United States ex rel. Westrick v. Second Chance Body Armor Inc., Civil Action No. 04–280 (RWR)

• Citation: 128 F.Supp.3d 1
• Decision Date: 04 September 2015
• Docket Number: Civil Action No. 07–1144 (RWR),Civil Action No. 04–280 (RWR)
• Parties: United States of America, ex rel. Westrick, Plaintiffs, v. Second Chance Body Armor Inc., et al., Defendants. United States of America, Plaintiff, v. Toyobo Co. Ltd, et al., Defendants.
• Court: U.S. District Court — District of Columbia

128 F.Supp.3d 1

United States of America, ex rel. Westrick, Plaintiffs,

v.Second Chance Body Armor Inc., et al., Defendants.

United States of America, Plaintiff,

v.Toyobo Co. Ltd, et al., Defendants.

Civil Action No. 04–280 (RWR)

Civil Action No. 07–1144 (RWR)

United States District Court, District of Columbia.

Signed September 4, 2015

Stephen M. Kohn, David K. Colapinto, Kohn, Kohn & Colapinto, LLP, Alicia J. Bentley, Albert Thomas Morris, Jeehae Jennifer Koh, Jennifer Lynn Chorpening, United States Department of Justice, Michael Justin Friedman, Keith V. Morgan, U.S. Attorney's Office, Washington, DC, for Plaintiffs.

Brian Keith Gibson, Jed P. Winer, Konrad Lee Cailteux, Weil, Gotshal & Manges, LLP, New York, NY, Christopher D. Barraza, Holly Elizabeth Loiseau, Weil, Gotshal & Manges, LLP, Washington, DC, Diane P. Sullivan, Weil Gotshal & Manges, LLP, Princeton, NJ, for Defendants.

Thomas E. Bachner, Jr., Eastport, MI, pro se.

Richard C. Davis, Central Lake, MI, pro se.

MEMORANDUM OPINION AND ORDER

RICHARD W. ROBERTS

, Chief Judge

The government brought these actions against defendants Second Chance Body Armor, Inc. and related entities (collectively "Second Chance"), Toyobo Co., Ltd. and Toyobo America, Inc. (collectively "Toyobo"), and individual defendants Thomas Bachner, Jr., Richard Davis, Karen McCraney, and Larry McCraney alleging violations of the False Claims Act ("FCA"), 31 U.S.C. §§ 3729

–3733, and common law claims, in connection with allegedly defective body armor material made or sold by the defendants involving federally-funded purchases.

Toyobo and the government each move for partial summary judgment on various claims in both actions.¹ In Civil Action 04280, Toyobo's first motion for partial summary judgment "seeks dismissal of the United States' claims under the False Claims Act, 31 U.S.C. § 3729(a)

-(c), in Counts 1, 2, and 3 of the Amended Complaint that are premised on the ‘at least 40,549’ Zylon-containing bullet-resistant vests purchased by federal agencies off of the General Service Administration's (‘GSA’) Multiple Award Schedule (‘MAS')." Defs.’ Toyobo Co., Ltd. and Toyobo America Inc.'s Mem. of P. & A. in Supp. of Their Mot. for Partial Summ. J., Civil Action No. 04–280, ECF No. 270–1 ("Toyobo's Mot. for Partial Summ. J. [270]") at 1. Toyobo filed a second motion for partial summary judgment seeking dismissal of "the United States' claims under the False Claims Act in Counts 1, 2, and 3 of the Amended Complaint related to vests purchased by state, local, and tribal law enforcement agencies for which the United States partially reimbursed those agencies under the [Bullet Proof Vest Grant Partnership Act][.]" Toyobo Co., Ltd. and Toyobo America Inc.'s Mem. of P. & A. in Supp. of Their Mot. for Partial Summ. J., Civil Action No. 04–280, ECF No. 343–1 ("Toyobo's Mot. for Partial Summ. J. [343]") at 2. The government filed a motion for partial summary judgment, or in the alternative summary adjudication of issues, on liability for "sales of the Ultima vest to the United States pursuant to the GSA Schedule[,]" and on "Toyobo's liability for its false statements in the form of its false and misleading degradation reports." United States' Mot. for Partial Summ. J. Against Defs. Toyobo Co. Ltd. and Toyobo America, Inc., Civil Action No. 04–280, ECF No. 344–1 ("Gov't Mot. for Partial Summ. J.") at 1 n.1 and at 2.

In Civil Action 07–1144, Toyobo moves for partial summary judgment on "the United States' claims under the False Claims Act (Counts 1, 2, and 3 of the Amended Complaint)" which includes the claims related to the bullet proof vests sold on the General Services Administration Schedule and those reimbursed by the United States through the Bullet Proof Vest Grant Partnership Act. Toyobo Co., Ltd. and Toyobo America Inc.'s Mem. of P. & A. in Supp. of Their Mot. for Partial Summ. J., Civil Action No. 07–1144, ECF No. 95–1 ("Toyobo's Mot. for Partial Summ. J. [95]") at 1. The government moves for partial summary judgment as to "only those vests which were sold to the United States by the Zylon Vest Manufacturers pursuant to the GSA Multiple Award Schedule[,]" and does not address vests sold through the Bulletproof Vest Grant Partnership Act. United States' Mem. of P. & A. in Supp. of its Mot. for Partial Summ. J. Against Defs. Toyobo Co. Ltd. and Toyobo America, Inc., Civil Action No. 07–1144, ECF No. 97–1 ("Gov't Mot. for Partial Summ. J. [97]") at 2 n.3.

Because a genuine dispute as to material facts exists regarding claims for Zylon vests sold off of the General Service Administration's Multiple Award Schedule after a 2002 contract modification took effect, summary judgment will be denied to both the defendants and the government as to those claims. As the undisputed facts entitle defendants to judgment as a matter of law on the claims for the remaining Zylon vests sold off of that Schedule, summary judgment will be granted to the defendants and denied to the government as to those claims. Because a genuine dispute as to material facts exists regarding whether Toyobo disseminated false information into the market, summary judgment will be denied to both the government and the defendants regarding claims for Zylon vests reimbursed through the Bullet Proof Vest Grant Partnership Act.

BACKGROUND

The background of this case is set forth in United States ex rel. Westrick v. Second Chance Body Armor,Inc., 685 F.Supp.2d 129, 132–33 (D.D.C.2010)

and United States v. Toyobo Co., Ltd., 811 F.Supp.2d 37, 41–44 (D.D.C.2011)

. Briefly, the government alleges that Second Chance and Toyobo contracted for Toyobo to supply Second Chance with the synthetic fiber "Zylon" for use in manufacturing Second Chance bulletproof vests. Second Chance, 685 F.Supp.2d at 132 ; Toyobo , 811 F.Supp.2d at 41–42. These Zylon vests were then sold to, or paid for by, the federal government through two different programs—the General Services Administration contracting program and the Bullet Proof Vest Grant Partnership Act program. The government claims that Toyobo's false and fraudulent actions under each program give rise to liability under the False Claims Act. Specifically, the government claims that the bullet proof vests containing Zylon degraded without warning and did not maintain the same level of bullet-resisting efficacy during the five year warranty period. SeeSecond Chance, 685 F.Supp.2d at 132 ; Toyobo , 811 F.Supp.2d at 41–42. Furthermore, the government claims that Second Chance and Toyobo knew that the vests were unable to maintain their bullet-resisting efficacy during the five year warranty period, did not inform the government or other buyers about this degradation concern, and intentionally placed false information into the market suggesting that there was no degradation concern. SeeSecond Chance, 685 F.Supp.2d at 132 ; Toyobo, 811 F.Supp.2d at 41–43.

A. General Services Administration Contracting Program

The General Services Administration ("GSA"), a federal agency responsible for administering the Multiple Award Schedule ("MAS") contracting program, negotiates contracts for commercial off-the-shelf items and makes those items available to various federal agencies without the need for those agencies to negotiate the prices or terms with contractors for themselves. Defs. Toyobo Co., Ltd. and Toyobo America Inc.'s Statement of Undisputed Material Facts in Supp. of Their Mot. for Partial Summ. J., 04–cv–280, ECF No. 270–2 ("Toyobo's SUMF [270]") at ¶¶ 11–12; Defs. Toyobo Co., Ltd. and Toyobo America, Inc.'s Statement of Undisputed Material Facts in Supp. of Their Mot. for Partial Summ. J., 07–cv–1144, ECF No. 95–2 ("Toyobo's SUMF [95]") at ¶¶ 7–8; United States' Combined Separate Statement of Material Facts (1) in Resp. to the Statement of Undisputed Facts of Defs. Toyobo Co. Ltd. and Toyobo America, Inc. in Supp. of Their Mot. for Partial Summ. J. against the United States; and (2) in Supp. of the United States' Statement of Facts in its Opp'n to Toyobo's Mot. for Partial Summ. J., 04–cv–280, ECF No. 295 ("Govt.'s SUMF [295]") at ¶¶ 11–12. "In 1995, GSA solicited offers to sell body armor on the MAS." Toyobo's SUMF [270] at ¶ 14; Toyobo's SUMF [95] at ¶ 9; Govt.'s SUMF [295] at ¶ 14. Second Chance responded to that solicitation and was subsequently awarded a contract from the GSA. Toyobo's SUMF [270] at ¶¶ 17–19; Govt.'s SUMF [295] at ¶¶ 17–19. "On October 23, 1998, GSA issued a modification of the Second Chance contract to add certain new body armor models to the MAS, one of which, the Ultima, contained Zylon." Toyobo's SUMF [270] at ¶ 20; Govt.'s SUMF [295] at ¶ 20. "On October 25, 1999, GSA issued another modification of the Second Chance contract to add another body armor model, the Tri–Flex, which also contained Zylon." Toyobo's SUMF [270] at ¶ 22; Govt.'s SUMF [295] ¶ 22. Various federal agencies purchased and received Zylon-containing vests from the MAS, and were invoiced directly by Second Chance. Toyobo's SUMF [270] at ¶¶ 28–30; Govt.'s SUMF [295] at ¶¶ 28–30.

Each Zylon vest came with the standard commercial warranty. Toyobo's SUMF [270] at ¶¶ 16–18; Toyobo's SUMF [95] at ¶ 22; Govt.'s SUMF [295] at ¶¶ 16–18. The standard commercial warranty substantively stated that the vests were

warranted to provide protection as stated on the protective panel label and to be free of defects in material and workmanship for the applicable warranty period.... The protection properties of the PANELS are warranted for five (5) years from the date of purchase.... If a defect is found in material or workmanship ... during the applicable warranty period, return the vest directly to SECOND CHANCE. SECOND CHANCE, in its discretion, without cost to you, will repair or replace the defective part or the entire vest.

Toyobo's SUMF [270] ¶ 6; Govt.'s SUMF [295] at ¶ 6. The parties disagree as to the proper interpretation of this warranty and as to which, if any, additional agreements between the parties bear on the current dispute.

B. Bullet...