The opinion of the court was delivered by: Nora Barry Fischer United States District Judge
This is a qui tam action brought by Plaintiff John R. Laymon, Jr. ("Plaintiff") on behalf of the United States of America, the state of California, and the San Francisco Bay Area Rapid Transit District ("BART") against Defendant Bombardier Transportation (Holdings) USA, Inc., formerly known as Adtranz, and Bombardier, Inc. (collectively "Bombardier") for violations of the Federal False Claims Act, 31 U.S.C. §§ 3729-33, and the California False Claims Act, Cal. Gov. Code § 12650, et. seq. Currently pending before the Court is Bombardier's Motion for Summary Judgment (Docket No. 45). For the reasons set forth herein, this Court DENIES Bombardier's Motion for Summary Judgment. (Docket No. ).
A. Local Rule 56.1 Violation
Before addressing the facts pertinent to the instant matter, the Court notes that Bombardier has violated Rule 56.1(c) of the Local Rules of this Court ("L.R. 56.1(c)").*fn1 In support of its motion, Bombardier filed a Concise Statement of Undisputed Material Facts. (Docket No. 47). Plaintiff filed its Response to Bombardier's Statement of Undisputed Facts and a Counterstatement of Material Facts. (Docket No. 53).*fn2 Defendant has failed to respond to the additional facts alleged by Plaintiff in his Counterstatement of Material Facts. (Docket No. 53 at 12-19). Local Rule 56.1(E) sets forth the consequences for failure to comply with L.R. 56.1(c) as follows: alleged material facts set forth in the moving party's Concise Statement of Material Facts or in the opposing party's Response to Defendant's Concise Statement of Material Facts, which are claimed to be undisputed, will for the purposes of deciding the motion for summary judgment be deemed admitted unless specifically denied or otherwise controverted by a separate concise statement of the opposing party.
W.D. Pa. L.R. 56.1(E)(2008). Therefore, for the purposes of the instant motion, the facts as stated in Plaintiff's Counterstatement of Material Facts (Docket No. 53 at 12-19) are deemed admitted by Bombardier, in accordance with Local Rule 56.1(E). See Janokowski v. Demand, Civ. A. No. 06- 618, 2008 U.S. Dist. LEXIS 34196, at *3 (W.D.Pa. April 25, 2008); GNC Franchising LLC v. Kahn, Civ. A. Nos. 05-1341; 06-238, 2008 U.S. Dist. LEXIS 16046, at *3 (W.D.Pa. Mar. 3, 2008); Ferace v. Hawley, Civ. A. No. 05-1259, 2007 U.S. Dist. LEXIS 71437, at *2 (W.D.Pa. Sept. 26, 2007) (citing Benko v. Portage Area Sch. Dist., Civ. A. No. 03-233J, 2006 U.S. Dist. LEXIS 40573 (W.D.Pa. June 19, 2006)).
The Court has gleaned the following relevant factual background from the parties' summary judgment filings.
Plaintiff, John R. Laymon, Jr., is an adult individual from Allegheny County, Pennsylvania and the owner of JRL Enterprises, Inc. ("JRL"), a corporation with its principal place of business in Pittsburgh, Pennsylvania. (Docket No. 31 at ¶ 1; Docket No. 47 at ¶ 20). JRL is engaged in the business of reconditioning rail car motors used in transit systems and at all times relevant hereto was certified as a Minority Business Enterprise ("MBE") and Disadvantaged Business Enterprise ("DBE") within the meaning of 13 C.F.R. § 124.105(d) and 49 C.F.R. Part 26.*fn3 (Docket No. 31 at ¶ 1; Docket No. 47 at ¶¶ 20-21; Docket No. 53 at ¶ 89). Defendant Bombardier Transportation (Holdings) USA, Inc. is a Delaware Corporation with a place of business in West Mifflin, Pennsylvania. (Docket No. 31 at ¶ 2). Defendant Bombardier, Inc. is a corporation headquartered in Montreal, Province of Quebec, Canada. (Id. at ¶ 3). It owns and controls Bombardier Transportation. (Id.).
C. The BART - Bombardier Contract
On April 7, 1995, Bombardier and BART entered into Contract No. 41 MF-110A wherein Bombardier agreed to renovate BART's transit vehicles and install new motors. (Docket No. 47 at ¶¶ 1, 16; Docket No. 53 at ¶¶ 1, 16). The contract was funded in part by the United States Federal Transit Administration ("FTA"). (Docket No. 47 at ¶ 2; Docket No. 53 at ¶ 2). This funding was allocated to the project but not provided to BART prior to performance on the project and invoicing for work. (Docket No. 31 at ¶ 9). Bombardier, as a contractor on the FTA-funded project, was required to certify that it had complied with the United States Department of Transportation's ("DOT") DBE program, specifically the requirements of 49 C.F.R. Part 26 relating to the participation of DBEs on the project. (Docket No. 47 at ¶ 3; Docket No. 53 at ¶ 80). The project was also funded by the state of California, thus Bombardier was also required to certify to BART and California that it had complied with California law relating to MBE/DBE participation. (Docket No. 31 at ¶ 10).
The purpose of this program is to ensure that DBEs have the opportunity to participate in BART contracts that are federally funded. (Docket No. 53 at ¶ 81). BART and DOT worked together throughout the course of the project to monitor DBE participation and compliance. (Id. at assistance in establishing and providing opportunities for DBEs. 49 C.F.R. § 26.1 ¶ 82). Pursuant to paragraph 7.13B of the BART contract, the DBE participation goal (the "goal") for the project was 16 % of the base contract amount. (Docket No. 47 at ¶ 4; Docket No. 53 at ¶ 4). The base contract amount was $330,045,952.00, therefore the DBE participation goal was $52,807,352. (Id. at ¶ 5). The contract originally involved the rehabilitation of 200 of BART's transit vehicles but after the contract was amended by change orders, a total of 439 transit cars were to be renovated. (Id. at ¶¶ 6-7). Therefore, Plaintiff contends that the DBE participation goal would have been expanded in proportion to the increase in the contract value and in accordance with subsequent change orders. (Docket No. 53 at ¶ 5).
During the course of the project, Steven Proctor, a BART project manager, was responsible for the DBE program. (Docket No. 47 at ¶¶ 36-37; Docket No. 53 at ¶¶ 36-37). He was required to personally investigate any claim or protest as to DBE compliance. (Id. at ¶¶ 38-40). The DBE reports submitted by Bombardier were audited and reviewed monthly by BART's office of civil rights to ensure their validity. (Id. at ¶ 43-45). Donald Deemer was BART's senior civil rights officer who was responsible for monitoring the overall DBE participation on the project. (Id. at ¶ 48). Martin Matvey, a project manager for Bombardier, and Susan Presley, a project manager for BART, reviewed the invoices submitted by Bombardier for payment in connection with the contract. (Id. at ¶ 65). Mr. Matvey executed a majority of the invoices that were submitted to BART for payment. (Id. at ¶ 66).
Pursuant to Section P9 of the contract, Bombardier was to be paid for its work, excluding change orders, on a unit price/percent complete basis at a unit price of $668,483.00 per vehicle, excluding engineering, tooling, testing and spare parts. (Docket No. 47 at ¶¶ 8-9; Docket No. 53 at ¶¶ 8-9). Bombardier was permitted to bill BART for a certain portion of the unit price for its base scope of work at various levels of completion as set forth in the contract. (Id. at ¶¶ 10-11). Bombardier's actual costs, including costs expended by its own forces or through subcontractors and/or material suppliers, were irrelevant to the amount that it could invoice BART. (Id.).
As part of the DBE program and pursuant to the contract, Bombardier was required to submit monthly DBE utilization reports to BART beginning in January of 1996, however, prior to the submission of the first report, BART notified Bombardier on December 12, 1995 of a few modifications to the report. (Id. at ¶¶ 12-13; Docket No. 53 at ¶ 12-13, 87).*fn4 Bombardier made the modifications to the DBE reports as suggested by BART. (Id. at ¶ 14). The monthly reports were to include the amounts awarded to DBEs as well as the cumulative amounts actually paid during each month. (Docket No. 53 at ¶¶ 83, 98). It was understood between BART and Bombardier that the monthly DBE reports submitted with each invoice were to be accurate and that BART was entitled to rely on them as being so. (Docket No. 53 at ¶¶ 92-93, 107-108). Upon receipt of the reports, BART would forward them to DOT to allow DOT to evaluate DBE participation and compliance with federally funded contracts. (Id. at ¶ 84). Thus, Bombardier was required to submit monthly DBE reports regardless of whether the DBE goal had been met because BART and DOT use these reports to evaluate the success of the DBE program on a contract-by contract basis and on a district and nationwide level. (Id. at ¶¶ 87-88).
Bombardier contends that, so long as BART certified a supplier or subcontractor as a DBE at the time Bombardier contracted with it, Bombardier could count that DBE's participation against the goal even if that DBE became subsequently decertified. (Docket No. 47 at ¶ 15). However, Plaintiff states if a DBE became decertified and remained so, Bombardier was not allowed to count that enterprise's participation towards the goal. (Docket No. 53 at ¶ 15).
As part of the subject BART contract, Bombardier guaranteed that the rail cars would function and be free of defects upon delivery, and thus, Bombardier could only invoice BART for completed, functioning cars but it could bill BART for a certain portion of the unit price at various levels of completion. (Docket No. 47 at ¶¶ 9-10; Docket No. 53 at ¶¶ 73-74). If defects were found in the motors, it was Bombardier's responsibility to correct them in order for the project to be considered complete and before Bombardier could invoice BART for payment of the unit price. (Docket No. 53 at ¶ 59-60). That is, Bombardier would not be entitled to payment for cars that were found to have problems or it was required to repair those cars if it had already been paid by BART for them pursuant to the fleet defect provision in the BART contract. (Id. at ¶¶ 63-63). Upon receipt of Bombardier's invoices for completed cars, BART would then submit requests for reimbursement to the FTA through a method called "Echo Payment Request." (Id. at ¶ 78-79). The FTA would then process those requests to authorize reimbursement to BART upon review and reliance on the information in the requests. (Id.).
D. The Bombardier - JRL Relationship
In early 2001, after Bombardier had renovated and been paid for many of the cars, BART issued a fleet defect notice to Bombardier regarding problems with the new motors. (Docket No. 47 at ¶ 17-18; Docket No. 53 at ¶¶ 17-18, 61). Bombardier accepted responsibility for the motor problems and thereafter contracted with JRL, DBE certified by BART, to perform the reconditioning work on the defective motors. (Docket No. 47 at ¶ 19; Docket No. 53 at ¶¶ 72, 89). Plaintiff contends that JRL also performed work on rail cars that had yet to be delivered to BART to ensure that defects that had been found in other already shipped cars were not replicated. (Docket No. 53 at ¶ 72). Once the defects were corrected and BART had possession of fully functioning rail cars, Bombardier was then entitled to payment. (Docket No. 53 at ¶¶ 74-75). Bombardier states that it could not seek reimbursement from BART for the work that JRL did on repairs. (Docket No. 47 at ¶ 61). While this is undisputed, Plaintiff highlights the fact that Bombardier was required to repair the motors pursuant to the contract's fleet defect provision before it could be paid the full unit price. (Docket No. 47 at ¶ 61; Docket No. 53 at ¶ 61, 72). At the time of the repair work, Bombardier had already been paid by BART for many of the vehicles; as a result, Bombardier could not invoice BART for payments made to JRL, but was still required to repair the motors before receiving the full unit price. (Id. at ¶¶ 63-64).
As JRL's involvement with the BART contract and work on the defective motors began in March of 2001, Bombardier could thereafter include JRL's participation on the contract in the overall DBE goal. (Id. at ¶¶ 22, 25, and 26). From September of 2001 through November of 2002, Bombardier submitted the required DBE status reports to BART certifying the amount that JRL has been awarded and paid. (Docket No. 53 at ¶¶ 90-91).
E. Bombardier's DBE Reports
Bombardier issued its first DBE utilization report in January of 1996 with an award total of $54,155,905 to DBE firms, which exceeded the 16% goal of $52,807,352, however, it is unclear to the Court whether this amount reflected the increased value of the contract due to change orders. (Docket No. 47 at ¶ 24; Docket No. 53 at ¶ 24). In March of 2001, when JRL became involved, Bombardier had already exceeded the 16% goal, before change orders, with a planned award amount of $63,450,542 and a cumulative amount paid of $53,877,010 to DBEs. (Docket No. 47 at ¶ 27; Docket No. 53 at ¶ 27). However, Plaintiff points out that the largest DBE utilized by Bombardier, Mindseed Corporation, had been under investigation and had been previously decertified. (Docket No. 53 at ¶ 27). Bombardier's July 2001 report indicated a cumulative award amount of ...