United States ex rel. Bunk v. Gov't Logistics N.V.

Decision Date15 November 2016
Docket NumberNo. 15-1088,15-1088
Citation842 F.3d 261
Parties United States ex rel. Kurt Bunk and Ray Ammons, Plaintiffs–Appellants, and United States ex rel. Daniel Heuser, Plaintiff, v. Government Logistics N.V., Defendant–Appellee, and Birkart Globistics GmbH & Co. Logistik und Service KG ; The Pasha Group; Andreas Christ Spedition & Mobeltransport GmbH; John Doe, 1–100; American Mopac International, Incorporated; Doe Defendants; Gateways International; Allied Freight Forwarders; North American Van Lines, Inc.; Global Worldwide Incorporated ; Air Land Forwarders Suddath; Covan International; Jet Forwarding Incorporated; Arpin International; Birkart Globistics AG ; Thiel Logistik AG ; Viktoria Schafer Internationale Spedition GmbH ; Viktoria–SKS Kurt Schafer Internationale GmbH & Co., KG; Gillen & Garcon GmbH & Co. Internationale Spedition KG ; Gillen & Garcon GmbH & Co. KG; M.T.S. Holding & Verwaltungs GmbH, d/b/a M.T.S. Gruppe; Andreas Christ GmbH; Michael Villinger; Erwin Weyand; Nicodemus Gosselin; Dieter Schmekel; Jurgen Graf ; Horst Baur; Kurt Schafer ; Martina Schafer; Birkart Vermogensverwaltung GmbH; Logwin Air + Ocean Deutschland GmbH ; Logwin Holding Deutschland GmbH ; Missy Donnelly; George Pasha; American Shipping Incorporated; Cartwright International Van Lines Incorporated ; Jim Hahn; International Shippers Association Incorporated; Gosselin Worldwide Moving, N.V.; Gosselin Group N.V.; Marc Smet ; Gosselin World Wide Moving, N.V. ; Viktoria International Spedition; Jeffrey Carll Coffman; ITO Mobel Transport GmbH, Defendants. United States Attorney General, Amicus Curiae.
CourtU.S. Court of Appeals — Fourth Circuit

ARGUED: John Edgar Petite, Greensfelder, Hemker & Gale, PC, St. Louis, Missouri, for Appellant. William Francis Coffield, IV, Laina Catherine Wilk Lopez, Berliner Corcoran & Rowe LLP, Washington, D.C., for Appellee. Michael Shih, United States Department of Justice, Washington, D.C., for Amicus United States of America. ON BRIEF: Ann Lugbill, Mark Hanna, Lauren Hoff–Downing, Murphy Anderson PLLC, Washington, D.C.; Richard E. Greenberg, Greensfelder, Hemker & Gale, PC, St. Louis, Missouri, for Appellant. Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Michael S. Raab, Civil Division, United States Department of Justice, Washington, D.C.; Dana J. Boente, United States Attorney, Office of the United States Attorney, Alexandria, Virginia, for Amicus United States of America.

Before KING, SHEDD, and THACKER, Circuit Judges.

Vacated and remanded by published opinion. Judge King wrote the opinion, in which Judge Shedd and Judge Thacker joined.

KING, Circuit Judge:

We are for the third time entertaining this complex matter, which began more than fifteen years ago as a bid-rigging scheme conjured up by shipping businesses to defraud the United States. In 2004, Gosselin Group N.V. (then known as Gosselin World Wide Moving, N.V.) and another business entity entered conditional guilty pleas in the Eastern District of Virginia to a pair of criminal conspiracy offenses. The district court thereafter dismissed one of those charges, and cross-appeals ensued. We determined in those appeals that the defendants were criminally liable for both conspiracies and remanded for resentencing. SeeUnited States v. Gosselin World Wide Moving, N.V., 411 F.3d 502 (4th Cir. 2005).

More recently, in the qui tam proceedings at issue herein, a jury returned a verdict in 2011 against three defendants that we collectively refer to as the "Gosselin defendants": Gosselin Group; Gosselin Worldwide Moving, N.V.; and Marc Smet, Gosselin Group's Chief Executive Officer and former Managing Director. Appeals were pursued by the United States and by relators Kurt Bunk and Ray Ammons (together, the "Relators"), who contested the district court's refusal to award civil penalties. We granted relief, directing the court to enter judgment on a claim pursued by Bunk in the sum of $24,000,000—to be levied against the Gosselin defendants—and remanding for further proceedings. SeeUnited States ex rel. Bunk v. Gosselin World Wide Moving, N.V., 741 F.3d 390 (4th Cir. 2013).

On remand, the district court was called upon to resolve the issue of whether Bunk was entitled to recover his judgment from another defendant, Government Logistics N.V. ("GovLog"), which was alleged to be a successor corporation to Gosselin Group. In disposing of the successor corporation liability issue, the court ruled against Bunk on two bases. SeeUnited States ex rel. Bunk v. Birkart Globistics GmbH & Co., No. 1:02–cv–01168, 2014 WL 7343204 (E.D. Va. Dec. 23, 2014), ECF No. 1362 (the " Decision"). First, the court decided that the successor corporation liability claims against GovLog should be dismissed because they had been inadequately pleaded. In the alternative, the Decision rejected those claims on the merits and awarded summary judgment, ruling that there was insufficient evidence to justify a trial. The Relators have appealed from the judgment, and as explained below, we are satisfied that the court erred. We therefore vacate and remand.

I.

Two government programs that facilitate the shipment of household goods belonging to military and domestic personnel to and from Europe have been at the center of this litigation.1 The first, known as the International Through Government Bill of Lading ("ITGBL") program, involves the solicitation of bids by the Department of Defense (the "DOD") from domestic freight forwarders who then subcontract their foreign operations to overseas businesses. The second, known as the Direct Procurement Method ("DPM") program, involves the solicitation of bids by the DOD directly from foreign businesses. Both programs were, as relevant to the bid-rigging conspiracy, administered by the Army's Military Transport Management Command (the "MTMC").2

Beginning in about 2001, the Gosselin defendants and at least one other entity, The Pasha Group, agreed to and implemented the bid-rigging scheme. Their scheme substantially increased the prices that the DOD paid to the culprits for shipping household goods belonging to military and diplomatic personnel to and from Europe under the ITGBL and DPM programs. As a result of what we characterized in the 2005 criminal appeals as "naked bid rigging," the DOD paid millions of dollars more to the conspirators than it should have paid. SeeGosselin, 411 F.3d at 508. The bid-rigging scheme did not go undetected, as it resulted in these qui tam proceedings and the successful criminal prosecutions.

A.

In 2002, the Relators instituted these qui tam proceedings under the False Claims Act (the "FCA").3 The Relators operated businesses that provided to the DOD services much like those performed by Gosselin Group and Pasha. Bunk filed his qui tam action in the Eastern District of Virginia on August 2, 2002, alleging an FCA claim related to the DPM program (the "DPM claim").4 Ammons filed his qui tam action in the Eastern District of Missouri on September 17, 2002, alleging FCA claims related to the ITGBL program (the "ITGBL claim") and to Gosselin Group's exertion of pressure on Covan International (the "Covan claim") and Cartwright International Van Lines (the "Cartwright claim") to submit higher ITGBL bids. Both qui tam actions were commenced under seal, pursuant to 31 U.S.C. § 3730, and remained sealed and pending in the district courts during the criminal proceedings.

B.

On November 13, 2003, a grand jury in the Eastern District of Virginia returned a two-count indictment against Gosselin Group and Smet, charging them with conspiracy to restrain trade, in violation of 15 U.S.C. § 1, and conspiracy to defraud the United States, in contravention of 18 U.S.C. § 371. Describing the manner and means of the conspiracy to restrain trade, the two-count indictment specified that Gosselin Group, Smet, and their co-conspirators "participat[ed] in meetings and conversations to discuss and agree upon a strategy to eliminate the prime rates" in specific transportation routes, or channels, "from Germany to the United States for the transportation of military household goods." See Indictment, United States v. Gosselin World Wide Moving, N.V., No. 1:03–cr–00551, at ¶ 16 (E.D. Va. Nov. 13, 2003), ECF No. 19. The indictment further alleged that Gosselin Group and Smet engaged in "written exchanges and other communications" to ensure other freight forwarders would not match the rates set by "a certain co-conspirator U.S. freight forwarder" and would cancel any rates lower than the second highest rate in channels from Germany to the United States. Id. The indictment charged the same with respect to the conspiracy to defraud the United States. Id.¶ 25 (alleging that Gosselin Group and Smet "discussed and agreed upon a strategy to eliminate the prime rates"); see also id.¶¶ 26–27.

In February 2004, Gosselin Group and Pasha agreed to be charged and prosecuted by criminal information in the Eastern District of Virginia for those same conspiracy offenses. By plea agreements with the United States Attorney, Gosselin Group and Pasha also agreed to plead guilty to the two charges alleged in the information. Smet, who signed Gosselin Group's plea agreement individually and on behalf of Gosselin Group, thereby escaped further criminal prosecution. That is, as a result of Gosselin Group's plea agreement being consummated, the prosecutors dismissed the indictment theretofore lodged against Gosselin Group and Smet.

Pursuant to its plea agreement, Gosselin Group admitted that, at Smet's urging, Gosselin Group and Pasha had conspired to undermine the ITGBL program's competitive bidding process by preventing "me-too bids," or matching bids, from converging to the prime through rate (i.e., the low bid for a particular route).5 To accomplish that objective in particular channels, "[i]n early January 2002, [Smet] agreed in writing to pay twelve of the largest German moving agents a specified fee," and "[t]he German agents ......

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