United States ex rel. Oliver v. Philip Morris United States, Inc.

• Decision Date: 30 April 2015
• Docket Number: Civil Action No. 08–0034CKK
• Parties: United States ex rel. Anthony Oliver, Plaintiff, v. Philip Morris USA, Inc., Defendant.
• Court: U.S. District Court — District of Columbia

101 F.Supp.3d 111

United States ex rel. Anthony Oliver, Plaintiff,

v.Philip Morris USA, Inc., Defendant.

Civil Action No. 08–0034CKK

United States District Court, District of Columbia.

Signed April 30, 2015

David S. Golub, Silver Golub & Teitell LLP, Stamford, CT, John F. Murphy, Hartford, CT, Carl S. Kravitz, Jason M. Knott, Zuckerman Spaeder, LLP, Washington, DC, for Plaintiff.

Elizabeth P. Papez, Winston & Strawn LLP, Washington, DC, Thomas J. Frederick, Winston & Strawn, Chicago, IL, for Defendant.

MEMORANDUM OPINION

COLLEEN KOLLAR–KOTELLY, United States District Judge

The plaintiff/relator in this case, Anthony Oliver (“Oliver”), brings suit against Philip Morris USA Inc. (“Defendant”) pursuant to the False Claims Act (the “FCA”), 31 U.S.C. § 3729 et seq.Presently before the Court is Defendant's Second Motion to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(1). ECF No. [69]. Upon consideration of the parties' submissions, the applicable authorities, and the record as a whole, the Court shall GRANT Defendant's motion and dismiss this case for lack of subject matter jurisdiction.¹

I. BACKGROUND

This Court and the D.C. Circuit have previously set forth the details of this case. SeeUnited States ex rel. Oliver v. Philip Morris USA Inc., 763 F.3d 36, 38–39 (D.C.Cir.2014); United States ex rel. Oliver v. Philip Morris USA Inc., 949 F.Supp.2d 238, 240–42 (D.D.C.2013). An abbreviated summary of the facts follows.

Oliver, the President and CEO of Medallion Brands International Co., a tobacco company, filed this qui tamsuit on January 4, 2008. ECF No. [1]. The United States declined to intervene. ECF No. [28]. In his Second Amendment Complaint, ECF No. [49] (hereinafter the “Complaint”), which is the operative complaint in this action, Oliver alleges that Defendant violated the FCA by falsely certifying that it was providing the United States military with the best price for its cigarettes.

Specifically, Oliver alleges that, at least from 2002 until the date the Complaint was filed, Defendant supplied the Navy Exchange Service Command (“NEXCOM”) and the Army and Air Force Exchange Service (“AAFES”) with cigarettes. Compl. ¶ 20. Oliver claims that Defendant sold cigarettes to NEXCOM and AAFES “pursuant to purchase orders ... that have incorporated, expressly or impliedly” most favored customer (“MFC”) warranties.²Id.¶¶ 21, 30, 34. Oliver alleges that Defendant violated these warranties by “knowingly [selling] cigarette products identical to the cigarettes sold to AAFES and NEXCOM to affiliates of defendant ... at prices lower than the prices such cigarettes were sold to NEXCOM and AAFES.” Id.¶ 25. Accordingly, Oliver contends that Defendant's “purchase orders and other forms of contract for sales of its cigarette products to [AAFES and NEXCOM] ... falsely warranted that defendant [was] in compliance with [the MFC warranties].” Id.¶¶ 31, 35. As a consequence of this fraud, Oliver alleges that Defendant “charged NEXCOM and AAFES millions of dollars more, annually, for its cigarette products than has been paid by either defendant's affiliates purchasing such products or foreign purchasers buying such products from defendant's affiliates.” Id.¶ 29.

In its original motion to dismiss, Defendant argued, first, that the public disclosure bar deprived this Court of subject matter jurisdiction over Oliver's suit and, second, that the Complaint failed to state a claim upon which relief could be granted. SeeDef.'s Mem. of Law in Supp. of Def. Philip Morris USA Inc.'s Mot. to Dismiss (“Def.'s First MTD”), ECF No. [53–1]. This Court granted Defendant's motion to dismiss for lack of subject matter jurisdiction. First, this Court held that the price differentials alleged by Oliver had previously been publicly disclosed in a document—which came to be called the “Iceland Memo”³—that was uploaded to a publicly available, fully searchable online database as part of a 1998 settlement agreement. See Oliver,949 F.Supp.2d at 244–47. Second, this Court held that while “the [Iceland Memo] does not reference the reason why the pricing differential is of questionable legality (i.e.,the ‘most favored customer’ certifications), the Court agrees with Defendant that the ‘most favored customer’ provisions contained within the AAFES and/or NEXCOM's General Provisions Publications are legal requirements that the Government is presumed to know.” Id.at 248–49. This Court further held that “Defendant's certifications with the ‘most favored customer’ requirements—by way of the purchase orders and contracts pertaining to its sales—can be inferred by the simple fact that AAFEX and NEXCOM continued to purchase Defendant's cigarette products during the time covered by the Complaint.” Id.at 249. As such, the Court concluded that “Oliver's Complaint describes ‘transactions' ‘substantially similar to those in the public domain’ and therefore is ‘based upon’ the public disclosure of those transactions.” Id.Moreover, the Court held that Oliver could not salvage subject matter jurisdiction for his suit by showing that he was an “original source” as defined in 31 U.S.C. § 3730(e)(4)(B). In particular, the Court found that Oliver “failed to show that he ha[d] ‘direct’ knowledge ... of the allegations underlying his Complaint.” Id.at 250. He also failed to prove that he disclosed “the fraud relating to the ‘most favored customer’ clauses that are the subject of his Complaint” to the government. Id.at 250–51. This Court therefore granted Defendant's motion to dismiss for lack of subject matter jurisdiction. Id.at 251.

Plaintiff appealed this Court's judgment. The D.C. Circuit explained that it only lacked subject matter jurisdiction over Oliver's claims if “boththe pricing disparities and [Defendant's] false certifications of compliance with the Most Favored Customer provisions ... were in the public domain.” Oliver,763 F.3d at 41. The Circuit “assum[ed] arguendothat the certifications could be inferred from the disclosure of the Most Favored Customer provisions,” but nevertheless found that “Oliver's suit is not barred because the Most Favored Customer provisions were not publicly disclosed.” Id.Rejecting Defendant's arguments to the contrary, the Circuit held that “the government's awareness of the Most Favored Customer requirements does not amount to their public disclosure” and that “the Iceland Memo did not publicly disclose the requirements of the Most Favored Customer provisions.”Id.at 42–43. After oral argument, Defendant submitted to the Circuit “a letter proffering new evidence purporting to show that the Most Favored Customer provisions were publicly available on the Exchanges' websites before 2008.” Id.at 44. The Circuit declined to consider this evidence. Id.(“[Defendant] has provided no explanation for its failure to timely present its new evidence to the district court, nor for its delay in providing that evidence to us. We are, in any event, in no position to assess on appeal its authenticity or its bearing on the issue for which it was submitted.”). The Circuit therefore vacated this Court's dismissal of the Complaint. Id.

Defendant has now submitted a second motion to dismiss for lack of subject matter jurisdiction. Accompanying the motion, Defendant has submitted new evidence purporting to show that the MFC requirements were publicly available throughout the period when Oliver alleges that the fraud occurred. Defendant now explains that, “[i]n May 2014, [Defendant] ... ran extensive public and federal records searches for evidence of pre–2008 Internet publication of the AAFES and NEXCOM MFC provisions.” Def.'s Mem., Decl. of Eric T. Werlinger (“Werlinger Decl.”) ¶ 4. Defendant states that it discovered documents suggesting that “the Uniform Resource Locators (‘URLs') for the AAFES and NEXCOM webpages [Defendant] cited in its July 2012 motion to dismiss were different than the URLs associated with the exchanges' websites before January 2008.” Id.¶ 5. Armed with these pre–2008 URLs, Defendant “searched the Internet Archive, a website that ‘offer[s] permanent access for researchers, historians, scholars, people with disabilities, and the general public to historical collections that exist in digital format.’ ” Id.¶ 6 (quoting Internet Archive, https://archive.org/about). On the Internet Archive, Defendant found “archived pages [from] 2002 and 2003 ... linking to copies of both the AAFES Supplier Requirements and Terms and Conditions and the NEXCOM General Provisions Publication No. 61 that contain the MFC provisions at the heart of this case.”⁴Id.¶ 7.

Oliver has also submitted new evidence that he asks this Court to consider. This new evidence consists of a declaration in which Oliver explains how he learned of the fraud and what he told the government. SeePl.'s Opp'n, Decl. of Anthony Oliver (“Oliver Decl.”). In the declaration, Oliver explains that he learned a critical piece of information from Tim Maloney, a “tobacco category buyer for NEXCOM,” in 2007 when Oliver and Maloney were discussing the possibility of Oliver's tobacco business “expanding its sales to NEXCOM's overseas outlets.” Id.¶ 3. Oliver told Maloney that he would deduct several surcharges that Oliver believed only applied domestically. See id.¶ 5. Oliver reports that “Maloney was surprised when [Oliver] told him that ... the two surcharges [did not apply] to overseas sales” and that “[Maloney] told [Oliver] that NEXCOM's other cigarette suppliers, including [Defendant], did not adjust their overseas prices to NEXCOM (as compared to the domestic prices they charged NEXCOM for their cigarette products) to reflect the inapplicability of these surcharges to overseas sales.” Id.; see also id.¶ 6 (“Mr. Maloney indicated to [Oliver] that the pricing to NEXCOM included amounts to cover the surcharges....”). After this revelation from Maloney, Oliver reportedly “made inquiries with certain of [his] industry contacts, including duty-free operators and overseas distributors, as to whether [Defendant's]...