United States ex rel. Morsell v. Symantec Corp.

• Decision Date: 30 March 2020
• Docket Number: Civil Action No. 12-800 (RC)
• Parties: UNITED STATES of America EX REL. Lori MORSELL, et al., Plaintiffs, v. SYMANTEC CORPORATION, Defendant.
• Court: U.S. District Court — District of Columbia

471 F.Supp.3d 257

UNITED STATES of America EX REL. Lori MORSELL, et al., Plaintiffs,

v.SYMANTEC CORPORATION, Defendant.

Civil Action No. 12-800 (RC)

United States District Court, District of Columbia.

Signed March 30, 2020

Christopher Bowmar Mead, Lance Alan Robinson, Mark London, London & Mead, Washington, DC, for Plaintiffs.

Anne B. Perry, David Lloyd Douglass, Jonathan S. Aronie, Christopher Michael Loveland, David T. Fischer, Keeley Allison McCarty, Sheppard Mullin Richter & Hampton LLP, Alexander Wood Major, McCarter & English, LLP, Washington, DC, for Defendant.

MEMORANDUM OPINION GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND GRANTING IN PART AND DENYING IN PART THE UNITED STATES’ MOTION FOR PARTIAL SUMMARY JUDGMENT

RUDOLPH CONTRERAS, United States District Judge

This case began as a qui tam action by Lori Morsell, an employee at Symantec Corporation ("Symantec"),¹ who came to believe that her employer had violated certain contractual obligations to the United States. She filed an action as Relator against Symantec under the False Claims Act ("FCA"). The United States ("the Government") intervened, along with California and Florida, and Morsell elected to assert claims on behalf of New York State. In brief, these governments claim that, in the process of setting pre-negotiated maximum prices for government purchasers with the General Services Administration, Symantec overcharged them by misrepresenting the existence of certain prices and discounts that were available to Symantec's private customers and by consequently failing to offer government purchasers the same low prices these customers received. See generally United States ex rel. Morsell v. Symantec Corp. , 130 F. Supp. 3d 106, 110–15 (D.D.C. 2015) (ECF No. 65) (summarizing the allegations raised at an earlier stage of this litigation, the essential details of which remain unchanged in the operative complaint).

The operative First Amended Omnibus and Restated Complaint (the "Omnibus Complaint"), ECF No. 70, brings fifteen counts against Symantec. Five are claims brought by the Government under the FCA (Counts I through V); four are common law claims by the Government (Counts VI through IX); two each are brought by California (Counts X and XI) and Florida (Counts XII and XIII) under state false claims statutes; and the remaining three are brought by Morsell on behalf of New York State, also under a state statute (Counts XIV through XVI). In the instant motions, Symantec seeks summary judgment in its favor on all claims. The Government seeks partial summary judgment. The Government asks the Court to find Symantec liable for the common law violations, leaving only the question of damages open for trial on these claims. It further asks the Court to resolve "threshold elements" of its False Claims Act claims, primarily the falsity of Symantec's claims and the materiality of its alleged false statements, leaving the knowledge and damages elements for trial.

The Court grants each motion in part and denies each in part. Overall, the extensive discovery record in this case makes for a complex factual pattern. There are pieces of evidence pointing both ways on most of the central questions in the case and genuine disputes of material fact abound. The Government has proven it is entitled to summary judgment on some discrete elements of certain claims, but it has not shown the absence of a dispute of material fact on any of the core factual questions underlying the vast majority of the Counts. Symantec is entitled to summary judgment on two common-law quasi-contract claims which, as a matter of law, can no longer coexist with the Government's breach of contract claim. Otherwise it has failed to prove as a matter of law that a reasonable jury could not find against it on any of the particular claims it faces.

The Court's opinion is organized as follows: First, the Court provides the relevant background, including the regulatory framework for the relevant government contracts, details on Symantec's pricing policies in general, the factual and procedural history of this dispute, and the relevant legal standards. Second, the Court addresses the Government's claims for breach of contract. This claim provides the clearest mechanism for presenting the core factual disputes in the case in an organized manner. Third, the Court addresses the government's other claims. Fourth and finally, the Court turns to address Symantec's motion.

I. BACKGROUND

Symantec Corporation is an infrastructure software firm that "help[s its] customers protect their infrastructure, information, and interactions by delivering software and services that address risks to information security, availability, and information technology, or IT, systems performance." United States’ Resp. to Symantec Corp.’s Statement of Undisputed Material Facts ("U.S. Resp. SMF") ¶ 3, ECF No. 139-1. This dispute arises out of Symantec's negotiation and performance of a Multiple Award Schedule ("MAS") contract with the General Services Administration ("GSA"), through which Symantec supplied a range of products, licenses, and services to the federal government.

A. Regulatory Framework

MAS contracts enable the GSA to streamline federal government procurement by providing pre-negotiated maximum prices and other terms that govern all subsequent purchases covered by the contract. Def. Symantec Corp.’s Statement of Genuine Issues Necessary to be Litigated in Resp. to the Gov't’s Statement of Undisputed Issues of Material Facts in Supp. of its Mot. for Summ. J. ("Sym. Resp. SMF") ¶ 1, ECF No. 137-2. The GSA establishes federal regulations governing solicitations, negotiations, and contracts executed under the MAS program. When the GSA awards a schedule contract, it "has already determined the prices of supplies and fixed-price services, and rates for services offered at hourly rates, under schedule contracts to be fair and reasonable." 48 C.F.R. § 8.404(d). This means that, for the most part, agencies placing orders under the schedule contract "are not required to make a separate determination of fair and reasonable pricing." Id. ; see also U.S. Resp. SMF. ¶ 6a (agreeing that 48 C.F.R. § 8.405-2(d) requires purchasers to undertake a price evaluation, "considering the level of effort and the mix of labor proposed ... and ... determining that the total price is reasonable"). However, agencies making orders under a MAS contract "may seek additional discounts before placing an order." 48 C.F.R. § 8.404(d). The arrangement is meant to be mutually beneficial, with the MAS obviating the need for each agency to individually shop around for the best prices, while also helping suppliers with schedule contracts to do a higher volume of business with the government than they could if they had to negotiate a new contract each time. See United States Mot. Summ. J. ("U.S. MSJ") Ex. 6, GSA MAS Program Desk Reference ("Desk Reference") at 16–17, ECF No. 130-6.

The MAS program is authorized under two statutes: Title III of the Federal Property and Administrative Services Act of 1949, 41 U.S.C. § 251 et seq. , and Title 40, 40 U.S.C. § 501. The program is additionally governed by Title 48 of the Code of Federal Regulations, which is also known as the Federal Acquisition Regulation ("FAR"), 48 C.F.R. § 8.402 et seq. See Desk Reference at 13. Additional regulations establishing procedures to be followed by contracting GSA officers are found in the GSA Acquisition Regulation ("GSAR"), 48 C.F.R. § 501.101 et seq. , the entirety of which is also incorporated into the GSA Acquisition Manual ("GSAM"), U.S. MSJ Ex. 9, GSAM (July 2004), ECF No. 130-9. Because the GSAM "consolidates" GSA's "agency acquisition rules and guidance" and presents them "in one document to eliminate the burden of checking multiple sources," the Court primarily refers to the GSAM rather than to the underlying regulations. GSAM at i.

GSA regulations prescribe standard questions contained in a MAS solicitation, in response to which an offeror must disclose certain information in a Commercial Sales Practices Format, known as the offeror's "CSPs." GSAM at 515-7 ("Commercial Sales Practices Format" or "CSPs Form"); id. at 515-8 fig.515.4-2 (Instructions for the Commercial Sales Practices Format). The CSPs Form provides that an offeror seeking a MAS contract must provide information that is "current, accurate, and complete" as of fourteen calendar days prior to submission. Id. The offeror is also told "you must ... disclose any changes in your price list(s), discounts and/or discounting policies which occur after the offer is submitted, but before the close of negotiations," and, "[i]f your discount practices vary by model or product line, the discount information should be by model or product line as appropriate." Id.

Prospective offerors are also required to make certain representations and to provide details about their discounting policies. Question 3 on the CSPs Form asks whether the discounts and concessions the offeror is offering the Government are "equal to or better than [its] best price ... offered to any customer acquiring the same items regardless of quantity or terms and conditions?" Id. at 515-7. Question 4(a) requires disclosure of information about discounting policies, and question 4(b) asks whether "any deviations from [these] written policies or standard commercial sales practices ever result in better discounts (lower prices) or concessions than indicated?" Id. A chart below question 4 must be filled out with details about the lowest discounts the offeror makes available—whether these are offered to the government or other customers. Id. at 515-8 (containing instructions for filling out the chart on the previous page). The information about discounts can also be presented "in an alternative format developed by the offeror." Id. at 515-7. When the offeror is a reseller, it must also disclose information about its...