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United States v. Kellogg Brown & Root Services, Inc.

United States District Court, Seventh Circuit

November 4, 2013

UNITED STATES OF AMERICA, Plaintiff,
v.
KELLOGG BROWN & ROOT SERVICES, INC., et al., Defendants.

ORDER

SARA DARROW, District Judge.

In this case, the United States claims that a defense contractor and its subcontractor inflated the costs of providing living containers to house American troops serving in Iraq. Defendant Kellogg Brown & Root Services, Inc. ("KBR"), [1] has moved for transfer of venue to the Eastern District of Virginia ("EDVA"), arguing that the interest of justice and convenience of material witnesses support transfer. Because the pleadings and accompanying affidavits have fully presented the relevant facts and issues, the Court DENIES KBR's request for a hearing on this motion, ECF No. 17 at 2. For the reasons set forth below, the Court DENIES KBR's Motion to Transfer Venue, ECF No. 17.

BACKGROUND

On November 20, 2012, the United States filed a complaint against KBR, Overseas Administration Services, Ltd., and KBR's subcontractor First Kuwaiti Trading Company in its various incarnations ("First Kuwaiti"), for inflating the costs of providing living containers to house American troops serving in Iraq. ECF No. 1. The seven-count complaint alleges violations of the False Claims Act ("FCA"), 31 U.S.C. §§ 3729-31, and the Contract Disputes Act ("CDA"), 41 U.S.C. §§ 7101-09, and breach of contract. The Court has subject matter jurisdiction over these claims under 18 U.S.C. § 1345 because the United States instituted this civil action.[2]

On December 14, 2001, the U.S. Army awarded an umbrella contract under its Logistics Civil Augmentation Program III ("LOGCAP III") to KBR for the provision of support services in the Iraqi military theater. ECF No. 3 at 2-4. In August 2003, Bed Down Mission, a program that replaced tents with living containers, was added to LOGCAP III. Id. at 5. KBR awarded to First Kuwaiti the subcontract to provide, deliver, and install living containers at Camp Anaconda in Iraq. Id. First Kuwaiti invoiced KBR for its services, and KBR in turn sought reimbursement from the United States for the costs of paying the subcontractor plus overhead, general expenses, and a one percent fee. Id. at 4. The living containers were to be delivered by December 15, 2003, but actual delivery was postponed due to causes contested by the parties. The complaint alleges that First Kuwaiti inflated the costs associated with delay, and KBR knew or had reason to know this, but still paid First Kuwaiti and then sought reimbursement from the U.S. for the allegedly inflated costs. See ECF No. 3.

Starting in 2005, the Government began questioning KBR's reported costs and, as a result, only partially reimbursed KBR's claims. ECF No. 18 at 1. KBR sought reimbursement for some $50 million to which it claimed it was entitled, filing a contract claim with the Armed Services Board of Contract Appeals ("ASBCA"). After the Government instituted the instant suit, the ASBCA proceeding was dismissed without prejudice upon the Government's motion while this Court adjudicates the fraud claims, over which the ASBCA has no jurisdiction. See ECF No. 18, Ex. 1 at 3. As of the ASBCA dismissal on January 29, 2013, KBR has three years to re-file its claim before that board. Id. at 4.

The Government selected the Central District of Illinois ("CDIL") as the forum for this case because LOGCAP III was officially administered out of the Rock Island Arsenal in Rock Island, Illinois, by U.S. Army Contracting Command. ECF No. 22 at 6-7. Further, KBR maintains a small space on the Rock Island Arsenal that it claims is not a business office but merely a post for facilitating communications between KBR and Army Sustainment Command. ECF No. 27 at 1-2. KBR claims that the location of material events and many potential witnesses in or near the EDVA favors transfer to that district, which is also home to the Defense Department's Pentagon headquarters. ECF No. 17 at 1. KBR also argues that the EDVA's so-called "rocket docket" would ensure KBR has time to re-file its ASBCA within the three-year window. See ECF No. 18 at 1-2.

DISCUSSION

I. Legal Standard

Under 28 U.S.C. § 1404(a), "[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." The party seeking transfer carries the burden of "establishing, by reference to particular circumstances, that the transferee forum is clearly more convenient." Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219-20 (7th Cir. 1986) (citations omitted). The convenience of the new forum must be manifest. "Where the balance of convenience is a close call, merely shifting inconvenience from one party to another is not a sufficient basis for transfer." Research Automation, Inc. v. Schrader-Bridgeport Int'l, Inc., 626 F.3d 973, 978 (7th Cir. 2010). The district court ultimately should decide motions to transfer based on a "case-by-case consideration of convenience and fairness.'" See id. at 977 (quoting Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 23 (1988)). Because neither party disputes the propriety of the transferee forum, the Court will evaluate the factors of convenience and the interest of justice.

II. Convenience

In performing the convenience evaluation, courts generally consider: (1) the availability of and access to witnesses, (2) each party's access to and distance from resources in each forum, (3) the location of material events, and (4) relative ease of access to sources of proof. Research Automation, Inc., 626 F.3d at 978. Additionally, the plaintiff's choice of forum should generally prevail "unless the balance is strongly in favor of the defendant." In re Nat'l Presto Indus., Inc., 347 F.3d 662, 664 (7th Cir. 2003).

A. Convenience of Witnesses

KBR argues that few if any key witnesses are located near Rock Island in the Central District of Illinois ("CDIL"), but "several" reside in or near the EDVA. ECF No. 18 at 11. KBR claims likely witnesses will be the same in this case as in the ASBCA proceeding, as both cases share the same operative facts. Id. The likely witnesses located near the EDVA that KBR identifies include one Government employee-Lt. Col. Damon Walsh-and six ...


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