Newyork ex rel. Khurana v. Spherion Corp.

• Decision Date: 06 January 2021
• Docket Number: 15-CV-6605 (JMF)
• Citation: 511 F.Supp.3d 455
• Parties: NEW YORK EX REL. Vinod KHURANA, et al., Plaintiffs, v. SPHERION CORP. (n/k/a SFN Group, Inc. ), Defendant.
• Court: U.S. District Court — Southern District of New York

511 F.Supp.3d 455

NEW YORK EX REL. Vinod KHURANA, et al., Plaintiffs,

v.SPHERION CORP. (n/k/a SFN Group, Inc. ), Defendant.

15-CV-6605 (JMF)

United States District Court, S.D. New York.

Signed January 6, 2021

Sean Estes, James Hoyer, P.A., Tampa, FL, Andrew Martin McNeela, David E. Kovel, David A. Bishop, Seth Matthew Shapiro, Kaina Kosharskyy, Kirby McInerney LLP, New York, NY, for Plaintiff Vinod Khurana.

Andrew Martin McNeela, Anna Linetskaya, David E. Kovel, Kirby McInerney LLP, New York, NY, for Plaintiffs The State of New York ex rel. Vinod Khurana, The City of New York ex rel. Vinod Khurana.

Christopher F. Robertson, Seyfarth Shaw LLP, Boston, MA, Howard Mark Wexler, Lisa Louise Savadjian, Seyfarth Shaw LLP, Rita Marie Glavin, Thomas Ross Hooper, Mark Joseph Hyland, Seward & Kissel LLP, New York, NY, for Defendant.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

JESSE M. FURMAN, United States District Judge:

In about 1998, New York City (the "City") launched an ambitious project to create an automated timekeeping system for all of its agencies called CityTime. By any reasonable standard, the project was a fiasco, taking many years longer and costing around ten times more than initially projected. In December 2010, one (though surely not the only) reason for these problems became clear when several people who worked on the project through contractors hired by the City were arrested and charged with participating in a kickback scheme.

Spherion Corporation ("Spherion"), Defendant here, was one of the contractors hired by the City in connection with the CityTime project. Plaintiff Vinod Khurana worked on the project from August 2004 until his termination in June 2007. In 2011, after the kickback scheme came to light, Khurana brought qui tam claims in New York State court under the New York False Claims Act ("NYS FCA"), N.Y. State Fin. Law §§ 187, et seq. , and the New York City False Claims Act ("NYC FCA"), N.Y.C. Admin. Code §§ 7-801, et seq. , as well as retaliation claims pursuant to both statutes. In 2015, after it was unsealed, the case was removed to this Court based on the Court's diversity jurisdiction. ECF No. 1. In 2016, the Honorable John F. Keenan, to whom the case was initially assigned, dismissed Khurana's qui tam claims. See New York ex rel. Khurana v. Spherion Corp. , No. 15-CV-6605 (JFK), 2016 WL 6652735 (S.D.N.Y. Nov. 10, 2016) (" Khurana I "). In November 2020, the Court held a bench trial on Khurana's remaining retaliation claims. With the parties’ consent, the trial was conducted remotely because of the COVID-19 pandemic conditions. See ECF No. 239. Direct testimony was taken largely by affidavit.

For the reasons that follow, the Court finds, by a preponderance of the evidence, that Spherion did not retaliate against Khurana in violation of either the NYS FCA or NYC FCA. Khurana certainly raised his fair share of concerns about the beleaguered CityTime project when he was employed at Spherion, but it was only later — after the fraud came to light — that he tried to recast them in ways that would implicate the FCA statutes. At most, the evidence shows that Khurana engaged in only one instance of activity "protected" by the FCA statutes, and Khurana failed to prove that his termination was because of that activity. Moreover, Spherion proved that Khurana's termination was due to legitimate, non-retaliatory reasons. Accordingly, and for the reasons that follow, Spherion is entitled to judgment.

FINDINGS OF FACT

Pursuant to Rule 52(a)(1) of the Federal Rules of Civil Procedure, the Court will begin with its findings of fact based on the testimony and exhibits at trial.¹ Before doing so, however, the Court addresses two preliminary matters that have significant bearing on the findings of fact: witness credibility and whether an adverse inference should be drawn based on the invocation by one witness of the Fifth Amendment privilege against self-incrimination.

A. Preliminary Matters

1. Witness Credibility

The Court is prepared to, and does, credit most of the testimony given at trial, with one prominent exception: The Court declines to credit Khurana's testimony in the absence of independent corroborating evidence. The Court reaches that conclusion based on both Khurana's prior record and on his testimony at trial, including his demeanor. On the former front, the record reveals several instances in which Khurana exaggerated, or outright lied, about his role on the CityTime project. For instance, just days after being terminated from the project, Khurana wrote to Rekha Basu, his former supervisor, informing her that he planned to use her as a reference for an upcoming job interview and requesting that she — if asked by the interviewer about the reason for his departure from CityTime — lie and inform the interviewer that he had a three-year contract that had expired. PX-87, at 2.² Further, in a December 22, 2010 interview with the New York City Department of Investigation ("DOI"), Khurana claimed that in 2007, after he was terminated by Spherion and before he began his next job, he had "made a report" to DOI about the need to investigate CityTime. DX-38, at 6; see Tr. 451-55. But that claim was false. See Tr. 432-33.³ Along similar lines, in November 2013, he told a recruiter (from Spherion — then doing business as Randstad Technologies — no less) that he had been called as a witness at a six-week trial concerning CityTime earlier that year. See DX-71. That claim was also false. See Tr. 422. Separate and apart from these incidents, during his employment at Spherion, Khurana adopted the practice of emailing himself (at his personal email address) to make a contemporaneous record of events he found problematic. Tr. 290-91. Conspicuously, however, there is no such record of several critical incidents for which the only evidence offered at trial was his testimony (in some instances, testimony that was contradicted by other witnesses). The lack of a contemporaneous record for these incidents is striking and casts doubt on whether they happened as Khurana now claims or happened at all.

Meanwhile, at trial, Khurana's testimony under oath was revealed to be exaggerated, if not outright false, in several important respects. To provide a few examples:

• On cross-examination, Khurana testified that, following his transfer to a new unit at Spherion in November 2006, he was not allowed to bill overtime. See Tr. 376. When confronted with the fact that in his own affidavit he had affirmed that he "was able to bill for overtime," Khurana Aff. ¶ 25, Khurana modified his testimony to state that, following his transfer, he was allowed to bill overtime for a few months, but not at all after February 2007, see Tr. 377-78. This too proved to be false. When confronted with pay records, Khurana admitted that he billed overtime until at least May 2007. See Tr. 378-79.

• When asked on cross-examination about a record documenting his attempt to "friend" Michael Siller — the former inspector general of DOI and a trial witness — and other DOI employees on the social media platform LinkedIn, Khurana initially testified that it was sent "[b]y mistake possibly." Tr. 476; see also DX-57. When confronted with the fact that he had sought to friend multiple DOI personnel, Khurana conceded that it had been intentional and that he "just ... liked to make connections with people in various professions" and "thought it would be nice to have somebody who was a detective, who was an attorney for the City of New York." Tr. 476-77.

• Plaintiff's Exhibit 24, a chain of emails, included the following: "The whole thing was beginning to sound like a ‘coverup’ ... and one reason why I sent this email to my personal [C]omcast email in case I would need it one day. Today, it came in handy." PX-24, at 5; see Tr. 322-24. On cross-examination and when questioned by the Court, Khurana unambiguously testified that he had written those words "to [him]self" in 2005. Tr. 324-26. Later, however, he forced to admit that he had written those words in 2011, not 2005. See Tr. 465-67.

• On cross-examination, Khurana denied having ever said, in reference to the CityTime project in 2007, that no one was more talented on the project than he. See Tr. 365. He was promptly impeached with his deposition testimony, in which he was asked if "anyone involved in this project was as talented" as he, to which he answered: "Not as talented as me." Tr. 365-66. He then testified: "OK. I do believe I was the most talented person on that team with the experience I had." Tr. 366.

• In his affidavit, Khurana wrote that, "in early May 2007, approximately one month before I was fired, I had lunch with Mss. Basu and Ella and told them that I thought the project was an exercise in ‘waste’ and ‘abuse.’ " Khurana Aff. ¶ 81. On cross-examination, however, Khurana admitted that he did not actually use the quoted words "waste" and "abuse" (or "fraud") — and indeed, never put those words in writing at all. Tr. 409-12.

Separate and apart from this pattern of untruths, key aspects of Khurana's testimony were expressly contradicted by the testimony of others — most notably, Howard Cohen, a former Spherion account executive, see, e.g. , Tr. 259-64, whose testimony the Court found credible.

In short, there are compelling reasons to doubt the veracity of Khurana's testimony and, absent corroboration by independent evidence, the Court generally declines to credit it.

2. Adverse Inference for Invocation of the Fifth Amendment

As discussed in further detail below, one of the central figures — perhaps the central figure — in the CityTime fraud was Mark Mazer. On April 28, 2014, following his conviction by a jury of various offenses relating to the fraud, Mazer was sentenced to twenty years’ imprisonment. See Judgment, United States v. Mazer , No. 11-CR-121 (GBD), ECF No. 366 (S.D.N.Y. Apr. 19, 2014). Thereafter, the Second Circuit affirmed his conviction on direct appeal, see United States v. Mazer , 631 F. App'x 57 (2d...