Court Opinion

ID: 3219422
Source: CourtListenerOpinion
Date Created: 2016-07-01 17:00:51.288168+00
Date Added: 2024-06-11T14:30:52.895819
License: Public Domain

UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT

                             No. 15-1124

SHAREL FARMER,

                 Plaintiff - Appellant,

           v.

EAGLE SYSTEMS AND SERVICES, INCORPORATED; DATA SOLUTIONS &
TECHNOLOGY (DST), INC.,

                 Defendants - Appellees.

Appeal from the United States District Court for the Eastern
District of North Carolina, at Raleigh. W. Earl Britt, Senior
District Judge. (5:14-cv-00403-BR)

Argued:   March 22, 2016                   Decided:   July 1, 2016

Before WYNN and DIAZ, Circuit Judges, and DAVIS, Senior Circuit
Judge.

Affirmed by unpublished opinion. Judge Wynn wrote the opinion,
in which Judge Diaz and Senior Judge Davis joined.

ARGUED: Ralph Thomas Bryant, Jr., Newport, North Carolina, for
Appellant.   Justin N. Davis, MULLEN HOLLAND & COOPER, P.A.,
Gastonia, North Carolina; Jang Hwan Jo, SMITH, ANDERSON, BLOUNT,
DORSETT, MITCHELL & JERNIGAN, L.L.P., Raleigh, North Carolina,
for Appellees. ON BRIEF: Mario White, Clinton, North Carolina,
for Appellant. Kerry A. Shad, SMITH, ANDERSON, BLOUNT, DORSETT,
MITCHELL & JERNIGAN, L.L.P., Raleigh, North Carolina, for
Appellee Eagle Systems and Services, Incorporated; Nancy B.
Paschall, MULLEN HOLLAND & COOPER, P.A., Gastonia, North
Carolina, for Appellee Data Solutions & Technology (DST), Inc.

Unpublished opinions are not binding precedent in this circuit.

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WYNN, Circuit Judge:

      Plaintiff Sharell 1 Farmer contends that he engaged in an

activity      protected      by    the    anti-retaliation          provision         of    the

False     Claims    Act    (FCA)    when,       in      the   course    of    an     internal

investigation,        he    reported       a        single    incident       of     theft    of

government property from a warehouse operated by his employers.

Because Farmer’s report of theft was neither “in furtherance of

an   action    under”      the    FCA    nor       an   “effort[]      to    stop”    an    FCA

violation, 31 U.S.C. § 3730(h)(1), we affirm.

                                               I.

      Farmer       was     employed      by        Defendants    Eagle        Systems       and

Services, Inc. (Eagle Systems) and Data Solutions & Technology,

Inc. (DST) under a joint contract, and he was supervised by DST. 2

Defendants      are       federal       government        contractors         who     jointly

operate a supply warehouse.

      In August 2012, Farmer witnessed warehouse supervisor Keith

Armstrong and his assistant steal government-owned night vision

goggles and convey them to a third person.                       A few days later, at

      1 According to counsel, Mr. Farmer’s first name is
“Sharell.”    The first name was initially misspelled in the
complaint, and an amended complaint was filed specifically to
correct the error.   The lower court docket was never corrected
to reflect the change, however.
     2  We accept the facts Farmer alleged in his amended
complaint as true and draw reasonable inferences in his favor in
reviewing this dismissal for failure to state a claim. See E.I.
du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435,
440 (4th Cir. 2011).

                                               3
the request of Eagle Systems Project Manager Roy Fischel, Farmer

wrote a statement reporting the theft he had witnessed.                                     After

receiving the report, Fischel disclosed Armstrong—the supervisor

who had committed the theft—the contents of the report and that

Farmer had authored it.

       From    then     until       the    day     Farmer    left   his    employment,         he

suffered       “persistent        and      numerous       incidences      of   retaliation,

ridicule, threats, intimidation and harassment.”                               J.A. 5.        His

supervisors isolated him from all other employees, stared at him

threateningly, and issued numerous disciplinary write-ups to him

“for       frivolous    and     baseless         reasons.”       J.A.     6–7.        Although

Farmer       tried     to   get     help     from     the     Eagle     Systems       and     DST

management       teams      regarding         the     mistreatment,         they      did     not

intervene      to    stop     it.         Farmer     eventually     found      this    working

environment unbearable and left his job in April 2013.

       In    July    2014,     Farmer       filed     a     complaint     alleging,         inter

alia, that Defendants violated the anti-retaliation provision of

the FCA. 3      Defendants filed motions to dismiss under Federal Rule

       3
       Farmer also brought a claim for breach of non-delegable
duty under North Carolina common law, a negligence claim under
North Carolina common law, and a North Carolina civil conspiracy
claim. Farmer consented below to the dismissal of the breach of
non-delegable duty claim.    On appeal, we affirm the district
court’s dismissal of Farmer’s negligence claim because Farmer
has not cited, and we are not aware of, any North Carolina case
articulating a duty to keep an employee’s identity confidential
during internal investigations—the conduct undergirding this

                                                 4
of Civil Procedure 12(b)(6).      The district court granted the

motions and dismissed Farmer’s claims, mainly on the ground that

the reported theft was not a protected activity under the FCA’s

anti-retaliation provision.   Farmer timely appealed.

                                 II.

     We review a district court’s dismissal for failure to state

a claim de novo.   U.S. ex rel. Rostholder v. Omnicare, Inc., 745

F.3d 694, 700 (4th Cir. 2014).    “To survive a motion to dismiss,

a complaint must contain sufficient factual matter, accepted as

true, to ‘state a claim to relief that is plausible on its

face.’”   Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). 4

claim in Farmer’s complaint.    Moreover, the duty of reasonable
care generally applies when an individual’s conduct creates a
risk of “injury to the person or property of the other,” which
cannot be inferred here.     See Estate of Mullis by Dixon v.
Monroe Oil Co., 505 S.E.2d 131, 137 (N.C. 1998) (quoting Dail v.
Taylor, 66 S.E. 135, 136 (N.C. 1909)); see also Restatement
(Third) of Torts: Phys. & Emot. Harm § 7(a) (“An actor
ordinarily has a duty to exercise reasonable care when the
actor’s conduct creates a risk of physical harm.” (emphasis
added)).    We also affirm the district court’s dismissal of
Farmer’s civil conspiracy claim because, as Farmer concedes,
North Carolina law does not recognize such a claim as an
independent cause of action, see Toomer v. Garrett, 574 S.E.2d
76, 92 (N.C. Ct. App. 2002), and Farmer’s civil conspiracy claim
thus rises and falls with his FCA claim.
     4  To state a claim under the FCA’s anti-retaliation
provision, a plaintiff need only satisfy the notice-pleading
standard under Rule 8(a) of the Federal Rules of Civil
Procedure, not the heightened pleading standard of Rule 9(b).

                                  5
       Congress passed the FCA to discourage fraud against the

federal government by contractors.                     See Glynn v. EDO Corp., 710

F.3d   209,    213    (4th    Cir.       2013).        To    that      end,     the      statute

includes        an         anti-retaliation             provision             to         protect

whistleblowers.             Id.    at        214.       That       provision           prohibits

retaliation against “lawful acts done . . . in furtherance of an

action”    under     the    FCA,       and    thanks    to    a    2009    amendment,         the

provision     also    protects          “other      efforts       to     stop      1    or   more

violations of” the FCA.                 31 U.S.C. § 3730(h)(1); see Young v.

CHS Middle E., LLC, 611 F. App’x 130, 132–3 (4th Cir. 2015)

(unpublished).        To     bring      a    successful       claim       under        the   anti-

retaliation     provision,         a    plaintiff      must       show    three        elements:

“(1) he engaged in protected activity, (2) the employer knew

about the activity, and (3) the employer took adverse action

against him as a result.”                    Smith v. Clark/Smoot/Russell, 796

F.3d 424, 433 (4th Cir. 2015).

       At the heart of this appeal is the “protected activity”

element.      This Court has held that an act is protected under the

FCA when it “reasonably could lead to a viable FCA action.”

Mann v. Heckler & Koch Def., Inc., 630 F.3d 338, 344 (4th Cir.

2010) (quoting Eberhardt v. Integrated Design & Constr., Inc.,

See Smith v. Clark/Smoot/Russell, 796 F.3d 424, 433 (4th Cir.
2015).

                                               6
167 F.3d 861, 869 (4th Cir. 1999)).                   Although this Court has not

yet articulated the precise scope of FCA-protected activity in

light of the 2009 “efforts to stop” amendment, see Smith, 796

F.3d at 434, 5 it is unnecessary to do so here.                          It is clear that

a   single     report   of     theft,       without       any    facts        suggesting        an

underlying fraud, is not plausibly an act “in furtherance of an

action under” the FCA or an “effort[] to stop” an FCA violation.

31 U.S.C. § 3730(h)(1).

      Farmer does not argue, nor could he, that the underlying

theft     he   reported      was     an     FCA     violation.            See      31        U.S.C.

§ 3729(a)(1).         However, Farmer invites us to consider how his

report    of   the    theft     might       have    indirectly          prevented            future

fraudulent deliveries to the government.                         While the speculative

connection     Farmer     seeks      to   draw      between       his    report,          tighter

inventory      controls,       and    the    eventual       prevention             of    an    FCA

violation      is    perhaps    possible,          Farmer       has    alleged          no    facts

making that attenuated connection plausible.                              See Iqbal, 556

U.S. at 678.        In fact, Farmer’s complaint indicates only that an

Eagle     Systems     manager        required       him     to        write    a        statement

      5Circuit courts have adopted different approaches to the
“protected activity” element in light of the 2009 amendment.
Compare Schell v. Bluebird Media, LLC, 787 F.3d 1179, 1187 (8th
Cir. 2015) (applying the same pre-2009 protected activity test),
with Halasa v. ITT Educ. Servs., Inc., 690 F.3d 844, 847–48 (7th
Cir. 2012) (suggesting that the amended FCA anti-retaliation
provision adds a new category of protected activities).

                                             7
reporting the theft and that he complied.      The complaint does

not allege facts that can plausibly demonstrate that he acted

“in furtherance of an action under” the FCA or undertook any

“efforts to stop” an FCA violation.   31 U.S.C. § 3730(h)(1).

                              III.

     Even accepting all alleged facts as true and drawing all

reasonable inferences in Farmer’s favor, we cannot conclude that

Farmer’s activity here was protected by the FCA.    Therefore, we

affirm the judgment.

                                                          AFFIRMED

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