### UNITED STATES DISTRICT COURT FORTHE DISTRICT OFCOLUMBIA UNITED STATES OFAMERICA, ex 

### reI. BRADY FOLLIARD, ) ) ) 

### Plaintiff,



### v. ) ) ) ) 

### Civil Case No. 07-1969 (RJL)

HEWLETT-PACKARD COMPANY, ) ) 

### Defendant. 

# ttMEMORANDUM OPINION (January

# -L/-, 2011) [#23] Plaintiff-realtor Brady Folliard ("realtor" or "Folliard")brings this qui tam action under the False Claims Act ("FCA"), 31 U.S.C. §§ 3729 etseq., on behalfofthe United States, againstHewlett-Packard Company ("defendant" or "HP"). Now before the Court is the defendant's Motion to Dismiss. After careful review ofthe pleadings, the relevant law, and the entire record, the defendant's motion is GRANTED. BACKGROUND DefendantHP is an information and technology products and services company that sells tothe United States government underthe General Services Administration ("GSA") Multiple Awards Schedule and under the Solutions for Enterprise-Wide Procurement ("SEWP") contract managed by the National Aeronautics and Space Administration ("NASA"). First Amed. Comp!. ("Comp!.")**~12.** 

### In addition to NASA, otherfederal agencies can purchase information technology products from HP underthe NASA SEWP contract. Id.**~13.** 

### Indeed, since 1992, HP had sold information technology

### products and services under the NASA SEWP contract to NASA as well as other federal agencies.) 

### ld. NASA SEWP contracts are covered by the Trade Agreements Act, which generally prohibits the United States government from purchasingproducts that originated in non-designated countries, except in certain circumstances. 

### ld.**~~16,** 

### 22. Vendors may list products from non-designated countries ifthe country oforigin is truthfully identified. 

### ld.**~22.** 

### This allows individual contracting offers to review and apply the limited circumstances when purchase ofaproduct from a non-designated country is permitted. 

### ld. China is anon-designated country. 

### ld.**~18.** 

### During the relevant time period, Folliard worked as a Strategic Account Executive at Insight Public Sector ("IPS"), selling information technology products and services to federal government agencies across the country. 

### ld.**~11.** 

### IPS is known in the industry as

a Value Added Reseller, or VAR, because it is abusiness that combines, configures, and sells computerproducts but does not manufacture any product itself. 

### ld.**~~24-25.** 

### IPS is

an authorized selling agent for HP on the SEWP contract. 

### ld.**~29.** 

### As part ofhis employment with IPS, realtor became familiar with the products HP sold under the SEWP contract, which are listed on the NASA SEWP webpage, along with each

)Specifically, from July 30, 2001 until April 20, 2007, HP sold information technology products and services to federal agencies under ContractNo. NAS5-01139. Compl.**~13.** 

### On May 1,2007, HP executed a secondNASA SEWP contract, Contract No. NNG07DAI7B, which is valid through April 30, 2014. 

### ld. Realtor estimates that between 1992 and 2007, HP sold approximately $620 million in products and services to the United States government, and that over the last 10 years, HP has provided approximately $1 billion in goods and services to government customers in the District of Columbia. 

### ld. 2product's country oforigin. 

### Id.**~~29-30.** In 2007, realtor identified 38 HP products that

are incorrectly identified as originating in a designated country; accordingto realtor, theseproducts are, in fact, from China, a non-designated country. 

### Id.**~~31-33.** According to Folliard, each time HP listed these products onthe NASA SEWP website, which it did in 2007, 2008, and 2009, HP knowingly made a material false statement, causing, in turn, submission ofa false claim eachtime one ofthe misidentifiedproducts was purchased. 

### Id.**~34.** In his complaint, realtor claims that "[i]t is highly likely that some or all ofthese products were purchased by the Government, especially those with the 'B-21' ending [in the product ID number], because, based upon Plaintiffs experience, products with the suffix 'B-21' are commonly used andpurchased in Government Information Technology applications." 

### Id.**~40.** As such, Folliard contends that HP has violated 31 U.S.C. §§ 3729(a)(l) and (a)(2) (2008) ofthe FCA, as well as 31 U.S.C. §§ 3729(a)(l)(A) and (a)(l)(8) (West 2010) ofthe FCA, as amended by the Fraud Enforcement Recovery Act of2009 ("FERA"). Folliard filed his initial complaint under seal on November 1,2007. On December 9,2009, havingnotyet heard from the government, the casewas unsealed. On February 3,2010, the United States filed notice that it did not intendto intervene in this matter. That same day, realtor filed his FirstAmended Complaint, which is the subject of defendant's Motion to Dismiss. ANALYSIS A courtmay dismiss all orpart ofa complaint that "fail[s] to state a claim upon whichreliefcan be granted." Fed. R. Civ. P. 12(b)(6). In considering a motion to 3

### dismiss, the court may only consider "the facts alleged in the complaint, any documents either attached to or incorporated in the complaint and matters ofwhich [the court] may takejudicial notice." E.E.

### 0.C. v. 

### St. FrancisXavier ParochialSch., 117 F.3d 621, 624 (D.C. Cir. 1997). To survive a motion to dismiss made pursuantto Rule 12(b)(6), a complaint must "plead[] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." 

### Ashcroftv. 

### Iqbal, 129 S.Ct. 1937, 1949 (2009). In evaluating a Rule 12(b)(6) motion, the Court construes the complaint "in favor ofthe plaintiff, who must be granted the benefit ofall inferences that

canbe derived from the facts alleged." 

### Schuler v. 

### UnitedStates, 617 F.2d 605, 608 (D.C. Cir. 1979) (internal quotation marks omitted). However, factual allegations, even though assumed to be true, must still "be enough to raise aright to reliefabove the speculative level." 

### BellAtlantic Corp. v. 

### Twombly, 550 U.S. 544, 555 (2007). Moreover, the Court "neednot accept inferences drawn by plaintiffI] ifsuch inferences are unsupported by the facts set out in the complaint. Nor must the court accept legal conclusions cast in the form offactual allegations." 

### Kowal v. 

### MCICommc 'ns Corp., 16 F.3d 1271, 1276 (D.C. Cir.1994). A plaintiffalleging fraud, such as one suingunder the FCA, must also "state with particularity the circumstances constituting fraud[.]" Fed. R. Civ. P. 9(b); 

### UnitedStates

ex reI. Williams v. 

### Martin-BakerAircraft Co., 389 F.3d 1251, 1256 (D.C. Cir. 2004) (citing 

### UnitedStates ex reI. Totten v. 

### Bombardier Corp., 286 F.3d 542, 551-52 (D.C. Cir. 2002)). The particularity requirement allows the defendant to "defend against the charge and notjustdeny that they have done anything wrong." 

### Williams, 389 F.3d at 1259 4(quotations omitted). Accordingly, to survive a motion to dismiss, a complaintpleading fraud must "state the time, place and content ofthe false misrepresentations, the fact misrepresented and what was retained or given up as a consequence ofthe fraud

... [and must] identify individuals allegedly involved in the fraud." Id. at 1256 (internal quotations and citations omitted). HP argues that the complaintmustbe dismissed in its entirety because it fails to identify: (1) any false claims submitted to the United States by HP; (2) the date ofany such claims; (3) the content ofany such claims; (4) the products for which the government was actually billed; (5) any individuals involved in the alleged fraud; and (6) the length oftime between the alleged fraudulent practice and submission ofclaim for payment.2 I agree. Folliard lists four counts in his complaint, but in essence claims two FCA violations. Because the FCA was amended in 2009 by FERA, Folliard includes two counts for each statutory violation, alleging one each under the current statute as well as its priorversion. 3 As another member ofthis Courthas recently noted, however, the FERA changes to § 3729(a)(1) and (a)(2) are not material to a presentment claim to the

2Folliard urges the Courtto takejudicial notice ofthe 54 exhibits attached to his opposition to HP's motion. However, as the facts included in the exhibits and their accuracy is subjectto reasonable dispute, the Court declines to do so in this case and does not considerthe exhibits. 3 The FCAwas amendedby FERA on May 20,2009. Pub. L. No. 111-21 §4(a), 123 Stat. 1617, 1621 (2009). All ofthe amendments to the FCAtook effect immediately except for subsection 3729(a)(1)(B), which took effect on June 7, 2008. Specifically, Folliard claims thatHP violated 31 U.S.C. § 3729(a)(1)priorto May 20, 2009, and the amended version, 31 U.S.C. § 3729(a)(1)(A), afterMay 20, 2009; and that HP violated 31 U.S.C. 

### § 3729(a)(2) priorto June 7,2008 and the amended version, § 3729(a)(1)(B) after June 7, 2008. 

### 5United States government. 

### UnitedStates ex rel. Folliardv. 

### CDWTechnology Servs., Inc., 722 F. Supp. 2d. 20, 25-26 (D.D.C. 2010) (Huvelle, J.).4 

### A. Counts I and II Count I and Count II ofthe complaint allege submission to the government of false claims for payment-Count I as a violation ofthe pre-FERA FCA subsection (a)(l), and Count II as a violation ofthe post-FERA FCA subsection (a)(l)(A). Because that section ofthe FCA "attaches liability, not to underlying fraudulent activity, butto the claim for payment," a realtor "must set forth an adequate factual basis for his allegations thatthe [defendant] submitted false claims

... including a more detailed description of the specific falsehoods that are the basis for his suit"to satisfy the heightened pleading requirements. 

### Totten, 286 F.3d at 551-52; 31 U.S.c. § 3729 (a)(l) and 31 U.S.C. 

### § 3729(a)(l)(A) (imposing liability on a personwho "knowinglypresents, or causes to be presented" a false or fraudulent claim); 

### see alsoAllisonEngine Co. v. 

### UnitedStates ex reI. Sanders, 553 U.S. 662, 671 (2009) (contrasting § 3729(a)(2), which does not require submission ofthe false claim to the government, with § 3729(a)(l), which does). In this case, as HP points out, realtor does not identify a single false claim submitted to the government for payment. While Folliard has 

### allegedthat HP "knowingly submitted, and caused to be submitted, false or fraudulent claims for

4 The United States argues that FERA strengthened the FCA such that the amended version ofthe FCA imposes liability for presentment ofa false claim for payment by either the federal government orthe recipient offederal funds. United States Stmt of Interest [Dkt. #28] at 5 (citing S. Rep. No. 111-10 and 10-15 (2009)). In this case, however, that distinction is without consequence as Folliard has only alleged presentment offalse claims to the federal government. 6payment and reimbursementbythe United States Government" and the United States paid these false claims (CompI.**~~44,** 48), he has failed to plead anyfacts supporting this bald recitation ofthe statute. Instead, Folliard merely argues that it is reasonable to infer thatthe governmentpurchased at least some ofthe 38 products whose country oforigin

was misidentified, and that in sellingthose products HP caused a false claim to be submitted. But Folliardhas not even alleged such a sale. To say the least, such speculative inferences are not sufficient to raise Folliard's "rightto reliefabove the speculative level," as required by Twombly. 550 U.S. at 553. Undaunted, Folliard argues that he need notplead actual submission ofa false claim because he alleges "particular details ofa scheme to submit false claims paired with reliable indicia that led to a strong inference that claims were actually submitted." Pl.'s Opp'n 24-25 (quoting UnitedStates ex reI. Grubbs v. Kanneganti, 565 FJd 180, 190 (5th Cir. 2009»; see also Folliard, 722 F. Supp. 2d at 26-27. However, I do not find Folliard's assertions to be reliable indiciathat the claims were actually submitted. Folliard does notpoint to anything otherthan the general popularity ofsome ofthe products on his listto supportthe allegation that a false claim was submittedto the government. There is nothing to indicate that the government did, in fact, purchase any ofthese products from HP. Moreover, even assuming that Folliard had met his burden in pleading the submission ofa false claim, the complaint fails to identify who made the false claims, when those claims were made, and any additional details aboutthe content



### 7ofthe claims, and thus fails to meetthe requirements ofRule 9(b) on these grounds as welI. 5 Accordingly, Counts I and II must be dismissed. 

### B. Counts III and IV Count III and Count IV allege that in misrepresentingthe country oforigin ofits products, HP "knowingly made, used, or causedto be made or used, material false statements to obtain Federal Governmentpaymentfor false or fraudulent claims" in violation ofpre-FERA § 3729(a)(2) and post-FERA § 3729(a)(l)(8). CompI.**~~53,** 58. Like Counts I and II, both Counts III and IV lack the required specificity to satisfy realtor's pleadingburden and must also be dismissed. As to Count III, a violation of§ 3729(a)(2)requires "thatthe defendant made a false record or statement for the purpose ofgetting a 'false or fraudulent claim paid or approved by the Government.'" 

### Allison Engine, 553 U.S. at 671 (quoting 31 U.S.C. § 3729(a)(2) (2008)). Unlike § 3729(a)(l), the defendant neednotpresentthe false claim 

### directly to the governmentto be liable; instead, the defendant must only 

### intendfor the government to pay the claim. 

### ld. at 669. However, toproperly plead a § 3729(a)(2) violation, a plaintiffmust nevertheless allege that a false claim does, in fact, exist, even if it was not submitted directly to the governmentby the defendant. As discussed above,

5 Folliard also argues thathe shouldbe entitled to post-pleading discovery underthe Rule 11(b)(3) exceptionbecause he has illustrated a high likelihood ofuncovering evidence necessary for a ruling in his favor. However, as courts in this and otherjurisdictions have noted, the heightenedpleading standards ofRule 9(b) serve in partto prevent the filing of a complaint as a means ofdiscovering an unknown wrong. 

### See, e.g., Martin v. 

### Arc

## 0/ the Districto/Columbia, 541 F. Supp. 2d 77,83 (D.D.C. 2008); 

### UnitedStates ex ref. Stinson, Lyons, Gerlin & 

### Bustamante, P.A. v. 

### Blue Cross Blue Shielda/Georgia, Inc., 755 F. Supp. 1040, 1052 (S.D. Ga. 1990). Allowing Folliardto proceed to post-pleading discovery under Rule 11(b)(3) would directly contravenethis purpose. 8such allegations are completely absent from the complaint at issue. Moreover, under the heightened Rule 9(b) requirements, the plaintiffmust plead additional details about who made the false statements and whenthey were made, which Folliard has failed to do. Accordingly, Count III must be dismissed. Forthe samereasons, Count IV must also be dismissed. Though the parties dispute whetherthe retroactivity language ofthe FERA amendment applies to claims for payment pending as ofJune 7, 2008, orto court cases pending as ofthat date,6 even assuming that § 3729(a)(l)(B) applies to realtor's claims, Count IV, which alleges the

same violation as Count III, must be dismissed for the same reasons previously discussed

as to Count III. In sum, as the defendantpoints out, Folliard's complaint consists oflittle more than a list of38 HPproducts available for sale onthe NASA SEWP website that mistakenly identity the country oforigin. Folliard does not provide any information as to whether any ofthese products were, in fact, purchasedbythe United States; instead, he speculates that because at least some ofthe products with similar item number suffixes

are "commonlyused andpurchased," it is therefore highly likely that at least some ofthe 6The amendment states, in relevant part, that "subparagraph (B) ofsection 3729(a)( 1) of title 31, United States Code, as added by subsection (a)(1), shall take effect as ifenacted on June 7, 2008, and apply to all 

### claims under the False Claims Act (31 U.S.C. 3729 et seq.) that are pending on or after that date." FERA, Pub. L. No. 111-21, § 4(f)(1), 123 Stat. at 1625 (2009) (emphasis added). Note, however, that members ofthis Court have held on multiple occasions that "claims" refers to claims for payment, and notpending court cases. 

### See, e.g., UnitedStates ex rei. Westrick v. 

### Second Chance BodyArmor, Inc., 709 F. Supp. 2d 52, 55 (D.D.C. 2010) ("The word 'claims,' as it applies in the relevant provision, refers to 'a defendant's request for payment' and notto 'civil actions for FCA violations."') (quotation omitted); 

### UnitedStates ex rei. Bender v. 

### NorthAm. Teiecomm., Inc., 686 F. Supp. 2d 46,49 n.4 (D.D.C. 2010). 

### 9

### products were purchased by the government. See Compi.**~40.** 

### As discussed above, because Folliardhas not-and in all likelihood, cannot-allegethe facts required to state

a claim underRule 9(b), each count ofFolliard's complaintmustbe dismissed.7 

### CONCLUSION For all the foregoing reasons, the defendant's Motion to Dismiss is GRANTED. An appropriate order shall accompany this memorandum opinion.

7 

### This action will be dismissed with prejudice as to all parties. Realtor filed his initial complaint in November 2007, and had overtwo years to conduct additional discovery and amend the current complaint. The United States also had overtwo years to elect to intervene or to prepare a complaint in this matter and declined. Accordingly, this action shall be dismissed with prejudice as to bothrealtor and the United States. 10