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United States of America v. Kellogg Brown & Root Services

August 31, 2012


The opinion of the court was delivered by: Royce C. Lamberth, Chief Judge


Before the Court is defendant's Motion to Compel Discovery (Feb. 9, 2012) [ECF No. 75]. Upon consideration of the motion, the opposition and reply thereto, plaintiff's Cross-Motion for Protective Order [ECF No. 84], the opposition and reply thereto, and the record herein, the Court denies in part defendant's motion to compel. The Court is inclined to compel discovery on one issue, but will stay issuing an order in favor of giving the parties an opportunity to resolve the remaining discovery issues. To that end, the Court will order the parties to meet and confer to discuss the scope and schedule for additional discovery.

Resolving this motion will also moot defendant's Motion to Expedite Consideration (Feb. 9, 2012) [ECF No. 76], plaintiff's Cross-Motion for Briefing Schedule (Feb. 9, 2012) [ECF No. 78], and plaintiff's Cross-Motion for Protective Order (Mar. 5, 2012) [ECF No. 84].


This case concerns a contract dispute between plaintiff United States and defendant KBR, Inc. (formerly doing business as "Kellogg Brown & Root Services, Inc."). In 2001, at the beginning of American military action in Iraq, the United States awarded a large logistical services contract to KBR, known as "LOGCAP III." Under LOGCAP III, KBR provided various services-such as providing food-to American troops stationed in Iraq. In executing LOGCAP III, KBR and its subcontractors allegedly hired armed private security companies ("PSC") to afford additional protection. The United States contends that KBR then passed on the costs of these PSCs to the United States by including those charges in its invoices. The Government*fn1 claims, under the terms of LOGCAPP III, that KBR could not pass on these costs. See Compl. (Apr. 1, 2010) at ¶¶ 7--12. The United States argues that the contract stipulates that all force protection be provided by the U.S. Military, LOGCAPP III, ¶ H-16 at 98, and that KBR could not arm any of its personnel without seeking the permission of Theater Commander. Id. at ¶ H-21, at 101.*fn2

In February 2007, the United States informed KBR that it would not reimburse $19.6 million in charges relating to the use of PSCs by one of KBR's subcontractors. The United States claims it subsequently discovered over $100 million in similarly disallowed PSC charges. KBR challenged this denial by filing a certified claim under the Contract Disputes Act ("CDA").*fn3 Since the contracting officer did not issue an opinion within the allotted time, KBR's claim was a "deemed denial." KBR appealed this denial to the Armed Services Board of Contract Appeals ("ASBCA"). See Def.'s Mot. to Dismiss Pl.'s Compl. (June 8, 2010) at 11--13.

While KBR's ASBCA appeal was pending, the United States brought suit in this Court on April 1, 2010. In its complaint, the Government alleged a violation of the False Claims Act, breach of contract, unjust enrichment, and payment by mistake. Compl. (Apr. 1, 2010) at ¶¶ 33-- 43. In August 2011, this Court dismissed the unjust enrichment and payment by mistake causes of action, but did not dismiss the False Claims Act or breach of contract claims. U.S. v. Kellogg Brown & Root Servs., Inc., 800 F. Supp. 2d 143, 161 (D.D.C. 2011).

On August 17, 2011, KBR filed notice of a counterclaim against the United States. KBR requested recoupment from the United States "arising out of the Government's failure to provide the requisite force protection, in breach of the Government's obligations under LOGCAP III." Def.'s Answer to Pl.'s Compl. (Aug. 17, 2011) at ¶ 84. The United States moved to dismiss KBR's counterclaim, and on April 23, 2012 this Court granted plaintiff's motion on the basis that KBR had not exhausted administrative remedies available under the CDA and KBR's counterclaim failed to allege facts showing entitlement to relief. U.S. v. Kellogg Brown & Root Servs., Inc, 2012 WL 1382986, *5--*7 (D.D.C. Apr. 23, 2012).

In the meantime, ASBCA ruled on KBR's appeal. On April 2, 2012, the Board issued a ruling denying both parties' motions for summary judgment and finding that LOGCAP III's force protection clause did not categorically prohibit KBR or its subsidiaries from hiring supplemental security-in the form of PSCs-to assist in the execution of the agreement. Kellogg Brown & Root Services, Inc, ASBCA No. 56358, 12-1 BCA ¶ 35,001 at 12. The United States asked the Board to reconsider, and the Board reaffirmed its ruling on June 22, 2012. See Ex. to Notice of Filing of ASBCA's Decision on Army's Mot. for Recons. (June 27, 2012).*fn4

Before the Court are several related motions. The primary motion is KBR's Motion to Compel [75], in which KBR claims that despite its attempts to meet and confer with the United States, the United States has refused to produce relevant information and fully answer interrogatories. The United States, in its opposition [83] and cross-motion for protective order [84], argues that the information KBR seeks is irrelevant and not discoverable under Rule 26(b).


When the parties are unable to resolve a discovery dispute, a party may file a motion to compel the opposing party to produce evidence or respond to interrogatories. Under Federal Rule 37, a party may "move for an order compelling disclosure or discovery" only after the "movant has in good faith conferred or attempted to confer with the person or party." F.R.C.P. 37(a)(1). Courts have held that conferring with the opposing party is a prerequisite to any successful Rule 37 motion to compel. See U.S. ex rel. Pogue v. Diabetes Treatment Centers of America, Inc., 235 F.R.D. 521, 529--30 (D.D.C. 2006) (Lamberth, J.) (denying motion to compel for failure to meet and confer prior to filing). When the opposing party has answered the movant's interrogatories, the party moving to compel discovery has the burden of showing that the opposing party's responses are incomplete. Guantanamera Cigar Co. v. Corporation Habanos, S.A., 263 F.R.D. 1, 7 (D.D.C. 2009) (Lamberth, C.J.). When the opposing party refuses to respond to a discovery request, the burden shifts to the opposing party to show that the movant's request is burdensome, overly broad, vague or outside the scope of discovery. Chubb Integrated Sys. Ltd. v. Nat'l Bank of Washington, 103 F.R.D. 52, 59--60 (D.D.C. 1984).

When considering whether to grant a motion to compel, a court must consider whether the "discovery appears reasonably calculated to lead to the discovery of admissible evidence," F.R.C.P. 26(b)(1), and whether the request falls under any of the limitations listed in Rule 26(b)(2)(C). The court must also consider the prior efforts of the parties to resolve the discovery dispute without court intervention. F.R.C.P. 37(a)(1); Pogue, 235 F.R.D. at 529--30. An appellate court will reverse a grant or denial of a motion to compel only if it finds that the district court abused its discretion. Libscomb v. Winter, 2009 WL 1153442, *1 (D.C. Cir Apr. 3, 2009) (affirming district court because "appellant has not shown the district court abused its discretion in denying his motion to compel discovery.") (citing U.S. v Microsoft Corp., 253 F.3d 34, 100 (D.C. Cir. 2001) ("[T]he trial court [has] wide latitude to receive evidence as it sees fit.")). As noted by the D.C. Circuit, "Trial courts exercise considerable discretion in handling discovery matters[.]" Food Lion, Inc. v. United Food and Commercial Workers Int'l Union, 103 F. 3d 1007, 1012 (D.C. Cir. 1997).


In its motion to compel, KBR identifies three categories of information that the "Government unilaterally refuses to provide": First, the Government refuses to identify which claims submitted by KBR are allegedly false, and will not specify which invoices it contends contain allegedly prohibited armed private security charges.

Second, the government refuses to provide documents or information related to the Army's providing (or, as KBR alleges, failure to provide) force protection to contractors in Iraq.

Third, the Government refuses to provide documents and information relating to its contracts and interactions with other prime contractors in Iraq that relate to armed private security.

Def.'s Mem. ISO its Mot. to Compel (Feb. 9, 2012) at 1 (formatting omitted). The United States responds with a Cross-Motion for a Protective Order, Or in the Alternative, To Compel and Stay. In this cross-motion, the United States requests that the Court issue an "order protecting the Government from KBR's attempts to obtain unduly burdensome discovery of two issues irrelevant to this litigation: force protection and contracts other than the LOGCAP III contract; and to relieve the United States of the burden to comb through KBR's own invoices and derive an answer to KBR's interrogatory that KBR itself can just as easily obtain." Pl.'s Cross-Mot. for Protective Order (Mar. 5, 2012) at 1. If the Court does not issue such a protective order, the Government asks the Court to "compel KBR itself to identify which of its own invoices contain private armed security costs and stay discovery on force protection issues until the Government's pending dispositive motion [on KBR's counterclaim] is resolved." Id.

For the reasons set forth below, the Court finds that KBR is entitled to discovery for some of the matters in the second category, but not for any in the first and third. Although the parties' prior efforts to compromise have failed, the Court hopes that with the guidance offered by this opinion, the parties can reach a mutually agreeable solution. Therefore, the Court will order the parties to meet and confer within seven (7) days and discuss how to proceed with discovery. Within thirty (30) days, the parties shall apprise the Court of their efforts, including, if possible, the compromises reached by the parties and an agreed-upon timetable for accomplishing the additional discovery. If the parties cannot agree-and granting additional time would likely be futile-the Court shall enter its own order compelling and setting the schedule for additional discovery. Furthermore, the Court finds its resolution of KBR's motion to compel moots the United States' cross-motion for protective order, as well as other motions concerning the briefing and decision schedule of the motion to compel.

A.KBR's Interrogatory Requesting Identification of Claims Submitted by KBR Containing Allegedly Unallowable or Fraudulent Charges KBR alleges that the Government has refused to provide information about which claims submitted by KBR contain unallowable PSC costs. In its first amended set of interrogatories, KBR submitted:


Identify by number, date, and amount all invoiced that KBR submitted to the Government for payment under LOGCAP III that allegedly contained prohibited costs for PSCs, the amount of those invoices paid by the Government and the date payments were made, the amount of the allegedly prohibited costs, and the amount of those invoices, if any, the Government has refused to pay or withheld and the date on which refusal or withholding was made.

Def.'s First Am. Interrogs. (Oct. 31, 2011) at 8. The United States responded:

The United States objects to the Interrogatory on the grounds stated in the General Objections and on the grounds that the information sought by this Interrogatory is already in the possession, custody, and control of KBR.

Subject to, and without waiving these objections, the United States responds by referring KBR to the invoices it submitted to the Army under LOGCAP III in which KBR billed the Army (either on a direct or indirect basis) amounts for: (i) the four employees under the command and control of the KBR Middle East Regional Office as described in KBR's April 17, 2007, submission to ASC; (ii) the three firms (CTU, Triple Canopy, and Omega Risk Solutions) KBR used to provide movement protection and other security services to KBR personnel in the Middle East as described in KBR's April 17, 2007, submission to ASC; (iii) ESS's LOGCAP III subcontracts; (iv) LOGCAP III subcontracts with the firms listed in the Government's First Set of Requests for the Production of Documents at Request No. 28; and (v) any other LOGCAP III subcontractor identified by KBR in its May 30, 2007, Addendum to May 1st Submittal chart entitled Armed Private Force Protection Summary provided to ASC. The Government further directs KBR to the Form 1, Notices of Contract Costs Suspended and/or Disapproved of February 7, 2007, and August 4, 2009, and the Government Assessment of KBR Private Security Costs provided to KBR on or about February 4, 2009, for the amounts, descriptions, and other details of the costs questioned by the Government in this action. The Government further directs KBR to the Contract Disputes Act ("CDA") claims it has submitted to ASC challenging ASC's withholdings of certain payments for descriptions of payments withheld by the Army incident to its suspension and disapproval of costs associated with unauthorized private armed security.

Pl.'s Resp. to Def.'s First Am. Interrogs. (Dec. 9, 2011) at 10--11. KBR claims the Government's response "does not shed any light on which invoices are at issue." Def.'s Mem. ISO its Mot. to Compel at 9. The United States counters that its response "identifie[s] with sufficient detail the records that KBR could review to ascertain the invoices at issue in this case." Pl.'s Mem. ISO its Opp'n to Def.'s Mot. to Compel (Mar. 5, 2012) at 34.

If the United States simply refused to answer the interrogatory, the burden would be on the United States explain why KBR's request is burdensome, overly broad, vague or outside the scope of discovery. Chubb, 103 F.R.D. at 59--60. However, the United States has provided an answer-one that may be acceptable under Rule 33(d) as discussed infra. Since the Government answered, the burden shifts to KBR to show that the Government's responses are incomplete. Guantanamera, 263 F.R.D. at 7. KBR has not overcome its burden to show that the United States' response is incomplete. The United States' response complies with Rule 33(d), and is therefore an acceptable answer to Interrogatory 1.

Federal Rule of Civil Procedure 33(d) allows a party to answer an interrogatory through the production of business records. The Rule reads in pertinent part:

Option to Produce Business Records. If the answer to an interrogatory may be determined by examining, auditing, compiling, abstracting or summarizing a party's business records., and if the burden of deriving or ascertaining the answer will be substantially the same for either party, the responding party may answer by:

(1) specifying the records that must be reviewed, in sufficient detail to enable the interrogating party to locate and identify them as ...

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