Smith v. Clark/Smoot/Russell

• Decision Date: 10 August 2015
• Docket Number: No. 14–1406.,14–1406.
• Parties: Brian K. SMITH, Plaintiff–Appellant, and United States of America ex rel. Brian K. Smith, Plaintiff, v. CLARK/SMOOT/RUSSELL, a Joint Venture; Clark Construction Group, LLC; Smoot Construction Company of Washington, D.C.; H.J. Russell and Company, Inc., a/k/a H.J. Russell and Company; Shirley Contracting Company, LLC; Shirley Contracting Company, LLC, d/b/a Metro Earthworks ; Shelton Federal Group, LLC; Shelton/Metro, a Joint Venture; HSU Development, Inc. ; HSU Development, INC., d/b/a HSU Builders, Defendants–Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

796 F.3d 424

Brian K. SMITH, Plaintiff–Appellant

and

United States of America ex rel. Brian K. Smith, Plaintiff

v.CLARK/SMOOT/RUSSELL, a Joint Venture; Clark Construction Group, LLC; Smoot Construction Company of Washington, D.C.; H.J. Russell and Company, Inc., a/k/a H.J. Russell and Company; Shirley Contracting Company, LLC; Shirley Contracting Company, LLC, d/b/a Metro Earthworks ; Shelton Federal Group, LLC; Shelton/Metro, a Joint Venture; HSU Development, Inc. ; HSU Development, INC., d/b/a HSU Builders, Defendants–Appellees.

No. 14–1406.

United States Court of Appeals, Fourth Circuit.

Argued: March 24, 2015.

Decided: Aug. 10, 2015.

ARGUED:Jerry Alfonso Miles, II, Deale Services, LLC, Rockville, Maryland, for Appellant. Randall A. Brater, Arent Fox LLP, Washington, D.C., for Appellees. ON BRIEF:William W. Goodrich, Patrick R. Quigley, Karen S. Vladeck, Arent Fox LLP, Washington, D.C., for Appellees.

Before WYNN, FLOYD, and HARRIS, Circuit Judges.

Opinion

Affirmed in part, reversed in part, vacated in part, and remanded for further proceedings by published opinion. Judge WYNN wrote the opinion, in which Judge FLOYD and Judge HARRIS concurred.

WYNN, Circuit Judge.

To bring an action under the False Claims Act, a relator must, among other things, file his complaint under seal and maintain that seal for a period of sixty days. Although the False Claims Act complaint in this matter was properly filed under seal, the relator's attorney revealed to the relator's employer the existence of the complaint well before the end of the sixty day waiting period. Finding a violation of the seal requirement, the district court dismissed the relator's action with prejudice.

On appeal, we conclude that the dismissal of Smith's case with prejudice was inappropriate under the False Claims Act because the seal violation did not incurably frustrate the seal's statutory purpose. Furthermore, neither of the district court's alternative reasons for dismissing Smith's claims—the doctrine of primary jurisdiction and failure to comply with Civil Procedure Rule 9(b) —warrant dismissal with prejudice. We also conclude that the district court erred when it dismissed Smith's retaliation claim. Accordingly, we reverse the dismissals and remand for further proceedings.

I.

A.

Relator Brian K. Smith worked on several federal construction projects in 2012 and 2013: the City Market on O Street project (“City Market”), the Smithsonian Institution's National Museum of African– American History and Culture (“African–American Museum”), and the Smithsonian National Zoo project (“National Zoo”). Due to their size, these projects were subject to the Davis–Bacon Act, 40 U.S.C. §§ 3141 –3144, 3146, 3147.

The Davis–Bacon Act requires contractors and subcontractors performing federally funded or assisted contracts of more than $2,000 to set forth stipulations in covered contracts agreeing to pay their workers no less than the locally prevailing wages.¹ Id. § 3142. The Secretary of Labor sets the prevailing wages, which fall under four wage schedules (Building, Residential, Highway, and Heavy) and several different labor categories (painter, plumber, laborer, bricklayer, etc.). Id. When a dispute arises regarding the proper classification of a particular type of work, the Department of Labor makes a determination of the prevailing wage. 29 C.F.R. § 5.11(a).

In this matter, the complaint named several defendants. However, only Defendants Shirley Contracting Co., LLC, which does business as Metro Earthworks (“Shirley/Metro”), and Clark Construction Group, LLC (“Clark”) (collectively, “Defendants”) are properly before us because Smith did not raise the dismissal of the other defendants on appeal. See, e.g., United States v. Al–Hamdi, 356 F.3d 564, 571 n. 8 (4th Cir.2004).

Defendants are construction companies that performed construction work on one or more of the projects. Shirley/Metro, a subsidiary of Clark, employed Smith. Smith believed that Defendants failed to pay him the required Davis–Bacon Act wages for the work he performed on the City Market, African–American Museum, and National Zoo projects.

B.

On the City Market project, Smith was employed from April through late-August 2012 as a bobcat operator, flagman, jackhammer operator, roller, and unskilled general laborer. He alleges that his City Market wages should have been paid under the Heavy wage schedule but Defendants misclassified his work under a lower-paying schedule. He also alleges Defendants' outright failure to pay certain fringe benefits due, regardless of the applicable schedule.

On the African–American Museum project, Smith worked from August 27 until November 13, 2012, as a flagman and a general laborer. The contract for the African–American Museum project included two different Davis–Bacon Act wage schedules, Building and Heavy, with the latter generally paying more for the same labor category. Smith received appropriate payment under the Building schedule, but alleges that he should have been paid under the higher-paying Heavy schedule for his work as a flagman.

In September 2012, Smith lodged an oral complaint with the Department of Labor's Wage and Hour Division, alleging that on both projects his pay was less than the Davis–Bacon Act required. The Department of Labor initiated an investigation, and Smith alleges that the investigator concluded that he was not being paid appropriate wages under the Davis–Bacon Act.

On November 14, 2012, Defendants temporarily reassigned Smith and his team members to a residential contract that was not subject to the Davis–Bacon Act. This transfer resulted in decreased wages, increased commuting costs, and a substantially longer commute. After working at the residential site for two weeks, Smith began working on the National Zoo project, where he worked as a general laborer, flagman, and shoveler. Between December 24 and December 31, 2012, Smith was scheduled to work only eight hours, which he alleges was a reduction.

C.

On January 2, 2013, Smith filed a False Claims Act complaint, alleging, inter alia, that (1) Defendants' certification of Davis–Bacon Act compliance on payrolls they submitted for payment constituted false claims because he was not paid appropriate wages on the City Market, African–American Museum, and National Zoo projects; and (2) the November 2012 reassignment and the alleged December 2012 hours reduction were retaliatory.

As required by Section 3730(b)(2), Smith's attorney filed the complaint under seal in camera. The next day, however, Smith's attorney called defendant Clark's in-house counsel to inform him that he had recently filed a False Claims Act case in which Clark was a defendant. During this phone call, the attorney requested that Clark cease retaliating against Smith. [J.A. 247–48] When Clark's in-house counsel asked for a copy of the complaint, Smith's attorney told him that he could not provide a copy because it had to remain under seal for sixty days. The next day, Smith's attorney contacted a Shirley/Metro human resources employee to request Smith's employment records and stated that he had recently filed a False Claims Act complaint in which Shirley/Metro was a defendant.

On January 23, 2013, Smith's attorney served the Government with a copy of the complaint. And on February 7, 2013, an attorney representing Shirley/Metro contacted the Government regarding the communications his client had received from Smith's attorney. Recognizing that there was “little point in maintaining the fiction of a seal when the defendants are aware of the filing,” the Government moved for a partial lifting of the seal. J.A. 169. In its memorandum in support of the motion, the Government noted that a partial lifting “may allow the government to better evaluate the relator's claims and speed the determination about whether the government will intervene in this case.” J.A. 169. Smith's attorney consented to the Government's motion, and the district court granted it on February 20, 2013.

After requesting and receiving an extension on the deadline by which it had to decide whether to intervene, the Government ultimately elected not to intervene in the case. Defendants then jointly filed a motion to dismiss pursuant to Civil Procedure Rules 12(b)(1) and 12(b)(6). After hearing arguments regarding the motion to dismiss, the district court dismissed all ten counts contained in the complaint with prejudice. Smith appeals only the dismissals of Counts I (Knowingly Presenting False Claims to the Government), II (Knowingly Making False Statements or Records to the Government), and IV (violation of False Claims Act Anti–Retaliation Provision).

II.

Smith first argues that the district court erred when it dismissed Counts I and II with prejudice. The district court grounded its dismissal of those counts primarily upon the “very serious matter” of the “violation of the statutory seal.” J.A. 488. Smith's attorney undoubtedly violated the False Claims Act's seal requirement by publicly discussing the complaint. Am. Civil Liberties Union v. Holder, 673 F.3d 245, 254 (4th Cir.2011) (recognizing that “the seal provisions [prevent] the relator ... from publicly discussing the filing of the qui tam complaint”); U.S. ex rel. Lujan v. Hughes Aircraft Co., 67 F.3d 242, 244 (9th Cir.1995) (holding that plaintiff “clearly violated the seal provision ... by making statements to [a newspaper about] the existence and nature of her qui tam suit”). The real dispute here centers on whether the district court properly dismissed Smith's case in response to the violation.

The procedural requirements of the False Claims Act, including its seal provision, “are not jurisdictional, and violation of those requirements does not per se require dismissal.” Lujan, 67 F.3d at 245. Further, “[n]o provision of the False Claims Act explicitly authorizes dismissal as a sanction for disclosures in violation of the seal requirement.” Id. Thus, the False Claims Act, on its face, neither mandates nor expressly...