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United States ex rel. McBride v. Halliburton Co.

United States District Court, D. Columbia.

May 27, 2014


For Relator: VICTOR A. KUBLI, ESQ., OF COUNSEL, LAW OFFICE OF VICTOR A. KUBLI, P.C., Germantown, Maryland.



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Frederick J. Scullin, Jr., Senior United States District Judge.


Currently before the Court is Defendants' motion for summary judgment with respect to the first and second claims in Relator McBride's third amended complaint. See Dkt. No. 196.[2] The Court heard oral argument with respect to Defendants' motion on October 30, 2013, and reserved decision. The following constitutes the Court's resolution of the pending motion.


Under a government contract called " LOGCAP III," [4] Defendants provided logistical services to the United States military in Iraq, performing tasks defined in contract documents called " Task Orders." Under this contract, Defendants were entitled to bill the Government for the actual costs they incurred providing those services, plus a " base fee" of one percent of a pre-negotiated " fee pool," which was an agreed estimate of what those services would cost. At the Government's discretion, Defendants could also earn a maximum of an additional two percent of the fee pool as an " award fee" for good performance as judged by various metrics set forth in the contract.

Task Order 59 was one of the first LOGCAP III Task Orders, issued in June 2003 and continuing to May 2005. It required Defendants to provide a wide range of life support services for the troops, including camp construction, power generation, dining facilities, operations and maintenance programs, potable and non-potable water services, laundry, fire protection, ice, and MWR facilities.[5] MWR facilities were a relatively small part of the overall effort, representing about 1.5% of total

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costs incurred and, at the two camps relevant to this case, Camps B-3, Camp Fallujah, and B-4, Ar Ramadi, less than one-tenth of one percent of total costs incurred.

Relator McBride filed this case under seal in April 2005; it was unsealed in July 2006 after the Government declined to intervene. See Dkt. Nos. 1, 6, 8. In October 2006, before Defendants were served with the complaint, the Defense Contract Audit Agency (" DCAA" ) investigated Realtor McBride's allegations, issuing written questions to Defendants and visiting Camp B-3 to review records and interview Defendants' personnel. The DCAA did not issue any formal findings. Neither DCAA nor any other agency of the Government disallowed or even challenged any of the amounts Defendants had billed for MWR services under Task Order 59.

After the Court unsealed this case, Defendants moved to dismiss. Judge Kennedy dismissed two co-relators, Mr. Meyer and Ms. Warren, and permitted just two of Relator McBride's claims to go forward to discovery: (1) her core assertion that Defendants had used false MWR head count tallies to overbill the Government and (2) her claim that Defendants had improperly requisitioned certain equipment from the Government for their own use. See Dkt. Nos. 45, 55.

Defendants then moved for summary judgment on the billing question, arguing that the contract documents clearly established, as a matter of law, that they did not charge the Government for MWR services on a " per head" basis. Judge Kennedy denied that motion without prejudice pending discovery. See Dkt. No. 67. Defendants then asked the Court to order Relator McBride to stage her discovery so that it focused in the first instance on her camp and time period and that discovery proceed to the dozens of other camps in wartime Iraq only if the initial discovery produced evidence tending to sustain her allegations. See Dkt. No. 72. The Court denied that motion.

For the next three years, Defendants produced pages of paper and electronic documents from their headquarters and all over Iraq. Defendants took Rule 30(b)(6) depositions of the Army in 2009 and deposed Relator McBride in 2010. Relator McBride took no fact depositions. As discovery neared a close, Relator McBride filed pretrial disclosures and an expert report that explained her " excessive staffing" theory and indicated that she would challenge Defendants' MWR reporting at only two camps, hers and B-4, Ar Ramadi, during a limited time period under Task Order 59, from July 1, 2004, to her termination on March 4, 2005. With only a few weeks left in discovery, Relator McBride tried to re-expand her case to other sites and timeframes, prompting Defendants to move for a protective order requesting that, for all discovery remaining at that point, principally, a Rule 30(b)(6) deposition of Defendants, the Court limit Relator McBride to the theory she had pled and to the narrow geographic and temporal scope she had recently announced in the case.

Both Magistrate Judge Facciola and this Court offered to provide Relator McBride with the opportunity to seek leave to file a further amended complaint to articulate her excessive staffing theory and the scope of her claims as she saw them. Relator McBride declined those offers; the Court granted Defendants' motion for a protective order; and discovery closed after Relator McBride took Defendants' Rule 30(b)(6) deposition in February 2013.

Defendants then filed the pending motion for summary judgment. See Dkt. No. 196. Relator McBride opposed that motion. See Dkt. No. 199.

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A. Summary judgment standard

A court will grant summary judgment " when the record shows that there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law." Actelion Pharmaceuticals Ltd. v. Kappos, 972 F.Supp.2d 51, 2013 WL 5310176, *2 (D.D.C. 2013) (citing Fed.R.Civ.P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). In addressing a motion for summary judgment, a court " will accept as true the evidence of the non-moving party, and draw 'all justifiable inferences'" in her favor. Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (citation omitted)). " A genuine dispute about a material fact only exists if 'the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Id. (quoting [ Anderson, 477 U.S.] at 248).

Once the moving party has made its initial showing, " the nonmoving party must demonstrate 'specific facts showing that there is a genuine issue for trial.'" United States ex rel. Fago v. M& T Mortg. Corp., 518 F.Supp.2d 108, 113 (D.D.C. 2007) (quoting Celotex, 477 U.S. at 324, 106 S.Ct. 2548). If the nonmoving party produces evidence that is merely colorable, or that is not significantly probative, the court may grant summary judgment. See id. (quoting Liberty Lobby, 477 U.S. at 249-50, 106 S.Ct. 2505 (citations omitted)).

B. Relator McBride's theory of the case

As one basis for their motion for summary judgment, Defendants contend that Relator McBride has abandoned the only theory of liability that survived their motion to dismiss and has waived her opportunity to proceed on an alternative theory. Specifically, Defendants assert that Relator McBride's initial theory was that Defendants had falsely overstated the number of troops who used their MWR facilities and, thus, fraudulently overcharged the Government, see Dkt. No. 196, Defendants' Memorandum of Law at 20, and that she has abandoned that theory in favor of a new theory that Defendants inflated their MWR head counts, not directly to overstate the costs they had incurred, but indirectly to persuade the Government to accept a level of MWR staffing that was excessive for the task at hand and to pay Defendants for incurring these unnecessary labor costs, see id. at 21. To the contrary, Relator McBride argues that she is not seeking to prove her case on a theory different from the one she pled. See Dkt. No. 199, Relator McBride's Opposition at 26.

Defendants are correct that Relator McBride cannot discover or try a case that she has not pled. However, to determine whether she is, in fact, attempting to do so requires the Court to review both her third amended complaint and the Court's prior decisions in this case.

In its July 5, 2007 Memorandum Opinion and Order, the Court (Kennedy, J.) noted that Relator McBride's then current and proposed second amended complaints alleged, among other things, that Defendants

(1) billed the government for meals not served to U.S. troops at its dining (" DFAC" ) facilities in Fallujah; (2) sold housing containers (colloquially referred to as " hooches" ) at exorbitant prices to the military; (3) inflated headcounts (collected via " situation reports," commonly referred to as " Sit Reps" ) documenting usage of its MWR facilities in Iraq and billed the government for " costs" that were calculated based on

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those inflated headcounts; and (4) made requisitions for supplies for the troops and then siphoned those supplies to [Defendants'] employees.

United States ex rel. McBride v. Halliburton Co., No. 05-00828, 2007 WL 1954441, *1 (July 5, 2007).

With regard to these claims, the Court found, as an initial matter, that, although " the public disclosure bar prevent[ed] her from pursuing her DFAC-related claims[,] [h]er other claims [were] not barred." [WL] at *7 (footnote omitted).

The Court then proceeded to determine whether Relator McBride had adequately alleged presentment. See [WL] at *8. In this regard, the Court found that, although " the allegations undeniably [were] lean, [Relator McBride did] allege that KBRSI submitted false claims regarding MWR headcounts." Id. The Court explained that Relator McBride's " complaint state[d] that payment under LOGCAP for MWR costs was based, at least 'in significant part,' on usage, i.e., 'the number of patrons who utilize the facilities.'" Id. (quoting Proposed 2nd Am. Compl. ¶ 24 (" [T]he U.S. paid KBR for the MWR facilities according to usage." (footnote omitted)). The Court concluded that, " [r]ead in the light most favorable to [Relator McBride], this allegation [might] be deemed to state that Sit Rep usage statistics [were] used to calculate KBR's costs under LOGCAP. These costs [were] submitted for payment to the government." Id. Furthermore, the Court stated that, although Defendants made " great hay of the fact that any inflated costs would have run (and in fact did run) the risk of a lower fee award (the amount paid over and above the cost of performance) from the government, but whether any alleged fraud regarding costs had an impact on [Defendants'] ...

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