Neal v. Honeywell Inc.

• Decision Date: 31 August 1994
• Docket Number: No. 93-3013,93-3013
• Citation: 33 F.3d 860
• Parties: , 129 Lab.Cas. P 11,219, 9 IER Cases 1500 Judith A. NEAL, Plaintiff-Appellee, v. HONEYWELL INC. and Alliant Techsystems Inc., Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 860

33 F.3d 860

63 USLW 2162, 129 Lab.Cas. P 11,219,

9 IER Cases 1500

Judith A. NEAL, Plaintiff-Appellee, v. HONEYWELL INC. and Alliant Techsystems Inc., Defendants-Appellants.

No. 93-3013.

United States Court of Appeals Seventh Circuit.

Argued April 15, 1994.

Decided Aug. 31, 1994.

Joshua G. Vincent (argued), William J. Holloway, Robert H. Muriel, Adrienne I. Logan, Hinshaw & Culbertson, Chicago, IL, for Judith A. Neal.

Mary Margaret Sullivan, Ross & Hardies, James A. Burstein, Seyfarth, Shaw, Fairweather & Geraldson, Chicago, IL, James P. Gallatin, Ann D. Davidson, Popham, Haik, Schnobrich & Kaufman, Ltd., Washington, DC, Paul E. Freehling, D'Ancona & Pflaum, Chicago, IL (argued), for Honeywell, Inc. and Alliant Techsystems.

Frank W. Hunger, Office of U.S. Atty. Gen., Douglas Letter, Bruce G. Forrest, Dept. of Justice, Civ. Div., Appellate Section, Washington, DC, James B. Burns, Office of U.S. Atty., Chicago, IL, for U.S. amicus curiae.

Before EASTERBROOK and RIPPLE, Circuit Judges, and DILLIN, District Judge. ^*

EASTERBROOK, Circuit Judge.

In 1987 Judith Neal concluded that co-workers were falsifying ammunition test data at the Joliet Army Arsenal Plant, which Honeywell Inc. administered. She told Honeywell's legal counsel, who immediately notified the Army and commenced an investigation. Senior managers concluded that Neal's allegations were correct; so did public prosecutors. Two of Honeywell's employees pleaded guilty to defrauding the United States. Without requiring the United States to bring a civil suit under the False Claims Act, 31 U.S.C. Secs. 3729-31, Honeywell agreed to a settlement worth approximately $2.5 million. Although the United States, Honeywell, and the culpable employees thus resolved the matter, Neal's supervisors at Joliet took umbrage at her honesty, which they believed jeopardized Honeywell's contract and thus their jobs. Neal alleges that these supervisors harassed her and threatened her with physical harm. She took this as an instruction to vamoose, and she quit. More than five years later she filed this suit under 31 U.S.C. Sec. 3730(h), seeking damages for the retaliation.

Section 3730(h), added to the False Claims Act in 1986, is designed to protect persons who assist the discovery and prosecution of fraud and thus to improve the federal government's prospects of deterring and redressing crime. The statute provides:

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. Such relief shall include reinstatement with the same seniority status such employee would have had but for the discrimination, 2 times the amount of back pay, interest on the back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys' fees. An employee may bring an action in the appropriate district court of the United States for the relief provided in this subsection.

Neal contended that she had been threatened, harassed, and constructively discharged on account of "lawful acts ... in furtherance of an action under this section". Honeywell replied that because the United States settled rather than sued, there was no "action under this section" and Sec. 3730(h) is inapplicable. Moreover, Honeywell contended, by waiting more than five years to sue, Neal missed the statute of limitations under Illinois law. Honeywell moved to dismiss the suit under Fed.R.Civ.P. 12(b)(6).

The district court denied this motion. 826 F.Supp. 266 (N.D.Ill.1993). The court wrote that, because neither the United States nor Neal herself had filed suit under the statute, "there can be no doubt that Ms. Neal's actions here do not fall within the literal language of the False Claims Act." Id. at 271. Nonetheless, the court believed, "federal whistleblower protection laws are to be broadly construed to cover internal whistleblowers, even where the specific conduct at issue does not fall within a literal reading of the statute." Ibid. Permitting Neal to recover for retaliation would promote the purposes of the Act and therefore, the court believed, is authorized without regard to the statutory language.

Next the court took up the statute of limitations. Neal filed her suit more than five, but fewer than six, years after the retaliatory events. Honeywell contended that federal courts should draw the statute of limitations from state law--in this case, the five years Illinois allows for such claims. But the district court concluded that 31 U.S.C. Sec. 3731(b) supplies a six-year period:

A civil action under section 3730 may not be brought--

(1) more than 6 years after the date on which the violation of section 3729 is committed....

A suit under Sec. 3730(h) protesting retaliation is "[a] civil action under section 3730", and Neal filed within six years after the "violation of section 3729"--that is, within six years of Honeywell's false claims. Therefore, the district court held, "the plain language of section 3731(b)" compels decision in Neal's favor even though this reading creates a possibility that the time for suit will expire before the retaliation occurs. 826 F.Supp. at 273. Later the court certified its decision for interlocutory review under 28 U.S.C. Sec. 1292(b), and we accepted Honeywell's appeal.

Honeywell has not missed the fact that the district court discarded the statutory language in favor of its understanding of public policy on one branch of the case, only to employ a "plain language" approach on the other--each time to Honeywell's detriment. Inconsistency is infectious. Neal embraces the district court's approach, and Honeywell argues for an equal and opposite contradiction: plain-language treatment of Sec. 3730(h) but a modification of Sec. 3731(b)(1) in light of its supposed functions. But the Supreme Court insists that we take statutes seriously, bending their language only when the text produces absurd results. Chicago v. Environmental Defense Fund, --- U.S. ----, 114 S.Ct. 1588, 128 L.Ed.2d 302 (1994); Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., --- U.S. ----, 114 S.Ct. 1439, 128 L.Ed.2d 119 (1994); National Organization for Women, Inc. v. Scheidler, --- U.S. ----, 114 S.Ct. 798, 127 L.Ed.2d 99 (1994). We think it both possible and desirable to read these two statutes exactly as written.

Start with Sec. 3730(h). The district court quickly concluded that Neal cannot prevail under the language of the statute and then declined to apply that language, instead invoking a principle that whistleblower statutes should be "broadly" construed. This is a variant on the theme that remedial statutes should be generously construed. As we remarked recently, the essential question is not which way the statute points but how far it directs one to go in that direction. Stomper v. Amalgamated Transit Union, 27 F.3d 316, 320 (7th Cir.1994). The text of the law is not just evidence about how much one interest (here, the government's in obtaining information by relieving employees of fear) should be preferred over another (here, the employer's in managing its labor force); the text is the decision about what to do--a decision approved by the Constitution's own means, bicameral approval and presidential signature. No principle of statutory construction says that after identifying the statute's accommodation of competing interests, the court should give a favored party a little extra. Any tendency to treat statutes regulating ethical dealing with the government as a species of common law, to be adjusted by courts according to their sense of contemporary needs, was squelched by Crandon v. United States, 494 U.S. 152, 110 S.Ct. 997, 108 L.Ed.2d 132 (1990).

Congress enacted a rule, 18 U.S.C. Sec. 209, preventing public employees from receiving additional compensation from private sources. Following a tradition of administrative construction, a court of appeals extended this statute to bar severance payments made by a private employer and before public service begins, if the employer would not have made such payments to employees leaving for jobs in the private sector. The Supreme Court unanimously reversed, concluding that the statute set its own limits. That the subject was ethics did not justify disregarding the statutory language. As the Court pointed out, all laws, including ethics rules, are compromises among competing interests. In Crandon the government wanted to hire employees not beholden to any private firm; the former employer wanted to encourage public service by its employees by easing the financial sacrifice (doubtless in the hope that they would return with valuable information and entree); whether one of these interests triumphs over the other, or whether instead they coexist uneasily, is determined not by natural justice but by the political process, which created a text.

Just so here. Congress wanted to make employees feel more secure in reporting fraud to the United States and in commencing qui tam litigation, the better to reduce the amount of fraud in federal procurement. But this comes at a cost. Some employees will cry "fraud" to make pests of themselves, in the hope of being bought off with higher salaries or more desirable assignments. Others will perceive the disappointments of daily life as "retaliation" and file suits that have some settlement value because of the high costs of litigation and the possibility of error. Careless cries of fraud are less culpable, but may be no less costly, than extortionate ones. Dealing with...