Eberhardt v. Integrated Design & Construction, Inc.Eberhardt v. Integrated Design & Construction, Inc.
- Reporters:
- Before:
- Herlong, Murnaghan, Michael
OPINION
HERLONG, District Judge:
In 1996, Ronald G. Eberhardt (“Eberhardt“) brought a qui tam action under
On October 2, 1996, the United States intervened as to the section 3729(b)(1) count and ultimately settled this claim on January 7, 1997. Eberhardt‘s discrimination claim proceeded to trial. On July 16, 1997, Eberhardt received a jury verdict in his favor of $417,700.99, and the district court entered a judgment on the verdict. On July 24, 1997, Eberhardt filed a motion for reinstatement and interest. On July 29, 1997, IDC filed a motion for judgment as a matter of law or, in the alternative, motion for new trial under
On October
I.
IDC was an architectural/engineering/construction firm which managed the design and construction of embassy facilities for the United States Department of State (“State Department“). IDC essentially acted as a conduit between the Government and subcontractors, invoicing the Government for subcontractors’ work plus IDC‘s administrative costs (“pass-through contracts“).
Eberhardt was promoted to Senior Staff Vice President on July 13, 1994, and he initiated an effort to organize IDC‘s accounting system and records. In late July 1994, IDC‘s then-CFO and in-house counsel, William Roemer (“Roemer“), who was responsible for administering IDC‘s pass-through contracts, informed Eberhardt that IDC had invoiced the State Department on uncompleted work in order to alleviate its cash flow problems. Roemer also told Eberhardt that McCoubrey knew of the billings. Eberhardt went to McCoubrey with this information, and McCoubrey stated that he would speak with Roemer. Eberhardt discovered more information supporting Roemer‘s claims and discussed the issue further with McCoubrey. In October 1994, they agreed to have a senior employee, Pascal Pittman (“Pittman“), review the contracts in question. Pittman reported to Eberhardt that $1.3 million in advance billings had taken place. IDC did not have these funds in its bank accounts and was facing a severe shortage in cash flow. Roemer became a focus of IDC‘s investigation, but he refused to cooperate and was terminated.
In December 1994, Eberhardt informed McCoubrey that there was an appearance of criminality, and he advised McCoubrey that IDC should obtain legal counsel. The next day, McCoubrey ordered Eberhardt to lead an official investigation with the aid of corporate counsel Mark Kellogg (“Kellogg“) and to submit a written report which was to be presented to the Board of Directors and ultimately forwarded to the federal government. The investigation continued until January 9, 1995, at which point Eberhardt submitted a written report revealing that the money from the advanced billings had been received and spent, creating a significant cash flow problem. During the course of the investigation, Eberhardt discovered that McCoubrey had personally signed the invoices, and he advised McCoubrey to obtain separate counsel. He also issued a set of questions to McCoubrey asking about McCoubrey‘s involvement in the scheme. Over the course of the investigation, Eberhardt‘s previous close relationship with McCoubrey deteriorated significantly, and McCoubrey excluded Eberhardt from closed door meetings.
On January 16, 1995, McCoubrey directed Eberhardt to return to his normal tasks and to monitor IDC‘s financial condition, but he allegedly issued a separate order for Eberhardt to no longer have access to any IDC financial information. On January 20, 1995, IDC officials met with the State Department and disclosed the advance billings. Eberhardt was excluded from this meeting. On January 30, 1995, Eberhardt reported to the board of directors that IDC had discharged its duty to report to the government and that he was disbanding the investigation.
On February 1, 1995, IDC implemented a plan to alleviate its cash flow problems, cutting the salaries of all senior staff employees by fifteen percent. An exception was made for the two lowest salaried senior employees, at their request, and they received ten percent cuts. In all, four employees (including Eberhardt) received a fifteen percent cut, and two received a ten percent cut. On February 7, 1995, IDC implemented a corporate reorganization, whereby it laid off two architects, formed an Executive Committee, and eliminated Eberhardt‘s position of Senior Staff Vice President, allegedly due to McCoubrey‘s increased involvement with the company. Eberhardt was tasked for business development, a job which Eberhardt felt was outside his expertise. In addition, on February 9, 1995, McCoubrey gave Eberhardt the special task of drafting IDC‘s 1995 comprehensive business plan/budget—an assignment for which Eberhardt felt unqualified.
Eberhardt responded by memorandum that same day, stating that he was being singled out for leading the investigation, that he was pretextually being put in an impossible predicament, and that IDC‘s actions were a violation of the Federal Whistleblower Protection Act. In a February 13, 1995, memorandum, McCoubrey denied these claims. Eberhardt responded by memorandum that same day that he was protected by the False
II.
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.
IDC argues Eberhardt did not make any of these three required showings.1 As a result of this failure, IDC argues that the district court erred in its jury instructions and in its denial of IDC‘s motions for judgment as a matter of law, new trial, and relief from judgment. As shown below, IDC is incorrect, and there was no error, with the exception of the grant of McCoubrey‘s Rule 60(b) motion.
A. Motions for Judgment as a Matter of Law
IDC claims that denying its motions for judgment as a matter of law was error because Eberhardt did not make out a prima facie case for retaliation. This issue is reviewed de novo, and the evidence must be viewed in the light most favorable to the non-moving party, Eberhardt. See Singer v. Dungan, 45 F.3d 823, 827 (4th Cir.1995). In addition, the trial court should not direct a verdict if the evidence is sufficient to support the jury‘s verdict. See Ellis v. International Playtex, Inc., 745 F.2d 292, 298 (4th Cir. 1984). Because there was evidence supporting a prima facie case, there is no error.
1. Initiation of a Qui Tam Action
The primary area of contention is whether Eberhardt met the first element of a prima facie case by engaging in protected activity. The statute protects “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.”
IDC neglects the fact that protected activity includes “initiation of ... an action filed or to be filed under this section.”
Eberhardt made his intentions known on several occasions prior to his termination. First, he wrote a February 9, 1995, memo to McCoubrey stating that he was being singled out for leading the investigation, that he was pretextually being put in an impossible predicament, and that IDC‘s actions were a violation of the Federal Whistleblower Protection Act. In a February 13, 1995, memo to Kellogg (IDC‘s corporate counsel), Eberhardt explicitly alleged that IDC had violated the False Claims Act and that Eberhardt was protected by section 3730(h). See (id. at 718.) That same day he told Kellogg of his intention to bring a qui tam action. On February 16, 1995, Eberhardt met with the Board of Directors and informed them of his intention to file suit against IDC under the False Claims Act. Because these acts constituted the “initiation of ... an action ... to be filed [under section 3730],” Eberhardt engaged in protected activity.
2. Investigation for a Qui Tam Action
Even had Eberhardt not made explicit claims that he would bring a qui tam suit against IDC, his investigatory actions nevertheless rose to the level of protected activity. Other circuits have held that an employee need not have actually filed a qui tam suit or even known about the protections of section 3730(h) in order to engage in protected activity. See, e.g., United States ex rel. Yesudian v. Howard University, 153 F.3d 731, 740 (D.C.Cir.1998) (stating that section 3730(h)‘s inclusion of an “‘investigation for ... an action filed or to be filed’ within its protective cover ... manifests Congress’ intent to protect employees while they are collecting information about a possible fraud, before they have put all the pieces of the puzzle together“). These courts require that litigation need only be a “distinct possibility,” Neal v. Honeywell, Inc., 33 F.3d 860, 864 (7th Cir.1994); Childree v. UAP/AG CHEM, Inc., 92 F.3d 1140, 1146 (11th Cir.1996), or similarly require that the “plaintiff must be investigating matters which are calculated, or reasonably could lead, to a viable FCA action,” United States ex rel. Hopper v. Anton, 91 F.3d 1261, 1269 (9th Cir.1996). In short, these courts interpret the “to be filed” phrase within section 3730(h) “to mean the equivalent of an action that reasonably could be filed.” Yesudian, 153 F.3d at 741. Eberhardt‘s investigation reasonably could have led to the filing of a qui tam action and is therefore protected activity under the statute.
IDC relies on the proposition that the actions of an employee who is assigned to investigate fraudulent activity is not sufficient
Our citation to these cases should not be read to suggest that an individual whose job entails the investigation of fraud is automatically precluded from bringing a section 3730(h) action. However, we do note that such persons must make clear their intentions of bringing or assisting in an FCA action in order to overcome the presumption that they are merely acting in accordance with their employment obligations.
Ramseyer, 90 F.3d at 1523 n. 7 (emphasis added). Without taking such measures, the employee fails “to put defendants on notice that she was acting ‘in furtherance of an FCA action—e.g., that she was furthering or intending to further an FCA action rather than merely warning the defendants of the consequences of their conduct.” Id.
The Fifth Circuit voiced similar concerns about notice when an employee‘s actions are consistent with his job duties. The court pointed out that the employee “never characterized his concerns as involving illegal, unlawful, or false-claims investigations” and consequently that there was “no evidence that [the employee] expressed any concerns to his superiors other than those typically raised as part of a contract administrator‘s job.” Robertson, 32 F.3d at 951. Thus, an action did not lie because there was no notice to the employer. This circuit cited Robertson for the proposition that “[s]imply reporting [the] concern of a mischarging to the government to [one‘s] supervisor does not suffice to establish that [an employee] was acting ‘in furtherance of a qui tam action.” Zahodnick, 135 F.3d at 914 (citing Robertson, 32 F.3d at 951).
Thus, the Yesudian/Honeywell/Childree/Hopper line of cases suggests that Eberhardt was engaged in protected activity on the basis of his internal investigation of fraud presenting the reasonable possibility of litigation, whereas the Ramseyer/Robertson line of cases suggests that Eberhardt‘s claim would fail because IDC was not on notice that Eberhardt‘s investigation could lead to a qui tam action. These two positions, however, are not necessarily inconsistent.
This court holds that an employee tasked with the internal investigation of fraud against the government cannot bring a section 3730(h) action for retaliation unless the employee puts the employer on notice that a qui tam suit under section 3730 is a reasonable possibility. Such notice can be accomplished by expressly stating an intention to bring a qui tam suit, but it may also be accomplished by any action which a fact-finder reasonably could conclude would put the employer on notice that litigation is a reasonable possibility. Such actions would include, but are not limited to, characterizing the employer‘s conduct as illegal or fraudulent or recommending that legal counsel become involved. These types of actions are sufficient because they let the employer know, regardless of whether the employee‘s job duties include investigating potential fraud, that litigation is a reasonable possibility.
It would not be enough to “[s]imply report [the] concern of a mischarging to the government to [one‘s] supervisor,” Zahodnick, 135 F.3d at 914, nor would it be enough to investigate “nothing more than [the] employer‘s non-compliance with federal or state regulations.” Yesudian, 153 F.3d at 740. The “investigation must concern ‘false or fraudulent’ claims,” or it does not fall under the False Claims Act. Id. But once an investigation involves such claims and the employee expresses concern to his employer that there actually is a likelihood of fraud or illegality, then the notice requirement is
Because there was evidence that Eberhardt engaged in protected activity, that IDC had notice, and that IDC discriminated against Eberhardt as a result of the protected activity, it cannot be said as a matter of law that there was insufficient evidence to satisfy a prima facie case under section 3730(h). Accordingly, the district court did not err in denying IDC‘s motions for judgment as a matter of law.
B. Jury Instructions
IDC contends that the district court erred in instructing the jury regarding the element of protected activity under
C. Motion for New Trial
“[T]he granting or refusing of a new trial is a matter resting in the sound discretion of the trial judge, and ... his action thereon is not reviewable upon appeal, save in the most exceptional circumstances.” Aetna Cas. & Sur. Co. v. Yeatts, 122 F.2d 350, 354 (4th Cir.1941). IDC has offered no exceptional circumstances which would warrant this court finding that the trial court abused its discretion. Thus, there was no error in denying the motion for a new trial.
D. Rule 60(b) Motions for Relief from Judgment
1. IDC‘s Rule 60(b) Motion for Relief from Judgment
IDC moves for relief from judgment under
2. IDC and McCoubrey‘s Rule 60(b) Motion for Relief from Judgment
IDC and McCoubrey move for relief from judgment under
No court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation, or from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.
While several sub-issues exist with respect to this question,4 the threshold issue is whether there was public disclosure. The statute specifically refers to three types of public disclosure: (1) “in a criminal, civil, or administrative hearing“; (2) “in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation“; or (3) “from the news media.” Id. The Eleventh Circuit has held these forums to be exclusive:
As a preliminary matter, we find that the methods of “public disclosure” set forth in section 3730(e)(4)(A) are exclusive of the types of public disclosure that would defeat jurisdiction under that section. The list of methods of “public disclosure” is specific and is not qualified by words that would indicate that they are only examples of the types of “public disclosure” to which the jurisdictional bar would apply. Congress could easily have used “such as” or “for example” to indicate that its list was not exhaustive. Because it did not, however, we will not give the statute a broader effect than that which appears in its plain language.
United States ex rel. Williams v. NEC Corp., 931 F.2d 1493, 1499-1500 (11th Cir.1991). We agree with this reasoning, and it is clear that none of these forums apply in the instant case. IDC alleges that the public disclosure occurred when IDC officials met with the State Department on January 20, 1995, in order to disclose the advance billings. There is no evidence that this meeting was recorded or transcribed. IDC does not even attempt to demonstrate how this meeting fits into one of the three categories. As a result, section 3730(e)(4) does not defeat subject matter jurisdiction.
3. McCoubrey‘s Rule 60(b) Motion for Relief from Judgment
The district court granted McCoubrey‘s Rule 60(b) motion to be relieved from the judgment on the basis that he could not be held individually liable as an “employer” under section 3730(h). The district court abused its discretion in granting this motion. Rule 60(b) is not a proper vehicle for such a motion.
Essentially, McCoubrey asserts a Rule 12(b)(6) motion for failure to state a claim. But there is no authority for such a motion to be brought after trial. Rule 12(h), entitled “waiver or preservation of certain defenses,” specifically provides that “[a] defense
McCoubrey nevertheless argues that Rule 60(b) offers relief because the judgment is “void,”
None of these three criteria have been met in the instant case. First, it is uncontested that the district court has jurisdiction over the parties. Second, we have rejected IDC‘s contention that the district court lacks jurisdiction over the subject matter. See supra Part II.D.2. Third, there has been no denial of McCoubrey‘s right to due process because he had ample opportunity to move for dismissal under Rule 12(b)(6) prior to and during trial. Cf. Schwartz, 976 F.2d at 217 (holding that there is no violation of due process when an order enforces a litigant‘s informed decision to settle and thereby to forego procedures designed to protect due process rights); Pitts v. Board of Educ., 869 F.2d 555, 557 (10th Cir.1989) (holding that due process rights may be waived by a knowing failure to assert them). Accordingly, the district court abused its discretion in allowing relief under Rule 60(b)(4).5
Neither could the district court‘s ruling be upheld under Rule 60(b)(6).6 Rule
[Rule 60(b)(6)] has been described as the “catch-all” clause because it provides the court with “a grand reservoir of equitable power to do justice in a particular case” and “vests power in courts adequate to enable them to vacate judgments whenever such action is appropriate to accomplish justice” where relief might not be available under any other clause in 60(b).
Compton v. Alton S.S. Co., 608 F.2d 96, 106-07 (4th Cir.1979) (quoting 7 Moore‘s Federal Practice § 60.27[2], at 375; Klapprott v. United States, 335 U.S. 601, 615, 69 S.Ct. 384, 93 L.Ed. 1099 (1949)). Yet this is not a case in which the judgment must be vacated in order to accomplish justice. As discussed above, a 12(b)(6) motion cannot be raised for the first time after trial, and there was no denial of due process. Consequently, Rule 60(b)(6), like Rule 60(b)(4), cannot accomplish what McCoubrey asks of it.7
E. Prejudgment Interest
Finally,8 IDC contends that the district court erred in granting Eberhardt‘s motion for prejudgment interest. Under section 3730(h), a successful plaintiff is entitled to certain forms of relief, including interest on an award of back pay:
Such relief shall include reinstatement with the same seniority status such employee would have had but for the discrimination, 2 times the amount of back pay, interest on the back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys’ fees.
Section 3730(h), however, does not provide for a discretionary award of prejudgment interest. Rather, use of the word “shall” mandates such an award. See Anderson v. Yungkau, 329 U.S. 482, 485, 67 S.Ct. 428, 91 L.Ed. 436 (1947) (“The word ‘shall’ is ordinarily ‘The language of command.‘” (quoting Escoe v. Zerbst, 295 U.S. 490, 493, 55 S.Ct. 818, 79 L.Ed. 1566 (1935))); see also United States ex rel. Kent v. Aiello, 836 F.Supp. 720, 725 (E.D.Cal.1993) (recognizing the mandatory phrasing of the language in section 3730(h)). The jury was instructed that Eberhardt was entitled to interest, but, as IDC concedes, the jury ignored this instruction and only awarded double back pay. Accordingly, it was not error for the court to add prejudgment interest to the verdict.
III.
We reverse the grant of McCoubrey‘s Rule 60(b) motion for relief from the judgment and remand in order for judgment to be entered against McCoubrey. Finding no other reversible error, we affirm all other decisions by the district court.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
Notes
With respect to the jury instruction, Rule 51 requires a party‘s objection to “stat[e] distinctly the matter objected to and the grounds of the objection.”
Compton, however, does not apply to the instant case because it involved a default judgment. The basis for the court‘s decision to allow relief under Rule 60(b) was as follows:
The judgment entered in this case violated the mandate of Rule 54(c). The first sentence of that rule states that a judgment by default is limited to relief to which the plaintiff is entitled under his complaint. There is a reference in the prayer of the complaint to “penalty wages as provided by the United States statutes,” (without the specification of the applicable statute) but the allegations in the body of the complaint, in which the plaintiff sets forth the facts of his claim, demonstrate indisputably that the claim of the plaintiff did not qualify for the penalty award allowable under [the statute].
Id. at 104-05. Thus, the reasoning of Compton does not apply to Eberhardt‘s claim against McCoubrey because there is no default judgment in the instant case with relief limited to what was in the pleadings. Due process concerns exist when relief under a default judgment goes beyond the complaint because it would result in fundamental unfairness to a defendant who chooses not to appear and thereby limit relief to the grounds of the complaint. See id. at 106 & n. 18. In the instant case, these due process concerns do not exist because the defendant was present for trial. Accordingly, Compton is inapplicable, the judgment is not void for lack of due process, and Rule 60(b) provides no relief.