Whistleblower’s Estate to Receive $23 Million

According to the South Florida Business Journal, a California judge has approved the $68.5 million settlement of a whistleblower’s case against Office Depot alleging violations of the California False Claims Act.

Office supply giant Office Depot, headquartered in Boca Raton, Florida, was named in a whistleblower’s lawsuit filed under the qui tam provision of the California False Claims Act. The whistleblower, David Sherwin, initially filed the qui tam complaint against Office Depot in March 2009, prior to its 2013 merger with Office Max. The City of Los Angeles intervened in the lawsuit in 2012.

Pursuant to the First Amended Complaint-in-Intervention of the City of Los Angeles (“Complaint”), relator David Sherwin was a Florida resident and a former account manager for Office Depot. The South Florida Business Journal reported that the whistleblower passed away in March 2014, but his estate continued to pursue this matter after his death.

According to the Complaint, the allegations against Office Depot stem from its participation in a contract with various California agencies through the U.S. Communities Government Purchasing Alliance (U.S. Communities). According to its website, U.S. Communities is a purchasing cooperative that combines the buying power of more than 90,000 public agencies nationwide by offering the participating public agencies the ability to make purchases through existing, competitively solicited contracts between a supplier and a lead public agency.

According to the whistleblower’s complaint, between 1996 and 2010, Los Angeles County was the lead public agency for U.S. Communities’ largest contract – a contract to supply office and stationery products. The County of Los Angeles awarded the contract to Office Depot after a competitive solicitation process designed to ensure that all public entities participating in the contract received the highest quality products and services at the lowest possible prices (the “Contract”).

The Complaint alleged that, after being awarded the Contract, Office Depot negotiated separate contracts with public entities outside U.S. Communities at lower prices than those contained in the Contract. According to the government, Office Depot was required to revise the prices in the Contract to match those favorable prices; however, it did not do so. In addition, the government claimed that Office Depot overstated its costs for certain items in violation of the Contract. The government contended these were violations of the California False Claims Act.

Office Depot has agreed to pay $68.5 million to approximately 1,000 California public agencies to settle the allegations. The whistleblower’s estate will receive approximately $23 million of the proceeds pursuant to the qui tam provisions of the California False Claims Act.