HIGHQBPO, LLC v. USA

Filing 26

PUBLISHED OPINION granting 14 Motion for Reconsideration. The matter is hereby STAYED.. Signed by Judge Emily C. Hewitt. (jh4)

HIGHQBPO, LLC v. USA

Doc. 26

In the United States Court of Federal Claims
N o . 08-70 C (E -F ile d : October 29, 2008) ) ) ) M o tio n for Reconsideration; ) R C F C 59(a); Motion to Stay ) ) ) ) ) ) )

H IG H Q B P O , LLC, P la in tif f , v. T H E UNITED STATES, Defendant.

D a v id T. Hickey, Washington, DC, for plaintiff. Joe R. Reeder, Washington, DC, of c o u n se l. M ich a e l N. O'Connell, with whom were Gregory G. Katsas, Assistant Attorney General, J e a n n e E. Davidson, Director, Mark A. Melnick, Assistant Director, Commercial L itig a tio n Branch, Civil Division, United States Department of Justice, Washington, DC, f o r defendant. Major Dara C. Leavitt, Assistant General Counsel, Commercial & F in a n c ia l Law, Army & Air Force Exchange Service Headquarters, of counsel. OPINION H E W IT T , Judge Before the court are Defendant's Motion For Reconsideration (defendant's Motion f o r Reconsideration or Def.'s Mot. for Recons.), Plaintiff's Response to the G o v ern m en t's Motion For Reconsideration and Request For Related Relief (plaintiff's R esp o n se or Pl.'s Resp.), and Defendant's Reply to Plaintiff's Response to Defendant's M o tio n For Reconsideration, and Request For Related Relief (defendant's Reply or Def.'s R e p ly).

Dockets.Justia.com

P la in tif f , International Outsourcing Services, LLC (IOS),1 had a contract with the A rm y & Air Force Exchange Service (AAFES) for "coupon redemption services." Complaint (Compl.) ¶ 2. The contract between IOS and AAFES (the IOS-AAFES c o n tra c t) ended on July 1, 2004. Id. at ¶ 3. On October 20, 2004, "AAFES e-mailed IOS, c la im in g that IOS had improperly deducted some $213,000 from payments to AAFES." Id. at ¶ 11. IOS responded on November 5, 2004 "explaining that `the short payments w e re the result of a denial of payment by the manufacturer, and not the result of any d o c u m en te d loss of coupons that would be covered under insurance.'" Id. at ¶ 12. On M a rc h 14, 2005, the Contracting Officer, Ms. Janie Walker, e-mailed IOS claiming "that IO S had improperly deducted $316,903.02 from payments to AAFES." Id. at ¶ 15. On F e b ru a ry 22, 2006, the Contracting Officer wrote IOS a letter claiming "that IOS was lia b le for $913,768.39 in lost coupons." Id. at ¶ 20. IOS disputed this figure and asked f o r any supporting records in a letter dated March 22, 2006. Id. at ¶ 21. The Contracting O f fic e r issued a final decision on February 1, 2007 "claiming that IOS breached the IOSA A F E S contract by losing coupons valued at $596,865.37." Id. at ¶ 22. In its Complaint, f ile d January 31, 2008, plaintiff "appeals the final decision of the AAFES Contracting O f f ic e r Ms. Janie Walker dated February 1, 2007." Id. at 1. Plaintiff requests that the c la im by AAFES that IOS breached its contract be declared "null and void due to a c o m p le te lack of any credible substantiation." Id. at 6. Defendant filed its answer on April 14, 2008, together with a counterclaim for d a m a g e s suffered by AAFES as a result of plaintiff's actions. Plaintiff filed a reply to d e f en d a n t's counterclaim on May 2, 2008. The parties filed a Joint Preliminary Status R e p o rt (JPSR) on June 20, 2008. After a telephonic status conference (TSC) with the p a rtie s on June 30, 2008, during which defendant undertook to file a dispositive motion, T ra n sc rip t of June 30, 2008 TSC (June 30, 2008 Tr.) 9:23-25, the court issued a s c h e d u lin g order setting forth a briefing schedule for defendant's expected dispositive m o tio n , Order of June 30, 2008. The first date on the schedule was the filing date for d e f en d a n t's disposive motion, August 22, 2008. Id. Defendant filed Defendant's Motion to Stay Pending the Resolution of Criminal Proceedings or, in the Alternative, to Cancel S u m m ary Judgment Briefing Schedule (defendant's August 7, 2008 Motion or Def.'s A u g , 7, 2008 Mot.) on August 7, 2008. Defendant's August 7, 2008 Motion requested th a t the court stay proceedings "pending completion of a related criminal proceeding b e in g conducted in the United States District Court for the Eastern District of W is c o n sin ." Def.'s Aug. 7, 2008 Mot. 1. After a TSC with the parties on August 18, 2 0 0 8 , the court denied defendant's August 7, 2008 Motion without prejudice and denied d e f en d a n t's Motion to Cancel Summary Judgment Briefing Schedule. Order of Aug. 18, Plaintiff International Outsourcing Services, LLC (IOS) became HighQBPO LLC. See Order of Oct. 15, 2008. The court refers to plaintiff in this opinion as IOS. 2
1

2 0 0 8 . Defendant moves for reconsideration of the court's denial of defendant's August 7, 2 0 0 8 Motion. Def.'s Mot. for Recons. 1. For the following reasons, defendant's Motion f o r Reconsideration is GRANTED. I. S ta n d a rd of Review

Pursuant to Rule 59 of the Rules of the United States Court of Federal Claims (R C F C ), "rehearing or reconsideration may be granted to all or any of the parties and on a ll or part of the issues, for any of the reasons established by the rules of common law or e q u ity applicable as between private parties in the courts of the United States." RCFC 5 9 (a )(1 ). The court is afforded significant discretion in determining whether to grant rec o n side ratio n . Yuba Natural Res., Inc. v. United States, 904 F.2d 1577, 1583 (Fed. Cir. 1 9 9 0 ); Matthews v. United States (Matthews), 73 Fed. Cl. 524, 525 (2006). "The court m u st consider such motion with `exceptional care.'" Henderson County Drainage Dist. N o . 3 v. United States (Henderson County), 55 Fed. Cl. 334, 337 (2003) (quoting F r u -C o n Constr. Corp. v. United States, 44 Fed. Cl. 298, 300 (1999)). "A motion for re c o n sid e ra tio n is not intended, however, to give an `unhappy litigant an additional c h a n ce to sway' the court." Matthews, 73 Fed. Cl. at 525 (quoting Froudi v. United S tate s, 22 Cl. Ct. 290, 300 (1991)). Accordingly, the movant "must do more than `merely re a ss e rt[ ] arguments which were previously made and carefully considered by the court.'" Bannum, Inc. v. United States, 59 Fed. Cl. 241, 243 (2003) (quoting Henderson County, 5 5 Fed. Cl. at 337). "To prevail on a motion for reconsideration, the movant must point to a manifest error of law or mistake of fact." Pac. Gas & Elec. Co. v. United States, 58 F e d . Cl. 1, 2 (2003). "Specifically, the moving party must show: (1) the occurrence of an in ter v e n in g change in the controlling law; (2) the availability of previously unavailable e v id e n c e; or (3) the necessity of allowing the motion to prevent manifest injustice." Matthews, 73 Fed. Cl. at 526 (citing Griswold v. United States, 61 Fed. Cl. 458, 460-61 (2 0 0 4 )). In this case, however, and unlike the usual circumstances surrounding a motion f o r reconsideration, the court denied defendant's August 7, 2008 Motion without p re ju d ic e , Order of Aug. 18, 2008, and the court views its decision on the Motion for R e c o n sid e ra tio n before it to be within its reasonable discretion and subject to the directive th a t the RCFC "be construed and administered to secure the just, speedy, and inexpensive d e te rm in a tio n of every action," RCFC 1. II. D is c u ss io n

D ef en d an t's Motion for Reconsideration now before the court provides the court w ith much more detail than that provided in defendant's August 7, 2008 Motion. Compare Def.'s Mot. for Recons. 1-3, 6-19 (providing four specific reasons that a stay is a p p ro p ria te ), with Def.'s Aug. 7, 2008 Mot. 5-7 (arguing briefly in three pages that a stay 3

is appropriate because of "a substantial overlap of witnesses and documentary evidence in th e criminal and civil proceedings"). With full briefing on defendant's Motion for R e c o n sid e ra tio n before the court, the court considers anew defendant's request to stay p ro c e e d in g s . Defendant articulates four reasons for filing its Motion for Reconsideration: (1) its surprise over plaintiff's opposition to defendant's August 7, 2008 Motion considering a g re e m e n ts and arguments made by plaintiff in related proceedings in the United States D is tric t Court for the Eastern District of Wisconsin, Def.'s Mot. for Recons. 1-2; (2) the p re ju d ic ia l nature of the August 18, 2008 TSC (related to defendant's surprise at p la in tif f 's opposition to its August 7, 2008 Motion), id. at 2-3; (3) the fact that defendant is "not in a position to file a dispositive motion requesting liability," id. at 3; and (4) because "it appears . . . that the Government's rights may not be vindicated by a contract c la im alone," id. Plaintiff argues that, because defendant "confidently represented to this Court that it could file a summary judgment motion" at the TSC on June 30, 2008, Pl.'s Resp. 1, and b e c a u se "the Government continues to have no basis for assessing liability against IOS in w h a t from the outset has been nothing but a contract dispute," id. at 2, a stay is not w a rra n te d . Defendant counters that "[a]t the June 30, 2008 status conference, counsel for th e Government did not know about the district court indictment involving $250 million o f coupon fraud[;] IOS did." Def.'s Reply 5. A. W h e th e r Plaintiff's Opposition to Defendant's Motion to Stay is In c o n sisten t With Plaintiff's Positions in District Court

A c c o rd in g to defendant: [T]he arguments . . . raised in support of [defendant's August 7, 2008 M o tio n ,] includ[ing] the overlap of witnesses in this case and the criminal c a se , the likely difficulty the Government would face in gathering evidence f ro m former owners, officers, employees, and contractors of [plaintiff] b e c au s e they are under indictment in a district court, and the overlap of e v id e n c e in the two cases[,] . . . are fully consistent with those made by [ p la in tif f ] and its former officers in at least two other civil cases. Def.'s Mot. for Recons. 6. The court identifies the criminal case related to the IOSA A F E S contract as the IOS-AAFES criminal case. Defendant draws the court's attention to Montana Food Distribs. Assoc. v. Int'l Outsourcing Servs., LLC, et al. (Montana Food) a n d Beiersdorf, et al. v. IOS, et al. (Beiersdorf). Def.'s Mot. for Recons. 6-11. 4

M o n tan a Food, No. 08-C-0457 (E.D. Wis.), involved a complaint alleging, as in th e IOS-AAFES criminal case, "that [plaintiff] submitted coupons to manufacturers even th o u g h it had already charged back those coupons to innocent retailers, and that [plaintiff] h ad developed a computer program to shift charge[s] back[] to innocent retailers," Def.'s M o t. for Recons. 7 (citing Appendix to defendant's Motion for Reconsideration (Def.'s M o t. for Recons. App.) 39-74 (Montana Food Class Action Complaint ¶¶ 48, 70)). On J u ly 30, 2008, IOS itself filed a motion to stay in Montana Food. Id. at 7; Def.'s Mot. for R e c o n s. App. 101-14 (IOS Brief in Support of Motions to Stay Proceedings Pending O u tc o m e of the Parallel Criminal Proceeding and to Enlarge Time to Answer or O therw ise Plead) (IOS Mot. to Stay, Montana Food). Defendant argues that plaintiff's re a so n s for filing its motion to stay in Montana Food are "exactly the same reasons that the Government argued in favor of the stay here." Def.'s Mot. for Recons. 7. Plaintiff's m o tio n to stay in Montana Food stated: T h e allegations in the Montana Foods Complaint assert facts that sig n if ica n tly overlap with the pending criminal proceeding and relate to s u b je c t matter significantly intertwined with the criminal case. All of the p e rtin e n t witnesses from IOS with knowledge of the facts [upon which] th e se allegations are premised . . . , and who would have to testify as to th e se facts in order for IOS to appropriately answer and mount a defense, a re currently indicted. These key witnesses will not be able to testify in this c iv il suit without waiving their constitutionally guaranteed Fifth A m e n d m e n t privilege, subjecting them to the substantial risk that their testim o n y could be used to aid in the criminal prosecution against them. If th e y choose to exercise their Fifth Amendment rights, as they are likely to, th e n IOS will have not have an adequate opportunity to mount a meaningful d e f en s e . As a result, this matter should be stayed pending the outcome of th e criminal action. D e f .'s Mot. for Recons. App. 102-03 (IOS Mot. to Stay, Montana Food 2-3). Defendant a rg u e s in its Motion for Reconsideration that, as in Montana Food, "the facts and w itn e ss e s in this case and the criminal case overlap" and that "it is likely that evidence c a n n o t be obtained from the `key' witnesses at IOS because they `will not be able to tes tify in this civil suit' without waiving their rights pursuant to the Fifth Amendment, ju st as IOS argued in the district court." Def.'s Mot. for Recons. 8. Defendant asserts th a t it "is concerned about its own ability to gather evidence through discovery and the e f f e c t that witnesses asserting a Fifth Amendment privilege would have upon the G o v e rn m e n t's ability to gather evidence." Id. at 9.

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In plaintiff's motion to stay in Montana Food, plaintiff argued, "Additionally, c o u rts have held that where only individuals are indicted, but a corporation will be unable to mount a defense in a related civil case because the key witnesses will invoke the Fifth A m e n d m en t, the better course is to grant a stay." Def.'s Mot. for Recons. App. 105 (IOS M o t. to Stay, Montana Food 5). At the TSC on August, 18, 2008, however, plaintiff a rg u e d against a stay because "there is no pending criminal action against IOS." Transcript of Aug. 18, 2008 TSC (Aug. 18, 2008 Tr.) 4:11-12. Defendant takes issue w ith plaintiff's argument in light of the argument made by plaintiff in Montana Food. Def.'s Mot. for Recons. 9.2 B eie rs d o rf , No. 07-C-0888 (E.D. Wis.), involved a complaint alleging that "IOS a n d its former owners, officers, and employees had `engaged in an enterprise whereby th e y conspired to defraud ­ and did defraud ­ consumer product manufacturers of h u n d re d s of millions of dollars,'" Def.'s Mot. for Recons. 10 (quoting Def.'s Mot. for R e c o n s. App. 115-49 (Beiersdorf Second Amended Complaint ¶ 1)). IOS officers Steven F u rr, Bruce Furr, Lance Furr, and William Babler were defendants in Beiersdorf. Def.'s M o t. for Recons. App. 122-23 (Beiersdorf Second Amended Complaint ¶¶ 27-30). They f ile d a motion to stay proceedings on December 13, 2007. Def.'s Mot. for Recons. App. 1 5 0 -5 6 (Defendants Steven A. Furr, Bruce A. Furr, Lance A. Furr and William L. B a b le r's Memorandum in Support of Their Motion for Stay of Proceedings Pending R e so lu tio n of Parallel Criminal Proceeding (Mot. to Stay, Beiersdorf). Defendant asserts th a t the motion to stay in Beiersdorf "emphasized the similarity of the criminal case and th e Beiersdorf matter, as well as [the defendants'] need to protect their rights against selfin c rim in a tio n under the Fifth Amendment." Def.'s Mot. for Recons. 11. On February 8, 2 0 0 8 , the defendants and plaintiffs in Beiersdorf stipulated to a stay. Def.'s Mot. for R e c o n s. App. 157-64 (Stipulation Concerning Stay With Respect to Individual D e f en d a n ts , Beiersdorf). On April 30, 2008, the United States District Court for the E a ste rn District of Wisconsin issued a Decision and Order stating that "[p]ursuant to p a ra g ra p h 12 of the parties' `Stipulation Concerning Stay with Respect to Individual D e f e n d a n ts,' the Court presumes that the parties will now move for a stay with regard to th is entire case, pending the resolution of the ongoing criminal matter." Def.'s Mot. for R e c o n s. App. 165-83 (Decision and Order of Apr. 30, 2008, Beiersdorf 19 (internal c ita tio n s omitted)). Defendant argues that plaintiff should be judicially estopped from objecting to the s ta y here because it involves taking a position that is inconsistent with the position it took The United States District Court for the Eastern District of Wisconsin has not yet ruled on IOS's Motion to Stay in Montana Food Distribs. Assoc. v. Int'l Outsourcing Servs., LLC, et al. (Montana Food), No. 08-C-0457 (E.D. Wis.). 6
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in Montana Foods and Beirsdorf. Def.'s Mot. for Recons. 11-12. The doctrine of judicial e sto p p e l posits that "where a party assumes a certain position in a legal proceeding, and su c c e e d s in maintaining that position, he may not thereafter, simply because his interests h a v e changed, assume a contrary position." Davis v. Wakelee, 156 U.S. 680, 689 (1895). "The decision whether to invoke judicial estoppel lies within the court's discretion . . . ." Data Gen. Corp. v. Johnson, 78 F.3d 1556, 1565 (Fed. Cir. 1996). "Judicial estoppel is d e sig n e d to prevent the perversion of the judicial process and, as such, is intended to p ro tec t the courts rather than the litigants." Id. Although there is no precise formula reg ard ing when the doctrine of judicial estoppel should be applied, certain factors inform th e court's decision: F irs t, a party's later position must be "clearly inconsistent" with its earlier p o s itio n . Second, courts regularly inquire whether the party has succeeded in persuading a court to accept the party's earlier position, so that judicial a c c e p tan c e of an inconsistent position in a later proceeding would create " th e perception that either the first or the second court was misled". . . . A th ird consideration is whether the party seeking to assert an inconsistent p o s itio n would derive an unfair advantage or impose an unfair detriment on th e opposing party if not estopped. N ew Hampshire v. Maine, 532 U.S. 742, 750-51 (2001) (citations omitted) ("In e n u m e r a tin g these factors, we do not establish inflexible prerequisites or an exhaustive f o rm u la for determining the applicability of judicial estoppel. Additional considerations m a y inform the doctrine's application in specific factual contexts. In this case, we simply o b s e rv e that the factors above firmly tip the balance of equities in favor of barring New H a m p s h ire 's present complaint."); Cuyahoga Metro. Hous. Auth. v. United States, 65 F e d . Cl. 534, 554 (2005) (discussing the same factors as New Hampshire v. Maine). According to defendant, the conditions in favor of judicial estoppel have been met: IO S 's opposition to a stay here is manifestly different from the position it a n d its former officers/employees have taken in the district court. These d if f e re n t positions could create the perception that either the district court or th is Court has been misled by their conflicting arguments concerning the o v e rla p of facts and witnesses in this case and the criminal case, the impact o n a civil case of witnesses taking the Fifth Amendment, and the fact that IO S is currently not a defendant in the criminal case. Finally, IOS would d e riv e an unfair advantage if it is not estopped because . . . the Government c a n n o t proceed in this case in a manner that would jeopardize its position in th e criminal case, nor can it risk limiting its liability to assert civil fraud c la im s against IOS. 7

D e f .'s Mot. for Recons. 12. As defendant notes, plaintiff's Response "does [not] address why it is u n re a so n a b le for the Government to adopt IOS's position that the civil cases should be s ta ye d pending the outcome of the criminal cases." Def.'s Reply 5. The court finds that p la in tif f 's opposition to defendant's Motion to Stay is "clearly inconsistent," New H a m p s h ire v. Maine, 532 U.S. at 750, with its position in Montana Food and Beiersdorf. In Beiersdorf, plaintiff succeeded in obtaining a stay, Def.'s Mot. for Recons. App. 1658 3 (Decision and Order of Apr. 30, 2008, Beiersdorf 19), while in Montana Food, the c o u rt has not yet decided IOS's Motion to Stay, see supra note 2. The court finds that " ju d icia l acceptance of [plaintiff's prior] inconsistent position in [this] proceeding would c re a te `the perception that either the [Eastern District of Wisconsin] or the [United States C o u rt of Federal Claims] was misled." New Hampshire v. Maine, 532 U.S. at 750. The c o u rt also finds that plaintiff could "derive an unfair advantage or impose an unfair d e trim e n t on" defendant if plaintiff is not estopped. See id. at 751. B. W h e th e r Defendant Will Be Prejudiced if the Case is Not Stayed

S e c o n d , defendant argues that the government will be prejudiced if this matter is n o t stayed. Def.'s Mot. for Recons. 12-14. Defendant argues that a denial of a stay "c o u ld cause hardship to the Government because of the greater scope of discovery a llo w e d in a civil case." Id. at 13 (arguing that "a stay would prevent the use of civil d isco v ery rules for criminal discovery purposes or to obstruct the prosecution"). Further, d e f en d a n t argues that "a stay may obtain the economies resulting from the doctrine of c o lla te ra l estoppel" because "if it were to establish in the criminal case that IOS f ra u d u len tly charged back any coupons to AAFES, the Government would be entitled to th e dismissal of IOS's complaint without the Court ever considering IOS's contract c la im ." Id. Defendant also alleges that by opposing defendant's August 7, 2008 Motion a n d defendant's Motion for Reconsideration, plaintiff is "attempt[ing] to obtain a ruling in this Court based upon an incomplete record that can be used to the advantage of IOS in th e event of future civil fraud proceedings (by claiming res judicata)." Id. at 14. Defendant asserts that "[a] ruling by the Court upon such an incomplete record could also im p ro p e rly benefit IOS's officers/employees in the district court criminal proceeding. Id. Finally, defendant points out that a stay would not result in any prejudice to plaintiff b e c au s e "IOS stands to receive no damages even if it wins this case because it is the G o v e rn m e n t that is seeking payment in this action, not IOS." Id. Plaintiff does not a d d re ss the issue of prejudice in its Response. See Pl.'s Resp. passim. The court agrees w ith defendant that defendant might be prejudiced if the case is not stayed, in particular, b e c au s e of the differing (and broader) scope of discovery in a civil proceeding as c o m p a re d to a criminal proceeding. 8

C.

Whether Defendant is in a Position to File a Dispositive Motion on Liability

D e f en d a n t argues that "the Government is simply not in the position to file a d is p o s itiv e motion requesting liability." Def.'s Mot. for Recons. 3. At the TSC held on A u g u s t 18, 2008 the court addressed defendant's August 7, 2008 Motion. Aug. 18, 2008 T r. passim. The court reasoned that because the dispute focuses for the most part on c o n tra c tu a l issues, defendant could proceed with a motion for summary judgment. Id. at 6 :2 1 -2 5 , 23:5-10. According to defendant, however, "based upon the revelations of the c rim in a l case and our audit to date, the Government currently is examining this matter as a potential fraud case." Def.'s Mot. for Recons. 14. Defendant argues that if they "seek a n d receive authority to file a motion to assert fraud counterclaims, the Court may never re a ch the contractual issues." Id. Furthermore, defendant asserts that "the Government c a n n o t at this time represent to the Court pursuant to Rule 11 that there are sufficient u n c o n tro v e rte d facts for the Court to enter summary judgment in favor of the Government u p o n liability." Id. at 14-15. Defendant argues that whether IOS had a right to charge b a c k AAFES depends on facts and circumstances that are the subject of an ongoing audit, id . at 15-18, and that "[u]ntil these facts can be developed through the audit and d is c o v e ry, [defendant] will not be in a position to file a motion for summary judgment, id. a t 18. The court agrees. In its Response, plaintiff states that "[i]f the Government is not able to articulate a b a s is for summary judgment, it obviously cannot be made to do so." Pl.'s Resp. 2. Plaintiff also argues that "instead of wasting nearly two months of time, the Government o w e d a duty to the Court to candidly convey this in advance, before the actual date a re q u ire d court-scheduled pleading is due, and rather than filing over 250 pages of a r g u m e n t and records having no place in this action." Id. at 2-3. Plaintiff appears to base its argument on the disparity in resources between defendant and plaintiff: T h e Department of Justice holds significant resources at its disposal. Those reso u rce s have already been deployed against IOS in the very preliminary s ta g e s of this litigation. IOS, on the other hand, cannot absorb significant le g a l costs simply to reach a stage where the Government is willing to stand re sp o n s ib ly behind the substance of the Contracting Officer's Final D e c is io n in the amount of $596.865.37. This action was filed because IOS d isa g re e d with AAFES' Final Decision and had to file this defensive suit to a v o id a default judgment under the Contract Disputes Act statutory filing d e a d lin e s . Now, the Government seeks to embroil this simple contract case w ith unexplored allegations of fraud against AAFES in the hope that its c u rre n t ruminations might uncover a single coupon upon which it can ju s tif y making a new fraud allegation. 9

Id . at 6. Defendant argues that "[d]istrict court resolution of issues would save both p a rties costs, and might even facilitate settlement." Def.'s Reply 4. According to d e f e n d a n t, "if IOS is truly concerned about its legal costs, it should support a stay in this m a tter, just as it has requested in the district court." Id. (footnote omitted). In response to p la in tif f 's allegation that the Government is attempting to "embroil" IOS in fraud alleg atio n s, Pl.'s Resp. 6, defendant points out that "IOS could hardly be any more e m b ro iled in fraud allegations than it already is in the district court criminal and civil c a s e s ," Def.'s Reply 5. Plaintiff argues that "[t]he Government should be constrained, as any other litig a n t, to what it responsibly can plead. Nothing in the Government's answer to the IOS c o m p la in t, or in its counterclaim, or, for that matter, the Contracting Officer's final d e c is io n of February 1, 2007 makes any mention of fraud." Pl.'s Resp. 6. Defendant a rg u e s that there is no requirement that the contracting officer's final decision have m e n tio n e d fraud. Def.'s Reply 3. Defendant responds, correctly, that "[t]he G o v e rn m e n t's right to assert fraud counterclaims in this Court is not dependent upon any d is c u ss io n of fraud in the contracting officer's final decision. Def.'s Reply 3 (citing M artin J. Simko Constr., Inc. v. United States (Martin J. Simko), 852 F.2d 540 (Fed. Cir. 1 9 8 8 )). Martin J. Simko involved the question of "whether the Contract Disputes Act of 1 9 7 8 [(CDA)] requires that the government's CDA and False Claims Act fraud c o u n te rc la im s , or a Special Plea in Fraud (however raised), first must be the subject of a c o n tra c tin g officer's (CO) decision before the Claims Court's jurisdiction is properly in v o k e d ." Martin J. Simko, 852 F.2d at 542. The Federal Circuit held that it did not. Id. a t 542-45. Defendant further argues that "[a]s of June 30, 2008, Government counsel was u n a w a re of any of these facts and the case seemed to be a `garden variety contract d is p u te .'" Def.'s Reply 5 (quoting Pl.'s Resp. 6). As defendant notes, "IOS does not address any of these facts in its brief or explain w h y gaining knowledge of them would not reasonably cause the Government to change its position with respect to moving forward on an early dispositive motion." Id. The c o u rt agrees with defendant that defendant is not in a position to file a dispositive motion o n liability at this time. D. W h e th e r the Government's Rights Will Be Vindicated By the Contract C laim

D e f en d a n t argues that "the Government cannot proceed with a summary judgment m o tio n because, if the Government were later to proceed with civil fraud claims in the d istrict court, [plaintiff] likely would argue that such claims are barred because they were m a n d a to ry counterclaims in this Court." Def.'s Mot. for Recons. 3. Furthermore, "the 10

G o v ern m en t cannot proceed with a summary judgment proceeding here and ask the Court to enter judgment on an incomplete record because any rulings on such an incomplete re c o rd potentially could prejudice the Government in the criminal case." Id. at 3. Plaintiff's Response contains no reply to this argument. See Pl.'s Resp. passim. E. W h e th e r Any Conditions Should Apply to Any Stay

In its Response, plaintiff requests that any stay be conditioned on the following: (1 ) IOS be relieved of all claims of accrued interest stemming from d e lay in resolving this dispute . . . ; (2) the Government be required to pay all needless costs that have b ee n incurred in reliance upon the accuracy of the Contracting Officer's F in a l Decision of February 1, 2007 demanding $596,865.37; (3 ) if and to the extent it allegedly pertains to contract interpretation o r performance at issue in this litigation, the Government be required to tim e ly complete what it characterized to this Court on August 7[, 2008] as a n e w audit; (4 ) consistent with RCFC 1, the Government be required to p ro m p tly provide copies to IOS of all records that could support any new or d if f e re n t claims against IOS, in whatever format such records are arranged b y the Government in support of any new or altered allegations or claims. This fourth condition, at a minimum, should include all of what the G o v ern m en t reports to this Court to be 90 boxes of related files. (Def.'s [ A u g . 7, 2008 Mot.] 2 . . . )[; and] (5 ) Further, consistent with RCFC 1, the Court should limit any stay o f relief to a specific time certain, during which the Government is re q u ire d , should it seek to inject criminality or fraud into this contract d isp u te, to timely amend its pleadings. Having initiated the statutory tim e ta b le for dispute resolution on February 1, 1007, the Government s h o u ld not be permitted unlimited time in which to toy with what is and w h a t is not before this Court for resolution. Pl.'s Resp. 7-8. Defendant argues that "[a]lthough IOS is the moving party with respect to these is s u e s, it provides no authority for the requested relief, other than a reference to Rule 1 of th e [RCFC]." Def.'s Reply 7. Furthermore, defendant points out that plaintiff "provides n o support for the argument that Rule 1 has been interpreted so broadly as to authorize the C o u rt to award the relief it requests." Id. Defendant argues that "to the extent that IOS 11

re q u e sts that the Court declare that the Government forfeit accrued interest, such relief w o u ld appear to be equitable or declaratory relief beyond this Court's jurisdiction." Id. In relation to its second proposed condition, plaintiff questions "how the Contracting O f f ic e r could have had any responsible basis for demanding . . . $596,865.37, without f irst having begun to examine the facts." Pl.'s Resp. 5. Defendant argues: [T]o the extent that IOS requests, without any citation to authority, that the G o v e rn m e n t be required to pay `costs that have been incurred in reliance u p o n the accuracy of the Contracting Officer's Final Decision' such a re q u e st is not only premature because the Government has not changed the a m o u n t sought, but is also inconsistent with th[e] precedent that expressly a llo w s the Government to depart from the decision without penalty. Def.'s Reply 2-3. Defendant cites to Wilner v. United States (Wilner), 24 F.3d 1397 (F e d . Cir. 1994) (en banc), to support its argument. In Wilner, the United States Court of A p p e a ls for the Federal Circuit stated: The plain language of the CDA and our decision in Assurance [Co. v. U n ited States, 813 F.2d 1202 (Fed. Cir. 1987)] make it clear that when suit is brought following a contracting officer's decision, the findings of fact in th a t decision are not binding upon the parties and are not entitled to any d e f ere n c e. W iln e r, 24 F.3d at 1401. Finally, defendant argues that requiring discovery during the s ta y would be inconsistent with the reasons for the stay and that limiting the stay to a time c e rta in would be inappropriate. Def.'s Reply 8. The court does not find any of plaintiff's proposed conditions either legally ju s tif ie d , or, given the pendency of the criminal proceeding, appropriate. III. C o n c lu s io n

B e c a u se defendant's Motion for Reconsideration demonstrates that a stay in this p ro c e ed in g is appropriate, defendant's Motion for Reconsideration is GRANTED. The c o u rt declines to impose any of the conditions on the stay requested by plaintiff in p la in tif f 's Response. The matter is hereby STAYED pending the outcome of criminal p ro c e ed in g s in the district court. The parties shall, within 10 days of the termination of th e criminal proceeding, file a joint status report or, if the parties cannot agree, separate s ta tu s reports, suggesting a schedule for further proceedings in this matter.

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IT IS SO ORDERED. s/ Emily C. Hewitt EMILY C. HEWITT Judge

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