Court Opinion

ID: 2674030
Source: CourtListenerOpinion
Date Created: 2014-05-14 00:01:47.38885+00
Date Added: 2024-06-11T12:57:51.866972
License: Public Domain

UNITED STATES DISTRICT COURT
                            FOR THE DISTRICT OF COLUMBIA

                                                 )
UNITED STATES OF AMERICA ex rel.                 )
EMIL IVANOV,                                     )
                                                 )
               Plaintiff,                        )
                                                 )
       v.                                        )   Civil Action No. 10-1619 (RCL)
                                                 )
EXELIS, INC.,                                    )
                                                 )
              Defendant.                         )
                                                 )

                                 MEMORANDUM OPINION

       Before the Court is defendant Exelis, Inc.’s motion [39] to dismiss relator Ivanov’s first

amended complaint. After having considered the motion, the opposition and reply thereto, and

the record herein, the Court has granted Exelis’s motion to dismiss.

I.     Background

       Relator Ivanov worked as a test engineer for defendant Exelis, Inc. from 2007 until Exelis

terminated his employment in 2010. He was assigned to work on the SBS Contract, a best-

efforts contract Exelis had with the Federal Aviation Administration “for the development,

testing, installation, and deployment of the ground-based system for the United States’ new air

traffic control system.” Def.’s Mot. 1. Alleging fraudulent testing in his 127-page Complaint,

Ivanov brought this action under the False Claims Act (FCA). Exelis sought dismissal of his

first amended complaint.

II.    Legal Standard

       a. Rule 12(b)(6)

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       To survive a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), “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, 129 S. Ct. 1937, 1948 (2009) (quoting Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 570 (2007)). A plaintiff must furnish “more than labels and

conclusions” or “a formulaic recitation of the elements of a cause of action.” Bell Atl. Corp. v.

Twombly, 550 U.S. at 555. Instead, the complaint’s “[f]actual allegations must be enough to raise

a right to relief above the speculative level, on the assumption that all the allegations in the

complaint are true (even if doubtful in fact).” Id. (internal citations omitted).

       b. Rule 9(b)

       Federal Rule of Civil Procedure 9(b) applies to FCA actions. United States v. Toyobo

Co., Ltd., 811 F. Supp. 2d 37, 44 (D.D.C. 2011) (citing United States ex rel. Totten v.

Bombardier Corp., 286 F.3d 542, 551-52 (D.C. Cir. 2002)). An FCA plaintiff “must state with

particularity the circumstances surrounding the defendants’ allegedly false claims, as required by

Rule 9(b) of the Federal Rules of Civil Procedure. He must also aver that the defendants actually

submitted false demands for payment, rather than merely non-conforming goods.” Totten, 286
F.3d at 544. The “time, place, and contents of the false representations” must be pleaded with

specificity, as these are the “elements of fraud about which the rule is chiefly concerned.” Id.

(citing 5 Charles Alan Wright & Arthur Miller, Federal Practice and Procedure § 1297 (2d ed.

1990); accord United States v. Kellogg Brown & Root Sevs., Inc. (“KBR”), 800 F. Supp. 2d 143,

152 (D.D.C 2011) (“the pleader must state the time, place and content of the false

misrepresentations, the fact misrepresented and what was retained or given up as a consequence

of the fraud.”) (internal quotations and citations omitted).

       c. FCA Retaliation Claims

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       The FCA’s whistleblower protection provision entitles an employee who, inter alia, is

discharged or discriminated against in the terms and conditions of his employment, as the result

of engaging in protected activity, “to all relief necessary to make the employee whole.” 31

U.S.C. § 3730(h) (2009). To prevail on an FCA 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”; (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., Ltd., 389 F.3d 1251, 1260 (D.C. Cir.

2004) (alteration in original) (quoting United States ex rel. Yesudian v. Howard Univ., 153 F.3d
731, 736 (D.C. Cir. 1998)); accord Shekoyan v. Sibley Int’l, 409 F.3d 414, 422 (D.C. Cir. 2005).

Regarding the first element of a whistleblower retaliation claim, “[m]ere dissatisfaction with

one’s treatment on the job is not . . . enough. Nor is an employee’s investigation of nothing more

than his employer’s noncompliance with federal or state regulations.” Shekoyan, 409 F.3d at 423

(alteration in original) (citing Yesudian, 153 F.3d at 741). Regarding the second element,

“[u]nless the employer is aware that the employee is investigating fraud, . . . the employer could

not possess the retaliatory intent necessary to establish a violation of §.” Williams, 389 F.3d at

1260-61 (second alteration in original) (quoting Yesudian, 153 F.3d at 744). Plaintiffs who allege

that “performance of their normal job responsibilities constitutes protected activity must

‘overcome the presumption that they are merely acting in accordance with their employment

obligations’ to put their employers on notice.” Id. at 1261 (quoting Yuhasz v. Brush Wellman,

Inc., 341 F.3d 559, 568 (6th Cir. 2003)).

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III.   Analysis

       a. Counts I and II do not state claims upon which relief may be granted.

       Rather than responding to Elexis’s arguments point by point, Ivanov seems to cross his

arms, stamp his feet, and cry, “It’s just not fair!” That is not enough to survive a 12(b)(6)

motion, notwithstanding the assumption that all of Ivanov’s allegations are true.

       Exelis’s principal argument proceeds as follows: First, there was no express certification

of work that had not been done. See Def.’s Mot. 12. Therefore, an FCA violation is possible in

this case only with implied certification, which in turn requires that certification was a

prerequisite to government action (i.e. payment). Id.; United States v. Sci. Applications Int’l

Corp., 626 F.3d 1257 (D.C. Cir. 2010). Here, certification was not a prerequisite because of the

cost-plus-incentive-fee nature of the contract. See id. at 13–14. Specifically, the SBS Contract is

a best-efforts contract, see FAA Clauses 3.3.1-12(a) & 3.3.1-14(a) (available at

http://conwrite.faa.gov), for which the United States pays costs up to a set amount, regardless of

any certification of compliance. See Def.’s Mot. 14–16.

       Ivanov responds first that Exelis is liable because the products were defective and

therefore literally false. See Pl.’s Opp’n 20–22. But a defective product does not a false claim

make when there is no material claim to the contrary. Second, Ivanov states that “the

contractually required verifications are an express certification of compliance that tests were

done when then they were not performed or verified as required.” Id. at 22. That statement

comes with neither a citation to the contract nor any tie-in to any request for payment, which is

required for an FCA violation. Lastly, Ivanov claims that the billing under the contract was

contingent on successful completion of the project. Id. at 23–24. In support of that, he argues

that the contract was not in fact a cost-plus contract because the best efforts clauses were not in

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fact in it. Id. at 25. That is simply false. The best efforts clauses were incorporated by reference

into the contract: “This screening information request (SIR) or contract, as applicable,

incorporates by reference the provisions or clauses listed below [including FAA Clauses 3.3.1-

12(a) & 3.3.1-14(a)] with the same force and effect as if they were given in full text.” ECF No.

39-2 at 89–90.

       For those reasons, relator’s first amended complaint does not survive the 12(b)(6) motion

to dismiss. Because the complaint does not state a claim upon which relief may be granted, the

Court need not address Exelis’s alternative argument for dismissal, that Ivanov did not plead an

FCA violation with sufficient particularity.

       b. Count III does not state a claim upon which relief may be granted.

       A retaliation claim under the FCA requires that the claimant engaged in a protected

activity and that he was discriminated against because of that activity. Ivanov did not plead any

facts in support of either element. On the first element, Ivanov offered only the statement that he

“investigated conduct on the part of Defendant that he reasonably believed violated the False

Claims Act.” Compl. ¶ 329. But the facts do not go beyond his normal job responsibilities as a

test engineer. On the second element, Ivanov made the following conclusory statement:

“Defendant was aware Relator had engaged in activities in furtherance of a potential action under

the qui tam provisions of the False Claims Act . . . .” Id. at ¶ 330. Again, without any facts

showing that Ivanov engaged in activity outside of his normal job responsibilities, Exelis could

not have been on notice that he was engaged in protected activity, let alone motivated by it.

       The circumstances of this case are strikingly similar to those in Yuhasz v. Brush Wellman,

341 F.3d 559 (6th Cir. 2003), a Sixth Circuit case that also ended in dismissal. In that case, as in

this one, Yuhasz worked in a testing laboratory and alleged that his employer failed to perform

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required tests, and also informed his employer “of the unlawful and illegal nature of its

certifications of compliance.” Id. at 567. Nonetheless, the Sixth Circuit held that “Yuhasz was

simply performing his ordinary duties as a supervisor of laboratory testing” and so his employer

“cannot be charged with notice on this basis.” Id.

        Ivanov argues that the complaint in Yuhasz is distinguishable because it “was short on

specifics, made no particularized allegations of wrongdoing, and as a supplier, made no direct

links to false bills to the Government.” Pl.’s Opp’n 45 (citing Yuhasz, 341 F.3d at 564). But that

is a misreading because the cited portion refers not to the retaliation claim in Yuhasz, but to

whether the plaintiff stated an FCA claim with sufficient particularity.

IV.    Conclusion

       For the foregoing reasons, the Court grants defendant’s motion to dismiss relator’s first

amended complaint.

       Signed by Royce C. Lamberth, U.S. District Judge, on May 13, 2014.

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