Opinion ID: 187122
Heading Depth: 2
Heading Rank: 2

Heading: Count II: Retaliation Claim

Text: FCA section 3730(h) provides in relevant part: Any employee who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment by his or her employer because of lawful acts done by the employee on behalf of the employee or others in furtherance of an action under this section, including investigation for, initiation of, testimony for, or assistance in an action filed or to be filed under this section, shall be entitled to all relief necessary to make the employee whole. 31 U.S.C. § 3730(h) (emphasis added). Count II alleges that ARC violated this provision by discharging Hoyte in retaliation for her protected activity, namely, repeatedly advising her supervisors that she believed that the American Red Cross had violated the law, [standard operating procedures], and the Consent Decree by not appropriately addressing the problems associated with the collection of the 607 unsuitable units of blood in Penn-Jersey. Compl. ¶ 71. The district court dismissed Count II on the ground that Hoyte's investigation and complaints about the blood handling and reporting were not in furtherance of an FCA action as required by section 3730(h) because Count Iasserting the reverse false claim under section 3729(a)(7)did not allege that ARC had any obligation to pay or transmit money or property to the Government as section 3729(a)(7) requires. We agree. This court has established that to prevail on a whistleblower claim, an employee must demonstrate that: (1) he engaged in protected activity, that is, acts done . . . in furtherance of an action under this section; and (2) he was discriminated against because of that activity. To establish the second element, the employee must in turn make two further showings. The employee must show that: (a) the employer had knowledge the employee was engaged in protected activity; and (b) the retaliation was motivated, at least in part, by the employee's engaging in [that] protected activity. United States ex rel. Williams v. Martin-Baker Aircraft Co., 389 F.3d 1251, 1260 (D.C.Cir.2004) (quoting United States ex rel. Yesudian v. Howard Univ., 153 F.3d 731, 736 (D.C.Cir.1998) (quoting S.Rep. No. 99-345, at 35 (1986), U.S.Code Cong. & Admin.News 1986 pp. 5266, 5300 (alterations in Yesudian ))). [5] For the first requirement  engaging in protected activity  `it is sufficient that a plaintiff be investigating matters that `reasonably could lead' to a viable False Claims Act case.' Id. (quoting Yesudian, 153 F.3d at 740). The matters Hoyte was investigating, however, could not have reasonably led to a viable FCA case. Section 3729(a)(7), on which Hoyte relies, imposes civil liability on a person who knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government. Yet Hoyte has not alleged that ARC had any obligation to pay or transmit money or property to the Government which it could conceal, avoid, or decrease through a false statement or record so as to violate section 3729(a)(7). The Consent Decree imposed no obligation on ARC to tender money or property to the Government but only to follow the prescribed blood handling and reporting requirements. In this respect, ARC is in the same position as any regulated entity subject to possible sanctions for violating an administrative requirement and we made clear in Yesudian that an unassessed potential penalty for regulatory noncompliance does not constitute an obligation that gives rise to a viable FCA claim or, consequently, a related whistleblower claim. Like Hoyte, the plaintiff in Yesudian filed a qui tam action asserting both (1) a false claim countalleging that his superior in the Purchasing Department at Howard University (Howard) falsified time and attendance records, accepted bribes from vendors, permitted payments to vendors who provided no services to Howard and took university property home for personal useand (2) a whistleblower claimalleging he was discharged because he reported the misconduct to various Howard officials. A jury returned a verdict against the relator on the false claim count and in his favor on the whistleblower count but the district court subsequently granted the defendants' motion for judgment as a matter of law on the whistleblower count. On appeal, we reversed the judgment on the whistleblower claim. Noting that in a whistleblower claim, it is sufficient that a plaintiff be investigating matters that `reasonably could lead' to a viable False Claims Act case, 153 F.3d at 740, we concluded that neither the relator's uncertainty whether a FCA suit would follow nor the jury's adverse verdict on the false claim count precluded success on the whistleblower count. See id. at 741 (Nor was it necessary for Yesudian to `know' that the investigation he was pursuing could lead to a False Claims Act suit.), 739 ([T]he protected conduct element of such a claim does not require the plaintiff to have developed a winning qui tam action before he is retaliated against.). Nonetheless, we unequivocally stated that an employee's investigation of nothing more than his employer's non-compliance with federal or state regulations is not enough to support a whistleblower claim. Id. at 740 (citing Hopper v. Anton, 91 F.3d 1261, 1269 (9th Cir.1996); United States ex rel. Ramseyer v. Century Healthcare Corp., 90 F.3d 1514, 1523 (10th Cir.1996)). In Yesudian, we found that the nature of [the relator's] charges could not have been mistaken for a complaint about mere regulatory compliance because his was a classic false claim which charged his supervisor with attempting to defraud the Government of money. Id. at 744. Not so with Hoyte's claim, which cannot be deemed a classic reverse false claimin which the defendant's alleged deception results in no payment to the government when a payment is obligated,  United States ex rel. Bain v. Ga. Gulf Corp., 386 F.3d 648, 653 (5th Cir.2004) (emphasis added)but, in contrast to Yesudian, involves mere regulatory compliance, namely, ARC's failure to follow the blood handling and reporting procedures spelled out in the Consent Decree. Relying heavily on Yesudian, Hoyte contends the district court erred in dismissing her whistleblower count because winning the underlying claim is not a necessary predicate to maintaining a Section (h) action. Appellant's Br. 27. It is true that under Yesudian a relator need not ultimately prevail on a FCA charge in order to recover for retaliation under section 3730(h). See 153 F.3d at 739. Indeed, in Yesudian, we concluded that the evidence supported the jury verdict in the relator's favor on the whistleblower claim notwithstanding the jury found against the relator on the underlying false claim count and we therefore reversed the district court's post-trial judgment setting aside the whistleblower verdict. Nonetheless, we made clear that the relator must have been investigating matters that `reasonably could lead' to a viable False Claims Act case, id. at 740, and here that is simply not the case. Under no reasonable interpretation of the statutory language can ARC be deemed to have had an obligation to pay or transmit money . . . to the Government, as section 3729(a)(7) requires, at the time of Hoyte's investigation and complaints. Hoyte's investigation was into mere regulatory noncompliance and did not concern `false or fraudulent claims' as it must to support a retaliation claim under section 3729(a). Yesudian, 153 F.3d at 740 (citing 31 U.S.C. § 3729(a)). Because the conduct Hoyte was investigatingARC's failure to report its noncompliance with the Consent Decreecould not have reasonably led to a viable claim under section 3729 of the FCA, her investigation of it was not protected activity in furtherance of an action under [section 3730], 31 U.S.C. § 3730(h)that is, an action for a violation of section 3729, id. § 3730(b)(1)so as to support a retaliation claim. Cf. Hamm v. Weyauwega Milk Prods., 332 F.3d 1058, 1066 (7th Cir.2003) (district court properly dismissed Title VII retaliation claim because complaints to employer and state agency amounted to claims of sexual orientation discrimination, not sex discrimination, and therefore did not concern an employment practice that violated Title VII). Relying again on language in Yesudian, Hoyte contends the court should focus on whether Hoyte had a good faith chance of success at the time that she suffered the retaliation. Appellant's Br. 27. In Yesudian the defendants argued that no actionable false claim charge existed at the time of the relator's investigation because there was no evidence that Howard ever re-submitted the allegedly false claims to the Government so as to transform the defendants' fraud on Howard into fraud on the United States as well. Without expressly deciding whether resubmission was necessary, the court concluded that Yesudian's personal knowledge that 80% of Howard's money came from the United States Government afforded a good faith basis for going forward at the time of the retaliation because, [g]iven the information he had about Howard's finances, it would have been reasonable to conclude there was a `distinct possibility' he would find evidence of resubmission of the claims. 153 F.3d at 739-40 (quoting Childree v. UAP/GA AG Chem., Inc., 92 F.3d 1140, 1146 (11th Cir.1996) (requiring distinct possibility of suit), and Neal v. Honeywell Inc., 33 F.3d 860, 864 (7th Cir.1994) (sufficient if litigation was distinct possibility or could be filed legitimately)). As we explained in Yesudian, determining whether the false claims were resubmitted required the kind of information a plaintiff normally cannot acquire until he files a suit and obtains the benefits of court-sanctioned discovery. Id. at 740. We therefore concluded Yesudian's personal knowledge provided the requisite good faith basis at the time of the investigation and retaliation to believe the defendants were defrauding the federal Government. Hoyte, in contrast, regardless of her subjective beliefs, had no objectively reasonable basis to believe that she was `investigating matters that reasonably could lead' to a viable False Claims Act case.' Martin-Baker Aircraft Co., 389 F.3d at 1260 (quoting Yesudian, 153 F.3d at 740); see Lang v. Nw. Univ., 472 F.3d 493, 495 (7th Cir.2006) (What [FCA relator] actually believed is irrelevant, for people believe the most fantastic things in perfect good faith; a kind heart but empty head is not enough. The right question is whether her belief had a reasonable objective basis. . . .). There was not even a distinct possibility that her claim against ARC might become viable before or at trial because under any view of the facts as alleged the claim lacked one of the legal requirements for a reverse false claim charge: the defendant must have an obligation to pay or transmit money or property to the Government, 31 U.S.C. § 3729(a)(7). ARC had no such obligation and no amount of discovery could cure this defect. There being no viable action against ARC under section 3730 for violation of section 3729(a), Hoyte's investigation and reporting of ARC's conduct did not constitute protected activitythat is, `acts done . . . in furtherance of an action under [section 3730],' Yesudian, 153 F.3d at 736 (quoting S.Rep. No. 99-345, at 35 (1986), U.S.Code Cong. & Admin.News 1986 pp. 5266, 5300)  and her subsequent discharge was therefore not unlawful retaliation under section 3730(h). [6] The dissent argues that Hoyte can pursue a retaliation claim even in the absence of a viable reverse FCA claim, relying in part on language culled from the Supreme Court's decision in Graham County Soil & Water Conservation District v. United States ex rel. Wilson, 545 U.S. 409, 125 S.Ct. 2444, 162 L.Ed.2d 390 (2005). Dissent at 70, 71-72, 72, 74. In Graham County, the question before the Supreme Court was whether the correct limitations period for an FCA retaliation claim is the 6-year period prescribed in FCA for [a] civil action under section 3730, 31 U.S.C. § 3731(b)(1), or the period established under the most closely analogous state statute of limitations, 545 U.S. at 422, 125 S.Ct. 2444. The Court held the latter and in the course of its analysis, observed that proving a violation of § 3729 is not an element of a § 3730(h) cause of action and thus, section 3730(h) protects an employee's conduct even if the target of an investigation or action to be filed was innocent, id. at 416 & n. 1, 125 S.Ct. 2444  both points that we made in Yesudian when we upheld the jury's verdict in Yesudian's favor on the whistleblower claim notwithstanding the jury held against him on the underlying qui tam claim. While it is true, as the dissent notes, that `a well-pleaded retaliation complaint need not allege that the defendant submitted a false claim,' Dissent at 74 (quoting Graham County, 545 U.S. at 416, 125 S.Ct. 2444), the complaint must allege that the defendant retaliated against him for engaging in `lawful acts done . . . in furtherance of' an FCA `action filed or to be filed,' Graham County, 545 U.S. at 416, 125 S.Ct. 2444 (quoting 31 U.S.C. § 3730(h) (ellipsis in Graham )), that is, for engaging in protected conduct. Yesudian defines protected conduct as conduct that `reasonably could lead' to a viable False Claims Act case, 153 F.3d at 740, as the Court acknowledged in Graham County, 545 U.S. at 416 n. 1, 125 S.Ct. 2444 (citing Yesudian ). [7] As we have explained, supra pp. 67-69, under Yesudian Hoyte's investigation could not reasonably lead to a viable reverse false claim action under section 3729(a)(7) (so as to support a whistleblower claim under section 3730(h)) because the activity she claims to have been investigating did not constitute an attempt to conceal, avoid, or decrease an obligation to tender money or property to the Government. The plain language of the statute (whether read by a lawyer or layman) requires that there be an obligation to make payment to the Government and ARC had no such obligation, contractual or otherwise. See Dissent at 73-74. It is true, as the dissent asserts, Dissent at 72-73, that the statute does not require in so many words that the investigation be in furtherance of a viable or non-frivolous action. But section 3730(h) does expressly require that the whistleblower's conduct, to be protected, be in furtherance of an action under this section  (emphasis added), that is, in furtherance of an action under section 3730, which in turn requires that the action be for a violation of section 3729 (in this case a violation of section 3729(a)(7)). Thus, to recover for retaliation under section 3730(h), it is not sufficient that the whistleblower further an action under some other statutory scheme or, as here, a non-existent action. In any event, it is the law of this Circuit that the employee must be investigating matters which are calculated, or reasonably could lead, to a viable FCA action. Shekoyan v. Sibley Int'l, 409 F.3d 414, 423 (D.C.Cir. 2005) (quotation omitted); see also Martin-Baker Aircraft Co., 389 F.3d at 1260; Yesudian, 153 F.3d at 740. And a frivolous action is by definition not a viable one. See Brandon v. D.C. Bd. of Parole, 734 F.2d 56, 59 (D.C.Cir.1984) ([I]f the complaint is viable it cannot be deemed frivolous.). Because there was no viable FCA action here, the district court properly dismissed Count II. For the foregoing reasons, we affirm the district court's judgment dismissing Hoyte's complaint. So ordered.