UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

______________________________ ) UNITED STATES OF AMERICA, ) ) Plaintiff, ) ) v. ) Civil Action No. 04-1543 (RWR) ) SCIENCE APPLICATIONS ) INTERNATIONAL CORPORATION, ) ) Defendant. ) ______________________________)

MEMORANDUM ORDER

The United States brought suit against Science Applications

International Corporation (“SAIC”) alleging, in part, that SAIC

failed to make disclosures of organizational conflicts of

interest as was required under two contracts that SAIC entered

into with the Nuclear Regulatory Commission (“NRC”) in 1992 and

1999, in violation of the False Claims Act (“FCA”),

. On SAIC’s appeal of a jury verdict finding SAIC liable

on the FCA claims, the D.C. Circuit vacated the judgment on FCA

liability and damages due to a faulty jury instruction about

calculating damages and remanded the case for further

proceedings. SAIC now moves to reopen discovery on damages.

Because SAIC is entitled to limited additional discovery on the

issue of the government’s continuing use of any SAIC work product

but is not entitled to a broader reopening of discovery, its

motion will be granted in part and denied in part. -2-

The D.C. Circuit found that the jury damages instruction was

flawed. At trial, the jury was instructed:

Your calculations of damages should be limited to determining what the [NRC] paid to SAIC over and above what the NRC would have paid had it known of SAIC’s organizational conflicts of interest. Your calculation of damages should not attempt to account for the value of services, if any, that SAIC conferred upon the [NRC].

Final Jury Instructions, Trial Tr. vol. 16 at 21:22-22:3,

July 28, 2013, ECF No. 161. The court of appeals found that this

instruction was erroneous because it “essentially required the

jury to assume that SAIC’s service had no value even in the face

of possible evidence to the contrary.” United States v. Sci.

Applications Int’l Corp. (SAIC III),

(D.C.

Cir. 2010). Instead, the court stated, “[t]o establish damages,

the government must show not only that the defendant’s false

claims caused the government to make payments that it would have

otherwise withheld, but also that the performance the government

received was worth less than what it believed it had purchased.”

Thus, for the government “to recover the full value of

payments made” to SAIC, “the government [must] prove[] that it

received no value from the product delivered.”

“SAIC,

however, must also be allowed to offer evidence to the

contrary[.]”

. -3-

SAIC moves under Federal Rules of Civil Procedure 26(b)(1)

and 16(b)(4) to reopen discovery, which closed in 2006, “for the

limited purpose of allowing SAIC to develop the record evidence

of value the Nuclear Regulatory Commission (‘NRC’) has received

from SAIC’s work[.]” SAIC’s Mot. for Targeted Discovery on

Damages (“SAIC’s Mot.”) at 1. To do this, “SAIC requests 120

days to depose a witness . . . on the NRC’s use of SAIC’s work

product; to conduct three half-day depositions of new fact

witnesses regarding damages; and to seek from the government

responses to specific and particularized document requests and a

single interrogatory relating to damages.”

The proposed

document requests seek: (1) “[a]ll documents related to or

reflecting the NRC’s use of SAIC’s work performed under the 1992

and 1999 Contracts and the NRC’s use of NUREG-1640,” (2) “[a]ll

documents that evidence, support or establish the damages

allegedly incurred by the Government as a result of the OCIs

alleged in the Complaint,” and (3) “[a]ll documents upon which

the Government intends to rely at trial (related to damages).”

SAIC’s Mem. in Supp. of Mot. for Targeted Discovery on Damages

(“SAIC’s Mem.”) at 16. SAIC insists that the discovery will lead

to relevant evidence it needs to contest the government’s

argument that SAIC’s services were worthless. The government -4-

opposes.1 See U.S.’s Mem. in Opp’n to Def. SAIC’s Mot. for

Discovery (“U.S. Opp’n”) at 1.

Generally, “discovery under the Federal Rules of Civil

Procedure should be freely permitted,” Edmond v. U.S. Postal

Serv. Gen. Counsel,

(D.C. Cir. 1991), and

discovery disputes are committed to the discretion of the court.

United Presbyterian Church v. Reagan,

(D.C.

Cir. 1984); accord Fusco v. Gen. Motors Corp.,

(1st Cir. 1993); Cleveland By & Through Cleveland v. Piper

Aircraft Corp.,

(10th Cir. 1993), abrogration

on other grounds recognized by US Airways, Inc. v. O’Donnell,

(10th Cir. 2010). This discretion includes

whether to reopen discovery. Watt v. All Clear Bus. Solutions,

LLC.,

(D.D.C. 2012); accord Fusco,

.

SAIC contends that a motion to reopen discovery prior to a

retrial is governed by the “good cause” standard. SAIC’s Mem. at

7. By contrast, the United States argues that the “manifest

injustice” standard should apply. U.S. Opp’n at 2. Neither the

1 The government also requests permission to conduct additional discovery about each SAIC’s employee’s relevant knowledge of the conflict of interest requirements if discovery is re-opened. However, the government has not demonstrated that it is entitled to reexplore an issue that it has already had the opportunity to explore during the initial discovery period. U.S. Opp’n at 19-20 n.9. Accordingly, that request will not be granted. -5-

D.C. Circuit nor the Supreme Court has spoken on what standard is

applicable to a motion to reopen discovery prior to a retrial.

Typically, “reopening discovery would require a showing of good

cause” because reopening discovery requires an amendment of a

scheduling order. United States ex rel. Pogue v. Diabetes

Treatment Ctrs. of Am.,

(D.D.C. 2008).

However, the United States contends that because a final pretrial

order was issued before the first trial, the appropriate standard

for reopening discovery is manifest injustice. U.S. Opp’n at 2

(“Moreover, in a retrial setting, Federal Rule of Civil Procedure

16(e) and Local Rule 16.5 mandate that final pretrial orders

issued by the Court for the first trial ‘shall control the

subsequent course of action . . . [and] shall be modified only to

prevent manifest injustice.’”); see also Fed. R. Civ. P. 16(e)

(stating that modification of a final pretrial order is

permissible only to “prevent manifest injustice.”); LCvR 16.5

(same). While there is some force to SAIC’s argument that the

good cause standard should apply, see SAIC’s Mem. at 4; SAIC’s

Reply at 3-5, it is unnecessary to decide which standard is

applicable since SAIC has shown that it would suffer a manifest

injustice if it were denied the opportunity to discover evidence

arising after discovery closed in 2006 about damages. However,

SAIC has not demonstrated good cause for reopening discovery on -6-

matters that it had a full opportunity to pursue before discovery

closed in 2006.

The factors that courts consider when determining whether

there is good cause to reopen discovery include “(1) whether

trial is imminent; (2) whether the request is opposed; (3)

whether the non-moving party would be prejudiced; (4) whether the

moving party was diligent in obtaining discovery within the

guidelines established by the court; (5) the foreseeability of

the need for additional discovery in light of the time allotted

by the district court; and (6) the likelihood that discovery will

lead to relevant evidence.” Childers v. Slater,

(D.D.C. 2000) (citing Smith v. United States,

(10th Cir. 1987)).

On balance, the Childers factors weigh in favor of reopening

discovery to allow SAIC to discover evidence about NRC’s

continued use of SAIC’s work product for the period after the

close of discovery in 2006 until the present, but against

reopening discovery for the issue of value before the close of

discovery. The trial is not imminent because no new trial date

has been set. This is not a request to reopen discovery on the

eve of trial, but one made well in advance of the retrial. No

time allotments have been made that would be upset by permitting

limited relevant additional discovery, and it was the D.C.

Circuit’s opinion that prompted the request for the evidence. -7-

While the government argues that it will be prejudiced by the

request, the argument is unconvincing since this order can craft

discovery limits that will avoid undue prejudice to the

government. Moreover, the minimal delay to the trial is

significantly outweighed by the potential value that the evidence

has to a central issue at retrial.

Most importantly, the discovery will also likely lead to

relevant information. While the government argues that the

information that SAIC seeks has “little, if any, relevance to the

determinations the jury will have to make on retrial,” U.S. Opp’n

at 23, the jury will be required to assess the value of SAIC’s

work to the government, should they find liability, in order to

determine damages. Any perceived continued use of SAIC’s work

may shape the jury’s assessment of that value. The information

regarding the continued use of SAIC’s work product after

discovery closed in 2006 could help the jury to assess the

magnitude of the damages that the government suffered, and there

is no reason here not to allow SAIC to discover such evidence.

See Fusco,

(“[T]here [is not] any general rule

prohibiting a party from offering new evidence at a second

trial[.]”). The government is certainly free to argue at trial

that because “[t]he NRC bargained for advice and assistance in

support of a rulemaking free from conflict of interest,” SAIC’s

work had no value. See U.S. Opp’n at 18; see also SAIC III, 626 -8-

F.3d at 1279-80 (“Of course, the government remains free to argue

that the value of SAIC’s advice and assistance was completely

compromised by the existence of undisclosed conflicts . . . .”).

However, since SAIC “must also be allowed to offer evidence to

the contrary,” id. at 1280, reopening discovery affords SAIC this

opportunity. Further, the discovery may also lead to relevant

information for the government because it is ultimately the

government’s burden to prove damages, id. at 1279, which includes

the value -- or lack thereof -- of SAIC’s work to the government.

The Childers factors, though, do not support reopening

discovery for the documents and evidence about value created

before the close of discovery in 2006. The government opposes

such renewed discovery. SAIC concedes that it had the

opportunity to discover at least the pre-2006 information before

the 2006 close of discovery. See SAIC’s Mem. at 8 (“[T]he

parties were able to conduct discovery related to damages before

the first trial, and the [c]ourt did not preclude them from doing

so . . . .” (emphasis omitted)). The need for evidence about the

value of SAIC’s work product should have been apparent from the

outset of the litigation, and in fact was apparent since SAIC

“sought to ascertain the nature and scope of NRC’s continued use

of its work product.” SAIC’s Mem. at 5. But these factors do

not weigh against reopening discovery for the present value of

SAIC’s product. -9-

Applying the manifest injustice standard yields the same

result. Barring SAIC from pursuing limited discovery regarding

current value would subject it to a manifest injustice. Keeping

discovery closed would unduly impair SAIC’s ability to contest

the government’s assertions regarding the present value of SAIC’s

product. See Piper Aircraft Corp.,

(“[T]he

court should allow sufficient leeway for the parties to produce

new evidence, without undue prejudice to their interest.”).

Additionally, because this will not require “extensive additional

discovery,” and the evidence is not “cumulative and redundant of

that which was produced before,” the “balanc[e] of the value of

the additional evidence with the need for judicial economy and

the reasons that the case was remanded in the first place” favor

allowing SAIC to engage in limited additional discovery. See

Piper Aircraft,

. This approach will prevent a

manifest injustice by limiting the burden that the government

must bear in producing discovery, while also allowing SAIC the

opportunity to discover relevant information.

Accordingly, SAIC will be permitted to take a 30(b)(6)

deposition, limited to evidence of value from the 2006 close of

discovery to the present; request documents created after the

2006 close of discovery “related to or reflecting the NRC’s use

of SAIC’s work performed under the 1992 and 1999 Contracts and

the NRC’s use of NUREG-1640” and those that “evidence, support or -10-

establish the damages allegedly incurred by the Government as a

result of the OCIs alleged in the complaint”; request

supplementation of any prior response to requests for documents

“upon which the Government intends to rely at trial (related to

damages)” which had not been produced earlier; request

supplementation of any prior response to any interrogatory

seeking the dollar amount and components and method of

calculation of each damage claim; and conduct one half-day

deposition of a new fact witness. Both sides will be permitted

discovery of one additional expert per side. Thus, it is hereby

ORDERED that SAIC’s motion [207] for targeted discovery on

damages be, and hereby is, GRANTED IN PART and DENIED IN PART.

It is further

ORDERED that, as detailed above, SAIC is permitted to (1)

depose one Rule 30(b)(6) representative designated by the NRC,

limited to evidence about value dating from the 2006 close of

discovery forward; (2) conduct one half-day deposition of a new

fact witness about damages; (3) serve a request for documents

created after the 2006 close of discovery regarding current

value; and (4) request supplementation of any prior discovery

responses regarding the government’s damages calculations and any

trial documents about damages. It is further -11-

ORDERED that each side will be permitted limited expert

discovery (one expert per side) about the value of SAIC’s work to

the government. It is further

ORDERED that all additional expert designations be made by

March 4, 2014, and all additional discovery be completed by

April 18, 2014. It is further

ORDERED that the parties appear for a scheduling conference

on April 22, 2014 at 9:45 a.m.

SIGNED this 19th day of December, 2013.

/s/ RICHARD W. ROBERTS Chief Judge