UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
______________________________ ) UNITED STATES OF AMERICA, ) ) Plaintiff, ) ) v. ) Civil Action No. 04-1543 (RWR) ) SCIENCE APPLICATIONS ) INTERNATIONAL CORPORATION, ) ) Defendant. ) ______________________________)
MEMORANDUM ORDER
The United States brought suit against Science Applications
International Corporation (“SAIC”) alleging, in part, that SAIC
failed to make disclosures of organizational conflicts of
interest as was required under two contracts that SAIC entered
into with the Nuclear Regulatory Commission (“NRC”) in 1992 and
1999, in violation of the False Claims Act (“FCA”), 31 U.S.C.
§ 3729. On SAIC’s appeal of a jury verdict finding SAIC liable
on the FCA claims, the D.C. Circuit vacated the judgment on FCA
liability and damages due to a faulty jury instruction about
calculating damages and remanded the case for further
proceedings. SAIC now moves to reopen discovery on damages.
Because SAIC is entitled to limited additional discovery on the
issue of the government’s continuing use of any SAIC work product
but is not entitled to a broader reopening of discovery, its
motion will be granted in part and denied in part. -2-
The D.C. Circuit found that the jury damages instruction was
flawed. At trial, the jury was instructed:
Your calculations of damages should be limited to determining what the [NRC] paid to SAIC over and above what the NRC would have paid had it known of SAIC’s organizational conflicts of interest. Your calculation of damages should not attempt to account for the value of services, if any, that SAIC conferred upon the [NRC].
Final Jury Instructions, Trial Tr. vol. 16 at 21:22-22:3,
July 28, 2013, ECF No. 161. The court of appeals found that this
instruction was erroneous because it “essentially required the
jury to assume that SAIC’s service had no value even in the face
of possible evidence to the contrary.” United States v. Sci.
Applications Int’l Corp. (SAIC III), 626 F.3d 1257, 1279 (D.C.
Cir. 2010). Instead, the court stated, “[t]o establish damages,
the government must show not only that the defendant’s false
claims caused the government to make payments that it would have
otherwise withheld, but also that the performance the government
received was worth less than what it believed it had purchased.”
Id. Thus, for the government “to recover the full value of
payments made” to SAIC, “the government [must] prove[] that it
received no value from the product delivered.” Id. “SAIC,
however, must also be allowed to offer evidence to the
contrary[.]” Id. at 1280. -3-
SAIC moves under Federal Rules of Civil Procedure 26(b)(1)
and 16(b)(4) to reopen discovery, which closed in 2006, “for the
limited purpose of allowing SAIC to develop the record evidence
of value the Nuclear Regulatory Commission (‘NRC’) has received
from SAIC’s work[.]” SAIC’s Mot. for Targeted Discovery on
Damages (“SAIC’s Mot.”) at 1. To do this, “SAIC requests 120
days to depose a witness . . . on the NRC’s use of SAIC’s work
product; to conduct three half-day depositions of new fact
witnesses regarding damages; and to seek from the government
responses to specific and particularized document requests and a
single interrogatory relating to damages.” Id. The proposed
document requests seek: (1) “[a]ll documents related to or
reflecting the NRC’s use of SAIC’s work performed under the 1992
and 1999 Contracts and the NRC’s use of NUREG-1640,” (2) “[a]ll
documents that evidence, support or establish the damages
allegedly incurred by the Government as a result of the OCIs
alleged in the Complaint,” and (3) “[a]ll documents upon which
the Government intends to rely at trial (related to damages).”
SAIC’s Mem. in Supp. of Mot. for Targeted Discovery on Damages
(“SAIC’s Mem.”) at 16. SAIC insists that the discovery will lead
to relevant evidence it needs to contest the government’s
argument that SAIC’s services were worthless. The government -4-
opposes.1 See U.S.’s Mem. in Opp’n to Def. SAIC’s Mot. for
Discovery (“U.S. Opp’n”) at 1.
Generally, “discovery under the Federal Rules of Civil
Procedure should be freely permitted,” Edmond v. U.S. Postal
Serv. Gen. Counsel, 949 F.2d 415, 425 (D.C. Cir. 1991), and
discovery disputes are committed to the discretion of the court.
United Presbyterian Church v. Reagan, 738 F.2d 1375, 1382 (D.C.
Cir. 1984); accord Fusco v. Gen. Motors Corp., 11 F.3d 259, 267
(1st Cir. 1993); Cleveland By & Through Cleveland v. Piper
Aircraft Corp., 985 F.2d 1438, 1450 (10th Cir. 1993), abrogration
on other grounds recognized by US Airways, Inc. v. O’Donnell, 627
F.3d 1318, 1326 (10th Cir. 2010). This discretion includes
whether to reopen discovery. Watt v. All Clear Bus. Solutions,
LLC., 840 F. Supp. 2d 324 (D.D.C. 2012); accord Fusco, 11 F.3d at
267.
SAIC contends that a motion to reopen discovery prior to a
retrial is governed by the “good cause” standard. SAIC’s Mem. at
7. By contrast, the United States argues that the “manifest
injustice” standard should apply. U.S. Opp’n at 2. Neither the
1 The government also requests permission to conduct additional discovery about each SAIC’s employee’s relevant knowledge of the conflict of interest requirements if discovery is re-opened. However, the government has not demonstrated that it is entitled to reexplore an issue that it has already had the opportunity to explore during the initial discovery period. U.S. Opp’n at 19-20 n.9. Accordingly, that request will not be granted. -5-
D.C. Circuit nor the Supreme Court has spoken on what standard is
applicable to a motion to reopen discovery prior to a retrial.
Typically, “reopening discovery would require a showing of good
cause” because reopening discovery requires an amendment of a
scheduling order. United States ex rel. Pogue v. Diabetes
Treatment Ctrs. of Am., 576 F. Supp. 2d 128, 133 (D.D.C. 2008).
However, the United States contends that because a final pretrial
order was issued before the first trial, the appropriate standard
for reopening discovery is manifest injustice. U.S. Opp’n at 2
(“Moreover, in a retrial setting, Federal Rule of Civil Procedure
16(e) and Local Rule 16.5 mandate that final pretrial orders
issued by the Court for the first trial ‘shall control the
subsequent course of action . . . [and] shall be modified only to
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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
______________________________ ) UNITED STATES OF AMERICA, ) ) Plaintiff, ) ) v. ) Civil Action No. 04-1543 (RWR) ) SCIENCE APPLICATIONS ) INTERNATIONAL CORPORATION, ) ) Defendant. ) ______________________________)
MEMORANDUM ORDER
The United States brought suit against Science Applications
International Corporation (“SAIC”) alleging, in part, that SAIC
failed to make disclosures of organizational conflicts of
interest as was required under two contracts that SAIC entered
into with the Nuclear Regulatory Commission (“NRC”) in 1992 and
1999, in violation of the False Claims Act (“FCA”), 31 U.S.C.
§ 3729. On SAIC’s appeal of a jury verdict finding SAIC liable
on the FCA claims, the D.C. Circuit vacated the judgment on FCA
liability and damages due to a faulty jury instruction about
calculating damages and remanded the case for further
proceedings. SAIC now moves to reopen discovery on damages.
Because SAIC is entitled to limited additional discovery on the
issue of the government’s continuing use of any SAIC work product
but is not entitled to a broader reopening of discovery, its
motion will be granted in part and denied in part. -2-
The D.C. Circuit found that the jury damages instruction was
flawed. At trial, the jury was instructed:
Your calculations of damages should be limited to determining what the [NRC] paid to SAIC over and above what the NRC would have paid had it known of SAIC’s organizational conflicts of interest. Your calculation of damages should not attempt to account for the value of services, if any, that SAIC conferred upon the [NRC].
Final Jury Instructions, Trial Tr. vol. 16 at 21:22-22:3,
July 28, 2013, ECF No. 161. The court of appeals found that this
instruction was erroneous because it “essentially required the
jury to assume that SAIC’s service had no value even in the face
of possible evidence to the contrary.” United States v. Sci.
Applications Int’l Corp. (SAIC III), 626 F.3d 1257, 1279 (D.C.
Cir. 2010). Instead, the court stated, “[t]o establish damages,
the government must show not only that the defendant’s false
claims caused the government to make payments that it would have
otherwise withheld, but also that the performance the government
received was worth less than what it believed it had purchased.”
Id. Thus, for the government “to recover the full value of
payments made” to SAIC, “the government [must] prove[] that it
received no value from the product delivered.” Id. “SAIC,
however, must also be allowed to offer evidence to the
contrary[.]” Id. at 1280. -3-
SAIC moves under Federal Rules of Civil Procedure 26(b)(1)
and 16(b)(4) to reopen discovery, which closed in 2006, “for the
limited purpose of allowing SAIC to develop the record evidence
of value the Nuclear Regulatory Commission (‘NRC’) has received
from SAIC’s work[.]” SAIC’s Mot. for Targeted Discovery on
Damages (“SAIC’s Mot.”) at 1. To do this, “SAIC requests 120
days to depose a witness . . . on the NRC’s use of SAIC’s work
product; to conduct three half-day depositions of new fact
witnesses regarding damages; and to seek from the government
responses to specific and particularized document requests and a
single interrogatory relating to damages.” Id. The proposed
document requests seek: (1) “[a]ll documents related to or
reflecting the NRC’s use of SAIC’s work performed under the 1992
and 1999 Contracts and the NRC’s use of NUREG-1640,” (2) “[a]ll
documents that evidence, support or establish the damages
allegedly incurred by the Government as a result of the OCIs
alleged in the Complaint,” and (3) “[a]ll documents upon which
the Government intends to rely at trial (related to damages).”
SAIC’s Mem. in Supp. of Mot. for Targeted Discovery on Damages
(“SAIC’s Mem.”) at 16. SAIC insists that the discovery will lead
to relevant evidence it needs to contest the government’s
argument that SAIC’s services were worthless. The government -4-
opposes.1 See U.S.’s Mem. in Opp’n to Def. SAIC’s Mot. for
Discovery (“U.S. Opp’n”) at 1.
Generally, “discovery under the Federal Rules of Civil
Procedure should be freely permitted,” Edmond v. U.S. Postal
Serv. Gen. Counsel, 949 F.2d 415, 425 (D.C. Cir. 1991), and
discovery disputes are committed to the discretion of the court.
United Presbyterian Church v. Reagan, 738 F.2d 1375, 1382 (D.C.
Cir. 1984); accord Fusco v. Gen. Motors Corp., 11 F.3d 259, 267
(1st Cir. 1993); Cleveland By & Through Cleveland v. Piper
Aircraft Corp., 985 F.2d 1438, 1450 (10th Cir. 1993), abrogration
on other grounds recognized by US Airways, Inc. v. O’Donnell, 627
F.3d 1318, 1326 (10th Cir. 2010). This discretion includes
whether to reopen discovery. Watt v. All Clear Bus. Solutions,
LLC., 840 F. Supp. 2d 324 (D.D.C. 2012); accord Fusco, 11 F.3d at
267.
SAIC contends that a motion to reopen discovery prior to a
retrial is governed by the “good cause” standard. SAIC’s Mem. at
7. By contrast, the United States argues that the “manifest
injustice” standard should apply. U.S. Opp’n at 2. Neither the
1 The government also requests permission to conduct additional discovery about each SAIC’s employee’s relevant knowledge of the conflict of interest requirements if discovery is re-opened. However, the government has not demonstrated that it is entitled to reexplore an issue that it has already had the opportunity to explore during the initial discovery period. U.S. Opp’n at 19-20 n.9. Accordingly, that request will not be granted. -5-
D.C. Circuit nor the Supreme Court has spoken on what standard is
applicable to a motion to reopen discovery prior to a retrial.
Typically, “reopening discovery would require a showing of good
cause” because reopening discovery requires an amendment of a
scheduling order. United States ex rel. Pogue v. Diabetes
Treatment Ctrs. of Am., 576 F. Supp. 2d 128, 133 (D.D.C. 2008).
However, the United States contends that because a final pretrial
order was issued before the first trial, the appropriate standard
for reopening discovery is manifest injustice. U.S. Opp’n at 2
(“Moreover, in a retrial setting, Federal Rule of Civil Procedure
16(e) and Local Rule 16.5 mandate that final pretrial orders
issued by the Court for the first trial ‘shall control the
subsequent course of action . . . [and] shall be modified only to
prevent manifest injustice.’”); see also Fed. R. Civ. P. 16(e)
(stating that modification of a final pretrial order is
permissible only to “prevent manifest injustice.”); LCvR 16.5
(same). While there is some force to SAIC’s argument that the
good cause standard should apply, see SAIC’s Mem. at 4; SAIC’s
Reply at 3-5, it is unnecessary to decide which standard is
applicable since SAIC has shown that it would suffer a manifest
injustice if it were denied the opportunity to discover evidence
arising after discovery closed in 2006 about damages. However,
SAIC has not demonstrated good cause for reopening discovery on -6-
matters that it had a full opportunity to pursue before discovery
closed in 2006.
The factors that courts consider when determining whether
there is good cause to reopen discovery include “(1) whether
trial is imminent; (2) whether the request is opposed; (3)
whether the non-moving party would be prejudiced; (4) whether the
moving party was diligent in obtaining discovery within the
guidelines established by the court; (5) the foreseeability of
the need for additional discovery in light of the time allotted
by the district court; and (6) the likelihood that discovery will
lead to relevant evidence.” Childers v. Slater, 197 F.R.D. 185,
188 (D.D.C. 2000) (citing Smith v. United States, 834 F.2d 166,
169 (10th Cir. 1987)).
On balance, the Childers factors weigh in favor of reopening
discovery to allow SAIC to discover evidence about NRC’s
continued use of SAIC’s work product for the period after the
close of discovery in 2006 until the present, but against
reopening discovery for the issue of value before the close of
discovery. The trial is not imminent because no new trial date
has been set. This is not a request to reopen discovery on the
eve of trial, but one made well in advance of the retrial. No
time allotments have been made that would be upset by permitting
limited relevant additional discovery, and it was the D.C.
Circuit’s opinion that prompted the request for the evidence. -7-
While the government argues that it will be prejudiced by the
request, the argument is unconvincing since this order can craft
discovery limits that will avoid undue prejudice to the
government. Moreover, the minimal delay to the trial is
significantly outweighed by the potential value that the evidence
has to a central issue at retrial.
Most importantly, the discovery will also likely lead to
relevant information. While the government argues that the
information that SAIC seeks has “little, if any, relevance to the
determinations the jury will have to make on retrial,” U.S. Opp’n
at 23, the jury will be required to assess the value of SAIC’s
work to the government, should they find liability, in order to
determine damages. Any perceived continued use of SAIC’s work
may shape the jury’s assessment of that value. The information
regarding the continued use of SAIC’s work product after
discovery closed in 2006 could help the jury to assess the
magnitude of the damages that the government suffered, and there
is no reason here not to allow SAIC to discover such evidence.
See Fusco, 11 F.3d at 267 (“[T]here [is not] any general rule
prohibiting a party from offering new evidence at a second
trial[.]”). The government is certainly free to argue at trial
that because “[t]he NRC bargained for advice and assistance in
support of a rulemaking free from conflict of interest,” SAIC’s
work had no value. See U.S. Opp’n at 18; see also SAIC III, 626 -8-
F.3d at 1279-80 (“Of course, the government remains free to argue
that the value of SAIC’s advice and assistance was completely
compromised by the existence of undisclosed conflicts . . . .”).
However, since SAIC “must also be allowed to offer evidence to
the contrary,” id. at 1280, reopening discovery affords SAIC this
opportunity. Further, the discovery may also lead to relevant
information for the government because it is ultimately the
government’s burden to prove damages, id. at 1279, which includes
the value -- or lack thereof -- of SAIC’s work to the government.
The Childers factors, though, do not support reopening
discovery for the documents and evidence about value created
before the close of discovery in 2006. The government opposes
such renewed discovery. SAIC concedes that it had the
opportunity to discover at least the pre-2006 information before
the 2006 close of discovery. See SAIC’s Mem. at 8 (“[T]he
parties were able to conduct discovery related to damages before
the first trial, and the [c]ourt did not preclude them from doing
so . . . .” (emphasis omitted)). The need for evidence about the
value of SAIC’s work product should have been apparent from the
outset of the litigation, and in fact was apparent since SAIC
“sought to ascertain the nature and scope of NRC’s continued use
of its work product.” SAIC’s Mem. at 5. But these factors do
not weigh against reopening discovery for the present value of
SAIC’s product. -9-
Applying the manifest injustice standard yields the same
result. Barring SAIC from pursuing limited discovery regarding
current value would subject it to a manifest injustice. Keeping
discovery closed would unduly impair SAIC’s ability to contest
the government’s assertions regarding the present value of SAIC’s
product. See Piper Aircraft Corp., 985 F.2d at 1450 (“[T]he
court should allow sufficient leeway for the parties to produce
new evidence, without undue prejudice to their interest.”).
Additionally, because this will not require “extensive additional
discovery,” and the evidence is not “cumulative and redundant of
that which was produced before,” the “balanc[e] of the value of
the additional evidence with the need for judicial economy and
the reasons that the case was remanded in the first place” favor
allowing SAIC to engage in limited additional discovery. See
Piper Aircraft, 985 F.2d at 1450. This approach will prevent a
manifest injustice by limiting the burden that the government
must bear in producing discovery, while also allowing SAIC the
opportunity to discover relevant information.
Accordingly, SAIC will be permitted to take a 30(b)(6)
deposition, limited to evidence of value from the 2006 close of
discovery to the present; request documents created after the
2006 close of discovery “related to or reflecting the NRC’s use
of SAIC’s work performed under the 1992 and 1999 Contracts and
the NRC’s use of NUREG-1640” and those that “evidence, support or -10-
establish the damages allegedly incurred by the Government as a
result of the OCIs alleged in the complaint”; request
supplementation of any prior response to requests for documents
“upon which the Government intends to rely at trial (related to
damages)” which had not been produced earlier; request
supplementation of any prior response to any interrogatory
seeking the dollar amount and components and method of
calculation of each damage claim; and conduct one half-day
deposition of a new fact witness. Both sides will be permitted
discovery of one additional expert per side. Thus, it is hereby
ORDERED that SAIC’s motion [207] for targeted discovery on
damages be, and hereby is, GRANTED IN PART and DENIED IN PART.
It is further
ORDERED that, as detailed above, SAIC is permitted to (1)
depose one Rule 30(b)(6) representative designated by the NRC,
limited to evidence about value dating from the 2006 close of
discovery forward; (2) conduct one half-day deposition of a new
fact witness about damages; (3) serve a request for documents
created after the 2006 close of discovery regarding current
value; and (4) request supplementation of any prior discovery
responses regarding the government’s damages calculations and any
trial documents about damages. It is further -11-
ORDERED that each side will be permitted limited expert
discovery (one expert per side) about the value of SAIC’s work to
the government. It is further
ORDERED that all additional expert designations be made by
March 4, 2014, and all additional discovery be completed by
April 18, 2014. It is further
ORDERED that the parties appear for a scheduling conference
on April 22, 2014 at 9:45 a.m.
SIGNED this 19th day of December, 2013.
/s/ RICHARD W. ROBERTS Chief Judge