McComas v. Wells Market et al
Filing
171
MEMORANDUM OPINION & ORDER that: (1) Stop N Shop #3's motion for summary judgment (Doc. 138 ) be, and is hereby, GRANTED; (2) McComas's FRCP 56(d) motion (Doc. 151 ) be, and is hereby, DENIED; and (3) the remaining defendants shall file a status report on or before March 31, 2021, stating whether they intend to file dispositive motions. Signed by Judge William O. Bertelsman on 3/17/2021.(ECO)cc: COR
Case: 2:16-cv-00217-WOB-CJS Doc #: 171 Filed: 03/17/21 Page: 1 of 8 - Page ID#: 2574
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF KENTUCKY
NORTHERN DIVISION AT COVINGTON
CIVIL ACTION NO.: 16-cv-217 (WOB)
CATHY MCCOMAS
VS.
PLAINTIFF
MEMORANDUM OPINION AND ORDER
WELLS MARKET, et al.
DEFENDANT
Cathy McComas filed a civil action against Wells Market, Balbinder Singh Randhawa, Gill
Petroleum, LLC., Jeevan Singh, Falmouth BP, LLC, APS1, LLC, Parminder Singh, and Stop N
Shop #3 (Doc. 38 at 1-2). She also listed five dbas for Wells Market: New Wells Market, Wells
Market LLC, Wells Open Air Food Market, Wells Carry Out, and Stop N Shop #3. She alleges
defendants violated portions of the False Claims Act, along with various federal and state wage
laws.
This matter is before the Court on Stop N Shop #3’s motion for summary judgment against
McComas. (Doc 138 at 1). The Court now issues the following Memorandum Opinion and Order.
Factual and Procedural Background
McComas’s initial complaint alleged violations of the False Claims Act against two
defendants: Wells Market (and five dbas) and Balbinder Singth Randhawa. (Doc. 154 at 1). She
eventually amended the complaint to include Stop N Shop #3, as the alter-ego of Wells Market.1
1
The amended complaint also included: Gill Petroleum, LLC; Jeevan Singh; Falmouth BP, LLC; and Parminder
Singh. These are all current or former tenants of Stop N Shop #3.
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(Doc. 38 at 1). Stop N Shop is a landlord who leases its premises to convenience stores. McComas
is a former employee of Wells Market, a previous tenant of Stop N Shop.
According to McComas, Wells Market made false statements to the government to redeem
food stamp coupons and Electronic Benefit Transfer Cards. (Doc. 38 at 2-3). In November 2016,
McComas provided the Department of Justice with written disclosure of the incidents. (Doc. 38
at 1). This prompted the U.S. Department of Agriculture to investigate McComas’s allegations.
(Doc. 38 at 2). Because of the investigation, the USDA charged Wells Market with accepting
SNAP benefits in exchange for ineligible merchandise. (Doc. 38 at 2). The USDA issued Wells
Market a six-month disqualification from food stamp eligibility, but the United State declined to
intervene. (Doc. 38 at 2).
McComas’s amended complaint fails to allege any false claims submitted by Stop N Shop.
(Doc. 38 1-35). Instead, the amended complaint states that Stop N Shop’s tenants submitted the
claims. McComas tries to link liability to Stop N Shop under an alter-ego theory.
Stop N Shop moved to dismiss, but after oral argument, the Court gave McComas nine
months to flesh out her False Claims Act allegations pertaining to Stop N Shop through discovery.
(Doc. 138 at 3). The discovery period has long since expired, as well as the extension. After the
expiration of the extended discovery request, Stop N Shop filed a motion for summary judgment
because the evidence is legally insufficient to establish a violation of the False Claims Act, or that
Stop N Shop is the alter ego of its tenants. (Doc. 138). This case was recently before Judge Smith
in District Court. Judge Smith issued a memorandum order, which this Court affirmed, limiting
discovery requests by McComas to only witness lists. (Doc. 154). Judge Smith even sanctioned
McComas’s attorney for bad faith.
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Analysis
Summary judgment is appropriate when no genuine issues of material fact exist, and the
moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317,
322-23 (1986) (citing Fed. R. Civ. P. 56(c)); see also LaPointe v. UAW, Local 600, 8 F.3d 376,
378 (6th Cir. 1993). The burden of showing the absence of any such genuine issues of material
facts rests with the moving party. Celotex, 477 U.S. at 323 (citing Fed. R. Civ. P. 56(c)).
A fact is “material only if its resolution will affect the outcome of the lawsuit.” Anderson v.
Liberty Lobby, 477 U.S. 242, 248 (1986). So the nonmoving party must present “significant
probative evidence” to show that “there is [more than] some metaphysical doubt as to the material
facts.” Moore v. Philip Morris Cos., Inc., 8 F.3d 335, 340 (6th Cir. 1993). The nonmoving party
may not simply rely on its pleading but must “produce evidence that results in a conflict of material
fact to be solved by a jury.” Cox v. Kentucky Dep't. of Transp., 53 F.3d 146, 150 (6th Cir. 1995).
The evidence, all facts, and any inferences that may permissibly be drawn from the facts must be
viewed in the light most favorable to the nonmoving party. Eastman Kodak Co. v. Image
Technical Servs., Inc., 504 U.S. 451, 456 (1992). That said, “[t]he mere existence of a scintilla of
evidence in support of the plaintiff's position will be insufficient; there must be evidence on which
the jury could reasonably find for the plaintiff.” Anderson, 477 U.S. at 252.
Summary judgment should be granted if a party who bears the burden of proof at trial does
not establish an essential element of his case. Tolton v. American Biodyne, Inc., 48 F.3d 937, 941
(6th Cir. 1995) (citing Celotex, 477 U.S. at 322).
1. False Claims Act
To sustain a claim under the FCA, McComas must prove each of these elements by a
preponderance of the evidence: (1) that Stop N Shop made a claim or statement to get the
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Government to pay money on a claim; (2) that the claim or statement was false or fraudulent; and
(3) that Stop N Shop knew that the claim or statement was false or fraudulent. See 31 U.S.C. §
3729(a)(2) (West 1999).
At a minimum, the FCA requires proof of an objective falsehood. Hagood v. Sonoma County
Water Agency, 81 F.3d 1465, 1477–78 (9th Cir. 1996). Expressions of opinion, scientific
judgments, or statements of conclusions about which reasonable minds may differ cannot be
false. See Wang ex rel. United States v. FMC Corp., 975 F.2d 1412, 1420–21 (9th Cir.1992).
An untrue statement, however, is not sufficient by itself to warrant liability under the FCA,
the Act also “requires a showing of knowing fraud.” Hagood, 81 F.3d at 1478. Thus, “statements
of claims which are false within the meaning of the FCA must be more than objectively untrue,
they must betray or suggest intentional deceit.” Lamers, 998 F. Supp. at 986–71.
Based on these principles, several federal courts have recognized that summary judgment is
properly granted to a defendant in a FCA case when a plaintiff fails to adduce enough evidence
from which a reasonable jury could find that the claim at issue was objectively false, or that the
defendant acted with the requisite intent. See, e.g., Lamers, 168 F.3d at 1019–20; Hagood, 81
F.3d at 1477–78; Northern Telecom, 52 F.3d at 815–16; Wang, 975 F.2d at 1420–21; U.S. ex rel.
Roby v. Boeing Co., 100 F. Supp. 2d 619, 625–26 (S.D. Ohio 2000), aff’d, 302 F.3d 637 (6th Cir.
2002).
Here, McComas fails to produce even a scintilla of evidence demonstrating Stop N Shop: (1)
made a claim or made a statement to get the Government to pay money on a claim; (2) that the
claim or statement was false or fraudulent; and (3) that Stop N Shop knew that the claim or
statement was false or fraudulent. Instead, McComas relies on instances in which Stop N Shop’s
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tenants provided ineligible food to SNAP benefit recipients. It is undisputed that Stop N Shop,
itself, never submitted any claims to the government for reimbursement. (Doc. 138 at 19). In fact,
McComas’s attorney prematurely subpoenaed Stop N Shop’s bank records, seeking to find some
evidence of a claim submission. This led Judge Smith to exclude bank records, e-fund discovery,
and other financial records. (Doc. 154 at 26-27). Judge Smith even issued sanctions against
McComas’s counsel for his behavior— declaring it was in bad faith. (Doc. 154 at 7). As Judge
Smith stated,
This action was initiated against Stop N Shop #3 as a dba of a nonlegal entity. Information was acquired on Stop N Shop #3 without
notifying it of subpoenas or that Plaintiff was investigating a case
against it. The Complaint was then modified in order to aim the qui
tam action against it, effectively substituting Stop N Shop #3 in the
place of prior defendant Wells Market, who, as it has later come to
light, lacks legal standing to be sued.
Id.
Despite discovery dragging on for over a year, McComas still finds no evidence linking
Stop N Shop to submitting a false claim to the government. Judge Smith’s recent issuance of a
Memorandum Order, and this Court’s affirmance of that order, drastically limited McComas’s
discovery to only witness lists. There is, therefore, no other avenue McComas has to find evidence
that Stop N Shop submitted a false claim to the government. Because there is no evidence Stop N
Shop submitted a false claim, even in a light most favorable to McComas, she cannot satisfy every
requirement of an FCA claim. Thus, the Court grants Stop N Shop’s motion for summary
judgment.
2. Alter Ego Theory
As noted in NLRB v. Allcoast Transfer, Inc., “th[e] factors relevant to a finding
of alter ego status include ‘whether the two enterprises have substantially identical management,
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business purpose, operation, equipment, customers, supervision and ownership.’” 780 F.2d 579
(6th Cir. 1986) (quoting Nelson Electric v. NLRB, 638 F.2d 965, 968 (6th Cir.1981)); Trustees of
Detroit Carpenters Fringe Benefit Funds v. Industrial Contracting, LLC, 581 F.3d 313, 315 (6th
Cir. 2009). The alter ego doctrine “was developed to prevent employers from evading obligations
under the Act merely by changing or altering their corporate form.” Allcoast Transfer, 780 F.2d
at 579.
McComas believes Stop N Shop is the alter ego of its tenants. That is simply false—and
impossible. In McComas’s response, she fails to cite to this Circuit’s well-established caselaw.
Instead, she relies on one Kentucky Supreme Court case and a Seventh Circuit opinion. McComas
cannot point to any evidence that the tenants and Stop N Shop had “substantially the same identical
management,
business
purpose,
operation,
equipment,
customers,
supervision
and
ownership.’” Id.
As previously noted, Judge Smith limited discovery on this issue. She stated, “McComas’s
most compelling pieces of evidence are inadequate to support a finding of control for purposes of
discovery production.” (Doc. 154 at 11). She then said, “it has been determined that Stop N Shop
#3 cannot be compelled to produced documents on behalf of the lessees.” (Doc. 154 at 13). The
record neither proves nor hints at proving Stop N Shop was a corporation above its tenants. On
the contrary, the only thing the record shows is a landlord/tenant relationship.2
2
Similarly, McComas also briefly argues that she pleaded FLSA and Kentucky overtime claims against Stop N Shop.
But she explicitly admitted to never working for Stop N Shop. She cannot now assert overtime claims against an
entity with whom she was never employed and has never sought damages on that claim. Stop N Shop is entitled to
summary judgment on this claim, as well.
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3. Jurisdictional Issues with the Public Disclosure Bar.
The FCA's public disclosure provision, 31 U.S.C. § 3730(e)(4)(A), “limits the subject matter
jurisdiction of federal courts over qui tam actions based upon previously disclosed
information.” Walburn v. Lockheed Martin Corp., 431 F.3d 966, 973 (6th Cir.2005). Its Public
Disclosure Bar states,
[n]o court shall have jurisdiction over an [FCA] action. . . based upon the public
disclosure of allegations or transactions in a[n]. . . administrative hearing. . . or
Government Accounting Office report, hearing, audit, or investigation. . . unless
the action is brought by the Attorney General or the person bringing the action
is an original source of the information.
31 U.S.C. 3730(e)(4)(a). Additionally, courts consider plaintiffs an “original source” if, before the
public disclosure of the information in the complaint, the plaintiff “has voluntarily disclosed to the
government the information on which the allegations are transaction in the claim are based.” 31
U.S.C. 3730(e)(4)(B)(i).
To determine whether § 3730(e)(4)(A)'s jurisdictional bar applies, a court must consider
“first whether there has been any public disclosure of fraud, and second whether the allegations in
the instant case are ‘based upon’ the previously disclosed fraud.” United States ex rel. Gilligan v.
Medtronic, Inc., 403 F.3d 386, 389 (6th Cir.2005); see also Walburn, 431 F.3d at 974 (“In
determining whether the jurisdictional bar of § 3730(e)(4) applies to a relator's case, we consider:
‘(A) whether there has been a public disclosure; (B) of the allegations or transactions that form the
basis of the relator's complaint; and (C) whether the relator's action is ‘based upon’ the publicly
disclosed allegations or transactions.’”) (quoting United States ex rel. Jones v. Horizon Healthcare
Corp., 160 F.3d 326, 330 (6th Cir.1998))). “If the answer is ‘no’ to [either] of these questions, the
inquiry ends, and the qui tam action may proceed; however, if the answer to each of the above
questions is ‘yes,’ then we must determine whether the relator nonetheless qualifies as an
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‘original source’ under § 3730(e)(4)(B), in which case the suit may proceed.” Walburn, 431 F.3d
at 974; U.S. ex rel. Poteet v. Medtronic, Inc., 552 F.3d 503, 511 (6th Cir. 2009).
Under the FCA, an original source is “an individual: (1) with direct and independent
knowledge of the information on which the allegations are based; and (2) who has voluntarily
provided the information to the government before filing an action under the FCA which is based
upon the information.” 31 U.S.C. § 3730(e)(4)(B). As for this second element, the Sixth circuit
has clarified that “[i]n addition to the requirement that a relator must have provided information to
the government prior to filing her FCA suit, ... a relator must also provide the government with the
information upon which the allegations are based prior to any public disclosure.” Jones, 160 F.3d
at 333–34 (citing McKenzie, 123 F.3d at 942).
McComas filed her original complaint on December 7, 2016. She provided a written
disclosure about these facts to the U.S. Attorney’s Office in Kentucky and Washington D.C. (Doc.
1 at 12 and Doc 146 at 23). A year later, she submitted her FOIA requires. (Doc. 45-1). Thus,
because she submitted her written disclosure before receiving the FOIA documents, she is
considered an original source. Because McComas cannot prove an FCA claim or alter-ego theory,
the Court grants Stop N Shop’s motion for summary judgment.
Therefore, having reviewed this matter, and the Court being advised,
IT IS ORDERED that: (1) Stop N Shop #3’s motion for summary judgment (Doc. 138)
be, and is hereby, GRANTED; (2) McComas’s FRCP 56(d) motion (Doc. 151) be, and is hereby,
DENIED; and (3) the remaining defendants shall file a status report on or before March 31, 2021,
stating whether they intend to file dispositive motions.
This 17th day of March 2021.
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