Court Dismisses One FCA Claim, Preserves Another

(CN) - Two technology firms that allegedly sold foreign computer parts to the federal government, a violation of the False Claims Act, were dealt very different fates by the D.C. Circuit. One firm saw the complaint against it dismissed. The other will have to battle on.

Relator Brady Folliard filed the action in 2007, claiming eight "information technology providers" sold laptop computers and parts from non-designated countries under government contracts, in violation of the Trade Agreements Act.

The companies swiftly filed motions to dismiss the suit, six of which were granted.

The remaining defendants, Government Acquisitions Inc. and Govplace, moved for summary judgment in November and December 2011, after the federal government elected not to intervene and unsealed the case.

The tech companies supply products to federal government agencies under separate general service contracts, which bar the government from purchasing end-products from non-designated countries.

In the action, Folliard claimed Government Acquisitions "knowingly sold" six unspecified computers or parts that originated in non-designated countries, and said Govplace "knowingly sold" 10 like products.

In an unsigned memorandum opinion, the court sternly rebuked Folliard for filing an "inordinate" amount of "irrelevant" paperwork, and granted Government Acquisitions' motion to dismiss.

The court, however, denied Govplace's motion in part based on specific facts offered by Folliard.

According to the ruling: "A proper FCA claim is composed of three elements: (1) the defendant presented a claim for payment or approval to the government, (2) the claim was 'false or fraudulent,' and (3) the defendant acted knowing that the claim was false. The defendant must provide at least some evidence about each element to survive summary judgment," the ruling states.

Folliard claimed Government Acquisitions sold laptop computers with parts - specifically, product number GH715AW - built in China. Government Acquisitions said it never sold the product.

"GAI [Government Acquisitions] argues that while it did sell computers, it didn't sell the computers plaintiff alleges it did," the ruling states.

The court said Folliard failed to offer specific facts against Government Acquisitions and assumed, "that the 'shear magnitude' of sales will present some sort of factual question.

"Despite the Court's clear directive limiting the focus of this litigation, plaintiff filed an inordinate amount of irrelevant, unresponsive paperwork," the ruling continues.

"The Court will not tolerate litigants completely disregarding its orders. They are not suggestions," the opinion said.

"Based on the record before it, the Court finds that plaintiff has provided no evidence of a genuine dispute about the sale of product number GH715AW," the court added.

Ruling on Govplace's alleged missteps, however, the court said Folliard may conduct focused discovery on five products - named only as Q4503A, 416577-B21, AG052A, Q5403A, and Q5983A - which the company purchased from Ingram Micro.

Folliard specified "what information he seeks and its relevance to the litigation," the court said, leading to the decision.

"GP does not refute that it sold the products, and it does not refute that they were from non-TAA compliant countries. Therefore, the focus moves to scienter. The Court finds summary judgment to be premature regarding these five products until plaintiff has an adequate opportunity to conduct focused discovery on GP's [Govplace] reliance on Ingram Micro," the ruling states.

Folliard's glaring misstep against Govplace: that he claimed the company submitted "false or fraudulent" claims for payment and reimbursement from the federal government, dated after May 20, 2009, the court ruled.

All alleged transactions occurred prior to May 20, 2009, the court noted, invalidating Folliard's remaining claims.

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