USA, ex rel Brady Folliard v. Government Acquisitions , 764 F.3d 19 ( 2014 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued April 4, 2014 Decided August 29, 2014
No. 13-7049
UNITED STATES OF AMERICA, EX REL. BRADY FOLLIARD,
APPELLANT
v.
GOVERNMENT ACQUISITIONS, INC. AND GOVPLACE,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:07-cv-00719)
H. Vincent McKnight, Jr. argued the cause and filed the
briefs for appellant.
Christopher M. Loveland argued the cause for appellee
Govplace. With him on the brief was Jonathan S. Aronie.
Timothy K. Halloran was on the brief of amicus curiae
Coalition for Government Procurement. With him on the
brief was Jason N. Workmaster. Daniel G. Jarcho entered an
appearance.
Before: KAVANAUGH and WILKINS, Circuit Judges, and
SILBERMAN, Senior Circuit Judge.
2
Opinion for the Court filed by Circuit Judge WILKINS.
WILKINS, Circuit Judge: Under the Trade Agreements
Act of 1979 (TAA), 19 U.S.C. §§ 2501–2581, the federal
government is barred from purchasing products that do not
originate from “designated countries.” See id. § 2512; 48
C.F.R. §§ 25.003, 52.225-5(a) (listing the designated
countries). Appellee Govplace sold Hewlett-Packard (“HP”)
products to the federal government. To determine whether
the HP products originated from designated countries,
Govplace relied on its distributor, Ingram Micro, which
expressly certified that the HP products complied with TAA
requirements. Govplace also sold other products to the
federal government, but claimed that these products were
exempt from TAA requirements.
Appellant Brady Folliard, a qui tam relator, brought suit
under the False Claims Act (FCA), 31 U.S.C. §§ 3729–3733,
alleging that the HP products Govplace sold to the federal
government originated from non-designated countries, in
violation of the TAA. The FCA imposes liability only if a
person “knowingly” makes a false claim. To satisfy the
FCA’s scienter requirement, Appellant claimed that Govplace
acted in reckless disregard to the falsity of its sales to the
federal government because Govplace’s reliance on Ingram
Micro’s certification was not reasonable. Appellant also
sought discovery regarding the products Govplace claimed
were exempt from TAA requirements.
Through a series of orders and opinions, the District
Court rejected all of Appellant’s claims on the merits and thus
granted summary judgment to Govplace, while denying some
of Appellant’s discovery requests. Appellant challenges some
of those rulings. Because we conclude that the District Court
3
properly exercised its discretion in managing discovery, and
that Govplace reasonably relied on Ingram Micro’s
certification, we affirm.
I.
A.
Appellee Govplace is a small business provider of IT
integration and product solutions, and delivers enterprise IT
solutions exclusively to the public sector. J.A. at 467.
Govplace has been a recipient of a General Services
Administration (GSA) schedule contract (“GSA schedule” or
“GSA contract”) since August 1, 1999. J.A. 468. The GSA
Schedules Program “provides Federal agencies . . . with a
simplified process for obtaining commercial supplies and
services at prices associated with volume buying.” 48 C.F.R.
§ 8.402. All products sold pursuant to a GSA schedule must
comply with the TAA. See Trade Agreements, GSA iGuide,
https://vsc.gsa.gov/iGuide/iGuide/Trade_Agreements.html
(last visited July 11, 2014); J.A. 362. The TAA requires that
“only U.S.-made or designated country end products [can] be
offered and sold under Schedule contracts.” Id.; 48 C.F.R.
§ 25.403(c)(1).
Govplace is not a manufacturer of the products it lists for
sale and does not acquire products directly from a
manufacturer. J.A. 468. Instead, Govplace acquires products
from distributors. J.A. 468. Ingram Micro, the largest
technology products distributor, is the distributor from which
Govplace acquires the vast majority of the products it sells on
its GSA schedule. J.A. 468, 972. Govplace acquires products
from Ingram Micro by participating in Ingram Micro’s GSA
Pass Through Program (“the Program”). J.A. 972-73.
According to Ingram Micro, its Program “helps solution
4
providers obtain Letters of Supply from manufacturers, a
requirement to include products on a GSA Schedule,” and
“helps resellers maintain their GSA contracts by regularly
passing through manufacturer-certified information such as
updated pricing and product documentation.” J.A. 972. For
example, in providing Govplace with the “current GSA
product/price list for Hewlett Packard” in January 2007,
Ingram Micro “passe[d] through” five manufacturer
certifications, including: “Products offered by the
manufacturer are compliant with the Trade Agreements Act.”
J.A. 516. Through its participation in the Program, Govplace
obtained Letters of Supply from both Ingram Micro and HP,
allowing it to resell HP products to the federal government.
J.A. 973.
GSA has implicitly approved of Govplace’s reliance on
Ingram Micro’s Program to demonstrate compliance with the
GSA schedule contract requirements. Since 2003, GSA has
conducted several “Contractor Administrative Visits” of
Govplace to evaluate its compliance with GSA schedule
contract requirements. J.A. 470. During those visits,
Govplace has explained to GSA that it relies on the Ingram
Program “for [Country of Origin (COO)] information and
certifications for the items” listed in its GSA schedule. J.A.
470. Upon finishing its evaluation, GSA typically issues an
Administrative Report Card. J.A. 470. In each of the
Administrative Report Cards evaluating Govplace, GSA has
determined that Govplace demonstrated compliance with the
TAA. J.A. 470.
5
B.
Relator Brady Folliard brought a qui tam suit under the
FCA, alleging that Govplace and other companies 1 sold
products to the federal government that “did not originate in
designated countries under the [TAA], and therefore are
making material false statements and presenting false claims”
to the federal government for payment. J.A. 75. Specifically,
Appellant alleged that Govplace knowingly listed twenty-
three products on its GSA schedule as having originated in the
United States when they allegedly originated in non-
designated countries, and that Govplace sold ten products that
originated in non-designated countries. J.A. 115-119.
Through three separate opinions and orders, the District Court
ultimately denied Appellant’s claims on the merits and thus
granted Govplace summary judgment, while denying in part
Appellant’s discovery requests. We briefly summarize each
of the three opinions as relevant to his appeal.
In its May 3, 2012 opinion, the District Court addressed
Appellant’s initial request for additional discovery pursuant to
Rule 56(d) of the federal rules of civil procedure, 2 which he
1
Appellant does not appeal the District Court’s dismissal of the
other defendants, so those claims are not before us.
2
This rule states: “If a nonmovant shows by affidavit or declaration
that, for specified reasons, it cannot present facts essential to justify
its opposition, the court may:
(1) defer considering the motion or deny it;
(2) allow time to obtain affidavits or declarations or to take
discovery; or
(3) issue any other appropriate order.”
FED. R. CIV. P. 56(d).
6
filed in connection with his opposition to Govplace’s motion
for summary judgment. United States ex rel. Folliard v.
Government Acquisitions, Inc., 858 F. Supp. 2d 79, 84–85
(D.D.C. 2012). In his Rule 56(d) request, Appellant asserted
that Govplace had refused to respond to his discovery
requests prior to filing its motion for summary judgment, J.A.
755, rendering him “unable to adequately respond to each of
[Govplace’s] purported undisputed material issues,” J.A. 756.
The court rejected Appellant’s request, describing it as
“improperly framed” because he did not “state concretely why
additional discovery is needed.” Government Acquisitions,
Inc., 858 F. Supp. 2d at 85 (internal quotation marks omitted).
The court did permit Appellant to amend his opposition to the
summary judgment motion, “limited to the specific sales the
complaint alleges as to each defendant.” Id. The court also
stated that “[i]f Folliard invokes Rule 56(d) in his opposition,
the request must describe the necessary discovery with
specificity.” Id. Finally, the court left open the possibility of
granting Appellant discovery regarding sales not specifically
identified in his complaint, explaining that “if Folliard
prevails as to either or both defendants on the specific sales
alleged in the complaint, the question of further discovery will
be ripe.” Id.
Then, in a subsequent opinion, the District Court
addressed Appellant’s Rule 56(d) request in his amended
opposition to Govplace’s summary judgment motion.
Through his amended Rule 56(d) request, Appellant sought
additional discovery related to four categories of sales: (1)
Govplace’s sales under its FirstSource contract, (2)
Govplace’s sales in the “open market,” (3) sales made by
New Tech Solutions, Inc. (“New Tech”) pursuant to an
“authorized government teaming agreement” it had entered
into with Govplace, and (4) Govplace’s sales of HP products
7
that it had received from distributor Ingram Micro. United
States ex rel. Folliard v. Government Acquisitions, Inc., 880
F. Supp. 2d 36, 46–48 (D.D.C. 2012).
Govplace opposed Appellant’s Rule 56(d) request,
arguing that the first three categories of sales were exempt
from TAA requirements. As to the FirstSource contract,
Govplace claimed that it was awarded this contract from the
federal government as a “Small Business Set-Aside.” Id. at
46. Govplace asserted that such contracts are exempt from
TAA requirements. Id.; 48 C.F.R. § 25.401(a)(1) (“This
subpart does not apply to . . . Acquisitions set aside for small
businesses[.]”). The District Court agreed. It stated that
Govplace “provided the [FirstSource] contract as Exhibit E to
its Motion for Summary Judgment,” and that “Plaintiff fails to
specify what particular discovery he desires regarding the
FirstSource contract.” Government Acquisitions, Inc., 880 F.
Supp. 2d at 46. After denying Appellant’s Rule 56(d) request,
the court granted Govplace summary judgment as to sales
made under its FirstSource contract, reasoning that “[s]ince
plaintiff offers absolutely no evidence refuting [Govplace’s]
motion for summary judgment, there is no genuine issue of
material fact.” Id.
As for its open market sale, Govplace contended that the
product at issue “was not listed on its GSA Schedule Contract
and was sold on the ‘open market’ without any representation
of its COO.” Id. at 48. It also asserted that “the sale totaled
less than the TAA threshold of $193,000 at the time of sale.”
Id. Appellant responded “by simply requesting to depose
[Govplace’s affiant, Adrianne] Angle and a 30(b)(6)
representative about ‘[Govplace’s] Open Market Sales.’ ” Id.
The court denied this request as well, explaining that he
“fail[ed] to explain what precisely he wishe[d] to garner from
a deposition and why it would be necessary for the litigation.”
8
Id. The court then granted summary judgment as to the open
market sale. Id.
The court also denied Appellant’s Rule 56(d) request and
granted Govplace summary judgment with respect to the sales
made by New Tech pursuant to its teaming agreement with
Govplace. Govplace had asserted that summary judgment
was proper because it did not actually sell the product—it
“was sold by a third party, [New Tech.]” Id. The District
Court also denied this request. It stated that Appellant’s
“boilerplate discovery request” seeking information regarding
Govplace’s various transactions and “all other claims for
exemptions from TAA requirements” was “inappropriately
vague.” Id. Crediting Govplace’s “uncontroverted”
assertions, the court granted it summary judgment as to the
product sale by New Tech. Id.
The District Court did, however, grant Appellant’s Rule
56(d) request with respect to the HP products that Govplace
received from Ingram Micro. Govplace had claimed that it
was entitled to summary judgment on sales of the HP
products because Ingram Micro had expressly certified that
the products complied with the TAA, and therefore, Govplace
argued, even if the products did not comply with the TAA
(which Govplace did not concede), it could not have
“knowingly” made a false sale. Id. at 47. The court
disagreed, finding “summary judgment to be premature
regarding these five products until plaintiff has an adequate
opportunity to conduct focused discovery on [Govplace’s]
reliance on Ingram Micro.” Id. (emphasis in original).
Finally, in a third opinion, after Appellant had an
opportunity to take discovery on the HP products Govplace
received from Ingram Micro, the District Court addressed the
remaining issue of whether Govplace’s reliance on Ingram
9
Micro precluded a finding that Govplace knowingly sold HP
products that did not comply with the TAA. The court
emphasized that in order to establish “reckless disregard”
under the FCA, Appellant was required to demonstrate not
merely negligence on the part of Govplace, but a standard the
court referred to as “gross negligence-plus.” United States ex
rel. Folliard v. Govplace, 930 F. Supp. 2d 123, 130 (D.D.C.
2013). The court explained that “absent some reason to
question Ingram Micro’s representations, it was not gross
negligence-plus for Govplace not to separately certify that the
products were TAA-compliant.” Id. at 134. Appellant
offered two reasons why Govplace’s reliance was
unreasonable, both of which the court rejected.
First, Appellant pointed to an email from an HP
employee purportedly establishing that Govplace sold a
product that was made in China, a non-designated country.
Id. at 135. The court rejected this argument because
Govplace received this email after the alleged sale occurred,
and therefore the information supplied in the email did not
have any bearing on Govplace’s knowledge at the time of the
sale. The court also rejected this argument because the email
indicated that, while some versions of the product in question
were made in China, there was a version that was made in a
TAA-compliant country, and it was far from clear that the
product Govplace sold was actually made in China. Id.
Second, Appellant relied on unsolicited price lists that
Tech Data Corporation (“Tech Data”), a competitor of Ingram
Micro, sent to Govplace. Id. These price lists, Appellant
asserted, “show[] critical inconsistencies regarding the origin
of the disputed products.” Id. (internal quotation marks
omitted). The court found this argument unpersuasive,
pointing first to the fact that “[t]here is no indication that
Govplace ever read or even opened these price lists,” id. at
10
136, and thus this information could not have undermined
Govplace’s reliance on Ingram Micro’s representations. In
addition, and more fundamentally, the court noted that, in
contrast to Ingram Micro’s express certifications regarding
the COO in its communications to resellers, the “Tech Data
price lists, on their face, disclaim their reliability.” Id. Thus,
even if Govplace had reviewed the price list, Govplace could
have disregarded the information given Tech Data’s
disclaimer. Concluding in turn that Govplace’s “actions
cannot amount to gross negligence plus, deliberate ignorance,
or reckless disregard,” the court granted Govplace summary
judgment as to this remaining claim, thereby dismissing the
complaint with prejudice. Id. at 137.
Appellant appeals the District Court’s denial of his Rule
56(d) requests and its granting of summary judgment to
Govplace, asserting that the court improperly limited the
scope of his discovery and erred in its assessment of whether
Govplace reasonably relied on Ingram Micro’s certification.
II.
Because summary judgment may not be granted until “all
parties have ‘had a full opportunity to conduct discovery,’ ”
Convertino v. U.S. Dep’t of Justice, 684 F.3d 93, 99 (D.C.
Cir. 2012) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 257 (1986)), we begin our analysis by determining
whether the District Court abused its discretion in denying
Appellant’s Rule 56(d) discovery request. If so, then its
summary judgment rulings were premature and thus cannot
stand. See id.
We review “a district court’s refusal to grant a Rule 56[d]
request under an abuse of discretion standard.” Messina v.
Krakower, 439 F.3d 755, 762 (D.C. Cir. 2006). We review
11
de novo a district court’s order granting summary judgment,
see, e.g., U.S. ex rel. Bettis v. Odebrecht Contractors of Cal.,
Inc., 393 F.3d 1321, 1325-26 (D.C. Cir. 2005), and its factual
findings for clear error, Salahi v. Obama, 625 F.3d 745, 750
(D.C. Cir. 2010).
A.
1.
Under the abuse of discretion standard that governs
discovery disputes, a trial court’s authority is at its zenith.
See Gaujacq v. EDF, Inc., 601 F.3d 565, 580 (D.C. Cir.
2010); see also Watts v. SEC, 482 F.3d 501, 507 (D.C. Cir.
2007) (“The basis for our deferential, abuse-of-discretion
review of district court discovery rulings is the recognition
that supervising the to-and-fro of district court litigation falls
within the expertise, in the first instance, of district courts and
not courts of appeals.”). Our decision in Convertino provides
the standard for ruling on Rule 56(d) requests. 3 In Convertino
we explained that the “movant must submit an affidavit which
states with sufficient particularity why additional discovery is
necessary.” Convertino, 684 F.3d at 99 (quoting Ikossi v.
Dep’t. of Navy, 516 F.3d 1037, 1045 (D.C. Cir. 2008))
(internal quotation marks omitted). We also outlined the three
criteria that the affidavit must satisfy: (1) “[I]t must outline
the particular facts [the non-movant] intends to discover and
describe why those facts are necessary to the litigation,” id. at
99; (2) “it must explain ‘why [the non-movant] could not
produce the facts in opposition to the motion for summary
3
The Convertino decision discusses then-Rule 56(f), which is now
Rule 56(d). Rule 56(d) “carrie[d] forward without substantial
change the provisions of former subdivision (f).” FED. R. CIV. P.
56 advisory committee’s notes to 2010 Amendments.
12
judgment,’ ” id. at 99–100 (quoting Carpenter v. Fed. Nat’l
Mortg. Ass’n, 174 F.3d 231, 237 (D.C. Cir. 1999)); and (3) “it
must show the information is in fact discoverable,” id. at 100.
Before beginning our discussion, we pause to clarify the
import of the statement in Convertino that a Rule 56(d)
request should be granted “almost as a matter of course unless
the non-moving party has not diligently pursued discovery of
the evidence,” 4 id. at 99 (internal quotation marks omitted), a
remark Appellant emphasizes in urging reversal. Appellant’s
Br. at 23, 25. Appellant appears to interpret this statement as
conveying the principle that, so long as the non-movant has
diligently pursued discovery, courts should routinely grant
their request. This is incorrect because it suggests that the
non-movant’s diligence in pursuing discovery trumps the
three requirements outlined in Convertino. While the non-
movant’s diligence is certainly a factor a district court may
consider, 5 it is not a sufficient basis, standing alone, to grant a
Rule 56(d) request. Instead, district courts must assess all the
requirements discussed in Convertino.
It is also incorrect to conclude, as Appellant suggests,
that district courts are supposed to grant Rule 56(d) requests
more often than not. District courts should resolve each
request based on its application of the Convertino criteria to
4
We first announced this principle in Berkeley v. Home Ins. Co., 68
F.3d 1409, 1414 (D.C. Cir. 1995), quoting from the Fifth Circuit’s
decision in Wichita Falls Office Assocs. v. Banc One Corp., 978
F.2d 915, 919 n.4 (5th Cir.1992). And it appears that the Fifth
Circuit adopted this principle from the Third Circuit. See, e.g.,
Costlow v. United States, 552 F.2d 560, 564 (3d Cir. 1977).
5
A district court may find the non-movant’s diligence relevant to
the requirement that the non-movant “explain why he could not
produce the facts in opposition to the motion for summary
judgment.” Convertino, 684 F.3d at 99-100.
13
the specific facts and circumstances presented in the request.
Indeed, in tracing the genesis of the phrase “granted almost as
a matter of course” to the Third Circuit’s decision in Ward v.
United States, 471 F.2d 667, 670 (3d Cir. 1973), it is clear
that the court made this statement based on the specific facts
before it, and thus was not placing a thumb on the scale in
favor of non-movants.
In Ward, the court held that the district court should
have granted the plaintiff’s Rule 56(d) request in its
negligence action against the United States, because “the facts
respecting possible . . . negligence [were] solely in the
possession of [the alleged tortfeasor].” Id. at 670; see also
Costlow v. United States, 552 F.2d 560, 564 (3d Cir. 1977)
(“[W]here the facts are in possession of the moving party a
continuance of a motion for summary judgment for purposes
of discovery should be granted almost as a matter of
course.”). The Third Circuit thus reached the conclusion that
when the facts giving rise to the cause of action are in the sole
possession of the moving party, courts should grant the Rule
56(d) request “almost as matter of course.” 6 It is easy to see
why the Convertino factors would likewise lead to the same
ruling under those facts.
Having clarified the Rule 56(d) criteria, we turn now
to whether the District Court abused its discretion in resolving
the discovery disputes in this case.
6
We also note that similar language appears in Federal Rule of
Civil Procedure 15(a)(2): a court “should freely give [a party] leave
[to amend its complaint] when justice so requires.” Yet there, as
well, despite this permissive language, a district court must assess
all factors we have deemed relevant. See Atchinson v. Dist. of
Columbia, 73 F.3d 418, 426 (D.C. Cir. 1996).
14
2.
The District Court denied Appellant’s Rule 56(d) request
with respect to (1) the products Govplace sold pursuant to its
FirstSource contract, (2) its “open market” sale, and (3) a sale
by New Tech, which had entered into a “teaming agreement”
with Govplace. The court also confined Appellant’s
discovery, at least at the outset, to the sales specifically
identified in Appellant’s complaint. We find no abuse of
discretion in any of those rulings.
Appellant claims that he was entitled to discovery related
to sales by Govplace that were not specifically identified in
his complaint, because the sales he identified in his complaint,
he contends, were “representative” of other allegedly
fraudulent sales. See Appellant Br. at 17. Appellant’s
argument is factually incorrect. He never alleged that the
Govplace sales identified in his complaint were representative
of other, yet-discovered Govplace transactions. Had he
sought to allege as much, he clearly knew how to do so. His
allegations against Govplace stand in stark contrast to his
allegations against some of the other defendants, in which he
expressly claimed that the transactions identified in his
complaint were representative. Compare, e.g., Pl.’s Second
Am. Compl. (“SAC”) ¶ 101 (J.A. 106-07) (asserting that the
“following chart summarizes confirmed sales of products by
Defendant Government Acquisitions to the US Government
in September 2007 that did not originate in designated
countries: These sales represent false claims presented by the
defendant to the United States Government, and further
auditing will uncover more”) (emphasis added), with SAC ¶¶
117-18 (J.A. 113-118) (identifying sales made by Govplace
but nowhere does Appellant allege that these specific sales
were “representative” of other procurements); see also
Government Acquisitions, Inc., 858 F. Supp. 2d at 85 & n.2
15
(stating that “Folliard’s complaint identifies GAI’s allegedly-
improper sales as ‘representative’ of GAI’s behavior,” but
observing in a footnote that “[n]o such allegation is made
towards Govplace[,]” as the “complaint only lists a specific
set of sales without reference to other sales to be
discovered”). In conclusion, the District Court did not abuse
its discretion in confining Appellant’s discovery to the
transactions listed in his complaint, especially considering
that the court left open the possibility of permitting Appellant
to engage in additional discovery “if [he] prevail[ed] as to
either or both defendants on the specific sales alleged in the
complaint.” Government Acquisitions, Inc., 858 F. Supp. 2d
at 85. 7
The court also did not abuse its discretion in denying in
part Appellant’s Rule 56(d) requests as to certain products.
Turning to the first request the court denied, Appellant
contends that the court should have granted discovery
regarding the products Govplace sold under its FirstSource
contract. Govplace had asserted before the District Court that
7
Because Appellant’s argument is factually incorrect, it is
unnecessary to decide whether Appellant should have been afforded
discovery regarding transactions that were not listed in his
complaint. We note that our sister circuits have addressed this
issue, with somewhat varying conclusions. Compare U.S. ex rel.
Duxbury v. Ortho Biotech Prods., L.P., 719 F.3d 31, 39 (1st Cir.
2013) (concluding that the district court did not abuse its discretion
in “limit[ing] discovery to those allegations, contained in paragraph
211 of the amended complaint, which satisfied Rule 9(b)’s
particularity requirement”), with U.S. ex rel. Bledsoe v. Cmty.
Health Sys., Inc., 501 F.3d 493, 510 (6th Cir. 2007) (“[W]here a
relator pleads a complex and far-reaching fraudulent scheme with
particularity, and provides examples of specific false claims
submitted to the government pursuant to that scheme, a relator may
proceed to discovery on the entire fraudulent scheme.”).
16
the FirstSource contract was exempt from TAA requirements
because it was awarded as a 100% Small Business Set-Aside.
Government Acquisitions, Inc., 880 F. Supp. 2d at 46.
Govplace also disclosed the contract to Appellant. Id.
Nonetheless, in his Rule 56(d) request Appellant sought
information related to the product—for example, the
procurement number, the number of units sold, and the
country of origin abbreviation of the products. J.A. 758. He
also sought to depose Adrianne Angle, the contracts manager
for Govplace, and a Rule 30(b)(6) representative, see FED. R.
CIV. P. 30(b)(6), regarding “[Govplace’s] FirstSource
Contract and how transactions under that agreement are
allegedly exempt from the TAA.” J.A. 903. Appellant’s
argument misses the point.
If the contract is exempt from the TAA, then any
products sold under the contract do not have to comply with
the TAA. Accordingly, any discovery related to “transactions
under that agreement” is immaterial. The discovery
Appellant sought, then, “ ‘would [not] create a triable issue.’ ”
Convertino, 684 F.3d at 99 (quoting Byrd v. U.S. EPA, 174
F.3d 239, 248 (D.C. Cir. 1999)). Appellant needed, instead,
to produce facts that contradicted Govplace’s claim that its
contract is exempt from the TAA. He failed to do this. The
District Court therefore correctly denied his request, and,
there being no genuine dispute as to any material fact, granted
Govplace summary judgment as to these products.
Appellant’s request for discovery related to Govplace’s
sales to the federal government in the “open market” was also
deficient. Govplace had claimed that the product at issue
“was not listed on its GSA Schedule Contract and was sold on
the ‘open market’ without any representation of its COO,”
and it also claimed that the sales “totaled less than the TAA
threshold of $193,000 at the time of sale.” Government
17
Acquisitions, Inc., 880 F. Supp. 2d at 48. Govplace again
disclosed the relevant contracts to Appellant. J.A. 711-730.
Appellant responded by requesting to depose Adrianne Angle
and a Rule 30(b)(6) representative regarding “GP’s Open
Market Sales.” J.A. 903. This request lacked the particularity
required by Convertino. Given that Appellant already had a
copy of the relevant contracts, this vague request does not
indicate why the depositions would reveal any information
beyond what is apparent on the face of the contracts—that the
product was not listed on Govplace’s GSA schedule and the
total value of sales ($181,358.00), J.A. 728, was below the
then-applicable TAA threshold. See Convertino, 684 F.3d at
99 (stating that the non-movant must state with “sufficient
particularity” why the discovery sought is necessary) (internal
quotation marks omitted). Accordingly, the District Court
correctly denied his request and granted Govplace summary
judgment as to these products.
We turn briefly to the remaining request for discovery,
which concerned the sale by New Tech pursuant to its
authorized government teaming agreement with Govplace.
Govplace argued that it was entitled to summary judgment on
this sale because it did not actually sell the product—“it was
sold by” New Tech, “a third party,” who “made all relevant
representations about the product.” Government Acquisitions,
Inc., 880 F. Supp. 2d at 48. Govplace also asserted that the
“product was not listed on its GSA Schedule Contract,” id.,
and it disclosed its contract with New Tech. J.A. 731-735.
Appellant did not explain at all—let alone with sufficient
particularity—why he sought discovery related to these
products. As the District Court observed, nowhere does
Appellant’s “boilerplate discovery request” mention the
relevant product by name, “New Tech, third party contract, or
‘Teaming Agreement.’ ” Government Acquisitions, Inc., 880
F. Supp. 2d at 48. Thus, we find no abuse of discretion in the
18
court’s denial of this discovery request, and the court
correctly granted summary judgment as to these products.
B.
We turn now to the remaining issue: whether Govplace
reasonably relied on Ingram Micro’s certification regarding
the COO information for the four HP products it sold to the
federal government. If Govplace’s reliance was reasonable,
the District Court correctly granted Govplace summary
judgment as to these products, because Govplace did not
“knowingly” sell HP products that originated from non-
designated countries.
Under the FCA, a person acts “ ‘knowingly’ by (1)
having actual knowledge, (2) acting in deliberate ignorance,
or (3) acting in reckless disregard.” U.S. ex rel. K & R Ltd.
P’ship v. Massachusetts Hous. Fin. Agency, 530 F.3d 980,
983 (D.C. Cir. 2008) (citing 31 U.S.C. § 3729(b)). “Reckless
disregard under the FCA is ‘an extreme version of ordinary
negligence.’ ” Id. (quoting United States v. Krizek, 111 F.3d
934, 942 (D.C. Cir. 1997)). “To successfully oppose
summary judgment,” Appellant Folliard “must show that a
reasonable factfinder, drawing all ‘justifiable inferences’ from
the evidence in [his] favor, could find [that Govplace] at least
recklessly disregarded the falsity of its claims.” Id. (citations
omitted). Applying these standards here, we conclude that
Appellant’s evidence fell short.
As we have discussed, see supra Part I.A., Govplace
acquired the HP products at issue from Ingram Micro, the
largest technology products distributor, by participating in
Ingram Micro’s Program. J.A. 468, 972-73. Through the
Program, Ingram Micro expressly certifies to resellers, such
as Govplace, that COO information is accurate, and more
19
generally that the products it distributes comply with the
TAA. J.A. 516.
Equally important, GSA has implicitly approved of
Govplace’s reliance on Ingram Micro’s certification:
Govplace has informed GSA during multiple Contractor
Administrator Visits that it relies on Ingram Micro’s Program
in representing that the COO information for the items listed
in its GSA schedule is accurate, and GSA’s Administrative
Report Cards evaluating Govplace have all concluded that
Govplace has complied with the TAA. J.A. 470. We think a
contractor like Govplace is ordinarily entitled to rely on a
supplier’s certification that the product meets TAA
requirements.
Appellant contends, nonetheless, that Govplace’s reliance
on Ingram Micro’s certifications in this case was
unreasonable for primarily two reasons: (1) Govplace
received an email from an HP employee indicating that some
of Govplace’s products were produced in China, a non-
designated country, Appellant Br. at 28; and (2) a competitor
of Ingram Micro sent Govplace an unsolicited price list
which, according to Appellant, contradicts the COO
information Govplace received from Ingram Micro, id. We
address, and ultimately reject, each argument in turn.
Appellant’s reliance on the email from the HP employee
is misplaced. First and most fundamentally, as the District
Court noted, “Govplace received this information after the
alleged sales of Q5983A took place,” therefore Appellant
“cannot use this to show that Govplace acted knowingly, at
the time of sale, for product number Q5983A.” Govplace,
930 F. Supp. 2d at 135 (emphasis in original). Second, as the
District Court also explained, the email demonstrates that
multiple versions of the product were made; and while the
20
email indicates that some versions of the product were made
in China, a non-designated country, “the products intended for
the public sector were made in a TAA-compliant country.”
Id. Thus, this email did not undermine Govplace’s reliance
on Ingram Micro’s certification.
Appellant also relies on an unsolicited price list that Tech
Data, a competitor of Ingram Micro, sent to Govplace,
purportedly showing inconsistencies in the origin of the
disputed products. This argument is equally flawed.
Govplace claimed that, “[b]ecause of [its] relationship with
Ingram Micro and its participation in the GSA Pass Through
Program, [it] had no need for Tech Data’s unsolicited
information and disregarded it.” Appellee Br. at 50. And the
District Court concluded that Appellant provided “no
evidence—such as an email from a Govplace employee
forwarding or commenting on a Tech Data list—that would
show Govplace actually read these price lists.” Govplace,
930 F. Supp. 2d at 136. We find no error in this factual
conclusion.
Furthermore, unlike Ingram Micro’s express certification
regarding the COO information, Tech Data’s price list
includes disclaimers regarding the same information. 8
Therefore, even if Govplace had reviewed Tech Data’s price
list, it did not provide any basis for Govplace to question the
8
Compare J.A. 978 (“Tech Data is not responsible for compliance
with regulations, requirements or obligations associated with any
contract resulting from this quotation unless said regulations,
requirements or obligations have been passed to Tech Data and
approved in writing by an authorized representative of Tech
Data.”), with J.A. 516 (“Ingram Micro passes through the following
manufacturer certifications: . . . Products offered by the
manufacturer are compliant with the Trade Agreements Act.”).
21
accuracy of Ingram Micro’s COO information. 9 In
conclusion, none of the evidence presented by Appellant
undermines Govplace’s reliance on Ingram Micro’s
certification regarding the COO information for the four HP
products.
III.
The District Court properly exercised its significant
discretion in managing discovery when it denied in part
Appellant’s Rule 56(d) discovery request as to certain
products. With the request denied, there was not any genuine
dispute as to material facts. We therefore do not find any
error in its grant of summary judgment to Govplace as to
products it sold to the federal government under its
FirstSource contract, in the open market, and as to the sale by
New Tech pursuant to their government authorized teaming
agreement with Govplace.
9
Appellant also relied on the declaration of Dr. Jeremy Albright to
demonstrate the unreasonableness of Govplace’s reliance on
Ingram Micro’s certification. Appellant Br. at 28. Dr. Albright’s
declaration asserts that “Govplace sold 1,375 goods to the federal
government that were manufactured in non-designated countries.”
J.A. 912. In arriving at his conclusions, Dr. Albright relied in part
on COO information produced in the course of another litigation
that did not involve Govplace. J.A. 913. Thus, even assuming Dr.
Albright’s declaration is admissible, see Govplace, 930 F. Supp. 2d
at 128-29 (discussing its “serious concerns” regarding the
admissibility of Dr. Albright’s declaration), and accurate, Appellee
Br. at 59 (“[T]he Albright report failed to acknowledge, let alone
even consider, the numerous exceptions to TAA compliance,
including small business set aside contracts for small businesses . . .
.”), it does not have any bearing on what Govplace knew at the time
of the transactions because Appellant failed to produce evidence
indicating that Govplace had knowledge of this COO information.
22
We conclude that Govplace reasonably relied on Ingram
Micro’s COO certification. Appellant has thus failed to raise
a genuine issue of material fact whether Govplace knowingly
sold to the federal government products that did not comply
with TAA requirements, a prerequisite to FCA liability.
Accordingly, we affirm.
So ordered.