United States District Court, N.D. Illinois, Eastern Division
United States ex rel. Per Bukh, Plaintiff,
Guldmann, Inc., Defendant.
MEMORANDUM OPINION AND ORDER
VIRGINIA M. KENDALL, District Judge.
Plaintiff Per Bukh filed this qui tam action on behalf of the public against Defendant Guldmann, Inc. alleging that Guldmann made false claims and statements in violation of the False Claims Act ("FCA"), 31 U.S.C. §§ 3729 et seq. Specifically, Bukh contends that Guldmann made false claims by (1) offering certain of its commercial customers a greater pricing discount than that offered to the United States Government in violation of the "best price" clause found in its Federal Supply Schedule ("FSS") Contract with the Department of Veteran's Affairs ("VA"), and (2) selling products to the Government that were not manufactured in the United States or a designated country in violation of the Trade Agreements Act ("TAA"), 19 U.S.C. §§ 2501 et seq. Bukh alleges that Guldmann was aware of its obligation to disclose this information and instead knowingly submitted false claims for reimbursement by the Government surrounding these products. The Government declined to intervene.
Guldmann now moves this Court to dismiss the Second Amended Complaint pursuant to Federal Rules of Civil Procedure 12(b)(3), 12(b)(5), 12(b)(6), 9(b), and 28 U.S.C. §1406(a). In the alternative, Guldmann moves to transfer this case to the Middle District of Florida, pursuant to 28 U.S.C. § 1404(a). For the following reasons, the Court grants Guldmann's Motion to Transfer. Because the Court grants the Motion to Transfer, it declines to rule on Guldmann's grounds for dismissal.
The following facts are taken from Bukh's Second Amended Complaint and Guldmann's affidavit in support of transfer. See, e.g., Simonian v. Monster Cable Products, Inc., 821 F.Supp.2d 996, 998 (N.D. Ill. 2010); Simes v. Jackson Nat'l Life Ins. Co., No. 05 C 3816, 2005 WL 2371969, at *2 (N.D. Ill. Sept. 22, 2005) (courts are not limited to allegations in the complaint and may consider affidavits when addressing a motion to transfer).
Bukh is an individual residing in Denmark. (Dkt. 29, Complaint ¶ 8; Dkt. 46, Pl. Resp. at 7). He joined Guldmann in October 2004 as its Controller and served in this position until March 2010. (Compl. ¶ 8). Guldmann is a producer of medical equipment and supplies, is incorporated, and maintains its corporate headquarters in Tampa, Florida. ( Id. at ¶ 9; Dkt. 45-1, Anders Drechsler Jensen Affidavit ¶4). Guldmann's sales offices in the United States are in Belmont, Massachusetts and Santa Rosa, California. (Jensen Aff. ¶4). Guldmann maintains all of its documents and electronic records pertaining to its contracts, manufacture, and delivery of products at the corporate headquarters in Tampa. ( Id. ¶8). The majority of Guldmann's employees referenced in the Complaint reside in Tampa. ( Id. ¶9).
On June 21, 2004, Guldmann entered into the FSS Contract with the VA National Acquisition Center located in the Northern District of Illinois. (Compl. ¶s 9, 12). The FSS Contract was available for use by all government agencies across the nation. ( Id. ¶18). Vendors entering FSS contracts with the VA must provide the Government with the lowest net price at which the vendor sells its products without regard to quantity, terms, or conditions. ( Id. ¶17). When negotiating the FSS Contract, Guldmann provided the Government with a document showing the discounts it provided to different classes of customers. ( Id. ¶27). Guldmann stated that the highest discount it provided to any customer was fifty percent off with no minimum quantity sold. ( Id. ). Guldmann provided the Government an additional one percent discount on orders of fifteen pieces or more of the same item in the same order for certain products in order to provide the Government with the lowest price. ( Id. ). Not long after entering into the FSS Contract, Guldmann offered one of its customers, Alpha Modalities LLC, a 73 percent discount on a certain product. ( Id. ¶30). This additional discount was never offered to the Government.
Bukh alleges that several emails in this time period demonstrate Guldmann's awareness of its obligation to provide the Government with its "best price" and its breach of that obligation by offering special rates to Alpha. ( Id. ¶33). On November 3, 2008, Guldmann's President Anders Drechsler wrote in an email:
We can't start showing a discount of 60% (for example) in [Guldmann's accounting system] just to show a certain margin % split between material and installation. This would give the VA the option to insist on a 60% discount on material going forward but also retroactively, because they should be offered the best price. Our contract is up for renewal before June 2009 so it is prime-time for an audit right now.
( Id. ¶42). Guldmann maintained its special pricing for Alpha. ( Id. ¶43). From November 18, 2006 to November 17, 2009, Guldmann impermissibly rebated nearly $1.1 million to Alpha through special pricing, although the special pricing continued through March 2010. ( Id. ¶s 47, 49). Guldmann concealed the special pricing offered to Alpha by issuing credits post-sale, characterized as "referral fees." ( Id. ¶51). Guldmann offered special discounts and pricing not offered to the Government to other customers as well, including the University of Pennsylvania Hospital, Blueleaf, Kinetic Concepts Inc., New England Medical Systems, Gwinnet, and Hoar Construction. ( Id. ¶s 51, 53, 54, 56, 58, 60).
On September 17, 2009, Guldmann sent a Request for Modification regarding the FSS Contract to VA Contract Specialist Richard M. Amesquita. ( Id. ¶63). The request falsely stated that a product was manufactured in Denmark when it was actually manufactured in China, in violation of the TAA. ( Id. ¶s 65, 76). The request also omitted the superior pricing and discounts offered to other customers. ( Id. ¶s 65, 69).
Section 1404 of Title 28 of the United States Code provides that "[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." A court may transfer a case under § 1404 when (1) venue is proper in the transferor district; (2) venue is proper in the transferee district; (3) the transfer will serve the convenience of the parties and witnesses; and (4) the transfer will serve the interests of justice. See, e.g., Hanover Ins. Co. v. Northern ...