United States Court of Appeals, District of Columbia Circuit
UNITED STATES OF AMERICA, EX REL. BRADY FOLLIARD, APPELLANT
GOVERNMENT ACQUISITIONS, INC. AND GOVPLACE, APPELLEES
Argued April 4, 2014
Appeal from the United States District Court for the District of Columbia. (No. 1:07-cv-00719).
H. Vincent McKnight, Jr. argued the cause and filed the briefs for appellant.
Christopher M. Loveland argued the cause for appellee Govplace. With him on the brief was Jonathan S. Aronie.
Timothy K. Halloran was on the brief of amicus curiae Coalition for Government Procurement. With him on the brief was Jason N. Workmaster. Daniel G. Jarcho entered an appearance.
Before: KAVANAUGH and WILKINS, Circuit Judges, and SILBERMAN, Senior Circuit Judge. OPINION filed by Circuit Judge WILKINS.
Wilkins, Circuit Judge
Under the Trade Agreements Act of 1979 (TAA), 19 U.S.C. § § 2501-2581, the federal government is barred from purchasing products that do not originate from " designated countries." See id. § 2512; 48 C.F.R. § § 25.003, 52.225-5(a) (listing the designated countries). Appellee Govplace sold Hewlett-Packard (" HP" ) products to the federal government. To determine whether the HP products originated from designated countries, Govplace relied on its distributor, Ingram Micro, which expressly certified that the HP products complied with TAA requirements. Govplace also sold other products to the federal government, but claimed that these products were exempt from TAA requirements.
Appellant Brady Folliard, a qui tam relator, brought suit under the False Claims Act (FCA), 31 U.S.C. § § 3729-3733, alleging that the HP products Govplace sold to the federal government originated from non-designated countries, in violation of the TAA. The FCA imposes liability only if a person " knowingly" makes a false claim. To satisfy the FCA's scienter requirement, Appellant claimed that Govplace acted in reckless disregard to the falsity of its sales to the federal government because Govplace's reliance on Ingram Micro's certification was not reasonable. Appellant also sought discovery regarding the products Govplace claimed were exempt from TAA requirements.
Through a series of orders and opinions, the District Court rejected all of Appellant's claims on the merits and thus granted summary judgment to Govplace, while
denying some of Appellant's discovery requests. Appellant challenges some of those rulings. Because we conclude that the District Court properly exercised its discretion in managing discovery, and that Govplace reasonably relied on Ingram Micro's certification, we affirm.
Appellee Govplace is a small business provider of IT integration and product solutions, and delivers enterprise IT solutions exclusively to the public sector. J.A. at 467. Govplace has been a recipient of a General Services Administration (GSA) schedule contract (" GSA schedule" or " GSA contract" ) since August 1, 1999. J.A. 468. The GSA Schedules Program " provides Federal agencies . . . with a simplified process for obtaining commercial supplies and services at prices associated with volume buying." 48 C.F.R. § 8.402. All products sold pursuant to a GSA schedule must comply with the TAA. See Trade Agreements, GSA iGuide, https://vsc.gsa.gov/iGuide/iGuide/Trade_Agreements.html (last visited July 11, 2014); J.A. 362. The TAA requires that " only U.S.-made or designated country end products [can] be offered and sold under Schedule contracts." Id.; 48 C.F.R. § 25.403(c)(1).
Govplace is not a manufacturer of the products it lists for sale and does not acquire products directly from a manufacturer. J.A. 468. Instead, Govplace acquires products from distributors. J.A. 468. Ingram Micro, the largest technology products distributor, is the distributor from which Govplace acquires the vast majority of the products it sells on its GSA schedule. J.A. 468, 972. Govplace acquires products from Ingram Micro by participating in Ingram Micro's GSA Pass Through Program (" the Program" ). J.A. 972-73. According to Ingram Micro, its Program " helps solution providers obtain Letters of Supply from manufacturers, a requirement to include products on a GSA Schedule," and " helps resellers maintain their GSA contracts by regularly passing through manufacturer-certified information such as updated pricing and product documentation." J.A. 972. For example, in providing Govplace with the " current GSA product/price list for Hewlett Packard" in January 2007, Ingram Micro " passe[d] through" five manufacturer certifications, including: " Products offered by the manufacturer are compliant with the Trade Agreements Act." J.A. 516. Through its participation in the Program, Govplace obtained Letters of Supply from both Ingram Micro and HP, allowing it to resell HP products to the federal government. J.A. 973.
GSA has implicitly approved of Govplace's reliance on Ingram Micro's Program to demonstrate compliance with the GSA schedule contract requirements. Since 2003, GSA has conducted several " Contractor Administrative Visits" of Govplace to evaluate its compliance with GSA schedule contract requirements. J.A. 470. During those visits, Govplace has explained to GSA that it relies on the Ingram Program " for [Country of Origin (COO)] information and certifications for the items" listed in its GSA schedule. J.A. 470. Upon finishing its evaluation, GSA typically issues an Administrative Report Card. J.A. 470. In each of the Administrative Report Cards evaluating Govplace, GSA has determined that Govplace demonstrated compliance with the TAA. J.A. 470.
Relator Brady Folliard brought a qui tam suit under the FCA, alleging that
Govplace and other companies sold products to the federal government that " did not originate in designated countries under the [TAA], and therefore are making material false statements and presenting false claims" to the federal government for payment. J.A. 75. Specifically, Appellant alleged that Govplace knowingly listed twenty-three products on its GSA schedule as having originated in the United States when they allegedly originated in non-designated countries, and that Govplace sold ten products that originated in non-designated countries. J.A. 115-119. Through three separate opinions and orders, the District Court ultimately denied Appellant's claims on the merits and thus ...