Onnen v. Sioux Falls Indep. Sch. Dist. A Local Gov't Agency
| Decision Date | 18 February 2011 |
| Docket Number | CIV 07-4174 |
| Parties | MATT ONNEN, and UNITED STATES ex rel. MATT ONNEN, Plaintiffs, v. SIOUX FALLS INDEPENDENT SCHOOL DISTRICT #49-5, a local government agency, and DARIN DARBY, DEANNA BARTH, KENT ALBERTY, DEBBIE HOFFMAN and DOUG MORRISON, the duly elected, qualified, and acting Members of the Sioux Falls School Board, individually and in their official capacities, and PAMELA HOMEN, the duly appointed qualified, and acting Superintendent of Schools of the Sioux Falls Independent School District, in her individual and official capacities, Defendants. |
| Court | U.S. District Court — District of South Dakota |
Pending before the Court are Motion for Sanctions, doc. 76, filed by Relator, Matt Onnen ("Onnen"), and Motion to Dismiss, doc. 73, filed by Defendants, Sioux Falls Independent School District #49-5, Darin Darby, Deanna Barth, Kent Alberty, Debbie Hoffman, Doug Morrison and Pamela Homan (collectively, "Defendants"). Onnen brought this action pursuant to the qui tarn provision of the False Claims Act ("FCA"), 31 U.S.C. § 3729, et.seq., alleging that Defendants submitted false claims to the government. In an amended complaint, Onnen added a retaliation claim under the whistle-blower protection provision of the FCA, 31 U.S.C. § 3730(h). The government has declined to intervene in Onnen's suit.
Prior to the termination of his employment, Onnen worked as Registrar of Southeast Technical Institute ("STI"). Onnen's employment with STI was terminated on August 30, 2007. The Sioux Falls School Board approved the termination on September 10, 2007. On November 6, 2007, Onnen filed an appeal of that decision pursuant to SDCL 13-46-1.1 In the appeal to the state circuit court, Onnen asserted that the Board's decision to dismiss him form his position as Registrar at STE was arbitrary and unreasonable, and in violation of the public policy set forth in SDCL 60-11-17.1.2Onnen's appeal of the School Board's decision to terminate his employment was heard in a three-day trial in state court on December 2 through December 4, 2009.3 The state court affirmed the School Board's termination decision by a letter decision dated January 25, 2010, finding that the evidence was clear Onnen was terminated for no reason other than his incompetence as Registrar. A Final Order was issued by the state court on February 9, 2010. Onnen filed a Motion for New Trial which was denied by an Order issued on June 3, 2010. On July 1, 2010, Onnen filed a Notice of Appeal to the South Dakota Supreme Court.
On November 19, 2007, Onnen filed the first complaint in this federal action pursuant to the qui tarn provisions of the FCA which permit private parties to file actions on behalf of themselves and the United States to recover damages under the Act. He filed an amended complaint on November 21, 2007, and another on March 7, 2008, Onnen alleged that during his employment at STI, Defendants applied for and received from the federal government money based on false and fraudulent representations that STI was graduating qualified individuals who had taken the proper courses, and that qualified teachers were being hired. After his complaint was dismissed for failing to plead fraud with particularity, Onnen filed an amended complaint more clearly alleging what he believes Defendants did to falsely certify compliance with requirements that were necessary to receive federal funds pursuant to STIs Program Participation Agreement with the Department o f Education.4Onnen also asserts a claim that his employment was terminated in retaliation for his investigation and reporting of the fraud allegedly perpetrated by Defendants.
When he first served the Complaint, Onnen failed to serve a copy of the Written Disclosure Statement upon the Attorney General, as required by 31 U.S.C. § 3730(b)(2). He fulfilled this requirement on January 8, 2008, thereby commencing the sixty-day period during which the United States could exercise its option to intervene and take over prosecuting the case, and during which the pleadings were to remain under seal. (Doc. 13.) Extensions of the sixty-day period were requested by the United States, and granted by the Court, until August 5, 2008, when the United States filed the Declination to Intervene. (Doc. 28.) The case was unsealed by Order issued on October 7, 2008, and the summonses were issued on November 10, 2008. Defendants' first motion to dismiss was filed on December 1, 2008. On May 28, 2009, the Court granted Defendants' motion and dismissed the Complaint for failure to plead fraud with the particularity required by Rule 9(b) of the Federal Rules of Civil Procedure. Onnen was given leave to file a motion to amend the complaint. A subsequent motion to amend the complaint was filed, and it was granted by the Court on December 17, 2009. Onnen made some changes to the amended complaint, as directed by the Court, and he filed it on January 4, 2010. Defendants filed another motion to dismiss the amended complaint, asserting that it was untimely. That motion was denied by the Court on August 9, 2010. (Doc. 72.) The Court directed Defendants to file their Answer to the Complaint, or other responsive pleading. The pending Motion to Dismiss followed.
Defendants now ask the Court to dismiss the Amended Complaint pursuant to Federal Rules of Civil Procedure 12(b)(6), 9(b) and 41(b). The Court set forth the pleading requirements and standard of review under Rule 9(b) in the Memorandum Opinion and Order issued on May 28, 2009, doc. 43, and that discussion will not be repeated here. Rule 12(b)(6) requires the court to review only the pleadings to determine whether they state a claim upon which relief can be granted. In considering a motion to dismiss, the court assumes all facts alleged in the complaint are true, construes the complaint liberally in the light most favorable to the plaintiff, and should dismiss only if "it appears beyond a doubt that the plaintiff can prove no set of facts which would entitle the plaintiff to relief." Coleman v. Watt, 40 F.3d 255, 258 (8th Cir. 1994). Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds by Davis v. Scherer, 468 U.S. 183, 191 (1984).
Defendants first contend that Onnen cannot bring this qui tarn action in his own name. The caption of the case names Matt Onnen individually as well as Matt Onnen on behalf of the United States. The government is the real party in interest in a qui tarn action filed pursuant to 31 U.S.C. § 3730(b) even if the government declines to intervene. See United States ex rel, Zssier v. Regents of the University of Minnesota, 154 F.3d 870, 872 (8th Cir. 1998) (). The statute requires the action to be brought "in the name ofthe Government." 31 U.S.C. § 3730(b)(1). Thus the correct name of the plaintiff in this case is "United States ex rel. Matt Onnen, " without Matt Onnen being named individually.
The individual Defendants, Daby, Barth, Alberty, Hoffman, Morrison and Homan, have moved for dismissal in their individual capacities. In order to prove these claims against them, Onnen would need to show that Defendants in their individual capacities knowingly made false claims for government reimbursement. See United States ex rel. Golden v. Arkansas Game & Fish Com 'n, 333 F.3d 867, 870 (8th Cir. 2003). Paragraph 34 of the Amended Complaint alleges that Defendants knew about the false claims made against the government but did not advise the government "for to do so would endanger their funding." Doc. 66, ¶ 34. Read liberally, Onnen's allegation in paragraph 34 is sufficient to avoid dismissal of Defendants in their individual capacities.
Defendants argue that Onnen has failed to plead fraud with particularity under Rule 9(b), and has failed to state a claim upon which relief can be granted under Rule 12(b)(6), because he did not attach to the Amended Complaint a copy of the Program Participation Agreement ("PPA") entered into by STI in order to receive federal funds. Onnen explained that he could not attach a copy of the PPA to the Amended Complaint as directed by the Court because he did not yet have a copy of it. He explained that his work as the Registrar at STI gave him personal knowledge of the requirements of all PPAs. In his Amended Complaint, Onnen set forth specific PPA requirements allegedly violated by Defendants in this case.5 The Court finds that the Amended Complaint pleads the alleged violations of the PPA with sufficient particularity to place Defendants on notice of the alleged violations and to allow them to respond, even without a copy of the PPA being attached to the Amended Complaint.
Next, Defendants assert Onnen's FCA claims are barred by the doctrines of res judicata and collateral estoppel because he had a full and fair opportunity to litigate the issues in the state court proceedings in Onnen v. Sioux Falls Indep. Sch. Dist. #49-5, Civ. 07-4594 (S.D. 2nd Cir.). Underthe full faith and credit statute, 28 U.S.C. § 1738, 6 "Congress has specifically required all federal courts to give preclusive effect to state-court judgments whenever the courts ofthe State from which the judgments emerged would do so." Allen v. McCurry, 449 U.S. 90, 96 (1980); see Knutson v. City of Fargo, 600 F.3d 992, 996 (8th Cir. 2010). Therefore, in determining whether the South Dakota judgment has preclusive effect on this action, the Court follows South Dakota law of res judicata which requires that: "(1) the issue in the prior adjudication must...
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