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UNITED STATES v. WITMER

September 9, 1993

UNITED STATES OF AMERICA, Petitioner
v.
JOHN D. WITMER, WILLIAM J. KELLY, and HARSCO CORPORATION, Respondents



The opinion of the court was delivered by: SYLVIA H. RAMBO

 Before the court are the motions of Respondents Witmer and Kelly (hereafter "Witmer/Kelly" or "Respondents") for leave to serve discovery on Petitioners and to stay enforcement of the CIDs issued with respect to them. Also pending is the Government's motion to strike Witmer and Kelly's joint reply to the discovery motion or, in the alternative, for leave to file a sur-reply. Briefs have been filed and the motions are ripe for disposition.

 Background

 This case involves a dispute over the issuance by the Attorney General and attempted enforcement by the Justice Department of several Civil Investigative Demands ("CIDs").

 CIDs are a pre-complaint discovery tool made available to the Government by statute in several particular contexts. See 31 U.S.C. § 3733 (CID authority to investigate allegations of fraud in military procurement contracts); 15 U.S.C. § 1314(f) (CID authority to investigate antitrust violations); 15 U.S.C. § 57b-1(c)(1) (CID authority to investigate Federal Trade Commission Act violations). The CID allows the Government, prior to the institution of suit, to subpoena witnesses and documents and otherwise gather information normally obtained during pretrial discovery. The purpose of the CID is to "enable the Government to determine whether enough evidence existed to warrant the expense of filing [a civil] suit, as well as to prevent the potential Defendant from being dragged into court unnecessarily." H.R. Rep. 660, 99th Cong., 2d Sess. 26 (1986).

 The particular CIDs involved in this case were issued as part of a Justice Department investigation into potential wrongdoing by Harsco Corporation ("Harsco"). Particularly, the CIDs before the court were issued to the Harsco Corporation, John Witmer, a current Harsco employee, and William Kelly, a former Harsco employee. *fn1"

 The investigation centers around a Harsco contract to sell 15,000 vehicles to the United States Army. Shortly after being awarded the contract, Harsco notified the government that it would seek an adjustment in the contract price because its initial bid on the vehicles did not include excise taxes on the vehicles sold after 1988. *fn2" The contract officer on the project rejected the claim but Harsco appealed to the Army Services Board of Contract Appeals (ASBCA), which awarded Harsco the adjustment that it sought. The Government is investigating whether, in seeking the contract adjustment, Harsco fraudulently misrepresented to the contract officer and to ASBCA that the disputed excise taxes were not included in the calculation of its initial bid.

 These allegations are being contested on several fronts. First, the Army has sought to reopen the ASBCA decision. ASBCA has yet to issue a decision on the motion to reopen. Second, allegations of criminal wrongdoing arising out of the contract adjustment apparently are before a grand jury in Michigan. Finally, the Justice Department is conducting the instant investigation to determine whether or not to bring a civil fraud action against Harsco under the False Claims Act, 33 U.S.C. § 3729 et seq.

 Discussion

 I. Witmer/Kelly Motion for Leave to Serve Discovery

 A. Government's Motion to Strike

 As an initial matter, the Government has moved to strike Respondent's reply as improper. *fn4" The Government claims that the reply is improper because it raises issues that should have been argued in Respondent's initial brief. The court agrees.

 In their brief in support of their motion for discovery, Respondents claim that they are entitled to discovery as a matter of right in these proceedings. The bulk of Respondents' seven-page initial brief is devoted to that argument. In that brief, Respondents also argue, in the alternative, that they are entitled to limited discovery because they "have reason to believe" that the Government is using the CIDs for an improper purpose. (Brief in support of motion to serve discovery at 5 n.5). Respondents asserted this alternative argument in a single footnote in their initial brief. The allegation was utterly devoid of specificity and factual support, by affidavit or otherwise. It was not until they filed their reply brief that Respondents chose to support their alternative theory. *fn5"

 This clearly was improper. "It is improper for a party to present a new argument in his or her reply brief." United States v. Medeiros, 710 F. Supp. 106, 110 (M.D. Pa.), aff'd, 884 F.2d 75 (3d Cir. 1989). It is also improper for a party to make new factual assertions in a reply brief because doing so "leaves the opposing party no opportunity to respond." Center Dev. Venture v. Kinney Shoe Corp., 757 F. Supp. 34, 36 (E.D. Wis. 1991).

 In this case, the alternative argument came as no surprise to Respondents. This argument was not raised for the first time in the Government's opposition brief; rather, Respondents themselves raised this alternative contention in their initial brief. Having done so, Respondents had an obligation to set forth both factual and legal support for their argument in that initial brief. A party may not merely allude to its claims in its initial brief and then argue them in detail in its reply, giving the opposing party no opportunity to respond. Medeiros, ...


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