United States District Court, S.D. Texas, Houston Division
S. HANEN UNITED STATES DISTRICT JUDGE.
Court has before it the Magistrate Judge's Memorandum and
Recommendation (Doc. No. 73) that the Court grant the Motion
for Summary Judgment filed by Defendant Canon USA, Inc.
(hereinafter "Canon"). (Doc. No. 59). The
Plaintiff, Stephanie Schweizer, filed objections to the
Memorandum and Recommendation, (Doc. No. 75), as did the
Government, acting as an interested party. (Doc. No. 74).
Defendant responded to these objections. (Doc. Nos. 77 &
78). Plaintiff filed a Reply. (Doc. No. 82).
Standard of Review
timely filed within fourteen days of entry of the United
States Magistrate Judge's memorandum and recommendation
must specifically identify the findings and recommendations
for which the party seeks reconsideration. 28 U.S.C. §
636(b)(1)(C); Fed.R.Civ.P. 72(b). Findings by the Magistrate
Judge to which a party specifically objects must be reviewed
de novo under 28 U.S.C. § 636(b)(1)(C).
Consequently, the Court considers these matters de
novo. The district court "may accept, reject, or
modify, in whole or in part, the findings or recommendations
made by the magistrate judge." 28 U.S.C. §
the public disclosure bar precludes a relator from bringing a
qui tarn action is determined in the summary
judgment context. See U.S. ex rel. Colquitt v. Abbott
Labs., 858 F.3d 365, 373 (5th Cir. 2017). Summary
judgment is warranted "if the movant shows that there is
no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law." Fed.R.Civ.P.
56(a). "The movant bears the burden of identifying those
portions of the record it believes demonstrate the absence of
a genuine issue of material fact." Triple Tee Golf,
Inc. v. Nike, Inc., 485 F.3d 253, 261 (5th Cir. 2007)
(citing Celotex Corp. v. Catrett, 477 U.S. 317,
322-25 (1986)). Once a movant submits a properly supported
motion, the burden shifts to the non-movant to show that the
Court should not grant the motion. Celotex, 477 U.S.
at 321-25. The non-movant then must provide specific facts
showing that there is a genuine dispute. Id. at 324;
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 587 (1986). A party opposing a properly
supported motion for summary judgment may not rest on mere
allegations or denials in a pleading, and unsubstantiated
assertions that a fact issue exists will not suffice.
Celotex, 411 U.S. at 324.
Statement of Facts
Magistrate Judge's Memorandum and Recommendation sets out
a detailed factual history. (Doc. No. 73 at 7-10). The Court
includes here only a brief restatement of the pertinent
facts. Plaintiff is a relator bringing this qui tarn
action against Defendant Canon alleging Defendant overcharged
the Government for copiers and services and provided copiers
that were manufactured in non-designated countries.
Previously, in 2006, Plaintiff brought a qui tarn
suit alleging similar conduct by Oce North America, Inc.
(hereinafter "Oce"). That suit (hereinafter
referred to as the "Oce Action") settled in 2012.
In that same year, Defendant Canon acquired Oce. Four years
later, Plaintiff brought this suit, alleging that Defendant
Canon "adopt[ed] and expand[ed] ... the fraudulent
scheme originally launched by Oce." (Doc. No. 75 at 13).
Defendant moved for summary judgment arguing, inter
alia, that Plaintiff could not clear the False Claims
Act's public disclosure bar and/or the government action
Magistrate Judge's Recommendation agrees with Defendant.
In its discussion of the public disclosure bar, the
Recommendation found first that "the allegations of
fraud related to the Government's purchase of copiers and
services were publicly disclosed in the Oce action and the
media reports associated therewith." (Doc. No. 73 at
14). Second, the Magistrate Judge found that "summary
judgment evidence show[ed] that [Plaintiffs current] qui
tarn action is 'based upon' allegations and
transactions disclosed in the Oce action." Id.
at 15. Third, the Magistrate Judge found that "the
summary judgment evidence does not show, or even raise a
genuine issue of material fact on whether, Schweizer was/is
an original source of the information upon which the
allegations in this case are based." Id. at 18.
As the action was based upon allegations and transactions
which were publicly disclosed, and Plaintiff could not show
she was an original source, the Magistrate Judge recommended
that summary judgment be granted in favor of the Defendant.
Public Disclosure Bar
de novo review of the record, the Court agrees with
the Magistrate Judge's conclusion that Plaintiff has not
brought forward evidence raising a genuine dispute exists
over any material facts. Under 31 U.S.C. §
3730(e)(4)(A), a "court shall dismiss an action or claim
under [the False Claims Act], unless opposed by the
government,  if substantially the same allegations or
transactions as alleged in the action or claim were publicly
disclosed .. . unless .. . the person bringing the action is
an original source of the information." The Fifth
Circuit has distilled this language governing the public
disclosure bar into a three-step inquiry asking "1)
whether there has been a 'public disclosure' of
allegations or transactions, 2) whether the qui tarn
action is 'based upon' such publicly disclosed
allegations, and 3) if so, whether the relator is the
'original source' of the information."
Abbott Labs., 858 F.3d at 373. On the first two
steps of the test, defendant bears the initial burden to
"point to documents plausibly containing allegations or
transactions on which [the relator's] complaint is
based." U.S. ex rel. Jamison v. McKesson Corp.,
649 F.3d 322, 327 (5th Cir. 2011). The burden then shifts to
the relator to "produce evidence sufficient to show that
there is a genuine issue of material fact as to whether [her]
action was based on those public disclosures."
Id. The Court discusses the three Abbott
Labs requirements below.
Was There a Public Disclosure of the Alleged Fraud?
Magistrate Judge concluded that "summary judgment
evidence shows that the allegations related to the
Government's purchase of copiers and services were
publicly disclosed in the Oce Action and media
reports associated therewith." (Doc. No. 73 at 14).
Plaintiff objects to this characterization of her lawsuit,
arguing that the "facts underlying Canon's fraud are
so separate from the Oce case, that the public disclosure bar
is not triggered in the first instance." (Doc. No. 75 at
19). To this end, Plaintiff argues that this suit
"involves Canon's adoption and expansion of the
fraudulent scheme originally launched by Oce."
Id. at 16. Separate from the alleged factual
distinction, Plaintiff argues that the Oce Action
did not publicly disclose the fraud because (1) the suit is
brought against a different company (Canon) and (2) the
intervening settlement agreement "weigh[s] against
applying the public disclosure bar." (Doc. No. 75 at
truth there may be to the notion that Canon adopted and
expanded Oce's fraudulent scheme, Plaintiff has brought
forward no admissible evidence to contest Defendant's
motion and consequently does not create a genuine issue of
fact. Here, Defendant raised the public disclosure bar, put
forward evidence of both public filings and news media
documenting the Oce Action, and properly
demonstrated the similarities between the two actions. (Doc.
Nos. 60-2, -3, -4 & -5). The burden then shifted to
Plaintiff to show that the allegations were not disclosed by
the Oce Action. Plaintiff has failed to do so. The
evidence attached to Plaintiffs Response to Defendant's
Motion for Summary Judgment is comprised of: a copy of the
Oce settlement agreement, records showing the Texas franchise
tax status of Canon USA, Oce Imagistics, and Oce North
America, and a somewhat paltry affidavit containing no more
than a few statements that provide evidence that may imply
Plaintiff was the relator and source in the Oce
action. (Doc. Nos. 61-2, -3, -4, -5, & -6).
None of these exhibits present facts detailing Canon's
alleged fraudulent scheme or the distinctions between said
scheme and the scheme at issue in the Oce Action,
and thus, these exhibits cannot create a fact issue as to
whether there has been a public disclosure of the fraud at
argument that this suit is against an entirely different
Defendant is equally unavailing. A defendant undergoing a
mere change in corporate ownership does not provide a license
for a qui tarn Plaintiff to renew allegations
against that defendant based upon prior public disclosures.
While Defendant's allegation that "Canon adopt[ed]
and expand[ed]... the fraudulent scheme originally launched
by Oce" may avoid the public disclosure ...