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United States v. Supervalu Inc.
United States District Court, C.D. Illinois, Springfield Division
July 12, 2018
UNITED STATES OF AMERICA, and THE STATES OF CALIFORNIA, DELAWARE, ILLINOIS, INDIANA, MASSACHUSETTS, MINNESOTA, MONTANA, NEVADA, NEW JERSEY, NORTH CAROLINA, RHODE ISLAND, VIRGINIA, ex rel . TRACY SCHUTTE and MICHAEL YARBERRY, Plaintiffs and Relators,
SUPERVALU, INC., SUPERVALU HOLDINGS, INC., FF ACQUISITIONS, LLC, FOODARAMA, LLC, SHOPPERS FOOD WAREHOUSE CORP., SUPERVALU PHARMACIES, INC., ALBERTSON'S LLC, JEWEL OSCO SOUTHWEST LLC, NEW ALBERTSON'S INC., AMERICAN DRUG STORES, LLC, ACME MARKETS, INC., SHAW'S SUPERMARKET, INC., STAR MARKET COMPANY. INC., JEWEL FOOD STORES, INC., and AB ACQUISITION LLC, Defendants.
RICHARD MILLS, U.S. DISTRICT JUDGE
a False Claims Act case pursuant to 31 U.S.C. § 3729.
before the Court is the Defendants' motion for limited
sanctions for spoliation of evidence.
Relators filed this qui tam action alleging that
Defendant Supervalu and related entities (collectively,
SuperValu or Defendants) defrauded government healthcare
programs by fraudulently reporting inflated Usual and
Customary (U&C) pharmacy prices for prescriptions filled
for government healthcare program beneficiaries. According to
the complaint, Relator Tracey Schutte worked as a pharmacist
at SuperValu for a short period of time in April of 2011.
Relator Michael Yarberry has worked as a pharmacist in the
retail pharmacy industry since 1992.
Relators allege that Defendants would report their regular
cash prices for prescriptions as their U&C prices. The
Relators claim this was a misrepresentation in order to
obtain funds from the Government in violation of the False
their first amended complaint, the Relators claim they each
spoke individually with employees of certain of
Defendants' pharmacies. SuperValu alleges the Relators
rely heavily on these alleged conversations to support their
fraud allegations. Specifically, the complaint discusses
alleged conversations between Relators and Defendants'
(now former) employees Bob Atchison, Lindsay Reel and Mark
Cross. The amended complaint also includes an allegation that
“Relators conducted numerous phone calls with pharmacy
staff at Defendants' branded pharmacies verifying
Defendants' price matching and fraudulent billing scheme
motion, SuperValu alleges that the Relators shredded
contemporaneous notes of “supposed conversations”
with Defendants' employees. Moreover, it is charged that
the Relators intentionally deleted computer files concerning
these conversations and also threw away the computer on which
the files were stored, thereby precluding examination of the
relevant metadata. SuperValu contends the Relators took these
actions after filing suit, despite having testified they lack
any recollection of the alleged conversations.
motion provides that on December 20, 2016, the Defendants
served interrogatories seeking details of the alleged
conversations. The Relators identified 19 alleged
conversations between Relators and SuperValu employees.
Relator Yarberry identified nine phone conversations
occurring in August, November and December of 2009. Relator
Schutte identified ten phone or in-person conversations
occurring in April, May or July of 2011.
Defendants also propounded requests for production which
sought, among other things, documents relating to certain
phone calls. The Relators produced no documents in response
to the requests. At his deposition, Yarberry testified he
prepared for his testimony by reviewing notes made by him or
Schutte for some of the calls.
the Relators' counsel produced five documents which
Yarberry confirmed were the notes that he reviewed. During
his deposition, Yarberry identified one document as notes he
made on his home computer concerning phone calls he allegedly
made to various Defendant pharmacies. Yarberry testified he
had no independent recollection of the substance of these
calls. The computer on which he prepared the notes
“quit working” and he threw it away after the
filing of this lawsuit. Yarberry “deleted everything
[all documents he prepared on the computer related to this
lawsuit] after [he] sent them to counsel.”
number of other notes were also prepared on the computer that
Yarberry discarded. Some of the handwritten notes or reports
that were the basis for this information were shredded or
Defendants also note that Schutte identified a May 2011
telephone call he claims to have had with Lindsay Reel,
regarding “[s]ubmitting price match to
insurance.” Schutte testified, “I'm sure I
took notes of the phone call;” “I assume
they're gone” and “I don't think I gave
any of my handwritten notes to anybody.” The Defendants
claim this vague testimony is inconsistent with the
Relators' complaint, which features a detailed version of
this alleged conversation about which there is apparently no
substantiating evidence, and about which the Relators have no
Relators claim SuperValu made no effort to investigate the
matters it addresses in its motion and did not speak to
counsel for the Relators before filing the motion. They
dispute that the notes on the various phone calls were
created “after litigation began.” Additionally,
the Relators allege they have the original electronic version
of the notes from Schutte's ...