United States District Court, S.D. Texas, Houston Division
OPINION AND ORDER
MELINDA HARMON, UNITED STATES DISTRICT JUDGE.
before the Court in the above-referenced qui tam
cause is Defendant Canon USA, Inc.'s
(“Canon”) Motion to Dismiss Relator's Amended
Complaint and/or Motion for Summary Judgment, Doc. 9,
Canon's Memorandum of Law in Support, Doc. 10, and
Relator's, Stephanie Schweizer (“Schweizer”),
Response, Doc. 12. Also pending before the Court is
Schweizer's Motion for Leave to File Second Amended
Complaint (“SAC”), Doc. 13, Canon's Response,
Doc. 15, and Schweizer's Reply, Doc. 16. Having
considered the Motions, the facts in the record, and the
applicable law, the Court concludes that Schweizer's
Motion for Leave to File its SAC should be granted,
Canon's Motion to Dismiss should be denied as moot, and
that Canon's subsequent Motion to Dismiss will be
considered against the SAC, in a subsequent opinion, without
the necessity of additional briefing.
as alleged in Schweizer's First Amended Complaint
(“FAC”), filed on November 15, 2016, Canon, Inc.
purchased Océ North America, Inc.
(“Océ”), novating certain General Services
Administration (“GSA”) contracts and acquiring
additional GSA contracts to sell “printers, copiers,
and related services to the United States Government.”
Doc. 5 at 6-7. Prior to the purchase, Schweizer monitored
Océ's compliance with the GSA contracts, noticed
that the Government was “overpaying for copiers and
services, ” when it was supposed to get “the
discounted price.” Id. at 3-4. In a prior
qui tam action, the Government reached a settlement.
Id. Since the settlement, however, Schweizer alleges
that Canon “has never done anything to rectify the
problem, ” and “contracts continue as
before.” Id. at 5. Additionally, Schweizer
alleges that Canon Business Solutions, Inc., a wholly owned
subsidiary of Canon, Inc., sells “printing
products” to the Government that were
“manufactured in non-designated countries.”
Id. Thus, Schweizer asserts claims under the False
Claims Act, 31 U.S.C. §3729(a)(1)-(3), for failure to
offer the Government the “best value or price” as
required under the contract, and for delivering products
manufactured in non-designated countries in violation of the
“Trade Agreement Act, ” presumably 19 U.S.C.
§ 2101, et seq. Id. at 13-14. In sum, Schweizer
asserts that Canon undertook these pre-existing or newly
acquired contracts, knew about Océ's violations
from the prior lawsuit and settlement, but continued to
engage in the same kind of fraud.
January 27, 2017, Canon filed its Motion to Dismiss, alleging
that Schweizer's claims were barred as “a
cut-and-paste repeat of the 2006 complaint which relies on
the same allegations and legal theories”; consists
solely of “conclusory allegations” under Rules
12(b)(6) and 9(b); and does not establish that “venue
is proper in this district.” Doc. 9 at 3-4. And on
February 17, 2017, Schweizer filed her Response, Doc. 12, and
her Motion for Leave to File her Second Amended Complaint.
Motion to Amend
grant or denial of an opportunity to amend is within the
discretion of the District Court.” Foman v.
Davis, 371 U.S. 178, 182 (1962). “Ordinarily, Rule
15(a) of the Federal Rules of Civil Procedure governs the
amendment of pleadings.” Filgueira v. U.S. Bank
Nat. Ass'n, 734 F.3d 420, 422 (5th Cir. 2013) (per
curiam) (unpublished). Rule 15(a) allows a party to amend its
pleadings once as a matter of course within 21 days of
serving it or, 21 days after service of a motion under Rule
12(b). Fed.R.Civ.P. 15(a)(1).
Schweizer filed her Motion for Leave within 21 days of
Canon's Motion to Dismiss. Because the rule explicitly
allows a timely amendment to a 12(b) motion, the Court holds
that Schweizer's filing is timely and should be granted.
Accordingly, the Court hereby GRANTS
Schweizer's Motion for Leave to File her Second Amended
Complaint, along with its referenced attachments. Doc. 13.
Motion to Dismiss
her SAC, Schweizer provides additional venue and background
facts, and a slightly different statutory basis for her
claims. As to venue, Schweizer alleges the addresses of all
Defendants in support of venue. Doc. 13-1 at 1-2. Schweizer
next alleges the details of her background, GSA contract
requirements, later modifications of those contracts, and the
origin of Canon's component parts. Id. at 3-7.
Schweizer re-asserts the Pricing and Trade Agreement Fraud,
but provides more detailed examples, distinguished the
alleged Canon's management fraud from Océ's
rogue sales personnel fraud, and asserts these frauds as
violations of 31 U.S.C. §3729(a)(1)(A)-(C). Id.
Texas federal courts have held that a pending Rule 12(b)(6)
becomes moot when a plaintiff files an amended complaint that
makes substantive changes, such as “new causes of
action” and “more specific facts.”
Maxim Integrated Products, Inc. v. State Farm Mut. Auto.
Ins. Co., No. SA-14-CV-1030-XR, 2015 WL 10990119, at *1
(W.D. Tex. Feb. 12, 2015) (collecting cases). But if
deficiencies persist from one complaint to another, then the
motion to dismiss should not be denied as moot.
People's Choice Home Loan, Inc. v. Mora, No.
3:06-CV-1709-G, 2007 WL 120006, at *2 (N.D. Tex. Jan. 18,
2007) (citing King v. Dogan, 31 F.3d 344, 346 (5th
Cir. 1994)). In such a situation, the court should instead
apply the motion to dismiss to the amended complaint.
Id. (citing Holmes v. Nat'l Football
League, 939 F.Supp. 517, 522 n.7 (N.D. Tex. 1996);
Sunset Fin. Resources, Inc. v. Redevelopment Grp. V,
LLC, 417 F.Supp.2d 632, 642 n.15 (D.N.J. 2006)).
the SAC adds additional facts. The SAC shifts the statutory
basis from 31 U.S.C. §3729(a)(1)-(3) to
§3729(a)(1)(A)-(C), which is not a significant shift.
The SAC adds party addresses, contract and manufacturing
details, and more specific examples of alleged statutory
violations. Thus, the SAC moots the Canon's initial
Motion to Dismiss. Compare Maxim Integrated
Products, 2015 WL 10990119, at *1 with Mora,
2007 WL 120006, at *2. Canon should be allowed to file a
Motion to Dismiss in response to the SAC. Fed.R.Civ.P. 12.
Consolidated Reply In Support of Motion to Dismiss asserts
that the SAC does not cure all of the issues raised in
Cannon's Motion to Dismiss. Doc. 15. Having granted
the filing of the SAC, the Court will consider this response
as a new Motion to Dismiss as against the SAC. And the Court
will also consider Schweizer's Reply to that Motion
because it directly addresses all points raised in the
Motion. Doc. 16. Accordingly, the Court hereby
that Packer Plus's Motion to Dismiss, Doc. 9 is
granted the filing of Schweizer's SAC, the Court will
also consider Canon's Motion to Dismiss, Doc. 15, against
it, once Schweizer has filed the attachments ...