United States District Court, District of Columbia
THE UNITED STATES OF AMERICA, ex rel. BRADY FOLLIARD, Plaintiff,
COMSTOR CORPORATION, et al., Defendant.
A. HOWELL CHIEF JUDGE
Folliard brought this action, as a relator, pursuant to the
qui tam provision of the False Claims Act
(“FCA”), 31 U.S.C. § 3730(b)(1), against
Westcon Group, Inc. and one of its wholly-owned subsidiaries,
Comstor Corporation, alleging that the two defendants sold
Cisco Systems, Inc. (“Cisco”) products to the
United States government, which products originated in
non-designated countries, in violation of the Trade Agreement
Act (“TAA”), 19 U.S.C. § 2501 et seq.
Rel.'s Third Am. Compl. (“TAC”) ¶¶
1-2, ECF No. 65. The operative Third Amended Complaint was
dismissed, however, for failing to state a claim for relief.
The relator now seeks reconsideration of the Court's
order, pursuant to Federal Rule of Civil Procedure 59(e),
arguing that the dismissal is manifestly unjust. For the
reasons explained below, the relator has not shown the need
for amendment and the motion is denied.
background of this FCA case is fully set out in the
Court's prior opinion. See United States ex rel.
Folliard v. Comstor Corp., 308 F.Supp.3d 56, 63-67
(D.D.C. 2018). Only a brief overview of the relevant facts is
necessary here. For two decades, the defendants have supplied
the federal government with Cisco products through two
Federal Supply Schedule (“FSS”) contracts. TAC
¶¶ 7-11. Transactions under each contract must
comply with the TAA. See TAC ¶ 58; see also TAC, Ex. 1,
Comstor Contract GS-35F-4389G (“Comstor
Contract”) at 6, ECF No. 65-2 (requiring compliance
with TAA); TAC, Ex. 2, Westcon Contract GS-35F-0563U
(“Westcon Contract”) at 9, ECF No. 65-3 (same).
The TAA and its implementing regulations, the Federal
Acquisition Regulations (“FAR”), require that
items sold through an FSS contract must be “U.S.-made
or designated country end products.” TAC ¶ 72
(citing FAR 52.225-5(b)). End products are “those
articles, materials, and supplies to be acquired under the
contract for public use.” Id. ¶ 59
(citing FAR 52.225-5(a)). For purposes of the TAA, an end
product originates from a country if “it is wholly the
growth, product, or manufacture of that country, ” or
if it “has been substantially transformed into a new
and different article of commerce” in that country.
Id. ¶ 77 (citing 19 U.S.C. § 2518(4)(B)
and 19 C.F.R. § 177.22(a)). Vendors selling to the
federal government through an FSS contract have a continuing
obligation to certify compliance with the TAA. Id.
¶ 67 (citing FAR 52.225-6(a)). A separate provision of
the FAR regulates the federal government's
“open-market” purchases, meaning purchases
incidental to an FSS contract. Open-market purchases are
permissible only upon satisfaction of FAR 8.402(f). See TAC
Third Amended Complaint alleged that the defendants falsely
certified TAA compliance for Cisco products sold to the
federal government and thereby violated the FCA. TAC
¶¶ 143, 182-189, 193, 198. The FCA's
presentment provision creates liability for “any person
who knowingly presents, or causes to be presented, a false or
fraudulent claim for payment or approval.” 31 U.S.C.
§ 3729(a)(1)(A). Additionally, the FCA's false
statement provision creates liability for “any person
who … knowingly makes, uses, or causes to be made or
used, a false record or statement material to a false or
fraudulent claim.” Id. §
relator's case “relies on the so-called
‘certification theory' of liability, or
alternatively ‘legally false certification.'”
United States v. Sci. Applications Int'l Corp.
(“SAIC”), 626 F.3d 1257, 1266 (D.C. Cir.
2010) (quoting Mikes v. Straus, 274 F.3d 687, 697
(2d Cir. 2001)). Under the certification 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. False
certifications can be either express or implied. Courts infer
implied certifications from silence ‘where
certification was a prerequisite to the government action
sought.'” Id. (quoting United States
ex. rel. Siewick v. Jamieson Sci. & Eng'g, Inc.,
214 F.3d 1372, 1376 (D.C. Cir. 2000)).
defendants moved to dismiss the Relator's Third Amended
Complaint, pursuant to Federal Rules of Civil Procedure
12(b)(1) and 12(b)(6), on grounds that: (1) the “claims
are based on, and substantially similar to, prior public
disclosures, ” for which the relator is not an
“original source, ” and therefore are barred,
under 31 U.S.C. § 3730(e)(4), Defs.' Mot. Dismiss
Rel.'s TAC (“Defs.' Mot. Dismiss”) at
1-2, ECF No. 67; and (2) the Third Amended Complaint did not
state a plausible claim for relief under the FCA or satisfy
the particularity requirements of Federal Rule of Civil
Procedure 9(b), Id. at 2-3.
defendants' first argument was unpersuasive. See
Folliard, 308 F.Supp.3d at 69-77. The second argument,
however, prevailed. A claim under the FCA's presentment
provision must allege “that a defendant submitted (1) a
claim to the government, (2) that the claim was false, and
(3) that the defendant knew that the claim was
false.'” Id. at 79 (quoting United
States ex rel. Davis v. District of Columbia, 793 F.3d
120, 124 (D.C. Cir. 2015)). The alleged falsity must have
been material to the government's willingness to pay to
be actionable under the FCA. Id. (citing
Universal Health Servs., Inc. v. United States ex rel.
Escobar, 136 S.Ct. 1989, 1996 (2016) (“Escobar
I”) and SAIC, 626 F.3d at 1269). Likewise, to succeed
on a claim under the FCA's false-statement provision,
“a plaintiff must allege that (1) the defendant made or
used a record or statement; (2) the record or statement was
false; (3) the defendant knew it was false; and (4) the
record or statement was material to a false or fraudulent
claim.” Id. at 92 (quoting United States
ex rel. Keaveney v. SRA Int'l, Inc., 219 F.Supp.3d
129, 153 (D.D.C. 2016)).
Third Amended Complaint adequately pleaded falsity as to some
of the defendants' transactions, Id. at 80-81,
but failed to do so as to sales for what the parties call
“configurable options, ” Id. at 81-82,
and as to open-market sales, Id. at 82-84.
Independently, the Third Amended Complaint was dismissed for
failing adequately to plead either materiality, Id.
at 84- 88, or scienter, Id. at 88-91.
pursuant to Federal Rule of Civil Procedure 59(e), the
relator seeks to alter or amend the order dismissing the
Third Amended Complaint, see Rel.'s Mot. Alter or Am. J.
(“Rel.'s Mot.”), ECF No. 77, which motion is
ripe for review.
59(e) of the Federal Rules of Civil Procedure authorizes
motions “to alter or amend a judgment, ”
Fed.R.Civ.P. 59(e), as a “limited exception to the rule
that judgments are to remain final, ” Leidos, Inc.
v. Hellenic Republic, 881 F.3d 213, 217 (D.C. Cir.
2018). A motion under Rule 59(e) may be granted only in three
circumstances: “(1) if there is an intervening change
of controlling law; (2) if new evidence becomes available; or
(3) if the judgment should be amended in order to correct a
clear error or prevent manifest injustice.”
Id. (internal quotations marks omitted); see also
Exxon Shipping Co. v. Baker, 554 U.S. 471, 486 n.5
(2008) (“Rule 59(e) permits a court to alter or amend a
judgment, but it may not be used to relitigate old matters,
or to raise arguments or present evidence that could have
been raised prior to the entry of judgment.” (internal
quotation marks omitted)); District of Columbia v.
Doe, 611 F.3d 888, 896 (D.C. Cir. 2010) (“Rule
59(e) motions are aimed at reconsideration, not initial
consideration.” (quoting Nat'l Ecological
Found. v. Alexander, 496 F.3d 466, 477 (6th Cir.2007)).
Whether to grant such a motion is within the district
court's discretion. Messina v. Krakower, 439
F.3d 755, 758 (D.C. Cir. 2006). With these limits,
“[r]econsideration of a judgment after its entry is an
extraordinary remedy which should be used sparingly.”
Mohammadi v. Islamic Republic of Iran, 782 F.3d 9,
17 (D.C. Cir. 2015) (internal quotation marks omitted).
relator argues only that the Court's order must be
amended to avoid manifest injustice. Rel.'s Mem. Supp.
Mot. Alter or Am. J. (“Rel.'s Mem.”) at 2,
ECF No. 77-1; Rel.'s Reply Supp. Mot. Alter or Am. J.
(“Rel.'s Reply”) at 1-2, ECF No. 80.
“[M]anifest injustice ‘does not exist where
… a party could have easily avoided the outcome, but
instead elected not to act until after a final order had been
entered.'” Leidos, 881 F.3d at 217 (quoting
Ciralsky v. CIA, 355 F.3d 661, 665 (D.C. Cir.
2004)). Instead, upsetting a final judgment requires
“at least (1) a clear and certain prejudice to the
moving party that (2) is fundamentally unfair in light of
governing law.” Id. (internal quotation marks
the law nor the record has changed since the defendants'
motion to dismiss was granted. Instead, the relator argues
that dismissing the complaint is manifestly unjust because
doing so prejudiced the relator's interest in pursuing
this action. Rel.'s Mem. at 2; Rel.'s Reply at 2. As
the relator views governing law, the Third Amended Complaint
adequately pleaded that the defendant falsely certified
compliance with conditions of government contracting, that
the defendants' false certifications were material to
receiving payment, and that the defendant had ...