United States District Court, W.D. Virginia, Harrisonburg Division
Michael F. Urbanski United States District Judge
case involves Civil Investigative Demand 15-439 (the
"CID"), issued December 28, 2015 to Beam Brothers
Trucking, Inc. ("Beam") pursuant to 31 U.S.C.
§§ 3729-33. In issuing the CID, the United States
seeks documents and interrogatory responses related to an
ongoing civil investigation by the Department of Justice
("DOJ") into whether Beam submitted false claims to
the United States Postal Service ("USPS") under
contracts to transport mail.
the court are Beam's petition to set aside the CID, ECF
No. 3, and the United States' cross petition to enforce
the CID, ECF No. 9. Under 31 U.S.C. § 3733, a CID may be
issued by the Attorney General, or a designee, "before
commencing a civil proceeding under section 3730(a) or other
false claims law, or making an election under section
3730(b)." The primary issues before the court are (1)
whether the actions taken by the United States constitute
either commencement of a civil proceeding or intervention in
a qui tarn action, and (2) whether the CID is overly
burdensome, given that it commands Beam to produce a large
quantity of materials already in the possession of the United
States. Because the court finds that the United States has
not commenced a civil proceeding or made an election in
regards to a qui tarn action, Beam's motion to
set aside the CID, ECF No. 3, is DENIED.
court finds that DOJ-Civil has authority to issue the CID and
that the information sought appears relevant to the
investigation of Beam. At the same time, however, the
government acknowledges that certain of the information
requested in the CID is already in its possession by virtue
of its six year investigation. Given dais lengthy government
investigation, during which the government has obtained a
large volume of Beam's data, the court is required to
consider whether enforcement of the CID will be unduly
burdensome in that it will require production of information
already widiin the government's possession. United
States v. Powell, 379 U.S. 48, 57-58 (1964). Beam argues
that many of the documents requested duplicate those obtained
by the government by means of a search warrant and Beam's
voluntary production. The government disputes the amount of
duplication wrought by the CID, and posits that certain other
non-duplicative information is necessary. Unlike the parties,
the court is in no position to assess the extent to which the
CID would require duplicative production. As such, the court
TAKES UNDER ADVISEMENT the government's motion to enforce
the existing CID, ECF No. 9, and DIRECTS the parties to meet
and confer as to the production of non-duplicative
information relevant to the government's inquiries.
Should the parties not be able to negotiate the production of
relevant, non-duplicative information within sixty
(60) days, the government may renew its motion or
issue an Amended CID narrowly tailored to obtain relevant and
non-duplicative information within ninety (90) days.
a trucking company located in Mt. Crawford, Virginia, and its
business consists primarily of shipping mail for the USPS.
ECF No. 24, at 1. Beam contracts with the USPS to deliver
mail on a number of Highway Contract Routes
("HCR"). Id. at 3.
2005, Beam participated in the USPS's HCR Fuel Management
Program ("FMP"). Id. Beam indicates that
prior to 2005, postal contractors like Beam incorporated fuel
cost estimates into their contract bids, subject to an
adjustment for fuel price fluctuations. Id. In the
pre-2005 system, contractors were allowed to retain fuel
money to the extent the estimate exceeded actual use.
Id. Beam indicates that since 2005, USPS required
postal contractors to participate in the FMP program.
Id. Under the FMP, USPS provided contractors
including Beam with Voyager fleet transaction cards,
essentially credit cards, to purchase fuel for HCR routes.
Id. Beam received a number of Voyager cards to use
for authorized fuel purchases. Id. FMP clauses
contained in the HCR contracts governed the appropriate use
of the Voyager cards. Id. In 2014, USPS began
phasing out use of the Voyager cards after determining that
use of the cards was generally ineffective and that USPS
itself could not comply with requirements of the Voyager
program. Id. at 4. The government indicates that
while many HCR contracts provide fuel reimbursement through
use of the Voyager card, some contracts stipulate pre-payment
of fuel expenses based on a monthly quota that fluctuates
with regional fuel price changes. ECF No. 22, at 3.
government has been investigating whether that Beam may have
misused the Voyager cards by using them for fuel on non-USPS
routes, for farm equipment, for personal vehicles, and on HCR
contracts where Beam had already been reimbursed through an
alternative payment arrangement. Id. at 4. The
government questions whether Beam has misused the Voyager
cards, leading to Beam's receipt of fuel reimbursements
far in excess of what was stipulated under contracts with the
February 12, 2013, approximately thirty federal agents
executed a search warrant on Beam's Mt. Crawford,
Virginia office, seizing large quantities of corporate
records. ECF No. 24, at 2. In an affidavit in support of the
application for the search warrant to be executed on Beam, a
special agent with the United States Department of
Transportation ("USDOT") Office of the Inspector
General ("OIG") stated that "[s]ince June of
2010, USDOT-OIG and the Postal Service-OIG have been engaged
in this investigation." Aff. of Joseph A.
Harris. ECF No. 24-1. Ex. 3. ¶ 11.
the raid, Beam engaged in dscussions with various government
agencies regardng the investigation. ECF No. 24, at 2. On
September 4, 2013, Beam personnel met with government
officials representing DOJ-Civil, DOJ-Criminal, and the U.S.
Attorney's office for the Western District of Virginia.
Id. Greg Pearson, an attorney with DOJ-Civil and the
named custodian of the CID, attended the September 4, 2013
meeting. Id. In addition to the parallel civil and
criminal investigations, Beam believes that a qui
tarn action has been filed against it in New Jersey.
Id. at 4.
contends the government has decided to intervene in the
qui tarn action, rendering service of the CID
improper. The government has not confirmed the existence of
the qui tarn action, nor has the government filed a
suit under 31 U.S.C. § 3730(a). ECF No. 22, at 11. On
July 29, 2015, Gregory Pearson, on behalf of DOJ-Civil, sent
a letter to Beam outlining the government's
"findings regarding potential False Claims Act..
.violations by Beam Bros. Trucking." July 29. 2015
Letter from Greg Pearson. ECF No. 24-1, Ex. 6. This
letter relayed the United States' belief that Beam had
improperly used Voyager cards and thereby obtained
"money from the federal government to which it [was] not
entided, and [did] so with actual knowledge or
including a setdement proposal prepared by the government,
failed to resolve the concerns raised in the July 29 letter,
and DOJ-Civil served the CID on Beam on December 28, 2015.
ECF No. 22, at 5. The CID seeks production of documents and
answers to written interrogatories that relate to Beam's
use of Voyager cards, government contracts, and fuel
asserts that in executing the February 12, 2013 search
warrant, -the government seized Beam contracts, driver gas
receipts, fifty-five boxes of fuel files, three boxes that
included fuel files, and eight boxes of employee files. ECF
No. 25, at 6. The government also imaged all of Beam's
computers, which contained a number of documents pertaining
to fuel. Id. Beam asserts that a number of other
documents relating to fuel purchases have been voluntarily
produced. IcL The government does not challenge that it
possesses some documents responsive to the CID, but disputes
the extent of the duplication requested. ECF No. 22, at 10.
Even were it, to consider Beam's concerns as to
duplication to be true, the government asserts "that
over half the materials requested by the CID have yet to be
provided and should be provided." Id
False Claims Act ("FCA"), 31 U.S.C. §3729-33,
empowers the Attorney General, or her designee, to issue a
CID requesting documents, responses to interrogatories, or
deposition testimony. 31 U.S.C. § 3733(a)(1). The CID
can only be issued "before commencing a civil proceeding
under section 3730(a) or other false claims law, or making an
election under section 3730(b)." 31 U.S.C. §
3733(a)(1); United States v. Kernan Hosp.. No.
RDB-11-2961, 2012 WL 5879133, *3 (D. Md. Nov. 20, 2012). The
CID allows the government "to assess quickly, and at the
least cost to the taxpayers or to the party from whom
information is requested, whether grounds exist for
initiating a false claims suit." United States v.
Markwood, 48 F.3d 969, 979 (6th Cir. 1995).
is an administrative subpoena. Markwood, 48 F.3d at
975-76. Courts must enforce an administrative subpoena where:
(1) the issuing agency has authority to engage in the
investigation; (2) the issuing agency has complied with the
statutory requirements of due process; (3) the information
sought is reasonably relevant to the investigation and (4)
where the information sought is not unduly burdensome.
E.E.O.C. v. Ranstad. 685 F.3d 433, 442 (4th Cir.
2012); EEOC v. Maryland Cup Corp.. 785 F.2d 471, 476
(4th Cir. 1986); see also United States v. Powell.
379 U.S.48, 57-58 (1964); EEOC v. Ocean City Police
Dept. 787 F.2d 955, 957 ...