['United States of America v. Capitol Supply Inc'] , 27 F. Supp. 3d 91 ( 2014 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA,
Petitioner,
Misc. No. 13-mc-0373 (BAH)
v.
Judge Beryl A. Howell
CAPITOL SUPPLY, INC.,
Respondent.
MEMORANDUM OPINION
The United States of America, on behalf of the Office of Inspector General for the
General Services Administration (“OIG”), filed the Petition for Summary Enforcement of two
Inspector General (“IG”) Subpoenas Duces Tecum (“Petition”), which is pending before the
Court. The subpoenas at issue seek to compel Capitol Supply, Inc. (“CSI”), to produce records
in connection with an OIG investigation of whether CSI violated the False Claims Act, 31 U.S.C.
§§ 3729 et seq., by falsely certifying that office-grade shredders and other office supplies, which
CSI sold to federal agencies via government-sponsored websites, were manufactured in
compliance with the Trade Agreements Act (“TAA”), 19 U.S.C. §§ 2501 et seq., and Buy
American Act (“BAA”), 41 U.SC. §§ 8301 et seq. CSI does not dispute that the subpoenas at
issue were served in accordance with an official investigation conducted by, and within the
statutory authority of, OIG or that the subpoenas seek information relevant to this investigation.
Nevertheless, CSI opposes this petition for judicial enforcement of the two subpoenas on the
grounds that it has already “diligently complied,” and that the subpoenas seek “documents that
do not exist” or are “already in the Government’s possession.” CSI Opp’n U.S. Pet. Summ. Enf.
1
IG Subpoena (“CSI Opp’n”) at 1, ECF No. 8. For the reasons discussed below, the
Government’s Petition for Summary Enforcement of the IG Subpoenas is granted.1
I. BACKGROUND
A. CSI’s Business with the Federal Government
CSI offers for sale nearly one million different products from thousands of manufacturers
to federal government customers under various GSA Federal Supply Schedule (“FSS”) contracts,
including Multiple Award Schedule Contract No. GS-02F-0100N for office supplies, through the
Department of Defense’s “EMALL” and GSA’s “GSA Advantage!” websites. Decl. of Robert
Steinman Supp. Opp’n U.S. Pet. Summ. Enf. IG Supboena (“Steinman Decl.”) ¶ 2–3, ECF No.
8-1.2 The Federal Acquisition Regulations (“FAR”) prescribe standard federal contract clauses
that are incorporated by reference into CSI’s GSA contracts. Decl. of Crystal L. Johnson,
Special Agent, OIG (“Johnson Decl.”) ¶ 8a, ECF No. 1-1. Among those contract clauses are
those that implement the requirements of the BAA and TAA. Id. Taken together, these two laws
permit federal agencies to purchase products from foreign countries only when those countries
are designated as providing “appropriate reciprocal competitive government procurement
opportunities to United States products and suppliers of such products.” 19 U.S.C. § 2511(b)(1);
see also id. § 2518(1). China is not included on the list of designated countries. Johnson Decl. ¶
8a (citing 48 C.F.R. § 25.003).
As part of its FSS contracts, CSI agreed to comply with applicable laws and regulations
ensuring that products offered for sale or sold under this contract to the United States
1
CSI’s request for an oral hearing on the petition was granted and a hearing held on March 18, 2014. See CSI
Opp’n at 1.
2
According to the OIG, CSI holds the following current FSS contracts: GS-02F-0100N (office products); GS-30F-
0019U (automotive superstore); GS-21F-0001K (hardware and appliances); GS-06F-0070R (hardware and
appliances); and GS-27F-0028P (furniture). Decl. of Crystal L. Johnson, Special Agent, OIG (“Johnson Decl.”) ¶ 7,
ECF No. 1-1.
2
Government were U.S.-made or designated country end products. Johnson Decl. ¶ 8a & b; see
also 48 C.F.R. § 52.225-6(a) (“The offeror certifies that each end product, except those listed in
paragraph (b) of this provision, is a U.S.-made or designated country end product, as defined in
the clause of this solicitation entitled ‘Trade Agreements.’”); 48 C.F.R. § 52.225-5(b) (“The
Contractor shall deliver under this contract only U.S.-made or designated country end products
except to the extent that, in its offer, it specified delivery of other end products in the provision
entitled ‘Trade Agreements Certificate.’”). According to the OIG, submitting claims for
payment for products sold through the FSS contracts, when those products do not conform to the
certification that the end product is made in the U.S. or a designated country, “may constitute
criminal false statements or civil false claims, in violation of 18 U.S.C. §§ 1001, 287, or 31
U.S.C. §§ 3729 et seq., respectively.” Johnson Decl. ¶ 8b. To ensure compliance with these
obligations, federal contractors are required to maintain sales records for three years from the
date of last payment and to permit the OIG to “have access to and the right to examine any
books, documents, papers, and records of the Contractor involving transactions related to this
contract or compliance with any clauses thereunder.” Id. at ¶ 15 (citing 48 C.F.R. 552.215-70).
B. OIG Initiation of Investigation
On June 29, 2010, relator Louis Scutellaro filed a qui tam complaint, which was placed
under temporary seal, alleging that CSI was “selling products to the United States Government
that did not originate in designated countries under the [TAA], and therefore . . . presenting false
claims to the United States Government for payment.” U.S. ex. rel. Scutellaro v. Capitol Supply,
Inc., Civ. No. 10-01094 (D.D.C.), Compl. ¶ 5, ECF No. 1.3 After receiving the qui tam
3
This qui tam complaint was partially unsealed on February 28, 2012 at the request of the United States for the
limited purpose of disclosing its allegations to CSI. See Order, dated Feb. 28, 2012, ECF No. 8. Over eight months
later, on October 12, 2012, the complaint and the Government’s Notice of Election to Intervene in Part were
unsealed. See Order, dated October 12, 2012, ECF No. 20. Almost one year after the complaint had been unsealed
3
complaint, the OIG initiated an investigation to “determine whether Capitol Supply unlawfully
advertised, certified and sold office supply products, including paper shredders, to Federal
agencies and offices pursuant to a GSA schedule contract.” Johnson Decl. ¶ 6. In furtherance of
its investigation, the OIG served two subpoenas on CSI, in 2010 and 2011, to obtain information
pertinent to the sales of products by CSI through its FSS contracts with the GSA. CSI’s
compliance with those two subpoenas is at issue in the pending petition.
C. 2010 Subpoena and Response
On November 5, 2010, the OIG issued its first Subpoena, No. 1732 (“2010 Subpoena”),
to CSI seeking production of all documents in CSI’s possession from January 1, 2004 until
November 4, 2010 “relating in any way to any sale of Fellowes brand shredders under any
schedule contract” with the GSA. Pet. Ex. 1 (“2010 Subpoena”) at 6, ECF No. 1-2. The 2010
Subpoena requested production of seven categories of documents related to the subject matter of
the subpoena, including sales data of Fellowes shredders sold pursuant to any GSA schedule
contract (No. l), correspondence and communications from suppliers regarding country of origin
of those shredders sold (Nos. 2 and 6), information as to the country of origin of the shredders
sold (Nos. 3 and 4), and the identities of employees who sold the shredders on behalf of CSI (No.
7). Id. at 6; see also Johnson Decl. ¶ 10.4
for disclosure to CSI, on February 5, 2013, the United States filed a Complaint in Partial Intervention on a portion of
the relator’s allegations pertaining to CSI’s sales, totaling approximately $408,930.04, of Fellowes Manufacturing
Company paper shredders to federal agencies through the GSA, with allegedly false certifications that the shredders
were made in the United States or other designated countries, when, in fact, they were manufactured in China, a
non-designated country, in violation, inter alia, of the False Claims Act, 31 U.S.C. § 3729(a)(1). See Compl.-in-
Partial Intervention ¶¶ 14–25, ECF No. 2. In an oblique reference to the subject matter of the instant dispute over
CSI’s compliance with the two subpoenas at issue, the government’s Complaint in Partial Intervention states that
“[b]ecause [CSI] failed to fully comply with a subpoena issued by the GSA Office of the Inspector General, the
United States believes that additional sales of non-compliant, Chinese-made products to the United States will be
uncovered during discovery.” Id. ¶ 13.
4
The 2010 Subpoena requests the following seven categories of records: (1) sales data (including country of origin
information) for sales of Fellowes-brand shredders; (2) correspondence pertaining to the country of origin of
Fellowes-brand shredders sold through CSI’s FSS contracts; (3) documents pertaining to the manufacture or
4
Shortly before the production deadline, CSI’s counsel tried unsuccessfully to negotiate
with the OIG to reduce the scope of the documents requested. See Decl. of Holly A. Roth Supp.
Opp’n Pet. (“Roth Decl.”) ¶ 3, ECF No. 8-2 (OIG Special Agent Johnson “did not substantively
respond to my request to narrow the scope of the document production required by the 1732
Subpoena”). The parties were able, however, to reach an agreement permitting CSI to produce
the requested documents in a “rolling fashion.” Johnson Decl. ¶ 11 (“We agreed that [CSI]
would produce responsive documents in a ‘rolling fashion’”).
CSI subsequently made two productions of material in response to the 2010 Subpoena.
The first production, on three compact discs (“CDs”), consisted of 4,224 pages and several
spreadsheets (Bates-number CS004220–21). CSI Opp’n Ex. D (letter, dated Dec. 23, 2010, from
CSI counsel to OIG) at 2–3, ECF No. 8-4; CSI Opp’n at 3. As the cover letter from CSI counsel
makes plain, two of the CDs contained “promotional” material sent to CSI by a vendor. Id. at 3.
According to CSI, the spreadsheet “show[ed] all sales of Fellowes shredders from 2004 to 2010
under any contract.” CSI Opp’n at 3; CSI Opp’n Ex. D at 2. The second production, on one CD,
consisted of 113 Bates-stamped native documents. CSI Opp’n Ex. E (letter, dated April 26,
2011, from CSI counsel to OIG) at 1, ECF No. 8-5; CSI Opp’n at 3–4. Together, both
productions “consisted of approximately 500,000 pages of documents, many of which were
produced as native documents.” Roth Decl. ¶ 4.
The OIG concluded that, although CSI’s response to the 2010 Subpoena contained “sales
information for Fellowes shredders for the time period 2004 to mid-December 2010,” Johnson
assembly location of Fellowes-brand shredders sold through CSI’s FSS contracts; (4) other documents pertaining to
the country of origin of Fellowes-brand shredders sold through CSI’s FSS contracts; (5) documents relating to the
deletion of Fellowes-brand shredders sold through CSI’s FSS contracts due to the shredders’ country of origin; (6)
documents Capitol received from its suppliers relating to Fellowes-brand shredders sold through CSI’s FSS
contracts; and (7) the names, positions, addresses, and titles of current and former CSI employees associated with
sales of Fellowes-brand shredders under CSI’s FSS contracts. Johnson Decl. ¶ 10.
5
Decl. ¶ 11, the response was insufficient in two respects. First, the documents produced only
“pertained to [GSA Schedule Contract] GS-02F-0100N, though the subpoena called for material
relating to Fellowes shredders sold through all of [CSI’s] contracts.” Id. Second, “[t]his
spreadsheet include[d] only 11 items sold through schedules other than GS-02F-0100N,” and
“did not provide country of origin information for the vast majority of the models.” Supp. Decl.
Crystal L. Johnson, Special Agent, OIG (“Johnson Supp. Decl.”) ¶ 3, ECF No. 11-1; Johnson
Decl. ¶ 11 (“for 36 of the 46 Fellowes shredder models offered through Capitol’s FSS contracts,
Capitol did not provide documentation regarding country of origin”). Another problem with the
spreadsheet was that, without “complete sales data,” the OIG could not “confirm whether these
represent all Fellowes sales under Capitol’s schedule contracts.” Johnson Supp. Decl. ¶ 3.
Notably, in a letter accompanying the first production responsive to the 2010 Subpoena,
CSI’s counsel informed the OIG that CSI simply may not have responsive documents, explaining
that CSI’s “historical documentation of country of origin is limited because [CSI] updates such
information on the products it offers based on the most recent electronic download from its
distributers.” CSI Opp’n Ex. D at 2. CSI’s counsel’s letter transmitting the second production
reiterated this limitation in CSI’s country of origin data, stating that CSI “and its suppliers
engage in an electronic interchange of data whereby the supplier automatically updates
information on products it sells through [CSI]—including country of origin (“COO”)” and “new
supplier data for a given product –such as a Fellowes shredder—would replace, or overwrite,
previous data in [CSI]’s system on that product.” CSI Opp’n Ex. E at 1; see also Decl. of Robert
Steinman, Chief Executive Officer, CSI (“Steinman Decl.”) ¶ 6, ECF No. 8-1 (“the information
in the databases was constantly being overwritten to reflect that latest information”); Johnson
Decl. Ex. 2 (letter, dated April 10, 2012, from CSI counsel Holly A. Roth to Special Agent
6
Crystal Johnson) at 2, ECF No. 1-3 (CSI’s counsel explaining that CSI’s “electronic system does
not maintain all of the information you have requested for the fields you have requested for the
time periods you have requested” because CSI’s “dynamic system . . . is designed to verify a
compliant country of origin from vendor provided information, e.g., the vendor feeds, in real
time when [CSI] accepts and fulfills an order,” but as “vendors frequently update information on
the products [CSI] offers under the Contract, it is the most current information on the Country of
Origin that is available on [CSI]’s system at any given time”).
In short, the system employed by CSI to maintain country of origin information is
constantly being overwritten with each new upload of updated information by vendors and this
information is apparently not otherwise preserved by CSI. According to the OIG, this is
inconsistent with CSI’s contractual obligations. See Johnson Decl. ¶ 15 (“To comply with the
Examination of Records clause, the contractor must first preserve these records.”); Johnson
Supp. Decl. ¶ 3 (noting CSI’s contention “that it does not possess this information” but stating
that CSI “is required to maintain this information under the terms of its schedule contract” and
“it is not clear how it could now lack the information unless it was destroyed”). Moreover, CSI’s
reliance on information provided by its vendors means that CSI “necessarily relies on the
accuracy of the [country of origin] data provided by its vendors.” Steinman Decl. ¶ 5. Thus, CSI
explains that “[i]f vendors provide inaccurate data—including inaccurate country of origin
information—then [CSI’s] databases will generally reflect those errors.” Id.D. 2011 Subpoena and Response
On June 22, 2011, the OIG issued a second Subpoena, No. 1774 (“2011 Subpoena”), to
CSI seeking production of all documents in CSI’s possession from January 1, 2004 until June 21,
2011 “relating in any way to” Multiple Award Schedule Contract No. GS-02F-0100N. Petition
7
Ex. 3 (“2011 Subpoena”), at 6, ECF No. 1-4. The 2011 Subpoena requested the same seven
categories of documents listed in the 2010 Subpoena.5 While the 2010 Subpoena requested
information related to Fellowes shredders sold under any Federal contract, the 2011 Subpoena
sought documentation about any product sold by CSI under a single Federal contract for the
same six and one-half year period.
CSI made four productions in response to the 2011 Subpoena. The first production of
16,923 documents, assigned Bates-stamped numbers 1–22208, was on an encrypted CD, which
the OIG could not access. CSI Opp’n Ex. F (letter, dated July 21, 2011, from CSI counsel to
OIG) at 1, ECF No. 8-6; Johnson Decl. ¶ 13.6 The second production of documents contained
both the first production of 16,923 documents, as well as 36,258 new documents, assigned Bates-
stamped numbers 22209–773448, for a total of 53,181 pages of “purchase orders that [CSI] has
received from various Government agencies through DoD E-Mall and GSAAdvantage over the
past year,” CSI Opp’n Ex. G (letter, dated July 26, 2011, from CSI counsel to OIG) at 1, ECF
5
The seven categories of documents requested in the 2011 Subpoena are: (1) sales data (including country of origin
information) for all products sold under the contract; (2) documents pertaining to the manufacture or assembly
location of products sold through the contract; (3) documents CSI received from its suppliers relating to the country
of origin of products sold through the contract; (4) other documents pertaining to the country of origin of products
sold through the contract; (5) documents relating to CSI’s efforts to comply with the TAA; (6) documents relating to
the deletion of products from the contract due to their country of origin; and (7) the names, positions, addresses, and
titles of current and former CSI employees associated with CSI’s performance of the contract. Johnson Decl. ¶ 12;
2011 Subpoena at 6.
6
CSI receives “data feeds [that] are generally text files, Excel spreadsheets, or Microsoft Access files,” which the
company’s “computerized tools read, format, and upload into its databases.” Steinman Decl. ¶ 4. At the hearing,
the government indicated that production of the data feeds in these native formats would be usable and searchable so
long as the individual entries are “delineated.” See Rough Transcript of Motion Hearing (March 18, 2014) (“Tr.”) at
15:11–21. The parties have not requested formal transcripts from the Court Reporter. Accordingly, the Court relies
on the court reporter’s rough transcript of the March 18, 2014 motion hearing in this Memorandum Opinion.
According to the government’s declarant, however, the data feeds produced were “a jumble of letters, numbers, and
symbols.” Johnson Decl. ¶ 13; cf. CSI Opp’n Ex. K at 3, ECF No. 8-11 (letter, dated April 10, 2012, from CSI’s
counsel to OIG, stating “we find it quite easy to identify the various pieces of information Subpoena No. 1774 is
seeking, including the country of origin for each product”). The Court need not resolve whether the data feeds were
a “jumble” or “easy to identify” but expects CSI to live up to its promise “to cooperate” and “provide such
documentary evidence that it maintains to demonstrate its compliance with the Contract’s Trade Agreements Act
clause.” Id. at 3.
8
No. 8-7, covering the period from August 2010 through April 2011.7 CSI Opp’n Ex. J (email,
dated April 3, 2012, from OIG to CSI’s counsel, noting that this production “doesn’t cover the
timeframe requested in the subpoena (January 1, 2004–June 21, 2011) and wasn’t provided in
excel format”). CSI’s counsel acknowledged that these two productions “represented
approximately six months of purchase orders, out of the 7.5 years of documents that the OIG
initially requested.” Roth Decl. ¶ 9.
The third production of documents, assigned Bates-stamped numbers 73449–1563209,
consisted of 1,489,760 pages of data feeds from CSI’s various suppliers, which had been
converted from .XML format to .PDF format and then encrypted. CSI Opp’n Ex. H, ECF No. 8-
8; id. Ex. I (email thread, dated February 2012, between CSI counsel and OIG); Johnson Decl. ¶
13 (CSI’s third production “contained 1,489,760 pages of data feeds from Capitol’s various
suppliers”). OIG could not access this information. CSI Opp’n Ex. J (email, dated April 3,
2012, from OIG to CSI’s counsel, noting number of pages in third production and that OIG
“can’t open this information”). Finally, the fourth production, on a hard drive, contained
documents assigned Bates-stamp numbers 1563210–1575609 in native format of previously
produced documents. CSI Opp’n Ex. L (letter, dated April 27, 2011, from CSI’s counsel to
OIG).8
Again, the OIG concluded CSI’s response to the 2011 Subpoena was deficient in at least
two respects. First, as CSI concedes, the submissions under the 2011 Subpoena consisted of only
a fraction, or about six months’ worth, of documentation when the subpoena called for seven and
7
The Roth Declaration summarizes the total as “73,000 pages of documents,” Roth Decl. ¶ 9, but does not explain
the mathematical computation to get to this number given the numbers of the pages cited in the original letters
transmitting the productions.
8
CSI’s opposition papers indicate that the company made “a fifth production of documents to OIG on April 27,
2011,” CSI Opp’n at 7, but the transmittal letter cited describes the production as the “fourth production of
documents,” CSI Opp’n Ex. L.
9
a half years. Roth Decl. ¶ 9; Johnson Decl. ¶ 13. Second, while CSI “did produce a second set
of what it maintains is country of origin documentation from its suppliers, this material did not in
fact contain country of origin information. Some of the documents lack part numbers or dates in
addition to country of origin information.” Johnson Supp. Decl. ¶ 10.
Throughout the productions in response to the 2010 and 2011 Subpoenas, CSI
complained about the cost and burden resulting from compliance. For example, CSI stated that it
could not “simply produce the databases containing this information” because “[t]hey [were]
extraordinarily complex, with many hundreds of data tables, hundreds of stored procedures, and
millions of lines of code.” Steinman Decl. ¶ 12. As a by-product of attempting to comply, CSI
asserted that it needed to lay “off nine personnel, or about 20% of its work force, in part because
of the costs of this litigation.” Id. For CSI, this was particularly frustrating because they
believed that the Government was already in possession of the requested documents as the
purchaser of the products sold by CSI. Id. at 13. The OIG disputes that the Government
possessed the requested documents because “[w]ith respect to sales of those products, only a
fraction of those sales [were] made through the GSA Advantage! website. Therefore, the GSA
OIG does not have information on all of [CSI]’s FSS sales.” Johnson Supp. Decl. ¶ 6.
Remaining dissatisfied with the completeness of production, the OIG now seeks judicial
enforcement of the subpoena. See Pet. ¶ 8.
II. LEGAL STANDARD
The court’s role in determining the enforceability of an administrative subpoena is
“strictly limited.” FTC v. Texaco, Inc., 555 F.2d 862, 872 (D.C. Cir 1997). The D.C. Circuit has
explained that the Supreme Court has “confined the judicial role” in evaluating an administrative
subpoena enforcement petition “to determining whether ‘the inquiry is within the authority of the
10
agency, the demand is not too indefinite and the information sought is reasonably relevant.’”
U.S. Int’l Trade Comm’n v. ASAT, Inc., 411 F.3d 245, 253 (D.C. Cir. 2005) (quoting United
States v. Morton Salt Co., 338 U.S. 632, 652–53 (1950); see also Texaco, 555 F.2d at 872;
Resolution Trust Corp. v. Walde, 18 F.3d 943, 946 (D.C. Cir. 1994); FTC v. Boehringer
Ingelheim Pharm., Inc., 898 F. Supp. 2d 171, 174 (D.D.C. 2012); United States v. Inst. for
College Access & Success, No. 13-mc-81, 2013 U.S. Dist. LEXIS 104704 (D.D.C. July 26,
2013). This circumscribed judicial role is designed to further the “important governmental
interest in the expeditious investigation of possible unlawful activity.” Texaco, 555 F.2d at 872.
Agencies are accorded “extreme breadth in conducting [their] investigations,” Linde
Thomson Langworthy Kohn & Van Dyke, P.C. v. Resolution Trust Corp. (“Linde Thomson”), 5
F.3d 1508, 1517 (D.C. Cir. 1993), because “‘a wide range of investigation is necessary and
appropriate where, as here, multifaceted activities are involved, and the precise character of
possible violations cannot be known in advance,’” id. (quoting Texaco, 555 F.2d at 877). Thus,
agencies are given broad deference both in their interpretation of the scope of their authority to
issue a subpoena for targeted records and their estimation of the relevance of such records. See
FTC v. Church & Dwight Co., 665 F.3d 1312, 1315–16 (D.C. Cir. 2011) (noting, “we defer to
the Commission’s interpretation of its own Resolution”); FTC v. Ken Roberts Co., 276 F.3d 583,
586–87 (D.C. Cir. 2001) (“we have held that enforcement of an agency’s investigatory subpoena
will be denied only when there is “a patent lack of jurisdiction” in an agency to regulate or to
investigate”); FTC v. Ernstthal, 607 F.2d 488, 492 (D.C. Cir. 1979) (declining to “relax the well-
established barrier against ruling on the agency’s regulatory jurisdiction in subpoena
enforcement proceeding . . . where the absence of jurisdiction is not patent, and there are no
allegations of agency bad faith”). Indeed, the D.C. Circuit has instructed that an agency’s
11
determination of relevance of the information sought in an administrative subpoena should not
be disturbed or “rejected” unless it is “obviously wrong.” FTC v. Invention Submission Corp.,
965 F.2d 1086, 1089 (D.C. Cir. 1992); see also United States v. Legal Servs., 249 F.3d 1077,
1084 (D.C. Cir. 2001) (same); Dir., Office of Thrift Supervision v. Vinson & Elkins, LLP, 124
F.3d 1304, 1307 (D.C. Cir. 1997) (“We give the agency a wide berth as to relevance because it
need establish only that the information is relevant to its investigation not to a hypothetical
adjudication, and as we have explained, the boundary of an investigation need only, indeed can
only, be defined in general terms.”).
Consequently, the burden of showing that an administrative subpoena is unreasonable
rests on the subpoenaed party and “is not easily met.” Texaco, 555 F.2d at 882.
III. DISCUSSION
As noted, CSI does not contest the authority of the OIG to issue the 2010 and 2011
subpoenas, nor the definiteness and relevance of the information sought.9 See generally CSI
Opp’n. Instead, CSI contends that the company has “diligently complied” with the subpoenas
through production of “more than 2 million pages of documents.” CSI Opp’n at 1; see also id. at
8 (noting that CSI has made “good-faith efforts to comply” with the subpoena request). In
opposing the pending petition for enforcement of the administrative subpoenas, CSI raises two
arguments: (1) that the United States’ intervention in the related qui tam action renders the
9
Indeed, under the Inspector General Act of 1978, the OIG possesses the authority “to conduct, supervise, and
coordinate audits and investigations relating to the programs and operations of [the agency and to] . . . prevent[] and
detect[] fraud and abuse in [the agency’s] programs and operations.” 5 U.S.C. App. 3 § 4. In exercising this
authority and carrying out its investigative functions, the OIG may “require by subpoena the production of all
information . . . and documentary evidence necessary in the performance of [its] functions.” Id. § 6(a)(4). In view
of this broad authority and the subject matter of the documents demanded, the two subpoenas are lawful and seek
relevant records. The Court does not construe CSI’s discounting of the pending Petition as “a series of meritless
quibbles, combined with a series of demands for documents that [CSI] has already provided or that do not exist,”
CSI Opp’n at 8, to be challenging the relevance of the documents sought.
12
enforcement proceeding moot; and (2) that the OIG demand for further compliance with the
subpoenas is unreasonable. These arguments will be addressed seriatim.
A. Subsequently Filed Civil Suit No Bar To Subpoena Enforcement
The Court first turns to CSI’s threshold argument that the United States’ partial
intervention in the qui tam action brought by relator Louis Scutellaro has rendered this summary
enforcement proceeding “duplicative and moot” because “the document requests are properly
governed by the Federal Rules of Civil Procedure.” CSI Opp’n at 16. CSI fails to cite any case
law in support of this proposition. See generally CSI Opp’n. That is because case law in this
Circuit falls squarely against CSI’s position. The D.C. Circuit has unequivocally stated that the
filing of a subsequent criminal or civil action has no effect upon the enforceability of an
administrative subpoena issued by a body with significant investigative powers. See Linde
Thompson., 5 F.3d at 1518 (“Nor does the statute authorizing RTC investigations contemplate
the termination of investigative authority upon the commencement of civil proceedings.”);
Resolution Trust Corp. v. Frates, 61 F.3d 962, 965 (D.C. Cir. 1995) (filing of civil case did not
deprive agency of subpoena power since it could mean that agency “was still searching for
further evidence of the extent of [subpoena recipient’s] wrongdoing or the value of the claims”);
Resolution Trust Corp. v. Walde, 18 F.3d 943, 950 (D.C. Cir. 1994) (rejecting subpoena
recipient’s argument that the administrative subpoena was moot due to the agency’s filing of a
federal civil suit).
On this point, Linde Thomson is dispositive. In Linde Thomson, the Resolution Trust
Corporation (“RTC”) issued a subpoena duces tecum upon the Linde Thomson law firm, which
had significant connections to a failed thrift savings and loan bank. Id. at 1510. Linde Thomson
refused to comply with the subpoena, citing a subsequently filed civil suit as rendering the
13
enforcement proceedings moot. Id. at 1512. The D.C. Circuit did not agree, finding that
Congress granted RTC the authority to issue administrative subpoenas and placed no further
limitation upon their enforcement—including the filing of a civil suit over the same subject
matter. Id. at 1518 (“In this case . . . the investigative powers authorized by statute are
unrestricted”).
As in Linde Thomson, Congress has granted the OIG the unrestricted authority to issue
administrative subpoenas to root out fraud and abuse. See 5 U.S.C. App. 3 (creating independent
and objective offices to root out fraud and abuse). Because the OIG has been granted the broad
prerogative to issue administrative subpoenas in this case, no subsequently filed civil suit renders
the proceeding moot. Thus, this proffered basis for excusing CSI’s further compliance with the
two subpoenas at issue is meritless.
B. Compliance With Subpoenas Insufficient
The Court next turns to CSI’s opposition to providing further records in response to the
two administrative subpoenas on grounds that the Petition is “unreasonable” because CSI “has
fully complied with this request.” CSI Opp’n at 9. According to CSI, this “small business” has
already “been forced to incur significant legal fees and the costs of an outside document vendor
in order to comply.” Id. at 8; see also CSI Sur-Reply to U.S. Pet. Summ. Enf. IG Subpoena
(“CSI Sur-Reply”), at 1, 8, ECF No. 15 (noting CSI’s “great lengths to produce documents”
“despite the significant burdens on [CSI]”). Any further compliance burden would be
unreasonable, in CSI’s view, because the Petition seeks “documents that have already been
produced, documents already in the Government’s possession, or documents that do not exist.”
CSI Opp’n at 1; see also id. at 8 (petition seeks documents “already provided or that do not
exist”). Thus, as noted, CSI is not contesting the relevance of the records sought, but whether
14
any further compliance with the subpoenas presents an undue burden. While the degree of
burden often is “related to relevance,” the Court is cognizant that “subpoenas might be relevant
but still unduly burdensome.” Legal Servs., 249 F.3d at 1083–84.
It cannot be gainsaid that “some burden on subpoenaed parties is to be expected and is
necessary in furtherance of the agency’s legitimate inquiry and the public interest.” CFTC v.
McGraw Hill Cos. (In re Application to Enforce Admin. Subpoena), 390 F. Supp. 2d 27, 35
(D.D.C. 2005) (quoting Texaco, Inc., 555 F.2d at 882); see also 48 C.F.R. § 552.215-70 (OIG is
permitted to “have access to and the right to examine any books, documents, papers, records of
the Contractor”). To establish an undue burden, the subpoenaed party resisting enforcement
must show that the “compliance threatens to unduly disrupt or seriously hinder normal
operations of a business.” United States v. Chevron U.S.A., Inc., 186 F.3d 644, 649 (5th Cir.
1999); see also United States v. Cal. Rural Legal Assistance, Inc., 824 F. Supp. 2d 31, 46
(D.D.C. 2011) (“‘respondent would have to make a substantial showing of hardship for this
Court to determine that the burden . . . of complying with the subpoena is undue”), aff’d in part,
vacated in part, remanded, 722 F.3d 424 (D.C. Cir. 2013) (affirming district court’s
determination on burden). In evaluating any claim of hardship arising from subpoena
compliance, however, the context is important. Here, CSI does not dispute that the company has
contractual obligations under its government contracts both “to preserve all contemporaneous
records received from its suppliers regarding the country of origin of its products . . . for three
years from the date of the last payment under the contract” and “to maintain its records so as to
allow the production and/or conversion of those records and other electronic data to a readable
and usable form for the GSA.” U.S. Reply Resp.’s Opp’n U.S. Pet. Summ. Enf. IG Subpoenas
(“U.S. Reply”) at 4, ECF No. 11 (citing 48 C.F.R. §§ 4.703, et seq., 552.215-70). The
15
government stresses that applicable regulations make clear that government “contractors must
maintain their records in a ‘readable form from one reliable computer medium to another,’ and
‘shall not destroy, discard, delete, or write over such computer data.’” Id. (citing 48 C.F.R. §§
4.703) (emphasis in original). It is set against this regulatory context that the Court evaluates
CSI’s objections to further subpoena compliance.
Without getting mired in the minutia of the back-and-forth between the parties since the
2010 Subpoena was issued, the objections posed by CSI to the pending Petition and further
compliance with the subpoenas appear to fall into three areas: (1) CSI has already produced
voluminous documents and further production would be an undue burden on this “small
business,” CSI Opp’n at 1; id. at 5, 6; (2) CSI has produced documents in the format in which the
documents are received and has no obligation to convert records into any other format requested
by the OIG, CSI Opp’n at 12–13; CSI Sur-Reply at 2, 4; and (3) CSI has no obligation to
produce records already in the government’s possession, CSI Opp’n at 10; CSI Sur-Reply at 7.
These objections are unavailing in the context of this case.
1. Production To Date Is Insufficient
CSI has argued to the OIG since receipt of the 2010 Subpoena that, due to the sheer
volume of orders processed by CSI during the time period requested in the two subpoenas, the
subpoenas are both “extraordinarily broad and burdensome,” but the company has nonetheless
made efforts to comply. CSI Opp’n at 6 (quoting CSI Opp’n Ex. K (CSI’s counsel letter, dated
April 10, 2012, to OIG)). In support of this assertion, CSI notes that the company has already
produced nearly 1.5 million pages, which has “cost many thousands of dollars in programming
16
time as well as lost productivity.” Steinman Decl. ¶ 9.10 Thus, CSI’s position with respect to the
pending Petition for subpoena enforcement boils down to a protest that “enough is enough.”
Notwithstanding CSI’s repeated protestations about diligence in producing all requested
records, the company concedes that it has not produced “the purchase orders for the entire date
range” demanded in the subpoenas and states that it “is more than willing to produce these
documents.” CSI Opp’n at 11. This reason alone warrants granting the Petition.
CSI also concedes that it has failed to produce country of origin data for all of the
Fellowes shredders it sold between 2004 and 2010, representing $492,491 in sales. CSI Opp’n at
10, 13 n. 2; CSI Sur-Reply at 7 (CSI “has produced all available country-of-origin information
that it has been able to discover after a diligent search”). The company’s excuse for the gaps in
documentation regarding this critical information requested by the subpoenas is that such
documentation no longer exists since the “dynamic” system employed by CSI regularly and
routinely over-writes this information as vendors update their product descriptions. CSI Opp’n
Ex. E at 1; Steinman Decl. ¶ 6 (“[T]he information in the databases was constantly being
overwritten.”). By choosing to be part of the federal contracting program, CSI assumed the
burden of maintaining country of origin status documentation for all of their products. Accord
Int’l Bhd. of Teamsters v. Goldberg, 303 F.2d 402, 407 (D.C. Cir. 1962 ) (enforcing subpoena
issued by Secretary of Labor to the Teamsters because “[i]t seems plain that, when the appellant
union chose to file . . . it assumed the burden imposed by the statute of maintaining the necessary
records in respect to the report which it chose to file”). CSI’s admitted over-writing of
10
CSI summarizes its subpoena response, stating the company has “made five productions of documents to the
OIG, totaling approximately 2 million pages of documents in response to the two subpoenas.” CSI Opp’n at 7. The
number of pages produced to date by CSI sounds impressive but this number is misleading. Given the issues that
the OIG encountered in trying to access certain productions in response to both subpoenas, see Johnson Decl ¶ 13;
Johnson Supp. Decl. ¶ 10, CSI was prompted to make duplicate productions to the OIG. The total of “1.5 million
pages” or “approximately 2 million pages” touted by CSI thus appears to be double-counting some number of pages.
17
information required to be retained under its contractual obligations with the government is not
so easily excused. Rather, CSI will have to bear the consequences of failing to fulfill these
obligations.11 In short, CSI is not excused from compliance with its government contract
obligations because it has relied upon proprietary databases and employed a system of records
management that triggers a significant burden in complying with OIG requests for documents.
At the hearing on the Petition, CSI’s counsel indicated that, to the best of his knowledge,
the company had no backup system for the company’s databases that would provide access to
additional information that the company was required to maintain. See Rough Transcript of
Motion Hearing (March 18, 2014) (“Tr.”) at 21:8–12; 21:23—22:10. In the event that CSI has
no backup system or other mechanism to retain country-of-origin information, which CSI was
required, but claims to have failed, to preserve for the requisite contractual period, CSI will have
to certify this fact. Indeed, at the hearing, the government made clear that, given CSI’s
representations about the lack of additional responsive information regarding country-of-origin
information for the Fellowes shredders or other products sold under the relevant GSA contracts,
the company must certify this fact. Tr. at 5:24–6:5. Such certification by CSI may carry
concomitant penalties under the government contract and have consequences in the related civil
litigation between the parties. Obviously, however, if the documents do not exist, their
production cannot be compelled. See Tech v. United States, 284 F.R.D. 192, 198 (M.D. Pa.
11
CSI describes the mechanism it uses to collect and verify country of origin information as follows: “[a]ppropriate
vendors are chosen to fulfill an order by [CSI]’s automated vendor selection tool . . . [which] includes a feature to
identify countries of origin and block sales of products that were manufactured in countries not designated under the
Trade Agreements Act, based on information provided by the vendors in their data feeds.” Steinman Decl. ¶ 5; id.(“Because [CSI] is not involved in the manufacturing of products offered to the Government for sale under the
Office Supply Contract, it necessarily relies on the accuracy of the data provided by its vendors.”). Thus, CSI is
wholly dependent upon the accuracy of the country of origin information provided by its vendors and on the
effectiveness of its “vendor selection tool” which “includes a feature to identify countries of origin and block sales
of products that were manufactured in countries not designated under the Trade Agreements Act.” Id. It is beyond
the purview of this litigation to evaluate whether CSI’s system employs adequate safeguards to protect against
vendor or manufacture misstatements about country of origin information and to ensure the effectiveness of its
“vendor selection tool” in blocking non-compliant products.
18
2012) (“It is clear that the court cannot compel the production of things that do not exist. Nor
can the court compel the creation of evidence by parties who attest that they do not possess the
materials sought by an adversary in litigation.”); Baker v. Perez, 2011 U.S. Dist. LEXIS 94613,
7–8 (E.D. Cal. Aug. 24, 2011) (“the court cannot order defendants to produce documents that do
not exist”); United States v. Carell, 2011 U.S. Dist. LEXIS 57435, 9–19 (M.D. Tenn. May 26,
2011) (“a party ‘cannot be expected to produce documents which do not exist’” (quoting
Williams v. Schueler, 2006 U.S. Dist. LEXIS 43007, 2006 WL 1728123 at * 2 (E.D. Wis. June
23, 2006))).
2. CSI’s Production Format
The 2010 and 2011 Subpoenas request that CSI produce responsive sales data “in
electronic format (can be in the following formats: Database (.DBF), Access (.MBD), or Excel
(.XLS).” 2010 Subpoena at 6; 2011 Subpoena at 6. CSI asserts that it has “strictly complied
with this demand to the best of its ability” but “does not maintain the information in any of the
formats demanded by the Government . . . .” CSI Sur-Reply at 2; id. at 4 (CSI “does not
maintain any sales data in the electronic formats specified by the Government in its subpoena”).
Consequently, CSI produced “purchase orders in PDF format, just as it received these documents
from the Government,” and “Department of Defense sales data in .edi format, just as it received
these documents from the Government.” CSI Sur-Reply at 5 (emphasis in original). According
to CSI, the .PDF and .EDI formats are not proprietary and should be formats easily accessible to
the OIG since “the Government itself created these documents that it now claims that it cannot
access.” Id.CSI fails to address a critical point. The ability to access the contents of a record in a
particular format is simply not the same thing as being able to efficiently or effectively use
19
records in that format. As the government’s declarant suggests, “tens of thousands of PDF
invoices,” each of which must be opened individually for review, are not in as usable a format as
one that would allow for searches to identify and easily extract information subject to appropriate
queries. See Johnson Supp. Decl. ¶ 8. See also D’Onofrio v. SFX Sports Group. Inc., 247
F.R.D. 43, 47 (D.D.C. 2008) (“If, however, it is not stored in a directly obtainable medium, a
request may be made of the responding party to translate the electronic data into a “reasonably
usable form.” (quoting FED. R. CIV. P. 34(a)(1)(A)).
The parties appear to be talking past each other. CSI accuses the government of requiring
the company “to interpret the data for them, pulling out the country of origin information for
each product from that jumble and linking it to specific sales of shredders,” a task that CSI
claims is “beyond the scope of the subpoena, beyond the requirements of the Federal Rules, and
beyond the scope of the Inspector General Act.” CSI Sur-Reply at 8 (emphasis in original). The
government, on the other hand, states that CSI’s production of “native versions” of sales data
“did not in fact contain country of origin information [and] lack[ed] part numbers or dates.”
Johnson Supp. Decl. ¶ 10. Thus, this production was simply insufficient—a circumstance that
may be due to CSI’s over-writing of pertinent data on its databases.
Moreover, rather than tasking CSI to “interpret” its production, as CSI asserts, the
government simply sought the results of any database query to be produced in a usable format.
Specifically, the government’s declarant explains, “contractors maintain this information in a
variety of databases . . . [and OIG] offers subpoena recipients examples of formats in which the
contractor may produce the results of a query of its system, understanding that, in the course of
running its business, the contractor must query its system and request a usable format for results
on a regular basis.” Id. ¶ 9. The fact that CSI’s databases may lack the functionality to run
20
queries for country of origin information to facilitate responses to the OIG subpoenas does not
relieve this government contractor from responding to the OIG subpoenas with responsive
information in a usable, searchable format. CSI must live with the consequences if, as the
government declarant speculates, CSI “has chosen to store its only electronic data regarding
government sales in a system from which information cannot be extracted (not the limber
custom-designed system [CSI] described).” Id. ¶ 8. Accordingly, to the extent that CSI has
retained information responsive to the subpoenas, it is required to produce that information in a
format that is reasonably usable, which includes searchable, just as its databases are presumably
designed to respond to search queries.12
3. CSI’s Refusal to Produce Records Purportedly Already in Government’s Possession
CSI claims that it should be relieved of any further obligation to produce sales data
documents in response to the subpoenas because “nearly 75% of the sales data that the
Government seeks is already in its possession.” CSI Sur-Reply at 7; see also CSI Opp’n at 13
(“Producing the databases would be essentially useless to the Government, particularly since it
already has in its possession the information that it currently demands.”). CSI’s objection is
unavailing for at least two reasons.
First, the purpose of the OIG’s subpoenas is not merely to discern country of origin for
all of the Fellowes shredders sold by CSI on its government contracts, but also to assess whether
CSI was aware at the time of its FSS certification that products were manufactured in non-
compliance with the BAA and TAA. U.S. Reply at 3. Thus, whatever sales documentation may
12
Additionally, at the hearing, the government indicated that CSI has refused to provide passwords to encrypted
documents that contain sales data related to CSI’s sales through the Department of Defense’s EMALL website. CSI
is directed to provide any passwords to encrypted documents that CSI has not yet provided to the OIG in response to
these subpoenas.
21
be extant in the government’s possession does not necessarily reflect what CSI precisely knew
when.13
Second, contrary to the premise of CSI’s argument that the government has the majority
of the sales data records in its possession, according to the government’s declarant, GSA only
maintains records for a small number of sales made by merchants on the GSA Advantage!
Website. Johnson Supp. Decl. ¶ 6. The government’s declarant explains that “[t]he United
States does not already possess information relating to the country of origin of [CSI]’s products
[because] . . . only a fraction of those sales are made through the GSA Advantage! Website . . .
[and] the FSS program involves sales by multiple federal agencies through a variety of sales
platforms…” Johnson Supp. Decl. ¶ 6. Indeed, CSI concedes that the GSA Advantage! website
is only one of multiple platforms used by CSI to market and sell its products to federal agencies.
See Steinman Decl. ¶ 3 (“Instead, [CSI] posts products for sale to the Government on the GSA
Advantage website, Department of Defense EMALL website, and Capitol Supply’s own
website.”). Thus, not only does the government not retain the sales data subject to the
subpoenas, but also the government would have difficulty collecting information from across
multiple federal agencies about sales made by CSI via multiple platforms. See Supp. Decl.
Johnson ¶ 6.
Accordingly, CSI is not excused from compliance with the subpoenas with respect to
production of information, which it is required to retain, even when that information is
purportedly in the government’s possession.
13
The government apparently obtained country of origin information about CSI’s sales of Fellowes shredders from
sources other than CSI. U.S. Reply at 9–10; Johnson Supp. Decl. ¶ 7.
22
IV. CONCLUSION
The United States Petition for Summary Enforcement of an Inspector General Subpoena
is granted. An appropriate Order consistent with this Memorandum Opinion will issue.
Digitally signed by Hon. Beryl A.
Howell
Date: March 19, 2014 DN: cn=Hon. Beryl A. Howell,
o=District of Columbia, ou=U.S.
District Court for the,
email=Howell_Chambers@dcd.uscour
ts.gov, c=US
Date: 2014.03.19 11:56:31 -04'00'
BERYL A. HOWELL
United States District Judge
23