UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA :
ex rel. LORI MORSELL, et al., :
:
Plaintiffs, : Civil Action No.: 12-800 (RC)
:
v. : Re Document No.: 200
:
NORTONLIFELOCK, INC. :
(f/k/a SYMANTEC CORPORATION), :
:
Defendant. :
MEMORANDUM OPINION
DENYING DEFENDANT’S MOTION FOR RECONSIDERATION
I. INTRODUCTION
Defendant NortonLifeLock Incorporated (“Norton”)1 seeks reconsideration of three
aspects of the Court’s earlier summary judgment rulings regarding the Federal Government’s
(“Government”) Federal False Claims Act (“FCA”) claims and the related state claims of
California, Florida, and Relator Morsell on behalf of New York (collectively, “the States”).
Specifically, Norton argues “that the Court’s opinion (1) failed to properly apply the binding
standard set by the Supreme Court in Universal Health Systems, Inc. v. U.S. ex rel. Escobar, 136
S. Ct. 1989 (2016), to its analysis of the FCA element of materiality; and (2) failed to apply
correctly the controlling precedent of this Circuit in U.S. ex rel. Purcell v. MWI Corp., 807 F.3d
281 (D.C. Cir. 2015), to its analysis of the FCA element of scienter.” Mot. for Recons. at 1, ECF
1
The Court stated in its opinion regarding motions for summary judgment that it would
refer to the company previously known as Symantec Corporation by its new name going
forward. United States ex rel. Morsell v. Symantec Corp., 471 F. Supp. 3d 257, 266 n.1 (D.D.C.
2020). However, the Court has not replaced instances of “Symantec” in quotations.
No. 200. For the reasons given below, the Court holds that Norton’s motion does not meet the
standard for reconsideration, and therefore is denied.
II. BACKGROUND
Because this is a motion for reconsideration, the relevant background is the same as the
background from the opinion Norton asks the Court to reconsider. See United States ex rel.
Morsell v. Symantec Corp., 471 F. Supp. 3d 257, 267–76 (D.D.C. 2020). To summarize, the
Government and the States claim that Norton violated the FCA, common law, state false claims
acts, and state contract law when, “in the process of setting pre-negotiated maximum prices for
government purchasers with the General Services Administration, Symantec overcharged them
by misrepresenting the existence of certain prices and discounts that were available to
Symantec’s private customers and by consequently failing to offer government purchasers the
same low prices these customers received.” Id. at 267. Norton was “required to make certain
representations and to provide details about their discounting policies” in their Commercial Sales
Practices Format (“CSPs”) disclosures, id. at 269, which were part of Norton’s contract, see id. at
281–82. Norton’s contract also contained a Price Reduction Clause (“PRC”), which “ensures
that the Government’s prices are reduced if [an agreed-upon] customer or category of customers
is given lower pricing or increased discounts.” Id. at 270. The Government’s claims at issue in
this motion concern alleged falsities regarding Norton’s CSPs and PRC.
The Court ruled on the parties’ motions for summary judgment on March 30, 2020.
Among other rulings, the Court denied Norton’s motion for summary judgment that the CSPs
and PRC were not material under the FCA, denied Norton’s motion for summary judgment that
Norton lacked knowledge of the falsities regarding its CSPs and PRC under the FCA, and denied
Norton’s motions for summary judgment on the States’ claims.
2
Norton now moves for reconsideration of these rulings, arguing that the Court incorrectly
denied summary judgment on the Government’s claims regarding materiality and knowledge due
to “misapplication of Supreme Court precedent in Escobar and Circuit precedent in Purcell,” and
that the States’ claims fail for the same reasons because they “are derivative of the government’s
federal FCA claims” and also because the States’ claims “depend on additional and separate
evidence that neither the States nor the Relator have identified in the record.” Mem. Supp. Mot.
for Recons. (“Mem.”) at 7, ECF No. 200-1. The motion has been fully briefed. See United
States’ Opp’n Mot. for Recons., ECF No. 202; States’ Opp’n Mot. for Recons., ECF No. 203;
Reply to United States’ Opp’n (“Reply”), ECF No. 204; Reply to States’ Opp’n, ECF No. 205.
III. LEGAL STANDARD
“Federal Rule of Civil Procedure 54(b) [(‘Rule 54(b)’)] governs reconsideration of orders
that do not constitute final judgments in a case.” Singh v. George Wash. Univ., 383 F. Supp. 2d
99, 101 (D.D.C. 2005) (quoting Cobell v. Norton, 355 F. Supp. 2d 531, 539 (D.D.C. 2005)).
Rule 54(b) provides that “any order or other decision, however designated, that adjudicates fewer
than all the claims or the rights and liabilities of fewer than all the parties”—that is, any order of
interlocutory judgment—“may be revised at any time before the entry of judgment adjudicating
all the claims and all the parties’ rights and liabilities.” Fed. R. Civ. P. 54(b). Relief upon
reconsideration of an interlocutory decision pursuant to Rule 54(b) is within the discretion of the
district court, see Lewis v. United States, 290 F. Supp. 2d 1, 3 (D.D.C. 2003), and may be entered
“as justice requires,” Estate of Botvin ex rel. Ellis v. Islamic Republic of Iran, 772 F. Supp. 2d
218, 223 (D.D.C. 2011) (quoting Childers v. Slater, 197 F.R.D. 185, 190 (D.D.C. 2000)). “‘As
justice requires’ indicates concrete considerations of whether the court ‘has patently
misunderstood a party, has made a decision outside the adversarial issues presented to the [c]ourt
3
by the parties, has made an error not of reasoning, but of apprehension, or where a controlling or
significant change in the law or facts [has occurred] since the submission of the issue to the
court.’” Id. (quoting Cobell v. Norton, 224 F.R.D. 266, 272 (D.D.C. 2004)). “Errors of
apprehension may include a Court’s failure to consider ‘controlling decisions or data that might
reasonably be expected to alter the conclusion reached by the court.’” Singh, 383 F. Supp. 2d at
101 (quoting Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995)). As such, “[i]n
general, a court will grant a motion for reconsideration of an interlocutory order only when the
movant demonstrates: ‘(1) an intervening change in the law; (2) the discovery of new evidence
not previously available; or (3) a clear error in the first order.’” Zeigler v. Potter, 555 F. Supp.
2d 126, 129 (D.D.C. 2008) (quoting Keystone Tobacco Co., Inc. v. U.S. Tobacco Co., 217 F.R.D.
235, 237 (D.D.C. 2003)). A court’s discretion to grant a Rule 54(b) motion, however, is “limited
by the law of the case doctrine and ‘subject to the caveat that, where litigants have once battled
for the court’s decision, they should neither be required, nor without good reason permitted, to
battle for it again.’” Judicial Watch v. U.S. Dep’t of the Army, 466 F. Supp. 2d 112, 123 (D.D.C.
2006) (quoting Singh, 383 F. Supp. 2d at 101).
Summary judgment is appropriate only where the summary judgment “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 initial burden of identifying
portions of the record that demonstrate the absence of any genuine issue of material fact. See
Fed. R. Civ. P. 56(c)(1); Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A “material” fact is
one capable of affecting the substantive outcome of the litigation. See Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is “genuine” if there is enough evidence for a
reasonable jury to return a verdict for the non-movant. See Scott v. Harris, 550 U.S. 372, 380
4
(2007). In response, the non-movant must point to specific facts in the record that reveal a
genuine issue that is suitable for trial. See Celotex, 477 U.S. at 324. In determining whether a
genuine issue exists, a court must refrain from making credibility determinations or weighing the
evidence; rather, “[t]he evidence of the non-movant is to be believed, and all justifiable
inferences are to be drawn in his favor.” Anderson, 477 U.S. at 255; see also Czekalski v. Peters,
475 F.3d 360, 363 (D.C. Cir. 2007). “In order to establish that a fact is or cannot be genuinely
disputed, a party must (a) cite to specific parts of the record—including deposition testimony,
documentary evidence, affidavits or declarations, or other competent evidence—in support of its
position, or (b) demonstrate that the materials relied upon by the opposing party do not actually
establish the absence or presence of a genuine dispute.” United States v. Dynamic Visions, Inc.,
220 F. Supp. 3d 16, 19–20 (D.D.C. 2016) (citing Fed. R. Civ. P. 56(c)(1)).
IV. ANALYSIS
Norton suggests several potential legal justifications for Rule 54(b) reconsideration of the
Court’s prior summary judgment rulings, but only one of those merits significant analysis. First,
Norton argues that reconsideration is justified “to correct ‘error in [the Court] failing to consider
controlling decisions.’” Reply at 4 (quoting Bayshore Cmty. Hosp. v. Azar, 325 F. Supp. 3d 18,
22 (D.D.C. 2018)). This is the only ground for reconsideration that Norton advances with any
particularity. Norton argues that “[u]nder the Supreme Court’s holding in Escobar and the D.C.
Circuit’s holding in Purcell, the government has failed to meet its burden of proof regarding the
elements of materiality and scienter, necessary elements of its FCA claims as to which it bears
the burden of proof at summary judgment and at trial.”2 Mem. at 9. Norton also argues that the
2
Norton argues repeatedly that “the Court’s holdings . . . reflect a misapplication of the
summary judgment standard.” E.g., Mem. at 18 n.7. For reasons discussed in this section, this
alone would not justify reconsideration even if true. Regardless, the Court disagrees. For
5
State claims fail for the same reasons because they “are derivative of the government’s federal
FCA claims.” Mem. at 7. Norton therefore asserts that the Court failed to consider two
supposedly controlling decisions. Because failing to consider controlling decisions is a sufficient
ground for reconsideration, the Court analyzes the sufficiency of this argument below.
Second, Norton argues that reconsideration is justified to ensure the “proper application
of controlling D.C. Circuit and Supreme Court authorities.” Reply at 4; see also Mot. for
Recons. at 1 (arguing that the Court “failed to properly apply” controlling precedent). However,
the Court does not believe that reconsideration is appropriate merely because a party seeks the
“proper application of controlling . . . authorities.” Reply at 4. Norton cites no authority
supporting Rule 54(b) reconsideration merely for misapplication of precedent. Such an
interpretation of the Rule 54(b) standard would be in tension with the stricter standard described
above: “fail[ure] to consider controlling decisions.” Bayshore Cmty. Hosp., 325 F. Supp. 3d at
22 (emphasis added). It would also be in tension with the Court’s admonition that “where
litigants have once battled for the court’s decision, they should neither be required, nor without
good reason permitted, to battle for it again.” Judicial Watch, 466 F. Supp. 2d at 123 (quoting
Singh, 383 F. Supp. 2d at 101). Were the Court to allow reconsideration merely to re-analyze
and re-apply precedent, Norton would indeed have been granted the opportunity to battle for the
court’s decision again. “[D]isagreeing with a court’s answer to an argument is not proper cause
to pursue reconsideration; that is better left to the appellate process.” Talbot v. U.S. Dep’t of
example, Norton argues that some of the Government’s claims should not have survived
summary judgment because the Court recognized that “[t]he Government has yet to establish
[that false disclosures were the basis of its prices].” Id. (second alteration in original) (quoting
Symantec, 471 F. Supp. 3d at 296). But the immediately preceding sentences clarify that
“genuine issues of material fact preclude summary judgment.” Id. No other example of the
Court’s supposed misapplication of the summary judgment standard is convincing.
6
State, 373 F. Supp. 3d 212, 220 (D.D.C. 2018). The Court therefore will not consider this
supposed ground for reconsideration.
Third, Norton argues in reply that the Court has discretion to reconsider its own
interlocutory decisions even when Rule 54(b) is not met. Reply at 4 n.1. Given Norton raised
this ground for reconsideration for the first time in reply, the Court will not consider it now. See
Baloch v. Norton, 517 F. Supp. 2d 345, 348 n.2 (D.D.C. 2007) (“If the movant raises arguments
for the first time in his reply to the non-movant’s opposition, the court [may] either ignore those
arguments . . . or provide the non-movant an opportunity to respond.”), aff'd sub nom. Baloch v.
Kempthorne, 550 F.3d 1191 (D.C. Cir. 2008).
Fourth, Norton states that reconsideration is justified if a court “patently misunderstood
the parties.” Mem. at 8 (quoting Bayshore Cmty. Hosp., 325 F. Supp. 3d at 22). But Norton
does not advance any argument that the Court misunderstood the parties. See, e.g., Mem. at 1
(arguing in brief’s first paragraph that “[t]he Court’s findings and conclusions . . . did not
properly apply the controlling authorities of this Circuit and of the Supreme Court,” without
mentioning anything about misunderstanding the parties). The Court will not consider this
ground for reconsideration.
Norton’s motion for reconsideration will therefore only be justified “to correct ‘error in
[the Court] failing to consider controlling decisions.’” Reply at 4 (quoting Bayshore Cmty.
Hosp., 325 F. Supp. 3d at 22). As discussed below, the Court holds that Norton has not shown
that the Court failed to consider any controlling decisions in its summary judgment opinion
regarding the materiality or knowledge elements of the FCA claims.
7
A. Materiality
Norton argues that the Government produced no sufficient evidence of materiality as
required by Escobar, and therefore that Norton is entitled to summary judgment on materiality.
Mot at 9. Norton’s motion fails on this issue because the Court already applied Escobar to find
sufficient evidence of materiality to prevent summary judgment in Norton’s favor. The Court
explicitly considered Escobar and Norton’s related arguments:
The Court’s decision on the motion to dismiss predated Escobar, but nothing the
Supreme Court said in that case changes the analysis here. Symantec seems to
argue otherwise and to suggest that the Government has asserted the kind of “per
se materiality” forbidden by Escobar. . . . If, in the course of litigation, it turns
out that the misrepresentations the Government can actually prove are only
“minor or insubstantial,” Symantec can renew the argument that Escobar requires
more for materiality. As it stands now, though, the misrepresentations that remain
the subject of genuine disputes are substantial enough to meet the materiality
threshold.
Symantec, 471 F. Supp. 3d at 263–64 (citation omitted). Norton therefore fails to show that the
Court failed to consider controlling decisions by not considering Escobar.
Although that could be the end of the inquiry for materiality, to be thorough the Court
will also analyze whether the Court failed to previously consider certain aspects of Escobar,
rather than the decision as a whole. As explained below, Norton fails to identify aspects of
Escobar that the Court failed to consider because Norton points to two supposed requirements
that are not actually required by Escobar.
First, Norton argues that the Government must identify evidence of its actual contracting
or payment decisions to prevent summary judgment on materiality. See, e.g., Mem. at 9 (“the
government presented no evidence regarding the government’s actual contracting or payment
decisions”); Mem. at 10 (“Rather, the government must prove materiality with evidence that the
government would not have paid the allegedly false claim if it had known of its alleged falsity”);
Reply at 6 (“Under any theory of liability, the FCA requires the plaintiff to adduce evidence that
8
the alleged falsity in the subject claims actually affected the government’s decision making.”);
Reply at 8 (“This is entirely consistent with the central teaching of Escobar that materiality
requires a showing of actual effect on government decision making.”). But Escobar does not
require such a showing.
We need not decide whether § 3729(a)(1)(A)’s materiality requirement is
governed by § 3729(b)(4) or derived directly from the common law. Under any
understanding of the concept, materiality “look[s] to the effect on the likely or
actual behavior of the recipient of the alleged misrepresentation.” 26 R. Lord,
Williston on Contracts § 69:12, p. 549 (4th ed. 2003) (Williston). In tort law, for
instance, a “matter is material” in only two circumstances: (1) “[if] a reasonable
man would attach importance to [it] in determining his choice of action in the
transaction”; or (2) if the defendant knew or had reason to know that the recipient
of the representation attaches importance to the specific matter “in determining
his choice of action,” even though a reasonable person would not. Restatement
(Second) of Torts § 538, at 80.
Escobar, 136 S. Ct. at 2002–03 (italics added; other alterations in original). If materiality looks
to the effect on the “likely” behavior of the recipient, it cannot always require evidence of actual
effect. Similarly, the above-referenced statute does not require demonstrating effect on actual
contracting or payment decisions: “[T]he term ‘material’ means having a natural tendency to
influence, or be capable of influencing, the payment or receipt of money or property.” 31 U.S.C.
§ 3729(b)(4). Norton does not cite any support for its claim that “the government must prove
materiality with evidence that the government would not have paid the allegedly false claim if it
had known of its alleged falsity.” Mem. at 10.
The D.C. Circuit recently confirmed this understanding. In analyzing whether a relator
adequately pleaded materiality for a fraudulent inducement claim regarding sales of software
licenses to the IRS, the court explained that “[i]t is . . . plausible that the IRS could have later
learned of IBM’s fraud and continued to pay for the licenses for any number of reasons that do
not render IBM’s fraud immaterial.” United States ex rel. Cimino v. Int’l Bus. Machines Corp.,
No. 19-cv-7139, 2021 WL 2799946, at *8 (D.C. Cir. July 6, 2021). The court continued, stating
9
that “[a]t a later stage in the litigation, evidence of the IRS’s continued payment under the
license agreement might be used to demonstrate that IBM’s false audit was not material to the
IRS.” Id. (emphasis added). This refutes Norton’s argument that “the government must prove
materiality with evidence that the government would not have paid the allegedly false claim if it
had known of its alleged falsity,” Mem. at 10, by acknowledging that evidence of the IRS
continuing to pay under a contract that it knew was induced by fraud merely might demonstrate
materiality, Cimino, 2021 WL 2799946, at *8.
Norton argues for a meaning of materiality closer to that of causation, but “materiality
and causation are not the same.” Id. at *5. Materiality concerns the natural tendency or
capability to influence, while causation concerns whether the falsity in fact caused the result.
See id. As the D.C. Circuit recently explained using the example of fraudulent inducement, “a
statement could be material—that is, capable of influencing the government’s decision to enter a
contract—without causing the government to do so.” Id. Under Norton’s interpretation that
materiality requires proving that the Government would not have paid a false claim if it had
known of the falsity, materiality would essentially be the same as causation.
Norton cites United States ex rel. McBride v. Halliburton Co., 848 F.3d 1027 (D.C. Cir.
2017), to support its argument that the Government was required to provide evidence of “their
actual contracting decisions based on the alleged omissions.” Mem. at 12 (citing McBride, 848
F.3d at 1029). But McBride does not dictate that requirement. The relator in McBride alleged
that the defendant “may have used inflated headcounts to justify excessive staffing levels” that in
turn led to unreasonable costs. McBride, 848 F.3d at 1033. But the relator did “not actually set
out to prove that staffing was excessive or costs were ‘unreasonable,’” relying instead on “[t]he
assumption . . . that accurate headcount data was relevant to determining the reasonableness of
10
costs” and testimony that a contracting officer “‘might’ have investigated further had he known
false head counts were being maintained, and that such an investigation ‘might’ have resulted in
some charged costs being disallowed.” Id. In opposition, the defendant proffered evidence that
headcount had not initially been used to make staffing decisions and that “headcount data . . . had
no bearing on costs.” Id. The court concluded that “[a]bsent any connection between
headcounts and cost determinations,” the relator had failed to proffer sufficient evidence of
materiality to avoid summary judgment. Id.
Nowhere does McBride say that materiality must be shown by evidence of actual
contracting decisions. In fact, the court quoted Escobar’s guidance that materiality “look[s] to
the effect on the likely or actual behavior of the recipient of the alleged misrepresentation.” Id.
at 1032 (quoting Escobar, 136 S. Ct. at 2002). The court emphasized “actual” because there was
evidence that the government continued to pay even after learning of the allegations and did not
disallow any charges after an investigation. Id. at 1034. If evidence of actual behavior was
always necessary, there would have been no reason to specifically call out “actual behavior”
because it would have been the only relevant type of evidence. See id. at 1032 (“[C]ourts need
not opine in the abstract when the record offers insight into the Government’s actual payment
decisions.” (emphasis added)). The defect in the relator’s evidence in McBride instead related to
the lack of “any connection between headcounts and cost determinations,” id. at 1033, discussed
further below.
Second, Norton argues that the Court erred by treating certain contract terms as per se
material. See, e.g., Mem. at 18 (“The government’s arguments on materiality, both in opposition
to Symantec’s motion and in support of its own, and the Court’s acceptance of those arguments,
commit the very analytical error against which Escobar warns—application of a per se
11
materiality standard based solely on the terms of applicable regulations, contracts, or conditions
of payment.”). At the outset, this argument fails to justify reconsideration because the Court
explicitly acknowledged this same argument previously made by Norton. In its summary
judgment opinion, the Court noted that “Symantec seems to argue . . . that the Government has
asserted the kind of ‘per se materiality’ forbidden by Escobar.” Symantec, 471 F. Supp. 3d at
302. The Court acknowledged that Escobar held that “‘statutory, regulatory, and contractual
requirements are not automatically material, even if they are labeled conditions of payment’ and
that ‘[t]he materiality standard is demanding.’” Id. (alteration in original) (quoting Escobar, 136
S. Ct. at 2001, 2003). But the Court then held that “[i]n this case, the Government has met that
standard because its allegations against Symantec are more than ‘garden-variety breaches of
contract or regulatory violations.’” Id. (quoting Escobar, 136 S. Ct. at 2003). Because the Court
already scrutinized Norton’s per se materiality argument based on Escobar, the Court did not fail
to consider controlling authority. Reconsideration is therefore not justified on this ground.
Norton’s argument is also based on an incorrect reading of Escobar. The Supreme Court
in Escobar did not hold that materiality can never be found through “the Court’s reading of the
relevant contract requirements.” Mem. at 11. The Court in Escobar held that “statutory,
regulatory, and contractual requirements are not automatically material, even if they are labeled
conditions of payment.” Escobar, 136 S. Ct. at 2001 (emphasis added). “[G]arden-variety
breaches of contract or regulatory violations” are not material. Id. at 2003. Merely having “the
option to decline to pay” due to certain noncompliance is not alone proof of materiality. Id.
Noncompliance that is “minor or insubstantial” is not material. Id. Taking these together, the
Court was refuting the notion that every violation that could hypothetically justify nonpayment is
necessarily and automatically material. See id. (“[T]he Government’s decision to expressly
12
identify a provision as a condition of payment is relevant, but not automatically dispositive.”).
The Court was not saying that materiality can never be found by analyzing statutory, regulatory,
or contractual provisions.
Under this reading of Escobar, the Court sees no aspect of Escobar that it failed to
consider that could justify reconsideration. Although not every contractual provision that could
justify nonpayment is material, the Court remains convinced that the record supported denying
Norton’s motion for summary judgment. Namely, the record shows that the provisions at issue
are important enough to the Government’s contracting and payment decisions such that Norton
has not shown beyond any genuine dispute of material fact that Norton’s alleged falsities relating
to those provisions were immaterial. See, e.g., Symantec, 471 F. Supp. 3d at 302 (“CSP
disclosure obligations are integrally connected to the Government’s determinations of what it
will pay on a MAS schedule contract.”); id. at 303 (“The very existence of the CSPs disclosure
requirements and the GSAM’s instructions to incorporate them into every MAS Schedule
contract that GSA negotiates suggests that they will have at least some influence in shaping
GSA’s decisions.”); id. at 304 (“PRC violations would necessarily have been material to
payments, because regardless of the precise details of how the price-discount relationship would
be calculated, the entire point of the PRC was to require price reductions when appropriate. If
prices were not properly reduced when required under the PRC, this would obviously and
necessarily be material to overpayments by the plaintiffs.”).
McBride is distinguishable on this issue. Norton argues that the court in McBride held
“that the plaintiff adduced no evidence of materiality beyond the regulatory and statutory text
establishing a condition of payment.” Mem. at 12. But the problem with the McBride relator’s
evidence was not sole reliance on “regulatory and statutory text.” As discussed above, the
13
problem in McBride was that the relator alleged that the defendant “may have used inflated
headcounts to justify excessive staffing levels” that in turn led to unreasonable costs, but did “not
actually set out to prove that staffing was excessive or costs were ‘unreasonable,’” relying
instead on “[t]he assumption . . . that accurate headcount data was relevant to determining the
reasonableness of costs” and testimony that a contracting officer “‘might’ have investigated
further had he known false head counts were being maintained, and that such an investigation
‘might’ have resulted in some charged costs being disallowed.” Id. The court concluded that
“[a]bsent any connection between headcounts and cost determinations,” the relator had failed to
proffer sufficient evidence of materiality to avoid summary judgment. Id. McBride does not say
that reliance on statutory, regulatory, or contractual terms can never be sufficient.
Here, in contrast to McBride, there is no difficulty seeing “any connection” between the
alleged falsities and the likely contracting or payment behavior of the Government. “CSP
disclosure obligations are integrally connected to the Government’s determinations of what it
will pay on a MAS schedule contract.” Symantec, 471 F. Supp. 3d at 302. “[T]he entire point of
the PRC was to require price reductions when appropriate.” Id. at 304. Unlike in McBride,
where the relator provided essentially no evidence connecting headcount to billed costs despite
government evidence that “headcount data . . . had no bearing on costs billed to the
Government,” 848 F.3d at 1033, here, the CSPs and PRC are directly related to setting contract
price.3
3
Norton advances other arguments that clearly do not meet the standard for
reconsideration. For example, Norton argues that the Government failed to produce any
evidence of materiality—and that Norton therefore should have been granted summary
judgment—because “the Court’s opinion recognized undisputed evidence that the challenged
disclosures did not influence the government’s ultimate payment or contracting decisions.”
Mem. at 14. There is no argument that this supposed error was caused by a failure of the Court
to consider controlling authority. Even under Norton’s incorrect reading of Escobar that would
14
* * *
Because Norton has not shown any aspect of a controlling decision related to materiality
that the Court failed to consider in its summary judgement opinion, Norton’s motion for
reconsideration is denied with respect to materiality.
B. Scienter
Norton argues “that the Court’s holding regarding the element of scienter under the
FCA . . . directly contravened [the] binding Circuit precedent” of United States ex rel. Purcell v.
MWI Corp., 807 F.3d 281 (D.C. Cir. 2015). Mem. at 19. As with materiality, the Court would
be justified in denying reconsideration merely because the Court already considered Purcell in
its summary judgment opinion in relation to scienter:
Symantec argues that because the PRC is ambiguous, it escapes liability because
the undisputed material facts show that it interpreted the ambiguous clause in a
reasonable way and was never warned away from that interpretation. Sym. MSJ
at 53–54 (citing United States ex rel. Purcell v. MWI Corp., 807 F.3d 281, 283–89
(D.C. Cir. 2015)). . . . Merely putting forward a reasonable alternative
interpretation of the text, however, is not enough, as it only shows facial
ambiguity.
Symantec, 471 F. Supp. 3d at 304. Norton therefore fails to show that the Court failed to
consider controlling decisions by not considering Purcell.
As with materiality, that could be the end of the inquiry for scienter for this motion for
reconsideration. To be thorough, the Court also now analyzes whether the Court failed to
require evidence of how the Government’s actual payment decisions were affected, Norton
ignores that the Court found the evidence to be disputed. Compare Mem. at 15 (“[T]he Court
noted undisputed evidence that the contracting officer in this case had specifically determined,
based on her own outside ‘market research,’ that the pricing structure under the Company’s
contract was, in fact, fair and reasonable.” (quoting Symantec, 471 F. Supp. 3d at 302)), with
Symantec, 471 F. Supp. 3d at 302 (explaining that even though contracting officer conducted
independent research and concluded that prices were fair and reasonable, “[n]othing about the
language of the Pre-Negotiation Memorandum suggests that this independent research was relied
on to the exclusion of the CSPs”).
15
previously consider certain aspects of Purcell, rather than the decision as a whole. Norton fails
to identify aspects of Purcell that the Court failed to consider because Norton points to a
misunderstanding of Purcell.
“To be liable under the FCA, a defendant must have made the false claims knowingly.”
Purcell, 807 F.3d at 287. A defendant has not acted knowingly if it made “an innocent, good-
faith mistake about the meaning of an applicable rule or regulation,” or acted “based on
reasonable but erroneous interpretations of a defendant’s legal obligations.” Id. at 287–88. Even
if a defendant held a reasonable interpretation, “a jury might still find knowledge if there is
interpretive guidance ‘that might have warned [the defendant] away from the view it took.’” Id.
at 288 (alteration in original) (quoting United States ex rel. K & R Ltd. P’ship v. Massachusetts
Hous. Fin. Agency, 530 F.3d 980, 983 (D.C. Cir. 2008)).
Norton argues that “a defendant is entitled to summary judgment on the element of
scienter if there is no genuine dispute that (1) the contractual terms upon which the alleged FCA
violations are premised are ambiguous, (2) the defendant’s interpretation of those ambiguous
terms is objectively reasonable, and (3) the government fails to identify evidence that it warned
the defendant away from that reasonable interpretation.” Mem. at 20. According to Norton, it
was entitled to summary judgment because all of these were met. See Mem. at 20–21. Norton
argues that the Court erred with respect to element two when it based its summary judgment
opinion in part upon the requirement that a defendant’s interpretation be held
contemporaneously.
Norton argues that under Purcell, “the timing of the defendant’s interpretation—and the
defendant’s subjective intent—are irrelevant.” Mem. at 20 (citing Purcell, 807 F.3d at 290); see
also Mem. at 23 n.9 (“Purcell does not require a showing that the defendant held its reasonable
16
interpretation of the ambiguous contract provision at the time the contract was formed.”); Reply
at 22 (“If subjective intent is irrelevant, so must be the question of when that intent was
formed.”). The Court previously denied summary judgment for Norton in part due to genuine
disputes of material fact regarding whether Norton “held its favored interpretations at the time
the contract was formed.” Symantec, 471 F. Supp. 3d at 305. Norton is therefore arguing that
the Court failed to consider Purcell because the Court added a contemporaneity requirement that
“Purcell does not require.” Mem. at 23 n.9.
Reconsideration is not justified on this issue because the Court previously considered this
question and Norton cites no controlling authority to the contrary. The Court previously stated
that “a claimant cannot avoid liability by manufacturing an after-the-fact reasonable
interpretation of an ambiguous provision.” Symantec, 471 F. Supp. 3d at 305 (quoting United
States ex rel. Bahnsen v. Boston Sci. Neuormodulation Corp., No. 11-cv-1210, 2017 WL
6403864, at *9 (D.N.J. Dec. 15, 2017)).4 Norton claims that Purcell “definitively rejected this
requirement” of contemporaneity. Reply at 22. But Purcell does not explicitly state whether a
reasonable interpretation must have been held contemporaneously. Its language, however,
indicates that contemporaneity is necessary. Purcell refers to “the defendant’s interpretation of
an ambiguous term” and “its reasonable interpretation.” 807 F.3d at 290. Standing alone, these
phrases could plausibly refer to either a contemporaneous interpretation or a current litigation
position. But if it were the latter, the court could have referred to “a reasonable interpretation” or
“any reasonable interpretation.”
4
Norton cites a Third Circuit case that is supposedly “irreconcilable” with Bahnsen.
Mem. at 23 n.9. But that case supports a contemporaneity requirement by stating that “a defense
on a reasonable, but erroneous, interpretation of a statute” requires that “a defendant's
interpretation of that ambiguity was objectively unreasonable.” United States v. Allergan, Inc.,
746 F. App’x 101, 106 (3d Cir. 2018) (emphasis added).
17
Purcell’s statement that “subjective intent—including bad faith—is irrelevant when a
defendant seeks to defeat a finding of knowledge based on its reasonable interpretation of a
regulatory term,” 807 F.3d at 290, does not mean that the reasonable interpretation need not have
been held contemporaneously, as Norton argues. See Reply at 22 (“If subjective intent is
irrelevant, so must be the question of when that intent was formed.”). There is nothing
irreconcilable about requiring a defendant to have actually held its objectively reasonable
interpretation at the relevant time, while ignoring whether that defendant subjectively desired to
submit falsities. Additionally, in noting that subjective intent is irrelevant for defeating a finding
of knowledge based on a reasonable interpretation of a regulatory term, the Purcell court noted
that “all this evidence might imply is that [defendant] did not hew to its reasonable interpretation
in good faith.” Id. This phrasing implies that the court accepted that the defendant did hew to
“its reasonable interpretation” at the time, whether in good faith or not, and that a reasonable
interpretation must have been held contemporaneously to defeat a finding of knowledge.
Nowhere in Purcell or any other case cited by Norton does a court say that post-hoc
interpretations are acceptable, and “culpability is generally measured against the knowledge of
the actor at the time of the challenged conduct.” Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct.
1923, 1933 (2016); cf. Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 70 (2007) (“Congress could
not have intended such a result for those who followed an interpretation that could reasonably
have found support in the courts, whatever their subjective intent may have been.” (emphasis
added)).5 To the contrary, there are cases indicating that contemporaneous adoption is required.
5
Norton disparages the Government’s citation of Halo Electronics, but Halo discussed
Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 (2007), and Safeco formed the basis for the
discussion of subjective intent in Purcell. See Purcell, 807 F.3d at 290 (citing Safeco, 551 U.S.
at 70 n.20, for the proposition that “the Supreme Court clarified that subjective intent—including
18
See, e.g., United States v. Newman, No. CV 16-1169 (CKK), 2017 WL 3575848, *8 (D.D.C.
Aug. 17, 2017) (explaining that “Defendants’ argument about knowing falsity is incapable of
resolution at the pleading stage” because “the complaint . . . says nothing about whether
Defendant held or acted on any particular interpretation of the regulations at issue” (emphasis
added)). If defendants were able to defeat scienter merely with interpretations adopted for
litigation, rather than those actually held and used, this Court would have expected that to be
stated clearly by a higher court.
Because Norton has not shown any aspect of a controlling decision related to scienter that
the Court failed to consider in its summary judgement opinion, Norton’s motion for
reconsideration is denied with respect to scienter.
C. States’ Claims
Regarding the States’ claims, Norton briefly argues that “[b]ecause the government has
failed to adduce the necessary evidence as to the elements of materiality and scienter on its FCA
claims, . . . the State Claims fail as well for the same reasons.” As explained above, the Court
disagrees that reconsideration is warranted for those previous summary judgment rulings.
Therefore, to the extent Norton’s argument for reconsideration of the States’ claims relies on its
arguments about the federal claims, Norton’s motion for reconsideration of the state claims is
denied.
Norton does not put forth any other argument that could support reconsideration of the
Court’s prior summary judgment rulings regarding the States’ claims. Norton does not attempt
to demonstrate how the Rule 54(b) standard is met for these claims. This section of Norton’s
bad faith—is irrelevant when a defendant seeks to defeat a finding of knowledge based on its
reasonable interpretation of a regulatory term”).
19
memorandum contains no citation to, or discussion of, any aspect of the Court’s summary
judgment opinion to show where the Court failed to consider relevant authority, nor any effort to
demonstrate how any of the other justifications for reconsideration are met. Norton’s motion for
reconsideration related to the States’ claims is therefore denied.
V. CONCLUSION
For the foregoing reasons, Norton’s Motion for Reconsideration is DENIED. An order
consistent with this Memorandum Opinion is separately and contemporaneously issued.
Dated: August 2, 2021 RUDOLPH CONTRERAS
United States District Judge
20
Morsell v. Symantec Corporation
Combined Opinion