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United States v. Shubhada Industries

United States District Court, E.D. Pennsylvania

June 7, 2018

UNITED STATES OF AMERICA
v.
SHUBHADA INDUSTRIES, et al.

          MEMORANDUM

          BARTLE, JUDGE

         The United States of America has sued two individual defendants Babu Metgud a/k/a Bob Metgud and Shubhada Kalyani a/k/a Shubhada Sue Kalyani Metgud for violations of the False Claims Act, 31 U.S.C. §§ 3729, et seq. There are also certain common law claims.[1] Metgud and Kalyani are representing themselves.

         The Government has moved for summary judgment on Count I of the amended complaint against these defendants for presentation of a false claim in violation of § 3729(a)(1)(A) of the False Claims Act.[2] See Fed.R.Civ.P. 56.

         I

         Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).[3] A dispute is genuine if the evidence is such that a reasonable factfinder could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254 (1986). Summary judgment is granted where there is insufficient record evidence for a reasonable factfinder to find for the nonmovant. Id. at 252.

         When ruling on a motion for summary judgment, we may only rely on admissible evidence. See, e.g., Blackburn v. United Parcel Serv., Inc., 179 F.3d 81, 95 (3d Cir. 1999). A party asserting that a particular fact “cannot be or is genuinely disputed” must support its assertion by “citing to particular parts of materials in the record” or by “showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.” Fed.R.Civ.P. 56(c)(1). In reviewing a motion for summary judgment, the court may consider any materials in the record but is not required to look beyond those materials cited by the parties. Fed.R.Civ.P. 56(c)(3).

         On a motion for summary judgment, a pro se party is not relieved from his or her obligations under Rule 56(e) of the Federal Rules properly to support or address a fact. See Dawson v. Cook, 238 F.Supp.3d 712, 717 (E.D. Pa. 2017) (citing Boykins v. Lucent Techs., Inc., 78 F.Supp.2d 402, 408 (E.D. Pa. 2000)).

         II

         The following facts are undisputed. Babu Metgud formed Metcon Aerospace in or about 1978 or 1979 after he was graduated from college. Metgud and Shubhada Kalanyi, husband and wife, formed Shubhada Industries, a New Jersey corporation, in 1992. Shubhada Industries provides engineering services, project management services, and parts to the United States military from its location in Mount Laurel, New Jersey. Metcon Aerospace is the predecessor company of Shubhada Industries.[4]

         Metgud and Kalyani are the only two officers of Shubhada Industries. Metgud provides “engineering and technical work, ” while Kalyani, the president of the company, is a “jack of all trades” and does “general and administrative work.” Metgud has a master's degree in mechanical engineering from Worcester Polytechnic Institute. Kalyani obtained an LLB degree in law in India.

         The United States Defense Logistics Agency Troop Support (“the Logistics Agency”) awards and administers contracts on behalf of various departments of the Department of Defense. On December 3, 2014, the Logistics Agency in Philadelphia issued a Request for Quotations to obtain two light assemblies for munitions trailers. The light assemblies are “heavy duty turn signals.”

         The Request for Quotations required the bidder to submit a quote using the Logistics Agency Internet Bid Board System. The Request specifically required the bidder to state in its quote whether it was a dealer or manufacturer of light assemblies. In addition, the Request contained a clause that directed dealers to retain information that traced the product to its manufacturing source. The bidder was also instructed to submit with the quote its Contractor and Government Entity Code (“CAGE Code”), signifying its status as a manufacturer or dealer. These instructions further provided that the submission of a quote “constitute[d] the offeror's compliance with the representations” contained in the quote. The Request stated that the Logistic Agency's “offer to purchase, as evidence by an order” would be “made on the basis of a submitted quotation.”

         On December 16, 2014, Shubhada Industries submitted a quote for $73, 842 to the Logistics Agency to furnish two light assemblies.[5] The quote identified Shubhada Industries as the vendor. It expressly provided that Shubhada Industries was a “manufacturer” rather than a “dealer” and contained a CAGE Code that signified it was a manufacturer rather than a dealer. In their amended answer, Metgud and Kalyani admitted that the quote was a “bid on the higher side” since they believed that the Logistics Agency's Request for Quotations was lacking in specification and instruction. The quote described the company as a woman-owned business and a minority-owned business.

         In addition to describing itself in the quote as a manufacturer, Shubhada Industries also identified itself as a “manufacturer of goods” in the System for Award Management database in which the Government requires contractors to register in order to do business with it. In its annual database certification valid from November 6, 2014 to November 6, 2015, Metgud certified for Shubhada Industries that for commercial items, the “place of manufacture” means “the place where an end product is assembled out of components, or otherwise processed from raw materials into the finished product that is to be provided to the Government.”

         The Logistics Agency accepted the Shubhada Industries quote by placing an order with it on May 11, 2015. The purchase order provided that when the purchase order “identifies supplies by manufacturer's name, Commercial and Government Entity (CAGE) code, and part number . . . the specified item(s) are the only item(s) acceptable under this contract. The contractor may not substitute a different item after award.” As with the Request for Quotations, the purchase order contained certain requirements that applied only to manufacturers and certain requirements that applied only to dealers. Notably, it mandated that a dealer offering the product of a manufacturer must provide documentation that traces the supplies back to the original equipment manufacturer, or its authorized distributor. In contrast, a manufacturer was not required to provide this documentation. Here, as previously noted, the purchase order identified the name of Shubhada Industries, its CAGE Code as a manufacturer, and explicitly designated Shubhada Industries as a manufacturer.

         On May 14, 2015, Metgud, through his company Metcon Aerospace, contacted DelVal Corporation to discuss the purchase and assembly of light assemblies.[6] DelVal responded to Metgud that it had experience assembling light assemblies. It offered to provide a small quantity of the item on “an experimental basis” and continue to assemble more if Metgud promised to purchase a larger quantity in the future. Metgud agreed that he would do so if the samples provided by DelVal were satisfactory.

         For the next few weeks, Metgud followed up with DelVal to investigate whether it had “real capabilities to manufacture” the light assemblies so that they would pass inspection by the Logistics Agency. He emailed DelVal on multiple occasions. He confirmed that DelVal had a copy of the light assembly drawings that were in the Logistics Agency purchase order. According to the amended answer, it is normal to do so since the Logistics Agency “require [sic] us prime contractors to make sure all the sub-contractors and suppliers have the government drawings[.]”

         On June 1, 2015, Metgud on behalf of Metcon Aerospace, ordered fifteen light assemblies from DelVal for $675.81 each. He did not inform the Logistics Agency of the purchase. The corresponding purchase order signed by Metgud between Metcon Aerospace and DelVal contains the same drawing number that is specified in purchase order between Shubhada Industries and the Logistics Agency. Before DelVal shipped the light assemblies, it ...


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