United States of America et al v. Get Engineering Corporation et al, No. 3:2019cv01249 - Document 115 (S.D. Cal. 2022)

Court Description: ORDER denying Relator's 101 Motion for Summary Judgment; granting in part and denying in part Defendants' 102 Motion for Summary Judgment. The Parties SHALL FILE a Joint Status Report within seven (7) days of the electronic docketing of this Order regarding the status of this litigation and proposing a joint schedule for pretrial dates and deadlines. Signed by Judge Todd W. Robinson on 1/18/2022. (fth)

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United States of America et al v. Get Engineering Corporation et al Doc. 115 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 UNITED STATES OF AMERICA ex rel MC2 SABTECH HOLDINGS, INC., d/b/a IXI TECHNOLOGY, INC., 13 14 15 16 17 18 Case No.: 19-CV-1249 TWR (AGS) ORDER (1) DENYING RELATOR’S MOTION FOR SUMMARY JUDGMENT, AND (2) GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT Plaintiffs and Relator, v. GET ENGINEERING CORP., GUILLE E. TUTTLE, RODNEY TUTTLE, GREG MACNEIL, DAVID GRUNDIES, LESLIE ADAMS, (ECF Nos. 101, 102) Defendants. 19 20 Presently before the Court are the cross-motions for summary judgment (the 21 “Motions”) filed by Plaintiff-Relator MC2 Sabtech Holdings, d/b/a IXI Technology, Inc. 22 (“IXI”) (“Rel.’s MSJ,” ECF No. 101) and Defendants GET Engineering Corporation 23 (“GET”), Rodney Tuttle, Greg MacNeil, David Grundies, and Leslie Adams (“Defs.’ 24 MSJ,” ECF No. 102). The Motions are fully briefed, (see ECF Nos. 107–111, 113–114), 25 and the Court held a hearing on November 10, 2021. (See ECF No. 112.) Having carefully 26 considered the Parties’ arguments, the record, and the applicable law, the Court DENIES 27 Relator’s Motion for Summary Judgment and GRANTS IN PART AND DENIES IN 28 PART Defendants’ Motion for Summary Judgment as follows. 1 19-CV-1249 TWR (AGS) Dockets.Justia.com 1 2 BACKGROUND I. Statutory and Regulatory Background 3 Relator generally alleges that, between August 9, 2009, and December 10, 2015 (the 4 “relevant time period”), Defendants falsely represented that GET was a Women-Owned 5 Small Business (“WOSB”) to obtain contracts with the federal government and prime 6 contractors to which it was not entitled. (See generally ECF No. 1 (“Compl.”).) Although 7 not provided by the Parties, an overview of the statutory and regulatory framework 8 incentivizing procurement contracts with WOSBs is critical to understanding Relator’s 9 claims and the Parties’ arguments. 10 Congress enacted the Small Business Act of 1953 with “the declared policy . . . that 11 the Government should aid, counsel, assist, and protect, insofar as is possible, the interests 12 of small-business concerns in order to preserve free competitive enterprise . . . and to 13 maintain and strengthen the overall economy of the Nation.” See PL 83-163 § 202, 67 Stat. 14 230, 232 (codified as amended at 15 U.S.C. § 631(a)). One of the means identified by 15 Congress was “to insure that a fair proportion of the total purchases and contracts or 16 subcontracts for supplies and services for the Government be placed with small-business 17 enterprises.” See id. To carry out its identified policies, Congress created the Small 18 Business Administration (“SBA”). See PL 83-163 § 204(a), 67 Stat. 230, 233 (codified at 19 15 U.S.C. § 633(a)). 20 In 1978, Congress enacted a policy to ensure greater participation of small 21 businesses in federal procurement contracts by establishing annual goals for the percentage 22 of the total value of all prime and subcontract awards. See Act to Amend the Small 23 Business Act and the Small Business Investment Act of 1958, PL 95-507, 92 Stat. 1757 24 (1978) (codified at 15 U.S.C. § 644(g)). In 1994, Congress added an annual five-percent 25 goal for small business concerns owned and controlled by women (the “WOSB Goal”). 26 See Federal Acquisition Streamlining Act of 1994 (“FASA”), PL 103-355 § 7106, 108 Stat. 27 3243, 369 (codified as amended at 15 U.S.C. § 644(g)(1)(A)(v) (“The Governmentwide 28 goal for participation by small business concerns owned and controlled by women shall be 2 19-CV-1249 TWR (AGS) 1 established at not less than 5 percent of the total value of all prime contract and subcontract 2 awards for each fiscal year.”)). For purposes of FASA, Congress defined “a small business 3 concern owned and controlled by women” as requiring “(1) at least 51 percent of [the] 4 small business concern is owned by one or more women or, in the case of any publicly 5 owned business, at least 51 percent of the stock of which is owned by one or more women; 6 and (2) the management and daily business operations of the business are controlled by 7 one or more women.” Id. (codified at 15 U.S.C. § 632(n)). 8 “The [WOSB G]oal was implemented by procurement regulations effective in fiscal 9 year 1996[,]” see United States General Accounting Office, GAO-01-346, Federal 10 Procurement: Trends and Challenges in Contracting With Women-Owned Small 11 Businesses 8 (2001), https://www.gao.gov/assets/gao-01-346.pdf; see also, e.g., Federal 12 Acquisition Regulation; Small Business, 60 Fed. Reg. 48258-02, 48261 (Sept. 18, 1995) 13 (to be codified at 48 C.F.R. § 19.202-5), and the legislative history of FASA “indicated 14 that the 5-percent [WOSB G]oal was not intended to create a new set-aside or program of 15 restricted competition for WOSBs.” 16 Government Accountability Office, GAO-19-168, Women-Owned Small Business 17 Program: Actions Needed to Address Ongoing Oversight Issues 26 (2019), https://www. 18 gao.gov/assets/gao-19-168.pdf (“Federal dollars obligated for contracts to all women- 19 owned small businesses . . . include contracts for any type of good or service awarded under 20 the WOSB program, under other federal programs, or through full and open competition.”). 21 Although the general twenty-three percent procurement goal for all types of small 22 businesses has been met consistently since Fiscal Year 2013, the WOSB Goal has only 23 been achieved twice, in Fiscal Years 2015 and 2019. See Robert Jay Dilger, Cong. Rsch. 24 Serv., R46322, SBA Women-Owned Small Business Federal Contracting Program 8–9 25 (2021). See GAO-01-346 at 8; see also United States 26 Another means Congress has used to help small businesses receive a fair proportion 27 of federal contracts and subcontracts are various contracting preferences, such as 28 “restricted competitions (set-asides), sole source awards, and price evaluation 3 19-CV-1249 TWR (AGS) 1 adjustment/preference in unrestricted competitions[.]” See id. at 1; see also id. at 10 & 2 n.30 (discussing programs available to small businesses owned and controlled by socially 3 and economically disadvantaged individuals and small businesses located in historically 4 underutilized business zones). Slow progress in achieving the five-percent WOSB Goal 5 led some to advocate for the creation of a new set-aside program for WOSBs (the “WOSB 6 Program”). See id. at 10. Accordingly, the WOSB Program was authorized by the Equity 7 in Contracting for Women Act of 2000, H.R. 4897, 106th Cong. (2000), which was 8 incorporated into the Small Business Reauthorization Act of 2000, itself enacted within the 9 Consolidated Appropriations Act, 2001. PL 106-554, 114 Stat. 2763 (codified as amended 10 at 15 U.S.C. §§ 647g, 657d–657e). 11 The WOSB Program “authorizes the contracting officers to restrict competition to 12 eligible . . . WOSBs for federal contracts in industries in which the SBA determines that 13 women-owned small businesses are underrepresented or substantially underrepresented in 14 federal procurement.” See Anna S. Molina, The Sisyphean Course of Combating Gender 15 Discrimination in the Federal Marketplace for Prime Contracts: Rolling the Boulder of 16 Small Business Size, 22 Cardozo J.L. & Gender 109, 126 (2015); see also 48 C.F.R. § 2.101 17 (eff. Apr. 1, 2011) (“Women–Owned Small Business (WOSB) Program means a program 18 that authorizes contracting officers to limit competition, including award on a sole source 19 basis, to . . . WOSB concerns eligible under the WOSB Program for Federal contracts 20 assigned a NAICS code in an industry in which SBA has determined that WOSB concerns 21 are substantially underrepresented in Federal procurement.”). For purposes of the WOSB 22 Program, “[t]he term ‘small business concern owned and controlled by women’ has the 23 meaning given such term in section 632(n) of this title, except that ownership shall be 24 determined without regard to any community property law.” § 811, 114 Stat. 2763 25 (codified at 15 U.S.C. § 637(m)(1)(B)). The statute allowed “a contracting officer [to] 26 restrict competition for any contract for the procurement of goods or services by the Federal 27 Government to small business concerns owned and controlled by women” under certain 28 circumstances, see id. (codified at 15 U.S.C. § 637(m)(2)), and required the SBA 4 19-CV-1249 TWR (AGS) 1 Administrator to “establish procedures” to verify eligibility for the WOSB Program. See 2 id. (codified at 15 U.S.C. § 637(m)(5)). 3 “[T]he WOSB [P]rogram’s implementation was delayed for over 10 years, primarily 4 due to the SBA’s difficulty in identifying an appropriate methodology to determine ‘the 5 industries in which WOSBs are underrepresented (and, by inference, substantially 6 underrepresented) with respect to federal procurement contracting.’” Dilger, supra, at 14. 7 On October 7, 2010, the SBA finally implemented regulations effectuating the WOSB 8 Program. See Women-Owned Small Business Federal Contract Program, 75 Fed. Reg. 9 62258-01, 62282–91 (Oct. 7, 2010) (to be codified at 13 C.F.R. §§ 127.100–127.700). 10 Among other things, these regulations provided the requirements to qualify as a WOSB for 11 purposes of the WOSB Program, see 13 C.F.R. §§ 127.200–127.203, and the requirements 12 for certification of WOSB status for purposes of the WOSB Program. See 13 C.F.R. 13 §§ 127.300–127.305. 14 The Federal Acquisition Regulation (“FAR”) amended its definition of WOSB in 15 2011, distinguishing between those entities eligible for inclusion in the WOSB Goal as 16 opposed to those eligible for the WOSB Program: 17 18 Women-owned small business concern means— (1) A small business concern— 19 20 (i) That is at least 51 percent owned by one or more women; or, in the case of any publicly owned business, at least 51 percent of the stock of which is owned by one or more women; and (ii) Whose management and daily business operations are controlled by one or more women; or 21 22 23 24 (2) 25 A small business concern eligible under the Women-Owned Small Business Program in accordance with 13 CFR part 127 (see subpart 19.15). 26 48 C.F.R. § 2.101. Further, the SBA recently clarified that “[a] concern must be certified 27 as a WOSB . . . pursuant to § 127.300 in order to be awarded a WOSB . . . set-aside or sole- 28 source contract,” see 13 C.F.R. § 127.200(c)(1), but that “[o]ther women-owned small 5 19-CV-1249 TWR (AGS) 1 business concerns that do not seek WOSB . . . set-aside or sole-source contracts may 2 continue to self-certify their status, receive contract awards outside the Program, and count 3 toward an agency’s goal for awards to WOSBs.” See 13 C.F.R. § 127.200(c)(2). 4 II. Undisputed Material Facts 5 The Parties have agreed to the following undisputed material facts: 6 “GET’s ownership split of 51% Guille Tuttle, and 49% to her husband Rodney Tuttle 7 has remained unchanged since 1982, with no other owners or shareholders.” (ECF No. 8 109 (“Jt. Stmt.”) ¶ 1.) “From the mid-1980s to present GET was located at 9350 Bond 9 Avenue, El Cajon, California.” (Id. ¶ 2.) “Between August 9, 2009 to December 10, 2015, 10 GET supplied tactical data equipment and interfaces to the Navy and prime government 11 contractors such as Raytheon Company, Northrop Grumman, Lockheed Martin, and DRS 12 Laurel Technologies, among others.” (Id. ¶ 3.) 13 “Between August 9, 2009[,] to December 10, 2015, GET had officer positions of 14 CEO/President, Vice President, Chief Financial Officer, Treasurer and Secretary.” (Id. 15 ¶ 14.) “Sometime in 1997, Mrs. Tuttle was no longer CEO due to health issues associated 16 with lupus.” (Id. ¶ 7.) Accordingly, “[s]tarting sometime in 1997, men served as GET’s 17 CEO until December 10, 2015.” (See id. ¶ 9; see also id. ¶ 10.) “After Mrs. Tuttle was no 18 longer CEO sometime in 1997, GET hired Bob Ruhe to succeed her as CEO, and he served 19 as CEO from sometime in 1997 to sometime in 2003.” (Id. ¶ 8.) “On December 1, 2003, 20 GET hired Greg MacNeil to serve as both its President and CEO.” (Id. ¶ 11; see also id. 21 ¶ 13.) “During Mr. MacNeil’s employment with GET from December 1, 2003[,] to 22 January 3, 2012[,] GET’s filings with the California Secretary of State identified Mr. 23 MacNeil as its President and CEO.” (Id. ¶ 12.) “On January 3, 2012, GET appointed 24 David Grundies, who was then serving as Vice President and reporting to Mr. MacNeil, to 25 succeed Mr. MacNeil as President and CEO.” (Id. ¶ 16.) 26 “In December of 1986, GET hired [Ms.] Leslie Adams[,] who worked for GET for 27 35 years straight.” (Id. ¶ 4.) “GET hired Ms. Adams approximately three years after she 28 graduated from high school.” (Id. ¶ 5.) “Ms. Adams does not have a college degree.” (Id. 6 19-CV-1249 TWR (AGS) 1 ¶ 6.) “Between August 9, 2009[,] to December 10, 2015, GET’s then serving male CEOs 2 conducted the performance reviews of Ms. Adams.” (Id. ¶ 15.) 3 “On or about August 9, 2009, GET represented to the U.S. Government and prime 4 contractors that it was a WOSB, as defined by FAR 2.101.” (Id. ¶ 17.) “Mr. MacNeil, as 5 CEO, and Ms. Adams, as General Manager, made the initial decision to hold GET out as a 6 WOSB.” (Id. ¶ 19.) “On August 31, 2009, GET’s then CEO, Mr. MacNeil, informed 7 GET’s Board of Directors during his presentation to the Board that ‘GET announced to our 8 customers that we are now a Small Business, Woman-Owned Corporation as defined by 9 the United States Federal Acquisitions Regulations (FAR) 2.101.’” (Id. ¶ 20.) 10 Accordingly, “GET represented itself as a WOSB on its website from August 9, 2009[,] to 11 December 10, 2015.” (See id. ¶ 21.) “At the time the decision was made to hold GET out 12 as a WOSB, Mr. Tuttle and Mrs. Tuttle were both members of the Board of Directors.” 13 (Id. ¶ 22.) 14 15 16 17 18 19 20 “As part of the representations and certifications that GET submitted to the federal Government, Leslie Adams certified on behalf of GET that: ‘I have read each of the FAR and DFARS provisions presented below. By submitting this certification I, Leslie Adams, am attesting to the accuracy of the representations and certifications contained herein, including the entire NAICS table. I understand that I may be subject to penalties if I misrepresent Get Engineering Corp. in any of the below representations or certifications to the Government.’” 21 (Id. ¶ 23.) “On March 28, 2012, Ms. Adams, on behalf of GET, inquired informally via e- 22 mail with the [Small Business Administration (“SBA”)] regarding the WOSB subject. 23 Specifically, Ms. Adams wrote Ms. Rosa Rodarte and stated: 24 25 26 27 ‘Our company has been in business for 30 years and we are a Women Owned Small Business in El Cajon. For many years we have been registered on the Government Central Contracting Registrations (CCR) and ORCA as a Women Owned Small Business and recently a SBA form 2413 has been brought to our attention which is I believe . . . the form needed for WOSB Program Certification. On that form it asks if we have been certified by the 28 7 19-CV-1249 TWR (AGS) 1 SBA as a WOSB. Is that a step that we should be doing before filling out this form and if so how do we go about getting certified by the SBA?’” 2 3 (Id. ¶ 24.) Additionally, “[i]n or around June, 2012, GET had communications with [the 4 Procurement Technical Assistance Centers (“PTAC”)] about the WOSB Program through 5 the SBA.” (See id. ¶ 25.) “After the meeting with PTAC, Mr. MacNeil stated in a 6 companywide email: 7 ‘It was obvious that he [PTAC] became somewhat confused about how we fit inside the new rules. After further discussion he advised us to go direct to the SBA who were the people that sent us to PTAC. Something like a circle game. 8 9 We will continue to operate as a WOSB until we get further clarity on how to get through this third party certification. We have never applied for or won a WOSB set aside since most of those go to service[-]oriented companies rather than manufacturers like GET.’” 10 11 12 13 (Id. ¶ 26 (first alteration in original).) 14 “After meeting with PTAC, Mr. MacNeil decided to continue to operate as a WOSB 15 until they got further clarity on how to get through third party certification as a WOSB.” 16 (Id. ¶ 27.) “Following the discussion with PTAC in June of 2012, GET did not approach 17 the SBA to inquire into the issues further and continued representing that GET was a 18 WOSB to the Government and prime contractors.” (Id. ¶ 28.) “Ms. Adams put the 19 concerns regarding GET’s WOSB status on the ‘back burner’ because Mr. MacNeil 20 became ill.” (Id. ¶ 29.) 21 “On November 17, 2015, the SBA notified GET that the agency would ‘be 22 performing an Eligibility Examination on [GET] to verify its status as a Women-Owned 23 Small Business . . . .’” (Id. ¶ 30 (alterations in original).) “On November 18, 2015, Leslie 24 Adams emailed Joshua Waddell, GET’s IT manager, and asked him to change GET’s 25 website from ‘GET is a Woman Owned Small Business (WOSB) . . . .’ to ‘GET is a Small 26 Business Woman Owned . . . .’” (Id. ¶ 31 (alterations in original).) “On December 10, 27 2015, GET terminated Mr. Grundies’ employment.” (Id. ¶ 32.) 28 /// 8 19-CV-1249 TWR (AGS) 1 Although the relevant time period ends December 10, 2015, (see ECF No. 102-1 2 (“Defs.’ Mem.”) at 1), the Parties also agreed to the following undisputed facts, which the 3 Court includes for the sake of completeness: 4 “On December 28, 2015, GET amended its corporate filing with the California 5 Secretary of State and listed Mrs. Tuttle as the CEO.” (Id. ¶ 33.) “GET unchecked the box 6 that it was a WOSB on [the United States’ System for Award Management (“SAM”)] as 7 of January 19, 2016 (available at www.sam.gov).” (Id. ¶ 18; see also id. ¶ 34.) “On 8 June 17, 2016, one of GET’s prime contractor customers, AMSEC Huntington Ingalls, 9 acting through employee Turin Pollard, identified the change in GET’s status on SAM and 10 emailed Leslie Adams stating that GET’s ‘attachment [GET Corporate Capabilities sheet] 11 lists GET Engineering as a WOSB, however your SAM.Gov profile doesn’t have that 12 checked. Which is correct?’” (Id. ¶ 35 (alteration in original).) “On the same day, 13 Ms. Adams responded that ‘[u]p until a few months ago we did not meet the Small Business 14 Administration WOSB definition needed to be self-certified. Only recently did that change 15 because Mrs. Guille Tuttle, the majority stockholder of our company is now interim CEO. 16 Until the decision on that position is made we are holding off on filing the paperwork and 17 can only state that we are a Small Business Women Owned.’” (Id. ¶ 36.) “On June 17, 18 2016, Mr. Pollard responded and stated that ‘We’re going to have to list you as an SM for 19 the prop, unless you decide to change your certification before we submit. That said, please 20 let us know as soon as you do change it, so we can track out socio-economic groups after 21 award.’” (Id. ¶ 37.) 22 “On September 28, 2016, James Burgess, Administrative Project Manager at DDL 23 OMNI Engineering LLC, one of GET’s customers, emailed Leslie Adams and stated ‘[t]he 24 questionnaire that was filled out [for DDL OMNI Engineering LLC] indicated that you are 25 a Women-Owned Small Business but the FAR&DFARS report on SAM.GOV report 26 indicates you are not. . . . In order to ensure our records are correct, please clarify the 27 discrepancy between the two.’” (Id. ¶ 38 (alterations in original).) “That same day, Ms. 28 Adams responded, ‘[t]he majority owned Shareholder and interim CEO is a woman so we 9 19-CV-1249 TWR (AGS) 1 consider ourselves a Small Business Women Owned. To meet the Small Business 2 definition of Woman Owned Small Business (WOSB) and be certified ‘the Woman’ must 3 run the same day to day operations which is what we currently are doing. The reason we 4 have not applied to be self-certified with SBA is because our CEO is only interim and we 5 aren’t sure if the CEO position will be held by another man or woman so we haven’t 6 proceeded with a change.’” (Id. ¶ 39 (alterations in original).) 7 “On October 5, 2016, IXI submitted a supplemental disclosure to the Navy.” (Id. 8 ¶ 40.) “On November 15, 2016, IXI, through counsel, met with representatives of the Navy 9 to provide information regarding GET’s claimed WOSB status.” (Id. ¶ 41.) “On 10 November 21, 2016, GET changed its SAM representation to represent and certify that it 11 was a WOSB.” (Id. ¶ 42.) “On December 22, 2016, IXI, through counsel, notified the 12 Navy that GET had ‘changed its SAM certification, yet again, this time certifying that it is 13 a WOSB.’” (Id. ¶ 43.) 14 “On January 13, 2017, the Navy issued GET a ‘Show Cause’ Letter indicating that 15 the Navy was considering taking administrative action, including suspension and 16 debarment, under FAR Subpart 9.4 regarding its use of the WOSB designation.” (Id. ¶ 44.) 17 “The letter from the Navy’s SDO stated: ‘Given the special consideration in the Federal 18 contracting award process that comes with WOSB status, I am concerned with GET’s 19 relatively frequent changes in WOSB status over the previous three years.’” (Id. ¶ 45.) 20 “The Navy letter further asked GET to address the following questions: 21 (1) 22 23 24 25 26 Clarify if GET is currently a WOSB as defined in 13 C.F.R. 127 and explain GET’s rationale for claiming WOSB status. ... (7) Address when and why GET’s website was updated from Woman Owned Small Business (WOSB) to Small Business Woman Owned.” (Id. ¶ 46 (alterations in original and internal quotation marks omitted).) 27 “A meeting was held between GET and Navy officials on April 11, 2017.” (Id. 28 ¶ 47.) “On April 14, 2017, the Navy issued a ‘Follow-Up’ letter to GET[,]” (id. ¶ 48), and 10 19-CV-1249 TWR (AGS) 1 “determined that GET was not eligible to claim the WOSB designation.” (Id. ¶ 49.) “As 2 part of the Navy’s determination and directed corrective actions, GET was required to 3 cease use of the WOSB designation and to notify all of its active customers that it was not 4 a WOSB.” (Id. ¶ 50.) 5 “In mid-2017, GET changed its website to state ‘GET is a Small Business . . .’ and 6 removed verbiage that stated ‘GET is a Small Business Woman Owned.’” (Id. ¶ 51 7 (alteration in original).) “On or around May 8, 2017, GET changed its SAM representation 8 to state that it was not a WOSB.” (Id. ¶ 52.) 9 III. Relevant Procedural History 10 Relator initiated this action on February 16, 2018, by filing this qui tam action in 11 camera and under seal against Defendants—including, at that time, Mrs. Tuttle—in the 12 United States District Court for the Central District of California. (See generally ECF No. 13 1.) Relator’s initial and operative Complaint alleged three causes of action for violations 14 of section 3729 of the False Claims Act (“FCA”), 31 U.S.C. §§ 3729–3733, for 15 (1) presentation of false claims under section 3729(a)(1)(A), (2) making or using a false 16 record or statement under section 3729(a)(1)(B), and (3) conspiracy under section 17 3729(a)(1)(C), as well as a fourth cause of action for violation of sections 1833(a) and 18 (c)(3) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 19 (“FIRREA”), Pub. L. No. 101-73, 103 Stat. 183 (1989) (codified at various sections of 12 20 and 15 U.S.C.). (See generally ECF No. 1.) 21 After the United States declined to intervene, (see generally ECF No. 12), the 22 Honorable Josephine L. Staton unsealed the action and ordered Relator to serve its 23 Complaint on Defendants. (See generally ECF No. 13.) On May 8, 2019, Defendants 24 moved to transfer this action to this District. (See generally ECF No. 39.) Judge Stanton 25 granted Defendants’ motion on June 20, 2019, (see generally ECF No. 42), following 26 which this action was transferred to this District and assigned to the Honorable Larry Alan 27 Burns. (See generally ECF Nos. 43, 44.) 28 /// 11 19-CV-1249 TWR (AGS) 1 Defendants answered Plaintiff’s Complaint on July 22, 2019, (see generally ECF 2 No. 46), at which point the Parties proceeded to engage in discovery. (See generally ECF 3 No. 48.) Defendants informed the Court on February 24, 2020, that Mrs. Tuttle had passed 4 away, (see generally ECF No. 64), following which Mr. Tuttle was designated as her 5 substitute. (See generally ECF Nos. 74, 79, 82.) 6 This action was transferred to the undersigned on November 2, 2020. (See generally 7 ECF No. 87). The Parties filed the instant Motions on May 14, 2021. (See generally 8 Motions.) 9 LEGAL STANDARD 10 Under Federal Rule of Civil Procedure 56, a party may move for summary judgment 11 as to a claim or defense or part of a claim or defense. Fed. R. Civ. P. 56(a). Summary 12 judgment is appropriate where “the movant shows that there is no genuine dispute as to 13 any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. 14 P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Although materiality is 15 determined by substantive law, “[o]nly disputes over facts that might affect the outcome of 16 the suit . . . will properly preclude the entry of summary judgment.” Anderson v. Liberty 17 Lobby, Inc., 477 U.S. 242, 248, (1986). A dispute is “genuine” only “if the evidence is 18 such that a reasonable jury could return a verdict for the nonmoving party.” Id. When 19 considering the evidence presented by the parties, “[t]he evidence of the non-movant is to 20 be believed, and all justifiable inferences are to be drawn in his favor.” Id. at 255. 21 The initial burden of establishing the absence of a genuine issue of material fact falls 22 on the moving party. Celotex, 477 U.S. at 323. The moving party may meet this burden 23 by “identifying those portions of ‘the pleadings, depositions, answers to interrogatories, 24 and admissions on file, together with the affidavits, if any,’ which it believes demonstrate 25 the absence of a genuine issue of material fact.” Id. “When the party moving for summary 26 judgment would bear the burden of proof at trial, ‘it must come forward with evidence 27 which would entitle it to a directed verdict if the evidence went uncontroverted at trial.’” 28 /// 12 19-CV-1249 TWR (AGS) 1 C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) 2 (quoting Houghton v. South, 965 F.2d 1532, 1536 (9th Cir. 1992)). 3 Once the moving party satisfies this initial burden, the nonmoving party must 4 identify specific facts showing that there is a genuine dispute for trial. Celotex, 477 U.S. 5 at 324. This requires “more than simply show[ing] that there is some metaphysical doubt 6 as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 7 586 (1986). Rather, to survive summary judgment, the nonmoving party must “go beyond 8 the pleadings and by her own affidavits, or by the ‘depositions, answers to interrogatories, 9 and admissions on file,’ designate ‘specific facts’” that would allow a reasonable fact finder 10 to return a verdict for the non-moving party. Celotex, 477 U.S. at 324; see also Anderson, 11 477 U.S. at 248. Accordingly, the non-moving party cannot oppose a properly supported 12 summary judgment motion by “rest[ing] upon mere allegations or denials of his pleading.” 13 Anderson, 477 U.S. at 256. 14 ANALYSIS 15 Through the instant Motions, Relator and Defendants each seek summary 16 adjudication in their favor as to Relator’s first three causes of action under the FCA. 1 (See 17 Rel.’s MSJ at 1; Defs.’ MSJ at 2.) Relator alternatively seeks partial summary adjudication 18 in its favor as to certain elements of its FCA causes of action. (See Rel.’s MSJ at 2–4.) 19 The Court begins, as it must, by addressing Defendants’ purported jurisdictional challenge 20 before turning to the Parties’ arguments concerning the merits of Relator’s FCA claims. 21 I. The Public Disclosure Bar 22 Defendants contend that this Court lacks jurisdiction over Relator’s FCA claims 23 under the FCA’s public-disclosure bar, 31 U.S.C. § 3730(e)(4). (See generally Defs.’ 24 25 26 27 28 1 Although Defendants also sought summary adjudication in their favor as to Relator’s fourth cause of action for violation of FIRREA, (see Defs.’ MSJ at 2), Relator withdrew this claim in its Opposition to Defendants’ Motion for Summary Judgment. (See ECF No. 108 (“Rel.’s Opp’n) at 36 n.8.) Accordingly, the Court DISMISSES Relator’s fourth cause of action without addressing Defendants’ arguments on the merits. 13 19-CV-1249 TWR (AGS) 1 Mem. at 30–35.) Although the Parties briefed the application of the 1986-version of 2 Section 3730(e)(4), (compare, e.g., Defs.’ Mem. at 31, with, e.g., ECF No. 108 (“Rel.’s 3 Opp’n”) at 29), the Court noted at the hearing that relevant statutory provision was 4 amended extensively effective March 23, 2010, and that the relevant time period spans 5 from August 9, 2009, when GET first began representing itself as a WOSB, until 6 December 10, 2015. (See ECF No. 101-1 (“Rel.’s Mem.”) at 6.) This overlap is critical 7 because, among other things, the 2010 amendments removed the jurisdictional language 8 from Section 70(e)(4)(A), “making the public disclosure bar an affirmative defense rather 9 than a matter of jurisdiction.” Silbersher v. Allergan Inc., 506 F. Supp. 3d 772, 788 (N.D. 10 Cal. 2020) (citing Prather v. AT&T, Inc., 847 F.3d 1097, 1102 (9th Cir.), cert. denied, 137 11 S. Ct. 2309 (2017)), motion to certify appeal granted, No. 18-CV-03018-JCS, 2021 WL 12 292244 (N.D. Cal. Jan. 28, 2021). The Court therefore requested that the Parties submit 13 supplemental briefing as to which version of the statute applies. (See ECF No. 112.) 14 In their Supplemental Briefs, the Parties agreed that “the 1986 version of Section 15 3730(e)(4) applies to any alleged false claims occurring before March 23, 2010, and the 16 2010 version of Section 3730(e)(4) applies to any alleged false claims made after 17 March 23, 2010.” (See generally ECF No. 113 (“Defs.’ Supp. Br.”); ECF No. 114 (“Rel.’s 18 Supp. Br.”); see also, e.g., United States ex rel. Savage v. CH2M Hill Plateau Remediation 19 Co., No. 4:14-CV-5002-EFS, 2015 WL 5794357, at *10 (E.D. Wash. Oct. 1, 2015) (citing 20 Hughes Aircraft Co. v. United States ex rel. Schumer, 520 U.S. 939, 946 (1997)).) But as 21 Relator notes, (see Rel.’s Supp. Br. at 2), the earliest purchase order in the record is from 22 April 23, 2010. (See ECF No. 101-46 (“Ex. 45”) at 1878; ECF No. 101-47 at 1890.) 23 Accordingly, only the 2010 version of the public disclosure bar applies based on the current 24 record. 25 As amended effective March 23, 2010, the public disclosure bar provides: 26 (A) 27 28 The court shall dismiss an action or claim under this section, unless opposed by the Government, if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed-- /// 14 19-CV-1249 TWR (AGS) 1 (i) in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party; (ii) in a congressional, Government Accountability Office[ (“GAO”)], or other Federal report, hearing, audit, or investigation; or (iii) from the news media, 2 3 4 5 6 7 unless the action is brought by the Attorney General or the person bringing the action is an original source of the information. 8 9 10 11 12 13 14 (B) For purposes of this paragraph, “original source” means an individual who either (i) prior to a public disclosure under subsection (e)(4)(a), has voluntarily disclosed to the Government the information on which allegations or transactions in a claim are based, or (2) who has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and who has voluntarily provided the information to the Government before filing an action under this section. 15 31 U.S.C. § 3730(e)(4)(A)–(B). The inquiry involves two steps. See United States ex rel. 16 Calva v. Impac Secured Assets Corp., No. SACV161983JVSJCGX, 2018 WL 6016152, at 17 *3 (C.D. Cal. June 12, 2018). “First, the Court must determine whether there was a prior 18 ‘public disclosure’ of the allegations or transactions underlying the qui tam suit through 19 one of the enumerated sources.” Id. (citing 31 U.S.C. § 3730(e)(4)(A) (1986 & 2010 20 versions)). “If there has been a public disclosure, the Court must then determine whether 21 the relator is an ‘original source’ within the meaning of the statute.” Id. (citing 31 U.S.C. 22 § 3730(e)(4)(A) (1986 & 2010 versions)). Here, Defendants challenge both whether 23 Relator (1) alleges allegations or transactions that were publicly disclosed, and, if so, (2) is 24 the original source of the information. (See Defs.’ Mem. at 30–35.) 25 As for the first prong, public disclosure requires that “three things are true: (1) the 26 disclosure at issue occurred through one of the channels specified in the statute; (2) the 27 disclosure was ‘public’; and (3) the relator’s action is ‘based upon’ the allegations or 28 transactions publicly disclosed.” United States ex rel. Mateski v. Raytheon Co., 816 F.3d 15 19-CV-1249 TWR (AGS) 1 565, 570 (9th Cir. 2016) (quoting Malhotra v. Steinberg, 770 F.3d 853, 858 (9th Cir. 2014) 2 (quoting 31 U.S.C. § 3730(e)(4)(A) (1986))); Silbersher, 506 F. Supp. 3d at 797 (quoting 3 United States ex rel. Solis v. Millennium Pharm., Inc., 885 F.3d 623, 626 (9th Cir. 2018)). 4 Here, Defendants argue that GET’s public website and publicly available filings with the 5 California Secretary of State “publicly disclosed the allegedly true state of facts[,] that is, 6 that GET’s CEO was a man rather than a woman.” (See Defs.’ Mem. at 31–33.) According 7 to Defendants, these sources, as “publicly-available filings” and “news media,” are one of 8 the channels specified by Section 3730(e)(4)(A). (See Defs.’ Mem. at 31.) 9 The Court first examines Defendants’ contention that their “publicly-available 10 filings,” presumably GET’s filings with the California Secretary of State revealing that it 11 had male CEOs during the entirety of the relevant period, “constitute an administrative 12 report.” (See Defs.’ Mem. at 31.) Although the 1986 version of the public disclosure bar 13 included “administrative . . . report[s],” See 31 U.S.C. § 3730(e)(4)(A) (1986), the 2010 14 version substituted “Federal” in its place. See 31 U.S.C. § 3730(e)(4)(A)(ii) (2010) (“The 15 court shall dismiss an action or claim under this section, unless opposed by the 16 Government, if substantially the same allegations or transactions as alleged in the action or 17 claim were publicly disclosed . . . in a congressional, Government Accountability Office, 18 or other Federal report, hearing, audit, or investigation.”). Defendants’ filings with the 19 California Secretary of State are not “congressional[;]” are not made with the GAO; and, 20 unlike the filings with the Securities and Exchange Commission in United States ex rel. 21 Ryan v. Endo Pharmaceuticals, Inc., 27 F. Supp. 3d 615, 628 n.16 (E.D. Pa. 2014), are not 22 “Federal.” The Court therefore concludes that Defendants have failed to establish that their 23 filings with the California Secretary of State were made publicly available through one of 24 the enumerated sources specified in the 2010 version of the public-disclosure bar. 25 Defendants also contend that GET’s website and filings with the California 26 Secretary of State qualify as “news media” for purposes of the FCA’s public-disclosure 27 bar. (See Defs.’ Mem. at 1; see also 31 U.S.C. § 3730(e)(4)(A)(iii).) Although there is 28 little in-depth analysis of the scope of the term “news media” for the purposes of the statute, 16 19-CV-1249 TWR (AGS) 1 the channels specified by the statute do “not capture all information that could be described 2 as ‘public’ in common parlance.” See United States ex rel. Integra Med Analytics LLC v. 3 Providence Health & Servs., No. CV 17-1694 PSG (SSX), 2019 WL 3282619, at *10 (C.D. 4 Cal. July 16, 2019), rev’d and remanded on different grounds, 854 F. App’x 840 (9th Cir. 5 2021). “Instead, ‘[b]y its plain terms, the public disclosure bar applies to some methods of 6 public disclosure and not to others.’” Id. (alteration in original) (quoting Schindler 7 Elevator Corp. v. United States ex rel. Kirk, 563 U.S. 401, 414 (2011). Consequently, 8 “applying the news media provision to anything ever published publicly on the internet is 9 contrary to the ordinary meaning of the term ‘news media’ and has the potential to 10 eviscerate the balance Congress struck between encouraging private parties to bring forth 11 evidence of fraud and preventing parasitic suits.” See id. at *12. 12 Accordingly, the Honorable Philip S. Gutierrez has proposed “several factors [that] 13 provide useful guideposts in determining whether information from an online source has 14 been disclosed ‘from the news media’ within the meaning of the FCA’s public disclosure 15 bar.” See id. at *14. “First, . . . the extent to which the information typically conveyed by 16 a source would be considered newsworthy is relevant to whether it is a news media source.” 17 See id. (emphasis in original). “Second, . . . a news media entity is ordinarily viewed as 18 one that collects information from outside sources, exercises some editorial judgment in 19 deciding what to publish, and then transmits the published information to an audience— 20 put more simply, it curates information—in contrast to an entity that simply publishes 21 information about itself.” See id. (emphasis in original); see also United States ex rel. 22 Customs Fraud Investigations, LLC v. Victaulic Co., 36 ITRD 697 (E.D. Pa. 2014) (“This 23 Court agrees that, at minimum, a publicly available website may qualify as ‘news media’ 24 where the information provided is to some extent curated—that is, where the authors or 25 editors of the website actively gather and disseminate information, provide search tools for 26 the public to analyze data, provide some editorial content, or exercise some control over 27 the information provided—and where the information bears at least some of the ‘indicia of 28 reliability or substantiation’ common to more traditional news media sources.”). “Third, 17 19-CV-1249 TWR (AGS) 1 . . . a source’s intent to disseminate information widely, as opposed to only to a few 2 individuals, is relevant to whether it is acting as a news media entity.” See Integra Med 3 Analytics, 2019 WL 3282619, at *14 (emphasis in original). “Fourth, . . . the more that an 4 online source functions like . . . traditional [news media] outlets, the more likely it is to be 5 news media under the FCA.” See id. at *15 (emphasis in original). “Relevant to this 6 consideration is the extent to which the conveyance of newsworthy information is the 7 primary purpose of entity publishing the online source or whether the dissemination of 8 such information is merely ancillary to some other purpose.” See id. “Finally, consistent 9 with the Supreme Court’s approach in Schindler Elevator, . . . the most important 10 consideration is whether the source in question falls within the ‘broad ordinary meaning’ 11 of the term ‘news media’—in other words, whether it could reasonably be described as 12 ‘news media’ as at least some people would [use] that term in everyday speech.” See id. 13 (emphasis in original) (quoting Schindler Elevator, 363 U.S. at 408). 14 Applying those factors here, it is clear that neither GET’s nor the California 15 Secretary of State’s website qualifies as “news media” for purposes of the FCA’s public- 16 disclosure bar. As for GET’s website, first, given GET’s size, it appears unlikely that the 17 announcement of its CEO would be considered particularly newsworthy. Second, GET’s 18 website is not “curated,” but rather “simply publishes information about itself.” See id. at 19 *14. Third, while GET does intend to circulate information widely to potential business 20 partners, fourth, the conveyance of this information is “merely ancillary to” its primary 21 business of manufacturing and selling naval tactical data systems. See id. at *15. Finally, 22 and most importantly, GET’s corporate website does not fall within the broad ordinary 23 meaning of the term “news media.” The same analysis would apply to GET’s filings on 24 the California Secretary of State’s website and GET’s submissions through SAM. The 25 Court therefore concludes that the sources Defendants identify as disclosing the allegedly 26 true state of facts are not “news media” as specified by the 2010 version of the FCA. 27 Because the Court concludes that none of the purported disclosures revealing the 28 allegedly “true” state of affairs—i.e., that GET had male CEOs during the relevant 18 19-CV-1249 TWR (AGS) 1 period—occurred through any channel specified by the 2010 version of the statute, 2 Relator’s FCA claims are not barred by the public-disclosure bar. Accordingly, the Court 3 DENIES Defendants’ Motion for Summary Judgment as to that argument. 4 II. FCA Claims 5 A. 6 Relator alleges claims for presentation of false claims in violation of 31 U.S.C. 7 § 3729(a)(1)(A), (see Compl. ¶¶ 90–94), and for making or using a false record or 8 statement under 31 U.S.C. § 3729(a)(1)(B). (See Compl. ¶¶ 95–100.) The Parties agree 9 that “the essential elements of False Claims Act liability . . . [are]: (1) a false statement or 10 fraudulent course of conduct, (2) made with scienter, (3) that was material, causing (4) the 11 government to pay out money or forfeit moneys due.” See United States ex rel. Hendow 12 v. Univ. of Phoenix, 461 F.3d 1166, 1174 (9th Cir. 2006); see also Rel.’s Mem. at 24; Defs.’ 13 Mem. at 23–24. Each Party contends that they are entitled to summary adjudication of 14 these claims—or parts of them—in their favor. (Compare, e.g., Rel.’s Mem. at 26–38, 15 with, e.g., Defs.’ Mem. at 23–27.) First and Second Causes of Action 16 As an initial matter, it is unclear whether Relator contends that Defendants 17 misrepresented GET as a WOSB for purposes of obtaining orders, contracts, and sub- 18 contracts as part of the WOSB Goal or under the WOSB Program. (See generally Compl.) 19 The two programs are distinct, meaning the standards and evidence required to establish 20 Defendants’ liability (or not) differ. For example, to the extent Relator’s claims are 21 premised on GET’s alleged misrepresentation that it was a WOSB for purposes of the 22 WOSB Program, Relator must prove that Defendants knowingly misrepresented GET as a 23 WOSB to obtain payment from the government for an award for which GET was not 24 eligible under the WOSB Program. Defendants have introduced uncontroverted evidence 25 that “GET has never . . . been awarded a contract under the WOSB Federal Contract 26 Program.” (See ECF No. 102-4, Ex. C (“Adams Decl.”) ¶ 3; see also ECF No. 107-1 27 (“Adams Opp’n Decl.”) ¶¶ 3, 7.) Accordingly, to the extent Relator’s claims are premised 28 on Defendants’ alleged false statements or presentation of false claims to obtain payment 19 19-CV-1249 TWR (AGS) 1 under the WOSB Program, the Court GRANTS Defendants’ Motion for Summary 2 Judgment and DENIES Relator’s. 3 As for Relator’s claims premised on Defendants’ alleged misrepresentations of 4 GET’s WOSB status in connection with the WOSB Goal, Defendants have introduced 5 uncontroverted evidence that certain contracts, subcontracts, and orders were awarded to 6 GET because GET was the sole source for components of its proprietary systems. (See, 7 e.g., Adams Opp’n Decl. ¶¶ 6–8 & Ex. A (attesting to contracts for which GET was the 8 sole available source).) Because no other entity—WOSB or not—could furnish these parts, 9 (see, e.g., id.; ECF No. 102-4 Ex. B (“R. Tuttle Decl.”) ¶¶ 4–5, 7–9, 12–16 (attesting that 10 GET’s products are not interchangeable with those of its competitors, meaning that GET 11 is the only available source for customers who have installed their system)), Defendants’ 12 representation of GET as a WOSB could not “hav[e had] a natural tendency to influence, 13 or be capable of influencing, the payment or receipt of money or property” under a sole- 14 source contract. See 31 U.S.C. § 3729(b)(4). Because there exist no disputes of fact that 15 the purchases identified in Exhibit A to the Adams Opposition Declaration could only have 16 been purchased from GET, the Court GRANTS Defendants’ Motion for Summary 17 Judgment as to those specific purchases and DENIES Relator’s. 18 As for the remaining invoices identified by Relator, (see generally ECF No. 101-46 19 (“Ex. 45”); ECF Nos. 101-47–56 (“Ex. 46”)), a number of critical material facts—and even 20 the relevant law—remain subject to dispute, preventing the Court from granting summary 21 adjudication in favor of either Party. For example, there is no evidence in the record as to 22 which, if any, of the remaining underlying contracts, subcontracts, or orders (1) were with 23 the government or a government contractor as opposed to a private party, (see ECF No. 24 107 (“Defs.’ Opp’n”) at 4; cf. Adams Decl. ¶ 4 & Ex. A (identifying 26 “direct Department 25 of Defense contracts between 2011 and 2015” in which GET “Marked Woman Owned”)); 26 (2) involved representations regarding GET’s claimed WOSB designation, (see Defs.’ 27 Opp’n at 6); and (3) were awarded to meet the WOSB Goal. (See id. at 5.) Accordingly, 28 neither Party has demonstrated the absence of disputed facts as to whether or not 20 19-CV-1249 TWR (AGS) 1 Defendants made false statements or presented false claims as to the remainder or these 2 invoices. 3 There also appears to be a great deal of confusion as to which statutory and/or 4 regulatory definition(s) of a WOSB controls here, both because there are several definitions 5 and because the majority of those definitions have been amended during the course of the 6 relevant conduct. 2 For example, Defendants began representing GET as a WOSB under 7 the FAR on August 9, 2009, (see Jt. Stmt. ¶ 15), after implementation of the WOSB Goal, 8 see 15 U.S.C. § 644(g)(1)(A)(v) (1994), but before the SBA finalized its regulations 9 promulgating the WOSB Program. See 13 C.F.R. §§ 127.100–127.700 (2010). Effective 10 April 1, 2011, FAR began distinguishing between WOSBs generally and those “eligible 11 under the WOSB Program (in accordance with 13 CFR part 127).” Compare, e.g., 48 12 C.F.R. §§ 2.101, 52.219-1, 52.212-3 (eff. July 1, 2009), with, e.g., 48 C.F.R. §§ 2.101, 13 52.219-1, 52.212-3 (eff. Apr. 1, 2011). This would seem to indicate that the WOSB 14 Program regulations are inapplicable to WOSBs that are not competing in the WOSB 15 Program. Relator’s falsity argument, however, relies heavily on the WOSB Program 16 regulations, (see generally Rel.’s Mem. at 26–30), which impose additional requirements 17 for control of a WOSB. See, e.g., 13 C.F.R. § 127.202(b) (“A woman . . . must hold the 18 highest officer position in the concern . . . .”).3 The Parties have identified—and the Court 19 20 21 22 23 24 25 26 27 28 2 Indeed, it appears that even the SBA and contracting officers have had a great deal of difficulty in navigating the WOSB Program. See, e.g., Dilger, supra, at 18–19 & nn.62–70 (noting high rate of ineligibility of WOSB set-aside and sole-source contract awards through 2019, including a 2018 SBA Office of Inspector General (“OIG”) audit finding that 50 of 56 audited contracts between January 1, 2016, and April 30, 2017, “were made ‘without having the necessary documentation to determine eligibility’ of the award recipients” (quoting SBA OIG, 18-18, Audit Report: SBA’s Women-Owned Small Business Federal Contracting Program 4 (2018), https://www.sba.gov/document/report-18-18-sbas-womenowned-small-business-contracting-program)). 3 For this reason, the Court is not persuaded by either the SBA’s of the Navy’s “determination” of GET’s WOSB status. The SBA eligibility examination related to GET’s eligibility as a WOSB under the WOSB Program. (See, e.g., ECF No. 101-33 (“Ex. 2”).) Further, although the SBA had promised to “provide [GET] with a written eligibility determination,” (see id.), the only “determination” available in the record is Defendant Adams’ handwritten Post-It note dated December 9, 2015, indicating that Glynis Long 21 19-CV-1249 TWR (AGS) 1 has found—no authority clarifying the correct standard to be applied here, and “differences 2 in interpretation growing out of a disputed legal question are . . . not false under the FCA.” 3 Thulin v. Shopko Stores Operating Co., No. 10-CV-196-WMC, 2013 WL 5946503, at *7 4 (W.D. Wis. Nov. 5, 2013) (alteration in original) (quoting United States ex rel. Lamers v. 5 City of Green Bay, 168 F.3d 1013, 1018 (7th Cir. 1999) (citing Hagood v. Sonoma Cnty. 6 Water Agency, 81 F.3d 1465, 1477 (9th Cir. 1996))) (citing United States v. Medica Rents 7 Co., Nos. 03-11297 et al., 2008 WL 3876307, at *3 (5th Cir. Aug. 19, 2008))), aff’d, 771 8 F.3d 994 (7th Cir. 2014). 9 Whatever standard applies, there exist genuine disputes of material fact as to GET’s 10 management structure and control and, consequently, the falsity of Defendants’ 11 designation of GET as a WOSB. It is uncontroverted that men served as GET’s CEO 12 during the relevant period, (see Jt. Stmt. ¶¶ 9–10), but Defendants introduce evidence that 13 GET’s “management and daily business operations [we]re controlled by one or more 14 women” during the relevant period. See 48 C.F.R. § 2.101. Specifically, Defendants 15 introduce evidence that the CEO was subordinate to Guille Tuttle, (see, e.g., ECF No. 102- 16 4 Ex. A (“G. Tuttle Decl.”) ¶¶ 15, 24–25 (attesting that Guille Tuttle “specifically chose to 17 avoid being mentioned publicly as being the face of the company” but “created and defined 18 a CEO position and established [her]self in the Ultimate Authority,” to which the CEO was 19 20 21 22 23 24 25 26 27 28 informed Defendant Adams by phone that “because David Grundies is running the company as CEO she is changing our status in SAM, unchecking the box until status of that office changes.” (See ECF No. 101-2 (“Ex. 1”).) It is unclear from the record whether Long was unchecking the WOSB Program certification—which Defendants acknowledged at the hearing was erroneously selected—or GET’s general WOSB certification for purposes of the WOSB Goal. (See, e.g., ECF No. 101-2 (“Ex. 22”).) The Navy determination, on the other hand, occurred well after the relevant time period. (See, e.g., ECF No. 101-42 (“Ex. 41”) (show cause letter dated January 1, 2017).) Further, like the SBA, the Navy appears to have been concerned with GET’s representation as a WOSB under the WOSB Program regulations, 13 C.F.R. 127. (See Ex. 41.) Finally, Relator has provided no record of the Navy’s determination except Defendants’ admission that “the Department of Navy, Acquisition Integrity Office determined that GET was not a WOSB and notified Defendants of this determination on or around April 14, 2017.” (See ECF No. 101-17 (“Ex. 16”) at 9, Request for Admission No. 25 and Response to Request for Admission No. 25.) Accordingly, the Court cannot determine the scope of the Navy’s final determination. 22 19-CV-1249 TWR (AGS) 1 “subordinate”)), and that several women, namely, Defendant Adams, Guille Tuttle, Sharon 2 Bakun, and Cheri McCadam, ran GET during the relevant period. (See, e.g., id. ¶¶ 24–25 3 (attesting that Guille Tuttle made final decisions over policies, procedures, and contractual 4 and operational commitments); Adams Decl. ¶ 2 (attesting that Adams served as “General 5 Manager” and “was responsible for the day-to-day business and manufacturing operations” 6 between 2003 and 2015); ECF No. 102-5 Ex. G (“Adams Depo.”) at 12:20–13:13 7 (testifying that, during the relevant period, Adams served as General Manager, Bakun held 8 the position of Head of Finance, and McCadam was Head of Production).) Because the 9 propriety of Defendants’ representation of GET as a WOSB requires resolving factual 10 issues (and credibility determinations), neither Party is entitled to summary adjudication in 11 their favor as to falsity. 12 While these determinations justify denial of both Motions for Summary Judgment, 13 Relator alternatively asks the Court to grant partial summary judgment in its favor as to 14 certain elements of its FCA claims. (See Rel.’s MSJ at 2–4.) Specifically, Relator asks the 15 Court to determine the following as a matter of law: 16 (1) From August 9, 2009[,] to December 10, 2015, Defendants represented that GET was a [WOSB]; 17 18 (2) From August 9, 2009[,] to December 10, 2015, GET was not a WOSB because during that period men – not women – (a) led GET and managed its daily business operations on a full-time basis and (b) served in its highest officer position of CEO; 19 20 21 (3) From August 9, 2009[,] to December 10, 2015, GET represented that it was a WOSB in at least 1,022 invoices that it submitted to government and prime contractor customers in connection with a request for payment under a federal government prime contract or subcontract; 22 23 24 (4) GET’s false representations were made knowingly, see 31 U.S.C. § 3729(b)(1), in that Defendants (a) had actual knowledge that GET was not a WOSB, (b) acted in deliberate ignorance of the truth or falsity of the representation that GET was a WOSB, and/or (c) acted in reckless disregard of the truth or falsity of the representation that GET was a WOSB; 25 26 27 28 /// 23 19-CV-1249 TWR (AGS) 1 2 3 4 5 6 7 8 9 10 (5) GET’s false representations that it was a WOSB were material in that they had a material effect on the decisions of the federal government and prime contractors to make awards to GET and to make payments to GET pursuant to the contracts awarded to GET as a result of such representations; (6) under the Presumed Loss Rule, 13 C.F.R. § 121.108, the United States suffered damages of approximately $16,001,503.07 as a result of GET’s false representations, reflecting the total value of the government contracts and subcontracts received by GET from 2009 through 2015, which is comprised of approximately $3,718,858 in government contracts and $12,282,645 in subcontracts under government contracts; (7) trebling the United States’ damages of approximately $16,001,503.07 pursuant to 31 U.S.C. § 3729(a)(1) yields damages of more than $48 million to be awarded under the False Claims Act; 11 12 13 14 15 16 17 (8) pursuant to 31 U.S.C. § 3729(a)(1), the minimum civil penalty to be awarded for each false document is currently $11,665, yielding total civil penalties of at least $11,921,630 based on the 1,022 invoices submitted by GET for payment; and (9) each Defendant is jointly and severally liable for the penalties and damages awarded for GET’s false claims. (See id.) 18 Regarding Relator’s first request, the Parties do not dispute that, “[o]n or about 19 August 9, 2009, GET represented to the U.S. Government and prime contractors that it was 20 a WOSB, as defined by FAR 2.101,” (Jt. Stmt. ¶ 17), or that “GET represented itself as a 21 WOSB on its website from August 9, 2009[,] to December 10, 2015.” (Id. ¶ 21.) To the 22 extent Relator seeks summary adjudication that GET represented itself as a WOSB in any 23 other capacity between August 9, 2009, to December 10, 2015, however, the Court 24 DENIES Relator’s request (1). 25 As for Relator’s second request, Defendants acknowledged at the hearing that GET 26 did not qualify as a WOSB for purposes of the WOSB Program. Nonetheless, because it 27 is undisputed that GET did not obtain any awards under the WOSB Program, the Court has 28 dismissed Relator’s FCA causes of action to that extent. The Court therefore DENIES AS 24 19-CV-1249 TWR (AGS) 1 MOOT Relator’s request (2) to the extent it is premised on GET’s qualification as a WOSB 2 under the WOSB Program. As for the WOSB Goal, the Court has already determined that 3 “there exist genuine disputes of material fact as to GET’s management structure and 4 control.” See supra page 22. The Court therefore DENIES Relator’s request (2)(a) to the 5 extent it is premised on GET’s eligibility as a WOSB for the WOSB Goal. Although the 6 Parties do not dispute that, “[s]tarting sometime in 1997, men served as GET’s CEO until 7 December 10, 2015,” (Jt. Stmt. ¶ 9), or that, “[b]etween August 9, 2009[,] to December 10, 8 2015, a man held the officer position entitled CEO/President,” (id. ¶ 10), the Court also 9 DENIES request (2)(b) to the extent Relator seeks a determination that GET was not a 10 WOSB for purposes of the WOSB Goal because it is not clear that the WOSB Program 11 regulations, including 13 C.F.R. § 127.202(b), apply. See supra pages 21–22. 12 Regarding Relator’s third request, the Court already has granted summary judgment 13 in Defendants’ favor on several of the invoices identified by Relator. See supra page 20; 14 see also Adams Opp’n Decl. Ex. A. As for the remaining invoices, the Court determined 15 that “there is no evidence in the record as to which, if any, of the remaining [invoices] . . . 16 involved representations regarding GET’s claimed WOSB designation.” See supra page 17 20. The Court therefore DENIES request (3). 18 As to Relator’s fourth request, given material issues concerning the alleged falsity 19 of Defendants’ WOSB representations and the abject confusion regarding the relevant 20 statutory and regulatory scheme, see supra pages 20–23 & nn.2–3; Defs.’ Opp’n at 20 21 (contending that any misrepresentations “may stem from innocent mistakes in 22 interpretation of the complex and frequently changing laws and regulations governing the 23 WOSB Program and federal procurement”), the Court DENIES Relator’s request (4). 24 Regarding Relator’s fifth request, the Court already has granted summary judgment 25 in favor of Defendants as to those orders for which GET was the sole source for its own 26 proprietary components. See supra page 20; see also Adams Opp’n Decl. Ex. A. The 27 Court therefore DENIES Relator’s request (5). 28 /// 25 19-CV-1249 TWR (AGS) 1 Relator’s remaining requests pertain to damages. Because Relator has failed to 2 establish liability, determinations related to damages (and their calculation) are premature. 3 The Court therefore DENIES requests (6) through (9). 4 Accordingly, the Court GRANTS IN PART AND DENIES IN PART Defendants’ 5 Motion for Summary Judgment and DENIES Relator’s Motion for Summary Judgment as 6 to Relator’s first and second causes of action. 7 B. 8 Relator’s third cause of action is for conspiracy to violate the FCA pursuant to 31 9 U.S.C. § 3729(a)(1)(C), (see generally Compl. ¶¶ 101–04), which makes liable “any person 10 who . . . conspires to commit a violation of [the FCA].” See 31 U.S.C. § 3729(a)(1)(C). 11 Relator contends that it is entitled to summary adjudication of this claim in its favor, (see 12 Rel.’s Mem. at 38–39), while Defendants urge that the claim is barred by the intracorporate 13 conspiracy doctrine. (See Defs.’ Mem. at 28.) Third Cause of Action for Conspiracy 14 “The intracorporate conspiracy doctrine, derived from antitrust law, holds that 15 a conspiracy requires ‘an agreement among two or more persons or distinct business 16 entities.’” United States ex rel. Lupo v. Quality Assurance Servs., Inc., 242 F. Supp. 3d 17 1020, 1027 (S.D. Cal. 2017) (quoting United States v. Hughes Aircraft Co., 20 F.3d 974, 18 979 (9th Cir. 1994), as amended (Apr. 28, 1994)). “The logic for the doctrine comes 19 directly from the definition of a conspiracy.” Id. (quoting Hoefer v. Fluor Daniel, Inc., 92 20 F. Supp. 2d 1055, 1057 (C.D. Cal. 2000)). “It is basic in the law of conspiracy that you 21 must have two persons or entities to have a conspiracy. ‘A corporation cannot conspire 22 with itself anymore than a private individual can, and it is the general rule that the acts of 23 the agent are the acts of the corporation.’” Id. (quoting Hoefer, 92 F. Supp. 2d at 1057 24 (quoting Nelson Radio & Supply Co. v. Motorola, Inc., 200 F.2d 911, 914 (5th Cir. 1952))). 25 “Though the Ninth Circuit has not spoken on the issue, a number of district courts, 26 including those within the Ninth Circuit, have applied the intracorporate conspiracy 27 doctrine to FCA claims.” Id. (collecting cases); see also Hawaii ex rel. Torricer v. Liberty 28 Dialysis-Haw. LLC, 512 F. Supp. 3d 1096, 1118 (D. Haw. 2021); United States ex rel. 26 19-CV-1249 TWR (AGS) 1 Markus v. Aerojet Rocketdyne Holdings, Inc., 381 F. Supp. 3d 1240, 1249 (E.D. Cal. 2019); 2 United States ex rel. Ruhe v. Masimo Corp., 929 F. Supp. 2d 1033, 1037–38 (C.D. Cal. 3 2012). Although Relator cites to a number of out-of-Circuit authorities to support its 4 argument that the intracorporate conspiracy doctrine does not apply in the FCA context, 5 (see Rel.’s Opp’n at 25–27), the Court finds persuasive the reasoning of “[t]he weight of 6 existing case law authority” within this Circuit. (Cf id. at 26.) Accordingly, the Court 7 concludes that it is appropriate to apply the intracorporate conspiracy doctrine here. 8 It is undisputed that Adams, Tuttle, MacNeil, and Grundies were acting as 9 employees of GET during the relevant period, (see Jt. Stmt. ¶¶ 1, 4, 11, 13, 16, 22), and 10 Relator introduces no facts showing that any of these Defendants conspired with any person 11 or entity distinct from GET. Accordingly, the Court concludes that Relator’s third cause 12 of action is barred by the intracorporate conspiracy doctrine and DISMISSES that claim. 13 C. 14 Finally, Defendants argue in their Opposition to Relator’s Motion for Summary 15 Judgment that Relator’s claims under the FCA are barred by the statute of limitations. (See 16 Defs.’ Opp’n at 29–31.) The FCA sets the following statute of limitations: 17 (b) Statute of Limitations A civil action under section 3730 may not be brought— 18 19 (1) more than 6 years after the date on which the violation of section 3729 is committed, or (2) more than 3 years after the date when facts material to the right of action are known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances, but in no event more than 10 years after the date on which the violation is committed, 20 21 22 23 24 25 26 whichever occurs last. 31 U.S.C. § 3731(b). 27 Defendants contend that any violations occurring before February 16, 2012—six 28 years before Relator filed its Complaint—are barred under 31 U.S.C. § 3731(b)(1). (See 27 19-CV-1249 TWR (AGS) 1 Defs.’ Opp’n at 30.) Relator does not contest that some its claims would be untimely under 2 Section 3731(b)(1); rather, it contends that the Section 3731(b)(2) applies to its FCA causes 3 of action. (See ECF No. 110 (“Rel.’s Reply”) at 13–15.) 4 As for Section 3731(b)(2), Defendants urge that Relator’s claims are untimely under 5 that provision because the contracting officers that verify the eligibility of contractors 6 should have been aware of any alleged fraud at the time of awarding GET any contracts. 7 (See Defs.’ Opp’n at 30–31.) Relator, on the other hand, argues that its claims are timely 8 because Relator did not provide its comprehensive disclosure to the SBA, Navy, and GSA 9 until August 9, 2015. (See Rel.’s Reply at 14 (citing ECF No. 101-32 (“Ex. 31”)).) In any 10 event, Relator asserts, the relevant official is not the contracting officer, but rather 11 somebody within the Department of Justice (“DOJ”), who was not notified in this case 12 until May 2, 2016, at the earliest. (See id. at 14–15 (citing ECF No. 101-2 (“Ex. 1”)).) The 13 Court therefore must determine who “the official of the United States charged with 14 responsibility to act in the circumstances” was and when that official “kn[ew] or reasonably 15 should have been known” of Defendants’ alleged fraud. 16 Unfortunately, there exists little guidance as to who the relevant official is for 17 purposes of the FTCA’s statute of limitations, and what little guidance there is has been 18 inconsistent. See, e.g., LW Constr. of Charleston, LLC v. United States, 139 Fed. Cl. 254, 19 295 (2018) (“Other judges in various federal courts, for example, are divided on whether 20 the ‘official of the United States’ refers specifically to an official within the Civil Division 21 of the DOJ or to any government employee.”); see also, e.g., Cochise Consultancy, Inc. v. 22 United States ex rel. Hunt, --- U.S. ---, 139 S. Ct. 1507, 1514 (2019) (declining to determine 23 “which official or officials the statute is referring to” but concluding that the phrase does 24 exclude relators). Ultimately, the Court finds persuasive those cases concluding that the 25 statute of limitations begins to run once the DOJ knew—or should have known—of the 26 material facts. See, e.g., United States ex rel. Jordan v. Northrop Grumman Corp., No. 27 CV 95-2985 ABC (EX), 2002 WL 35628747, at *4 (C.D. Cal. Aug. 5, 2002) (“Based upon 28 the legislative history, the Court finds that the relevant official is one withing the 28 19-CV-1249 TWR (AGS) 1 Department of Justice.”); United States ex rel. Condie v. Bd. of Regents of Univ. of Cal., 2 No. C89-3550-FMS, 1993 WL 740185, at *2 (N.D. Cal. Sept. 7, 1993) (“[T]he Court 3 follows the reasoning of Island Park and holds that the statute of limitations was tolled 4 until the DOJ became aware, or should have become aware, of the false claims.”); United 5 States v. Inc. Vill. of Island Park, 791 F. Supp. 354, 363 (E.D.N.Y. 1992) (“[T]he 6 limitations period was tolled until ‘the facts material to the right of action [were] known or 7 reasonably should have been known’ by that DOJ official.”). 8 Applying that standard here, Relator’s claims are timely whether the Court 9 determines that the DOJ reasonably should have known of Defendants’ allegedly 10 fraudulent claims after Relator made its disclosure to the Navy, SBA, and GSA on 11 August 9, 2015, (see generally Ex. 31); after Relator met with officials from the Criminal 12 Division of the United States Attorney’s Office for the Southern District of California on 13 May 2, 2016, (see generally ECF No. 110-2); or after Relator subsequently met with 14 officials from the Civil Division of that office. (See Rel.’s Reply at 15 n.7.) The limitations 15 period therefore did not run until August 9, 2018, at the earliest, which was over six months 16 after Relator filed its Complaint on February 16, 2018. 17 Accordingly, the Court concludes that Relator’s FCA claims are timely. 18 (See generally Compl.) CONCLUSION 19 In light of the foregoing, the Court DENIES Relator’s Motion for Summary 20 Judgment (ECF No. 101) and GRANTS IN PART AND DENIES IN PART Defendants’ 21 Motion for Summary Judgment (ECF No. 102). 22 Defendants’ Motion for Summary Judgment as to (1) Relator’s first and second causes of 23 action to the extent those claims are premised on (a) Defendants’ allegedly false statements 24 or claims in connection with the WOSB Program, and (b) the orders identified in Exhibit 25 A to the Adams Opposition Declaration (ECF No. 107-1 at 6–15 as numbered by 26 CM/ECF); and (2) Relator’s third and fourth causes of action in their entirety. Defendants’ 27 Motion for Summary Judgment is DENIED in all other respects. As Relator’s request, the 28 Court also DISMISSES Relator’s fourth cause of action. Specifically, the Court GRANTS 29 19-CV-1249 TWR (AGS) 1 The Parties SHALL FILE a Joint Status Report within seven (7) days of the 2 electronic docketing of this Order regarding the status of this litigation and proposing a 3 joint schedule for pretrial dates and deadlines. 4 5 IT IS SO ORDERED. Dated: January 18, 2022 6 7 Honorable Todd W. Robinson United States District Court 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 30 19-CV-1249 TWR (AGS)

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