Ex-sales manager files 'whistleblower' lawsuit vs. W.W. Grainger

A former W.W. Grainger Inc. sales manager has filed a lawsuit against the Lake Forest company, alleging the industrial-supply distributor repeatedly over-billed the U.S. government on its supply contracts. Full Story
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Michael OConnor

Palatine, IL

#1 Feb 9, 2008
I applaud Brian Holbrook, someone from the commercial business sector, with a conscience who knows the mechanics of government contracting and doing business with the federal government. He encouraged his employer to do the right thing and abide by the contract, but was overruled.
Let this be a lesson to others doing business with the federal government.
Neutral observer

Frederick, MD

#2 Feb 9, 2008
Sounds like a standard case involving the bitterness of a disgruntled former employee. This suit he seeks to profit from, will waste the taxpayers time & money.
eja

Chicago, IL

#3 Feb 9, 2008
Neutral observer wrote:
Sounds like a standard case involving the bitterness of a disgruntled former employee. This suit he seeks to profit from, will waste the taxpayers time & money.
So what? Is he right? If he is lots of people will get their just reward.
GraingerRanger

Marietta, GA

#4 Feb 10, 2008
If the alleged charges are true. The Justice Dept needs to also file criminal charges against the executive leadership team.
Another Neutral Observer

Kenosha, WI

#5 Feb 10, 2008
I don't think you can file criminal charges for breech of contract. In other articles it says the Government intervened on Mr. Holbrook's bahlf. It is unlikely that if there was nothing to this case, they would not have made that move and "wasted the taxpayers time & money".

It will be interesting to see how this unfolds and there should be consequences for either side if there is wrong doing.

Nowhere did I read in Grainger's press release that he was fired, bitter or disgruntled. This is a bias stereotype and not fact based.

I also did not read anywhere that Mr. Holbrook was from the commercial business sector, where did that information come from?
Been Around the Block

AOL

#6 Feb 10, 2008
How is it that:

-Every private citizen pays under list price for everything

-And even mid-sized companies get sizable discounts for most of what they buy

-But the largest purchaser of all, the US government pays MORE for everything, from pharmaceuticals to light-bulbs?

It just doesn't make any ECONOMIC sense.

Of course it does make perfect POLITICAL sense doesn't it?

We need to demand that these whistleblower laws be maintained; otherwise corrupt politicians and big-business will continue to get away with this crap.
BIGDADDY

United States

#7 Mar 3, 2008
Brian worked as A District Sales Manager for the government team and was in charge of the Govt sales team in WI. Grainger and Brian parted ways because of differences in handling personel and customer pricing. Grainger runs on a 41% margin with a 6% profit. They have overcharged everyone trying to maintain that margin requirement! The Govt has a case and Grainger will pay-hopefully the VP in charge will get charged if he is still in that role.
WWG has so much turnover it is unclear what or who is in charge.
eong

Memphis, TN

#8 Apr 22, 2008
You speak of the whistle blower getting fired. That usually happens when you report unethical behavior at Grainger. They are only interested in protecting assets, not being ethical. They hire experienced employees that knows how to make Grainger look clean and when there is a slip, they cover it up.
New Post

Cleveland, OH

#9 Apr 22, 2008
The case details that were filed are online now and Grainger really has the nerve of saying nothing happened?

What a crock of crap. If management was really informed, Grainger should stop denying and start firing managers.

Grainger will settle quietly and sweep it under the carpet. Great, honorable company....B.S.

Grainger should offer him a position on the board of directors and straighten that place out.
-2 Die Grainger

Grand Rapids, MI

#10 May 15, 2008
Worst company ever. Rip off artists who are only concerned about themselves....and that means the very few "top" echelon Presidents/VP's.

The treat their suppliers like garbage, their own employees like garbage & their customers like garbage.
former grainger employee

AOL

#11 Jun 23, 2008
As someone who exited gracefully from Grainger despite seeing the complete manipulation of employees and the lack of ethics they practice on a day to day basis I believe this ex-employee to be truthful. If it was personal he should cite the grave indifference to treating people like human beings and reference numerous practices they partake in. Grainger is a Corporate giant whose main objective is profit at any cost. They just have the right legal teams in place to protect them.
too tired to care

Morrison, CO

#12 Jul 24, 2008
http://milwaukee.bizjournals.com/milwaukee/st...

Friday, May 30, 2008
Grainger 'whistleblower' federal case close to settlementThe Business Journal of Milwaukee - by David Doege
W.W. Grainger Inc. is close to reaching a settlement with federal prosecutors in a whistleblower lawsuit accusing the company of repeatedly overcharging the U.S. government and re-labeling materials made in restricted countries before selling them to federal agencies, according to new court documents.

While a spokesman for W.W. Grainger declined to elaborate on the settlement talks, the attorney for the whistleblower, a former company sales manager from New Berlin, said his client's allegations of wrongdoing have been substantiated.

"The allegations in the complaint have been specifically verified," said attorney Alan Olson of New Berlin. "This case is a good example of a situation where an individual is in a position to make significant change occur."

Olson said he believed the settlement could be finalized and signed within 60 days and a filing by a federal prosecutor indicates that "the terms" have been ironed out, with only the signatures of various officials still needed.

Matthew Richmond, civil division chief for the U.S. Attorney's office in Milwaukee, declined to comment.

Olson said he was not at liberty to discuss what type of financial reward his client is in line to receive, but it could be substantial.

The lawsuit does not say how much the government was allegedly overcharged by W.W. Grainger, but seeks damages "equal to three times the amount of damages the U.S. government has sustained," plus a fine of $5,000 to $10,000 for each violation committed by the company.

The suit says the company's annual sales to federal agencies "are approximately $750 million."

The lawsuit asks that Brian Holbrook, the "whistleblower" who filed the lawsuit, be awarded 15 percent to 25 percent "of the proceeds of the action or settlement of claim" for his role in the case. The lawsuit was filed in 2006 and remained sealed until February when federal prosecutors joined the case.

W.W. Grainger is based in Lake Forest, Ill., but has a large presence in the Milwaukee area. Holbrook is a former W.W. Grainger district sales manager based in Waukesha.

The lawsuit claimed the company's contract with the U.S. government only allowed a markup of 26 percent above cost, yet one of W.W. Grainger's accounts with the U.S. Postal Service featured profit margins from "the mid-30 percent to 60 percent range."

Beyond the price tags, the lawsuit claimed the company violated another feature of its contract by selling the government products originally purchased from countries that do not have reciprocal fair trade agreements with the United States, such as China.

A growing volume of products distributed by W.W. Grainger are bought from foreign suppliers, with 54 percent of that volume coming from China, the suit stated.

"We remain committed to working with the Department of Justice and are working to resolve the matter as quickly as possible," said Ernest Duplessis, vice president of internal and external communications for W.W. Grainger. "The government is an important customer for us and we take this matter very seriously."

All contents of this site American City Business Journals Inc. All rights reserved.
Sir Digby Chicken Caesar

Chicago, IL

#13 Jul 24, 2008
People blowing whistles is annoying, especially at night. But, I see no reason to file a lawsuit about it.
Settlement

Oak Creek, WI

#14 Jul 25, 2008
$6 million dollar whistle. Keep blowing it if these are the damages. Shame on Grainger. Way to sweep it under the carpet with a settlement. i guess this shows it was not an unfounded claim.

W.W. Grainger Pays United States $6 Million to Resolve False Claims Act Allegations

Last update: 3:18 p.m. EDT July 25, 2008
WASHINGTON, July 25, 2008 /PRNewswire-USNewswire via COMTEX/-- W.W. Grainger Inc. has paid the United States $6 million to settle allegations that it submitted false claims to United States government agencies, the Justice Department announced today. The company, based in Lake Forest, Ill., supplies facilities, maintenance and other related products in North America.
The settlement resolves allegations that the company sold government agencies special order items at a markup greater than that allowed by Grainger's contract with the General Services Administration (GSA). The settlement also resolves allegations that Grainger sold government agencies products from countries that do not have reciprocal trade agreements with the U.S., such as China and Taiwan. Grainger was required by its contract with the GSA and by the Trade Agreements Act to prevent such items from being offered for sale to U.S. government agencies.
"Federal contractors will be held accountable for their knowing violations of procurement regulations," said Gregory G. Katsas, Assistant Attorney General of the Department of Justice's Civil Division. "This settlement is an example of the Department's determination to ensure that federal funds are protected from fraud and abuse."
The case was filed under the qui tam provisions of the False Claims Act by Brian M. Holbrook, a former Grainger employee, in the U.S. District Court for the Eastern District of Wisconsin in January 2006. Holbrook will receive $70,400 of the total recovery as his statutory award. Under the qui tam provisions of the False Claims Act, private parties can file an action on behalf of the United States and receive a portion of the proceeds of a settlement or judgment awarded against a defendant.
"The Civil Division of the U.S. Attorney's Office is committed to actively pursuing allegations of fraud by companies against government agencies," said Steven M. Biskupic, U.S. Attorney for the Eastern District of Wisconsin in Milwaukee. "This settlement is another example of the Civil Division's continuing efforts to investigate and prosecute affirmative civil matters."
The settlement resulted from an investigation by the Justice Department's Civil Division, the U.S. Attorney's Office for the Eastern District of Wisconsin and GSA's Office of the Inspector General.
SOURCE U.S. Department of Justice
http://www.USDOJ.gov
WWGsucks

Wheeler, WI

#15 Aug 9, 2008
I saw this thing break from the beginning and our management told us that Grainger did nothing wrong and that it was all the ex-employee's fault and did nothing but make him the bad guy.

Nobody follows rules when it comes to government accounts, inside sales people hardly ever inform a government customer that the products they were ordering were made in China.

A few weeks later, Grainger management said we needed to retake an online course for government sales and they never followed up to see if everyone took the video course or even inquired if we had any questions.

I can actually say that they will quietly go back to doing it again. Grainger looked great when I started and then one sees all the flaws months later.
hate grainger

Cumming, GA

#16 Oct 3, 2008
I work at a small company. We developed a product with a large manufacturer, Grainger got ahold of the sku as they also buy from the same manufacturer, approached our largest customer with the same product, couldn't match our price, then pressured the manufacturer to raise their price to us so THEY/Grainger would be more competitive.
I hope they lose their ass.
paul

Vietnam

#17 Feb 27, 2009
tks Another Neutral Observer
GRAINGER EMPLOYEE

Pleasanton, CA

#18 Mar 26, 2009
OHH LOOK WHO IS FIRING MASSIVE AMOUNTS OF EMPLOYEES ??? OTHER MAJOR CORP.'s GRAINGER FIRES LESS THAN 2%..while giving them an excellent severance package so the employees are not left on their @$$.... they cut all management pay without cutting hourly employee raises. I think you guys forgot that the US market is set up as survival of the fittest... of course Grainger will pressure small companies... and if they dont give in they will drop their prices and drive you out of business and buy you out .. thats what being a GIANT IN INDUSTRIAL SUPPLY IS ALL ABOUT !!!
Anon

Seattle, WA

#19 Aug 26, 2009
Wrong is wrong and hourly employees got a raise, but smaller than usual. Some people employed by the company do unethical things, but nobody cares as long as nobody sees it.!
GRAINGER EMPLOYEE wrote:
OHH LOOK WHO IS FIRING MASSIVE AMOUNTS OF EMPLOYEES ??? OTHER MAJOR CORP.'s GRAINGER FIRES LESS THAN 2%..while giving them an excellent severance package so the employees are not left on their @$$.... they cut all management pay without cutting hourly employee raises. I think you guys forgot that the US market is set up as survival of the fittest... of course Grainger will pressure small companies... and if they dont give in they will drop their prices and drive you out of business and buy you out .. thats what being a GIANT IN INDUSTRIAL SUPPLY IS ALL ABOUT !!!
Tina

Cumming, GA

#20 Mar 3, 2010
hate grainger wrote:
I work at a small company. We developed a product with a large manufacturer, Grainger got ahold of the sku as they also buy from the same manufacturer, approached our largest customer with the same product, couldn't match our price, then pressured the manufacturer to raise their price to us so THEY/Grainger would be more competitive.
I hope they lose their ass.
I worked for Grainger for 6 years. Not only did they use their weight to pressure their suppliers to lower prices to Grainger, but they also pressured these same suppliers to raise prices to Graingers competition. They are one of the most unscrupulous company's I have ever seen. They are predatory to the core.
Their sales people walk into a customer site, see something that a customer is buying from another supplier, find out who makes it, then go after the manufacturer and promise huge sales, then force the price up to the current supplier so they can't sell in the same area. Grainger pays "Incentives" (Bribes) to numerous customers' corporate purchasing agents. And if, as a customer, you try to go elsewhere, they pressure you to the point of trying to lay a guilt trip on you and to the point of confrontation.
I now work for a former large customer of Graingers, which I recently encountered one of their sales people on the prowl attempting to interfere with a supplier that we have had a relationship with for years, and we took particular delight in escorting the whore out the door!

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