Court Opinion

ID: 2804396
Source: CourtListenerOpinion
Date Created: 2015-05-29 15:02:38.464975+00
Date Added: 2024-06-11T11:49:33.261584
License: Public Domain

United States Court of Appeals
                          For the Eighth Circuit
                      ___________________________

                              No. 14-1649
                      ___________________________

                                  Martin Schell

                      lllllllllllllllllllllRelator - Appellant

               United States of America, ex rel Martin Schell

                            lllllllllllllllllllll Plaintiff

                                          v.

               Bluebird Media, LLC; Bluebird Network, LLC

                   lllllllllllllllllllll Defendants - Appellees
                                    ____________

                   Appeal from United States District Court
             for the Western District of Missouri - Jefferson City
                               ____________

                         Submitted: January 14, 2015
                            Filed: May 29, 2015
                              ____________

Before SMITH, BENTON, and SHEPHERD, Circuit Judges.
                           ____________

SHEPHERD, Circuit Judge.
       Martin Schell filed a qui tam suit against Bluebird Media and Bluebird
Network under the False Claims Act, 31 U.S.C. §§ 3729-3733, alleging Bluebird1
made false statements to the government to secure a grant and retaliated against
Schell, a former Bluebird employee, for reporting fraudulent or illegal conduct. The
district court2 granted summary judgment in Bluebird’s favor on all of Schell’s
claims. Schell now appeals, challenging the court’s grant of summary judgment and
two earlier orders denying Schell’s motion to modify the scheduling order and motion
for an extension of time to respond to Bluebird’s motion for summary judgment. We
lack jurisdiction to address Schell’s challenges to the two earlier orders because he
did not indicate his intent to appeal those decisions in his notice of appeal. We affirm
the district court’s grant of summary judgment on all other claims.

                                    I. Background

      In March 2010, Bluebird Media submitted an application for a three-year grant
from the National Telecommunications and Information Administration (“NTIA”) of
the United States Department of Commerce for the purpose of increasing broadband
accessibility in northern Missouri. NTIA awarded Bluebird Media the grant in July
2010. In January 2011, Bluebird Media informed NTIA of its intent to enter a joint
venture with Missouri Network Alliance (“MNA”). The two companies created and
co-owned a new company, Bluebird Network,3 which NTIA approved as a sub-

      1
       Bluebird Media and Bluebird Network are noted separately where necessary
and otherwise referred to jointly as “Bluebird.”
      2
      The Honorable Nanette K. Laughrey, United States District Judge for the
Western District of Missouri.
      3
      Bluebird Media owned 51% of Bluebird Network and MNA created a holding
company, MNA Holdings, which owned 49% of Bluebird Network. Bluebird
Network established a wholly owned subsidiary, Bluebird Media Network, which
became the sub-recipient of the grant.

                                          -2-
recipient for the grant’s continued administration through the end of the grant period.
Bluebird Network was managed by a Board consisting of five individuals selected by
Bluebird Media and five individuals selected by MNA.

       The grant required Bluebird to provide matching funds for more than $19
million in project-related costs, which could be in the form of cash or in-kind
contributions from non-federal sources. In its grant application, Bluebird provided
a project budget that identified a number of potential sources for the matching funds,
including $10 million from Advantage Capital Partners, $9.158 million from Boone
County National Bank, and a $10.5 million in-kind contribution from the State of
Missouri (“the State”). Bluebird ultimately met its match requirements through the
in-kind contribution and cash and financing obtained from the joint venture with
MNA. The application noted the State would provide discounted rights-of-way along
state properties and convey parcels of land so Bluebird could lay fiber optic cables
and operate facilities, and the State would receive heavily discounted bandwidth rates
in exchange. All three potential funding sources provided letters in support of
Bluebird’s application. The application stated the project would serve underserved
areas of northern Missouri, including a number of “community anchor institutions,”
such as schools, libraries, and healthcare providers. The application did not name
specific institutions that would be served. Bluebird’s due diligence documents
included a letter stating Bluebird Media would be solely responsible for the
management of the proposed project. The letter also stated that GlenMartin, Inc., a
company owned by two Bluebird owners, Chris and Tatum Martin, would have no
role in the management of Bluebird Media and would only be associated with
Bluebird Media as a potential subcontractor.

      Schell began working for Bluebird Media in October 2010 and became Vice
President of Operations of Bluebird Network in June 2011. Schell reported to Eric
Fogle, who served as Bluebird’s CEO from August 2010 to December 2011, when
Fogle was terminated. Fogle instructed Schell to complete various assignments

                                         -3-
related to the grant, including analyzing the value of the State’s in-kind contribution
and the cost of the services Bluebird provided to the State. During his tenure as Vice
President of Operations, Schell expressed various concerns to Fogle about Bluebird’s
ability to meet its obligations under the grant, including the viability of the Boone
funding, Chris and Tatum Martin’s involvement in Bluebird’s management,
Bluebird’s ability to quote or provide service in MNA service areas, and the validity
of the State in-kind match arrangement. Schell also suggested more cost-effective
means for obtaining the rights-of-way the State offered to provide. Fogle informed
the Board that Schell questioned the validity of the in-kind match arrangement and
suggested more cost-effective means of securing rights-of-way, and Schell stated that
he believed his other concerns were known to the Board, based on his knowledge of
Bluebird’s communication and corporate structure. In October 2011, Bluebird
terminated Schell’s employment, informing him they were eliminating the position
of Vice President of Operations. At Schell’s request, Bluebird provided him a service
letter, pursuant to Missouri Revised Statute § 290.140, that stated Schell was
terminated because his position was eliminated.

       Schell filed a qui tam complaint under seal in January 2012. The government
declined to intervene, and Schell’s complaint was unsealed and served on Bluebird
in February 2013. Schell raised three claims against Bluebird: (1) fraud against the
United States, pursuant to 31 U.S.C. § 3729; (2) retaliation, pursuant to 31 U.S.C.
§ 3730(b); and (3) violation of the Missouri service letter statute, Mo. Rev. Stat.
§ 290.140. In Count 1, relevant to this appeal, Schell alleged Bluebird knowingly
made false statements to NTIA in its grant application by: (1) asserting Boone could
provide certain matching funds, even though Bluebird and Boone knew Boone did
not intend to provide this funding; (2) falsely classifying the exchange with the State
as an “in-kind contribution” when Bluebird actually exchanged rate discounts for the
rights-of-way and parcels of land it received; (3) promising Chris and Tatum Martin
would not manage Bluebird’s participation in the grant, when in fact they did manage
Bluebird’s participation and used it to engage in self-dealing with GlenMartin; and

                                         -4-
(4) knowingly allowing the purpose of the grant network to be redirected from
providing service to specified community anchor institutions to providing connection
and backhaul services to wireless communication towers and cellular companies once
MNA took effective control of the grant project.4 In Count 2, Schell alleged he was
terminated as a result of his complaints to Fogle about Bluebird’s fraudulent and
illegal behavior. In Count 3, Schell alleged Bluebird gave a false reason for his
termination in the service letter they provided, stating his position was eliminated
when in fact he was terminated in retaliation for his complaints.

       The district court granted Bluebird’s motion for summary judgment on all
counts. On Count 1, the court found Schell failed to present submissible evidence
showing Bluebird made false statements to NTIA in its grant application. On Count
2, the court found Schell did not put forward evidence showing that he engaged in
protected activity or that Bluebird’s board knew about his complaints when they
terminated him. On Count 3, the court found no reasonable juror could conclude the
service letter Bluebird provided was false. Schell now appeals, arguing genuine
issues of material fact precluded the district court from granting summary judgment.

      4
       Schell also claimed that Bluebird knowingly made a false statement in telling
NTIA that the area they intended to serve was underserved in terms of broadband
access even though they knew it was not, an argument the district court rejected.
Schell has not meaningfully briefed a challenge to the court’s ruling on this point and
thus has waived it on appeal. See Rotskoff v. Cooley, 438 F.3d 852, 854 (8th Cir.
2006) (appellant’s failure to develop an issue in his brief, as required by rules of
appellate procedure, constitutes abandonment of the issue on appeal).

                                         -5-
                                     II. Discussion

                    A. Motions to Modify and for an Extension

        In his brief, Schell argued the district court erred in denying two motions he
filed, a motion to modify the scheduling order and a motion for an extension of time
to respond to Bluebird’s motion for summary judgment. We lack jurisdiction to
consider these arguments. Schell’s notice of appeal indicated he was appealing from
the district court’s final order, its grant of summary judgment, and did not indicate his
intent to appeal earlier orders. Federal Rule of Appellate Procedure 3 requires that
the notice of appeal specify, among other things, “the judgment, order, or part thereof
being appealed.” Fed. R. App. P. 3(c)(1)(B). “Although we traditionally construe
notices of appeal liberally . . . an intent to appeal the judgment in question must be
apparent and there must be no prejudice to the adverse party.” Berdella v. Delo, 972
F.2d 204, 207 (8th Cir. 1992). If an appellant fails to provide proper notice of his
intent to appeal an order or judgment, we lack jurisdiction to review it. Trustees of
Electricians’ Salary Deferral Plan v. Wright, 688 F.3d 922, 925 n.2 (8th Cir. 2012).

       In this case, Schell’s intent to appeal the district court’s earlier orders was not
apparent. Schell points to a statement of issues he filed after the time period for
appeal had passed, which indicated his intent to appeal the denial of the motion to
modify the scheduling order, and asks us to treat it as an appeal information form for
the purposes of curing his deficient notice of appeal. See Hallquist v. United Home
Loans, Inc., 715 F.3d 1040, 1045 (8th Cir. 2013) (“‘[E]ven when the notice of appeal
is deficient, jurisdiction may be established by a properly filed appeal information
form . . . which indicates the appellant’s intent to appeal a particular order.’” (quoting
USCOC of Greater Mo. v. City of Ferguson, Mo., 583 F.3d 1035, 1040 (8th Cir.
2009))). Even if we were to do so, it would not help Schell in this case, as he filed
his statement of issues after the time period for appeal had elapsed. See Wright, 688
F.3d at 925 n.2 (“In order for Form A [the appeal information form] to be considered

                                           -6-
part of the notice of appeal, it must be filed within the time constraints for the notice
of appeal.”). As Schell did not give proper notice of his intent to appeal these orders,
we lack jurisdiction to review them.

                                   B. False Claims

       We review the district court’s grant of summary judgment de novo, evaluating
“whether the record, viewed in a light most favorable to the non-moving party, shows
that there is no genuine issue of material fact and that the moving party is entitled to
judgment as a matter of law.” Rabushka ex rel. United States v. Crane Co., 122 F.3d
559, 562 (8th Cir. 1997); see also Fed. R. Civ. P. 56(a).

       The False Claims Act (FCA) imposes liability on those who knowingly make
false or fraudulent claims that cause the government to pay money. See In re Baycol
Prods. Litig., 732 F.3d 869, 874 (8th Cir. 2013). It applies to a person who
“knowingly presents, or causes to be presented, a false or fraudulent claim for
payment or approval” or “knowingly makes, uses, or causes to be made or used, a
false record or statement material to a false or fraudulent claim,” among other actions.
31 U.S.C. § 3729(a)(1)(A)-(B). “Summary judgment is appropriate if the plaintiff
lacks sufficient evidence to show that any false or fraudulent claims have been
made.” Rabushka, 122 F.3d at 563.

       Schell argues that Bluebird made false statements in their grant application that
were material to NTIA’s decision to award Bluebird the grant. In identifying
Bluebird’s alleged false claims, Schell argues that “[t]wo different analyses
potentially apply to these facts” because “the grant was implemented in a manner that,
in several regards, was substantially different from the grant application that had been
previously submitted to, and approved by, the NTIA.” Schell’s proposed analyses are
that: (1) the grant application itself was a false claim because it contained false
statements, or (2) Bluebird fraudulently induced NTIA to award the grant by making

                                          -7-
false statements in their grant application, thus making all subsequent requests for
payment actionable false claims. Bluebird argues that Schell has waived the
fraudulent inducement theory because he raised it for the first time on appeal and that,
regardless of which analysis is applied, Schell’s claim fails because he has not shown
Bluebird knowingly made any false statements in its initial grant application. We
agree that, viewing the evidence in Schell’s favor, he has failed to present evidence
that raises a genuine issue as to whether Bluebird made false statements in their grant
application, and thus his claim fails under either analysis.

       The district court thoroughly discussed each of the statements Schell claimed
were false, and we add only brief comments to that discussion. Schell appeals the
district court’s findings on Bluebird’s statements in five areas. First, Schell alleges
that Bluebird promised to serve community anchor institutions throughout northern
Missouri and violated that promise by redlining areas where MNA was already
present, i.e., choosing not to compete or provide service in those areas. Second,
Schell alleges that Bluebird identified Boone as the source of $9.158 million in
funding but knew all along that Boone was not a viable funding source. Third, Schell
alleges Bluebird misrepresented the nature of the contribution it received from the
State, arguing that a contribution should not be considered “in-kind” if it involves
reciprocal exchange of services and that the valuation of the agreement was flawed.
Fourth, Schell alleged that Bluebird promised to maintain control of the grant
throughout its implementation but broke that promise by merging with MNA and
effectively ceding control and management of the grant by giving MNA 5 of the 10
Bluebird Network board positions. Finally, Schell claims Bluebird broke its promise
that Chris and Tatum Martin and their company, GlenMartin, would not be involved
in the management and implementation of the grant by allowing them to be heavily
involved in the operations of Bluebird Media.5

      5
      The promise in question, stemming from a letter signed by Bluebird Media’s
managing member, stated that GlenMartin would have no role in the management of

                                          -8-
        The evidence presented shows Bluebird made some changes as it executed the
grant. Mere evidence of these changes, without more, does not prove Bluebird’s
initial statements were false. The grant application did not contain a specific list of
community anchor institutions that would be served, and after the grant was awarded,
Bluebird communicated with and received approval from NTIA on the route and
specific institutions it would serve. Bluebird’s grant application identified proposed
funding options it was negotiating, and NTIA approved the full financing Bluebird
eventually secured. The grant application made clear that Bluebird intended to offer
the State discounted bandwidth rates in exchange for its in-kind contribution, and
once Bluebird finalized negotiations with the State, NTIA approved the contribution.
Schell provides no authority suggesting the exchange of services invalidated the in-
kind contribution, which necessarily means he fails to provide authority suggesting
that Bluebird knew or should have known the contribution was invalid because it
involved exchange of services. Bluebird Media informed NTIA of its intent to join
with MNA, and NTIA approved that change and continued to administer the grant
with Bluebird Network. Schell provides no authority for the proposition that
Bluebird Media ceded control of the grant when it proceeded with a joint venture, the
terms of which NTIA knew and approved. And even if he had, he presents no
evidence suggesting Bluebird intended to pursue that course when it submitted the
grant application. Schell’s claim that Bluebird misrepresented GlenMartin’s
management of the project fails for the same reason: not only does he fail to offer
sufficient evidence showing Bluebird actually violated its promise, but he also offers
no evidence that Bluebird intended to do something other than what it promised in
the grant application.6

Bluebird Media. The letter did not mention Chris and Tatum Martin, whose
involvement in the project was evident throughout the grant application.
      6
       Schell also appeals two evidentiary decisions the district court made, arguing
the court failed to consider evidence that would have supported his claims. First, he
challenges the district court’s decision that a statement by Eric Fogle—claiming that

                                         -9-
       Schell does not show that Bluebird knew these changes would be necessary and
obscured the true information or otherwise presented their grant application with the
mens rea the FCA requires.7 Cf. United States ex rel. Costner v. United States, 317
F.3d 883, 888 (8th Cir. 2003) (“A contractor that is open with the government
regarding problems and limitations and engages in a cooperative effort with the
government to find a solution lacks the intent required by the Act.”); United States
ex rel. Lamers v. City of Green Bay, 168 F.3d 1013, 1018 (7th Cir. 1999) (where a
relator claims the presentment made to the government was a defendant’s false
promise of future compliance, the relator must show the promise was false when
made, meaning the defendant did not intend to comply). The district court properly
granted summary judgment on Schell’s claim because he failed to present evidence
of a false claim within the meaning of the FCA.

another Bluebird executive, Chris Bach, told him well after the grant application was
submitted that Boone was not a legitimate source of funds—was inadmissible
hearsay. Schell argues the statement was admissible as an opposing party statement,
but we find the point irrelevant. Bach’s statement says nothing about Bluebird’s
understanding of the viability of the Boone funding when they submitted the grant
application. Schell also claims the court erred in refusing to consider Fogle’s
testimony that GlenMartin bought and managed domain rights affiliated with
Bluebird Media’s email system. While the court did note that Fogle failed to show
personal knowledge of this information, it still analyzed the testimony and concluded
Schell’s evidence was insufficient. Thus we do not find the court refused to consider
this testimony and need not address Schell’s argument against exclusion.
      7
        Schell argues NTIA’s knowledge does not constitute a defense to Bluebird’s
false statements because the false statements were made before the government had
knowledge of the true information. See United States ex rel. Costner v. United States,
317 F.3d 883, 887 (8th Cir. 2003) (“‘[I]f the government knows and approves of the
particulars of a claim for payment before that claim is presented, the presenter cannot
be said to have knowingly presented a fraudulent or false claim.’” (alteration in
original) (quoting United States ex rel. Becker v. Westinghouse Savannah River Co.,
305 F.3d 284, 289 (4th Cir. 2002))). This point is irrelevant as Schell cannot prove
Bluebird made any false statements it needed to correct.

                                         -10-
                                 C. FCA Retaliation

      Schell filed an FCA retaliation claim pursuant to 31 U.S.C. § 3730(h), alleging
Bluebird terminated him for engaging in protected conduct. Bluebird contests that
Schell engaged in any protected activity and argues that, even if he had, he failed to
present any evidence that the decision makers who terminated him—Bluebird’s
board—knew he engaged in protected activity.

        “The FCA whistleblower statute protects employees who are ‘discharged . . .
because of lawful acts done by the employee . . . in furtherance of [a civil action for
false claims].’” Schuhardt v. Washington Univ., 390 F.3d 563, 566 (8th Cir. 2004)
(alterations in original) (quoting 31 U.S.C. § 3730(h)). To prove retaliation under the
FCA, “a plaintiff must prove that (1) the plaintiff was engaged in conduct protected
by the FCA; (2) the plaintiff’s employer knew that the plaintiff engaged in the
protected activity; (3) the employer retaliated against the plaintiff; and (4) the
retaliation was motivated solely by the plaintiff’s protected activity.” Id. To
constitute protected activity, an employee’s conduct must satisfy two conditions:
(1) it “must have been in furtherance of an FCA action” and (2) it “must be aimed at
matters which are calculated, or reasonably could lead, to a viable FCA action,”
meaning “‘the employee in good faith believes, and . . . a reasonable employee in the
same or similar circumstances might believe, that the employer is possibly
committing fraud against the government.’” Id. at 567 (quoting Wilkins v. St. Louis
Hous. Auth., 314 F.3d 927, 933 (8th Cir. 2002)).

        Eric Fogle, who served as Schell’s supervisor and the CEO of Bluebird during
Schell’s tenure there, claimed that Bluebird’s board instructed him to terminate Schell
but initially did not give a reason for the termination. Fogle warned the Board that
terminating a vice president without a reason could expose the company to legal
liability, so the Board asked him to “hold off” on any termination action.
Approximately two weeks later, the Board instructed Fogle to terminate Schell and

                                         -11-
inform him that his position had been eliminated. Fogle claimed the Board did not
discuss potential cost savings from Schell’s termination, but he also said he was not
included in conversations about the termination, and he did not indicate Schell was
terminated in retaliation for his complaints. Schell alleges he was terminated because
he voiced concerns about Bluebird’s conduct in administering the grant. Fogle told
the Board that Schell questioned the validity of the State’s in-kind contribution and
had suggested a more cost-effective means of obtaining the rights-of-way. Schell
spoke to Fogle about his other complaints but does not provide any evidence
indicating these complaints were shared with the Board, stating only that “[u]pon
knowledge and belief about the communication and corporate structure of BN
[Bluebird Network], my concerns were known to BN’s Board.”

       We note first that, even if Schell’s complaints constituted protected activity,
his assumption that Fogle shared the bulk of his concerns with the Board is
insufficient evidence of the Board’s knowledge at the summary judgment stage. See
Camfield Tires, Inc. v. Michelin Tire Corp., 719 F.2d 1361, 1367 (8th Cir. 1983)
(“Under Rule 56(e), an affidavit filed in support of or opposition to a summary
judgment motion must be based upon the personal knowledge of the affiant;
information and belief is insufficient.”). Schell only provided submissible evidence
of the Board’s knowledge of his complaints about the State’s in-kind contribution.
Schell claims he questioned the validity of the exchange of bandwidth discounts for
rights-of-way, offered a more cost-effective means of obtaining the rights-of-way, and
complained that the State was not honoring its agreement to provide a full $10.5
million dollar contribution. Schell’s job was to analyze the value of the in-kind
contribution and Bluebird’s reciprocal services. His complaints are evidence he was
doing his job, but they do not show Schell believed or had reason to believe Bluebird
had made a false or fraudulent claim to NTIA, nor do they show he alerted Bluebird
to fraudulent or illegal activity. Compare Green v. City of St. Louis, Mo., 507 F.3d
662, 667-68 (8th Cir. 2007) (affirming summary judgment on plaintiff’s FCA
retaliation claim where he complained about the advisability of internal policies,

                                        -12-
claiming they created a high probability of flawed reports and an inferior work
product, but did not have reason to believe his employer was making false or
fraudulent claims), with Schuhardt, 390 F.3d at 567 (reversing summary judgment on
plaintiff’s FCA retaliation claim where plaintiff complained to her supervisor that
billing practices were illegal and fraudulent and took actions outside of her regular
job duties to investigate and expose the fraud). The district court properly granted
summary judgment on Schell’s retaliation claim because Schell has failed to offer
sufficient evidence from which a reasonable jury could find any of the elements
required for a finding of FCA retaliation.

                          D. Missouri Service Letter Statute

        Finally, Schell claims the district court erred in granting summary judgment on
his Missouri service letter claim.8 Schell argues Bluebird violated the Missouri
service letter statute, Missouri Revised Statute § 290.140, by issuing him a service
letter that stated a false reason for his termination. The statute requires employers,
in certain circumstances, to provide a letter on the employee’s request “setting forth
the nature and character of service rendered by such employee to such corporation
and the duration thereof, and truly stating for what cause, if any, such employee was
discharged or voluntarily quit such service.” Mo. Rev. Stat. § 290.140.1.

        As Schell conceded that Bluebird provided a letter and that he never provided
that letter to prospective employers, he could only recover nominal damages, and only
if he presented sufficient evidence to show that the service letter did not state the true

      8
         Bluebird argues Schell waived this claim by failing to address it in his
opposition to their motion for summary judgment. Schell did fail to address the claim
in the argument section of his opposition, but he referenced it in his response to
Bluebird’s statement of uncontroverted material facts, and the district court analyzed
it and granted summary judgment. We do not need to decide if the claim was waived
as it clearly fails on the merits.

                                          -13-
reason he was terminated. See Callantine v. Staff Builders, Inc., 271 F.3d 1124, 1132
(8th Cir. 2001) (nominal damages are available even without proof of actual damages,
and punitive damages are only available if the employee shows the employer acted
with malice in failing to respond to a service letter request); Herberholt v. dePaul
Cmty. Health Ctr., 625 S.W.2d 617, 621-24 (Mo. banc 1981) (while actual damages
require a showing that plaintiff lost an employment opportunity because of an
improper service letter, nominal damages are available if plaintiff shows his service
letter did not state the true reason for his discharge). Schell’s service letter stated he
was terminated because his position was eliminated. Schell asserts he was terminated
in retaliation for his protected activity, relying on the same evidence that was
insufficient to prove his FCA retaliation claim. He relies primarily on Fogle’s
account, but Fogle never stated Schell’s termination was in any way related to his
complaints; rather Fogle testified the Board initially instructed him to terminate
Schell without cause and then later instructed him to do so because the position was
being eliminated. And while Schell contends that his position was essential to the
success of the company, the evidence shows Bluebird has never reinstated the Vice
President of Operations’ position after Schell’s termination. As Schell has failed to
raise any genuine issue as to whether his service letter stated a false reason for his
termination, we affirm the district court’s grant of summary judgment on this claim.

                                    III. Conclusion

       We lack jurisdiction to address Schell’s challenges to the district court’s orders
denying his motion to modify the scheduling order and motion for an extension of
time to respond to Bluebird’s motion for summary judgment. We affirm the district
court’s grant of summary judgment on all other claims.
                        ______________________________

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