Gary WAAG, Plaintiff-Appellant, v. SOTERA DEFENSE SOLUTIONS, INC., Defendant-Appellee.
No. 15-2521
United States Court of Appeals, Fourth Circuit.
May 16, 2017
857 F.3d 179
Argued: December 7, 2016
A defendant can have “actual knowledge” that a condition is material without the Government expressly calling it a condition of payment. If the Government failed to specify that guns it orders must actually shoot, but the defendant knows that the Government routinely rescinds contracts if the guns do not shoot, the defendant has “actual knowledge.” Likewise, because a reasonable person would realize the imperative of a functioning firearm, a defendant‘s failure to appreciate the materiality of that condition would amount to “deliberate ignorance” or “reckless disregard” of the “truth or falsity of the information” even if the Government did not spell this out.
Universal Health, 136 S.Ct. at 2001-02. Guns that do not shoot are as material to the Government‘s decision to pay as guards that cannot shoot straight.
In addition, in discussing the types of evidence the Government could introduce to show materiality, the Court referenced whether the Government typically paid claims that violated the particular requirement. Here, the Government did not renew its contract for base security with Triple Canopy and immediately intervened in the litigation. Both of these actions are evidence that Triple Canopy‘s falsehood affected the Government‘s decision to pay. As we explained, the “Government‘s decision to pay a contractor for providing base security in an active combat zone would be influenced by knowledge that the guards could not, for lack of a better term, shoot straight.” Triple Canopy, 775 F.3d at 638.
In sum, nothing contradicts our conclusion that the Government properly alleged that Triple Canopy violated the FCA.
III.
Having reconsidered our earlier panel decision in light of Universal Health, we conclude that the Government has stated a claim under
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED
Before NIEMEYER, TRAXLER, and HARRIS, Circuit Judges.
TRAXLER, Circuit Judge:
Gary Waag brought an action alleging that his former employer, Sotera Defense Solutions, Inc., violated the Family and Medical Leave Act (“FMLA“),
I.
A.
Before his employment with Sotera, Waag worked for Potomac Fusion, Inc., reporting directly to Dan Haug. At Potomac Fusion, Waag was “Senior Director of Operations, National Intelligence Programs.” J.A. 227. Waag‘s primary duties at Potomac Fusion included “provid[ing] budgetary guidance” and oversight for national security programs, J.A. 74; developing standardized “program controls,” J.A. 75; and “support[ing] business development efforts to ... grow the footprint of the firm,” J.A. 77, particularly in the area of modeling and simulation.
In December 2011, Sotera, a defense contractor that provides technology products and services to federal agencies, acquired Potomac Fusion, which became Sotera‘s Data Fusion Analytics (“DFA“) division. Sotera installed Haug as Vice President for the DFA division, and Waag maintained the “Director of Operations” title he had held at Potomac Fusion for Sotera‘s DFA division. At the time of the acquisition, “key Potomac Fusion employees” were identified and offered “retention bonus agreements.” J.A. 215. Despite his Senior Director title, Waag “was not deemed critical to the strategic growth of the company,” id., and therefore was not identified as a key employee. Id. Waag‘s duties at Sotera included oversight of issues related to “recruiting, security, IT, and facilities.” J.A. 79. Waag was also involved in the development of new business at Sotera after the acquisition.
In September 2012, the United States Army selected Sotera as one of the non-exclusive prime contractors for the Software and Systems Engineering Services Next Generation program (“SSES NexGen” or “NexGen” program) to provide warfighting software solutions and support to the Army at the Aberdeen Proving Ground in Maryland. NexGen was an IDIQ contract—an “indefinite delivery/indefinite quantity” contract. J.A. 668. A prime contractor has the right to bid on “Requests for Proposals” (“RFPs“) or “task orders” issued by a federal department or agency under an IDIQ contract like NexGen. Sotera was qualified to bid on RFPs in the area of software and analytics. With a budgetary ceiling of $7 billion, the NexGen program was potentially very lucrative for contractors who were awarded work, but Sotera still had to outbid other prime contractors to win a project under NexGen. Thus, the NexGen program was worth nothing to Sotera until it outbid other prime contractors for NexGen work.
In early October 2012, Haug and Vice President Kathleen Lossau asked Waag to become the Program Manager (“PM“) of Sotera‘s NexGen work in light of Waag‘s experience managing IDIQ contracts. The PM position for an IDIQ contract is largely “a marketing business development role,” J.A. 101-02, particularly in the early stages. Thus, Waag‘s salary was not directly billable to the government—it was paid out of Sotera‘s overhead costs. During Waag‘s brief tenure as PM, Sotera did not have any work related to NexGen task orders, and Waag had no staff or employees reporting to him on NexGen projects.
On October 17, 2012, Waag severely injured his hand when he fell off the roof of
According to Waag, Sotera never notified him of his rights to take leave under FMLA. Sotera, however, gave its employees a handbook containing its leave policies, and this information was also accessible online. Sotera‘s leave policy provides up to 12 weeks of unpaid family and medical leave and states that, “with limited exceptions, an employee who takes leave under this policy will be able to return to the same job or a job with equivalent status, pay, benefits and other employment terms.” J.A. 170.1 When Waag began his employment, he received a Kindle device onto which Sotera‘s leave and other human resources policies were loaded.
While he was on leave, Waag communicated with Sotera Vice-President Lossau about NexGen. In late October 2012, Waag indicated he was “severely limited in [his] ability to step out into the SSES NEXGEN [Project Manager] role.” J.A. 256. After speaking with Waag and learning he would be out of work until mid-December or early January 2013, Lossau told Haug, “I need a new PM for SSES nexgen,” and asked for Haug‘s input. J.A. 879. Shortly thereafter, Haug and Lossau decided to place Devin Edwards, who was Director of Mission Analytics and Collection, in charge of NexGen IDIQ work. Haug told Edwards there was “nothing to do” at the time Edwards took over because there were no pending task orders.
In early November, Waag and Lossau corresponded via e-mail regarding the NexGen PM position. Lossau explained that “Devin has agreed to be the SSES NexGen PM and will get things started for us” and asked Waag to “pass on any info [he had] to Devin.” J.A. 240. Waag asked what his role in NexGen would be after he returned to work, noting that Lossau‘s e-mail “reads like Devin will be your full-time permanent SSES NEXGEN PM and not just a stop-gap measure until I am able to return.” J.A. 239. Lossau responded that Waag should not “worry about [his] position” and that “[f]or the purposes of getting the team up and going with SSES NexGen we have to provide some stability [and] Devin is that stability for now.” Id. Lossau encouraged Waag that “[a]ll will work out,” and that “we will evaluate as we ease you back into full time work when you are ready ... [T]ogether we [will] figure out what roles work best for all involved.” Id. But, she also told Waag that he had “been in the business long enough to know that no position is permanent.” Id.
Shortly after Waag began his medical leave, federal budget sequestration went into effect, resulting in substantial cuts to federal spending. The effect of sequestration on defense contractors was significant since funding was not readily available for government contracts. One of the many programs delayed was NexGen. Lossau and Edwards attended the government‘s “kickoff meeting” for the NexGen contractors at which the contractors learned that “there was no funding available for the
In late December 2012, Haug told Waag that when he returned to work, Waag would be reporting to a different supervisor, Jim Gerard, to help grow Sotera‘s new Electronic Warfare Program (“EWP“) which involved modeling and simulation work. Unlike the NexGen program, which had no RFPs to bid on, the EWP unit was competing for a specific contract. Gerard was tasked with winning an EWP Management Trainer (“EWPMT“) contract—“a 70 or 80 million dollar single award contract.” J.A. 96. Because of Waag‘s experience in modeling and simulation, he was assigned to work on the EWPMT proposal, which was “a very complex pricing job.” J.A. 141. Waag spent the majority of his time in January 2013 working on the EWPMT proposal, which was submitted in February 2013. The salary for Waag‘s new position was identical to the salary for the NexGen PM position he held before taking medical leave, and, as before, Waag‘s salary was overhead as he was not performing billable work in the EWP. According to Lossau, Waag‘s new job “was an equivalent position” to the NexGen PM job and provided Waag “concrete work to perform.” J.A. 252.
In late 2012, “Sotera and [its] DFA Business Unit saw a drastic decrease in work due to sequestration,” J.A. 217, and Sotera missed its 2012 budget revenue goal “by $110 million,” J.A. 219. In February 2013, Haug “was informed by senior management that [he] needed to cut [his division‘s] overhead cost by $2.3 million and that the only way to do that [was] to lay off employees.” J.A. 219. Haug‘s DFA “business unit was especially under pressure because it had the highest indirect costs and was woefully underperforming on the revenue side.” Id. In choosing which employees in his unit to lay off, Haug focused on employees who were not performing work directly billable to the government and “who were assigned to the less important strategic priorities.” Id. Haug determined that the EWP and modeling and simulation groups were doing lower priority work than several other groups in the DFA division. Thus, Waag, an overhead employee not doing high priority work, was included in the initial group of employees laid off in February 2013. During 2013, fourteen senior managers were either laid off or resigned and were not replaced, and Waag‘s boss Gerard, a vice president, was laid off after Sotera failed to win the EWPMT contract. But Edwards, Waag‘s replacement for NexGen PM, was not among those laid off. Even though Sotera had no NexGen IDIQ work, Edwards was retained because he “was critical to a number of other significant revenue programs” and “was vital to the organization for reasons unrelated to NexGen.” J.A. 220. Layoffs “continued throughout 2013 and 2014,” and the DFA division ultimately “was rolled into the company and no longer exists.” J.A. 220. Finally, rather than be laid off himself, Haug resigned from Sotera in October 2014.
B.
Waag brought this action against Sotera in federal court, asserting that Sotera violated his FMLA rights (1) by failing to restore Waag “to the same position” after he returned from medical leave, J.A. 19, (2) by failing to restore him to “a bona fide equivalent position,” and (3) by “terminating his employment,” J.A. 20. Sotera moved for summary judgment, arguing
The district court granted Sotera‘s motion for summary judgment. First, the district court rejected Waag‘s argument that Sotera violated the FMLA by failing to restore him to his old job, concluding that the FMLA requires only that an employee returning from leave be restored “to either the same position or an equivalent position.” J.A. 1139. Second, the district court concluded that “there is no genuine issue of material fact as to whether the tangible aspects of the EWP/M&S position to which plaintiff was restored were equivalent to those of plaintiff‘s former position.” J.A. 1140. The court observed that
[i]n all material and significant respects, the two positions were the same: (i) both positions paid the same salary and benefits; (ii) both positions were senior director positions that required plaintiff to report to a vice president; (iii) neither position included significant managerial responsibilities; and (iv) in both positions, [Waag] was an indirect employee, whose work could not be billed directly to the government.
J.A. 1140-41 (internal citations and footnote omitted). And, “[m]ost important[]” to the district court, Waag‘s “primary responsibility in both positions was business development, a responsibility for which plaintiff was well-suited given his past experience.” J.A. 1141. Finally, the court rejected Waag‘s claim that he was terminated in violation of the FMLA. The court addressed Waag‘s termination claim under two separate theories. First, the court rejected the argument that Sotera interfered with Waag‘s FMLA rights by terminating him rather than restoring him to at least an equivalent position because Waag would have lost his job even if he had not taken medical leave. Second, the district court rejected Waag‘s argument that he was terminated in retaliation for exercising his leave rights under the FMLA. Applying the burden-shifting framework of McDonnell Douglas Corporation v. Green, 411 U.S. 792 (1973), the district court assumed that Waag could make out a prima facie case of retaliation but concluded that Sotera established a legitimate non-discriminatory reason for terminating Waag: the “financial hardship” resulting from government sequestration forced Sotera to lay off numerous employees, of which Waag was one. J.A. 1148. Turning to whether Waag, in response, had shown that Sotera‘s non-discriminatory reason was merely a pretext for FMLA retaliation, the district court concluded that the evidence “create[d] no genuine issue of material fact [as to whether] defendant had an improper purpose in discharging plaintiff.” Id.
Waag appeals, challenging each of the district court‘s conclusions. “We review a district court‘s decision to grant summary judgment de novo, applying the same legal standards as the district court, and viewing all facts and reasonable inferences therefrom in the light most favorable to the nonmoving party.” T-Mobile Ne. LLC v. City Council of Newport News, 674 F.3d 380, 384-85 (4th Cir. 2012) (internal quotation marks omitted). Summary judgment is
II.
In passing the FMLA, Congress sought “to balance the demands of the workplace with the needs of families, to promote the stability and economic security of families, ... to promote national interests in preserving family integrity,” and “to entitle employees to take reasonable leave for medical reasons, for the birth or adoption of a child, and for the care of a child, spouse, or parent who has a serious health condition.”
Under the FMLA, “an eligible employee” is “entitled to a total of 12 workweeks of leave during any 12-month period” for family- and health-related reasons.
(A) to be restored by the employer to the position of employment held by the employee when the leave commenced; or
(B) to be restored to an equivalent position with equivalent employment benefits, pay, and other terms and conditions of employment.
The FMLA makes it “unlawful for any employer to interfere with, restrain, or deny the exercise of or the attempt to exercise, any right provided under [the FMLA].”
III.
A.
Waag first argues that Sotera interfered with his FMLA rights by failing to restore Waag after he returned from leave “to his former position with the company even though the position was still available.” Brief of Appellant at 2. As is clear from its plain language, however, the FMLA does not require an employer to restore an employee returning from leave to his previous position no matter what. The FMLA
We reject Waag‘s reliance on
General rule. On return from FMLA leave, an employee is entitled to be returned to the same position the employee held when leave commenced, or to an equivalent position with equivalent benefits, pay, and other terms and conditions of employment. An employee is entitled to such reinstatement even if the employee has been replaced or his or her position has been restructured to accommodate the employee‘s absence.
Pursuant to the plain terms of
Waag next argues that Sotera interfered with his FMLA rights by failing to restore him “to an equivalent position with equivalent employment benefits, pay, and other terms and conditions of employment.”
The district court concluded that there was no genuine issue of material fact regarding “whether the tangible aspects of the EWP/M&S position to which [Waag] was restored were equivalent to those of [Waag‘s] former position,” finding that “[i]n all material and significant respects, the two positions were the same.” J.A. 1140. It is undisputed that Waag‘s salary was identical for both jobs—$189,000—and that Waag was eligible for bonuses in both positions. See
Moreover, the “terms and conditions of employment” were equivalent for both jobs. Waag‘s worksite was the same before and after leave. See
Waag nonetheless argues that his pre-leave job was very much unlike the EWP position he was restored to after leave. Primarily, Waag asserts that as NexGen PM, he was responsible for preparing and responding to RFPs, a decidedly non-business-development function. In support, Waag points to a 47-item Action Item List that he created shortly after being named NexGen PM. The list describes duties relating to the management of proposals for NexGen task orders and the performance of NexGen task orders. Waag contends
Waag highlights numerous other differences between the two jobs. For example, he contends that the two positions were not equivalent because he was a member of the business unit‘s “core management” group prior to, but not after, his medical leave. Brief of Appellant at 48. Waag, however, fails to explain the purpose and function of this group or how the tangible or measurable aspects of his employment were affected by exclusion from this group. To the extent Waag complains about a loss of prestige, such a difference is de minimis and would not prevent Waag‘s post-leave position from being considered equivalent to his original one. See
Waag also complains that his new EWP position “had no billable work ... [or] pipeline of task orders” attached to it, and that he “no longer had any responsibility or authority to manage contracts, employees, or revenue.” Brief of Appellant at 30-31. Such circumstances, however, do not distinguish the EWP and NexGen positions. Before Waag took leave, and for a substantial period after he returned, the NexGen PM likewise had no pipeline of task orders, no billable work, and no employees to manage. Therefore, as Waag himself recognized, initially one of the most critical duties of an IDIQ PM is “business development.” J.A. 101.
In our view, no reasonable factfinder could conclude that Sotera failed to place Waag in “an equivalent position” or that the differences between the two jobs were more than merely de minimis.
IV.
Finally, Waag challenges the dismissal of two claims based on his termination from Sotera. First, Waag argues that Sotera interfered with his FMLA rights by terminating him a little more than one month after his return from medical leave. See
Waag claims that Sotera did not restore him to a real position. Rather, Waag believes that his post-leave job associated with the EWP was, in fact, a sham position, created to make it appear that Waag had been restored to an equivalent position but that, in actuality, was slated for elimination. Basically, Waag thinks Sotera decided to fire him while he was on leave and then did so by placing him in a make-work job after he returned. The district court rejected this argument, concluding that Waag would have been discharged regardless of whether or not he had taken leave. The district court noted that Waag‘s termination was inevitable in light of Sotera‘s dire financial circumstances as a result of sequestration, the lack of work under the NexGen contract, and Waag‘s status as an indirect employee paid out of overhead.
On appeal, Waag contends that summary judgment was inappropriate because a triable question of fact exists as to whether his post-leave position was a sham, essentially scheduled to be eliminated after a few weeks. Waag relies on an FMLA regulation that fleshes out the limitations on the right to reinstatement recognized in the statute. See
We conclude, however, that no reasonable juror would believe, based on this record, that Waag was put in a short-term sham job to cover Sotera‘s decision to fire Waag when he returned from leave. Waag argues that a jury could conclude that the job Sotera gave Waag following medical leave “was a fake or sham position” based largely on “temporal proximity“—that is, he was placed in a new business development job that was eliminated approximately six weeks later. Brief of Appellant at 49-50. Waag points out that obtaining government contract work involves a protracted bidding process, and he argues that his business development position was eliminated well before he had a chance to generate any revenue. Waag, however, points to no actual evidence in the record that would permit a jury to conclude—without speculating—that the EWP job was a sham. The undisputed evidence shows that Waag‘s position was genuine and that it was not slated for lay-offs at the time that Waag returned from leave. Vice President Gerard was assigned to the EWP, which, at the time Waag joined, was working toward winning an EWPMT contract worth “70 or 80 million dollar[s].” J.A. 96. Indeed, Waag worked on the proposal as well. Although Sotera‘s bid was ultimately unsuccessful, it was a real bid. And if it was a sham, it was an elaborate one that affected other people—Gerard, a vice president, also lost his job following the failed bid. Accordingly, we affirm the district court‘s conclusion that Sotera was entitled to summary judgment on Waag‘s claim that Sotera interfered with his FMLA rights by reinstating him to a sham position and then firing him at the first opportunity.5
B.
Waag contends that Sotera terminated him in retaliation for exercising his rights under the FMLA to take medical leave in violation of
Significantly, “[u]nlike prescriptive entitlement or interference claims, employer intent here is relevant.” Id. If the plaintiff can produce no direct evidence of intent, he can demonstrate intent by circumstantial evidence, which we evaluate under the framework established for Title VII cases in McDonnell Douglas; see Vannoy v. Fed. Reserve Bank of Richmond, 827 F.3d 296, 304 (4th Cir. 2016) (applying McDonnell Douglas to FMLA retaliation claim). Under this framework, the plaintiff must establish the elements of a prima facie FMLA retaliation claim set forth above. See Sharif, 841 F.3d at 203. If the plaintiff produces sufficient evidence to establish a prima facie case, then a presumption of retaliation arises and the “burden of production then shifts to the employer to rebut the presumption of retaliation and provide [a] legitimate, non-discriminatory reason for the adverse employment action.” Id. (internal quotation marks omitted). If the employer rebuts the presumption of retaliation, then “the
Waag argues that he established a prima facie case of retaliation by showing close temporal proximity between the protected activity at issue—medical leave—and his employer‘s adverse action—termination from employment—less than six weeks after Waag returned from leave. We agree that, for purposes of establishing a prima facie case, close temporal proximity between activity protected by the statute and an adverse employment action may suffice to demonstrate causation. See Price v. Thompson, 380 F.3d 209, 213 (4th Cir. 2004), abrogation on other grounds recognized by Foster v. Univ. of Md.-E. Shore, 787 F.3d 243, 249 (4th Cir. 2015). But, even assuming that Waag established a prima facie case of retaliation under the FMLA, he still “bears the burden of establishing that [Sotera‘s] proffered explanation is pretext for FMLA retaliation.” Yashenko, 446 F.3d at 551 (internal quotation marks omitted). Sotera offered evidence that government sequestration in October 2012 had a disastrous effect on the defense contracting industry, cutting federal spending on programs such as NexGen. Sotera missed its projected revenue for 2012 by $110 million and determined that drastic cuts in spending were required. In February 2013, Sotera decided that the DFA division, which had high overhead and was underperforming in terms of revenue, needed to cut costs by $2.3 million. To effectuate these drastic cuts, the DFA division began laying off employees in February 2013 and continued throughout 2014. Haug focused initially on employees who were not performing important strategic work that could be billed directly to the government, and thus Waag was among the first employees included in the layoffs.
Waag appears to contend that Sotera‘s budgetary reduction-in-force explanation is pretextual on a few different bases.6 First, Waag suggests that Sotera has exaggerated the effect of sequestration and that the idea of Sotera‘s budgetary crisis was overblown, pointing to an FAQ page created by Sotera to answer questions about sequestration. In particular, Sotera indicated its “leadership team ... deliberately positioned the company in the right spaces over the past few years to inoculate ourselves from the inevitable return to ‘peacetime’ defense spending levels.” J.A. 801. Obviously, such language in no way refutes the substantial evidence proffered by Sotera. Moreover, the same FAQ page warned that “[t]he sequester will reduce 2013 discretionary spending ... [by] approximately $85.4 billion,” and that “Sotera will likely be impacted.” J.A. 801. Second, Waag contends that another indication that Sotera‘s reason was pretextual is the fact that Sotera never produced
I spoke with Gary tonight.
He will be on short term disability until mid dec (earliest) and January more likely.
I need a new PM for SSES nexgen.... Thoughts?
J.A. 879. As the district court stated, “no reasonable juror could interpret this email as indicating that defendant had already decided that plaintiff would be discharged,” J.A. at 1148, especially in light of Lossau‘s emails to Waag making clear that she needed someone to assume the role of NexGen PM since the program was in its initial stages. Indeed, if anything, Lossau‘s email recognizes that Waag would be returning to work in December or January. Finally, Waag argues that “Sotera‘s claim about the need to save money (and thus, the company had to RIF [him]) makes no rational sense because Sotera paid Devin Edwards more than [him]” and Edwards was not terminated. Brief of Appellant at 25. The retention of Edwards, however, does not show pretext since Edwards did not fit the criteria for the initial layoffs. Unlike Waag, Edwards was responsible for numerous additional contracts and projects, including some work that was directly billable to the government.7
Accordingly, we conclude that Waag failed to adduce sufficient evidence to create a genuine issue of material fact “such that a reasonable factfinder could conclude the adverse employment action was taken for an impermissible reason, i.e., retaliation.” Sharif, 841 F.3d at 203.
V.
For the foregoing reasons, we affirm the district court‘s grant of summary judgment in favor of Sotera as to each of Waag‘s claims under the FMLA.
AFFIRMED
WILLIAM B. TRAXLER, JR.
UNITED STATES CIRCUIT JUDGE