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United States v. BAE Systems Tactical Vehicle Systems, LP

United States District Court, E.D. Michigan, Southern Division

April 25, 2017

UNITED STATES OF AMERICA, Plaintiff,
v.
BAE SYSTEMS TACTICAL VEHICLE SYSTEMS, LP, Defendant.

          OPINION AND ORDER GRANTING DEFENDANT'S MOTION TO COMPEL [38, 39]

          Nancy G. Edmunds United States District Judge

         This opinion addresses a discovery dispute between Plaintiff United States of America (the Government) and Defendant BAE Systems Tactical Vehicle Systems (BAE). BAE has requested discovery related to the facts, conclusions, and analysis underlying the decision of United States Contracting Officer Lisa Jones to rescind the Army's demand for payment from BAE. The Government, which is pursuing this action on the Army's behalf, has refused to respond substantively to those requests, objecting on the bases of attorney-client privilege and work product doctrine. The Government argues that those protections apply because Ms. Jones rescinded the demand "in consultation with and based on information and advice provided by counsel[.]" (Dkt. 38-17, at 6.) Now BAE moves to compel the requested discovery, arguing that the Army's "strategic decision to conduct [its] review through counsel, and funnel the basis for the decision to the Contracting Officer through lawyers, does not shroud the Contracting Officer's conclusions or the underlying facts and analyses in attorney-client privilege or work product protection." (Dkt. 38, at 2.) For the reasons that follow, the motion to compel is GRANTED.

         I. Background

         This litigation arises out of a contract under which BAE agreed to provide trucks and trailers to the Army. (Dkt. 3 at ¶ 21.) The Government alleges that, during contract negotiations, BAE provided pricing information that falsely or fraudulently over-charged the Government. (Id. at ¶ 3.) BAE's alleged misrepresentations also led to a (now-rescinded) demand for payment by the Army, which in turn formed the basis of (now-dismissed) proceedings before the Armed Services Board of Contract Appeals (ASBCA).

         The Army's pursuit of payment from BAE began after the Defense Contract Audit Agency (DCAA) finished auditing the contract. The post-audit final report, which was issued on May 31, 2013, alleged generally that BAE provided cost or pricing data that was not accurate, complete, and current as of the date of price agreement. (Dkt. 38-9, at 1.) On June 11, 2014, Army Contracting Officer Timothy Nichols sent BAE a letter incorporating the allegations from that report and demanding approximately $56 million paid under the contract, plus interest. (Dkt. 38-6.) A month after that, Mr. Nichols issued a contracting officer's final decision reiterating the demand for payment. (Dkt. 38-7.)

         BAE then appealed the contracting officer's final decision, which initiated proceedings before the ASBCA. During those proceedings, the Army was represented by attorneys from the Army Legal Services Agency, Contract & Fiscal Law Division (KFLD), and the parties engaged in extensive discovery. (Dkt. 47-1, at ¶¶ 3-5.) According to the Government, the record of discovery from those proceedings, also called the "Rule 4 File, " comprises 260 exhibits, including contract and negotiation records, spreadsheets, audit reports, and some of the cost and pricing data at issue. (Dkt. 47, at 3.) The parties also conducted depositions and exchanged additional documents. (Id.)

         Meanwhile, as discovery in the ASBCA proceedings continued, the Government filed this action in June 2015 "on behalf of the Department of the Army, an agency of the United States, acting by and through the Contracting Officer for the Army Contracting Command." (Dkt. 3 at ¶ 9.) The Amended Complaint alleges, inter alia, that BAE is liable under the False Claims Act (FCA) based on fraud, false claims for payment, and false statements. (Id. at ¶¶ 135-148.) The FCA provisions invoked impose liability on any person who "knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval, " or who "knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim." 31 U.S.C. § 3729(a)(1)(A)-(B).

         Soon after this litigation began, the Army moved to stay the ASBCA proceedings until this case resolved. (See Dkt. 38-10.) The Army argued that a stay was appropriate primarily because litigating the same facts and legal issues in both forums could result in conflicting decisions. (See Id. at 2.) The Army explained that the two matters involved "precisely the same facts, " for they were "similarly rooted in the findings of the DCAA Audit of BAE's pricing, and involve[d] the same pricing proposal[, ] BOMs [Bills of Materials, ] and negotiations." (See Id. at 5-6.) The only significant difference between the matters, the Army emphasized, was that the FCA requires the Government to prove that BAE acted "knowingly." (Id. at 6.) The ASBCA ultimately denied the request for a stay, finding that BAE was "entitled to our decision" on "whether the government has correctly claimed that BAE [] did not meet its contractual duty to disclose current, accurate, and complete cost or pricing data." (Dkt. 38-11, at 10.) But the ASBCA acknowledged that "[b]oth parties agree that the facts relevant to both cases are nearly completely overlapping and that the two cases will require examination of common documents and witnesses[.]" (Id. at 8.)

         In October 2016, Ms. Jones replaced Mr. Nichols as the contracting officer assigned to the contract between the Army and BAE. Then, in what BAE calls "a telling and abrupt turn of events, " Ms. Jones sent a letter to BAE on November 17, 2016 stating that the Army was "unequivocally and entirely" rescinding the previous contracting officer's demand letter and final decision. (Dkt. 38-12.) This letter also reported that "[t]he Government has no intention of issuing a new Final Decision" but elaborated no further. (Id.) The next day, the Army moved to dismiss the ASBCA action as moot because the contracting officer had rescinded the final decision underlying the appeal. (Dkt. 38-13.) The ASBCA granted the motion to dismiss. (Dkt. 38-14.)

         Around the same time, BAE filed discovery requests in this action related to Ms. Jones' decision to rescind the demand letter and final decision. (Dkt. 38-16.) These included: (1) an interrogatory asking the Government to describe in detail the basis for Ms. Jones' decision, including the rationale for the rescission and all documents, facts, or information relied upon or related to the rescission; (2) a request for production of all documents used, reviewed, or relied on to respond to that interrogatory, or used, reviewed, relied on, or that related to Jones' decision; and (3) a deposition of Ms. Jones. (Id.)

         The Government objected to these requests on the bases of attorney-client privilege and work product doctrine, explaining that Ms. Jones rescinded the demand "in consultation with and based on information and advice provided by counsel[.]" (Dkt. 38-17, at 6.) According to the Government, "KFLD selected for review and provided to Ms. Jones all of the factual evidence that she reviewed[.]" (Dkt. 47, at 4.) Ms. Jones has since corroborated that account, testifying that she did not review the underlying facts and relied on KFLD's assessment. (Dkt. 38-2, at 140:8-15; 141:7-11.) The materials that KFLD assessed included the Rule 4 File and the discovery produced by both parties. (Dkt. 47-1 at ¶¶ 7-9.) Ms. Jones also received access to the "Trial Attorney Litigation File, " but she does not recall whether she reviewed it. (Dkt. 38-2, at 111:13-112:14.)

         Following further correspondence between the parties, the Government produced Ms. Jones for a deposition on January 25, 2017. (Id.) But the Government prevented Ms. Jones from testifying regarding her review of the facts, her conclusions, or her underlying reasons for rescinding the demand letter and final decision. Furthermore, the Government produced 838 documents, but 31 of these were redacted for privilege or protection. The Government also withheld 56 documents as allegedly privileged or protected. Now BAE moves to compel the Government to produce the requested discovery.[1] BAE requests in the alternative that, if the Court finds that privilege and work product protection must be determined on a communication-by-communication basis, the Court will conduct an in camera review of the documents withheld by the Government.

         II. Applicable Standard

         "The scope of discovery under the Federal Rules of Civil Procedure is traditionally quite broad." Lewis v. ACB Business Servs., Inc., 135 F.3d 389, 402 (6th Cir. 1998). "Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case[.]" Fed.R.Civ.P. 26(b)(1). "Information within this scope of discovery need not be admissible in evidence to be discoverable." Id. A party may move to compel discovery if a deponent fails to answer a question asked under Rule 30 or 31; fails to answer an interrogatory submitted under Rule 33; or fails to produce documents requested under Rule 34. Fed.R.Civ.P. 37(a)(3)(B).

         III. ...


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