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June 16, 1993

JUDITH A. NEAL, Plaintiff,
HONEYWELL INC., a corporation, and ALLIANT TECHSYSTEMS INC., a corporation, Defendants.


The opinion of the court was delivered by: PAUL E. PLUNKETT


This matter is before us on the Defendants' Motion to Dismiss the Complaint. For the reasons stated below, the motion is denied.


 Plaintiff Judith Neal alleges that in February 1987 she discovered that her employer, Honeywell, was falsifying ballistics test data and delivering defective ammunition to the United States Army. When she discovered this conduct, she reported it to her superiors pursuant to internal Honeywell procedures. (Compl. PP 8, 15, 17, 19.) Honeywell responded by notifying the government and conducting an internal investigation. (Compl. P 21.) The results of the investigation were shared with the Army, and a settlement agreement was reached under section 3730(a) of the False Claims Act. 31 U.S.C. § 3730(a). Pursuant to the agreement, Honeywell paid a settlement with an approximate value of two and one half million dollars. (Compl. P 32.)

 Neal alleges that Honeywell discriminated against her for notifying her superiors of the fraud. (Compl. P 23, 34.) She was cut off from the Honeywell investigation, and never questioned about the matter by those in charge. (Compl. P 23(a).) Physical threats were made against her by members of the plant's management, and she was often told that her coworkers hated her. (Compl. P 23(c), (d).) Neal also alleges that Honeywell never informed her of her rights under the False Claims Act to file a qui tam lawsuit on behalf of the government. (Compl. P 33.) The Complaint alleges that this conduct, which included the above threats, change of work responsibilities and failure to disclose her rights under the False Claims Act, constituted constructive suspension and discharge in violation of the whistleblower protection provisions of the False Claims Act. (Compl. P 34.)

 The Defendants have moved to dismiss the Complaint on three grounds. First, they argue that internal whistleblowers are not protected from retaliation by the False Claims Act. Second, they argue that the applicable statute of limitations has run. Finally, they argue that Neal failed to exhaust her state remedies.


 On a motion to dismiss, the court views the allegations of the complaint as true, along with reasonable inferences therefrom, and views these in the light most favorable to the plaintiff. Dawson v. General Motors, 977 F.2d 369, 372 (7th Cir. 1992); Powe v. Chicago, 664 F.2d 639, 642 (7th Cir. 1981). A complaint should not be dismissed with prejudice unless it appears beyond doubt that the plaintiff is unable to prove any set of facts consistent with the complaint which would entitle the plaintiff to relief. Bartholet v. Reishauer A.G., 953 F.2d 1073, 1078 (7th Cir. 1992). Unless otherwise provided by Rule 9 of the Federal Rules of Civil Procedure, facts need not be plead with particularity. Leatherman v. Tarrant County Narcotics and Intelligence Unit, 122 L. Ed. 2d 517, 113 S. Ct. 1160, 1163 (1993). Nevertheless, a plaintiff must allege sufficient facts to outline the cause of action, proof of which is essential to recovery. Ellsworth v. Racine, 774 F.2d 182, 184 (7th Cir. 1985), cert. denied, 475 U.S. 1047, 89 L. Ed. 2d 574, 106 S. Ct. 1265 (1986) (citations omitted).

 I. The False Claims Act

 Plaintiff's claims arise under the False Claims Act. See 31 U.S.C. § 3729 et seq. In response to fraudulent practices by defense contractors during the Civil War, the False Claims Act [the "Act"] was first adopted in 1863 and signed into law by President Lincoln. The Act, in its present incarnation, allows the government to recover treble damages from those making false claims or submitting false information in support of those claims. 31 U.S.C. § 3729 (Supp. 1993). In addition, the United States is entitled to a $ 5,000-$ 10,000 penalty for each fraudulent submission, regardless of actual damage. See 31 U.S.C. § 3729 et seq. (Supp. 1993); Sen. R. No. 345, 99th Cong., 2d Sess., reprinted in, 1986 U.S.C.C.A.N. 5266, 5273 (history of the Act).

 The original statute also allowed for a private party to bring suit under the Act. A private party who brings suit for a fraud committed against the government is known as a "qui tam" plaintiff. The term qui tam is derived from the Latin phrase qui tam pro domino rege quam pro se ipso in hac parte sequitur, which means "who brings the action for the king as well as for himself." See William Blackstone, Commentaries on the Law of England 160 (1768). *fn1" Under the original law, a qui tam plaintiff, or "relator" who brought suit successfully was entitled to one-half the damages and forfeitures as well as his costs. See Sen. R. No. 345, 99th Cong. 2d Sess., reprinted in, 1986 U.S.C.C.A.N. 5266, 5275 (history of the Act).

 Though Congress and the courts have significantly restricted the ability of a private party to bring a qui tam lawsuit, *fn2" the current version of the law still provides for qui tam suits and entitles a successful qui tam relator to a portion of any recovery or settlement of the claim. See 31 U.S.C. § 3730(d) (Supp. 1993).

 The purpose of the False Claims Act is, of course, to discourage fraud against the government. Concomitantly, the purpose of the qui tam provision of the Act is to encourage those with knowledge of fraud to come forward. See H.R. Rep. No. 660, 99th Cong., 2d Sess., 22 (1986).

 In order to protect qui tam relators from retaliation by their employers, the False Claims Act now contains a whistleblower protection clause. That clause, 31 U.S.C. section 3730(h), provides in pertinent part:


Any employee who is . . . in any . . . manner discriminated against in the terms and conditions of employment by . . . her employer because of lawful acts done by the employee . . . in furtherance of 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. § 3730(h).

 It is clear that the statutory protections of section 3730(h) *fn3" extend to persons who bring a qui tam action, pursuant to section 3730(b), for violations of the Act. See, e.g., Coleson v. Inspector General of the Dep't of Defense, 721 F. Supp. 763, 765 (E.D. Va. 1989). It is also clear that protected conduct under section 3730(h) extends beyond the actual qui tam relator to others involved in the suit, including any person who initiated, investigated, testified, or assisted in "an action filed or to be filed" under the Act. 31 U.S.C. § 3730(h). What is not clear, however, is how far the protections of the statute extend beyond those limits.

 II. The Scope of Whistleblower Protection under the Act

 In the present case the Plaintiff did not take her information to the government. Instead, she reported what she had uncovered to her superiors at Honeywell who then notified the government and the matter was settled. Though the Plaintiff alleges that the Attorney General conducted an investigation, no False Claims Act lawsuit was ever filed, and because the government is now in possession of the relevant information and has settled the matter, no such action may be filed. Thus, the issue presented to us is whether an internal whistleblower may state a claim under the whistleblower protection provisions of the False Claims Act when no lawsuit was ever filed, either by the whistleblower or another informer as a qui tam relator, or by the government.

 A. As a general rule, whistleblower protection statutes are remedial in nature and thus are broadly construed.

 Many courts have addressed issues similar to the one before us today under different federal whistleblower protection statutes. Almost without exception, they have held that the coverage of the statute at issue should be broadly construed so as to include internal, or "intracorporate" whistleblowing, ever where the conduct involved did not come under the literal terms of the statute.

 In NLRB v. Scrivener, 405 U.S. 117, 31 L. Ed. 2d 79, 92 S. Ct. 798 (1972), the Supreme Court held that language in the National Labor Relations Act extended whistleblower protection to an employee who did not meet the literal requirements of the statute. While the statute expressly covered an employee who "has filed charges or given testimony," the Court extended protection to an employee who had given a statement to a NLRB examiner but had neither filed charges or testified at a formal hearing. In so holding, the Court noted that such an interpretation had a long history: the Labor Board had, since 1934, interpreted the language to cover those "giving information relating to violations of the NLRA." Id. at 123 (citing New York Rapid Transit Corp., 1 N.L.R.B. Dec. 192 (1934)). See also NLRB v. Retail Store Employees Union, 570 F.2d 586, 590 (6th Cir. 1978) (following Scrivener), cert denied, 439 U.S. 819, 58 L. Ed. 2d 109, 99 S. Ct. 81 (1978).

 In Passaic Valley Sewerage Commissioners v. United States Department of Labor, 992 F.2d 474, 1993 WL 114741 (3d Cir. filed April 16, 1993), the Third Circuit upheld the Secretary of Labor's construction of the whistleblower protection clause in the Clean Water Act to cover internal whistleblowers. The language at issue in Passaic was similar to the language of the False Claims Act. It protected any employee who "has filed, instituted, or cause to be filed or instituted any proceeding under this chapter." 33 U.S.C. § 1367. The Secretary of Labor held that the language protected an employee who had made only internal complaints to his superiors, and the Third Circuit agreed.

 In addition to Scrivener and Passaic, the federal courts have been nearly unanimous in holding that whistleblower protection is available under various statutes to employees who are discriminated against after taking their concerns to internal corporate entities rather than an outside law enforcement agency. See Passaic, id., Jones v. Tennessee Valley Auth., 948 F.2d 258, 264 (6th Cir. 1991) (internal safety complaints are protected by pre-amendment Energy Reorganization Act, 42 U.S.C. § 5851(a), which covered employees who "commenced . . . a proceeding under this chapter."); Pogue v. United States Dep't of Labor, 940 F.2d 1287, 1289 (9th Cir. 1991) (noting that there was no dispute that internal whistleblowing was protected conduct under The Clean Water Act); *fn4" Rayner v. Smirl, 873 F.2d 60, 63-64 (4th Cir. 1989) (Federal Railroad Safety Act, 45 U.S.C. § 441(a), which literally covers employees who "filed any complaint or instituted . . . any proceeding under or related to the enforcement of the Federal Railroad safety laws . . . ." covers internal complaints), cert denied, 493 U.S. 876, 107 L. Ed. 2d 166, 110 S. Ct. 213 (1989); In re Willy, 831 F.2d 545, 547-48 (5th Cir. 1987) (noting that the decision in Brown & Root, supra, which denied protection to internal whistleblowers, had been rejected by three other circuits and by the Secretary of Labor); Kansas Gas & Elec. Co. v. Brock, 780 F.2d 1505, 1510-11 (10th Cir. 1985) (Energy Reorganization Act), cert denied, 478 U.S. 1011, 106 S. Ct. 3311, 92 L. Ed. 2d 724 (1986); Mackowiak v. University Nuclear Sys., Inc., 735 F.2d 1159, 1162-63 (9th Cir. 1984) (Energy Reorganization Act); Donovan v. Stafford Constr. Co., 235 U.S. App. D.C. 352, 732 F.2d 954, 960 (D.C. Cir. 1984) (though the a literal reading of the Mine Safety Act requires an employee to file charges or give testimony, such a narrow construction frustrates remedial purpose of the Act); Consolidated Edison Co. v. Donovan, 673 F.2d 61 (2d Cir. 1982) (assuming without discussion that the Energy Reorganization Act covers internal whistleblowers); Baker v. Interior Board of Mine Operations Appeals, 193 U.S. App. D.C. 361, 595 F.2d 746 (D.C. Cir. 1978) (The Mine Safety Act, 30 U.S.C. § 820(b)(1), which protects employees who "filed, instituted, or caused to be filed or instituted any proceeding under this chapter . . . ." protects internal complaints); Phillips v. Interior Bd. of Mine Operators Appeals, 163 U.S. App. D.C. 104, 500 F.2d 772, 781-83 (D.C. Cir. 1974) (Mine Safety Act construed to cover miners who complain but do not initiate formal proceedings), cert denied sub nom., Kentucky Carbon Corp. v. Interior Board of Mine Operations Appeals, 420 U.S. 938, 43 L. Ed. 2d 415, 95 S. Ct. 1149 (1975). But see Brown & Root, Inc. v. Donovan, 747 F.2d 1029, 1031-32 (5th Cir. 1984) (internal whistleblowing is not protected under the Pre-amendment Energy Reorganization Act).

 In each of these cases, internal whistleblowers who did not fall within the literal terms of the statute were given protection in order to further the remedial purposes of the statutes involved. The present case presents a very similar situation. As in the cases cited above, there can be no doubt that Ms. Neal's actions here do not fall with in the literal language of the False Claims Act. However, the great weight of precedent on this issue makes it clear that federal whistleblower protection laws are to be broadly construed to cover internal whistleblowers, even where the specific conduct at issue does not fall within a literal reading of the statute.

 Defendant argues that the use of the word "action" indicates Congressional intent to limit the scope of 3730(h)'s protection to participants in a formal proceeding of some kind. Though the Defendants do not credit the Fifth Circuit for this logic, the reasoning urged upon us here is precisely that adopted by the court in Brown & Root, 747 F.2d at 1031-32.

 In Brown & Root, the Fifth Circuit found that the use of the phrase "in any other action . . . implies an 'action' is a kind of structured proceeding in which a person may participate, not just any act a person may perform." Id., 747 F.2d at 1032. Thus, the court held that an internal whistleblower is not protected from discrimination.

 Of course, Brown & Root took a minority position. More importantly, its holding was addressed directly by Congress when the Energy Reorganization Act was amended. The statute now explicitly protects internal whistleblowers. See 42 U.S.C. § 5851(a) (Supp. 1992) (employee protected who "notified his employer of an alleged violation of this chapter. . . . "). We view the amendment to the Energy Reorganization Act as a rejection of the literal, hypertechnical and overly narrow reading of whistleblower statutes urged upon us by the Defendant. *fn5"

  B. Defendants' authority is unpersuasive.

 Defendants' cited cases do not persuade us. In Casarez v. Delco Sys. Operations, No. 92-5844, 1993 WL 169255 (C.D. Cal. filed March 3, 1993) (Tashika, J.), the court read the language of section 3730(h) to show that the actual filing of a qui tam lawsuit under section 3730(b) is an absolute prerequisite to a suit for retaliation under section 3730(h). Id. at *1. It is of value to note that the Casarez decision was made without the benefit of argument from the plaintiff, who did not respond to the motion to dismiss. Id.

 We reject Casarez for two reasons. First, it simply ignores the overwhelming precedent for the proposition that federal whistleblower statutes are to be broadly construed. Second, it construes section 3730(h) even more narrowly than can be justified with a literal reading: the absolute requirement of a qui tam suit as a prerequisite to protection under section 3730(h) is, we believe, an extreme position that is not supported by the statute. Though the literal language of section 3730(h) requires an action "filed or to be filed" under the provisions of the Act, it makes no distinction between one filed by a qui tam relator under subparagraph (b) and one filed by the government under subparagraph (a). See 31 U.S.C. § 3730(h).

 Defendants' other cases do mention that action in furtherance of a False Claims Act is protected by the statute. See X Corp. v. Doe, 816 F. Supp. 1086, 1095, 1993 WL 90355 at *9 (E.D. Va. filed March 25, 1993) (Ellis, J.) (summary judgment granted against corporate attorney who could not prove his warnings to company officers were "in furtherance" of a qui tam suit); Hardin v. DuPont Scandinavia, 731 F. Supp. 1202, 1205 (S.D.N.Y. 1990) (dicta suggesting that Plaintiff must have acted "in furtherance of" an action under section 3730). See also Mayo v. Questech, 727 F. Supp. 1007, 1014 n.14 (E.D. Va. 1989) (noting that legislative history of 3730(h) indicates it is a remedy of limited scope without any analysis or explanation of that conclusion). However, none of these cases discuss the precedent we have cited above, and we respectfully decline to follow them.

 While attacking the Casarez court as "hopelessly mixed up," (Mem. in Opp. at 8), the Plaintiff cites Rehman v. ECC International Corp., No. 90-425, 1993 WL 85758 (M.D. Fla. filed March 4, 1993) (Report and Recommendation) (Baker, Mag. J.). In Rehman, the Magistrate Judge recommended denial of a motion for summary judgment on the issue of whether the employer knew that the employee was acting pursuant to the Act. The employer argued that, because the employee never explicitly notified them that he was acting *fn6" pursuant to the False Claims Act, they could not have retaliated against him on that basis. Id., 1993 WL 875758 at *2. The Magistrate Judge properly rejected that argument, stating:


The intent of the statute is to provide early assurance to employees that their jobs will not be endangered by looking into and reporting possible misconduct by government contractors, regardless of the informality or nascent status of the proceeding.

 Id. (emphasis added). Though this language is dicta, we believe the Magistrate Judge correctly summarized the purpose of the False Claims Act and the need to broadly construe its whistleblower protections in order to effectuate that purpose.

 The False Claims Act is intended to put an end to fraud against the government by encouraging those with knowledge of such fraud to come forward. In order to further that purpose, public policy demands that internal whistleblowers like the Plaintiff in the present case be protected from retaliation.

  We respectfully decline to follow the Casarez construction of the Act. *fn7" It would make little sense to protect an anonymous qui tam plaintiff who filed an expensive and time-consuming lawsuit while ignoring someone like the Plaintiff, whose bold conduct led to a quick, voluntary and efficient disclosure of the fraud and reparation to the government. Thus, we hold that the whistleblower protection provision of the False Claims Act forbids discrimination against an employee who has made an intracorporate complaint about fraud against the government.

 III. The Applicable Statute of Limitations

 The Defendant next argues that the applicable statute of limitations is the five year Illinois retaliatory discharge statute, which has run. Defendant advances this argument in spite of the presence of a six year statute in the False Claims Act itself. See 31 U.S.C. § 3731(b)(1) (Supp. 1993).

 Defendant argues that section 3731 applies only to qui tam actions brought under section 3729. See United States ex rel. Truong v. Northrop Corp., No. CV-88-967 MRP (C.D. Cal. filed Nov. 26, 1991) (applying state limitations period to action under 3730(h)). This argument contradicts the plain language of section 3731(b), which by its own terms applies to "[a] civil action under section 3730 . . . ." 31 U.S.C. § 3731(b)(1). Plaintiff's action is, of course, filed pursuant to section 3730(h), and is therefore covered by the six year statute. See Grand ex rel. United States of America v. Northrop Corp., 811 F. Supp. 333, 335-36 (S.D. Ohio 1992) (rejecting reasoning of Truong and holding that internal whistleblowers retaliation suit was subject to limitations period in 3731(b)). We find the reasoning in Grand to be more persuasive, and hold that the six year statute of limitations found in section 3731(b) applies in the present case.

 IV. Plaintiff's Request for Qui Tam Remedies

 Finally, the Defendants urge us to strike a portion of the Plaintiff's prayer for relief. The offending portion seeks the damages Neal would have been entitled to if she had filed a qui tam suit under section 3730(b). (See Compl. P 35(f)). Neal apparently seeks qui tam remedies on the theory that she would have been entitled to them had Honeywell not misled her about her rights to maintain anonymity while filing an action under the False Claims Act.

 The Defendants simply argue that because no qui tam action was filed, Neal may not recover qui tam damages. *fn8" Indeed, section 3730(b), entitled "Award to Qui Tam plaintiff," applies only in the case of a qui tam suit by its own terms. However, Neal's theory is that she was, in effect, defrauded of a valid qui tam action when a Honeywell "hotline" attorney failed to tell her of its availability.

 We make no determination on the validity of that theory, which is not directly challenged in this motion. However, section 3730(h) itself provides that a whistleblower who suffers retaliation "shall be entitled to all relief necessary to make the employee whole." 31 U.S.C. § 3730(h). To the extent that Neal can demonstrate that she was deprived of her right to file a successful qui tam suit by the actions of the Defendants, the damage provision of section 3730(b) may provide an effective guide to the jury when awarding damages. *fn9" Thus, we decline to strike paragraph 34(f) at this state of the litigation.


 For the reasons stated above, the Motion to Dismiss is denied.




 DATED: June 16, 1993

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