United States ex rel Morsell v. Nortonlifelock, Inc.
| Decision Date | 19 January 2023 |
| Docket Number | Civil Action 12-800 (RC) |
| Parties | UNITED STATES OF AMERICA ex rel. LORI MORSELL, et al., Plaintiffs, v. NORTONLIFELOCK, INC. f/k/a SYMANTEC CORPORATION, Defendant. |
| Court | U.S. District Court — District of Columbia |
FINDINGS OF FACT AND CONCLUSIONS OF LAW RE DOC. NOS 298, 299, 348, 354
Relator Lori Morsell brought this qui tam action in 2012 alleging that her employer, Symantec,[1] had violated the False Claims Act in connection with General Services Administration (“GSA”) Schedule contract. At the heart of this case is Symantec's practice, like many large companies of offering non-standard discounts above and beyond its standard list prices in order to achieve more sales, and whether that was appropriately disclosed to GSA during the negotiations and the life of the contract. This case has been exhaustively litigated since then, and eventually culminated in a four-week bench trial in February and March 2022. Following the trial, the parties submitted proposed findings of fact and conclusions of law, as well as subsequent briefs in opposition. The Court now makes its Findings of Fact and Conclusions of Law, as required by Rule 52(a)(1) of the Federal Rules of Civil Procedure. For the reasons discussed in detail below, the Court will enter partial judgment in favor of the United States in the amount of $1,299,950.16 in damages and penalties, and partial judgment to California in the amount of $379,500 in penalties.
For clarity in following the Court's specific findings of fact and conclusions of law, the Court first provides a brief overview of the facts underlying this case and a summary of the case's procedural history and current posture.
Symantec began negotiations with the GSA in 2006 for a GSA Multiple Award Schedule (“MAS”) contract, which is a pre-approved pricelist from which federal agencies can purchase commercial goods without independently analyzing whether the prices are fair and reasonable. Like all government contracts, MAS contracts are subject to extensive rules and regulations set by the government, including many standard clauses. At the same time, each MAS contract is the product of a bilateral negotiation between the contractor and GSA that sets its own discounts and key terms.
The negotiators of the particular contract at issue here were Gwendolyn Dixon, the contracting officer for GSA, and Kimberly Bradbury, a Symantec employee. During that negotiation, Bradbury provided Dixon with large amounts of information, including information about Symantec's sales and discounting practices. As the Court will explain in more detail, not all of that information was accurate and complete, as it is required to be by GSA's standard contracting terms. The information did, however, make clear that GSA was not being offered Symantec's best price in all circumstances and that Symantec offered non-standard discounts to commercial customers for a variety of reasons.
After negotiations, the parties eventually signed the final contract on January 25, 2007. Among other things, the final contract specified that Symantec's “basis of award customer,” to whom GSA's discounts were tied, was Symantec's entire “commercial class of customers.” The final agreement also incorporated a chart of Symantec's various discounts from which the parties could calculate the “price/discount relationship” and thereby ensure that GSA's relationship to the basis of award customer remained stable. The final version also specified that GSA was only receiving Symantec's best price “under similar terms and conditions.”
During the life of the contract, Symantec continued offering non-standard discounts to commercial customers, often exceeding 90% even on relatively small sales. Symantec did not report those discounts to GSA or offer it a corresponding price reduction, and in fact routinely certified that its sales practices had not changed. Problems started to become apparent around the time that GSA initiated a pre-award audit in connection with the contract's renewal. After Morsell, who had by that time joined Symantec, eventually raised concerns internally about compliance with the GSA contract, Symantec decided to cancel its contract altogether. A post-award audit was initiated but eventually gave way to the present litigation.
This case began as a qui tam action brought by Lori Morsell, a Symantec employee, who came to believe that the company had violated certain contractual obligations to the United States. She filed an action as Relator against Symantec under the False Claims Act (“FCA”) in May 2012. See Compl., ECF No. 1. The United States intervened, as did the States of California and Florida, and Morsell elected to assert claims on behalf of New York State. See United States' Notice of Election to Intervene, ECF No. 21; Notice of the People of the State of California of Election to Intervene, ECF No. 28; Notice of Election to Intervene by State of Florida, ECF No. 29; Notification that Relator Intends to Proceed with Action on Behalf of New York State, ECF No. 40. The United States, Florida, California, and Morsell on behalf of New York filed an Omnibus Complaint asserting all their collective claims in October 2014. See United States', California's, Florida's, & Relator's Omnibus & Restated Compl. in Intervention, ECF No. 41.
Symantec then moved to dismiss, and the United States moved for partial summary judgment. See ECF Nos. 46, 54. The Court issued a combined Memorandum Opinion addressing both motions, which denied the Government's motion and granted Symantec's motion in part while also denying it in part. United States ex rel. Morsell v. Symantec Corp., 130 F.Supp.3d 106, 110 (D.D.C. 2015) (“MTD Mem. Op.”). The Court found that California, Florida, and Morsell had failed to state claims, but granted them leave to amend their complaints. Id. at 126. They did so, and the operative Omnibus Complaint includes nine counts brought by the United States, two each from California and Florida, and three from Morsell on behalf of New York. See United States', California's, Florida's, and Relator's First Am. Omnibus & Restated Compl. & Compl. in Intervention (“Omnibus Compl.”), ECF No. 70. Discovery was extensive, spanning from November 2015 to March 2019, with multiple extensions. See Scheduling Order, ECF No. 75; Min. Order of Oct. 31, 2018 (granting final extension of expert discovery).
At the close of discovery, Symantec moved for summary judgment and the United States moved for partial summary judgment, and the Court granted in part and denied in part both motions. See United States ex rel. Morsell v. Symantec Corp., 471 F.Supp.3d 257, 267 (D.D.C. 2020), reconsideration denied sub nom. United States ex rel. Morsell v. NortonLifeLock, Inc., 560 F.Supp.3d 32 (D.D.C. 2021) (“MSJ Mem. Op.”). Specifically, the Court determined that the United States was entitled to summary judgment on some of the discrete elements of its breach of contract and negligent misrepresentation claims, namely the existence of a valid contract and a duty on the part of Symantec with respect to the Commercial Sales Practices Disclosures and the Modifications Clause, but it determined that material issues of fact remained with respect to the remaining breach-of-contract elements and the remaining claims. Id. at 281- 95, 297, 299. The Court also granted partial summary judgment to Symantec on the claims of unjust enrichment and payment by mistake between Symantec and the United States because the existence of a valid contract between those parties precluded those quasi-contract claims, but it allowed those counts to proceed with respect to sales between the United States and the resellers. Id. at 309.[2]
On the same day the Court issued its summary judgment opinion, it issued a separate opinion addressing two cross-motions seeking to exclude certain experts. United States ex rel. Morsell v. Symantec Corp., No. 12-cv-800, 2020 WL 1508904, at *1 (D.D.C. Mar. 30, 2020) (“Expert Mem. Op.”). Relevant here, the Court excluded the testimony of one of the United States' proposed experts, Charles Harris, who would have testified that he evaluated a dataset of transactions and made a determination about whether or not the transaction triggered the price reduction clause as he understood it. Id. at *6.
The Court agreed with Norton that the proposed testimony crossed the line into improper legal conclusions and risked confusing or misleading the jury. Id. at *6-7. In so holding, it summarized its reasoning:
It appears that Harris was essentially a middleman between Dr. Holt and Dr. Gulley, and that he simply agreed with counsel that the transactions Dr. Holt had identified looked like the kinds of transactions he would have flagged. These transactions were passed along to Dr. Gulley with Harris's imprimatur. Rather than having Harris testify to liability, and possibly confuse a jury with his purported expertise, the Government could instead show Dr. Gulley the transactions identified by Dr. Holt and ask him to assume liability. This would avoid confusing the legal question of liability with the factual questions to which experts may properly testify. The Government has explained that Harris's “opinions are being proffered in connection with a complex damages analysis,” but it has not argued that the damages calculation is impossible without his input. Because, as the Court understands it, there is an alternative means of introducing testimony concerning damages-though it may require an update to Dr. Gulley's report-the exclusion of Dr. Harris will not prejudice the government by seriously...
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