US ex rel. Kirk v. Schindler Elevator Corp.

• Decision Date: 06 April 2010
• Docket Number: Docket No. 09-1678-cv.
• Parties: UNITED STATES of America ex rel. Daniel KIRK, Plaintiff-Appellant, v. SCHINDLER ELEVATOR CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

601 F.3d 94

UNITED STATES of America ex rel. Daniel KIRK, Plaintiff-Appellant, v. SCHINDLER ELEVATOR CORPORATION, Defendant-Appellee.

Docket No. 09-1678-cv.

United States Court of Appeals, Second Circuit.

Argued: December 10, 2009.

Decided: April 6, 2010.

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Jonathan A. Willens, Jonathan A. Willens LLC, New York, NY, for Plaintiff-Appellant.

Steven Alan Reiss (Gregory Silbert, David Yolkut, on the brief), Weil, Gotshal & Manges LLP, New York, NY, for Defendant-Appellee.

Charles W. Scarborough, Appellate Staff (Michael S. Raab, Appellate Staff, on the brief), for Tony West, Assistant Attorney General, U.S. Department of Justice, Civil Division, Washington, DC; Jeannette Vargas, Assistant United States Attorney, for Preet Bharara, United States Attorney, Southern District of New York, New York, NY, for Amicus Curiae the United States of America.

Katherine Y.K. Cheung (Rae T. Vann, on the brief), Norris, Tysse, Lampley & Lakis, LLP, Washington, DC, for Amicus Curiae the Equal Employment Advisory Council.

Before: McLAUGHLIN, KATZMANN, and LYNCH, Circuit Judges.

KATZMANN, Circuit Judge:

The Vietnam Era Veterans Readjustment Assistance Act ("VEVRAA"), 38 U.S.C. § 4212, requires contractors doing business with federal government entities to submit annual reports to the Secretary of Labor providing information about the number of veterans employed by the contractor (the "VETS-100 reports"). Plaintiff-Appellant Daniel Kirk brought this qui tam action on behalf of the United States government under the False Claims Act ("FCA"), 31 U.S.C. § 3729 et seq., alleging that his former employer, Defendant-Appellee Schindler Elevator Corp. ("Schindler"), obtained government contracts while representing that it had filed the required VETS-100 reports, when in fact it either had failed to file a report or had filed a false report for the relevant years. Kirk based his allegations in large part on information he obtained after submitting requests under the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552.

This case calls on us to decide a question of first impression in this Circuit: whether the FCA's jurisdictional bar, 31 U.S.C. § 3730(e)(4)(A), which provides that "no court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions in. . . a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation," applies when the plaintiff's allegations are based on materials produced in response to a FOIA request. Our sister Circuits are divided on this issue. If the jurisdictional bar does not apply, this case also presents the question whether Schindler may be held liable under the FCA for (1) failing to file VETS-100 reports, and (2) filing false VETS-100 reports.

We hold that the answer to the question whether a document obtained in response to a FOIA request qualifies as an enumerated source under 31 U.S.C. § 3730(e)(4)(A) depends on the nature of the document itself; the FCA's jurisdictional bar applies only when the document is a "congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation." We further hold that Kirk stated valid claims under the FCA when he alleged that (1) Schindler had failed to file VETS-100 reports for certain years, and (2) Schindler had filed false VETS-100 reports for certain years. We vacate the judgment of the district court and remand for further proceedings consistent with this opinion.

BACKGROUND

The FCA is designed to help combat fraud against the federal government by persons who provide goods and services to it. See United States ex rel. Doe v. John Doe Corp., 960 F.2d 318, 319 (2d Cir.1992). It establishes liability for persons who submit false claims for payment to the government, 31 U.S.C. § 3729(a)(1), and it contains a variety of measures designed to enhance deterrence and enforcement. These include, for example, a treble damages provision, id., and — central to this case — qui tam provisions that allow private citizens who learn of fraud to bring suit in the name of the government and to share in any recovery, id. § 3730(b)-(d). Plaintiff-relator Daniel Kirk brought such an action based on his belief that his employer, Schindler, had obtained contracts and payments from the federal government while failing to comply with the requirements of VEVRAA.

Kirk served in the United States Army from 1969 to 1971, performing part of his service in Vietnam. In 1978, he took a job at Millar Elevator Industries, Inc. ("Millar"). Millar was bought by Schindler in 1989, but the two companies operated separately until 2002. In the years preceding 2002, Kirk was promoted several times, eventually (in 2001) becoming Vice President responsible for the Modernization, Repair, and Maintenance Support Departments of Millar. After Schindler integrated Millar's operations into its own in 2002, Kirk was initially named Schindler's Regional Modernization Manager for New York City and Long Island, in which capacity he managed over 100 employees. In July 2003, however, Kirk discovered, apparently without being informed directly, that he was being demoted to the non-managerial position of Field Superintendent. He resigned from Schindler in August 2003.

In April 2004, Kirk filed a complaint with the Office of Federal Contract Compliance Programs ("OFCCP") at the Department of Labor ("DOL"), claiming that he had been improperly demoted and constructively terminated by Schindler despite the fact that he was a Vietnam veteran in violation of VEVRAA. The OFCCP provided Schindler with a copy of Kirk's complaint and began an investigation of Schindler's compliance with VEVRAA. In February 2005, OFCCP found that there was insufficient evidence to support Kirk's claim. Kirk appealed this finding, and in November 2009, the DOL affirmed the OFCCP's finding that Schindler had not violated VEVRAA when it took an adverse employment action against him.

In March 2005, meanwhile, Kirk filed the instant case under the FCA in the name of the U.S. government. As provided for by the FCA, see 31 U.S.C. § 3730(b), the case was initially filed under seal; in June 2007, after the government had decided not to intervene, the action was unsealed and Kirk was permitted to pursue it as relator. He then filed the Amended Complaint.

Before turning to the factual allegations in the Amended Complaint, it is useful to review the relevant requirements of VEVRAA. VEVRAA and its accompanying regulations impose several specific requirements on contracts "entered into by any department or agency of the United States for the procurement of personal property and nonpersonal services (including construction)," when the value of the contract exceeds a certain monetary threshold.¹ 38 U.S.C. § 4212(a)(1). Contracts subject to VEVRAA must contain provisions obligating the contractor (1) to "take affirmative action to employ and advance in employment qualified covered veterans,"² 38 U.S.C. § 4212(a)(1); (2) to invite eligible veterans to identify themselves voluntarily to their employer, 48 C.F.R. §§ 22.1310(b), 52.222-37(e); and (3) to submit annual reports to the Secretary of Labor (the "VETS-100 reports") providing data about the qualified covered veterans in the contractor's workforce, including the number of qualified covered veterans in each job category and hiring location and the number of new employees who are qualified covered veterans, 38 U.S.C. § 4212(d); 48 C.F.R. §§ 22.1310(b), 52.222-37(c).

In 1998, Congress passed the Veterans Employment Opportunities Act, 31 U.S.C. § 1354, which provides that "no agency may obligate or expend funds . . . to enter into a contract covered by VEVRAA with a contractor from which a VETS-100 report was required . . . if such contractor did not submit such report," id. § 1354(a)(1). In turn, 48 C.F.R. § 52.222-38 provides that "by submission of its offer, the offeror represents that, if it is subject to the reporting requirements of VEVRAA . . . it has submitted the most recent VETS-100 Report required by the Act." This regulation issued in October 2001 and became effective December 21, 2001. See 66 Fed.Reg. 53,487-01, 53,487 (Oct. 22, 2001).

Kirk's Amended Complaint alleges that Schindler, while entering into numerous contracts with the federal government that were subject to the requirements of VEVRAA, failed to comply with it in several salient ways. Because the district court dismissed the complaint under Fed. R.Civ.P. 12(b)(6) and 12(b)(1), we accept as true the material facts alleged in the complaint and draw all reasonable inferences in Kirk's favor. Sharkey v. Quarantillo, 541 F.3d 75, 83 (2d Cir.2008); Freedom Holdings, Inc. v. Spitzer, 363 F.3d 149, 151 (2d Cir.2004).

Kirk alleges that from 1998 to the present, he was never asked to identify himself as a veteran and that when Schindler integrated its operations with Millar's, the approximately 400 former Millar employees were not given an opportunity to self-identify as veterans. He further alleges that as a manager of 100 employees at Schindler with responsibility for hirings, firings, and promotions, he was never informed of any affirmative action program aiding veterans. A copy of Schindler's employee manual makes no reference to an affirmative action program for veterans.

In addition, Kirk alleges that Schindler failed to submit VETS-100 reports from 1998 until late 2004 and that the reports it did file in 2004, 2005, and 2006 are false. These latter allegations are based in significant part on the results of several FOIA requests submitted to the DOL by his wife, Linda Kirk. In November 2004, Mrs. Kirk submitted a FOIA request seeking copies of any VETS-100 reports filed by Schindler for the years 2002, 2003, or 2004. In a letter dated February 11, 2005, the Office of the Assistant Secretary for Veterans...