U.S. Attorney General Intervenes in Whistleblower Suit Against Computer Software Industry Leader

by Akin Gump Strauss Hauer & Feld LLP

The U.S. Attorney General recently intervened in a qui tam case brought by a current employee of California-based computer software giant Symantec Corporation, alleging violations of the federal, California, Florida and New York False Claims Acts (FCA) (United States ex rel. Morsell v. Symantec Corp., No. 1:12-cv-00800 [D.D.C.]). The first amended complaint (the “complaint”) alleges that Symantec fraudulently induced the U.S. General Services Administration (GSA) to purchase its computer software products by providing false information about its commercial pricing practices. The complaint alleges that Symantec deliberately failed to disclose to GSA the discounts that it routinely offered to commercial purchasers of its computer software products, and, thus, charged GSA higher prices than it did for its commercial purchasers. According to the complaint, GSA would have insisted on the same discounts had Symantec disclosed them during the contract negotiations, and Symantec’s alleged deliberate failure to so disclose rendered Symantec’s claims for payment under the GSA contracts, false.  

Federal law requires government contractors to participate in a full and open competitive bidding process. They must provide GSA with true and extensive information about their commercial sales and practices, including all price and discount information, 41 U.S.C. § 253 (a) (1). GSA contracting officials must be able to “seek to obtain the offerer’s best price (the best price given to the most favored customer)” and to “compar[e] the terms and conditions . . . with the terms and conditions of agreements with the offeror’s commercial customers.” (48 C.F.R. § 538.270 (a).) As the complaint notes, “GSA contracting officers therefore rely heavily on the accuracy and truthfulness of the information provided by the offeror regarding its commercial sales in negotiating the terms of [a] contract” (Complaint ¶ 15).

The complaint alleges that Symantec did not comply with federal law, by withholding from GSA the true terms and conditions ordinarily offered to its most favored commercial customers, causing GSA to enter into purchasing contracts at higher price schemes. The complaint further alleges that Symantec’s conduct violated several state FCAs (California, Florida and New York) because those states predicated their contracts with Symantec upon their general practice of adopting the terms and conditions agreed to among GSA and contractors. Thus, if Symantec defrauded the federal government (GSA) by failing to disclose its discounts to GSA, it also defrauded the state governments. The named states have not yet intervened in the case, but have until September 16, 2014 to do so.

The complaint seeks an unstated amount of treble damages and civil penalties for each false claim, spanning the course of years commencing in 2007. The complaint alleges that “[b]etween January 25, 2007, through the first quarter of 2012, the United States directly paid Symantec approximately $74,803,831 for Symantec GSA schedule products” (Complaint ¶ 62).


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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