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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, ...

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