Ferris v. Afognak Native Corporation et al

Filing 414

ORDER granting in part and denying in part 390 Motion for Protective Order. Signed by Judge H. Russel Holland on 6/4/18. (JLH, COURT STAFF)

WO

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA

UNITED STATES OF AMERICA,
ex rel. BEN FERRIS,

)
)
)
Plaintiff,
)
)
vs.
)
)
AFOGNAK NATIVE CORPORATION
)
and ALUTIIQ, LLC,
)
)
Defendants.
)
_______________________________________)

No. 3:15-cv-0150-HRH

ORDER
Motion for a Protective Order
Relator moves1 for a protective order quashing defendants’ first set of requests for
admissions. This motion is opposed.2 Oral argument was not requested and is not deemed
necessary.
Background
On April 11, 2008, defendants served relator with their first set of requests for
admissions, which consisted of 537 requests.3 The RFAs consist of two parts. The first part
consists of twenty-two RFAs which seek to identify the scope of relator’s claims generally.

1

Docket No.390.

2

Docket No. 411.

3

Exhibit A, Declaration of Michael J. Pendell [etc.], Docket No. 391.
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The second part consists of seventeen sections, with each section being devoted to a
particular 8(a) subsidiary (the sixteen 8(a) subsidiaries relator alleges are shams and the one
8(a) subsidiary that relator allegedly has admitted was not a sham). Each of the seventeen
sections contains approximately 30 RFAs. The RFAs in each section are largely identical.
Defendant Alutiiq LLC also served relator with its third set of interrogatories, which includes
Interrogatory No. 20.4 Interrogatory No. 20 asks: “If your response to any of Defendants’
First Set of Requests for Admissions is anything other than an unconditional admission, state
the reason for denying the request and identify all facts, witnesses, and documents that
support that response.”5
Relator now moves for a protective order quashing the requests for admission and
Interrogatory No. 20.
Discussion
“Courts have the power to issue protective orders in the discovery process in order ‘to
protect a party or person from annoyance, embarrassment, oppression, or undue burden or
expense.’” Byard v. City and County of San Francisco, 16-cv-00691-WHA (DMR), 2017
WL 988497, at *1 (N.D. Cal. March 15, 2017) (quoting Fed. R. Civ. P. 26(c)(1)).
“Generally, a party seeking a protective order has a ‘heavy burden’ to show why discovery
should be denied. . . .” Sequoia Property v. United States, 203 F.R.D. 447, 451 (E.D. Cal.
2001) (quoting Blankenship v. Hearst Corp., 519 F.2d 418, 429 (9th Cir. 1975)).
4

Exhibit B, Pendell Declaration, Docket No. 391.

5

Id. at 6.
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Rule 36, Federal Rules of Civil Procedure provides:
A party may serve on any other party a written request to admit,
for purposes of the pending action only, the truth of any matters
within the scope of Rule 26(b)(1) relating to:
(A) facts, the application of law to fact, or opinions about either;
and
(B) the genuineness of any described documents.
“Admissions are sought, first, to facilitate proof with respect to issues that cannot be
eliminated from the case and, second, to narrow the issues by eliminating those that can be.”
Conlon v. United States, 474 F.3d 616, 622 (9th Cir. 2007). “The rule is not to be used in
an effort to ‘harass the other side’ or in the hope that a party’s adversary will simply concede
essential elements.” Id. (quoting Perez v. Miami–Dade County, 297 F.3d 1255, 1268 (11th
Cir. 2002)). “Rather, the rule seeks to serve two important goals: truth-seeking in litigation
and efficiency in dispensing justice.” Id. “[R]equests for admission should not be used to
establish facts which are obviously in dispute, to demand that the other party admit the truth
of a legal conclusion, even if the conclusion is attached to operative facts, or to ask the party
to admit facts of which he or she has no special knowledge.” Tuvalu v. Woodford, Case No.
CIV S-04-1724 DFL KJM P, 2006 WL 3201096, at *7 (E.D. Cal. Nov. 2, 2006) (internal
citations omitted).
First, relator argues that the sheer number of RFAs that defendants have propounded
is oppressive and unduly burdensome. However, “courts do not readily grant protective
orders against an entire set of discovery requests on the grounds that the number of requests

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is excessive.” Jones v. Skolnik, Case No. 3:10–cv–00162–LRH, 2014 WL 2625000, at *2
(D. Nev. June 12, 2014). “Like all discovery, Requests for Admissions . . . are bound by the
scope of Rule 26 requiring discovery to be relevant and proportional to the needs of the
case.” Blanton v. Torrey Pines Property Mgmt., Inc., Case No. 15-CV-0892 W (NLS), 2017
WL 2291752, at *3 (S.D. Cal. May 24, 2017). The factors the court considers in determining
whether a discovery request is proportional are 1) “the importance of the issues at stake in
the action,” 2) “the amount in controversy,” 3) “the parties’ relative access to relevant
information,” 4) “the parties’ resources,” 5) “the importance of the discovery in resolving the
issues,” and 6) “whether the burden or expense of the proposed discovery outweighs its
likely benefit.” Fed. R. Civ. P. 26(b)(1).
This case involves fraud on the government, which is an important issue, and relator
contends there are billions of dollars at stake. Only relator has access to the information that
defendants seek because only he knows whether he plans to dispute certain facts. Relator has
the resources to respond to the RFAs given that he has a number of lawyers representing him.
And, the expense or burden of responding to these RFAs will not outweigh the likely benefit
because relator’s responses will help the parties determine what facts are actually in dispute.
While “[r]equests to admit should not be excessive in number and, obviously, should be
tailored in a manner and scope to avoid harassment and improper motive[,]” Tamas v. Family
Video Movie Club, Inc., 301 F.R.D. 346, 347 (N.D. Ill. 2014), the number of RFAs that
defendants have propounded is not excessive, given the nature of this case. Relator has put
sixteen of defendants’ 8(a) subsidiaries at issue and has alleged a fraudulent scheme
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involving those sixteen entities that spans several years and that has allegedly resulted in the
government being defrauded of billions of dollars. If this were a case involving two or three
simple, straightforward claims, 537 RFAs would be excessive. But, it is not; it is a factintensive, complex case. The number of RFAs that defendants have propounded is not out
of proportion to the needs of this case.
Relator next argues that some of the RFAs are improper because they ask for legal
conclusions. Specifically, relator points to the RFAs that ask him to admit or deny that each
subsidiary was a “business concern” within the meaning of 13 C.F.R. § 121.105 and to admit
or deny that each subsidiary was a “separate and distinct legal entity” within the meaning of
13 C.F.R. § 124.109(c)(1).
Defendants argue that these RFAs are not asking for legal conclusions, but rather are
asking that relator apply the law to the facts of this case, which is a proper use of RFAs. For
example, in Adobe Systems Inc. v. Christenson, Case No. 2:10–cv–00422-–LRH–GWF,
2011 WL 540278, at *7 (D. Nev. Feb. 7, 2011), which was a copyright and trademark
infringement action, in several RFAs, the defendants were asked to admit whether “their
advertisement, offer for sale, sale or distribution of the DISPUTED PRODUCT infringed
Plaintiff's exclusive rights in the COPYRIGHTS.” One of the objections the defendants
raised to these RFAs was that “they call[ed] for legal conclusions. . . .” Id. The court
overruled this objection because “Rule 36(a)(1)(A) states that a request may call upon a party
to admit facts, the application of law to facts, or opinions about either.” Id. Although the
court did not expressly so state, the court appeared to be implying that these RFAs asked the
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defendants to apply the law to the facts of the case. Similarly here, defendants argue that this
is what they are asking relator to do, to apply the law to the facts of this case. Moreover,
defendants point out that “RFAs on the ultimate issue in [a] case: e.g., whether a party was
negligent; whether an accident is covered under an insurance policy” are permissible. See
Fed. Prac. Guide Fed. Civ. Proc. Before Trial § 11:2007. Yet, these RFAs, according to
defendants, are not even asking relator to admit any essential element of a FCA claim, the
elements of which are “(1) a false statement or fraudulent course of conduct, (2) made with
scienter, (3) that was material, causing (4) the government to pay out money or forfeit
moneys due.” United States ex rel. Campie v. Gilead Sciences, Inc., 862 F.3d 890, 902 (9th
Cir. 2017). Defendants insist that based on the discovery that has been produced to date, they
have a reasonable expectation that relator could admit in good faith that the seventeen entities
are business concerns under 13 C.F.R. § 121.105 and “separate and distinct legal entities”
under 13 C.F.R. § 124.109(c)(1).
As one court has observed, the line between a RFA that asks for a pure legal
conclusion and one that asks for the application of law to the facts of the case “is not always
easy to draw.” Apple Inc. v. Samsung Electronics Co., Case No. C 11–cv–1846 LHK (PSG),
2012 WL 952254, at *3 (N.D. Cal. March 20, 2012). But, these RFAs have crossed over the
line of asking relator to apply the law to the facts of the case to being RFAs that ask relator
to “admit the truth of a legal conclusion that would translate into deemed concessions of
[relator’s] entire case[,]” which are improper. Id. (citation omitted). RFA Nos. 30-31, 61-62,

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92-93, 122-123, 151-152, 180-181, 210-211, 241-242, 272-273, 303-304, 334-335, 364-365,
394-395, 425-426, 455-456, 484-485, 514-515 are quashed.
Defendants have also asked relator to admit or deny whether each entity was “small”
under the 8(a) Business Development regulations when it was admitted to the 8(a) BD
program, whether it was “small” when it submitted initial offers for 8(a) and non-8(a)
contracts, and whether the SBA determined that the entity was “small” at the time each
contract was awarded. These RFAs do not ask relator to admit specific evidentiary facts.
Rather, they ask relator to admit legal conclusions that would translate into deemed
concessions of his entire case. Defendants are asking relator to admit “the truth of a legal
conclusion, even if the conclusion is attached to operative facts[,]” which is improper. Bezi
v. Camacho, Case No. SACV 11-00677-JLS (DTB), 2016 WL 4870469, at *5 (C.D. Cal.
Aug. 8, 2016) (citation omitted). RFA Nos. 32-35, 63-66, 94-97, 124-127, 153-156, 182185, 212-215, 243-246, 274-277, 305-308, 336-339, 366-369, 396-399, 427-430, 457-460,
486-489, 516-519 are quashed.
Next, relator argues that many of the RFAs ask him to admit or deny factual issues of
which he has no special knowledge. Specifically, relator points out that defendants have
asked him to admit or deny whether each subsidiary maintained insurance, kept and
maintained financial statements, owned assets, had financial liabilities, had accounts
receivable, paid taxes, had a place of business located in the United States, and operated
primarily within the United States or made a significant contribution to the U.S. economy
through the payment of taxes or use of American products, materials, and labor.
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A party can “assert lack of knowledge or information as a reason for failing to admit
or deny only if the party states that he has made reasonable inquiry and that the information
[he] knows or can readily obtain is insufficient to enable [him] to admit or deny.” In re
Owen, Case No. 2:11–CV–00196–JAM–GGH, 2012 WL 4845575, at *4 (E.D. Cal. Oct. 10,
2012). Defense counsel avers that defendants have produced discovery showing that the
sixteen entities maintained insurance, kept and maintained financial statements, owned
assets, had financial liabilities, had accounts receivable and paid taxes.6 Relator however
complains that “[d]efendants have produced over 98,000 documents (totaling over 815,000
pages)” since discovery began in this case in 20157 and argues that it is not reasonable for
defendants to expect him to make binding admissions based on his review of this many
documents which have been produced over a span of more than three years.
That there is a lot of discovery that relator will have to review to respond to some of
the requests for admissions is, to a large degree, of relator’s own making since he determined
the scope of his claims, not defendants. Relator has sufficient information to respond to the
RFAs set out above, with one exception. The RFAs that ask relator to admit or deny whether
an entity operated primarily within the United States or made a significant contribution to the
U.S. economy through the payment of taxes or use of American products, materials, and
labor are not proper RFAs because whether the 8(a) subsidiaries “operated” at all is a
disputed fact. RFA Nos. 28, 59, 90, 120, 149, 178, 208, 239, 270, 301, 332, 362, 392, 423,
6

See Declaration of Angela R. Jones [etc.] at 3-4, ¶ 9, Docket No. 412.

7

Id. at 2, ¶ 5.
-8-

453, 482, 512 are quashed. For the same reason, the following RFAs that ask relator to admit
or deny whether Afognak Native Corporation was committed to financially supporting the
“operations” of the 8(a) entities are quashed: RFA Nos. 52, 83, 114, 143, 172, 201, 232, 263,
294, 325, 356, 385, 416, 447, 476, 505, 536. The following RFAs however are not quashed:
RFA Nos. 27, 43-48, 58, 74-79, 89, 105-110, 119, 134-139, 148, 163-168, 177, 192-197,
207, 223-228, 238, 254-259, 269, 285-290, 300, 316-321, 331, 347-352, 361, 376-381, 391,
407-412, 422, 438-443, 452, 467-472, 481, 496-501, 511, 527-532.
Other RFAs also ask relator to admit or deny facts that are obviously in dispute.
Defendants ask relator to admit or deny whether each entity met the self-performance
requirements for each 8(a) and non-8(a) contract awarded. If the 8(a) entities were not
separate and distinct entities, as relator contends, then the issue of whether they met the selfperformance requirements is also in dispute. The same is true of the RFAs that ask relator
to admit or deny whether the entities had employees, “grew” and “developed” after being
admitted to the 8(a) program, and possessed reasonable prospects for success. In addition,
defendants ask relator to admit or deny whether each entity operated in accordance with its
operating agreement while it was in the 8(a) program. Whether each entity had an operating
agreement may not be a disputed fact, but whether each entity was operating in accordance
with that agreement is. Because they ask relator to admit or deny disputed facts, the
following RFAs are quashed: RFA Nos. 36-39, 42, 51, 53, 67-70, 73, 82, 84, 98-101, 104,
113, 115, 128-131, 133, 142, 144, 157-160, 162, 171, 173, 186-189, 191, 200, 202, 216-219,
222, 231, 233, 247-250, 253, 262, 264, 278-281, 284, 293, 295, 309-312, 315, 324, 326, 340-9-

343, 346, 355, 357, 370-373, 375, 384, 386, 400-403, 406, 415, 417, 431-434, 437, 446, 448,
461-464, 466, 475, 477, 490-493, 495, 504, 506, 520-523, 526, 535, 537.
For the subsidiaries that have “graduated” from the 8(a) program, defendants ask
relator both to admit the actual date on which the entity graduated and to admit that the entity
actually graduated. These RFAs are duplicative and relator is only required to respond to the
RFAs that ask him to admit the date on which the entity graduated (RFA Nos. 24, 55, 86,
204, 235, 266, 297, 328, 388, 419, 508). RFA Nos. 40, 71, 102, 220, 251, 282, 313, 344,
404, 435, 524 are quashed.
As for the RFAs that have not been discussed above, the court has reviewed these
RFAs and determined that they are proper RFAs. The following RFAs are not quashed:
RFA Nos. 1-23, 25-26, 29, 41, 49-50, 54, 56-57, 60, 72, 80-81, 85, 87-88, 91, 103, 111-112,
116-118, 121, 132, 140-141, 145-147, 150, 161, 169-170, 174-176, 179, 190, 198-199, 203,
205-206, 209, 221, 229-230, 234, 236-237, 240, 252, 260-261, 265, 267-268, 271, 283, 291292, 296, 298-299, 302, 314, 322-323, 327, 329-330, 333, 345, 353-354, 358-360, 363, 374,
382-383, 387, 389-390, 393, 405, 413-414, 418, 420-421, 424, 436, 444-445, 449-451, 454,
465, 473-474, 478-480, 483, 494, 502-503, 507, 509-510, 513, 525, 533-534.
Next, relator argues that defendants have in essence served 537 interrogatories. This
argument is based on Interrogatory No. 20 which asks: “If your response to any of
Defendants’ First Set of Requests for Admissions is anything other than an unconditional
admission, state the reason for denying the request and identify all facts, witnesses, and

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documents that support that response.”8 Courts have held that “[a]llowing service of an
interrogatory which requests disclosure of all of the information on which the denials of each
. . . request[] for admissions [are] based . . . essentially transforms each request for admission
into an interrogatory.” Safeco of Amer. v. Rawstron, 181 F.R.D. 441, 445 (C.D. Cal. 1998).
“This is not the purpose requests for admissions were intended to serve, and because Rule
36 imposes no numerical limit on the number of requests for admissions that may be served,
condoning such a practice would circumvent the numerical limit contained in Rule 33(a).”
Id. Thus, relator argues that defendants have not served him with 537 RFAs but rather 537
interrogatories, which greatly exceeds the 25 that are provided for by Rule 33.
Contrary to defendants’ contention, this argument is not premature. Because relator
is being required to respond to a number of RFAs, it appropriate to determine at this time
whether Interrogatory No. 20 should be construed as 537 interrogatories, rather than one. As
to that issue, the court concludes that Interrogatory No. 20 should be construed as a separate
interrogatory for each RFA to which relator must respond.
The question then becomes how many interrogatories do defendants have remaining.
Defendants contend that only Alutiiq, LLC has propounded any interrogatories and that it has
only propounded 20 so far.

Thus, defendants argue that Alutiiq, LLC has 5 more

interrogatories and Afognak still has all of its 25 interrogatories. Relator, however, argues
that defendants should be treated as one for purposes of discovery.

8

Exhibit B at 6, Pendell Declaration, Docket No. 391.
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“‘[T]he decision to consider multiple parties as one for the purposes of Rule 33(a) is
within the discretion of the court.’” Beeman v. Anthem Prescription Mgmt., Inc., Case No.
EDCV 04-407-VAP (KKx), 2017 WL 5564535, at *3 (C.D. Cal. Nov. 17, 2017) (quoting
Rahman v. Smith & Wollensky Rest. Grp., Inc., No. 06-CIV-6198-LAK (JCF), 2007 WL
1521117, at *8 n.7 (S.D.N.Y. May 24, 2007)). Because defendants have jointly defended
this case from the outset, defendants will be treated as one for purposes of Rule 33, which
means that they have 25 interrogatories total, not 25 interrogatories each.
For now, relator need only answer Interrogatory No. 20 to the extent that doing so will
not exceed Rule 33’s 25-interrogatory limit. If, after relator has responded to the nonquashed RFAs, defendants believe that there would be good cause to allow additional
interrogatories, the court will entertain a motion to that effect at that time.
Finally, in his opening brief, relator notes that he is “reserv[ing] the right to object to
the substance of any of the Requests following the [c]ourt’s ruling on this [m]otion.”9
However, “[i]f a motion for a protective order is wholly or partly denied, the court may, on
just terms, order that any party or person provide or permit discovery.” Fed. R. Civ. P.
26(c)(2). Relator shall respond to the non-quashed RFAs without further objection.
Conclusion
Relator’s motion for a protective order10 is granted in part and denied in part. The
motion is granted as to RFA Nos. 28, 30-40, 42, 51-53, 59, 61-71, 73, 82-84, 90, 92-102,
9

Relator’s Motion for Protective Order [etc.] at 2, n.1, Docket No. 390.

10

Docket No. 390.
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104, 113-115, 120, 122-131, 133, 142-144, 149, 151-160, 162, 171-173, 178, 180-189, 191,
200-202, 208, 210-220, 222, 231-233, 239, 241-251, 253, 262-264, 270, 272-282, 284, 293295, 301, 303-313, 315, 324-326, 332, 334-344, 346, 355-357, 362, 364-373, 375, 384-386,
392, 394-404, 406, 415-417, 423, 425-435, 437, 446-448, 453, 455-464, 466, 475-477, 482,
484-493, 495, 504-506, 512, 514-524, 526, and 535-537. These RFAs are quashed.
Relator shall answer Interrogatory No. 20 only to the extent that doing so will not
exceed Rule 33’s 25-interrogatory limit.
The motion is otherwise denied.
DATED at Anchorage, Alaska, this 4th day of June, 2018.
/s/ H. Russel Holland
United States District Judge

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