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UNITED STATES v. CACI INT'L INC.

July 6, 1995

UNITED STATES OF AMERICA by the Department of Defense, and PENTAGEN TECHNOLOGIES INTERNATIONAL LIMITED, Plaintiffs,
v.
CACI INTERNATIONAL INC., et al., (First Defendants), INTERNATIONAL BUSINESS MACHINES CORP., et al., (Second Defendants), and "John Doe" and "Jane Doe", (Third Defendants), Defendants.


ROBERT L. CARTER, U.S.D.J.


The opinion of the court was delivered by: CARTER

CARTER, District Judge

 Preliminary Statement

 Plaintiff Pentagen Technologies International Ltd. ("Pentagen") brought an action against defendant CACI International Inc. ("CACI") and other defendants as a "qui tam " relator pursuant to the False Claims Act, 31 U.S.C. §§ 3729-3733 (Supp. 1995) ("FCA" or the "Act"). Plaintiff United States of America notified the court of its intention not to intervene in the action, pursuant to § 3730(b)(4)(B).

 Defendants contracted with the U.S. Army Information Systems Selection and Acquisition Agency division within the Department of Defense ("DoD") to modernize installation information management systems under the Sustaining Base Information System ("SBIS") Program, Contract Number 93-94-D0013 ("SBIS contract" or the "contract"). Pentagen claims first that defendants International Business Machines ("IBM") and Loral Corporation ("Loral") breached the FCA by entering into the SBIS contract and continuing to submit payment claims pursuant to that contract when defendants knew or should have known that they did not have suitable software to perform the services allegedly undertaken and that they could not achieve the alleged contracted targets. More specifically, Pentagen contends that IBM/Loral was awarded a contract to deliver computer hardware and to develop and deliver computer software development methodology to use with the new hardware and that they are unable to perform as agreed because they do not have the licenses to use a number of the required tools, which will result in enormous cost overruns. *fn1" Defendants contend that the provisions of the SBIS contract that Pentagen claims were breached were not part of the final contract but were merely statements made by the Army and the defendants during the request for proposal process. Defendants claim that IBM/Loral and the Army negotiated final "task orders" which do not contain any of the provisions that Pentagen claims were breached.

 Pentagen now moves the court to enjoin the DoD and DoD's counsel from the U.S. Attorneys Office and the Department of Justice from communicating with defendants in relation to issues raised in the lawsuit; to enjoin defendants IBM and Loral from receiving any moneys from the DoD under or for work performed under the $ 474,000,000 SBIS Program; and in the alternative, to enjoin all further activities under the SBIS program, pending a final decision in this litigation. The court denied all of Pentagen's motions at a hearing held on June 28, 1995, for the reasons outlined below.

 Prerequisites for Injunctive Relief

 In order to obtain a preliminary injunction, Pentagen must show a) that without the injunction it will suffer irreparable harm and b) either i) likelihood of success on the merits or ii) the existence of sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of the hardships tipping decidedly towards Pentagen. Shapiro v. Cadman Towers, Inc., 51 F.3d 328, 332 (2d Cir. 1995) (citing Resolution Trust Corp. v. Elman, 949 F.2d 624, 626 (2d Cir. 1991)); In Re Puma & Sheet Metal Workers' v. Int'l Ass'n. Local 137, 862 F. Supp. 1077, 1083 (S.D.N.Y. 1994) (Carter, J.). The irreparable injury complained of must be "neither remote nor speculative, but actual and imminent," Shapiro, 51 F.3d at 332 (quoting Tucker Anthony Realty Corp. v. Schlesinger, 888 F.2d 969, 975 (2d Cir. 1989)), and it must be an injury that cannot be remedied by monetary damages. Shapiro, 51 F.3d at 332; Schlesinger, 888 F.2d at 975; see generally, EEOC v. Local 638...Local 28 of the Sheet Metal Workers Int'l Ass'n, No. 71 Civ. 2877 (S.D.N.Y. June 7, 1995) (Carter, J.).

 A. Injunction of Communication

 Regarding Pentagen's request that the court enjoin the defendants from communicating with the government, the court need not address whether there is irreparable harm and likelihood of success on the merits or the existence of sufficiently serious meritorious questions and hardship tipped in favor of Pentagen because there is absolutely no basis for such an injunction in this case.

 Pentagen argues that as a qui tam relator it has replaced the government's counsel and that Pentagen now acts as the government's attorney. As a result, Pentagen contends communication between the defendants and the government should be prohibited according to the rules of ethical conduct, and those who have already engaged in such prohibited conduct should be penalized. *fn2" Defendants assert that the government is not Pentagen's client and that Pentagen cannot expropriate the government's power or prohibit communications between the government and defendants. Surely defendants are correct.

 31 U.S.C. § 3729 provides for a civil cause of action for fraud against the government, and § 3730(b) (1) authorizes individuals to "bring a civil action for a violation of section 3729 for the person and for the United States . . ." in the name of the government. 31 U.S.C. § 3730(b)(1). "The Government may elect to intervene and proceed with the action," 31 U.S.C. § 3730(b)(2), or it may "notify the court that it declines to take over the action, in which case the person bringing the action [the qui tam relator] shall have the right to conduct the action." 31 U.S.C. § 3730(b)(4)(B); see United States ex rel. Kreindler & Kreindler v. United Technologies Corp., 985 F.2d 1148, 1153 (2d Cir.), cert. denied, 508 U.S. 973, 125 L. Ed. 2d 663, 113 S. Ct. 2962 (1993); United States ex rel. Dick v. Long Island Lighting Co., 912 F.2d 13, 16 (2d Cir. 1990); United States ex rel. Mikes v. Straus, 853 F. Supp. 115, 117 (S.D.N.Y. 1994) (Broderick, J.). The purpose of the FCA is to prevent the United States Treasury from being drained of millions of dollars by fraudulent billings by federal government contractors. See S. Rep. No. 345, 99th Cong., 2d Sess. 3, reprinted in 1986 U.S. Code Cong. & Admin. News 5266, 5268. In furtherance of that purpose, Congress strengthened the FCA in 1986 by revamping its qui tam provisions to encourage private individuals to bring suits on behalf of the government. United States ex rel. Doe v. John Doe Corp., 960 F.2d 318, 319 (2d Cir. 1992); United States ex rel. McCoy v. California Medical Review, Inc., 715 F. Supp. 967, 968 (N.D. Cal. 1989) ("Congress' objectives in amending the Act [were] principally to expand the role of qui tam plaintiffs and to keep pressure on the United States to prosecute the cases") (citing S. Rep. No. 99-345, 99th Cong., 2d Sess. 24, reprinted in 1986 U.S. Code Cong. & Admin. News 5266, 5288-92). Indeed, Congress noted that "much of the purpose of qui tam actions would be defeated unless the private individual is able to advance the case to litigation." S. Rep. No. 99-345, 99th Cong., 2d Sess. 24, reprinted in 1986 U.S. Code Cong. & Admin. News 5266, 5289; see United States ex rel. McCoy, 715 F. Supp. at 970 ("Congress clearly intended to bestow upon relators in proceedings under the Act substantial power to force the prosecution of cases.").

 While Congress has made it clear that qui tam relators should be able to effectively bring civil suits under the FCA, it does not follow that once the government has decided it will not intervene, it is relegated to the position of the relator's client. 31 U.S.C. § 3730(c)(3) states that "if the Government elects not to proceed with the action, the person who initiated the action shall have the right to conduct the action." However, the statute also recognizes that even where the government does not intervene, the government maintains the right to be served with copies of all pleadings filed in the action and to be supplied with all deposition transcripts, 31 U.S.C. § 3730(b)(2); to limit discovery under certain circumstances, 31 U.S.C. § 3730(c)(4); to later intervene in the action if it so desires, upon a "showing of good cause" and "without limiting the status and rights of the person initiating the action," 31 U.S.C. § 3730(c) (3); to settle the action with the defendants over the objections of the individual bringing the action, 31 U.S.C. § 3730(c) (2) (B); and finally, to seek dismissal of the case. 31 U.S.C. § 3730(b). There is nothing in the FCA's language which ...


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