United States ex rel. Oliver v. Philip Morris USA, Inc., 2015 U.S. Dist. LEXIS 56655 (D.D.C. April 30, 2015):

The plaintiff/relator in this case, Anthony Oliver ("Oliver"), brings suit against Philip Morris USA Inc. ("Defendant") pursuant to the False Claims Act (the "FCA"), 31 U.S.C. §§ 3729 et seq. ***

Oliver, the President and CEO of Medallion Brands International Co., a tobacco company, filed this qui tam suit on January 4, 2008. ECF No. [1]. The United States declined to intervene. ECF No. [28]. In his Second Amendment Complaint, ECF No. [49] (hereinafter the "Complaint"), which is the operative complaint in this action, Oliver alleges that Defendant violated the FCA by falsely certifying that it was providing the United States military with the best price for its cigarettes.

Specifically, Oliver alleges that, at least from 2002 until the date the Complaint was filed, Defendant supplied the Navy Exchange Service Command ("NEXCOM") and the Army and Air Force Exchange Service ("AAFES") with cigarettes. Compl. ¶ 20. Oliver claims that Defendant sold cigarettes to NEXCOM and AAFES "pursuant to purchase orders . . . that have incorporated, expressly or impliedly" most favored customer ("MFC") warranties. Id. ¶¶ 21, 30, 34. Oliver alleges that Defendant violated these warranties by "knowingly [*3]  [selling] cigarette products identical to the cigarettes sold to AAFES and NEXCOM to affiliates of defendant . . . at prices lower than the prices such cigarettes were sold to NEXCOM and AAFES." Id. ¶ 25.

***

This Court granted Defendant's motion to dismiss for lack of subject matter jurisdiction. First, this Court held that the price differentials alleged by Oliver had previously been publicly disclosed in a document- which came to be called the "Iceland Memo"³ - that was uploaded to a publicly available, fully searchable online database as part of a 1998 settlement agreement. See Oliver, 949 F. Supp. 2d at 244-47. Second, this Court held that while "the [Iceland Memo] does not reference the reason why the pricing differential is of questionable legality (i.e., the 'most favored customer' certifications), the Court agrees with Defendant that the 'most favored customer' provisions contained within the AAFES and/or NEXCOM's General Provisions Publications are legal requirements that the Government is presumed to know." Id. at 248-49. This Court further held that "Defendant's certifications with the 'most favored customer' requirements - by way of the purchase orders and contracts pertaining to its sales - can be inferred by the simple fact that AAFEX and NEXCOM continued to purchase Defendant's cigarette products during the time covered by the Complaint." Id. at 249. As such, the Court concluded that "Oliver's Complaint describes 'transactions' 'substantially similar to those in the public domain' and therefore is 'based upon' the public disclosure of those transactions." Id.

3.   The D.C. Circuit described the contents of the document as follows: "The Iceland Memo is a Philip Morris inter-office transmittal sheet dated December 28, 1999, relating to a letter . . . that the director of Morale, Welfare & Recreation . . . at a United States naval station in Iceland apparently wrote to a duty- free wholesaler of Philip Morris cigarettes as part of MWR's unsuccessful efforts to buy cheaper Philip Morris cigarettes from the duty-free source." Oliver, 763 F.3d at 40. The Iceland Memo contained the following line: "[Philip Morris International] Duty-Free list prices are lower than [Philip Morris] USA Military tax-free prices and we frequently receive inquiries from the Service Headquarters on why they can't purchase tax-free product at these lower [*6]  prices." See Def.'s First MTD, Ex. A (Mem. from Mike Madden to Jacquie Gilbert regarding MWR NAS Keflavik, Iceland, Dec. 28, 1999).

Moreover, the Court held that Oliver could not salvage subject matter jurisdiction for his suit by showing that he was an "original source" as defined in 31 U.S.C. § 3730(e)(4)(B). In particular, [*7]  the Court found that Oliver "failed to show that he ha[d] 'direct' knowledge . . . of the allegations underlying his Complaint." Id. at 250. He also failed to prove that he disclosed "the fraud relating to the 'most favored customer' clauses that are the subject of his Complaint" to the government. Id. at 250-51. This Court therefore granted Defendant's motion to dismiss for lack of subject matter jurisdiction. Id. at 251.

Plaintiff appealed this Court's judgment. The D.C. Circuit explained that it only lacked subject matter jurisdiction over Oliver's claims if "both the pricing disparities and [Defendant's] false certifications of compliance with the Most Favored Customer provisions . . . were in the public domain." Oliver, 763 F.3d at 41. The Circuit "assum[ed] arguendo that the certifications could be inferred from the disclosure of the Most Favored Customer provisions," but nevertheless found that "Oliver's suit is not barred because the Most Favored Customer provisions were not publicly disclosed." Id. Rejecting Defendant's arguments to the contrary, the Circuit held that "the government's awareness of the Most Favored Customer requirements does not amount to their public disclosure" and that "the Iceland Memo did not publicly [*8]  disclose the requirements of the Most Favored Customer provisions." Id. at 42-43. After oral argument, Defendant submitted to the Circuit "a letter proffering new evidence purporting to show that the Most Favored Customer provisions were publicly available on the Exchanges' websites before 2008." Id. at 44. The Circuit declined to consider this evidence. Id. ("[Defendant] has provided no explanation for its failure to timely present its new evidence to the district court, nor for its delay in providing that evidence to us. We are, in any event, in no position to assess on appeal its authenticity or its bearing on the issue for which it was submitted."). The Circuit therefore vacated this Court's dismissal of the Complaint. Id.

Defendant has now submitted a second motion to dismiss for lack of subject matter jurisdiction. Accompanying the motion, Defendant has submitted new evidence purporting to show that the MFC requirements were publicly available throughout the period when Oliver alleges that the fraud occurred. Defendant now explains that, "[i]n May 2014, [Defendant] . . . ran extensive public and federal records searches for evidence of pre-2008 Internet publication of the AAFES and NEXCOM MFC [*9]  provisions." Def.'s Mem., Decl. of Eric T. Werlinger ("Werlinger Decl.") ¶ 4. Defendant states that it discovered documents suggesting that "the Uniform Resource Locators ('URLs') for the AAFES and NEXCOM webpages [Defendant] cited in its July 2012 motion to dismiss were different than the URLs associated with the exchanges' websites before January 2008." Id. ¶ 5. Armed with these pre-2008 URLs, Defendant "searched the Internet Archive, a website that 'offer[s] permanent access for researchers, historians, scholars, people with disabilities, and the general public to historical collections that exist in digital format.'" Id. ¶ 6 (quoting Internet Archive, https://archive.org/about). On the Internet Archive, Defendant found "archived pages [from] 2002 and 2003 . . . linking to copies of both the AAFES Supplier Requirements and Terms and Conditions and the NEXCOM General Provisions Publication No. 61 that contain the MFC provisions at the heart of this case."4 Id. ¶ 7.

4 The archived NEXCOM webpage is located at https://web.archive.org/web/20020804185351/ http:/www.navy-nex.com/command/contractor_vendor/PUBS/general_provisions/section_c.html ("Archived NEXCOM Page"). The archive of AAFES's Terms and Conditions is located at https://web.archive.org/web/20030714061220/http://www.aafes.com/pa/selling/termscon.pdf ("Archived AAFES Page"). Defendant has also provided the Court with a link to an archive of AAFES's webpage for suppliers, which contains a link to the aforementioned Terms and Conditions page: https://web.archive.org/web/20030921021246/ http://www.aafes.com/pa/selling. Defendant included a reproduction of these webpages as an exhibit. See Def.'s Mem., Ex. A. An Office Manager at the Internet Archive [*11]  explains, via affidavit, that the website "assigns a URL on its site to the archived files in the format http://web.archive.org/web/[Year in yyyy][Month in mm][Day in dd][Time code in hh:mm:ss]/[Archived URL]." See Def.'s Mem., Aff. of Christopher Butler ¶ 5. According to this coding scheme, the AAFES Terms and Conditions document was archived on July 14, 2003, the general AAFES website was archived on September 21, 2003, and the NEXCOM website was archived on August 4, 2002.

B. Public Disclosure Bar

The version of the FCA in effect when Oliver filed his Complaint provided that "[n]o court shall have jurisdiction over an action . . . based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit or investigation, or from the news media, unless . . . the person bringing the action is an original source of the information." 31 U.S.C. § 3730(e)(4)(A) (2008).  The D.C. Circuit has explained that the phrase "based upon" means "supported by," [*21]  not "derived from." United States ex rel. Findley v. FPC-Boron Employees' Club, 105 F.3d 675, 682 (D.C. Cir. 1997). Thus, the "jurisdictional bar . . . encompass[es] situations in which the relator's complaint repeats what the public already knows, even though she had learned about the fraud independent of the public disclosures." Id. at 683. Defendant argues that the archived webpages show that NEXCOM and AAFES's MFC requirements were already publicly disclosed when Oliver filed his Complaint.

i.  Authenticity

The Court must initially determine whether there is sufficient evidence to support a finding that the archived webpages are authentic. The first piece of evidence is an archived online document titled "Terms & Conditions (for Expense, Supplies and Equipment Purchased by AAFES)." Archived AAFES Page. This document bears the AAFES logo and is dated January 2001. Id. The archived page is accessible at a URL with a date stamp that corresponds to an archive date of July 14, 2003. See supra [*22]  note 4. The document contains the following language:

Contractor warrants that during this contract, the net price to AAFES (considering unit price, discounts, allowances, co-op advertising, rebates and other terms and conditions) for each item purchased will be as favorable as, or better than, the price the item is being sold by contractor, to other customers under the same or similar conditions and in the same general geographical area pursuant to agreements made during the same period.

Archived AAFES Page at 7. This language is identical to the language Oliver alleges AAFES included as a contracting requirement. See Compl. ¶ 16.

The second piece of evidence is a webpage titled "NEXCOM General Provisions Publication Number 61." Archived NEXCOM Page. It is accessible at a URL with a date stamp that corresponds to an archive date of August 4, 2002. See supra note 4. The document contains the following language:

Most Favored CustomerThe Contractor certifies that prices, terms and conditions offered under this contract, including consideration of any discount rebate arrangements, do not exceed prices then being charged the Contractor's most favored customer or another military exchange for like items

Archived NEXCOM [*23]  Page. Again, this language is identical to the language that Oliver alleges NEXCOM included as a contracting requirement. See Compl. ¶ 14.

"To satisfy the requirement of authenticating or identifying an item of evidence, the proponent must produce evidence sufficient to support a finding that the item is what the proponent claims it is." Fed. R. Evid. 901(a). The "appearance, contents, substance, internal patterns, [and] other distinctive characteristics . . . taken together with all the circumstances," are sufficient to authenticate the webpages. Id. 901(b)(4). The webpages include the trademarks of both AAFES and NEXCOM. See NEX, Registration No. 2146965; NEX, Registration No. 2146966; ARMY AND AIR FORCE EXCHANGE SERVICE, Registration No. 1148343; AAFES, Registration No. 2167655. Although both the AAFES and NEXCOM domain names have changed since the pages were archived, see Werlinger Decl. ¶ 5, the domain names from the archived pages - aafes.com and navy-nex.com - include those organizations' registered marks. Finally, as discussed above, the pages contain verbatim recitals of the MFC provisions that Oliver pleads in his Complaint. These distinctive characteristics suffice to authenticate the archived pages [*24]  under Rule 901.

Oliver does not suggest that the web pages were not published by NEXCOM and AAFES. Rather, his only argument contesting authentication is that "it remains unclear when [the webpages] became available on the Internet." Pl.'s Opp'n at 22 n.9. He points to the Frequently Asked Questions page of the Internet Archive, which states that "[t]he date assigned by the Internet Archive applies to the HTML file but not to image files linked therein."  Frequently Asked Questions, https://archive.org/legal/faq.php. He does not, however, argue that the pages submitted by Defendant link to any images. The Court has carefully examined the webpages and is confident that the pertinent language is on the webpages themselves and is not embedded in any image file. Oliver highlights another line from the FAQ explaining that "if a user . . . clicks on a link on an archived page . . . and the link is not available, sometimes the Wayback Machine will redirect to the live web." Id. Again, though, this observation is irrelevant because Defendant has submitted to the Court the actual archived webpages. That relevant language on those webpages is visible without clicking on any links. The Court is confident that it is examining the archived [*25]  websites and not the live web. See also Def.'s Mem., Aff. of Christopher Butler ¶ 6 (verifying that the submitted documents are "records of the HTML files for the URLs and the dates specified in the footer of the printout"); Def.'s Mem., Aff. of John T. Hollyoak ¶ 7 (attesting that "the archived webpages" submitted to the Court "each . . . contain a URL indicating the pages and links were crawled by Internet Archive software" in 2002 and 2003).

In light of the above, the Court concludes Defendant has submitted sufficient evidence to support a finding that the archived webpages are authentic. See also United States v. Kieffer, 681 F.3d 1143, 1153 n.3 (10th Cir. 2012) (affirming authenticity of Internet Archive evidence);

United States v. Bansal, 663 F.3d 634, 667-68 (3d Cir. 2011) (same).