ANDREW S. HANEN, District Judge.
The Court has before it the Magistrate Judge's Memorandum and Recommendation (Doc. No. 73) that the Court grant the Motion for Summary Judgment filed by Defendant Canon USA, Inc. (hereinafter "Canon"). (Doc. No. 59). The Plaintiff, Stephanie Schweizer, filed objections to the Memorandum and Recommendation, (Doc. No. 75), as did the Government, acting as an interested party. (Doc. No. 74). Defendant responded to these objections. (Doc. Nos. 77 & 78). Plaintiff filed a Reply. (Doc. No. 82).
Objections timely filed within fourteen days of entry of the United States Magistrate Judge's memorandum and recommendation must specifically identify the findings and recommendations for which the party seeks reconsideration. 28 U.S.C. § 636(b)(1)(C); FED. R. CIV. P. 72(b). Findings by the Magistrate Judge to which a party specifically objects must be reviewed de novo under 28 U.S.C. § 636(b)(1)(C). Consequently, the Court considers these matters de novo. The district court "may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge." 28 U.S.C. § 636(b)(1)(C).
Whether the public disclosure bar precludes a relator from bringing a qui tam action is determined in the summary judgment context. See U.S. ex rel. Colquitt v. Abbott Labs., 858 F.3d 365, 373 (5th Cir. 2017). Summary judgment is warranted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). "The movant bears the burden of identifying those portions of the record it believes demonstrate the absence of a genuine issue of material fact." Triple Tee Golf, Inc. v. Nike, Inc., 485 F.3d 253, 261 (5th Cir. 2007) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-25 (1986)). Once a movant submits a properly supported motion, the burden shifts to the non-movant to show that the Court should not grant the motion. Celotex, 477 U.S. at 321-25. The non-movant then must provide specific facts showing that there is a genuine dispute. Id. at 324; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). A party opposing a properly supported motion for summary judgment may not rest on mere allegations or denials in a pleading, and unsubstantiated assertions that a fact issue exists will not suffice. Celotex, 477 U.S. at 324.
The Magistrate Judge's Memorandum and Recommendation sets out a detailed factual history. (Doc. No. 73 at 7-10). The Court includes here only a brief restatement of the pertinent facts. Plaintiff is a relator bringing this qui tam action against Defendant Canon alleging Defendant overcharged the Government for copiers and services and provided copiers that were manufactured in non-designated countries. Previously, in 2006, Plaintiff brought a qui tam suit alleging similar conduct by Océ North America, Inc. (hereinafter "Océ"). That suit (hereinafter referred to as the "Océ Action") settled in 2012. In that same year, Defendant Canon acquired Océ. Four years later, Plaintiff brought this suit, alleging that Defendant Canon "adopt[ed] and expand[ed] ... the fraudulent scheme originally launched by Océ." (Doc. No. 75 at 13). Defendant moved for summary judgment arguing, inter alia, that Plaintiff could not clear the False Claims Act's public disclosure bar and/or the government action bar.
The Magistrate Judge's Recommendation agrees with Defendant. In its discussion of the public disclosure bar, the Recommendation found first that "the allegations of fraud related to the Government's purchase of copiers and services were publicly disclosed in the Océ action and the media reports associated therewith." (Doc. No. 73 at 14). Second, the Magistrate Judge found that "summary judgment evidence show[ed] that [Plaintiff's current] qui tam action is `based upon' allegations and transactions disclosed in the Océ action." Id. at 15. Third, the Magistrate Judge found that "the summary judgment evidence does not show, or even raise a genuine issue of material fact on whether, Schweizer was/is an original source of the information upon which the allegations in this case are based." Id. at 18. As the action was based upon allegations and transactions which were publicly disclosed, and Plaintiff could not show she was an original source, the Magistrate Judge recommended that summary judgment be granted in favor of the Defendant.
After a de novo review of the record, the Court agrees with the Magistrate Judge's conclusion that Plaintiff has not brought forward evidence raising a genuine dispute exists over any material facts. Under 31 U.S.C. § 3730(e)(4)(A), a "court shall dismiss an action or claim under [the False Claims Act], unless opposed by the government,
The Magistrate Judge concluded that "summary judgment evidence shows that the allegations related to the Government's purchase of copiers and services were publicly disclosed in the Océ Action and media reports associated therewith." (Doc. No. 73 at 14). Plaintiff objects to this characterization of her lawsuit, arguing that the "facts underlying Canon's fraud are so separate from the Océ case, that the public disclosure bar is not triggered in the first instance." (Doc. No. 75 at 19). To this end, Plaintiff argues that this suit "involves Canon's adoption and expansion of the fraudulent scheme originally launched by Océ." Id. at 16. Separate from the alleged factual distinction, Plaintiff argues that the Océ Action did not publicly disclose the fraud because (1) the suit is brought against a different company (Canon) and (2) the intervening settlement agreement "weigh[s] against applying the public disclosure bar." (Doc. No. 75 at 13).
Whatever truth there may be to the notion that Canon adopted and expanded Océ's fraudulent scheme, Plaintiff has brought forward no admissible evidence to contest Defendant's motion and consequently does not create a genuine issue of fact. Here, Defendant raised the public disclosure bar, put forward evidence of both public filings and news media documenting the Océ Action, and properly demonstrated the similarities between the two actions. (Doc. Nos. 60-2, -3, -4 & -5). The burden then shifted to Plaintiff to show that the allegations were not disclosed by the Océ Action. Plaintiff has failed to do so. The evidence attached to Plaintiff's Response to Defendant's Motion for Summary Judgment is comprised of: a copy of the Océ settlement agreement, records showing the Texas franchise tax status of Canon USA, Océ Imagistics, and Océ North America, and a somewhat paltry affidavit containing no more than a few statements that provide evidence that may imply Plaintiff was the relator and source in the Océ action.
Plaintiff's argument that this suit is against an entirely different Defendant is equally unavailing. A defendant undergoing a mere change in corporate ownership does not provide a license for a qui tam Plaintiff to renew allegations against that defendant based upon prior public disclosures. While Defendant's allegation that "Canon adopt[ed] and expand[ed] ... the fraudulent scheme originally launched by Océ" may avoid the public disclosure bar, that allegation, as noted above, is completely unsupported by summary judgment evidence. (Doc. No. 73 at 16).
Finally, the Court finds Plaintiff's argument that this suit covers a different period of time to be similarly unsupported. Plaintiff cites a case from the Sixth Circuit which it believes stands for the proposition that "a prior settlement weigh[s] against applying the public disclosure bar." (Doc. No. 75 at 13) (citing U.S. ex rel. Ibanez v. Bristol-Myers Squibb Co., 874 F.3d 905, 919 (6th Cir. 2017)). Plaintiff cites a portion of the case stating:
Ibanez, 874 F.3d at 919. Even assuming this case to be controlling,
The Recommendation found that Plaintiff's allegations "were `based upon' the publicly disclosed allegations and transactions in the Océ action." (Doc. No. 73 at 17). Plaintiff argues that this is incorrect, standing by her argument that "the facts underlying Canon's fraud are so separate from the Océ case that the public disclosure bar is not triggered in the first instance." (Doc. No. 75 at 19). Here too, Plaintiff fails to bring forward any admissible evidence to contest Defendant's motion and consequently does not create a genuine issue of fact. Defendant raised the public disclosure bar, put forward evidence of both public filings and news media documenting the Océ action, and properly alleged that the current action was based upon these disclosures. (Doc. Nos. 60-2, -3, -4 & -5). The burden then shifted to Plaintiff to raise an issue of material fact that her allegations were not based upon the Océ Action or the news media documenting it. Similar to the first step, Plaintiff fails to raise a genuine issue of fact on this issue, as none of the evidence even hints that this suit was based upon anything else.
Defendant has raised the public disclosure bar and supported its motion with evidence. That being the case, the Court must consider whether Plaintiff qualifies for the original source exception to the public disclosure bar. Abbott Labs., 858 F.3d at 373. In the Recommendation, the Magistrate Judge found that "none of the summary judgment evidence shows, suggests, or implies that [Plaintiff] has any direct and independent knowledge of the fraud she alleges in this case." (Doc. No. 73 at 19). Based upon the "evidence" filed in response to the summary judgment motion, the Magistrate Judge is undoubtedly correct. Interestingly, Plaintiff does not claim that she is the original source for the "separate and distinct fraudulent acts pursued by Canon after it acquired Océ." (Doc. No. 75 at 18). Instead, in her Objections she argues that she is an original source because she provided the initial public disclosure of the Océ allegations when she filed her complaint in that action thirteen years ago. Id. The Recommendation rejected this argument finding that it would "allow for the type of piggyback and/or parasitic lawsuits the public disclosure bar is meant to prevent." (Doc. No. 73 at 19).
The Court agrees with that conclusion. Plaintiff may have been an original source for the Océ action. That lawsuit was brought and resolved years ago. Nothing in the law gives Plaintiff the right to perpetually pursue the same cause of action ad infinitum without obtaining new "knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions." 31 U.S.C. § 3730(e)(4)(B) (2010). To rule otherwise would be inconsistent with the public disclosure bar's purpose of balancing "competing interests encouraging whistleblowing while preventing `parasitic' suits." Abbott Labs., 858 F.3d at 373. Such a ruling does not prevent qui tam plaintiffs from bringing actions of fraud continuing beyond an initial settlement, it merely recognizes that to do so the plaintiff must bring new, non-public information to the table. See Pfizer, 9 F.Supp.3d 46-47 (adopting a similar approach).
Plaintiff concedes that she has no new evidence that is independent of and materially adds to the publicly disclosed allegations. Indeed, she admits that she "does not contend that she is an original source for the separate and distinct fraudulent acts pursued by Canon after it acquired Océ." (Doc. No. 75 at 18). As such, no other grounds exist for Plaintiff to argue she is an original source. More importantly, she has brought no forth no evidence to raise a fact issue.
In summary, Plaintiff argues on the one hand that the claims against Canon are completely different than those in the Océ Action and thus the public disclosure bar is not implicated, but then argues even if it is implicated, she was the original source in the Océ Action. Neither avenue provides her the sanctuary she seeks. If the claims against Canon are wholly separate and apart from the Océ Action as Plaintiff now claims, she might avoid the "parasitic lawsuit" categorization, but her claims still fail because she provides no evidence to counteract Defendant's summary judgment motion. If she was the original source in the Océ Action and this Canon case is based upon those claims, she might prevail under an Abbott Labs analysis, but then would be subject to the claim that this suit falls under the forbidden category of a "parasitic lawsuit," as found by the Magistate Judge. In either event, prevailing law forecloses this action.
The Government, as well as Plaintiff, objects to the recommendation that summary judgment be granted against Plaintiff because she failed to clear the government action bar. As the foregoing discussion dismisses Plaintiff's suit, the Court does not need to reach this issue. Therefore, without commenting on its merits, the Court does not adopt the portion of the Magistrate Judge's recommendation granting summary judgment due to the government action bar.
For the foregoing reasons, the Magistrate Judge's Memorandum and Recommendation (Doc. No. 73) is
(Doc. No. 61-6).