United States ex rel. Sandager v. Dell Marketing, L.P.

872 F. Supp. 2d 801, 2012 U.S. Dist. LEXIS 59714, 2012 WL 1453610
CourtDistrict Court, D. Minnesota
DecidedApril 26, 2012
DocketCivil No. 08-4805 (PAM/TNL)
StatusPublished
Cited by3 cases

This text of 872 F. Supp. 2d 801 (United States ex rel. Sandager v. Dell Marketing, L.P.) is published on Counsel Stack Legal Research, covering District Court, D. Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States ex rel. Sandager v. Dell Marketing, L.P., 872 F. Supp. 2d 801, 2012 U.S. Dist. LEXIS 59714, 2012 WL 1453610 (mnd 2012).

Opinion

MEMORANDUM AND ORDER

PAUL A. MAGNUSON, District Judge.

This matter is before the Court on nine separate Motions to Dismiss filed by all [804]*804Defendants. For the reasons that follow, the Motions are granted.

BACKGROUND

A. Factual

This is a qui tarn action brought by Relator Bryan Sandager. Sandager has worked as a corporate compliance officer in the computer technology field since 1988. Sandager currently works for Imation Corporation, a competitor of Defendants.

Defendants are Dell Marketing, L.P., Vion Corporation, ImmixTechnology, Inc., Government Acquisitions, Inc., Emtec Federal, Inc., Force 3, Inc., Unistar-Sparco Computers, Inc., Lyme Computer Systems, Inc., Insight Public Sector, Inc., Red River Computer Company, Inc., MA Federal, Inc., Marzik, Inc., Promark Technology, Inc., World Wide Technology, Inc., AC Technology, Inc.1, A & T Marketing, Inc., PC Specialists, Inc., PC Mall Gov, Inc., and Commercial Data Systems, Inc. Defendants are in the business of selling computer equipment. Sandager alleges that through his long-held position in the industry he has learned that Defendants offered to sell the Government computer products that were not made in the United States or in approved designated countries, in violation of federal law.

Federal agencies are able to purchase commercial supplies, including computer equipment, through an on-line shopping service called GSA Advantage!. GSA Advantage! offers more than 11 million different products for sale to the Government. (Pi’s Mem. at 23.) Yearly sales exceed $40 billion. (Id.) According to Sandager, Defendants Dell, PC Mall Gov, A & T, Unistar-Sparco, Insight Public Sector, Government Acquisitions, World Wide Technology, Emtec, and Force 3 collectively offer more than 380,000 products for sale on GSA Advantage!. (Id.) In order to qualify to sell products through GSA Advantage!, vendors are required to meet certain criteria. One criterion is that the products comply with the Trade Agreements Act of 1979 (“TAA”), 19 U.S.C. § 2501, et seq., which requires that the products sold to the Government be made or “substantially transformed” in the United States or certain designated countries. “Substantially transformed” means that the product was “transformed into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was so transformed.” 19 U.S.C. § 2518(4)(B). The TAA is an adjunct to the Buy American Act of 1933 (“BAA”), which restricts the Government’s ability to purchase products from non-domestic suppliers. 48 C.F.R. § 25.001(a)(1). When a vendor is qualified to sell products, the GSA agrees to a long-term government-wide contract to allow the products to be sold through GSA Advantage!. The contracts are referred to as “Schedule Contracts.”

Sandager alleges that between July 31, 2002, and the present, Defendants defrauded the Government by offering to sell computer hard drives (“HDDs”) and storage devices comprised of multiple HDDs through GSA Advantage! that were neither made in nor “substantially transformed” in the United States, as required by the TAA. The Schedule Contract applicable to such sales is referred to as “Schedule 70.” Schedule 70 materials expressly state that the products must be compliant with the TAA. According to the Amended Complaint, Defendants’ products were actually made in non-designated countries such as China, Thailand, and the [805]*805Philippines, and were not substantially transformed in the United States. Sandager contends that Defendants violated to the False Claims Act (“FCA”) by misrepresenting and falsely certifying that their products comply with the TAA.

B. Procedural

Sandager filed his original Complaint under seal on July 31, 2008. The Government investigated the allegations and on September 30, 2009, declined to intervene in the action, but requested that it be served with all pleadings and that its consent be solicited before the dismissal or settlement of the action. The Court issued an Order to that effect on October 5, 2009. Little else appears to have occurred in the case until Sandager filed an Amended Complaint in September 2011. Defendants have now moved to dismiss the Amended Complaint on the various grounds discussed below.

C. Previously Filed Cases

Sandager’s claims are similar to those raised in three earlier filed qui tarn actions. On March 28, 2006, Relator Christopher Crennen filed a sealed FCA claim against several of the defendants named here — Dell, Emtec, Force 3, Unistar-Sparco, and PC Mall Gov — alleging that defendants sold computer equipment to the Government through the GSA Advantage! website that were made in non-designated countries such as China, India, Indonesia, Malaysia, Taiwan, and Thailand. United States ex rel. Crennen v. Dell Marketing, L.P., et at. (Crennen), Civil Action No. 06-10546-PBS (D.Mass.). (See Cragg Decl. Exs. 1, 6.) The court unsealed Crennen in May 2009. Crennen, Civil Action No. 06-10546-PBS (D.Mass. May 1, 2009). On July 22, 2009, after investigating Crennen’s claims for approximately three years, the Government declined to intervene in the case.2 (Cragg Decl. Exs. 2-5.) Crennen filed an amended complaint on September 18, 2009, which did not include PC Mall Gov as a defendant. (Id. Ex. 6.) Crennen later voluntarily dismissed Dell from the case. Crennen, Civil Action No. 06-10546-PBS (D.Mass. Jan. 22, 2010), ECF No. 166. The court ultimately dismissed Crennen’s claim for failure to plead the alleged FCA violations with sufficient particularity. Crennen, 711 F.Supp.2d 157 (D.Mass.2010).

On April 20, 2007, while Crennen was still under seal, Relator Brady Folliard filed an FCA claim against some of the defendants named in this case (and Crennen)-, specifically, Government Acquisitions, Emtec, Force 3, and Insight Public Sector. United States ex rel. Folliard (Folliard I), 798 F.Supp.2d 66 (D.D.C. 2011); (see also Cragg Decl. Exs. 7-8). Like Crennen, Folliard alleged that the defendants sold the Government computer products that were made in non-designated countries like China. (Cragg Decl. Ex. 7.) Folliard filed an amended complaint on March 24, 2008, and a second amended complaint on October 13, 2010. (Id. Ex. 8); Folliard I, No. 07-cv-719 (RCL)(D.D.C. Oct. 13, 2010), ECF No. 37. On March 24, 2008, the court granted Folliard’s request to voluntarily dismiss Insight Public Sector from the case. Id., ECF No. 33. The Government declined to intervene on May 27, 2010. Id., ECF No. 31. The court unsealed the case on June 17, 2010. Id., ECF No. 32.

The court subsequently dismissed Emtec, Force 3, and others not named in this [806]*806suit under the first-to-file bar, concluding that Folliard’s complaint was based on the “same material elements of the complaint brought by Crennen.” Folliard I, 798 F.Supp.2d 66, 77 (D.D.C.2011). Government Acquisitions, which was not named in Crennen, remains -a defendant in Folliard I.

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872 F. Supp. 2d 801, 2012 U.S. Dist. LEXIS 59714, 2012 WL 1453610, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-ex-rel-sandager-v-dell-marketing-lp-mnd-2012.