United States of America et al v. Berger Group Holdings, Inc. et al

Filing 123

MEMORANDUM OPINION. Signed by Judge Roger W Titus on 7/24/2017. (aos, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND

UNITED STATES OF AMERICA ex rel.
HAROLD SALOMON,
Plaintiff,
v.
DERISH M. WOLFF,
Defendant.

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Civil Case No. RWT-06-1970

MEMORANDUM OPINION
On July 31, 2006, relator Harold Salomon (“Relator”) filed a complaint in the District of
Maryland against corporate defendants including the Louis Berger Group, Inc. (“LBG”), alleging
violations of the False Claims Act (“FCA”), 31 U.S.C. §§ 3729-3733. ECF No. 2. Relator filed
an amended complaint (“Amended Complaint”) on July 10, 2009, adding three additional
individual defendants, including Derish M. Wolff (“Wolff”) and Salvatore J. Pepe (“Pepe”).
ECF No. 18.

On November 5, 2010, Relator, LBG, and the United States of America

(“Government”) signed an agreement settling the claims against LBG and providing for LBG’s
dismissal from the case.
On July 28, 2016, the Government filed a Complaint in Intervention (“Complaint in
Intervention”) against Wolff and Pepe only. ECF No. 83. On December 2, 2016, Wolff filed a
Motion to Dismiss for Improper Venue Or, in the Alternative, to Transfer Venue to New Jersey
[ECF No. 105], arguing that venue in Maryland was not proper when the Government filed its
Complaint in Intervention in 2016 and that venue more appropriately lies in the District of New
Jersey. Both parties also filed motions for leave to file sur-replies. ECF Nos. 113, 121. This

Court held a hearing on the motions on July 7, 2017. For the reasons that follow, Wolff’s motion
will be granted in part and the case will be transferred to the United States District Court for the
District of New Jersey.
BACKGROUND
Relator’s Amended Complaint alleged that Defendants knowingly defrauded the United
States by “tens of millions of dollars,” through manipulation of overhead cost data and overhead
rate proposals relating to contracts for domestic and international construction, engineering, and
environmental projects. ECF No. 18 ¶ 3. It stated that venue was proper in the District of
Maryland “pursuant to 31 U.S.C. § 3732(a) because LBG transacts business in, and acts
proscribed by 31 U.S.C. § 3729 were committed in, the District of Maryland.” Id. ¶ 36.
On November 5, 2010, Relator, LBG, and the United States of America signed an
Agreement settling the claims against LBG. ECF No. 105-3. The agreement stipulated that all
further claims between the parties to the agreement would fall under “the exclusive jurisdiction
and venue” of the United States District Court for the District of Maryland. Id. ¶ 15.
Also on November 5, 2010, in the District of New Jersey, Pepe pled guilty to conspiracy
to defraud the United States. ECF No. 83 ¶ 26. On December 12, 2014, in the District of New
Jersey, Wolff also pled guilty to conspiracy to defraud the United States. Id. ¶ 23. The criminal
charges against both Wolff and Pepe are related to the conduct at issue in the Government’s
Complaint in Intervention. ECF No. 105 at 6.
In its Complaint in Intervention against Wolff and Pepe only, the Government alleged an
“East Orange [New Jersey] Office Costs Scheme” and a “Washington, D.C. Office Costs
Scheme,” pursuant to which Defendants Wolff and Pepe allegedly committed FCA violations
while

working

at

LBG’s

corporate

headquarters

2

in

East

Orange,

New

Jersey.

ECF No. 83 ¶¶ 82-93. On May 22, 2017, this Court entered an Order dismissing with prejudice
all claims against Pepe, thus leaving only the claims against Wolff remaining. ECF No. 119.
DISCUSSION
I.

Wolff’s Motion to Dismiss for Improper Venue Or, in the Alternative, to Transfer
Venue to New Jersey [ECF No. 105]
a. Legal Standards
The FCA provides that venue for any action brought under § 3730 is proper in any

judicial district in which “any one defendant can be found, resides, transacts business, or in
which any act proscribed by section 3729 occurred.” 31 U.S.C. § 3732(a).
A district court may, for the “convenience of parties and witnesses, and in the interest of
justice,” transfer a civil case to any other district or division where it might have been brought
originally. See 28 U.S.C. § 1404(a); see also 28 U.S.C. § 1406(a) (“The district court of a
district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it
be in the interest of justice, transfer such case to any district or division in which it could have
been brought.”).
A district court has discretion to decide motions to transfer based on “an ‘individualized,
case-by-case consideration of convenience and fairness.’” Stewart Org., Inc. v. Ricoh Corp.,
487 U.S. 22, 29 (1988) (quoting Van Dusen v. Barrack, 376 U.S. 612, 622 (1964)). The party
seeking transfer must establish by a preponderance of the evidence that the transfer will “better
and more conveniently serve the interests of the parties and witnesses and better promote the
interests of justice.” Helsel v. Tishman Realty & Constr. Co., 198 F. Supp. 2d 710, 711
(D. Md. 2002) (citations and quotation marks omitted). “[U]nless the balance is strongly in favor
of

the

defendant,

the

plaintiff’s

choice

of

forum

should

rarely

be

disturbed.”

Collins v. Straight, Inc., 748 F.2d 916, 921 (4th Cir. 1984) (quoting Gulf Oil v. Gilbert,
3

330 U.S. 501, 508 (1946)). Four factors guide the Court’s evaluation of whether transfer is
appropriate: “(1) the weight accorded to the plaintiff’s choice of venue; (2) witness convenience
and access; (3) convenience of the parties; and (4) the interest of justice.” Dicken v. United
States, 862 F. Supp. 91, 92 (D. Md. 1994).
b. The relevant factors favor transfer to the District of New Jersey.
Because the alleged wrongdoing occurred at LBG corporate headquarters in New Jersey,
the case could have been brought originally in New Jersey under 31 U.S.C. § 3732(a). The
parties dispute whether venue is proper in Maryland in the first instance. This dispute turns on
whether this action commenced when Relator filed his Amended Complaint in 2009 or when the
Government filed its Complaint in Intervention in 2016. The Government argues that, in 2009,
at least one defendant—LBG—transacted business in Maryland, and its subsequent dismissal
from the action does not render venue improper. ECF No. 108 at 6-9. Wolff argues that venue
should be evaluated with regard to the circumstances that existed in 2016 when the Government
filed its Complaint in Intervention, at which time neither Pepe nor Wolff transacted business in
Maryland and none of the alleged proscribed acts occurred in Maryland. ECF No. 105 at 9-14.
This appears to be a question of first impression.
The Court need not decide this interesting question of first impression, however, because
it concludes that the relevant factors favor transfer of the case to the District of New Jersey. See
28 U.S.C. § 1404(a).
i. The Weight Accorded to the Plaintiff’s Choice of Venue
Though a plaintiff’s choice of forum is ordinarily granted significant deference, a
lowered amount of deference is appropriate when “‘none of the conduct complained of occurred
in the forum selected by the plaintiff and said forum has no connection with the matter in

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controversy.’” Dicken, 862 F. Supp. at 92-93 (quoting Mims v. Proctor & Gamble Distrib. Co.,
257 F. Supp. 648, 657 (D.S.C.1966)). The deference to a plaintiff’s choice is also lower when a
plaintiff chooses to bring suit in a foreign forum as opposed to his or her home jurisdiction.
Tse v. Apple Computer, Inc., Civ. No. L-05-2149, 2006 WL 2583608, at *2 (D. Md.
Aug. 31, 2006). If the plaintiff is a government agency, the deference to the plaintiff’s choice is
diminished further. E.E.O.C. v. FedEx Ground Package Sys., Inc., No. CIV.A. WMN-14-3081,
2015 WL 790500, at *1 (D. Md. Feb. 24, 2015) (citations omitted) (finding that, while plaintiff’s
choice of forum does not weigh as heavily when the plaintiff is a government agency, the choice
is still “entitled to some deference”); see also United States ex rel. Thomas v. Duke Univ.,
No. 4:13-cv-17, 2017 WL 1169734, at *3 (W.D. Va. Mar. 28, 2017) (noting that at “least one
district court from the Fourth Circuit has held that [the] deference [given to a plaintiff’s choice of
forum] is even more limited in a qui tam action where the real party in interest is the United
States”) (citing United States ex rel. Howard v. Harper Constr. Co., No. 7:12-cv-215-BO, 2015
WL 9463103, at *2 (E.D.N.C. Dec. 28, 2015)).
Because the Plaintiff is a government agency, and this is a qui tam action, the
Government’s choice of forum is entitled to lesser deference than what would usually be given to
the plaintiff’s choice. Moreover, the Government here accepted Relator’s choice of forum.
ECF No. 108 at 12.

Relator was a citizen of New Mexico when he filed the Amended

Complaint, ECF No. 18 ¶ 11, and a citizen of Florida when the Government filed the Complaint
in Intervention, ECF No. 83 ¶ 14. At no point was Relator a citizen of Maryland.
Additionally, it appears that none of the conduct complained of occurred in the District of
Maryland and thus this forum has little connection with the matter in controversy, so the
Government’s choice of forum is entitled to even lesser deference. By contrast, the Complaint in

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Intervention

specifically

alleges

an

“East

Orange

Office

Costs

Scheme,”

see

ECF No. 83 ¶¶ 82-89, which relates to allegedly proscribed acts taken at LBG’s East Orange
corporate headquarters in New Jersey. See ECF No. 105 at 16 (“The very business records of the
Company upon which the Government will rest its case are in New Jersey.”).
Because the Government is the Plaintiff and chose its forum based on the forum selection
of a foreign Relator, and because none of the specific wrongdoing alleged occurred in Maryland,
the Government’s choice of forum will be accorded minimal deference.
ii. Witness Convenience and Access
This Court has noted that “motions to transfer have been regularly granted where the
defendant has shown that most of its key witnesses are residents of another district.” Cronos
Containers, Ltd. v. Amazon Lines, Ltd., 121 F. Supp. 2d 461, 465 (D. Md. 2000). Convenience
of the witnesses is “perhaps the most important factor to consider when analyzing a § 1404(a)
motion to transfer venue.” Ralph v. Long, Civ. No. 8:99-3281-DKC, 2001 WL 706034, at *3
(D. Md. June 14, 2001).
Wolff asserts that “[a]s many as thirty to forty substantive witnesses from LBG, most of
whom live in New Jersey,” were interviewed as part of the criminal investigation and are
potential witnesses in this litigation. See ECF No. 105-1 ¶ 12 (Certification of Mark Rufolo).
In his attorney’s certification attached to his reply brief, Wolff asserts that “57 persons
interviewed by federal agents and therefore, potential witnesses” live in New Jersey, compared
with a total of twenty-eight witnesses whose residences were either outside of New Jersey or
unclear. ECF No. 111-1 ¶ 7. Wolff does not provide any substantive information regarding the
identity of the potential New Jersey witnesses or the relative importance of any witness’s
testimony. Id.

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The Government identifies only three potential witnesses who live in Maryland,
including LBG officials who likely have knowledge of the alleged scheme. ECF No. 108 at 13.
The rest of the witnesses, the Government argues, reside in “New York, Virginia, Florida, North
Carolina, South Carolina, Massachusetts, Vermont, and elsewhere.”

Id.

However, the

government does not provide any information on the probable number of any of these potential
witnesses. Id. The Government is also silent about the number of potential witnesses who reside
in New Jersey, arguing only that the certification by Wolff’s counsel lacks a factual basis for the
assertion that “most” of the “thirty to forty substantive witnesses from LBG” reside in New
Jersey. See ECF No. 108 at 13 n.7.
While the exact numbers are disputed, there have been only three witnesses identified
who reside in Maryland, and the rest appear to reside in New Jersey or elsewhere. While Wolff
has not identified with specificity which witnesses reside in New Jersey and their relative level
of importance, many New Jersey witnesses were interviewed as part of the criminal investigation
that took place in New Jersey. Moreover, many of the alleged proscribed acts took place at the
LBG office in New Jersey, and it is obvious that there are likely to be a number of key witnesses
who reside in New Jersey. Accordingly, the convenience of the witnesses favors transfer.
iii. Convenience of the Parties
The Court should consider the impact of transfer on both parties, but it is not appropriate
to shift the burden of inconvenience from the defendant to the plaintiff. See Trustees of Nat’l
Asbestos Workers Pension Fund and Med. Fund v. Lake Erie Insulation Co., 688 F. Supp. 1059,
1060 (D. Md. 1988); see also Atlantic City Assocs. No. Two (S-1), LLC v. Reale, No. CIV.
CCB-11-78, 2011 WL 1769842, at *3 (D. Md. May 9, 2011) (finding transfer appropriate when
travel to the original forum would cause hardship to the defendants but transfer would not cause

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hardship to the plaintiffs other than the fact that “its records [were] maintained in the Baltimore
office”).
Though the Government contends that Maryland is more convenient to Wolff, a Florida
resident, because Maryland is closer to Florida than New Jersey, ECF No. 108 at 14, Wolff is
eighty-one years old and has a residence in New Jersey, ECF No. 111 at 20. The fact that Wolff
is requesting transfer further supports Wolff’s belief that the District of New Jersey is more
convenient to him.
Wolff’s attorney claims to have “voluminous hard-copy documents and legal files, which
occupy file cabinets at [his] office, as well as millions of pages of material on [his] internal
electronic network system,” which may relate to the case. ECF No. 105-1 at ¶ 3. Wolff also
asserts that “the company records that are at issue were generated at [LBG’s] headquarters in
New Jersey,” ECF No. 111 at 3, though it is unclear where those records are currently located.
The District of Maryland is generally more convenient to the Government because of the
Southern Division’s proximity to Washington, D.C. ECF No. 108 at 14. The Government
agencies involved have their main offices in Washington, D.C., and 319 boxes of seized
documents that may include evidence are located in Washington, D.C. Id.
Nevertheless, Department of Justice attorneys from Washington, D.C. participated in the
criminal investigation into this matter in the District of New Jersey, ECF No. 111 at 19, and
made previous attempts to settle with Wolff at meetings in New Jersey, id. at 3. This suggests
that it would not be prohibitively inconvenient for the Government to pursue litigation in the
District of New Jersey. This factor, therefore, counsels slightly in favor of transfer.

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iv. The Interest of Justice
The interest of justice weighs strongly “when a party has previously litigated a case
involving similar issues and facts before the transferee court.” D2L Ltd. v. Blackboard, Inc.,
671 F. Supp. 2d 768, 784 (D. Md. 2009). Choice of law, local interest, and other public factors
may also be important. See, e.g., Atlantic City Assocs. No. Two (S-1), LLC, 2011 WL 1769842,
at *3 (“Also relevant is the local interest in having localized controversies decided at home.”)
(citing King v. Navistar Int'l Trans. Corp., 709 F.Supp. 261, 262 (D.D.C.1989)).
In this case, a related criminal investigation has already concluded in New Jersey,
ECF No. 111 at 19, and Pepe and Wolff have already pled guilty in the District of New Jersey to
crimes related to the present matter, ECF No. 83 ¶¶ 23, 26. The familiarity of the District of
New Jersey with both the underlying facts and the parties may be useful in resolving the civil
litigation. ECF No. 105 at 22. This factor weighs in favor of transfer to the District of New
Jersey.
c. Conclusion
Regardless of whether venue was proper in the District of Maryland at the time that the
Government filed its Complaint in Intervention, the four discretionary factors, considered
together, favor transfer to the District of New Jersey under 28 U.S.C. § 1404(a). Therefore,
Wolff’s Motion to Dismiss for Improper Venue Or, in the Alternative, to Transfer Venue to New
Jersey [ECF No. 105] will be granted in part and the case will be transferred to the District of
New Jersey.
II.

Plaintiff’s and Defendant’s Motions for Leave to File Sur-Replies [ECF Nos. 113,
121]
Allowing a sur-reply is within the Court’s discretion, but they are generally disfavored.

See E.E.O.C. v. Freeman, 961 F. Supp. 2d 783, 801 (D. Md. 2013), aff’d in part,
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778 F.3d 463 (2015). “Surreplies may be permitted when the moving party would be unable to
contest matters presented to the court for the first time in the opposing party’s reply.” Id. While
the Court has not relied on either of the proposed sur-replies in reaching its conclusions, in the
interest of allowing both parties to fully respond to the issues raised, the Government’s Motion
for Leave to File Sur-Reply [ECF No. 113] and Wolff’s Motion for Leave to File a Response to
the Government’s Sur-Reply [ECF No. 121] will be granted.
CONCLUSION
For the foregoing reasons, Wolff’s Motion to Dismiss for Improper Venue Or, in the
Alternative, to Transfer Venue to New Jersey [ECF No. 105] will be granted in part and the case
will be transferred to the District of New Jersey. The Government’s Motion for Leave to File
Sur-Reply [ECF No. 113] and Wolff’s Motion for Leave to File a Response to the Government’s
Sur-Reply [ECF No. 121] will be granted. A separate Order follows.

Date: July 24, 2017

/s/
ROGER W. TITUS
UNITED STATES DISTRICT JUDGE

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