Citynet, LLC v. Frontier West Virginia, Inc., et al.

Filing 563

MEMORANDUM OPINION AND ORDER The 481 MOTION by Mark McKenzie to Revise 465 Memorandum Opinion and Order is granted to the extent set forth herein; the 465 Memorandum Opinion and Order is set aside and vacated as to the finding of liability against defendant McKenzie on Count VII. Signed by Senior Judge John T. Copenhaver, Jr. on 12/2/2022. (cc: counsel of record; any unrepresented parties) (kew)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON
CITYNET, LLC, on behalf of
the United States of America,
Plaintiff/Relator,
v.

Civil Action No. 2:14-cv-15947

FRONTIER WEST VIRGINIA, INC.,
a West Virginia corporation;
KENNETH ARNDT, individually;
DANA WALDO, individually;
MARK MCKENZIE, individually;
JIMMY GIANATO, individually;
and GALE GIVEN, individually,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending is defendant Mark McKenzie’s (“McKenzie”)
motion to revise summary judgment ruling (ECF No. 481), filed
September 19, 2022.

In support of this motion, McKenzie filed a

declaration (ECF No. 487) dated September 19, 2022 but not
docketed until September 20, 2022.

Plaintiff/relator Citynet,

LLC (“Citynet”) filed a response to the motion (ECF No. 511) on
September 23, 2022, and McKenzie filed a reply (ECF No. 521) on
September 27, 2022.
McKenzie’s motion to revise summary judgment is
substantially based upon an argument he did not raise at summary
judgment regarding the existence of a Memorandum of

Understanding between the State of West Virginia and Frontier
West Virginia.

McKenzie’s motion seeks revision of the court’s

order of September 8, 2022 insofar as it awarded summary
judgment to Citynet establishing liability of McKenzie of the
cause of action set forth in Count VII of the amended complaint
relating to Frontier’s charges for processing the invoices of
third-party contractors who did facilities build-out (“FBO”)
work.
I.

Background

As part of the American Recovery and Reinvestment Act
of 2009, Congress appropriated $4,700,000,000 to the National
Telecommunications and Information Association (“NTIA”) to carry
out the Broadband Technology Opportunities Program (“BTOP”).
Pub. L. No. 111-5, 123 Stat. 115, 128 (2009).

Through BTOP,

Congress aimed to “establish a national broadband service
development and expansion program” through which unserved and
underserved areas could gain access to broadband internet.

Id.

at 512-13.
On February 12, 2010, NTIA awarded the Executive
Office of West Virginia (“WVEO”) $126,323,296 of BTOP grant
funding.

See Financial Assistance Award No. NT10BIX5570031,

https://www2.ntia.doc.gov/grantee/executive-office-of-the-state2

of-west-virginia (click “Financial Assistance Award Form CD450”).

In its application, the WVEO stated that “the primary

use of BTOP funding will be to extend the reach and density of
broadband access throughout the state.”

WVEO BTOP Application

11, https://www2.ntia.doc.gov/grantee/executive-office-of-thestate-of-west-virginia (click “Application Part 1 (Incorporated
into the award by reference)”).

WVEO’s “strategy” to accomplish

that goal was, among other things, the “build out of an ‘open’
network middle mile solution that will provide fiber to critical
community anchor tenants.”

Id. at 7.

“Middle mile” is a

category of internet infrastructure comprising the fiber optic
lines that link the larger “backbone” fiber optic lines to “last
mile” lines that connect to the end consumer.

See Inquiry

Concerning the Deployment of Advanced Telecommunications
Capability, 15 FCC Rcd. 20913, 20922-23 (2000).
The WVEO proposed building a “backbone” 1 middle-mile
fiber-optic network to “community anchor institutions” (“CAI”)
like schools, libraries, and healthcare provider centers.
Application Part 1 at 3.

See

Other internet service providers could

then tap into that middle mile -- it would be “open” to
competitors -- for “last mile” service directly to consumers.
As previously noted, “backbone” and “middle mile” are separate
portions of internet infrastructure. The parties, however,
sometimes refer to “middle mile” as “backbone.”
1

3

See, e.g., id. at 9.

WVEO represented that the fiber network

was “estimated to be 900 miles of new fiber.”

Id. at 26.

After the WVEO was awarded the grant, Frontier held
internal discussions attempting to ascertain details of the
WVEO’s grant award and whether Frontier could assist in its
implementation.

See February 17, 2010, Frontier Internal Email

Chain, ECF No. 380-26; February 18, 2010, Frontier Internal
Email Chain, ECF No. 380-18; Arndt Dep. 286-87.

Defendant

McKenzie was an executive-level employee of Frontier during the
times relevant to the pending motions.

See McKenzie Decl. ¶ 3,

ECF No. 380-38.
Eventually, the WVEO and Frontier agreed that Frontier
would serve as the WVEO’s contractor to build the middle-mile
fiber network component of the BTOP grant.

See August 30, 2010,

Frontier Internal Email Chain, ECF No. 393-29.

WVEO’s lead

grant writer explained in a letter that “[t]his portion of the
grant was written in a manner utilizing the pre-existing State
of West Virginia MPLS contract” previously held by Verizon and
passed to Frontier with Frontier’s purchase of Verizon.
6, 2010, Todorovich Letter, ECF No. 402-8. 2

October

But “[a]s [the WVEO]

“MPLS” is short for Multi-Protocol Label Switching. See
William Lehr, Would You Like Your Internet With or Without
Video?, 2017 Ill. J. of Law, Tech. & Policy 73, 87 n.62 (2017).
Under the MPLS contract, Frontier “provide[d] network facilities
2

4

started implementing the grant . . . , NTIA advised that we
should treat Frontier as a sub-recipient [of the BTOP grant]
rather than a contractor.”

Id.

Thus, in October 2010, the WVEO entered into a
memorandum of understanding (“MOU”) with Frontier to be the BTOP
grant’s subrecipient and to build the fiber network contemplated
by the grant.

See MOU, ECF No. 382-9.

The MOU provided that

Frontier would carry out its subrecipient duties under the BTOP
grant pursuant to the existing MPLS contract.

Id.

But because

award of the BTOP grant required acceptance of the grant terms
and conditions, Frontier and the WVEO also agreed to be bound by
those as well.

See id.; see also id. at 3.

As is emphasized in McKenzie’s motion to revise the
summary judgment order, the MOU provided that where Frontier
incurred “any additional overhead costs . . . as a result of
being a sub-recipient of the Grant,” such costs would be allowed
either as eligible costs under the grant or allowed as costs
payable by WVEO under the MPLS contract.

Id. at 3.

Where

Frontier sought payment for costs under the MPLS contract, the
MOU required these to be “separately invoiced” to the WVEO.

and other services to the State of West Virginia.”
1, ECF No. 380-4.
5

Id.

See MOU at

In a July 15, 2011, memorandum sent by Frontier to the
WVEO, Frontier memorialized discussions between Frontier and the
WVEO regarding apparent issues with “CAI premises
conduit/entrance facilities.”

July 15, 2011, Email from

McKenzie to WVEO, ECF No. 394-5.

Frontier contended that prior

documentation, including grant documents, the MPLS contract, and
the MOU, showed “that the CAI is responsible for any
conduit/entry work needed.

In fact, the State allocated BTOP

funding for this purpose.”

Id.

Frontier also stated that

“[its] business does not ordinarily include this type of work.”
Id.

At some point, however, the WVEO and Frontier agreed that

Frontier would perform this portion of the fiber build by hiring
contractors, which was later referred to as “facilities buildout” or “FBO” work.
11, 392-2, 393-19.

See Gregg Dep. 127-29, ECF Nos. 380-2, 382FBO work involved building fiber from a

“meet point” outside each CAI into the CAI itself.
128-29.

See id. at

For example, “actually doing whatever was necessary to

drill into that building and go to the closet, cabinet, whatever
it was, where the service would be terminated” and the CAI could
connect to the fiber network.

Id. at 128.

Originally, Frontier set its FBO invoice processing
costs as a fee of 35.2% of what its contractors charged to
perform the FBO work.

See McKenzie Dep. 253.

6

Internal Frontier

emails called the FBO invoice processing costs a “markup.”
November 2, 2012, Internal Frontier Email, ECF No. 384-8;
January 28, 2013, Internal Frontier Email, ECF No. 382-30; July
16, 2013, Internal Frontier Email, ECF No. 384-14. 3

Internal

Frontier emails and documents also refer to the company’s FBO
invoice processing costs as a “revenue opportunity,” “profit,”
“income,” and “actual cost + 35.2%.”

See November 30, 2011,

Internal Frontier Email, ECF No. 384-7 (“revenue opportunity”);
November 2, 2012, Internal Frontier Email, (“profit,” “income,”
and “actual cost + the 35.2%”); January 24, 2013, Internal
Frontier Email, ECF No. 384-9 (“profit” and “profit increase”);
January 28, 2013, Internal Frontier Email (“income”); July 16,
2013, Internal Frontier Email (“income”); see also McKenzie Dep.
176-77 (agreeing that FBO invoice processing costs were actual
cost plus 35.2%).
Frontier prepared a memorandum to the State with
specific details about the amount and nature of the markups, but
it appears to have never been sent.

See November 20, 2012,

Internal Frontier Email, ECF No. 382-27 (“I cannot confirm the
35.2% loading was fully communicated [to the WVEO].”); Given
Dep. 156-57, 230.

On November 15, 2012, the State’s Chief

“Markup” means “an amount added to the cost price to determine
the selling price,” or broadly “profit.” Markup, MerriamWebster, https://www.merriam-webster.com/dictionary/markup.
3

7

Technology Officer, defendant Given, asked McKenzie, “what
activities does Frontier perform on each FBO site?”

November 15

and 16, 2012, Email Chain Between Given and McKenzie, ECF No.
382-26.

McKenzie replied that the percentage-based markup was

reflective of Frontier’s incurred costs: “our Corporate office
did a cost analysis for this function and hence the standard
[cost] you see on these invoices.”

Id.

McKenzie also set forth

a purported eleven-step process for processing FBO invoices from
contractors.

Id.

On November 16, 2012, Given expressed concern that the
35.2% markup “seems entirely unreasonable.”

Id.

At her

deposition, Given correctly explained that a rate-based fee
could not accurately capture Frontier’s actual costs incurred to
process an FBO invoice.

See Given Dep. 158.

This is because

the actual cost to process an invoice would be roughly the same
from invoice to invoice, while a rate-based fee could vary
wildly with the amount charged by a contractor.

See Given Dep.

158.
In response, on January 29, 2013, Frontier, through a
memorandum authored by McKenzie, proposed a $1,808 flat fee for
each invoice submitted by it for its FBO invoice processing
costs.

January 29, 2013, Memorandum to Given, ECF No. 380-6;

see also McKenzie Dep. 187-89.

Frontier represented that its
8

flat-fee figure was “[b]ased upon actual costs incurred by
Frontier in processing FBO invoices,” which it calculated after
“correspond[ing] with the multiple Frontier departments who
process invoices associated with [FBO] work.”
Memorandum to Given.

January 29, 2013,

The memorandum details an eleven-step

process for each FBO invoice that took sixteen separate
employees four hours total on average to complete.

Id.

However, the face of the memorandum plainly evidences
that the $1,808 figure was arrived at by dividing the cumulative
amount of FBO fees charged as of that date at the 35.2% rate by
the total number of FBO invoices processed, rather than by
analyzing costs associated with the purported eleven-step
process outlined in the memorandum.
Memorandum to Given.

See January 29, 2013,

Internal Frontier emails show a consultant

hired by Frontier, Billy Jack Gregg, proposing various flat fees
not based on actual costs, but based on a “target loading
percentage.”

December 13, 2012, Email from Gregg to Frontier,

ECF No. 384-11; see also December 12, 2012, Email from Gregg to
Frontier, ECF No. 384-1; December 19, 2012, Email from Gregg to
Frontier, ECF No. 384-12.

McKenzie testified that, in helping

to devise the purported eleven-step process, he spoke to
Frontier employees but did not review any documents.
Dep. 187-89.

9

McKenzie

Pursuant to 31 U.S.C. § 3730(b)(2), Citynet’s qui tam
complaint was filed on May 17, 2014, in camera, sealed, and
served on the United States but not the defendants.
3.

ECF Nos. 2-

The United States then moved for several extensions under 31

U.S.C. § 3730(b)(3) while it investigated Citynet’s allegations
to decide whether to intervene and conduct the action on its own
behalf.

See ECF Nos. 4-26.

declined to intervene.

On June 17, 2016, the United States

ECF No. 27.

On July 18, 2016, Citynet

filed the first amended complaint, which is the operative
pleading in this matter.

First Am. Compl., ECF No. 30.

Citynet

alleges generally that the defendants defrauded the United
States in connection with the grant in violation of the FCA.
Id. ¶¶ 3-6, 9-12, 14.

In Count VII, Citynet asserts

specifically that the defendants fraudulently billed the United
States for Frontier’s FBO invoice processing costs.

See id. ¶¶

147-53, 175-81.
On September 8, 2022, this court entered the order on
the parties’ cross-motions for summary judgment.

ECF No. 465.

As relevant here, the court granted summary judgment in favor of
the plaintiff-relator and against defendants McKenzie and
Frontier as to liability on Count VII.

10

Id. at 71.

II. Legal Standard
Under Rule 54(b), a trial court retains the power to
reconsider and modify its interlocutory orders at any time prior
to final judgment when such is warranted.

See Am. Canoe Ass’n

v. Murphy Farms, Inc., 326 F.3d 505, 514–15 (4th Cir. 2003);
Fayetteville Invs. v. Com. Builders, Inc., 936 F.2d 1462, 1469
(4th Cir. 1991).

The Fourth Circuit has applied two analyses to

determine the applicable standard of review for a motion to
reconsider: (1) comparison to the standards of Rules 59(e) and
60(b) of the Federal Rules of Civil Procedure for amending a
final judgment and (2) comparison to the law-of-the-case
doctrine.
Under the first Rules-based analysis, amending or
reconsidering a judgment is proper on three grounds: “(1) to
accommodate an intervening change in controlling law; (2) to
account for new evidence not available at trial; or (3) to
correct a clear error of law or prevent manifest injustice.”
Pac. Ins. Co. v. Am. Nat’l Fire Ins. Co., 148 F.3d 396, 403 (4th
Cir. 1998).

In general, reconsideration of a judgment is an

“extraordinary remedy [that] should be used sparingly.”

Id.

(quoting 11 Charles Alan Wright et al., Federal Practice and
Procedure § 2810.1 (2d ed. 1995)).

11

Under the second analysis, federal courts cabin
revision of interlocutory orders pursuant to Rule 54(b) by
treating such rulings as law of the case.

Carlson v. Bos. Sci.

Corp., 856 F.3d 320, 325 (4th Cir. 2017).

Although it is not a

limitation on the court’s power, the law-of-the-case doctrine
“expresses the practice of courts generally to refuse to reopen
what has been decided.”
444 (1912).

Messenger v. Anderson, 225 U.S. 436,

The doctrine provides that, in the interest of

finality, “when a court decides upon a rule of law, that
decision should continue to govern the same issues in subsequent
stages in the same case.”

United States v. Aramony, 166 F.3d

655, 661 (4th Cir. 1999) (quoting Christianson v. Colt Indus.
Operating Corp., 486 U.S. 800, 815-16 (1988)).

A court may

revise an interlocutory order under the law-of-the-case doctrine
under three circumstances: (1) “a subsequent trial produc[ing]
substantially different evidence”; (2) a change in applicable
law; or (3) clear error causing “manifest injustice.”

Am. Canoe

Ass’n, 326 F.3d at 515 (quoting Sejman v. Warner–Lambert Co.,
Inc., 845 F.2d 66, 69 (4th Cir. 1988)); see, e.g., U.S. Tobacco
Coop. Inc. v. Big S. Wholesale of Va., LLC, 899 F.3d 236, 257
(4th Cir. 2018) (applying these circumstances to review a motion
to reconsider).

12

Motions to reconsider should not be used to present
new arguments or evidence that could have been raised
previously.

See Carlson v. Boston Sci. Corp., 856 F.3d 320, 326

(4th Cir. 2017); Cray Commc’ns Inc. v. Novatel Comput. Sys.,
Inc., 33 F.3d 390, 395-96 (4th Cir. 1994); see also Nanendla v.
WakeMed, 24 F.4th 299, 304 (4th Cir. 2022).
III. Discussion
McKenzie avers that revision of the court’s entry of
summary judgment against him as to liability on Count VII is
appropriate for two reasons.

First, as his “core contention,”

McKenzie argues that there is “not sufficient evidence to
conclude that McKenzie had, as a matter of law, the requisite
scienter to determine his FCA liability for Frontier’s FBO
charges.”

McKenzie Reply, ECF No. 521 at 2.

In support of this

contention, McKenzie points to the existence of the Memorandum
of Understanding (“MOU”) between Frontier and the State, 4 as well
as his background as an engineer who relied on other Frontier
employees for matters relating to accounting, billing, and
compliance.

Id.

Second, McKenzie renews an argument that the

court has previously rejected, attempting to recharacterize what
This argument was neither raised nor argued by the movant at
the summary judgment stage when Frontier and McKenzie were
represented by the same counsel.
4

13

he and others within Frontier repeatedly referred to as a
“markup” and “actual cost + 35.2%” instead as “in reality a fee
for various services associated with the retention of thirdparty contractors to perform the FBO work.”

McKenzie Mem. Supp.

Mot. to Revise, ECF No. 482 at 7-9.
As an initial matter, the court need not reach
McKenzie’s second contention on reconsideration.

With this

exercise in post-hoc semantics, McKenzie argues that the court
erred in attributing to his words the same meaning that he
himself gave them.

See id. at 7-8.

This argument is

substantially the same as one previously advanced and equally
unavailing.

The court thoroughly addressed the argument in its

summary judgment order and sees no reason to revisit it here.
See ECF No. 465 at 53-57.

The court next considers whether

McKenzie’s contention with respect to scienter, now based on the
MOU with WVEO, identifies a clear error of law or manifest
injustice meriting revision of the summary judgment order.
The FCA is an anti-fraud statute aimed at those who
submit to the United States “false claims” for payment.
U.S.C. §§ 3729-3733.

See 31

Section 3729 imposes liability upon “any

person who,” inter alia, “(A) knowingly presents, or causes to
be presented, a false or fraudulent claim for payment or
approval; (B) knowingly makes, uses, or causes to be made or
14

used, a false record or statement material to a false or
fraudulent claim; [or] (C) conspires to commit a violation of”
section 3729.

Id. § 3729(a)(A)-(C).

Count VII is a false records claim under the FCA.
31 U.S.C. § 3729(a)(1)(B).

See

“[A]ny time a false statement is

made in a transaction involving a call on the U.S. fisc, False
Claims Act liability may attach.”

Harrison v. Westinghouse

Savannah River Co., 176 F.3d 776, 788 (4th Cir. 1999).

A false

records claim has four elements:
(1) there was a false statement or fraudulent course
of conduct; (2) made or carried out with the requisite
scienter; (3) that was material; and (4) that caused
the government to pay out money or to forfeit moneys
due.
United States ex rel. Nicholson v. MedCom Carolinas, Inc., 42
F.4th 185, 193 (4th Cir. 2022).
The FCA’s element of scienter requires that “a person
has actual knowledge of the information, acts in deliberate
ignorance of the truth or falsity of the information, or acts in
reckless disregard of the truth or falsity of the information.”
United States ex rel. Gugenheim v. Meridian Senior Living, LLC,
36 F.4th 173, 179 (4th Cir. 2022) (quoting 31 U.S.C. §
3729(b)(1)(A)) (internal marks omitted).

While no specific

intent to defraud is required, 31 U.S.C. § 3729(b)(1)(B), the
knowledge requirement is generally strictly enforced.
15

See

Purcell, 807 F.3d at 287; Ruckh v. Salus Rehabilitation, LLC,
963 F.3d 1089, 1108 (11th Cir. 2020).
The plaintiff-relator bears the burden of proving each
element of the FCA.

See United States ex rel. Purcell v. MWI

Corp., 807 F.3d 281, 287 (D.C. Cir. 2015).

Summary judgment is

appropriate only “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.”

Fed. R. Civ. P. 56(a).

“Material” facts are those necessary to establish the elements
of a party’s cause of action.

Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 248 (1986); see also News & Observer Publ’g Co. v.
Raleigh-Durham Airport Auth., 597 F.3d 570, 576 (4th Cir. 2010).
A “genuine” dispute of material fact exists if, in viewing the
record and all reasonable inferences drawn therefrom in a light
most favorable to the non-moving party, a reasonable fact-finder
could return a verdict for the non-moving party.

Anderson, 477

U.S. at 248.
A party is entitled to summary judgment if the record,
as a whole, could not lead a reasonable trier of fact to find
for the non-moving party.
823 (4th Cir. 1991).

Williams v. Griffin, 952 F.2d 820,

Conversely, summary judgment is

inappropriate if the evidence is sufficient for a reasonable

16

fact-finder to return a verdict in favor of the non-moving
party.

Anderson, 477 U.S. at 248.
McKenzie’s first contention is that the existence of

the MOU between Frontier and the WVEO establishes a triable
issue of fact as to his scienter on the FBO charges.

See

McKenzie Mem. Supp. Mot. to Revise, ECF No. 482 at 1-2, 6-7.

In

relevant part, a provision of this MOU under the heading
“Accounting Requirements” states that: 5
FTR will invoice EOWV for eligible costs under the
Grant, as defined in the [Notice of Funds Availability
for BTOP grants]. FTR may separately invoice EOWV for
other costs that are not eligible under the Grant
pursuant to the MPLS. EOWV agrees that any additional
overhead costs incurred by FTR as a result of being a
sub-recipient of the Grant shall either be allowed as
eligible costs under the Grant or under the MPLS
Contract.
ECF No. 382-9 at 3.
As evidenced by the MOU, Frontier and the WVEO agreed
that Frontier’s costs which were not eligible for payment with
federal monies under the terms of the BTOP grant would be paid
with separate State monies pursuant to the existing MPLS
contract, per the MOU provision, if not allowed under the BTOP

As defined in the MOU: FTR refers to Frontier; EOWV refers to
the WVEO; MPLS refers to 2007 State Telecommunications Contract,
MPLS07.
5

17

grant. 6

Where Frontier sought payment under the MPLS contract

for costs not eligible under the BTOP requirements, it was
required to submit such invoices separately.

McKenzie concedes

that “he understood Frontier was billing FBO charges,” but he
contends there is no record evidence to suggest he had knowledge
that the WVEO would pay the FBO charges with BTOP grant funds,
as opposed to State funds pursuant to the MOU.
at 2.

McKenzie Reply

He further concedes that he was “Frontier’s point person

on the BTOP project,” but contends that nevertheless “he is an
engineer by trade, and the focus of his efforts related to
engineering” such that “[i]n terms of other aspects of the
project, [he] relied on Frontier’s accounting department,
accounts receivable personnel and other subject-matter
specialists.”

McKenzie Mem. at 6.

McKenzie makes no contention

that the FBO charges were, in fact, invoiced separately as
required by the MOU.

Taken at its highest, McKenzie’s argument

is essentially that there remains a genuine issue of material
fact as to whether McKenzie had knowledge that the FBO invoices
were being submitted for payment with federal BTOP funds or with
State funds deriving from an alternative source not subject to
the BTOP grant restrictions.

The specific terms of the MPLS contract have not been made
known to the court, as no party presented such evidence at
summary judgment.
6

18

Citynet disputes McKenzie’s argument as a factual
matter.

Citynet argues that the MOU between Frontier and the

WVEO does not disturb the court’s grant of summary judgment in
Citynet’s favor because the MOU included a specific requirement
that Frontier’s charges for unallowable costs under the BTOP
grant be invoiced separately, which Frontier never did.
Resp., ECF No. 511 at 3.

Citynet

In Citynet’s view, Frontier’s failure

to submit separate invoices is conclusive evidence of McKenzie’s
scienter; to support this contention, Citynet submits deposition
testimony of McKenzie. 7

Therein, McKenzie testified that he

oversaw Frontier’s billing process to the extent that he was
“tracking that billing was being done appropriately and timely,”
although he “wasn’t involved in the preparation of the billing.”
McKenzie Dep. 80-81, ECF No. 511-1.

McKenzie testified that he

was the person tasked with making sure all of the steps in the
billing process took place.

Id. at 81.

Taken together, Citynet’s argument is that McKenzie’s
claimed lack of knowledge as to whether the invoices being
submitted with FBO charges were being paid with BTOP funds or
other State funds pursuant to the MOU cannot stand because he
The evidence in question was not submitted by either party at
summary judgment, but its consideration on this motion is
warranted to refute McKenzie’s claim of legal error as to
scienter. See Cray Commc’ns Inc. v. Novatel Comput. Sys., Inc.,
33 F.3d 390, 395 (4th Cir. 1994).
7

19

was the person responsible for overseeing billing and he knew
that NTIA was “monitoring the WVEO’s administration of the
grant.”

Citynet Resp. at 3.
Ultimately, Citynet’s argument is inadequate to

surmount the high bar it faces as the movant for summary
judgment.

While no party contests the court’s finding on

summary judgment that Frontier knowingly submitted false claims
for payment with BTOP funds meriting FCA liability, see ECF No.
465 at 51-66, the same finding cannot stand for McKenzie.

There

is a genuine dispute of fact as to whether McKenzie individually
knew, or acted with reckless disregard, as to whom the FBO
charges were being billed.
Citynet has presented strong circumstantial evidence
of McKenzie’s involvement in the billing process such that a
reasonable juror could very well conclude he knew that the
falsified FBO charges were being submitted for payment with
federal funds that were subject to the grant’s no-profit
requirement or, at the very least, acted with reckless disregard
of such occurrence.

However, on the evidence before the court,

an equally reasonable juror could also conclude that McKenzie
believed that the invoices were destined for payment with State
funds under the MPLS contract and thereby not subject to the no-

20

profit requirement.

See McKenzie Mem. Supp. Mot. to Revise at

1-2.
Citynet’s other cited support – the notes of a threeday site visit by three NTIA representatives working on aspects
of the BTOP grant program – provides little that might resolve
the doubt of a reasonable juror as to McKenzie’s scienter.
ECF No. 380-29.

See

The document lists the three federal

representatives as the sole “attendees,” although it is clear on
the face of the document that at certain points during the site
visit McKenzie and other members of the Grant Implementation
Team in West Virginia were also present.

See id.

As relevant

here, the site visit notes reflect four items: (1) the “NTIA
team met with representatives from Frontier Communications and
WV Grant Implementation Team to discuss billing delays and
challenges”; (2) McKenzie presented to the visitors information
about the damage caused by a recent snowstorm, in the context of
a conversation about the “current network expansion and
deployment efforts on behalf of Frontier”; (3) it was resolved
that an “independent verification and validation” inspection of
Frontier’s FBO work would be performed; and (4) the Grant
Implementation Team provided the site visitors with an overview
of their accounts payable process, using Frontier as an example.
Id.

21

These notes of discussion suggest that detailed
exchanges about Frontier’s billing process and BTOP grant
requirements may well have occurred, but it is not clear who
might have been involved in such exchanges.

Indeed, it is

certainly not clear on the face of the document whether McKenzie
was present for any portion of the site visit other than the
discussion of a snowstorm.

This hardly constitutes evidence of

McKenzie’s knowledge so as to command summary judgment in
Citynet’s favor.
Because the court finds that there is a genuine issue
of material fact as to McKenzie’s scienter regarding the source
of the funds being used to pay the FBO invoices, summary
judgment in favor of the plaintiff is improper.

The court finds

no clear error of law in the analysis of its summary judgment
order because McKenzie failed to raise the arguments contained
in the pending motion at summary judgment.

However, the court

nevertheless finds that summary judgment against McKenzie as to
his liability on Count VII would result in manifest injustice to
him by unduly denying him the opportunity to make his case to
the jury.

Because Rule 54(b) allows the court to revise its

prior orders before final judgment to prevent manifest
injustice, Pac. Ins. Co. v. Am. Nat’l Fire Ins. Co., 148 F.3d

22

396, 403 (4th Cir. 1998), the court revises its summary judgment
ruling on Count VII as to McKenzie’s liability.
Finally, the court briefly addresses McKenzie’s newlysubmitted declaration (ECF No. 487).

The court notes with

concern that this declaration was not submitted until McKenzie
submitted his motion to revise the summary judgment order
finding his Count VII liability.

McKenzie provides no

explanation as to why a straightforward declaration of his own
knowledge could not previously have been presented. 8
Nevertheless, even were the court to consider McKenzie’s
declaration, it would do nothing to affect the reasoning or
conclusions in this memorandum opinion and order.

Whether on

the face of this declaration or on the basis of the other
evidence discussed above, it is clear that there is a material
question of fact remaining about McKenzie’s knowledge of the
billing and invoicing of FBO charges, including whether he was
aware of Frontier’s failure to comply with the MOU’s “separate
invoice” requirement resulting in the FBO charges being paid
with BTOP funds.

The resolution of such questions is one

appropriately left to the jury for its consideration and

Despite not being docketed until September 20, 2022, one day
after the present motion, the declaration is dated September 19,
2022 and referenced in McKenzie’s memorandum in support of the
motion.
8

23

decision on the basis of documentary evidence and witness
testimony, not one to be resolved by the court as a matter of
law based on a late-filed self-serving declaration of the
movant.
IV. Conclusion
For the reasons expressed herein, it is ORDERED that:
1. McKenzie’s Motion to Revise Summary Judgment
Ruling be, and hereby is, granted to the extent
set forth below;
2. The court’s order on summary judgment (ECF No.
465) be, and hereby is, set aside and vacated as
to the finding of liability against defendant
McKenzie on Count VII.
Remaining in the case are the issues of damages
against Frontier under Count VII; liability and damages against
Waldo and McKenzie under Count VII; and liability and damages
against Frontier under Count VIII.
The Clerk is directed to transmit copies of this order
to all counsel of record and any unrepresented parties.
ENTER: December 2, 2022
24