Morsell v. Symantec Corporation , 130 F. Supp. 3d 106 ( 2015 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
UNITED STATES ex rel. LORI MORSELL, :
:
Plaintiff, : Civil Action No.: 12-00800 (RC)
:
v. : Re Document Nos.: 46, 54
:
SYMANTEC CORPORATION, :
:
Defendant. :
MEMORANDUM OPINION
GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS; DENYING THE
UNITED STATES’ MOTION FOR PARTIAL SUMMARY JUDGMENT
I. INTRODUCTION
In the course of her work at Symantec Corporation, Lori Morsell came to believe that her
employer had violated certain contractual obligations to the United States. She subsequently
filed this qui tam action as Relator against Symantec under the False Claims Act. The United
States, California, and Florida intervened, and Relator elected to assert claims on behalf of New
York. All plaintiffs filed a joint complaint. Presently before the Court are Symantec’s motion to
dismiss the complaint and the United States’ motion for partial summary judgment. Because the
United States adequately pleads all of its claims but California, Florida, and Relator fail to do so,
the Court grants in part and denies in part Symantec’s motion to dismiss. Because there are
genuine disputes of material fact as to all issues presented in the United States’ motion for partial
summary judgment, the Court denies that motion in full.
II. FACTUAL BACKGROUND 1
A. Negotiation of the Contract
Symantec Corporation provides software and services in the areas of security, storage,
and backup. See Omnibus and Restated Complaint and Complaint in Intervention (“Omnibus
Complaint”) ¶ 20, ECF No. 41. The instant dispute arises out of Symantec’s negotiation and
performance of a Multiple Award Schedule (“MAS”) contract for supplying a range of products,
licenses, and services to the federal government (the “Contract” or “GSA Contract”). See id. ¶¶
21, 55, 56.
MAS contracts enable the General Services Administration (“GSA”) to streamline federal
government procurement by providing pre-negotiated maximum prices and other terms that
govern all subsequent purchases covered by the contract. See id. ¶¶ 33–35. The GSA establishes
federal regulations governing solicitations, negotiations, and contracts executed under the MAS
program. See id. ¶¶ 39–52. These regulations prescribe standard questions contained in MAS
solicitations, in response to which the offeror must disclose certain information in a Commercial
Sales Practice Format, known as the offeror’s “CSPs.” See id. ¶¶ 41–42; 48 C.F.R. § 515.408
(MAS Requests for Information); id. § 515.408, fig. § 515.4 (Instructions for the Commercial
Sales Practices Format). Additionally, an offeror seeking an MAS contract must provide
information that is “current, accurate, and complete” as of fourteen calendar days prior to
submission. See id. § 515.408, fig. 515.4. For their part, GSA contracting officers are required
1
Because the majority of the Court’s analysis concerns Symantec’s motion to dismiss,
see infra Part IV, the Court’s factual background assumes the truth of the well-pleaded factual
allegations in the Omnibus Complaint, see Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), and
draws on documents referenced in and integral to the complaint, see Marshall v. Honeywell
Tech. Solutions, Inc., 536 F. Supp. 2d 59, 65 (D.D.C. 2008). In connection with the United
States’ motion for partial summary judgment, the parties have proffered evidence underlying
various disputes of fact; to simplify the factual background, the Court will reserve discussion of
that evidence for its analysis below. See infra Part V.
2
to “seek to obtain the offeror’s best price (the best price given to the most favored customer).”
Id. § 538.270(a). To this end, contracting officers must “compare the terms and conditions of the
[offeror’s response to the] MAS solicitation with the terms and conditions of agreements with the
offeror’s commercial customers.” Id. § 538.270(c); see also Omnibus Compl. ¶¶ 31–52
(reviewing MAS regulatory scheme).
In February 2006, in response to the GSA’s solicitation for the Contract, Symantec
submitted an initial offer containing its CSPs. See Omnibus Compl. ¶¶ 41, 58. Consistent with
applicable regulations, the solicitation asked in Question 3 whether the discounts and
concessions offered by Symantec to the Government were “equal to or better than [its] best price
. . . offered to any customer acquiring the same items regardless of quantity or terms and
conditions.” Omnibus Compl. ¶ 59; CSPs, Def.’s Attach. A, ECF No. 46-1. 2 In response to this
question, Symantec checked the box for “NO.” Id.
Question 4(a) directed Symantec to disclose information in the standard CSP format
about its discounting practices. See CSPs, Def.’s Attach. A. To comply with this requirement,
Symantec attached several charts. See Omnibus Compl. ¶ 61. One chart purported to describe
the frequency of non-published discounts by magnitude for 2005 sales (“Frequency Chart”). See
id. ¶ 64.a. The Frequency Chart showed that in 2005, Symantec offered non-published discounts
of over 40% only very rarely—less than 3% of the time. See id. ¶ 65. Moreover, the chart
showed that in 0.02% of sales, Symantec offered discounts ranging from 91-100%. See CSPs,
Def.’s Attach. A.
2
Question 3 reads in full: “Based on your written discounting policies (standard
commercial sales practices in the event you do not have written discounting policies), are the
discounts and any concessions which you offer the Government equal to or better than your best
price (discount and concessions in any combination) offered to any customer acquiring the same
items regardless of quantity or terms and conditions? YES ___ NO ___.” Omnibus Compl. ¶ 59;
CSPs, Def.’s Attach. A.
3
The Frequency Chart, however, included numerous published discounts, in addition to
the non-published discounts it purported to reflect. This erroneous inclusion of published
discounts caused Symantec to understate the frequency of discounts above 40% (and, for the
same reason, to inflate the frequency of discounts below 40%). See Omnibus Compl. ¶¶ 101,
102. Had the Frequency Chart included only non-published discounts, it would have shown that
in 2005, Symantec provided non-published discounts above 40% over 20% of the time—not
merely 3%. See id. ¶ 103. Symantec knew of the Frequency Chart’s inclusion of published
discounts, among other inaccuracies. See id. ¶¶ 108–12.
A second chart purported to set forth the types of reasons for Symantec’s non-published
discounts and the frequency of each type (“Reason Code Chart”). See id. ¶ 64.b. According to
the Reason Code Chart, a sizeable plurality (47%) of non-standard discounts resulted from
proration of service agreements and adjustments to enterprise license agreements, and Symantec
offered non-standard discounts for “other” reasons not specified in the chart relatively
infrequently—only 7% of the time. See id. ¶¶ 67, 68; see also CSPs, Def.’s Attach. A. A third
chart purported to report the level of management approval required at various discount
magnitudes (“Management Approval Chart”). See Omnibus Compl. ¶ 64.c. For instance,
according to the Management Approval Chart, all discounts greater than 50% required approval
by a Regional Vice President. See id. ¶ 69.
In actuality, however, both the Reason Code Chart and Management Approval Chart
were inaccurate. The charts were generated using data from “eSPA”—Symantec’s system for
approving non-published discounts. See id. ¶¶ 81, 99. 3 In 2005, however, over 9,000
3
The Omnibus Complaint also alleges that Symantec submitted a separate chart
explaining management approval for non-published discounts for services, similar to the
Management Approval Chart, which covered only products and other items. See Omnibus
4
commercial orders receiving non-published discounts were not processed through the eSPA
system. See id. ¶ 99. Accordingly, neither the Reason Code Chart nor Management Approval
Chart accounted for these orders. Symantec knew at the time that eSPA was an ineffective
system for monitoring discounts. See id. ¶¶ 100, 104–07.
Question 4(b) asked whether “any deviations” from Symantec’s disclosed policies and
practices “ever result in better discounts (lower prices) or concessions than indicated.” Id. ¶ 59;
CSPs, Def.’s Attach. A. 4 Symantec responded “NO.” Id. The February 2006 offer containing
the CSPs was signed by Symantec’s Senior Director of Public Sector Business Operations Kim
Bradbury. See Omnibus Compl. ¶ 56.
During the subsequent MAS contract negotiation, Bradbury submitted various materials
to GSA contracting officer Gwen Dixon elaborating on the pricing offered by Symantec. In
October 2006, Bradbury emailed Dixon a presentation purporting to give “an overview of new
discounting policies and procedures for all products sold by Symantec Corporation” (“October
2006 Presentation”). Id. ¶ 72. The October 2006 Presentation mentioned five buying
programs—(a) Express, (b) Government, (c) Academic, (d) Rewards, and (e) Enterprise
Options—along with the requirements for purchasing at different pricing levels or “bands”
within each program. Id. ¶¶ 73–75. According to the October 2006 Presentation, in order to
obtain Rewards program pricing, customers had to accumulate points based on the volume of
their purchases and were required to make a minimum initial purchase amounting to 6,000
Compl. ¶ 91. To the extent that the services chart is relevant to the issues addressed in this
Memorandum Opinion, the Court herein refers collectively to both charts as the “Management
Approval Chart.”
4
Question 4(b) reads in full: “Do any deviations from your written policies or standard
commercial sales practices disclosed in the above chart ever result in better discounts (lower
prices) or concession than indicated? YES ___ NO ___. If YES, explain deviations in accordance
with the instructions at Figure 515.4-2, which is provided in this solicitation for your
convenience.” Omnibus Compl. ¶ 59; CSPs, Def.’s Attach. A.
5
points. See id. ¶¶ 78, 79. The points, moreover, expired after two years. See id. ¶ 80. Bradbury
also provided Dixon with documents stating that Symantec’s “Government buying program”
enjoyed a discount of 0% to 16% off of “Commercial MSRP.” Id. ¶ 87. 5 Lastly, Bradbury
averred that “[a]ny deviations from published discounts require management approval,” and that
“[d]eviations must be documented and approved in accordance with . . . guidelines,” such as
meeting competition and market segment penetration. Id. ¶ 90.
These disclosures were allegedly false or incomplete. First, the “Commercial MSRP”
that Symantec used as a baseline for communicating the offered discounts was derived solely
from the Express program pricelist and did not reflect prices for all of Symantec’s commercial
customers. See id. ¶ 88. Symantec further failed to disclose to the GSA that pricing under the
Rewards buying program was better than that offered through the Express, Government, and
Academic programs. See id. ¶¶ 76–77, 85, 115. Symantec also did not explain how customers
accumulated points, or how easily commercial customers could qualify for Rewards pricing by
earning at worst one point for every five dollars spent. See id. ¶ 116. Symantec did not disclose
documented exceptions to the Rewards program rules—the minimum initial purchase
requirement, points needed to enjoy better pricing bands, and the two-year validity period for
points. See id. ¶ 118. Lastly, Symantec failed to disclose any information about its rebate
programs. See id. ¶¶ 62, 77, 123. Symantec had contemporaneous knowledge of all of these
inaccuracies. See id. ¶¶ 119–26.
On January 25, 2007, Symantec sent Dixon its Final Proposal Revision for the Contract.
See id. ¶ 93. 6 Symantec stated therein that “all commercial business practices have been fully
5
“MSRP” stands for “manufacturer’s suggested retail price.”
6
The Omnibus Complaint refers to this document as the “Final Proposed Revision.”
Omnibus Compl. ¶ 93. The Court uses the title “Final Proposal Revision,” which appears in the
6
disclosed and are current, accurate and complete as of the conclusion of the negotiation,” and
certified “that the discounts, pricing and/or rates given to the government are either equal to
and/or greater than what is granted to any commercial and/or Government customer under
similar terms and conditions.” Id. ¶ 94. Symantec also proposed that the GSA receive these
discounts off of published pricelists: (i) for hardware appliance, enterprise availability, backup
executive, and security products and services, Symantec offered the GSA pricing at between 5%
and 35% off of Government End User MSRP; and (ii) for training, professional, managed
security, and technical support services, Symantec offered the GSA pricing at between 5% and
10% off of “Commercial MSRP.” Id. ¶ 95. That same day, the GSA accepted Symantec’s offer
as revised by the Final Proposal Revision, thereby executing the Contract. See id. ¶ 96.
Incorporated into the Contract is a standard mechanism known as the “Price Reductions
Clause,” which helps ensure that the GSA continues to receive favorable pricing and terms
during the performance of an MAS contract. The Clause provides:
(a) Before award of a contract, the Contracting Officer and the
Offeror will agree upon (1) the customer (or category of
customers) which will be the basis of award, and (2) the
Government’s price or discount relationship to the identified
customer (or category of customers). This relationship shall be
maintained through out the contract period. Any change in the
Contractor’s commercial pricing or discount arrangement
applicable to the identified customer (or category of customers)
which disturbs this relationship shall constitute a price reduction.
(b) During the contract period, the Contractor shall report to
the Contracting Officer all price reductions to the customer (or
category of customers) that was the basis of award. The
Contractor’s report shall include an explanation of the conditions
under which the reductions were made.
actual document, attached as Exhibit 18 to the United States’ Motion for Partial Summary
Judgment. See Final Proposal Revision, U.S. Ex. 18, ECF No. 55-19.
7
(c) (1) A price reduction shall apply to purchases under this
contract if, after the date negotiations conclude, the Contractor—
(i) Revises the commercial catalog, pricelist, schedule
or other document upon which contract award was
predicated to reduce prices;
(ii) Grants more favorable discounts or terms and
conditions than those contained in the commercial
catalog, pricelist, schedule or other documents upon
which contract award was predicated; or
(iii) Grants special discounts to the customer (or
category of customers) that formed the basis of
award, and the change disturbs the price/discount
relationship of the Government to the customer (or
category of customers) that was the basis of award.
(2) The Contractor shall offer the price reduction to the
Government with the same effective date, and for the same
time period, as extended to the commercial customer (or
category of customers)
48 C.F.R. § 552.238–75(a)–(c); see also Omnibus Compl. ¶¶ 48–52. Additionally, the Price
Reduction Clause requires contractors to notify the Government of any price reduction “as soon
as possible, but not later than 15 calendar days after its effective date,” 48 C.F.R. § 552.238–
75(f), and to modify the contract “to reflect any price reduction which becomes applicable,” id. §
552.238–75(g). In accordance with the Price Reduction Clause, and by the terms of the Final
Proposal Revision, Symantec and the GSA agreed that the Contract’s “basis of award” would be
Symantec’s “commercial class of customers.” See Omnibus Compl. ¶¶ 127–28.
B. Performance of the Contract
The Contract was in effect from January 2007 through September 2012. See id. ¶ 5.
During the life of the Contract, Symantec made numerous claims for payment under the Contract
or derivative agreements. See id. ¶ 134.
Meanwhile, Symantec extended more favorable pricing to numerous similarly situated
commercial customers. This better pricing resulted from non-published discounts, see id. ¶ 135,
8
the Rewards buying program, see id. ¶ 144, exceptions and modifications to Express and
Rewards buying program terms, see id. ¶¶ 146–57, and rebates, see id. ¶¶ 158–60. Based on the
volume of purchases made, the Government would have qualified for the best pricing under the
Rewards program within days of entering into the Contract. See id. ¶¶ 140–43. Symantec
neither informed the GSA of the better pricing offered to its commercial customers nor adjusted
the Government’s pricing under the Contract to match discounts enjoyed by those commercial
customers. See id. ¶¶ 133, 135, 145, 157, 160. Lastly, Symantec’s discounting practices during
the life of the Contract departed significantly from the Frequency Chart’s representation. See id.
¶¶ 137–39.
Rather than disclose any of these circumstances to the GSA, Symantec, in the course of
requesting modifications to the Contract, repeatedly certified to the GSA that its previously
disclosed commercial sales practices “ha[d] not changed.” Id. ¶¶ 182–83. While making these
certifications, Symantec’s management knew that Symantec lacked systems for maintaining the
relationship between the GSA’s and commercial pricing, that Symantec’s discounting programs
were in a state of disarray, that commercial customers were in fact receiving better pricing than
Symantec, and that sales representatives received no training on the Contract’s requirements.
See id. ¶¶ 161–80, 185. Symantec’s false and inaccurate initial disclosures, violations of the
Price Reduction Clause, and certifications that its initial disclosures remained unchanged caused
the Government to overpay for Symantec products by millions of dollars on sales directly made
by Symantec under the Contract. See id. ¶¶ 186–87.
Additionally, Symantec authorized the GSA and certain independent resellers to use its
CSPs and other disclosures in negotiating their own MAS contracts for the sale of Symantec
products. See id. ¶¶ 189–96. The resellers subsequently made numerous inflated claims for
9
payment under those MAS contracts. See id. ¶¶ 195–96. Accordingly, Symantec caused the
Government to overpay by millions of dollars for Symantec products purchased from the
resellers. See id. ¶ 197.
C. State Contracts
1. California
To expedite state agencies’ procurement, the California Department of General Services
(“DGS”) solicits, negotiates, and awards Leveraged Procurement Agreements (“LPAs”). See id.
¶ 203. Two types of LPAs govern procurement of information technology products and
services—(1) California Multiple Award Schedule (“CMAS”) contracts and (2) Software
License Program (“SLP”) contracts. Id. ¶ 205. The pricing and terms of CMAS and SLP
contracts are not usually negotiated or solicited competitively by California; instead, they are
generally based upon previously awarded federal GSA MAS contracts, though agencies may
attempt to negotiate better pricing and terms. Id. ¶¶ 207–08, 214–17.
Beginning as early as March 2009, Symantec authorized certain independent resellers to
respond to a CMAS solicitation by offering Symantec products covered by the GSA Contract.
See id. ¶ 220. Similarly, in as early as December 2009, Symantec submitted an SLP Letter of
Offer to DGS to supply Symantec products, through certain resellers, at discounts mirroring
those enjoyed by the GSA under the GSA Contract. See id. ¶ 223. Specifically, the SLP Letter
of Offer states that, subject to certain conditions, Symantec “will extend to the Authorized
Resellers the discount levels identified in Exhibit B,” which lists discounts ranging from 5% to
35%. SLP Letter of Offer, Def.’s Attach. D, ECF No. 46-4. The Letter also states that “[t]he
State shall be responsible for independently negotiating the final purchase price and payment
terms with its Authorized Resellers.” Id. Ultimately, DGS awarded CMAS and SLP contracts to
10
numerous resellers. See Omnibus Compl. ¶¶ 221, 224. Those resellers, in turn, sold Symantec
products to various California agencies. See id. ¶¶ 226–37.
2. Florida
In April 2006, the Division of State Purchasing of Florida’s Department of Management
Services issued a purchasing memorandum authorizing state agencies to procure products and
services under the GSA’s “Schedule 70,” which covers information technology software. See id.
¶ 241; Florida State Purchasing Mem. No. 2 (2005–06), Def.’s Attach. E, ECF No. 46-5.
Subsequently, Florida made purchases of Symantec products, and at least into 2011, Symantec
failed to disclose the fact that it offered larger discounts to commercial customers than it did for
orders placed by Florida. See Omnibus Compl. ¶¶ 241–42, 322. Symantec also used or allowed
to be used certain records or statements in connection with claims presented to Florida—
including its initial disclosures to the GSA, applications to modify the Contract with the GSA,
and certain “bills and GSA pricing information.” Id. ¶ 325.
3. New York
In November 2000, Veritas Software, which Symantec acquired between 2005 and 2006,
executed a contract with New York for the sale of software licenses and services (“New York
Contract”). See id. ¶¶ 54, 243. The New York Contract based its pricing on Veritas’s, and later
Symantec’s, “U.S. commercial price lists,” and extended to New York a 22.5% discount on
software and a 5.5% discount on related services. See id. ¶ 243. The New York Contract also
contained a price reduction clause that required Veritas, and later Symantec, to match price
reductions extended to “its customers generally or to similarly situated government customers”
and special offers or promotions “generally offer[ed] . . . to other customers . . . for a similar
quantity.” Id. In 2006, Veritas assigned the New York Contract to Symantec, which certified
11
that it would maintain the pricing terms. See id. ¶ 244. During the life of the New York
Contract, which expired in November 2010, Veritas and Symantec offered to similarly situated
commercial customers more favorable pricing than that enjoyed by New York. See id. ¶¶ 245–
47.
D. Procedural History
Lori Morsell has been a Symantec employee since March 2011. See id. ¶ 24. After
joining the company, she managed the GSA Contract and relations with business partners that
sold Symantec products under their own MAS contracts. Id. In this capacity, she became aware
of the above-described conduct and attempted unsuccessfully to change Symantec’s practices.
See id. ¶¶ 172, 174–75.
In May 2012, Morsell, as Relator on behalf of the United States, filed her initial
complaint against Symantec. See generally Compl., ECF No. 1. Subsequently, the United States
and the States of California and Florida elected to intervene. See ECF Nos. 21, 28, 29. Although
the State of New York declined to intervene, see ECF No. 27, Relator elected to proceed on its
behalf, see ECF No. 40; see also 13 N.Y.C.R.R. § 400.4(c)(1). In October 2014, the United
States, California, Florida, and Relator on behalf of New York filed their joint Omnibus
Complaint, which superseded all previous complaints. See Omnibus Compl. 1.
In the Omnibus Complaint, the United States brings several claims against Symantec
under the federal False Claims Act, 31 U.S.C. §§ 3729 et seq. (“FCA”). Count I alleges that
Symantec knowingly presented false claims, in violation of § 3729(a)(1)(A). See Omnibus
Compl. ¶¶ 248–55. Count II alleges that Symantec knowingly made false statements material to
its false claims, in violation of § 3729(a)(1)(B). See id. ¶¶ 256–62. In Count III, the United
States contends that Symantec caused certain independent resellers to present false claims, in
12
violation of § 3729(a)(1)(A). See id. ¶¶ 263–71. Count IV alleges that Symantec caused
independent resellers to make false statements material to false claims, in violation of
§ 3729(a)(1)(B). See id. ¶¶ 272–79. Lastly, Count V alleges that Symantec concealed its
obligations to the United States, in violation of § 3729(a)(1)(G). See id. ¶¶ 280–85.
Additionally, the United States asserts against Symantec a series of common-law claims—
negligent misrepresentation, id. ¶¶ 286–91 (Count VI), breach of contract, id. ¶¶ 292–97 (Count
VII), unjust enrichment, id. ¶¶ 298–300 (Count VIII), and payment by mistake, id. ¶¶ 301–03
(Count IX).
California, Florida, and Relator on behalf of New York each allege that Symantec
violated their respective state false claims statutes. See id. ¶¶ 304–39 (Counts X–XVI). By way
of relief, the United States, California, Florida, and New York (through Relator) each seek
damages, treble damages, and civil penalties under the statutes applicable to their claims. See id.
at 77–78. Relator seeks a share of the recoveries of the United States and the States under the
respective federal and state statutes. See id. at 78.
Symantec subsequently moved to dismiss the Omnibus Complaint in its entirety. See
Mot. Dismiss, ECF No. 46. The United States then moved for partial summary judgment on
certain elements of its FCA and contractual claims. See U.S. Mot. Partial Summ. J., ECF No.
54. 7 Both motions are now fully briefed.
7
Additionally, after the parties briefed both motions, the United States filed a notice of
supplemental authority, which the Court has considered. See ECF No. 63.
13
III. LEGAL STANDARDS
A. Rule 12(b)(6)
The Federal Rules of Civil Procedure require that a complaint contain “a short and plain
statement of the claim” in order to give the defendant fair notice of the claim and the grounds
upon which it rests. Fed. R. Civ. P. 8(a)(2); accord Erickson v. Pardus, 551 U.S. 89, 93 (2007)
(per curiam). A motion to dismiss under Rule 12(b)(6) does not test a plaintiff’s ultimate
likelihood of success on the merits; rather, it tests whether a plaintiff has properly stated a claim.
See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). A court considering such a motion presumes
that the complaint’s factual allegations are true and construes them liberally in the plaintiff’s
favor. See, e.g., United States v. Philip Morris, Inc., 116 F. Supp. 2d 131, 135 (D.D.C. 2000).
Nevertheless, “[t]o survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). This means that a plaintiff’s factual allegations “must be enough to raise a right to relief
above the speculative level, on the assumption that all the allegations in the complaint are true
(even if doubtful in fact).” Twombly, 550 U.S. at 555–56 (citations omitted). “Threadbare
recitals of the elements of a cause of action, supported by mere conclusory statements,” are
therefore insufficient to withstand a motion to dismiss. Iqbal, 556 U.S. at 678. A court need not
accept a plaintiff’s legal conclusions as true, see id., nor must a court presume the veracity of
legal conclusions that are couched as factual allegations, see Twombly, 550 U.S. at 555.
B. Rule 9(b)
Plaintiffs bringing claims under the FCA must satisfy the additional pleading
requirements of Rule 9(b). See United States ex rel. Totten v. Bombardier Corp., 286 F.3d 542,
14
551–52 (D.C. Cir. 2002). Rule 9(b) provides that “[i]n alleging fraud or mistake, a party must
state with particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b).
However, “[m]alice, intent, knowledge, and other conditions of a person’s mind may be alleged
generally.” Id. Reading Rule 9(b) together with Rule 8’s requirement that allegations be “short
and plain,” Fed. R. Civ. P. 8(a)(2), the D.C. Circuit has required plaintiffs to “state the time,
place and content of the false misrepresentations, the fact misrepresented and what was retained
or given up as a consequence of the fraud,” and to “identify individuals allegedly involved in the
fraud,” United States ex rel. Williams v. Martin-Baker Aircraft Co., Ltd., 389 F.3d 1251, 1256
(D.C. Cir. 2004) (citation omitted).
C. Rule 56
A court may grant summary judgment 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). A party moving for summary judgment bears the “initial responsibility” of
demonstrating “the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477
U.S. 317, 323 (1986); see also Fed. R. Civ. P. 56(c). In determining whether a genuine issue
exists, a court must refrain from making credibility determinations or weighing the evidence;
rather, “[t]he evidence of the non-movant is to be believed, and all justifiable inferences are to be
drawn in his favor.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
IV. SYMANTEC’S MOTION TO DISMISS
In its motion to dismiss, Symantec proffers a range of reasons why the Omnibus
Complaint’s allegations are deficient. As to all of the Government’s FCA claims, the Court
denies the motion to dismiss. See infra Part IV.A. Because California, Florida, and Relator on
behalf of New York have failed to state claims under their respective state statutes, the Court
15
dismisses their claims but grants them leave to amend their allegations. See infra Part IV.B.
Lastly, the Court denies the motion to dismiss as to the Government’s negligent
misrepresentation, breach of contract, unjust enrichment, and payment by mistake claims. See
infra Part IV.C, IV.D.
A. United States’ FCA Claims
In Counts I through V, the United States (the “Government”) asserts several claims
against Symantec under the FCA. See Omnibus Compl. ¶¶ 248–85. Originally enacted during
the Civil War to combat unscrupulous government contractors, the FCA enables a qui tam
plaintiff, known as a Relator, to initiate a civil action on behalf of the United States to recover
monies paid on account of false or fraudulent claims. See 31 U.S.C. § 3730; United States v.
Kellogg Brown & Root Servs., Inc., 800 F. Supp. 2d 143, 146–47 (D.D.C. 2011). As pertinent to
this case, the FCA, as amended, 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); “knowingly makes, uses, or causes to be made or used, a false record or statement
material to a false or fraudulent claim,” id. § 3729(a)(1)(B); or “knowingly conceals or
knowingly and improperly avoids or decreases an obligation to pay or transmit money or
property to the Government,” id. § 3729(a)(1)(G). 8
8
This Memorandum Opinion’s analysis is governed throughout by the FCA as amended
by the Fraud Enforcement and Recovery Act of 2009 (“FERA”). See FERA, Pub. L. No. 111–
21, 123 Stat. 1617 (2009). The Government expressly invokes the post-FERA FCA as to Count
V, which alleges that Symantec unlawfully concealed its obligations to the Government. See
Omnibus Compl. ¶ 67. The Government also asserts that the post-FERA “false statements”
provision, codified at 31 U.S.C. § 3729(a)(1)(B), applies retroactively to all conduct in this case,
and that for other FCA provisions, FERA did not materially change any element of liability. See
id. ¶ 30. For purposes of this motion, the Court assumes that the post-FERA version of the FCA
governs all claims in this action because Symantec has not moved to dismiss any claims on the
basis that the FERA amendments do not apply. See Mot. Dismiss 12, 38 (citing post-FERA
FCA).
16
1. Presenting or Causing to Be Presented False Claims (Counts I and III)
In Count I, the Government alleges that Symantec knowingly presented false claims for
payment under the Contract, in violation of 31 U.S.C. § 3729(a)(1)(A). See Omnibus Compl. ¶¶
248–55. In Count III, the Government contends that Symantec caused its independent resellers
to make false claims by allowing the resellers to use the false disclosures that it used in its own
negotiations with the GSA, in violation of the same FCA provision. See id. ¶¶ 263–71.
Section 3729(a)(1)(A) 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). Claims under this FCA provision are known as “presentment” claims. See
United States ex rel. Tran v. Computer Scis. Corp., 53 F. Supp. 3d 104, 117 (D.D.C. 2014). The
elements of presentment claims are that: “(1) the defendant submitted or caused to be submitted
a claim to the government, (2) the claim was false, and (3) the defendant knew the claim was
false.” See id. at 121–22 (citation and alteration omitted). In the case of the “paradigmatic . . .
factually false claim,” a claimant “submits information that is untrue on its face.” Kellogg
Brown & Root Servs., 800 F. Supp. 2d at 154 (citation omitted). 9 But a claim need not be
facially false to trigger liability under § 3729(a)(1)(A). See United States ex rel. Hendow v.
Univ. of Phoenix, 461 F.3d 1166, 1170 (9th Cir. 2006). Rather, courts have developed two
theories of legal “falsity”—the implied certification theory and the fraudulent inducement theory.
See id. at 1170–74; Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 786–88 (4th
Cir. 1999) (reviewing theories).
9
“Claim” means “any request or demand . . . for money or property” that is presented to
an officer or agent of the United States. 31 U.S.C. § 3729(b)(2)(A). Here, the parties do not
dispute that the Omnibus Complaint adequately alleges that Symantec submitted numerous
“claims” to the Government under the Contract or that Symantec’s resellers did the same under
their own contracts. See Omnibus Compl. ¶¶ 134, 195–96.
17
As the Court explains below, Count I survives Symantec’s motion to dismiss under either
the implied certification or fraudulent inducement theory. See infra Part IV.A.1.a. The Court
also denies the motion to dismiss Count III given Symantec’s failure to address two elements of
this indirect presentment claim—causation and false claims. See infra Part IV.A.1.b.
a. Presentment Claim (Count I)
Although the motion to dismiss is hardly a model of clarity, to the extent that Symantec
seeks dismissal of the presentment claim in Count I under both the implied certification and
fraudulent inducement theories, the Court rejects Symantec’s arguments as to both theories. 10
The implied certification theory proceeds from the premise that a defendant can be liable
under § 3729(a)(1)(A) for presenting a claim for payment that “rests on a false representation of
compliance with an applicable federal statute, federal regulation, or contractual term.” United
States v. Sci. Applications Int’l Corp., 626 F.3d 1257, 1266 (D.C. Cir. 2010) (“SAIC”).
Certifications need not be express; under the implied certification theory, a party can incur
liability for making claims under a contract while “withh[olding] information about its
noncompliance with material contractual requirements.” Id. at 1269. Courts applying the
implied certification theory still must ensure that claims satisfy both materiality and knowledge
requirements. A plaintiff must establish that the breached legal requirement was “a material
condition of the contract” or regulation under which the defendant made its claim for payment.
Id.; see also id. at 1271 (explaining that the plaintiff must establish that “compliance with the
legal requirement in question is material to the government’s decision to pay”). While the
10
Symantec’s motion cites in passing both the implied certification and fraudulent
inducement theories but neglects to analyze either of the two theories with any amount of
structure or clarity. See Mot. Dismiss 34, 37 (referencing implied certification theory); id. at 4,
14, 19 (referencing fraudulent inducement theory). This deficient briefing alone is grounds for
denying Symantec’s motion, though the Court below explains why the Omnibus Complaint’s
allegations are sufficient under both theories.
18
“existence of express contractual language specifically linking compliance to eligibility for
payment may well constitute dispositive evidence of materiality,” such language is not a
“necessary condition” for liability under the implied certification theory. Id. at 1269. 11
Likewise, the knowledge requirement helps “ensure that ordinary breaches of contract are not
converted into FCA liability.” Id. at 1271. The requisite knowledge has two dimensions: The
plaintiff must show 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.” Id.;
see also United States ex rel. Heath v. AT & T, 791 F.3d 112, 125 (D.C. Cir. 2015) (explaining
that plaintiff alleged that defendant “knew that compliance was a material and express condition
for reimbursement”).
The Government has adequately alleged each element of its presentment claim under the
implied certification theory. The Omnibus Complaint alleges that when making claims for
payment under the Contract, Symantec impliedly certified that its pricing continued to comply
with the Price Reduction Clause. See id. ¶¶ 250–51; see also 48 C.F.R. § 552.238–75(a)–(c), (f),
(g). But according to the Omnibus Complaint, these implied certifications were false: Symantec
routinely failed to disclose more favorable pricing extended to similarly situated commercial
customers and to adjust the Government’s pricing accordingly. See Omnibus Compl. ¶¶ 135–60.
As for materiality, given that the central goal of the MAS program is allegedly to ensure that the
Government receives a reasonable price for products and services, the Omnibus Complaint
supports a plausible inference that compliance with the Price Reduction Clause by maintaining
the agreed-upon “discount relationship” with commercial customers is “material to the
11
The parties assume, as will this Court, that, at least for purposes of this motion, the
question of whether a contractual or regulatory requirement is “material” to a decision to pay
under the implied certification theory mirrors the inquiry into whether a statement is “material”
to a false claim under § 3729(a)(1)(B). See SAIC, 626 F.3d at 1271; accord Mot. Dismiss 13.
19
government’s decision to pay.” SAIC, 626 F.3d at 1271; see also Omnibus Compl. ¶¶ 31–47, 94;
48 C.F.R. §§ 538.270, 552.238–75(a); cf. United States v. Triple Canopy, Inc., 775 F.3d 628,
637–38 (4th Cir. 2015) (reversing dismissal of implied certification presentment claim and
concluding that materiality was adequately alleged where “common sense strongly suggests that
the Government’s decision to pay a contractor for providing base security in an active combat
zone would be influenced by knowledge that the guards could not, for lack of a better term, shoot
straight”). Lastly, because knowledge “may be alleged generally” at this stage in the litigation,
Fed. R. Civ. P. 9(b), the Government’s general allegation suffices, see Omnibus Compl. ¶ 253
(“Symantec . . . had actual knowledge that [its] claims were false or acted with deliberate
ignorance or reckless disregard as to their falsity . . . .”). 12
Under the fraudulent inducement theory, liability attaches under § 3729(a)(1)(A) “for
each claim submitted to the Government under a contract which was procured by fraud, even in
the absence of evidence that the claims were fraudulent in themselves.” United States ex rel.
12
Symantec makes four arguments that seem to address the implied certification theory:
Symantec challenges the Government’s allegations that its certifications of compliance with the
Price Reduction Clause were (1) false and (2) made knowingly; (3) argues that the Omnibus
Complaint does not satisfy the particularity requirement of Rule 9(b); and (4) asserts that liability
is negated by the allegation that the Government was aware of the falsity. The Court rejects all
of these arguments as meritless—whether they pertain to the implied certification theory or any
other FCA claim or theory of liability. See United States ex rel. Shemesh v. CA, Inc., No. 09-cv-
1600, 2015 WL 1447755, at *8 (D.D.C. 2015) (“Shemesh II”) (rejecting defendant’s argument
that FCA claim should be dismissed for insufficient allegation of knowledge given lack of
“relevant materials to assess whether [defendant’s] position on its disclosure obligations is
objectively reasonable”); Heath, 791 F.3d at 126 (explaining that “the precise details of
individual claims are not, as a categorical rule, an indispensable requirement of a viable [FCA]
complaint” because the “central question” under Rule 9(b) is “whether the complaint alleges
‘particular details of a scheme to submit false claims paired with reliable indicia that lead to a
strong inference that claims were actually submitted’” (citation omitted)). In particular,
regarding Symantec’s “government knowledge” defense, even assuming (without deciding) that
such a defense exists under the FCA, the Court concludes that the Omnibus Complaint alleges at
most that the GSA understood that Symantec on rare occasions offered better pricing to certain
commercial customers, not that the GSA was aware that those customers were similarly situated
such that Price Reduction Clause obligations would be triggered.
20
Bettis v. Odebrecht Contractors of Cal., Inc., 393 F.3d 1321, 1326 (D.C. Cir. 2005) (applying
theory to “claims” under pre-FERA FCA). Congress expressly recognized this theory when it
amended the FCA in 1986, explaining that “each and every claim submitted under a contract . . .
which was originally obtained by means of false statements or other corrupt or fraudulent
conduct, or in violation of any statute or applicable regulation, constitutes a false claim.” Id.
(quoting S. Rep. No. 99–345, at 9 (1986)).
The Court has doubts as to whether the Government can press its presentment claim
under the fraudulent inducement theory given an inconsistency in the way courts have described
what this theory requires. In Bettis, the D.C. Circuit explained that the theory applies where a
contract was “procured by fraud,” suggesting a causal link between the defendant’s fraud and the
contract’s formation. Bettis, 393 F.3d at 1326; see also Tran, 53 F. Supp. 3d at 130. By
contrast, other courts have held that the fraudulent inducement theory requires that “a party
mak[e] promises at the time of contracting that it intends to break.” United States ex rel. Head v.
Kane Co., 798 F. Supp. 2d 186, 196 (D.D.C. 2011) (emphasis added); see also United States ex
rel. Frascella v. Oracle Corp., 751 F. Supp. 2d 842, 855 (E.D. Va. 2010). Although the
Omnibus Complaint’s allegations readily support an inference of causation or reliance, the
Government does not appear to allege that Symantec had any intent to break its promises. See
Omnibus Compl. ¶ 253 (alleging “knowledge” of the claims’ falsity or “deliberate ignorance or
reckless disregard as to their falsity”).
The Court, however, need not resolve this inconsistency in the fraudulent inducement
theory jurisprudence because Symantec does not invoke the “intent” formulation of that theory—
or any formulation, for that matter. Given that Symantec bears the burden to demonstrate that
the Government has failed to state a claim, its deficient briefing provides a sufficient basis for
21
denying its motion as to the fraudulent inducement theory. See Intelsat USA Sales Corp. v. Juch-
Tech, Inc., 24 F. Supp. 3d 32, 48 n.10 (D.D.C. 2014) (“All federal courts are in agreement that
the burden is on the moving party in a Rule 12(b)(6) motion to prove that no legally cognizable
claim for relief exists[.]” (alterations and citation omitted)). 13
For the foregoing reasons, the Court denies the motion to dismiss as to Count I under the
implied certification and fraudulent inducement theories.
b. Indirect Presentment Claim (Count III)
In Count III, the Government alleges that Symantec caused its resellers to submit false
claims by providing the resellers with the “false information Symantec provided GSA during
negotiation of the Contract” that in turn inflated pricing for Symantec products under the
resellers’ own MAS contracts. See Omnibus Compl. ¶¶ 263–71.
Count III asserts an indirect presentment claim under § 3729(a)(1)(A). The elements of
such claims are that: “(1) the defendant . . . caused to be submitted a claim to the government, (2)
the claim was false, and (3) the defendant knew the claim was false.” See Tran, 53 F. Supp. 3d
at 121–22 (citation and alteration omitted). As with Count I, knowledge is adequately alleged.
See Omnibus Compl. ¶¶ 268–69. Accordingly, the remaining elements that the Government
must plead to support Count III are causation and false claims.
The Court declines to dismiss Count III. First, Symantec’s motion contains no discussion
of whether the Omnibus Complaint sufficiently alleges a causal link between Symantec’s actions
13
In reply, Symantec asserts that the fraudulent inducement theory requires “prompt non-
performance” of the contract at issue, and that the Omnibus Complaint contains no such
allegation. See Def.’s Reply to U.S. 11; see also Tran, 53 F. Supp. 3d at 132 (reviewing other
circuits’ case law on prompt non-performance requirement and assuming, without deciding, that
prompt non-performance is required under the fraudulent inducement theory). This argument is
waived by Symantec’s failure to press it in its opening brief. See Walker v. Pharm. Research &
Mfrs. of Am., 461 F. Supp. 2d 52, 58 n.9 (D.D.C. 2006).
22
and its reseller’s claims. See United States v. Toyobo Co., 811 F. Supp. 2d 37, 48 (D.D.C. 2011)
(“For a plaintiff to allege a cause of action under § 3729(a)(1)’s ‘causes to be presented’ prong, it
must allege that the defendant’s conduct was ‘at least a substantial factor in causing, if not the
but-for cause of, submission of false claims.’” (citation omitted)). 14 As for falsity, Symantec
devotes much attention in its briefing to why the Omnibus Complaint’s allegations cannot
support an inference that its own claims were false, but nowhere does Symantec make the same
argument with respect to its resellers’ claims. Compare Mot. Dismiss 3, 16 (contending that
Count III must be dismissed for failure to allege that Symantec caused or induced the
“Contracting Officer to accept Symantec’s offer” (emphasis added)), with Omnibus Compl. ¶¶
263–71 (alleging that resellers’ claims were inflated).
Given Symantec’s deficient briefing, the Court denies the motion as to Count III.
2. Making or Causing Resellers to Make False Statements Material to False Claims (Counts II
and IV)
In Count II, the Government alleges that Symantec knowingly made false records or
statements material to false claims, in violation of 31 U.S.C. § 3729(a)(1)(B). See Omnibus
Compl. ¶¶ 256–62. In Count IV, the Government alleges that Symantec knowingly caused its
resellers to make false records or statements material to false claims, in violation of the same
FCA provision. See id. ¶¶ 272–79.
14
In reply, Symantec contends that the Government has failed to adequately allege
causation under § 3729(a)(1)(A), (B), and (G). See Def.’s Reply to U.S. 1, 3, 6. Because new
arguments asserted in reply are waived, the Court declines to consider Symantec’s causation
argument. See Walker, 461 F. Supp. 2d at 58 n.9. In any event, Symantec’s wholly conclusory
assertion that causation is not adequately alleged would not enable it to carry its burden. See
Intelsat USA Sales Corp., 24 F. Supp. 3d at 48 n.10; Def.’s Reply to U.S. 6.
23
Section 3729(a)(1)(B) establishes 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.”
31 U.S.C. § 3729(a)(1)(B). To state such a “false statements” claim, “a plaintiff must allege that
(1) the defendant made or used [or caused to be 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.” United States ex rel. Hood v. Satory
Global, Inc., 946 F. Supp. 2d 69, 85 (D.D.C. 2013). 15 The false statements provision is
“designed to prevent those who make false records or statements . . . from escaping liability
solely on the ground that they did not themselves present a claim for payment or approval.”
Totten, 380 F.3d at 501.
As amended by FERA, the FCA defines “material” to mean “having a natural tendency to
influence, or be capable of influencing, the payment or receipt of money or property.” 31 U.S.C.
§ 3729(b)(4). The D.C. Circuit has concluded that a causal link between the false statement and
false claim would suffice to satisfy this standard. See Heath, 791 F.3d at 124–25 (finding
sufficient, under the implied certification theory, the allegation that had government-appointed
fund administrator known of noncompliance, it would not have made payments). But actual
causation is not necessary to establish FCA liability. In applying the identical definition of
“material” under a criminal statute, the D.C. Circuit concluded that “the question of materiality is
not to be answered by reference only to the specific circumstances of the case at hand.” United
States v. Moore, 612 F.3d 698, 701 (D.C. Cir. 2010) (applying materiality standard under 18
15
The plaintiff must also allege that the defendant knew that the record or statement was
material to a false claim. Cf. SAIC, 626 F.3d at 1271 (requiring, under implied certification
theory, knowledge of materiality of compliance); Heath, 791 F.3d at 124 (same).
24
U.S.C. § 1001). 16 That is, “a statement need not actually influence [the government] in order to
be material.” Id.; see also U.S. ex rel. Feldman v. van Gorp, 697 F.3d 78, 95 (2d Cir. 2012)
(interpreting FCA materiality test as “objective” and not requiring proof of actual reliance). Put
differently, “[a] statement or omission is ‘capable of influencing’ a decision even if those who
make the decision are negligent and fail to appreciate the statement’s significance.” United
States v. Rogan, 517 F.3d 449, 452 (7th Cir. 2008) (interpreting materiality under FCA); accord
Feldman, 697 F.3d at 95.
In seeking the dismissal of Counts II and IV, Symantec contends that the Omnibus
Complaint fails to allege that the company made or caused its resellers to make any “false”
records or statements, that the company acted “knowingly,” and that such statements, even if
knowingly false, were “material” to a false claim. See Mot. Dismiss 14–19; Hood, 946 F. Supp.
2d at 85. At most, in Symantec’s view, the facts alleged represent the sometimes messy “give
and take of contract negotiations,” and that “the more plausible interpretation” is that Symantec
acted “in good faith.” Mot. Dismiss 16.
For the reasons given below, the Court concludes that the Omnibus Complaint’s
allegations are sufficient as to all of the records or statements at issue. First, the Omnibus
Complaint sufficiently alleges the falsity of numerous records or statements concerning
discounting practices that Symantec used or caused its resellers to use. In response to Question
4(b) of the initial MAS contract solicitation, which asked whether “any deviations” from
Symantec’s disclosed policies and practices “ever result in better discounts (lower prices) or
concessions than indicated,” Symantec answered “NO,” when in fact deviations did enable
16
In Moore, the D.C. Circuit interpreted “material” under 18 U.S.C. § 1001. In contrast
to the FCA, 18 U.S.C. § 1001 does not expressly define material, but the courts had adopted the
same definition as that codified in the FCA—that “a statement is material if it has a natural
tendency to influence, or is capable of influencing” an agency’s action. Moore, 612 F.3d at 701.
25
Symantec to extend discounts on a more frequent and flexible basis than indicated. Omnibus
Compl. ¶ 59; CSPs, Def.’s Attach. A. 17 As for the Frequency Chart, the Government alleges that
the inclusion of numerous published discounts understated the frequency of discounts exceeding
40%. See Omnibus Compl. ¶¶ 101, 102. Symantec averred in the Final Proposal Revision to the
Contract that it had disclosed in up-to-date, accurate form “all commercial business practices”
and certified that the Government’s discounts and pricing are “equal to and/or greater than what
is granted to any commercial and/or Government customer under similar terms and conditions.”
Id. ¶ 94. But these statements were allegedly false because Symantec misrepresented
comparative pricing among its standard buying programs, id. ¶¶ 75–77, failed to disclose the full
terms of its Rewards buying program (and their generous, flexible exceptions) and rebate
policies, see id. ¶¶ 78–80, 83, 92, 115–18, 123–26, and failed to explain that the GSA’s 16%
discount off of “Commercial MSRP” was actually a discount off of only the Express program
pricelist, see id. ¶ 88. Lastly, the Omnibus Complaint alleges that when requesting various
modifications to the Contract, Symantec repeatedly certified to the GSA that its previously
disclosed commercial sales practices “ha[d] not changed,” when in fact those initial disclosures
were false from the start. Id. ¶¶ 182–83.
The Omnibus Complaint also plausibly alleges falsity as to records or statements
concerning Symantec’s discount controls—the Reason Code Chart, the Management Approval
Chart, and Symantec’s statement that “[a]ny deviations from published discounts require
17
Regarding Question 4(b), Symantec explains that the discounts and concessions
“indicated” in the Frequency Chart included discounts ranging up to 100%; by Symantec’s logic,
then, it was perfectly truthful to state that deviations from policies never resulted in discounts
exceeding 100%. See Mot. Dismiss 8. While Symantec’s reading of Question 4(b) may
ultimately be accepted by a finder of fact, the Government has advanced a reasonable reading,
which suffices on this motion to dismiss. Cf. supra Part IV.A.1.a (finding that Government
advanced reasonable reading of Price Reduction Clause).
26
management approval.” Id. ¶ 90. According to the Omnibus Complaint, although the two charts
purported to provide data for all non-published discounts in 2005, they actually reflected only
those non-published discounts approved through Symantec’s eSPA system, see id. ¶ 81, and in
2005, over 9,000 commercial orders were not processed through that system, see id. ¶ 99.
Additionally, the fact that several large non-published discounts received no management
approval at all renders false both the Management Approval Chart and Symantec’s statement that
all non-published discounts required such approval. See id. ¶ 90. 18
Second, the Omnibus Complaint adequately alleges that each of these false records or
statements was “material” to Symantec’s false claims. Because the GSA contracting officer
must reach decisions by “compar[ing] the terms and conditions of the [offeror’s response to the]
MAS solicitation with the terms and conditions of agreements with the offeror’s commercial
customers,” 48 C.F.R. § 538.270(c), the records or statements bearing on Symantec’s pricing and
discount practices have the potential to impact a GSA contracting officer’s ability to “seek to
obtain the offeror’s best price,” id. § 538.270(a); see also Shemesh I, 2015 WL 1446547, at *9
(“Considering that the pricelist was the basis for the negotiated price, defendant’s argument that
misrepresenting CA’s pricelist is immaterial to the government’s decision to pay a certain
contract price is puzzling at best.”). 19 Accordingly, each false record or statement has “a natural
18
The Omnibus Complaint’s allegations as to management approval are imprecise. With
respect to five discounts not processed through eSPA ranging from 45% to 96% off list price, the
Government contends both that Symantec did not “maintai[n] . . . a record of management
approval,” Omnibus Compl. ¶ 99, and that those transactions “did not receive management
approvals” at all, id. ¶ 100. Under either allegation, the Court’s analysis would be the same.
19
Given that the Omnibus Complaint adequately alleges each of these regulatory
obligations, Symantec’s contention that the Omnibus Complaint “makes no allegations
concerning how Ms. Dixon determined fairness to Symantec” is completely unfounded. See
Mot. Dismiss 18.
27
tendency to influence,” or is “capable of influencing, the payment or receipt of money.” 31
U.S.C. § 3729(b)(4); see also Feldman, 697 F.3d at 95.
Likewise, the Omnibus Complaint sufficiently alleges that the inaccuracies in the records
or statements concerning Symantec’s discount controls were “material” to false claims. To be
sure, as Symantec emphasizes, the Government does not allege that discount controls were
expressly required by the Contract or applicable regulations, or that the GSA inquired into the
robustness of such systems. But the Omnibus Complaint does allege that the Price Reduction
Clause obligated Symantec to monitor its discounting practices closely. See Omnibus Compl. ¶¶
48–52. Given that the Government plainly would be reluctant to contract with a party unable to
comply with contractual terms, the Omnibus Complaint permits a plausible inference that the
inaccurate representations concerning Symantec’s discount controls could have “a natural
tendency to influence, or be capable of influencing” the GSA’s decision. 31 U.S.C. §
3729(b)(4); cf. SAIC, 626 F.3d at 1269 (explaining under implied certification theory that
evidence of parties’ mutual understanding that “payment was conditional on compliance” could
suffice to establish materiality of contractual provision). 20
Because the Omnibus Complaint adequately alleges that Symantec knowingly used or
caused to be used records or statements that were false and material to false claims, the Court
denies the motion to dismiss Counts II and IV. 21
20
As to Count IV, Symantec does not contend that the Omnibus Complaint fails to allege
that any records or statements were material to the resellers’ false claims. The Court thus has no
occasion to consider materiality in this context.
21
As explained above, because knowledge “may be alleged generally” at this stage in the
litigation, Fed. R. Civ. P. 9(b), the Omnibus Complaint’s general allegations of knowledge as to
each Count are sufficient, see Omnibus Compl. ¶¶ 260 (Count II), 277 (Count IV). Indeed, the
Government has gone beyond what is required of it at this stage, alleging a factual basis for
inferring that Symantec executives either had actual knowledge or acted in reckless disregard of
the falsity of their statements. See, e.g., Omnibus Compl. ¶¶ 109–12, 123–26.
28
3. Concealing Obligations (Count V)
Count V alleges that Symantec concealed its obligations to the United States, in violation
of 31 U.S.C. § 3729(a)(1)(G). See Omnibus Compl. ¶¶ 280–85.
Section 3729(a)(1)(G) establishes a cause of action for “reverse” false claims, creating
liability for any person who “knowingly conceals or knowingly and improperly avoids or
decreases an obligation to pay or transmit money or property to the Government.” 31 U.S.C.
§ 3729(a)(1)(G); see also Si v. Laogai Research Found., 71 F. Supp. 3d 73, 88 (D.D.C. 2014).
“Obligation” is defined broadly to mean “an established duty, whether or not fixed, arising from
an express or implied contractual, grantor-grantee, or licensor-licensee relationship, from a fee-
based or similar relationship, from statute or regulation, or from the retention of any
overpayment.” 31 U.S.C. § 3729(b)(3); see also Si, 71 F. Supp. 3d at 89 (explaining that FERA
added this broad definition of “obligation” to reject the narrower interpretation that certain courts
had adopted).
The Government has plausibly alleged liability for a “reverse” false claim, on the basis
that Symantec knowingly failed to adjust the Contract’s pricing terms as required by the Price
Reduction Clause. The Complaint alleges that internal audits in 2010 and 2011 put Symantec
executives on notice that the company’s undisciplined discounting practices could have led to
violations of its Price Reduction Clause commitments. See Omnibus Compl. ¶¶ 165, 281.
Nonetheless, Symantec allegedly concealed this knowledge and shirked its contractual duties to
disclose violations and to adjust the Government’s pricing upon any triggering price reduction.
See id. ¶¶ 282–83; see also 48 C.F.R. § 552.238–75(a)–(c). In sum, the Omnibus Complaint
adequately alleges that Symantec “knowingly conceal[ed] or knowingly and improperly
avoid[ed]” an “obligation to pay or transmit money” to the Government “arising from an express
29
. . . contractual . . . relationship, . . . or from the retention of any overpayment.” 31 U.S.C.
§§ 3729(a)(1)(G), 3729(b)(3).
Accordingly, the Court denies Symantec’s motion to dismiss Count V.
B. State-Law Claims
In Counts X through XVI, California, Florida, and Relator on behalf of New York each
allege that Symantec violated their respective state false claims statutes. See Omnibus Compl. ¶¶
304–39. Symantec has moved to dismiss all of these claims. See Mot. Dismiss 39–43.
The Court concludes that California, Florida, and Relator have failed to state any claims.
These plaintiffs each imply in cursory fashion that Symantec’s alleged fraud against them is a
consequence of the company’s fraud against the GSA without sufficient factual allegations that
support such a connection. Accordingly, the Court grants the motion to dismiss all of the state-
law claims.
The Court also, however, sua sponte grants California, Florida, and Relator leave to
amend their respective portions of the Omnibus Complaint. Cf. Jones v. Horne, 634 F.3d 588,
603 n.7 (D.C. Cir. 2011) (holding that under general rule that leave to amend is granted only
upon motion, a district court did not abuse its discretion in failing sua sponte to grant such
leave). 22 Should they opt to file amendments, California, Florida, and Relator are encouraged to
flesh out their allegations and to tie them more precisely to the elements of liability under their
respective state statutes. See supra Part IV.A.1, A.2 (discussing elements of federal FCA
presentment and false statements claims). Below, the Court elaborates on some of the specific
ways in which each of the state-law claims falls short, as identified by Symantec’s motion.
22
Of the state-law plaintiffs, only California mentions the possibility of an amendment,
but California does not expressly seek leave to amend. See States’ Opp’n 2 n.7.
30
1. California
In Count X, California asserts that Symantec knowingly caused its independent resellers
to make false claims under CMAS and SLP contracts by providing false information that it knew
the resellers and DGS would use in negotiating the CMAS and SLP contracts, in violation of the
California False Claims Act (“CFCA”), Cal. Gov’t Code § 12651(a)(1). See Omnibus Compl.
¶¶ 304–12. Based on the same facts, in Count XI, California alleges that Symantec knowingly
caused its resellers to use false statements material to their false claims under CMAS and SLP
contracts, in violation of the CFCA, Cal. Gov’t Code § 12651(a)(2). See id. ¶¶ 313–20.
The CFCA creates liability for “[a]ny person who . . . (1) [k]nowingly presents or causes
to be presented a false or fraudulent claim for payment or approval . . . [or] (2) [k]nowingly
makes, uses, or causes to be made or used a false record or statement material to a false or
fraudulent claim.” Cal. Gov’t Code § 12651(a)(1), (2). Because the CFCA was patterned after
the federal FCA, federal decisions are “persuasive authority” in adjudicating CFCA claims. See
United States v. Shasta Servs., Inc., 440 F. Supp. 2d 1108, 1111 (E.D. Cal. 2006).
With respect to both the CMAS and SLP contracts, California has failed to state either a
presentment or false statements claim. As to the presentment claim, California alleges only that
Symantec authorized its resellers to respond to CMAS solicitations and that the CMAS contracts
ultimately incorporated the pricing and terms of the GSA Contract. See Omnibus Compl.
¶¶ 220, 222. Similarly, with respect to the SLP contracts, the Omnibus Complaint alleges that
Symantec submitted an SLP Letter of Offer to DGS to supply Symantec products through its
resellers at discounts mirroring those enjoyed by the GSA under the GSA Contract and that the
resellers ultimately sold Symantec products to state agencies under SLP contracts with the same
pricing and terms as the GSA Contract. See id. ¶¶ 223–37. Lacking, however, is any allegation
31
that Symantec had the requisite scienter—that it “knowingly” caused its resellers to present false
claims. Cal. Gov’t Code § 12651(a)(1). Indeed, there is no allegation that Symantec knew the
precise pricing and terms that its resellers would offer in response to the CMAS or SLP
solicitations or knew that it was causing the resellers to submit “false” claims (under any theory
of falsity). See Mot. Dismiss 39–40; cf. Tran, 53 F. Supp. 3d at 121–22 (setting forth elements
of federal FCA indirect presentment claim as: “(1) the defendant . . . caused to be submitted a
claim to the government, (2) the claim was false, and (3) the defendant knew the claim was
false.” (emphasis added) (citation and alteration omitted)). As for the CFCA false statements
claim, there is similarly no allegation that Symantec had knowledge that its initial disclosures
were (or would be) material to its resellers’ claims under the CMAS or SLP contracts;
Symantec’s alleged knowledge of the materiality of false records or statements related to its
dealings with the GSA cannot support an inference that Symantec had any knowledge that those
false records or statements would be material to its reseller’s dealings with California. See supra
note 15.
Accordingly, the Court dismisses Counts X and XI of the Omnibus Complaint as to both
the CMAS and SLP contracts.
2. Florida
In Count XII, Florida asserts that Symantec presented the state with false claims, in
violation of the Florida False Claims Act, Fla. Stat. § 68.082(2)(a) (“FFCA”). See Omnibus
Compl. ¶¶ 321–23. In Count XIII, Florida alleges that Symantec made or used, or caused to be
made or used, false records or statements material to false claims, in violation of the FFCA, Fla.
Stat. § 68.082(2)(b). See id. ¶¶ 324–26. The Court concludes that Florida’s allegations do not
state any claims under the FFCA.
32
The FFCA creates liability for “[a]ny person who . . . (a) [k]nowingly presents or causes
to be presented a false or fraudulent claim for payment or approval . . . [or] (b) [k]nowingly
makes, uses, or causes to be made or used a false record or statement material to a false or
fraudulent claim.” Fla. Stat. § 68.082(2)(a), (b). The definitions of “knowingly” and “material”
are consistent with those of the federal FCA, see id. § 68.082(1)(c), (d), and the standards for
FFCA liability mirror those under the federal FCA, see United States ex rel. Schubert v. All
Children’s Health Sys., Inc., No. 8:11-CV-01687-T-27, 2013 WL 6054803, at *7 n.8 (M.D. Fla.
Nov. 15, 2013).
The Court concludes that Florida’s FFCA claims must be dismissed. Florida’s claims
rest on the purchasing memorandum issued by a state agency in 2006. See Florida State
Purchasing Mem. No. 2 (2005–06), Def.’s Attach. E. But as Symantec explains, this internal
memorandum does not mention Symantec or establish that any “legal obligation” between
Florida and Symantec existed. See Mot. Dismiss 42. Nor is the conclusory allegation that
Symantec submitted “bills and GSA pricing information” sufficient. Omnibus Compl. ¶ 325. At
bottom, Florida has failed to allege the existence of any “claims”—let alone “false claims.” And
without alleged false claims, Florida cannot maintain presentment or false statements claims
under the FFCA.
Because Florida has failed to plead plausible claims under the FFCA, the Court dismisses
Counts XII and XIII of the Omnibus Complaint.
3. New York
Relator on behalf of New York asserts in Counts XIV and XV that Symantec presented
false claims under various contracts, see Omnibus Compl. ¶¶ 327–35, and in Count XVI that
Symantec made and used, or caused to be made and used, false records and statements material
33
to false claims, all in violation of the New York False Claims Act, N.Y. St. Fin. Law § 189(1)(a),
(b) (“NYFCA”), see id. ¶¶ 336–39.
The NYFCA establishes penalties for “any person who . . . (a) knowingly presents, or
causes to be presented a false or fraudulent claim for payment or approval . . . [or] (b)
knowingly makes, uses, or causes to be made or used, a false record or statement material to a
false or fraudulent claim.” N.Y. St. Fin. Law § 189(1)(a), (b). “The NYFCA follows the federal
[FCA] and therefore it is appropriate to look toward federal law when interpreting the New York
act.” State of New York ex rel. Seiden v. Utica First Ins. Co., 96 A.D.3d 67, 71 (N.Y. App. Div.
2012).
The Court concludes that New York has not plausibly pleaded falsity of any claims—
whether facial or legal. See SAIC, 626 F.3d at 1266; Mot. Dismiss 42 (contending that Omnibus
Complaint fails to allege any “overpriced” claims). Although the Omnibus Complaint alleges
that the New York Contract provided discounts ranging between 22.5% and 5.5%, as Symantec
explains, there is no allegation of any linkage to the GSA Contract or of any wrongdoing. See
Mot. Dismiss 42. In opposition, New York explains that because its discounts were generally
less than the GSA’s discounts ranging between 35% and 5%, the numerous commercial
customers that allegedly received larger discounts than the GSA’s necessarily received better
pricing than New York did. See States’ Opp’n 10. The problem with this theory, as Symantec
explains in reply, is that the Omnibus Complaint does not allege that the New York Contract and
the GSA Contract shared the same discount baseline: The New York Contract discounts were
allegedly based on “U.S. commercial price lists,” Omnibus Compl. ¶ 243, while the GSA
Contract discounts were allegedly based on Symantec’s Express program pricelist, see id. ¶ 88;
Def.’s Reply to States 9, ECF No. 53, and the Omnibus Complaint does not allege that the two
34
are identical. Accordingly, the Omnibus Complaint fails to allege any false claims, and without
false claims, New York’s false statements claim also must fail. See N.Y. St. Fin. Law §
189(1)(b) (creating liability for using or causing to be used a “false record or statement material
to a false or fraudulent claim” (emphasis added)).
Because Relator on behalf of New York has failed to plead plausible presentment or false
statements claims under the NYFCA, the Court dismisses Counts XIV, XV, and XVI of the
Omnibus Complaint.
C. United States’ Negligent Misrepresentation and Breach of Contract Claims
In Counts VI and VII, the Government asserts against Symantec common-law negligent
misrepresentation and breach of contract claims, respectively. See Omnibus Compl. ¶¶ 286–97.
In its motion to dismiss, Symantec contends that this Court lacks jurisdiction to hear these
claims. See Mot. Dismiss 43.
The Court readily concludes that dismissal of these claims would be improper at this
juncture. In its motion to dismiss, Symantec first contends that the Contract Disputes Act, 41
U.S.C. § 7101 et seq., provides the exclusive remedy for claims arising from government
contracts. See Mot. Dismiss 43. Symantec then candidly concedes that actions “involving
fraud” are excepted from the Contract Disputes Act’s exclusivity before going on to argue that
dismissal of Counts VI and VII is still proper because the Government has failed to allege
plausible claims under the FCA. See id. (citing 41 U.S.C. § 7103(a)(4)(B)); see also United
States v. First Choice Armor & Equip., 808 F. Supp. 2d 68, 80 (D.D.C. 2011) (“The use of this
broader language [‘involving fraud’] reflects a congressional intent to except from CDA
exclusivity not only causes of action for fraud in particular, but also actions the factual bases of
which are intertwined with allegations of fraud.”). In other words, as the Government points out,
35
Symantec’s argument for dismissal of the negligent misrepresentation and breach of contract
claims in Counts VI and VII is premised on this Court’s dismissal of the FCA claims. See U.S.
Mem. Opp’n 41. Because the Court has not dismissed the latter claims, the Court likewise
denies Symantec’s motion to dismiss as to the former claims.
D. United States’ Unjust Enrichment and Payment By Mistake Claims
In Count VIII, the Government alleges that Symantec was unjustly enriched “[b]y
directly or indirectly obtaining Government funds to which it was not entitled.” Omnibus
Compl. ¶ 300. Similarly, in Count IX, the Government claims that Symantec received mistaken
payments for its products, having led the Government to believe that its disclosures were
accurate and that it was complying with the Price Reduction Clause. See id. ¶¶ 301–03. In its
motion to dismiss, Symantec contends that both claims are foreclosed by the Government’s
allegation of the Contract’s existence. See Mot. Dismiss 44–45.
As a general rule, a valid contract’s existence precludes a plaintiff from asserting unjust
enrichment and payment by mistake claims, which are based on quasi-contract theories. See
First Choice Armor & Equip., 808 F. Supp. 2d at 77–78 (“Allegations in a complaint that an
express contract existed between the parties . . . preclude a plaintiff from proceeding on
alternative theories of FCA liability and unjust enrichment or payment by mistake.”). While a
plaintiff may advance quasi-contract claims in the alternative, see United States ex rel. Purcell v.
MWI Corp., 254 F. Supp. 2d 69, 78–79 (D.D.C. 2003), these alternative claims “must be
supported by, at the very least, an allegation that there is no valid contract,” see Kellogg Brown
& Root Servs., Inc., 800 F. Supp. 2d at 160.
The Court denies the motion as to the unjust enrichment and payment by mistake claims
insofar as those claims are based on payments “directly” paid to Symantec under the Contract.
36
Omnibus Compl. ¶ 300. To be sure, throughout the Omnibus Complaint, the Government
alleges that the Contract was valid. See id. ¶¶ 5, 96, 127–88. But in Counts VIII and IX, the
Government does not squarely allege such validity, instead alleging that Symantec “obtain[ed]
Government funds to which it was not entitled” and “caused the United States to make payments
for Symantec products based upon . . . mistaken beliefs” concerning Symantec’s disclosures and
contractual compliance. Id. ¶¶ 300, 302. 23 Additionally, Symantec’s argument that the Contract
was not validly formed (in opposition to the Government’s motion for partial summary
judgment) makes the Government’s alternative quasi-contract claims all the more reasonable.
See Purcell, 254 F. Supp. 2d at 78–79; Kellogg Brown & Root Servs., Inc., 800 F. Supp. 2d at
160.
In addition to the Government’s direct purchases from Symantec, the Omnibus
Complaint also alleges that the Government purchased Symantec products through independent
resellers at prices inflated by Symantec’s false disclosures. See Omnibus Compl. ¶¶ 189, 197.
These indirect reseller purchases also underlie the Government’s unjust enrichment and payment
by mistake claims. See id. ¶ 300 (expressly referencing “indirec[t]” payments to Symantec), ¶
302 (“Symantec caused the United States to make payments for Symantec products . . . .”).
Moreover, the Omnibus Complaint does not allege the existence of any contract between the
Government and Symantec governing these indirect purchases. Accordingly, the Court will deny
the motion to dismiss the Government’s quasi-contract claims as to the purchases of Symantec
products through independent resellers. See First Choice Armor & Equip., 808 F. Supp. 2d at 78
23
Although the Government asserts a presentment claim under the fraudulent inducement
theory, see supra Part IV.A.1.a, fraudulent inducement generally renders a contract voidable, not
void. See, e.g., Flynn v. Thibodeaux Masonry, Inc., 311 F. Supp. 2d 30, 43 (D.D.C. 2004)
(explaining defenses under claim for employer contributions under section 515 of ERISA); see
also Archdiocese of Milwaukee v. Doe, 743 F.3d 1101, 1105 (7th Cir. 2014) (Wisconsin law).
37
(dismissing government’s quasi-contract claims as to government’s direct purchases governed by
alleged contract but denying motion as to purchases made by state and local authorities, for
which the government provided a partial reimbursement, given that “complaint d[id] not allege
an express contract between [defendant] and the government with respect to” those transactions);
Toyobo, 811 F. Supp. 2d at 52 (denying motion to dismiss unjust enrichment claim against
manufacturer of fibers for bulletproof vests, where government alleged that fiber manufacturer
“indirectly” obtained benefit from government’s purchases of finished vests from vest
manufacturers).
Accordingly, with respect to Symantec’s motion to dismiss the unjust enrichment and
payment by mistake claims in Counts VIII and IX, the Court denies the motion both as to the
Government’s direct purchases from Symantec under the (allegedly invalid) Contract and as to
the Government’s indirect purchases through independent resellers.
V. THE UNITED STATES’ MOTION FOR PARTIAL SUMMARY JUDGMENT
The Government has moved for partial summary judgment on certain issues in an effort
to streamline future proceedings. See U.S. Mot. Partial Summ. J. 1, ECF No. 54; see also United
States ex rel. Anti-Discrimination Ctr. of Metro New York, Inc. v. Westchester Cnty., N.Y., 668 F.
Supp. 2d 548, 570–71 (S.D.N.Y. 2009) (granting partial summary judgment as to certain
elements of FCA claim). Specifically, the Government seeks summary judgment on its positions
that the Contract was a valid, enforceable agreement; that Symantec’s CSPs and other
disclosures were false and breached the Contract in several respects; that Symantec made false
statements to the GSA when it directed the GSA to use its CSPs and disclosures in negotiations
with resellers; that Symantec breached the Price Reduction Clause; and that Symantec’s periodic
38
certifications that the CSPs and disclosures remained accurate were false. See U.S. Mot. Partial
Summ. J. 1–2. 24
For the reasons given below, the Court denies the United States’ motion for partial
summary judgment as to all issues.
A. Validity of the Contract
The Government seeks judgment on the issue that the Contract is a “valid and
enforceable written agreement.” U.S. Mot. Partial Summ. J. 1. According to the Government,
the Contract’s validity is relevant to many aspects of its FCA claims as well as its breach of
contract claim. See U.S. Mem. Supp. Mot. Partial Summ. J. 37. 25
“The party alleging a contract must show a mutual intent to contract including an offer,
an acceptance, and consideration passing between the parties.” Thermalon Indus., Ltd. v. United
States, 34 Fed. Cl. 411, 414 (1995). “In addition, the party must demonstrate that the
government representative who entered or ratified the agreement had authority to bind the United
States in contract.” Id. 26
24
The Government’s motion for partial summary judgment rests only on “certain theories
of falsity” and reserves other falsity arguments for future proceedings. See U.S. Mem. Supp.
Mot. Partial Summ. J. 2 n.2. For instance, not at issue in the motion for partial summary
judgment are the Omnibus Complaint’s allegations that the Frequency Chart, while purporting to
reflect all sales made in 2005, was limited to Symantec Security products and services, see
Omnibus Compl. ¶ 109, to products that remained on Symantec’s 2006 pricelist, see id. ¶ 110,
and primarily to the last three quarters of 2005, see id. ¶ 111. Additionally, the Government does
not seek judgment on materiality or knowledge, or that Symantec failed to disclose its Rewards
program. See U.S. Mem. Supp. Mot. Partial Summ. J. 13 n.6.
25
For purposes of providing context, the Court here and below sets forth the
Government’s explanations of the relevance of the issues on which it seeks judgment. The
Court, however, expresses no opinion as to the correctness of those explanations.
26
The Government contends that federal law “generally” governs disputes arising out of
contracts to which the United States is a party. U.S. Mem. Supp. Mot. Partial Summ. J. 33 n.14
(citing Clearfield Trust Co. v. United States, 318 U.S. 363, 365–67 (1943); United States v.
Kimbell Foods, Inc., 440 U.S. 715, 726 (1979)). The only legal authority cited by Symantec on
the issue of contract formation is RDP Technologies, Inc. v. Cambi AS, a case from this Court
39
The Government has not carried its initial burden at summary judgment to show the
absence of a genuine issue of material fact. See Celotex, 477 U.S. at 323. Although the
Government includes a passing citation in a footnote to the requirement that the Government’s
representative “who entered or ratified the agreement [must have] had authority to bind the
United States in contract,” the Government does not explain how the undisputed record evidence
establishes that any individual (presumably Dixon, who accepted the Final Proposal Revision)
had such authority. See U.S. Mem. Supp. Mot. Partial Summ. J. 38 n.19 (quoting Thermalon
Indus., 34 Fed. Cl. at 414); Solicitation/Contract/Order for Commercial Items, U.S. Ex. 19, ECF
No. 55-20.
Because the Government has failed to demonstrate that the undisputed record evidence
shows that it is entitled to summary judgment on the issue of the Contract’s formation, the Court
denies the Government’s motion as to this issue. 27
B. Falsity of CSPs and Other Disclosures
The Government moves for partial summary judgment on the issue that Symantec’s CSPs
and other disclosures were false in three respects—the Frequency Chart was inaccurate,
Symantec falsely stated that all non-published discounts must be approved through eSPA, and
applying D.C. law. See Def.’s Mem. Opp’n 20 (citing RDP Techs., Inc. v. Cambi AS, 800 F.
Supp. 2d 127, 140 (2011)). The Court need not decide today whether federal or D.C. law
governs: Even if the Government’s position were correct, it has still failed to carry its initial
summary judgment burden.
27
Because the Court concludes that the Government has failed to carry its initial
summary judgment burden on the formation issue, it expresses no opinion on the Government’s
additional submission that because the Contract is valid, then there can also be no dispute as to
the meaning of two of Symantec’s obligations under the Contract—the obligations to disclose
truthful CSPs and to report any single discounts larger than those enjoyed by the GSA or
deviations from the Frequency Chart. See U.S. Mem. Supp. Mot. Partial Summ. J. 38–39.
Moreover, the Court notes that a decision on whether a valid and enforceable written agreement
exists would not result in the streamlining of future proceedings. Accordingly, no renewed
motion for summary judgment on this issue will be entertained by the Court until the conclusion
of discovery.
40
Symantec failed to disclose back-end reseller rebate programs notwithstanding its certification
that its disclosures were complete. See U.S. Mot. Partial Summ. J. 1–2. Findings on these
issues, the Government contends, will resolve, in part, the falsity elements of its false statements
and negligent misrepresentation claims. See U.S. Mem. Supp. Mot. Partial Summ. J. 39.28
For the reasons given below, the Court denies the Government’s motion for partial
summary judgment as to all issues related to the falsity of the CSPs and other disclosures.
1. Frequency Chart
The Government seeks judgment as to the falsity of the Frequency Chart submitted by
Symantec as part of its CSPs. See U.S. Mot. Partial Summ. J. 1. The Government proffers
evidence that purports to show that, in 2005, over 20% of non-standard discounts extended by
Symantec—not less than 3%, as represented in the Frequency Chart—exceeded 40% in
magnitude. See U.S. Mem. Supp. Mot. Partial Summ. J. 16–18. For the reasons that follow, the
Court concludes that the Government has not carried its initial burden of showing “the absence
of a genuine issue of material fact.” Celotex, 477 U.S. at 323; see also id. at 330–31 (Brennan,
J., dissenting on other grounds) (explaining that “ultimate burden of persuasion” to establish lack
of genuine dispute of material fact “always remains on the moving party”).
In attempting to establish the Frequency Chart’s falsity, the Government relies solely on
the declaration of Relator’s counsel Lance Robinson. See U.S. Mem. Supp. Mot. Partial Summ.
J. 16–18. 29 In his declaration, Robinson describes the methodology by which he and his
28
The Government also asserts that the disclosures’ falsity is relevant to its breach of
contract claim. See U.S. Mem. Supp. Mot. Partial Summ. J. 39. This assertion is premised on an
interpretation of the Contract (specifically, the Final Proposal Revision) that the Court declines
to adopt at this stage in the proceedings, as discussed above. See supra note 27.
29
Symantec contends that the Robinson declaration is inadmissible evidence on the basis
that Robinson relies on hearsay and lacks personal knowledge of the content of his declaration.
See Def.’s Mem. Opp’n 24–26. The Court declines to consider this argument; even if the
41
colleagues analyzed certain data used by Symantec in generating the Frequency Chart. Using
these data, Robinson derived a set of discount distribution figures for 2005 and ultimately
concluded that the Frequency Chart falsely overstated the frequency of non-published discounts
below 40%.
But this battle over percentages is illustrative of many: The devil is in the denominator.
Symantec’s Frequency Chart is based on 129,630 product-specific transactions, whereas
Robinson’s version captures only 14,681 transactions—a mere 11% of Symantec’s sample.
Compare Bradbury Aff. ¶ 22.h, Def.’s Ex. A, ECF No. 59-2, with Robinson Decl. ¶ 10.g, U.S.
Ex. 20, ECF No. 55-21. 30 Of course, a smaller sample size alone would not be fatal for the
Government, if the correctness of its smaller sample were factually undisputed.
Rather than show the lack of a genuine dispute of fact about this smaller sample,
however, Robinson’s declaration all but creates such a dispute. At the outset, there seems to be
no dispute over how non-published discounts are generally defined and calculated (in theory):
Non-published discounts are reductions off of Standard Buy Price, which in turn reflects
published discounts off of MSRP. See Pricing waterfall, Ex. B to McGee Aff., Def.’s Ex. M,
ECF No. 59-14; Robinson Decl. ¶¶ 8–10, U.S. Ex. 20. The parties diverge, however, in their
calculation of non-published discounts for purposes of this motion. Bradbury calculated such
discounts by subtracting from MSRP the final sales prices (found in monthly price lists)—a
methodology that Symantec appears to concede wrongly caused its calculated non-published
discounts to include published discounts. See Bradbury Aff. ¶ 22, Def.’s Ex. A; U.S. Reply 17
Robinson declaration were admissible, the Government has still failed to show the absence of a
genuine dispute of material fact.
30
Robinson’s declaration refers to “line items” in Symantec’s sales records. Each line
item represents a specific product purchased as part of a particular order. Here, the Court uses
the term “product-specific transaction.”
42
(citing Def.’s Mem. Opp’n 27–28). Robinson, recognizing that the monthly price lists contained
no Standard Buy Prices, opted to begin his analysis by extracting Standard Buy Prices from a
table containing records of orders approved through the eSPA system. See Robinson Decl.
¶10.b–d, U.S. Ex. 20; id. ¶ 8 (“By comparing Standard Buy Price to the actual selling price . . . ,
we are able to calculate the true non-published discount—i.e., the discount provided by
Symantec to customers above and beyond published discounts . . . .”). But the problem with
Robinson’s approach is that many transactions were apparently not processed through the eSPA
system (as the Government itself alleges); ultimately, cross-referencing the eSPA data enabled
Robinson to retrieve a Standard Buy Price for only 195,617 out of the total 331,562 transactions
in Symantec’s 2005 sales records. See id. ¶ 10.d. Put differently, Robinson excluded over 40%
of Symantec’s 2005 product-specific transactions at the first step of his analysis for no reason
other than the fact that Symantec’s eSPA database did not happen to contain the Standard Buy
Price for those transactions. Moreover, the number of transactions excluded by Robinson—
135,945—exceeds the difference between Symantec’s and Robinson’s sample size—114,949.
Whether the inclusion of an additional 114,949 transactions in Robinson’s calculations (if
Standard Buy Prices for those transactions had been available from another source) would have
shown the Frequency Chart to be “true” is anyone’s guess, and on the Government’s motion for
partial summary judgment, this Court must draw inferences in Symantec’s favor. The
Government’s attempt to demonstrate the Frequency Chart’s falsity is thus flawed from the
start. 31
31
Symantec’s critique of Robinson’s analysis consists primarily of vague, conclusory
suggestions of inaccuracies. See, e.g., Def.’s Mem. Opp’n 27 (assailing Relator’s counsel’s
declaration as “premised on an inaccurate understanding of the underlying data upon which his
conclusions are based”). In particular, Symantec’s contention that the Government relies on “a
method [for deriving the Frequency Chart] far different from that employed by Symantec”
43
To be sure, Symantec does not seem to dispute the fact that because it relied on the 2005
monthly price lists, it wrongly calculated the magnitude of non-published discounts based off of
MSRP, instead of Standard Buy Price—a methodology that potentially caused Symantec to
overstate the magnitude of all non-published discounts in the Frequency Chart by the size of any
published discounts. See U.S. Reply 17 (“Symantec’s own Opposition confirms that it included
published discounts as well.”). But because the FCA does not penalize mathematical errors, the
Government must do more than poke holes in Symantec’s calculations. See id. (“A correct
calculation would necessarily be different than the erroneous one used by Symantec.” (emphasis
added)). Rather, it must show a lack of genuine dispute as to the falsity of the resulting record
or statement—i.e., the Frequency Chart itself. See 31 U.S.C. § 3729(a)(1)(B). Here, the
Government fails to proffer any evidence showing that the use of MSRP necessarily rendered the
Frequency Chart false: That is, even if all of the discounts in the Frequency Chart were indeed
inflated by the amount of Symantec’s published discounts, the discount distribution presented
therein could still be true, because no record evidence establishes the magnitude of the
erroneously included published discounts. 32 Given that a reasonable jury could still find the
entirely misses the point: Symantec must show that the Government’s method is factually
wrong—and thus an inaccurate benchmark for assessing the Frequency Chart’s truth or falsity—
not merely different. Id. But because the Government has not discharged its initial burden to
show the absence of a dispute of fact, the Court will conclude that a genuine dispute of material
fact remains. See Celotex, 447 U.S. at 330–31 (Brennan, J., dissenting on other grounds).
32
Assume, for example, that for all transactions represented in the Frequency Chart, all
published discounts were less than 10%, and that all transactions occurred at the highest
discounts possible consistent with that Chart—i.e., all 11 sales in the 0-10% discount range
actually occurred at a discount of 10%, that all 5,352 sales in the 10-20% range actually occurred
at a discount of 20%, and so forth. Under such assumptions, correcting for Symantec’s reliance
on MSRP instead of Standard Buy Price (reducing all discounts by less than 10%) would have
no impact on the distribution presented by the Frequency Chart. Of course, the “illustrative” and
“hypothetical” pricing waterfall suggests that published discounts could be much larger than
10%, see Pricing waterfall, Ex. B to McGee Aff., Def.’s Ex. M, but there is no record evidence
that the published discounts associated with any of the specific transactions represented in the
44
figures in the Frequency Chart to be true (at least on the record presently before the Court), the
Government is not entitled to summary judgment.
At bottom, both the Government’s and Symantec’s Frequency Chart analyses suffer from
significant shortcomings. Even if the Government’s approach were superior to Symantec’s in
certain respects and even if data limitations do not enable a perfect analysis, at summary
judgment, in particular prior to any discovery being had, the Government cannot prevail by
showing merely that it opted for a better, but still materially limited, approach. Because the
Government moves for summary judgment as the party that would bear the burden of proof at
trial on the falsity of the Frequency Chart, it must introduce evidence that precludes a contrary
finding by a reasonable jury. Cf. Celotex, 477 U.S. at 331 (Brennan, J., dissenting on other
grounds) (“If the moving party will bear the burden of persuasion at trial, that party must support
its motion with credible evidence—using any of the materials specified in Rule 56(c)—that
would entitle it to a directed verdict if not controverted at trial.”). If any gaps in the data or in
the Government’s methodology could support a finding that the Frequency Chart was not false,
then the task of deciding falsity must fall to a jury, not this Court. Because there remains a
genuine dispute of material fact as to the Frequency Chart’s falsity, the Court denies the
Government’s motion for partial summary judgment as to this issue. 33
Frequency Chart in fact exceeded 10%. Certain record evidence suggests that Symantec actually
extended published discounts upwards of 30% to certain resellers, see Morsell letter of Sept. 8,
2011, U.S. Ex. 33b, ECF No. 55-35, but the record does not show that these transactions would
not have been excluded from the Frequency Chart for reasons upon which the parties seem to
agree (e.g., international sales), see Robinson Decl. ¶ 10.f, U.S. Ex. 20; Bradbury Aff. ¶ 22.g,
Def.’s Ex. A.
33
Furthermore, even if the Court did not have the above-referenced reservations about
Robinson’s analysis, it would be disinclined to grant summary judgment based on such analysis
without giving Symantec the opportunity to take discovery about it and, ultimately, depose the
person providing the opinion.
45
2. Statement Concerning eSPA
The Government also seeks judgment as to the falsity of Symantec’s disclosures insofar
as they “inaccurately stated that non-published discounts given by Symantec to commercial
customers were approved by management through a tool known as eSPA.” U.S. Mot. Partial
Summ. J. 1–2; see also U.S. Mem. Supp. Mot. Partial Summ. J. 40. Again, the Court concludes
that the Government is not entitled to summary judgment.
At the outset, the Court construes the Government’s motion as seeking judgment only on
the falsity of Symantec’s representation that all non-published discounts must be approved
through eSPA, not on the falsity of the Reason Code Chart or Management Approval Chart. To
the extent that the Government does seek judgment as to the falsity of the charts, 34 the Court
readily denies the motion: The charts do not represent that all discounts were approved through
eSPA; indeed, the term “eSPA” appears nowhere in the charts. Additionally, on their face, the
charts—which appear under the heading “Non-Published Discounts” and respective sub-
headings “Discount Reason Codes” and “Management Discount Approval Levels”—do not
purport to represent all of Symantec’s non-published discounts, though they could be interpreted
in this way. See CSPs, U.S. Ex. 10, ECF No. 55-11.
Turning to the statement at issue, the Court concludes that Symantec has created a
genuine dispute of material fact as to whether the company even represented in the first place
that all non-published discounts must be approved through eSPA. The representation at issue
34
Certain language in the motion could suggest that the Government seeks judgment as
to the falsity of the Reason Code Chart and Management Approval Chart. See, e.g., U.S. Mem.
Supp. Mot. Partial Summ. J. 40 (arguing that Symantec’s “express representation” was false and
explaining it was “facially important to provide GSA comfort that . . . Symantec’s non-standard
discounts were controlled, reported, and confined to the remote occasions and specific
circumstances disclosed on the Frequency Chart and Reason Code Chart”); id. at 18 (attacking
truth of Symantec’s “representations” regarding its discount controls); id. at 11–12 (explaining
Reason Code Chart and Management Approval Chart).
46
appears in the below paragraph, part of Bradbury’s October 9, 2006, response to various
inquiries from Dixon:
Does Symantec Corporation offer better rates and/or terms and
conditions to other customers? If yes, please provide pricing
information.
Symantec Response: Information regarding deviations from
existing discounting policies was provided in Symantec’s original
proposal submission. Any deviations from published discounts
require management approval. Deviations must be documented
and approved in accordance with the following guidelines: As
previously disclosed to GSA as part of Symantec’s established
discounting policies, the Worldwide Sales discounting tool referred
to as “eSPA” was established to allow Symantec the flexibility to
respond to competition. This process provides non-standard
competitive pricing to strategic accounts by requiring
commitments from the identified account for annual quantity
purchases, or to meet one of the following guidelines; which are
provided as examples:
1. To meet market competition or displace a named competitor at
a customer site;
2. Customers who agree to standardize on Symantec products and
services;
3. New market or market segment penetration;
4. Educational, including prime contractors, or [c]haritable
organizations or institutes;
5. Introduction of a new product and services through more
aggressive discounts and in exchange for press or customer
references.
Oct. 9, 2006 Response, U.S. Ex. 16, ECF No. 55-17 (emphasis added). As Symantec explains in
opposition, although the explanation quoted above states that all deviations from published
discounts “require management approval,” a reasonable juror could conclude that the company
did not aver that such approval must happen through the eSPA system, which is described only
as a “Worldwide Sales discounting tool” that provides “the flexibility to respond to competition.”
Id. Moreover, the mandatory “guidelines” in accordance with which all “[d]eviations must be
47
documented and approved” could be interpreted as referring not to eSPA, but to the five
enumerated “guidelines” below the umbrella paragraph. Id. 35
Given that a dispute of fact exists as to whether Symantec actually represented that all
non-published discounts must be approved through eSPA, there is necessarily a dispute of fact as
to the falsity of any such representation. Accordingly, the Court denies the Government’s
motion for partial summary judgment as to this issue.
3. Disclosure of Rebate Programs
The Government further moves for judgment on the falsity of Symantec’s CSPs and
disclosures, on the grounds that Symantec failed to disclose certain back-end reseller rebate
programs. See U.S. Mot. Partial Summ. J. 2.36 The Court concludes that Symantec has created a
dispute of material fact that precludes summary judgment.
The Court prefaces its analysis by explaining the Government’s theory of falsity as it
applies to Symantec’s alleged failure to disclose its back-end reseller rebates. The Government
does not allege that this non-disclosure itself was “false.” Rather, the Government claims that
Symantec’s omission renders false the company’s other representations about its disclosures’
completeness. For instance, Symantec averred in its Final Proposal Revision that “all
commercial business practices have been fully disclosed and are current, accurate and complete
as of the conclusion of [the] negotiation.” Final Proposal Revision SYM00396765, Def.’s Ex. G,
ECF No. 59-8 (emphasis added); see also U.S. Reply 24 (pointing to this “unequivocal statement
35
In further support of its reading, Symantec cites its draft best and final offer, which
contains similar language. See Symantec Best and Final Offer Letter SYM00370748, Def.’s Ex.
E, ECF No. 59-6.
36
The Omnibus Complaint repeatedly alleges that Symantec failed to disclose any
information about rebates, and that this total omission rendered the disclosures false. See
Omnibus Compl. ¶¶ 62, 77, 123, 126. But elsewhere, the Omnibus Complaint alleges that
Symantec’s rebate-related disclosures were “inaccurate and incomplete.” Id. ¶¶ 251, 258. The
Court’s analysis proceeds under the latter, broader allegation.
48
made in [Symantec’s] FPR” and arguing that, on account of Symantec’s failure to disclose the
back-end rebates, “[t]here exists no genuine issue of material fact that this statement was false
and that Symantec’s Periodic Certifications (which verified the continuing veracity of its FPR)
were false” (emphasis added)). Accordingly, in order for the Government to obtain summary
judgment under its theory of falsity, it must demonstrate the absence of any dispute that a
“complete” disclosure necessarily would have included information about the back-end reseller
rebates at issue.
The Court concludes that Symantec has created such a dispute by pointing to record
evidence suggesting that back-end reseller rebates did not in fact fall within the scope of its
disclosures or of the parties’ negotiation. Bradbury’s affidavit states that she was told by Dixon
in October 2006 that “GSA does not purchase as a distributor or reseller and that programs or
discounts targeted specifically at distributors or resellers (such as Symantec’s ‘rebate’ programs
used to incentivize Partner sales) were no longer applicable to GSA.” Bradbury Aff. ¶ 37, Def.’s
Ex. A. Similarly, Dixon’s own notes, viewed in the light most favorable to Symantec, indicate
that she understood the relevant comparator customers to be “Commercial End Users” rather
than resellers or distributors. Price Negotiation Memorandum 5, Def.’s Ex. F, ECF No. 59-7. If
reseller back-end rebates were in fact outside the scope of the Contract negotiations, a jury could
find that Symantec’s failure to disclose such rebates did not render false the company’s statement
in its Final Proposal Revision that its disclosures were “current, accurate and complete”—or any
other similar statement claiming that its disclosures were complete. Final Proposal Revision
SYM00396765, Def.’s Ex. G; cf. Hindo v. Univ. of Health Sciences/The Chicago Med. Sch., 65
F.3d 608, 613 (7th Cir. 1995) (explaining, with respect to false claims, that the “claim must be a
lie”); accord United States ex rel. Bettis v. Odebrecht Contractors of Cal., Inc., 297 F. Supp. 2d
49
272, 277 (D.D.C. 2004), aff'd, 393 F.3d 1321 (D.C. Cir. 2005). Put differently, under the
Government’s own theory of falsity, a jury could conclude that an offeror’s obligation to disclose
“all commercial business practices” is necessarily limited to those business practices that the
GSA and the offeror agree are within the scope of the negotiation at hand.
Because Symantec has created a dispute of fact as to whether its failure to disclose
reseller back-end rebates rendered its CSPs and other disclosures false, the Court denies the
Government’s motion for partial summary judgment as to this issue. 37
C. Violation of Price Reduction Clause
The Government seeks judgment that Symantec violated the Price Reduction Clause by
failing to disclose discounts either larger than those extended to the GSA or that departed from
the Frequency Chart’s distribution, and to adjust the GSA’s pricing under the Contract
accordingly. See U.S. Mot. Partial Summ. J. 2. Such a finding, according to the Government,
would resolve part of its breach of contract claim. See U.S. Mem. Supp. Mot. Partial Summ. J.
41–42. 38
For the reasons given below, the Court concludes that Symantec has created a genuine
dispute of material fact both as to the parties’ contemporaneous understanding of the Price
Reduction Clause when the Contract was concluded and as to the extent of Symantec’s
compliance with that Clause (even under the Government’s interpretation).
37
Because the Court concludes that Symantec has created a dispute of fact as to whether
back-end reseller rebates were relevant at all to its CSPs, the Court has no occasion to consider
whether there is a dispute of fact over the nature of certain rebates disclosed by Symantec—i.e.,
whether the disclosed rebates were back-end or front-end rebates. See U.S. Reply 23–24.
38
Summary judgment on a Price Reduction Clause violation would presumably also
support the Government’s presentment claim under the implied certification theory. See supra
Part IV.A.1.a.
50
In interpreting a contract, courts must “begin with the plain language” and “give the
words of the agreement their ordinary meaning unless the parties mutually intended and agreed
to an alternative meaning.” Armour of Am. v. United States, 96 Fed. Cl. 726, 737 (2010)
(citation omitted). That is, “[w]hen the terms of a contract are clear and unambiguous, there is
no need to resort to extrinsic evidence for its interpretation.” Id. But “extrinsic evidence will be
allowed to interpret an ambiguous clause,” so long as such evidence supports an interpretation
that “gives meaning to all [of the contract’s] provisions” and is not used to “rea[d] a term into an
agreement that is not found there.” Id. at 738 (citations omitted). “An ambiguity, however, is
not generated merely because the parties differ in their respective interpretations, but occurs
when the contract is susceptible to more than one reasonable interpretation.” W & F Bldg.
Maintenance Co., Inc. v. United States, 56 Fed. Cl. 62, 69 (2003). 39
Here, based on the incomplete, pre-discovery record before it, the Court concludes that
there is a dispute of material fact as to whether the parties “mutually intended and agreed” to the
Government’s preferred construction of the Price Reduction Clause. Armour of Am., 96 Fed. Cl.
at 737. At the outset, the Court finds that the Price Reduction Clause’s language is ambiguous
because it is “susceptible to more than one reasonable interpretation.” Id. The parties have
advanced reasonable interpretations of (at least) two ambiguous terms under the Clause—
“commercial class of customers,” who served as the basis of award, and, relatedly, the “discount
relationship” that Symantec was obligated to maintain with those customers. The Government
reads “commercial class of customers” to mean all parties to which Symantec sells its products
and services including resellers and distributors, and contends that the “discount relationship” is
39
The Government is correct that contract interpretation is a “question of law.” See U.S.
Mem. Supp. Mot. Partial Summ. J. 39 (quoting Greco v. Dep’t of the Army, 852 F.2d 558, 560
(Fed. Cir. 1988)). But that is beside the point; here, Symantec has created a factual dispute
precluding this Court from deciding the legal question in favor of the Government.
51
altered (thereby triggering the Price Reduction Clause) whenever a single customer receives
better pricing than the GSA under similar terms and conditions or when the discount distribution
departs from the Frequency Chart’s representations. See U.S. Mem. Supp. Mot. Partial Summ. J.
20–21, 23–26. Symantec maintains that “commercial class of customers” excludes resellers and
distributors, Def.’s Mem. Opp’n 34, and that changes in the “discount relationship” cannot be
effected by any non-published discounts given that Symantec disclosed the existence of certain
such discounts, see id. 22–23. Because the Clause is ambiguous in these respects, extrinsic
evidence serves to give its terms meaning. See Armour of Am., 96 Fed. Cl. at 737–38. But both
parties have proffered evidence from the Contract’s negotiation that favors their reading of the
Clause. 40 Accordingly, there remains a dispute of fact about how the parties interpreted the Price
Reduction Clause during negotiations that, in turn, can inform an understanding of Symantec’s
obligations under the Clause.
Even if the Government were correct that the Price Reduction Clause at least obligated
Symantec to disclose a pattern of discounts that deviated from the Frequency Chart, there
remains a dispute of material fact as to whether Symantec actually failed to do so. In its motion
for partial summary judgment, the Government again relies on Robinson’s declaration. See U.S.
Mem. Supp. Mot. Partial Summ. J. 23–24. In relevant part, Robinson explains how he generated
40
Compare Bradbury email of Jan. 24, 2007 at 8–9, U.S. Ex. 17 (confirming definitions
of “Commercial MSRP” and “Government End User Discount Off Commercial MSRP” without
limitations related to resellers or disclosed non-published discounts); Bradbury email of Feb. 2,
2006, U.S. Reply Ex. 53, ECF No. 62-3 (“Commercial is defined as any entity other than the
Federal Government.”), with Symantec Best and Final Offer Letter SYM00370749, Def.’s Ex. E
(listing exclusions from Price Reduction Clause including “[n]on-standard discounts offered to
commercial customers”); Bradbury Aff. ¶ 50, Def.’s Ex. A (explaining understanding that under
the Price Reduction Clause, Symantec would “retain the commercial flexibility to offer ‘non-
standard competitive pricing to strategic accounts’”); Pre-Negotiation Memorandum 9, Def.’s
Ex. D, ECF No. 59-5 (indicating that at least certain “Commercial End Users” receive discounts
that “equa[l] or excee[d]” those offered to the GSA).
52
charts purporting to show the frequency of Symantec’s discounts at various magnitudes from
2007 to 2011 and then compared these charts to the Frequency Chart. See Robinson Decl. ¶¶
14–18, U.S. Ex. 20. Again, however, the Government fails to show the lack of a dispute of
material fact. See Celotex, 477 U.S. at 323 (discussing movant’s initial burden of showing “the
absence of a genuine issue of material fact”). In his declaration, Robinson candidly admits that
Symantec’s 2007–2011 sales data contained only MSRP, not Standard Buy Price, for each (or
most) of its product-specific transactions. See Robinson Decl. ¶ 16, U.S. Ex. 20. As a result, his
analysis was “limited” because the discounts that he calculated were the sum of published and
non-published discounts. Id. By Robinson’s own admission, then, the record contains no
evidence showing Symantec’s non-published discount distributions—isolated from published
discounts—during the life of the Contract. Accordingly, a reasonable jury could reject out of
hand Robinson’s analysis of Symantec’s 2007–2011 sales data and conclude that the
Government has failed to demonstrate the falsity of the Frequency Chart’s representations. 41
Because, based on the current record, there are factual disputes both as to the parties’
contemporaneous understanding of the Price Reduction Clause and as to whether Symantec
complied with that Clause (even as the Government would prefer to construe it) at least at this
pre-discovery stage of the case, the Court denies the Government’s motion insofar as it seeks
judgment that Symantec violated the Clause.
41
The Government contends that incorporating both published and non-published
discounts into its 2007–2011 sales analysis is justified because the Frequency Chart, too,
encompassed both published and non-published discounts. See U.S. Mem. Supp. Mot. Partial
Summ. J. 23 n.11. The problem with the Government’s theory, however, is that it rests on an
assumption for which there is no record evidence—that is, that the relative magnitude of
published and non-published discounts remained constant between 2005 (the year to which
Symantec’s initial disclosures pertained) and 2007–2011 (the life of the Contract).
53
D. Falsity of Certifications and Falsity of Statements Whose Usage Was Authorized by
Symantec
The Government moves for partial summary judgment on two final issues—the falsity of
the disclosures that Symantec authorized the GSA to use in negotiations with resellers, and the
falsity of Symantec’s certifications that its disclosures remained accurate. See U.S. Mot. Partial
Summ. J. 2. According to the Government, the former issue would resolve the “making or
using” element and, in part, the falsity element of the Government’s false statement FCA claims
based on the reseller contracts, see U.S. Mem. Supp. Mot. Partial Summ. J. 41, while the latter
issue would resolve the falsity element of the Government’s false statement claim based on the
certifications and its negligent misrepresentation claim, see id. at 42–43.
The parties agree that both of these issues, as presented at this juncture in the
Government’s motion, are premised on the falsity of Symantec’s disclosures—the Frequency
Chart, its representation about eSPA, and its failure to disclose certain back-end rebates. See
U.S. Mem. Supp. Mot. Partial Summ. J. 41–42; Def.’s Mem. Opp’n 34. The Court has already
concluded there are genuine disputes of material fact concerning the falsity of these disclosures.
See supra Part V.B. Accordingly, the Court denies the Government’s motion for partial
summary judgment on the falsity of the disclosures that Symantec authorized the GSA to use in
negotiations with resellers, and the falsity of Symantec’s certifications that its disclosures
remained accurate.
VI. CONCLUSION
For the foregoing reasons, Symantec’s motion to dismiss (ECF No. 46) is GRANTED
IN PART and DENIED IN PART, and the Government’s motion for partial summary judgment
54
(ECF No. 54) is DENIED. An Order consistent with this Memorandum Opinion is separately
and contemporaneously issued.
Dated: September 10, 2015 RUDOLPH CONTRERAS
United States District Judge
55