U.S. ex rel. Ackley v. Intern. Business Machines, No. Civ. PJM 97-3189.

• Decision Date: 27 July 2000
• Docket Number: No. Civ. PJM 97-3189.
• Parties: UNITED STATES of America ex rel. Robert D. ACKLEY, Plaintiff, v. INTERNATIONAL BUSINESS MACHINES CORPORATION, et al., Defendants.
• Court: U.S. District Court — District of Maryland

110 F.Supp.2d 395

UNITED STATES of America ex rel. Robert D. ACKLEY, Plaintiff, v. INTERNATIONAL BUSINESS MACHINES CORPORATION, et al., Defendants.

No. Civ. PJM 97-3189.

United States District Court, D. Maryland, Southern Division.

July 27, 2000.

COPYRIGHT MATERIAL OMITTED

Thomas Earl Patton, Walter G. Birkel, Tighe, Patton, Tabackman & Babbin, Washington, DC, Dean Francis Pace, Pace & Rose, Los Angeles, CA, for Plaintiff.

Kathryn D. Kirmayer, Kimberly King Hartwell, Michele T. St. Mary, Thomas P. Humphrey, Crowell & Moring, Washington, DC, for Defendants.

OPINION

MESSITTE, District Judge.

This is a relator's suit under the qui tam provisions of the False Claims Act (FCA), 31 U.S.C. § 3729 et seq. Following the Court's Order granting Defendants' Motion to Dismiss Counts I and II of Plaintiff's Second Amended Complaint,¹ Defendants were directed to file pleadings responsive to Count III, the only count remaining in the Second Amended Complaint, which alleges retaliation in violation of the FCA, 31 U.S.C. § 3730(h). Defendants have responded by filing a partial Motion to Dismiss Count III,² and alternatively ask the Court to Strike significant portions of the Second Amended Complaint. Ackley has filed an opposition, to which Defendants have replied. Having considered the pleadings, the Court will DENY the Motion to Dismiss and the Motion to Strike.

I.

Recapping the facts:

Plaintiff Robert D. Ackley is a former employee of Defendant International Business Machines Corporation ("IBM") and a current employee of Defendant Lockheed Martin Corporation ("Lockheed").³ IBM, a multinational corporation with its principal place of business in Armonk, New York, is the world's largest supplier of advanced information processing technology. Lockheed, also a multinational corporation, has its principal place of business in Bethesda, Maryland, and is one of the world's largest defense contractors.

Between 1987 and October 1993, Ackley worked as a Contract Program Manager on IBM's Space Station Freedom ("SSF") Project at its FSC facility in Owego, New York.⁴ As such, Ackley was responsible for ensuring the integrity of IBM's time and cost-charging practices on the Project. In or around April 1993, he became concerned over certain developments he says were taking place within his area of responsibility. Specifically, in that month he reported to his superiors that a number of IBM employees were charging time to the SSF account that had in fact been spent on matters unrelated to the Project. Ackley says that, although IBM conducted an investigation based on his report, the investigation was at best superficial. Moreover IBM then undertook a "sham" investigation of sexual harassment charges against Ackley himself that, in October 1993, resulted in his demotion from Contract Program Manager on the SSF Project to Program Manager for Business Acquisition.

In March 1994 IBM sold FSC to Loral Federal Systems Company ("Loral"),⁵ at which point Ackley ceased to be IBM's employee and became Loral's. In April 1996, Loral was acquired by Lockheed and Ackley became a Lockheed employee. Ackley alleges that IBM retaliated against him by pursuing the sham sexual harassment investigation and by demoting him, as well as by denying him relocation benefits at the time of the sale to Loral. Ackley also says that Lockheed, through numerous acts of harassment, continued to retaliate against him.

The present action began on September 7, 1995, when Ackley filed suit in the United States District Court for the Eastern District of Pennsylvania. His initial Complaint, which named only IBM as defendant, alleged two causes of action: submission of false claims in violation of 31 U.S.C. § 3729(a)(1) and retaliation against an employee in violation of Section 3730(h). After the United States declined to intervene in the suit, Ackley filed a First Amended Complaint in the Pennsylvania federal court, still naming only IBM as defendant, but adding a common law cause of action for wrongful constructive termination. On March 2, 1998, after the case was transferred to this Court, Ackley filed a Second Amended Complaint, adding Lockheed as defendant as to the retaliation claim, and dropping the constructive termination claim against IBM, but adding a claim against IBM for use of false records and statements in violation of 31 U.S.C. § 3729(a)(2).

The false claims and false records claims under Section 3729(a) are now out of the case by reason of the Court's Order of November 17, 1999. In the present Motion, IBM asks the Court to dismiss the retaliation count against it for failure to state a claim upon which relief can be granted, arguing (1) that Ackley has not alleged that he took an action "in furtherance of" a qui tam suit during his employment at IBM or that IBM was aware of any such action and (2) that the retaliation claim is otherwise time-barred in its entirety. Lockheed argues that the retaliation claim against it is time-barred insofar as retaliatory acts prior to March 3, 1997 are alleged and asks that any such claims for that period be dismissed. Alternatively, both Defendants ask the Court to strike "significant portions" of the Second Amended Complaint as immaterial in light of the Court's previous dismissal of Counts I and II and the anticipated dismissal of Count III insofar as it relates to IBM.

II.

A motion to dismiss under Fed.R.Civ.P. 12(b)(6) will be granted if the allegations of the complaint, taken as true and construed in the light most favorable to the plaintiff, fail as a matter of law to state a claim for which relief can be granted. See Carter v. Burch, 34 F.3d 257, 261 (4th Cir.1994); Ammer v. United States, 881 F.Supp. 1007, 1010 (D.Md.1994), aff'd, 56 F.3d 60 (4th Cir.1995). A claim is not to be dismissed "`unless it appears beyond [ ] doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" Comet Enterprises Ltd. v. Air-A-Plane Corp., 128 F.3d 855, 860 (4th Cir.1997) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)).

III. Elements of a Retaliation Claim under the FCA

A) The Issues

The FCA protects whistle-blowers against retaliation by their employers:

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.

31 U.S.C.A. § 3730(h) (West Supp.1999).

To state a claim for retaliation under Section 3730(h), a plaintiff must allege that (1) he took an action "in furtherance" of a qui tam suit, i.e., engaged in "protected activity," (2) his employer knew of this action, and (3) his employer retaliated against him as a result of the action. Eberhardt v. Integrated Design & Constr., Inc., 167 F.3d 861, 866 (4th Cir.1999) (citing Zahodnick v. International Business Machs. Corp., 135 F.3d 911, 914 (4th Cir. 1997)); see also United States ex rel. Ramseyer v. Century Healthcare Corp., 90 F.3d 1514, 1522 (10th Cir.1996). Defendants contend that Ackley has failed to allege that he engaged in protected activity while employed by IBM or that IBM was aware of any such activity before it supposedly retaliated against him. Ackley disagrees and so does the Court.

B) The "action in furtherance" requirement

Ackley says he acted in furtherance of a qui tam suit during his employment with IBM because: (1) he took "all available steps" to report to senior management that, by deliberately under-reporting certain indirect costs otherwise allocable to the SSF Project (a substantial portion of which would be unreimbursable by the Government), IBM was engaging in the "fraudulent practice" of charging the Government a higher fee on the SSF Project than would otherwise be due [Second Amended Complaint ¶¶ 116-121],⁶ and (2) he took advantage of IBM's "Open Door" reporting policy by contacting Anthony J. Macina, Vice President and General Manager of IBM's FSC division, in April 1993 and advising him that certain employees, under the direction of senior management, were engaging in "time card fraud" as part of an "overall scheme ... to unilaterally expand IBM's participation and profit" by charging time spent on other projects to the SSF Project [Second Amended Complaint ¶¶ 12, 123-128].

Despite this, Defendants maintain that Ackley does not fall within the protection of the statute. They cite Zahodnick v. International Business Machines Corporation, supra, in which a Fourth Circuit panel rejected a plaintiff's claim that he acted "in furtherance of" a qui tam action where the sole evidence was that he had informed his supervisor that other employees were incorrectly charging time spent on one project to another, holding that "[s]imply reporting his concern of a mischarging to the government to his supervisor does not suffice to establish that Zahodnick was acting `in furtherance of' a qui tam action." 135 F.3d at 914. Ackley, in response, cites Eberhardt v. Integrated Design & Construction, Incorporated, supra, in which another Fourth Circuit panel stated that a plaintiff's internal investigation of fraud constituted protected activity because it "reasonably could have led to the filing of a qui tam action." 167 F.3d at 867. Defendants attempt to distinguish Eberhardt on the ground that the plaintiff in that case had conducted an internal investigation whereas here Ackley says only that he made reports to his superiors and does not claim to have engaged in "predicate investigatory conduct."

The Court finds Defendants' arguments unpersuasive. Nothing in Eberhardt suggests that the "action in furtherance"...