United States ex rel Davis v. U.S. Training Center Inc.

Filing

UNPUBLISHED AUTHORED OPINION filed. Originating case number: 1:08-cv-01244-TSE-TRJ. Copies to all parties and the district court/agency. [998996534]. [11-2180]

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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 11-2180

UNITED STATES OF AMERICA ex rel. MELAN DAVIS; UNITED STATES
OF AMERICA ex rel. BRAD DAVIS,
Plaintiffs - Appellants,
v.
U.S. TRAINING CENTER INCORPORATED, f/k/a Blackwater Lodge
and Training Center, Incorporated,
Defendant – Appellee,
and
BLACKWATER SECURITY CONSULTING, LLC; BLACKWATER ARMOR AND
TARGETS, LLC; BLACKWATER LOGISTICS, LLC; BLACKWATER CANINE;
RAVEN DEVELOPMENT GROUP LLC; GREYSTONE LIMITED; THE PRINCE
GROUP, LLC; XE SERVICES LLC, f/k/a EP Investments, LLC,
d/b/a
Blackwater
Worldwide;
ERIK
PRINCE;
BLACKWATER
AIRSHIPS, LLC,
Defendants.

Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria.
T. S. Ellis, III, Senior
District Judge. (1:08-cv-01244-TSE-TRJ)

Argued:

October 25, 2012

Decided:

December 6, 2012

Before MOTZ and KEENAN, Circuit Judges, and James K. BREDAR,
United States District Judge for the District of Maryland,
sitting by designation.

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Affirmed by unpublished opinion.
Judge Keenan
opinion, in which Judge Motz and Judge Bredar joined.

ARGUED: Susan L. Burke,
Appellants. David William
& MORING, LLP, Washington,
M. Sajadi, BURKE PLLC,
Richard L. Beizer, CROWELL
Appellee.

wrote

the

BURKE PLLC, Washington, D.C., for
O'Brien, Brian T. McLaughlin, CROWELL
D.C., for Appellee. ON BRIEF: Susan
Washington, D.C., for Appellants.
& MORING, LLP, Washington, D.C., for

Unpublished opinions are not binding precedent in this circuit.

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BARBARA MILANO KEENAN, Circuit Judge:
Relators Brad Davis and Melan Davis (Relators) brought this
qui tam lawsuit under the False Claims Act, 31 U.S.C. §§ 37293733, against U.S. Training Center, Inc. (USTC), formerly known
as

Blackwater

(Blackwater), 1
Defendants). 2
by

USTC,

Worldwide
and

Lodge

several

and

other

Training

defendants

Center,

Inc.

(collectively,

The Relators, a married couple formerly employed

alleged

that

Defendants

overbilled

the

federal

government and committed other acts of fraud in connection with
two

contracts

that

USTC

entered

into

with

the

Department

of

Homeland Security (DHS), and the Department of State (the State
Department), respectively.
The district court granted summary judgment in favor of
USTC with respect to the contract with DHS, which required USTC
to provide security services in support of DHS’ efforts in 2005
to assist affected areas in the aftermath of Hurricane Katrina

1

We refer to the principal defendant as USTC, although we
note that the company was known as Blackwater during the events
that gave rise to the Relators’ complaint.
2

The other parties named as defendants in the Relators’
second amended complaint were Erik Prince, the founder and CEO
of Blackwater, and several corporate entities affiliated with
Blackwater, including Blackwater Security Consulting, LLC,
Greystone Limited, The Prince Group LLC, and Xe Services LLC.
These parties were dismissed from the lawsuit by the district
court, such that the only defendant relevant to this appeal is
USTC.

3

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(the Katrina contract).

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Relators appeal from the court’s grant

of summary judgment with respect to the Katrina contract.
The

district

concerning

the

court

State

allowed

Department

two

of

contract,

Relators’
under

claims

which

USTC

provided security services in Iraq and Afghanistan in connection
with the United States’ military presence in those areas (the
Protective Services contract), to proceed to a jury trial.
jury

rendered

presented.

a

verdict

in

favor

of

USTC

on

the

The

claims

The Relators sought a new trial on the basis that

one of USTC’s trial witnesses allegedly committed perjury.

The

district court denied the motion.
On appeal, Relators argue that they are entitled to a new
trial

because

evidentiary

the

rulings,

district

court

prohibiting

made

Relators

certain
from

erroneous
introducing

evidence that would have bolstered their claims and would have
undermined

USTC’s

defenses.

Relators

also

appeal

from

the

district court’s denial of their motion for a new trial.
Upon our review, we hold that the district court: (1) did
not err in granting summary judgment in favor of USTC on the
claims relating to the Katrina contract; (2) did not abuse its
discretion

in

excluding

certain

categories

of

evidence

that

Relators sought to introduce at trial; and (3) did not abuse its
discretion in denying Relators’ motion for a new trial because

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to

establish

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Relators

failed

that

USTC’s

witness

committed

perjury.

Accordingly, we affirm the district court’s judgments.

I.
A.
In 2005, the Federal Protective Service division of DHS
selected USTC to provide armed guard services in Louisiana in
support of DHS’ Hurricane Katrina recovery efforts.
parties’

written

agreement,

USTC

was

required

Under the
to

provide

fourteen armed guards and four vehicles to protect a temporary
morgue

in

Baton

Rouge,

Louisiana. 3

The

Katrina

contract

specified that the armed security guards provided by USTC were
required

to

meet

certain

minimum

qualifications,

including

United States citizenship, a high school diploma, proficiency in
the

English

language,

“[s]ubstance
qualifications,

current

screening,”
and

valid

or

prior

firearms

security
training,

firearms-related

experience,
firearms

licenses.

The

contract further specified that the security guards must undergo
a “NCIC check,” which is a criminal background check conducted

3

The Katrina contract also provided that DHS could direct
USTC to perform additional duties, potentially increasing the
number of personnel required. The contract authorized a maximum
of 4494 “man days,” and described a “man day” as consisting of a
“minimum of 12 productive hours of security service or directly
related work in support of the ongoing security operation.”

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with

the

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Federal

Bureau

National Crime Information Center (NCIC). 4

of

Investigation’s

However, the contract

also provided that DHS, rather than USTC, was responsible for
obtaining these background checks.
Also in 2005, the State Department selected USTC to provide
security services in Iraq and Afghanistan under a “Worldwide
Personal Protective Services” agreement.
Services

contract,

security

personnel

Under the Protective

provided

by

USTC

would

assist the Bureau of Diplomatic Security of the State Department
(the Bureau) in fulfilling the Bureau’s security goals. 5
The Protective Services contract provided that USTC would
be compensated for its personnel on a fixed “per-person-per-day”
basis, referred to as the “boots on the ground” billing rule.
As required by the contract, USTC used “muster sheets,” which
are computer spreadsheets that require manual input, to “track[]
4

See Federal Bureau of Investigation, National
Information Center, http://www.fbi.gov/about-us/cjis/ncic.
5

Crime

The “Statement of Work” in the Protective Services
contract identified the following “specific goals” of the
Bureau:
“Prevent[ing] loss of life, injury to personnel, and
damage/destruction of facilities or equipment, worldwide as
specified by individual Task Orders issued under this contract.
Ensur[ing] security and safety of personnel and facilities in
static
(fixed)
locations
and/or
in
mobile
(in
transit)
operations.
Expedit[ing] the movement of personnel in the
accomplishment of their missions. Secur[ing] the environment to
enable personnel to conduct their business and complete their
missions.
Protect[ing] personnel and the organizations they
represent from harm or embarrassment.”

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the daily duty status for each authorized position at a duty
station.”
purposes

The State Department used these “muster sheets” for
of

validating

USTC’s

monthly

labor

invoices.

Essentially, a “muster sheet” functioned as a daily time sheet,
and recorded whether and how many of USTC’s personnel had “boots
on the ground” each day.
receive

reimbursement

expenditures,

by

Additionally, USTC was permitted to

for

certain

submitting

to

the

expenses,
State

such

as

Department

travel
invoices

supported by appropriate documentation such as hotel bills and
flight itineraries.
B.
Relators both were formerly employed by USTC.

Brad Davis

(Brad), a former member of the United States Marine Corps, was
hired by USTC in April 2005.
work

in

contract.

Iraq

in

Upon being hired, he was sent to

connection

with

the

Protective

Services

Brad worked in Iraq on USTC’s behalf for about three

months in 2005, and later returned to Iraq in 2006 to conduct
additional work for USTC.

During the interim period, he was

sent by USTC to provide security services in Louisiana under the
Katrina contract.

He worked in Louisiana for one month, first

as an assistant area manager, and later was promoted to the
position of area manager.

During his employment in Iraq and in

Louisiana for USTC, Brad allegedly observed fraud and other acts

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view,

were

in

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violation

of

USTC’s

contractual

responsibilities.
Melan Hebert Davis (Melan) became engaged to Brad shortly
before he was hired by USTC and sent to Iraq.

When Brad was

working in Louisiana under the Katrina contract, he learned that
USTC

needed

personnel

responsibilities.
in

that

to

perform

record-keeping

and

billing

Melan applied and was hired to work for USTC

capacity.

During

her

employment

in

Louisiana,

she

allegedly observed numerous fraudulent acts, such as overbilling
and submission of false invoices.
Melan alleged that she was discharged from her position
when she raised these concerns to her supervisors.
was

rehired

by

USTC

to

perform

work

under

the

She later
Protective

Services contract, serving as a “cost reimbursable” clerk on
USTC’s finance team.

In this position, she allegedly discovered

additional fraudulent billing and other acts of fraud committed
by Defendants.

Melan eventually was discharged from USTC during

a health-related leave of absence.
C.
On behalf of the United States pursuant to the qui tam
provision of the False Claims Act, Relators filed a complaint
against

Defendants

in

December

2008

in

the

United

District Court for the Eastern District of Virginia.

States
Relators

twice amended their complaint, once in April 2010, and again in
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July 2010 with the filing of the Second Amended Complaint (the
Complaint), which is the set of allegations relevant to this
appeal.
As

set

forth

in

the

Complaint

and

the

accompanying

disclosure statements, Relators alleged that Defendants engaged
in widespread fraud against the government and otherwise failed
to comply with the duties required by the Katrina contract and
the Protective Services contract.

With respect to the Katrina

contract, Relators alleged that Defendants provided “worthless
services” to DHS under the contract because Defendants failed to
manage personnel, failed to monitor the distribution of weapons,
and failed to ensure that weapons were not given to felons or
guards otherwise disqualified 6 from carrying firearms.

After

discovery, the district court granted summary judgment in favor
of Defendants on all claims relating to the Katrina contract. 7
Relators

appeal

from

the

district

court’s

summary

judgment

award.
6

The Complaint referred to the Lautenberg Act, 18 U.S.C. §
922(g)(9), otherwise known as the Lautenberg Amendment, which
prohibits access to firearms by persons convicted of misdemeanor
crimes of domestic violence.
7

Relators also alleged that Defendants submitted falsified
time cards for employees performing services required by the
contract, and used false accounting records to justify the
“daily rate” paid for employees.
Relators do not challenge on
appeal the district court’s dismissal of these additional
allegations.

9

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With respect to the Protective Services contract, Relators
alleged

that

Defendants

submitted

false

“muster

sheets,”

resulting in USTC receiving compensation for hours in which USTC
employees
Relators
records. 8
sheets”

were
also

performing

alleged

that

contractual

Defendants

services.

submitted

false

The
travel

The case proceeded to trial on the false “muster
claims

against USTC. 9
opinion,

not

the

and

the

false

travel

records

claims

asserted

As described in greater detail later in this
district

court

made

certain

evidentiary

rulings

before and during trial prohibiting the admission of several
categories of evidence offered by Relators.
The jury found in USTC’s favor on both claims presented at
trial.

After

the

trial

concluded,

Relators

filed

a

motion

seeking a new trial pursuant to Rule 59(a)(1) of the Federal
Rules of Civil Procedure, arguing that Danielle Esposito, USTC’s
8

Relators alleged in the Complaint two additional claims
relating to the Protective Services contract.
First, Relators
asserted that Defendants provided “worthless services” to the
State Department under the contract because USTC employees used
steroids, “smuggled” weapons, and engaged in the unjustified use
of excessive force.
The district court dismissed this claim
before discovery.
Second, Relators alleged that Defendants
falsely billed for expenses incurred by affiliates and submitted
false invoices. The district court granted summary judgment in
favor of Defendants on this claim after discovery. Relators do
not challenge on appeal the district court’s dismissal of those
two claims.
9

The district court granted summary judgment in favor of
all Defendants except USTC on these claims.

10

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Officer,

allegedly

committed

perjury.

During her trial testimony, Esposito stated that she provided to
government auditors a copy of a report prepared by an accounting
firm,

which

had

controls.

criticized

After

the

USTC’s

trial,

accounting

Relators

practices

obtained

a

and
sworn

declaration prepared by the government representative to whom
Esposito purportedly gave the accounting firm’s report.

In that

declaration, the government representative stated that Esposito
did not provide him the report.
declaration

and

concluded,

The district court reviewed the

among

other

things,

failed to prove that Esposito perjured herself.

that

Relators

The court thus

denied the Relators’ Rule 59 motion.

II.
As

described

above,

issues for our review.

the

Relators’

appeal

presents

three

First, we address whether the district

court erred in granting summary judgment in USTC’s favor on the
“worthless
Second,

services”

we

discretion

address
in

claim

relating

whether

excluding

from

the

to

the

district

evidence

Katrina
court

certain

contract.

abused

categories

its
of

documents and testimony offered by Relators in support of their
claims relating to the Protective Services contract.
finally,

we

address

whether

the

district

court

Third and
abused

its

discretion in denying Relators’ motion for a new trial on the
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basis of Esposito’s allegedly perjured testimony.

We address

each of these issues in turn.
A.
We review de novo the district court’s award of summary
judgment in favor of USTC on the allegations relating to the
Katrina contract.

See S.C. Green Party v. S.C. State Election

Comm’n, 612 F.3d 752, 755 (4th Cir. 2010).
and

all

reasonable

inferences

that

may

We view the facts,

be

drawn

from

those

facts, in the light most favorable to Relators, the non-moving
parties.

See Bonds v. Leavitt, 629 F.3d 369, 380 (4th Cir.

2011).

Summary judgment is appropriate only when “there is no

genuine

dispute

as

to

any

material

fact

and

entitled to judgment as a matter of law.”
56(a);

Celotex

Corp.

v.

Catrett,

477

the

movant

is

Fed. R. Civ. P.

U.S.

317,

322

(1986);

Merritt v. Old Dominion Freight Line, Inc., 601 F.3d 289, 295
(4th Cir. 2010).
The False Claims Act (the Act) provides that a complaint
may be brought against anyone who “knowingly presents” to the
government
approval.” 10
under

the

“a

false

or

fraudulent

31 U.S.C. § 3729(a)(1)(A).
Act,

which

are

predicated

10

claim

for

payment

or

The elements of a claim
on

fraudulent

conduct,

The Act similarly allows suit against anyone who
“knowingly makes . . . a false record or statement material to a
false or fraudulent claim.” 31 U.S.C. § 3729(a)(1)(B).

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required that Relators establish: (1) that USTC engaged in a
fraudulent course of conduct; (2) that such conduct was carried
out knowingly; (3) that the conduct was material; and (4) that
the

conduct

caused

the

government

to

pay

money

in

return.

United States ex rel. Owens v. First Kuwaiti Gen. Trading &
Contracting Co., 612 F.3d 724, 729 (4th Cir. 2010).
The
contract

essence
was

of

that

Relators’

USTC’s

claim

relating

performance

under

to

the

the

Katrina

contract

was

materially deficient in three respects described below, and that
had

the

government

been

aware

of

these

deficiencies,

the

government justifiably would have refused to compensate USTC for
the services it provided.
that

“[t]he

personnel,
that

the

contract

monitor
company

the
did

Relators alleged in the Complaint

required

that

distribution
not

give

[USTC]
of

weapons

management

manage

weapons[,]

and

ensure

to

or

persons

felons

disqualified from using weapons by the Lautenberg Act, which
prohibits

those

involved

in

domestic

abuse

from

obtaining

weapons.”

In light of this allegation that comprised the core

of Relators’ “worthless services” claim, 11 we analyze the Katrina

11

As described by the Second Circuit, “[i]n a worthless
services claim, the performance of the service is so deficient
that for all practical purposes it is the equivalent of no
performance at all.”
Mikes v. Straus, 274 F.3d 687, 703 (2d
Cir. 2001).

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contract

to

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determine

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whether

USTC

actually

was

required

to

carry out the obligations identified by Relators.
Our review of the Katrina contract requires us to apply
settled principles of contract interpretation.

“When the United

States enters into contract relations, [the government’s] rights
and duties therein are governed generally by the law applicable
to

contracts

between

private

individuals.”

Lynch

v.

United

States, 292 U.S. 571, 578 (1934); see also In re Peanut Crop
Ins. Litig., 524 F.3d 458, 470 (4th Cir. 2008); United States v.
Bankers Ins. Co., 245 F.3d 315, 321 (4th Cir. 2001).

Except

when Congress has explicitly adopted a different standard, we
apply

“the

principles

of

general

contract

law,

which

become

federal common law” in interpreting government contracts.

In re

Peanut Crop Ins. Litig., 524 F.3d at 470 (quoting Long Island
Sav. Bank, FSB v. United States, 503 F.3d 1234, 1245 (Fed. Cir.
2007)).
As
“begin[]

a

primary

with

the

principle
language

of
of

contract

the

written

interpretation,
agreement.”

we
NVT

Techs., Inc. v. United States, 370 F.3d 1153, 1159 (Fed. Cir.
2004).

In construing the language of a contract, “the plain and

unambiguous meaning of [the] written agreement controls.”

Craft

Mach. Works, Inc. v. United States, 926 F.2d 1110, 1113 (Fed.
Cir. 1991).

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these

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principles,

we

agree

with

the

district

court’s conclusion that the Katrina contract did not require
USTC

to

manage

personnel,

to

monitor

the

distribution

of

weapons, or to ensure that weapons were not given to felons or
persons disqualified from using them by the Lautenberg Act.

We

observe that the Katrina contract, by its plain terms, did not
assign

USTC

the

responsibility

for

managing

monitoring the distribution of weapons.
the

contract

persons

did

not

ineligible

require

to

USTC

possess

personnel

or

We also conclude that

to

ensure

weapons

Lautenberg Act did not receive weapons.

by

that

felons

or

of

the

virtue

As the district court

correctly explained, ensuring that such people do not receive
firearms requires a background check to determine their criminal
history.
USTC,

However, under the Katrina contract, DHS, rather than

expressly

criminal

was

background

given

the

checks

responsibility
for

the

of

performing

security

guards.

Accordingly, we conclude that the underlying basis for Relators’
remaining claim under the Katrina contract, that USTC rendered
“worthless

services”

in

failing

to

fulfill

its

purported

Relators’

additional

contractual responsibilities, is illusory.
Our

conclusions

are

not

altered

by

argument, in which Relators assert that summary judgment was
unwarranted

because

there

remained

a

factual

dispute

whether

USTC falsely certified to the government that USTC was providing
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contractually-conforming services.

The district court held that

Relators could not avoid summary judgment on this basis, because
Relators did not allege such a “false certification” claim in
the Complaint.

We agree with the district court’s conclusion.

See Owens, 612 F.3d at 731 (plaintiff may not raise new claims
after discovery has begun without first amending the complaint);
Wahi v. Charleston Area Med. Ctr., Inc., 562 F.3d 599, 617 (4th
Cir. 2009) (same).
award

of

summary

Accordingly, we affirm the district court’s
judgment

in

favor

of

USTC

on

the

Katrina

contract claim.
B.
We next address Relators’ argument that they are entitled
to a new trial because the district court erred in excluding
certain categories of evidence that Relators sought to introduce
during the trial.
rulings,

we

In reviewing the district court’s evidentiary

observe

that

the

district

court

has

substantial

discretion in making rulings on the admissibility of evidence.
See United States v. Hedgepeth, 418 F.3d 411, 418–19 (4th Cir.
2005).

We

relevance

and

have

stated

prejudice

are

that

“[j]udgments

fundamentally

a

of

evidentiary

matter

of

trial

management, for ‘[t]rial judges are much closer to the pulse of
a trial than we can ever be and broad discretion is necessarily
accorded them.’”

United States v. Benkahla, 530 F.3d 300, 309

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(4th Cir. 2008) (quoting United States v. Simpson, 910 F.2d 154,
157 (4th Cir. 1990)).
For

these

reasons,

we

afford

the

district

court

“substantial deference,” and we will not overturn any of the
court’s

evidentiary

rulings

absent

an

abuse

of

discretion.

United States v. Medford, 661 F.3d 746, 751 (4th Cir. 2011).

A

district court abuses its discretion when the court acts in an
arbitrary manner, when the court fails to consider judiciallyrecognized factors limiting its discretion, or when the court
relies on erroneous factual or legal premises. 12

United States

v. Henry, 673 F.3d 285, 291 (4th Cir. 2012).
1.
We first consider the district court’s exclusion of certain
portions

of

Relators

alleged

agency

an

containing

employees.

electronic
was
a

a

mail

(email)

genuine

itinerary

handwritten

note

attachment,
from

from

USTC’s

one

of

which
travel
USTC’s

Relators sought to introduce this evidence as part

of their claim that USTC was overbilling the State Department
for travel reimbursements.

The district court granted USTC’s

12

Even if we concluded that the district court’s
evidentiary
rulings
constitute
an
abuse
of
the
court’s
discretion, any such errors would not entitle a party to a new
trial unless those errors affected the party’s substantial
rights. Schultz v. Capital Int’l Sec., Inc., 466 F.3d 298, 310
(4th Cir. 2006) (citing Fed. R. Evid. 103(a)).

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motion

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to

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exclude

this

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evidence

under

the

rule

prohibiting

hearsay.
On appeal, Relators argue that the email attachment should
have been admitted because it was not being offered for the
truth of the matter asserted, cf. Fed. R. Evid. 801(c), and
because

the

attachment

was

admissible

under

the

hearsay

exemption for party admissions, see Fed. R. Evid. 801(d)(2)(D).
Upon our review of the record, we conclude that Relators did not
sufficiently raise these arguments in the district court and,
accordingly, have waived them. 13

See Jimenez v. DaimlerChrysler

Corp., 269 F.3d 439, 453 (4th Cir. 2001) (evidence is properly
excluded when alternative theory of admissibility is not timely
offered); see also Wheatley v. Wicomico Cnty., 390 F.3d 328, 334
(4th Cir. 2004) (issues raised for the first time on appeal are
generally

not

considered

absent

exceptional

circumstances).

Because Relators do not otherwise challenge the district court’s
bases

for

excluding

portions

of

the

email

attachment,

we

conclude that this evidentiary ruling was not an abuse of the
court’s discretion.
13

During trial, Relators argued that the attachment was not
hearsay because they offered it to show that Melan’s supervisor
directed her to fraudulently alter travel invoices. Relators do
not raise this theory on appeal, and instead argue that the
attachment is not hearsay because Relators sought its admission
to prove “notice” to USTC that the travel agency had the ability
to generate accurate travel documentation retroactively.

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2.
We next address the district court’s exclusion of certain
testimony and exhibits relating to the State Department’s 2007
review

of

USTC’s

operations

in

Iraq.

Relators

sought

to

introduce this evidence, which they claim suggested that the
reviewers found that USTC was altering billing records and that
a USTC employee issued a “death threat” to one of the reviewers,
to show USTC’s intent to defraud and “hide its bad acts through
intimidation.”

The

district

court

excluded

this

evidence

because the court found that the evidence lacked significant
probative

value

and

was

highly

prejudicial,

and

thus

was

conclude

that

the

inadmissible under Federal Rule of Evidence 403. 14
Upon
district

our
court

determinations.

review
did

of

In

not

the

abuse

our

record,
its

view,

14

we

discretion

the

evidence

in

making

concerning

these
the

Rule 403 of the Federal Rules of Evidence provides that
“[t]he court may exclude relevant evidence if its probative
value is substantially outweighed by a danger of one or more of
the
following:
unfair
prejudice,
confusing
the
issues,
misleading the jury, undue delay, wasting time, or needlessly
presenting cumulative evidence.”
The district court also
excluded several exhibits that are part of this category of
evidence on authentication grounds, as well as certain testimony
on hearsay grounds.
Relators do not argue on appeal that the
district court erred in reaching those conclusions.

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alleged “death threat” was inherently sensational, and was only
marginally, if at all, relevant to Relators’ claims. 15
We further agree with the district court that the evidence
concerning the alteration of billing records lacked probative
value and thus was properly excluded from admission, because
there

is

no

evidence

that

the

records

alleged

to

have

been

altered were related to USTC’s billing or submission of claims
to the government at issue in this case.

Relators conceded at

trial that the reviewer who purportedly observed USTC employees
making alterations did not know whether the alterations were
improper

or

whether

they

pertained

submitted to the State Department.
that

the

district

court

did

not

to

billing

records

to

be

Accordingly, we conclude
abuse

its

discretion

in

excluding from evidence testimony and exhibits relating to the
State Department’s 2007 review.
3.
The next category of excluded evidence that we consider
includes testimony and email records allegedly showing that USTC
paid

“bribes”

to

officials

in

15

Afghanistan

to

expedite

visa

In making its ruling, the district court observed,
accurately in our view, that there is no evidence suggesting
that the “death threat” was related to the reviewers’ search for
billing discrepancies or other falsehoods. As explained by the
district court, the confrontation “could have been clash of
personalities.
It could have been anger about something that
happened somewhere else.”

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renewals for USTC personnel, and that USTC submitted bills to
the State Department to be reimbursed for such bribes.

Relators

sought to introduce this evidence to refute USTC’s defense that
any overbillings occurred because of “innocent mistakes,” and
also

to

bolster

Melan’s

credibility.

The

district

court

excluded this evidence under Rule 404(b), which prohibits the
use of evidence of crimes, wrongs or other acts as evidence of
character or to show that a party acted in conformance with that
character.

The court also cited Rule 403 in support of its

ruling.
Evidence concerning “prior bad acts” is admissible under
Rule 404(b) only if the evidence is: (1) relevant to an issue
other than character, (2) necessary, and (3) reliable.

United

States v. Hernandez, 975 F.2d 1035, 1039 (4th Cir. 1992) (citing
United States v. Rawle, 845 F.2d 1244, 1247 (4th Cir. 1988)).
However, even if the evidence satisfies this test, the evidence
still may be excluded under Rule 403.

Id.

The district court

addressed these factors, finding that the bribery evidence was
not necessary because it was relevant only to the character of
USTC’s employees, implying that the employees were “bad people
willing to pay bribes,” and that the evidence was not reliable

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because it was “sharply disputed.” 16

Upon our review of the

record and the parties’ arguments, we agree with the district
court’s reasoning, and we conclude that the court acted well
within

its

discretion

in

excluding

under

Rule

404(b)

the

evidence concerning alleged bribes to Afghani officials. 17
Our

conclusion

is

not

altered

by

Relators’

additional

argument that the evidence was admissible because the bribes
purportedly were part of the “false billings” at issue in this
case.

The district court ruled on summary judgment that the

Complaint

“does

Department

of

Relators

did

not

State
not

allege
for

appeal

that

bribes
that

[D]efendants

paid

aspect

to
of

Afghani
the

billed

the

officials.”

district

court’s

judgment, and thus have waived argument concerning any potential
claims alleging bribes to foreign officials.

See Wheatley, 390

F.3d at 334; Jimenez, 269 F.3d at 453.
4.
We next address Relators’ argument that the district court
erred

in

excluding

a

draft

audit

report

prepared

by

David

16

The district court further concluded that whether the
payments were actually bribes was contested and that admission
of this evidence could lead to a “side litigation.”
17

In light of our holding, we need not reach the issue
whether this category of evidence also would have been properly
excluded under Rule 403.

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Cotton, Chairman of the firm Cotton & Company, 18 and testimony
concerning the report.
testify

concerning

The district court allowed Mr. Cotton to

any

matters

within

his

personal

knowledge

during his work as an auditor that were relevant to Relators’
claims.

However, because Relators did not designate Mr. Cotton

as an expert witness or provide an expert witness disclosure as
mandated by Rule 26 of the Federal Rules of Civil Procedure, the
court prohibited Mr. Cotton from offering any expert opinions.
Accordingly, Mr. Cotton was not permitted to offer any testimony
concerning

discrepancies

in

the

bills

USTC

submitted

to

the

government, or to provide an analysis of USTC’s bills or billing
procedures.
Relators

argue

that

the

district

court

abused

its

discretion in characterizing the prohibited subjects as matters
of expert testimony, rather than as lay testimony.
with Relators’ argument.

We disagree

Based on our review of the draft audit

report, we easily conclude that the report, and Mr. Cotton’s
potential

testimony

concerning

matters of expert testimony.

the

report’s

conclusions,

are

Relators’ unsupported assertion

that lay testimony is appropriate on complicated matters such as

18

Cotton & Company was retained by the government to
conduct an audit of USTC’s performance under the Protective
Services contract.

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the interpretation of billing practices does not make it so. 19
See United States v. Perkins, 470 F.3d 150, 155 (4th Cir. 2006)
(“Rule 701 forbids the admission of expert testimony dressed in
lay witness clothing.”).
relating

to

knowledge”

Rather, opinions offered on matters

“scientific,

are

considered

technical,
expert

or

other

testimony

under

specialized
the

Federal

Rules of Evidence, see Fed. R. Evid. 701, and are subject to the
limitations contained in Fed. R. Evid. 702 and the disclosure
requirements contained in Fed. R. Civ. P. 26(a)(2).

See United

States v. Johnson, 617 F.3d 286, 292 (4th Cir. 2010) (opinions
not

based

experience

on

witnesses’

and

training

own
are

perception
expert

but

rather

on

their

opinions

rather

than

lay

opinions); United States v. White, 492 F.3d 380, 403-04 (6th
Cir.

2007)

concerning

(concluding
the

understanding

of

Medicare
certain

that

Medicare

reimbursement
terms

subject to Fed. R. Evid. 702).

auditors’
process

constituted

expert

testimony
and

their

testimony

For these reasons, we conclude

19

For instance, the report reflected Cotton & Company’s
conclusions
in
three
categories:
“1)
Internal
Control
Deficiencies; 2) Questioned Costs; and 3) Compliance Issues.”
The report further summarized Cotton & Company’s “audit
objectives,” such as the performance of a “risk assessment,” the
evaluation of USTC’s “internal controls,” and reviewing the
Protective Service contract’s “current cost model.”
Relators’
argument that the excluded testimony concerning the report’s
conclusions is fact testimony rather than expert opinion
testimony strains credulity.

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district

court

did

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not

abuse

its

discretion

in

prohibiting the introduction of the Cotton & Company report and
testimony

concerning

that

report,

because

Relators

did

not

designate these matters as expert opinion evidence.
5.
We also conclude that the district court did not abuse its
discretion

in

falsification
former

excluding
of

a

evidence

government

president. 20

The

relating

form

document

by

at

to

Gary

issue

the

alleged

Jackson,
was

a

USTC’s

Bureau

of

Alcohol, Tobacco, Firearms, and Explosives (ATF) form relating
to a separate matter for which Jackson had been indicted by the
government.

The ATF form that Jackson allegedly falsified was

not related to the Protective Services contract, and therefore
was not directly at issue in this case.
Relators
falsified
“Jackson’s

ATF

sought
form

to
as

willingness

ask

part
to

Jackson
of

sign

about

Relators’
his

name

the

allegedly

inquiry

concerning

to

government

forms

swearing to the truth of statements and claims that are in fact
false.”

Relators

intended

by

such

questioning

to

“provoke”

Jackson to assert his Fifth Amendment rights, thereby allowing
Relators to obtain an instruction advising the jurors that they
20

According to Relators, Jackson certified several of the
USTC invoices billed to the State Department that were at issue
in this case.

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to

draw

an

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adverse

inference

from

Jackson’s

invocation of his constitutional rights.
The

district

regarding

this

line

court
of

granted

USTC’s

questioning,

motion

concluding

in
that

limine
it

was

inadmissible under Federal Rule of Evidence 404(a) as character
evidence offered for the purpose of proving action in conformity
with

that

character. 21

We

agree

with

the

district

court’s

conclusion, because the ATF form was not a form identified in
the complaint as having been falsified, and, as noted above, the
form

was

unrelated

to

the

Protective

Services

contract.

Therefore, testimony regarding this form would have related only
to Jackson’s character and his purported propensity to falsify
government forms, 22 bases of inquiry expressly prohibited by Rule
404(a).

Accordingly, we hold that the district court did not

21

Rule 404(a) of the Federal Rules of Evidence provides
that “[e]vidence of a person’s character or character trait is
not admissible to prove that on a particular occasion the person
acted in accordance with the character or trait.” The district
court also held that evidence concerning the ATF form was
subject to exclusion under Rule 403.
22

We find no merit in Relators’ conclusory argument that
evidence concerning the ATF form was admissible to prove “intent
and motive.” Even assuming that there was a minimal connection
between the allegedly falsified form and Jackson’s motive and
intent in this case, the substantial deference we afford to the
district court’s evidentiary rulings would require us to reject
Relators’ argument.

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abuse its discretion in barring Relators from asking Jackson any
questions concerning the allegedly falsified ATF form.
6.
We

next

Relators

address

argue

was

the

final

wrongly

category

excluded

from

of

evidence

admission,

that

namely,

certain testimony from Relators’ expert witness, John Willis, a
forensic

accountant.

The

district

court

limited

Willis’

testimony only to the extent that he was not permitted to state
that

he

found

documents.
certain

“fraud

The

travel

court

and

indicators”
allowed

“muster

upon

Willis

sheet”

to

reviewing
testify

discrepancies,

USTC’s

concerning
so

long

as

Willis did not state that such discrepancies were an “indicator
of fraud.”

The court prohibited this narrow aspect of Willis’

testimony because, in the court’s view, “[f]raud requires proof
of

things

that

no

accountant

has,”

and

thus,

testimony

concerning “fraud indicators” was beyond Willis’ expertise.
Although this ruling presents a closer question than the
other evidentiary challenges raised by Relators, we hold that
the

district

court

did

not

abuse

the

broad

and

substantial

discretion that the court is afforded in ruling on evidentiary
matters. 23

See

Benkahla,

530

23

F.3d

at

309.

The

testimony

We also observe that Relators did not cite any cases to
the district court supporting their position that an accounting
expert may label certain findings “fraud indicators.”
On
(Continued)
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excluded by the district court was only one discrete aspect of
Willis’
testify

conclusions,
about

discrepancies
documents.

any
that

and

Willis

and

all

he

observed

expressly
travel
during

was

and
his

permitted

“muster
review

to

sheet”
of

the

Accordingly, for these reasons, we hold that the

district court did not abuse its discretion in making the above
evidentiary rulings challenged in this appeal.
C.
Finally, we address Relators’ argument that the district
court erred in failing to grant a new trial or to order an
evidentiary hearing on the Rule 59 motion involving Relators’
contention that Esposito, the former Chief Operating Officer of
USTC, committed perjury.

A new trial is warranted based on a

witness’ perjury when: (1) the trial court is “reasonably well
satisfied” that a material witness gave false testimony; (2) in
the absence of the false testimony, the jury may have reached a

appeal, however, Relators cite United States v. Bollin, 264 F.3d
391 (4th Cir. 2001), in support of their argument. We stated in
Bollin, in the course of holding that the evidence supported the
defendant’s
conviction,
that
“[t]he
Government’s
expert
testified that there were numerous indicators of fraud” in the
documents he reviewed. Id. at 407. Our decision in Bollin did
not, however, involve a challenge to the admissibility of
testimony concerning “fraud indicators.” Accordingly, Relators’
reliance on Bollin for the proposition that “[t]his Circuit
routinely allows qualified experts to testify about fraud
indicators” is misleading and unavailing.

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different conclusion; and (3) the party requesting the new trial
was “taken by surprise” when the false testimony was given, and
was unable to address it or was not aware of its falsity until
after the trial.

United States v. Wallace, 528 F.2d 863, 866

(4th Cir. 1976); see also Davis v. Jellico Cmty. Hosp., Inc.,
912 F.2d 129, 134 (6th Cir. 1990) (applying this test in civil
context).

In reviewing the district court’s denial of Relators’

motion, we observe that “[t]he decision to grant or deny a new
trial is within the sound discretion of the district court, and
we respect that determination absent an abuse of discretion.”
Cine v. Wal-Mart Stores, Inc., 144 F.3d 294, 301 (4th Cir. 1998)
(citing Atlas Food Sys. & Servs., Inc. v. Crane Nat’l Vendors,
Inc., 99 F.3d 587, 594 (4th Cir. 1996)).
As noted previously, Esposito testified at trial that she
provided to government auditors a copy of an independent audit
report

(the

report)

that

was

procedures

and

controls. 24

provide

copy

of

team?”

a

[the

critical

Esposito

report]

to

of

was
the

Esposito replied, “Yes, I did.”

asked,

accounting
“[D]id

[government’s]

you

audit

Relators’ counsel asked

Esposito, “[W]ho did you provide it to?”
24

USTC’s

Esposito answered,

The report, prepared by the accounting firm BDO Seidman,
concluded that USTC managerial practices in Iraq “resulted in a
fair amount of unnecessary or inappropriate expenditures, as
well as waste,” and “created an environment lacking sufficient
accountability and asset security.”

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“[Robert] Farrell or one of his three reps, but I am pretty sure
it was Mr. Farrell.” 25
Robert Farrell, a Certified Fraud Examiner hired by Cotton
&

Company,

the

government’s

auditing

firm

in

this

matter,

executed a sworn declaration after the trial that was appended
to Relators’ Rule 59 motion.

In his declaration, responding to

Esposito’s claim at trial that she provided him or his employees
a copy of the report, Farrell stated, “Ms. Esposito’s testimony
is incorrect.

Ms. Esposito never gave me or any of the other

Cotton & Company representatives a copy of [the report].”
Relators
declaration

argued

in

established

the

district

that

Esposito

court

that

Farrell’s

committed

perjury.

Relators further asserted that they were entitled to a new trial
because if the jury had been made aware of the purported false
testimony, USTC’s defenses of “government knowledge” and “lack
of intent to defraud” would have been undermined.
The district court denied Relators’ Rule 59 motion without
a

hearing.

Among

other

reasons,

the

court

concluded

that

Relators failed to satisfy their evidentiary burden because the
evidence offered by Relators, namely Farrell’s declaration, did
25

Esposito further testified that there was no document
that memorialized her transmission of the report because she
“hand delivered it to [the government’s audit team].” Esposito
also stated during her testimony that she could not remember the
exact date on which she provided the report.

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establish

Wallace,

528

that

at

the

district

to

testimony

given

omitted).
record

Esposito’s

F.2d

establish

by

a

According

discloses

perjury

has

a

Pg: 31 of 33

that

866

testimony

(movant

to

the

the

different

seeking

court’s

material

new

must

that

“the

is

false”)

court,

district

“[a]t

alleged

recollection

to

from

have

the

See

trial

satisfaction

witness

witness

false. 26

was

(citation
most,

the

committed

witness

now

adduced by [Relators], and there simply is no way to determine
which witness has a better memory or remembers the events in
question more accurately.”
We

agree

Farrell’s
testimony

with

declaration
was

false,

the

district

does
but

not

rather,

court’s

conclusion

establish
at

most,

that
suggests

that

Esposito’s
that

recollection of the events was different than Farrell’s.

her

A mere

discrepancy in the testimony of two witnesses does not establish
perjury.
Cir.

See United States v. Anderson, 509 F.2d 312, 327 (D.C.

1974)

(holding

that

the

fact

26

that

two

witnesses

gave

The district court provided two additional bases for its
denial of the Rule 59 motion.
First, the court held that
Relators’ post-trial assertion of perjury by Esposito was
untimely, because Relators had sufficient time to present
Farrell as a witness to the jury.
Second, the court held that
even if Esposito’s testimony was false, the jury would not have
reached a different verdict because the contested testimony was
“incidental, rather than central,” to the issues before the
jury. In light of our analysis of the court’s primary basis for
denying Relators’ motion, we need not address these additional
reasons for concluding that a new trial was not warranted.

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different testimony “is obviously insufficient to establish that
either is a perjurer”).
for

Relators’

accusation

Because this discrepancy is the basis
that

Esposito

committed

perjury,

we

hold that the district court did not abuse its discretion in
denying Relators’ Rule 59 motion for a new trial.
Likewise, we find no merit in Relators’ argument that they
were entitled to an evidentiary hearing to develop further their
contention
United

that

States

Esposito

v.

Smith,

perjured

herself.

62

641,

F.3d

651

As

we

(4th

noted

Cir.

in

1995),

“[j]ust as the district court has broad discretion in resolving
a new trial motion, so too does it enjoy discretion whether to
hold an evidentiary hearing on the motion.”
This

degree

of

deference

is

appropriate

(Citation omitted).
because

“the

acumen

gained by a trial judge over the course of the proceedings”
makes the court “well qualified” to rule on a motion for a new
trial

without

an

evidentiary

hearing.

United

Hamilton, 559 F.2d 1370, 1373–74 (5th Cir. 1977).

States

v.

Upon our

review of the record and the parties’ arguments, we have no
difficulty in concluding that the district court did not abuse
its discretion in resolving Relators’ motion on the pleadings
rather than ordering a post-trial evidentiary hearing.

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III.
In sum, we hold that the district court correctly concluded
that USTC was entitled to summary judgment on claims arising
under the Katrina contract.

We further hold that the district

court did not abuse its discretion in its evidentiary rulings or
in concluding that Relators were not entitled to a new trial on
claims

arising

under

the

Protective

Services

contract.

Accordingly, we affirm the district court’s judgments.
AFFIRMED

33