*1 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ________________________________________
UNITED STATES OF AMERICA, ex rel. )
WILLIAM ROBIN HOOD, et al. , )
) Plaintiffs/Relators, ) Civil Action No. 11-774 (RMC) )
v. )
)
SATORY GLOBAL, INC., )
)
Defendant. )
________________________________________ )
OPINION
Plaintiffs William Robin Hood and Troy Maxon, information technology specialists, moved across the country to work for Satory Global, LLC in Washington, D.C. Plaintiffs were assigned to do work for the Department of Justice pursuant to a subcontract Satory held for information technology support services. They allege that, upon beginning work, they learned that Satory was fraudulently billing the Department of Justice by charging for time spent on private corporate development work instead of on the contract and by performing its subcontracting tasks in an inefficient, unethical way that guaranteed Satory future contracting work. When Mr. Robin raised concerns to his supervisor and to Satory management, he was terminated; Mr. Maxon contends that he was constructively discharged shortly thereafter. Plaintiffs then brought a qui tam suit under the False Claims Act and District of Columbia common law. After the United States declined to intervene in the case, Plaintiffs served the Complaint on Satory, which now moves to dismiss. For the reasons set forth below, the Court will grant the motion to dismiss in part and deny it in part.
I. FACTS
A. Plaintiffs Join Satory
Plaintiffs are two computer experts, William Robin Hood [1] and Troy Maxon, who were recruited for Satory [2] by a recruiting firm called Global IT Resources in July 2010. Compl. [Dkt. 1] ¶ 3. Satory recruited them to work on a Department of Justice (“DOJ”) contract (“the Contract”) for which Satory was the subcontractor to Access Systems, Inc., the prime contractor. Id. The Contract was for “Information Technology (‘IT’) Support Services” and was a “Multiple Award Contract under which twelve prime contracts were awarded, each of which [was] an Indefinite Delivery/Indefinite Quantity, Time and Material contract.” Id. ¶ 4. The contract had a “schedule of fixed unit price Labor Hour rates.” Id. Satory’s work was performed at a DOJ building at 2 Constitution Square, N.E., in Washington, D.C. called “2Con,” where the DOJ Enterprise Services Staff-Infrastructure Development project (“ESS/ID”) was located. Id. ¶ 5.
Both Messrs. Robin and Maxon agreed to move to the Washington, D.C. area with their families to take positions with Satory in the late summer of 2010—Mr. Robin from Hawaii and Mr. Maxon from Oregon. ¶¶ 14–16, 18–19. On August 5, 2010, Satory sent Mr. Robin an Offer Letter for a position as “Associate I” at a monthly salary of $11,166.66, plus benefits and a possible bonus. ¶ 14; see also Def. Mot. Dismiss (“Def. MTD”) [Dkt. 16], Ex. 1 [Dkt. 16-1] (Robin Offer Letter). [3] Mr. Robin’s “initial role” was to be SharePoint *3 Administrator with the “primary responsibility” of “support[ing] the [operations & maintenance] mission of the infrastructure delivery and shared services teams with [DOJ].” Robin Offer Letter at 1. The Offer Letter also listed various “[o]ther duties” and stated: “these activities and services may change.” Id. The second page of the Offer Letter, next to Employment Status, stated: “Your employment with the Company is ‘at-will’ and you will not be entered into a contract of employment.” Id. at 2. Mr. Robin was provided a Relocation Expense Reimbursement and Repayment Agreement, offering him $15,000 for relocation expenses. Compl. ¶ 14; see also Def. MTD, Ex. 3 [Dkt. 16-3] (Robin Relocation Agreement). The Relocation Agreement also included: “Employment is at-will at all times.” Robin Relocation Agreement at 1. Mr. Robin executed the Offer Letter on August 9, 2010 and the Relocation Agreement on August 10, 2010; the Relocation Agreement was countersigned by Haldane Smith of Satory on September 2, 2010.
Mr. Maxon signed a substantially similar Offer Letter on August 26, 2010, and a substantially similar Relocation Agreement on October 4, 2010. See Def. Mot. Dismiss, Ex. 2 [Dkt. 16-2] (Maxon Offer Letter); id. , Ex. 4 [Dkt. 16-4] (Maxon Relocation Agreement). Mr. Maxon accepted Satory’s offer to work as an “Associate II” at a monthly salary of $11,250, plus benefits, Maxon Offer Letter at 2, and he was offered $10,000 in relocation expenses, Maxon Relocation Agreement at 1. His initial role was to be “SharePoint Solutions Architect,” although the Offer Letter also included a non-exhaustive list of possible “[s]pecific assignments.” at 1. As with Mr. Robin, both Mr. Maxon’s Offer Letter and Relocation Agreement stated that his employment would be at will. at 2, Maxon Relocation Agreement at 1.
B. I&T Lab and Lab Migration
Instead of working as a SharePoint Administrator when he arrived, Mr. Robin was assigned by his supervisor, Joaquin Jesus Rosario, to “rebuild an existing development lab,” *4 called the DevLab. Compl. ¶ 20. A development lab is “a computer environment in which contractors and DOJ personnel are able to test new software in a safe environment . . . without worrying about interfering with ongoing operations.” Id. Mr. Robin completed the DevLab project in about three weeks. Id. ¶ 22. He was then assigned by Anne Isaacs, CEO, Founder, and Managing Partner of Satory, “to migrate the existing DOJ Integration & Test [‘I&T’] Lab” from another contracting firm in Alexandria, Virginia, to 2Con (the “Lab Migration Project”). Id. ¶¶ 13, 23. Mr. Robin was “frustrated with the menial work he was assigned” and displeased that he was not working as a SharePoint Administrator, and he complained to his recruiter at Global IT Resources and to Mr. Rosario. Id. ¶¶ 25–26.
Mr. Robin worked on the Lab Migration project in October 2010. In doing so, he “became aware of Satory practices that he considered to be unethical,” such as Mr. Rosario’s instruction that Mr. Robin “not . . . meet with any DOJ personnel or other contractors without one of Satory management present,” even though Mr. Robin needed to contact those persons to complete the Lab Migration Project. Id. ¶ 27. Satory employees gave Mr. Maxon “the same instructions.” Id. Mr. Rosario’s “instruction made [Mr.] Robin’s job as Project Manager for the migration of the I&T Lab to the 2Con building difficult, costly and inefficient,” and DOJ personnel and other contractors, frustrated with Mr. Rosario’s “lack of competence,” began contacting Mr. Robin for help directly. ¶¶ 28–29.
Mr. Rosario then “told [Mr.] Robin that Satory wanted to make sure that two servers in the Lab were configured so as to be dedicated to Satory, even though they were DOJ property and needed to be used by all contractors.” ¶ 30. Mr. Robin objected because doing so “would be configuring a gateway into the I&T Lab and the 2Con lab, which would pose time- consuming obstacles to shared usage . . . waste money, alienate other contractors, and benefit *5 Satory with control of all lab projects to the financial detriment of DOJ.” Id. According to Plaintiffs, Mr. Rosario gave this direction “because under the DOJ Contract, a task order could be awarded without competition only if it met one of four exceptions,” including that “only one contractor can provide services,” and Mr. Rosario “hoped to position Satory to receive no- competition task orders.” Id. Mr. Robin completed the Lab Migration Project on November 6, 2010. Id. ¶ 31. A DOJ representative, Christopher Greer, then asked Satory to take over Lab Management for DOJ from another contractor and requested that Mr. Robin become Lab Manager. Id. ¶ 32. Satory was required to prepare a Lab Manager job description. Although Ms. Isaacs originally assigned a different Satory employee to define the Lab Manager job description, that person was unable to complete the task and was replaced by Mr. Robin. Id. ¶¶ 33–34.
C. Off-Contract Work at DOJ Facilities
According to Plaintiffs, in October 2010, Ms. Isaacs invited a Microsoft contractor, Carol Corneby, to meet with Satory at 2Con to “create a business proposal for Satory to present to Microsoft,” notwithstanding that Ms. Corneby “had no business with DOJ and was not working on the DOJ Contract.” Compl. ¶ 35. Satory personnel—including “Craig Foote, Ivory Banks, [Brian] Seitz, Barry Hartzberg, Anne Isaacs, Mary Egesdal, Silvana Nani, [Mr.] Rosario, [Jeff] Webb, and [Mr.] Robin”—and Ms. Corneby formed a “Working Group” that “worked for 10 hours a day, including weekends, for four to six weeks.” ¶¶ 36–37. The Working Group’s goal was to create “a proposal and presentation to present to Microsoft in the hopes that Microsoft would recommend Satory to Viacom and Iron Mountain as Microsoft Partners capable of delivering a quality Records Management solution.” Even though they were “actively involved almost every day in the private Satory corporate business development effort during normal business hours,” the Working Group “billed 40 hours to the DOJ contract *6 every week” through October, November, and December. Id. When Messrs. Maxon, Robin, and Seitz and Ms. Corneby “asked whether it was appropriate to be conducting private corporate Satory business in government facilities and using government resources, power, materials, and email,” Ms. Isaacs “instructed [them] to keep working and not worry about it.” Id. The collaboration among Ms. Corneby and the Satory personnel ended when Ms. Isaacs “tried to usurp” Ms. Corneby’s “propriet[ary] solution” and present it to Microsoft herself. Id. ¶ 38.
Plaintiffs allege that Satory worked on other Satory corporate projects while using DOJ resources, on DOJ property. According to Plaintiffs, Satory “worked on a huge initiative to build the Satory Corporate Cloud Architecture and SharePoint Internet & Intranet Portal while working at DOJ’s 2Con building and using DOJ’s facilities, power, phones and resources.” Id. ¶ 39. This initiative involved “most everyone employed by Satory at the DOJ Site” throughout “[m]ost of every day from December [2010] through at least March of 2011.” Id. Messrs. Maxon, Webb, and Rosario, along with Craig Foote, Amol Kaikini, Ivory Banks, and Mary Egesdal led these efforts, although Messrs. Maxon, Seitz, and Robin, as well as Ms. Corneby, “spoke up to question this behavior.” ¶¶ 39–40.
Satory also allegedly treated DOJ’s 2Con building as its corporate headquarters, including by: (1) “install[ing] a private internet wireless broadband network;” (2) having its Staffing Director, Betty Lauricia, work in a DOJ cubicle exclusively doing “Satory corporate business;” (3) conducting “employee performance reviews and health insurance briefings . . . in DOJ conference rooms using DOJ projectors and white boards, phones, and other resources;” and (4) arranging for “outside vendors to come onsite at DOJ’s 2Con building to make presentations to Satory staff on Satory business matters not related to DOJ or the government in any way.” ¶¶ 41–44. Plaintiffs also aver that Barry Hartzberg, a Satory Partner and COO, *7 “came into DOJ[’s] 2Con building and conducted nothing but Satory corporate business,” for “almost 20 hours a week.” Id. ¶ 43. According to Plaintiffs, no other contracting firm used DOJ resources in this manner.
D. Mr. Robin’s December 2010 Meeting; January 2011 Events Mr. Robin completed configuring the 2Con Lab on December 6, 2010. Compl.
¶ 46. On December 23, 2010, Messrs. Rosario, Hartzberg, and Ryan Elliott of Satory conducted an “informal performance review” for Mr. Robin. Id. ¶ 47. Mr. Robin “was told that they were very happy with his work ethic, the job he was doing, and the quality of his work,” and he received a “$1,000 performance bonus and a $5,000 bonus in advance for the upcoming six months.” Id. Mr. Robin again asked to work as the SharePoint Administrator, as he believed he had been offered when accepting employment with Satory, but at the request of DOJ, Mr. Robin agreed to serve as Lab Manager instead for the “short term.” Id. ¶¶ 48–49.
Mr. Robin then set out to “creat[e] a Virtual Lab Team of [Subject Matter Experts] who would work together to re-organize and architect the [DevLab].” Id. ¶ 50. Mr. Rosario again interfered, proposing that Mr. Rosario himself serve as Lab Manager or that Mr. Robin configure the DevLab in such a way that it would give Satory exclusive control over access. Id. Mr. Robin objected, telling Mr. Rosario and other Satory personnel “that DOJ Leadership and all [Subject Matter Experts] should be involved in the Governance, Process, and Access to the Lab” and that he was concerned that “Satory was trying to ‘rig the game’ by defining how Projects would flow through the DOJ Lab.” ¶ 51. This concerned Mr. Robin because “[c]onventional architecture” would require a Lab Manager to “define, implement, maintain and support the ‘Governance’ of the DOJ Labs by building a Virtual Lab Team of all the [Subject Matter Experts] from all Cont[r]acting Firms with DOJ ESS/ID” so that the entire team would supervise access to the DevLab. ¶ 52. The manner in which Mr. Rosario *8 directed Mr. Robin to design the DevLab positioned Satory to “[b]e the first contracting company aware of any new projects or head count needs coming down the line;” “[m]ake it impossible for any other contracting company to be successful in any project without Satory,” thereby allowing Satory to bill DOJ for project management work; “[c]ontrol all project manager tools and the SharePoint Team” as “gatekeeper and governance board;” and “attach billable hours to all documentation, communication, and collaboration efforts at DOJ ESS/ID.” Id. ¶ 60.
Mr. Robin expressed his concerns to Mr. Rosario on January 11, 2011, which led to a “short but heated” conversation. Id. ¶¶ 53–54. Mr. Robin also sent an e-mail to upper Satory management, stating in part that “DOJ Leadership [should] be made aware of Satory’s proposal for controlling access to the DOJ Lab.” Id. ¶ 55. This angered Mr. Rosario, who “berated” Mr. Robin for the e-mail. Id.
On January 12, 2011, Mr. Robin met with Messrs. Rosario and Elliott, again expressing his concerns about the way in which he was being directed to administer the DevLab, which would give Satory “a significant unfair advantage over any other contracting firm at DOJ in delivering projects faster, with higher quality, and more [efficiency] than other contracting firms” and would allow Satory to “bill more hours for DOJ work than actually was needed.” Id. ¶¶ 56–58. Messrs. Rosario and Elliott “refused to address [Mr.] Robin’s concerns,” which led Mr. Robin to inform them that Mr. Rosario “had instructed him to make sure that the Dell R710 servers currently in the DevLab and owned by the DOJ were to be configured so that only Satory could use them” and that “[Mr.] Rosario had configured another DOJ server that formerly belonged to the I&T Lab to serve only Satory.” Id. ¶ 59. Mr. Rosario “yelled and cursed at [Mr.] Robin and left.” Mr. Robin sent Messrs. Rosario and Elliott an e-mail “hoping to work things out . . . but objecting to being cursed for his opinions;” neither responded. ¶ 61.
E. Retaliation Allegations After the meeting on January 12, 2011, Satory removed Mr. Robin from his position as Lab Manager, directed him to work from home, instructed others not to contact him, and “did not assign him any new work.” Id. ¶ 62. On January 13, 2011, Mr. Robin sent CEO Isaacs an e-mail “repeating the concerns he had expressed to others.” Id. ¶ 63. Mr. Robin attended a meeting with Ms. Isaacs and Peg Gamse, a human resources representative, on January 20, 2011, in which he “informed them that Satory was being unethical in attempting to ‘game’ the system of governance of the labs;” they responded by “accus[ing] him of being at fault.” Id. ¶ 64. After the meeting, Mr. Maxon officially replaced Mr. Robin as Lab Manager. Id. ¶ 65. Mr. Robin was offered a written separation agreement on March 17, 2011 worth $28,141, including cash payment of $9,000. Id. ¶ 69. The proposed separation agreement included a confidentiality provision and had a deadline for acceptance of April 8, 2011. Id. ¶¶ 69, 73. Mr. Robin was terminated on March 17, 2011, and he did not accept the separation agreement, although “[s]everal Satory personnel communicated with him repeatedly from April 8 to April 12 trying to get him to respond.” ¶ 73.
On March 8, 2011, Mr. Maxon, who “had complained to supervisors about conducting corporate work on DOJ property and with DOJ resources” and “incompetent management of the DOJ project and inefficiencies [in] performing the DOJ work,” resigned “because of the abusive conduct he saw at Satory.” ¶ 68.
F. Procedural History
Plaintiffs filed their Complaint under seal on April 22, 2011. The Complaint consists of seven counts, including four under the False Claims Act (“FCA”), 31 U.S.C. §§ 3729–33. Plaintiffs’ claims are: presentation of false claims in violation of 31 U.S.C. § 3729(a)(1)(A) (Counts I and II), use of false statements and records in violation of 31 U.S.C. *10 § 3729(a)(1)(B) (Count III), FCA retaliation in violation of 31 U.S.C. § 3730(h) (Count IV), wrongful termination under D.C. law (Count V), breach of employment contract under D.C. law (Count VI), and punitive damages (Count VII). From April 22, 2011, until October 19, 2012, this case remained under seal while the United States investigated Plaintiffs’ allegations and determined whether it would intervene. Once the United States filed notice that it declined to intervene, see Dkt. 12, the Complaint was unsealed and served upon Satory, which filed a motion to dismiss the Complaint in its entirety, see Dkt. 16 (“Def. MTD”). Plaintiffs then filed their Opposition, see Dkt. 20 (“Pls. Opp.”), and Satory filed a Reply, see Dkt. 21 (“Def. Reply”).
In its reply brief, Satory noted that Mr. Robin had died during the week of March 4, 2013. Def. Reply at 1 n.1. The Court directed Plaintiffs’ counsel to confirm that statement and address whether Mr. Robin’s FCA claims survive his death. See Minute Order dated April 29, 2013. Plaintiffs’ counsel confirmed Mr. Robin’s death, see Mot. Extension of Time, Dkt. 22, at 1, and submitted a memorandum providing authority for the proposition that FCA claims do survive death. See Statement Regarding Survival [Dkt. 23]. Because the Court concludes that FCA claims survive the death of the plaintiff-relator for the reasons set forth below, a timely motion from Plaintiffs’ counsel to substitute a successor-in-interest for Mr. Robin as plaintiff will be granted.
II. LEGAL STANDARDS
A. Motion to Dismiss
A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6)
challenges the adequacy of a complaint on its face, testing whether a plaintiff has properly stated
a claim. Fed. R. Civ. P. 12(b)(6). Federal Rule of Civil Procedure 8(a) requires that a complaint
contain “a short and plain statement of the claim showing that the pleader is entitled to relief.”
Fed. R. Civ. P. 8(a)(1). A complaint must be sufficient “to give a defendant fair notice of what
*11
the . . . claim is and the grounds upon which it rests.”
Bell Atl. Corp. v. Twombly
,
In deciding a motion under Rule 12(b)(6), a court may consider the facts alleged
in the complaint, documents attached to the complaint as exhibits or incorporated by reference,
and matters about which the court may take judicial notice.
Abhe & Svoboda, Inc. v. Chao
, 508
F.3d 1052, 1059 (D.C. Cir. 2007) (internal quotation marks and citation omitted). To survive a
motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a
claim for relief that is “plausible on its face.”
Twombly
,
A court must treat the complaint’s factual allegations as true, “even if doubtful in
fact.”
Twombly
,
B. Heightened Pleading Requirement for Fraud
Federal Rule of Civil Procedure 8 requires that every complaint include “a short
and plain statement of the claim showing that the pleader is entitled to relief” and that “each
allegation . . . be simple, concise, and direct.” Fed. R. Civ. P. 8(a), (d)(1). “[B]ecause the False
Claims Act is self-evidently an anti-fraud statute, complaints brought under it must [also] comply
with Rule 9(b).”
United States ex rel. Totten v. Bombardier Corp.
,
The D.C. Circuit has noted that Rules 8 and 9(b) are not contrary to one another, but should be read in conjunction.
[T]his means that the pleader must state the time, place and content of the false misrepresentations, the fact misrepresented and what was obtained or given up as a consequence of the fraud. The rule serves to discourage the initiation of suits brought solely for their nuisance value, and safeguards potential defendants from frivolous accusations of moral turpitude. . . . And because “fraud” encompasses a wide variety of activities, the requirements of Rule 9(b) guarantee all defendants sufficient information to allow for preparation of a response.
United States ex rel. Joseph v. Cannon
,
Pleading on information and belief for claims subject to the strictures of Rule 9(b)
is permitted when essential information lies uniquely within another party’s control.
Kowal v.
MCI Commc’ns Corp.
,
C. Jurisdiction and Venue
The Court has federal question jurisdiction over Plaintiffs’ FCA claims under 28 U.S.C. § 1331 and supplemental jurisdiction over their state law claims under 28 U.S.C. § 1367. Venue is proper in this District under 31 U.S.C. § 3732(a) (providing for venue “in any judicial district in which the defendant . . . resides, transacts business, or in which any act proscribed by [31 U.S.C. §] 3729 occurred”).
III. ANALYSIS
In its motion to dismiss, Satory asserts that Plaintiffs have failed to state a claim on any of the seven counts in the Complaint, characterizing this lawsuit as “simply a case of disgruntled former employees now trying to couch their employment grievances as a violation of the [FCA].” Def. Reply at 2. The Court will first provide relevant background as to procedure *14 in FCA cases. It will then address whether Mr. Robin’s death during the pendency of this case extinguishes his FCA claims. Finally, the Court will rule on the motion to dismiss on each of the claims advanced by the Plaintiffs.
A. Procedure in FCA Cases Generally
The FCA’s “chief purpose . . . is to prevent the commission of fraud against the
federal government and to provide for the restitution of money that was taken from the federal
government by fraudulent means.”
United States ex rel. Purcell v. MWI Corp.
, 824 F. Supp. 2d
12, 15–16 (D.D.C. 2011) (citation omitted). First enacted in the time of President Lincoln to
stem chicanery in Civil War defense contracts, the FCA provides civil penalties for,
inter alia
,
submission of false claims to the United States government. Private parties, called relators, are
permitted to sue for violations of the FCA in the name of the United States. 31 U.S.C.
§ 3730(b)(1). Special procedures apply in such cases, which are called
qui tam
actions—“short
for the Latin phrase
qui tam pro domino rege quam pro se ipso in hac parte sequitur
, which
means ‘who pursues this action on our Lord the King’s behalf as well as his own.’”
Vt. Agency
of Nat’l Res. v. United States ex rel. Stevens
,
B. FCA Claims Survive the Death of the Relator-Plaintiff
Mr. Robin’s death requires the Court to address whether his FCA claims against
the government are extinguished or whether they survive his demise as part of his estate. When
a federal statute contains no explicit statement on survival rights, as is true of the FCA, the
general rule under federal common law is that rights of action under federal statutes survive a
plaintiff’s death if the statute is remedial, not penal.
See Ex parte Schreiber
,
In the leading case addressing whether an FCA claim survives the death of the
relator-plaintiff,
United States v. NEC Corp.
,
The structure and underlying policy of the FCA convince us that the statute’s qui tam provisions are remedial in nature. The purpose of the qui tam provisions is to provide individuals with incentive to inform the government of fraudulent activity and to compensate such relators for the time and expense of coming forward with such information. The qui tam provisions are remedial and in no way act to penalize the FCA defendant. We therefore hold that a relator’s qui tam action survives his death.
With one exception, “[t]he few [district] courts that have considered the issue
have concluded that the
qui tam
action survives the death of the relator. In such a circumstance,
a personal representative of the relator’s estate may proceed with the case.” Claire M. Sylvia,
The False Claims Act: Fraud Against the Government
§ 11:98 (West 2010 & Supp. 2012)
(collecting cases). The sole exception is
United States ex rel. Harrington v. Sisters of
Providence in Oregon
,
The Court agrees with the reasoning of NEC Corporation and the nearly unanimous district courts that FCA claims survive the death of the relator-plaintiff. Upon a timely motion to substitute, a personal representative of Mr. Robin’s estate may proceed with the case. See Fed. R. Civ. P. 25(a)(1) (requiring a motion to substitute to be filed within 90 days of filing of a suggestion of death). If no motion to substitute is timely filed, Mr. Robin will be dismissed as a relator-plaintiff.
C. Counts I & II: Presentation of False Claims In Counts I and II, Plaintiffs allege that Satory presented false claims to the Government by knowingly submitting false and fraudulent invoices for payment under its DOJ contract “on or about every two weeks, from August 2010 to the present . . . to the DOJ *17 [Contracting Officer’s Technical Representative], Government Task Mangers, and Contracts Management Service.” Compl. ¶ 75. Plaintiffs aver that Satory submitted the invoices “along with a Form DD 250, or equivalent document, certifying that Satory’s billing conformed to the contract,” even though “the services did not conform to the contract because Satory billed for work that was performed for Satory’s own benefit and not for the DOJ contract” and that “did not meet the standards called for under the DOJ contract. ¶¶ 75, 77.
Satory argues that Messrs. Robin and Maxon have failed to plead fraud with particularity under Rule 9(b) because they “do not identify any particular fraudulent claim for payment that was submitted by Satory to the U.S. Government, the date of any such claims, the content of any such claims, the work for which the Government was actually billed, the individuals involved in the billing, or the length of time between the alleged fraudulent practice and the submission of any claim for payment.” Def. MTD at 6. Satory complains that “the Complaint is surprisingly devoid of any details as to a specific fraudulent invoice, the amount of any invoice, who submitted the invoice, and when the invoice was ultimately paid.” at 8; see also Def. Reply at 10. Characterizing the Plaintiffs’ allegations as “general dissatisfaction with their job assignments and their belief that Satory engaged in conduct in violation of its contract,” Satory argues that “the Relators merely allege actions that they believe might have violated Satory’s government contract[,] but not the FCA.” Def. MTD at 8–9; see also Def. Reply at 7.
Plaintiffs respond that they sufficiently alleged a “factually false” claim submission in Count I by averring that Ms. Isaacs “invited a Microsoft records management expert [Ms. Corneby] to the 2Con building . . . to create a presentation to Microsoft in the hopes that Microsoft would recommend Satory’s work to other companies” and that she required Satory employees to work on that effort, which “was completely unrelated to the DOJ contract.” *18 Pls. Opp. at 9. Plaintiffs also note that they alleged that Satory “took on a major initiative to build its own Corporate Cloud Architecture and SharePoint Internet & Portal from the offices in the 2Con building” and that several Satory employees, identified by name, billed 40 hours to DOJ per week “in October, November, and December” of 2010. at 9–10.
In Count II, Plaintiffs argue that they satisfied the requirements of Rule 9(b) by
alleging that “Satory did not perform the services requested by the DOJ” because it
“commandeered DOJ property for its own use and abused its access to the DOJ’s computer
infrastructure to erect obstacles for other contractors and position itself to receive additional, and
sometimes unnecessary work,” thus “rendering [Satory’s] claim for payment for the requested
services factually false.” Pls. Opp. at 10. Their allegations were sufficiently specific, Plaintiffs
contend, because they “alleged that at the direction of [Ms.] Isaacs and [Mr.] Rosario, Satory
‘submitted invoices under the contract on or about every two weeks’ and that in October,
November, and December of 2010, those bi-weekly invoices contained hours that certain named
employees spent on non-DOJ projects and work that did not conform to the contract.” at 12–
13. To the extent that they did not allege “invoice numbers and invoice dates” in the Complaint,
Messrs. Maxon and Robin argue that those items are “within the exclusive control of Satory and
the DOJ,” relieving them from any lack of specificity on that point under the D.C. Circuit’s
decision in
United States ex rel. Williams v. Martin-Baker Aircraft Co.
,
The FCA imposes liability on “any person who knowingly presents, or causes to
be presented, a false or fraudulent claim for payment or approval.” 31 U.S.C. § 3729(a)(1)(A).
[4]
There are three elements to an FCA presentment claim under § 3729(a)(1)(A): (1) the defendant
presented a claim for payment or approval to the government, (2) the claim was “false or
fraudulent,” and (3) the defendant acted knowing that the claim was false.
See United States ex
rel. Schwedt v. Planning Research Corp.
,
The Court cannot agree with Satory that the Plaintiffs have not identified any
“false or fraudulent” claim allegedly submitted and its characterization of the Plaintiffs’
allegations as mere “job dissatisfaction.” Messrs. Robin and Maxon set forth allegations that
Satory, through at least Ms. Isaacs and Mr. Rosario, had an ongoing scheme to bill for work that
was not compliant with the DOJ contract in two respects: (1) Satory used DOJ facilities and
resources for its own private corporate purposes while billing DOJ for its time, and (2) Satory
constructed DOJ IT contract deliverables in a manner that was inefficient and contrary to
*20
industry standards and in a way that positioned Satory to have exclusive access to future IT
contracts at DOJ.
E.g.
, Compl. ¶ 52 (describing how “[c]onventional architecture” of a
development lab would involve a Lab Manager who formed a team of subject-matter experts
from all constituents, including DOJ and all contractors), ¶ 60 (describing how Mr. Rosario
directed Mr. Robin to structure the DevLab so that it would be “impossible for any other
contracting company to be successful in any project without Satory” billing DOJ for project
management work). Non-conforming service cases—i.e., those in which a company bills for
“employee work that was not performed” and “overcharge[s]” for services provided—clearly fall
within the scope of the FCA.
See United States ex rel. Head v. Kane Co.
,
The Court also finds that the allegations made by Messrs. Robin and Maxon
comply with Rule 9(b). A plaintiff’s task is to “plead factual content that allows the court to
draw the reasonable inference that the defendant is liable for the misconduct alleged,”
United
States ex rel. Westrick v. Second Chance Body Armor, Inc.
,
While Satory attempts to make much of the fact that Plaintiffs have not been more
specific as to the “details [of] the alleged fraudulent invoices,”
see
Def. MTD at 8, Def. Reply at
10–12, Messrs. Robin and Maxon have clearly put Satory on notice of the nature of the alleged
fraud and averred that Satory submitted “false and fraudulent” certifications for “services [that]
did not conform to the contract because Satory billed for work that was performed for Satory’s
own benefit and not for the DOJ contract” and “that did not meet the standards called for under
the DOJ Contract.” Compl. ¶¶ 75, 77. Plaintiffs’ inability to allege more details about the
*22
invoices submitted by Satory is of no significance at this stage of the case because, as Plaintiffs
note,
see
Pls. Opp. at 13, they have alleged that they were front-line IT workers who had no
direct access to the bills Satory submitted to DOJ. Accepting Satory’s argument that Plaintiffs’
Complaint must fail without specific invoice numbers and dates would, at least in the context of
a motion to dismiss, be contrary to the purpose of the False Claims Act.
See Martin-Baker
, 389
F.2d at 1258 (“[T]his circuit provides an avenue for plaintiffs unable to meet the particularity
standard because defendants control the relevant documents—plaintiffs in such straits may allege
lack of access in the complaint.”);
see also United States ex rel. Bender v. N. Am. Telecommc’ns
Inc.
,
Accordingly, the Court will deny Satory’s motion to dismiss as to Counts I and II. D. Count III: False Statements
In Count III, Plaintiffs assert that “Satory knowingly made, used or caused to be made or used numerous false records and statements to obtain approval and payment for the false and fraudulent claims submitted to DOJ.” Compl. ¶ 79. Satory asserts that this count should be dismissed because Plaintiffs “provide nothing in the way of time, place, or contents of any purportedly false representations, nor do they ‘link’ the scheme to claims for payment made by the United States.” Def. MTD at 12; see also Def. Reply at 11–13 (arguing that the Plaintiffs “provide no details as to the alleged fraudulent invoices that were submitted, including the amount which the Government was overbilled, the dates on which the invoices were submitted, or even the individuals who certified the invoices”). Plaintiffs respond that they “provided significant details as to the content time, and place of Satory’s misrepresentations,” including *23 “the names of employees who billed work to the DOJ contract while actually working in DOJ offices at the 2Con building on corporate matters unrelated to the DOJ, ‘for weeks in October, November, and December,’ of 2010, and the managers who instructed them to do so.” Pls. Opp. at 14–15.
The FCA provides a cause of action against any person who “knowingly makes,
uses, or causes to be made or used, a false record or statement material to a false or fraudulent
claim.” 31 U.S.C. § 3729(a)(1)(B). “Material” is defined as “having a natural tendency to
influence, or be capable of influencing, the payment or receipt of money or property.” § 3729(b)(4).
[5]
Thus, under the post-amendment FCA, a plaintiff must allege that (1) the
defendant made or used a “record or statement;” (2) the record or statement was false; (3) the
defendant knew it was false; and (4) the record or statement was “material” to a false or
fraudulent claim. § 3729(a)(1)(B). Because Rule 9(b) applies, “the pleader must state the
time, place and content of the false misrepresentations [and] the fact misrepresented.”
Joseph
,
The Court concludes that Messrs. Robin and Maxon have sufficiently alleged a
false statement violation. Plaintiffs alleged that Satory submitted invoices along with a
certification that “Satory’s billing conformed to the contract” and that the certification was false
because Satory was misrepresenting its compliance with the contract. Compl. ¶¶ 75, 77, 79.
*24
Indeed, in having expressly alleged that Satory submitted a false certification for payment,
Plaintiffs here are on stronger footing than plaintiffs in so-called “implied certification” cases, in
which plaintiffs rely only on “a statute, regulation, or contractual provision [that] makes
compliance with a requirement an express condition precedent to payment.”
TDC Mgmt. Corp.
,
Satory’s argument as to particularity under Rule 9(b), which is effectively
identical to its argument as to Counts I and II, fails for the same reasons discussed above
regarding Plaintiffs’ presentment allegations.
See United States ex rel. Matheny v. Medco Health
Solutions, Inc.
,
E. Count IV: False Claims Retaliation
Plaintiffs allege in Count IV that they were “discharged, suspended, threatened, harassed, and in other manners discriminated against in the terms and conditions of their employment by Satory because of lawful acts” they performed “in furtherance of a False Claims Act action,” including their investigation. Compl. ¶ 82. According to Satory, Messrs. Robin and Maxon “failed to allege that they ever participated in a protected activity under the FCA” because they never “raised concerns about Satory’s alleged fraudulent billing practices” but instead “merely raised concerns about their employment grievances and concerns that Satory was somehow impermissibly performing work in government facilities.” Def. MTD at 14; see also Def. Reply at 13–15 (arguing that Messrs. Robin and Maxon “have only alleged a scheme *25 whereby a company possibly could defraud the Government, not a situation whereby Satory actually did defraud the Government”).
Messrs. Robin and Maxon respond that they alleged that they challenged Satory’s practice of billing DOJ “for hours its employees spent doing work unrelated to the DOJ contract,” Satory’s “use of DOJ offices and resources for its own purposes,” and “its abuse of the access it gained under the DOJ contract to erect barriers to competition and position itself for additional work.” Pls. Opp. at 15–16. Plaintiffs argue that these concerns, raised to CEO Isaacs and others, went beyond “concerns of mere regulatory compliance.” at 16.
The FCA incorporates broad anti-retaliation protection for whistleblowers. At 31
U.S.C. 3730(h)(1), the law provides: “Any employee, contractor, or agent shall be entitled to all
relief necessary to make that employee, contractor, or agent whole, if that employee, contractor,
or agent is discharged, demoted, suspended, threatened, harassed, or in any other manner
discriminated against in the terms and conditions of employment because of lawful acts done by
the employee, contractor, agent or associated others in furtherance of an action under this section
or other efforts to stop [one] or more violations of this subchapter.” “To make out a claim of
retaliation under the FCA, an employee must demonstrate that: ‘(1) he [or she] engaged in
protected activity . . . and (2) he [or she] was discriminated against because of that activity.’”
Sharma v. District of Columbia
,
The Court finds that Plaintiffs have stated a claim for FCA retaliation. First, they
have alleged that they engaged in protected activities on several occasions. Mr. Robin
complained to Mr. Rosario about the configuration of the servers during the Lab Migration
Project, Compl. ¶ 30; Messrs. Maxon and Robin, among others, questioned Ms. Isaacs about the
propriety of Satory’s private corporate work while on DOJ facilities using DOJ resources,
id.
¶¶ 36–37, 39-40; after being instructed to construct the DevLab in a way he considered wasteful
and unethical, Mr. Robin complained to Mr. Rosario and wrote an e-mail to Satory management
stating that “DOJ Leadership [should] be made aware of Satory’s proposal for controlling access
to the DOJ Lab,”
id.
¶¶ 53–55; and Mr. Robin raised his concerns during two face-to-face
meetings in January 2011, once to Messrs. Rosario and Elliott and once to Mr. Elliott and Ms.
Gamse,
id.
¶¶ 56–58, 64. These reports are sufficient to show that Plaintiffs engaged in
protected activity.
See Yesudian
,
As to the second prong, Plaintiffs have established that Satory “had knowledge
[they] were engaged in protected activity,” given their repeated complaints to supervisors,
including Satory’s CEO, Ms. Isaacs.
See Yesudian
,
F. Count V: Wrongful Termination
Plaintiffs assert that Satory terminated Mr. Robin and constructively discharged Mr. Maxon after Satory became aware of their complaints that Satory was violating the FCA, in violation of District of Columbia law. ¶¶ 85–88. This count should be dismissed, Satory argues, because “neither Mr. Maxon nor Mr. [Robin] can establish that their termination or voluntary separation from employment was caused by their participation in any protected activity and . . . because their claim does not fit within the narrow confines of the at-will employment exception under D.C. law.” Def. MTD at 14. “[B]ecause the FCA provides for a specific and significant remedy” for the Plaintiffs’ allegedly wrongful discharges, Satory argues that the Plaintiffs cannot also bring a claim for improper termination of their at-will employment with Satory on the ground that they opposed illegal activity. Def. MTD at 15–16 (internal citation and quotation marks omitted); see also Def. Reply at 16.
Plaintiffs respond that their allegations are sufficient because they “objected to
Satory’s failure to comply with regulations,” which falls within the recognized exceptions to the
at-will employment doctrine under D.C. law. Pls. Opp. at 17–18 (citing,
inter alia
,
Byrd v.
VOCA Corp.
,
“It has long been settled in the District of Columbia that an employer may
discharge an at-will employee at any time and for any reason, or for no reason at all.”
Adams v.
George W. Cochran & Co.
,
The D.C. Circuit applied the
Nolting
rule approvingly in
Kassem v. Washington
Hospital Center
,
G. Count VI: Breach of Employment Contract Count VI encompasses Plaintiffs’ allegation that Satory “breached its employment contracts” with them. Compl. ¶ 91. Satory contends that neither Mr. Maxon nor Mr. Robin has alleged the existence of an employment contract and that, even if their offer letters could be construed as employment contracts, Satory at most agreed to at-will employment. Def. MTD at 16–17.
The offer letters “clearly were general offers of employment [that] specifically
noted that their ‘position and . . . activities and services may change.’” Def. Reply at 20. “In the
District of Columbia, absent express language indicating particular terms or duration of
*31
employment, the employment relationship is presumed to be at-will. This presumption applies
unless the parties state clearly their intention to limit the employer’s right to terminate, such as
by a contract provision setting out employment for a fixed term or language that allows
termination only for cause.”
Daisley v. Riggs Bank, N.A.
,
Conceding that fact, Plaintiffs change tack in their opposition brief, instead
arguing that Satory violated their Offer Letters and Relocation Expense Agreements by not
paying relocation expenses and by placing them in different roles than those stated in the Offer
Letters.
Id.
at 19–20 (acknowledging that Plaintiffs “do not allege that Satory breached the
contract by terminating them”). This, too, is a row too tough to hoe because even assuming
arguendo
that the Relocation Agreements and Offer Letters were legally effective as contracts,
Plaintiffs have made no allegation that any contractual terms were breached. Despite the vague
statements in their opposition brief, they have made no allegation of relocation expenses that
went unpaid or identified any terms of a contract that Satory allegedly broke other than assigning
different duties than they anticipated.
See Ponder v. Chase Home Fin., LLC
,
H. Count VII: Punitive Damages
In Count VII, Plaintiffs demand punitive damages as a remedy for actions taken
by Satory “with evil motive, actual malice, deliberate oppression, with intent to injure, and in
willful disregard for [their] rights.” Compl. ¶ 95. Satory argues that this count should be
dismissed because “punitive damages is available to a plaintiff as a remedy and is not a free-
standing cause of action.” Def. MTD at 18–19 (citing,
inter alia
,
Int’l Kitchen Exhaust Cleaning
Ass’n v. Power Washers of N. Am.
,
Because Plaintiffs concede that this claim “need not be formally plead as a count in their complaint,” Pls. Opp. at 20, the Court will grant Satory’s motion to dismiss as to Count VII.
IV. CONCLUSION
For the foregoing reasons, Satory’s motion to dismiss will be denied as to Counts I through IV. The motion will be granted as to Counts V, VI, and VII because Plaintiffs have *33 failed to state claims for wrongful termination, breach of contract, or punitive damages. [7] A memorializing Order accompanies this Opinion.
DATE: May 23, 2013
/s/ ROSEMARY M. COLLYER United States District Judge
Notes
[1] The documents in the case are inconsistent between referring to “Mr. Robin” or “Mr. Hood.” The Court will use “Mr. Robin” in this Opinion, consistent with the Complaint.
[2] Satory has noted that its proper name is “Satory Global, LLC,” not “Satory Global, Inc.” as alleged in the Complaint. See Def. Mot. Dismiss [Dkt. 16] at 1.
[3] As Plaintiffs bring claims for breach of contract based on their offer letters and relocation
reimbursement agreements, the documents are incorporated to the complaint, and the Court may
consider them on a motion to dismiss.
See Abhe & Svoboda, Inc. v. Chao
,
[4] 31 U.S.C. § 3729 was amended in May 2009, see Pub. L. 111-21, § 4(a), 123 Stat. 1621 (May 20, 2009), and § 3730 was amended in July 2010, see Pub. L. 111-203, Title X, § 1079 A(c), 124 Stat. 2079 (July 21, 2010). The post-amendment versions apply to the allegations here, all of which took place in late 2010 or early 2011. Subsection (a)(1)(A) was subsection (a)(1) in the earlier version of the statute.
[5] In the post-amendment version of the FCA, “[t]he false statement clause was renumbered from
31 U.S.C. § 3729(a)(2) to 31 U.S.C. § 3729(a)(1)(B),” and the clause was changed “from ‘false
record or statement to get a false or fraudulent claim paid or approved by the government’ to
‘statement material to a false or fraudulent claim.’”
United States ex rel. Folliard v. Gov’t
Acquisitions
,
Inc.
,
[6] Because there is no allegation here that Plaintiffs’ “normal job activities” involved reporting
compliance, this case does not fall within the
Martin-Baker
rule requiring a special showing of
notice.
See Martin-Baker
,
[7] Plaintiffs note in passing that they “request that the Court . . . grant them leave to amend their
complaint consistent with the Court’s decision.” Pls. Opp. at 20. If Plaintiffs wish to seek leave
to amend their Complaint, they must file a motion setting forth valid reasons for doing so,
together with a proposed amended complaint.
See
LCvR 7(i). As to the claims dismissed in this
Opinion, however, the Court notes that amendment would likely be futile for the reasons stated
in this Opinion.
See Howell v. Gray
,