United States ex rel. Marshall v. Woodward, Inc.

• Decision Date: 27 March 2015
• Docket Number: 06 C 1746
• Citation: 85 F.Supp.3d 973
• Parties: United States of America ex rel. Debra Marshall and Peggy Thurman, Debra Marshall, individually, and Peggy Thurman, individually, Plaintiffs/Relators, v. Woodward, Inc., Defendant.
• Court: U.S. District Court — Northern District of Illinois

85 F.Supp.3d 973

United States of America ex rel. Debra Marshall and Peggy Thurman, Debra Marshall, individually, and Peggy Thurman, individually, Plaintiffs/Relators

v.Woodward, Inc., Defendant.

06 C 1746

United States District Court, N.D. Illinois, Eastern Division.

Signed March 27, 2015

Michael I. Behn, Behn & Wyetzner, Chartered, Evanston, IL, Steven Paul Schneck, Robert D. Allison, Allison & Schneck LLC, Chicago, IL, for Plaintiffs/Relators.

Lawrence Charles Dinardo, Elizabeth E. Manning, Elizabeth Jenkins Marino, Thomas P. McNulty, Tina M. Tabacchi, Jones Day, Jill Susan Vorobiev, Dykema Gossett PLLC, Chicago, IL, Peter F. Garvin, Jones Day, Washington, DC, Thomas Hackney, Faegre Baker Daniels LLP, Denver, CO, for Defendant.

Memorandum Opinion and Order

Feinerman, United States District Judge

Relators Debra Marshall and Peggy Thurman brought this qui tam suit on behalf of the United States, alleging that their former employer, Woodward, Inc., violated the False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq., in connection with its manufacture and sale of military parts to General Electric and the Department of Defense. Doc. 1. Marshall and Thurman also brought retaliation claims on their own behalf under the FCA's anti-retaliation provision and Illinois law, alleging that Woodward fired them for questioning its improper conduct. Ibid. Nearly six years later, the Chief Judge unsealed the complaint after the United States declined to intervene. Docs. 17–19. Relators filed an amended complaint, Doc. 24, which survived a motion to strike, Doc. 49, and then filed a corrected amended complaint, Doc. 55. With the parties' agreement, a three-week jury trial has been set for May 18, 2015. Doc. 240.

Now before the court is Woodward's motion for summary judgment, Doc. 197, and Relators' motions for leave to file a surreply brief, Docs. 224, 230. Relators' motions are granted, and the court has considered their surreply in considering Woodward's motion, which is granted as well.

Background

The facts are set forth as favorably to Relators as the record and Local Rule 56.1 permit. See Hanners v. Trent, 674 F.3d 683, 691 (7th Cir.2012). On summary judgment, the court must assume the truth of those facts, but does not vouch for them. See Smith v. Bray, 681 F.3d 888, 892 (7th Cir.2012).

A. The T2 Sensor

Woodward manufactures a device called the “T2 sensor” under contracts with General Electric (“GE”) and the United States Department of Defense (“DoD”). Doc. 204 at ¶¶ 2–3. The T2 sensor is a component of another device called the “T700 HMU,” which regulates fuel flow in the GE T700 engine that the military uses in Blackhawk and Apache helicopters. Ibid. Woodward sells T2 sensors to GE (to incorporate into T700 engines) and DoD (for spare and replacement parts).Id. at ¶ 3.

The T2 sensor has a “coil” end and a “bellows” end. Id. at ¶ 5. The two ends are connected by a “capillary tube ” encased in a flexible “armor cable.” Ibid. A photo is here:

Doc. 199 at ¶ 5. The “coil” end measures changes in air temperature. Doc. 204 at ¶¶ 5–6. Such changes cause alcohol in the capillary tube to expand or contract, which causes corresponding movement in the bellows end. Id. at ¶ 6. The T2 sensor communicates those changes in temperature to the T700 HMU, which then helps to set the optimal fuel ratio for the T700 engine. Id. at ¶¶ 2–3, 6.

B. The Grade A Joint and SP–865

Woodward's “Engineering Drawings,” “Process Drawings,” and internal “Shop Procedures” govern its production of the T2 sensor. Id. at ¶¶ 8–9. Shop Procedure 865 (“SP–865”) describes the brazing procedure. Id. at ¶ 9. Brazing is a process that bonds two metal surfaces by heating both surfaces and a filler metal until the filler metal flows into a joint by capillary action. Id. at ¶ 14.

The T2 sensor's “Grade A” joint connects the capillary tube to the “sensor head” at the bellows end. Id. at ¶ 18. To braze that joint, Woodward first applies a small amount of “stop-off” that prevents filler metal from flowing into the capillary tube. Id. at ¶ 19. Next, Woodward applies braze paste containing “flux” to enhance the flow of braze material. Ibid. The brazing process is completed in a furnace using an automated process. Id. at ¶ 16. The process creates two lines of brazing material along the edges of the joint—with only one being visible from the outside of the assembly—called “fillets.” Id. at ¶ 24. The T2 sensor undergoes several tests before shipment. Id. at ¶¶ 30, 32, 35–39. Woodward completed a “Certificate of Conformance” with each shipment; the document states that Woodward “certif[ies] that such supplies were in the Quantities and of the Quality called for, and were in all respects in accord with the applicable specifications.” Id. at ¶ 143.

A few sections of SP–865 are pertinent here. Section 5.0 and Table 17.1.1 require “Class 1” joints to have a diametrical clearance (the area between the two pieces of metal being brazed) within a specific range. Id. at ¶¶ 50, 53. Sections 12.1.5 and 12.1.6 state that “[a]ll evidence of stop-off” and “all evidence of flux must be removed.” Id. at ¶ 54. Section 6.1.1 requires a “visual inspection” for “filler material” of the Grade A joint's “exposed edges” (the fillets), and if “evidence of braze flow is not apparent by visual inspection ... an alternate inspection method may be used [such as x-ray].” Id. at ¶ 56.

Before 1996, an engineering drawing for a predecessor part of the current T2 sensor did not call for an x-ray inspection. Id. at ¶ 26. In 1996, Woodward added an x-ray requirement, but later found that the sensor's density and configuration prevented useful x-rays. Id. at ¶ 27. Woodward engineer Steve Krugler concluded that the x-ray inspection was unnecessary, and a 1997 revision to the engineering drawing deleted that requirement. Id. at ¶ 28.

In early 2004, Woodward received a shipment of capillary tubes that did not conform to specifications. Id. at ¶ 61. Although GE and DoD permitted Woodward to use nonconforming parts under certain circumstances, id. at ¶¶ 58–59, Woodward belatedly issued a nonconformance report informing GE that the capillary tubes were non-conforming but safe. Id. at ¶ 61.

Woodward Assembly and Test Leader Mark Meichtry, who served as Relators' supervisor, was disciplined for failing to timely notify GE. Ibid.

C. Relators' Complaints and Woodward's Investigation

While employed by Woodward, Relators worked on the T2 sensor. Id. at ¶ 63. In early 2005, Diedrich (the T700 project engineer) asked Materials Engineer Barb Swanson to investigate certain problems with the T2 sensor. Id. at ¶¶ 69–70. Marshall volunteered to examine the issue, id. at ¶ 70, and asked x-ray technician Mark Frutig to x-ray the joint, id. at ¶ 74. Based on her and Frutig's assessment, Marshall concluded that the diametrical clearance of the Grade A joint was too small, and that stop-off and flux were not removed, which risked contaminating the joint. Id. at ¶ 78. Marshall also concluded Woodward was using braze material for another T2 sensor joint (the “Grade D joint”) to “mask problems” with the Grade A joint by “creat [ing] a secondary seal [over] the Grade A joint.” Id. at ¶ 68.

On April 6, 2005, Marshall conveyed her conclusions to two other Woodward employees, and she told Meichtry (Relators' supervisor) and Steven Gorman (Meichtry's supervisor) that Relators would cease working on the T2 sensor because of their concerns. Id. at ¶¶ 72, 81. Diedrich and Senior Engineer David Kunchinski investigated the issue. Id. at ¶ 85. On April 12 and 13, Meichtry informed Relators that the engineers had concluded that the T2 sensor “parts were good to ship.” Ibid. Relators still refused to work on the sensor. Ibid. ; Doc. 218 at ¶ 20.

Relators suggest that Meichtry was unreceptive to their complaints even before Diedrich and Kunchinski's investigation. On April 7, Meichtry sent an email to Marshall and Thurman stating: “Let's keep this job moving.” Doc. 218 at ¶ 8. Meichtry also told Relators on April 12 that, as Relators describe what he said, “(1) it's going to take too much time and cost too much money to fix these problems, (2) GE wants the parts regardless of the problems and (3) it's the two of you against the world.” Doc. 204 at ¶¶ 82, 85.

On April 14, Relators met with Gorman, Diedrich, Meichtry, Quality Director Spitty Tata, and Human Resources Manager Carol Smith. Id. at ¶ 86. Gorman told Relators that Woodward had concluded that the parts were okay. Id. at ¶ 88. Marshall was not convinced. Ibid. Tata asked what Woodward could do to assure Marshall the parts were “good.” Id. at ¶ 89. Marshall asked Tata to x-ray twenty parts. Ibid.

In response, Swanson and Diedrich reviewed x-rays and said that they had observed no problems, as there was no evidence of filler from the Grade D joint “coming across and enclosing the entire fillet of the Grade A joint.” Id. at ¶ 95. Meichtry and Diedrich provided Relators with sixteen x-rays, fourteen of which were too dark. Ibid. Although two of the x-rays showed some evidence of masking, the engineers concluded that “for masking to create a problem, the filler metal from the Grade D joint would have to completely cover the Grade A joint ... because it was extremely remote that you could have braze flowing into the exact proper spot to seal off a leak.” Ibid. (internal quotation marks omitted). Unconvinced, Relators entered Woodward's premises the night of April 14 without authorization, took several scrap parts, cut and examined them, and took them home. Id. at ¶ 90. Marshall said that she found evidence of masking. Id. at ¶¶ 86, 89–90.

On April 18, despite Woodward's conclusion that everything was fine, Relators maintained that they were still unwilling to work on the T2 sensor parts. Id. at ¶ 96.

Woodward asserts that Meichtry then suspended Relators, while Relators assert that they were fired.Ibid.

Marshall then called a hotline established by Woodward to report suspected violations of its ethics policies. Id. at ¶¶ 97,...