Mann v. Heckler & Koch Def.

• Decision Date: 27 December 2010
• Docket Number: No. 09–1847.,09–1847.
• Parties: Jason MANN, Plaintiff–Appellant,v.HECKLER & KOCH DEFENSE, INCORPORATED, Defendant–Appellee,andHeckler & Koch GMBH, Defendant.Metropolitan Washington Employment Lawyers Association; National Whistleblowers Center, Amici Supporting Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

630 F.3d 338

31 IER Cases 1092

Jason MANN, Plaintiff–Appellant,

v.HECKLER & KOCH DEFENSE, INCORPORATED, Defendant–Appellee,andHeckler & Koch GMBH, Defendant.Metropolitan Washington Employment Lawyers Association; National Whistleblowers Center, Amici Supporting Appellant.

No. 09–1847.

United States Court of Appeals, Fourth Circuit.

Argued: Oct. 28, 2010.Decided: Dec. 27, 2010.

ARGUED: Jason Mark Zuckerman, The Employment Law Group, PC, Washington, D.C., for Appellant. C. Allen Foster, Greenberg Traurig, LLP, Washington, D.C., for Appellee. ON BRIEF: R. Scott Oswald, The Employment Law Group, PC, Washington, D.C., for Appellant. Robert P. Charrow, Laura Metcoff Klaus, Greenberg Traurig, LLP, Washington, D.C., for Appellee. Richard R. Renner, National Whistleblower Legal Defense and Education Fund, Washington, D.C., for Amici Supporting Appellant.Before TRAXLER, Chief Judge, WILKINSON, Circuit Judge, and BOBBY R. BALDOCK, Senior Circuit Judge of the United States Court of Appeals for the Tenth Circuit, sitting by designation.Affirmed by published opinion. Judge WILKINSON wrote the opinion, in which Chief Judge TRAXLER and Senior Judge BALDOCK joined.

OPINION

WILKINSON, Circuit Judge:

Jason Mann brought a False Claims Act (“FCA”) retaliation action against Heckler & Koch Defense, Inc. (“HKD”). He argued that HKD took adverse employment action against him because he investigated and opposed HKD's attempts to defraud the United States. But Mann's actions fall outside the scope of FCA protection. The FCA shields employees from retaliation when they oppose fraud. And the conduct Mann opposed involved nothing more than non-fraudulent statements made by HKD during the course of a contractual bidding process. The district court rejected Mann's claim, and we now affirm.

I.

HKD is in the business of selling firearms to United States military and law enforcement agencies. On November 23, 2007, the Secret Service issued a contract solicitation for rifles for its counterassault team. Wayne Weber, Mann's supervisor, believed that the Statement of Work (“SOW”) detailing the specifications of the rifle matched up well with HKD's HK–416 rifle. But the SOW required two components that were not available on the HK–416, ambilevers, which are devices that allow left-handed personnel to operate the rifle, and two-stage match triggers. Nevertheless, HKD submitted its bid along with sample HK–416 rifles on February 28, 2008. HKD noted that while it did not currently meet the ambilever and two-stage match trigger requirements, it would be able to provide these components if it won the bid.

Around that same time, Weber received aftermarket ambilevers for the HK–416 from consultant Larry Vickers. Mann and another HKD employee, Robbie Reidsma, thought that the ambilevers did not fit the HK–416 and did not meet HKD's typical quality standards. Vickers echoed these concerns. But Weber overruled them. In order to demonstrate that the sample HK–416 could conform to the SOW, Weber arranged to deliver the ambilevers to Jim Galvin, a friend at the Secret Service. He sent Reidsma to deliver the ambilevers to Galvin on March 3, 2008, which was after the official close of bidding.

When Weber informed Mann of this delivery, Mann expressed disapproval of Weber's handling of the bid. Mann told Weber that he should not have submitted the bid in the first place because it did not meet the SOW specifications and that he should not have delivered the ambilevers after the deadline. Mann also began investigating whether Weber's conduct violated federal contracting regulations or other laws. In early April 2008, Mann expressed his concerns about Weber's conduct to numerous HKD employees, who then relayed his concerns to HKD management.

Martin Newton, CEO of HKD, and the rest of HKD management took prompt action when they learned of Mann's concerns. Newton immediately ordered HKD personnel to halt their informal investigation of Mann's allegations and instead retained John Einwechter, an attorney specializing in these matters, to conduct a formal investigation. HKD also put Mann on administrative leave for approximately one week starting on April 9, 2008. During the ensuing investigation, Mann relayed his concerns about Weber's conduct to Einwechter. Einwechter concluded that while Weber may have violated regulatory procedures by contacting Galvin outside of proper channels, he did not violate the FCA because there was no fraud. Weber did not conceal his actions during the bid process, and, therefore, any regulatory violation was open and apparent on its face.

As for the bid, Weber's strategy proved to be ineffective. HKD began receiving complaints from the Secret Service in April 2008 about the deficiencies in the HK–416 rifles. This was to be expected because HKD's bid submission made plain that the bid was nonconforming. The Secret Service ultimately rejected HKD's bid on May 21, 2008.

On June 11, 2008, Mann filed a complaint against HKD, asserting that HKD retaliated against him for engaging in protected activity under the False Claims Act (“FCA”) (“Count I”) and defamed him under Virginia law. HKD placed Mann on administrative leave again on June 24, 2008 and terminated his employment the next month. Mann contends he was dismissed because of his efforts to stop HKD's attempts to defraud the United States and his filing of a retaliation claim. HKD, however, asserts that Mann's termination stemmed from his involvement in an unlawful scheme to procure machine guns for a small police force. Mann later amended his complaint to assert an additional claim of retaliation on the theory that HKD retaliated against him for filing his initial retaliation claim (“Count II”).

HKD filed a motion to dismiss all claims, which the district court granted with respect to Count II. HKD later moved for summary judgment on the remaining claims, and the district court granted that motion on July 1, 2009. Mann v. Heckler & Koch Defense, Inc., 639 F.Supp.2d 619 (E.D.Va.2009). The district court noted that Mann never identified any instance of HKD making a false statement or engaging in fraudulent conduct. Id. at 632–33. Without evidence of a false or fraudulent claim against the United States, the district court reasoned, there was no reasonable possibility that HKD was violating the FCA. Id. Therefore, Mann did not qualify for FCA protection. Id. Mann now appeals the district court's rulings with respect to his claims of retaliation under the FCA.

II.

In this appeal, Mann contends that HKD retaliated against him for his investigation of and opposition to HKD's attempt to defraud the United States. Mann also asserts that HKD retaliated against him for his filing of the initial retaliation claim. We shall first set forth the framework for addressing anti-retaliation claims under the FCA and then proceed to address Mann's particular contentions.

A.

The FCA is a statutory scheme designed to discourage fraud against the federal government. Robertson v. Bell Helicopter Textron, Inc., 32 F.3d 948, 951 (5th Cir.1994). Its roots lie in the rampant fraud perpetrated by contractors against the government during the Civil War, and it has served ever since as a safeguard against unscrupulous government contractors. Wilkins v. St. Louis Hous. Auth., 314 F.3d 927, 933 (8th Cir.2002). The cornerstone provision of the FCA prohibits any person from presenting “a false or fraudulent claim for payment or approval” to the United States. 31 U.S.C. § 3729(a).

There are two enforcement mechanisms to police this prohibition. First, the Attorney General can bring a civil action to remedy violations of § 3729. 31 U.S.C. § 3730(a). Second, a private party can bring a qui tam action, which is an action brought in the name of the United States. 31 U.S.C. § 3730(b); Graham County Soil & Water Conservation Dist. v. United States ex rel. Wilson, 545 U.S. 409, 412, 125 S.Ct. 2444, 162 L.Ed.2d 390 (2005).

Congress amended the FCA in 1986, adding an anti-retaliation provision to protect whistleblowers. False Claims Amendments Act of 1986, Pub.L. No. 99–562, § 4, 100 Stat. 3153, 3157–58. The relevant part of this provision states:

Any employee who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment by his or her employer because of lawful acts done by the employee on behalf of the employee or others in furtherance of an action under this section, including investigation for, initiation of, testimony for, or assistance in an action filed or to be filed under this section, shall be entitled to all relief necessary to make the employee whole.

31 U.S.C. § 3730(h).^*

The purpose of § 3730(h) is to promote enforcement of the FCA by “assur[ing] those who may be considering exposing fraud that they are legally protected from retaliatory acts.” S.Rep. No. 99–345, at 34, 1986 U.S.C.C.A.N. 5266, 5299 (1986). Congress “recognize[d] that few individuals will expose fraud if they fear their disclosures will lead to harassment, demotion, loss of employment, or any other form of retaliation,” and, accordingly, sought “to halt companies and individuals from using the threat of economic retaliation to silence ‘whistleblowers.’ ” Id. In furtherance of this goal, § 3730(h) creates a cause of action for employees who suffer retaliation for taking measures to prevent contractor fraud against the United States.

B.

Employees seeking to bring a cause of action under § 3730(h) must meet three elements derived from the statutory text. Zahodnick v. Int'l Business Machines Corp., 135 F.3d 911, 914 (4th Cir.1997). An “employee must prove that (1) he took acts in furtherance of a qui tam suit; (2) his employer knew of these acts; and (3) his employer [took adverse action against] him as a result of these acts.” Id. Only the first element, referred to as the “protected activity” prong, is at issue in the instant case.

An employee need...