MacDowell v. Synnex Corporation

Background

Matthew MacDowell worked for United Office Solutions, Inc., a competitor and authorized reseller of Synnex products, from 2007 to 2010. He learned through his work that Synnex had sold information-technology products to federal agencies under the General Services Administration’s Multiple Award Schedule 70 contract.

MacDowell alleged that Synnex sold products containing parts manufactured in China and the Philippines, which the complaint characterized as countries not designated under the Trade Agreements Act of 1979. He alleged that Synnex concealed the products’ origins by bundling them with services and labeling some products as substantially modified in the United States.

MacDowell initially filed the action in 2012 against seventeen defendants. The government declined to intervene in the claims against Synnex. After the case was transferred to the Northern District of California and unsealed, MacDowell filed an operative complaint against Synnex.

Summary-judgment motion

Synnex moved for summary judgment, arguing among other things that MacDowell was not an “original source” under the False Claims Act. The original-source exception can allow a person to pursue claims even when substantially similar allegations or transactions were publicly disclosed. The court had previously ruled that the public-disclosure bar applied because two earlier federal lawsuits contained substantially similar allegations, but allowed MacDowell’s case to proceed subject to proof that he qualified as an original source.

The court declined to reconsider that earlier ruling based on an unpublished appellate memorandum and because MacDowell had not sought permission to file a reconsideration motion as required by a local rule. The court applied the version of the original-source statute in effect before 2010 to earlier claims and the amended version to later claims.

Under the pre-2010 standard, an original source needed direct and independent knowledge of the information underlying the allegations. The court found that MacDowell’s employment experience did not provide the required knowledge. He could not recall basic information about a transaction, could not say whether certain sales involved a GSA contract or required compliance with the Trade Agreements Act, and could not identify the source of documents used in his case. The court characterized his knowledge about Synnex’s sales to the government as speculative and secondhand.

The court reached the same result under the post-2010 standard. MacDowell had not disclosed the information to the government before the earlier public disclosures. The court also found no evidence that his knowledge was independent of those disclosures or materially added to them. For information obtained after his employment ended, MacDowell testified that his primary sources were the internet, including Google and YouTube.

Because MacDowell did not produce evidence creating a genuine dispute over whether he was an original source, the court held that his claims were barred by the public-disclosure bar. The court did not reach Synnex’s other summary-judgment arguments.

Other motions and disposition

The court granted summary judgment in favor of Synnex. Because that ruling resolved the case, the court denied Synnex’s motion to exclude MacDowell’s expert report as moot.

MacDowell separately moved to file portions of his opposition and several exhibits under seal. The court explained that court records are subject to a strong presumption of public access. It denied the sealing motion because Synnex had designated the materials confidential under a protective order but had not filed the supporting declaration required by the applicable local rule.

Final ruling

Judge William Alsup granted summary judgment in favor of Synnex Corporation, denied Synnex’s expert-evidence motion as moot, and denied MacDowell’s motion to file materials under seal.