United States District Court, S.D. Texas, Houston Division
S. HANEN UNITED STATES DISTRICT JUDGE
the Court is Plaintiff-Relator Stephanie Schweizer's
("Plaintiff or "Schweizer") Motion to
Reconsider (Doc. No. 85) the Court's Order Adopting in
Part the Magistrate Judge's Memorandum and Recommendation
(Doc. No. 84). The Defendant, Canon, Inc.
("Canon"), filed a response. (Doc. No. 86).
Plaintiff filed a Reply. (Doc. No. 87).
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. 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 16)
(Plaintiffs Objections to Magistrate Judge's Memorandum
and Recommendations). Defendant moved for summary judgment
arguing, inter alia, that Plaintiff could not clear
the False Claims Act's public disclosure bar.
Magistrate Judge's Recommendation agreed 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 that 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.
Court agreed with the Magistrate Judge's conclusion and
issued an order adopting the recommendation in
and granting summary judgment. Guided by the procedural
analysis laid out in the Fifth Circuit's decision in
U.S. ex rel. Jamison v. McKesson Corp., 649 F.3d
322, 327 (5th Cir. 2011), the Court found that, after Canon
presented sufficient evidence to meet its burden on summary
judgment, Plaintiff failed to put forward sufficient factual
evidence to create a genuine issue of material fact as to
whether her action was foreclosed by the public disclosure
bar. (Doc. No. 84). In reaching this conclusion, the Court
also found that Plaintiff was not an "original
source" as that term is defined in the False Claims Act
for this law suit. As such, the Court dismissed
Plaintiffs suit with prejudice.
brings a motion asking the Court to reconsider its ruling.
The motion argues the Court erred because: (1) summary
judgment on the public disclosure bar looks only to the
allegations in the complaint; (2) the Court applied the
incorrect prong of the original source exception; and (3) the
Court disposed of the case due to lack of evidence despite
not permitting Plaintiff to conduct discovery. The Court will
take each of these arguments in turn, but first, some legal
background is necessary.
Plaintiffs challenge is to whether the Court correctly
applied the law relating to the public disclosure bar. 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." U.S. ex rel. Colquitt v. Abbott
Labs., 858 F.3d 365, 373 (5th Cir. 2017). Whether the
public disclosure bar precludes a relator from bringing a
qui tarn action is determined in the summary
judgment context. See id.
first contention is that the Court erred in applying the
standard derived from the Fifth Circuit's decision in
Jamison. In Jamison, the Fifth Circuit
stated that, although typically a Plaintiff bears the burden
of establishing jurisdiction,  it would be unfair to require a
Plaintiff to prove the absence of publicly existing
information. Jamison, 649 F.3d at 327. Therefore, on
the first two steps of the Abbott Labs test, the
defendant bears the initial burden to "point to
documents plausibly containing allegations or transactions on
which [the relator's] complaint is based."
Id. Once the defendant has done so, the burden
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. (emphasis added).
Plaintiff argues that the Court failed to undertake an
analysis as to whether Defendants pointed to documents
plausibly raising the issue of whether her allegations were
based upon the prior disclosures in the Oce Action,
"provid[ing] only a cursory statement that"
Defendants had done so. (Doc. No. 85 at 10). Next, Plaintiff
argues that even if the burden did shift, she created a fact
issue by submitting an affidavit and the settlement agreement
in the Oce Action. Finally, Plaintiff argues that
her Complaint creates a fact issue as to whether her
allegations were based on the Oce Action.
these alleged points of error are correct. As to the
Court's "cursory" analysis, the Court notes
that it did not write against a blank slate. In her
Recommendation, the United States Magistrate Judge undertook
an extensive analysis, considering the allegations in both
the complaint and the prior Oce Action, and found
that Plaintiffs claims were based on the Oce Action.
See (Doc. No. 73 at 15-17); see also Id. at
12-13 (addressing similarities between the actions in the
context of the government action bar). There was no need for
this Court to repeat the extensive factual review in its
the Defendant provided public disclosures regarding the
Oce Action, including public filings and news media
documenting the Oce action. (Doc. Nos. 60-2, -3, -4
& -5). Plaintiffs Second Amended Complaint is replete
with references that her claims originate with, or are based
on, the Oce Action. Indeed, she discusses at length
the Oce contracts that were assumed by Canon and the prior
Oce lawsuit. The complaint details the Oce
settlement and the Government's refusal to pursue Canon.
It states at various places:
• Previously, Oce, now Canon, was routinely giving
non-government customers substantially better prices for the
same products and creating false documents in an attempt to
hide this from a government audit in violation of the above
contractual provisions. Canon has continued this behavior as
non-government customers are receiving lower pricing for the
same products that the U.S. Government is purchasing through
the GSA contracts. (Doc. No. 19 at 10).
• When Canon purchased Oce, Oce had specifically
represented to the Government that the products and
components that it manufactured came from the Netherlands.
With the GSA Contracts that were novated, Canon had to abide
by the same rules and have its products manufactured in
countries that are compliant with the federal trade law. But
this did not occur. The products sold by Canon to the
Government are either comprised completely of components made
in non-designated countries and later assembled in a
designated country or ...