United States District Court, W.D. New York
THE UNITED STATES OF AMERICA ex rel. KEVIN GRUPP and ROBERT MOLL, Plaintiffs,
DHL EXPRESS (USA), INC., DHL WORLDWIDE EXPRESS, INC., and DPWN HOLDINGS (USA), INC. (f/k/a DHL HOLDINGS (USA), INC.), Defendants
Decided September 10, 2014.
HODGSON RUSS LLP (DANIEL C. OLIVERIO, ESQ., JOHN L. SINATRA, ESQ., and REETUPARNA DUTTA, ESQ., OF COUNSEL), Buffalo, New York, Attorneys for Plaintiffs.
CONNORS & VILARDO, LLP (TERRENCE M. CONNORS, ESQ., LAWRENCE J. VILARDO, ESQ., and PAUL A. WOODARD, ESQ., OF COUNSEL), Buffalo, New York, Attorneys for Defendants.
JOHN T. CURTIN, United
States District Judge.
This is a qui tam action brought by the relators on behalf of the United States for alleged violations of the False Claims Act (" FCA" ), 31 U.S.C. § 3729, et seq. Relators assert that the defendants have violated the FCA by improperly billing the United States for jet fuel surcharges on deliveries that traveled solely by ground transportation. Specifically, relators allege that the defendants " falsely and fraudulently misrepresented that certain Next Day and 2nd Day shipments were delivered by air such that jet fuel surcharges were necessary, when, in fact, they were delivered solely by ground transportation . . . ." (Item 25, ¶ 2). Additionally, relators allege the defendants imposed diesel fuel surcharges on ground delivery shipments when " only a small portion of those surcharge amounts was passed along to DHL's independent contractor network of trucking companies who bought the relevant fuel." Id., ¶ 3.
The case was originally assigned to Chief United States District Judge William M. Skretny. In a Notice of Election filed March 24, 2011, the Government declined to intervene in the action (Item 21). On July 15, 2011, the relators filed a notice of their intention to proceed with the action in light of the Government's election not to intervene (Item 24) and additionally filed an amended complaint (Item 25). On November 8, 2011, the defendants filed a motion to dismiss (Item 36), raising several grounds for dismissal. Thereafter, on March 16, 2012, the case was transferred to the docket of the undersigned (Item 47).
In a Decision and Order filed September 14, 2012, this court granted the defendants' motion and dismissed the complaint (Item 50). That decision was based solely on defendants' argument that the relators had failed to satisfy the statutory notice requirement imposed by 49 U.S.C. § 13710(a)(3)(B). That statute requires a shipper, in a proceeding before the Surface Transportation Board, to contest a bill within 180 days of its receipt, as a precondition to suit. Upon appeal to the Second Circuit, that court agreed with the relators that the 180-day rule did not apply in a qui tam action under the FCA. The Court of Appeals vacated the judgement for defendants and remanded the matter to this court (Item 56).
As neither this court nor the Second Circuit addressed the defendants' remaining grounds for dismissal, this court issued an order directing the filing of additional submissions in support of and opposition to the motion to dismiss (Items 60, 62-64). The court has determined that oral argument is unnecessary. For the reasons that follow, the defendants' motion to dismiss is granted.
According to the amended complaint (Item 25, ¶ 20), defendants, collectively referred
to as " DHL," are a shipping company that transports packages for a fee. DHL provided delivery services to the United States government, through the General Services Administration (" GSA" ), the Department of Homeland Security, and the Department of Defense. Id., ¶ 25. At all times relevant to the complaint, relators were the owners and operators of MVP Delivery and Logistics, Inc., (" MVP" ), a trucking company located in Depew, New York, and an independent contractor to DHL. Id., ¶ 9. Relators allege that, beginning in or about 2003 or 2004, DHL began to assess a jet fuel surcharge on its " Next Day" and " 2nd Day" delivery service, regardless of whether the package traveled by air or ground. Id., ¶ 29. Relators further allege that a " substantial percentage of DHL Next Day and 2d Day shipments paid for by the United States government did not travel by air at all, even though they included a jet fuel surcharge." Id., ¶ 32. Additionally, beginning in 2003 or 2004, DHL began charging a diesel fuel surcharge notwithstanding the fact that it contracted out 65% to 70% of its ground delivery service. Id., ¶ 40. Relators allege that DHL " shared only a small portion of fuel surcharges with its independent contractors." Id., ¶ 42. At all times relevant to the complaint, the jet fuel surcharge has been substantially higher than the ground fuel surcharge. Id., ¶ 38.
Relators offered three specific examples of the alleged improper jet fuel surcharges. Waybill #61662929845 represents a March 2008 Next Day shipment from Washington, D.C. to Lorton, Virginia which traveled solely by ground transportation through DHL's truck hub in Allentown, Pennsylvania. Waybill #75371715440 represents a March 2008 Next Day shipment from Buffalo, New York to Cleveland, Ohio which traveled by ground transportation through DHL's truck hub in Erie, Pennsylvania. Waybill #65415662141 represents a February 2008 Next Day shipment from Alameda, California to Walnut Creek, California which traveled solely by ground transportation through DHL's truck hub in Fresno, California. Relators allege that in each of these instances, the government was improperly assessed a jet fuel surcharge (Item 25, ¶ 36).
In support of their motion to dismiss, defendants submitted DHL's 2008 " Standard Rate Guide" (Item 36, Exh. B), a copy of DHL's Ground Delivery Service Waybill (Item 36, Exh. C), DHL's 2008 Fuel Surcharge Tables (Item 36, Exh. D), and a copy of DHL's ...