Armstrong v. Arcanum Grp., Inc.

• Decision Date: 27 July 2018
• Docket Number: No. 17-1378,17-1378
• Parties: Mindy ARMSTRONG, Plaintiff–Appellant, v. THE ARCANUM GROUP, INC., Defendant–Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

897 F.3d 1283

Mindy ARMSTRONG, Plaintiff–Appellant,

v.THE ARCANUM GROUP, INC., Defendant–Appellee.

No. 17-1378

United States Court of Appeals, Tenth Circuit.

July 27, 2018

Robert A. McGuire, III, Robert McGuire Law Firm, Lone Tree, Colorado for Plaintiff-Appellant.

Chanda M. Feldkamp, Kelly & Walker, LLC, Denver, Colorado for Defendant-Appellee.

Before HARTZ, MURPHY, and McHUGH, Circuit Judges.

HARTZ, Circuit Judge.

Mindy Armstrong was employed by The Arcanum Group, Inc., which serves as a placement agency to staff federal-government positions. She was placed with the Real Estate Leasing Services Department of the Bureau of Land Management (BLM). After she complained that BLM employees were falsifying lease-related records, the BLM demanded that Arcanum remove her from the placement. Her Arcanum supervisor, Steven Cota, could not find an alternative placement for Armstrong and therefore terminated her employment. Armstrong sued Arcanum in the United States District Court for the District of Colorado, claiming that Arcanum retaliated against her for her falsification complaints, in violation of the antiretaliation provisions of the False Claims Act (FCA) and the National Defense Authorization Act (NDAA). The district court granted Arcanum summary judgment, and Armstrong appeals. We affirm because Armstrong did not produce sufficient evidence that Cota had knowledge of her complaints before he terminated her.

I. BACKGROUND

In May 2014, Arcanum contracted to provide the BLM with workers for three positions. Arcanum hired Armstrong to be a BLM lease administrator. She began work in July 2014. One of Armstrong's duties was to prepare a quarterly report that the BLM would submit to the Department of the Interior. Part of the task was to review leases to check the accuracy of a spreadsheet of BLM leases called the Master Report. The BLM leased some space from the General Services Administration (GSA) and some from private lessors. Armstrong believed she found two systematic errors.

One error concerned the distinction between usable square feet (USF) and rentable square feet (RSF). RSF includes the tenant's share of common areas in the measure of leased space, while USF excludes such areas. Before 2000 many BLM leases referred to USF. But all later leases used RSF; and the GSA charged the BLM rent based on RSF amounts. The BLM did not remeasure leased spaces to convert the older USF leases to the RSF measure. Rather, it approximated the RSF value by multiplying the USF value by 1.15 (the "blanket factor") for use in various documents, including the Master Report. Armstrong believed this was improper under governing GSA policies.

Second, Armstrong believed the Master Report incorrectly omitted measures of no-cost space . When private lessors allowed the BLM, as part of a lease, to use certain space for free (the lease reflected the space, but the BLM did not pay more for it), the BLM did not include that space in its Master Report. (As best we can tell, lessors treat leased spaced as no-cost space to keep within square-footage limits in bid specifications.) Leases with no-cost space thus had area measurements differing from those in the Master Report. Armstrong believed GSA policies made this improper as well.

Armstrong told Barbra Burns-Fink—an Arcanum employee working at the BLM as a realty specialist—that lease data were being falsified. Burns-Fink suggested that Armstrong raise her concerns with Terry Baker, the team lead for the Real Estate Leasing Services Department, but Armstrong did not do so at that time. At a team meeting a week later, however, Armstrong asked to speak to Baker privately. Baker responded that she had heard of Armstrong's accusations and insisted that no fraud was occurring. After the meeting another BLM employee met with Armstrong and showed her a BLM policy provision authorizing the use of the blanket-factor conversion, though Armstrong still did not believe that BLM staff had the authority to overrule other operative rules.

Two days later, on October 3, 2014, Baker had two meetings with Armstrong during which they discussed Armstrong's falsification claims and Armstrong expressed "confus[ion] as to what [her] actual job duties were." Aplt. App., Vol. 2 at 271 (Armstrong deposition). Later that day Baker emailed Tina Hamalak, who was the BLM contracting officer for the Arcanum contract, to complain about Armstrong. The email requested that Armstrong be removed from her BLM position for a variety of reasons, including Armstrong's falsification accusation, her inadequate Excel skills, her failure to ask Baker for guidance when she was confused about her role, and her inability to adjust to the BLM's "unstructured environment." Id. at 346.

Hamalak called Cota's assistant Chelsea Peterson to tell her to remove Armstrong from the BLM position, and Peterson relayed the message to Cota. Cota called Hamalak to ask about the reasons for removal, but Hamalak provided no details and her confirming email said only that Armstrong was "not working out." Id. at 348. Before Armstrong's termination, Hamalak did not send Cota or anyone else at Arcanum a copy of Baker's email complaining about Armstrong. Cota checked whether Arcanum had any other open positions suitable for Armstrong. Finding none, he decided, without consulting anyone else, to terminate Armstrong. He held an exit interview with Armstrong later that afternoon. After he informed her that she was being terminated, she told him—for the first time—of her falsification complaints. He apparently did not indicate that he had previously heard of the complaints; and he testified at his deposition that he had not heard of her complaints until she told him.

Armstrong's district-court complaint alleged that Arcanum retaliated against her in violation of the FCA, 31 U.S.C. § 3730(h), and the NDAA, 41 U.S.C. § 4712(a), and wrongfully discharged her in violation of Colorado common law. The district court granted Arcanum summary judgment on the FCA and NDAA claims, and then declined to exercise supplemental jurisdiction over her state-law claim.¹

II. ANALYSIS

A. The Governing Statutes’ Knowledge Requirement

The FCA is the federal government's "primary tool for redressing fraud claims against the Government." Claire M. Sylvia, The False Claims Act: Fraud Against the Government § 1:1, at 3 (3d ed. 2016) (hereafter Sylvia). It "supplements the Government's enforcement efforts by authorizing private citizens with information about fraud to initiate a civil action [a ‘qui tam’ action] on the Government's behalf." Id. This "provides the Government a powerful means of combating fraud through an action for multiple damages and penalties." Id. To protect whistleblowers, the FCA has an antiretaliation provision that imposes liability on an employer if an employee is "discriminated against in the terms and conditions of employment because of lawful acts done by the employee ... in furtherance of ... efforts to stop 1 or more violations of [the FCA]." 31 U.S.C. § 3730(h)(1) (emphasis added).² Such lawful acts are commonly referred to as "protected activity."³

We agree with the parties that one element of a § 3730(h) claim is that the retaliator know of the whistleblower's protected activity. See U.S. ex rel. Sikkenga v. Regence Bluecross Blueshield of Utah , 472 F.3d 702, 729 (10th Cir. 2006) (citing legislative history stating that a § 3730(h)"whistleblower must show the employer had knowledge the employee was engaged in ‘protected activity’ "); Sylvia § 5:23, at 393 ("The requirement that the defendant have been aware of the plaintiff's protected activity is essential ...."). Otherwise, the retaliation could not have been "because of" the protected activity.

Similarly, the antiretaliation provision of the NDAA, 41 U.S.C. § 4712(a)(1), prohibits a government contractor from discriminating against an employee "as a reprisal for disclosing ... information that the employee reasonably believes is ... a violation of law, rule, or regulation related to a Federal contract."⁴ Again, we agree with the parties that one element of a § 4712(a)(1) claim is that a plaintiff's protected activity " ‘was a contributing factor in the employer's decision to take an adverse employment action.’ " Aplt. Br. at 50; Aplee. Br. at 48 (both quoting Miller v. Abbott Labs. , Civil Action No. 3:14CV-00363-JHM, 2015 WL 3773114, at *7 (W.D. Ky. June 17, 2015) ). Protected activity can play that role only if the employer knew of the activity. See Craine v. Nat’l Sci. Found. , 687 F. App'x 682, 685, 692 (10th Cir. 2017) (upholding agency's decision that protected activity of § 4712 plaintiff was not a contributing factor to plaintiff's termination because disciplinary process began before decisionmakers knew of protected activity). Also, we note that § 4712(c)(6) incorporates the "legal burdens of proof specified in [ 5 U.S.C. § 1221(e) ]" for determining in administrative or judicial proceedings whether discrimination prohibited by § 4712 has occurred. And 5 U.S.C. § 1221(e)(1) includes a knowledge requirement. See 5 U.S.C. § 1221(e)(1) ("The employee may demonstrate that the disclosure or protected activity was a contributing factor in the personnel action through circumstantial evidence, such as evidence that ... (A) the official taking the personnel action knew of the disclosure or protected activity; and (B) the personnel action occurred within a period of time such that a reasonable person could conclude that the disclosure or protected activity was a contributing factor in the personnel action."); Kerrigan v. Merit Sys. Prot. Bd. , 833 F.3d 1349, 1354–55 (Fed. Cir. 2016) (applying knowledge requirement of § 1221(e)(1) ), cert. denied , ––– U.S. ––––, 137 S.Ct. 2180, 198 L.Ed.2d 234 (2017) ; Horton v. Dep’t of Navy , 66 F.3d 279, 284 (Fed. Cir. 1995) (same), superseded by statute on other grounds as recognized in El v. Merit Sys. Prot. Bd. , 663 F. App'x 921, 925 (Fed. Cir. 2016).

Thus, we turn to...