United States ex rel. Fadlalla v. Dyncorp Int'l LLC, Civil Action No. 8:15-cv-01806-PX

• Court: United States District Courts. 4th Circuit. United States District Court (Maryland)
• Writing for the Court: Paula Xinis, United States District Judge
• Citation: 402 F.Supp.3d 162
• Parties: UNITED STATES of America EX REL. Elgasim Mohamed FADLALLA, et al., Plaintiff-Relators, v. DYNCORP INTERNATIONAL LLC, et al., Defendants.
• Decision Date: 05 September 2019
• Docket Number: Civil Action No. 8:15-cv-01806-PX

402 F.Supp.3d 162

UNITED STATES of America EX REL. Elgasim Mohamed FADLALLA, et al., Plaintiff-Relators,
v.
DYNCORP INTERNATIONAL LLC, et al., Defendants.

Civil Action No. 8:15-cv-01806-PX

United States District Court, D. Maryland.

Signed September 5, 2019

402 F.Supp.3d 172

Charles S. Fax, Rifkin Livingston Levitan and Silver LLC, Bethesda, MD, Joseph A. Hennessey, The Law Office of Joseph Hennessey LLC, Chevy Chase, MD, Andrew W. Ferich, Pro Hac Vice, Steven A. Schwartz, Pro Hac Vice, Chimicles Schwartz Kriner and Donaldson-Smith LLC, Timothy Newlyn Mathews, Pro Hac Vice, Chimicles and Tikellis LLP, Haverford, PA, Liesel Johanna Schopler, Rifkin Weiner Livingston Levitan and Silver LLC, Annapolis, MD, for Plaintiff-Relators.

Jan Paul Miller, Thompson Coburn LLP One US Bank Plz, Claire M Schenk, Pro Hac Vice, Thompson Coburn LLP, St Louis, MO, P. Nicholas Peterson, Pro Hac Vice, Roderick L. Thomas, Pro Hac Vice, Craig Smith, Wiley Rein LLP, David Rhinesmith, Pro Hac Vice, William F Stute, Pro Hac Vice, Jonathan Adler Direnfeld, Orrick Herrington and Sutcliffe LLP, Adam P. Feinberg, Pro Hac Vice, Marc J. Gerson, Pro Hac Vice, Preston L. Pugh, Pro Hac Vice, Dawn Elise Murphy-Johnson, Miller and Chevalier Chartered, Philip Tucker Evans, Holland and Knight LLP, Washington, DC, Lane Hornfeck, Shulman Rogers Gandal Pordy Ecker PA, Potomac, MD, Richard O. Wolf, Moore and Lee LLP, McLean, VA, Mitchell A. Bashur, Pro Hac Vice, Megan Mocho Jeschke, Holland & Knight LLP, Tysons, VA, for Defendants.

MEMORANDUM OPINION

Paula Xinis, United States District Judge

This qui tam action concerns the provision of translators to assist our armed forces in the Middle East. Pending before the Court are seven motions to dismiss filed by Defendants TigerSwan, Inc. (ECF No. 64), AECOM National Security Programs, Inc. (ECF No. 80), KMS Solutions, LLC (ECF No. 81), DynCorp International, LLC (ECF No. 83), Global Linguist Solutions, LLC (ECF No. 85), Thomas/Wright, Inc. (ECF No. 100), and Shee Atika Languages, LLC (ECF No. 129). The motions are fully briefed, and no hearing is necessary. See Loc. R. 105.6. For the following reasons, the motions are GRANTED in part and DENIED in part.

I. Background

Relators'¹ false claims allegations arise out of the performance of two government contracts awarded to Global Linguist Solutions, LLC ("GLS") by the Commander, Headquarters, United States Army Intelligence and Security Command ("INSCOM"). ECF No. 9 ¶ 2. Relators are 29 United States citizens who worked for GLS under one or both of the contracts "as security-cleared linguists, translators and interpreters for U.S. military and intelligence-gathering operations in the Middle East." Id. ¶ 5.

A. Subcontractor Fraud Scheme

On December 5, 2007, INSCOM selected GLS as the "proposed awardee" of Contract W911W4-08-D-0002 ("Contract 1"), a $4.645 billion contract of an indefinite duration

402 F.Supp.3d 173

and quantity for "the provision of linguists to support U.S. military and intelligence-gathering efforts in the Middle East." Id. ¶¶ 59–61. To be awarded Contract 1, GLS had to submit a "Small Business Subcontracting Plan." Id. ¶¶ 69, 70. This plan included a statement of total dollars to be subcontracted to various categories of small businesses, to include those owned by veterans, women, and those considered "disadvantaged" businesses. Id. ¶¶ 69, 77. GLS was required to submit reports at the close of each fiscal year, in which it would note any subcontract awards to small disadvantaged business. The contract also specifically stated that GLS' failure "to comply in good faith with its subcontracting plan" would amount to a "material breach." Id. ¶ 79. Relators assert that the small business subcontract provisions were designed to "enhance the ability of small businesses to perform the contracts and provide the services needed to enhance the competition necessary to promote a free marketplace" as envisioned in the Aid to Small Business Act. Id. ¶ 73 (emphasis in original).

In bidding for Contract 1, GLS entered into "Teaming Agreements" with Small Business Defendants KMS Solutions, LLC ("KMS"), Shee Atika Languages, LLC ("Shee Atika"), Thomas/Wright, Inc. ("Wright"), TigerSwan, Inc. ("TigerSwan"), and Invizion, Inc. ("Invizion"). Id. ¶¶ 8, 83. GLS next represented to INSCOM "that it intended to utilize the Small Business Defendants in accordance with the subcontracting requirements of Contract 1." Id. ¶ 84. However, in practice, and through the Teaming Agreements, the Small Business Defendants acted as "GLS affiliates" and not "bona fide independent small business entities." Id. ¶ 86. As part of GLS' contracting scheme, GLS performed all of the contract work while giving the appearance that the Small Business Defendants performed the same work under the subcontracts. Id. ¶ 88.

As part of the scheme, GLS had Relators sign various employment contracts to make it appear, falsely, that one of the Small Business Defendants was the Relator's employer. Each Relator executed multiple employment contracts, seriatim, within a matter of months. See, e.g., id. ¶¶ 190, 230–32. GLS managers interacted with Relators almost exclusively, not the Small Business Defendants who nominally appeared on the employment contracts. Id. ¶ 94. GLS oversaw the recruitment and hiring process, paid for Relators' training, coordinated background investigations and medical testing, determined where Relators were deployed, and managed Relators' transportation to Kuwait. Id. ¶¶ 96–111. When these "transfers" occurred, GLS often told Relators to not worry and that nothing about their employment would change, except they would now be paid by the new subcontractor. Id. ¶¶ 261, 278–79, 283, 310, 340, 405. Small Business Defendants, in turn, "did not know, at any given time, which Relators were on their payrolls." Id. ¶ 115. Accordingly, "GLS received unjustified payments from the U.S. by falsely representing its employees, including Relators, as working for the Small Business Defendants, outsourcing task orders to them, and earning fees for such outsourced work." Id. ¶ 117.

In the National Defense Authorization Act for Fiscal Year 2008, Congress established the Commission on Wartime Contracting in Iraq and Afghanistan ("CWC") to investigate "fraud, waste, abuse and mismanagement of wartime government contracts." Id. ¶ 164. On August 12, 2009, the CWC "held a hearing on linguist support services provided by GLS," calling GLS President John Houck to testify. Id. ¶ 165. In questioning Houck on the role of the subcontractors, Houck falsely testified

402 F.Supp.3d 174

that GLS was "leasing" linguists from the Small Business Defendants. Id. ¶ 167. Houck also stated that 60% of the linguists were employed by subcontractors, and that only 40% were GLS employees, when in fact GLS employed almost all linguists. Id. According to Relators, Houck's false testimony "thwart[ed] discovery...of GLS's material breaches of Contract 1 and false claims thereunder." Id. ¶ 177.

On July 11, 2011, INSCOM awarded Contract No. W911W4-11-D0004 ("Contract 2") to GLS for $9.7 billion. Id. ¶ 92. Like Contract 1, Contract 2 "calls for provision of similar linguistic, interpretation and translation services for U.S. military personnel and other agencies, only on a global basis." Id. ¶ 4. In submitting its proposal for Contract 2, GLS "falsely represented that it had complied with Contract 1," including the small business contracting requirements. Id. ¶ 92. Relators aver that INSCOM awarded Contract 2 to GLS, relying at least in part on these false representations. Id. ¶¶ 4, 180.

B. Work Visa Fraud Scheme with Alshora

Under Contract 1, GLS was responsible for ensuring that employees such as Relators secured necessary travel documents, and that all personnel, including subcontractors, complied with "Host Country, local and international laws and regulations...applicable to the contractor in the area of operations." Id. ¶ 65. As part of this contractual obligation, GLS represented that performance under Contract 1 complied with Kuwaiti labor and immigration laws. Id. ¶ 506. However, foreign nationals must obtain a Resident Visa to work in Kuwait, and businesses owned by foreign nationals cannot serve as employers. Id. ¶¶ 127–28.

To circumvent Kuwait's prohibition on GLS employing the Relators directly, GLS subcontracted with Alshora International General Trading and Contracting Company ("Alshora"), a Kuwaiti owned business, for Alshora to obtain Resident Visas for GLS employees in exchange for a "sponsorship fee." Id. ¶ 124. Beginning December 9, 2009, "Alshora and GLS obtained Relators' signatures on documents purporting to identify Relators as Alshora employees." Id. ¶ 129. To further this scheme, GLS forced Relators to open bank accounts in Kuwait and then deducted from Relators' pay an amount for Alshora to deposit into the Kuwait accounts all to make it appear as if Relators worked for Alshora. Id. ¶ 130. GLS also held Relators' passports for weeks or months at a time and without explanation, thus preventing Relators from leaving Kuwait or venturing off the U.S. military bases to which they were assigned. Id. ¶¶ 194–97, 201, 219, 229, 249, 265, 373, 391...