs] very seriously,” Turner Test., 7/8 p.m. Tr. 109:1-3, the government has not shown that Turner knew that the conflict of interest obligations were material to the government’s decision to pay the claims submitted under the 1992 and 1999 contracts. Therefore, the government has not provided evidence that shows that there is a triable issue as to whether Turner knew that SAIC’s claims and statements were false.
Second, the government argues that Murray knew that SAIC had an OCI with its work for the NRC and that its conflict of interest obligations were material. There is evidence that Murray knew that SAIC’s work with BNFL on thе Oak Ridge Project created an OCI. See, e.g., Murray Test., 7/2 p.m. Tr. 75:11-25 (testifying that he knew that there were some “overlaps” between SAIC’s work with BNFL and the NRC); Murray Test., 7/3 a.m. Tr. 11:25-12:4 (testifying that he was “concerned that there was a potential for conflict of interest for work related to the Oak Ridge projects, . . . and the work on the NRC contract on metal recycle”). However, the government has not cited any evidence that shows that Murray knew that the NRC contracts contained conflict of interest obligations or that the obligations were material. Thus, the government has not made a showing sufficient to establish that Murray knew that SAIC’s claims and statements were false.
Third, the government alleges that McKenzie-Carter knew that SAIC’s claims and statements were false. McKenzie-Carter was an SAIC scientist who “helped prepare SAIC’s technical proposal for the 1992 Contract and worked on both the 1992 and 1999 Contracts.” SAIC Mot. (FCA Liability), Def. SAIC’s Stmt. of Undisputed Material Facts in Supp. of its Mot. for Summ. J. on FCA Liability ¶ 42. In this capacity, he was familiar with the scope of the work to be performed under the NRC contracts including that SAIC’s work could affect potential rulemaking. McKenzie-Carter Test., 7/17 p.m. Tr. 41:14-42:10. In his deposition, McKenzie-Carter testified that he was “somewhat familiar” with the OCI regulations that applied to the 1992 and 1999 contracts. U.S. Opp’n (FCA Liability), Ex. 35 (“McKenzie- Carter Dep.”) at 105:19-106:2. At trial, McKenzie-Carter also confirmed that he understood that the NRC wanted a product that could be “trusted” and that “one of the ways that NRC seeks to make sure that its contrаctors’ assistance can be trusted is organizational conflict of interest avoidance.” McKenzie-Carter Test., 7/17 p.m. Tr. 45:25-46:21. Thus, a jury could find that McKenzie-Carter knew that the conflict of interest obligations in the NRC contracts were material.
McKenzie-Carter testified that, in late 1999, another SAIC employee informed him about the work that employee was doing on the BNFL Oak Ridge Project. See McKenzie-Carter Test., 7/17 p.m. Tr. 77:12-18. In his deposition, McKenzie-Carter stated that he knew about the BJC project and had considered whether it created an OCI with SAIC’s work for the NRC. See McKenzie-Carter Dep. at 91:20-92:20, 93:11-12. Although McKenzie-Carter testified that he ultimately concluded that there was no OCI, a jury could disbelieve his testimony in light of McKenzie-Carter’s knowledge of the substantial overlap between the work being done for the BJC project and the work being done under the NRC contracts. See id. at 93:13-94:17. Thus, the record could support a finding that McKenzie-Carter knew that the BNFL Oak Ridge project and the BJC project created OCIs with the NRC work. The government also asserts that McKenzie-Carter either knew or recklessly disregarded Motl’s role on the board of the ARMR. See U.S.’s Resp. Stmt. of Genuine Issues & Material Facts in Supp. of its Mem. in Opp’n to SAIC’s Mot. for Summ. J. on FCA Liability (“U.S. Resp. Stmt. (FCA Liability)”) ¶ 200. Specifically, the government argues that unlike other versions of Motl’s resume, the one submitted with the NRC contract omitted Motl’s service with the ARMR. See id. ¶ 198. However, the United States failed to provide any evidence that McKenzie-Carter was responsible for selеcting Motl to work on the 1999 contract or that McKenzie- Carter knew or was responsible for omitting the ARMR board position from the version of Motl’s resume submitted to the NRC with the 1999 Contract. Accordingly, the government has shown that whether McKenzie-Carter knew that SAIC’s claims and statements were false in 1999 is a triable issue.
Fourth, the government argues that SAIC employee Jeffery Slack knew that SAIC’s claims were false. The government has provided sufficient evidence to establish that Slack knew that the Oak Ridge Project with BNFL created an OCI with the NRC contracts. Slack testified that he worked on the BNFL Oak Ridge project and on the BJC project. Slack Test., 7/9 a.m. Tr. 84:24- 85:11, 112:14-23. He further stated that his work for BJC included recycling radioactive materials. Id. at 100:1-101:19. Slack admitted that he was aware of the work that SAIC was doing under the NRC contracts and that he knew that the work included recycling contaminated metals. See id. at 104:13-105:17. However, the government has not demonstrated that Slack knew of SAIC’s conflict of interest obligations under the NRC contracts or that Slack knew that those obligations were material to the government’s decision to pay. Thus, the government has not provided evidence that shows that there is a triable issue as to whether Slack knew that SAIC’s claims and statements were false.
Finally, the government asserts that Rucker “understood that SAIC was required to avoid and disclose potential organizational conflicts of interest to its customers, including the NRC.” U.S. Resp. Stmt. (FCA Liability) ¶ 149. However, the government has provided no evidence to support this assertion. [6] Moreover, even if Rucker did testify that he knew that SAIC was required to avoid potential OCIs, the government has not cited any evidence that Rucker knew of SAIC’s obligations under the 1992 and 1999 contracts or that they were material to the NRC’s decision to pay SAIC’s claims. Therefore, the government has not made a showing sufficient to establish that Rucker knew that SAIC’s claims and statements were false.
In its Responsive Statement of Genuine Issues and Material Facts in Support of its Memorandum in Opposition to SAIC’s Motion for Summary Judgment on False Claims Act Liability, the government also argues that SAIC employees Richard Profant, Gerald Truitt, Christopher Caldwell, Motl, Gary Leatherman, and Milo Larsen knew that the NRC contracts contained an OCI provision and that the OCI provision was material. See U.S. Resp. Stmt. (FCA Liability) ¶¶ 154-55, 161-62, 184-95, 201-10. [7] SAIC. U.S. Opp’n (FCA Liability), Ex. 27 (Rucker Dep. at 246:21- 247:1). However, he did not testify about the knowledge he gained from that training. Similarly, the cited portions of Rucker’s trial testimony are silent as to whether Rucker knew that SAIC had an obligation to avoid and disclose potential OCIs. See Rucker Test., 7/10 a.m. Tr. 106:8-108:15 (testifying that he did not think that “it was a potential conflict of interest if SAIC was preparing or furnishing advice to a government agency in a technical area where it was also providing consulting assistance to any other organization”).
[7] The government buried these arguments in its 101-page Responsive Statement, hardly the “concise” statement contemplated by Local Civil Rule 7(h)(1). Its legal arguments and conclusions belonged in its memorandum of points and authorities in opposition, which cannot exceed 45 pages. LCvR 7(a)-(b), (e). However, the government’s arguments in its Responsive Statement are insufficient to create a triable issue as to whether SAIC had actual knowledge of its allegedly false claims.
The government asserts that a jury could reasonably infer that SAIC employee Dr. Reginald Gotchy knew that SAIC had OCI obligations under the 1992 contract and that they were material. See id. ¶ 153. While Gotchy’s status as SAIC’s Project Manager for the 1992 contract is sufficient evidence to create a genuine dispute of material fact about whether Gotchy knew that the 1992 contract imposed conflict of interest obligations on SAIC, without more, this evidence is insufficient for a reasonable jury to conclude that Gotchy knew that the obligations were material to the NRC’s decision to pay.
The government argues that SAIC employee Betty Bidwell knew that SAIC’s claims to the NRC were false. See id. ¶¶ 176-80. During her deposition, Bidwell agreed that it was her “understanding that contractors with the NRC, contractors like SAIC, have an obligation to disclose to the NRC information describing relations which may give rise to an actual or potential conflict of interest.” U.S. Opp’n (FCA Liability), Ex. 31 (Bidwell Dep. at 129:22-130:4). She also testified that contractors must “disclose relevant information in accordance with whatever the [request for proposal] states if there’s a potential OCI for [a relationship] to be an actual conflict.” Id. at 130:7-11. However, the government did not provide аny evidence to establish that Bidwell knew that the NRC contracts included such an obligation or that if it did, that the obligation was material. Thus, the government has not provided evidence that shows that there is a triable issue as to whether Bidwell knew that SAIC was noncompliant with the NRC contracts and that the OCI obligations were material.
Thus, evidence in the record could support a finding that in 1999, McKenzie-Carter knew that SAIC was noncompliant with its OCI obligations and that SAIC’s conflict of interest obligations were material to the government’s decision to pay the NRC contract. The government has not made a showing sufficient to establish that any other individual SAIC employee had actual knowledge that SAIC’s claims and statements were false.
3. Reckless disregard or deliberate ignorance SAIC argues that there is insufficient evidence to show that SAIC recklessly disregarded or deliberately ignored the truth or falsity of its claims submitted to the NRC. See SAIC Mem. (FCA Liability) at 30-42. The government counters that as was determined in SAIC II, there is sufficient evidence for a reasonable jury to find that SAIC’s OCI compliance system prevented SAIC from determining the truth or falsity of its claims or statements. U.S. Opp’n (FCA Liability) at 35-38. SAIC retorts that the government cannot rely on the holding in SAIC II because in SAIC III, the D.C. Circuit changed the reckless disregard and deliberate ignorance standards. See Reply Mem. in Supp. of Def. SAIC’s Mot. for Summ. J. on FCA Liability at 17 n.3 (arguing that the D.C. Circuit’s “statements about the scienter requirement (including its rejection of the Government’s collective knowledge theory) apply with equal force” to the three FCA knowledge standards).
In finally rejecting the collective knowledge theory, the
D.C. Circuit limited the theories an FCA plaintiff can use to
prove that a defendant had constructive knowledge that its claims
or statements were false.
[8]
However, the court agreed that an FCA
plaintiff can still establish that a defendant acted knowingly by
demonstrating that a corporate defendant’s structures or
processes were such that the defendant could not learn that its
claims and statements were false. See SAIC III,
In SAIC II, SAIC argued that “the evidence at trial was
legally insufficient to support a jury finding of knowledge under
a reckless disregard or deliberate ignorance theory because the
evidence shows that SAIC made diligent inquiry to ensure
compliance with its OCI obligations.”
While SAIC maintains that its OCI compliance system was both reasonable and effective, and that it made a diligent inquiry to ensure compliance, there was also testimony provided by at least two witnesses, Sandra Carder and Betty Bidwell, who testified that SAIC’s OCI compliance system was inadequate in certain important respects, including by failing to incorporate some of SAIC’s business relationships, by containing incomplete descriptions of SAIC’s work, and by failing to associate relevant key words with certain descriptions. (Carder Test., 7/22 a.m. Tr. 66:18–69:11, 78:13–21; Bidwell Test., 7/16 a.m. Tr. 76:14–77:9.) Similarly, witness John Pierce Martin testified that he made representations to the government about SAIC’s OCIs without having seen documents the jury could have deemed relevant to their assessment of SAIC’s OCIs. (See Martin Test., 7/14 p.m. Tr. 18–40.) Accordingly, there was sufficient evidence to support a jury’s finding that SAIC acted with reckless disregard or deliberate ignorance.
Id. Thus, it has already been determined that there is sufficient evidence for a jury to find that SAIC’s compliance system did not allow SAIC to determine the truth or falsity of its claims or statements. [9] Because there is sufficient evidence that SAIC knew that its claims and statements were false, SAIC’s motion for summary judgment will be denied.
B. False claims and statements
The government moves for partial summary judgment that SAIC’s claims and statements were false.
“[T]o establish the existence of a ‘false or fraudulent’
claim on the basis of implied certification of a contractual
condition, the FCA plaintiff -- here the government -- must show
that the contractor withheld information about its noncompliance
with material contractual requirements.” SAIC III,
The government argues that the jury’s verdict that SAIC
violated the FCA bars SAIC from relitigating that SAIC breached
its conflict of interest obligations and that SAIC failed to
disclose its noncomрliance with the NRC. See U.S. Mem. (Falsity)
at 20-22. The government asserts it is the law of the case that
SAIC submitted false claims and made false statements to the NRC.
Id. On remand, the D.C. Circuit vacated “the judgment as to
judgment ‘mirrors’ the standard for judgment as a matter of law,
such that ‘the inquiry under each is the same.’” Reeves v.
Sanderson Plumbing Prods., Inc.,
The government also argues that the undisputed evidence shows that all five of SAIC’s challenged business relationships -- SAIC’s relationships with BNFL, BJC, ARMR, and Alaron, and its financial interest in the PHP -- violated SAIC’s conflict of interest obligations. See U.S. Mem. (Falsity) at 26; see also U.S. Reply in Supp. of its Mot. for Partial Summ. J. (“U.S. Reply (Falsity)”) at 23 n.18. In addition, the government argues that it is undisputed that SAIC did not disclose any of these relationships to the NRC. U.S. Mem. (Falsity) at 26.
1. Contractor provides work to an organization regulated by the NRC in the same area or on the same matter as the contractor’s work for the NRC The 1992 and 1999 contracts required SAIC to certify that the NRC contracts did not result in any of the following situations or relationships:
(i) Where the . . . contractor provides advice and recommendations to the NRC in the same technical area where it is also providing consulting assistance to any organization regulated by the NRC.
(ii) Where the . . . contractor provides advice to the NRC on the same or similar matter on which it is also providing assistance to any organization regulated by the NRC.
48 C.F.R. § 2009.570-3(b)(1); see also SAIC III,
First, the government has shown that there is evidence in
the record that BNFL was regulated by the NRC. See SAIC II, 653
F. Supp. 2d at 100. SAIC counters that there is evidence that
SAIC’s work with BNFL was not regulated by the NRC. See, e.g.,
Turner Test., 7/8 p.m. Tr. at 104:13-23. However, SAIC does not
dispute the government’s broader claim that BNFL is an
organization regulated by the NRC. Thus, the government’s
assertion that BNFL was a NRC licensee during the relevant period
is conceded. See Fed. R. Civ. P. 56(e)(2) (allowing court to
consider as undisputed a movant’s factual assertion that the
opponent fails to address); Iweala v. Operational Techs. Servs.,
Inc.,
Second, the government argues that ARMR included a number of NRC licensees. See Loiselle Test., 7/7 a.m. Tr. at 56:12-15. The government further argues that as a member of the board of directors for ARMR, Motl advised and assisted ARMR on the same proposed rule with which SAIC was assisting the NRC. See id. at 106:2-109:8. However, SAIC provides evidence that SAIC was never a member of ARMR. See Loiselle Test., 7/7 p.m. Tr. at 38:1-5. Thus, a reasonable jury could find that SAIC was not a member of ARMR and that Motl’s individual role on the board of directors was insufficient to create an actual or potential OCI.
Third, at trial, there was evidence that Alaron had an NRC-
regulated facility. See SAIC II,
Fourth, the government asserts that based on SAIC’s concept of the PHP, the рroject could have involved materials regulated by the NRC including radioactive waste. See Larsen Test., 7/10 a.m. Tr. at 32:2-14; 11:2-10. SAIC counters that the PHP never came to fruition. See id. at 57:15-23. As such, it contends that any plans to seek an NRC license are irrelevant because the concept was never regulated by the NRC. There is also evidence that the majority of the PHP work was “designed specifically for DOE’s [waste].” Leatherman Test., 7/16 a.m. Tr. at 42:12-21. Based on the evidence in the record, a reasonable jury could find that the PHP was not regulated by the NRC and that the SAIC’s proposed work with the PHP was not in the same area or on the same matter as SAIC’s work for the NRC.
2. Potential bias Under the 1992 and 1999 contracts, SAIC affirmed numerous times that it did not have any OCIs and agreed to promptly disclose any OCIs that arose after SAIC entered into the contracts. The contracts adopted the then-NRC regulations’ definition of an OCI. The regulations defined an OCI as:
“a relationship . . . whereby a contractor or prospective contractor has present or planned interests related to the work to be performed under an NRC contract which: (1) May diminish its capacity to give impartial, technically sound, objective assistance and advice or may otherwise result in a biased work product, or (2) may result in its being given an unfair advantage.”
SAIC III,
There is evidence that SAIC’s work with BNFL did not result in biased work for the NRC. Caldwell denied that SAIC had “any responsibility to release metals from” from BNFL’s facility. Caldwell Test., 7/9 p.m. Tr. at 114:7-9. He further testified that SAIC did not have a financial interest in the release or recycle from the BNFL facility. Id. at 114:10-115:2. Because SAIC was not obligated to release metals and did not have a financial interest in any release or recycle from the BNFL facility, a reasonable jury could find that SAIC’s work with BNFL did not result in biased work for the NRC.
There is also evidence that SAIC’s work with BJC did not result in biased work for the NRC. At trial, the government introduced testimony and other evidence that SAIC’s work for both BJC and the NRC included dose assessment and cost-benefit analyses of proposed recycle options. See SAIC II, 653 F. Supp. 2d at 101. “On the evidence presented at trial regarding the similarities between the work performed for the NRC and for the BJC Dose Assessment project, [a] jury could . . . reasonably conclude[] that the BJC project may have created an actual or potential OCI.” Id. However, a reasonable jury could also reach the opposite conclusion and find that SAIC’s work for the NRC was not biased despite the similarities. For example, Slack testified that the DOE limits on the release of materials applied to the BJC project. See Slack Test., 7/9 p.m. Tr. at 26:22. However, because the NRC and the DOE placed the same limits on release, in an early report prepared for BJC, SAIC stated that the assessments in the report complied with both DOE and the NRC limits for release. See id. at 26:13-27:12. Thus, a reasonable jury could find that the similarities between the work SAIC was doing for BJC and the NRC reflected common industry practices and mirrored similarities between the NRC’s and the DOE’s regulations and a finding that the similarities indicate bias overstate their significance.
SAIC has shown that whether its relationship with ARMR
created a potential to produce biased work for the NRC is
disputed. Although there is evidence that “Motl’s involvement
with the [ARMR] placed SAIC in a conflicting role where it may
have been biased,” SAIC II,
As is discussed above, SAIC’s work with Alaron and PHP never progressed beyond conceptual, planning stages. Because SAIC never engaged in work with Alaron or employed thе PHP concept, a reasonable jury could find that these projects did not create OCIs because they did not create a potential to produce bias in SAIC’s work for the NRC.
3.
Materiality of conflict of interest obligations
The government argues that there is no genuine dispute of
material fact that SAIC’s conflict of interest obligations were
material. See U.S. Reply (Falsity) at 23 n.18; see also U.S.
Mem. (Falsity) at 29-31. At trial, “[n]umerous witness[es] from
both the NRC and SAIC testified that the OCI obligations in
SAIC’s contracts with the NRC were important to the overall
purpose of the contract.” SAIC II,
Because SAIC has provided sufficient evidence for a reasonable jury to find that its challenged business relationships did not violate its OCI obligations and that the obligations were not material, the government’s motion for summary judgment will be denied.
C. Statements or records made “to get” false claims paid The government argues that “the undisputed facts demonstrate that SAIC made and used false statements regarding its lack of OCIs to get its claims paid.” U.S. Mem. (Falsity) at 31. As used in 31 U.S.C. § 3729(a)(2), “to get” denotes a defendant’s purpose of getting the government itself to pay the claim. Allison Engine Co., Inc. v. United States ex rel. Sanders, 553 U.S. 662, 668-69 (2008).
Here, there was evidence at trial that SAIC made statements
about its OCIs directly to the NRC
“for the purpose
of having
[its] claims paid.” SAIC II,
Rodehau testified that SAIC had to agree to the provisions regarding OCIs in its NRC contract to be eligible for an award of the contract and to receive payment under the contract, and that a violation of the OCI provisions could result in termination of the contract. SAIC’s Martin also testified that in response to the NRC’s cure notice seeking additional information regarding SAIC’s OCIs, SAIC submitted a response to the NRC that SAIC intended the NRC to rely on when deciding whether to terminate its contract with SAIC.
Id. at 105 (internal citations omitted). However, Rodehau also agreed at trial that he had never “submit[ted] to the NRC any representation that SAIC had no OCIs just in order to get the company’s claims paid.” Rodehau Test., 7/7 a.m. Tr. at 30:25- 31:2. Martin also testified that when he received a modification of the 1992 contract, he did not make his OCI representation to get any of SAIC’s claims paid. See Martin Test., 7/14 p.m. Tr. at 60:7-9. Drawing all justifiable inferences in favor of SAIC, there is a genuine dispute as to whether SAIC made statements “to get” the NRC to pay its claims.
II. FCA DAMAGES
A. 1992 contract
SAIC argues that the government is barred under the issue preclusion or law of the case doctrines from recovering morе than $78 in FCA damages under the 1992 contract because the proper measure of FCA damages articulated in SAIC III is “identical” to the breach of contract damages actually and necessarily decided by the jury. See Def. SAIC’s Mot. for Summ. J. on Damages (“SAIC Mot. (Damages)”), Mem. of P. & A. in Supp. of Def. SAIC’s Mot. for Summ. J. on Damages (“SAIC Mem. (Damages)”) at 16-25. [12] The government counters that it is not precluded from arguing that it is entitled to more than $78 in FCA single damages because FCA damages and breach of contract damages are not the same issue and thus, FCA damages were not decided by the jury. U.S. Mem. in Opp’n to Def. SAIC’s Mot. for Partial Summ. J. on Damages (“U.S. Opp’n (Damages)”) at 12.
SAIC argues that breach of contract damages and FCA damages
in this case are the same issue. In SAIC III, the court of
appeals held that in this case, “[t]o establish [FCA] damages,
the government must show not only that the defendant’s false
claims caused the government to make payments that it would have
otherwise withheld, but also that the performance the government
received was worth less than what it believed it had purchased.”
SAIC III,
SAIC contends that in holding that FCA damages should be calculated using the benefit of the bargain measure described, the D.C. Circuit “adopted a measure of FCA damages that is identical to the standard used by the jury to calculate the Government’s $78 award of breach-of-contract damages.” SAIC Mem. (Damages) at 22. At trial, the jury was instructed that “[t]he measure of damages for a breach of contract is that amount of money necessary to place the injured party in the same economic position it would have been if the contract had not been breached.” Final Jury Instructions, 7/28 a.m. Tr. at 24:2-6. The jury was further instructed that the government is entitled only to “damages that were foreseeable at the time the contract was made.” Id. at 24:13-14.
Breach of contract damages include “(a) the loss in the
value to him of the other party’s performance caused by its
failure or deficiency, plus (b) any other loss, including
incidental or consequential loss, caused by the breach, less
(c) any cost or other loss that he has avoided by not having to
perform.” Restatement (Second) of Contracts § 347 (1981). Thus,
to calculate damages, a jury should “first determine the amount
of money the plaintiff would have received had the contract not
been breached. Next, add both incidental damages and
consequential damages, if any. Lastly, subtract from that any
money [the plaintiff] saved because [the plaintiff] did not have
to complete the contract.” D.C. Std. Civ. Jury Instr. No. 11-31
(Breach of Contract -- Damages). Additionally, contract damages
are recoverable only if they were reasonably foreseeable when the
parties formed the contract. See Sears, Roebuck & Co. v. Goudie,
B. 1999 contract
SAIC moves for summary judgment on the government’s claim that it incurred FCA damages under the 1999 contract arguing that “the Government has failed to produce any evidence that the value of SAIC’s work under that Contract was less than what the Government paid for it.” SAIC Mem. (Damages) at 25.
The government is seeking “the total amount paid by the
United States under the 1999 Contract” as single damages for
SAIC’s allegedly false claims and statements made under the 1999
Contract. See SAIC Mem. (Damages), Ex. 24 (The U.S.’s Am. Obj’ns
& Resps. to Def. SAIC’s 2d Set of Interrogs. at 4). In this
case, the government’s damages are “the amount of money the
government paid due to SAIC’s false claims over and above what
the services the company actually delivered were worth to the
government.” SAIC III,
SAIC argues that thе government cannot show that it suffered any damages as a result of SAIC’s allegedly false claims and court adopting the contract damages’ calculation as the proper measure of FCA damages and SAIC has not demonstrated otherwise. statements under the 1999 contract for at least three reasons. First, “[i]n early 2000, the NRC and SAIC agreed to terminate the [1999] contract and entered into a ‘no-cost’ settlement.” SAIC Mot. (Damages), Def. SAIC’s Stmt. of Undisputed Material Facts in Supp. of its Mot. for Summ. J. on Damages (“SAIC Stmt.
(Damages)”) ¶ 16. Under the agreement, SAIC agreed to forego
payment of an outstanding invoice for work that SAIC completed
after November 26, 1999. Id. ; see also SAIC Mem. (Damages), Ex.
13 (Modification No. 1 Under Contract NRC-04-99-046 ¶ 1 at 2).
SAIC contends that there is “no better valuation of the services
. . . ‘actually delivered’ than the amount agreed upon in an
arms-length negotiation after the Government is aware of the
deficiency.” SAIC (Damages) at 27 (quoting SAIC III,
Second, SAIC asserts that “[t]he Government’s pursuit of FCA damages under the 1999 Contract is also inconsistent with the undisputed record evidence that SAIC delivered high-quality, technically sound work product to the NRC.” SAIC Mem. (Damages) at 27-28. There is evidence in the record that SAIC provided “extremely high” quality work to the NRC and that the NRC continued to use SAIC’s work even after it discovered the alleged OCIs. See, e.g., Robert Meck Test., 7/3 p.m. Tr. 21:2-3 (government’s witness); Ashok Thadani Test., 7/21 a.m. Tr. 40:17- 19 (SAIC’s witness). However, there is also evidence that despite the quality of SAIC’s work, it was less valuable to the government than work free from OCIs would have been. For example, after learning of the OCIs, rather than abandon SAIC’s work product, the NRC commissioned a center to conduct an independent peer review of SAIC’s work. SAIC Stmt. (Damages) ¶ 23. Cheryl Trottier, an NRC employee who oversaw SAIC’s work for the NRC, testified in her deposition that the government was unable to use SAIC’s work as the technical basis for the NRC’s rulemaking as originally planned because of SAIC’s alleged OCIs and the public’s resulting distrust of SAIC’s work product. U.S. Opp’n (Damages), Ex. 7 (“Trottier Dep.” at 52:4-53:10); see also id. at 42:20-43:14. Trottier also implied that SAIC’s work was worthless to the government because the only way the government could have erased any trace of bias was to completely redo the work. Id. at 25:21-27:19, 48:4-22, 49:23-50:12. Accordingly, there is a genuine dispute of material fact about whether the value of SAIC’s services were less than the government paid. [14]
Third, SAIC contends that the government cannot produce any
“non-speculative evidence of diminished value.” SAIC Mem.
(Damages) at 29. Under the FCA, the government bears the burden
of presenting sufficient evidence to allow the jury to determine
the amount of damages it is owed. See SAIC III,
CONCLUSION AND ORDER
There is sufficient evidence for a reasonable jury to find that SAIC knew that its claims and statements were false, but also that SAIC’s challenged business relationships did not create potential or actual OCIs. Because SAIC has not shown that the amount of FCA damages under the 1992 contract is the “same issue” as the breach of contract damages, the government is not precluded from arguing that it is entitled to FCA damages under the 1992 contract beyond $78. The government provided sufficient evidence to show that there is a genuine dispute as to the value of SAIC’s services provided under the 1999 contract.
Accordingly, it is hereby
ORDERED that SAIC’s motion [196] for summary judgment on FCA liability be, and hereby is, DENIED. It is further
ORDERED that the government’s motion [195] for partial summary judgment regarding the element of falsity be, and hereby is, DENIED. It is further
ORDERED that SAIC’s motion [197] for pаrtial summary judgment on FCA damages be, and hereby is, DENIED. It is further
ORDERED that the parties appear for a scheduling conference on September 5, 2013 at 9:45 a.m.
SIGNED this 22 nd day of July, 2013.
/s/ RICHARD W. ROBERTS Chief Judge
[1] Furthermore, the NRC regulations incorporated into the 1992 Contract required SAIC to disclose information concerning situations or relationships that may give rise to OCIs under the following circumstances: (i) Where the offeror or contractor provides advice and recommendations to the NRC in a technical area in which it is also providing consulting assistance in the same area to any organization regulated by the NRC. (ii) Where the offeror or contractor provides advice to the NRC on the same or similar matter in which it is also providing assistance to any organization regulated by the NRC. (iii) Where the offeror or contractor evaluates its own products or services, or the products or services of another entity where the offeror or contractor has been substantially involved in their development or marketing. (iv) Where the award of a contract would result in placing the offeror or contractor in a conflicting role in which its judgment may be biased in relation to its work for the NRC, or would result in an unfair competitive advantage for the offeror or contractor. See 41 C.F.R. [§] 20–1.54 at p. 3. The NRC regulations incorporated into the 1999 Contract required SAIC to disclose situations or relationships that may give rise to organizational conflicts of interest under the following circumstances: ([i]) Where the offeror or contractor provides advice and recommendations to the NRC in the same technical area where it is also providing consulting assistance to any organization regulated by the NRC. (ii) Where the offeror or contractor provides advice to the NRC on the same or similar matter on which it is also providing assistance to any organization regulated by the NRC. (iii) Where the offeror or contractor evaluates its own products or services, or has been substantially involved in the development or marketing of the products or services of another entity. (iv) Where the award of a contract would result in placing the offeror or contractor in a conflicting role in which its judgment may be biased in relation to its work for the NRC, or would result in an unfair
[2] This subsection was recodified as 31 U.S.C. § 3729(a)(1)(B) under the Fraud Enforcement and Recovery Act of 2009, Pub. L. No. 111-21, 123 Stat. 1617. However, the amended version of this provision does not apply in this action. See SAIC II,653 F. Supp. 2d at 106-07 ; cf. SAIC III,626 F.3d at 1266 (assuming that the district court’s determination that the amended version of the FCA does not apply to this action is correct). Thus, this memorandum opinion will continue to refer to § 3729(a)(2).
Notes
[3] The government contends that under the implied certification theory, the second prong of the scienter requirement requires that it show that an SAIC employee knew that the contractual provision was material. It proceeds to explain that “information is material under the False Claims Act whenever it has a tendency to influence, or is capable of influencing, agency decision-making.” U.S.’s Mem. in Opp’n to Def. SAIC’s
[4] This language was the court’s “counterfactual assessment
of what verdict the jury might have reached” had it not relied on
an erroneous jury instruction. See SAIC III,
[5] United States ex rel. Harrison v. Westinghouse Savannah
River Co.,
[6] The portions of Rucker’s trial and deposition testimony that the government cites do not support its assertion. At his deposition, Rucker testified that he received OCI training at
[8] For example, if a contractor’s employee was recklessly
unaware of the contractor’s non-compliance with a contractual
provision and another employee was recklessly unaware of the
materiality of that contractual provision, an FCA plaintiff could
not rely on the employеes’ “collective pool of knowledge” alone
to argue that the contractor knew that its claims were false.
Instead, an FCA plaintiff would have to show that the
organization’s structure or processes prevented one employee from
learning of the falsity of the claim. See SAIC III,
[9] Although SAIC II was deciding a motion for judgment as a matter of law under Rule 50, “the standard for granting summary
[10] The government also argues that the jury’s verdict that
SAIC breached the 1992 contract precludes SAIC “from arguing
during retrial that it did not breach its duty to avoid and
disclose organizational conflicts of interest.” U.S. Mem.
(Falsity) at 17. However, “[i]ssue preclusion is inapplicable
here because it applies only where a Court has decided an issue
in a separate lawsuit.” Havens v. Mabus,
[11] There is evidence that Motl did not play a key role in the 1992 contract, see Mem. of P. & A. in Supp. of Def. SAIC’s Opp’n to Pl. U.S.’ Mot. for Partial Summ. J., Ex. 54 (SAIC’s Request for Proposal (Jan. 23, 1992)) (not listing Motl as a management/technical lead or technical support).
[12] For the reasons discussed above, see supra note 10, law of the case and not issue preclusion applies in this context.
[13] SAIC argues that the D.C. Circuit explicitly confirmed that the jury’s breach of contract damages calculation is identical to the FCA damages. SAIC Mem. (Damages) at 16-17. In recognizing the “difficulty the jury will face in calculating the value of services tainted by potential conflict,” the D.C. Circuit confirmed that the jury can make such a calculation noting that “the district court’s breach of contract instruction asked the jury to make just such a valuation.” SAIC III , 626 F.3d at 1280. The D.C. Circuit’s acknowledgment that the jury was asked to value the services SAIC provided as part of the breach of contract damages calculation does not equate with the
[14] To the extent that SAIC argues that undisputed evidence
showing that it provided to the government high quality work bars
the government from arguing that it is entitled to FCA damages,
the D.C. Circuit has already explained that this is not the case.
In SAIC III, the court reasoned that “a jury could rationally
conclude that no matter how technically proficient SAIC’s
performance, the value of that performance to the NRC was
compromised by the appearance of bias created by the company’s
failure to live up to its contractual conflict of interest
obligations.” SAIC III ,