In United States ex rel. Rille v. Sun Microsystems, Inc., Civil Action No. 04-CV-00986 (E.D. Ark. Jan. 30. 2012), an Arkansas district court denied the motions to dismiss brought by the Department of Justice (DOJ) and the defendant against the relators, although the DOJ and defendant already settled the underlying claims brought by the relators.
The case arises out of a series of General Services Administration (GSA) contracts awarded by the government to defendant Sun Microsystems, Inc. (“Sun”) in the late 1990s and early 2000s for the provision of computer server and software services. The lawsuit alleged that defendant paid “alliance benefits” and other kickbacks to third-party consultants in order to improperly procure GSA contract awards, and failed to disclose material pricing information or discounts throughout the negotiation and performance of a GSA contract. The relators filed their original complaint in September 2004. The DOJ eventually intervened in 2007. Unbeknownst to the relators, the GSA had already initiated a parallel investigation of the defendant and several articles were published at around this time revealing audit-related conversations between the GSA and Sun.
In early 2011, the DOJ and Sun entered into a settlement agreement, under which Sun agreed to pay $4 million to settle an anti-kickback claim and another $42 million to settle a deceptive pricing claim brought by the relators on behalf of the government. The relators were unable to agree with the DOJ on the amount of the relators’ share and remained in dispute with defendant as to the attorneys’ fees and costs. Thus, the DOJ stipulated to the dismissal of its case against Sun with prejudice, but agreed that the court shall retain jurisdiction to determine the relators’ share as well as the relators’ attorney fees and costs. Shortly after the court granted the dismissal pursuant to its stipulation, however, the DOJ moved to dismiss the relators’ deceptive pricing claim based on the public disclosure bar and the GSA’s parallel investigation of Sun. Sun joined in the motion and further moved to dismiss the relators’ anti-kickback claim on similar grounds.
The Arkansas district court observed that the publications and the GSA investigation failed to reveal the “critical elements of fraud” required to invoke the public disclosure bar in the Eighth Circuit. The court also observed that the relators were an original source given their prior employment with one of the “allied” third-party consultants that received the improper kickbacks from Sun. This case is instructive in that the government’s interest may not always be aligned with that of the relator.