United States District Court, N.D. California
ORDER RE MOTION FOR LEAVE TO FILE FOURTH AMENDED
WILLIAM ALSUP, UNITED STATES DISTRICT JUDGE
False Claims Act action, qui tam relator moves for
leave to file a fourth amended complaint. To the extent
stated below, the motion is Granted.
orders have explained this case. In short, defendant Synnex
Corporation sells office products to the federal government.
In 1980, defendant entered into a contract with the
government for the sale of electric power-supply products.
The contract incorporated the Trade Agreements Act which
necessitated end products sold to the United States
Government be manufactured in certain countries. In 2006,
Synnex entered into a contract with Huawei Technologies Co.,
Ltd., a Chinese technology corporation, to sell technology
components in the United States. As a result of the
agreement, Synnex imported products from APC by Schneider
Electric (formerly known as American Power Conversion
Corporation), which contained Huawei-manufactured parts. The
complaint alleges Synnex offered for sale and sold power-
supply products to the government under the MAS 70 contract
knowing that they contained parts from APC that were
manufactured in TAA noncompliant countries (Compl.
¶¶ 2, 6, 9, 43, 45).
Matthew MacDowell filed the instant action in August 2012 in
the United States District Court for the District of
Columbia, followed by an amended complaint in February 2014
and a second amended complaint in January 2017, all under
seal. During this time, various extensions of time allowed
the United States to consider whether to intervene. A
transfer sent the action to the United States District Court
for the Northern District of California in January 2019. The
government successfully moved to unseal the complaint in
February 2019, but declined to intervene. Relators then filed
a public third amended complaint in April 2019, alleging
violations of the False Claim Act. Defendant moved to dismiss
the complaint. A September 2019 order granted the motion and
allowed relator to seek leave to amend (Dkt. Nos. 1, 15, 44,
58, 69, 94, 114). Relator now moves for leave to file a
fourth amended complaint. Defendant opposes.
seeks to add detailed allegations regarding the TAA
noncompliant products sold to the government. FRCP 15(a)(2)
permits a party to amend its pleading with the court's
leave, stating that “[t]he court should freely give
leave when justice so requires.” In the FRCP 15
context, our court of appeals has instructed that
“[f]ive factors are frequently used to assess the
propriety of a motion for leave to amend: (1) bad faith, (2)
undue delay, (3) prejudice to the opposing party, (4)
futility of amendment[, ] and (5) whether plaintiff has
previously amended his complaint.” Allen v. City of
Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990). These
factors weigh in favor of granting leave here.
Particularity of Pleading.
allege a False Claims Act claim for relief, there must be a
“(1) a false statement or fraudulent course of conduct,
(2) made with scienter, (3) that was material, causing (4)
the government to pay out money or forfeit moneys due.”
United States v. Safran Grp., S.A., No. 15-
CV-00746-LHK, 2017 WL 3670792, at *9 (N.D. Cal. Aug. 25,
2017) (Judge Koh).
because the complaint alleges fraud, it is subject to a
heightened pleading standard under FRCP 9(b) which requires
“a party [to] state with particularity the
circumstances constituting fraud or mistake.” To
demonstrate sufficient particularity under FRCP 9(b),
plaintiff must allege “the who, what, when, where, and
how of the misconduct charged.” Vess v. Ciba-Geigy
Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003).
the order granting defendant's motion to dismiss all of
relator's claims did so on the ground that the complaint
did not plead with adequate particularity that defendant had
sold products and parts to the government that were TAA
noncompliant. Specifically, relator did not adequately allege
which noncompliant products from the offer to sale lists were
sold to the government, when they were sold, who specifically
sold them, and how they did so. Relator has now pled these
details with sufficient particularity.
fourth amended complaint provides import records from 2011,
records of shipments (and corresponding shipment dates) to
Synnex from Asian countries in 2014 and 2015, the types of
APC parts routinely included in shipments from the 2014 and
2015 records, and the types of products that were sold to the
government, but allegedly misrepresented as originating from
the United States.
argues that of the hundreds of shipment details relator has
provided from 2014 and 2015, only four shipments at most
originated in TAA noncompliant countries, and that
importantly, the shipments alleged to have originated in
China from the list actually originated in Taiwan, a
TAA-compliant country. Although it is true that most of
foreign ports of lading listed in the complaint are in
Taiwan, in closely examining the shipping details as well as
the export numbers, it is adequately pled that some of the
products in question originated from the Philippines or
China, TAA noncompliant countries. In particular, the
proposed amended complaint provides import records from 2011