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United States of America, Ex v. Cdw Government

July 3, 2012

UNITED STATES OF AMERICA, EX REL. JOE LIOTINE, INDIVIDUALLY, PLAINTIFFS,
v.
CDW GOVERNMENT, INC., AN ILLINOIS CORPORATION,
DEFENDANT.



The opinion of the court was delivered by: Herndon, Chief Judge:

MEMORANDUM AND ORDER

Plaintiff, relator Joe Liotine, brought two counts against his former employer, defendant CDW Government, Inc. ("CDW-G"), under the False Claims Act, 31 U.S.C. § 3729 et seq. ("FCA"), alleging that CDW-G engaged in fraudulent conduct in connection with its sales to the General Sales Administration ("GSA") and that CDWG retaliated against relator for investigating CDW-G's conduct. Both parties have moved for summary judgment on relator's false claims count, and CDW-G has moved for summary judgment on relator's retaliation claim. There are also three evidentiary motions pending: 1) CDW-G's motion in limine to exclude the data analysis and testimony of Dr. Jeremy Albright; 2) CDW-G's motion in limine to exclude the expert testimony of Keith Withycombe; and 3) CDW-G's motion to strike exhibit O, a PowerPoint presentation. For the reasons that follow, the evidentiary motions are denied, CDW-G's motion for partial summary judgment on count I (Doc. 222) is granted in part and denied in part, relator's motion for summary judgment as to CDW-G's affirmative defenses (Doc. 218) is granted in part and denied in part, relator's motion for partial summary judgment (Doc. 216) is denied, and CDW-G's motion for partial summary judgment on count II (Doc. 220) is denied.

I. Background

On January 19, 2005, relator filed a two count complaint against CDW-G pursuant to the FCA. Count I alleges that CDW-G engaged in fraudulent conduct in connection with its sales to the GSA. Specifically, under count I relator alleges that defendant charged the government for shipping when the contracts provided for free shipping, overcharged the government for other shipping rates, overcharged the government by failing to offer the "most favored customer" pricing as required by the contract, failed to remit the proper amount of Industrial Funding Fee ("IFF"), sold items to the government even though CDW-G was not an authorized seller, and sold non-trade compliant items. Count II alleges that CDW-G retaliated against relator in violation of the FCA.

In his complaint, relator alleges that he worked for CDW-G from March 20, 1997, to July 7, 2001, as a customer service representative, shipper, and sales representative (Id. at ¶7). Relator, acting as a sales representative, received and filled purchase orders from government agencies, including the GSA and U.S. Mint (Id. at ¶ 8). The government contracts with defendant provided free ground shipping and reduced expedited shipping for both the GSA and U.S. Mint (Id. at ¶ 38). Relator claims that CDW-G and its sales representatives, in order to maximize its gross profits, increased the price of products being sold to the GSA. Defendant further charged the GSA for shipping costs and increased expedited shipping costs (Id. at ¶ 46-61). Further, CDW-G also increased shipping costs on items sent to U.S. Mint. (Id. at ¶¶ 63-67). Relator alleges that U.S. Mint was continually overcharged for shipping over the course of two years (Id.). During the Spring of 2001, relator alleges that defendant began withholding IFF from the GSA by failing to determine the shipments were being sent to the GSA through their computer software (Id. at ¶¶ 49-52). Relator further alleges that he has knowledge of the fraudulent statements and actions towards the government and is the original source of those allegations (Id. at ¶ 10). Relator alleges that while employed by defendant, he began contacting Simon Fritz of U.S. Mint regarding the actions defendant was committing against U.S. Mint (Id. at ¶¶ 32-33).

In count II, relator alleges that he was fired for his attempts to provide evidence to the government regarding CDW-G's fraudulent activities. Specifically, he claims that his manager, Bob Rossi, instructed him to take advantage of certain purchasers at U.S. Mint. Relator claims that shortly after this, he approached Rossi and told him that he did not think it was right to take advantage of these purchasers and that he thought it was wrong the way CDW-G was defrauding the government on shipping, insurance, returns, etc. Relator asserts that Rossi responded that relator should not make such accusations and that relator should consider whether relator really knew what he was talking about. Shortly after this conversation, relator claims that he began having inexplicable scheduling problems and that consequently relator would miss or be tardy to training. This resulted in relator being written up and after three "write ups," relator was suspended from work for a week. The gist of these allegations is that relator was being set up to be fired.

Relator also alleges that after he began questioning CDW-G's alleged illegal sales practices and stopped following CDW-G's directions, Rossi became verbally abusive, and when relator similarly responded, he was taken to Chris Rother's office to be terminated; relator was not terminated, however, after divulging the substance of the exchanges. Relator further contends that he called Simon Fritz of U.S. Mint and told Fritz to begin scrutinizing defendant's prices. Relator claims that Fritz requested a spreadsheet of the items U.S. Mint had purchased from defendant, but relator was told not to give this information to U.S. Mint. Relator asserts that he ignored these instructions and emailed Fritz the information anyway. After this, relator claims that he knew he was about to be discharged and in order to inform other purchasers of the actions CDW-G was taking to defraud them, relator copied the names and phone numbers of the accounts in his system and emailed them to himself. Relator alleges that defendant began questioning him about what he knew and what information he had given to the government. Thereafter, he was terminated. He claims that defendant told him that if he did not sign a form containing defendant's description of why he was terminated he would not receive full payment/compensation of what CDW-G owed him.

Following the filing of the complaint, the United States began investigating relator's claims and on February 19, 2008, filed a notice with the Court indicating that it would not intervene at that time but that its investigation would continue. (Doc. 38). The United States also requested that should either relator or defendant propose that this action be dismissed, settled, or otherwise discontinued, the Court solicit the written consent of the United States before ruling or granting its approval. (Doc. 38). On February 21, 2009, CDW-G filed a motion to dismiss count I of relator's complaint, and on September 29, 2009, the Court entered an ordered denying that motion. (Doc. 100).

On November 7, 2011, several motions for summary judgment were filed by the parties. Relator filed a motion for partial summary judgment, and a motion for summary judgment as to defendant's affirmative defenses (Doc. 218). Defendant filed a motion for partial summary judgment on count I of relator's complaint (Doc. 222), and a motion for summary judgment on count II of relator's complaint (Doc. 220). Defendant also filed a motion in limine to exclude the data analysis and testimony of Dr. Jeremy Albright (Doc. 224), a motion in limine to exclude the expert testimony of Keith Withycombe (Doc. 226), and a motion to strike exhibit O to relator's memorandum in support of relator's motion for partial summary judgment (Doc. 228). Pursuant to CDW-G's request (Doc. 256), the Court held oral argument on the motions. The Court will now rule on each motion.

II. Analysis

Because the Court's rulings on the evidentiary motions may impact how the Court rules on the motions for summary judgment, the Court will address those motions first, followed by the motions for summary judgment.

A. CDW-G's motion in limine to exclude the data analysis and testimony of Dr. Jeremy Albright (Doc. 224)

CDW-G filed a motion in limine to exclude the data analysis and testimony of Dr. Jeremy Albright (Doc. 224), contending that the three reports offered by Dr. Albright are peppered with expert opinions, are based on missing and fabricated data and mistaken assumptions, and because Dr. Albright has no personal knowledge of the underlying information. Therefore, CDW-G posits that Dr. Albright's reports and testimony should be excluded. Relator responds by arguing that Dr. Albright is not being offered for expert testimony and that his reports are explicitly permitted by Federal Rule of Evidence 1006. In light of relator's response, CDW-G filed a reply contending that the Dr. Albright's reports are not admissible under Rule 1006 because they are not based on accurate records that are admissible in evidence.

Rule 1006 provides that a "proponent may use a summary, chart, or calculation to prove the content of voluminous writings, recordings, or photographs that cannot be conveniently examined in court." FED. R. EVID. 1006. "The provision, however, is not an end around to introducing evidence that would otherwise be inadmissible; therefore, in applying this rule, we require the proponent of the summary to demonstrate that the underlying records are accurate and would be admissible as evidence." United States v. Oros, 578 F.3d 703, 708 (7th Cir. 2009) (citing Judson Atkinson Candies, Inc. v. Latini-Hohberger Dhimantec, 529 F.3d 371, 382 (7th Cir. 2008)). One way to do this is through the business records exception.

"It is well established that computer data compilations are admissible as business records under [Federal Rule of Evidence] 803(6) if a proper foundation as to the reliability of the records is established." United States v. Briscoe, 896 F.2d 1476, 1494 (7th Cir. 1990) (citing United States v. Croft, 750 F.2d 1354, 1364 (7th Cir. 1984)). Rule 803(6) provides that the following is not excluded by the rule against hearsay:

(6) Records of a Regularly Conducted Activity. A record of an act, event, condition, opinion, or diagnosis, if:

(A) the record was made at or near the time by--or from information transmitted by-- someone with knowledge;

(B) the record was kept in the course of a regularly conducted activity of a business, organization, occupation, or calling, whether or not for profit;

(C) making the record was a regular practice of that activity; (D) all these conditions are shown by testimony of the custodian or another qualified witness, or by a certification that complies with Rule 902(11) or (12) or with a statute permitting certification;

(E) neither the source of information nor the method or circumstances of preparation indicate a lack of trustworthiness.

FED. R. EVID. 803(6). "While Rule 803(6) does not require that the qualified witness be the person who prepared the record, [citation], or that the witness have personal knowledge of the entries in the records, [citation], the business records exception does require that the witness have knowledge of the procedure under which the records were created, [citation]." Collins v. Kibort, 143 F.3d 331, 337-38 (7th Cir. 1998).

Here, Dr. Albright produced three reports using CDW-G's own sales records, country of origin information, definitions of price codes, and other information Dr. Albright has been able to obtain from CDW-G. Thus, it appears that Dr. Albright is using CDW-G's business records as a "summary, chart, or calculation to prove the content of voluminous . . . recordings . . . that cannot be conveniently examined in court," the exact purpose behind Rule 1006. See FED. R. EVID. 1006. Thus, if plaintiff can meet the requirements of Rule 803(6) by laying the proper foundation and reliability of the records underlying Dr. Albright's reports, then the evidence will be admissible at trial. Dr. Albright can authenticate his evidence by describing the process he used and showing that it produces an accurate result. See FED. R. EVID. 901(b)(9) ("Evidence About a Process or System. Evidence describing a process or system and showing that it produces an accurate result."). The fact that the reports may reflect missing or fabricated data or mistaken assumptions goes to the weight accorded the reports and not to their admissibility. The witness is subject to cross examination on this point.

As to CDW-G's arguments that Dr. Albright's reports are peppered with expert opinions, the Court understands Dr. Albright to be an expert in order to accomplish the task he was asked to complete, i.e., to use his specialized computer knowledge to summarize data within the parameters that have been given to him. He will not, however, give expert testimony; rather, he will only testify about the evidence he compiled from the exhibits, which will be in evidence and are from CDW-G. This evidence does not require peer reviewed scientific analysis or extrapolation. Dr. Albright is just a witness qualified by knowledge, skill, experience, training, or education to input data and then explain the results. Dr. Albright is not opining on the meaning of those results; rather, he is just reporting what he found and the jury can assess for itself what it means. To the extent that Dr. Albright's testimony may qualify as expert testimony, regarding how he gathered the information for his testimony, under the framework of Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), the Court finds that his testimony qualifies for admission under Federal Rule of Evidence 702. See Roback v. V.I.P. Transport, Inc., 90 F.3d 1207, 1215-16 (7th Cir. 1996) (finding testimony documenting the malfunctioning of a vehicle by gathering and compiling data during a test run qualified for admission under Rule 702 where the expert used standard components to assemble his computerized data acquisition system, could have been interrogated about the way in which his software worked, and where his data was subject to examination and independent verification). Accordingly, CDW-G's motion in limine to exclude the data analysis and testimony of Dr. Albright (Doc. 224) is denied.

B. CDW-G's motion in limine to exclude the expert testimony of Keith Withycombe (Doc. 226)

In CDW-G's motion in limine to exclude the expert testimony of Keith Withycombe (Docs. 226 & 227), CDW-G argues that relator is prohibited from calling Withycombe as an expert witness in this matter because government regulations prohibit Withycombe from testifying as an expert witness on behalf of relator and because all applicable rules bar Withycombe from testifying as an expert witness for relator. Relator responds by arguing that the GSA Touhy*fn1 regulations do not prohibit relator from calling Withycombe as an expert witness and that none of CDW-G's other arguments for excluding the testimony of Withycombe have merit. Relator further contends that Touhy has already been satisfied by CDW-G itself, that even if the GSA had not already produced Withycombe, the balance of authority holds that Touhy regulations do not authorize exclusion of otherwise relevant evidence from actions in federal court, and that CDW-G has no standing to preclude Withycome's testimony. Because the Court agrees with this latter argument, the Court need not address the other arguments raised on this point.

In United States v. Fidelity & Deposit Co. of Md., 986 F.2d 1110 (1993), the defendant argued that the district court erred in not excluding the testimony of two Army personnel because their appearances as witnesses violated Army regulations, particularly the requirement that Army personnel obtain written permission from the Department of the Army prior to giving expert opinion testimony at trial. On appeal, the Seventh Circuit found it important to note "that the Army [was] not attempting to enforce the regulation in order to prevent its personnel from testifying in private litigation." Id. at 1118. Instead, the court recognized that it was presented with the "rather unusual situation in which a private litigant . . . [was] attempting to enforce Army regulations in litigation in which the Army [was] not a party and ha[d] no interest." Id. Accordingly, before determining whether the Army personnel's testimony violated the Army regulations and were erroneously admitted at trial, the court determined that the defendant, as a private party, did not "have standing to claim a violation based upon the provisions at issue." Id. at 1119. The court found that "[w]hile it is true that the regulation recites that the Department of the Army 'maintains strict impartiality in private litigation' and states that 'conflicts of interest are to be avoided,' [citation] . . . [the court did] not believe that the regulation, when read as a whole, [could] be interpreted to protect [the defendant's] interest." Id. The court elaborated further by stating:

Indeed, this entire section of the Code of Federal Regulations is designed to provide the Army with a single, centralized method of dealing with litigation, both public and private, in which the military service might be asked to play a role. The Department of the Army has stated that the regulations are meant to prescribe "policy and procedures for the representation of the Department of the Army and its personnel in civilian court proceedings," as well as the "prosecution of offenses committed on military installations; and the release of information and appearances of witnesses in criminal and civil court actions." [Citation]. None of these goals is intended to benefit private litigants.

Id.

Similar to the Army regulations in Fidelity & Deposit Co. of Md., the regulations at issue here provide in relevant part:

An employee shall not serve, other than on behalf of the United States, as an expert witness, with or without compensation, in any proceeding before a court or agency of the United States in which the United States is a party or has a direct and substantial interest, unless the employee's ...


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