Neal v. Honeywell, Inc., 93 C 1143.

• Decision Date: 09 July 1993
• Docket Number: No. 93 C 1143.,93 C 1143.
• Citation: 826 F. Supp. 266
• Court: U.S. District Court — Northern District of Illinois
• Parties: Judith A. NEAL, Plaintiff, v. HONEYWELL, INC., a corporation, and Alliant Techsystems Inc., a corporation, Defendants.

826 F. Supp. 266

Judith A. NEAL, Plaintiff, v. HONEYWELL, INC., a corporation, and Alliant Techsystems Inc., a corporation, Defendants.

No. 93 C 1143.

United States District Court, N.D. Illinois, E.D.

June 16, 1993.

Opinion Certifying Interlocutory Appeal July 9, 1993.

William J. Holloway, Michael John Leech, William G. Swindal, Robert Hill Smeltzer, Hinshaw & Culbertson, Chicago, IL, for plaintiff.

James A. Burstein, Paul E. Freehling, Kristin E. Michaels, Pope, Ballard, Shepard & Fowle, Ltd., Chicago, IL, for defendants.

MEMORANDUM OPINION AND ORDER

PLUNKETT, District Judge.

This matter is before us on the Defendants' Motion to Dismiss the Complaint. For the reasons stated below, the motion is denied.

Facts

Plaintiff Judith Neal alleges that in February 1987 she discovered that her employer, Honeywell, was falsifying ballistics test data and delivering defective ammunition to the United States Army. When she discovered this conduct, she reported it to her superiors pursuant to internal Honeywell procedures. (Compl. ¶¶ 8, 15, 17, 19.) Honeywell responded by notifying the government and conducting an internal investigation. (Compl. ¶ 21.) The results of the investigation were shared with the Army, and a settlement agreement was reached under section 3730(a) of the False Claims Act. 31 U.S.C. § 3730(a). Pursuant to the agreement, Honeywell paid a settlement with an approximate value of two and one half million dollars. (Compl. ¶ 32.)

Neal alleges that Honeywell discriminated against her for notifying her superiors of the fraud. (Compl. ¶¶ 23, 34.) She was cut off from the Honeywell investigation, and never questioned about the matter by those in charge. (Compl. ¶ 23(a).) Physical threats were made against her by members of the plant's management, and she was often told that her coworkers hated her. (Compl. ¶ 23(c), (d).) Neal also alleges that Honeywell never informed her of her rights under the False Claims Act to file a qui tam lawsuit on behalf of the government. (Compl. ¶ 33.) The Complaint alleges that this conduct, which included the above threats, change of work responsibilities and failure to disclose her rights under the False Claims Act, constituted constructive suspension and discharge in violation of the whistleblower protection provisions of the False Claims Act. (Compl. ¶ 34.)

The Defendants have moved to dismiss the Complaint on three grounds. First, they argue that internal whistleblowers are not protected from retaliation by the False Claims Act. Second, they argue that the applicable statute of limitations has run. Finally, they argue that Neal failed to exhaust her state remedies.

Discussion

On a motion to dismiss, the court views the allegations of the complaint as true, along with reasonable inferences therefrom, and views these in the light most favorable to the plaintiff. Dawson v. General Motors, 977 F.2d 369, 372 (7th Cir.1992); Powe v. Chicago, 664 F.2d 639, 642 (7th Cir.1981). A complaint should not be dismissed with prejudice unless it appears beyond doubt that the plaintiff is unable to prove any set of facts consistent with the complaint which would entitle the plaintiff to relief. Bartholet v. Reishauer A.G., 953 F.2d 1073, 1078 (7th Cir.1992). Unless otherwise provided by Rule 9 of the Federal Rules of Civil Procedure, facts need not be plead with particularity. Leatherman v. Tarrant County Narcotics and Intelligence Unit, ___ U.S. ___, ___, 113 S.Ct. 1160, 1163, 122 L.Ed.2d 517 (1993). Nevertheless, a plaintiff must allege sufficient facts to outline the cause of action, proof of which is essential to recovery. Ellsworth v. Racine, 774 F.2d 182, 184 (7th Cir.1985), cert. denied, 475 U.S. 1047, 106 S.Ct. 1265, 89 L.Ed.2d 574 (1986) (citations omitted).

I. The False Claims Act

Plaintiff's claims arise under the False Claims Act. See 31 U.S.C. § 3729 et seq. In response to fraudulent practices by defense contractors during the Civil War, the False Claims Act the "Act" was first adopted in 1863 and signed into law by President Lincoln. The Act, in its present incarnation, allows the government to recover treble damages from those making false claims or submitting false information in support of those claims. 31 U.S.C. § 3729 (Supp.1993). In addition, the United States is entitled to a $5,000-$10,000 penalty for each fraudulent submission, regardless of actual damage. See 31 U.S.C. § 3729 et seq. (Supp.1993); Sen.R. No. 345, 99th Cong., 2d Sess., reprinted in, 1986 U.S.C.C.A.N. 5266, 5273 (history of the Act).

The original statute also allowed for a private party to bring suit under the Act. A private party who brings suit for a fraud committed against the government is known as a "qui tam" plaintiff. The term qui tam is derived from the Latin phrase qui tam pro domino rege quam pro se ipso in hac parte sequitur, which means "who brings the action for the king as well as for himself." See William Blackstone, Commentaries on the Law of England 160 (1768).¹ Under the original law, a qui tam plaintiff, or "relator" who brought suit successfully was entitled to one-half the damages and forfeitures as well as his costs. See Sen.R. No. 345, 99th Cong., 2d Sess., reprinted in, 1986 U.S.C.C.A.N. 5266, 5275 (history of the Act).

Though Congress and the courts have significantly restricted the ability of a private party to bring a qui tam lawsuit,² the current version of the law still provides for qui tam suits and entitles a successful qui tam relator to a portion of any recovery or settlement of the claim. See 31 U.S.C. § 3730(d) (Supp. 1993).

The purpose of the False Claims Act is, of course, to discourage fraud against the government. Concomitantly, the purpose of the qui tam provision of the Act is to encourage those with knowledge of fraud to come forward. See H.R.Rep. No. 660, 99th Cong., 2d Sess., 22 (1986).

In order to protect qui tam relators from retaliation by their employers, the False Claims Act now contains a whistleblower protection clause. That clause, 31 U.S.C. section 3730(h), provides in pertinent part:

Any employee who is ... in any ... manner discriminated against in the terms and conditions of employment by ... her employer because of lawful acts done by the employee ... in furtherance of 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).

It is clear that the statutory protections of section 3730(h)³ extend to persons who bring a qui tam action, pursuant to section 3730(b), for violations of the Act. See, e.g., Coleson v. Inspector General of the Dep't of Defense, 721 F.Supp. 763, 765 (E.D.Va.1989). It is also clear that protected conduct under section 3730(h) extends beyond the actual qui tam relator to others involved in the suit, including any person who initiated, investigated, testified, or assisted in "an action filed or to be filed" under the Act. 31 U.S.C. § 3730(h). What is not clear, however, is how far the protections of the statute extend beyond those limits.

II. The Scope of Whistleblower Protection under the Act

In the present case the Plaintiff did not take her information to the government. Instead, she reported what she had uncovered to her superiors at Honeywell who then notified the government and the matter was settled. Though the Plaintiff alleges that the Attorney General conducted an investigation, no False Claims Act lawsuit was ever filed, and because the government is now in possession of the relevant information and has settled the matter, no such action may be filed. Thus, the issue presented to us is whether an internal whistleblower may state a claim under the whistleblower protection provisions of the False Claims Act when no lawsuit was ever filed, either by the whistleblower or another informer as a qui tam relator, or by the government.

A. As a general rule, whistleblower protection statutes are remedial in nature and thus are broadly construed.

Many courts have addressed issues similar to the one before us today under different federal whistleblower protection statutes. Almost without exception, they have held that the coverage of the statute at issue should be broadly construed so as to include internal, or "intracorporate" whistleblowing, even where the conduct involved did not come under the literal terms of the statute.

In NLRB v. Scrivener, 405 U.S. 117, 92 S.Ct. 798, 31 L.Ed.2d 79 (1972), the Supreme Court held that language in the National Labor Relations Act extended whistleblower protection to an employee who did not meet the literal requirements of the statute. While the statute expressly covered an employee who "has filed charges or given testimony," the Court extended protection to an employee who had given a statement to a NLRB examiner but had neither filed charges or testified at a formal hearing. In so holding, the Court noted that such an interpretation had a long history: the Labor Board had, since 1934, interpreted the language to cover those "giving information relating to violations of the NLRA." Id. at 123, 92 S.Ct. at 802 (citing New York Rapid Transit Corp., 1 N.L.R.B. Dec. 192 (1934)). See also NLRB v. Retail Store Employees Union, 570 F.2d 586, 590 (6th Cir.1978) (following Scrivener), cert. denied, 439 U.S. 819, 99 S.Ct. 81, 58 L.Ed.2d 109 (1978).

In Passaic Valley Sewerage Commissioners v. United States Department of Labor, 992 F.2d 474 (3d Cir.1993), the Third Circuit upheld the Secretary of Labor's construction of the whistleblower protection clause in the Clean Water Act to cover internal whistleblowers. The language at issue in Passaic was similar to the language of the False Claims Act. It protected any employee who "has filed, instituted, or cause to be filed or instituted any proceeding under this chapter." 33 U.S.C. § 1367. The Secretary of Labor held that the language protected an employee who had made only internal complaints to his superiors, and the Third Circuit agreed....